Exhibit (a)(6)
XXXXXX COMMUNICATIONS CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
This Non-Qualified Stock Option Agreement (the "Agreement"), effective as of
January 23, 2003, is made by and between Xxxxxx Communications Corporation, a
Delaware corporation (the "Company"), and the individual "Recipient" identified
on the signature page hereof and Schedule I to this Agreement (the "Recipient").
Background
The Company has established the Xxxxxx Communications Corporation 1998 Stock
Incentive Plan (as amended, the "Plan"). The Company wishes to grant to the
Recipient a Non-Qualified Stock Option pursuant to the terms of the Plan.
Therefore, the Company and the Recipient agree as follows:
1. Grant of Option. In consideration of service to the Company and for
other good and valuable consideration, the Company grants to the
Recipient, in accordance with the terms and conditions of the Plan and
this Agreement, a Non-Qualified Stock Option to purchase the number of
Shares of the Company's Common Stock set forth in Schedule I of this
Agreement (the "Option").
2. Exercise Price. The exercise price of each Share covered by the Option
will be the price set forth in Schedule I of this Agreement.
3. Adjustments in Option. If the outstanding Shares subject to the Option
are changed into or exchanged for a different number or kind of shares
of the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split, stock
dividend or combination of shares, the Shares subject to the Option and
the exercise price per Share will be equitably adjusted to reflect
these changes. This adjustment in the Option will be made without
change in the total price applicable to the unexercised portion of the
Option (except for any change in the aggregate price resulting from
rounding-off of share quantities or prices) and with any necessary
corresponding adjustment in the exercise price per Share. Any
adjustment made by the Committee will be final and binding upon the
Recipient, the Company and all other interested persons.
4. Manner of Exercise. The Option, or any portion thereof, may be
exercised only in accordance with the terms of the Plan and solely by
delivery to the Secretary of the Company of all of the following items
prior to the time when the Option or the portion of the Option becomes
unexercisable under the terms of the Plan.
(a) The Recipient or other person entitled to exercise the Option
must sign and deliver a written notice stating that the Option
or portion thereof is thereby exercised, which notice must
comply with all applicable rules (if any) established by the
Committee.
(b) The Recipient or other person entitled to exercise the Option
must deliver full payment for the Shares with respect to which
the Option or portion thereof is exercised either (i) in cash
or by certified check or (ii) by the Company's refraining from
issuing ("Share Withholding"), pursuant to an instruction from
the Recipient, a portion of the Option Shares not constituting
Unvested Shares (such Option Shares being referred to herein
as "Vested Shares") issuable upon the exercise of the Option
having a Fair Market Value equal to the full exercise price.
If, by reason of an election to pay the exercise price through
Share Withholding, the net number of Vested Shares issuable
includes a fractional share, the Company shall pay to the
Recipient promptly following exercise an amount equal to the
Fair Market Value of that fractional share as of the Option
Expiration Date. The Recipient does not have the right to
apply Unvested Shares to pay the option exercise price under
this Section 4(b) or to satisfy the Recipient's tax
withholding obligations under Section 4(c), and the Recipient
shall satisfy any portion of those obligations that is not
satisfied through Share Withholding of Vested Shares through a
direct cash payment to, or delivery of a certified check to,
the Company.
(c) The Recipient or other person entitled to exercise the Option
must deliver full payment of an amount sufficient to satisfy
any federal (including FICA and FUTA amounts), state, and
local withholding tax requirements at the time the Recipient
or his beneficiary recognizes income for federal, state, and
local tax purposes as the result of the receipt of Shares
pursuant to the exercise of the Option or portion thereof.
Withholding requirements may be satisfied at the election of
the Recipient through one of the following forms of payment,
or through any combination thereof: (i) by payment to the
Company in cash or certified check or by wire transfer of
immediately available funds, or (ii) by Share Withholding,
pursuant to an instruction from the Recipient, of Vested
Shares having a Fair Market Value equal to all or a portion of
the full dollar amount necessary to satisfy all federal
(including FICA and FUTA amounts), state, and local tax
withholding requirements. Notwithstanding the preceding
sentence, and regardless of any instruction from the Recipient
to the contrary, the Company may elect at any time in its sole
discretion to satisfy all or a portion of the Recipient's
withholding requirements through Share Withholding. If Share
Withholding is elected by Recipient or the Company, the
Company will not issue fractional Vested Shares but will round
down the net number of Vested Shares to be issued to the
nearest whole share and will increase the dollar amount deemed
withheld by the Fair Market Value of any such fractional
share. Notwithstanding anything to the contrary, the Recipient
will only be permitted to satisfy the Recipient's withholding
obligations relating to any Section 83(b) election made by the
Recipient with respect to the Unvested Shares through Share
Withholding if the Recipient shall have notified the Company
in writing on or before the Date of Grant of the Recipient's
election to satisfy such obligations through Share
Withholding. Subject to the immediately preceding sentence,
the Recipient shall be required to satisfy the Recipient's tax
withholding obligations relating to the Unvested Shares,
whether those obligations arise from the termination of the
Period of Restriction or from a Section 83(b) election made by
the Recipient with respect to the Unvested Shares, through
payment to the Company in cash or by certified check or by
wire transfer of immediately available funds. If any excise
tax withholding by the Company is required pursuant to Code
Section 4999 on an "excess parachute payment," as this term is
defined in Code section 4999, in connection with any Award or
issuance of Shares, the Company will be required to pay
compensation to the Participant ("Gross-Up Payment") in an
amount equal to the excise tax withholding required to be
withheld by the Company on the Award or issuance of Shares and
the Gross-Up Payment itself. The Company will withhold this
Gross-Up Payment to satisfy the withholding obligation.
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(d) The Recipient or other person entitled to exercise the Option
must sign and deliver a bona fide written representation and
agreement, in a form satisfactory to the Committee, stating
that the Option Shares are being acquired for his own account,
for investment and without any present intention of
distributing or reselling said Shares or any of them except as
may be permitted under the Securities Act of 1933, as amended
(the "Act"), and then applicable rules and regulations
thereunder, and that the Recipient or other person then
entitled to exercise the Option will indemnify the Company
against and hold it free and harmless from any loss, damage,
expense or liability resulting to the Company if any sale or
distribution of the Option Shares is contrary to the
representation and agreement referred to above. The Committee
may, in its absolute discretion, take whatever additional
actions it deems appropriate to ensure the observance and
performance of these representations and agreement and to
effect compliance with all federal and state securities laws
or regulations. Without limiting the generality of the
foregoing, the Committee may require an opinion of counsel
acceptable to it to the effect that any subsequent transfer of
Option Shares acquired on an Option exercise does not violate
the Act and may issue stop-transfer orders covering those
Option Shares. The written representations and agreement
referred to in the first sentence of this subsection (d),
however, will not be required if the Option Shares to be
issued pursuant to the exercise have been registered under the
Act, and the registration is then effective in respect of the
Option Shares.
(e) If the Option or any portion thereof is exercised pursuant to
Section 4 of this Agreement by any person other than the
Recipient, that person must deliver appropriate proof,
satisfactory to the Committee, of the right of that person to
exercise the Option.
5. Conditions to Issuance of Shares. The Shares deliverable upon the
exercise of the Option, or any portion thereof, may be either
previously authorized but unissued Shares or issued Shares which have
been reacquired by the Company. Those Shares will be fully paid and
non-assessable. The Recipient will not receive a certificate evidencing
the Recipient's ownership of the Shares deliverable upon the exercise
of the Option. The Company shall instruct its transfer agent to make an
annotation in the Company's stock transfer records evidencing the
issuance of such Shares to the Recipient. As to the Recipient's
Vested Shares, the transfer agent will then effect, as promptly
as reasonably practicable, a book entry transfer of those Shares to
the Recipient's broker's account with The Depository Trust
Company (DTC) using DTC's Deposit/Withdrawal At Custodian (DWAC)
system. The transfer agent will not make an immediate book entry
transfer, however, with respect to the Recipient's Unvested Shares.
The transfer agent will transfer those Shares to the Recipient's
broker's account with DTC via DWAC at such time as the Period
of Restriction (as defined below) and the Recipient has satisfied
the Recipient's tax withholding obligations arising from the lapse
of the restrictions upon those Unvested Shares.
6. Rights of Shareholders. The Recipient will not be, nor have any of the
rights or privileges of, a shareholder of the Company in respect of any
Shares purchasable upon the exercise of any part of the Option unless
and until the Company issues certificates representing those Shares to
the Recipient.
7. Exercisability and Vesting; Risk of Forfeiture Applicable to Unvested
Shares. The Option is fully exercisable immediately as to all of the
Option Shares. After the exercise of the Option, the Recipient's
interest in any Unvested Shares specified in Schedule I of this
Agreement shall, subject to Section 9, be forfeited immediately upon
termination of the Recipient's employment with the Company during the
Period of Restriction as a result of a Non-Qualifying Termination.
"Non-Qualifying Termination" means termination of the Recipient's
employment with the Company, whether the termination is effected by the
Company, the Recipient or otherwise, except (a) termination as a result
of the Recipient's
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death or Disability or (b) termination by the Company other than for
Cause. "Period of Restriction" means a period commencing on the Date of
Grant and terminating on the date that is one year after the Date of
Grant; provided, however, that the Period of Restriction shall
terminate immediately on such earlier date as either of the following
shall have occurred: (i) termination as a result of the Recipient's
death or Disability or (ii) termination by the Company other than for
Cause. Recipient shall deliver any certificates in Recipient's
possession representing Unvested Shares to the Company within five days
after the occurrence of a Non-Qualifying Termination. Recipient's
interest in all Unvested Shares shall immediately cease to be subject
to a risk of forfeiture on the date on which the Period of Restriction
terminates, and shall also immediately cease to be subject to a risk of
forfeiture under the circumstances addressed in Section 9. The
Committee, in its sole discretion, may at any time accelerate the date
on which the Recipient's interest in any or all of the Unvested Shares
shall cease to be subject to a risk of forfeiture.
8. Duration of Option. The Option will be exercisable for a one business
day period commencing on the "Option Expiration Date" set forth in
Schedule I of this Agreement and expiring at midnight, Eastern Standard
Time, on that Option Expiration Date.
9. Acceleration of Date on Which Unvested Shares Cease to be Subject to a
Risk of Forfeiture. The Recipient's interest in all Unvested Shares
shall immediately cease to be subject to a risk of forfeiture (i) upon
a Change of Control or (ii) if the Company terminates the Recipient's
employment (x) within six months prior to a Change of Control, or (y)
during the pendency of any transfer of control application or similar
filing with the Federal Communications Commission with respect to a
transaction which would, when consummated, result in a Change of
Control. For purposes of this Agreement, a "Change of Control" will
occur if (I) none of Xxxxxx X. Xxxxxx, his estate, his wife, his lineal
descendants, or any trust created for the sole benefit of any one or
more of them during their lifetimes, or any combination of any of the
foregoing, shall (A) own, directly or indirectly, at least 35 percent
of the issued and outstanding capital stock of the Company or (B) have
voting control, directly or indirectly, equal to at least 51 percent of
the issued and outstanding capital stock of the Company entitled to
vote in the election of Board of Directors of the Company; (II) the
consummation of a reorganization, merger, or consolidation, in each
case, with respect to which persons who were shareholders of the
Company immediately prior to this reorganization, merger or
consolidation do not, immediately thereafter, own more than 50 percent
of the combined voting power entitled to vote generally in the election
of directors of the reorganized, merged or consolidated company's (or
any successor entity's) then outstanding securities; (III) a
liquidation or dissolution of the Company or of the sale of all or at
least 80 percent of the Company's assets; or (IV) the occurrence of a
"Change of Control" (or such other term or provision of substantially
equivalent meaning) with respect to the Company under the terms of any
written agreement of employment between Recipient and the Company or
its subsidiaries; PROVIDED, HOWEVER, that Recipient acknowledges and
agrees that the immediately preceding clause (IV) shall not be deemed
to be effective in any way with respect to (1) any alleged or actual
unwritten agreement or understanding with respect to Recipient's
employment, or (2) any writing between Recipient and the Company and
its subsidiaries which is not expressly stated to be an agreement of
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employment (even though such writing may discuss matters relating to
Recipient's employment with the Company or its subsidiaries).
10. Administration. The Committee has the power to interpret this Agreement
and to adopt rules for the administration, interpretation and
application of the Agreement as are consistent herewith and to
interpret or revoke any rules. All actions taken and all
interpretations and determinations made by the Committee in good faith
will be final and binding upon the Recipient, the Company and all other
interested persons. No member of the Committee will be personally
liable for any action, determination or interpretation made in good
faith with respect to this Agreement or any similar agreement to which
the Company is a party.
11. Restrictions on Transferability. The Option shall not be transferable.
The Recipient shall have the right to transfer any Vested Shares
without restriction at any time. Recipient shall not transfer any
Unvested Shares during the Period of Restriction.
12. Shares to be Reserved. The Company will at all times during the term of
the Option reserve and keep available the Shares sufficient to satisfy
the requirements of this Agreement.
13. Notices. All notices to the Company will be in writing and will be
delivered to:
Xxxxxxx X. Xxxxxxxx, Esq.
Executive Vice President,
Secretary and General Counsel
Xxxxxx Communications Corporation
000 Xxxxxxxxxx Xxxx Xxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000.
All notices to a Recipient will be delivered personally or mailed to
the Recipient at his address appearing in the Company's personnel
records. The address of any person may be changed at any time by
written notice given in accordance with this Section 13.
14. Titles. Titles in this Agreement are for convenience only and are not
to serve as a basis for interpretation or construction of this
Agreement.
15. Incorporation of Plan by Reference. The Option is granted in accordance
with the terms and conditions of the Plan. The terms of the Plan are
incorporated in this Agreement by reference, and this Agreement will in
all respects be interpreted in accordance with the Plan. Any term used
in this Agreement that is not otherwise defined in this Agreement will
have the meaning assigned to it by the Plan; PROVIDED, HOWEVER, that in
the event of any conflict or inconsistency between the definition of
"cause" under the Plan and such term (or substantially equivalent term)
defined under an employment agreement between Recipient and the Company
or any subsidiary thereof, the definition of cause contained in such
employment agreement shall be deemed to control.
[Signatures set forth on following page.]
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IN WITNESS WHEREOF, the Company and the Recipient have executed and
delivered this Agreement effective as of the date first written above.
Company:
XXXXXX COMMUNICATIONS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
Chief Executive Officer
Recipient:
-----------------------------------------
Name:
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SCHEDULE I
1. Name of Recipient:
2. Date of Grant: January 23, 2003
3. Number of Shares of Common Stock Covered by the Option:
4. Exercise Price Per Option Share: $0.01
5. Option Expiration Date (except as otherwise provided in the January 24, 2003
attached Agreement):
6. Number of Unvested Shares, if any, at Date of Grant:
