Exhibit 4.2 Form of Incentive Stock Option Agreement
OPTIONABLE, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
as of _______, 2004 (the "Grant Date") by and between Optionable, Inc., a
Delaware corporation (the "Company"), and ______________ (the "Optionee").
WHEREAS, the Company desires to grant the Optionee a stock option under the
Company's 2004 Stock Option Plan (the "Plan") to acquire shares of the Company's
Common Stock, $0.001 par value per share (the "Common Stock").
WHEREAS, Section 5 of the Plan provides that each option is to be evidenced by
an award agreement, setting forth the terms and conditions of the option.
NOW THEREFORE, in consideration of the premises and of the mutual covenants and
agreements contained herein, the Company and the Optionee hereby agree as
follows:
Grant of Option. The Company hereby grants to the Optionee,
under the Plan and subject to the terms and conditions of the Plan, a stock
option (the "Option") to purchase all or any part of the number of shares of
Common Stock (the "Shares") set forth below the Optionee's name on the signature
page hereto, on the terms and conditions hereinafter set forth. The Option
granted hereunder shall be treated as an incentive stock option under section
422 of the Internal Revenue Code of 1986, as amended (the "Code").
Exercise Price. The exercise price per share ("Exercise
Price") for the Shares covered by the Option shall be ten cents ($.10) per
Share, subject to adjustment pursuant to Section 10.
Vesting.
The right to exercise the Option shall be ___ vested upon the Grant Date. The
"Vested Percentage" of the Option shall be as follows:
The right to exercise this Option shall immediately vest in
the event of a "Change of Control" of the Company. For this purpose, a "Change
of Control" means the acquisition after the date hereof, directly or indirectly,
by any Person of ownership of, or the power to direct the exercise of voting
power with respect to, a majority of the issued and outstanding voting shares of
the Company. For this purpose, a "Person" means an individual or a corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
Term of Options.
Cancellation and Forfeiture. The Option shall be cancelled and
shall be null and void, and the Optionee
shall forfeit all rights pursuant to the
Option, (i) if the Optionee does not execute
and return this Agreement to the Company
within sixty (60) days of the Grant Date,
(ii) unless otherwise agreed to in writing
by the Board, upon the Optionee's
bankruptcy, and (iii) upon the Optionee's
attempted assignment or transfer of the
Option in violation of Section 9.
Termination. The Option shall terminate and shall no
longer be exercisable, even if vested, upon
the earliest to occur of the following
events:
_________;
if the Optionee dies, the first anniversary
of the date of death;
immediately upon the termination of the
Optionee's employment or service as
a consultant for Cause, or because
the Optionee is in breach of any
employment or consulting agreement
with the Company or one of its
subsidiaries, in each case as
determined by the Board. For
purposes of this Agreement "Cause"
shall mean (A) deliberate or
intentional failure, in a continuing
or repeated manner, by the Optionee
to substantially perform the
material duties of Optionee's
employment or consulting
relationship (other than due to
Disability), (B) deliberate or
intentional engagement by the
Optionee in conduct which is
materially detrimental to the
reputation, goodwill, business or
operations or the Company or any of
its subsidiaries, (C) willful fraud
or material dishonesty by the
Optionee in connection with the
performance of the duties of the
Optionee or (D) conviction or plea
of nolo contendere by the Optionee
to a felony or to a misdemeanor
involving moral turpitude, all as
determined by the Board; and
three (3) months after termination of the
Optionee's employment or
service as a consultant
other than for Cause.
Exercise of Option.
Exercisability. The Option shall be exercisable at any time
prior to its termination pursuant to Section
4(b) only to the extent of the Vested
Percentage as of that time. Notwithstanding
termination of the Option pursuant to
Section 4(b), the Board, in its discretion,
may extend the period of exercisability of
the Option for such time period as it deems
appropriate.
Method of Exercise. To the extent the Option is exercisable
pursuant to Section 5(a), the Optionee may
exercise the Option in full or in part by
giving written notice to the Company, signed
by the Optionee (or his legal representative
or heir, in the event of the Optionee's
death), stating the Optionee's election to
exercise the Option and the number of whole
Shares for which the Option is being
exercised. The written notice must be
accompanied by (i) full payment of the
exercise price for the number of Shares
being purchased, and (ii) an executed copy
of the form of investor representation
letter referred to in Section 6(b), if
required pursuant to such Section 6(b).
Payment of Exercise Price. Payment of the exercise price for
the number of Shares for which the Option is
being exercised shall be made:
In cash or by check payable to the order of
the Company;
at the discretion of the Board, by tender to
the Company of shares of
Common Stock owned by the
Optionee, acceptable to the
Board, having a Fair Market
Value (as defined in the
Plan) on the date of
exercise at least equal to
the exercise price;
at the discretion of the Board, by a
combination of the methods described above;
or
by such other method as may be approved by
the Board.
Maintenance of Shares. The Company shall at all times during
the term of the Option reserve and keep
available such number of shares of its
Common Stock as will be sufficient to
satisfy the requirements of the Option.
Securities Law Restrictions.
The grant of the Option and the issuance of Shares upon
exercise of the Option shall be
subject to compliance with all applicable
requirements of federal, state or foreign
law with respect to such securities. The
Option may not be exercised if the issuance
of Shares upon such exercise would
constitute a violation of any applicable
federal, state or foreign securities laws or
other law or regulations. In addition, the
Option may not be exercised unless (i) a
registration statement under the Securities
Act of 1933, as amended (the "Securities
Act"), shall at the time of exercise of the
Option be in effect with respect to the
Shares to be issued upon exercise of the
Option or (ii) in the opinion of legal
counsel to the Company, the Shares to be
issued upon exercise of the Option may be
issued in accordance with the terms of an
applicable exemption from the registration
requirements of the Securities Act. THE
OPTIONEE IS CAUTIONED THAT THE OPTION MAY
NOT BE EXERCISABLE UNLESS THE FOREGOING
CONDITIONS ARE SATISFIED. ACCORDINGLY, THE
OPTIONEE MAY NOT BE ABLE TO EXERCISE THE
OPTION WHEN DESIRED EVEN THOUGH THE OPTION
IS VESTED. As a condition to the exercise of
the Option, the Company may require the
Optionee to satisfy any qualifications that
may be necessary or appropriate, to evidence
compliance with any applicable law or
regulation and to make any representation or
warranty with respect thereto as may be
requested by the Company.
In the event that, as of the date on which the Option is
exercised in whole or in part, the
Shares to be issued upon exercise of the
Option shall not be effectively registered
under the Securities Act, the person
exercising the Option shall give a written
representation to the Company in the form
attached hereto as Exhibit A and the Company
shall place an "investment legend," as
described in Exhibit A, upon any certificate
for the Shares issued by reason of such
exercise.
The Company shall be under no obligation to cause a
registration statement or a post-effective
amendment to any registration statement to
be prepared for the purposes of covering the
issue of Shares.
Intentionally Left Blank.
Non-Transferability.
Unless otherwise approved by the Board in its discretion, the
Option may be exercised during the lifetime
of the Optionee only by the Optionee and may
not be assigned or transferred in any
manner, except by will or by the laws of
descent and distribution. Upon the
Optionee's death, the Optionee's legal
representative, or any person empowered
under the Optionee's will or under
applicable laws of descent and distribution,
may exercise the Option to the extent
unexercised and exercisable by the Optionee
as of the date of death.
Except as provided in Section 9(a), without the prior written
consent of the Board, no right or benefit
under this Agreement shall be subject to
anticipation, alienation, sale, assignment,
pledge, encumbrance or charge, and any
attempt to anticipate, alienate, sell,
assign, pledge, encumber or charge the
same without such consent, if applicable,
shall be void. Except with such consent, no
right or benefit under this Agreement shall
in any manner be liable for or subject to
the debts, contracts, liabilities or torts
of the Optionee.
Change in Stock Subject to Option. In the event of a
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, or other change in corporate structure affecting the Common Stock, the
Board may adjust the terms of the Option in accordance with Section 3 of the
Plan.
No Special Rights; Duties of Optionee.
The Optionee shall have no rights as a stockholder with
respect to any Shares covered by the Option
until the date of the issuance of a
certificate or certificates for the Shares
for which the Option has been exercised.
No adjustment shall be made for dividends
or distributions or other rights for which
the record date is prior to the date such
certificate or certificates are issued,
except as provided pursuant to Section 10.
Nothing contained in this Agreement shall be construed or
deemed by any person under any
circumstances to bind the Company to
commence or continue the employment or
consulting relationship of the Optionee for
the period within which this Option may be
exercised, nor shall this Agreement be
construed to create any duty of the Company
or any of its affiliates or any of its other
shareholders to the Optionee, or any duty of
the Optionee to the Company or any of its
affiliates or other shareholders, comparable
to the duties which partners or joint
venturers may owe to each other. However,
during the period that the Optionee provides
employment or consulting services to the
Company, the Optionee shall render
diligently and faithfully the services which
are assigned to the Optionee from time to
time by the Board or by the executive
officers of the Company. The Optionee shall
at no time take any action which directly or
indirectly would be inconsistent with the
best interests of the Company.
Notices. Any notices or other communications required to be
given hereunder shall be given by hand delivery or by certified or registered
mail, return receipt requested, with all fees prepaid and addressed, if to the
Company, to it at 000 Xxxxxxxxxxxxx Xxxx, Xxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxxxxx
Xxxxx, Xxx Xxxx 00000, and if to the Optionee, at the address set forth on the
signature page hereto, or to such other address as either party may specify in
writing from time to time.
Termination or Amendment. The Board may terminate or amend the
Plan and/or the Option at any time; provided, however, that no such termination
or amendment may adversely affect the Option or any unexercised portion thereof
without the written consent of the Optionee.
Integrated Agreement. This Agreement constitutes the entire
understanding and agreement of the Optionee and the Company with respect to the
subject matter contained herein and supersedes any prior understanding or
agreement between the parties, whether or not in writing, including, but not
limited to, any prior grant by the Company or any of its officers or authorized
representatives to the Optionee of an option or warrant to purchase Common
Stock. There are no agreements, understandings, restrictions, representations,
or warranties among the Optionee and the Company other than those as set forth
or provided for herein. To the extent contemplated herein, the provisions of
this Agreement shall survive any exercise of the Option and shall remain in full
force and effect.
Binding Effect. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrations, successors and assigns.
Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of
Delaware, without regard to principles of conflicts of laws.
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IN WITNESS WHEREOF, the parties hereto have executed this Nonstatutory Stock
Option Agreement as of the Grant Date.
OPTIONABLE, INC.
By:________________________
Name:
Title:
The undersigned Optionee represents that the Optionee is familiar with the terms
and provisions of this Incentive Stock Option Agreement and the Plan, and hereby
accepts the Option subject to all of the terms and provisions thereof. The
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board upon any questions arising under this Incentive
Stock Option Agreement and the Plan. The undersigned acknowledges receipt of a
copy of the Plan.
________________________
Signature of Optionee
_______________________
Address:
_______________________
_______________________
_______________________
Social Security Number:
Number of Shares Subject to Option:
