Exhibit 4.3
ISLAND HOLDING COMPANY, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement"), made as of the
1st day of February, 2002 (the "Grant Date"), between Island Holding Company,
Inc. (the "Company"), and Xxxx Xxxx (the "Optionee").
WHEREAS, the Company has determined to grant an option to
acquire the Company's common stock to the Optionee as provided herein
inrrecognition of consultation services that the Optionee has provided to the
Company in the past while in the employ of Datek Online Holdings Corp. ("Datek")
and in order to provide an incentive to the Optionee to provide such services to
the Company in the future through his continued employment by Datek.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
1.1 The Company hereby grants to the Optionee the right and option
(the"Option") to purchase all or any part of an aggregate of
10,000 Shares, subject to, and in accordance with, the terms
and conditions set forth in this Agreement.
1.2 The Option is not intended to qualify as an Incentive
Stock Option within the meaning of Section 422 of the Code.
2. Exercise Price.
The price at which the Optionee shall be entitled to purchase
Shares upon the exercise of the Option shall be $11.06 per Share.
3. Duration of Option.
The Option shall be exercisable to the extent and in the
manner provided herein for a period beginning on the Grant
Date and ending on February 1, 2012 (the "Exercise Term");
provided, however, that the Option may be earlier terminated
as provided in Section 6 hereof.
4. Vesting; Exercisability of Option.
4.1 This Option shall vest with respect to twenty-five percent
(25%) of the total number of Shares subject to this Option on each of the first
four (4) anniversaries of the day next preceding the Grant Date, in each case,
if the Optionee is in the employ or service of Datek or the Company on such
anniversary. Any fractional number of shares of common stock resulting from the
application of the foregoing percentages shall be rounded to the next higher
whole number of shares of common stock. The Committee may accelerate the vesting
of this Option or any portion hereof at any time.
4.2 The Optionee shall be entitled to exercise the vested
portion of this Option at any time on or after the occurrence of an Exercise
Event. The portion of this Option that becomes vested after the occurrence of an
Exercise Event may be exercised at any time after it becomes vested. To the
extent not exercised, installments shall accumulate and be exercisable, in whole
or in part, at any time after becoming exercisable, but not later than the date
this Option expires.
5. Manner of Exercise and Payment.
5.1 Subject to the terms and conditions of this Agreement, the
Option may be exercised by written notice delivered in person or by mail to the
Secretary of the Company, at its principal executive office. Such notice shall
state that the Optionee is electing to exercise the Option and the number of
Shares in respect of which the Option is being exercised and shall be signed by
the person or persons exercising the Option. If requested by the Company, such
person or persons shall (i) deliver this Agreement to the Secretary of the
Company who shall endorse thereon a notation of such exercise and (ii) provide
satisfactory proof as to the right of such person or persons to exercise the
Option.
5.2 The notice of exercise described in Section 5.1 hereof
shall be accompanied by the full exercise price for the Shares in respect of
which this Option is being exercised in either of the following forms (or any
combination thereof): (a) cash or (b) the transfer, either actually or by
attestation, to the Company of Shares that have been held by the Optionee for at
least six (6) months (or such lesser period as may be permitted by the
Committee) prior to the exercise of this Option, such transfer to be upon such
terms and conditions as determined by the Committee or (c) a combination of cash
and the transfer of Shares; provided, however, that the Committee may determine
that the exercise price shall be paid only in cash. In addition, following an
Initial Public Offering, this Option may be exercised through a registered
broker-dealer pursuant to such cashless exercise procedures which are, from time
to time, deemed acceptable by the Committee. Any Shares transferred to the
Company as payment of the exercise price under this Option shall be valued at
their Fair Market Value on the day preceding the date of exercise of this
Option. No fractional Shares (or cash in lieu thereof) shall be issued upon
exercise of this Option and the number of Shares that may be purchased upon
exercise shall be rounded to the nearest number of whole Shares.
5.3 Upon receipt of notice of exercise and full payment for
the Shares in respect of which this Option is being exercised, the
Company shall take such action as may be necessary to effect the
transfer to the Optionee of the number of Shares as to which such
exercise was effective.
5.4 The Optionee shall not be deemed to be the holder of, or
to have any of the rights of a holder with respect to any Shares subject to this
Option until (i) the Option shall have been exercised pursuant to the terms of
this Agreement and the Optionee shall have paid the full exercise price for the
number of Shares in respect of which the Option was exercised, (ii) the Company
shall have issued and delivered the Shares to the Optionee, and (iii) the
Optionee's name shall have been entered as a shareholder of record on the books
of the Company, whereupon the Optionee shall have full voting and other
ownership rights with respect to such Shares.
6. Effect of a Termination of Employment. Subject to Section 7 hereof,
each Option shall terminate prior to the time set forth in Section 3 hereof as
follows:
6.1 In the event the Optionee ceases to be employed by Datek
for any reason other than his termination for Cause, the Optionee may, for a
period ending thirty (30) days after such termination, but in no event beyond
the expiration date of the Option as set forth in Section 3 hereof, exercise the
Option to the extent, and only to the extent, that such Option or portion
thereof was vested and exercisable as of the date of such termination, after
which time the Option shall automatically terminate in full; provided, however,
if immediately following the termination of the Optionee's employment with Datek
the Optionee becomes employed by the Company, this Option shall continue to
remain outstanding in accordance with the terms hereof until the Optionee ceases
to be employed by the Company in which case this Section 6 shall apply as if
such termination from the Company had been a termination of the Optionee's
employment with Datek.
6.2 If the Optionee's employment by Datek is terminated for
Cause, the Option held by the Optionee hereunder shall immediately terminate in
full and no rights thereunder may be exercised.
7. Restrictions on Transfer.
This Option shall not be transferable by the Optionee other
than by will or by the laws of descent and distribution, and this Option shall
be exercisable during the lifetime of the Optionee only by the Optionee or his
or her guardian or legal representative. The terms of this Agreement shall be
final, binding and conclusive upon the beneficiaries, executors, administrators,
heirs and successors of the Optionee.
8. Adjustment Upon Changes in Capitalization.
8.1 In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, subject to
Section 9, to the number and class of Shares or other stock or securities which
are subject to this Option the exercise price therefor, if applicable.
8.2 If, by reason of a Change in Capitalization, the Optionee
shall be entitled to exercise this Option with respect to new, additional or
different shares of stock or securities of the Company or any other corporation,
such new, additional or different shares shall thereupon be subject to all of
the conditions, restrictions and performance criteria which were applicable to
the Shares subject to this Option, as the case may be, prior to such Change in
Capitalization.
9. Effect of Certain Transactions.
In the event of (a) the liquidation or dissolution of the
Company or (b) a merger or consolidation of the Company with or into any other
corporation or other entity (a "Transaction"), this Option shall continue in
effect in accordance with its terms, except that following a Transaction either
(i) this Option shall be treated as provided for in the agreement entered into
in connection with the Transaction or (ii) if not so provided in such agreement,
the Optionee shall be entitled to receive in respect of each Share subject to
this Option, upon exercise of this Option following the Transaction, the same
number and kind of stock, securities, cash, property or other consideration that
each holder of a Share was entitled to receive in the Transaction in respect of
a Share; provided, however, that such stock, securities, cash, property, or
other consideration shall remain subject to all of the conditions, restrictions
and performance criteria which were applicable to this Option prior to such
Transaction.
10. Withholding of Taxes.
The Company shall have the right to deduct from any
distribution of cash to the Optionee an amount equal to the federal, state and
local income taxes and other amounts as may be required by law to be withheld
(the "Withholding Taxes") with respect to the Option. If the Optionee is
entitled to receive Shares upon exercise of the Option, the Optionee shall pay
the Withholding Taxes to the Company in cash prior to the issuance of such
Shares.
11. Market Standoff.
In connection with any underwritten public offering by the
Company of its equity securities pursuant to an effective registration statement
filed under the Securities Act, including the Company's Initial Public Offering,
neither the Optionee nor any holder of Shares acquired pursuant to the exercise
of this Option shall sell, make any short sale of, loan, hypothecate, pledge,
grant any option for the purchase of, or otherwise dispose or transfer for value
or otherwise agree to engage in any of the foregoing transactions with respect
to, any such Shares without the prior written consent of the Company or its
underwriters. Such limitations shall be in effect for such period of time as may
be requested by the Company or such underwriters and agreed to by the Company's
officers and directors with respect to their Shares; provided, however, that in
no event shall such period exceed 180 days. The limitations of this paragraph
shall in all events terminate two years after the effective date of the
Company's Initial Public Offering. Holders of Shares issued pursuant to the
Option shall be subject to the market standoff provisions of this paragraph only
if the officers and directors of the Company are also subject to similar
arrangements.
In the event of any stock split, stock dividend,
recapitalization, combination of Shares, exchange of Shares or other change
affecting the Company's outstanding Shares effected as a class without the
Company's receipt of consideration, then any new, substituted or additional
securities distributed with respect to the Shares acquired pursuant to the
Option shall be immediately subject to the provisions of this Section 11, to the
same extent the Shares are at such time covered by such provisions.
In order to enforce the limitations of this Section 11, the
Company may impose stop-transfer instructions with respect to the Shares
acquired pursuant to the Option until the end of the applicable standoff period.
12. Modification of Agreement.
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but only by a written
instrument executed by the parties hereto.
13. Severability.
Should any provision of this Agreement be held by a court of competent
jurisdiction to be unenforceable or invalid for any reason, the remaining
provisions of this Agreement shall not be affected by such holding and shall
continue in full force in accordance with their terms.
14. Regulations and Other Approvals; Governing Law.
14.1 Except as to matters of federal law, this Agreement and
the rights of all persons claiming hereunder shall be construed and determined
in accordance with the laws of the State of Delaware without giving effect to
conflicts of laws principles thereof.
14.2 The obligation of the Company to sell or deliver Shares
with respect to the Option shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state securities laws, and the
obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.
14.3 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority.
14.4 This Option is subject to the requirement that, if at any
time the Committee determines, in its discretion, that the listing, registration
or qualification of Shares issuable pursuant to this Agreement is required by
any securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the issuance of Shares, no payment made or
Shares issued, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions as
acceptable to the Committee.
14.5 Notwithstanding anything contained in this Agreement to
the contrary, in the event that the disposition of Shares acquired pursuant to
this Agreement is not covered by a then current registration statement under the
Securities Act, and is not otherwise exempt from such registration, such Shares
shall be restricted against transfer to the extent required by the Securities
Act and Rule 144 or other regulations thereunder. The Committee may require any
individual receiving Shares pursuant to this Option, as a condition precedent to
receipt of such Shares, to represent and warrant to the Company in writing that
the Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than pursuant to
an effective registration thereof under said Act or pursuant to an exemption
applicable under the Securities Act or the rules and regulations promulgated
thereunder. The certificates evidencing any of such Shares shall be
appropriately amended or have an appropriate legend placed thereon to reflect
their status as restricted securities as aforesaid.
14.6 Notwithstanding anything in this Agreement to the
contrary, the Company may make any necessary or desirable modifications or
amendments to this Option, including termination of this Option without payment
therefore, in order to obtain or perfect any exemption or other relief from the
Securities and Exchange Commission in connection with this Agreement or any
equity plan of the Company or any of its Subsidiaries.
14.7 In the event of the Optionee's death, a condition of
exercising any Option shall be the delivery to the Company of such tax waivers
and other documents as the Board or Committee shall determine.
15. No Limitation on Corporate Acts.
The existence of the Option shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes to the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting Shares or 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 similar in
character or otherwise.
16. Successors in Interest.
This Agreement shall inure to the benefit of and be binding
upon any successor to the Company. This Agreement shall inure to the benefit of
the Optionee's legal representatives. All obligations imposed upon the Optionee
and all rights granted to the Company under this Agreement shall be final,
binding and conclusive upon the Optionee's heirs, executors, administrators and
successors.
17. Notices.
All notices provided for in this Agreement shall be in writing
and shall be given when personally delivered or sent by registered or certified
mail, return receipt requested; if intended for the Company, shall be addressed
to it, attention of its General Counsel, at:
Island Holding Company, Inc.
00 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
or at such other address of which the Company shall have given notice to
Optionee in the manner herein provided; and if intended for Optionee, shall be
addressed to him at:
000 Xxxxxxx Xxxxxx, Xxx. 0
Xxxxxxxx, XX 00000
or at such other address of which the Optionee shall have given notice to the
Company in the manner herein provided.
18. Definitions.
18.1 "Board" means the Board of Directors of the Company.
18.2 "Cause" means (i) the commission by the Optionee of any
act or omission that would constitute a crime under federal, state or equivalent
foreign law, (ii) the commission by the Optionee of any act of moral turpitude,
(iii) fraud, dishonesty or other acts or omissions by the Optionee that result
in a breach of any fiduciary or other material duty to Datek, the Company and/or
its or their the subsidiaries or affiliates or (iv) continued alcohol or other
substance abuse that renders the Optionee incapable of performing his material
duties to the satisfaction of Datek, the Company and/or its of their
subsidiaries or affiliates.
18.3 "Change in Capitalization" means any increase or
reduction in the number of Shares, or any change (including, but not limited to,
in the case of a spin-off, dividend or other distribution in respect of Shares,
a change in value) in the Shares or exchange of Shares for a different number or
kind of shares or other securities of the Company or another corporation, by
reason of a reclassification, recapitalization, merger, consolidation,
reorganization, spin-off, split-up, issuance of warrants or rights or
debentures, stock dividend, stock split or reverse stock split, cash dividend,
property dividend, combination or exchange of shares, repurchase of shares,
change in corporate structure or otherwise.
18.4 A "Change in Control" shall mean the occurrence of any of
the following:
(a) An acquisition (other than directly from Datek or
the Company) of any Voting Securities of the Company by any "Person" (as the
term person is used for purposes of Section 13(d) or 14(d) of the Exchange Act),
immediately after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of Voting Securities
representing fifty percent (50%) or more of the then outstanding combined voting
power of the Company's then outstanding Voting Securities; provided, however, in
determining whether a Change in Control has occurred pursuant to this Section
18.4(a), Voting Securities which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which would cause a
Change in Control. A "Non-Control Acquisition" shall mean any direct or indirect
acquisition by (i) an employee benefit plan (or a trust forming a part thereof)
maintained by (A) the Company or (B) any corporation or other Person of which a
majority of its voting power or its voting equity securities or equity interest
is owned, directly or indirectly, by the Company (for purposes of this
definition, a "Related Entity"), (ii) Datek, the Company or any Related Entity,
or (iii) any Person in connection with a "Non-Control Transaction" (as
hereinafter defined);
(b) The consummation of:
(i) A merger, consolidation or reorganization
with or into the Company or in which securities of the Company are issued (a
"Merger"), unless such Merger is a "Non-Control Transaction." A "Non-Control
Transaction" shall mean a Merger where:
(A) the stockholders of the Company or
Datek, immediately before such Merger own directly or indirectly immediately
following such Merger at least fifty percent (50%) of the combined voting power
of the outstanding Voting Securities of (x) the corporation or other entity
surviving or resulting from such Merger (the "Surviving Corporation") if fifty
percent (50%) or more of the combined voting power of the then outstanding
Voting Securities of the Surviving Corporation is not Beneficially Owned,
directly or indirectly by another Person (a "Parent Corporation"), or (y) if
there are one or more Parent Corporations, the ultimate Parent Corporation; or
(B) in which the Company is merged with
or into Datek or any subsidiary of Datek.
(ii) A complete liquidation or
dissolution of the Company; or
(iii) The sale or other disposition
of all or substantially all of the assets of the Company to any Person (other
than a transfer to Datek or a Related Entity or under conditions that would
constitute a Non-Control Transaction with the disposition of assets being
regarded as a Merger for this purpose or the distribution to the Company's
stockholders of the stock of a Related Entity or any other assets).
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the then outstanding
Voting Securities as a result of the acquisition of Voting Securities by the
Company which, by reducing the number of Voting Securities then outstanding,
increases the proportional number of Voting Securities Beneficially Owned by the
Subject Persons, provided that if a Change in Control would occur (but for the
operation of this sentence) as a result of the acquisition of Voting Securities
by the Company, and after such acquisition by the Company, the Subject Person
becomes the Beneficial Owner of any additional Voting Securities which increases
the percentage of the then outstanding Voting Securities Beneficially Owned by
the Subject Person, then a Change in Control shall occur.
18.5 "Code" means the Internal Revenue Code of 1986, as
amended.
18.6 "Committee" means a committee appointed by the Board from
time to time that is responsible for dealing with options to purchase Shares and
to perform the functions set forth herein.
18.7 "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
18.8 "Exercise Event" means the first to occur of (x) an
Initial Public Offering of the Company and (y) a Change in Control (i) in which
a majority of the Shares outstanding immediately before such Change in Control,
are acquired for, or converted or exchanged into, cash, cash equivalents or
marketable securities or (ii) after giving effect to which either the Company or
the entity resulting from or surviving such Change in Control, or any Parent of
them, is subject to the reporting requirements under Section 13 of the Exchange
Act with respect to any class of equity securities.
18.9 "Fair Market Value" on any date means the closing sales
prices of the Shares on such date on the principal national securities exchange
on which such Shares are listed or admitted to trading, or, if such Shares are
not so listed or admitted to trading, the average of the per Share closing bid
price and per Share closing asked price on such date as quoted on the National
Association of Securities Dealers Automated Quotation System or such other
market in which such prices are regularly quoted, or, if there have been no
published bid or asked quotations with respect to Shares on such date, the Fair
Market Value shall be the value established by the Committee in good faith.
18.10 "Initial Public Offering" means the consummation of the
first public widely distributed underwritten offering of Shares pursuant to a
registration statement (other than a Form S-8 or successor forms) filed with,
and declared effective by, the Securities and Exchange Commission.
18.11 "Parent" means any corporation which is a parent
corporation (within the meaning of Section 424(e) of the Code) with respect to
the Company.
18.12 "Securities Act" means the Securities Act of 1933, as
amended.
18.13 "Shares" means the Series A-1F Common Stock, par value
$0.001 per share, of the Company and any other securities into which such shares
are changed or for which such shares are exchanged.
18.14 "Subsidiary" means any corporation which is a subsidiary
corporation within the meaning of Section 424(f) of the Code with respect to the
Company.
18.15 "Voting Securities" means with respect to any entity,
the shares of equity securities of such entity, as required by the context,
generally allowed to vote in the election of the board of directors of such
entity.
ISLAND HOLDING COMPANY, INC.
By:
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Xxxxxxx Xxxxxxxx
President & CEO
Attest:
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Xxxxxxx Xxxxx
Secretary
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Xxxx Xxxx
