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EXHIBIT 10.03
OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered
into as of __________ ____, 1998, by and among ________________ ("Stockholder"),
XXXXXXxx.xxx, Inc. ("NYSERNet") and IXC Internet Services, Inc., a Delaware
corporation ("IXC"), and Grumman Hill Investments III, L.P. ("Grumman Hill" or
"GHI", and together with IXC, "Purchasers").
A. Pursuant to that certain Stock Purchase Agreement of even date
herewith by and among AppliedTheory Communications, Inc., a New York corporation
("ATC"), IXC, Grumman Hill, NYSERNet and certain stockholders (including
Stockholder) of ATC (the "Stock Purchase Agreement"), Purchasers are purchasing
certain shares of common stock of ATC.
B. The parties hereto hereby acknowledge that none of them would be
willing to enter into the transactions contemplated by the Stock Purchase
Agreement without the execution and delivery of this Agreement at the closing of
the transactions contemplated by the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements, covenants, representations, warranties and promises set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE PUT OPTION
SECTION 1.1 THE PUT OPTION. During the Initial Option Period defined
below, the Stockholder shall have the option (the "Put Option"), in
Stockholder's own discretion, to sell _____ shares of Common stock of ATC held
by Stockholder (the "Stock"), either directly or through one or more trusts
established for the benefit of himself or family members, for the Purchase Price
defined below to Purchasers (two-thirds to IXC, one-third to Grumman Hill). This
option cannot be revoked by Purchasers without the consent of Stockholder.
SECTION 1.2 INITIAL OPTION PERIOD. The "Initial Option Period" shall
begin on the thirteen month anniversary of the execution of this Agreement and
shall end on the twenty-sixth month anniversary of the execution of this
agreement.
SECTION 1.3 PURCHASE PRICE. The "Purchase Price" shall be $22.0290
per share.
SECTION 1.4 EXERCISE OF PUT OPTION. Stockholder may exercise the Put
Option in whole or in part on one or more occasions during the Initial Period by
written notice to Purchasers at the address set forth in the Stock Option
Agreement. On or before
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20 business days from the date of such notice, each Purchaser shall pay the
Stockholder for the Stock, with such Purchaser paying a pro-rata share of the
Purchase Price in (two-thirds IXC, one-third Grumman Hill). The date of such
payment is referred to as the "Put Option Closing". Stockholder agrees that,
upon such payment, without further action on Stockholder's part, IXC will become
the sole legal and beneficial owner of two-thirds of the shares of Stock and
Grumman Hill will become the sole legal and beneficial owner of one-third of the
shares of Stock. Stockholder covenants to sell and transfer to Purchasers all
right, title and interest in and to the Stock, free and clear of all liens,
claims, charges, encumbrances, restrictions, liabilities, obligations, rights or
interests of others of any kind. From and after the receipt of payment by
Stockholder as set forth above, Stockholder shall cease to have any rights with
respect to the Stock.
THE CALL OPTION
THE CALL OPTION. During the Subsequent Option Period defined below, Purchasers
shall have the option (the "Call Option"), in their discretion, to purchase the
Stock held by the Stockholder for the Purchase Price per share. This Call Option
can be separately exercised, in whole or in part, by IXC as to two-thirds of the
shares of Stock and by Grumman Hill as to one-third of the shares of Stock. This
option cannot be revoked by Stockholder.
SECTION 1.5 SUBSEQUENT OPTION PERIOD. The "Subsequent Option Period"
shall begin on the first day of the twenty-seventh month from the date this
Agreement is executed and shall end on the last day of the thirty-sixth month
from the execution date of this Agreement.
SECTION 1.6 EXERCISE OF CALL OPTION. Either Purchaser may exercise
its Call Option by written notice to Stockholder at the address set forth in the
Stock Purchase Agreement. On or before 10 business days from the date of such
notice, such Purchaser shall pay the Stockholder for the Stock. The date of such
payment is referred to as a "Call Option Closing." Stockholder agrees that, upon
such payment, without further action on Stockholder's part, such Purchaser, will
become the sole legal and beneficial owner of the Stock purchased. Stockholder
covenants to sell and transfer to such Purchaser all right, title and interest
in and to the Stock, free and clear of all liens, claims, charges, encumbrances,
restrictions, liabilities, obligations, rights or interests of others of any
kind. From and after the receipt of payment as set forth above, Stockholder
shall cease to have any rights with respect to the Stock.
CREATION OF ESCROW ACCOUNT
SECTION 1.7 DELIVERY OF STOCK TO ESCROW AGENT. Stockholder shall,
within ninety days of the date hereof, deliver to _______________ (the "Escrow
Agent") a certificate representing the shares of Stock subject to the Put Option
and the Call Option. Such certificate shall be properly endorsed for transfer or
accompanied by a stock power duly endorsed for transfer. Stockholder may, from
time to time, substitute
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certificates representing an equivalent number of shares of the Stock with the
endorsement or stock powers referred to above in substitution of the
certificates then held in escrow pursuant to this Agreement.
SECTION 1.8 RELEASE OF STOCK BY ESCROW AGENT. At any Put Option
Closing or Call Option Closing, the Escrow Agent shall deliver to the
Purchasers, free from any lien or encumbrance, a certificate representing the
shares of Stock to which the Put Option or Call Option pertained and for which
the Purchase Price was delivered to the Stockholder. At the expiration of the
Subsequent Option Period, a certificate representing the shares of Stock, if
any, not previously delivered to the Purchasers by the Escrow Agent under the
terms of this Agreement shall be delivered by the Escrow Agent to the
Stockholder, together with any corresponding stock power.
SECTION 1.9 ADJUSTMENT IN OPTIONS. In the event that the outstanding
shares of the Stock subject to either the Put Option or the Call Option are
changed into or exchanged for a different number or kind of shares of ATC or
other securities of ATC by reason of merger, consolidation, recapitalization,
reclassification, stock split, stock dividend or combination or shares,
Stockholder and the Escrow Agent shall make an appropriate and equitable
adjustment in the number and kind of shares as to which the Put Option or Call
Option apply.
ADDITIONAL AGREEMENTS
SECTION 1.10 ASSIGNMENT. This Agreement shall not be assigned by any
party without the other parties' prior written consent. Notwithstanding the
foregoing, this Agreement may be assigned without prior written notice or
consent by IXC to Grumman Hill or GHI to IXC or to any Affiliate of IXC or
Grumman Hill or entity which merges with or into IXC or Grumman Hill or acquires
substantially all the assets of IXC or GHI, so long as the consideration to be
received by Stockholder shall not be different from that contemplated hereunder.
SECTION 1.11 NOTICES. All notices, demands and other communications
which may or are required to be given hereunder or with respect hereto shall be
in writing, shall be given either by personal delivery or by nationally
recognized overnight courier or by telecopier, and shall be deemed to have been
given or made when personally delivered, one business day after delivered to a
nationally recognized overnight courier, postage prepaid and receipt requested,
or one business day after transmission by telecopier, receipt confirmed,
addressed as set forth in the Stock Purchase Agreement.
SECTION 1.12 ENTIRE AGREEMENT. This Agreement, together with the
Stock Purchase Agreement and the related agreements in substantially the form of
the exhibits to the Stock Purchase Agreement, constitutes the entire agreement
between the parties and supersedes and cancels any and all prior agreements
between the parties relating to the subject matter hereof.
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SECTION 1.13 RULES OF CONSTRUCTION. This Agreement shall be
construed as follows:
(a) Except as otherwise defined in this Agreement, words shall be
given their commonly understood meaning in agreements of this nature,
except that accounting terms shall be given the meaning ascribed thereto
by generally accepted accounting principles and interpretations;
(b) This Agreement has been negotiated on behalf of the parties
hereto with the advice of counsel and no general rule of contract
construction requiring an agreement to be more stringently construed
against the drafter or proponent of any particular provision shall be
applied in construction of this Agreement;
(c) The captions of Articles and Sections hereof are for convenience
only and shall not control or affect the meaning or construction of any of
the provisions of this Agreement;
(d) Throughout this Agreement, the masculine, feminine or neuter
genders shall be deemed to include the masculine, feminine and neuter, and
the singular and plural, and vice versa; and
(e) All of the exhibits and schedules attached hereto are
incorporated herein and made a part of this Agreement by reference
thereto.
SECTION 1.14 LAW GOVERNING. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York, but
not including the choice of law rules thereof.
SECTION 1.15 WAIVER OF PROVISIONS. The terms, covenants,
representations, warranties or conditions of this Agreement may be waived only
by a written instrument executed by the party waiving compliance. The failure of
any party at any time or times to require performance of any provision hereof
shall in no manner affect the right at a later time to enforce the same. No
waiver by any party of any condition, or the breach of any provision, term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or of the
breach of any other provision, term, covenant, representation or warranty of
this Agreement. The representations and warranties of ATC and the Stockholder
contained in this Agreement or in any certificate or other document delivered
pursuant hereto or in connection herewith prior to or at the Closing shall not
be deemed waived or otherwise amended or modified by any investigation made by
any party hereto.
SECTION 1.16 SUCCESSORS. All of the terms and conditions of this
Agreement shall be binding upon and inure to the benefit of the successors and
permitted assigns of Purchasers and Stockholder. For the purpose of this
Agreement, the term "successors" shall include but not be limited to heirs,
legatees, and devisees.
SECTION 1.17 COUNTERPARTS. This Agreement may be executed in several
counterparts, and all so executed shall constitute one agreement, binding on all
of the parties hereto, notwithstanding that all parties are not signatory to the
original or the same counterpart.
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SECTION 1.18 SEVERABILITY. In the event that any provision in this
Agreement be held invalid or unenforceable, by a court of competent
jurisdiction, such provision shall be severable from, and such invalidity or
unenforceability shall not be construed to have any effect on, the remaining
provisions of this Agreement, unless such provision goes to the essence of this
Agreement in which case the entire Agreement may be declared invalid and not
binding upon any of the parties.
SECTION 1.19 COSTS AND EXPENSES. Each party shall pay all attorney
fee's, accountant's fees and expenses incurred by it in connection with the
proposed transaction. No party will retain any broker, finder or similar
intermediary in connection with the proposed transaction and each party will
indemnify the other parties from any commissions, finder's fees or similar
obligations incurred by such party.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day, month and year first above written.
IXC INTERNET SERVICES, INC.
By:________________________________________
Name:______________________________________
Title:_____________________________________
GRUMMAN HILL INVESTMENTS III, L.P.
By:________________________________________
Name:______________________________________
Title:_____________________________________
XXXXXXxx.xxx, INC.
By:________________________________________
Name:______________________________________
Title:_____________________________________
STOCKHOLDER:
___________________________________________
Name:____________________
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