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EXHIBIT 4.3
STOCK OPTION CONTRACT
THIS STOCK OPTION CONTRACT made by and between MAGNETIC TECHNOLOGIES
CORPORATION, having its offices located at 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxx
Xxxx 00000 ("the Company") and G. XXXXXX XXXXX, residing at 0000 Xxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000 ("the Director").
WHEREAS, the Company's Board of Directors and stockholders
have adopted the "1996 Stock Option Plan" ("the Plan"), under which a
Non-Qualified Stock Option may be issued to the Director (that is an
option not intended to meet the requirements of an Incentive Stock
Option under Section 422 of the Internal Revenue Code of 1986); and
WHEREAS, the Directors Option Committee of the Company's Board
of Directors has determined that it is desirable to provide an
incentive to the Director to serve as a member of the Company's Board
of Directors by enabling the Director to share in the success of the
Company through an equity interest; and
WHEREAS, in the judgment of the Company's Board of Directors,
the fair market value of the Company's Common Stock on December 16,
1996 (the day before this Stock Option Contract was authorized) was
$4.00 per share;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the Company hereby grants to the Director a stock
option to purchase an aggregate of seven thousand five hundred (7,500) shares of
the Company's $.15 par value Common Stock ("the Shares") at a price of Four
Dollars ($4.00) per Share, pursuant to the terms and conditions of this Contract
and of the Plan (the terms of the Plan are incorporated by reference within this
Contract).
1. EXERCISE TERM. The term of this stock option (that is, the period
during which it may be exercised by the Director in whole or in part) will
commence on January 1, 1997, and will expire upon the earliest to occur of the
following dates: (a) December 16, 2006; (b) pursuant to any of the provisions of
the Plan or this Contract; (c) upon the mutual written agreement of the Company
and the Director or (d) upon the occurrence of, and in accordance with, the any
of the following events:
A. This stock option may be exercised during the Director's
lifetime only if, at all times beginning on the date hereof and ending
three (3) months before the exercise date, the Director is a member of
the Company's Board of Directors; provided, however, that, if such
directorship becomes terminated by reason of the Director's disability,
the three-month period after the cessation of the directorship during
which this stock option may be exercised will instead be a period of
one (1) year, but no event later than December 16, 2006.
B. In the event that the Director shall die prior to the
complete exercise of all rights under this Contract, the then
unexercised portion of this stock option may be exercised in whole or
in part for a period of six (6) months after the date of the Director's
death, either by the Director's estate or by or on behalf of such
persons to whom the Director's rights hereunder shall pass under the
Director's Will or the laws of descent and distribution, but in no
event later than December 16, 2006.
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2. NON-ASSIGNABILITY. This stock option may be exercised only by the
Director during the Director's lifetime, and the rights granted under this
Contract may not be assigned, pledged or transferred by the Director, except by
Will or the laws of descent and distribution as set forth in Paragraph 1 hereof.
3. ADJUSTMENTS FOR CHANGE OF SHARES. The aggregate number and kind of
Shares issuable under this Contract, and the exercise price of this stock
option, shall be adjusted for any change in the Shares resulting from a stock
dividend or recapitalization (including a stock split, merger, combination or
exchange of Shares; but excluding the Company's issuance, sale or purchase of
Shares for money, services or property).
4. EXERCISE PROCEDURE. In order to exercise the stock option granted
hereunder, in whole or in part, the Director (all references to the Director in
this Paragraph 4 will mean and include any party acting on behalf of the
Director's estate) must give written notice to the Company, directed to its
Secretary at its principal office, such notice to specify the number of Shares
being purchased and the purchase price being paid therefor, accompanied by
payment in full of such purchase price.
A. In addition, if the Shares are not then registered under
the Securities Act of 1933 ("the Act"), the Director shall concurrently
tender a letter to the Company containing, in form and substance
satisfactory to counsel for the Company, written acknowledgments,
representations and covenants by the Director with respect to such
limitations on the transferability of the Shares as counsel for the
Company may in its sole discretion determine to be in effect at that
time by reason of such non-registration of the Shares, including the
Director's (i) acknowledgment that the Shares are being purchased under
a claim of exemption from registration under the Act as a transaction
not involving a public offering, (ii) representations and warranties
that the Shares are being acquired for investment purposes and not with
a view to the distribution thereof, and (iii) agreement not to
transfer, encumber or dispose of the Shares unless (x) a registration
statement with respect to the Shares shall be effective under the Act
and there shall have been compliance with applicable state laws or (y)
in compliance with Rule 144 or some other exemption from registration
under the Act.
B. The Company will issue stock certificate(s) to the Director
representing the Shares purchased by the Director hereunder as soon as
practical after the Company's receipt of the aforementioned notice and
payment, including clearance of funds. Each such certificate shall
contain such restrictive legends as may be established by counsel for
the Company evidencing the aforementioned transfer restrictions. The
Director will acquire rights as a stockholder of the Company with
respect to the Shares so purchased upon the date of the issuance of
such stock certificate(s).
5. NO RESERVATION OF SHARES. Because of the substantial conditions
which must be met to entitle the Director to exercise the stock option rights
hereunder, the Company is under no obligation to reserve the Shares under this
Contract, and no particular portion of the Company's Common Stock will be
construed as optioned or reserved for the Director pursuant to this Contract.
The Company will be deemed to have complied with the terms of this Contract if
at the time of the Director's exercise of this stock option, the Company has a
sufficient number of authorized and unissued Shares or treasury Shares available
for such purpose.
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6. LIMITATIONS ON DISPOSITIONS OF THE SHARES. The Director agrees not
to make any subsequent disposition of any Shares acquired by reason of the
Director's exercise of this stock option for a period of six (6) months from and
after the date of this Contract.
7. RIGHT OF COMPANY TO CANCEL OPTIONS. The Company retains the right to
cancel any unexercised options granted under this Contract at any time, without
cause, upon a vote of the Company's Board of Directors. Should the Company
determine to cancel any such option, it shall pay to the Director a purchase
price equal to the difference between the exercise price of this stock option
and the value of the Shares on the effective date of the Company's purchase as
established in the notice from the Company to the Director; provided, however,
that in no event shall the purchase price be less than zero.
8. LEGAL RESERVATION. This Contract and the Plan are subject to all
federal and State statutes, rules and regulations, including securities laws.
If, in the opinion of the Company's counsel, the issuance, sale or transfer of
Shares under this Contract is not lawful for any reason, the Company will not be
obligated to issue, sell or transfer the Shares notwithstanding conflicting
provisions of this Contract or the Plan.
IN WITNESS WHEREOF, the parties hereto have executed this Contract as
of December 17, 1996, in several counterparts, each of which shall be considered
to be an original and at least one of which has been delivered to each party
hereto.
MAGNETIC TECHNOLOGIES
CORPORATION
By: /s/ Xxxxxx X. XxXxxx
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Xxxxxx X. XxXxxx, President
THE DIRECTOR:
By: /s/ G. Xxxxxx Xxxxx
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G. Xxxxxx Xxxxx
