EXHIBIT 4.2
FORM OF STOCK OPTION AGREEMENT
This Agreement made as of the 18th day of October, 1999.
BETWEEN:
(Name of Optionee), who has a residential address of__________
_____________________________________________________________.
(the "Optionee")
AND:
XXXXXX MUSIC INC., an Alberta Corporation with its head office
at 0000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(the "Corporation")
WHEREAS:
1. The Corporation has established a Stock Option Plan (the "Plan"), which
Plan was approved by the directors on August 30, 1996. The board of
Directors of the Corporation will administer the Plan.
2. The Optionee is a director, officer, employee or consultant of the
Corporation.
3. The Corporation wishes to maintain the continued services of, and to
provide incentive to the Optionee and to this end is desirous of
granting to the Optionee an option to purchase shares in the capital
stock of the Corporation subject to the terms and conditions of the
Plan.
NOW THEREFORE IN CONSIDERATION OF the covenants and agreements contained in this
Agreement, and other good and valuable considerations, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. THE PLAN
The Plan is attached hereto as Schedule "A" and the Optionee acknowledges that
the Optionee has read and understood the Plan and agrees to be bound by the
terms and conditions of the Plan. All words and expressions defined in the Plan
shall have the same meaning in this Agreement unless otherwise defined herein.
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2. GRANTING OF OPTION
Upon the recommendation of the Board of Directors in accordance with the terms
of the Plan, and subject to paragraph 4 hereof, the Corporation hereby grants to
the Optionee a non-assignable, non- transferable. Option to purchase (Number of
Shares) Common Shares of the Corporation (the "Option Shares"). The date on
which the Option is granted is the date first written above (the "Option Date").
3. EXERCISE PRICE OF OPTION SHARES
The price per Common Share at which Option Shares may be purchased upon the
exercise of the Option (the "Option Price") is $_______________ per Common
Share.
4. TERM OF OPTION AND VESTING SCHEDULE
The Optionee may exercise the Option at any time before the end of business in
Vancouver, British Columbia on October 18, 2002 while the Optionee is still a
director, officer, employee or consultant of the Corporation, provided that in
no circumstance will the Optionee be entitled to purchase more than one-third
(1/3) of the total number of Option Shares referred to in paragraph 2 above in
each of the first, second and third years of the term of this Option Agreement.
Notwithstanding the foregoing, in the event that the Optionee ceases to be a
director, officer or full time employee of the Corporation, or if the Optionee
is no longer entitled to hold or exercise options pursuant to the Securities
Laws of British Columbia of British Columbia or Alberta or the rules or Policies
of the Canadian Venture Exchange (in each case to the extent that they are
applicable to the Optionee), the Optionee will have 30 days from the date of
ceasing to be a director, officer or full time employee or otherwise ceasing to
be entitled to hold or exercise Options to exercise the Option.
5. NOTICE TO EXERCISE
Subject to paragraph 4, the Optionee may exercise any portion of the Option
exercisable hereunder during the term of the Option by providing written notice
to the Corporation to that effect. Any such notice shall be dated the day it is
delivered to the Corporation and shall specify the number of Common Shares with
respect to which the Option is being exercised and shall be accompanied by a
bank draft, money order or certified cheque drawn on a Canadian chartered bank
in favour of the Corporation in full payment of the aggregate acquisition cost
for the number of Common Shares then being purchased (collectively an "Exercise
Notice"). A sample of a suitable Exercise Notice is attached hereto.
6. DELIVERY OF COMMON SHARE CERTIFICATE
Within a reasonable time after receipt of the Exercise Notice the Corporation
shall, subject to paragraph 7, deliver or cause to be delivered to the Optionee
a Common Share certificate
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representing the number of shares with respect to which the Option was exercised
and issued as of the date of the Exercise Notice.
7. WITHHOLDING TAX
Whenever the Corporation proposes to deliver Common Shares under the Plan, the
Corporation shall have the right to require the individual who is to receive the
Common Shares to remit to the Corporation, prior to the delivery of any
certificate(s) for such Common Shares, an amount sufficient to satisfy any
federal, provincial and/or local tax withholding requirements.
8. EFFECT OF CHANGE IN CONTROL
"Change in Control" is defined as the occurrence of:
(a) as a result of the issuance of securities, amalgamation,
takeover or other transaction or series of transactions, an
acquisition, through one or more transactions, by any person
or group of persons acting in concert, of the right to control
or direct, directly or indirectly, 35% or more votes
attributable to all outstanding voting securities; or
(b) less than 51% of the members of the Board of Directors of the
Corporation being comprised of persons who are directors of
such board as of the date hereof except in the case where
incumbent directors are replaced because of voluntary
retirement or medial reasons.
In the event of a Change in Control of the Corporation, the Board of Directors
may in its discretion, notwithstanding the provisions of paragraph 4 hereof,
make any or all of the following adjustments:
(a) provide that all Options granted pursuant to the Plan will
become exercisable immediately upon such Change in Control (or
such other time as the Board shall determine);
(b) provide for the payment to the Optionee, upon surrender of the
Option (or a portion thereof), of an amount in cash equal to:
(i) the aggregate fair market value of the Common Shares
covered by such Option (or a portion thereof) on the
date of surrender; minus
(ii) the aggregate exercise price the Optionee would be
required to pay to purchase Common Shares had the
Optionee exercised the Option, except that in not
event will the Optionee have a right to receive with
respect to any Option an amount in excess of the fair
market value on the date of surrender of the total
number of Common Shares;
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(c) make any other adjustments, or take such other action, as the
Board of Directors, in its sole discretion, shall deem
appropriate. In the event that the Board of Directors provides
for the surrender of Options pursuant to clause (b) above, to
the extent any Option is surrendered, it shall be deemed to
have been exercised for purposes of paragraph 4.
9. REGULATORY AUTHORITIES
The Optionee acknowledges that:
(a) the Corporation is a reporting issuer in Canada and is subject
to regulatory authorities therein and that the Common Shares
are listed on The Canadian Venture Exchange;
(b) the Plan, the grant of Options and the exercise of the Options
may be subject to approval by all or a portion of the share-
holders of the Corporation and by regulatory
authorities;
(c) the Common Shares acquired under this Agreement may be subject
to certain restrictions on the resale or other dispositions of
such Common Shares; and
(d) the Option may not be assigned or transferred.
Thus the Optionee agrees to be bound by any restrictions imposed on the granting
or exercise of the Option or on the acquisition or disposition of Common Shares,
as imposed by any regulatory authorities or any stock exchange on which the
Common Shares are listed whether imposed before or after the granting of the
Option.
10. PLAN GOVERNS
In the event of an inconsistency between the terms of this Agreement and the
Plan, the provisions of the Plan shall govern and apply, and the terms of this
Agreement shall be modified accordingly.
11. TIME
Time shall be of the essence of this Agreement.
12. GOVERNING LAW
This Agreement and all rights hereunder shall be construed according to and be
governed by the laws governing the Plan.
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IN WITNESS WHEREOF the parties hereto have executed these presents the day and
year first written above.
XXXXXX MUSIC INC.
Per:______________________________
Authorized Signatory
(Signature of Optionee)
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SAMPLE
To: Xxxxxx Music Inc.
0000 Xxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
RE: NOTICE OF EXERCISE OF STOCK OPTION
I hereby exercise my option to purchase __________ Common Shares of Xxxxxx Music
Inc. at Cdn. $_____________ per share in accordance with the terms of the Stock
Option Agreement for an aggregate subscription price of Cdn. $_________________.
The share certificate should be issued to me at the following address:
I understand that the share certificate will be issued only upon receipt of
payment by Xxxxxx Music Inc.
Complete the following only if applicable:
I authorize Xxxxxx Music Inc. to instruct the transfer agent to forward my share
certificate to my stockbroker as follows:
Name of Stockbroker:____________________________________________________________
Name of Brokerage Firm:_________________________________________________________
Address of Firm:________________________________________________________________
Telephone Number:_______________________________________________________________
I enclose herewith my cheque payable to Xxxxxx Music Inc. for Cdn. $__________.
Dated this _______ day of ____________________, 2000.
Signature:__________________________________________
Name:_______________________________________________
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SCHEDULE OF STOCK OPTIONS GRANTED
Name Number of Shares Exercise Price (Cdn.$)
---- ---------------- ----------------------
Xxxxxxx Xxxxxx 100,000 $0.10
Xxxxx X. Xxxxxx 150,000 $0.10
Xxxxxx X. Xxxxxxxxxxx 100,000 $0.10
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