EXHIBIT 10.17
NETWORK ACCESS SOLUTIONS, INC. 1998 STOCK INCENTIVE PLAN
INCENTIVE STOCK OPTION GRANT AGREEMENT
This Grant Agreement (the "Agreement") is entered into this first day of
November, 1998, by and between NETWORK ACCESS SOLUTIONS, INC., a Delaware
corporation (the "Corporation"), and the grantee whose name appears on Schedule
A hereto 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"), an incentive stock option to purchase shares
of Common Stock, par value of $0.001 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.
Section 1.2 Limitation on Term of Option. Notwithstanding the foregoing,
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in no event shall the Option expire later than 5:00 p.m. Eastern Time on the day
prior to the tenth (10th) anniversary of its Grant Date (or on the day prior to
the fifth (5th) anniversary of its Grant Date if the Grantee owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Corporation or of any of its subsidiaries on the Grant Date).
ARTICLE 2
VESTING
Section 2.1 Vesting Schedule. Subject to Section 2.2 below, unless the
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Option has earlier terminated pursuant to the provisions of the Agreement, the
Grantee shall become vested in the shares of Stock subject to the Option over a
four (4) year period as follows: the Grantee shall become vested in 6.25% of the
total shares of Stock subject to the Option on the date that is three months
from the Grant Date (the "Initial Vesting Date") and shall become vested in
6.25%
of the total shares of Stock subject to the Option every third (3rd) month after
the Initial Vesting Date, on the date in each such month that corresponds with
the Initial Vesting Date (each referred to as a "Vesting Date"), during the
forty-eight (48) month period immediately following the Initial Vesting Date, so
that the Grantee shall be vested in 100% of the shares of Stock subject to the
Option on the fourth (4th) anniversary of the Grant Date; provided, however,
that the Grantee must be in the continuous employ or service of the Corporation
or an Affiliate at all times from the Grant Date through the specified Vesting
Date or Initial Vesting Date, as applicable, for such vesting to occur.
Section 2.2 Acceleration. Notwithstanding the foregoing, in the event of
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a "change of control," as defined below, the Grantee shall become vested in 100%
of any unvested Option that has not been terminated in accordance with the terms
of this Agreement. For purposes of this Agreement, a "change of control" shall
be deemed to occur upon the first of the following events:
(i) any person becomes the beneficial owner, directly or indirectly,
of securities of the Corporation representing 50% or more of the combined
voting power of the Corporation's then outstanding voting securities and
such person has the ability to elect a majority of the members of the
Corporation's Board of Directors, if such ownership is not in place on the
date of grant;
(ii) any person becomes the beneficial owner, directly or indirectly,
of securities of the Corporation sufficient to elect a majority of the
members of the Board of Directors of the Corporation, provided that
Optionee's responsibilities as an employee of the Corporation are
materially adversely diminished by such change in control; or
(iii) the sale of all or substantially all the assets of the
Corporation, or a merger, consolidation, or similar transaction of the
Corporation in which the Corporation is not the surviving entity or the
Corporation's stockholders immediately prior to such transaction hold less
than 50% of the voting securities of the surviving entity.
A "change in control" shall not include either of the following
events:
(i) a transaction, the sole purpose of which is to change the state
of the Corporation's incorporation; or
(ii) a transaction, the result of which is to sell all or
substantially all of the assets of the Corporation to another entity (the
"surviving entity"); provided that the surviving entity is owned directly
or indirectly by the Corporation's stockholders immediately following such
transaction in substantially the same proportions as their ownership of the
Corporation's voting capital stock immediately preceding 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.
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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 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 therefore 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.
ARTICLE 4
TERMINATION OF OPTION
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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 Employment or Service for Reason Other Than
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Death or Disability. Unless the Option has earlier terminated pursuant to the
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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 Grantee is no longer employed by, nor in the service of, the
Corporation and its Affiliates for any reason other than the Grantee's death or
Disability. Notwithstanding the foregoing, the Option shall terminate in its
entirety, regardless of whether the Option is vested in whole or in part, upon
termination of the employment or service of the Grantee by the Corporation or an
Affiliate or "Cause".
If the Grantee is a party to a written employment agreement or service
agreement with the Corporation or an Affiliate which contains a definition of
"cause," "termination for cause" or words of similar import, whether such
Grantee is terminated for "Cause" pursuant to this Section 4.2 shall be
determined according to the terms of and in a manner consistent with the
provisions of such written agreement. If the Grantee is not party to such a
written employment agreement or service agreement with the Corporation or an
Affiliate, then for purposes of this Section 4.2, "Cause" shall mean (a) the
conviction of the Grantee of, or the entry of a pleading of guilty or nolo
contendere by the Grantee to, any crime involving moral turpitude that may
reasonably be expected to have an adverse impact on the Corporation's reputation
or standing in the community or any felony, (b) willful misconduct in connection
with the Grantee's duties, willful failure to follow the directions of the
Grantee's supervisor or supervisors, or willful failure to perform his or her
responsibilities in the best interest of the Corporation, except in cases
involving the mental or physical incapacity or disability of the Grantee, or (c)
in the sole judgement of the President of the Corporation, the Grantee has acted
or is acting in a manner that is not in the best interest of the Corporation or
its employees, including but not limited to, disparaging the Corporation or its
products or engaging in harassment or other inappropriate behavior directed
towards employees of the Corporation. "Willful misconduct" and "willful failure
to perform" shall not include actions or inactions on the part of the Grantee
which were taken or not taken in good faith by the Grantee. The good faith
determination by the Administrator of whether the Grantee's employment or
service was terminated by the Corporation for "Cause" shall be final and binding
for all purposes hereunder.
Section 4.3 Upon Grantee's Death. Unless the Option has earlier
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terminated pursuant to the provisions of the Agreement, upon the Grantee's death
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, may exercise all or any part of the outstanding Option with
respect to the shares of Stock as to which the Option is vested as of the
Grantee's date of death, provided such exercise occurs within twelve (12) months
after the date of the Grantee's death, but not later than the Expiration Date of
the Option. Unless sooner terminated, the Option shall terminate upon the
expiration of such twelve- (12-) month period.
Section 4.4 Termination of Employment or Service by Reason of Disability.
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Unless the Option has earlier terminated pursuant to the provisions of the
Agreement, in the event that
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the Grantee ceases, by reason of Disability, to be an employee of or in the
service of the Corporation or an Affiliate, the outstanding Option may be
exercised in whole or in part with respect to the shares of Stock as to which
the Option is vested as of the date of the Grantee's termination of employment
or service due to Disability at any time within twelve (12) months after the
date of such termination, but not later than the Expiration Date of the Option.
Unless sooner terminated, the Option shall terminate upon the expiration of such
twelve- (12-) month period.
For purposes of this Agreement, Disability shall mean the inability 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 (12) months. The administrator may require such proof of
Disability as the Administrator in its sole discretion deems appropriate and the
Administrator's determination as to whether the Grantee is Disabled shall be
final and binding on all parties concerned.
Section 4.5 Leave of Absence. For purposes of this Agreement, the
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Grantee's employment or service with the Corporation or an Affiliate shall not
be deemed to terminate if the Grantee takes any military leave, sick leave, or
other bona fide leave of absence approved by the Administrator of ninety (90)
days or less. In the event of a leave in excess of ninety (90) days, the
Grantee's employment or service shall be deemed to terminate on the ninety-first
(91st) day of the leave unless the Grantee's right to re-employment with the
Corporation or Affiliate remains guaranteed by statute or contract.
Notwithstanding the foregoing, unless otherwise determined by the Administrator
(or required by law), a leave of absence shall not be treated as employment or
service for purposes of vesting in additional shares of Stock during such leave
pursuant to Section 2.1 of this Agreement.
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
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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 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.
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. Notwithstanding anything in
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the Plan or the Agreement to the contrary and without the consent of the
Grantee, the Administrator, in its sole discretion, may make any modifications
to the Option, including but not limited to cancellation, forfeiture, surrender
or other termination of the Option in whole or in part regardless of the vested
status of the Option, in order to facilitate any business combination that is
authorized by the Board to comply with requirements for treatment as a pooling
of interests transaction for accounting purposes under generally accepted
accounting principles.
Section 6.3 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 Non-Guarantee of Employment. Nothing in the Plan or the
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Agreement shall alter the employment status of the Grantee, nor be construed as
a contract of employment between the Corporation (or an Affiliate) and the
Grantee, or as a contractual right of the Grantee to continue in the employ or
service of the Corporation or an Affiliate, or as a limitation of the right of
the Corporation or an Affiliate to discharge the Grantee at any time with or
without cause or notice.
Section 7.2 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
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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 7.3 Qualified Nature of Option. The Option is intended to qualify
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as an incentive stock option ("Incentive Stock Option") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), to
the fullest extent permitted within the limit set forth under Section 422(d) of
the Code and this Agreement shall be so construed. The aggregate fair market
value (determined as of the Grant Date) of shares of Stock with respect to which
all Incentive Stock Options first become exercisable by the Grantee in any
calendar year under the Plan or any other plan of the Corporation (and its
parent and subsidiary corporations, as may exist from time to time) may not
exceed $100,000 or such other amount as may be permitted from time to time under
Section 422 of the Code. To the extent that such aggregate fair market value
shall exceed $100,000 or other applicable amount in any calendar year, such
stock options shall be treated as nonqualified stock options with respect to the
amount of aggregate fair market value thereof that exceed the Section 422(d)
limit. For this purpose, the Incentive Stock Options will be taken into account
in the order in which they were granted. In such case, the Corporation may
designate the shares of Stock that are to be treated as stock acquired pursuant
to the exercise of an Incentive Stock Option and the shares of Stock that are to
be treated as stock acquired pursuant to a nonqualified stock option by issuing
separate certificates for such shares and identifying the certificates as such
in the stock transfer records of the Company.
Section 7.4 Notice of Disqualifying Disposition. If the Grantee makes a
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disposition (as that term is defined in Section 424(c) of the Code) of any
shares of Stock acquired pursuant to the exercise of this Option within two (2)
years of the Grant Date or within one (1) year after the shares of Stock are
transferred to the Grantee, the Grantee shall notify the Administrator of such
disposition in writing within thirty (30) days of the disposition.
Section 7.5 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 7.6 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, the disposition (as that
term is defined in Section 424(c) of the Code) of shares of Stock acquired
pursuant to 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 7.7 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
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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 7.8 Non-transferability of Option. The Option shall be non-
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transferable 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 7.9 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 tot he 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 of, 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 7.10 Entire Agreement; Modification. The Agreement contains the
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entire agreement between the parties with respect to the subject matter
contained herein 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 7.11 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 7.12 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 7.13 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.
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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, INC.
/s/ Xxx Xxxxx 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/ Xxxx X. Xxxxxx /s/ Xxxx X. Xxxxxxx
___________________________ __________________________
Date: 3/30/99
___________________
Enclosure: Network Access Solutions, Inc. 1998 Stock Incentive Plan
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SCHEDULE A
Stock Option Granted to: Xxxx Xxxxxxx
Xxxxx Date: January 24, 1999
Number of Shares: 300,000
Exercise Price Per Share: $0.40
Expiration Date: January 24, 2009
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