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EXHIBIT 4.2
BADGER METER, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of the ____ day of _________, 19__,
by and between BADGER METER, INC., a Wisconsin corporation (the "Company"), and
the undersigned employee (the "Optionee");
W I T N E S S E T H :
WHEREAS, the Company has adopted the Badger Meter, Inc. Stock
Option Plan (the "Plan"), to permit options to purchase shares of the Company's
Common Stock, $1.00 par value per share ("Stock"), to be granted to certain key
employees of the Company or any subsidiary of the Company ("Subsidiary"); and
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements herein set forth, the parties hereby mutually covenant
and agree as follows:
1. Grant of Option. Subject to the terms and conditions
of the Plan and this Agreement, the Company grants to the Optionee the option
to purchase from the Company all or any part of an aggregate number of _____
shares of Stock (hereinafter such shares of Stock are referred to as the
"Optioned Shares", and this option to purchase the Optioned Shares is referred
to as the "Option"). The Option is intended by the Company to constitute a
nonqualified stock option.
2. Option Price. The price to be paid for the Optioned
Shares shall be __________ per share (the "Option Price"), which has been
determined by the Plan Administrator designated pursuant to Section 3 of the
Plan to be not less than 100% of the fair market value of such stock on the
date of grant.
3. Exercise of Option. The Option may be exercised by
the Optionee, in whole or in part, from time to time, during the period
beginning one year after the date of this Agreement and ending ____________,
____, but only in accordance with the following schedule:
To the extent otherwise exercisable, the Option may be exercised following the
termination of the employment relationship between the Optionee and Company
only as provided in subsections (b) and (c) of Section 5 herein.
4. Manner of Exercise and Payment. The Option may be
exercised only by written notice to the Company by the Optionee of the
Optionee's intent to exercise the Option, delivered or mailed by postpaid
registered or certified mail addressed to the Secretary of the Company at its
office in Milwaukee, Wisconsin, specifying the number of Optioned Shares in
respect of which the Option is being exercised. Such notice shall be
accompanied by payment of the entire Option Price of the Optioned Shares being
purchased in cash or its equivalent.
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5. Termination of Employment.
(a) If the Optionee's employment with the Company
or a Subsidiary is terminated by the Company "for cause", or by the Optionee
for any reason other than death, disability or retirement, the Option shall
terminate immediately upon such termination of employment.
(b) If the Optionee's employment with the Company
or a Subsidiary is terminated by the Company without cause or by reason of
retirement, the Option may be exercised to the extent otherwise exercisable at
the date of such termination of employment, in whole or in part, within three
(3) months after the date of such termination of employment, but not
thereafter.
(c) If the Optionee's employment with the Company
or a Subsidiary is terminated by reason of disability within the meaning of
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended ("Code") or
death, the Option may be exercised, to the extent otherwise exercisable at the
date of such termination of employment, in whole or in part, within twelve (12)
months after the date of such termination of employment, but not thereafter.
For purposes of this Section 5, termination by the Employer "for cause" shall
mean any termination of the Optionee by reason of any action or omission on the
part of the Optionee which is contrary to the interests of the Company or not
in the interests of the Company.
6. Withholding Taxes.
(a) It shall be a condition to the obligation of
the Company to issue or transfer shares of Stock upon exercise of the Option
that the Optionee pay to the Company upon its demand or otherwise make
arrangements satisfactory to the Company for payment of such amount as may be
requested by the Company for the purpose of satisfying its liability to
withhold federal, state or local income or other taxes incurred by reason of
the exercise of the Option. If any amount requested is not paid, the Company
may refuse to issue or transfer shares of Stock upon exercise of the Option.
(b) (i) The Optionee shall be permitted to
satisfy the Company's withholding tax requirements by electing (the "Election")
to have the Company withhold shares of Stock otherwise issuable to the Optionee
or to deliver to the Company shares of Stock having a fair market value on the
date income is recognized pursuant to the exercise of the Option (the "Tax
Date") equal to the amount required to be withheld. If the number of shares of
Stock determined pursuant to the preceding sentence shall include a fractional
share, the number of shares withheld or delivered shall be reduced to the next
lower whole number and the Optionee shall deliver to the Company cash in lieu
of such fractional share, or otherwise make arrangements satisfactory to the
Company for payment of such amount.
(ii) If the Optionee is an officer,
director or more than 10% shareholder of the Company (an "Insider"), the full
number of shares of Stock purchased may be issued to the Optionee upon exercise
and the Optionee shall be unconditionally obligated to deliver to the Company,
as soon as practicable after the Tax Date, the number of shares of Stock having
a fair market value on the Tax Date equal to the amount required to be
withheld. If the number of shares so determined shall include a fractional
share, the Optionee shall deliver cash in lieu of such fractional share.
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(iii) The Election must be received by the
Secretary of the Company at its principal office in Milwaukee, Wisconsin prior
to the Optionee's Tax Date; and if the Optionee is an Insider, the Election (1)
shall not be effective until at least six months after the date of this
Agreement; provided, however, that this restriction shall not apply in the
event death or disability of the Optionee occurs prior to the expiration of
this six month period; and (2) must be received by the Secretary of the Company
either six-months or more prior to the Tax Date or during a ten-day period
beginning on the third business day following the release of the Company's
quarterly or annual summary statement of sales and earnings which occurs prior
to the Tax Date.
(iv) The Election shall be irrevocable,
and shall be subject to disapproval, in whole or in part, by the Plan
Administrator. The Election shall be made in writing and shall be made
according to such rules and regulations and in such form as the Plan
Administrator shall determine.
7. Status of Optionee. The Optionee shall not be deemed
for any purposes to be a shareholder of the Company with respect to any shares
which may be acquired hereunder except to the extent that the Option shall have
been exercised and a stock certificate has been issued.
8. Nontransferability of Option. The Option shall not be
transferable by the Optionee otherwise than by will or the laws of descent and
distribution.
9. Powers of Company Not Affected. The existence of the
Option shall not affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issuance of
bonds, debentures, preferred or prior preference stock ahead of or affecting
the Stock or the rights thereof, or dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
10. Adjustment of Number of Shares and Price. In the
event of a capital adjustment resulting from a stock dividend (other than a
stock dividend in lieu of an ordinary cash dividend), stock split,
reorganization, recapitalization, merger, consolidation, combination or
exchange of shares or the like, the Optioned Shares shall be adjusted in a
manner consistent with such capital adjustment; provided, however, that no such
adjustment shall require the Company to sell any fractional shares and the
adjustment shall be limited accordingly. The determination of the Plan
Administrator as to any adjustment shall be final.
11. Restrictions on Optioned Shares. Shares of stock
purchased under the Plan and held by any person who is an officer or director
of the Company, or who directly or indirectly controls the Company, may not be
sold or otherwise disposed of except pursuant to an effective Registration
Statement under the Securities Act of 1933 or in a transaction which, in the
opinion of counsel for the Company, is exempt from registration under such Act.
The Plan Administrator may waive the foregoing restrictions in whole or in part
in any particular case or cases, or may terminate such restrictions, whenever
the Plan Administrator determines that such restrictions afford no substantial
benefit to the Company.
12. Interpretation by Plan Administrator. As a condition
of the granting of the Option, the Optionee agrees for himself and his legal
representatives that any dispute or disagreement which may arise under, as a
result of or pursuant to this Agreement, shall be determined by the Plan
Administrator in its sole discretion, and any interpretation by the Plan
Administrator of the terms of this Agreement shall be final, binding and
conclusive.
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13. Employment. It is understood that nothing herein
contained shall be deemed to confer upon the Optionee any right to continue in
the employ of the Company, or to interfere in any way with the right of the
Company to terminate the employment of the Optionee at any time.
14. Benefits of Agreement. The benefits and obligations
under this Agreement shall inure to and be binding upon all successors of both
parties to this Agreement.
IN WITNESS WHEREOF, the Company has caused this instrument to
be executed by its duly authorized officers and its corporate seal hereunto
affixed, and the Optionee has hereunto affixed his hand and seal, as of the day
and year first above written.
BADGER METER, INC.
By:
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President
Attest:
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Secretary
AGREED AND ACCEPTED
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Optionee
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