Exhibit 4.2
ADVANCED LUMITECH, INC.
Incentive Stock Option Agreement
Advanced Lumitech, Inc., a Nevada corporation (the "Company"), hereby
grants this ___ day of , 199__ (the "Grant Date"), to (the
"Employee"), an option to purchase a maximum of (____) shares of the
Company's Common Stock, $.001 par value per share (the "Common Stock"), at the
price of $ ____ per share, on the following terms and conditions:
1. Grant Under 1999 Stock Option/Stock Issuance Plan. (a) This option is
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granted pursuant to and is governed by and subject to the Company's 1999 Stock
Option/Stock Issuance Plan (the "Plan"), the terms and conditions of which are
incorporated herein by this reference. Unless the context otherwise requires,
terms used herein shall have the same meaning as in the Plan. Determinations
made pursuant to the Plan in connection with this option shall be governed by
the Plan as it exists on the date of this option agreement ("Agreement").
(b) The granting of this option shall be subject to receipt by the
Company of the Company's current form of Non-Disclosure, Non-Competition and
Developments Agreement, executed and delivered by the Employee.
2. Grant as Incentive Stock Option, Other Options. This option is intended
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to qualify as an incentive stock option ("ISO") within the meaning of Section
422 of the Internal Revenue Code of 1986 (the "Code"). This option is in
addition to any other options heretofore or hereafter granted to the Employee by
the Company, but a duplicate original of this instrument shall not effect the
grant of another option.
3. Exercise of Option and Provisions for Termination.
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(a) Vesting Schedule. Except as otherwise provided in this Agreement,
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and subject to all other terms and conditions of this Agreement, if the Employee
has continued to be employed by the Company through any applicable date in the
table below, this option may be exercised prior to the tenth anniversary of the
Grant Date (hereinafter the "Expiration Date") in installments for not more than
the number of shares set forth opposite such applicable date:
As of the Grant Date 0 shares
_________, 2000 an additional shares
_________, 2001 an additional shares
_________, 2002 an additional shares
_________, 2003 an additional shares
_________, 2004 an additional shares
The right of exercise shall be cumulative so that if the option is not
exercised to the maximum extent permissible as of an applicable date, it shall
be exercisable, in whole or in part, with respect to all shares not so purchased
at any time prior to the Expiration Date or the earlier termination of this
option. Notwithstanding any other provision of this Agreement or the Plan, this
option may not be exercised at any time on or after the Expiration Date.
(b) Method of Exercise. Subject to the terms and conditions set forth
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in this Agreement, this option shall be exercised by the Employee's delivery of
written notice of exercise to the President or Treasurer of the Company,
specifying the number of shares to be purchased and the purchase price to be
paid therefor and accompanied by payment in full in accordance with Section 4
hereof. Such exercise shall be effective upon receipt by the President or
Treasurer of the Company of such written notice together with the required
payment. The Employee may purchase less than the number of shares covered
hereby, provided that no partial exercise of this option may be for any
fractional share or for fewer than 500 whole shares.
(c) Continuous Employment Required. Except as otherwise provided in
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this Section 3, this option may not be exercised unless the Employee, at the
time he or she exercises this option, is, and has been at all times since the
Grant Date, an employee of the Company. For all purposes of this Agreement, (i)
"employee" and "employment" shall be defined in accordance with the provisions
of Treasury Regulation Section 1.421-7(h) under the Code, or any successor
regulations, (ii) employment by a parent or subsidiary corporation of the
Company shall be deemed to be employment by the Company and (iii) if this option
shall be assumed or a new option substituted therefor in a transaction to which
Section 424(a) of the Code applies, employment by such assuming or substituting
corporation (hereinafter a "Successor Corporation") shall be considered for all
purposes of this option to be employment by the Company. As used herein, the
terms "parent" and "subsidiary" mean "parent corporation" and "subsidiary
corporation", respectively, as those terms are defined in Sections 424(e) and
424(f) or successor provisions of the Code.
(d) Exercise Period Upon Termination of Employment. If the Employee
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ceases to be employed by the Company for any reason, then, except as provided in
paragraphs (e) and (f) below, the right to exercise this option shall terminate
on the date which is three (3) months after the date of cessation of employment
(but in no event after the Expiration Date); provided, however, that this option
shall be exercisable only to the extent that the Employee was entitled to
exercise this option on the date of such cessation. Notwithstanding the
foregoing, if, in the judgment of the Company, the Employee, prior to the
Expiration Date, materially violates the non-competition or confidentiality
provisions of any employment contract, confidentiality and nondisclosure
agreement or other agreement between the Employee and the Company, the right to
exercise this option shall terminate immediately upon written notice to the
Employee from the Company describing such violation.
(e) Exercise Period Upon Death or Disability. If the Employee dies or
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becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to
the Expiration Date while he or she is an employee of the Company, or if the
Employee dies within three (3) months after the date on which the Employee
ceases to be an employee of the Company (other than as the result of a discharge
for "cause" as specified in Paragraph (f) below), this option shall be
exercisable within the period of one (1) year following the date of death or
disability of the Employee (but in no event after the Expiration Date), by the
Employee or by the person to whom this option is transferred by will or the laws
of descent and distribution; provided, however, that this option shall be
exercisable only to the extent that this option was exercisable by the Employee
on the date of his or her death or disability. Except as otherwise indicated by
the context, the term "Employee", as used in this Agreement, shall include the
estate of the Employee, the Employee's personal representative, or any other
person who acquires the right to exercise this option by bequest or inheritance
or otherwise by reason of the death of the Employee or by reason of the
Employee's incapacity.
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(f) Discharge for Cause. If the Employee, prior to the Expiration
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Date, is discharged by the Company for "cause" (as defined below), the right to
exercise this option shall terminate immediately upon such discharge. "Cause"
shall mean willful misconduct or willful failure by the Employee to perform his
or her employment responsibilities in the best interests of the Company
(including, without limitation, breach by the Employee of any provision of any
employment, nondisclosure, non-competition or other similar agreement between
the Employee and the Company), as determined by the Company, which determination
shall be conclusive. The Employee shall be considered to have been discharged
"for cause" if the Company determines, within thirty (30) days after the
Employee's resignation, that discharge for cause was warranted.
4. Payment of Purchase Price. Payment of the purchase price for shares
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purchased upon exercise of this option shall be made by delivery to the Company
of cash or wire transfer or a check payable to the order of the Company in an
amount equal to the purchase price per share as hereinabove set forth times the
number of shares so purchased (the "exercise price").
5. Delivery of Shares.
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(a) General. The Company shall, upon payment of the exercise price
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for the number of shares purchased and paid for, make prompt delivery of such
shares to the Employee; provided, however, that if any law or regulation
requires the Company to take any action with respect to such shares before the
issuance thereof, then the date of delivery of such shares shall be extended for
the period necessary to complete such action.
(b) Listing, Registration, Qualification, Etc. This option shall be
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subject to the requirement that if, at any time, counsel to the Company shall
determine that the listing, registration or qualification of the shares subject
hereto upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, or that the
disclosure of non-public information or the satisfaction of any other condition
is necessary as a condition of, or in connection with, the issuance or purchase
of shares hereunder, this option may not be exercised, in whole or in part,
unless such listing, registration, qualification, consent or approval,
disclosure or satisfaction of such other condition shall have been effected or
obtained on terms acceptable to the Board of Directors of the Company. Nothing
herein shall be deemed to require the Company to apply for, effect or obtain
such listing, registration, qualification, or disclosure, or to satisfy such
other condition.
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6. Nontransferability of Option. Except as provided in Paragraph (e) of
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Section 3 hereof, this option is personal and no rights granted hereunder may be
transferred, assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) nor shall any such rights be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of this option or of such rights contrary to
the provisions hereof, or upon the levy of any attachment or similar process
upon this option or such rights, this option and such rights shall, at the
election of the Company, become null and void.
7. No Special Employment Rights. Nothing contained in the Plan or this
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Agreement shall be construed or deemed by any person under any circumstances to
obligate the Company to continue the employment of the Employee for any period.
8. Rights as a Shareholder. The Employee shall have no rights as a
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shareholder with respect to any shares which may be purchased by exercise of
this option (including, without limitation, any rights to vote or to receive
dividends or other distributions with respect to such shares) unless and until a
certificate representing such shares is duly issued and delivered to the
Employee. No adjustment shall be made for dividends or other rights for which
the record date is prior to the date such stock certificate is issued.
9. Adjustment Provisions.
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(a) General. If through, or as a result of, any merger,
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consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, (i) the outstanding shares of
Common Stock are increased or decreased or are exchanged for a different number
or kind of shares or other securities of the Company, or (ii) additional shares
or new or different shares or other securities of the Company or other non-cash
assets are distributed with respect to such shares of Common Stock or other
securities, the Employee shall, with respect to this option or any unexercised
portion hereof, be entitled to the rights and benefits, and be subject to the
limitations, set forth in Paragraph 14 of the Plan.
(b) Board Authority to Make Adjustments. Any adjustments under this
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Section 9 shall be made by the Board of Directors of the Company, whose
determination as to what adjustments, if any, will be made and the extent
thereof will be final, binding and conclusive. No fractional shares will be
issued with respect to this option on account of any such adjustments.
(c) Limits on Adjustments. No adjustment shall be made under this
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Section 9 which would, for purposes of any applicable provision of the Code,
constitute a modification, extension or renewal of this option or a grant of
additional benefits to the Employee.
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10. Mergers, Consolidations, Asset Sales, Liquidations, Etc. In the event
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of a consolidation or merger or sale of all or substantially all of the assets
of the Company in which outstanding shares of Common Stock are exchanged for
securities, cash or other property of any other corporation or business entity,
or in the event of the liquidation of the Company, prior to the Expiration Date
or other termination of this option, the Employee shall, with respect to this
option or any unexercised portion hereof, be entitled to the rights and
benefits, and be subject to the limitations, set forth in Paragraph 16 of the
Plan.
11. Withholding of Taxes. The Company's obligation to deliver shares upon
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the exercise of this option shall be subject to the Employee's satisfaction of
all applicable federal, state and local income and employment tax withholding
requirements as described in Paragraph 23 of the Plan. Without limiting the
generality of the foregoing, if the Company in its discretion determines that it
is obligated to withhold tax with respect to a Disqualifying Disposition (as
defined in Section 12 hereof), the Employee agrees that the Company may withhold
from the Employee's wages the appropriate amount of federal, state and local
withholding taxes attributable to such Disqualifying Disposition. If any
portion of this option is treated as a Non-Qualified Option, the Employee agrees
that the Company may withhold from the Employee's wages the appropriate amount
of federal, state and local withholding taxes attributable to the Employee's
exercise of such Non-Qualified Option. At the Company's discretion, the amount
required to be withheld may be withheld in cash from such wages, or otherwise as
may be permitted under the Plan. The Employee further agrees that, if the
Company does not withhold an amount from the Employee's wages sufficient to
satisfy the Company's withholding obligation or if such obligation is not
otherwise satisfied, as determined by the Company, the Employee will reimburse
the Company on demand, in cash, for the amount underwithheld.
12. Holding Period Requirements for Incentive Stock Option Shares. It is
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understood and intended that this option shall qualify as an "incentive stock
option" as defined in Section 422 of the Code (an "ISO"). Accordingly, the
Employee understands that in order to obtain the beneficial tax treatment
accorded an ISO, no sale or other disposition may be made of any shares acquired
upon exercise of the option within one (1) year after the day of the transfer of
such shares to the Employee, nor within two (2) years after the Grant Date. If
the Employee intends to dispose, or does dispose (whether by sale, exchange,
gift, transfer or otherwise), of any such shares within either of said periods,
he or she will notify the Company in writing within ten (10) days after such
disposition (a "Disqualifying Dispositions").
13. Investment Representations, Warranties and Covenants; Legends.
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(a) Representations. The Employee represents, warrants and covenants
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that:
(i) Any shares purchased upon exercise of this option shall be
acquired for the Employee's account for investment only and not with a view to,
or for sale in connection with, any distribution of the shares in violation of
the Securities Act of 1933 (the "Securities Act") or any rule or regulation
under the Securities Act.
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(ii) The Employee has had such opportunity as he or she has deemed
adequate to obtain from representatives of the Company such information as is
necessary to permit the Employee to evaluate the merits and risks of his or her
investment in the Company.
(iii) The Employee is able to bear the economic risk of holding shares
acquired pursuant to the exercise of this option for an indefinite period.
(iv) The Employee understands that (A) the shares acquired pursuant to
the exercise of this option will not be registered under the Securities Act and
are "restricted securities" within the meaning of Rule 144 under the Securities
Act; (B) such shares cannot be sold, transferred or otherwise disposed of unless
they are subsequently registered under the Securities Act or an exemption from
registration is then available; (C) in any event, an exemption from registration
under Rule 144 or otherwise under the Securities Act may not be available for at
least two years and even then will not be available unless a public market then
exists for the Common Stock, adequate information concerning the Company is then
available to the public and other terms and conditions of Rule 144 are complied
with; and (D) there is now no registration statement on file with the Securities
and Exchange Commission with respect to any stock of the Company and the Company
has no obligation or current intention to register any shares acquired pursuant
to the exercise of this option under the Securities Act.
(v) The Employee agrees that, if the Company offers for the first time
any of its Common Stock for sale pursuant to a registration statement under the
Securities Act, the Employee will not, without the prior written consent of the
Company, publicly offer, sell, contract to sell or otherwise dispose of,
directly or indirectly, any shares purchased upon exercise of this option for a
period of ninety (90) days, or such longer period as the Company may reasonably
require, after the effective date of such registration statement.
(vi) The Employee's principal residence is at the address set forth
below on the signature page. The Employee shall promptly notify the Company of
any change in the Employee's principal residence.
By making payment upon any exercise of this option, in whole or in part, the
Employee shall be deemed to have reaffirmed, as of the date of such payment, the
representations made in this Section 13.
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(b) Legends on Stock Certificates. All stock certificates
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representing shares of Common Stock issued to the Employee upon exercise of this
option shall have affixed thereto legends substantially in the following forms,
in addition to any other legends required by applicable state law:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 and may not be
transferred, sold or otherwise disposed of in the absence of an
effective registration statement with respect to the shares evidenced
by this certificate, filed and made effective under the Securities Act
of 1933, or an opinion of counsel satisfactory to the Company to the
effect that registration under such Act is not required."
14. Miscellaneous.
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(a) Except as otherwise expressly provided herein, this Agreement may
not be amended or otherwise modified unless evidenced in writing and signed by
the Company and the Employee.
(b) All notices under this Agreement shall be delivered by hand, sent
by commercial overnight courier service or sent by registered or certified mail,
return receipt requested, and first-class postage prepaid, to the parties at
their respective addresses set forth beneath their names below or at such other
address as may be designated in a notice by either party to the other.
Notwithstanding the foregoing, any notice sent to such an address in a country
other than that from which the notice is sent may be sent by telefax, telegram
or commercial air courier.
(c) Any reference in this Agreement to a Section of the Code shall
refer to that Section as it reads as of the date of this Agreement and as it may
be amended from time to time, and to any successor provision.
(d) Each provision of this Agreement shall be considered separable.
The invalidity or unenforceability of any provision shall not affect the other
provisions, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted.
(e) Sections 12, 13, and 14 hereof shall survive any termination of
this Agreement.
(f) This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
(g) The failure of the Company or the Employee to insist upon strict
performance of any provision hereunder, irrespective of the length of time for
which such failure continues, shall not be deemed a waiver of such party's right
to demand strict performance at any time in the future. No consent or waiver,
express or implied, to or of any breach or default in the performance of any
obligation or provision hereunder shall constitute a consent or waiver to or of
any other breach or default in the performance of the same or any other
obligation hereunder.
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(h) Except for the right of any party to apply to a court of competent
jurisdiction for a temporary restraining order, preliminary injunction, or other
equitable relief to preserve the status quo or prevent irreparable harm pending
the selection and confirmation of an arbitrator, any controversy or claim
arising out of or relating to this Agreement, including without limitation
claims under the Americans with Disabilities Act, the Age Discrimination in
Employment Act of 1967, as amended, Title VII of the Civil Rights Act of 1964 as
amended, Massachusetts General Laws Chapter 151B], or any other applicable state
or federal statutory or common law; shall be resolved by arbitration in Boston,
Massachusetts, in accordance with the governing rules of the American
Arbitration Association (the "AAA"). A demand for arbitration shall be filed
with the AAA during the term, or within six months after termination or
expiration, of this Agreement. The arbitrator shall have the authority to
permit discovery, to the extent deemed appropriate by the arbitrator, upon the
request of a party and to grant any type of injunctive relief as well as award
damages; provided, however, the arbitrator shall have no authority to award
multiple or punitive damages. The costs of the arbitration proceeding,
including the fee of the arbitrator, shall be borne equally by the parties.
Each party shall bear the costs of its own counsel. Judgment upon the award
entered may be enforced by any court of competent jurisdiction.
Date of Grant: ________________________________, 199__.
Advanced Lumitech, Inc.
By: __________________________
Title: _________________________
Address:
______________________________
______________________________
Employee's Acceptance
The undersigned hereby accepts the foregoing option and agrees to the terms
and conditions of this Agreement. The undersigned hereby acknowledges receipt
of a copy of the Company's 1999 Stock Option/Stock Issuance Plan.
[Name of Employee]
______________________________
Signature
Address:_____________________
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