EXHIBIT 10.21.6
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Non-Competition
PAETEC CORP.
NONQUALIFIED STOCK OPTION AGREEMENT
This sets forth the terms of the NONQUALIFIED STOCK OPTION AGREEMENT
("Agreement") entered into as of the ______ day of _________, ____ ("Effective
Date"), by and between PAETEC CORP. ("Company") and ________________, an
employee of the Company or one of its subsidiaries ("Optionee").
TERMS
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1. Definition of Terms. For purposes of this Agreement, all defined
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terms, as indicated by the capitalization of the first letter of such term,
shall have the meanings specified in the PaeTec Corp. 1998 Incentive
Compensation Plan ("Plan") to the extent not specified in this Agreement.
2. Grant of Option. Pursuant to the Plan and subject to the terms
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and conditions of the Plan and this Agreement, the Company hereby grants to the
Optionee the option to purchase from the Company all or any part of an aggregate
of shares of Class A Common Stock, at a purchase price of $ per
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share. The Option Rights granted pursuant to this Agreement are not intended to
qualify as Incentive Stock Options.
3. Expiration Date and the Vesting Start Date. The Option Rights
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granted pursuant to this Agreement shall expire on , [insert
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date that is ten years from Vesting Start Date], unless sooner terminated or
canceled under the provisions of Paragraphs 6 or 8 below. The Vesting Start Date
shall be , [insert date of initial grant of option being
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exchanged].
4. Exercise of Option.
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(a) The Optionee, provided the Optionee has remained in the continuous
employ of the Company or one of its subsidiaries from the Vesting Start Date,
may exercise the Option Rights granted under this Agreement during the periods
described below, for the acquisition of the number of shares of Common Stock
stated.
(i) All or any part of 25 percent of the Option Rights granted under
this Agreement may be purchased at any time during the period that begins on the
first anniversary of the Vesting Start Date and ends on the tenth anniversary of
the Vesting Start Date;
Non-Competition
(ii) All or any part of an additional 25 percent of the Option Rights
granted under this Agreement may be purchased at any time during the period that
begins on the second anniversary of the Vesting Start Date and ends on the tenth
anniversary of the Vesting Start Date;
(iii) All or any part of an additional 25 percent of the Option
Rights granted under this Agreement may be purchased at any time during the
period that begins on the third anniversary of the Vesting Start Date and ends
on the tenth anniversary of the Vesting Start Date; and
(iv) All or any part of the remaining 25 percent of the Option Rights
granted under this Agreement may be purchased at any time during the period that
begins on the fourth anniversary of the Vesting Start Date and ends on the tenth
anniversary of the Vesting Start Date.
(b) If an anniversary described in (a) above occurs on a date that is
not a normal business day of the Company, the anniversary shall be deemed to
occur on the next ensuing normal business day of the Company.
5. Manner of Exercise.
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(a) Option Rights may be exercised on or after the applicable exercise
date and prior to the expiration date (or earlier termination or cancellation
date) at any time, and may be exercised in whole or in part as to the shares of
Common Stock then available for purchase.
(b) Option Rights may be exercised only to acquire whole shares of
Common Stock. No fractional shares shall be issued, and an exercise that would
otherwise result in the issuance of fractional shares shall be disregarded to
the extent of the fraction.
(c) Option Rights shall be exercised by delivery to the Committee (or
its designee), in person or by certified mail, return receipt requested, the
following:
(i) A written notice containing a reference to this Agreement and
a statement of the number of shares of Common Stock with respect to which Option
Rights are being exercised.
(ii) Subject to the approval of the Committee, cash in an amount
equal to the purchase price for such shares, or shares of Common Stock having an
aggregate fair market value, as of the date of exercise, equal to such purchase
price, or a combination of cash and shares of Common Stock.
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Non-Competition
(iii) Such additional documents as the Committee may require.
6. Termination or Resignation of Employment. Following the
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Optionee's termination or resignation of employment with the Company or one of
its subsidiaries (other than by reason of the Optionee's death or disability),
the Optionee may exercise Option Rights granted under this Agreement, to the
extent the Optionee is entitled to do so on the date of exercise, for a period
that ends on the later of (a) 30 days after the date of the Optionee's
termination or resignation of employment or (b) 30 days after the end of the
period during which the non-competition covenant is in effect pursuant to
Paragraph 8. Following the Optionee's termination of employment with the Company
or one of its subsidiaries as a result of the Optionee's death or disability,
the Optionee (or the Optionee's legal representative) may exercise Option Rights
granted under this Agreement, to the extent the Optionee is entitled to do so on
the date of termination, for a period of 12 months following the date of the
Optionee's termination of employment. Notwithstanding the foregoing of this
Paragraph 6, no Option Rights granted under this Agreement may be exercised
later than the expiration date described in Paragraph 3.
7. Assignment or Transfer. Option Rights granted pursuant to this
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Agreement shall be exercisable only by the Optionee (or the Optionee's duly
appointed guardian or legal representative) during the Optionee's lifetime and
may not be sold, transferred, assigned, pledged, hypothecated or otherwise
disposed of in any other way, except by will or the laws of descent and
distribution, and shall not be subject to execution, attachment, garnishment or
similar process. All unexercised Option Rights granted under this Agreement
shall be canceled automatically upon any such assignment, transfer, attachment,
etc. The foregoing shall not preclude the exercise of Option Rights after the
Optionee's death.
8. Non-Competition.
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(a) For a period of one year after termination or resignation of the
Optionee's employment with the Company or one of its subsidiaries (regardless of
the reason for termination), the Optionee shall not, directly or indirectly:
(i) solicit or serve clients or customers of the Company or any
affiliate of the Company (including any subsidiary), whether for the Optionee's
own account or as an employee, shareholder, partner, officer, member, manager,
director, consultant, or other representative of any third party;
(ii) direct any business from, or enter into competition with, the
Company or any affiliate of the Company (including any subsidiary) in any line
of business
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Non-Competition
and in any geographic region in which the Company or such affiliate then is
conducting operations; or
(iii) serve as an employee, shareholder, partner, officer, member,
manager, director, consultant or other representative of a third party which
engages in any line of business competitive with the Company or any affiliate of
the Company (including any subsidiary) anywhere in the world.
The Optionee acknowledges that the foregoing limitations are reasonable in time
and scope and agrees not to raise any objection to the reasonableness of the
foregoing in any action or proceeding to enforce the terms of this paragraph.
(b) As consideration for the non-competition covenant set forth in
subparagraph (a) above, the Company agrees that, if the Optionee's employment is
terminated by the Company or one of its subsidiaries without Cause, the Company
or the subsidiary shall pay the Optionee or the Optionee's personal
representative during the one-year period in which the covenant is in effect an
amount equal to the annualized base salary paid to the Optionee immediately
prior to termination of the Optionee's employment. Payment shall be made in
accordance with the Company's or subsidiary's customary payroll practices.
Continued payment of the Optionee's base salary under this subparagraph (b)
shall not be made if termination of the Optionee's employment is due to the
Optionee's death, disability, voluntary resignation or withdrawal or termination
for "Cause" (as defined below).
(c) As additional consideration for the non-competition covenant set
forth in subparagraph (a) above, the Company agrees that (i) in the event the
Optionee's employment terminates due to the death or disability of the Optionee
or is terminated by the Company or one of its subsidiaries without Cause, the
one-year period during which the non-competition covenant is to be in effect
shall be counted as a year of employment with the Company for purposes of
determining the number of Shares that may be acquired by an exercise of the
Option Rights granted pursuant to this Agreement and (ii) in the event the
Optionee's employment is terminated by the Company or one of its subsidiaries
for Cause or terminates due to the voluntary resignation or withdrawal of the
Optionee, the Company shall have the option of (A) waiving the non-competition
covenant set forth in subparagraph (a) above, or (B) counting the one-year
period during which the non-competition covenant is to be in effect as a year of
employment for purposes of determining the number of Shares that may be acquired
by an exercise of the Option Rights granted pursuant to this Agreement.
(d) Should the Optionee violate the terms of the non-competition
covenant set forth in subparagraph (a), the Company, in addition to any other
remedies available under law, may (i) discontinue any payments being made to the
Optionee pursuant to subparagraph (b) hereof and (ii) terminate Option Rights
with respect to any additional Shares
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Non-Competition
that could have been acquired by the Optionee if the one-year period of the non-
competition covenant was counted as an additional year of employment pursuant to
the terms of subparagraph (c) hereof.
(e) For purposes of this Paragraph 8, termination for "Cause" shall
mean termination of the Optionee's employment with the Company or one of its
subsidiaries due to: (i) material failure or refusal to perform the duties
assigned to the Optionee, (ii) refusal of the Optionee to follow the reasonable
directives of the Board of Directors or Chief Executive Officer of the Company
or one of its subsidiaries, (iii) conviction of a felony, (iv) misappropriation
of any funds or property of the Company or any affiliate of the Company
(including any subsidiary), or (v) commission of any act which could materially
injure the business or reputation of, or materially adversely affect the
interests of Company or any affiliate of the Company (including any subsidiary).
(f) The Optionee acknowledges that his/her services are unique and
extraordinary and are not readily replaceable, and hereby expressly agrees that,
in the event of a violation of the non-competition covenant set forth in
subparagraph (a), the Company and its affiliates (including any subsidiary) will
be irreparably harmed and the remedy of damages or other remedy at law will be
inadequate. Therefore, the Optionee agrees that, in the event of a threatened
or actual violation of the non-competition covenant, the Company shall be
entitled to obtain from any court of competent jurisdiction, an injunction
restraining the Optionee from committing the violation, without the necessity of
proving actual damage and in addition to any other relief available under this
Agreement or at law.
(g) Notwithstanding the foregoing of this Paragraph 8, the payment of
the Optionee's annualized base salary pursuant to subparagraph (b) will cease if
such payment would duplicate continued salary payments provided pursuant to any
prior or subsequent agreement of any kind between the Option and the Company or
one of its subsidiaries.
9. No Right To Continued Employment. This Agreement shall not confer
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upon the Optionee any right to continued employment with the Company or any of
its subsidiaries nor shall it interfere, in any way, with the right of the
Company to modify the Optionee's compensation, duties, and responsibilities, or
the Company's authority to terminate the Optionee's employment.
10. No Rights as a Shareholder. The granting of Option Rights shall
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not confer upon the Optionee any rights as an owner of shares of Common Stock
until the Optionee exercises Option Rights and the Company issues stock
certificate(s) to the Optionee.
11. Withholding. The Company shall have the right to deduct any sums
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that federal, state or local tax laws require to be withheld upon the grant or
exercise of Option
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Non-Competition
Rights. In the alternative, the Committee may require as a condition to either
granting Option Rights or issuing shares of Common Stock that the Optionee (or
other person exercising Option Rights) pay to the Company for deposit with the
appropriate taxing authority, any amounts that federal, state or local tax laws
require to be withheld.
12. Notices. All notices and communications under this Agreement
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shall be in writing and shall be given by personal delivery or by registered or
certified mail, return receipt requested, addressed to the residence of the
Optionee and to the principal office of the Company, or such other address as
may be designated by the Company or the Optionee. Notice shall be deemed given
upon personal delivery or upon receipt.
13. Successors and Assigns. This Agreement shall be binding upon and
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shall inure to the benefit of the successors and assigns of the Company, and the
heirs, successors and assigns of the Optionee.
14. Governing Law. This Agreement shall be construed in accordance
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with the laws of the State of New York. The Optionee agrees to accept as
binding, conclusive and final all decisions and interpretations of the Committee
with respect to any questions that may arise under the Plan and this Agreement.
15. Acknowledgments by Optionee. Optionee acknowledges that he/she
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has been advised, and that he/she understands, that:
(a) Option Rights and any shares issued pursuant to the exercise
of Option Rights have not been registered under the Securities Act of 1933;
(b) the grant of Option Rights and the issuance of any shares
pursuant to the exercise of Option Rights may be subject to, or may become
subject to, applicable reporting, disclosure and holding period restrictions
imposed by Rule 144 under the Securities Act of 1933 ("Rule 144") and Section 16
of the Securities Exchange Act of 1934 ("Section 16");
(c) pursuant to Rule 144, Optionee may have to hold any shares
issued for a period of one year from the option exercise date; and
(d) shares acquired could be subject to Section 16(a) reporting
requirements as well as the short swing trading prohibition contained in Section
16(b) which precludes any profit taking with respect to any stock transactions
which occur within any six-month period. The Optionee further acknowledges
receipt of a copy of the Plan.
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Non-Competition
The Company has caused this Agreement to be executed by its duly
authorized officer, and the Optionee has executed this Agreement, both as of the
day and year first written above.
PAETEC CORP.
By:
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Title:
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OPTIONEE
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Employee
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