EXHIBIT 4.3
EXECUTION COPY
USTRAILS INC.
STOCK OPTION AGREEMENT
This Stock Option Agreement ("AGREEMENT") is made and entered into as of
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the Date of Grant indicated below by and between USTrails Inc., a Nevada
corporation (the "COMPANY"), and the Xxxxxxx X. Xxxx ("OPTIONEE").
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A. Optionee is the President and Chief Executive Officer of the Company.
In order to retain and motivate Optionee subsequent to the consummation of the
restructuring of the outstanding debt represented by the Company's 12% Senior
Secured Notes Due 1998, and to align the interest of Optionee with the
stockholders of the Company by providing for a proprietary interest of Optionee
in the Company, all of which will substantially benefit the Company, the Special
Committee of the Board of Directors of the Company (the "BOARD") has approved
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the grant to Optionee of an option to purchase shares of the common stock, par
value $.01 per share, of the Company (the "COMMON STOCK"), on the terms and
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conditions set forth herein.
B. In consideration of the foregoing recitals and the covenants set forth
herein, the parties hereto hereby agree as follows.
1. GRANT OF OPTION; CERTAIN TERMS AND CONDITIONS. The Company hereby
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grants to Optionee, subject to stockholder approval (which stockholder approval
shall be within twelve months of the Date of Grant), and Optionee hereby
accepts, as of the Date of Grant, an option to purchase the number of shares of
Common Stock indicated below (the "OPTION SHARES") at the Exercise Price per
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share indicated below, which option shall expire at 5:00 o'clock p.m. (local
time at the Company's principal executive office) on the Expiration Date
indicated below (unless earlier terminated pursuant to Section 2 hereof or, with
respect to the portion of the Option not constituting an Incentive Stock Option,
extended pursuant to Section 8(c) hereof), and shall be subject to all of the
terms and conditions set forth in this Agreement (the "OPTION").
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DATE OF GRANT: August 1, 1996
NUMBER OF SHARES PURCHASABLE: 664,495
EXERCISE PRICE PER SHARE: $.69
EXPIRATION DATE: July 31, 2006
OPTIONS TO PURCHASE UP TO 144,927 OPTION SHARES ARE INTENDED TO QUALIFY AS AN
INCENTIVE STOCK OPTION (FOR PURPOSES HEREOF, SUCH PORTION OF THE OPTION IS
REFERRED TO AS THE "INCENTIVE STOCK OPTION") UNDER SECTION 422 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED ("CODE"). THE COMPANY AND THE OPTIONEE HEREBY
ACKNOWLEDGE THAT THE EXERCISE PRICE REPRESENTS THE FAIR MARKET VALUE OF THE
COMMON STOCK ON THE DATE OF GRANT. THE OPTION SHALL BE EXERCISABLE, DURING HIS
LIFETIME, ONLY BY THE OPTIONEE. THE OPTIONS WITH RESPECT TO ALL OTHER OPTION
SHARES SHALL NOT BE AN INCENTIVE STOCK OPTION, BUT RATHER SHALL BE A
NONQUALIFIED OPTION.
2. TERMINATION OF OPTION.
(A) TERMINATION OF EMPLOYMENT OR OTHER STATUS.
(i) Death or Disability. In the event that Optionee shall
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cease to be an employee of the Company (such event shall be referred to
herein as the "TERMINATION" of Optionee's "STATUS") by reason of the death
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or Permanent Disability (as hereinafter defined) of Optionee, then the
Option shall, subject to Section 8(c), terminate upon the earlier of the
Expiration Date or the first anniversary of the date of such Termination of
Status. "PERMANENT DISABILITY" shall be deemed to have occurred if:
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(A) as result of the Optionee's incapacity due to
physical or mental illness, the Optionee shall
have been continuously absent from his duties for
at least six (6) consecutive months, and
(B) the Company shall have given the Optionee written
notice of the termination of the Optionee's
employment or other Status on account of the
Optionee's Disability, and
(C) thirty (30) days shall have elapsed after the
giving of such notice, and
(D) the Optionee shall not have resumed his duties on
a full time basis prior to the expiration of such
thirty (30) day period.
(ii) Termination by the Company. Except as provided below,
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if Optionee's Status is Terminated by the Company for any reason other than
death or Permanent Disability, then, subject to Section 8(c), the Option
shall terminate upon the earlier of the Expiration Date or the completion
of three (3) months after the date of such Termination. However, if the
Termination was for "cause," as defined below, the Option shall terminate
immediately upon such Termination. For purposes hereof, "cause" shall mean
termination of the Optionee's Status by the Company because of: (i) the
Optionee's conviction for or plea of nolo contendere to any felony or crime
involving moral turpitude, (ii) the Optionee's commission of an act of
personal dishonesty or breach of fiduciary duty involving personal profit
in connection with the Optionee's employment by the Company, (iii) the
Optionee's commission of an act involving intentional misconduct on the
part of the Optionee in the conduct of his duties, (iv) the Optionee's
willful failure to execute lawful policies of the Company, (v) chronic
alcoholism or any other form of addiction to drugs on the part of the
Optionee, or (vi) a material breach by the Optionee of any material
provision of any the Employment Agreement between Optionee and the Company
dated as of May 11, 1995, as amended, modified or supplemented from time to
time, or any other employment agreement to which he may from time to time
be a party.
(iii) Voluntary Resignation. If a Optionee's Status is
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terminated due to the Optionee's resignation (as determined by the Board), then,
subject to Section 8(c), the Option shall terminate upon the earlier of the
Expiration Date or the completion of three (3) months after the date of such
Termination.
(b) Other Events Causing Termination of Option. Notwithstanding
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anything to the contrary in this Agreement, the Option shall terminate upon the
consummation of any of the following events, or, if later, the thirtieth day
following the first date upon which such event shall have been approved by both
the Board and the stockholders of the Company, or upon such later date as shall
be determined by the Board:
(i) the dissolution or liquidation of the Company; or
(ii) a sale of substantially all of the property and assets of
the Company, unless the terms of such sale shall provide otherwise.
3. ADJUSTMENTS. In the event that the outstanding securities of the
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class then subject to the Option are increased, decreased, or exchanged for or
converted into cash, property, and/or a different number or kind of securities,
or cash, property, and/or securities are distributed in respect of such
outstanding securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, restructuring, reclassification, spin-off,
spin-out, dividend (other than a regular cash dividend) or other distribution,
stock split, reverse stock split or the like, or in the event that substantially
all of the property and assets of the Company are sold, then, unless such event
shall cause the Option to terminate pursuant to Section 3(b) hereof, (A) a
committee of the Board of Directors of the Company comprised solely of two or
more directors who qualify as "outside directors" (as defined in Code Section
162(m)) and (B) a committee of the Board of Directors comprised solely of "non
employee directors" (as defined in Rule 16b-3 promulgated under the Securities
Exchange Act of 1934) or the full Board of Directors (the "COMMITTEES") shall
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make appropriate and proportionate adjustments in the number and type of shares
or other securities or cash or other property that may thereafter be acquired
upon the exercise of the Option; provided, however, that any such adjustments in
the Option shall be made without changing the aggregate Exercise Price of the
then unexercised portion of the Option.
4. EXERCISE. Subject to stockholder approval within twelve months of the
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Date of Grant and subject also to Section 8 hereof, the Option shall be
exercisable, in full or in part, at any time and from time to time after the
date the Option is so approved by the stockholders of the Company and prior to
the Expiration Date (unless earlier terminated pursuant to Section 2, but
subject to Section 8(c)). The Option shall be exercisable during Optionee's
lifetime only by Optionee, and after Optionee's death only by the person or
entity entitled to do so under Optionee's last will and testament or applicable
intestate law. The Option may only be exercised by the delivery to the Company
of a written notice of such exercise, which notice shall specify the number of
Option Shares to be purchased (the "PURCHASED SHARES") and the aggregate
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Exercise Price for such shares (the "EXERCISE NOTICE"), together with payment in
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full of such aggregate Exercise Price in cash or by check payable to the
Company; provided, however, that payment of such aggregate Exercise Price may
instead be made, in whole or in part:
(i) with the prior approval of the Committees, by the delivery to
the Company of a promissory note in a form and amount satisfactory to the Board,
provided that the principal amount of such note shall not exceed the excess of
such
aggregate Exercise Price over and above the aggregate par value of the Purchased
Shares; or
(ii) with prior approval of the Committees, by the delivery to the
Company of a certificate or certificates representing shares of Common Stock,
duly endorsed or accompanied by a duly executed stock powers, which delivery
effectively transfers to the Company good and valid title to such shares, free
and clear of any pledge, commitment, lien, claim or other encumbrance (such
shares to be valued on the basis of the aggregate Fair Market Value thereof on
the date of such exercise), provided that the Company is not then prohibited by
the terms of any contractual obligation or legal restriction from purchasing or
acquiring such shares of Common Stock.
5. PAYMENT OF WITHHOLDING TAXES.
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(a) If the Company is obligated to withhold an amount on account of
any federal, state, or local tax, including, but not limited to, any income tax,
F.I.C.A. tax, disability insurance tax, or other employment tax, imposed for any
reason, including, without limitation, upon the exercise of the Option or
subsequent disposition of the underlying stock, then the Optionee, upon the
occurrence of the taxable event and providing the Optionee is still an employee
of the Company, shall pay the applicable withholding liability (the "WITHHOLDING
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LIABILITY") to the Company in cash or by check payable to the Company; provided,
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however, that, in the discretion of the Committees, Optionee may, pursuant to an
irrevocable election of Optionee (a "WITHHOLDING ELECTION") made on or prior to
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the date of such exercise, instead pay all or any part of the Withholding
Liability by the delivery to the Company of a stock certificate or certificates
representing shares of Common Stock, duly endorsed or accompanied by a duly
executed stock powers, which delivery effectively transfers to the Company good
and valid title to such shares, free and clear of any pledge, commitment, lien,
claim, or other encumbrance (such shares to be valued on the basis of the
aggregate Fair Market Value thereof on the date of such exercise), provided that
the Company is not then prohibited by the terms of any contractual obligation or
legal restriction from purchasing or acquiring such shares of Common Stock. For
purposes hereof, "FAIR MARKET VALUE" shall mean the average of the closing bid
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and asked quotation for the Common Stock as quoted through the NASD OTC Bulletin
Board and National Quotation Bureau's Pink Sheets or, if quoted thereon, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotations System.
(b) The Committees, in their sole discretion, may (1) impose such
additional conditions under Section 4 and Section 5 as may be required to comply
with Section 16 under the Exchange Act and the rules promulgated thereunder, and
(2) waive any of the restrictions in Section 4 and Section 5 in the event that
either (A) the transaction would not result in liability under Section 16(b) of
the Exchange Act, or (B) the Optionee consents to liability thereunder and
consents to disgorge any profits relating thereto to the Company.
(c) The Committees shall have sole discretion to approve or
disapprove any Withholding Election and may adopt such rules and regulations as
are consistent with and necessary to implement the foregoing. The Committees may
permit Optionee to make a Withholding Election to pay withholding taxes in
excess of the minimum amount required by law, provided that the amount of
withholding taxes so paid does not exceed the estimated total federal, state,
and local tax liability of Optionee attributable to such exercise.
6. STOCK EXCHANGE REQUIREMENTS; APPLICABLE LAWS.
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(a) Notwithstanding anything to the contrary in this Agreement, no
shares of stock purchased upon exercise of the Option, and no certificate
representing all or any part of such shares, shall be issued or delivered if
(a) such shares have not been admitted to listing or approved for quotation upon
official notice of issuance on each stock exchange or automated quotation system
upon which shares of that class are then listed, or (b) in the opinion of
counsel to the Company, such issuance or delivery would cause the Company to be
in violation of or to incur liability under any federal, state or other
securities law, or any requirement of any stock exchange listing agreement to
which the Company is a party or other rules or regulations of the National
Association of Securities Dealers, Inc. to which the Company is subject, or any
other requirement of law or of any administrative or regulatory body having
jurisdiction over the Company.
(b) Optionee represents to the Company that Optionee is a bona fide
resident of the State of Texas (the "STATE"). Notwithstanding anything to the
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contrary herein, this Agreement shall not become effective until the making of
all applicable security filings under the laws of the State and the
effectiveness thereof. Optionee shall promptly notify the Company in writing if
the Optionee becomes a bonafide resident of any jurisdiction other than the
State.
7. NONTRANSFERABILITY. Neither the Option nor any interest therein may
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be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner other than by will or the laws of descent and
distribution.
8. RESTRICTIONS. (a) Except as otherwise permitted under Section 16 of
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the Exchange Act (including any rules promulgated thereunder), Optionee may not,
if he is subject to liability under Section 16 of the Exchange Act, sell any
Option Share issued hereunder until the expiration of the six (6) month period
commencing on the Date of Grant, unless the same would either not result in
liability under said Section 16 or the Optionee consents to such liability and
consents to disgorge any profits relating thereto to the Company.
(b) Optionee may not exercise this Option if, and to the extent that,
Option Shares issued hereunder would constitute "Excess Common Stock" as defined
in Article Nine of the Restated Bylaws of the Company (or any successor
provision in the charter or bylaws of the Company or its successor in interest);
provided, however, that with respect to that portion of the Option constituting
the Incentive Stock Option, the restriction on exercise in this Section 8(b)
shall not apply during the 90 day period immediately prior to the Expiration
Date.
(c) If pursuant to any provision hereof the Option would terminate on a
date on which Optionee is prohibited from exercising all or a portion of the
Option pursuant to Section 8(b), the term of the Option shall be extended with
respect to that portion of the Option Shares which would constitute "Excess
Common Stock" and shall terminate on the date which is 90 days after the date
the Option may thereafter first be exercised with respect to such Option Shares
without limitation pursuant to Section 8(b); provided that portion of the
Option constituting the Incentive Stock Option shall in any event expire on the
Expiration Date.
(d) Optionee acknowledges and agrees that the Option Shares issued
hereunder shall be subject to the restrictions set forth in Article Nine of the
Restated By-Laws of the Company (or any successor provision in the charter or
bylaws of the
Company or its successor in interest) and each certificate representing Option
Shares will contain a legend substantially to the following effect (or as may be
required to give notice of any successor provision in the charter or bylaws of
the Company or its successor in interest):
TRANSFER OF THESE SHARES IS SUBJECT TO RESTRICTIONS DESIGNED
TO AVOID AN "OWNERSHIP CHANGE" WITHIN THE MEANING OF SECTION 382
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. SUCH
RESTRICTIONS ARE SET FORTH IN ARTICLE NINE OF THE RESTATED BYLAWS
OF THE COMPANY. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO BE BOUND BY SUCH RESTRICTIONS. THE COMPANY WILL
FURNISH TO THE RECORD HOLDER OF THIS CERTIFICATE UPON REQUEST TO
THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS, A COPY OF SUCH
RESTRICTIONS.
(e) Optionee understands and acknowledges that the Option and Option
Shares have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), or other applicable securities laws and represents that
he is acquiring the Option and will acquire the Option Shares for his own
account for investment and not with a view to any distribution thereof. Optionee
acknowledges that, unless issued pursuant to an effective registration
statement, each certificate for Option Shares will contain a legend
substantially to the following effect:
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY ONLY PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OR PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO IT.
9. STOCKHOLDER RIGHTS. No person or entity shall be entitled to vote,
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receive dividends, or be deemed for any purpose the holder of any Option Shares
until the Option shall have been duly exercised to purchase such Option Shares
in accordance with the provisions of this Agreement.
10. STATUS RIGHTS. No provision of this Agreement or of the Option
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granted hereunder shall (a) confer upon Optionee any right to continue in his
Status with the Company, (b) affect the right of the Company to Terminate the
Status of Optionee, with or without cause, or (c) confer upon Optionee any right
to participate in any employee benefit plan or other program of the Company.
11. NOTICES. Any notice to be given to the Company shall be personally
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delivered to or addressed to the Secretary of the Company, at its principal
office, and any notice to be given to the Optionee shall be addressed to him at
the address given beneath his signature hereto, or at such other address as the
Optionee may hereafter designate in writing to the Company. Any notice to the
Company is deemed given when received by the Company. Any notice to the
Optionee is deemed given when enclosed in a properly sealed envelope addressed
as aforesaid, and deposited, postage prepaid, in a post office or branch post
office regularly maintained by the United States.
12. SUCCESSOR AND ASSIGNS. This Agreement shall inure to the benefit of
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and be binding upon the parties hereto and the Optionee's beneficiaries, heirs,
executors, and administrators, and the Company's successors and assigns.
13. GOVERNING LAW. This Agreement and the Option granted hereunder shall
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be governed by and construed and enforced in accordance with the laws of the
State of Nevada (except to the extent preempted by federal law).
[Signatures on next page]
IN WITNESS WHEREOF, the Company and Optionee have duly executed this
Agreement effective as of the Date of Grant.
USTRAILS INC.
By: ___________________________________
Name:______________________________
Title:_____________________________
OPTIONEE
________________________________________
Xxxxxxx X. Xxxx
Social Security Number:_________________
Address: _______________________________
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