[EXHIBIT 4.2]
STOCK OPTION AGREEMENT
AGREEMENT, dated as of June 21, 2001, between WILD HEART RANCH INC. (the
"Company"), a Delaware corporation with offices at 000 Xxxx Xxxxx, Xx. 0000,
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000-0000, and XXXXXX X. XXXX (the "Optionee"),
residing at The Esplanade, Suite West 1105, 00-00 Xxxxxxxxx Xxxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx 00000.
WHEREAS, the Company desires to provide additional incentive to the
Optionee to utilize the Optionee's utmost efforts to contribute to the Company's
future success and prosperity by giving the Optionee an opportunity to purchase
shares of its common stock (the "Common Stock"), subject to the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Option Grant. The Company hereby grants to the Optionee the option (the
"Option") to purchase 100,000 shares (the "Optioned Shares") of Common Stock
from the Company at a price of $1.00 per share. The Optionee shall have the
right to exercise the Option beginning on June 21, 2002 through and including
June 20, 2005. The Option may be exercised in whole at any time or in part
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from time to time during the exercise period and is subject to adjustment as to
price and number of shares as set forth in Section 5 hereof.
2. Option Exercise; Cashless Exercise. The Option may be exercised by
notice to the Company of the intent to exercise the Option, an acceptable form
of which notice is set forth as Exhibit A hereto and made a part hereof,
specifying the number of Optioned Shares in respect of which the Option is being
exercised and the Option exercise price and accompanied by payment for such
Shares by cash, wire transfer or a bank or certified check payable to the order
of the Company. This Option also is exercisable by a broker- dealer, acting on
behalf of the Optionee, if (a) such broker-dealer and the Optionee shall agree
to comply with the applicable provisions of Section 220.3(e)(4) of Regulation T
of the Federal Reserve Board, (b) if the broker-dealer agrees to remit the
Option exercise price to the Company out of the net sales proceeds of the
Optioned Shares being acquired and (c) if the Company receives written
instructions, signed by the Optionee, requesting the Company to deliver such
Shares to such broker dealer and specifying the account into which such Shares
should be deposited. The Optionee agrees to make adequate provision for the
payment of any withholding taxes due upon exercise of the Option.
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3. Option Transferable Only Upon the Death of the Optionee. During the life
of the Optionee, the Option shall not be transferable and may be exercised only
by the Optionee; provided, however, that in the event of the death of the
Optionee prior to the Expiration Date, the Option, to the extent not theretofore
exercised, shall be exercisable in full by the person to whom the Option is
transferred by will or by the applicable laws of descent and distribution, and
the Option shall terminate upon its expiration date and not prior to such date.
4. Reservation of Common Stock. During the period within which the Option
may be exercised the Company shall at all times have authorized and reserved for
issuance upon such exercise a sufficient number of shares of Common Stock to
provide for its exercise. The Company agrees that its issuance of this Agreement
shall constitute full authority to its officers who are charged with the duty of
causing the issuance of stock certificates of the Company to take all action
necessary or appropriate to cause to be issued the necessary stock certificates
for the shares of Common Stock issuable upon the proper exercise of the Option.
5. Adjustment of Option Price and Number of Optioned Shares. With respect
to the Option granted hereunder, the Option
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price and the number and kind of securities purchasable upon the exercise of the
Option shall be subject to adjustment from time to time upon the occurrence of
certain events as follows:
(a) In case the Company shall (i) pay a dividend in shares of its capital
stock, (ii) subdivide its outstanding shares of Common Stock, (iii) reduce,
consolidate, or combine its outstanding shares of Common Stock into a smaller
number of shares, or (iv) issue by reclassification of its shares of Common
Stock any shares of Common Stock of the Company, the Option price in effect
immediately prior thereto shall be adjusted to that amount, determined by
multiplying the Option price in effect immediately prior to such date by a
fraction, of which the numerator shall be the number of shares of Common Stock
outstanding on such date before giving effect to such event, and of which the
denominator shall be the number of shares of Common Stock outstanding after
giving effect thereto. An adjustment made pursuant to this Section 5(a) shall
become effective retroactively, immediately after the record date in the case of
a dividend, and immediately after the effective date in the case of a
subdivision, reduction, consolidation, combination or reclassification. Each
such adjustment shall be made successively whenever any such effective date or
record date shall occur.
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(b) If the Common Stock issuable upon the exercise of the Option shall be
changed into the same or a different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification or otherwise (other
than a subdivision or combination of shares or stock dividend, or a
reorganization, merger, consolidation or sale of assets provided for in this
Section 5), then, and in each such event, the Optionee shall have the right
thereafter to receive, without payment of any additional consideration therefor,
the kind and amount of shares of Common Stock and other securities properly
receivable upon such reorganization, reclassification or other change by holders
of the number of shares of Common Stock into which the Option might have been
exercised, as reasonably determined by the Company's Board of Directors,
immediately prior to such reorganization, reclassification or change, all
subject to further adjustment as provided in this Section 5.
(c) If at any time or from time to time there shall be a capital
reorganization of the Common Stock (other than a subdivision, combination,
reclassification or exchange of shares provided for in this Section 5) or a
merger or consolidation of the Company with or into another corporation, or the
sale of all or substantially all of the Company's properties and assets to any
other person, then, as a part of such reorganization, merger,
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consolidation or sale, provision shall be made as reasonably determined by the
Company's Board of Directors so that the Optionee shall thereafter be entitled
to receive upon exercise of the Option, without payment of any additional
consideration therefor, the number of shares of capital stock or other
securities or property of the Company or of the successor corporation resulting
from such merger or consolidation or sale, to which a holder of Common Stock
deliverable upon exercise of the Option would have been entitled on such capital
reorganization, merger, consolidation or sale.
(d) Upon each adjustment in the Option price, the number of shares of
Common Stock purchasable hereunder shall be adjusted, to the nearest whole share
to the product obtained, by multiplying the number of shares of Common Stock
purchasable immediately prior to such adjustment in the Option price by a
fraction, the numerator of which shall be the Option price immediately prior to
such adjustment and the denominator of which shall be the Option price
immediately thereafter.
(e) The adjustments provided for in this Section 5 are cumulative and shall
apply to successive divisions, subdivisions, reductions, combinations,
consolidations, issues, distributions or other events contemplated herein
resulting in any adjustment under the provisions of this Section 5; provided,
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however, that, notwithstanding any other provision of this Section 5, no
adjustment of the Option price shall be required if (1) the issue of Common
Stock is being made pursuant to any stock option or stock purchase plan in force
from time to time for officers and/or employees of the Company, or any other
option(including warrants) outstanding at the date of issuance of this Option or
(2) unless such adjustment would require an increase or decrease of more than
five percent (5%) in the Option price then in effect; and provided further,
however, that any adjustments in the Option price, which by reason of this
Section 5(e), are not required then to be made shall be carried forward and
taken into account in any subsequent adjustment.
6. Certificate of Adjustment. Whenever the Option price is adjusted, as
provided in Section 5 above, the Company shall promptly deliver to the Optionee
a certificate of the principal financial officer of the Company setting forth
the Option price after such adjustment and setting forth a brief statement of
the facts requiring such adjustments and the calculation thereof.
7. No Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise of the Option. In lieu of any fractional
shares which would otherwise be
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issuable, the Company shall pay cash equal to the product of such fraction
multiplied by the Option price in effect on the date of exercise.
8. Notice of Certain Events. If at any time prior to the expiration or full
exercise of the Option, the Company shall:
(a) Take a record of the holders of any class of securities of the Company
for the purpose of determining the holders thereof who are entitled to receive
any dividend (other than a cash dividend at the same rate as the rate of the
last cash dividend theretofore paid) or other distribution, or any rights to
subscribe for, purchase or otherwise acquire any shares of capital stock of any
class or any other securities or property, or to receive any other right;
(b) Offer for subscription pro rata to holders of Common Stock of the
Company any additional shares of capital stock of any class or other rights;
(c) Propose any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any consolidation or
merger of the Company with, or sale of all or substantially all of its assets
to, another corporation or business organization; or
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(d) Be the subject of any voluntary or involuntary dissolution, liquidation
or winding-up;
then, in each such event, the Company shall mail to the Optionee a notice
specifying (i) the date or expected date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and (ii) the date or
expected date upon which any such reorganization, reclassification,
recapitalization, dissolution, liquidation, winding-up or offering is to take
place and the time, if any, to be fixed, as of which the holders of record of
Common Stock shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, recapitalization, dissolution, liquidation or winding-up. Such
notice shall be mailed at least forty-five (45) days prior to the earlier of the
dates specified in clauses (i) and (ii) above.
9. Rights as a Stockholder.
(a) The Optionee shall not be deemed for any purposes to be a stockholder
of the Company with respect to any of the Optioned Shares except to the extent
that the Option shall have been duly exercised with respect thereto.
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(b) The existence of an 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, recapitalization, reorganizations or other changes in 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 the Common 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. Compliance with Securities Laws.
(a) Until such time as the Optioned Shares shall have been either
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or sold pursuant to an exemption from registration, the Company shall utilize
its best efforts to comply with the reporting requirements of Sections 13 and
15(d) of the Securities Exchange Act of 1934 (whether or not it shall be
required to do so pursuant to such sections) and will use its best efforts to
comply with all other public information reporting requirements of the
Securities and Exchange Commission (the "SEC") (including, without limitation,
Rule 144 promulgated by the SEC
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under the Securities Act) from time to time in effect and relating to the
availability of an exemption from registration under the Securities Act for the
sale of restricted securities. The Company also will cooperate with the Optionee
in supplying such information as may be necessary for the Optionee to complete
and file any information reporting forms presently or hereafter required by the
SEC as a condition to the availability of such an exemption.
(b) Unless prior to the issuance thereof the Optioned Shares shall be
registered under the Securities Act, as a condition precedent to the valid
exercise of an Option the Optionee shall represent in writing to the Company
that he is acquiring such Shares for his own account as an investment and not
with a view to, or for sale in connection with, the distribution of any thereof.
If the Optioned Shares shall not be registered under the Securities Act at or
prior to the issuance thereof, each certificate representing Optioned Shares
shall bear a legend customary for securities not registered under the Securities
Act.
(c) The Company will use its best efforts to qualify, file or register the
Optioned Shares in accordance with the securities laws of such states of the
United States of America as may be reasonably designated by the Optionee and to
obtain the consent, authorization or approval of any governmental agency
required in connection with the issuance of such Shares or which
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may be required in order that the Optionee may otherwise publicly sell such
Shares.
11. Notices. All notices required or desired to be given hereunder shall be
in writing and shall be deemed properly given to a party if personally delivered
or mailed by certified mail, return receipt requested, to such party at the
address set forth at the head of this Agreement or to such other address as
shall be specified by notice duly given. Notices given by certified mail shall
be deemed given three business days after the date of mailing, and notices
delivered in person shall be deemed given on the date of delivery.
12. Entire Agreement; Breach and Waiver. The provisions hereof constitute
the entire agreement between the parties with respect to the subject matter
hereof and supersede any prior written or oral understanding. This Agreement may
not be amended or modified in any manner, except by an instrument in writing
signed by both parties hereto. The failure of either party hereto to enforce at
any time any of the provisions hereof shall in no way be construed to be a
waiver of any such provision or any other provision, or of the right of such
party thereafter to enforce each and every such provision or other provision in
the event of a
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subsequent breach. Any waiver must be in writing and duly authorized.
13. Agreement Binding Upon Successors. This Agreement shall inure to the
benefit of, and shall be binding upon the Company, its successors and assigns,
and upon the Optionee, his successors and assigns, heirs, executors,
administrators and legal representatives.
14. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
15. Construction. This Agreement shall be governed by, and construed in
accordance with, the local laws of the State of New York.
16. Headings. The headings herein are solely for the convenience of
reference and shall be given no effect in the construction or interpretation
hereof and shall not constitute, or be deemed to constitute, a part hereof.
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IN WITNESS WHEREOF, the Company and the Optionee have executed this
Agreement as of the day and year first above written.
WILD HEART RANCH INC.
By: /s/Xxxx Xxx Xxxx
---------------------------------
Chief Executive Officer
Optionee:
/s/ Xxxxxx X. Xxxx
-------------------------------------
Xxxxxx X. Xxxx
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EXHIBIT A
Date: ___________________, 200__
Wild Heart Ranch Inc.
000 Xxxx Xxxxx, Xx. 0000
Xxxxx Xxxxxxx, XX 00000-0000
Attn: Chairman
Re: Exercise of Stock Option
Gentlemen:
Please be advised that I wish to exercise my Stock Option by purchasing
_________ shares of Common Stock of the Company at the option price of $ per
share. I enclose herewith a check in the amount of $_______________ in full
payment for said shares.
Please deliver the certificate(s) to me at the following address:
Sincerely,
Name:_________________________
Address:______________________
Social Security Number:
______________________________
Enclosure
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