EXHIBIT 4.2
STOCK OPTION AGREEMENT
AGREEMENT dated as of the 14 day of September, 1998, by and
between Individual Investor Group, Inc., a Delaware corporation ("Company"), and
Picard International, Ltd. ("Picard").
WHEREAS, the Company and Brette Popper ("Popper") have entered
into an Employment Agreement dated September 11, 1998 pursuant to which Popper
will be employed by the Company ("Employment Agreement");
WHEREAS, Picard was the employment consultant in connection
with the Company locating and hiring Popper which is entitled to a fee in
respect thereof of which this option is a part;
WHEREAS, on September 14, 1998 ("Grant Date"), the Board of
Directors of the Company authorized the grant to Picard of an option ("Option")
to purchase an aggregate of 62,500 shares of the authorized but unissued Common
Stock of the Company, $.01 par value ("Common Stock"), conditioned upon Popper's
acceptance of, and continued, employment upon the terms and conditions set forth
in this Agreement and certain of the terms of the Employment Agreement; and
WHEREAS, Picard desires to acquire the Option on the terms and
conditions set forth in this Agreement;
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants Picard the
Option to purchase all or any part of an aggregate of 62,500 shares of Common
Stock ("Option Shares") on the terms and conditions set forth herein and subject
to certain provisions of the Employment Agreement.
2. Non-Incentive Stock Option. The Option represented hereby
is not intended to be an Option which qualifies as an "Incentive Stock Option"
under Section 422 of the Internal Revenue Code of 1986, as amended.
3. Exercise Price. The exercise price of the Option is $1.1875
per share, subject to adjustment as hereinafter provided.
4. Exercisability. This Option is exercisable, subject to the
terms and conditions of this Agreement, as follows: (i) the right to purchase
15,625 of the Option Shares shall be exercisable on or after September 14, 1999,
(ii) the right to purchase an additional 15,625 of the Option Shares shall be
exercisable on and after September 14, 2000, (iii) the right to purchase an
additional 15,625 of the Option Shares shall be exercisable on and after
September 14, 2001, and (iv) the right to purchase an additional 15,625 of the
Option Shares shall be exercisable on or after September 14, 2002. After a
portion of the Option becomes exercisable, it shall remain exercisable, except
as otherwise provided herein, until the close of business on September 14, 2008
("Exercise Period").
5. Effect of Termination of Employment of Popper.
5.1. Termination Due to Death. If Popper's
employment by the Company terminates by reason of death, the portion of the
Option, if any, that was exercisable as of the date of death may thereafter be
exercised by Picard, for a period of one year from the date of such death of
Popper or until the expiration of the Exercise Period, whichever period is
shorter. The portion of the Option, if any, that was not exercisable as of the
date of death of Popper shall immediately terminate upon death.
5.2. Termination Due to Disability. If Popper's
employment by the Company terminates by reason of Disability (as such term is
defined in the Employment Agreement), the portion of the Option, if any, that
was exercisable as of the date of termination of employment may thereafter be
exercised by Picard for a period of one year from the date of the termination of
the employment of Popper or until the expiration of the Exercise Period,
whichever period is shorter. The portion of the Option, if any, that was not
exercisable as of the date of the termination of employment of Popper shall
immediately terminate upon the termination of employment.
5.3. Other Termination.
5.3.1. If Popper's employment is terminated
by the Company for cause (as defined in Section 9(a) of the Employment
Agreement), this Option, whether or not exercisable, shall immediately expire.
5.3.2. If Popper's employment is
terminated by the Company without cause (as defined in Section 9(a) of the
Employment Agreement), the portion of the Option, if any, that was exercisable
as of the date of termination of employment of Popper may thereafter be
exercised by Picard for a period of one year from the date of the termination of
employment of Popper or until the expiration of the Exercise Period, whichever
period is shorter. The portion of the Option, if any, that was not exercisable
as of the date of the termination of employment of Popper shall immediately
terminate upon the termination of employment.
5.3.3. If Popper terminates her employment
with the Company, this Option, whether or not exercisable, shall immediately
expire.
6. Withholding Tax. Not later than the date as of which an
amount first becomes includible in the gross income of Picard for Federal income
tax purposes with respect to the Option, Picard shall notify the Company of the
amount and, to the extent required, pay to the Company, or make arrangements
satisfactory to the Board regarding the payment of, any Federal, state and local
taxes of any kind required by law to be withheld or paid with respect to such
amount. The obligations of the Company pursuant to this Agreement shall be
conditional upon such payment or arrangements with the Company, and the Company
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to Picard from the Company.
7. Adjustments. In the event of any recapitalization, dividend
(other than cash dividend), stock split, reverse stock split, or other change in
capital structure of the Company affecting the number of issued shares of Common
Stock, the Company shall proportionally adjust the number and kind of Option
Shares and the exercise price of the Option in order to prevent the dilution or
enlargement of Picard's proportionate interest in the Company and Picard's
rights hereunder immediately prior to the reorganization, recapitalization,
consolidation, dividend, stock split, reverse stock split or other change,
provided that the number of Option Shares shall always be a whole number.
8. Acceleration of Vesting on Change of Control.
Notwithstanding the provisions of Sections 4, in the event of a "change of
control" (as defined below) while Popper is employed by the Company, the vesting
of this Option shall accelerate and all the Option Shares shall be purchasable
by Picard simultaneous with such change of control. For the purposes of this
Agreement, a change of control shall mean (i) the acquisition by any "person"
(as defined in Section 3(a)(9) and 13(d) of the Securities Exchange Act of 1934,
as amended ("Exchange Act")), other than a stockholder of the Company which is
the beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange
Act) of 10% or more of the outstanding voting securities of the Company as of
the date of this Agreement, of more than 50% of the combined voting power of the
then outstanding voting securities of the Company or (ii) the sale by the
Company of all, or substantially all, of the assets of the Company to one or
more purchasers, in one or a series of related transactions, where the
transaction or transactions require approval pursuant to Delaware law by the
stockholders of the Company.
9. Method of Exercise.
9.1. Notice to the Company. The Option shall be
exercised in whole or in part by written notice in substantially the form
attached hereto as Exhibit A directed to the Company at its principal place of
business accompanied by full payment as hereinafter provided of the exercise
price for the number of Option Shares specified in the notice.
9.2. Delivery of Option Shares. The Company
shall deliver a certificate for the Option Shares to Picard as soon as
practicable after payment therefor.
9.3. Payment of Purchase Price. Picard shall
make payments by wire transfer, certified or bank check, in each case payable to
the order of the Company. Alternatively, Picard may make arrangements
satisfactory to the Company with a bank or a broker who is a member of the
National Association of Securities Dealers, Inc. to sell on the exercise date a
sufficient number of the Option Shares being purchased so that the net proceeds
of the sale transaction will at least equal the Exercise Price multiplied by the
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number of Option Shares being purchased pursuant to such exercise, plus the
amount of any applicable withholding taxes and pursuant to which the bank or
broker undertakes to deliver the full Exercise Price multiplied by the number of
Option Shares being purchased pursuant to such exercise, plus the amount of any
applicable withholding taxes to the Company on a date satisfactory to the
Company, but no later than the date on which the sale transaction would settle
in the ordinary course of business.
10. Nonassignability. The Option shall not be assignable or
transferable, except with the written approval of the Company. No transfer of
the Option by Picard shall be effective to bind the Company unless the Company
shall have been furnished with written notice thereof and such other evidence as
the Company may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions of the
Option.
11. Company Representations. The Company hereby
represents and warrants to Picard that:
(a) the Company, by appropriate and all required
action, is duly authorized to enter into this Agreement and consummate
all of the transactions contemplated hereunder; and
(b) the Option Shares, when issued and delivered by
the Company to Picard in accordance with the terms and conditions
hereof, will be duly and validly issued and fully paid and
non-assessable.
12. Picard's Representations. Picard hereby represents and
warrants to the Company that:
(a) it is acquiring the Option and shall acquire the
Option Shares for its own account and not with a view towards the
distribution thereof;
(b) it has received a copy of all reports and
documents required to be filed by the Company with the Commission
pursuant to the Exchange Act within the last 24 months and all reports
issued by the Company to its stockholders;
(c) it understands that it must bear the economic
risk of the investment in the Option Shares, which cannot be sold by it
unless they are registered under the Securities Act of 1933 ("1933
Act") or an exemption therefrom is available thereunder and that there
is no right by it to have the Option Shares registered by the Company
under the Act;
(d) it has had both the opportunity to ask questions
and receive answers from the officers and directors of the Company and
all persons acting on its behalf concerning the terms and conditions of
the offer made hereunder and to obtain any additional information to
the extent the Company possesses or may possess such information or can
acquire it without unreasonable effort or expense necessary to verify
the accuracy of the information obtained pursuant to clause (b) above;
(e) it is aware that the Company shall place stop
transfer orders with its transfer agent against the transfer of the
Option Shares in the absence of registration under the 1933 Act or an
exemption therefrom as provided herein; and
(i) The certificates evidencing the Option
Shares may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said
Act."
"The shares represented by this certificate have been
acquired pursuant to a Stock Option Agreement, dated
as of September 14, 1998, a copy of which is on file
with the Company, and may not be transferred, pledged
or disposed of except in accordance with the terms
and conditions thereof."
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13. Restriction on Transfer of Option and Option Shares.
Anything in this Agreement to the contrary notwithstanding and in addition to
the provisions of Section 10 of this Agreement, Picard hereby agrees that it
shall not sell, transfer by any means or otherwise dispose of the Option Shares
acquired by it without registration under the 1933 Act, or in the event that
they are not so registered, unless (i) an exemption from the 1933 Act
registration requirements is available thereunder, and (ii) Picard has furnished
the Company with notice of such proposed transfer and the Company's legal
counsel, in its reasonable opinion, shall deem such proposed transfer to be so
exempt.
14. Miscellaneous.
14.1. Notices. Any notices or other
communications required or permitted hereunder shall be in writing and shall be
deemed given upon delivery if delivered in person or by overnight courier (e.g.
Federal Express), or on the third business day following deposit in the United
States mail, if sent by registered or certified mail, return receipt requested,
addressed to the address of the party to receive notice set forth herein, or to
such this address as a party shall designate by notice in writing given to the
this party in accordance with the terms hereof, except that notices regarding
changes in address shall be effective only upon receipt.
14.2. Stockholder Rights. Picard shall not have
any of the rights of a stockholder with respect to the Option Shares until such
shares have been issued after the due exercise of the Option.
14.3. Waiver. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any other or subsequent breach.
14.4. Entire Agreement. This Agreement and where
applicable, the Employment Agreement constitute the entire agreement between the
parties with respect to the subject matter hereof. This Agreement may not be
amended except by writing executed by the party to be charged.
14.5. Binding Effect; Successors. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and, to the
extent not prohibited herein, their respective heirs, successors, permitted
assigns and representatives. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto and as provided
above, their respective heirs, successors, permitted assigns and representatives
any rights, remedies, obligations or liabilities.
14.6. Governing Law. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York without regard to principles of conflicts of law.
14.7. Headings. The headings contained herein are
for the sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or provisions of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the day and year first above written.
INDIVIDUAL INVESTOR GROUP, INC. Address:
1633 Broadway, 38th Floor
New York, New York 10019
By: /s/ Jonathan L. Steinberg
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Jonathan L. Steinberg
Chairman and Chief Executive Officer
PICARD INTERNATIONAL, LTD.: Address:
125 East 38th Street
New York, New York 10016
By: /s/ Daniel A. Picard
- ----------------------------------
Name: Daniel A. Picard
Title:
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EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
- -------------------------------
DATE
Individual Investor Group, Inc.
1633 Broadway, 38th Floor
New York, New York 10019
Attention: Board of Directors
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of
September 14, 1998 ("Agreement") with Individual Investor Group, Inc.
("Company"), I hereby irrevocably elect to exercise the right to purchase
_________ shares of the Company's common stock, par value $.01 per share
("Common Stock"), which are being purchased for investment and not for resale.
As payment for my shares, enclosed is (check and complete
applicable box[es]):
|_| a [personal check] [certified check] [bank check]
payable to the order of "Individual Investor Group,
Inc." in the sum of $_________; and/or
|_| confirmation of wire transfer in the amount of
$_____________.
I hereby represent, warrant to, and agree with, the Company
that:
(i) I have acquired the Option and shall acquire the
Option Shares for my own account and not with a view towards the
distribution thereof;
(ii) I have received a copy of all reports and
documents required to be filed by the Company with the Commission
pursuant to the Exchange Act within the last 24 months and all reports
issued by the Company to its stockholders;
(iii) I understand that I must bear the economic risk
of the investment in the Option Shares, which cannot be sold by me
unless they are registered under the Securities Act of 1933 ("1933
Act") or an exemption therefrom is available thereunder and that I have
no right to require the Company to register the Option Shares under the
Act;
(iv) I have had both the opportunity to ask questions
and receive answers from the officers and directors of the Company and
all persons acting on its behalf concerning the terms and conditions of
the offer made hereunder and to obtain any additional information to
the extent the Company possesses or may possess such information or can
acquire it without unreasonable effort or expense necessary to verify
the accuracy of the information obtained pursuant to clause (ii) above;
(v) I am aware that the Company shall place stop
transfer orders with its transfer agent against the transfer of the
Option Shares in the absence of registration under the 1933 Act or an
exemption therefrom as provided herein;
(vi) my rights with respect to the Option Shares
shall, in all respects, be subject to the terms and conditions of this
Agreement and the Employment Agreement; and
(vii) the certificates evidencing the Option Shares
may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said
Act."
"The shares represented by this certificate have been
acquired pursuant to a Stock Option Agreement, dated
as of September 14, 1998, a copy of which is on file
with the Company, and may not be transferred, pledged
or disposed of except in accordance with the terms
and conditions thereof."
Kindly forward to me my certificate at your earliest
convenience.
Very truly yours,
- ----------------------------------------- --------------------------------
(Signature) (Address)
- ----------------------------------------- --------------------------------
(Print Name) (Address)
--------------------------------
(Social Security Number)