[Exhibit 4.2]
GIANT MOTORSPORTS, INC.
STOCK OPTION AGREEMENT
OPTION FOR 1,000,000 Shares of Common Stock
THIS AGREEMENT is made as of this 16th day of August, 2004,
between GIANT MORTORSPORTS, INC., a Nevada corporation with an
address at 00000 Xxxxx Xxxxx 00, Xxxxx Xxxx 00000 (the
"Company"), and XXXXXXX X. XXXXX, with an address at 00000 Xxxxx
Xxxxx 00, Xxxxx Xxxx 00000 (the "Optionee").
W I T N E S S E T H :
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WHEREAS, the Optionee as of the date of this Agreement is
the Chairman of the Board and Chief Executive Officer of the
Company; and
WHEREAS, the Company's Board of Directors has authorized the
issuance to the Optionee of an option to purchase one million
(1,000,000) shares of the Company's common stock, as and for
bonus compensation payable to the Optionee for his services
provided, on behalf of the Company during fiscal year 2004, and
to insure the Optionee's continued services on behalf of the
Company;
NOW, THEREFORE, in consideration of the promises and the
mutual covenants herein contained, the Company and the Optionee
hereby agree as follows:
1. Grant of Option. The Company hereby grants to the
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Optionee, subject to the terms and conditions herein set forth,
the right and option (the "Option") to purchase from the Company,
all or any part of an aggregate of one million (1,000,000) shares
of Common Stock of the Company, par value $.001 per share (the
"Option Stock") at the purchase price of $1.25 per share (the
"Exercise Price"), such Option to be exercisable as hereinafter
provided, and subject only to adjustment in such number of shares
and price as provided in Paragraph 10 hereafter.
2. Term of Option. Unless terminated earlier as provided
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under the terms and conditions of this Agreement, this Option
shall be exercisable until the close of business on August 15,
2009.
3. Period of Exercise. This Option shall be exercisable
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for all of the shares of Option Stock included hereunder
commencing on August 16, 2004.
4. Exercise of Option. This Option is exercisable as
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follows:
(a) Right to Exercise.
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(i) This Option shall be exercisable at any time
during the term of this Agreement.
(ii) This Option may not be exercised for a fraction
of a share.
(iii) In no event may this Option be exercised after
the date of expiration of the term of this Option as set forth in
Paragraph 2 above.
(b) Method of Exercise. This Option shall be exercisable by
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written Notice (in the form attached as Exhibit A). The Notice
must state the number of shares of Option Stock for which the
Option is being exercised, and such other representations and
agreements with respect to such shares of Option Stock as may be
reasonably required by the Company. The Notice must be signed by
the Optionee and shall be delivered in person or by certified
mail to the Secretary of the Company. The Notice must be
accompanied by payment of the Exercise Price, including payment
of any applicable withholding tax, unless payment is made
pursuant to a Cashless Exercise as provided in Paragraph 6
hereafter. This Option shall be deemed to be exercised upon
receipt by the Company of such written Notice accompanied by the
Exercise Price and payment of any applicable withholding tax.
No shares of Option Stock shall be issued pursuant to
the exercise of an Option unless such issuance and such exercise
comply with all relevant provisions of law and the requirements
of any stock exchange upon which the Common Stock may then be
listed. Assuming such compliance, for income tax purposes the
shares of Option Stock shall be considered transferred to the
Optionee on the date on which the Option is exercised.
5. Optionee's Representations. At the time this Option is
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exercised, Optionee shall, if required by the Company,
concurrently with the exercise of all or any portion of this
Option, deliver to the Company his investment representation
statement in the form attached hereto as Exhibit A.
6. Method of Payment. Payment for shares of Option Stock
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may be made in the form of cash, check, wire transfer, or any
combination thereof. All requisite original issue or transfer
documentary stamp taxes shall be paid by the Company. In
addition, at the Optionee's written request the Company may
deliver certificates for the Option Stock for which the Option is
being exercised to a broker for sale on behalf of the Optionee (a
"Cashless Exercise"), provided that the Optionee has irrevocably
instructed such broker to remit directly to the Company, on the
Optionee's behalf, the full amount of the exercise price from the
proceeds of such sale. All expenses associated with a Cashless
Exercise shall be borne by the Optionee.
7. Restrictions on Exercise. If the issuance of shares of
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Option Stock upon the exercise of this Option, or if the method
of payment for such shares would constitute a violation of any
applicable federal or state securities or other law or
regulation, then this Option may not be exercised. The Company
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may require Optionee to make any representation and warranty to
the Company as may be required by any applicable law or
regulation before allowing the Option to be exercised.
8. Non-Transferability of Option. This Option may not be
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transferred in any manner except by will or by the laws of
descent or distribution. It may be exercised during the lifetime
of Optionee only by Optionee. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors and
assigns of the Optionee.
9. Rights as a Stockholder. The Optionee or a transferee
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of this Option shall have no rights as a stockholder with respect
to any shares of Option Stock covered by this Option until the
date of exercise of this Option with respect to the applicable
Option Stock. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record
date is prior to the date such stock certificate is issued,
except as provided in Paragraph 10 hereafter.
10. Adjustments. In the event of a reorganization,
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recapitalization, stock split, stock dividend, combination of
shares, merger or consolidation, or the sale, conveyance, or
other transfer by the Company of all or substantially all of its
property, or any other change in the corporate structure or
shares of the Company, pursuant to any of which events the then
outstanding shares of Common Stock are split up or combined, or
are changed into, become exchangeable at the holder's election
for other shares of stock or any other consideration, or in the
case of any other transaction described in section 424(a) of the
Code, the Board of Directors shall change the number and kind of
shares (including by substitution of shares of another
corporation) (i) which may be issued pursuant to this Option or
(ii) and the exercise price of such shares in the manner that it
shall deem to be equitable and appropriate. In the event of any
merger, consolidation, reorganization or similar corporate event
in which shares of the common stock are to be exchanged for
payment of cash (the "Cash Consideration"), the Board of
Directors may, in its discretion, (i) make equitable adjustments
as provided above, or (ii) cancel this Option in exchange for
payment in cash, if any, equal to the excess of the Cash
Consideration for the shares of Option Stock over the Exercise
Price for such shares.
11. Registration of Option Stock. The Company agrees to
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use its best efforts to register the shares of Option Stock
exercisable by the Optionee hereunder, under the Securities Act,
pursuant to a Registration Statement on Form S-8, to the extent
that such registration is available, within twelve (12) months
after the date of grant of this Option.
12. Non-Qualified Option. This Option is a non-qualified
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option and is not intended to be an incentive stock option within
the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended.
13. Binding Effect. Except as herein otherwise expressly
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provided, this Agreement shall be binding upon and inure to the
benefit of the parties hereto, their legal representatives,
successors and assigns.
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14. Governing Law; Jurisdiction. This Agreement and the
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Option granted hereunder shall be governed by and construed in
accordance with the internal laws of the State of New York
without regard to the conflicts of laws principles thereof. The
parties hereto hereby irrevocably agree that any suit or
proceeding arising directly and/or indirectly pursuant to or
under this Agreement, shall be brought solely in a federal or
state court located in the City, County and State of New York. By
its execution hereof, the parties hereby covenant and irrevocably
submit to the in personam jurisdiction of the federal and state
courts located in the City, County and State of New York and
agree that any process in any such action may be served upon any
of them personally, or by certified mail or registered mail upon
them or their agent, return receipt requested, with the same full
force and effect as if personally served upon them in New York
City. The parties hereto waive any claim that any such
jurisdiction is not a convenient forum for any such suit or
proceeding and any defense or lack of in personam jurisdiction
with respect thereto. In the event of any such action or
proceeding, the party prevailing therein shall be entitled to
payment from the other party hereto of its reasonable counsel
fees and disbursements in an amount judicially determined.
15. Notices. Any notice, consent or communication required
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under the provisions of this Agreement shall be given in writing
and sent or delivered by hand, overnight courier or messenger
service, against a signed receipt or acknowledgment of receipt,
or by registered or certified mail, return receipt requested, to
the parties at their respective addresses set forth at the
beginning of this Agreement with notice to the Company being sent
to the attention of the individual who executed this Agreement on
behalf of the Company. Either party may, by like notice, change
the person, address or facsimile number to which notice is to be
sent.
16. Counterparts. This Agreement may be executed in
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counterparts, each of which shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Company and the Optionee have
executed this Agreement, as of the day and year first above
written.
GIANT MOTORSPORTS, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, President
/s/ Xxxxxxx X. Xxxxx
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XXXXXXX X. XXXXX
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FORM OF EXERCISE NOTICE
AND INVESTMENT REPRESENTATION
The undersigned hereby exercises the right to purchase
_________ shares of common stock, $.001 par value per share (the
"Shares") of Giant Motorsports, Inc. (the "Company") pursuant to
the Stock Option Agreement between the Company and Xxxxxxx X.
Xxxxx, dated as of August 16, 2004 (the "Stock Option
Agreement"), and delivers herewith the exercise price for the
Shares in full, as described in the Stock Option Agreement,
unless such exercise is made pursuant to the provisions for
Cashless Exercise as provided in Paragraph 6 of the Stock Option
Agreement. All of the Shares hereby acquired are vested. In
connection with the purchase of the Shares, the undersigned
represents as follows:
1. The undersigned understands that if this exercise is
being made prior to the creation of a public trading market for
the Company's shares of common stock, if such ever exists, there
will be no market for the Shares and the undersigned will not be
able to liquidate or dispose of the Shares in the event of an
emergency or otherwise. The Shares are subject to restrictions
of transferability and resale and may not be transferred or
resold except as permitted under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to registration or
exemption therefrom.
2. In the event that the Shares have not been registered
pursuant to a Registration Statement on Form S-8 or otherwise
under the Securities Act, the undersigned represents that
he/she/it is acquiring the Shares for the account of the
undersigned for investment purposes only and not for the account
of others or with a view to the sale or other distribution
thereof, in whole or in part.
3. In the event that the Shares have not been registered
pursuant to a Registration Statement on Form S-8 or otherwise
under the Securities Act, the undersigned recognizes that an
investment in the Company involves a high degree of risk.
4. In the event that the Shares have not been registered
pursuant to a Registration Statement on Form S-8 or otherwise
under the Securities Act, the undersigned has determined that
this investment is suitable for the undersigned and that the
undersigned has the resources necessary to withstand the risks
attendant thereto. In such event, the undersigned has no need
for liquidity and could afford a complete loss with respect to
the exercise contemplated hereunder.
5. The address set forth below is the undersigned's true
and correct residence, and the undersigned is a bona fide
resident and domiciliary of the state hereinafter set forth.
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6. The undersigned agrees that, to the extent applicable,
all of the representations in this exercise form shall survive
the issuance of the Shares.
Signature _____________________________
Name: _____________________________
Address: _____________________________
Dated: __________________
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