EXHIBIT 4.2
FORM FOR ISO UNDER 1994 EMPLOYEE
STOCK OPTION PLAN
NONTRANSFERABLE INCENTIVE STOCK
OPTION AGREEMENT dated as of ________
__, 19__, between BLYTH INDUSTRIES,
INC., a Delaware corporation (the
"Company"), and __________ (the
"Optionee", which term as used herein
shall be deemed to include any successor
to the Optionee by will or by the laws
of descent and distribution, unless the
context shall otherwise require).
Pursuant to the Company's amended and restated 1994 Employee Stock
Option Plan (the "Plan"), the Company, acting through the Stock Option and
Compensation Committee of its Board of Directors (the "Committee"), approved the
issuance to the Optionee, effective as of the date set forth above, of an
incentive stock option to purchase up to an aggregate of [# OF SHARES] shares of
Common Stock, $.02 par value, of the Company (the "Common Stock"), at the price
(the "Option Price") of [not less than 100% of the fair market value of a share
of Common Stock on the date of grant (110%, in the case of a 10% stockholder)]
[PRICE] per share, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual premises and
undertakings hereinafter set forth, the parties hereto agree as follows:
1. OPTION; OPTION PRICE. On behalf of the Company, the Committee
hereby grants to the Optionee the option (the "Option") to purchase, subject to
the terms and conditions of this Agreement and the Plan (which are incorporated
by reference herein and which in all cases shall control in the event of any
conflict with the terms, definitions and provisions of this Agreement), [# OF
SHARES] shares of Common Stock of the Company at an exercise price per share
equal to the Option Price, which Option is intended to qualify for Federal
income tax purposes as an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). A copy of
the Plan as in effect on the date hereof has been supplied to the Optionee, and
the Optionee hereby acknowledges receipt thereof.
2. TERM. The term (the "Option Term") of the Option shall commence
on the date of this Agreement and shall expire on
the tenth anniversary of the date of this Agreement [fifth anniversary, in the
case of a 10% stockholder], unless such Option shall theretofore have been
terminated in accordance with the terms hereof or of the Plan.
3. TIME OF EXERCISE. (a) Unless accelerated in the discretion of
the Committee or as otherwise provided herein, the Option shall become
exercisable as to the total number of shares of Common Stock subject to the
Option multiplied by the fraction specified in Exhibit A hereto, for the periods
specified in Exhibit A hereto. Subject to the provisions of Sections 5 and 8
hereof, shares as to which the Option becomes exercisable pursuant to the
foregoing provisions may be purchased at any time thereafter prior to the
expiration or termination of the Option.
(b) Anything contained in this Agreement to the contrary
notwithstanding, the Option shall not be exercisable to the extent that the
aggregate Fair Market Value (as determined in accordance with Section 6(b) of
the Plan) on the date hereof of all stock with respect to which incentive stock
options are exercisable for the first time by the Optionee during any calendar
year (under the Plan and all other plans of the Company and its subsidiaries, if
any) exceeds $100,000.
4. TERMINATION OF OPTION. (a) The unexercised portion of the
Option shall automatically terminate and shall become null and void and be of no
further force or effect upon the first to occur of the following:
(i) the expiration of the Option Term;
(ii) the expiration of three months from the date that the
Optionee ceases to be an employee of the Company or any of its subsidiaries
(other than as a result of an Involuntary Termination (as defined in
subparagraph (iii) below) or a Termination For Cause (as defined in
subparagraph (iv) below)); PROVIDED, HOWEVER, that if the Optionee shall
die during such three-month period, the time of termination of the
unexercised portion of the Option shall be determined in accordance with
subparagraph (iii) below;
(iii) the expiration of 12 months from the date that the Optionee
ceases to be an employee of the Company or any of its subsidiaries as a
result of the Optionee's death or permanent and total disability (within
the meaning of Section 22(e)(3) of the Code) (an "Involuntary
Termination");
- ---------------
* Subject to modification by the Committee to accommodate performance
objectives, if any.
-2-
(iv) immediately if the Optionee ceases to be an employee of the
Company or any of its subsidiaries if such termination is for cause or is
otherwise attributable to a breach by the Optionee of an employee,
noncompetition or other similar agreement with the Company or any such
subsidiary (any such termination, determined in accordance with paragraph
(b) below, a "Termination For Cause");
(v) the effective date of a Corporate Transaction (as defined in
Section 9(b) of the Plan) to which Section 9(b)(ii) of the Plan (relating
to assumptions and substitutions of Options) does not apply; PROVIDED,
HOWEVER, that the Optionee's right to exercise the Option prior to such
effective date shall in all events be suspended during the period
commencing 10 days prior to the proposed effective date of such Corporate
Transaction and ending on either the actual effective date of such
Corporate Transaction or upon receipt of notice from the Company that such
Corporate Transaction will not in fact occur; and
(vi) except to the extent permitted by Section 9(b)(ii) of the
Plan, the date on which the Option or any part thereof or right or
privilege relating thereto is transferred (otherwise than by will or the
laws of descent and distribution), assigned, pledged, hypothecated,
attached or otherwise disposed of by the Optionee.
(b) The Board of Directors of the Company shall have the power to
determine what constitutes a Termination For Cause, and the date upon which such
Termination For Cause occurs. Any such determination shall be final, conclusive
and binding upon the Optionee.
(c) Anything contained herein to the contrary notwithstanding, the
Option shall not be affected by any change of duties or position of the Optionee
(including a transfer to or from the Company or one of its subsidiaries), so
long as the Optionee continues to be an officer or employee of the Company or
one of its subsidiaries.
5. PROCEDURE FOR EXERCISE. (a) The Option may be exercised, from
time to time, in whole or in part (but for the purchase of whole shares only),
by delivery of a written notice (the "Notice") from the Optionee to the
Secretary of the Company, which Notice shall:
(i) state that the Optionee elects to exercise the
Option;
(ii) state the number of shares with respect to which
the Option is being exercised (the "Optioned Shares");
-3-
(iii) state the method of payment for the Optioned Shares
pursuant to Section 5(b);
(iv) state the date upon which the Optionee desires to
consummate the purchase of the Optioned Shares (which date must be
prior to the termination of such Option and no later than 30 days from
the delivery of such Notice);
(v) include any representations of the Optionee required
under Section 8(b); and
(vi) if the Option shall be exercised pursuant to Section 10
by any person other than the Optionee, include evidence to the
satisfaction of the Committee of the right of such person to exercise
the Option.
(b) Payment of the Option Price for the Optioned Shares shall be
made (i) in cash or by personal or certified check, (ii) by delivery of stock
certificates (in negotiable form) representing shares of Common Stock that have
been owned of record by the Optionee for at least six months prior to the date
of exercise and that have a Fair Market Value on the date of exercise
(determined in the manner set forth in Section 6(b) of the Plan) equal to the
product of (A) the number of Optioned Shares which are being purchased pursuant
to the exercise of such Option, multiplied by (B) the applicable Option Price,
(iii) (A) by arrangements which are acceptable to the Committee whereby the
Optionee delivers irrevocable instructions to a broker to promptly deliver to
the Company the amount of sale proceeds from the sale of the Optioned Shares as
is necessary to pay the Option Price and, unless otherwise allowed by the
Committee, any applicable tax withholding obligation or (B) in compliance with
any other cashless exercise program authorized by the Company for use in
connection with the Plan at the time of such exercise, or (iv) a combination of
the methods set forth in the foregoing clauses (i), (ii) and (iii).
(c) The Company shall issue a stock certificate in the name of
the Optionee (or such other person exercising the Option in accordance with the
provisions of Section 10) for the Optioned Shares as soon as practicable after
receipt of the Notice and payment of the aggregate Option Price for such shares.
6. NO RIGHTS AS A STOCKHOLDER. The Optionee shall not have any
privileges of a stockholder of the Company with respect to any Optioned Shares
until the date of issuance of a stock certificate pursuant to Section 5(c).
7. ADJUSTMENTS. (a) Subject to Section 7(b), if, at any time while
the Option is outstanding, the Common Stock is
-4-
changed by reason of a stock split, reverse stock split, stock dividend or
recapitalization, or converted into or exchanged for other securities as a
result of a merger, consolidation or reorganization, the Committee shall make
adjustments in the number and class of shares of stock subject to the Option,
and the Option Price of the Option, subject to the provisions of Sections 9(a)
and 9(c) of the Plan (or any similar or successor provisions of the Plan which
may be hereafter adopted).
(b) In the event of the dissolution or liquidation of the
Company, or reorganization, merger or consolidation in which the Company is not
the surviving corporation or a sale of all or substantially all of the assets of
the Company to another person or entity, the provisions of Sections 9(b) and
9(c) of the Plan (or any similar or successor provisions of the Plan which may
be hereafter adopted) shall apply.
8. ADDITIONAL PROVISIONS RELATED TO EXERCISE. (a) The Option shall
be exercisable only on such date or dates and during such period and for such
number of shares of Common Stock as are set forth in this Agreement.
(b) To exercise the Option, the Optionee shall follow the
procedures set forth in Section 5 hereof. Upon the exercise of the Option at a
time when there is not in effect a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), relating to the shares of Common
Stock issuable upon exercise of the Option, the Committee in its discretion may,
as a condition to the exercise of the Option, require the Optionee (i) to
represent in writing that the shares of Common Stock received upon exercise of
the Option are being acquired for investment and not with a view to distribution
and (ii) to make such other representations and warranties as are deemed
appropriate by counsel to the Company. No shares of Common Stock shall be
issued and delivered upon the exercise of the Option unless and until the
Company and/or the Optionee shall have complied with all applicable Federal or
state registration, listing and/or qualification requirements and all other
requirements of law or of any regulatory agencies having jurisdiction.
(c) Stock certificates representing shares of Common Stock
acquired upon the exercise of the Option that have not been registered under the
Securities Act shall, if required by the Committee, bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION
-5-
STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN
OPINION OF COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT."
9. NO EVIDENCE OF EMPLOYMENT OR SERVICE. Nothing contained in the
Plan or this Agreement shall confer upon the Optionee any right to continue in
the employ of the Company or any of its subsidiaries or interfere in any way
with the right of the Company or its subsidiaries (subject to the terms of any
separate agreement to the contrary) to terminate the Optionee's employment or to
increase or decrease the Optionee's compensation at any time.
10. RESTRICTION ON TRANSFER. The Option may not be transferred,
pledged, assigned, hypothecated or otherwise disposed of in any way by the
Optionee, except by will or by the laws of descent and distribution, and may be
exercised during the lifetime of the Optionee only by the Optionee. If the
Optionee dies, the Option shall thereafter be exercisable, during the period
specified in Section 4(a)(iii), by his executors or administrators to the full
extent to which the Option was exercisable by the Optionee at the time of his
death. The Option shall not be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of the Option contrary to the provisions hereof, and the levy of any
execution, attachment or similar process upon the Option, shall be null and void
and without effect.
11. DISQUALIFYING DISPOSITIONS; TAXES. (a) If Optioned Shares are
disposed of within two years following the date of this Agreement or one year
following the issuance thereof to the Optionee (a "Disqualifying Disposition"),
the Optionee shall, immediately prior to such Disqualifying Disposition, notify
the Company in writing of the date and terms of such Disqualifying Disposition
and provide such other information regarding the Disqualifying Disposition as
the Company may reasonably require.
(b) At the time of a Disqualifying Disposition, the Optionee shall
remit to the Company in cash the amount of any applicable Federal, state and
local withholding taxes and employment taxes.
12. NOTICES. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if (i) personally
delivered, (ii) sent by nationally-recognized overnight courier or (iii) sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
-6-
if to the Optionee, to the address set forth on the signature
page hereto; and
if to the Company, to:
Blyth Industries, Inc.
100 Field Point Road
Greenwich, Connecticut 06830
Attention: Secretary;
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered, if
personally delivered, (ii) on the first Business Day (as hereinafter defined)
after dispatch, if sent by nationally-recognized overnight courier and (iii) on
the third Business Day following the date on which the piece of mail containing
such communication is posted, if sent by mail. As used herein, "Business Day"
means a day that is not a Saturday, Sunday or a day on which banking
institutions in the city to which the notice or communication is to be sent are
not required to be open.
13. NO WAIVER. No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.
14. OPTIONEE UNDERTAKING. The Optionee hereby agrees to take
whatever additional actions and execute whatever additional documents the
Company may in its reasonable judgment deem necessary or advisable in order to
carry out or effect one or more of the obligations or restrictions imposed on
the Optionee pursuant to the express provisions of this Agreement.
15. MODIFICATION OF RIGHTS. The rights of the Optionee are subject
to modification and termination in certain events as provided in this Agreement
and the Plan.
16. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts made and to be wholly performed therein.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
18. ENTIRE AGREEMENT. This Agreement and the Plan constitute the
entire agreement between the parties with respect to the subject matter hereof,
and supersede all previously
-7-
written or oral negotiations, commitments, representations and agreements with
respect thereto.
-8-
IN WITNESS WHEREOF, the parties hereto have executed this
Nontransferable Incentive Stock Option Agreement as of the date first written
above.
BLYTH INDUSTRIES, INC.
By:
---------------------------
Name:
Title:
OPTIONEE:
------------------------------
Name:
-------------------------
Address:
----------------------
----------------------
----------------------
EXHIBIT A
One-fifth (1/5) of the aggregate number of options issued hereunder
shall become exercisable on each anniversary of the date of grant on which the
Optionee is employed by the Company.