EXHIBIT 4.2
STOCK OPTION AGREEMENT
This agreement, dated as of the _____ day of ______________ by and
between DESWELL INDUSTRIES, INC., a British Virgin Island international business
company with its principal offices at Unit 516-517, Hong Leong Industrial
Complex, No. 4 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong (hereinafter
called the "COMPANY"), party of the first part, and __________________
(hereinafter called "OPTIONEE"), a party of the second part;
WITNESSETH
Whereas, the company has adopted on January 7, 2002 the "2001 Stock
Option Plan of Deswell Industries, Inc." (the "2001 plan") to permit options to
be granted to certain employees or directors of the company and its subsidiaries
(hereinafter called the "employer corporation") to purchase common shares of the
company; and
Whereas, the optionee is employed by the employer corporation in a key
capacity, and the company desires him to remain in such employ, and to secure or
increase his stock ownership in the company in order to increase his incentive
and personal interest in the welfare of the employer corporation;
Now, therefore, in consideration of the premises and of the covenants
and agreements herein set forth, the parties hereby mutually covenant and agree
as follows:
1. Subject to the terms and conditions set forth herein, the company
grants to the optionee the option to purchase from the company all or any part
of an aggregate amount of ____________ common shares of the company authorized
and unissued or, at the option of the company, treasury stock if available
(hereinafter, the "optioned shares").
2. The price per share (the "option price") to be paid for the optioned
shares shall be U.S.$______, which is the fair market value of the common shares
on the date of grant as determined by the committee of directors appointed to
administer the plan. The option price may be paid in U.S. dollars or its
equivalent in Hong Kong dollars on the date the option is exercised.
3. Subject to the provisions of paragraphs four and six hereof, the
Option(s) shall be exercisable as to the specified number of optioned shares on
and after the "First" dates and on or before the "Last" dates set forth below:
Exercise Dates
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Number of Shares First Last
- ---------------- --------------------- ---------------
Optionee acknowledges that he understands he has no right whatsoever to exercise
the Option(s) granted hereunder with respect to any Optioned Shares covered by
any installment until such installment accrues as provided above. Optionee
further understands that the Option(s) granted hereunder shall expire and become
unexercisable as provided in Section (6) below.
4. The option herein granted may be exercised only by written notice of
intent to exercise the option, served upon the secretary of the company at its
principal offices the number of shares in respect of which the option is being
exercised, accompanied by payment for such shares in cash or by certified check
or bank draft to the order of the company. Such shares, upon payment of the
purchase price, shall be fully paid and non-assessable.
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5. The option herein granted shall not be transferable by the optionee
otherwise than by will or the laws of descent and distribution, and may be
exercised during the life of the optionee only by the optionee.
6. The option granted hereunder shall expire and become unexercisable on
or before the earliest of the following dates, whichever is applicable: (i) the
date of the optionee's termination of employment from or as a director of the
employer corporation for any reason other than death or disability; or (ii) the
date that is one year following the optionee's termination of employment from
the employer corporation by reason of his and her death, or by reason of his or
her disability, whichever is applicable.
7. If any of the events specified in paragraph 13 of the 2001 plan
occur, the adjustments in Optioned Shares and option price therein provided
shall be made.
8. As to all Optioned Shares (or any stock issued as a stock dividend
thereon or any securities issued in lieu thereof or in substitution therefor),
purchased by the optionee or his personal representative upon the exercise of
any portion of the option herein granted, the Committee, in its sole discretion,
may require that the optionee or his personal representative, as the case may
be, agree to any of the following conditions:
(a) That they sign an investment letter to the effect that they
are taking said shares for investment and not for resale.
(b) That they will comply with such restrictions as may be
necessary to satisfy the requirements of the United States Securities Act of
1933.
9. The optionee shall not be deemed for any purposes to be a shareholder
of the company with respect to any of the Optioned Shares except to the extent
that the option herein granted shall have been exercised with respect thereto
and a stock certificate issued therefor. Nothing in this agreement shall be
construed to confer upon the optionee any right to continued employment with the
employer corporation or to restrict in any way the right of the employer
corporation to terminate his or her employment. Optionee acknowledges that in
the absence of an express written employment agreement to the contrary,
optionee's employment with the employer corporation may be terminated by the
employer corporation at any time, with or without cause.
10. The existence of the option herein granted shall not affect in any
way the right or power of the company or its shareholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes in
the company's capital structure or its business, or any merger or consolidation
of the company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the common stock of the company or the rights
thereof, or dissolution or liquidation of the company, or any sale or transfer
of all or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
11. As a condition of the granting of the option herein granted, the
optionee agrees, for himself and his personal representatives, that any dispute
or disagreement which may arise under or as a result of or pursuant to his
agreement shall be determined by the committee in its sole discretion, and that
any interpretation by the committee of the terms of this agreement shall be
final, binding and conclusive.
12. If, at any time, the Committee shall determine, in its discretion,
that the listing, registration or qualification of the shares covered by the
option upon any securities exchange or under any law of the United States, state
thereof or any other jurisdiction, is necessary or desirable or as a condition
of or in connection with the purchase of shares thereunder, the option may not
be exercised, in whole or in part, unless and until such listing, registration
or qualification shall have been effected free of any conditions not acceptable
to the Committee.
IN WITNESS WHEREOF, the company has caused this instrument to be
exercised by its duly authorized officers, the optionee has hereunto affixed his
or her hand.
DESWELL INDUSTRIES, INC.
By:
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Lau Pui Hon
Chief Executive Officer
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Optionee
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