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.
5.5 Competing With the Company. In the event that,
within 18 months after the date of termination of Employee's employment with the
Company, Employee accepts employment with any competitor of, or otherwise
competes with, the Company, the Committee, in its sole discretion, may require
such 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, Employee agrees to remit the economic value
to the Company in accordance with Section 5.4(b).
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. Adjustment. In the event of any merger, reorganization,
consolidation, recapitalization, dividend (other than cash dividend), stock
split, reverse stock split, or other change in corporate structure affecting the
number of issued shares of Common Stock, 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.
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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;
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(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.
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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: --------------------------- ---------------------------
Xxxxxxx X. xxx Xxxxxx Date Signed
Executive Vice President
EMPLOYEE: Address:
------------------------------- --------------------------
Name:
SS#: --------------------------
--------------------------
Date Signed
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