EXHIBIT 4.2
XXXXXXXXXX LABORATORIES, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Agreement, made as of ______________, 19____, by and between
XXXXXXXXXX LABORATORIES, INC., a Texas corporation (the "Company"), and
________________________ ______________________ ("Employee"),
W I T N E S S E T H:
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WHEREAS, it has been determined (i) that Employee is eligible to receive a
nonqualified stock option under the Company's 1995 Stock Option Plan (the
"Plan"), and (ii) that such an option should be granted to Employee;
NOW, THEREFORE, the Company and Employee hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
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the following meanings, respectively:
(a) "Affiliate" shall have the meaning set forth in Article I, Section
1.02(a) of the Plan and shall include any party now or hereafter coming
within that definition.
(b) "Commencement Date" shall mean the date which is one (1) year from
the date of this Agreement. (By way of example, if the date of this
Agreement were January 1, 1996, the Commencement Date would be January 1,
1997.)
(c) "Common Stock" shall have the meaning set forth in Article I,
Section 1.02(e) of the Plan.
(d) "Expiration Date" shall mean the date which is ten (10) years from
and inclusive of the date of this Agreement. (By way of example, if the
date of this Agreement were January 1, 1996, the Expiration Date would be
December 31, 2005.)
2. Option. The Company hereby grants to Employee the option to purchase,
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on the terms hereinafter set forth, _____________ shares of the Company's Common
Stock at a price of $_________ per share during the period beginning on the
Commencement Date and ending on the first to occur of (i) the Expiration Date or
(ii) the date on which the employment of Employee by the Company or any of its
Affiliates terminates for any reason; provided, however, that
(a) if such employment terminates on or after the Commencement Date
and on or before the Expiration Date, other than by reason of Employee's
retirement,
death or disability, then Employee may exercise this option, to the extent
he was entitled to do so at the date of such termination of employment, at
any time within thirty (30) days after the date of such termination but not
after the Expiration Date; or
(b) if such employment terminates on or after the Commencement Date
and on or before the Expiration Date by reason of Employee's becoming
permanently and totally disabled (within the meaning of Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended), or by reason of amended),
or by reason of Employee's death, then Employee (or Employee's legal
representative, if Employee is legally incompetent), the executor or
administrator of Employee's estate or anyone who shall have acquired this
option by will or pursuant to the laws of descent and distribution may
exercise this option, to the extent Employee was entitled to do so at the
date of such termination, at any time within one (1) year after such
termination but not after the Expiration Date; or
(c) if such employment terminates on or after the Commencement Date
and on or before the Expiration Date by reason of Employee's retirement,
Employee may exercise this option, to the extent he was entitled to do so
at the date of such retirement, at any time within three (3) years after
the date of such retirement; provided, however, that if Employee shall die
within such three-year period, then the executor or administrator of
Employee's estate or anyone who shall have acquired this option by will or
pursuant to the laws of descent and distribution may exercise this option,
to the extent Employee was entitled to do so at the date of his death, at
any time within the first to expire of (i) two (2) years after the date of
his death or (ii) three (3) years after the date of his retirement, but not
after the Expiration Date in any event.
Notwithstanding anything to the contrary herein, this option shall
terminate immediately upon the termination of Employee's employment on account
of fraud, dishonesty or the performance of other acts detrimental to the Company
or an Affiliate, or if, following the date of termination of Employee's
employment, the Company determines that there is good cause to cancel this
option. A transfer of employment among the Company and any of its Affiliates
without interruption of service shall not be considered a termination of
employment for purposes of this Agreement.
The Stock Option Committee that administers the Plan shall have the
authority to make, in its sole discretion, any and all determinations that are
required to be made in connection with this Agreement regarding the reasons for
or circumstances of the termination of Employee's employment with the Company or
any Affiliate, including but not limited to the determinations of (1) whether
Employee's employment by the Company or any of its Affiliates terminated by
reason of Employee's retirement, death or disability or on account of fraud,
dishonesty or the performance of other acts detrimental to the Company or
whether there is good cause to cancel this option, and (2) what criteria or
requirements,
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if any, should be applied in making the determinations described in clause (1)
of this sentence.
3. Exercise During Employment. Except as provided in Section 2 hereof,
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this option may not be exercised unless Employee is at the time of exercise an
employee of the Company or an Affiliate.
4. Exercisability. Subject to the provisions of Sections 2 and 3 hereof,
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this option may be exercised during the period beginning on the Commencement
Date and ending on the Expiration Date in accordance with the following
schedule:
(a) that number of whole shares of Common Stock which equals or most
closely approximates (but does not exceed) 25% of the total number of
shares covered by this option may be purchased in whole at any time, or in
part from time to time, on or after the Commencement Date;
(b) an additional number of whole shares of Common Stock which equals
or most closely approximates (but does not exceed) 25% of the total number
of shares covered by this option may be purchased in whole at any time, or
in part from time to time, on or after the date which is two (2) years from
and inclusive of the date of this Agreement;
(c) an additional number of whole shares of Common Stock which equals
or most closely approximates (but does not exceed) 25% of the total number
of shares covered by this option may be purchased in whole at any time, or
in part from time to time, on or after the date which is three (3) years
from and inclusive of the date of this Agreement; and
(d) all remaining shares of Common Stock covered by this option may
be purchased in whole at any time, or in part from time to time, on or
after the date which is four (4) years from and inclusive of the date of
this Agreement.
Notwithstanding any contrary indication in this Agreement, (i) no fractional
shares of Common Stock may be purchased upon exercise of this option, and (ii)
upon the occurrence of a Change in Control (as defined in the Plan) prior to the
termination of this option, this option shall immediately and automatically
become exercisable with respect to all of the shares of Common Stock, if any, as
to which it was not already exercisable, and this provision shall be applicable
regardless of whether such Change in Control occurs before or after the
Commencement Date; provided, however, that this provision shall not be
interpreted to increase the number of shares of Common Stock for which this
option may be exercised by Employee if his employment by the Company or any of
its Affiliates shall have terminated prior to the occurrence of such Change in
Control.
5. Manner of Exercise. This option may be exercised by written notice
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signed by the person entitled to exercise the same and delivered to the
President of the Company
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or sent by United States registered mail addressed to the Company (for the
attention of the President) at its corporate office in Irving, Texas. Such
notice shall state the number of shares of Common Stock as to which this option
is exercised and shall be accompanied by payment of the full purchase price of
such shares, plus the amount of any federal, state or local taxes required by
law to be paid or withheld in connection with such exercise.
6. Payment. The purchase price for shares of Common Stock purchased upon
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exercise of this option shall be paid in cash or by check in United States
dollars.
7. Delivery of Shares. Delivery of the certificate or certificates
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representing the shares of Common Stock purchased upon exercise of this option
shall be made promptly after the Company's receipt of notice of exercise and
payment. If the Company so elects, its obligation to deliver shares of Common
Stock upon the exercise of this option shall be conditioned upon its receipt
from the person exercising this option of any additional documents that, in the
opinion of the Company and its legal counsel are required in order to comply
with any applicable law.
8. Adjustments. In the event that, before delivery by the Company of all
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the shares of Common Stock in respect of which this option is granted, the
Company shall have effected a Common Stock split or a dividend payable in Common
Stock, or the outstanding Common Stock of the Company shall have been combined
into a smaller number of shares, the shares of Common Stock still subject to
this option shall be increased or decreased to reflect proportionately the
increase or decrease in the number of shares outstanding, and the purchase price
per share shall be decreased or increased to make the aggregate purchase price
for all the shares then subject to this option the same as immediately prior to
such stock split, stock dividend or combination. In the event of a
reclassification of the shares of Common Stock not covered by the foregoing, or
in the event of a liquidation or reorganization (including a merger,
consolidation or sale of assets) of the Company, the Board of Directors of the
Company shall make such adjustments, if any, as it may deem appropriate in the
number, purchase price and kind of shares still subject to this option.
9. Transferability. This option is not transferable otherwise than by
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will or the laws of descent and distribution, and during the lifetime of
Employee this option is exercisable only by Employee or, if Employee is legally
incompetent, by Employee's legal representative.
10. Employment. Nothing in this Agreement confers upon Employee any right
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to continue in the employ of the Company or any Affiliate, nor shall this
Agreement interfere in any manner with the right of the Company or any Affiliate
to terminate the employment of Employee with or without cause at any time.
11. Option Subject to Plan. By execution of this Agreement, Employee
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agrees that this option and the shares of Common Stock to be received upon
exercise hereof shall be governed by and subject to all applicable provisions of
the Plan.
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12. Construction. This option shall not be treated as an incentive stock
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option under Section 422 of the Internal Revenue Code of 1986, as amended. This
Agreement is governed by, and shall be construed and enforced in accordance
with, the laws of the State of Texas. Words of any gender used in this
Agreement shall be construed to include any other gender, unless the context
requires otherwise. The headings of the various sections of this Agreement are
intended for convenience of reference only and shall not be used in construing
the terms hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
XXXXXXXXXX LABORATORIES, INC.
By:_____________________________________
Xxxxxxx X. Xxxxxx, Ph.D., President
________________________________
Signature of Employee
________________________________
(Type or print name of Employee)
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RECORD OF EXERCISE
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DATE NO. OF SHARES EXERCISED INITIAL/AGREED
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__________________ ________________________ ______________
__________________ ________________________ ______________
__________________ ________________________ ______________
__________________ ________________________ ______________
__________________ ________________________ ______________
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