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Exhibit 10.13
NONSTATUTORY STOCK OPTION AGREEMENT
UNDER THE
NET2000 COMMUNICATIONS, INC. 1999 STOCK INCENTIVE PLAN
This Grant Agreement (the "Agreement") is entered into this 15th day of
November, 1999, by and between NET2000 COMMUNICATIONS, INC., a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxxxxxxxx (the "Employee"),
effective as of November 15, 1999 (the "Grant Date").
In consideration of the premises, mutual covenants and agreements
herein, the Company and the Employee agree as follows:
1. Grant of Option. The Company hereby grants to the Employee, pursuant
to the NET2000 COMMUNICATIONS, INC. 1999 Stock Incentive Plan (the "Plan"), a
nonstatutory stock option to purchase from the Company, at a price of $4.00 per
share (the "Exercise Price"), up to 275,000 shares of Common Stock of the
Company, $.01 par value per share ("Stock"), subject to the provisions of this
Agreement and the Plan (the "Option"). The Option shall expire at 5:00 p.m.
Eastern Time on the last business day preceding the tenth anniversary of the
Grant Date (the "Expiration Date"), unless fully exercised or terminated
earlier.
2. Terminology. Unless stated otherwise in this Agreement, capitalized
terms in this Agreement shall have the meaning set forth in the Plan. Except
where the context otherwise requires, the term "Company" shall include NET2000
COMMUNICATIONS, INC. and its Affiliates.
3. Exercise of Option.
(a) Right to Exercise. Except as otherwise provided in this
Agreement, this Option may be exercised as to its vested portion at any time and
from time to time, in whole or in part, on or before the Expiration Date or
earlier termination of the Option. In the event of the Employee's death,
disability, or other termination of employment or service relationship, the
exercisability is governed by Section 4 below.
(b) Vesting. The Option vests as follows: 1/3 of the shares
shall vest immediately upon the Grant Date, with the remainder of the shares
vesting 1/36 per month thereafter; provided, however, that the Employee is in
the continuous employ of or in a service relationship with the Company from the
Grant Date through the applicable date upon which vesting is scheduled to occur.
Unless the Option has earlier terminated, vesting of the Option shall be
accelerated so that the unvested portion of the Option shall become 50% vested
upon the occurrence of a Change in Control, with the remaining 50% vesting in
six (6) equal monthly installments over a period commencing one month after a
Change in Control and ending on the date that is six (6) months after the Change
in Control. For the purposes of this Agreement, the term "Change in Control"
shall have the same meaning as set forth in the employment agreement entered
into by the Employee and the Company on November 15, 1999 ("Employment
Agreement").
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(c) Exercise Procedure. Subject to the conditions set forth in
this Agreement, this Option shall be exercised by delivery of written notice of
exercise on any business day to the Corporate Secretary of the Company, or any
individual designated by the Corporate Secretary, in such form as the
Administrator may require from time to time. Such notice shall specify the
number of shares in respect of which the Option is being exercised and shall be
accompanied by full payment of the Exercise Price for such shares in accordance
with Section 3(d) of this Agreement. The exercise shall be effective upon
receipt by the Corporate Secretary of the Company, or any individual designated
by the Corporate Secretary, of such written notice accompanied by the required
payment or properly executed, irrevocable instructions to effectuate a
broker-assisted cashless exercise. The Option may be exercised only in multiples
of whole shares and may not be exercised at any one time as to fewer than one
hundred shares (or such lesser number of shares as to which the Option is then
exercisable). No fractional shares shall be issued pursuant to this Option.
(d) Method of Payment. Payment of the Exercise Price shall be
by any of the following, or a combination thereof, as determined by the
Administrator in its discretion at the time of exercise:
i. by delivery of cash, certified or cashier's check, money order
or other cash equivalent acceptable to the Administrator in
its discretion;
ii. by tender (via actual delivery or attestation) to the Company
of other shares of Stock of the Company which have a Fair
Market Value on the date of tender equal to the Exercise
Price, provided that such shares have been owned by the
Employee for a period of at least six months or were purchased
on the open market without assistance, direct or indirect,
from the Company;
iii. by a broker-assisted cashless exercise; or
iv. by any other method approved by the Administrator.
(e) Issuance of Shares upon Exercise. Upon due exercise of the
Option, in whole or in part, in accordance with the terms of this Agreement, the
Company shall issue to the Employee, the brokerage firm specified in the
Employee's delivery instructions pursuant to a broker-assisted cashless
exercise, or such other person exercising the Option, as the case may be, the
number of shares of Stock so paid for, in the form of fully paid and
nonassessable stock and shall deliver certificates therefor as soon as
practicable thereafter. The stock certificates for any shares of Stock issued
hereunder shall, unless such shares are registered or an exemption from
registration is available under applicable federal and state law, bear a legend
restricting transferability of such shares.
4. Termination of Employment or Service.
(a) Exercise Period Following Cessation of Employment or
Service Relationship, In General. If the Employee ceases to be employed by, or
in a service relationship with, the Company for any reason other than death,
total and permanent disability (as defined in Section 4(b) below) or discharge
for "Cause" (as defined in Section 4(d) below), (i) this Option shall terminate
immediately upon such cessation to the extent it is unvested, and (ii) this
Option shall be exercisable during the 90-day period following such cessation to
the extent it is vested, but in no event after the Expiration Date. Unless
sooner terminated, this Option shall terminate in its entirety upon the
expiration of such 90-day period.
(b) Disability of Employee. Notwithstanding the provisions of
Section 4(a) above, if the Employee ceases his employment or other service
relationship with the Company as a result of his
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total and permanent disability, (i) this Option shall terminate immediately upon
such cessation to the extent it is unvested, and (ii) this Option shall be
exercisable during the 12-month period following such cessation to the extent it
is vested, but in no event after the Expiration Date. Unless sooner terminated,
this Option shall terminate in its entirety upon the expiration of such 12-month
period. For purposes of this Agreement, "total and permanent disability" shall
mean the inability to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve months. The Administrator may require
such proof of total and permanent disability as the Administrator in its sole
discretion deems appropriate and the Administrator's good faith determination as
to whether the Employee is totally and permanently disabled shall be final and
binding on all parties concerned.
(c) Death of Employee. If the Employee dies prior to the
Expiration Date or other termination of the Option, (i) this Option shall
terminate immediately upon the Employee's death to the extent it is unvested,
and (ii) this Option shall be exercisable during the 12-month period following
the date of death of the Employee to the extent it is vested, but in no event
after the Expiration Date, by the Employee's executor, personal representative,
or the person(s) to whom this Option is transferred by will or the laws of
descent and distribution. Unless sooner terminated, this Option shall terminate
in its entirety upon the expiration of such 12-month period.
(d) Cause. Notwithstanding anything to the contrary herein,
this Option shall terminate in its entirety, regardless of whether the Option is
vested in whole or in part, immediately upon the Employee's discharge of
employment or other service relationship for Cause or upon the Employee's
commission of any act that would constitute Cause during any period following
the cessation of employment or other service relationship during which the
Option otherwise would be exercisable. For purposes of this Agreement, "Cause"
shall have the same meaning as set forth in the Employment Agreement.
5. Non-Guarantee of Employment or Service Relationship. Nothing in the
Plan or this Agreement shall alter the employment status or service relationship
of the Employee, nor be construed as a contract of employment or other service
relationship between the Company and the Employee, or as a contractual right of
Employee to continue in the employ of, or in a service relationship with, the
Company, or as a limitation of any rights of the Company regarding the
Employee's employment.
6. No Rights as a Stockholder. The Employee shall not have any of the
rights of a stockholder with respect to the shares of Stock that may be issued
upon the exercise of the Option until such shares of Stock have been issued to
him upon the due exercise of the Option. No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior to
the date such certificate or certificates are issued.
7. Nonstatutory Nature of the Option. This Option is not intended to
qualify as an incentive stock option within the meaning of Code section 422, and
this Agreement shall be so construed. The Employee acknowledges that, upon the
exercise of the Option, the Employee will recognize taxable income in an amount
equal to the excess of the then Fair Market Value of the Stock over the Exercise
Price and must comply with the provisions of Section 8 of this Agreement with
respect to any tax withholding obligations that arise as a result of such
exercise.
8. Withholding of Taxes. At the time the Option is exercised, in whole
or in part, or at any time thereafter as requested by the Company, the Employee
hereby authorizes withholding from payroll
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or any other payment of any kind due the Employee and otherwise agrees to make
adequate provision for federal, state, local or other taxes required by law to
be withheld, if any, which arise in connection with the Option. The Company may
require the Employee to make a cash payment to cover any withholding tax
obligation as a condition of exercise of the Option.
The Administrator may, in its sole discretion, permit the
Employee to satisfy, in whole or in part, any withholding tax obligation which
may arise in connection with the Option either by electing to have the Company
withhold from the shares to be issued upon exercise that number of shares, or by
electing to deliver to the Company already-owned shares, in either case having a
Fair Market Value equal to the amount necessary to satisfy the statutory minimum
withholding amount due.
9. Nontransferability of Option. This Option is nontransferable
otherwise than by will or the laws of descent and distribution and during the
lifetime of the Employee, the Option may be exercised only by the Employee or,
during the period the Employee is under a legal disability, by the Employee's
guardian or legal representative. Subject to the approval of the Compensation
Committee, however, the Employee may transfer the Option in limited
circumstances to a Family Member. Family Member shall mean the Employee's child,
stepchild, grandchild, spouse, son-in-law or daughter-in-law, or a trust in
which these persons have more than 50% of the beneficial interest. For purposes
of determining Family Member status, adoptive relationships shall be included.
Except as provided above, the Option may not be assigned, transferred, pledged,
hypothecated or disposed of in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process.
10. Notices. All notices and other communications made or given
pursuant to this Agreement shall be in writing and shall be sufficiently made or
given if hand delivered or mailed by certified mail or overnight commercial
courier, addressed to the Employee at the address contained in the records of
the Company, or addressed to the Administrator, care of the Company for the
attention of its Corporate Secretary at its principal office or, if the
receiving party consents in advance, transmitted and received via telecopy or
via such other electronic transmission mechanism as may be available to the
parties.
11. Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the stock option granted hereunder. Any oral
or written agreements, representations, warranties, written inducements, or
other communications made prior to the execution of this Agreement with respect
to the stock option granted hereunder shall be void and ineffective for all
purposes. All provisions contained herein, however, shall be deemed to be in
conformance with those contained in the Employment Agreement and this Agreement
shall supercede any corresponding provisions of the Employment Agreement
regarding this Option.
12. Amendment. This Agreement may be amended from time to time by the
Administrator in its discretion; provided, however, that this Agreement may not
be modified in a manner that would have a materially adverse effect on the
Option as determined in the discretion of the Administrator, except as provided
in the Plan or in a written document signed by each of the parties hereto.
13. Conformity with Plan. This Agreement is intended to conform in all
respects with, and is subject to all applicable provisions of, the Plan, which
is incorporated herein by reference. Inconsistencies between this Agreement and
the Plan shall be resolved in accordance with the terms of the Plan. In the
event of any ambiguity in this Agreement or any matters as to which this
Agreement is silent, the Plan shall govern. A copy of the Plan is provided to
you with this Agreement.
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14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia, other than the
conflict of laws principles thereof.
15. Headings. The headings in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
16. Execution. This Agreement is voidable by the Company if the
Employee does not execute and return the Agreement to the Company within 30 days
of its execution by the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer as of the date first above written.
NET2000 COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
Date: November 15, 1999
The undersigned hereby acknowledges that he has carefully read this Agreement
and the Plan and agrees to be bound by all of the provisions set forth in such
documents.
EMPLOYEE
/s/ Xxxxx Xxxxxxxxxxx
Date: November 15, 1999
Enclosure: Net2000 Communications, Inc. 1999 Stock Incentive Plan
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NET2000 COMMUNICATIONS, INC. EXERCISE FORM
Administrator of Net2000 Communications, Inc. 1999 Stock Incentive Plan
c/o Office of the Corporate Secretary
[____________________________________________________
_____________________________________________________
_____________________________________________________]
Gentlemen:
I hereby exercise the Option granted to me on ____________________,
_____, by NET2000 COMMUNICATIONS, INC. (the "Company"), subject to all the terms
and provisions thereof and of the NET2000 COMMUNICATIONS, INC. 1999 STOCK
INCENTIVE PLAN (the "Plan"), and notify you of my desire to purchase
____________ shares of Common Stock of the Company at a price of $4.00 per share
pursuant to the exercise of said Option. This will confirm my understanding with
respect to the shares to be issued to me by reason of this exercise of the
Option (the shares to be issued pursuant hereto shall be collectively referred
to hereinafter as the "Shares") as follows:
(a) I am acquiring the Shares for my own account for
investment with no present intention of dividing my interest with others or of
reselling or otherwise disposing of any of the Shares.
(b) The Shares are being issued without registration under the
Securities Act of 1933, as amended (the "Act"), in reliance upon one or more
exemptions contained in the Act, and such reliance is based in part on the above
representation.
(c) The certificates for the Shares to be issued to me will
bear a legend substantially as follows:
"The securities represented by this stock certificate
have not been registered under the Securities Act of 1933 (the "Act")
or applicable state securities laws (the "State Acts"), and shall not
be sold, pledged, hypothecated, donated, or otherwise transferred
(whether or not for consideration) by the holder except upon the
issuance to the Company of a favorable opinion of its counsel and/or
submission to the Company of such other evidence as may be satisfactory
to counsel for the Company, to the effect that any such transfer shall
not be in violation of the Act and the State Acts.
The shares of stock represented by this certificate
are subject to restrictions on transfer, an option to purchase and a
market stand-off agreement set forth in a certain Stock Restriction
Agreement between the Company and the registered owner of this
certificate (or his predecessor in interest), and no transfer of such
shares may be made without compliance with that Agreement. A copy of
that Agreement is available for inspection by any shareholder of the
Company at the office of the Company upon appropriate request and
without charge."
Appropriate stop transfer instructions will be issued by the issuer to its
transfer agent.
(d) Since the Shares have not been registered under the Act,
they must be held indefinitely until an exemption from the registration
requirements of the Act is available or they are subsequently registered, in
which event the representation in Paragraph (a) hereof shall terminate. As a
condition to any transfer of the shares, I understand that the issuer will
require an opinion of counsel
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satisfactory to the issuer to the effect that such transfer does not require
registration under the Act or any state securities law.
(e) The issuer is not obligated to comply with the
registration requirements of the Act or with the requirements for an exemption
under Regulation A under the Act for my benefit.
(f) I am a party to a Stock Restriction Agreement with the
Issuer, pursuant to which I have agreed to certain restrictions on the
transferability of the Shares and other matters relating thereto.
Total Amount Enclosed: $__________
Date:________________________ ____________________________________
(Employee)
Received by NET2000 COMMUNICATIONS, INC. on
________________________________, _____
By: _________________________________
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