EXHIBIT 4.2
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT is entered into as of December
12, 2001 by and between MTR Gaming Group, Inc. a Delaware corporation (the
"Company"), and Xxxxx X. Xxxxxxx (the "Optionee"), an independent director of
the Company.
In consideration of the mutual promises hereinafter set forth, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
1. OPTION GRANT. The Company and the Optionee hereby agree to be
bound by the terms of this Agreement with respect to the grant made by the
Company's Board of Directors effective on May 1, 2001 of an option to purchase
an aggregate of 25,000 shares of the common stock, $.00001 par value per share,
of the Company ("Common Stock") at an exercise price of $7.30 per share, being
the estimated fair market value of such shares of Common Stock on the date of
grant (the "Option"). This Option is not intended to constitute an "incentive
stock option" (within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended). The parties hereto acknowledge that the Option was granted as
additional compensation for services rendered by the Optionee as director of the
Company. The Options will vest and be deemed earned in tranches of 6,250 for
each quarterly board meeting, audit committee meeting, or annual or special
meeting of shareholders attended in person (for up to four meetings in any
calendar year). Any options that have not vested by December 31, 2001 shall be
deemed cancelled.
2. TERM; EXERCISE. This Option will expire on May 1, 2006, subject
to earlier termination as provided herein (the "Termination Date"). Subject to
the vesting provisions of Section 1 of this Agreement, this Option is
exercisable at anytime prior to the Termination Date except as otherwise
provided by the terms of this Option. In no event may a fraction of a share of
Common Stock be purchased under this Option.
3. NOTICE OF EXERCISE; PAYMENT. This Option shall be exercisable giving
written notice to the Company at its principal office, presently Xxxxx Xxxxx 0
Xxxxx, Xxxxxxx, Xxxx Xxxxxxxx, Xxxx.: Chief Financial Officer, stating that the
Optionee is exercising this Option, specifying the number of shares being
purchased and accompanied by payment in full of the aggregate purchase price
therefor: (a) in cash or by certified check; (b) with previously acquired shares
of Common Stock having an aggregate Fair Market Value on the date of exercise
equal to the aggregate exercise price of all Options being exercised; (c) with
any combination of cash, certified check or shares of Common Stock having such
value; or (d) any other form of legal consideration that may be acceptable to
the Board in its sole discretion.
4. REPRESENTATIONS AND WARRANTIES OF OPTIONEE. Notwithstanding the
foregoing, this Option shall not be exercisable by the Optionee unless: (a) a
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the shares of Common Stock to be received upon
the exercise of the Option shall be effective and current at the time of
exercise; or (b) there is an exemption from the registration requirements under
the Securities Act for the issuance of the shares of Common Stock upon
exercise. The Optionee hereby represents and warrants to the Company, that: (i)
the shares of Common Stock to be issued upon the exercise of this Option are
being acquired by the Optionee for the Optionee's own account, for investment
only and not with a view to the resale or distribution thereof; and (ii) any
subsequent resale or distribution of shares of Common Stock by the Optionee will
be made only pursuant to (x) a Registration Statement under the Securities Act
which is effective and current with respect to the shares of Common Stock being
sold, or (y) a specific exemption from the registration requirements of the
Securities Act, but in claiming such exemption, the Optionee shall, prior to any
offer of sale or sale of such shares of Common Stock, provide the Company with a
favorable written opinion of counsel satisfactory to the Company, in form,
substance and scope satisfactory to the Company, as to the applicability of such
exemption to the proposed sale or distribution. Such representation and
warranties shall also be deemed to be made by the Optionee upon each exercise of
this Option. Nothing herein shall be construed as requiring the Company to
register the shares subject to this Option under the Securities Act.
5. LEGENDS; STOP TRANSFER INSTRUCTIONS. The Company may affix appropriate
legends upon the certificates for shares of Common Stock issued upon exercise of
this Option and may issue such "stop transfer" instructions to its transfer
agent in respect of such shares as it determines, in its discretion, to be
necessary or appropriate to: (a) prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act and any
applicable state securities laws; or (b) implement the provisions of any
agreement between the Company and the Optionee with respect to such shares of
Common Stock.
6. TAXES. The Company may withhold cash and/or shares of Common Stock to
be issued to the Optionee in the amount which the Company determines is
necessary to satisfy its obligation to withhold taxes or other amounts incurred
by reason of the grant or exercise of this Option, its disposition or the
disposition of the underlying shares of Common Stock. Alternatively, the Company
may require the Optionee to pay the Company such amount in cash promptly upon
demand.
7. COMPLIANCE WITH APPLICABLE LAWS. The Optionee agrees to comply with all
applicable laws relating to the grant and exercise of the Option and the
disposition of the shares of Common Stock acquired upon exercise of the Option,
including without limitation, federal and state securities and "blue sky" laws,
and applicable prospectus delivery requirements.
8. TRANSFERABILITY. The Option is not transferable otherwise than by will
or the laws of descent and distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee, or the Optionee's legal
representatives, provided, however, that the Option may be exercised and the
underlying securities resold by any family member of the Optionee who has
acquired the Option from the Optionee through a gift or a domestic relations
order. For purposes of this Option, "family member" includes any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the Optionee's household (other than a tenant
or employee), a trust in which these persons have more than fifty percent of the
beneficial interest, a foundation in which these persons (or the Optionee)
control the management of assets, and any other entity in which these persons
(or the Optionee) own more than fifty percent of the voting interests.
9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
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inure to the benefit of the parties hereto, any successor or assign of the
Company and to any Legal Representative of the Optionee, or any family member as
defined in this Agreement acquiring the Option as a result of a gift or pursuant
to a domestic relations order.
10. RESTRICTION ON SALES. The Optionee agrees not to sell more than 25,000
shares of Common Stock issuable pursuant to this agreement in any calendar week
without the written consent of the Company.
11. GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without regard
to the conflicts of law rules thereof.
12. VALIDITY. The invalidity, illegality or unenforceability of any
provision herein shall not affect the validity, legality or enforceability of
any other provision, all or which shall be valid, legal and enforceable to the
fullest extent permitted by applicable law.
13. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding any other
provision of this Agreement, in the event of a stock dividend, recapitalization,
merger in which the Company is the surviving corporation, spin-off, split-up,
combination or exchange of shares or the like which results in a change in the
number or kind of shares of Common Stock which is outstanding immediately prior
to such event, the aggregate number and kind of shares subject to the Agreement,
the aggregate number and kind of shares subject to each outstanding Award, the
exercise price of each option, any contingencies and restrictions based on the
number or kind of shares, shall be appropriately adjusted by the Board of
Directors, whose determination shall be conclusive and binding on all parties.
Such adjustment may provide for the elimination of fractional shares without
payment therefor. In the event of (a) the liquidation or dissolution of the
Company, (b) a merger in which the Company is not the surviving corporation or a
consolidation, or (c) any transaction (or series of related transactions) in
which (i) more than 50% of the outstanding Common Stock is transferred or
exchanged for other consideration, or (ii) shares of Common Stock in excess of
the number of shares of Common Stock outstanding immediately preceding the
transaction are issued (other than to stockholders of the Company with respect
to their shares of stock in the Company), any outstanding options, unvested
stock shall terminate upon the earliest of any such event, unless other
provision is made therefor in the transaction. The Company and the Optionee
agree that the terms of this Section 13 shall apply to and be deemed to be
incorporated in all option agreements executed by and between the Company and
the Optionee prior to the date of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MTR GAMING GROUP, INC.
By: \s\ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Its: President
OPTIONEE
By: \s\ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
________________________________________
________________________________________
(Address)
________________________________________
(Social Security Number)
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