Option Agreement - Atlantic Investors LLC and Denis Martin
OPTION AGREEMENT
This Option Agreement (the "Agreement") is entered into as of
August 21, 2003, by and between Atlantic Investors LLC, a Delaware limited
liability company (the "Grantor") and Mr. Denis Martin (the "Option Holder").
WHEREAS, the Option Holder wishes to acquire and the Grantor
wishes to grant an option to purchase 170,898 shares (the "NaviSite Shares") of
Common Stock, par value $0.01 per share, of NaviSite, Inc., a Delaware
corporation ("NaviSite"), owned by the Grantor, on the terms and conditions
herein set forth.
NOW, THEREFORE, in consideration of the premises, and for the
consideration herein set forth the receipt of which is hereby acknowledged, the
parties hereby agree as follows:
Section 1 Grant of Options.
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1.1 Subject to and upon the terms and conditions set forth in
this Agreement, the Grantor hereby grants to the Option Holder an exclusive
irrevocable option (the "Option") to purchase the NaviSite Shares, at an
exercise price of $2.27 per share (the "Exercise Price").
1.2 The Option shall have a term of ten (10) years, measured
from August 21, 2003, and shall accordingly expire at the close of business on
August 21, 2013 (the "Expiration Date").
Section 2 Manner of Exercising Options.
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2.1 The Option Holder may exercise the Option with respect to
all or a portion of the NaviSite Shares at any time from time to time on or
before the Expiration Date. In order to exercise the Option, the Option Holder
shall execute and deliver to the Grantor a duly completed Notice of Exercise in
the form attached hereto as Exhibit I at any time prior to the Expiration Date.
3 Action Upon Delivery of Notice of Exercise. Upon the
delivery by the Option Holder of a Notice of Exercise as provided in Section 2.1
hereof, the Grantor will, as promptly as possible, cooperate, take all action
and execute all documents and instruments necessary or desirable to effect the
transfer of the requisite NaviSite Shares to the Option Holder as contemplated
by this Agreement.
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Section 3 Adjustments.
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3.1 ADJUSTMENT OF EXERCISE PRICE AND NAVISITE SHARES. The
number of NaviSite Shares issuable upon exercise of the Option and the Exercise
Price are subject to adjustment upon occurrence of the following events prior to
the Expiration Date:
(a) ADJUSTMENT FOR STOCK SPLITS, STOCK SUBDIVISIONS OR COMBINATIONS OF
NAVISITE SHARES. The Exercise Price shall be proportionally decreased and the
number of NaviSite Shares issuable upon exercise of the Option shall be
proportionally increased to reflect any stock split or subdivision of the Common
Stock of NaviSite. The Exercise Price shall be proportionally increased and the
number of NaviSite Shares issuable upon exercise of the Option shall be
proportionally decreased to reflect any combination of the Common Stock of
NaviSite.
(b) ADJUSTMENT FOR DIVIDENDS OR DISTRIBUTIONS OF STOCK OR OTHER PROPERTY
WITH RESPECT TO NAVISITE SHARES. In case NaviSite shall make or issue, or shall
fix a record date for the determination of eligible holders entitled to receive,
a dividend or other distribution with respect to the NaviSite Shares, payable in
(a) securities of NaviSite or (b) assets (excluding cash dividends paid or
payable solely out of retained earnings), then, in each such case, the Option
Holder on exercise hereof at any time after the consummation, effective date or
record date of such dividend or other distribution, shall receive, in addition
to the NaviSite Shares issuable on such exercise prior to such date, and without
the payment of additional consideration therefor, the securities or such other
assets of NaviSite to which such Option Holder would have been entitled upon
such date if such Option Holder had exercised the Option on the date hereof and
had thereafter, during the period from the date hereof to and including the date
of such exercise, retained such shares and/or all other additional stock
available by it as aforesaid during such period giving effect to all adjustments
called for by this Section 3.
(c) RECLASSIFICATION OF NAVISITE SHARES. If NaviSite, by reclassification
of securities or otherwise, shall change the NaviSite Shares into the same or a
different number of securities of any other class or classes, the Option shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
NaviSite Shares exercisable under the Option immediately prior to such
reclassification or other change and the Exercise Price therefore shall be
appropriately adjusted, all subject to further adjustment as provided in this
Section 3.
(d) ADJUSTMENT FOR CAPITAL REORGANIZATION, MERGER OR CONSOLIDATION OF
NAVISITE. In case of any capital reorganization of the common stock of NaviSite
(other than a combination, reclassification, exchange or subdivision of shares
otherwise provided for herein), or any merger or consolidation of NaviSite with
or into another corporation, or the sale of all or substantially all of the
assets of NaviSite then, and in each such case, the Option Holder shall
thereafter be entitled to receive upon exercise of the Option, during the period
specified herein and upon payment of the Exercise Price then in effect, the
number of shares of stock or other securities or property of the successor
corporation resulting from such reorganization, merger, consolidation, sale or
transfer that a holder of the shares of NaviSite common stock deliverable upon
exercise of the Option would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if the Option had been
exercised immediately before such reorganization, merger, consolidation, sale or
transfer, all subject to further adjustment as provided in this Section 3. The
foregoing provisions of this Section 3.1(d) shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the stock
or securities of any other corporation that are at the time receivable upon the
exercise of the Option. If the per-share consideration payable to the Option
Holder hereof for shares in connection with any such transaction is in a form
other than cash or marketable securities, then the value of such consideration
shall be determined in good faith by the Managing Members of the Grantor. In all
events, appropriate adjustment (as determined in good faith by the Grantor's
Managing Members) shall be made in the application of the provisions of the
Option with respect to the rights and interests of the Option Holder after the
transaction, to the end that the provisions of this Option Agreement shall be
applicable after that event, as near as reasonably may be, in relation to any
shares or other property deliverable after the event upon exercise of the
Option.
Section 4 Closing.
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4.1 TIME, PLACE, AND MANNER OF CLOSING. Upon exercise by the
Option Holder of the Option, the closing of the transaction contemplated hereby
(the "Closing") will be held at the offices of the Grantor, or such other place
as the parties may agree, within ten (10) days of the receipt by the Grantor of
the Notice of Exercise. At the Closing, the Grantor shall deliver to the Option
Holder certificate(s) representing the number of shares of Common Stock of
NaviSite issuable upon such exercise against payment of an amount equal to the
product obtained by multiplying the number of shares of Common Stock of NaviSite
being purchased upon such exercise by the then effective Exercise Price ("the
"Exercise Amount") in immediately available funds. In case of any partial
exercise of the Option, the Grantor and the Option Holder shall cancel this
Agreement and shall execute a new Option Agreement of like tenor and date for
the balance of the shares of Common Stock of NaviSite purchasable hereunder.
[Notwithstanding the foregoing, the Option Holder shall have the right to elect
to pay the Exercise Amount through a cashless exercise (i.e. the number of
shares of NaviSite Common Stock to be received by the Option Holder will be
equal to the number of shares of NaviSite Common Stock exercised by the Option
Holder less the number of shares of NaviSite Common Stock with a fair market
value as of the date of exercise equal to the Exercise Amount.
Section 5 Miscellaneous Provisions.
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5.1. OWNERSHIP; TRANSFERABILITY. Grantor is the legal and
beneficial owner of the NaviSite Shares underlying the Option, free and clear of
any security interest, mortgage, pledge, encumbrance, lien or restriction on
transfer, other than restrictions (i) under the Act, and (ii) reflected in a
legend on the certificate(s) representing the NaviSite Shares and has authorized
and reserved such NaviSite Shares for issuance upon the exercise of the Option.
5.2 AMENDMENT AND MODIFICATION. Subject to applicable law,
this Agreement may be amended, modified or supplemented only by a written
agreement signed by the Option Holder and the Grantor.
5.3 NOTICES. Any notice provided for in this Agreement shall
be in writing and shall be either personally delivered, mailed by certified mail
(postage prepaid and return receipt requested), sent by reputable overnight
courier service (charges prepaid) or transmitted by facsimile to each party at
the address set forth below. Notices shall be deemed to have been given
hereunder when delivered personally or by facsimile, three (3) calendar days
after deposit in the U.S. mail and one (1) calendar day after deposit with a
reputable overnight courier service.
If to the Option Holder to:
Denis Martin
95 Woodward Avenue
Narragansett, RI 02882
Facsimile: (401) 782-9017
or to such other person or address as the Option Holder furnishes to the Grantor
pursuant to the above.
If to the Grantor to:
c/o Madison Technology LLC
20 East 66th Street, 2nd Floor
New York, New York 10021
Attention: Arthur Becker
Facsimile: (212) 396-2388
with a copy to:
Heller Ehrman White & McAuliffe LLP
120 West 45th Street
New York, New York 10036
Attention: Guy N. Molinari, Esq.
Facsimile: (212) 763-7600
or to such other address as the Grantor furnishes to the Option Holder
pursuant to the above.
5.4 ENTIRE AGREEMENT. This Agreement contains the entire
understanding between and among the parties and supersedes any prior
understandings and agreements among them respecting the subject matter of
this Agreement.
5.5 AGREEMENT BINDING. This Agreement shall be binding
upon the heirs, executors, administrators, successors and assigns of the parties
hereto.
5.6 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to the conflict of laws provisions thereof.
5.7 FURTHER ACTION. The parties hereto shall execute and
deliver all documents, provide all information and take or forbear from all such
action as may be necessary or appropriate to achieve the purposes of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Option
Agreement to be duly executed and delivered as of the date first above written.
ATLANTIC INVESTORS LLC
By: Madison Technology LLC, its
Managing Member
By: ______________________________
Name: Arthur Becker
Title: Managing Member
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DENIS MARTIN
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Exhibit I
NOTICE OF EXERCISE
The undersigned hereby irrevocably elects to exercise the
option to purchase ____ shares of NaviSite Common Stock, pursuant to Section 2.1
of that certain Option Agreement, dated as of __________, 2003, between Atlantic
Investors LLC and Mr. Denis Martin (the "Option Agreement"). The undersigned
shall deliver the Exercise Amount to Atlantic Investors LLC at the Closing which
shall take place no later than ten (10) days after the date of this Notice of
Exercise. All capitalized terms not defined in this Notice of Exercise have the
meanings set forth in the Option Agreement.
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DENIS MARTIN