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EXHIBIT 4.2
THE XXXXX COMPANIES, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement (the "Agreement") is entered into
as of "Date," by and between The Xxxxx Companies, Inc., a California corporation
(the "Company") and _______________________ (the "Optionee") pursuant to the
Company's Amended and Restated 1994 Stock Incentive Plan (the "Plan").
1. GRANT OF OPTION. The Company hereby grants to Optionee an option (the
"Option") to purchase all or any portion of a total of _______________ (_______)
shares (the "Shares") of the Common Stock of the Company at a purchase price of
_________________ ($______) per share (the "Exercise Price"), subject to the
terms and conditions set forth herein and the provisions of the Plan. This
Option is NOT intended to qualify as an "incentive stock option" as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. VESTING OF OPTION. The Optionee may not purchase any shares by exercise
of this Option between the date of this Agreement and the first anniversary date
hereof. On and after the following anniversary dates of this Agreement this
Option may be exercised up to the indicated number of shares covered by this
Option:
Percentage Cumulative
Anniversary Initially Percentage
Date Exercisable Exercisable
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First 20% 20%
Second 20% 40%
Third 20% 60%
Fourth 20% 80%
Fifth 20% 100%
No additional shares shall vest after the date of termination of Optionee's
"Continuous Service" (as defined in Section 3 below), but this Option shall
continue to be exercisable in accordance with Section 3 hereof with respect to
that number of shares that have vested as of the date of termination of
Optionee's Continuous Service; provided, however, if the Optionee shall take a
leave of absence exceeding thirty (30) days which is authorized by the Company
in writing and the Optionee recommences providing services to the Company at the
end of such authorized leave of absence, then the vesting date(s) for any
Option(s) that are unvested at the date of commencement of such leave of absence
shall be extended by the length of such leave of absence.
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3. TERM OF OPTION. Optionee's right to exercise this Option shall terminate
upon the first to occur of the following:
(a) the expiration of ten (10) years from the date of this Agreement.
(b) the expiration of thirty (30) days from the date of termination
of Optionee's Continuous Service if such termination occurs for any reason
other than permanent disability or death or voluntary resignation:
provided, however, that if Optionee dies during such thirty-day period the
provisions of Section 3(d) below shall apply;
(c) the expiration of one (1) year from the date of termination of
Optionee's Continuous Service if such termination is due to permanent
disability of the Optionee (as defined in Section 22(e)(3) of the Code);
(d) the expiration of one (1) year from the date of termination of
Optionee's Continuous Service if such termination is due to Optionee's
death or if death occurs during the thirty-day period following termination
of Optionee's Continuous Service pursuant to Section 3(b) above; or
(e) the expiration of ninety (90) days from the date of termination
of Optionee's Continuous Service if such termination is due to voluntary
resignation; provided, however that if Optionee dies during such ninety-day
period the provisions of Section 3(d) above shall apply.
As used herein, the term "Continuous Service" means (i) employment by
either the Company or any parent or subsidiary corporation of the Company, or by
a corporation or a parent or subsidiary of a corporation issuing or assuming a
stock option in a transaction to which Section 424(a) of the Code applies, which
is uninterrupted except for vacations, illness (except for permanent disability
as defined in Section 22(e)(3) of the Code), or leaves of absence which are
approved in writing by the Company or any other employer corporations, if
applicable; (ii) service as a member of the Board of Directors of the Company
until Optionee resigns, is removed from office, or Optionee's term of office
expires and he or she is not reelected; or (iii) so long as Optionee is engaged
as a consultant or service provider to the Company or other corporation referred
to in clause (i) above.
4. EXERCISE OF OPTION. On or after the vesting of any portion of this
Option in accordance with Section 2 above, and until termination of this Option
in accordance with Section 3 above, the portion of this Option which has vested
may be exercised in whole or in part by the Optionee (or, after his or her
death, by the person designated in Section 5 below) upon delivery of the
following to the Company at its principal executive offices:
(a) a written notice of exercise which identifies this Agreement and
states the number of Shares then being purchased (but no fractional Shares
may be purchased).
(b) a check or cash in the amount of the Exercise Price (or payment of
the Exercise Price in such other form of lawful consideration as the
Administrator may approve from time to time under the provisions of Section
5.3 of the Plan);
(c) a check or cash in the amount reasonably requested by the Company
to satisfy the Company's withholding obligations under Federal, State or
other applicable tax laws with respect to the taxable income, if any,
recognized by the Optionee in connection with the exercise of this Option
(unless the Company and Optionee shall have made other arrangements for
deductions or withholding from Optionee's wages, bonus or other
compensation payable to Optionee, or by the withholding of Shares issuable
upon exercise of this Option or the delivery of Shares owned by the
Optionee in accordance with Section 10 of the Plan, provided such
arrangements satisfy the requirements of applicable tax laws); and
(d) a letter, if requested by the Company, in such form and substance
as the Company may require, setting forth the investment intent of the
Optionee, or person designated in Section 5 below, as the case may be.
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5. DEATH OF OPTIONEE; NO ASSIGNMENT. The rights of the Optionee under this
Agreement may not be assigned or transferred except by will or by the laws of
descent and distribution, and may be exercised during the lifetime of the
Optionee only by such Optionee. Any attempt to sell, pledge, assign,
hypothecate, transfer or dispose of this Option in contravention of this
Agreement or the Plan shall be void and shall have no effect. If the Optionee's
Continuous Service terminates as a result of his or her death, and provided
Optionee's rights hereunder shall have vested pursuant to Section 2 hereof,
Optionee's legal representative, his or her legatee, or the person who acquired
the right to exercise this Option by reason of the death of the Optionee
(individually, a "Successor") shall succeed to the Optionee's rights and
obligations under this Agreement. After the death of the Optionee, only a
Successor may exercise this Option.
6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.
(a) Optionee represents and warrants that this Option is being
acquired by Optionee for Optionee's personal account, for investment
purposes only, and not with a view to the distribution, resale or other
disposition thereof.
(b) Optionee acknowledges that the Company may issue Shares upon the
exercise of the Option without registering such Shares under the Securities
Act of 1933, as amended (the "Act"), on the basis of --- certain exemptions
from such registration requirement. Accordingly, Optionee agrees that his
or her exercise of the Option may be expressly conditioned upon his or her
delivery to the Company of an investment certificate including such
undertakings as the Company may reasonably require in order to assure the
availability of such exemptions, including a representation that Optionee
is acquiring the Shares for investment and not with a present intention of
selling or otherwise disposing thereof and an agreement by Optionee that
the certificates evidencing the Shares may bear a legend indicating such
non-registration under the Act and the resulting restrictions on transfer.
Optionee acknowledges that, because Shares received upon exercise of an
Option may be unregistered, Optionee may be required to hold the Shares
indefinitely unless they are subsequently registered for resale under the
Act or an exemption from such registration is available.
(c) Optionee acknowledges receipt of a copy of the Plan and
understands that all rights and obligations connected with this Option are
set forth in this Agreement and in the Plan.
7. RESTRICTIVE LEGENDS. Optionee hereby acknowledges that Federal
securities laws and the securities laws of the State in which he or she resides
may require the placement of certain restrictive legends upon the Shares issued
upon exercise of this Option, and Optionee hereby consents to the placing of any
such legends upon certificates evidencing the Shares as the Company, or its
counsel, may deem necessary or advisable.
8. LIMITATION OF COMPANY'S LIABILITY FOR NONISSUANCE. The Company agrees to
use its reasonable best efforts to obtain from any applicable regulatory agency
such authority or approvals as may be required in order to issue and sell the
Shares to the Optionee pursuant to this Option. Inability of the Company to
obtain, from any such regulatory agency, authority or approval deemed by the
Company's counsel to be necessary for the lawful issuance and sale of the Shares
hereunder and under the Plan shall relieve the Company of any liability in
respect of the nonissuance or sale of such Shares as to which such requisite
authority or approval shall not have been obtained.
9. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE. In the event that the
outstanding shares of Common Stock of the Company are hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of a recapitalization, stock split,
combination of shares, reclassification, stock dividend or other change in the
capital structure of the Company, then appropriate adjustment shall be made by
the Administrator to the number of Shares subject to the unexercised portion of
this Option and to the Exercise Price per share, in order to preserve, as nearly
as practical, but not to increase, the benefits of the Optionee under this
Option, in accordance with the provisions of Section 4.2 of the Plan.
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10. MERGERS, REORGANIZATIONS, ETC. In the event that the Company at any
time proposes to sell substantially all of its assets, merge into, consolidate
with another entity or to enter into any other reorganization in which the
Company is not the surviving corporation, this Option shall terminate upon the
effective date of such transaction unless provision is made in writing in
connection with such transaction for (i) the assumption of this Option or the
substitution of this Option with a new option of comparable value covering
shares of a successor corporation, with the appropriate adjustments as to the
number and kind of shares and the Exercise Price, in which event this Option or
the new option substituted therefor shall continue in the manner and under the
terms so provided; or (ii) the substitution for this Option of a program or plan
to provide rights to Optionee to receive, on exercise of such rights, the type
and amount of consideration Optionee would have received had he or she exercised
this Option prior to such transaction and less the aggregate Exercise Price
therefor.
11. NO EMPLOYMENT CONTRACT CREATED. Neither the granting of this Option nor
the exercise hereof shall be construed as granting to the Optionee any right
with respect to continuance of employment by the Company or any of its
subsidiaries. The right of the Company or any of its subsidiaries to terminate
at will the Optionee's employment at any time (whether by dismissal, discharge
or otherwise), with or without cause, is specifically reserved.
12. RIGHTS AS SHAREHOLDER. The Optionee (or transferee of this option by
will or by the laws of descent and distribution) shall have no rights as a
shareholder with respect to any Shares covered by this Option until the date of
the issuance of a stock certificate or certificates to him or her for such
Shares, notwithstanding the exercise of this Option.
13. "MARKET STAND-OFF" AGREEMENT. Optionee agrees that, if requested by the
Company or the managing underwriter of any proposed public offering of the
Company's securities, Optionee will not sell or otherwise transfer or dispose of
any Shares held by Optionee without the prior written consent of the Company or
such underwriter, as the case may be, during such period of time, not to exceed
180 days following the effective date of the registration statement filed by the
Company with respect to such offering, as the Company or the underwriter may
specify.
14. INTERPRETATION. This Option is granted pursuant to the terms of the
Plan, and shall in all respects be interpreted in accordance therewith. The
Administrator shall interpret and construe this Option and the Plan, and any
action, decision, interpretation or determination made in good faith by the
Administrator shall be final and binding on the Company and the Optionee. As
used in this Agreement, the term "Administrator" shall refer to the committee of
the Board of Directors of the Company appointed to administer the Plan, and if
no such committee has been appointed, the term Administrator shall mean the
Board of Directors.
15. NOTICES. Any notice, demand or request required or permitted to be
given under this Agreement shall be in writing and shall be deemed given when
delivered personally or three (3) days after being deposited in the United
States mail, as certified or registered mail, with postage prepaid, and
addressed, if to the Company, at its principal place of business, Attention: the
Chief Financial Officer, and if to the Optionee, at his or her most recent
address as shown in the employment or stock records of the Company.
16. GOVERNING LAW. The validity, construction, interpretation, and effect
of this Option shall be governed by and determined in accordance with the laws
of the State of California.
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17. SEVERABILITY. Should any provision or portion of this Agreement be held
to be unenforceable or invalid for any reason, the remaining provisions and
portions of this Agreement shall be unaffected by such holding.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be deemed one instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
THE XXXXX COMPANIES, INC. OPTIONEE
By:
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Xxxx X. Xxxxx, (Signature)
Chief Executive Officer
By:
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Xxxx X. Xxxxxxxxx,
Chief Financial Officer
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