Exhibit 4.2
ITC/\DELTACOM, INC.
STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
ITC/\DeltaCom, Inc., a Delaware corporation (the "Company"), hereby grants an
Option to purchase shares of its common stock, $.01 par value (the "Stock"), to
the Optionee named below. The terms and conditions of the Option are set forth
in this cover sheet, in the attachment and in the ITC/\DeltaCom, Inc. Stock
Incentive Plan (the "Plan").
Grant Date: __________________, 200__
Name of Optionee: ______________________________
Optionee's Social Security Number: _____-____-_____
Number of Shares Covered by Option: ______________
Option Price per Share: $_____.___
By signing this cover sheet, you agree to all of the terms and
conditions described in this Agreement and in the Plan, a copy of which is
attached. You acknowledge that you have carefully reviewed the Plan and agree
that the Plan will control in the event any provision of this Agreement should
appear to be inconsistent with the terms of the Plan.
Optionee: _________________________________________________________
(Signature)
Company: _________________________________________________________
(Signature)
Title: _________________________________________________
Attachment
This is not a stock certificate or a negotiable instrument.
ITC/\DELTACOM, INC.
STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
Nonqualified Stock Option This Option is not intended to be an
incentive stock option under Section 422 of
the Internal Revenue Code and will be
interpreted accordingly.
Definitions Capitalized terms not defined in this
Agreement are defined in the Plan, and have
the meaning set forth in the Plan. The
following additional terms have the
meanings provided below:
"Service" means service by you as an
employee, officer, director or consultant
to the Company or an Affiliate. A change in
your position or duties shall not result in
interrupted or terminated Service so long
as you continue to be an employee, officer,
director or consultant of the Company or an
Affiliate.
"Cause" means, as determined by the Board
and unless otherwise provided in an
applicable employment agreement between you
and the Company or an Affiliate, (i) your
gross negligence or willful misconduct in
connection with the performance of your
duties, (ii) your conviction of a criminal
offense (other than minor traffic offenses)
or (iii) your material breach of any term
of any employment, consulting or other
services, confidentiality, intellectual
property or non-competition agreement
between you and the Company or an
Affiliate.
Vesting This Option is only exercisable before it
expires and then only with respect to the
vested portion of the Option. Subject to
the preceding sentence and the stockholder
approval requirement set forth in the
preceding paragraph, you may exercise this
Option, in whole or in part, to purchase a
whole number of vested shares not less than
100 shares, unless the number of shares
purchased is the total number available for
purchase under the Option, by following the
procedures set forth in the Plan and below
in this Agreement.
Your right to purchase shares of Stock
under this Option vests as to one third
(1/3) of the total number of shares covered
by this Option, as shown on the cover
sheet, on the Grant Date. An additional one
third (1/3) of the shares of Stock will
become vested on each of the first and
second anniversaries of the Grant Date,
provided you then continue in Service. The
resulting aggregate number of vested shares
will be rounded down to the nearest whole
number of shares. You may not vest in more
than the number of shares covered by
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this Option.
Except as otherwise may be provided for in
an applicable employment agreement between
you and the Company or an Affiliate, no
additional shares of Stock will vest after
your Service has terminated for any reason.
Term Your Option will expire in any event at the
close of business at Company headquarters
on the day before the 10th anniversary of
the Grant Date, as shown on the cover
sheet. Your Option will expire earlier if
your Service terminates, as described
below.
Regular Termination If your Service terminates for any reason,
other than your death, Disability or Cause,
except as otherwise may be provided for in
an applicable employment agreement between
you and the Company or an Affiliate, then
the unvested portion of your Option will
terminate immediately and the vested
portion of your Option will expire at the
close of business at Company headquarters
three (3) months after your termination
date.
Termination for If your Service is terminated for Cause,
Cause then you will immediately forfeit all
rights to your Option and the Option will
immediately expire. In addition, you shall
be required to forfeit to the Company an
amount equal to the aggregate gain that you
recognized pursuant to the vesting or
exercise of Incentive Awards during the
twelve (12) month period preceding your
termination of Service (the "Look-back
Period"). For this purpose the aggregate
gain recognized by you is equal to the sum
of: (i) the aggregate spread value of all
Options exercised by you (including Options
exercised by a Family member or Family
Trust) during the Look-back Period, where
the spread value is the difference between
the fair market value of the Stock on the
date of the Option exercise and the Option
exercise price; (ii) the aggregate value of
all shares of Restricted Stock owned by you
that vested during the Look-back Period,
less the purchase price, if any, for the
Restricted Stock and (iii) the aggregate
value of all shares of Stock delivered to
you pursuant to Restricted Units during the
Look-back Period. Any amount required to be
paid by you to the Company pursuant to this
paragraph shall be reduced by any amount
repaid by you to the Company pursuant to
Section 304 of the Xxxxxxxx-Xxxxx Act of
2002.
Death If your Service terminates because of your
death, then your Option will become 100%
vested, and your Option will expire at the
close of business at Company headquarters
on the date which is twelve (12) months
after the date of your death. During that
twelve-month
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period, your estate or heirs may exercise
your Option.
In addition, if you die during the three
(3) month period described in connection
with a regular termination (a termination
of your Service not on account of your
death, Disability or Cause), and a vested
portion of your Option has not yet been
exercised, then your Option will instead
expire on the date which is twelve (12)
months after your termination date. In such
a case, during the period following your
death up to the date which is twelve (12)
months after your termination date, your
estate or heirs may exercise the vested
portion of your Option.
Disability If your Service terminates because of your
Disability, then your Option will become
100% vested and your Option will expire at
the close of business at Company
headquarters on the date which is twelve
(12) months after your termination date.
Leaves of Absence For purposes of this Option, your Service
will not terminate when you go on a bona
fide employee leave of absence that was
approved by the Company in writing, if the
terms of the leave provide for continued
Service crediting, or when continued
Service crediting is required by applicable
law. However, your Service will be treated
as terminating 90 days after you go on
employee leave unless your right to return
to active work is guaranteed by law or by a
contract. Your Service will terminate in
any event when the approved leave ends
unless you immediately return to active
employee work.
The Company will determine, in its sole
discretion, which leaves count for this
purpose, and when your Service terminates
for all purposes under the Plan.
Notice of Exercise When you wish to exercise this Option, you
must notify the Company by filing the
proper "Notice of Exercise" form at the
address given on the form. Your notice must
specify how many shares you wish to
purchase (in a parcel of at least 100
shares generally). Your notice must also
specify how your shares of Stock should be
registered. The notice will be effective
when it is received by the Company.
If someone else wants to exercise this
Option after your death, that person must
prove to the Company's satisfaction that
such person is entitled to do so.
Form of Payment When you submit your notice of exercise,
you must include payment of the Option
Price for the shares you are purchasing.
Payment may be made in one (or a
combination) of the following forms:
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. Cash, your personal check, a
cashier's check, a money order or
another cash equivalent acceptable to
the Company.
. Shares of Stock which have already
been owned by you for more than six
months, either by surrender of the
shares to the Company or by written
attestation of the shares. The value
of the shares, determined as of the
effective date of the Option
exercise, will be applied to the
Option Price.
. By delivery (on a form prescribed by
the Company) of an irrevocable
direction to a licensed securities
broker acceptable to the Company to
sell Stock and to deliver all or part
of the sale proceeds to the Company
in payment of the aggregate Option
Price and any withholding taxes,
provided that this form of payment
will not be permitted without the
express prior consent of the Board if
you are an Executive Officer or
Director at the time that you attempt
to exercise this Option.
Withholding Taxes You will not be allowed to exercise this
Option unless you make acceptable
arrangements to pay any withholding or
other taxes that may be due as a result of
the Option exercise or sale of Stock
acquired under this Option. In the event
that the Company determines that any
federal, state, local or foreign tax or
withholding payment is required relating to
the exercise or sale of shares arising from
this grant, the Company will have the right
to require such payments from you or to
withhold such amounts from other payments
due to you from the Company or any
Affiliate.
Transfer of Option During your lifetime, only you (or, in the
event of your legal incapacity or
incompetency, your guardian or legal
representative) may exercise the Option.
You may not transfer or assign this Option.
For instance, you may not sell this Option
or use it as security for a loan. If you
attempt to do any of these things, this
Option will immediately become invalid. You
may, however, dispose of this Option in
your will or this Option may be transferred
upon your death by the laws of descent and
distribution. In addition, you may transfer
this Option subject to the terms and
conditions contained in this Agreement
(including the vesting conditions) by gift
to one or more or your Family members or to
a Family Trust.
Except to the extent you have transferred
your Option to a Family member or a Family
Trust in accordance with the preceding
paragraph, regardless of any marital
property settlement agreement, the Company
is not obligated to honor a notice of
exercise from
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your spouse, nor is the Company obligated
to recognize your spouse's interest in your
Option in any other way.
Retention Rights Neither your Option nor this Agreement
gives you the right to be retained by the
Company (or any Affiliate) in any capacity.
The Company (and any Affiliate) reserves
the right to terminate your Service at any
time and for any reason.
Shareholder Rights You, or your estate or heirs, have no
rights as a stockholder of the Company
until a certificate for your Option shares
has been issued (or an appropriate book
entry has been made). No adjustments will
be made for dividends or other rights if
the applicable record date occurs before
your stock certificate is issued (or an
appropriate book entry has been made),
except as described in the Plan.
Adjustments In the event of a stock split, a stock
dividend or a similar change in the Stock,
the number of shares covered by this Option
and the Option Price per share will be
adjusted (and rounded down to the nearest
whole number) if required pursuant to the
Plan. Your Option will be subject to the
terms of the agreement of merger,
liquidation or reorganization in the event
the Company is subject to such a corporate
transaction.
Applicable Law This Agreement will be interpreted and
enforced under the laws of the State of
Delaware, other than any conflicts or
choice of law rule or principle that might
otherwise refer construction or
interpretation of this Agreement to the
substantive law of another jurisdiction.
The Plan The text of the Plan is incorporated in
this Agreement by reference. This Agreement
and the Plan constitute the entire
understanding between you and the Company
regarding this Option. Any prior
agreements, commitments or negotiations
concerning this Option are superseded.
Consent to Electronic The Company may choose to deliver certain
Delivery statutory materials relating to the Plan in
electronic form. By accepting this Option
grant you agree that the Company may
deliver the Plan prospectus and the
Company's annual report to you in an
electronic format. If at any time you would
prefer to receive paper copies of these
documents, which you are entitled to
receive, the Company would be pleased to
provide copies. Please contact
___________________ at ____________________
to request paper copies of these documents.
By signing the cover sheet of this Agreement, you agree to all of the terms
and conditions described above and in the Plan.
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