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Exhibit 10.42
INCENTIVE STOCK OPTION AGREEMENT
ALLOY ONLINE, INC.
AGREEMENT made as of _________, 1999 between Alloy Online, Inc., a
Delaware corporation (the "Company"), and Xxxx Xxxxx, an employee of the Company
(the "Employee").
WHEREAS, the Company desires to grant to the Employee an
Option to purchase shares of its common stock, par value $.01 per share (the
"Shares"), under and for the purposes set forth in the Company's Restated 1997
Employee, Director and Consultant Stock Option Plan (the "Plan"); and
WHEREAS, the Company and the Employee understand and agree that any
terms used and not defined herein have the same meanings as in the Plan; and
WHEREAS, the Company and the Employee each intend that the Option
granted herein qualify as an ISO.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. GRANT OF OPTION. The Company hereby grants to the Employee the right
and option to purchase all or any part of an aggregate of [THE TOTAL OF THE
SHARES IN SECTION 3 BELOW] (______) Shares, on the terms and conditions and
subject to all the limitations set forth herein and in the Plan, which is
incorporated herein by reference. The Employee acknowledges receipt of a copy of
the Plan.
2. PURCHASE PRICE. The purchase prices of the Shares covered by the
Option shall be as set forth in Section 3 below, subject to adjustment, as
provided in the Plan, in the event of a stock split, reverse stock split or
other events affecting the holders of Shares. Payment shall be made in
accordance with Paragraph 7 of the Plan.
3. EXERCISABILITY OF OPTION. Subject to the terms and conditions set
forth in this Agreement and the Plan, the Option granted hereby shall become
exercisable as follows:
on or after [THE DATE OF up to [100,000 DIVIDED BY THE IPO PRICE]
COMMENCEMENT OF EMPLOYMENT] Shares at [PRICE PER SHARE EQUAL TO THE
PRICE TO THE PUBLIC IN THE IPO (BEFORE
COMMISSIONS AND EXPENSES) (THE "IPO
PRICE")]
on or after the [FIRST up to an additional [100,000 DIVIDED BY
ANNIVERSARY OF DATE OF THE IPO PRICE] Shares at [PRICE PER SHARE
COMMENCEMENT OF EMPLOYMENT] EQUAL TO THE IPO PRICE]
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on or after the [SECOND up to an additional [100,000 DIVIDED BY
ANNIVERSARY OF DATE OF 120% OF THE IPO PRICE] Shares at [PRICE
COMMENCEMENT OF EMPLOYMENT] PER SHARE EQUAL TO 120% OF THE IPO PRICE]
on or after the [THIRD up to an additional [100,000 DIVIDED BY
ANNIVERSARY OF DATE OF 150% OF THE IPO PRICE] Shares at [PRICE
COMMENCEMENT OF EMPLOYMENT] PER SHARE EQUAL TO 150% OF THE IPO PRICE]
on or after the [FOURTH up to an additional [100,000 DIVIDED BY
ANNIVERSARY OF DATE OF 175% OF THE IPO PRICE] Shares at [PRICE
COMMENCEMENT OF EMPLOYMENT] PER SHARE EQUAL TO 175% OF THE IPO PRICE]
The foregoing rights are cumulative and are subject to the other terms
and conditions of this Agreement and the Plan.
Notwithstanding any provision to the contrary in the Plan or this
Agreement:
(i) If a Change of Control (as hereinafter defined) occurs while the
Employee is an employee, director or consultant of the Company or of an
Affiliate, the Option shall accelerate and become fully exercisable immediately
prior to the effectiveness of such Change of Control; and
(ii) If the Employee's employment is terminated by the Employee's
employer without "cause" (as defined in the Plan), the Option shall accelerate
and become fully exercisable upon the effectiveness of such termination of
employment.
As used herein, "Change of Control" means that any of the following
events has occurred:
(a) Any person (as such term is used in Section 13(d) of the Securities
Exchange Act of 1934), other than the Company, any employee benefit plan of the
Company or any entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan, together with all "affiliates" and
"associates" (as such terms are defined in Rule 12b-2 under the Securities
Exchange Act) becomes the beneficial owner or owners (as defined in Rule 13d-3
and 13d-5 promulgated under the Securities Exchange Act), directly or
indirectly, of more than fifty percent (50%) of the outstanding Common Stock of
the Company, or otherwise becomes entitled to vote more than fifty percent (50%)
of the voting power entitled to be cast at elections for directors ("Voting
Power") of the Company;
(b) A consolidation or merger of the Company pursuant to which the
holders of the Company's shares of Common Stock immediately prior to such merger
or consolidation would not be the holders, directly or indirectly, immediately
after such merger or consolidation of more than fifty percent (50%) of the
Voting Power of the entity surviving such transaction;
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(c) The sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets of
the Company; or
(d) The liquidation or dissolution of the Company or the Company
ceasing to do business.
4. TERM OF OPTION. The Option shall terminate ten (10) years from the
date of this Agreement or, if the Employee owns as of the date hereof more than
ten percent (10%) of the total combined voting power of all classes of capital
stock of the Company or an Affiliate, five (5) years from the date of this
Agreement, but shall be subject to earlier termination as provided herein or in
the Plan.
If the Employee ceases to be an employee of the Company or of an
Affiliate (for any reason other than the death or Disability of the Employee or
termination of the Employee's employment by the Employee's employer for any
reason, the Option may be exercised, if it has not previously terminated, within
three (3) months after the date the Employee ceases to be an employee of the
Company or an Affiliate, or within the originally prescribed term of the Option,
whichever is earlier, but may not be exercised thereafter. In such event, the
Option shall be exercisable only to the extent that the Option has become
exercisable and is in effect at the date of such cessation of employment.
Notwithstanding the foregoing, in the event of the Employee's Disability or
death within three (3) months after the termination of employment, the Employee
or the Employee's Survivors may exercise the Option within one (1) year after
the date of the Employee's termination of employment, but in no event after the
date of expiration of the term of the Option.
Notwithstanding any other provision of this Agreement, in the event the
Employee's employment is terminated by the Employee's employer without "cause"
(as defined in the Plan), the Option may be exercised, if it has not previously
terminated, within the originally prescribed term of the Option, provided that
the Employee and the Company recognize, agree and understand that any such
exercise later than three (3) months after the date the Employee ceases to be an
employee of the Company or an Affiliate will result in the Option being treated
as a Non-Qualified Option and not as an ISO.
In the event the Employee's employment is terminated by the Employee's
employer for "cause" (as defined in the Plan), the Employee's right to exercise
any unexercised portion of this Option shall cease as of such termination, and
this Option shall thereupon terminate.
Notwithstanding anything herein to the contrary, if subsequent to the
Employee's termination as an employee, but prior to the exercise of the Option,
the Board of Directors of the Company determines that, either prior or
subsequent to the Employee's termination, the Employee engaged in conduct which
would constitute "cause," then the Employee shall immediately cease to have any
right to exercise the Option and this Option shall thereupon terminate.
In the event of the Disability of the Employee, as determined in
accordance with the Plan, the Option shall be exercisable within one (1) year
after the Employee's termination of
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employment or, if earlier, within the term originally prescribed by the Option.
In such event, the Option shall be exercisable:
(a) To the extent exercisable but not exercised as of the date of
Disability; and
(b) In the event rights to exercise the Option accrue periodically, to
the extent of a pro rata portion of any additional rights to exercise the Option
as would have accrued had the Employee not become Disabled prior to the end of
the accrual period which next ends following the date of Disability. The
proration shall be based upon the number of days during the accrual period prior
to the date of Disability.
In the event of the death of the Employee while an employee of the
Company or of an Affiliate, the Option shall be exercisable by the Employee's
Survivors within one (1) year after the date of death of the Employee or, if
earlier, within the originally prescribed term of the Option. In such event, the
Option shall be exercisable:
(x) To the extent exercisable but not exercised as of the date of
death; and
(y) In the event rights to exercise the Option accrue periodically, to
the extent of a pro rata portion of any additional rights to exercise the Option
as would have accrued had the Employee not died prior to the end of the accrual
period which next ends following the date of death. The proration shall be based
upon the number of days during the accrual period prior to the Employee's death.
5. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of
this Agreement, the Option may be exercised by written notice to the Company at
its principal executive office, in substantially the form of Exhibit A attached
hereto. Such notice shall state the number of Shares with respect to which the
Option is being exercised and shall be signed by the person exercising the
Option. Payment of the purchase price for such Shares shall be made in
accordance with Paragraph 7 of the Plan. The Company shall deliver a certificate
or certificates representing such Shares as soon as practicable after the notice
shall be received, provided, however, that the Company may delay issuance of
such Shares until completion of any action or obtaining of any consent, which
the Company deems necessary under any applicable law (including, without
limitation, state securities or "blue sky" laws). The certificate or
certificates for the Shares as to which the Option shall have been so exercised
shall be registered in the name of the person or persons so exercising the
Option (or, if the Option shall be exercised by the Employee and if the Employee
shall so request in the notice exercising the Option, shall be registered in the
name of the Employee and another person jointly, with right of survivorship) and
shall be delivered as provided above to or upon the written order of the person
or persons exercising the Option. In the event the Option shall be exercised,
pursuant to Section 4 hereof, by any person or persons other than the Employee,
such notice shall be accompanied by appropriate proof of the right of such
person or persons to exercise the Option. All Shares that shall be purchased
upon the exercise of the Option as provided herein shall be fully paid and
nonassessable.
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6. PARTIAL EXERCISE. Exercise of this Option to the extent above stated
may be made in part at any time and from time to time within the above limits,
except that no fractional share shall be issued pursuant to this Option.
7. NON-ASSIGNABILITY. The Option shall not be transferable by the
Employee otherwise than by will or by the laws of descent and distribution. The
Option shall be exercisable, during the Employee's lifetime, only by the
Employee (or, in the event of legal incapacity or incompetency, by the
Employee's guardian or representative) and shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process. Any attempted transfer,
assignment, pledge, hypothecation or other disposition of the Option or of any
rights granted hereunder contrary to the provisions of this Section 7, or the
levy of any attachment or similar process upon the Option shall be null and
void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Employee shall have no
rights as a stockholder with respect to Shares subject to this Agreement until
registration of the Shares in the Company's share register in the name of the
Employee. Except as is expressly provided in the Plan with respect to certain
changes in the capitalization of the Company, no adjustment shall be made for
dividends or similar rights for which the record date is prior to the date of
such registration.
9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. The Plan contains
provisions covering the treatment of Options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to stock subject to Options and the related provisions with respect to
successors to the business of the Company are hereby made applicable hereunder
and are incorporated herein by reference, provided, however, that in the event
of an Acquisition (as defined in Section 16B of the Plan) that also constitutes
a Change of Control (as defined herein), the Option shall become fully
exercisable immediately prior to the effectiveness of and for the purposes of
such Acquisition.
10. TAXES. The Employee acknowledges that any income or other taxes due
from him or her with respect to this Option or the Shares issuable pursuant to
this Option shall be the Employee's responsibility. In the event of a
Disqualifying Disposition (as defined in Section 15 below) or if the Option is
converted into a Non-Qualified Option and such Non-Qualified Option is
exercised, the Company may withhold from the Employee's remuneration, if any,
the appropriate amount of federal, state and local withholding taxes
attributable to such amount that is considered compensation includable in such
person's gross income. At the Company's discretion, the amount required to be
withheld may be withheld in cash from such remuneration, or in kind from the
Shares otherwise deliverable to the Employee on exercise of the Option. The
Employee further agrees that, if the Company does not withhold an amount from
the Employee's remuneration sufficient to satisfy the Company's income tax
withholding obligation, the Employee will reimburse the Company on demand, in
cash, for the amount under-withheld.
11. PURCHASE FOR INVESTMENT. Unless the offering and sale of the Shares
to be issued upon the particular exercise of the Option shall have been
effectively registered under the Securities Act of 1933, as now in force or
hereafter amended (the "1933 Act"), the Company
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shall be under no obligation to issue the Shares covered by such exercise unless
and until the following conditions have been fulfilled:
(a) The person(s) who exercise the Option shall warrant to the Company,
at the time of such exercise, that such person(s) are acquiring such Shares for
their own respective accounts, for investment, and not with a view to, or for
sale in connection with, the distribution of any such Shares, in which event the
person(s) acquiring such Shares shall be bound by the provisions of the
following legend which shall be endorsed upon the certificate(s) evidencing the
Shares issued pursuant to such exercise:
"The shares represented by this certificate have been taken for
investment and they may not be sold or otherwise transferred by any
person, including a pledgee, unless (1) either (a) a Registration
Statement with respect to such shares shall be effective under the
Securities Act of 1933, as amended, or (b) the Company shall have
received an opinion of counsel satisfactory to it that an exemption
from registration under such Act is then available, and (2) there shall
have been compliance with all applicable state securities laws;" and
(b) If the Company so requires, the Company shall have received an
opinion of its counsel that the Shares may be issued upon such particular
exercise in compliance with the 1933 Act without registration thereunder.
Without limiting the generality of the foregoing, the Company may delay issuance
of the Shares until completion of any action or obtaining of any consent, which
the Company deems necessary under any applicable law (including without
limitation state securities or "blue sky" laws).
12. RESTRICTIONS ON TRANSFER OF SHARES. If, in connection with a
registration statement filed by the Company pursuant to the Securities Act, the
Company or its underwriter so requests, the Employee will agree not to sell any
Shares for a period not to exceed 180 days following the effectiveness of such
registration.
13. NO OBLIGATION TO EMPLOY. The Company is not by the Plan or this
Option obligated to continue the Employee as an employee of the Company.
14. OPTION IS INTENDED TO BE AN ISO. The parties each intend that the
Option be an ISO so that the Employee (or the Employee's Survivors) may qualify
for the favorable tax treatment provided to holders of Options that meet the
standards of Section 422 of the Code. Any provision of this Agreement or the
Plan which conflicts with the Code so that this Option would not be deemed an
ISO is null and void and any ambiguities shall be resolved so that the Option
qualifies as an ISO. Nonetheless, if the Option is determined not to be an ISO,
the Employee understands that neither the Company nor any Affiliate is
responsible to compensate him or her or otherwise make up for the treatment of
the Option as a Non-Qualified Option and not as an ISO. The Employee should
consult with the Employee's own tax advisors regarding the tax effects of the
Option and the requirements necessary to obtain favorable tax treatment under
Section 422 of the Code, including, but not limited to, holding period
requirements.
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15. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. The Employee agrees
to notify the Company in writing immediately after the Employee makes a
Disqualifying Disposition of any of the Shares acquired pursuant to the exercise
of the Option. A Disqualifying Disposition is defined in Section 424(c) of the
Code and includes any disposition (including any sale) of such Shares before the
later of (a) two years after the date the Employee was granted the Option or (b)
one year after the date the Employee acquired Shares by exercising the Option,
except as otherwise provided in Section 424(c) of the Code. If the Employee has
died before the Shares are sold, these holding period requirements do not apply
and no Disqualifying Disposition can occur thereafter.
16. NOTICES. Any notices required or permitted by the terms of this
Agreement or the Plan shall be given by hand delivery or by recognized courier
service, facsimile, registered or certified mail, return receipt requested,
addressed as follows:
If to the Company to: The Company at its principal business office.
If to the Employee to: The Employee at the address set forth below.
or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given upon
the earlier of receipt, one business day following delivery to a recognized
courier service or three business days following mailing by registered or
certified mail.
17. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the law of the State of Delaware, without giving effect to the
conflict of law principles thereof.
18. BENEFIT OF AGREEMENT. Subject to the provisions of the Plan and the
other provisions hereof, this Agreement shall be for the benefit of and shall be
binding upon the heirs, executors, administrators, successors and assigns of the
parties hereto.
19. ENTIRE AGREEMENT. This Agreement, together with the Plan, embodies
the entire agreement and understanding between the parties hereto with respect
to the subject matter hereof and supersedes all prior oral or written agreements
and understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant or agreement not expressly set forth in this
Agreement shall affect or be used to interpret, change or restrict, the express
terms and provisions of this Agreement, provided, however, in any event, this
Agreement shall be subject to and governed by the Plan.
20. MODIFICATIONS AND AMENDMENTS. The terms and provisions of this
Agreement may be modified or amended as provided in the Plan.
21. WAIVERS AND CONSENTS. Except as provided in the Plan, the terms and
provisions of this Agreement may be waived, or consent for the departure
therefrom granted, only by written document executed by the party entitled to
the benefits of such terms or provisions. No such waiver or consent shall be
deemed to be or shall constitute a waiver or consent with respect to any other
terms or provisions of this Agreement, whether or not similar.
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Each such waiver or consent shall be effective only in the specific instance and
for the purpose for which it was given, and shall not constitute a continuing
waiver or consent.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Employee has hereunto set his
or her hand, all as of the day and year first above written.
ALLOY ONLINE, INC.
By:___________________________________
Name
Title
EMPLOYEE
_______________________________________
Signature
Xxxx Xxxxx
_______________________________________
Print Name
Address:
_______________________________________
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Exhibit A
NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION
[FORM FOR REGISTERED SHARES]
TO: ALLOY ONLINE, INC.
IMPORTANT NOTICE: This form of Notice of Exercise may only be used at such time
as the Company has filed a Registration Statement with the Securities and
Exchange Commission under which the issuance of the Shares for which this
exercise is being made is registered and such Registration Statement remains
effective.
Ladies and Gentlemen:
I hereby exercise my Incentive Stock Option to purchase _______ shares
(the "Shares") of the common stock, par value $.01 per share, of Alloy Online,
Inc. (the "Company"), at the exercise price of $________ per share, pursuant to
and subject to the terms of that certain Incentive Stock Option Agreement
between the undersigned and the Company dated _______________, 199_.
I understand the nature of the investment I am making and the financial
risks thereof. I am aware that it is my responsibility to have consulted with
competent tax and legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the Option and the
purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
Please issue the stock certificate for the Shares (check one): [ ] to
me; or [ ] to me and ____________________________, as joint tenants with right
of survivorship and mail the certificate to me at the following address:
_______________________________________.
My mailing address for shareholder communications, if different from
the address listed above, is: __________________________________________________
Very truly yours,
_____________________________________
Employee (signature)
_____________________________________
Print Name
_____________________________________
Date
_____________________________________
Social Security Number
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