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EXHIBIT 4.11
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is dated as of the 7th day of June, 1999,
by and between THE PRISM NETWORK, INC., a Florida corporation (the "Company'),
and Xxxxxxx X. Xxxxxx (the "Optionee").
1. Definitions.
1.1 "Acceleration Event" means (i) any person (including
any group of persons acting in concert) other than an Existing Security Holder
acquires more than fifty percent (50%) of the combined voting power of the
Company's securities on a fully diluted basis (assuming the exercise or
conversion of all outstanding options and convertible securities), (ii) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, the assets of the Company,
(iii) upon the effectiveness of any merger, consolidation, statutory share
exchange, reorganization or similar event (a "Business Combination") of the
Company in which the Company is not the continuing or surviving Corporation or
pursuant to which the Common Stock will be converted into cash, securities or
other property, other than a Business Combination in which the holders of more
than fifty percent (50%) of the Common Stock on a fully diluted basis (assuming
the exercise of conversion of all outstanding options and convertible
securities) immediately prior to such Business Combination own, directly or
indirectly, more than fifty percent (50%) of the combined voting power of the
voting securities of the entity resulting from such Business Combination on a
fully diluted basis (assuming the exercise or conversion of all outstanding
options and convertible securities), or (iv) the Company's shareholders approve
any plan or proposal for the liquidation or dissolution of the Company.
1.2 "Affiliate" means any entity controlling, controlled
by or under common control with the Company.
1.3 "Board" means the Board of Directors of the Company.
1.4 "Cause" means (i) the failure by the Optionee to
substantially perform his duties as an employee (other than by reason of
physical or mental disability) and continuance of such failure for more than 15
days after the Company notifies the Optionee in writing that he is failing to
substantially perform his duties and setting forth the specific facts and
circumstances thereof, it being acknowledged that the term "duties," as used
herein, is not intended to include the attainment of corporate goals, such as
"$1 million of revenues," but rather actions (such as the implementation of the
means to facilitate the attainment of a corporate goal) which are performed by
Optionee, (ii) the Optionee engages in willful misconduct (including, without
limitation, any criminal, fraudulent or dishonest conduct) that is, or is
reasonably likely to be injurious to the Company or any of
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its Affiliates, (iii) the Optionee is convicted of and has no further right to
appeal, or enters a plea of nolo contendere to, any crime that constitutes a
felony (exclusive of traffic related offenses), or (iv) the Optionee materially
breaches any written agreement with the Company or any of its Affiliates not to
disclose any information pertaining to the Company or any of its Affiliates or
not to compete against or interfere with the business of the Company or any of
its Affiliates and, if such breach is capable of cure, fails to cure the same
within 15 days after written notice thereof from the Company.
1.5 "Common Stock" means the shares of common stock, par
value $0.01 per share, of the Company.
1.6 "Exercise Price" means $1.75 per Option Share, which
the Board has determined to be the per share fair market value of the Common
Stock as of the date of this Agreement.
1.7 "Existing Security Holder" means Xxxxx X.
Xxxxxxxxxxx, Xx., Rock Creek Partners, Ltd., Chartwell Capital Investors, L.P.,
Chartwell Capital Investors II, L.P. and any Affiliate to whom an Existing
Security Holder may transfer common stock or options or other securities which
are exercisable for or convertible into common stock of the Company (including
equity owners of an Existing Security Holder that makes a pro rata distribution
of securities to its owners).
1.8 "Option Shares" has the meaning ascribed to it in
Section 2.
1.9 "Options" has the meaning ascribed to it in Section
2.
2. Grant: Number of Shares. The Company hereby grants to the
Optionee options (the "Options") to purchase an aggregate of twenty thousand
(20,000) shares (the "Option Shares") of Common Stock at the Exercise Price, on
the terms and subject to the conditions set forth herein. The Options are not
intended to be "incentive stock options" as defined in Section 422 of the
Internal Revenue Code of 1986, as amended. The Optionee shall not have any of
the rights of a shareholder of the Company with respect to any Option Shares
unless and until the Optionee has paid the Exercise Price with respect thereto
and the conditions set forth in Section 4 have been satisfied.
3. Termination. The Options will terminate upon the earliest of
(i) the full exercise of the Options, (ii) ten (10) years from the date of this
Stock Option Agreement, (iii) six months after termination of the Optionee's
employment with the Company and all of its subsidiaries for any reason other
than Cause, or (iv) termination by the Company of the Optionee's employment with
the Company or any subsidiary for Cause.
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4. Exercise of Options.
4.1 Exercisability. The Options shall be exercisable 33
1/3%, per year for each full year of Optionee's employment from the date of
original employment with the Company. Thus, if Optionee has completed one full
year of employment with the Company, he may exercise 33 1/3% of his Options;
after three complete years of employment with the Company after October 30,
1996, Optionee shall be entitled to exercise all Options. In the event of an
Acceleration Event, all options shall become exercisable immediately except to
the extent, and provided that the Company promptly delivers to Optionee an
opinion of reputable counsel or accounting firm to the effect, that such
exercisability shall constitute an "excess parachute payment" under Section 280G
of the Internal Revenue Code of 1986, as amended (or any successor provision),
in which case unvested Options shall become exercisable as to one share less
than that number of whole shares the exercisability of which would result in an
excess parachute payment, and the remainder of the unvested Options shall become
exercisable according to the schedule that would have applied but for the
application of this sentence. Optionee understands, agrees and acknowledges that
this exercisability schedule does not create any right of employment in favor of
Optionee, who remains an employee at will of the Company and subject to
termination of employment at any time without cause.
4.2 Notice. The Optionee may exercise vested Options by
delivering written notice of such exercise to the Company, accompanied by
payment of the Exercise Price as described in Section 4.3. Such written notice
shall be deemed sufficient for this purpose only if delivered to the Company at
its principal office and only if such written notice states the number of
Options being exercised. The date of exercise of the Options with respect to the
Option Shares specified in the notice shall be the date on which the Company
receives the notice and payment.
4.3 Payment and Other Conditions. On the exercise of any
Option, the written notice described in Section 4.2 must be accompanied by a
check payable to the Company, in the amount of the Exercise Price of all Option
Shares purchased pursuant to such exercise of the Options and an amount equal to
the federal, state and local taxes, if any, required to be withheld as a result
of such exercise. At Optionee's written election delivered as part of the
written notice described in Section 4.2, all or any portion of the Exercise
Price and applicable taxes due to the Company may be paid by reducing the number
of Option Shares issued upon such exercise by the number of whole Option Shares
having a fair market value, as determined by the Board, on the date of exercise
most nearly equal to (but not in excess of) the amount due to the Company, and
any remaining balance shall be paid by check.
Upon the request of the Company, the Optionee shall return this Stock
Option Agreement to the Company and the Company may endorse thereon a notation
of the exercise and return this Stock
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Option Agreement to the Optionee. Also, as an express condition to the exercise
of any option, Optionee shall first execute the Shareholder Agreement dated
April 1, 1996 by and between the Company and its various shareholders, and agree
to be bound as a "Plan Shareholder" by the provisions therein.
4.4 Issuance of Stock Certificates. Upon satisfaction of
the conditions of Sections 4.2 and 4.3, the Company shall promptly deliver to
the Optionee a certificate or certificates for the number of shares of Common
Stock in respect of which Options have been exercised, legended to reflect the
agreements and conditions applicable to such Shares referred to in Section 6 for
so long as applicable securities laws require such legend. The Certificate
legend shall also reflect the Shareholder Agreement referenced in Section 4.3
above, which agreement shall continue to govern the Optionee's rights with
regard to said stock, provided, however, that after the occurrence of an
Acceleration Event said legend shall be removed and such Shareholder Agreement
shall not have any further application to any shares of Common Stock issued
pursuant to the Options.
5. Nontransferability of Option. No Option shall be transferable
by the Optionee otherwise than by will or the laws of descent and distribution.
6. Specific Restrictions Upon Option Shares. The Optionee hereby
agrees with the Company that the Optionee shall acquire the Option Shares for
investment purposes only and not with a view to resale or other distribution
thereof to the public in violation of the Securities Act of 1933, as amended
(the "Securities Act"), and shall not dispose of any Option Shares in any
transaction which, in the opinion of counsel to the Company, would violate the
Securities Act, or the rules and regulations thereunder, or any applicable state
securities or "blue sky" laws.
7. Adjustment in Shares Subject to the Option.
(a) In the event of a merger or consolidation of the Company in
which the Company is not the surviving corporation and in which the
consideration received by holders of Common Stock consists of securities of the
surviving corporation or any affiliate, or in the event of a statutory share
exchange (each a "Transaction"), (i) the Option shall automatically become
exercisable for that number of securities (rounded to the near whole share) that
the Optionee would have received in the Transaction had the Optionee exercised
the Options immediately prior to the Transaction and participated in the
Transaction as a holder of Common Stock, and (ii) the Exercise Price per new
security shall be adjusted proportionately. For example, if as a result of the
Transaction two shares of common stock of the surviving corporation are issued
with respect to each share of Common Stock outstanding immediately prior to the
Transaction, (i) each Option Share issuable upon exercise of the Options shall
consist after the Transaction of two shares of common stock of the surviving
corporation, and (ii) the exercise price per
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share after the Transaction shall be reduced to one half of the exercise price
in effect immediately prior to the Transaction.
(b) If the Company shall combine or subdivide its outstanding
shares of Common Stock into a greater or lesser number of shares solely by means
of a forward or reverse stock split or reorganization having the same effect or
increase the number of its outstanding shares of Common Stock into a greater
number of shares by means of a stock dividend, any such event being called a
"Common Stock Reorganization," then (i) the Exercise Price shall be adjusted,
effective immediately after the effective date of such Common Stock
Reorganization, to a price determined by multiplying the Exercise Price in
effect immediately prior to such effective date by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding on such
effective date before giving effect to such Common Stock Reorganization and the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such Common Stock Reorganization, and (ii) the number of
shares of Common Stock subject to purchase upon exercise of the Options shall be
adjusted, effective at such time, to a number determined by multiplying the
number of shares of Common Stock subject to purchase immediately before such
Common Stock Reorganization by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding after giving effect to such Common
Stock Reorganization and the denominator of which shall be the number of shares
of Common Stock outstanding immediately before such Common Stock Reorganization.
(c) In addition, in the event that the Board shall determine that
any dividend or other distribution (whether in the form of cash, stock of the
Company, other securities, or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, sale of
substantially all the Company's assets, split-up, spin-off, combination,
repurchase, or exchange of securities of the Company, or other similar corporate
transaction or event, effects the Option Shares issuable on exercise of the
Option such that an adjustment not otherwise provided for herein is determined
by the Board to be appropriate in order to prevent dilution or enlargement of
the benefit or potential benefit intended to be made available under this
Agreement, then the Board shall, in such manner as it may deem equitable, adjust
the number and type of Option Shares awarded pursuant to this Stock Option
Agreement and/or the terms, conditions or restrictions of this Stock Option
Agreement.
8. Registration of Shares; Limitations on Exercisability.
Anything in this Stock Option Agreement to the contrary notwithstanding, the
obligation of the Company to sell or deliver shares of Common Stock with respect
to the Options shall be subject to all applicable laws, rules and regulations,
including all applicable federal and state securities laws, securities exchange
rules, or listing requirements and the obtaining of all approvals by
governmental agencies as may be deemed necessary by the Board,
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and the Company shall use its reasonable efforts to take all necessary actions
to comply with such requirements.
9. Notices. Any notice required or permitted under this Stock
Option Agreement shall be given at the address for each party indicated on the
signature page thereof.
10. Successors and Assigns. Neither this Agreement nor any Options
granted hereunder may be assigned by Optionee except by will or the laws of
descent and distribution, and during Optionee's lifetime Options may be
exercised only by Optionee. This Agreement shall be binding on Optionee's heirs,
legatees, personal representatives and permitted assignees and on the Company's
successors and assigns (including a purchaser of all or substantially all of the
assets of the Company).
11. Miscellaneous. No provisions of this Stock Option Agreement
may be modified, waived or discharged unless such modification, waiver or
discharge is agreed to in writing signed by both the Optionee and such officer
of the Company as may be specifically designated by the Board. No waiver by
either party hereto at any time of (i) any breach by the other party hereto of,
or (ii) compliance with, any condition or provision of this Stock Option
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar conditions or provisions at the same time or at any prior
or subsequent time. The validity, interpretation, construction and performance
of this Stock Option Agreement shall be governed by the laws of the state of
Florida without regard to its conflicts of law principles.
12. Severability. The invalidity or unenforceability of any
provision or provisions of this Stock Option Agreement shall not affect the
validity or enforceability of any other provision of this Stock Option
Agreement, which shall remain in full force and effect.
13. Counterparts. This Stock Option Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same instrument.
14. Entire Agreement. This Stock Option Agreement sets forth the
entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any party hereto or by any officer, employee or representative of
any party hereto; and any prior agreement of the parties hereto in respect of
the subject matter contained herein is hereby terminated and canceled.
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IN WITNESS WHEREOF, the parties have executed this Stock Option
Agreement on the day and year first above written.
THE PRISM NETWORK, INC.,
a Florida corporation
By: /s/ XXXXX X. XXXXXXXXXXX, XX.
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Xxxxx X. Xxxxxxxxxxx, Xx.
Its: President
/s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx, Optionee
