1
EXHIBIT 4.2
MUSTANG SOFTWARE, INC.
STOCK OPTION AGREEMENT
This AGREEMENT is made effective as of the ______ day of 19__,
(the "Option Grant Date"), by and between Mustang Software, Inc. (the
"Company") and ______________________ (the "Optionee").
RECITALS
WHEREAS, the Board of Directors of the Company has established
the 1994 Incentive Stock Option Plan and the 1994 Nonstatutory Stock Option
Plan (either such Plan the "Plan" unless otherwise specified) effective as of
December 12, 1994, and
WHEREAS, pursuant to the provisions of said Plan, the Board of
Directors of the Company, by action duly taken on ____________, 19__, granted
to the Optionee an option or options (the "Option(s)") to purchase shares of
the Common Stock of the Company on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants set forth herein and other good and valuable consideration,
the parties hereto agree as follows:
1. The Option(s). The Optionee may, at his option, purchase
all or any part of an aggregate of ______________ shares of Common Stock (the
"Optioned Shares"), at the price of $_____________ per share (the "Option
Price"), on the terms and conditions set forth herein.
2. Plan Type; Exercise Dates and Exercise. Options intended
to qualify as Incentive Stock Options under Plan A are designated by an "A"
under the category "Plan." Options intended as separate nonstatutory options
under Plan B are designated by a "B" under the category "Plan." 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
--------------------------
Plan 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
1
2
further understands that the Option(s) granted hereunder shall expire and
become unexercisable as provided in Section 3(c) below.
This Option shall be deemed exercised as to the shares to be purchased
when written notice of such exercise has been given to the Company at its
principal business office by the Optionee with respect to the Common Stock to
be purchased. Such notice shall be accompanied by (i) full payment in cash or
cash equivalents, (ii) with shares of Common Stock pursuant to Section 14 of
the Plan, (iii) with such form of financial assistance as may be determined by
the Board (or Committee if so authorized) pursuant to Section 11(a) of the
Plan, or (iv) by any combination of (i), (ii) and (iii) as may be determined by
the Board (or Committee if so authorized) with respect to the shares to be
purchased.
3. Governing Plan. This Agreement hereby incorporates by reference
the Plan and all of the terms and conditions of the Plan as heretofore amended
and as the same may be amended from time to time hereafter in accordance with
the terms thereof, but no such subsequent amendment shall adversely affect the
Optionee's rights under this Agreement and the Plan except as may be required
by applicable law. The Optionee expressly acknowledges and agrees that the
provisions of this Agreement are subject to the Plan; the terms of this
Agreement shall in no manner limit or modify the controlling provisions of the
Plan, and in case of any conflict between the provisions of the Plan and this
Agreement, the provisions of the Plan shall be controlling and binding upon the
parties hereto. The Optionee also hereby expressly acknowledges, represents
and agrees as follows:
(a) Acknowledges receipt of a copy of the Plan, a
copy of which is attached hereto and by reference incorporated herein, and
represents that he is familiar with the terms and provisions of said Plan, and
hereby accepts this Agreement subject to all the terms and provisions of said
Plan.
(b) Agrees to accept as binding, conclusive and
final all decisions or interpretations of the Board of Directors (or the
Committee, if so authorized) upon any questions arising under the Plan.
(c) Acknowledges that he is familiar with Sections
of the Plan regarding the exercise of the Option(s) and represents that he
understands that said Option(s) must be exercised on or before the earliest of
the following dates, whichever is applicable: (i) the "Last" exercise date
noted above in Section 2; (ii) the day prior to the fifth anniversary of the
Option(s) Grant Date with respect to Options granted under Plan A and the day
prior to the tenth anniversary of the Option(s) Grant Date with respect to
Options granted under Plan B, in each as provided in Subsection 7(c) of the
Plan; (iii) the effective date of a sale or other disposition of all or
substantially all of the stock or assets of the Company, as provided in
Subsection 8(a) of the Plan; (iv) the date which is 30 days following the
Optionee's termination of employment, directorship or consulting or other
arrangement (unless extended) for any reason other than death or disability as
provided under Section 10 of the Plan; or (v) the date that is one year
following the Optionee's termination of employment, directorship or consulting
or other arrangement by reason of his death, or the date that is one year
following his termination of employment, directorship or consulting or other
arrangement by reason of disability, whichever is applicable, as provided in
Subsection 10(b) of the Plan.
(d) Acknowledges, understands and agrees that the
existence of the Plan and the execution of this Agreement are not sufficient by
themselves to cause any exercise of any Option(s) granted under Plan A to
qualify for favorable tax treatment through the application of Section 422(A)
of the Internal Revenue Code; that Optionee must, in order to so qualify,
individually meet by his own action all applicable requirements of Section
422A, including without limitation the following holding period and employment
requirements:
(1) holding period requirement: no
disposition of an Optioned Share may be made by Optionee
within two (2) years from the date of the granting of the
Option(s) nor within one (1) year after the transfer of such
Optioned Share to him, and
(2) employment requirement: at all times
during the period beginning on the date of the granting of the
Option(s) and ending on the day three (3) months before the
date of exercise,
2
3
the Optionee must have been an employee of the Company, its
parent, or a subsidiary of the Company, or a corporation or a
parent or subsidiary of such corporation issuing or assuming
the Option(s) in a transaction to which Section 425(a) of the
Internal Revenue Code applies, except where the termination of
employment is by means of the employee's disability, in which
case said 3 month period may be extended to 1 year, as
provided under Internal Revenue Code Section 422A.
4. Representations and Warranties. As a condition to the
exercise of any portion of an Option, the Company may require the person
exercising such Option to make any representation and/or warranty to the
Company as may, in the judgment of counsel to the Company, be required under
any applicable law or regulation, including but not limited to a representation
and warranty that the shares are being acquired only for investment and without
any present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required under the Securities
Act of 1933 or any other applicable law, regulation or rule of any governmental
agency. Optionee hereby represents to the Company that each of the Option
evidenced hereby and the shares purchasable upon exercise thereof is being
acquired only for investment and without any present intention to sell or
distribute such securities.
5. Options Not Transferable. The Option(s) may be exercised
during the lifetime of the Optionee only by the Optionee. The Optionee's
rights and interests under this Agreement and in and to the Option(s) may not
be sold, pledged, hypothecated, assigned, encumbered, gifted or otherwise
transferred in any manner, either voluntarily or involuntarily by operation of
law, except by will or the laws of descent or distribution.
6. No Enlargement of Employee Rights. Nothing in this
Agreement shall be construed to confer upon the Optionee (if an employee) any
right to continued employment with the Company (or an Affiliated Company), or
to restrict in any way the right of the Company (or an Affiliated Company if he
is an employee thereof) to terminate his employment. Optionee acknowledges
that in the absence of an express written employment agreement to the contrary,
Optionee's employment with the Company may be terminated by the Company at any
time, with or without cause.
7. Withholding of Taxes. Optionee authorizes the Company to
withhold, in accordance with any applicable law, from any compensation payable
to him any taxes required to be withheld by federal, state or local law as a
result of the grant of the Option(s) or the issuance of stock pursuant to the
exercise of such Option(s).
8. Laws Applicable to Construction. This Agreement shall be
construed and enforced in accordance with the laws of the State of California.
9. Agreement Binding on Successors. The terms of this
Agreement shall be binding upon the executors, administrators, heirs,
successors, transferees and assignees of the Optionee.
10. Costs of Litigation. In any action at law or in equity
to enforce any of the provisions or rights under this Agreement or the Plan,
the unsuccessful party to such litigation, as determined by the court in a
final judgment or decree, shall pay the successful party or parties all costs,
expenses and reasonable attorneys' fees incurred by the successful party or
parties (including without limitation costs, expenses end fees on any appeals),
and if the successful party recovers judgment ln any such action or proceeding
such costs, expenses and attorneys' fees shall be included as part of the
judgment.
11. Necessary Acts. The Optionee agrees to perform all acts
and execute and deliver any documents that may be reasonably necessary to carry
out the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
12. Counterparts. For convenience this Agreement may be
executed in any number of identical counterparts, each of which shall be deemed
a complete original in itself and may be introduced in evidence or used for any
other purpose without the production of any other counterparts.
3
4
13. Invalid Provisions. In the event that any provision of
this Agreement is found to be invalid or otherwise unenforceable under any
applicable law, such invalidity or unenforceability shall not be construed as
rendering any other provisions contained herein invalid or unenforceable, and
all such other provisions shall be given full force and effect to the same
extent as though the invalid and unenforceable provision was not contained
herein.
14. Limitation on Value of Optioned Shares. Optionee
acknowledged that the Plan provides that the aggregate fair market value
(determined as of the date hereof) of the shares of Common Stock to which
Options granted under Plan A are exercisable for the first time by Optionee
during any calendar year under all incentive stock option plans of the Company
and its Affiliated Companies shall not exceed $100,000. It is understood and
agreed that should it be determined that an Option if granted pursuant to Plan
A hereunder would exceed such maximum, such Option shall be not be considered
granted under Plan A to the extent, but only to the extent of such excess.
This limitation shall not apply to any option granted under Plan B.
IN WITNESS WHEREOF, the Company and the Optionee have executed
this Agreement effective as of the date first written hereinabove.
MUSTANG SOFTWARE, INC. OPTIONEE
By
----------------------- -------------------------
Title:
------------------- -------------------------
Street Address
-------------------------
City, State and Zip
-------------------------
Social Security No.
By his or her signature below, the spouse of the Optionee, of
such Optionee be legally married as of the date of his execution of this
Agreement, acknowledges that he or she has read this Agreement and the Plan and
is familiar with the terms and provisions thereof, and agrees to be bound by
all the terms and conditions of said Agreement and said Plan document.
___________________________________
Spouse
Dated: ____________________________
By his or her signature below the Optionee represents that he
or she is not legally married as of the date of execution of this Agreement.
___________________________________
Optionee
Dated: ____________________________
4