EXHIBIT 4.1
STOCK OPTION AGREEMENT
AGREEMENT dated as of the 14 day of September, 1998, by and
between Individual Investor Group, Inc., a Delaware corporation ("Company"), and
Xxxxxx Xxxxxx ("Employee").
WHEREAS, the Company and Employee have entered into an
Employment Agreement dated September 11, 1998 pursuant to which Employee will be
employed by the Company ("Employment Agreement");
WHEREAS, on September 14, 1998 ("Grant Date"), the Stock
Option Committee of the Board of Directors of the Company authorized the grant
to the Employee of an option ("Option") to purchase an aggregate of 250,000
shares of the authorized but unissued Common Stock of the Company, $.01 par
value ("Common Stock"), conditioned upon the Employee's acceptance thereof upon
the terms and conditions set forth in this Agreement and the terms of the
Employment Agreement; and
WHEREAS, the Employee desires to acquire the Option on the
terms and conditions set forth in this Agreement;
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants the
Employee the Option to purchase all or any part of an aggregate of 250,000
shares of Common Stock ("Option Shares") on the terms and conditions set forth
herein and subject to the provisions of the Employment Agreement.
2. Non-Incentive Stock Option. The Option represented hereby
is not intended to be an Option which qualifies as an "Incentive Stock Option"
under Section 422 of the Internal Revenue Code of 1986, as amended.
3. Exercise Price. The exercise price of the Option is $1.1875
per share, subject to adjustment as hereinafter provided.
4. Exercisability. This Option is exercisable, subject to the
terms and conditions of this Agreement, as follows: (i) the right to purchase
62,500 of the Option Shares shall be exercisable on or after September 14, 1999,
(ii) the right to purchase an additional 62,500 of the Option Shares shall be
exercisable on and after September 14, 2000 (iii) the right to purchase an
additional 62,500 of the Option Shares shall be exercisable on and after
September 14, 2001 and (iv) the right to purchase an additional 62,500 of the
Option Shares shall be exercisable on or after September 14, 2002. After a
portion of the Option becomes exercisable, it shall remain exercisable, except
as otherwise provided herein, until the close of business on September 14, 2008
("Exercise Period").
5. Effect of Termination of Employment.
5.1. Termination Due to Death. If Employee's
employment by the Company terminates by reason of death, the portion of the
Option, if any, that was exercisable as of the date of death may thereafter be
exercised by the legal representative of the estate or by the legatee of the
Employee under the will of the Employee, for a period of one year from the date
of such death or until the expiration of the Exercise Period, whichever period
is shorter. The portion of the Option, if any, that was not exercisable as of
the date of death shall immediately terminate upon death.
5.2. Termination Due to Disability. If
Employee's employment by the Company terminates by reason of Disability (as such
term is defined in the Employment Agreement), the portion of the Option, if any,
that was exercisable as of the date of termination of employment may thereafter
be exercised by the Employee for a period of one year from the date of the
termination of employment or until the expiration of the Exercise Period,
whichever period is shorter. The portion of the Option, if any, that was not
exercisable as of the date of the termination of employment shall immediately
terminate upon the termination of employment.
5.3. Other Termination.
5.3.1. If Employee's employment is terminated
by the Company for cause (as defined in Section 9(a) of the Employment
Agreement), this Option, whether or not exercisable, shall immediately expire.
5.3.2. If Employee's employment is
terminated by the Company without cause (as defined in Section 9(a) of the
Employment Agreement), the portion of the Option, if any, that was exercisable
as of the date of termination of employment may thereafter be exercised by the
Employee for a period of one year from the date of the termination of employment
or until the expiration of the Exercise Period, whichever period is shorter. The
portion of the Option, if any, that was not exercisable as of the date of the
termination of employment shall immediately terminate upon the termination of
employment.
5.3.3. If Employee terminates her employment
with the Company, this Option, whether or not exercisable, shall immediately
expire.
6. Withholding Tax. Not later than the date as of which an
amount first becomes includible in the gross income of the Employee for Federal
income tax purposes with respect to the Option, the Employee shall notify the
Company of the amount and, to the extent required, pay to the Com pany, or make
arrangements satisfactory to the Board regarding the payment of, any Federal,
state and local taxes of any kind required by law to be withheld or paid with
respect to such amount. The obligations of the Company pursuant to this
Agreement shall be conditional upon such payment or arrangements with the
Company and the Company shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to the Employee
from the Company.
7. Adjustments. In the event of any recapitalization, dividend
(other than cash dividend), stock split, reverse stock split, or other change in
capital structure of the Company affecting the number of issued shares of Common
Stock, the Company shall proportionally adjust the number and kind of Option
Shares and the exercise price of the Option in order to prevent the dilution or
enlargement of the Employee's proportionate interest in the Company and
Employee's rights hereunder immediately prior to the reorganization,
recapitalization, consolidation, dividend, stock split, reverse stock split or
other change, provided that the number of Option Shares shall always be a whole
number.
8. Acceleration of Vesting on Change of Control.
Notwithstanding the provisions of Sections 4, in the event of a "change of
control" (as defined below) while the Employee is employed by the Company, the
vesting of this Option shall accelerate and all the Option Shares shall be
purchasable by Employee simultaneous with such change of control. For the
purposes of this Agreement, a change of control shall mean (i) the acquisition
by any "person" (as defined in Section 3(a)(9) and 13(d) of the Securities
Exchange Act of 1934, as amended ("Exchange Act")), other than a stockholder of
the Company that, as of the date of this Agreement, is the beneficial owner (as
defined in Rule 13d-3 promulgated under the Exchange Act) of 10% or more of the
outstanding voting securities of the Company, of more than 50% of the combined
voting power of the then outstanding voting securities of the Company or (ii)
the sale by the Company of all, or substantially all, of the assets of the
Company to one or more purchasers, in one or a series of related transactions,
where the transaction or transactions require approval pursuant to Delaware law
by the stockholders of the Company.
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9. Method of Exercise.
9.1. Notice to the Company. The Option shall be
exercised in whole or in part by written notice in substantially the form
attached hereto as Exhibit A directed to the Company at its principal place of
business accompanied by full payment as hereinafter provided of the exercise
price for the number of Option Shares specified in the notice.
9.2. Delivery of Option Shares. The Company
shall deliver a certificate for the Option Shares to the Employee as soon as
practicable after payment therefor.
9.3. Payment of Purchase Price. The Employee
shall make payments by wire transfer, certified or bank check, in each case
payable to the order of the Company. Alternatively, the Employee may make
arrangements satisfactory to the Company with a bank or a broker who is a member
of the National Association of Securities Dealers, Inc. to sell on the exercise
date a sufficient number of the Option Shares being purchased so that the net
proceeds of the sale transaction will at least equal the Exercise Price
multiplied by the number of Option Shares being purchased pursuant to such
exercise, plus the amount of any applicable withholding taxes and pursuant to
which the bank or broker undertakes to deliver the full Exercise Price
multiplied by the number of Option Shares being purchased pursuant to such
exercise, plus the amount of any applicable withholding taxes to the Company on
a date satisfactory to the Company, but no later than the date on which the sale
transaction would settle in the ordinary course of business.
10. Nonassignability. The Option shall not be assignable or
transferable except by will or by the laws of descent and distribution in the
event of the death of the Employee. No transfer of the Option by the Employee by
will or by the laws of descent and distribution shall be effective to bind the
Company unless the Company shall have been furnished with written notice thereof
and a copy of the will and such other evidence as the Company may deem necessary
to establish the validity of the transfer and the acceptance by the transferee
or transferees of the terms and conditions of the Option.
11. Company Representations. The Company hereby represents and
warrants to the Employee that:
(a) the Company, by appropriate and all required
action, is duly authorized to enter into this Agreement and consummate
all of the transactions contemplated hereunder; and
(b) the Option Shares, when issued and delivered by
the Company to the Employee in accordance with the terms and conditions
hereof, will be duly and validly issued and fully paid and
non-assessable.
12. Employee Representations. The Employee hereby represents
and warrants to the Company that:
(a) she is acquiring the Option and shall
acquire the Option Shares for her own account and not with a view
towards the distribution thereof;
(b) she has received a copy of all reports and
documents required to be filed by the Company with the Commission
pursuant to the Exchange Act within the last 24 months and all reports
issued by the Company to its stockholders;
(c) she understands that she must bear the economic
risk of the investment in the Option Shares, which cannot be sold by
her unless they are registered under the Securities Act of 1933 ("1933
Act") or an exemption therefrom is available thereunder;
(d) she has had both the opportunity to ask questions
and receive answers from the officers and directors of the Company and
all persons acting on its behalf concerning the terms and conditions of
the offer made hereunder and to obtain any additional information to
the extent the Company possesses or may possess such information or can
acquire it without unreasonable effort or expense necessary to verify
the accuracy of the information obtained pursuant to clause (b) above;
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(e) she is aware that the Company shall place stop
transfer orders with its transfer agent against the transfer of the
Option Shares in the absence of registration under the 1933 Act or an
exemption therefrom as provided herein; and
(i) The certificates evidencing the Option Shares
may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said
Act."
"The shares represented by this certificate have been
acquired pursuant to a Stock Option Agreement, dated
as of September 14, 1998, a copy of which is on file
with the Company, and may not be transferred, pledged
or disposed of except in accordance with the terms
and conditions thereof."
13. Restriction on Transfer of Option and Option Shares.
Anything in this Agreement to the contrary notwithstanding and in addition to
the provisions of Section 10 of this Agreement, the Employee hereby agrees that
she shall not sell, transfer by any means or otherwise dispose of the Option
Shares acquired by her without registration under the 1933 Act, or in the event
that they are not so registered, unless (i) an exemption from the 1933 Act
registration requirements is available thereunder, and (ii) the Employee has
furnished the Company with notice of such proposed transfer and the Company's
legal counsel, in its reasonable opinion, shall deem such proposed transfer to
be so exempt.
14. Registration Right. The Company agrees to file a
registration statement ("Registration Statement") on Form S-8 (or successor
form) to register the Option Shares for issuance to Employee on or prior to the
date the Option or any portion thereof first becomes exercisable. The Company
will bear all expenses and pay all fees incurred in connection with the filing
and modification or amendment of the Registration Statement, exclusive of
underwriting discounts, and commissions payable in respect of the sale of the
Common Stock and any counsel for the Employee. Moreover, if the Company fails to
comply with the provisions of this Section 14, the Company shall, in addition to
any other equitable or other relief available to the Employee, be liable for any
and all incidental, special and consequential damages and damages due to loss of
profits sustained by the Employee.
15. Miscellaneous.
15.1. Notices. Any notices or other
communications required or permitted hereunder shall be in writing and shall be
deemed given upon delivery if delivered in person or by overnight courier (e.g.
Federal Express), or on the third business day following deposit in the United
States mail, if sent by registered or certified mail, return receipt requested,
addressed to the address of the party to receive notice set forth herein, or to
such this address as a party shall designate by notice in writing given to the
this party in accordance with the terms hereof, except that notices regarding
changes in address shall be effective only upon receipt.
15.2. Stockholder Rights. The Employee shall not
have any of the rights of a stockholder with respect to the Option Shares until
such shares have been issued after the due exercise of the Option. Nothing
contained in this Agreement shall be deemed to confer upon Employee any right to
continued employment with the Company or any subsidiary thereof, nor shall it
interfere in any way with the right of the Company to terminate Employee in
accordance with the provisions regarding such termination set forth in
Employee's Employment Agreement with the Company, or if there exists no such
agreement, to terminate Employee at will.
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15.3. Waiver. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any other or subsequent breach.
15.4. Entire Agreement. This Agreement and the
Employment Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof. This Agreement may not be amended except
by writing executed by the party to be charged.
15.5. Binding Effect; Successors. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and, to the
extent not prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
15.6. Governing Law. This Agreement shall be
governed by and construed in accordance with the Internal laws of the State of
New York without regard to principles of conflicts of law.
15.7. Headings. The headings contained herein are
for the sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or provisions of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the day and year first above written.
INDIVIDUAL INVESTOR GROUP, INC. Address:
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
By: /s/ Xxxxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxxxx X. Xxxxxxxxx
Chairman and Chief Executive Officer
EMPLOYEE: Address:
000 Xxxx Xxx Xxxxxx
Xxxxxxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
/s/ Xxxxxx Xxxxxx
---------------------
Xxxxxx Xxxxxx
EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
------------------------------
DATE
Individual Investor Group, Inc.
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Board of Directors
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of
September 14, 1998 ("Agreement") with Individual Investor Group, Inc.
("Company"), I hereby irrevocably elect to exercise the right to purchase
_________ shares of the Company's common stock, par value $.01 per share
("Common Stock"), which are being purchased for investment and not for resale.
As payment for my shares, enclosed is (check and complete
applicable box[es]):
|_| a [personal check] [certified check] [bank check]
payable to the order of "Individual Investor Group,
Inc." in the sum of $_________; and/or
|_| confirmation of wire transfer in the amount of
$_____________.
I hereby represent, warrant to, and agree with, the Company
that:
(i) I have acquired the Option and shall acquire the
Option Shares for my own account and not with a view towards the
distribution thereof;
(ii) I have received a copy of all reports and
documents required to be filed by the Company with the Commission
pursuant to the Exchange Act within the last 24 months and all reports
issued by the Company to its stockholders;
(iii) I understand that I must bear the economic risk
of the investment in the Option Shares, which cannot be sold by me
unless they are registered under the Securities Act of 1933 ("1933
Act") or an exemption therefrom is available thereunder;
(iv) I have had both the opportunity to ask questions
and receive answers from the officers and directors of the Company and
all persons acting on its behalf concerning the terms and conditions of
the offer made hereunder and to obtain any additional information to
the extent the Company possesses or may possess such information or can
acquire it without unreasonable effort or expense necessary to verify
the accuracy of the information obtained pursuant to clause (ii) above;
(v) I am aware that the Company shall place stop
transfer orders with its transfer agent against the transfer of the
Option Shares in the absence of registration under the 1933 Act or an
exemption therefrom as provided herein;
(vi) my rights with respect to the Option Shares
shall, in all respects, be subject to the terms and conditions of this
Agreement and the Employment Agreement; and
(vii) the certificates evidencing the Option Shares
may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said
Act."
"The shares represented by this certificate have been
acquired pursuant to a Stock Option Agreement, dated
as of September 14, 1998, a copy of which is on file
with the Company, and may not be transferred, pledged
or disposed of except in accordance with the terms
and conditions thereof."
Kindly forward to me my certificate at your earliest
convenience.
Very truly yours,
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(Signature) (Address)
---------------------------------------- ----------------------------------
(Print Name) (Address)
----------------------------------
(Social Security Number)
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