EXHIBIT 4.2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is entered into
effective as of September 1, 1998, by and between X-Ceed, Inc., a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxxxx ("Optionee").
In consideration of, and subject to, the covenants set forth in that
certain Employment Agreement (the "Employment Agreement") dated July 17, 1998 by
and between the Company and Optionee and the covenants set forth herein, the
parties agree as follows:
1. OPTION GRANT: NUMBER OF SHARES: PRICE. The Company hereby grants to
Optionee the right ("Option") to purchase all or any portion of 1,000,000 shares
of the Common Stock of the Company ("Stock") at a purchase price of $6.00 per
share (the "Option Price"). This Option is currently exercisable and may be
exercised in whole or in part from time to time until its expiration in
accordance with Section 2 below. It is intended that the Option will not qualify
for treatment as an "Incentive Stock Option" under Section 422 of the Internal
Revenue Code of 1986, as amended.
2. TERMS OF AGREEMENT. This Agreement shall expire ten (10) years from
the date of this Agreement.
3. THIS AGREEMENT SUBJECT TO EMPLOYMENT AGREEMENT. This Agreement is
made under and subject to the provisions of the Employment Agreement and shall
be interpreted in a manner consistent with it. To the extent that any provision
in this Agreement is inconsistent with the Employment Agreement, the provisions
of the Employment Agreement shall control.
4. EXERCISE OF THE OPTION. This Option may be exercised by Optionee (or
after Optionee's death, by the person designated in Section 5 of this Agreement)
only in accordance with the following provisions:
(a) This Option may be exercised by Optionee upon delivery
of the following to the Company at its principal
executive offices:
(i) a written notice of exercise which identifies
this Agreement, states the number of shares of
Stock then being purchased and, if such
exercise is by way of "cashless exercise," an
order to a broker to sell Stock as required
pursuant to Section 3.4.4 of the Employment
Agreement;
(ii) except upon exercise of all or any portion
of the Option by way of "cashless exercise"
as described in Section 3.4.4 of the
Employment Agreement, a check or cash in the
amount of the Option Price (or payment of
the Option Price in such other form of
lawful consideration as the Company's Board
of Directors may approve from time to time);
and
(iii) except upon exercise of any portion of the
Option by way of "cashless exercise" as
described in Section 3.4.4 of the Employment
Agreement, a check or cash, if requested by
the Company either before or after the
Company's receipt of the notice of exercise,
in the amount of any taxes (other than stock
issue or transfer taxes) which the Company
is obligated to collect or withhold by
reason of the exercise of the Option.
(b) The Option shall be exercisable at any time prior to the
end of the business day on which this Agreement expires
in accordance with the terms of Section 2 above.
5. CONSULTING DUTIES. Provided that (i) any part of the Option is
currently exercisable and (ii) Optionee's obligation to consult would not cause
him to be in competition or otherwise conflict with any endeavor or other
obligation to a third party in which Optionee was then engaged, the Company
shall have the right but not the obligation to consult with Optionee pursuant to
the terms set forth in this Section 5 on matters involving strategic alliances
for the Company and the achievement of growth on the interactive sector.
Optionee shall make himself available for consultation in Los Angeles,
California, or such other place as Optionee may designate, for a period of five
(5) years commencing upon the expiration of the Employment Agreement and
terminating on the fifth anniversary of such expiration; provided, however,
Optionee's obligation to provide such consulting services shall be limited to no
more than six (6) occasions in any one (1) year and no more than one (1) hour on
each such occasion. In addition thereto and during such five-year period, the
Company shall have the right but not the obligation to retain Optionee to
evaluate possible candidates for acquisitions by the Company, provided Optionee
is compensated for such services at a rate to be mutually agreed upon by the
parties.
6. NO ASSIGNMENT; DEATH OF OPTIONEE. The rights of Optionee under this
Agreement may not be assigned or transferred except by will or by the laws of
descent and distribution. This Option shall be exercisable only by Optionee
during Optionee's lifetime. Any attempt to assign this Option in contravention
of this Agreement shall be void and shall have no effect. If Optionee should die
while any part of the Option remains unexercised, Optionee's legal
representative, Optionee's legatee, or the person who acquired the right to
exercise this Option by reason of the death of Optionee (the "Successor")
succeeds to Optionee's rights under this Agreement. After the death of Optionee,
only Optionee's Successor may exercise the Option.
7. RECAPITALIZATION, REORGANIZATION, MERGER OR CONSOLIDATION. If the
outstanding shares of Common Stock of the Company are increased, decreased or
exchanged for different securities through reorganization, merger,
consolidation, recapitalization, reclassification, stock split, stock dividend
or like capital adjustment, a proportionate adjustment shall be made in the
number, price, and kind of shares subject to the Option granted herein.
Upon the dissolution or liquidation of the Company or upon any
reorganization, merger or consolidation in which the Company does not survive or
in which the equity ownership of the Company prior to such transaction
represents less than 50% of the equity ownership of the Company
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subsequent to the transaction, this Option shall terminate; provided, however,
that the Company will give written notice thereof to Optionee at least 30 days
prior to the date of such dissolution, liquidation, reorganization, merger or
consolidation, and in such event (a) the Company shall grant the right, until
ten (10) days before the effective date of such dissolution, liquidation,
reorganization, merger or consolidation, to exercise, in whole or in part, this
Option; and (b) to the extent such Options remain unexercised as of the
effective date of such dissolution, liquidation, reorganization, merger or
consolidation, the surviving corporation shall tender to Optionee an option or
options to purchase shares of the surviving corporation, and such new option or
options shall contain such terms and provisions as shall be required to
substantially preserve the rights and benefits of this Agreement.
8. NO RIGHTS AS STOCKHOLDER. Other than as required by law, Optionee
shall have no rights as a stockholder of any shares of Stock covered by this
Agreement until the date an entry evidencing such ownership is made in the stock
transfer books of the Company.
9. NO RIGHT TO EMPLOYMENT. Except as provided in the Employment
Agreement, this Agreement shall not confer upon Optionee any right to employment
or continuance of performance of services for the Company or any subsidiary
corporation.
10. RESTRICTIVE LEGENDS. Optionee hereby acknowledges that federal
securities laws and the securities laws of the state in which Optionee resides
may require the placement of certain restrictive legends upon the Stock issued
upon exercise of the Option, and Optionee hereby consents to the placing of any
such legends upon certificates evidencing the Stock as the Company, or its
counsel, may reasonably deem necessary; provided, however, that any such legend
or legends immediately shall be removed when no longer applicable.
11. NOTICES. All notices, requests and other communications hereunder
shall be in writing and, if given by telegram, telecopy or telex, shall be
deemed to have been validly served, given or delivered when sent, if given by
personal delivery, shall be deemed to have been validly served, given or
delivered upon actual delivery and, if mailed, shall be deemed to have been
validly served, given or delivered three business days after deposit in the
United States mails, as registered or certified mail, with proper postage
prepaid and addressed to the party or parties to be notified, at the following
addresses (or such other address(es) as a party may designate for itself by like
notice):
If to the Company:
X-Ceed, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to Optionee:
Xxxxx X. Xxxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
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12. AMENDMENT AND WAIVERS. This Agreement and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.
13. GOVERNING LAW. This Agreement shall be construed under and governed
by the laws of the State of Delaware without regard to the conflict of law
provisions thereof.
14. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original and both of which together shall be deemed
one Agreement.
IN WITNESS WHEREOF, the Company and Optionee have executed this
Agreement effective as of the date first set forth above.
"Company" X-CEED, INC., a Delaware corporation
By: /s/ XXXXXX X. XXXXX
--------------------------------
Xxxxxx X. Xxxxx
Its: Chief Financial Officer
"Optionee" /s/ XXXXX X. XXXXXXX
-----------------------------------
Xxxxx X. Xxxxxxx
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