Exhibit 10.26
NETWORK ACCESS SOLUTIONS, INC.
1998 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION GRANT AGREEMENT
This Grant Agreement (the "Agreement") is entered into as of the 1st day of
April, 1999, by and between NETWORK ACCESS SOLUTIONS CORPORATION a Delaware
corporation (the "Corporation"), and Xxxxxx Xxxxxxx ("Grantee"), effective as of
the Grant Date as defined in Article 1 hereof.
In consideration of the premises, mutual covenants and agreements herein,
the Corporation and the Grantee agree as follows:
ARTICLE 1
GRANT OF OPTION
Section 1.1 Grant of Option. The Corporation hereby grants to the
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Grantee, pursuant to the provisions of the Network Access Solutions, Inc. 1998
Stock Incentive Plan (the "Plan"), a nonqualified stock option to purchase
shares of Common Stock, par value of $0.01 per share, of the Corporation
("Stock"), subject to the provisions of this Agreement (the "Option"). Unless
stated otherwise herein, capitalized terms in this Agreement shall have the same
meaning as defined in the Plan. Schedule A, attached hereto and incorporated
herein, sets forth the following terms of the Option:
(i) the date the Administrator approved the Option (the "Grant Date");
(ii) the number of shares of Stock which the Grantee may purchase under
the Option;
(iii) the exercise price per share (the "Exercise Price"); and
(iv) the date as of which the Option shall expire (the "Expiration Date"),
at 5:00 p.m. Eastern Time, unless terminated earlier pursuant to
other provisions of this Agreement.
In addition, upon an initial public offering of the Company's Common Stock,
the Company will grant to the Grantee and adjustment option (the "Adjustment
Option") to be determined in accordance with the formula (the "Formula") set
forth on Schedule A. It is expressly agreed that upon such offering, the
Schedule A initially attached hereto shall be replaced by a Schedule A that
reflects the actual number of shares subject to the Option and the Adjustment
Option and their respective Exercise Prices, the number of shares and Exercise
Price of the Adjustment Option to be determined by application of the Formula.
The Company will provide the replacement Schedule A within 7 days of the closing
of the initial public offering. Except as set forth above, for the purposes of
this Agreement the Adjustment Option shall be subject to terms of this Agreement
in the same manner as if it was the Option and shall be considered the "Option"
hereunder.
ARTICLE 2
VESTING
Section 2.1 Vesting Schedule. Unless the Option has earlier terminated
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pursuant to the provisions of the Agreement, the Grantee shall become vested in
the shares of Stock subject to the Option over a three- (3-) year period as
follows: the Grantee shall become vested in 8.25% of the total shares of Stock
subject to the Option every third (3rd) month after the Grant Date, on the date
in each such month that corresponds with the Grant Date (each referred to as a
"Vesting Date"), during the thirty-six (36) month period immediately following
the Grant Date, so that the Grantee shall be vested in 100% of the shares of
Stock subject to the Option on the third (3rd) anniversary of the Grant Date;
provided, however, that the Grantee must be continuously a member of the
Corporation's Board of Directors at all times from the Grant Date through the
specified Vesting Date for such vesting to occur.
Section 2.2 Acceleration of Vesting. Following the Corporation's initial
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public offering of its common stock, unless the Option has earlier terminated
pursuant to the provisions of the Agreement, vesting of the Option shall be
accelerated so that all unvested shares of Stock subject to the Option shall
become one hundred percent (100%) vested in the Grantee upon a Change of
Control. For purposes of this Agreement, the term "Change of Control" shall
mean (i) the sale of all or substantially all of the assets of the Corporation,
(ii) the sale of more than fifty percent (50%) of the outstanding common stock
of the Corporation in a non-public sale, other than a sale of common stock to
professional investors in a private placement, (iii) the dissolution or
liquidation of the Corporation, or (iv) any merger, share exchange,
consolidation or other reorganization or business combination of the Corporation
if immediately after such transaction persons who hold a majority of the voting
capital stock of the surviving entity are not persons who held a majority of the
voting capital stock of the Corporation immediately prior to such transaction.
ARTICLE 3
EXERCISE OF OPTION
Section 3.1 Exercisability of Option. Pursuant to the terms of the
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Agreement, the Option may be exercised at any time, and from time to time, with
respect to the number of shares subject to the Option.
Section 3.2 Stock Restriction Agreement. The Administrator in its sole
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discretion may require as a condition precedent to the exercise of the Option
granted pursuant to Section 1.1, that the Grantee or such other person
exercising the Option be, or shall execute and become, a party to a Stock
Restriction Agreement in substantially the form attached to this Agreement as
Exhibit A.
Section 3.3 Manner of Exercise. The Option may be exercised, in whole or
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in part, by delivering written notice to the Administrator in such form as the
Administrator may require from time to time; provided, however, that the Option
may not be exercised at any one time as to fewer than one hundred (100) shares
(or such number of shares as to
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which the Option is then exercisable if such number of shares then exercisable
is less than one hundred (100)). Such notice shall specify the number of shares
of Stock subject to the Option as to which the Option is being exercised, and
shall be accompanied by full payment of the Exercise Price for such shares.
Payment of the Exercise Price shall be made (a) in cash (or cash
equivalents acceptable to the Administrator in the Administrator's discretion);
(b) in the Administrator's discretion at the time of exercise, by tender to the
Corporation of shares of the Corporation's common stock owned by the Grantee,
having a Fair Market Value on the date of tender not less than the Exercise
Price, which either have been owned by the Grantee at least six (6) months or
were not acquired, directly or indirectly, from the Corporation; (c) in the
Administrator's discretion at the time of exercise, by the Grantee's full
recourse promissory note in a form approved by the Administrator; (d) by a
broker-assisted cashless exercise in accordance with Regulation T of the Board
of Governors of the Federal Reserve System and the provisions of the next
paragraph; or (e) by any combination of the foregoing. In the Administrator's
sole and absolute discretion, the Administrator may authorize payment of the
Exercise Price to be made, in whole or in part, by such other means as the
Administrator may prescribe. The Option may be exercised only in multiples of
whole shares and no fractional shares shall be issued.
If the Stock is registered under Section 12(b) of the Securities Exchange
Act of 1934, as amended, payment of the exercise price may be made, in whole or
in part, subject to such limitations as the Administrator may determine, by
delivery of a properly executed exercise notice, together with irrevocable
instructions: (i) to a brokerage firm approved by the Administrator to deliver
promptly to the Corporation the aggregate amount of sale or loan proceeds to pay
the exercise price and any withholding tax obligations that may arise in
connection with the exercise, and (ii) to the Corporation to deliver the
certificates for such purchased shares directly to such brokerage firm.
Section 3.4 Issuance of Shares and Payment of Cash upon Exercise. Upon
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exercise of the Option, in whole or in part, in accordance with the terms of the
Agreement and upon payment of the Exercise Price for the shares of Stock as to
which the Option is exercised and delivery of such executed Stock Restriction
Agreement as may be required by the Administrator pursuant to Section 3.2, the
Corporation shall issue to the Grantee 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, except as otherwise provided in
the Stock Restriction Agreement, 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 and referencing the Stock Restriction
Agreement, if applicable.
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ARTICLE 4
TERMINATION OF OPTION
Section 4.1 Termination, In General. The Option granted hereby shall
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terminate and be of no force or effect after the Expiration Date set forth on
Schedule A, unless terminated prior to such time as provided below.
Section 4.2 Termination of Service as a Member of the Board of Directors.
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Unless the Option has earlier terminated pursuant to the provisions of the
Agreement, the Option shall terminate in its entirety, regardless of whether the
Option is vested in whole or in part, thirty (30) days after the date the
Grantee is no longer serving as a member of the Corporation's Board of Directors
for any reason.
ARTICLE 5
DRAG-ALONG RIGHTS
Section 5.1 Drag-Along Rights. If at any time any stockholder of the
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Corporation or group of stockholders owning a majority or more of the voting
capital stock of the Corporation proposes to enter into any transaction
involving (i) the sale of all or substantially all of the assets of the
Corporation; (ii) the sale of more than fifty percent (50%) of the outstanding
common stock of the Corporation in a non-public sale; (iii) any merger, share
exchange, consolidation or other reorganization or business combination of the
Corporation, if immediately after such transaction either (A) persons who were
directors of the Corporation immediately prior to such transaction do not
constitute at least a majority of the directors of the surviving entity, or (B)
persons who hold a majority of the voting capital stock of the surviving entity
are not persons who held a majority of the voting capital stock of the
Corporation immediately prior to such transaction; or (iv) the dissolution or
liquidation of the Corporation, the Corporation and/or the transferring
stockholders may require the Grantee to participate in such transaction by
giving the Grantee written notice thereof at least ten (10) days in advance of
the date of the transaction or the date that tender is required, as the case may
be. Upon receipt of such notice, the Grantee shall sell, assign, tender or
transfer the same percentage of shares subject to the Option as the percentage
of the shares of Stock proposed to be sold, assigned, tendered or transferred by
the transferring stockholders collectively, upon the same terms and conditions
applicable to the transferring stockholders and at a price equal to the
difference between the Exercise Price per share under the Option and the price
per share of Stock the transferring stockholders will receive pursuant to the
terms of the transaction. If the Grantee has options to purchase Stock of the
Corporation other than the Option hereunder, and such options are subject to
terms similar to those set forth in this Section 5.1, then the Grantee's options
shall be transferred in the order in which they were granted. The provisions of
this Section 5.1 shall apply in the event of the Grantee's death, to the
Grantee's executor, personal representative or the person(s) to whom the Option
shall have been transferred by will or the laws of descent and distribution, as
though such person is the Grantee.
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ARTICLE 6
ADJUSTMENTS; BUSINESS COMBINATIONS
Section 6.1 Adjustments for Events Affecting Common Stock. In the event
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of changes in the Common Stock of the Corporation by reason of any stock
dividend, split-up, recapitalization, merger, consolidation, business
combination or exchange of shares and the like, the Administrator shall, in its
discretion, make appropriate adjustments to the number, kind and price of shares
covered by this Option, and shall, in its discretion and without the consent of
the Grantee, make any other adjustments in this Option, including but not
limited to reducing the number of shares subject to the Option or providing or
mandating alternative settlement methods such as settlement of the Option in
cash or in shares of Common Stock or other securities of the Corporation or of
any other entity, or in any other matters which relate to the Option as the
Administrator shall, in its sole discretion, determine to be necessary or
appropriate.
Section 6.2 Pooling of Interests Transaction. No modifications to the
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Option shall be made in order to facilitate any business combination unless
agreed to in writing by the Grantee.
Section 6.3 Adjustments for Unusual Events. The Administrator is
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authorized to make, in its discretion and without the consent of the Grantee,
adjustments in the terms and conditions of, and the criteria included in, the
Option in recognition of unusual or nonrecurring events affecting the
Corporation, or the financial statements of the Corporation or any Subsidiary,
or of changes in applicable laws, regulations, or accounting principles,
whenever the Administrator determines that such adjustments are appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Option or the Plan.
Section 6.4 Binding Nature of Adjustments. Adjustments under this Article
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6 will be made by the Administrator, whose determination as to what adjustments,
if any, will be made and the extent thereof will be final, binding and
conclusive. No fractional shares will be issued pursuant to this Option on
account of any such adjustments.
ARTICLE 7
MISCELLANEOUS
Section 7.1 No Rights of Stockholder. The Grantee shall not have any of
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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.
Section 7.2 Nonqualified Nature of Option. The Option is intended to be a
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stock option that does not qualify as an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and
this Agreement shall be so construed.
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Section 7.3 The Corporation's Rights. The existence of this Option shall
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not affect in any way the right or power of the Corporation or its stockholders
to make or authorize any or all adjustments, recapitalizations, reorganizations
or other changes in the Corporation's capital structure or its business, or any
merger or consolidation of the Corporation, or any issue of bonds, debentures,
preferred or other stocks with preference ahead of or convertible into, or
otherwise affecting the Stock or the rights thereof, or the dissolution or
liquidation of the Corporation, or any sale or transfer of all or any part of
the Corporation's assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
Section 7.4 Withholding of Taxes. The Corporation or any Affiliate shall
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have the right to deduct from any compensation or any other payment of any kind
(including withholding the issuance of shares of Stock) due the Grantee the
amount of any foreign, federal, state or local taxes required by law to be
withheld as the result of the exercise of the Option or the lapsing of any
restriction with respect to any shares of Stock acquired on exercise of the
Option; provided, however, that the value of the shares of Stock withheld may
not exceed the statutory minimum withholding amount required by law. In lieu of
such deduction, the Administrator may require the Grantee to make a cash payment
to the Corporation or an Affiliate equal to the amount required to be withheld.
If the Grantee does not make such payment when requested, the Corporation may
refuse to issue any Stock certificate under the Plan until arrangements
satisfactory to the Administrator for such payment have been made.
Section 7.5 Grantee. Whenever the word "Grantee" is used in any provision
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of this Agreement under circumstances where the provision should logically be
construed to apply to the estate, personal representative or beneficiary to whom
this Option may be transferred by will or by the laws of descent and
distribution, the word "Grantee" shall be deemed to include such person.
Section 7.6 Nontransferability of Option. The Option shall be
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nontransferable otherwise than by will or the laws of descent and distribution
and during the lifetime of the Grantee, the Option may be exercised only by the
Grantee or, during the period the Grantee is under a legal disability, by the
Grantee's guardian or legal representative. Except as provided in the preceding
sentence, 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.
Section 7.7 Notices. All notices and other communications made or given
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pursuant to the Agreement shall be in writing and shall be sufficiently made or
given if hand delivered or mailed by certified mail, addressed to the Grantee at
the address contained in the records of the Corporation, or addressed to the
Administrator, care of the Corporation for the attention of its 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.
Section 7.8 Entire Agreement; Modification. The Agreement contains the
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entire agreement between the parties with respect to the subject matter
contained herein
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and may not be modified, except as provided in the Plan or in a written document
signed by each of the parties hereto. Any oral or written agreements,
representations, warranties, written inducements, or other communications made
prior to the execution of the Agreement shall be void and ineffective for all
purposes.
Section 7.9 Conformity with Plan. This Agreement is intended to conform
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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 the Agreement or any matters as to which
the Agreement is silent, the Plan shall govern. A copy of the Plan is available
upon request to the Administrator.
Section 7.10 Governing Law. This Agreement shall be governed by and
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construed in accordance with the laws of the Commonwealth of Virginia, other
than the conflict of laws principles thereof.
Section 7.11 Headings. The headings in the Agreement are for reference
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purposes only and shall not affect the meaning or interpretation of the
Agreement.
{signatures on next page}
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officer as of the date first above written.
ATTEST: NETWORK ACCESS SOLUTIONS
CORPORATION
/s/ Illegible By: /s/ Xxxxx Xxxxxx
__________________________ _______________________________
The undersigned hereby acknowledges that he/she has carefully read this
Agreement and the Plan and agrees to be bound by all of the provisions set forth
in such documents.
WITNESS: GRANTEE
/s/ Xxxxxx X. Xxxxxxx
__________________________ ______________________________________
Date: 4/21/99
_______________________________
Enclosure: Network Access Solutions, Inc. 1998 Stock Incentive Plan
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SCHEDULE A
Stock Option Granted to: Xxxxxx Xxxxxxx
Xxxxx Date: April 1, 1999
Number of Shares: 333,333
Exercise Price Per Share: $5.00
Expiration Date: April 1, 2009
Adjustment Option:
Upon on initial public offering of the Corporation's Common Stock pursuant to an
effective registration statement (the "IPO"), the Grantee will be issued an
additional option (the "Adjustment Option") to purchase shares of the
Corporation's Common Stock. The number of shares subject to the Adjustment
Option and the Exercise Price of such option shall be calculated in accordance
with the formulas set forth below.
Number of Shares: The number of shares ("X") will be determinable at the time
of the Corporation's IPO as follows:
X = Adjustment Amount * 1.33333
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Y
Where "Y" equals the Corporation's "initial price per share to the public" of
its Common Stock in the IPO as set forth on the cover page of the final
prospectus for the IPO (the "Price to the Public") and the "Adjustment Amount"
is to be calculated in accordance with the following formula:
Adjustment Amount = $5,000,000 - (333,333*(Y-$5.00))
Exercise Price Per Share: 25% of the IPO Price to the Public.
Except as set forth above, the Adjustment Option shall be identical in terms to
the Option.
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Administrator of 1998 Stock Incentive Plan
c/o Office of the Corporate Secretary
Network Access Solutions Corporation
000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Gentlemen:
I hereby exercise the Option granted to me on ____________________, ______,
by NETWORK ACCESS SOLUTIONS CORPORATION (the "Company"), subject to all the
terms and provisions thereof and of the NETWORK ACCESS SOLUTIONS, INC. 1998
STOCK INCENTIVE PLAN (the "Plan"), and notify you of my desire to purchase
____________ shares of Common Stock of the Company at a price of $___________
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 transfer of any interest in the securities represented by
this certificate is subject to a Stock Restriction Agreement, dated
_____________ [DATE OF STOCK RESTRICTION AGREEMENT], by and among NETWORK
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ACCESS SOLUTIONS CORPORATION, a Virginia corporation and the holder of the
certificate, and no such transfer may be made without compliance with that
Agreement. A copy of that Agreement is available for inspection by any
shareholder of the Corporation at the office of the Corporation upon
appropriate request and without charge."
Appropriate stop transfer instructions will be issued by the issuer to its
transfer agent.
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(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 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:___________________ ______________________________________
(Optionee)
Received by NETWORK ACCESS SOLUTIONS
CORPORATION on
___________________________, ______
By: ______________________________
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