Exhibit 4.3
ESMOR CORRECTIONAL SERVICES, INC.
STOCK OPTION AGREEMENT
AGREEMENT, made as of the 8th day of April, 1996, between Esmor
Correctional Service, Inc., a Delaware corporation (the "Corporation") and
Xxxxxx Xxxxxx (the "Optionee").
WHEREAS, the simultaneously herewith the Corporation has entered into an
employment agreement with the Optionee pursuant to which the Corporation has
agreed to grant to the Optionee an option to purchase an aggregate of fifteen
thousand (15,000) authorized but unissued shares of the Corporation's Common
Stock, par value $.01 per share (the "Common Shares").
NOW, THEREFORE, for good and valuable consideration paid by the Optionee to
the Corporation, the adequacy of which is hereby acknowledged, and the mutual
covenants hereinafter set forth, the parties agree as follows:
1. Grant of Option. The Corporation hereby grants to the Optionee the right
and option to purchase all or any part of an aggregate of fifteen thousand
(15,000) Common Shares (subject to adjustment as provided in Paragraph 6 hereof)
on the terms and conditions set forth herein (the "Option"). The Optionee
acknowledges that the Option is not an "incentive option" within the meaning of
an "incentive stock option plan" and Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. Purchase Price. The purchase price of the Common Shares covered by the
Option shall be $8.75 per share (subject to adjustment as provided in Paragraph
6 hereof).
3. Vesting of Option. The Option is exercisable as to 7,500 shares
commencing one year from the date hereof and as to an additional 7,500 shares
commencing two years from the date hereof. The Option granted hereby shall
expire April 8, 2001, unless earlier terminated as hereinafter set forth.
4. Method of Exercising Option. If the Optionee elects to exercise the
Option, he may do so in whole or in part at any time subject to the termination
dates specified herein. The Option, or any part thereof, may be exercised by the
Optionee in either of the following ways:
(a) If the Optionee decides to exercise all or part of his Option and make
payment for the Common Shares in full, he shall give written notice to the
Corporation, specifying therein the number of Common Shares which he then elects
to purchase, accompanied by cash or certified check payable to the order of the
Corporation.
(b) If the Optionee decides to exercise all or part of the Option and make
payment in installments, the Optionee shall give written notice to the
Corporation specifying therein the number of Common Shares which he then elects
to purchase, accompanied by a promissory note, in a form satisfactory to the
Corporation, executed by the Optionee and evidencing the obligation of the
Optionee to pay the option price to the Corporation in equal annual installments
payable on the annual anniversary date of exercise beginning one year after the
date of such exercise and terminating on the third anniversary of the date of
exercise of the Option, together with interest at the lowest rate imputed by the
Internal Revenue Service when an interest rate is not stated in a contract.
Notwithstanding the foregoing, in the event the Optionee's relationship with the
Corporation is terminated for
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any reason, (a) then any such promissory note shall immediately be due and
payable, and (b) the Optionee shall not be eligible to exercise the Option and
make payment in installments, but shall be required to make payment by cash or
certified check payable to the order of the Corporation.
As soon as practicable after receipt by the Corporation of such notice and
of payment in full of the Option price of all the Common Shares with respect to
which the Option has been exercised (including interest if payment is made in
installments), a certificate or certificates representing such Common Shares
shall be issued in the name of the Optionee, or, if the Optionee shall so
request in the notice exercising the Option, in the name of the Optionee and
another person jointly, with right of survivorship, and shall be delivered to
the Optionee. All Common Shares shall be issued only upon receipt by the
Corporation of the Optionee's representation that the shares are purchased for
investment and not with a view toward distribution thereof.
5. Availability of Shares. The Corporation, during the term of this Option,
at all times shall keep available the number of shares of common stock required
to satisfy the Option.
The Corporation shall utilize its best efforts to comply with the
requirements of each regulatory commission or agency having jurisdiction in
order to issue and sell the Common Shares to satisfy the Option; provided,
however, that the Corporation shall not be required to register the Common
Shares issuable on exercise of the Option under the Securities Act of 1933. Such
compliance will be a condition precedent to the right to exercise the Option.
The inability of the Corporation to effect such compliance with any
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such regulatory commission or agency which counsel for the Corporation
deems necessary for the lawful issuance and sale of the Common Shares to satisfy
this Option shall relieve the Corporation from any liability for failure to
issue and sell the Common Shares to satisfy the Option for such period of time
as such compliance is not effectuated.
6. Adjustments. If prior to the exercise of any option granted hereunder
the Corporation shall have effected one or more stock split-ups, stock
dividends, or other increases or reductions of the number of shares of its
common stock outstanding without receiving compensation therefor in money,
services or property, the number of Common Shares subject to the option hereby
granted shall (a) if a net increase shall have been effected in the number of
outstanding shares of the Corporation's Common Shares, be proportionately
increased and the cash consideration payable per Common Share shall be
proportionately reduced; and (b) if a net reduction shall have been effected in
the number of outstanding shares of the Corporation's Common Shares, be
proportionately reduced and the cash consideration payable per Common Share be
proportionately increased.
7. Restrictions. The holder of this Option, by acceptance hereof,
represents and warrants as follows:
(a) This Option and the right to purchase common stock hereunder is
personal to the holder and shall not be transferred to any other person. The
Option may not be pledged or otherwise hypothecated.
(b) The holder hereof has been advised and understands that the Option has
been issued in reliance upon exemptions from registration under the Securities
Act and applicable state statutes; the exercise of the Option and resale of the
Option and the
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Common Shares have not been registered under the Securities Act or
applicable state statutes and must be held and may not be sold, transferred, or
otherwise disposed of for value unless they are subsequently registered under
the Securities Act or an exemption from such registration is available; except
as set forth herein, the Corporation is under no obligation to register the
Option or the Common Shares under the Securities Act or the applicable state
statutes; in the absence of such registration, (i) the sale of the Option or the
Common Shares may be practicably impossible, and (ii) the Corporation's
registrar and transfer agent will maintain stop-transfer instructions against
registration or transfer of the Option and the Common Shares and any certificate
issued upon exercise of the Option representing the Common Shares will bear on
its face a legend in substantially the following form restricting the sale of
the Common Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
AND ARE "RESTRICTED SECURITIES" WITHIN THE
MEANING OF RULE 144 PROMULGATED UNDER THE
SECURITIES ACT. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD
OR TRANSFERRED WITHOUT COMPLYING WITH RULE
144 IN THE ABSENCE OF EFFECTIVE REGISTRATION OR
OTHER COMPLIANCE UNDER THE SECURITIES ACT.
(c) In the absence of registration, prior to two years from the date the
Option has been exercised and the Common Shares fully paid for, the Corporation
may refuse to transfer the Common Shares unless the holder thereof provides an
opinion of legal counsel reasonably satisfactory to the Corporation or a "no
action" letter or interpretive response from the staff of the Securities and
Exchange Commission to the effect that the
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transfer is proper; further, unless such opinion letter or response states that
the Common Shares are free of any restrictions under the Securities Act, the
Corporation may refuse to transfer the Common Shares to any transferee who does
not furnish in writing to the Corporation the same representations and agree to
the same conditions with respect to such Common Shares as are set forth herein.
Notwithstanding any of the foregoing, the Corporation may refuse to transfer the
Common Shares if any circumstances are present reasonably indicating that the
transferee's representations are not accurate.
(d) In the absence of registration, after two years but prior to three
years from the date the Option has been exercised and the Common Shares fully
paid for, the Corporation may refuse to transfer the Common Shares unless the
holder either (i) meets the requirements of Subparagraph (b) above; or (ii)
sells such Common Shares in accordance with Rule 144 and furnishes to the
Corporation written assurances of compliance therewith in the form of a copy of
the Notice of Form 144 and appropriate letters of compliance from the holder of
such Common Shares and the securities broker-dealer to or through which such
Common Shares are being sold. No opinion of counsel for the holder of the Common
Shares shall be required respecting sales in reliance on Rule 144 pursuant to
Clause (ii) of this Subparagraph (d).
(e) In the absence of registration, after three years from the date of the
Option has been exercised and the Common Shares fully paid for, the Corporation
shall, upon the written request of any persons who have held the Common Shares
for three years (excluding any tolling period provided for by Rule 144) and who
is not, and has not been during the preceding three months, an affiliate of the
Corporation, re-issue to such holder in
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such names and denominations as the holder shall request, one or more
certificates for the Common Shares without any restriction whatsoever on their
further transfer and cancel any and all stop transfer instructions regarding
such Common Shares on the books and records of the Corporation.
8. Shareholders's Rights. This Option is non-transferable by the Optionee,
except in the event of the Optionee's death as provided in Section 10(b) hereof
and during the Optionee's lifetime is exercisable only by the Optionee. On any
attempt to transfer or otherwise dispose of this Option other than pursuant to
the terms hereof or the terms of the Plan, this Option shall immediately become
null and void. The Optionee shall have no rights as a shareholder with respect
to Option Shares until payment of the Option price and delivery to the Optionee
of the Common Shares as provided herein.
9. Registration Rights. The Corporation agrees to promptly file a
registration statement on Form S-8, or other permissible form, with the
Securities and Exchange Commission with respect to the Common Shares.
10. Termination of Option. Except as otherwise stated herein, the Option to
the extent not heretofore exercised shall terminate upon the first of the
following dates to occur:
(a) In the event the Optionee cases to be a member of the Board of
Directors of the Corporation for any reason other than death or permanent
disability, any then unexercised portion of the Option granted to the Optionee
shall, to the extent not then vested, immediately terminate and become void; any
portion of the Option which is then vested but has not been exercised at the
time the Optionee so ceases to be a member of the
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Board of Directors may be exercised, to the extent it is then vested, by
the Optionee within 180 days of the date the Optionee ceased to be a member of
the Board; and all options shall terminate after such 180 days have expired. (b)
In the event that the Optionee ceases to be a member of the Board by reason of
his or her death or permanent disability, any option granted to Optionee shall
be immediately and automatically accelerated and become fully vested and all
unexercised options shall be exercisable by Optionee (or by the Optionee's
personal representative, heir or legatee, in the event of death) until the
scheduled expiration date of the Option.
(c) April 8, 2001.
11. Validity and Construction. The validity and construction of this Option
shall be governed by the laws of the State of Delaware. Such construction is
vested in the board and its construction shall be final and conclusive.
IN WITNESS WHEREOF, the Corporation has caused this Option Agreement to be
executed by its proper corporate officers thereunto duly authorized.
ESMOR CORRECTIONAL SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxxx, President
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/s/ Xxxxxx Xxxxxx, Optionee
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