EXHIBIT 4.2
TEJON RANCH CO.
STOCK OPTION AGREEMENT
PURSUANT TO THE
1992 EMPLOYEE STOCK INCENTIVE PLAN
This Incentive Stock Option Agreement ("Agreement") is made and entered
into as of the Date of Grant indicated below by and between Tejon Ranch Co., a
Delaware corporation (the "Company"), and the person named below as Optionee.
WHEREAS, Optionee is an employee, officer or director of the Company
and/or one or more of its subsidiaries;
WHEREAS, pursuant to the Company's 1992 Employee Stock Incentive Plan
(the "1992 Plan"), the Compensation Committee of the Board of Directors of the
Company administering the 1992 Plan (the "Committee") approved the grant to
Optionee of an option to purchase shares of the Common Stock, par value $.50
per share, of the Company (the "Common Stock"), on the terms and conditions
set forth in a Stock Option Agreement entered into by Optionee and the Company
as of the Date of Grant;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby amend and restate their
agreement as so amended:
1. Grant of Option; Certain Terms and Conditions. The Company hereby
grants to Optionee, and Optionee hereby accepts, as of the Date of Grant
indicated below, an option (the "Option") to purchase the number of shares of
Common Stock indicated below (the "Option Shares") at the Exercise Price per
share indicated below. The Option shall become exercisable on and after the
Vesting Dates indicated below as to the number of shares indicated with
respect to each such Vesting Date, except as otherwise provided in Section 3.
The Option shall expire at 5:00 p.m., Los Angeles, California time, on the
Expiration Date indicated below and shall be subject to all of the terms and
conditions set forth in this Agreement.
Optionee:
Date of Grant:
Number of shares purchasable:
Exercise Price per share:
Expiration Date:
Vesting Dates:
2. Incentive Stock Option; Internal Revenue Code Requirements. The
Option is intended to qualify as an incentive stock option under Section 422
of the Internal Revenue Code (the "Code") except to the extent that the
aggregate Fair Market Value (determined as of the Date of Grant) of the shares
of Common Stock with respect to which the Option is exercisable for the first
time by Optionee during any calendar year (under the 1992 Plan and all other
stock option plans of the Company and its subsidiaries) exceeds $100,000.
Such excess shares are intended to be treated as shares issued pursuant to an
Option that is not an incentive stock option described in Section 422 of the
Code, in accordance with Section 422(d) of the Code. The number of such
excess shares as to which this option is not intended to be treated as an
incentive option is ______.
The "Fair Market Value" of a share of Common Stock or other security on
any day shall be equal to the last sale price, regular way, per share or unit
of such other security on such day or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the
American Stock Exchange or, if the shares of Common Stock or such other
security are not listed or admitted to trading on the American Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the shares of Common Stock or such other security are listed or admitted
to trading or, if the shares of Common Stock or such other securities are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System or such other system
then in use or, if on any such date the shares of Common Stock or such other
security are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a
market in shares of Common Stock or such other security selected by the Board
of Directors.
3. Acceleration and Termination of Option.
(a) Termination of Employment.
(i) Definition of Termination. In the event that Optionee
shall cease to be an employee of the Company or any of its subsidiaries
voluntarily or involuntarily or for any reason whatever, such event is
referred to in this Agreement as a "Termination" of Optionee's "Employment."
(ii) Normal Termination. If Optionee's Employment is
Terminated for any reason other than those enumerated in this Section
3(a)(ii), then the Option shall terminate three (3) months from the date of
such Termination of Employment but in no event later than the Expiration Date.
During such three month period, the Option shall be exercisable only if the
date of Termination of Employment is after the ninth anniversary of the Date
of Grant.
(iii) Death or Permanent Disability. In the event of a
Termination of Optionee's Employment by reason of the death of Permanent
Disability (as hereinafter defined) of Optionee, the Option shall terminate on
the first anniversary of the date of such Termination of Employment or the
Expiration Date, whichever is earlier.
"Permanent Disability" shall mean the inability to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than
twelve (12) months. The Optionee shall not be deemed to have a Permanent
Disability unless proof of the existence thereof shall have been furnished to
the Committee in such form and manner, and at such times, as the Committee may
require. Any determination by the Committee that Optionee does or does not
have a Permanent Disability shall be final and binding upon the Company and
Optionee.
(b) Death or Permanent Disability Following Termination of
Employment. Notwithstanding anything to the contrary in this Agreement, if
Optionee shall die or suffer a Permanent Disability at any time after the
Termination of his or her Employment and prior to the Expiration Date, then to
the extent that the Option was exercisable on the date of such death or
Permanent Disability the Option shall terminate on the earlier of the
Expiration Date or the first anniversary of the date of such death.
(c) Acceleration of Option Upon a Change of Control. The Option
shall become fully exercisable with respect to all Option Shares in the event
of a Change of Control. A "Change of Control" shall mean the first to occur
of the following events:
(i) a reorganization, merger or consolidation of the
Company, the issuance or transfer of securities of the Company in one
transaction or series of related transactions or any other transaction or
series of related transactions in each case if and only if as a result of the
transaction or transactions persons other than the shareholders immediately
prior to such transaction or transactions shall own 80% or more of the voting
securities of the Company or its successor after the transaction;
(ii) the sale or transfer by the Company of all or
substantially all of its property and assets in a single transaction or series
of related transactions; or
(iii) the dissolution or liquidation of the Company.
(d) Discretionary Acceleration. The Committee, in its sole
discretion, may accelerate the exercisability of the Option for any reason,
including without limitation in the event of death or disablement of Optionee
or termination of employment of Optionee by the Company other than for cause.
(e) Other Events Causing Termination of Option. Notwithstanding
anything to the contrary in this Agreement, the Option shall terminate in the
event of the occurrence of an event referred to in clause (ii) or (iii) of
paragraph (c) above or a merger or consolidation referred to in clause (i) of
paragraph (c) above (a "Termination Event") (even if such Termination Event
occurs after an event referred to in clause (i) of said paragraph (c) above
which is not a Terminating Event) unless the terms of any such transaction
constituting the Terminating Event otherwise provide. Such termination shall
occur on the 30th day following any such Terminating Event (or such later date
as the Board of Directors or the Committee shall determine) unless the Board
of Directors or the Committee (i) sets an earlier date which is at least ten
days prior to the occurrence of the Terminating Event, (ii) notifies the
Optionee in writing at least ten days before the occurrence of the Terminating
Event of the setting of such date and (iii) accelerates the exercisability of
the Option to the extent it would otherwise be exercisable for any part of the
thirty day period after such event pursuant to Section 1 or pursuant to
paragraph (c) above so that, to such extent, the Option could be exercised for
a period of at least ten days prior to the occurrence of the Terminating
Event. In such event where the requirements of clauses (i), (ii) and (iii) of
the preceding sentence are met, the Option shall expire immediately upon the
occurrence of the Terminating Event.
4. Adjustments. In the event that the outstanding securities of the
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, reclassification, dividend (other
than a cash dividend paid out of earned surplus) 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, the Committee shall
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.
5. Exercise. The Option shall be exercisable during Optionee's
lifetime only by Optionee or by his or her guardian or legal representative,
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 pursuant to the notice procedures set forth in Section
7 hereof, which notice shall specify the number of Option Shares to be
purchased (the "Purchased Shares") and the aggregate Exercise Price for such
shares (the "Exercise Notice"), together with payment in full of such
aggregate Exercise Price as follows:
(a) 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 power, 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 from purchasing or
acquiring such shares of Common Stock; and/or
(b) by reducing the number of shares of Common Stock to be
issued and delivered to Optionee upon such exercise (such reduction to be
valued on the basis of the aggregate Fair Market Value (determined on the date
of such exercise) of the additional shares of Common Stock that would
otherwise have been issued and delivered upon such exercise), provided that
the Company is not then prohibited from purchasing or acquiring such shares of
Common Stock.
The balance of the Exercise Price not paid by an exchange of shares
pursuant to (a) or (b) above shall be paid in cash or by a cashier's or
certified bank check payable to the Company.
The Optionee will be obligated to pay the Exercise Price in the manner
contemplated by (a) and/or (b) above and will be permitted to pay the Exercise
Price in cash only to the extent that it cannot be paid in the manner provided
in (a) and (b) above. Notwithstanding the foregoing, the Optionee shall be
obligated to pay the Exercise Price in the manner contemplated by (a) above
only to the extent that he or she owns shares of Common Stock beneficially,
has the power to dispose of those shares and such disposition contemplated by
(a) above would not constitute a "disqualifying disposition" of shares
resulting in a loss of the special tax treatment afforded incentive stock
options.
6. Payment of Withholding Taxes.
(a) If the Company is obligated to withhold an amount on account
of any federal, state or local tax imposed as a result of the exercise of the
Option, including, without limitation, any federal, state or other income tax,
or any F.I.C.A., state disability insurance tax or other employment tax, then
Optionee shall, concurrently with such exercise, pay such amount (the
"Withholding Liability") to the Company in cash or by a cashier's or certified
bank check payable to the Company; provided, however, that, in the discretion
of the Committee, the Optionee may, pursuant to an irrevocable election of
Optionee (a "Withholding Election") made on or prior to the date of such
exercise, instead pay all or any part of the Withholding Liability in the
following manner:
(i) 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 from purchasing or
acquiring such shares of Common Stock; and/or
(ii) by reducing the number of shares of Common Stock to be
issued and delivered to Optionee upon such exercise (such reduction to be
valued on the basis of the aggregate Fair Market Value (determined on the date
of such exercise) of the additional shares of Common Stock that would
otherwise have been issued and delivered upon such exercise), provided that
the Company is not then prohibited from purchasing or acquiring such shares of
Common Stock.
(b) The Committee 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
Committee 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.
7. Notices. Any notice given to the Company shall be addressed to
the Company at P.O. Box 1000, Lebec, California 93243, Attention: President,
or at such other address as the Company may hereinafter designate in writing
to Optionee. Any notice given to Optionee shall be sent to the address set
forth below Optionee's signature hereto, or at such other address as Optionee
may hereafter designate in writing to the Company. Any such notice shall be
deemed duly given when delivered personally or five days after mailing by
prepaid certified or registered mail return receipt requested.
8. Stock Exchange Requirements; Applicable Laws. Notwithstanding
anything to the contrary in this Agreement, no shares of stock issuable upon
exercise of the Option, and no certificate representing all or any part of
such shares, shall be purchased, issued or delivered if (a) such shares have
not been admitted to listing upon official notice of issuance on each stock
exchange 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 any other requirement of law or of any
administrative or regulatory body having jurisdiction over the Company.
9. Restrictions on Transferability.
(a) Neither the Option nor any interest therein may be sold,
assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in
any manner other than by will or the laws of descent and distribution.
(b) By accepting the Option, the Optionee for himself or herself
and his or her transferees by will or the laws of descent and distribution,
represent and agree that all shares of Common Stock purchased upon exercise of
the Option will be acquired for investment and not with a view to the
distribution thereof unless they have been registered under the Securities Act
of 1933, and will otherwise be acquired, held and disposed of and held in
accordance with the restrictions of said Act and the rules and regulations of
the Securities and Exchange Commission thereunder, that the Company may
instruct its transfer agent to restrict further transfer of said shares in its
records except upon receipt of satisfactory evidence that such restrictions
have been satisfied, that upon each exercise of any portion of the Option, the
certificates evidencing the purchased shares shall bear an appropriate legend
on the face thereof evidencing such restrictions, and that the person entitled
to exercise the same shall furnish evidence satisfactory to the Company
(including a written and signed representation) to the effect that the shares
are being acquired subject to such restrictions.
10. 1992 Plan. The Option is granted pursuant to the 1992 Plan, as in
effect on the Date of Grant, and is subject to all the terms and conditions of
the 1992 Plan, as the same may be amended from time to time; provided,
however, that no such amendment shall deprive Optionee, without his or her
consent, of the Option or of any of Optionee's rights under this Agreement.
The interpretation and construction by the Committee of the 1992 Plan, this
Agreement, the Option and such rules and regulations as may be adopted by the
Committee for the purpose of administering the 1992 Plan shall be final and
binding upon Optionee. Until the Option shall expire, terminate or be
exercised in full, the Company shall, upon written request therefor, send a
copy of the 1992 Plan, in its then-current form, to Optionee or any other
person or entity then entitled to exercise the Option.
11. Stockholder Rights. No person or entity shall be entitled to
vote, 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 and the Option
Shares have been issued.
12. Employment Rights. No provision of this Agreement or of the
Option granted hereunder shall (a) confer upon Optionee any right to continue
in the employ of the Company or any of its subsidiaries, (b) affect the right
of the Company and each of its subsidiaries to terminate the employment of
Optionee, with or without cause, or (c) confer upon Optionee any right to
participate in any employee welfare or benefit plan or other program of the
Company or any of its subsidiaries other than the 1992 Plan. The Optionee
hereby acknowledges and agrees that the Company and each of its subsidiaries
may terminate the employment of Optionee at any time and for any reason, or
for no reason, unless Optionee and the Company or such subsidiary are parties
to a written employment agreement that expressly provides otherwise.
13. Effect on Other Agreement. This Agreement supersedes the Stock
Option Agreement between the Optionee and the Company previsouly entered into
with respect to the Option and dated as of the Date of Grant.
14. Governing Law. This Agreement and the Option granted hereunder
shall be governed by and construed and enforced in accordance with the laws of
the State of Delaware.
IN WITNESS WHEREOF, the Company and Optionee have duly executed this
Agreement as of the Date of Grant.
TEJON RANCH CO.OPTIONEE
By: ______________________________ ______________________________
Name: Signature
Title:
______________________________
Street Address
______________________________
City, State and Zip Code
______________________________
Social Security Number