Exhibit 4.2(a)
The Xxxx-XX Corporation
INCENTIVE STOCK OPTION AGREEMENT
1986 Stock Option Plan
BASIC TERMS
Name of Optionee:
Number of Class A Shares covered by Option:
(See Section 3 of the Administrative Provisions)
Date of Grant:
Exercise Price:
(See Sections 2 and 3 of the Administrative Provisions)
Vesting:
Eligibility Date Number of Shares
Total
(See Sections 4 and 5 of the Administrative Provisions)
First Exercise Date:
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Expiration Date:
Signatures:
The Basic Terms set forth above and the attached Administrative Provisions
(6 pages total) together constitute the Incentive Stock Option Agreement
between the Optionee and the Company. Subject to the terms and conditions
therein contained, the Company hereby grants, and the Optionee hereby
accepts, a stock option pertaining to shares of the Company's Class A
Common Stock.
The Xxxx-XX Corporation Optionee:
Xxxxx X. Xxxxx
Vice President/Treasurer Printed Name:
INCENTIVE STOCK OPTION AGREEMENT
1986 Stock Option Plan
Administrative Provisions
1. DEFINITIONS. As used in the Basic Terms and the Administrative Provisions,
the following terms have the indicated meanings:
1.1. Act. "Act" shall mean the Securities Act of 1933, as amended.
1.2. Code. "Code" shall mean the Internal Revenue Code of 1986,
as amended.
1.3. Company. "Company" shall include The Xxxx-XX Corporation
and any of its subsidiary corporations which meet the definition set forth in
Section 425 (f) of the Code.
1.4. Committee. "Committee" shall mean the Committee appointed by
the Board of Directors to administer the Plan.
1.5. Exchange Act. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
1.6. Incentive Options. "Incentive options" shall be those options
described in Section 422(a) of the Code.
1.7. Non-Qualified Options. "Non-qualified options" shall mean options
which are not incentive options.
1.8. Plan. "Plan" shall mean the Company's 1986 Stock Option Plan,
as amended.
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1.9. Shares. Unless the context otherwise requires, "shares" shall
mean the shares of the Company's Class A Stock.
2. EXERCISE PRICE. The exercise price per share shown in the Basic Terms
is hereby acknowledged to be at least 100% of the fair market value of the
Class A Common Stock at the date of grant.
3. ADJUSTMENTS. Adjustments to the shares covered by the option and the
exercise price shall be made as follows:
3.1. Recapitalizations. The number of shares of Stock covered by the
option and the exercise price shall be proportionately adjusted for any
increase or decrease in the number of issued and outstanding shares of
Common Stock resulting from: (i) a subdivision or consolidation of shares;
(ii) the payment of a stock dividend of more than 2%; or (iii) any other
increase or decrease of more than 2% in the number of issued and outstanding
shares of Common Stock effected without receipt of consideration
by the Company.
3.2. Rights Offerings. In the event the Company shall issue rights,
warrants or options to its shareholders on a pro rata basis entitling them
to purchase shares of Class A or Class B Stock at a price less than the
fair market value of such Stock, the option price shall be proportionately
reduced (and/or the number of shares subject to the option proportionately
increased) to reflect as nearly as practicable the benefit that the
option holder would have received had the option been exercised immediately
prior to the record date for such rights, warrants or options.
3.3. Reorganizations. If any merger, consolidation or similar transaction
in which the Company is the surviving corporation (and which is not a Change
in Control as hereinafter defined) shall affect any outstanding option under
the Plan, the Committee shall take such action as is equitable or appropriate
to substitute a new option for such affected option and to make the new
option equivalent to the affected option as nearly as practicable.
3.4. Changes in Control-Definition. A "Change in Control" shall be deemed
to have occurred if:
(a) there shall be consummated (i) any reorganization, consolidation
or merger of the Company in which the Company is not the continuing or
surviving corporation, or (ii) any sale or other transfer of all or
substantially all of the Company's assets (in one transaction or a series
of related transactions); or
(b) the stockholders of the Company shall have approved a plan or
proposal for the liquidation or dissolution of the Company; or
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(c) there shall be consummated a sale to any person or group (as defined
in the Securities Exchange Act of 1934) of Class A and/or Class B shares
entitled to cast more than 50% of the total combined votes of all outstanding
Class A and Class B Shares; or
(d) the Board of Directors of the Company shall otherwise have
determined that a Change in Control has otherwise occurred.
3.5. Changes in Control--Effect. A Change in Control shall cause each
outstanding option to terminate effective one hundred eighty days after
the consummation thereof, unless any agreement relating to a Change in
Control shall otherwise provide. Notwithstanding the foregoing, agreements
relating solely to a transaction described in paragraph (c) of Section 3.6
may not terminate an outstanding option earlier than one hundred eighty days
after the consummation thereof unless the optionee consents to an earlier
termination. Effective concurrently with the Change in Control (whether or
not the option is terminated or affected by the Change in Control) each
optionee shall be entitled to exercise his option in full without regard
to any limitations on exercisability and such option shall be considered
fully vested.
3.6. Committee's Authority. The Committee, in its discretion, shall make
such other and further adjustments are equitable and appropriate with respect
to any transaction affecting the capitalization of the Company.
3.7. Company's Rights Unimpaired. Nothing contained in this agreement
shall in any way affect the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell,
or transfer all or any part of its business or assets.
4. VESTING. The Optionee will become eligible to exercise the option in
installments as set forth in the Basic Terms. Except as specifically
otherwise provided herein, if the Optionee ceases to serve as an employee
prior to the eligibility date of an installment, the option shall terminate
with respect to that installment (without pro ration for fractional years of
service) and all subsequent installments. After the optionee has
become eligible to exercise an installment, the right to exercise with
respect to that installment shall remain in effect until the expiration or
sooner termination of the option. No partial exercise will be permitted for
less than ten shares.
5. TERMINATION OF SERVICES.
5.1. Termination on of Relationship-Generally. In the event that the
Optionee shall cease to be an employee of the Company for any reason other
than his death or disability, his option shall be exercisable, to the
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extent it was exercisable at the date he ceased to be an employee, for a
period of three months after such date and prior to the date on which the
option expires by its terms. If not so exercised, the option shall
terminate.
5.2. Death or Disability. If the Optionee dies or becomes permanently
disabled within the meaning of Section 22(e)(3) of the Code while an employee
of the Company, or within the three-month period after termination of such
status during which he is permitted to exercise an option in accordance
with Section 11.1, such option may, to the extent it was exercisable at the
time of death or disability, be exercised for a period not to exceed the
lesser of: (i) one year after the optionee's death or disability; or
(ii) the period prior to the date on which the option expires by its terms.
In the event of death, the option may be exercised by any person or persons
designated by the Optionee on a Beneficiary Designation Form adopted by the
Committee for such purpose, or, if there is no effective Beneficiary
Designation Form on file with the Committee, by the executors or
administrators of the Optionee's estate or by any person or persons
who shall have acquired the option directly from the Optionee by his will
or the applicable law of descent and distribution. As a condition to
acquiring any rights under this Agreement, any such successor to the
Optionee shall execute such documents as the Company shall reasonably
request.
6. COMPLIANCE WITH SECURITIES LAWS. Notwithstanding anything to the
contrary herein, the option shall not be exercisable until the completion of
any listing, registration or qualification procedure with any securities
exchange or federal or state governmental authority which the Committee
deems, in its sole discretion, necessary or desirable. Unless the shares
issuable upon exercise of an option have been registered under the Act, the
option holder shall, as a condition of issuance, provide written
representations satisfactory to the Company's counsel to the effect that the
shares are being acquired for the optionee's 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 no transfers of the shares shall be made except in
compliance with the Act and any rules and regulations promulgated thereunder.
A legend to this effect may be endorsed upon unregistered shares so issued.
7. TERMINATION DATE. Notwithstanding any other provision of this Agreement,
this option is not exercisable after August 31, 2004.
8. MANNER OF EXERCISE. This option may be exercised by giving written notice
of exercise to the Company in such form as the Committee may from time to time
determine, specifying the number of shares to be purchased and accompanied by
full payment of the exercise and the amount of any income or other tax the
Company is required by law to withhold by reason of such exercise. The
exercise price shall be payable in cash or, in the discretion of the
Committee, in shares of Common Stock or in a combination of cash and such
shares. For purposes of computing the exercise price, shares surrendered
will be valued at their fair market value on the date of exercise.
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9. RESTRICTIONS ON TRANSFER. This option shall be exercisable during the
Optionee's lifetime only by the Optionee and shall be nontransferable by the
Optionee otherwise than by will, the laws of descent and distribution or
pursuant to "qualified domestic relations orders" as defined in the Code.
Except as aforesaid, this option shall not be transferred, assigned,
pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to sale under execution, attachment or
similar process. Upon any attempt to transfer, assign, pledge or otherwise
dispose of the option contrary to the provisions hereof, or upon any
attempted sale under any execution, attachment or similar process, the
option and all associated rights shall immediately become null and void.
10. DISQUALIFYING DISPOSITIONS. Optionee acknowledges that under current
provisions of the Code: (i) no taxable income is recognized upon exercise of
an incentive stock option provided that the Shares are held at least one year
after exercise and are not disposed of within two years from the date of
grant; (ii) the amount by which the fair market value of the Shares at the
time of exercise exceeds the exercise price will be an item of tax preference
which may be subject to the alternative minimum tax; (iii) any gain or loss
recognized upon the disposition of such shares by the optionee after the one
year and two-year periods described above will be treated as long-term capital
gain or loss; and (iv) any sales or dispositions of the Shares prior to the
expiration of such one year and two year periods will require the Optionee
to recognize taxable income equal to the amount by which the fair market
value of the Shares (at the time of exercise) exceeds the exercise price, in
addition to any other income which may be recognizable because
of such transactions.
11. NO RIGHTS AS SHAREHOLDER. Neither the Optionee nor any successor shall
have any rights or privileges as a shareholder of the Company with respect to
any shares issuable upon the exercise of the option prior to the issuance of
a stock certificate representing such shares.
12. INDEPENDENCE OF RELATIONSHIP. Nothing in this agreement shall constitute
an employment contract or be construed as limiting in any respect whatsoever
the rights of the Company to terminate or change the terms of the employment
of the Optionee, at any time for any reason whatsoever, with or without
good cause.
13. INTERPRETATION BY COMMITTEE. The Committee shall have the power to
interpret this Agreement and adopt procedures for its administration. All
actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon the Optionee, the
Company and all other interested persons. No member of the Committee shall
be personally liable for any action, determination or interpretation made
in good faith with respect to this Agreement.
14. MISCELLANEOUS.
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14.1. Notices. Any notice to be given to the Company under the terms of
this Agreement shall be addressed to The Xxxx-XX Corporation at 000 Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 or at such other address as the Company
may hereafter designate in writing. Any notice to be given to the Optionee
shall be addressed to the Optionee at the address shown by the Company's
personnel records or at any such other address as the Optionee may hereafter
designate in writing. Any such notice shall be deemed to have been duly
given when deposited in the U. S. Mail, registered or certified, postage
prepaid.
14.2. Successors. Subject to the limitations on exercisability and
transferability contained herein, this Agreement shall be binding upon
and inure to the benefit of the heirs, legal representatives, successors
and assigns of the parties hereto.
14.3. Severability. In the event that any provision in this Agreement
shall be invalid or unenforceable, such provision shall be severable from
this Agreement and its invalidity or unenforceability shall not be construed
to have any effect on the remaining provisions of this Agreement.
