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EXHIBIT 4.2
WELLS-GARDNER ELECTRONICS CORPORATION
OPTION AGREEMENT
This Option Agreement is made as of _______________, 199__ (the "Grant
Date") between you and Wells-Gardner Electronics Corporation (the "Company")
pursuant to the Wells-Gardner Electronics Corporation 1999 Stock Purchase Plan
as adopted effective January 1, 1999 (the "Plan"). Please read the Prospectus
before reading this Option Agreement and completing the form on page 6. Please
refer to the Plan for the definition of certain terms used in this Option
Agreement. This Option Agreement is subject to all of the terms and conditions
of the Plan, which are controlling. The Option (as defined below) granted
hereunder is awarded pursuant to the Plan and is subject to the approval of the
shareholders of the Company and the ratification and adoption of the Plan by the
Board of Directors.
IF YOU ACCEPT THE OPTION, YOU SHOULD EXECUTE PAGE 6, INDICATING THE
AMOUNT OF YOUR PAYROLL DEDUCTION, AND RETURN IT TO THE COMMITTEE FOR THE STOCK
PURCHASE PLAN, C/O CORPORATE SECRETARY, WELLS-GARDNER ELECTRONICS CORPORATION,
2701 NORTH KILDARE AVENUE, CHICAGO, ILLINOIS 60639. YOU MUST RETURN AN EXECUTED
COPY OF PAGE 6 BY _______________, 1999.
IF YOU DO NOT ACCEPT THE OPTION, YOU SHOULD EXECUTE PAGE 6 WHERE
APPROPRIATE AND RETURN ONE COPY TO THE COMMITTEE FOR THE STOCK PURCHASE PLAN,
C/O CORPORATE SECRETARY, WELLS-GARDNER ELECTRONICS CORPORATION, 2701 NORTH
KILDARE AVENUE, CHICAGO, ILLINOIS 60639. IF PAGE 6 IS NOT RETURNED BY
_______________, 1999, THE COMPANY WILL ASSUME YOU HAVE REJECTED THE OPTION.
1. Option Grant. Subject to the terms and conditions of the Plan and
this Option Agreement, the Company is pleased to grant to you the option (the
"Option") to purchase shares of the Company's Common Stock at an option price
per share that is the lesser of 85% of the Fair Market Value per share on the
Grant Date or 85% of the Fair Market Value per share on the Exercise Date(s) (as
defined in Section 2 below) (the "Option Price"). (The number of shares is
described in Section 3, and depends, in part, on your contribution and the total
contribution of all other Participants.)
2. Exercise Schedule. The Option is exercisable on
_______________________ [SPECIFY THE DATE OR DATES ON WHICH THE OPTION IS
EXERCISABLE WITHIN THE LIMITS SET FORTH BY SECTION 423(B)(7) OF THE INTERNAL
REVENUE CODE FOR THE OPTION PERIOD] (the "Exercise Date(s)") on the terms and
conditions in the Plan and in this Option Agreement. As described in the Plan
and Prospectus, there are certain circumstances under which the Option would no
longer be exercisable and any of your money withheld, as described below, would
be returned to you.
3. Method of Option Exercise. By signing this Option Agreement, you are
authorizing the Company or its Subsidiary for whom you are employed to deduct a
specified amount from each paycheck for each payroll period during the Option
Period. The deductions will begin on or about the date on which the payroll
deduction form on page 6 of this Option
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Agreement must be returned to the Committee (as specified above), and will
continue until the earliest of the Exercise Date, the date you suspend
deductions or the date you withdraw from the Plan. The amounts deducted will be
credited to your Account. No interest will accrue on any amounts held in your
Account. All amounts will be held as general funds of the Company. At any time
during the Option Period, you may notify the Company that you want to suspend or
discontinue your contributions. If you suspend your contributions, your
deductions will commence again only at such time and on such conditions as
permitted by the Committee. If you discontinue contributions, you will receive
the value of your Account in cash. Any notice to the Company must be on forms
provided by the Company, and will be effective no earlier than ___ days after
receipt by the Company unless otherwise agreed to by the Committee.
On the Exercise Date, the value of your Account will be applied to
purchase shares of Common Stock. On the Exercise Date, your Account will be
reduced by the Option Price per share, multiplied by the maximum number of
shares that can be purchased on such Exercise Date, subject to certain limits
described in the Plan. If the total number of shares of Common Stock available
for purchase on a particular Exercise Date are not sufficient to satisfy all
Participants' requests, the Committee may reduce the number of shares of Common
Stock to be purchased under this Option Agreement in the proportion that your
payroll deductions bear to the payroll deductions of all Participants entitled
to purchase shares of Common Stock on such Exercise Date. The number of shares
you may purchase during the Option Period shall never exceed an amount equal to
$2,083 divided by 85% of the Fair Market Value of a share of Common Stock on the
Grant Date (rounded to the next lower whole share). The certificate for Common
Stock purchased pursuant to this Option may be held by a custodian.
4. Withholding. You hereby agree that the Company will have the right
to withhold in all relevant payroll periods all federal, state, local and other
taxes as a result of the exercise of the Option or the disposition of shares
pursuant to an Option. If you are not an employee of the Company on an Exercise
Date or the date on which occurs the disposition of shares, you agree to
promptly make available to the Company, upon request, sufficient funds to meet
these withholding requirements. Your shares will not be transferred unless you
have previously made arrangements, satisfactory to the Company, to meet the
withholding requirements.
5. Nontransferability. This Option cannot be assigned, transferred
(except as provided in this Option Agreement or the Plan), pledged or disposed
of in any way (whether by operation of law or otherwise), other than by will or
the laws of descent and distribution. This Option is exercisable during your
lifetime only by you or your appointed guardian or legal representative, and the
Option is not subject to attachment or similar process. Any attempt to assign,
transfer, pledge, or otherwise dispose of this Option contrary to these
provisions will be null and void and without effect. Shares of Common Stock
received upon the exercise of this Option are subject to any limited
restrictions on transfer as are provided in the Plan or this Option Agreement.
6. Plan. Notwithstanding any other provision of this Option Agreement,
the Option is granted pursuant to the Plan, as adopted and in effect on the date
hereof, and is subject to all the terms and conditions of the Plan, as the same
may be amended from time to time. The Board has the right to amend the Plan, and
the Board and the Committee have the right to amend this Option Agreement. The
interpretation and construction by the Committee of the Plan, this Option
Agreement, the Option, and such rules and regulations as may be adopted by
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the Committee for the purpose of administering the Plan, shall be final and
binding upon you. Until the Option shall expire, terminate or be exercised in
full, the Company shall, upon written request therefor, send a copy of the Plan,
in its then-current form, to you or any other person or entity then entitled to
exercise the Option.
You hereby acknowledge receipt of a copy of the Plan and the
Prospectus.
7. Requirements of Law. The Company shall not be required to sell or
issue any shares under the Option if the issuance of such shares would
constitute a violation of any provision of any law or regulation of any
governmental authority, any Company policy or any rule or interpretation of the
Plan established by the Committee. Specifically, in connection with the
Securities Act, upon exercise of the Option, unless a registration statement
under the Securities Act is in effect with respect to the shares of Common Stock
covered by the Option, the Company shall not be required to issue such shares
unless the Company has received evidence reasonably satisfactory to it to the
effect that you are acquiring such shares for your own account, and unless the
certificate issued representing the shares of Common Stock bears a legend
determined appropriate by the Committee. At such time as, in the opinion of
counsel for the Company, the legend is no longer required solely for compliance
with applicable securities laws, then the holders of such certificates shall be
entitled to exchange such certificates for certificates representing a like
number of shares but without such legend. The Company shall not be obligated to
deliver any shares of Common Stock upon exercise of the Option until there has
been compliance with any tax withholding requirements, securities exchange
listing or other requirements the Committee deems appropriate or as provided in
this Option Agreement or in the Plan. At the Company's discretion, the
certificate for the Common Stock issued may bear a legend stating that tax
withholding requirements must be met to the Company's reasonable satisfaction
before the shares can be transferred.
8. Changes in Company's Capital Structure. The existence of the Option
will not affect in any way the right or authority of the Company or its
stockholders to make or authorize (a) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business; (b) any merger or consolidation of the Company's capital structure or
its business; (c) any merger or consolidation of the Company; (d) any issue of
bonds, debentures, preferred or prior preference stock ahead of or affecting the
Common Stock or the rights thereof; (e) the dissolution or liquidation of the
Company; (f) any sale or transfer of all or any part of its assets or business;
or (g) any other corporate act or proceeding, whether of a similar character or
otherwise. In the event of a Change in Control or other corporate restructuring
provided for in the Plan, you shall have such rights, and the Committee shall
take such actions, as are provided for in the Plan.
9. Shareholder Rights. Until the Option shall have been duly exercised
to purchase shares of the Common Stock granted hereunder and such shares have
been officially recorded as issued on the Company's official shareholder
records, no person or entity shall be entitled to vote, receive dividends or be
deemed for any purpose the holder of any such shares, and adjustments for
dividends or otherwise shall be made only if the record date therefor is prior
to the date such shares are recorded.
10. Employment Rights. No provision of this Option Agreement or of the
Option granted hereunder shall give you any right to continue in the employ of
the Company or any
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Subsidiary, create any inference as to the length of your employment, affect the
right of the Company or any Subsidiary to terminate your employment, with or
without cause, or give you any right to participate in any employee welfare or
benefit plan or other program (other than the Plan) of the Company or any
Subsidiary.
11. Disclosure Rights. The Company shall have no duty or obligation to
affirmatively disclose to you, and you shall have no right to be advised of, any
material information regarding the Company or a Subsidiary at any time prior to,
upon or in connection with the exercise of an Option or the Company's purchase
of Common Stock in accordance with the terms of this Option Agreement.
12. Notices. Any notice which either party hereto may be required or
permitted to give the other shall be in writing and may be delivered personally
or by mail, postage prepaid, addressed to Committee for the 1999 Stock Purchase
Plan, Corporate Secretary, Wells-Gardner Electronics Corporation, 2701 North
Kildare Avenue, Chicago, Illinois 60639, and to your address as shown on the
Company's payroll records, or to such other address as you, by notice to the
Company, may designate in writing from time to time.
13. Headings. The headings contained in this Option Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Option Agreement.
14. Severability. If any provision of this Option Agreement shall for
any reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not effect any other provisions hereof, and this Option
Agreement shall be construed as if such invalid or unenforceable provision were
omitted.
15. Successors and Assigns. This Option Agreement shall inure to the
benefit of and be binding upon each successor and assign of the Company. All
obligations imposed upon you, and all rights granted to the Company hereunder,
shall be binding upon you and your heirs, legal representatives and successors.
16. Waiver; Cumulative Rights. The failure or delay of either party to
require performance by the other party of any provision hereof shall not affect
its right to require performance of such provision unless and until such
performance has been waived in writing. Each and every right hereunder is
cumulative and may be exercised in part or in whole from time to time.
17. Other. This Agreement will be governed by the laws of the State of
Illinois (other than its laws respecting choice of law). The Plan and this
Option Agreement constitute the entire agreement between the Company and you
with respect to the Option granted hereunder. This Option Agreement may be
executed in counterparts. You agree to be responsible for any and all tax
consequences to you with respect to your Option.
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IN WITNESS WHEREOF, the Company has caused this Option Agreement to be
duly executed by an officer thereof duly authorized, and the Participant has
hereunto set his hand, all as of the day and year first above written.
PARTICIPANT WELLS-GARDNER
ELECTRONICS CORPORATION
Signature: By:
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Title:
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WELLS-GARDNER ELECTRONICS CORPORATION
1999 STOCK PURCHASE PLAN
I. PARTICIPANT INFORMATION
NAME SOCIAL SECURITY #
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EMPLOYMENT DATE / / BIRTH DATE / /
---- ---- ---- ---- ---- -----
PARTICIPATION DATE / / LOCATION CODE
---- ---- ---- -----------------------
II. PAYROLL SAVINGS ELECTION (Check the box next to either "a" or "b".)
a. | | I hereby elect to participate in the Plan and authorize a
payroll deduction of $______________ each pay period from my
pay check. (The amount may not be less than $5.00 per pay
period, nor more than $_________ during the entire Option
Period.)
I realize that any monies contributed into the Wells-Gardner
Electronics Corporation 1999 Stock Purchase Plan will be held
by Wells-Gardner Electronics Corporation without interest and
issued to me in the form of:
- Wells-Gardner Electronics Corporation Stock
certificates purchased on the Exercise Date(s); or
- A check for all monies paid to Wells-Gardner
Electronics Corporation upon termination or per my
request.
b. | | I hereby decline to participate in the Plan.
III. CERTIFICATION
I hereby certify that the information provided above is accurate and
authorize Wells-Gardner Electronics Corporation to deduct from my
earnings the amount stated above.
I HAVE RECEIVED A COPY OF THE PROSPECTUS.
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Participant's Signature Date
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's Signature Date
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