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EXHIBIT 4.2
XXXXXXXXX INDUSTRIES, INC.
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is entered into as
of____________, 199__, between Xxxxxxxxx Industries, Inc., a Delaware
corporation (the "Company"), and ____________________ (the "Optionee").
RECITALS
The Company desires to grant, and the Optionee desires to accept, an
option to purchase shares of the Company's common stock, $.001 par value per
share (the "Common Stock"), upon the terms and conditions set forth in this
Agreement.
TERMS OF AGREEMENT
The parties hereto agree as follows:
1. Grant. The Company hereby grants to the Optionee an option
(the "Option") to purchase _________ shares of Common Stock, at a purchase price
per share of $_________. This Option is intended to be treated as an option
which does not qualify as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Restrictions on Exercisability. Except as specifically
provided otherwise herein, the Option will become exercisable in accordance with
the following schedule based upon the period of the Optionee's continuous
employment with the Company or a subsidiary thereof following the date hereof:
Incremental Cumulative
Period of Percentage Percentage of
Continuous of Option Option
Employment Exercisable Exercisable
---------- ----------- -----------
Less than 1
year _____% _____%
1 year _____% _____%
2 years _____% _____%
3 years _____% _____%
No shares of Common Stock may be purchased pursuant to the Option hereunder
unless the Optionee shall have remained in the continuous employ of the Company
or a subsidiary thereof for at least one year from the date hereof. Unless
sooner terminated, the Option will expire if and to the extent it is not
exercised, ten years from the date hereof.
3. Exercise. The Option may be exercised in whole or in part in
accordance with the schedule set forth in Section 2 above by delivering to the
Secretary of the Company (a) a copy of a completed Option Exercise Form (in the
form attached hereto) and (b) payment in full of the exercise price, together
with the amount, if any, deemed necessary by the Company to enable it to satisfy
any income tax withholding obligations with respect to the exercise (unless
other arrangements acceptable to the Company are made for the satisfaction of
such withholding obligations). The exercise price shall be payable (i) in cash
or by check payable to the order of the Company in an amount equal to the
exercise price of the Option, (ii) by delivery of shares of Common Stock owned
by the Optionee having a fair market value equal in amount to the exercise price
of the Option or (iii) any combination of (i) and (ii); provided, however, that
payment of the exercise price by delivery of shares of Common Stock owned by the
Optionee may be made only upon the condition that such payment does not result
in a charge to earnings for
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financial accounting purposes as determined by the Board of Directors of the
Company (the "Board"), unless such condition is waived by the Board.
4. Rights as Stockholder. No shares of Common Stock shall be sold
or delivered pursuant to the Option until full payment for such shares has been
made. The Optionee shall not be deemed for any purpose to be a stockholder of
the Company with respect to the Option except to the extent that the Option
shall have been exercised with respect thereto and, in addition, a stock
certificate shall have been issued theretofore and delivered to the Optionee.
Except as otherwise provided in Section 8 of this Agreement, no adjustment shall
be made for dividends or distributions or other rights for which the record date
is prior to the date such stock certificate is issued.
5. Nontransferability. The Option is not assignable or
transferable other than by will or the laws of descent, and the Option shall be
exercisable during the lifetime of the Optionee only by the Optionee. The Option
hereby granted shall be null and void and without effect upon the bankruptcy of
the Optionee, or upon any attempted assignment or transfer except as herein
provided, including without limitation any purported assignment, whether
voluntary or by operation of law, pledge, hypothecation or other disposition,
attachment, trustee process or similar process, whether legal or equitable, upon
the Option.
6. Termination of Service, Disability or Death. If the Optionee
ceases to perform services for the Company or one of its subsidiaries, except as
set forth below, the Option will be terminated three months after the date the
Optionee ceases to perform services for the Company or one of its subsidiaries,
or on the date on which the Option expires by its terms, whichever occurs first.
If the Optionee ceases to perform services for the Company or one of its
subsidiaries because of dismissal for cause or because the Optionee is in breach
of any employment agreement, or because of the termination of employment by the
Optionee, the Option will terminate on the date the Optionee ceases to perform
services for the Company or one of its subsidiaries. If the Optionee ceases to
perform services for the Company or one of its subsidiaries because the Optionee
has become permanently disabled (within the meaning of Section 22(e)(3) of the
Code), the Option shall terminate twelve months after the date the Optionee
ceases to perform services for the Company or one of its subsidiaries, or on the
date on which the Option expires by its terms, whichever occurs first. In the
event of the death of the Optionee, the Option shall terminate twelve months
after the date of death, or on the date on which the Option expires by its
terms, whichever occurs first. Any unexercised portion of the Option shall
automatically terminate without notice and become null and void subsequent to
ten (10) years from the date of grant hereunder. In the event that the Optionee
ceases to perform services for the Company for any reason set forth above, the
Option shall be exercisable (if at all) only to the extent that the Option has
vested and is in effect on the date the Optionee so ceases to perform services.
7. Securities Registration Required.
a. Unless the shares to be issued upon exercise of the
Option have been effectively registered under the Securities Act of 1933, as
amended (the "1933 Act"), the Company shall be under no obligation to issue any
shares covered by any Option unless the Optionee shall give a written
representation and undertaking to the Company which is satisfactory in form and
scope to counsel for the Company and upon which, in the opinion of such counsel,
the Company may reasonably rely, that the Optionee is acquiring the shares
issued pursuant to such exercise of the Option for his or her own account as an
investment and not with a view to, or for sale in connection with, the
distribution of any such shares, and that he or she will make no transfer of the
same except in compliance with any rules and regulations in force at the time of
such transfer under the 1933 Act, or any other applicable law, and that if
shares are issued without such registration, a legend to this effect may be
endorsed upon the securities so issued. The Option shall in no event be
exercisable and shares shall not be issued hereunder if, in the opinion of
counsel to the Company, such exercise and/or issuance would result in a
violation of federal or state securities laws.
b. Notwithstanding anything to the contrary contained
herein, the Company shall be under no obligation to register or qualify any
shares covered by the Option under federal or state securities laws unless
otherwise agreed to by the Company in writing.
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In the event that the Company shall, nevertheless, deem it necessary or
desirable to register under the 1933 Act or other applicable statutes any shares
with respect to which the Option shall have been exercised, or to qualify any
such shares for exemption from the 1933 Act or other applicable statutes, then
the Company may take such action and may require from each grantee such
information in writing for use in any registration statement, supplementary
registration statement, prospectus, preliminary prospectus or offering circular
as is reasonably necessary for such purpose and may require reasonable indemnity
to the Company and its officers and directors from such holder against all
losses, claims, damages and liabilities arising from such use of the information
so furnished and caused by any untrue statement of any material fact therein or
caused by the omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
8. Change in Control; Capital Changes.
a. In the event that the then-outstanding shares of
Common Stock are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation by reason of
any reorganization, merger, consolidation, recapitalization, reclassification,
stock split-up, combination of shares, or dividends payable in capital stock,
appropriate adjustment shall be made in accordance with Section 424(a) of the
Code in the number and kind of shares as to which the Option or portion thereof
then unexercised shall be exercisable, to the end that the proportionate
interest of the Optionee shall be maintained as before the occurrence of such
event; such adjustment, in the case of options, shall be made without change in
the total price applicable to the unexercised portion of the Option and with a
corresponding adjustment in the exercise price per share.
b. Notwithstanding Section 8(a) above, unless otherwise
determined by the Board in its sole discretion, in the case of any Change in
Control (as hereinafter defined) of the Company, the purchaser(s) of the
Company's assets or stock may, in his, her or its discretion, deliver to the
Optionee the same kind of consideration that is delivered to the stockholders of
the Company as a result of such Change in Control, or the Board may cancel the
Option in exchange for consideration in cash or in kind, which consideration in
both cases shall be equal in value to the value of those shares of stock or
other securities the Optionee would have received had the Option been exercised
and no disposition of the shares acquired upon such exercise been made prior to
such Change in Control, less the exercise price therefor. Upon receipt of such
consideration, the Option shall immediately terminate and be of no further force
and effect. The value of the stock or other securities the Optionee would have
received if the Option had been exercised shall be determined in good faith by
the Board. The foregoing provisions of this Section 8(b) shall be inapplicable
to the Option if it was granted within six (6) months before the occurrence of a
Change in Control and if the Optionee is subject to the reporting requirements
of Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and no exemption from liability under Section 16(b) of the
Exchange Act is otherwise available to the Optionee.
c. In the event of a Change in Control under subsection
(e)(i), (e)(ii) or (e)(iii) below, the Option shall immediately become
exercisable. In the event of a Change in Control under subsection (e)(iv) below,
the Board may, in its sole discretion, elect to accelerate the exercisability of
the Option.
d. Notwithstanding any provisions hereof to the
contrary, if the Option is accelerated under subsection (c) above, the portion
of the Option that may be exercised to acquire shares that the Optionee would
not be entitled to acquire but for such acceleration (the "Acceleration
Shares"), shall be limited to that number of Acceleration Shares which may be
acquired without causing the Optionee to be deemed to have received an "excess
parachute payment, " as defined in Section 280G of the Code, determined by
taking into account all other "parachute payments" to the Optionee within the
meaning of Section 280G of the Code. The Optionee shall have no further right to
acquire the balance of the Acceleration Shares which may not be acquired by
reason of the limitation set forth in this Section 8(d).
e. A "Change in Control" shall mean:
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(i) (x) a reorganization, merger, consolidation or
other form of corporate transaction or series of transactions, in each
case, with respect to which persons who were the stockholders of the
Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own
more than fifty percent (50%) of the combined voting power entitled to
vote generally in the election of directors of the reorganized, merged
or consolidated company's then outstanding voting securities, or (y) a
liquidation or dissolution of the Company or (z) the sale, lease,
exchange or other disposition of all or substantially all of the assets
of the Company; or
(ii) the acquisition by any person, or any two or
more persons acting as a group, and all affiliates of such person or
persons, who prior to such time owned less than fifty percent (50%) of
the combined voting power entitled to vote generally in the election of
directors, of additional voting power in one or more transactions, or
series of transactions, such that following such transaction or
transactions, such person or group and affiliates beneficially own
fifty percent (50%) or more of the combined voting power entitled to
vote generally in the election of directors; or
(iii) individuals who, as of the date hereof,
constitute the Company's Board (as of the date hereof the "Incumbent
Board") cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election
or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to
the election of the Directors of the Company, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall
be, for purposes of this Agreement, considered as though such person
were a member of the Incumbent Board; or
(iv) the acquisition (other than from the Company or
its subsidiaries) by any person, entity or "group," within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act (excluding, for
this purpose, the Company or its subsidiaries, or any employee benefit
plan of the Company or its subsidiaries), of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 19% or more of either the then outstanding shares of the Company's
Common Stock or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally in the
election of directors.
f. No fraction of a share shall be purchasable or
deliverable upon the exercise of the Option, but in the event any adjustment
hereunder in the number of shares covered by the Option shall cause such number
to include a fraction of a share, such fraction shall be adjusted to the nearest
smaller whole number of shares.
9. No Employment Rights. Nothing in this Agreement shall confer
upon the Optionee any right with respect to the continuation of his or her
employment by the Company or any subsidiary or interfere in any way with the
right of the Company or any subsidiary, subject to the terms of any separate
employment agreement to the contrary, at any time to terminate such employment
or to increase or decrease the compensation of the Optionee from the rate in
existence at the time of the grant of the Option.
10. Miscellaneous.
a. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
b. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware. This Agreement constitutes
the entire agreement between the parties with respect to the subject matter
hereof, and controls and supersedes any prior understandings, agreements or
representations by or between the parties, written
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or oral between the parties with respect to its subject matter and may not be
modified except by written instrument executed by the parties.
c. Any notice under this Agreement shall be in writing
and shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Company, to the Company's Secretary at 0000 Xxxxxxxxxxxxx
Xxxxxxx, Xxxxxxx, Xxxxxxx 00000, or if the Company should move its principal
office, to such principal office, and, in the case of the Optionee, to the
Optionee's last permanent address as shown on the Company's records, subject to
the right of either party to designate some other address at any time hereafter
in a notice satisfying the requirements of this Section 10(c).
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
XXXXXXXXX INDUSTRIES, INC.
By:
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Zivi X. Xxxxxx
President and Chief Executive Officer
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Optionee:
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XXXXXXXXX INDUSTRIES, INC.
OPTION EXERCISE FORM
I hereby exercise the right to purchase _______________ shares of
common stock, $.001 par value per share, of Xxxxxxxxx Industries, Inc. pursuant
to the option granted to me as of _______________, 1999. Enclosed herewith is
$_____________, an amount equal to the total exercise price for the shares of
common stock being purchased pursuant to this Option Exercise Form.
Date:
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Optionee
Please send a completed copy of this Option Exercise Form to:
Xxxxxxx Xxxxxx, Secretary
Xxxxxxxxx Industries, Inc.
0000 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000