Exhibit 4.2
EDUCATIONAL VIDEO CONFERENCING, INC.
STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of the 12th day of May, 1997, by
EDUCATIONAL VIDEO CONFERENCING, INC., a Delaware Corporation (the "Company"),
with Xxxxxxx X. Xxxxx (the "Holder"):
The Company, desiring to afford an opportunity to the Holder to
purchase certain shares of the Company's Common Stock, $.0001 par value (the
"Common Stock"), to provide the Holder with an inducement to remain in the
service of the Company, to enable the Holder to participate in the future
success of the Company and to associate the interests of the Holder with those
of the Company, hereby grants to Holder, and Holder hereby accepts, an option
(the "Option") to purchase all or any part of 30,000 shares of Common Stock, at
a price per share of $2.40 (the "Exercise Price"), which price is not less than
the fair market value of a share of Common Stock on the date hereof, as
determined by the Company's Board of Directors (the "Board"). The Option shall
vest and become exercisable (provided the Holder is then an employee of the
Company or a Related Entity, as defined below), on a cumulative basis, as to
10,000 shares 12 months after the completion of the Company's initial public
offering (the "IPO") and as to an additional 10,000 shares on each of the next
two succeeding anniversary dates of the IPO, so that 100% of the shares subject
to the Option shall be purchasable upon exercise of the Option three years from
the date of the IPO. The Option shall be subject to the following terms and
conditions:
1. a. This Agreement supersedes any and all other prior stock
option agreements between the parties with respect to the Option. The Option
shall continue in force through May 11, 2007 (the "Expiration Date"), unless
sooner terminated as provided herein.
b. This Option is designated as a stock option that does not
qualify as an incentive stock option pursuant to Section 422 of the Internal
Revenue Code of 1986, as amended.
2. a. If the Holder shall die and if the Option was otherwise
exercisable immediately prior to the occurrence of such event, then the Option
may be exercised as set forth herein by the person or persons to whom the
Holder's rights under the Option pass by will or by the laws of decent and
distribution, or if no such person has such right, by his executors or
administrators, at any time prior to the Expiration Date.
b. In the event of a change in control of the Company, of the
type that would be required to be described as a change in control of the
Company in a proxy or information statement
distributed by the Company pursuant to Section 14 of the Securities Exchange Act
of 1934, in response to Item 6(e) of Schedule 14 A promulgated thereunder (if
such Act is applied to the company), the Option will immediately become fully
exercisable in accordance with the terms of this Agreement.
3. a. The Holder may exercise the Option with respect to any
whole number of shares less than the full number of shares subject to the
Option. The Holder may exercise the Option by giving the Company written notice
in the form annexed, as provided in paragraph 8 hereof, of such exercise. Such
notice shall specify the number of shares as to which the Option is being
exercised and shall be accompanied by payment in full by means of one or a
combination of the following: (i) in cash, of an amount equal to the Exercise
Price multiplied by the number of shares as to which the Option is being
exercised (the "Purchase Price"); (ii) if permitted by the Board, by surrender
to the Company of a number of shares of Common Stock, or by allowing the Company
to deduct a number of shares from the shares of Common Stock deliverable to the
Holder upon exercise of the Option, having a fair market value, as determined by
the Board on the date of the exercise (whose determination shall be final and
conclusive), equal to the Purchase Price; or (iii) if the Holder is an employee
of the Company or a Related Entity at the time of exercise, and if the Board
permits, by interest bearing promissory note in an amount not to exceed 90% of
the Purchase Price, such promissory note to be repaid in quarterly installments
over a period not to exceed five years (the remaining 10% of such Purchase Price
to be paid either in cash or by surrender or deduction of shares of Common
Stock).
b. Prior to or concurrently with delivery by the Company to
the Holder of a certificate(s) representing such shares, the Holder shall, upon
notification of the amount due, pay promptly any amount necessary to satisfy
applicable federal, state or local tax requirements. In the event such amount is
not paid promptly, the Company shall have the right to apply from the Purchase
Price paid any taxes required by law to be withheld by the Company with respect
to such payment and the number of shares to be issued by the Company will be
reduced accordingly.
4. Notwithstanding any other provision of this Agreement, in the
event of a change in the outstanding Common Stock of the Company by reason of a
stock dividend, split-up, split-down, reverse split, recapitalization, merger,
consolidation, combination or exchange of shares, spin-off, reorganization,
liquidation or the like, then the aggregate number of shares subject to the
option and the Exercise Price shall be appropriately adjusted by the Board as
the Board shall determine to be equitably required, its determination to be
final and conclusive.
5. This Option shall, during the Holder's lifetime, be
exercisable only by him, and neither this Option nor any right
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hereunder shall be transferable by him, by operation of law or otherwise, except
by will or the laws of descent and distribution. In the event of any attempt by
the Holder to transfer, assign, pledge, hypothecate or otherwise dispose of this
Option or of any right hereunder, except as provided for herein, or in the event
of the levy or any attachment, execution or similar process upon the rights or
interest hereby conferred, the Company may terminate this Option by notice to
the Holder and it shall thereupon become null and void.
6. Neither the Holder nor, in the event of his death, any person
entitled to exercise his rights, shall have any of the rights of a stockholder
with respect to the shares subject to the Option until share certificates have
been issued and registered in the name of the Holder or his estate, as the case
may be.
7. Nothing in this Agreement shall confer upon the Holder any
right to continue in the employ or service of the Company or any entity that
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Company (a "Related
Entity").
8. Any notice to the Company provided for in this Agreement shall
be addressed to the Company in care of its Chief Financial Officer, at its
principal executive offices, and any notice to the Holder shall be addressed to
him at his address now on file with the Company, or to such other address as
either may last have designated to the other by notice as provided herein. Any
notice so addressed shall be deemed to be given upon receipt, if delivered by
hand, receipt acknowledged, or on the second business day after mailing, by
registered or certified mail, at a post office or branch post office within the
United States.
9. In the event that any question or controversy shall arise with
respect to the nature, scope or extent of any one or more rights conferred by
this Option, the determination by the Board (as constituted at the time of such
determination) of the rights of the Holder shall be conclusive, final and
binding upon the Holder and upon any other person who shall assert any right
pursuant to this Option.
EDUCATIONAL VIDEO CONFERENCING, INC.
By: /s/ Xx. Xxxx X. Xxxxxxxx
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Name: Xx. Xxxx X. Xxxxxxxx
Title: Chairman & CEO
ACCEPTED AND AGREED
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
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