EXHIBIT 4.1
FORM OF STOCK OPTION AGREEMENT
AGREEMENT, made as of the ___ day of _________, 199_ among WINSTAR
COMMUNICATIONS, INC. ("WCII"), a Delaware corporation (the "Company"),
______________ (the "Employee").
WHEREAS, ______________ is a wholly-owned subsidiary of the Company; and
WHEREAS, on ______________, 199_ (the "Grant Date"), the Board of Directors
of the Company (the "Board") authorized the grant to the Employee of an option
(the "Option") to purchase an aggregate of ________ shares of the authorized but
unissued Common Stock of the Company, $.01 par value (the "Common Stock"),
conditioned upon the Employee's acceptance thereof upon the terms and conditions
set forth in this Agreement; and
WHEREAS, the Employee desires to acquire the Option on the terms and
conditions set forth in this Agreement;
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants to the Employee the
Option to purchase all or any part of an aggregate of ______ shares of the
Common Stock (the "Option Shares") on the terms and conditions set forth herein.
2. Non-qualified Stock Option. The Option represented hereby is a
non-qualified stock option, not intended to qualify under any section of the
Internal Revenue Code of 1986, as amended, and is not granted under any plan,
including the Company's 1992 or 1995 Performance Equity Plans ("Plan"). Certain
terms used herein, however, are defined in the Plan.
3. Exercise Price. The exercise price of the Option shall be $______ per
share, subject to adjustment as hereinafter provided.
4. Exercisability. This Option shall vest and become exercisable as
follows: (i) Options to purchase ______% of the Option Shares shall be
exercisable on and after ______________, (ii) Options to purchase an additional
________% of the Option Shares shall be exercisable on and after ______________
and (iii) Options to purchase the remaining ________% of the Option Shares shall
be exercisable on and after ______________. After a portion of the Option
becomes exercisable, it shall remain exercisable except as otherwise provided
herein, until the close of business on ______________ (the "Exercise Period").
5. Effect of Termination of Employment.
5.1 Termination Due to Death. If Employee's employment by the Company
terminates by reason of death, the Option shall become fully vested and
exercisable and may thereafter be exercised by the legal representative of the
estate or by the legatee of the Employee under the will of the Employee, for a
period of one year from the date of such death or until the expiration of the
Exercise Period, whichever period is shorter.
5.2 Termination Due to Disability. If Employee's employment by the Company
terminates by reason of Disability (as such term is defined in the Plan), the
Option shall become fully vested and exercisable and may thereafter be exercised
by the Employee for a period of one year from the date of such termination or
until the expiration of the Exercise Period, whichever period is shorter.
5.3 Termination Without Cause and/or Due to Retirement. If Employee's
employment is terminated by the Company without cause or due to Normal
Retirement (as such term is defined in the Plan), then the portion of the Option
which has vested by the date of termination of employment may be exercised for a
period of three months from termination of employment or until the expiration of
the Exercise Period, whichever is shorter. The portion of the Option not yet
exercisable on the date of termination of employment shall immediately expire.
5.4 Other Termination.
(a) If Employee's employment is terminated for any reason other than (i)
Death, (ii) Disability, (iii) Normal Retirement, or (iv) Without cause by the
Company, the Option shall expire on the date of termination.
(b) The Committee (as such term is defined in the Plan) may, in the event
the Employee's employment is terminated for cause, annul the Option and, in such
event, may require the Employee to return to the Company the economic value of
any Option Shares purchased hereunder by the Employee within the six month
period prior to the date of termination. In such event, the Employee hereby
agrees to remit to the Company, in cash, an amount equal to the difference
between the Fair Market Value of the Option Shares on the date of termination
(or the sales price of such Shares if the Option Shares were sold during such
six month period) and the Exercise Price of such Shares.
6. Withholding Tax. Not later than the date as of which an amount first
becomes includible in the gross income of the Employee for Federal income tax
purposes with respect to the Option, the Employee shall pay to the Company, or
make arrangements satisfactory to the Committee regarding the payment of, any
Federal, state and local taxes of any kind required by law to be withheld or
paid with respect to such amount. The obligations of the Company under the Plan
and pursuant to this Agreement shall be conditional upon such payment or
arrangements with the Company and the Company shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the Employee from the Company.
7. Adjustments. In the event of any reorganization, consolidation, stock
dividend, stock split, reverse stock split, or other change in corporate
structure affecting the Common Stock as a whole, the Company shall
proportionally adjust the number of and kind of Option Shares and the exercise
price of the Option in order to prevent the dilution or enlargement of the
Employee's proportionate interest in the Company and his rights hereunder,
provided that the number of Option Shares shall always be a whole number.
8. Method of Exercise.
8.1 Notice to the Company. The Option shall be exercised in whole or in
part by written notice directed to the Company at its principal place of
business accompanied by full payment as hereinafter provided of the exercise
price for the number of Option Shares specified in the notice.
8.2 Delivery of Option Shares. The Company shall deliver a certificate for
the Option Shares to the Employee as soon as practicable after payment therefor.
8.3 Payment of Purchase Price
8.3.1 Cash Payment. The Employee shall pay the purchase price in cash or by
wire transfer, certified or bank check or personal check, in each case payable
to the order of WinStar Communications, Inc.; the Company shall not be required
to deliver certificates for Option Shares until the Company has confirmed the
receipt of good and available funds in payment of the purchase price thereof.
8.3.2. Payment Price of Withholding Tax. Any required withholding tax must
be paid in cash.
9. Nonassignability. The Option shall not be assignable or transferable
except by will or by the laws of descent and distribution in the event of the
death of the Employee. No transfer of the Option by the Employee by will or by
the laws of descent and distribution shall be effective to bind the Company
unless the Company shall have been furnished with written notice thereof and a
copy of the will and such other evidence as the Company may deem necessary to
establish the validity of the transfer and the acceptance by the transferee or
transferees of the terms and conditions of the Option.
10. Company Representations. The Company hereby represents and warrants to
the Employee that:
(i) the Company, by appropriate and all required action, is duly authorized
to enter into this Agreement and consummate all of the transactions contemplated
hereunder; and
(ii) the Option Shares, when issued and delivered by the Company to the
Employee in accordance with the terms and conditions hereof, will be duly and
validly issued and fully paid and non-assessable.
11. Employee Representations. The Employee hereby represents and warrants
to the Company that:
(i) he is acquiring the Option and shall acquire the Option Shares for his
own account and not with a view towards the distribution thereof;
(ii) he has received a copy of all reports and documents required to be
filed by the Company with the Commission pursuant to the Exchange Act within the
last 24 months and all reports issued by the Company to its stockholders;
(iii) he understands that he must bear the economic risk of the investment
in the Option Shares, which cannot be sold by him unless they are registered
under the Securities Act of 1933 (the "1933 Act") or an exemption therefrom is
available thereunder and that the Company is under no obligation to register the
Option Shares for sale under the 1933 Act;
(iv) the Employee understands that the Company may use the proceeds derived
from the exercise of his option to make investments in, acquire, make loans to,
or otherwise enter into business arrangements with, companies which are not
involved in the telecommunications business. Specifically, the Company may
contribute such proceeds to WinStar New Media Company, Inc. and its other
subsidiaries which acquire, produce and distribute information and entertainment
content;
(v) in his position with the Company, he has had both the opportunity to
ask questions and receive answers from the officers and directors of the Company
and all persons acting on its behalf concerning the terms and conditions of the
offer made hereunder and to obtain any additional information to the extent the
Company possesses or may possess such information or can acquire it without
unreasonable effort or expense necessary to verify the accuracy of the
information obtained pursuant to clause (ii) above;
(vi) he is aware that the Company shall place stop transfer orders with its
transfer agent against the transfer of the Option Shares in the absence of
registration under the 1933 Act or an exemption therefrom as provided herein;
and
(vii) the certificates evidencing the Option Shares shall bear the
following legends:
"The shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of 1933.
The shares may not be sold or transferred in the absence of such
registration or an exemption therefrom under said Act."
"The shares represented by this certificate have been acquired pursuant to
a Stock Option Agreement, dated as of ______________, a copy of which is on
file with the Company, and may not be transferred, pledged or disposed of
except in accordance with the terms and conditions thereof."
12. Restriction on Transfer of Option Shares. Anything in this Agreement to
the contrary notwithstanding, the Employee hereby agrees that he shall not sell,
transfer by any means or otherwise dispose of the Option Shares acquired by him
without registration under the 1933 Act, or in the event that they are not so
registered, unless (i) an exemption from the 1933 Act registration requirements
is available thereunder, and (ii) the Employee has furnished the Company with
notice of such proposed transfer and the Company's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
13. Miscellaneous.
13.1 Notices. All notices, requests, deliveries, payments, demands and
other communications which are required or permitted to be given under this
Agreement shall be in writing and shall be either delivered personally or sent
by registered or certified mail, or by private courier, return receipt
requested, postage prepaid to the parties at their respective addresses set
forth herein, or to such other address as either shall have specified by notice
in writing to the other. Notice shall be deemed duly given hereunder when
delivered or mailed as provided herein.
13.2 Change of Control. If (i) any person or entity other than the Company
and/or any officer, director or principal stockholder (i.e., a holder
(beneficially or of record) of more than ten percent of the Company's voting
stock) of the Company as of the date hereof acquire securities of the Company
(in one or more transactions) having 25% or more of the total voting power of
all the Company's securities then outstanding and (ii) the Board of Directors of
the Company does not authorize or otherwise approve such acquisition, then the
option vesting period hereunder shall be accelerated, the Option will
immediately and entirely vest, and the Employee will have the right to
immediately purchase all Option Shares on the terms set forth in this Agreement.
13.3 Stockholder Rights. The Employee shall not have any of the rights of a
stockholder with respect to the Option Shares until such shares have been issued
after the due exercise of the Option.
13.4 Waiver. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any other or
subsequent breach.
13.5 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof. This Agreement
may not be amended except by writing executed by the Employee and the Company.
13.6 Binding Effect; Successors. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and, to the extent not prohibited
herein, their respective heirs, successors, assigns, and representatives.
Nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto and as provided above, their respective
heirs, successors, assigns and representatives any rights, remedies, obligations
or liabilities.
13.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (without regard to choice of
law provisions).
13.8 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
day and year first above written.
WINSTAR COMMUNICATIONS, INC. Address:
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
By: ----------------------------- --------------------------------
Date Signed
EMPLOYEE: Address:
---------------------------------
--------------------------------- ---------------------------------
Name:
SS#:
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Date Signed
