XPEDITE SYSTEMS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT ("Agreement"), dated as
of 22nd day of April, 1996, between Xpedite Systems, Inc., a Delaware
corporation (the "Company"), and ---------------- (the "Executive").
W I T N E S S E T H :
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WHEREAS, the Compensation Committee (the "Committee") of the
Board of Directors (the "Board") has determined that it is in the best interests
of the Company and its stockholders to provide an incentive for key executive
officers of the Company to devote their utmost effort and skill to the
advancement and betterment of the Company by permitting them to participate,
upon the achievement of certain financial performance targets established by the
Committee, in the ownership of the Company and thereby in the success and
increased value of the Company; and
WHEREAS, to give effect to the foregoing, the Committee
believes it to be in the best interests of the Company and its stockholders to
grant to the Executive options (the "Options") to purchase shares of Common
Stock of the Company (the "Stock"), at the price and subject to the terms
herein;
NOW, THEREFORE, IN CONSIDERATION of the promises and the
mutual covenants and agreements hereinafter set forth, the Company and the
Executive agree as follows:
1. OPTION.
(a) GRANT OF OPTION. The Company hereby grants the Executive
an Option to receive an aggregate of up to ----------------------------- shares
of Stock, subject to the achievement by the Company of certain performance
targets as set forth in this Section 1(a) and otherwise in accordance with the
terms and conditions of this Agreement.
(i) The Executive shall be granted Options to
purchase ------------------- shares (50% of the amount in Section
1(a) above) (the "First Tranche") in the event that either (x) the
average of the last sale price of the Stock reported in the Nasdaq
National Market for each trading day during any consecutive period
of ninety (90) calendar days commencing on or after the date
hereof but no later than December 31, 1996 is greater than $22.50
per share, as adjusted for any stock splits, stock dividends and
combinations of shares occurring after the date hereof, or (y)
there occurs prior to December 31, 1996
the closing of an offering and sale of Stock for the account of
the Company in an underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933,
as amended, in which the price to the public is at least equal to
$22.50 per share.
(ii) The Executive shall be granted Options to
purchase --------------- shares (50% of the amount in Section 1(a)
above) (the "Second Tranche") in the event that the average of the
last sale price of the Stock reported in the Nasdaq National
Market for each trading day during any consecutive period of
ninety (90) calendar days commencing on or after the date hereof
but no later than December 31, 1997 is greater than $30.00 per
share, as adjusted for any stock splits, stock dividends and
combinations of shares occurring after the date hereof; provided,
however, that fifty percent (50%) of the Second Tranche shall be
granted to the Executive in the event of an acquisition of all of
the outstanding Stock or a merger or consolidation of the Company
where the Company is not the surviving corporation, in either case
announced or completed prior to December 31, 1997, and the price
per share paid by the acquiring entity for the Stock acquired in
such transaction is greater than $28.00 per share but less than
$30.00 per share, as adjusted for any stock splits, stock
dividends and combinations of shares occurring after the date
hereof.
(iii) In the event of an acquisition of a
majority of the outstanding Stock or a merger or consolidation of
the Company where the Company is not the surviving corporation,
the price per share paid by the acquiring entity for the Stock
acquired in such transaction shall be used to determine whether
the price-per-share thresholds for the First Tranche and the
Second Tranche set forth in subsections (i) and (ii) above have
been achieved, and the requirement that such price be an average
maintained for 90 consecutive days shall not apply.
(iv) In the event that the conditions precedent
to the issuance of either the First Tranche or the Second Tranche
are not achieved within the time periods specified in subsections
(a)(i) and (c)(ii) hereof, respectively, then the First Tranche or
the Second Tranche, as the case may be, shall not be issued to the
Executive hereunder and the Executive shall have no right to
receive the same from the Company.
(b) EXERCISE PERIOD. Except as otherwise provided in this
Agreement, the Options granted hereunder shall become exercisable by the
Executive according to the following schedule: one forty-eighth (1/48) of the
number of Options granted shall become exercisable on the same calendar date as
the date of grant in each of the next succeeding 48 months following the month
in which the date of grant occurs in accordance with Section 1(a) until all such
Options are exercisable; provided, however,
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that the right to exercise an Option as to any fractional share of Stock shall
be deemed the right to exercise an Option as to a full share of Stock with
appropriate adjustments made to the last exercise period so that the total
number of Options shall not exceed that specified under paragraph (a) of Section
1 hereof.
(c) NO LAPSE OF EXERCISE POWER. Any Option which becomes
exercisable on a certain date but is not exercised in full on that date shall
not lapse but shall remain outstanding as to the unexercised portion and shall
continue in effect throughout the remainder of the Option Term (taking into
account any early termination of such Option Term which may be provided for
under this Agreement).
(d) OPTION TERM. An option which is not exercised shall
expire upon the earlier of:
(i)five (5) years after the date such Option was
granted;
(ii) three (3) months after the date the
Executive terminates his employment with the Company, unless such
termination was the result of the Executive's death or disability
or unless the Company terminates the employment for cause;
(iii) one (1) year after the Executive's death or
disability; and
(iv) any such earlier termination date as may be
provided by this Agreement.
The period commencing on the date hereof and concluding on the date of
termination as provided in this paragraph (d) shall be referred to herein as the
"Option Term".
(e) OPTION PRICE. The purchase price for each share of
Stock subject to the Option shall be $0 per share.
(f) ADJUSTMENTS.
(i) STOCK SPLITS AND DIVIDENDS. Subject to any
required action by the Board and/or stockholders, the number of
Shares covered by each outstanding Option shall be proportionately
adjusted for any increase or decrease in the number of issued
Shares resulting from a subdivision or consolidation of Shares or
the payment of a stock dividend (but only if paid in Shares), a
stock split or any other increase or decrease in the number of
issued Shares effected without receipt of consideration by the
Company.
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(ii) MERGERS. Subject to any required action by
the Board and/or stockholders, if the Company shall merge with
another corporation and the Company is the surviving corporation
in such merger and under the terms of such merger the Shares
outstanding immediately prior to the merger remain outstanding and
unchanged, each outstanding Option shall continue to apply to the
Shares subject thereto and shall also pertain and apply to any
additional securities and other property, if any, to which a
holder of the number of Shares subject to the Option would have
been entitled as a result of the merger.
(iii) COMMITTEE. Adjustments under this Section
1(f) shall be made by the Committee, whose determination as to
what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive. In computing any adjustment under
this Section 1(f), any fractional Share which might otherwise
become subject to an Option shall be eliminated.
2. LIMITATIONS ON OPTIONS.
(a) SEQUENTIAL EXERCISE. Options granted to the Executive
may be exercised in any order, so that the Executive may exercise an Option if
another Option, granted to him at an earlier time, remains outstanding in whole
or in part.
(b) NON-TRANSFERABILITY OF OPTION. The Options may not be
assigned or transferred other than by will or by the laws of descent and
distribution. During the lifetime of the Executive, the Options may be
exercisable only by the Executive. Transfer of an Option by will or by the laws
of descent and distribution shall not be effective to bind the Company unless
the Company shall have been furnished with written notice thereof and an
authenticated copy of the will or such other evidence as the Committee may deem
necessary to establish the validity of the transfer and the acceptance by the
transferee of the terms and conditions of such Option. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of the Option contrary to
the provisions hereof, or the levy of any execution, attachment or similar
process upon the Option shall be null and void and without effect.
3. METHOD OF EXERCISING OPTIONS. Options shall be exercised by a
written notice delivered to the Company at its principal office in Eatontown,
New Jersey.
In the event the Company determines that it is required to
withhold state or Federal income tax as a result of the exercise of an Option,
as a condition to the exercise thereof, the Executive may be required to make
arrangements satisfactory to the Company to enable it to satisfy such
withholding requirements. Payment of such withholding requirements may be made,
in the discretion of the Committee, (i) in cash, (ii) by delivery of Shares
registered in the name of the Executive, or by the Company not issuing such
number of Shares subject to the Option, having a Fair Market Value at the
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time of exercise equal to the amount to be withheld or (iii) any combination of
(i) and (ii) above. If (i) any Shares are registered under Section 12 of the
Exchange Act, (ii) the Executive is an officer (as defined in Section 16 of the
Exchange Act) of the Company subject to Section 16(b) of the Exchange Act and
(iii) such payment is made with Shares acquired by the Executive upon the
exercise which gives rise to such withholding, an election under the preceding
sentence (a) must be irrevocable and with respect to all Shares covered by the
Option subject to the election, provided, however, that such election may be
changed through another irrevocable election that takes effect at least six
months after the prior election; or (b) may be made during the period beginning
on the third business day following the date of release of quarterly and annual
summary statements of sales and earnings as provided by Rule 16b-3(e)(3) of the
Securities and Exchange Commission and ending on the twelfth (12th) business day
following such date and only if such period occurs before the date the Company
requires payment of the withholding tax. The election need not be made during
the ten-day window period if counsel to the Company determines that compliance
with such requirement is unnecessary.
4. ISSUANCE OF OPTIONED STOCK.
(a) ISSUANCE OF CERTIFICATES. The Company shall not be
required to issue or deliver any certificate for Stock upon the exercise of any
Option, or any portion thereof, prior to fulfillment of each of the following
applicable conditions:
(i) The admission of such Stock to listing on all
stock exchanges or markets on which the Stock is then listed to
the extent such admission is necessary;
(ii) The completion of any registration or other
qualification of such Stock under any federal or state securities
laws or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory body,
which the Board shall in its sole discretion deem necessary or
advisable or the determination by the Board in its sole discretion
that no such registration or qualification is required;
(iii) The obtaining of any approval or other
clearance from any federal or state governmental agency which the
Board shall, in its sole discretion, determine to be necessary or
advisable; and
(iv) The lapse of such reasonable period of time
following the exercise of the Option as the Board from time to
time may establish for reasons of administrative convenience.
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(B) COMPLIANCE WITH SECURITIES AND OTHER LAWS. In no event
shall the Company be required to issue or deliver Stock pursuant to Options if
in the opinion of the Board the issuance thereof would constitute a violation by
either the Executive or the Company of any provision of any law or regulation of
any governmental authority or any securities exchange. As a condition of any
issuance of Stock pursuant to Options, the Company may place legends on the
Stock, issue stop-transfer orders and require such agreements or undertakings
from the Executive as the Company may deem necessary or advisable to assure
compliance with any such law or regulation, including, if the Company or its
counsel deems it appropriate, representations from the Executive that he is
acquiring the Stock solely for investment and not with a view to distribution
and that no distribution of Stock acquired by him will be made unless registered
pursuant to applicable federal and state securities laws or unless, in the
opinion of counsel to the Company, such registration is unnecessary.
5. OPTION RIGHTS IN THE EVENT OF CERTAIN EVENTS.
(a) RIGHTS IN THE EVENT OF SALE, MERGER OR OTHER
REORGANIZATION OF COMPANY.
(i) In the event of a merger or consolidation
where the Company is not the surviving corporation, and the
agreement of merger or consolidation does not provide for the
substitution for the unexercised portion of the Option of a new
option on substantially the same terms (including the exercise
price thereof), or for the assumption of the Option by the
surviving corporation, or in the event of the sale or transfer of
assets, liquidation or dissolution and the plan of liquidation or
dissolution or agreement of sale does not make special provision
for the Option, Executive shall have the right immediately prior
to the effective date of such merger, consolidation, sale or
transfer of assets, liquidation or dissolution to exercise the
Option in whole or in part without regard to any installment
provision contained in paragraph (b) of Section 1 hereof. If not
so exercised, the Option shall terminate at the time of any such
merger, consolidation, sale or transfer of assets, liquidation or
dissolution.
(ii) In the event the Option is assumed by the
surviving corporation in a merger or consolidation where the
Company is not the surviving corporation, or a new option on
substantially the same terms (including the exercise price
thereof) is substituted by the surviving corporation for the
unexercised portion of the Option, or other special provision is
made for continuation of the Option in the event of the sale or
transfer of assets, liquidation or dissolution, if (A) the
Executive is terminated by the surviving corporation without
"cause" (as defined below), (B) the Executive suffers a reduction
in the annual rate of base salary or level of participation in any
bonus or incentive plan for which he is eligible, relative to the
amount thereof paid to the Executive by
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the Company prior to such transaction or (C) the Executive suffers
a material diminution in his position, duties, responsibility or
authority, relative to the level thereof enjoyed by the Executive
during his employment by the Company prior to such transaction,
then and in such event vesting of Options granted to the Executive
pursuant to paragraph (a) of Section 1 shall accelerate and such
Options shall be fully exercisable by the Executive without regard
to any installment provision contained in paragraph (b) of Section
1.
(iii) In no event, however, may any Option which
becomes exercisable pursuant to this paragraph (a) of Section 5,
be exercised, in whole or in part, later than the date specified
in paragraph (d) of Section 1 above.
(b) TERMINATION OF EMPLOYMENT. In the event that an
Executive's employment with the Company terminates, other than by reason of
death or "Total and Permanent Disability", voluntary termination of employment
by the Executive or termination by the Company for "cause", vesting of Options
granted to the Executive pursuant to paragraph (a) of Section 1 shall accelerate
and such Options shall be fully exercisable by the Executive for a period which
shall not exceed the earlier of the remaining Option Term or three months from
such termination of employment, without regard to any installment provision
contained in paragraph (b) of Section 1. At the expiration of such three month
period, or such earlier time as may be applicable, any such Options which remain
unexercised shall expire. Notwithstanding the foregoing, if the Executive's
employment is terminated for cause, the Company may notify the Executive that
any Options not exercised prior to the termination are cancelled. For purposes
hereof, (x) "Total and Permanent Disability" shall mean the inability of the
Executive 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; and (y) a termination of employment for
"cause" shall include, but not be limited to, dismissal as a result of (1)
Executive's conviction of any crime or offense involving money or other property
of the Company or its subsidiaries or which constitutes a felony in the
jurisdiction involved; (2) Executive's gross negligence, gross incompetence or
willful misconduct in the performance of his or her duties; or (3) Executive's
willful failure or refusal to perform his or her duties.
(c) TOTAL AND PERMANENT DISABILITY. If an Executive's
employment with the Company is terminated on account of Total and Permanent
Disability, vesting of Options granted to the Executive pursuant to paragraph
(a) of Section 1 shall accelerate and such Options shall be fully exercisable by
the Executive for a period which shall not exceed the earlier of the remaining
Option Term or one year from the date of such Executive's disability, without
regard to any installment provision contained in paragraph (b) of Section 1. At
the expiration of such one year period, or such earlier time as may be
applicable, any such Options which remain unexercised shall expire.
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(d) DEATH. If an Executive's employment with the Company is
terminated on account of death, vesting of Options granted to the Executive
pursuant to paragraph (a) of Section 1 shall accelerate and such Options shall
be fully exercisable by the person or persons who shall have acquired the right,
by will or the laws of descent and distribution, to exercise his Options for a
period which shall not exceed the earlier of the remaining Option Term or one
year from the date of such Executive's death, without regard to any installment
provision contained in paragraph (b) of Section 1. At the expiration of such one
year period, or such earlier time as may be applicable, any such Options which
remain unexercised shall expire.
6. ADMINISTRATION BY COMMITTEE. The interpretation and
construction by the Committee of any provisions of this Agreement shall be
final. No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Options granted hereunder.
The members of the Committee, of which there are at least two, are
"disinterested persons", as such term is defined pursuant to Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended.
7. RESTRICTIVE COVENANTS.
(a) COVENANT NOT TO COMPETE. The Executive acknowledges
that he or she is aware that the services performed by him or her for the
Company or its subsidiaries have been and are of a special and unique character.
The Executive further acknowledges and recognizes his or her possession of
confidential and proprietary information regarding the business of the Company.
Accordingly, the Executive agrees that he or she will not, without the written
permission of the Company, within or outside of the United States for a period
of one (1) year from the date on which such Executive's employment by or on
behalf of the Company or its subsidiaries is terminated (i) directly or
indirectly engage or become interested or involved in any Competitive Business
(as hereinafter defined), whether such engagement, interest or involvement shall
be as an employer, officer, director, owner, stockholder, employee, partner or
in any other capacity or relationship, (ii) assist others in engaging in any
Competitive Business in the manner described in the foregoing clause (i), or
(iii) induce employees of the Company or its subsidiaries to terminate their
employment with the Company or its subsidiaries or engage in any Competitive
Business; provided, however, that nothing contained in this Section 7(a) shall
be deemed to prohibit the Executive from acquiring, solely for investment
purposes, less than 5% of the publicly-traded shares of the capital stock of any
corporation. As used in this Section 7(a), the term "Competitive Business" means
and includes any business or activity that is now or at any time in the future
competitive with or directly related to the business conducted by the Company or
its subsidiaries on the date the Executive's employment by or on behalf of the
Company or its subsidiaries is terminated.
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(b) AGREEMENT NOT TO SOLICIT CUSTOMERS. For a period of
one (1) year from the date on which such Executive's employment by or on behalf
of the Company or its subsidiaries is terminated, the Executive agrees that he
or she will not, for or on behalf of a Competitive Business, directly or
indirectly, as owner, officer, stockholder, partner, associate, consultant,
manager, advisor, representative, employee, agent, creditor or otherwise,
attempt to solicit or in any other way disturb or service any person, firm or
corporation that has been a customer account of the Company or its subsidiaries
at any time or times prior to the date hereof, whether or not the Executive had
direct account responsibility for such customer account.
(c) CONFIDENTIAL INFORMATION.
(i) The Executive agrees not to disclose to any
person or use, at any time after the date hereof, any confidential
information of the Company or its subsidiaries, whether the
Executive has such information in his memory or embodied in
writing or any other physical form. For purposes of this Agreement
the phrase "confidential information of the Company" means all
information which (a) is known only to the employees of the
Company or its subsidiaries, or others in a confidential
relationship with the Company or its subsidiaries or employees of
affiliated companies, (b) relates to specific technical matters,
such as the Company's or its subsidiaries' proprietary
information, plans, reports, and promotional, sales or operational
procedures and materials, or (c) relates to the identity and
solicitation of customers and accounting procedures of the Company
or its subsidiaries or other business practices of the Company or
its subsidiaries.
(ii) The Executive agrees not to remove from the
premises of the Company, at any time after the date hereof, any
document or object containing or reflecting any confidential
information of the Company or its subsidiaries, and the Executive
recognizes that all such documents and objects, whether developed
by the Company or by someone else for the Company, are the
exclusive property of the Company and its subsidiaries.
(iii) It is agreed that the names and addresses
of customers who were contacted by the Executive on behalf of the
Company or its subsidiaries, or of whom the Executive became aware
through his or her employment with the Company or its
subsidiaries, are trade secrets of the Company, as is other such
confidential information of the Company and its subsidiaries,
including but not limited to the customer's business needs and
requirements.
(iv) The Executive shall, at any time requested
by the Company after the date hereof, promptly deliver to the
Company all confidential memoranda, notes, reports, lists, and
other documents (and all copies thereof)
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relating to the business of the Company which he or she may then
possess or have under his or her control.
8. LOCK-UP AGREEMENT. The Executive agrees, if requested by the
Company and an underwriter of Common Stock (or other securities) of the Company,
not to sell or otherwise transfer or dispose of any Common Stock (or other
securities) of the Company held by the Executive during the one hundred eighty
(180) day period following the effective date of a registration statement filed
under the 1933 Act, as amended, without the prior consent of the Company or such
underwriter, as the case may be, provided that such agreement only applies to
registration statements including securities to be sold to the public in an
underwritten offering during the period ending on December 31, 2001.
9. MISCELLANEOUS.
(a) NO EMPLOYMENT RIGHTS. Nothing in the Agreement or in
any Option granted hereunder shall confer upon any employee the right to
continue in the employ of the Company.
(b) BINDING EFFECT. The Agreement shall be binding upon,
and inure to the benefit of the Company, Executive, and their respective
personal representatives, successors and permitted assigns.
(c) SINGULAR, PLURAL; GENDER. Whenever used herein, except
where the context clearly indicates to the contrary, nouns in the singular shall
include the plural, and the masculine pronoun shall include the feminine gender.
(d) HEADINGS. Headings of the Sections hereof are inserted
for convenience and reference and constitute no part of the Agreement.
(e) RIGHTS AS STOCKHOLDERS. The Executive or transferee
of an Option shall have no rights as a stockholder with respect to any Stock
subject to such Option prior to the purchase of such Stock by exercise of such
Option as provided herein.
(f) APPLICABLE LAW. This Agreement and the Options granted
hereunder shall be interpreted, administered and otherwise subject to the laws
of the State of New Jersey, except to the extent the General Corporation Law of
the State of Delaware shall govern.
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IN WITNESS WHEREOF, the Company and the Executive have
executed this Agreement as of the day and year first written above.
EXECUTIVE XPEDITE SYSTEMS, INC.
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Name: By: Xxx X. Xxxxxxxx, Xx.
Address: President and CEO
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