Exhibit No 4.2
Media Services Group, Inc.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (the "Agreement"), dated as of the 24th
of March 2004, between Media Services Group, Inc., a Nevada corporation (the
"Company"), and Xxxxx Xxxxxxx (the "Grantee").
The Company hereby grants to the Grantee a stock option (the
"Option") to purchase all or any part of an aggregate of 10,000 shares of the
Company's common stock, $.01 par value per share (the "Shares"). This Option is
intended to be an Incentive Stock Option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), but the Company does not
represent or warrant that the Option qualifies as such.
To evidence the Option and to set forth its terms, the Company
and the Grantee agree as follows:
1. Confirmation of Grant. The Company hereby evidences and confirms its grant of
the Option to the Grantee on the date of this Agreement.
2. Number of Shares. This Option shall be for an aggregate of 10,000 Shares.
3. Exercise Price. The exercise price shall be $2.99 per Share for a total of
$29,900.00 (the "Exercise Price").
4. Medium and Time of Payment. The Option shall be exercised by a written notice
signed by the Grantee, which identifies this Agreement and states the number of
Shares then being purchased (the "Exercise Notice"), delivered to the attention
of the Company's Secretary at the Company's principal office in New York, New
York. The exercise date shall be the date such notice is received by the
Company. Such notice shall be accompanied by (i) cash payment or certified check
equal to the Exercise Price; or (ii) a certificate representing Company stock
owned by the Grantee, if not subject to any restrictions, with a Fair Market
Value equal to the Exercise Price; or (iii) instructions for the Company to
withhold from the purchased shares an amount with a Fair Market Value equal to
the Exercise Price. "Fair Market Value" means the fair market value of a Share
as determined by the Board of reference to the closing price quotation, or, if
none, the average of the bid and asked prices, reported on Nasdaq Small Cap or
other exchange or quotation system as of the most recent available date with
respect to Company's common stock.
Upon acceptance of the Exercise Notice and receipt of payment
in full, the Company shall cause to be issued a certificate representing the
Shares so purchased.
5. Term and Exercise of the Option. The Option shall expire on the 24th of
March, 2014 (the "Expiration Date") and may be exercised in whole or in
increments in accordance with the following schedule:
(i) On FIRST ANNIVERSARY 20% of the Shares.
(ii) On SECOND ANNIVERSARY An additional 40% of the Shares shall vest. (iii) On
THIRD ANNIVERSAY Remaining 40% of the Shares shall vest.
6. Nontransferability. The Option may be transferred only by will or the laws of
descent and distribution and the Option may be exercised during the Grantee's
lifetime only by the Grantee (or by the Grantee's legal representative under the
circumstances described in Section 7 hereof).
7. Rights in the Event of the Grantee's Disability. If the Grantee's employment,
position as director, or other relationship with the Company and any parent or
subsidiary corporation (within the meaning of Section 424(e) and (f) of the Code
(each an "Affiliate")) is terminated on account of Disability, the Grantee or
the Grantee's legal representative may exercise the Option, to the extent
exercisable on the date of the Grantee's termination of employment or other
relationship, at any time within six months after termination of employment or
other relationship but in no event after the expiration of the term of the
Option. The Grantee's "Estate" means the Grantee's legal representative or any
person who acquires the right to exercise the Option by reason of the Grantee's
death. "Disability" means a medically diagnosable mental or physical condition
which the Company's Board of Directors (the "Board") has determined, based on
such medical evidence as it may find satisfactory, will prevent a Grantee from
performing his or her duties for the Company and is expected to be permanent.
8. Rights in the Event of the Grantee's Death. If the Grantee dies while an
employee or director of the Company or any Affiliate or within three months
after terminating such employment or other relationship, but in either event
while he still has the right to exercise this Option, his Estate may exercise
the Option, to the extent exercisable at the date of the Grantee's death, any
time within one year after the Grantee's death, but in no event after the
expiration of the term of the Option, subject to the provisions of any
stockholders agreement of the Company to which Grantee is a party.
9. Rights in the Event of Termination of Employment or Other Relationship. If
Grantee's employment, position as director, or other relationship with the
Company or any Affiliate is terminated (i) for cause or is otherwise
attributable to a breach by the Grantee of an employment or confidentiality or
non-disclosure or invention assignment agreement or (ii) voluntarily by the
Grantee without good reason (if good reason termination is permitted by
Grantee's employment agreement), the Grantee's Option shall expire as of the
date of termination of employment or other relationship. The Board of Directors
(the "Board") of the Company or the committee shall have the power to determine,
in its sole discretion, what constitutes a termination for cause or a breach of
an employment or confidentiality or non-disclosure or invention assignment
agreement (where Grantee has entered into an employment agreement with the
Company and cause is defined therein, such determination shall be in accordance
with such employment agreement), whether Grantee has been terminated for cause
or has breached such an agreement, and the date upon which such termination for
cause or breach occurs. Any such determination shall be final and conclusive and
binding upon the Grantee and all other persons interested or claiming interest
under this Agreement. If the Grantee's employment or other relationship is
terminated for any reason other than death, Disability, or as described in the
preceding sentences of this Section, the Grantee may exercise the Option, to the
extent exercisable before the termination, within three months after the
termination, but in no event after the expiration of the term of the Option. If
the terms of this Section 9 are inconsistent with the terms of any employment
agreement between Grantee and the Company, the terms of the employment agreement
shall govern.
10. Extension If Grantee Subject to Section 16(b) of the 1934 Act.
Notwithstanding the foregoing paragraphs 7, 8 and 9, if the exercise of the
Option within the applicable time periods set forth above would subject the
Grantee to suit under Section 16(b) of the Securities Act of 1934, as amended,
the Option shall remain exercisable to the extent permitted by law until the
earliest to occur of (i) the 10th day following the date on which the Grantee
would no longer be subject to such suit; (ii) the 360th day after the Grantee's
termination of employment or other relationship; provided such termination was
due to the death or Disability of the Grantee; (iii) the 90th day after the
Grantee's termination of employment or other relationship; provided such
termination was not for cause or otherwise attributable to a breach by the
Grantee of an employment or confidentiality or non-disclosure or invention
assignment agreement; or (iv) the Expiration Date; provided that no additional
vesting of the Option shall occur during such periods. Any such extension of the
period in which the Option may be exercised may result in the Option ceasing to
qualify as an Incentive Stock Option and the Company makes no representation as
to the tax consequences of any such delayed exercise. The Grantee agrees to
consult with the Grantee's own tax advisors as to the tax consequences to the
Grantee of any such delayed exercise.
11. Representations and Warranties of Grantee.
(a) Grantee represents and warrants that this Option is being acquired by
Grantee for Grantee's personal account, for investment purposes only, and not
with a view to the distribution, resale or other disposition thereof.
(b) Grantee acknowledges that the Company may issue Shares upon the exercise of
the Option without registering such Shares under the Securities Act of 1933, as
amended (the "1933 Act"), on the basis of certain exemptions from such
registration requirement. Accordingly, Grantee agrees that his or her exercise
of the Option may be expressly conditioned upon his or her delivery to the
Company of an investment certificate including such representations and
undertakings as the Company may reasonably require in order to assure the
availability of such exemptions, including a representation that Grantee is
acquiring the Shares for investment and not with a present intention of selling
or otherwise disposing thereof and an agreement by Grantee that the certificates
evidencing the Shares may bear a legend indicating such non-registration under
the 1933 Act and the resulting restrictions on transfer. Grantee acknowledges
that, because Shares received upon exercise of an Option may be unregistered,
Grantee may be required to hold the Shares indefinitely unless they are
subsequently registered for resale under the 1933 Act or an exemption from such
registration is available, it being understood that the Company is making no
representation regarding registration of any Shares.
(c) Grantee hereby acknowledges that, in addition to certain restrictive legends
that the securities laws of the state in which Optionee resides may require,
each certificate representing the Shares may be endorsed with the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN
ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT AND ANY
APPLICABLE STATE SECURITIES LAW OF RECEIPT BY THE ISSUER OF AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT
REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS NOT
REQUIRED.
12. Adjustment in the Shares. If the Shares, as presently constituted, shall be
changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation (whether by reason of
merger, consolidation, recapitalization, reclassification, split, reverse split,
combination of shares, or otherwise) or if the number of Shares shall be
increased through the payment of a share dividend, the Grantee shall receive
upon exercise of the Option the number and kind of shares or other securities
into which each outstanding Share shall be so changed, or for which each such
Share shall be exchanged, or to which each such Share shall be entitled, as the
case may be. If there shall be any other change in the number or kind of the
outstanding Shares, or of any shares or other securities into which the Shares
shall have been changed, or for which the Shares shall have been exchanged,
then, if the Board shall, in its sole discretion, determine that such change
equitably requires an adjustment in the Option, such adjustment shall be made in
accordance with that determination. Notice of any adjustment shall be given by
the Company to the Grantee.
13. Stop-Transfer Notices. Grantee understands and agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop-transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
14. No Limitation on Rights of the Company. The grant of this Option shall not
in any way affect the right or power of the Company to make adjustments,
reclassifications, or changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell, or transfer all or any part of its
business or assets.
15. Rights as a Shareholder. The Grantee shall have the rights of a shareholder
with respect to the Shares covered by the Option only upon becoming the holder
of record of those Shares.
16. Compliance with Applicable Law. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause to be issued or delivered
any certificates for Shares pursuant to the exercise of the Option, unless and
until the Company is advised by its counsel that the issuance and delivery of
such certificates is in compliance with all applicable laws, regulations of
governmental authority, and the requirements of any exchange upon which Shares
are traded. The Company shall in no event be obligated to register any
securities pursuant to the 1933 Act (as now in effect or as hereafter amended)
or to take any other action in order to cause the issuance and delivery of such
certificates to comply with any such law, regulation or requirement. The Board
may require, as a condition of the issuance and delivery of such certificates
and in order to ensure compliance with such laws, regulations, and requirements,
that the Grantee make such covenants, agreements, and representations as the
Board, in its sole discretion, considers necessary or desirable.
17. No Obligation to Exercise Option. The granting of the Option shall impose no
obligation upon the Grantee to exercise the Option.
18. Agreement Not a Contract of Employment. This Agreement is not a contract of
employment, and the terms of employment of the Grantee or the relationship of
the Grantee with the Company or any Affiliate shall not be affected in any way
by this Agreement except as specifically provided herein. The execution of this
Agreement shall not be construed as conferring any legal rights upon the Grantee
for a continuation of employment or relationship with the Company or any
Affiliate, nor shall it interfere with the right of the Company or any
subsidiary thereof to discharge the Grantee and to treat him without regard to
the effect which that treatment might have upon him as a Grantee.
19. Notices. Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally or sent by certified,
registered, or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally or, if mailed, four days after the date of
deposit in the United States mails, to each party at its address set forth above
or to such other address as may be designated in a notice given in accordance
with this Section.
20. Governing Law. Except to the extent preempted by Federal law, this Agreement
shall be construed and enforced in accordance with, and governed by, Nevada law.
21. Attorneys' Fees. In the event any litigation concerning any controversy,
claim or dispute between the parties hereto, arising out or relating to this
Agreement or the breach hereof, or the interpretation hereof, the prevailing
party shall be entitled to recover from the losing party reasonable expenses,
reasonable attorneys' fees and reasonable costs incurred therein or in the
enforcement or collection of any judgement or award rendered therein. The
"prevailing party" means the party determined by the court to have most nearly
prevailed, even if such party did not prevail in all matters, not necessarily
the one in whose favor a judgement is rendered.
22. Entire Agreement. This Agreement contains all of the understandings and
agreements between the Company and its Affiliates, and the Grantee concerning
this Option and supersedes all earlier negotiations and understandings, written
or oral, between the parties with respect thereto. The Company, its Affiliates
and the Grantee have made no promises, agreements, conditions or understandings
either orally or in writing, that are not included in this Agreement.
23. Headings. The headings of Sections and subsections herein are included
solely for convenience of reference and shall not affect the meaning of any of
the provisions of the Agreement.
24. Amendments. This Agreement may be amended or modified at any time by an
instrument in writing signed by the parties hereto.
IN WITNESS WHEREOF, the Company and the Grantee have duly
executed this Agreement as of the date first written above.
Media Services Group, Inc.
__________________________ By:___________________________
Witness
Grantee
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Witness
