Exhibit
10.4


 


STOCK
OPTION AGREEMENT


 


STOCK
OPTION AGREEMENT
(“Agreement”) effective as of September 10, 2003 (“Grant Date”), by and
between AboveNet, Inc. (the “Company”) and Michael A.
Doris (the “Optionee”).


 


WHEREAS, by order dated and entered August 21,
2003, the Honorable Adlai S. Hardin, Jr., United States Bankruptcy Judge,
United States Bankruptcy Court for the Southern District of New York (the
“Bankruptcy Court”) confirmed the Second Amended Plan of Reorganization of
Metromedia Fiber Network, Inc. et  al. dated July 1,
2003, as amended (the “Plan of Reorganization”);


 


WHERES, the Company emerged from proceedings
under Chapter 11 of the Bankruptcy Code on the date hereof;


 


WHEREAS, in accordance with the Plan of
Reorganization, the Company was authorized to implement the AboveNet, Inc.
Management Incentive Plan (the “Plan”);


 


WHEREAS, in accordance with the Plan of
Reorganization, the Company was authorized and directed to grant to the
Participant an option to purchase 16,500 shares
of common stock of the Company at an exercise price of $20.95 subject to vesting and other terms
and conditions set forth herein as an incentive for the Optionee to advance the
interests of the Company; and


 


WHEREAS, the Bankruptcy Court has approved the
Plan and the grant of options to certain officers of the Company, including the
Optionee, set forth on Exhibit A to the Plan; and


 


WHEREAS, the Optionee and the Company have
executed an employment agreement which sets forth the terms of the option,
including the number of shares underlying such option, to be granted to the
Optionee by the Company.


 


NOW, THEREFORE, the parties agree as follows:


 


1.             Grant of Option.


 


(a)           Pursuant to the Plan, a copy of which is
attached hereto, and subject to the terms and conditions set forth herein and
therein, the Company hereby grants to the Optionee the right and option (the
“Option”) to purchase all or any part of 16,500
shares (the “Option Shares”) of the Company’s common stock, $.01 par
value per share (the “Common Stock”).


 


(b)           The Option is intended to qualify as an
incentive stock option, as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”), to the maximum extent permitted by such
Section 422.


 

















 


2.             Exercise Price.


 


The purchase price (the
“Exercise Price”) of the Option Shares shall be $20.95 per share.


 


3.             Time of Exercise; Term.


 


(a)           Subject to acceleration as expressly
provided in Paragraph 6 hereof, the Option shall vest and become exercisable,
on a cumulative basis, as to one-third of the Option Shares on the first
anniversary of the Grant Date, an additional one-third of the Option Shares on
the second anniversary of the Grant Date and the remaining one-third of the
Option Shares on the third anniversary of the Grant Date.


 


(b)           Subject to earlier expiration as
expressly provided in Paragraph 6 hereof, the Option shall expire and cease to
have any force or effect on the end of the day immediately preceding the tenth
anniversary of the Grant Date (the “Scheduled Expiration Date”).


 


4.             Adjustment Upon Changes in
Capitalization.


 


(a)           The aggregate number of Option Shares and
the Exercise Price shall be proportionately adjusted by the Board or the
Compensation Committee of the Board (the “Committee”) for any increase or
decrease in the number of issued shares of Common Stock resulting from a
subdivision or consolidation of shares or other capital adjustment, or the
payment of a stock dividend or other increase or decrease in such shares,
effected without receipt of consideration by the Company, or other change in
corporate or capital structure. The Board or the Committee may also make the
foregoing changes and any other changes, including changes in the classes of
securities available, to the extent it is deemed necessary or desirable to
preserve the intended benefits of the Plan for the Company and the Optionee in
the event of any other reorganization, recapitalization, merger, consolidation,
spin-off, extraordinary dividend or other distribution or similar transaction.
To the extent the Option is an incentive stock option, any such adjustments to
the Option must meet the requirements of Code Section 424(a).


 


(b)           Any adjustment under this Paragraph 4 in
the number of Option Shares shall apply proportionately to only the unexercised
portion of the Option. If fractions of a share would result from any such
adjustment, the adjustment shall be revised to the next lower whole number of
shares.


 


5.             Method of Exercising Option and
Withholding.


 


(a)           The Option shall be exercised, in whole,
or from time to time in part, by the delivery of a written notice of exercise
by the Optionee to the Company at its principal office (or at such other
address as may be established by the Board or the Committee) stating the number
of Option Shares as to which the Option is being exercised, accompanied by
payment in full of the aggregate Exercise Price for such Option Shares. Payment
for such Option Shares shall be made (i) in U.S. dollars by cash, personal
check, bank draft or money order payable to the order of the Company, by money
transfers or direct account debits; (ii) through the delivery or deemed
delivery based on attestation to the ownership of Mature Shares


 


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(as defined in the Plan)
with a Fair Market Value (as defined in the Plan) at least equal to the total
payment due; (iii) pursuant to a broker-assisted “cashless exercise”
program if established by the Company; or (iv) by a combination of the
methods described in clauses (i) through (iii) above.


 


(b)           The Company’s obligation to deliver
shares of Common Stock upon the exercise of the Option shall be subject to the
payment by the Optionee of any applicable federal, state and local withholding
tax. The Company shall, to the extent permitted by law, have the right to deduct
from any payment of any kind otherwise due to the Optionee any federal, state
or local taxes required to be withheld with respect to the exercise of the
Option. Subject to the right of the Board or the Committee to disapprove any
such election and require the withholding tax in cash, the Optionee shall have
the right to elect to pay the withholding tax with shares of Common Stock to be
received upon exercise of the Option or which are otherwise owned by the
Optionee. Any election to pay withholding taxes with stock shall be irrevocable
once made.


 


6.             Termination of Employment; Change in
Control.


 


(a)           In the event of the Optionee’s death
prior to the end of the Term (as defined in the employment agreement between
the Optionee and the Company, effective as of the Grant Date, or in any
successor agreement to such employment agreement (the “Employment Agreement”)),
the unvested and unexercisable portion of the Option shall immediately vest and
become exercisable. The Option shall remain exercisable until the earlier of:
(i) end of the day on the third anniversary of the Optionee’s death or
(ii) the Scheduled Expiration Date; provided, however, if
the Optionee’s death occurs upon or after a Change in Control (as defined in
the Plan), the portion of the Option which was exercisable at the time of the
Change in Control or became exercisable upon the Change in Control shall remain
exercisable until the Scheduled Expiration Date.


 


(b)           Upon the termination of Optionee’s
employment with the Company prior to the end of the Term as a result of a
Disability (as defined in the Employment Agreement), the unvested and
unexercisable portion of the Option shall immediately vest and become
exercisable. The Option shall remain exercisable until the earlier of:
(i) the end of the day on the third anniversary of the termination of the
Optionee’s employment or (ii) the Scheduled Expiration Date; provided,
however, if the termination of the Optionee’s employment occurs upon or
after a Change in Control, the portion of the Option which was exercisable at
the time of the Change in Control or became exercisable upon the Change in
Control shall remain exercisable until the Scheduled Expiration Date.


 


(c)           In the event of the termination of the
Optionee’s employment by the Company for “Cause” or by the Optionee without
“Good Reason” (as each such term is defined in the Employment Agreement) before
the end of the Term, the unvested and unexercisable portion of the Option shall
immediately be forfeited. The vested and exercisable portion of the Option may
be exercised within ninety (90) days of such termination, and shall thereafter
be forfeited.


 


(d)           Upon the termination of the Optionee’s
employment by the Company without Cause or by the Optionee for Good Reason, the
unvested and unexercisable


 


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portion of the Option
shall immediately vest and become exercisable. The Option shall remain
exercisable until the earlier of: (i) end of the day of the third
anniversary of the termination of the Optionee’s employment or
(ii) Scheduled Expiration Date; provided, however, if the
termination of the Optionee’s employment occurs upon or after a Change in
Control (as defined in the Plan), the portion of the Option which was
exercisable at the time of the Change in Control or became exercisable upon the
Change in Control shall remain exercisable until the Scheduled Expiration Date.


 


(e)           In the event of a Change in Control
during the Term, 50% of the unvested and unexercisable portion of the Option
shall immediately vest and become exercisable, and the aggregate vested and
exercisable portion of the Option shall remain exercisable until the Scheduled
Expiration Date. For the remaining unvested and unexercisable portion of the
Option: (i) if, following the Change in Control, Common Stock continues to
be publicly traded (for example, a merger where the Company is the surviving
entity), the unvested and unexercisable portion of the Option shall continue to
vest and become exercisable as set forth in subparagraph (a) of Paragraph
3 of this Agreement; (ii) if, following the Change in Control, Common
Stock does not continue to be publicly traded (for example, in a merger whereby
the other party is the surviving entity), then, (A) if the transaction is
a stock transaction, the unvested and unexercisable portion of the Option shall
continue to vest and become exercisable as set forth in subparagraph
(a) of Paragraph 3 of this Agreement and shall be converted into an option
to purchase the acquirer’s stock according to the exchange ratio set forth in
the transaction, or (B) if the transaction is a cash transaction, the
unvested and unexercisable portion of the Option shall continue to vest and
become exercisable as set forth in subparagraph (a) of Paragraph 3 of this
Agreement, but upon becoming exercisable, when the Optionee seeks to exercise
the Option, the Company shall pay the Optionee the corresponding cash value
equal to the excess of: (x) the value per share paid in the cash
transaction, minus (y) the Exercise Price of the Option.


 


(f)          In the event of the termination of the
Optionee’s employment for any reason after the end of the Term, the unvested
and un-exercisable portion of the Option shall immediately be forfeited. The
vested and exercisable portion of the Option shall remain exercisable until the
earlier of: (i) end of the day of the third anniversary on the termination
of the Optionee’s employment or (ii) the Scheduled Expiration Date; provided,
however, if the termination of the Optionee’s employment occurs upon or
after a Change in Control (as defined in the Plan), the portion of the Option
which was exercisable at the time of the Change in Control or became
exercisable upon the Change in Control shall remain exercisable until the
Scheduled Expiration Date.


 


7.             Transfer of Option; Limitations on
Issuance of Option Shares.


 


(a)           The Option is not transferable otherwise
than by will or the laws of descent and distribution, and the Option may be
exercised during the Optionee’s lifetime only by the Optionee. Any attempt to
transfer the Option in contravention of this subparagraph (a) is void ab
initio. The Option shall not be subject to execution, attachment or other
process.


 


(b)           Notwithstanding anything herein to
the contrary, the Option shall not be exercisable and the Company shall not be
required to issue or sell any Option Shares


 


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unless, at the time of
exercise, (i) a registration statement under the 1933 Act relating to the
Option Shares has been filed with, and declared effective by, the Securities
and Exchange Commission, and no stop order suspending the effectiveness of such
registration statement has been issued by the Securities and Exchange
Commission or (ii) the issuance of the Options Shares is, in the opinion
of counsel to the Company, permitted pursuant to an exemption from the
registration requirements of the 1933 Act.


 


8.             No Rights in Option Shares.


 


The Optionee shall have
none of the rights of a shareholder with respect to the Option Shares unless
and until issued to him upon exercise of the Option.


 


9.             No Right to Employment.


 


Nothing contained herein
shall be deemed to confer upon the Optionee any right to remain as an employee
of the Company. The Company reserves the right to dismiss Optionee free from
any liability, or any claim under the Plan, except as specifically provided in
this Agreement.


 


10.          Governing Law/jurisdiction.


 


This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without reference to principles of conflict of laws.


 


11.          Miscellaneous.


 


This Agreement cannot be
changed or terminated orally. This Agreement and the Plan contain the entire
agreement between the parties relating to the subject matter hereof. The
paragraph headings herein are intended for reference only and shall not affect
the interpretation hereof.


 


IN
WITNESS WHEREOF, the
parties have executed this Agreement as of the day and year first above
written.


 


	
   

  	
  /s/ Michael A. Doris

  	 

	
   

  	
  Michael
  A. Doris 

  	 

	
   

  	
  Optionee

  	 

	 
	
   

  	
   

  
	 
	
   

  	
   

  
	 
	
   

  	
  ABOVENET,
  INC.

  
	
   

  	
  By:

  	
  /s/ Hadley Feldman

  	 

	
   

  	
   

  	
  Name:

  	
  Hadley Feldman

  	 

	
   

  	
   

  	
  Title:

  	
  VP Legal Affairs

  	 

							



 


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