1
EXHIBIT 4.2
ISOPIA INTERACTIVE NETWORK INC.
- and -
[ ]
STOCK OPTION AGREEMENT
Prepared by:
XXXXX XXXXX
Xxxxx 0000
Xxxxxx Xxxxx
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
2
TABLE OF CONTENTS
PAGE
-----
ARTICLE 1 DEFINITIONS AND CONSTRUCTION............................................................................2
1.1 Definitions..............................................................................................2
1.2 Construction.............................................................................................2
ARTICLE 2 OPTION AND EXERCISE OF OPTION...........................................................................2
2.1 Issuance of Option.......................................................................................2
2.2 When Option May Be Exercised.............................................................................2
2.3 Exercise on Take-Over Bid or Change in Control...........................................................3
2.4 Manner of Exercise of Option.............................................................................3
2.5 Compliance with Requirements.............................................................................4
2.6 Termination of Employment or Engagement..................................................................4
2.7 Death, Mental Disability or Physical Disability of Optionee..............................................5
ARTICLE 3 ISSUANCE OF SHARES......................................................................................5
3.1 Regulatory Approvals and Regulatory Requirements.........................................................5
3.2 Issuance of Shares.......................................................................................6
3.3 Extent of Liability for Non-Issue of Shares..............................................................6
ARTICLE 4 SHARE APPRECIATION RIGHTS...............................................................................6
4.1 Share Appreciation Rights................................................................................6
ARTICLE 5 OTHER MATTERS...........................................................................................7
5.1 No Fractional Shares.....................................................................................7
5.2 Rights Not Assignable....................................................................................7
5.3 Restriction on Participation by Residents of Foreign Jurisdiction........................................7
5.4 Other Matters............................................................................................7
5.5 Compliance with Applicable Law...........................................................................7
5.6 Governing Law............................................................................................7
5.7 Priority of Stock Option Plan............................................................................7
3
SIGNING STOCK OPTION AGREEMENT
THIS SIGNING STOCK OPTION AGREEMENT made as of (todays date),
B E T W E E N:
ISOPIA INTERACTIVE NETWORK INC., an Ontario corporation,
(hereinafter referred to as the "Corporation")
- and -
[ ],
(hereinafter referred to as "Optionee")
WHEREAS the Board of Directors of the Corporation established a Stock
Option Plan (the "Plan") effective January 1, 2000, which was approved by the
shareholders of the Corporation on January 1, 2000, and the Corporation now
wishes to issue the Optionee Options under the Stock Option Plan;
AND WHEREAS, in order to induce the Optionee to join the Corporation as an
employee, the Corporation promised the Optionee Options (as herein defined);
AND WHEREAS this Agreement is the instrument pursuant to which the
Corporation is carrying out its promise to grant options to the optionee for
joining the Corporation as an employee.
NOW THEREFORE in consideration of the mutual covenants herein contained,
the parties agree as follows:
1
4
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS
In this Agreement, capitalized terms shall have the meanings set out in Section
1.1 of the Stock Option Plan attached as Schedule A, except where the context or
subject matter is inconsistent therewith.
1.2 CONSTRUCTION
The headings of all sections and subsections in this Agreement are inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement. Whenever the singular or masculine are used in
this Agreement, the same shall be construed as being the plural or feminine or
neuter or vice versa where the context so requires. All references to currency
in this Agreement are references to Canadian currency. "Hereby," "hereunder",
and similar expressions refer to this Agreement as a whole and not to any
particular article, section, subsection or other part of this Agreement. In the
event of any conflict between this Agreement or any predecessor agreement and
the Stock Option Plan, the terms of this Agreement shall govern.
ARTICLE 2
OPTIONS AND EXERCISE OF OPTIONS
2.1 ISSUANCE OF OPTIONS
In accordance with its promise to grant "signing" Options to the Optionee, the
Corporation hereby issues to the Optionee Options to purchase up to g Shares in
the capital stock of the Corporation, as presently constituted, for cash, at a
price of g US Dollars (US$g) per Share, upon the terms and conditions set out in
this Agreement.
2.2 WHEN OPTION MAY BE EXERCISED
(a) One-quarter of the Options vest on the first anniversary of the commencement
of the Optionee's grant date, and the Optionee may exercise them on or after
that date. The remaining Options vest on, and may be exercised on or after, the
following dates:
(i) one-quarter of the Options vest on g [Insert second anniversary of
date of grant] and the Optionee may exercise them on or after that date;
(ii) one-quarter of the Options vest on g [Insert third anniversary of date
of grant] and the Optionee may exercise them on or after that date;
(iii) the remaining one-quarter of the Options vest on g [Insert fourth
anniversary of date of grant] and the Optionee may exercise them on or after
that date.
2
5
(b) Options that have not vested are not exercisable and do not confer any
rights upon the Optionee.
(c) When Options are exercised, the number of Shares allotted and issued will be
rounded down to the nearest full Share.
(d) All or part of the Shares for which the Options have become exercisable may
be purchased at any time after the particular anniversary date, until the
expiration or termination of the Options.
(e) The Options shall expire at 5:00 p.m. five years from the date of vest,
after which the Options shall be of no further force or effect. In addition, the
Options shall expire and all rights hereunder shall be of no further force or
effect at such time or upon the happening of certain events as provided
elsewhere in this Agreement.
(f) Any amount paid to the Corporation for the Options shall be considered the
property of the Corporation and shall not be refunded to the Optionee for any
reason, including without limitation if the Options expire without having been
exercised.
2.3 EXERCISE ON TAKE-OVER BID OR CHANGE IN CONTROL
Notwithstanding the percentage limitations contained in Section 2.2, if:
(a) there is a Take-Over Bid made for all or part of the issued and outstanding
Shares, the Options (if unexpired and not terminated) may be exercised
immediately for all the Shares subject to the Options, in order to permit the
Shares subject to the Options to be tendered to such a Take-Over Bid; or
(b) there is an offer to purchase all the issued and outstanding Shares, the
Board may, in its discretion, require the Options (whether or not vested) to be
exercised in order to permit the Shares subject to the Options to be sold as
part of the purchase transaction, and the Board may send a notice in writing to
the Optionee informing the Optionee that his or her Options are deemed to have
been terminated in accordance with Section 4.1, and the Optionee shall be
entitled to such portion of the price payable pursuant to the purchase
transaction as is calculated in accordance with Section 4.1.
2.4 MANNER OF EXERCISE OF OPTIONS
The Options may be exercised only by the Optionee, or by the person or persons
entitled to exercise the same pursuant to the provisions of Section 2.7. Subject
to the Stock Option Plan and any regulations and administrative policies under
the Stock Option Plan, the Options may be exercised only by the delivery to the
Corporation at its registered office of written notice of election to exercise
the Options, specifying the number of Shares for which the Options are being
exercised and accompanied by payment in full of the purchase price of the Shares
then purchased by cash or certified cheque in favour of the Corporation.
3
6
2.5 COMPLIANCE WITH REQUIREMENTS
(a) The notice under Section 2.4 shall constitute the Optionee's acknowledgement
of, and undertaking to comply with, to the satisfaction of the Corporation and
its counsel, all applicable legal or other requirements of a Stock Exchange and
of any applicable regulatory authority. Such requirements may include:
(i) the placement of legends on share certificates restricting transfer of
such Shares;
(ii) the making of representations by the Optionee that the Optionee is
acquiring such Shares for investment and not with a view to distribution;
(iii) the filing of any required information or statements with a Stock
Exchange or any applicable regulatory authority; and
(iv) the making of arrangements with the Optionee's employer (if the
Optionee provides his services through a personal services corporation) to
withhold income taxes that may become payable pursuant to the Optionee's
exercise of Options under this Agreement.
(b) The Corporation may at its election require that this Agreement be presented
for endorsement upon the exercise of the Options.
2.6 TERMINATION OF EMPLOYMENT OR ENGAGEMENT
(a) Subject to Section 2.7 and any express resolution passed by the Board with
respect to the Options, the Options and all rights to purchase pursuant thereto,
shall expire and terminate:
(i) if the Optionee's employment or engagement is terminated by the
Corporation without cause, sixty (60) days after the date that the Optionee
ceases to be a director, officer or employee of the Corporation or of any
subsidiary of the Corporation ("SUBSIDIARY"); or
(ii) if the Optionee resigns, within thirty (30) days after the date the
Optionee ceases to be a director, officer or employee of the Corporation or of
any Subsidiary.
(b) If the Optionee is a Consultant, the termination of the Options shall be in
accordance with the Optionee's Personnel Contract or, if the termination of the
Options is not specifically dealt with in the Personnel Contract, then the
Options shall be terminated as though the Consultant were an employee.
(c) The Options shall not be affected by any change of employment of the
Optionee or by the Optionee's ceasing to be a director where the Optionee
continues to be employed by the Corporation or continues to be a director of a
Subsidiary or an officer of the Corporation or a Subsidiary.
4
7
2.7 DEATH, MENTAL DISABILITY OR PHYSICAL DISABILITY OF OPTIONEE
If, before the expiry of the Options in accordance with the Options' terms, the
Optionee's employment or engagement terminates by reason of:
(a) the death of the Optionee;
(b) the mental disability of the Optionee; or
(c) the physical disability of the Optionee,
such Options may, subject to the terms of the Options and the Stock Option Plan,
be exercised by:
(d) the legal representative of the Optionee's estate;
(e) the legal representative of the Optionee; or
(f) the Optionee, as the case may be, at any time during the first twelve (12)
months following the Optionee's termination, provided that the exercise occurs
prior to the expiry of the Options in accordance with the Options' terms and
that the exercise is limited to the extent that the Optionee was entitled to
exercise the Options at the date of the Optionee's termination.
ARTICLE 3
ISSUANCE OF SHARES
3.1 REGULATORY APPROVALS AND REGULATORY REQUIREMENTS
(a) The obligation of the Corporation to issue and deliver any Shares in
accordance with this Agreement shall be subject to any necessary approval of the
Stock Exchange and any other regulatory authority having jurisdiction over the
securities of the Corporation. If any Shares cannot be issued to the Optionee
for whatever reason, the obligation of the Corporation to issue such Shares
shall terminate and any Option Price paid to the Corporation shall be returned
to the Optionee.
(b) If at any time the Corporation determines, in its sole discretion, that it
is necessary or desirable to comply with the legal or other requirements of a
Stock Exchange or any other regulatory authority as a condition of, or in
connection with, the exercise of Options or the issue of Shares under Options,
then the Optionee's exercise of the Options shall not be effective unless the
Optionee complies with such legal or other requirements in a manner satisfactory
to the Corporation.
5
8
3.2 ISSUANCE OF SHARES
Neither the Optionee nor the legal representative of the Optionee shall be, nor
shall be deemed to be, a holder of any Shares until the Corporation issues a
certificate (or certificates) for such Shares. Subject to Section 3.1, upon the
Optionee's exercising the Options and paying the Corporation the purchase price
for the Shares in respect of which the Options have been exercised, the
Corporation shall as soon as practicable issue and deliver a certificate (or
certificates) representing the Shares so purchased, registered in the name of
the Optionee or the Optionee's estate, as the case may be.
3.3 EXTENT OF LIABILITY FOR NON-ISSUE OF SHARES
If for any reason other than the failure or default of the Optionee, the
Corporation is unable to issue and deliver the Shares as contemplated in this
Agreement to the Optionee upon the exercise by the Optionee of the Options to
purchase any of the Shares covered by the Options, the Corporation will pay, in
complete satisfaction of its obligations hereunder, to the Optionee, in cash, an
amount equal to the difference between the Option exercise price and the fair
market value of such Shares on the date that the Optionee gave notice of such
exercise in accordance with Section 2.4, as though the Shares were listed on a
Stock Exchange and the Options had been terminated in accordance with Section
4.1. If the Shares are not listed on a Stock Exchange, the fair market value of
the Shares shall be as determined by the Board, acting reasonably. If the Shares
are listed on a Stock Exchange, then the fair market value of the Shares shall
be the closing price of the Shares on the Stock Exchange on the last trading day
immediately preceding the date of exercise of rights.
ARTICLE 4
SHARE APPRECIATION RIGHTS
4.1 SHARE APPRECIATION RIGHTS
Provided the Shares are listed on a Stock Exchange, and with the consent of the
Board, an Optionee may, rather than exercise an Option which the Optionee is
entitled to exercise under this Stock Option Plan, elect to terminate the Option
in whole or in part and, in lieu of receiving the Shares to which the terminated
Option relates, receive the number of Shares, disregarding fractions, which,
when multiplied by the fair market value of the Shares to which the terminated
Option relates, has a value equal to the product of the number of Shares to
which the terminated Option relates multiplied by the difference between the
fair market value and the Option Price of the Shares to which the terminated
Option relates, less any amount withheld on account of income taxes, which
withheld income taxes will be remitted by the Corporation. The fair market value
of the Shares shall be the closing price of the Shares on the Stock Exchange on
the last trading day immediately preceding the date of exercise of rights under
this Section 4.1.
6
9
ARTICLE 5
OTHER MATTERS
5.1 NO FRACTIONAL SHARES
The Corporation shall not be obligated to issue fractional Shares in
satisfaction of its obligations under this Agreement.
5.2 RIGHTS NOT ASSIGNABLE
Except as provided in Section 2.7 or by the laws of descent and distribution,
the rights of the Optionee under this Agreement are personal to the Optionee and
are not assignable.
5.3 RESTRICTION ON PARTICIPATION BY RESIDENTS OF FOREIGN JURISDICTION
If the Optionee is a resident of a foreign jurisdiction, the Optionee represents
and warrants that the Optionee's participation in the Stock Option Plan pursuant
to this Agreement is in accordance with and does not violate any securities or
other legislation of the Optionee's resident jurisdiction.
5.4 OTHER MATTERS
The Options and the rights of the Optionee shall be subject to all the terms,
conditions and restrictions set out in the Stock Option Plan attached as
Schedule A. Without limiting the generality of the foregoing, the Options and
the rights of the Optionee are subject to the provisions of the Stock Option
Plan relating to: when rights as a shareholder arise; the lack of a contract of
employment rights; the effect of the right to purchase pro rata additional
shares; the substitution of Shares on consolidation, merger, etc.; the
adjustment of Shares by reason of a stock dividend, consolidation, etc.; and
Take-Over Bids, etc.
5.5 COMPLIANCE WITH APPLICABLE LAW
If a provision of this Agreement or the Options contravene any law or any order,
policy, by-law or regulation of any regulatory body having jurisdiction, then
such provision shall be deemed to be amended to the extent necessary to bring
such provision into compliance therewith.
5.6 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
the Province of Ontario.
5.7 PRIORITY OF AGREEMENT
The Optionee acknowledges that a copy of the Stock Option Plan has been attached
as Schedule A to this Agreement. The Optionee acknowledges that upon any
conflict between the terms of the Stock Option Plan and this Agreement the terms
of this Agreement shall prevail.
7
10
IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be signed,
sealed and delivered by their respective authorized signatories as of the date
first written above.
ISOPIA INTERACTIVE NETWORK INC.
Per:
President
Per:
Director
WITNESS TO SIGNATURE OF OPTIONEE:
---------------------------------
Signature of Optionee
---------------------------------
Signature of Witness
8
