EXHIBIT 4.2
LUNA TECHNOLOGIES INTERNATIONAL, INC.
NON-QUALIFIED STOCK OPTION PLAN
l. Purpose. This Non-Qualified Stock Option Plan (the "Plan") is
intended to advance the interests of Luna Technologies International, Inc. (the
"Company") and its shareholders, by encouraging and enabling selected officers,
directors, consultants and key employees upon whose judgment, initiative and
effort the Company is largely dependent for the successful conduct of its
business, to acquire and retain a proprietary interest in the Company by
ownership of its stock. Options granted under the Plan are intended to be
Options which do not meet the requirements of Section 422 of the Internal
Revenue Code of 1954, as amended (the "Code").
2. Definitions.
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(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means the directors duly appointed to administer the Plan.
(c) "Common Stock" means the Company's Common Stock.
(d) "Date of Grant" means the date on which an Option is granted under
the Plan.
(e) "Option" means an Option granted under the Plan.
(f) "Optionee" means a person to whom an Option, which has not expired, has
been granted under the Plan.
(g) "Successor" means the legal representative of the estate of a
deceased optionee or the person or persons who acquire the right to exercise an
Option by bequest or inheritance or by reason of the death of any Optionee.
3. Administration of Plan. The Plan shall be administered by the
Company's Board of Directors or in the alternative, by a committee of two or
more directors appointed by the Board (the "Committee"). If a Committee should
be appointed, the Committee shall report all action taken by it to the Board.
The Committee shall have full and final authority in its discretion, subject to
the provisions of the Plan, to determine the individuals to whom and the time or
times at which Options shall be granted and the number of shares and purchase
price of Common Stock covered by each Option; to construe and interpret the
Plan; to determine the terms and provisions of the respective Option agreements,
which need not be identical, including, but without limitation, terms covering
the payment of the Option Price; and to make all other determinations and take
all other actions deemed necessary or advisable for the proper administration of
the Plan. All such actions and determinations shall be conclusively binding for
all purposes and upon all persons.
4. Common Stock Subject to Options. The aggregate number of shares
of the Company's Common Stock which may be issued upon the exercise of Options
granted under the Plan shall not exceed 600,000. The shares of Common Stock to
be issued upon the exercise of Options may be authorized but unissued shares,
shares issued and reacquired by the Company or shares bought on the market for
the purposes of the Plan. In the event any Option shall, for any reason,
terminate or expire or be surrendered without having been exercised in full, the
shares subject to such Option but not purchased thereunder shall again be
available for Options to be granted under the Plan.
5. Participants. Options may be granted under the Plan to
employees, directors and officers, and consultants or advisors to the Company
(or the Company's subsidiaries), provided however that bona fide services shall
be rendered by such consultants or advisors and such services must not be in
connection with the offer or sale of securities in a capital-raising
transaction.
6. Terms and Conditions of Options. Any Option granted under the
Plan shall be evidenced by an agreement executed by the Company and the
recipient and shall contain such terms and be in such form as the Committee may
from time to time approve, subject to the following limitations and conditions:
(a) Option Price. The Option Price per share with respect to each Option
shall be determined by the Committee but shall in no instance be less than the
par value of the Common Stock.
(b) Period of Option. The period during which each option may be exercised,
and the expiration date of each Option shall be fixed by the Committee, but,
notwithstanding any provision of the Plan to the contrary, such expiration date
shall not be more than ten years from the date of Grant.
(c) Vesting of Shareholder Rights. Neither an Optionee nor his successor
shall have any rights as a shareholder of the Company until the certificates
evidencing the shares purchased are properly delivered to such Optionee or his
successor.
(d) Exercise of Option. Each Option shall be exercisable from time to time
during a period (or periods) determined by the Committee and ending upon the
expiration or termination of the Option; provided, however, the Committee may,
by the provisions of any Option Agreement, limit the number of shares
purchaseable thereunder in any period or periods of time during which the Option
is exercisable.
(e) Nontransferability of Option. No Option shall be transferable or
assignable by an Optionee, otherwise than by will or the laws of descent and
distribution and each Option shall be exercisable, during the Optionee's
lifetime, only by him. No Option shall be pledged or hypothecated in any way and
no Option shall be subject to execution, attachment, or similar process except
with the express consent of the Committee.
(f) Death of Optionee. If an Optionee dies while holding an Option granted
hereunder, his Option privileges shall be limited to the shares which were
immediately purchasable by him at the date of death and such Option privileges
shall expire unless exercised by his successor within four months after the date
of death.
7. Reclassification, Consolidation, or Merger. If and to the
extent that the number of issued shares of Common Stock of the Corporation shall
be increased or reduced by change in par value, split up, reclassification,
distribution of a dividend payable in stock, or the like, the number of shares
subject to Option and the Option price per share shall be proportionately
adjusted by the Committee, whose determination shall be conclusive. If the
Corporation is reorganized or consolidated or merged with another corporation,
an Optionee granted an Option hereunder shall be entitled to receive Options
covering shares of such reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same conditions. The new
Option or assumption of the old Option shall not give Optionee additional
benefits which he did not have under the old Option, or deprive him of benefits
which he had under the old Option.
8. Restrictions on Issuing Shares. The exercise of each Option
shall be subject to the condition that if at any time the Company shall
determine in its discretion that the satisfaction of withholding tax or other
withholding liabilities, or that the listing, registration, or qualification of
any shares otherwise deliverable upon such exercise upon any securities exchange
or under any state or federal law, or that the consent or approval of any
regulatory body, is necessary or desirable as a condition of, or in connection
with, such exercise or the delivery or purchase of shares purchased thereto,
then in any such event, such exercise shall not be effective unless such
withholding, listing, registration, qualification, consent, or approval shall
have been effected or obtained free of any conditions not acceptable to the
Company.
Unless the shares of stock covered by the Plan have been registered with
the Securities and Exchange Commission pursuant to Section 5 of the Securities
Act of l933, each optionee shall, by accepting an option, represent and agree,
for himself and his transferrees by will or the laws of descent and
distribution, that all shares of stock purchased upon the exercise of the option
will be acquired for investment and not for resale or distribution. Upon such
exercise of any portion of an option, the person entitled to exercise the same
shall, upon request of the Company, furnish evidence satisfactory to the Company
(including a written and signed representation) to the effect that the shares of
stock are being acquired in good faith for investment and not for resale or
distribution. Furthermore, the Company may, if it deems appropriate, affix a
legend to certificates representing shares of stock purchased upon exercise of
options indicating that such shares have not been registered with the Securities
and Exchange Commission and may so notify the Company's transfer agent. Such
shares may be disposed of by an optionee in the following manner only: (l)
pursuant to an effective registration statement covering such resale or reoffer,
(2) pursuant to an applicable exemption from registration as indicated in a
written opinion of counsel acceptable to the Company, or (3) in a transaction
that meets all the requirements of Rule l44 of the Securities and Exchange
Commission. If shares of stock covered by the Plan have been registered with the
Securities and Exchange Commission, no such restrictions on resale shall apply,
except in the case of optionees who are directors, officers, or principal
shareholders of the Company. Such persons may dispose of shares only by one of
the three aforesaid methods.
9. Use of Proceeds. The proceeds received by the Company from the sale of
Common Stock pursuant to the exercise of Options granted under the Plan shall be
added to the Company's general funds and used for general corporate purposes.
l0. Amendment, Suspension, and Termination of Plan. The Board of Directors
may alter, suspend, or discontinue the Plan at any time.
Unless the Plan shall theretofore have been terminated by the Board, the
Plan shall terminate ten years after the effective date of the Plan. No Option
may be granted during any suspension or after the termination of the Plan. No
amendment, suspension, or termination of the Plan shall, without an Optionee's
consent, alter or impair any of the rights or obligations under any Option
theretofore granted to such Optionee under the Plan.
11. Limitations. Every right of action by any person receiving
options pursuant to this Plan against any past, present or future member of the
Board, or any officer or employee of the Company arising out of or in connection
with this Plan shall, irrespective of the place where such action may be brought
and irrespective of the place of residence of any such director, officer or
employee cease and be barred by the expiration of one year from the date of the
act or omission in respect of which such right of action arises.
l2. Governing Law. The Plan shall be governed by the laws of the State of
Delaware.
13. Expenses of Administration. All costs and expenses incurred in the
operation and administration of this Plan shall be borne by the Company.