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EXHIBIT 10.12.2
NET2000 COMMUNICATIONS, INC.
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement"), effective as of
November 10, 1999, is made by and between NET2000 COMMUNICATIONS, INC., a
Delaware corporation (the "Company"), and XXXXXX X. XXXXXX (the "Optionee").
WHEREAS, the Company wishes to grant an option to purchase shares of
the Company's common stock to the Optionee pursuant to the terms of the
Company's 1997 Equity Incentive Plan (the "Plan");
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
GRANT OF OPTION
Section 1.1 - Grant of Option
In consideration of service to the Company and for other good and
valuable consideration, the Company grants to the Optionee an option to purchase
45,000 shares of the Company's common stock in accordance with the terms and
conditions of the Plan. The option is not intended by the parties to be, and
shall not be treated as, an incentive stock option, as such term is defined
under Section 422 of the Internal Revenue Code of 1986 (the "Code"). The
Optionee's rights with respect to the option shall be governed by the terms of
the Plan.
Section 1.2 - Option Price
The purchase price of the shares of stock covered by the option shall
be $4.00 per share.
Section 1.3 - Adjustments in Option
In the event that the outstanding shares of stock subject to the
option are changed into or exchanged for a different number or kind of shares of
the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split, stock dividend
or combination of shares, the shares subject to the option and the price per
share will be equitably adjusted to reflect such changes pursuant to Article IX
of the Plan. Such adjustment in the option shall be made without
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change in the total price applicable to the unexercised portion of the option
(except for any change in the aggregate price resulting from rounding-off of
share quantities or prices) and with any necessary corresponding adjustment in
the option price per share. Any such adjustment made by the Administrator of the
Plan (the "Administrator" as defined in the Plan) shall be final and binding
upon the Optionee, the Company and all other interested persons.
ARTICLE II
EXERCISE OF OPTION
Section 2.1 - Person Eligible to Exercise.
During the lifetime of the Optionee, only the Optionee may exercise
the option or any portion thereof. After the death of the Optionee, any
exercisable portion of the option may, prior to the time when the option becomes
unexercisable under the terms of the Plan or the Agreement, be exercised by the
Optionee's personal representative or by any other person empowered to do so
under the Optionee's will, trust or under then applicable laws of descent and
distribution.
Section 2.2 - Manner of Exercise
The option, or any portion thereof, may be exercised only in
accordance with the terms of the Plan and solely by delivery to the President of
the Company of all of the following items prior to the time when the option or
such portion becomes unexercisable under the terms of the Plan:
(a) Notice in writing signed by the Optionee or the other
person then entitled to exercise the option or portion thereof, stating that the
option or portion thereof is thereby exercised, such notice complying with all
applicable rules (if any) established by the Administrator;
(b) Full payment (in cash or by cashiers' or certified
check) for the shares with respect to which such option or portion thereof is
exercised;
(c) A bona fide written representation and agreement, in a
form satisfactory to the Administrator, signed by the Optionee or other person
then entitled to exercise such option or portion thereof, stating that the
shares of stock are being acquired for his or her own account, for investment
and without any present intention of distributing or reselling said shares, or
any of them, except as may be permitted under the Securities Act of 1933, as
amended (the "Act"), and then applicable rules and regulations thereunder, and
that the Optionee or other person then entitled to exercise such option or
portion will indemnify the Company against and hold it free and harmless from
any loss, damage, expense or liability resulting to the Company if any sale or
distribution of the shares by such person is contrary to the representation and
agreement referred to above.
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The Administrator may, in its absolute discretion, take whatever additional
actions it deems appropriate to ensure the observance and performance of such
representations and agreement and to effect compliance with all federal and
state securities laws or regulations. Without limiting the generality of the
foregoing, the Administrator may require an opinion of counsel acceptable to it
to the effect that any subsequent transfer of shares acquired on an option
exercise does not violate the Act and may issue stop-transfer orders covering
such shares. The written representations and agreement referred to in the first
sentence of this subsection (c), however, shall not be required if the shares to
be issued pursuant to such exercise have been registered under the Act, and such
registration is then effective in respect of such shares; and
(d) In the event the option or any portion thereof shall be
exercised pursuant to Section 2.1 by any person or persons other than the
Optionee, appropriate proof, reasonably satisfactory to the Administrator, of
the right of such person or persons to exercise the option.
Section 2.3 - Conditions to Issuance of Shares
(a) The Company shall not issue any shares to the Optionee
until the Optionee has executed and delivered to the Company a Stock Restriction
Agreement substantially in the form of attached Exhibit 1, and a Notice of
Exercise of Stock Option letter, substantially in the form of attached Exhibit
2.
(b) The shares of stock deliverable upon the exercise of
the option, or any portion thereof, may be either previously authorized but
unissued shares or issued shares which have been reacquired by the Company. Such
shares shall be fully paid and nonassessable and certificates representing such
shares shall be delivered to Optionee immediately upon full compliance with the
terms and conditions contained in this Agreement and the Plan.
Section 2.4 - Rights of Shareholders
The Optionee shall not be, nor have any of the rights or privileges
of, a shareholder of the Company in respect of any shares purchasable upon the
exercise of any part of the option unless and until certificates representing
such shares shall have been issued by the Company to the Optionee.
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Section 2.5 - Vesting and Exercisability.
The option granted hereunder shall vest according to the schedule in
this Section 2.5 and shall be exercisable as to not more than the vested
percentage of the shares subject to the option at any point in time. The option
shall become vested according to the following schedule:
Cumulative Percentage
Date of Shares Vested
---- ----------------
Immediately 25%
1-36 1/36th of remaining 75%
per month
Section 2.6 - Duration of Option
Except as specified below, the option granted hereunder shall expire
ten years from the effective date of grant. Notwithstanding the foregoing, the
option may expire prior to ten years from the effective date of this Agreement,
in the following circumstances:
(a) In the case of the Optionee's death, the option shall
expire on the one-year anniversary of the Optionee's death.
(b) In the case of the Optionee's total and permanent
disability and resulting termination of employment with the Company, the option
shall expire on the one-year anniversary date of the Optionee's last day of
employment.
(c) If the Optionee's employment terminates by reason of
normal retirement under the Company's normal retirement policies, the option
will expire 90 days after the last day of his employment.
(d) If the Optionee ceases employment for any reason other
than death, disability or retirement (as described in the preceding paragraph),
the option shall lapse on the 30th day following the day upon which the
Optionee's employment with the Company is terminated.
(e) Notwithstanding any provisions set forth above in this
Section 2.6, if the Optionee shall (i) commit any act of material malfeasance
affecting the Company or its affiliates, (ii) breach any covenant not to compete
or any material provision of any other agreement with the Company or any
affiliate, or (iii) engage in conduct that would warrant the Optionee's
discharge for cause, any unexercised part of the option shall lapse immediately
upon the earlier of the occurrence of such event or the last day the Optionee is
employed by the Company.
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Section 2.7 - Change of Control
If there is a Change in Control, as defined below, 67% of the
outstanding unvested options to purchase Company capital stock held by the
Optionee shall vest immediately. Notwithstanding the preceding sentence, (i) if
the Optionee shall be terminated by the Company, without cause (as defined in
the Employment Agreement by and between the Company and the Optionee of even
date herewith, the "Employment Agreement"), within three months of a Change in
Control, as defined below, 100% of the outstanding unvested options to purchase
Company capital stock held by the Optionee shall vest at the time of termination
or (ii) if the Optionee shall be terminated by the acquiring company, without
cause (as defined in the Employment Agreement effective December 15, 1997 by and
between the Company and the Optionee), within six months following a Change in
Control, as defined below, 100% of the outstanding unvested options to purchase
Company capital stock held by the Optionee shall vest at the time of
termination.
Change of control shall be deemed to occur upon the first of the
following events:
(i) any person becomes the beneficial owner,
directly or indirectly, of the securities of the Company representing 50% or
more of the combined voting power of the Company's then outstanding voting
securities and such person has the ability to elect a majority of the members of
the Company's Board of Directors, if such ownership is not in place on the date
of the grant;
(ii) any person becomes the beneficial owner,
directly or indirectly, of the securities of the Company sufficient to elect a
majority of the members of the Board of Directors of the Company, provided that
the Optionee's responsibilities as an employee of the Company are materially
adversely diminished by such change in control; or
(iii) the sale of all or substantially all of the
assets of the Company, or a merger, consolidation, or similar transaction of the
company in which the Company is not the surviving entity or the Company's
stockholders immediately prior to such transaction hold less than 50% of the
voting securities of the surviving entity.
A "change in control" shall not include either of the following events:
(i) a transaction, the sole purpose of which is
to change the state of the Company's incorporation; or
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(ii) a transaction, the result of which is to
sell all or substantially all of the assets of the Company to another entity (
the "surviving entity"); provided the surviving entity is owned directly or
indirectly by the Company's stockholders immediately following such transaction
in substantially the same proportions as their ownership of the Company's voting
capital stock immediately preceding such transaction.
ARTICLE III
MISCELLANEOUS
Section 3.1 - Administration
The Administrator shall have the power to interpret this Agreement
and to adopt such rules for the administration, interpretation and application
of the Agreement as are consistent herewith and to interpret or revoke any such
rules. All actions taken and all interpretations and determinations made by the
Administrator in good faith shall be final and binding upon the Optionee, the
Company and all other interested persons. No member of the Administrator shall
be personally liable for any action, determination or interpretation made in
good faith with respect to this Agreement or any similar agreement to which the
Company is a party.
Section 3.2 - Options Not Transferable
Neither the option nor any interest or right therein or part thereof
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition is voluntary
or involuntary or by operation of law, by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy)
and any attempted disposition thereof shall be null and void and of no effect;
provided, however, that this Section 3.2 shall not prevent transfers by will or
by the applicable laws of descent and distribution.
Section 3.3 - Shares to be Reserved
The Company shall at all times during the term of the option reserve
and keep available such number of shares of stock as will be sufficient to
satisfy the requirements of this Agreement.
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Section 3.4 - Notices
Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary and any
notice to be given to the Optionee shall be addressed to him at the address
given beneath his signature below. By a notice given pursuant to this Section
3.4, either party may hereafter designate a different address for notices to be
given to him. Any notice which is required to be given to the Optionee shall, if
the Optionee is then deceased, be given to the Optionee's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section. Any notice shall have
been deemed duly given when enclosed in a properly sealed envelope addressed as
aforesaid, deposited (with postage prepaid) in a United States postal
receptacle.
Section 3.5 - Titles
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
Section 3.6 - Notification of Disposition
The Optionee shall give prompt notice to the Company of any
disposition or other transfer of any shares of stock acquired under this
Agreement if such disposition or transfer is made within two (2) years from the
date of the exercise of an option with respect to such shares. Such notice shall
specify the date of such disposition or other transfer and the amount realized,
in cash, other property, assumption of indebtedness or other consideration, by
the Optionee in such disposition or other transfer.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties as of the date first written above.
NET2000 COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
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Xxxxxxx X. Xxxxxx, Xx., President
XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
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1510 Xxxx Court
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Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000
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