EXHIBIT 4.2
AVID SPORTS, INC.
1999 STOCK OPTION PLAN
1. Definitions. As used in this 1999 Stock Option Plan of Avid Sports,
Inc., the following terms shall have the following meanings:
1.1 Board means the Company's Board of Directors.
1.2 Code means the federal Internal Revenue Code of 1986, as
amended.
1.3 Committee means a committee appointed by the Board or, if
no such committee is appointed, the Board itself. Such committee or the
Board, as the case may be, shall be responsible for the administration
of the Plan, as provided in section 5 of the Plan.
1.4 Company means Avid Sports, Inc., a Delaware corporation.
1.5 Fair Market Value means (i) on any date prior to the
Initial Public Offering Date, the value of a share of Stock on any such
date as determined by the Committee, and (ii) on the Initial Public
Offering Date or on any date thereafter, (A) the average of the closing
bid and asked prices of a share of Stock on the over-the-counter
market, as reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") on such date, or (B) the closing
price of a share of Stock on an exchange or the NASDAQ Stock Market's
National Market System, as the case may be, on such date.
1.6 Grant Date means the date as of which an Option is
granted, as determined under Section 7.
1.7 Incentive Option means an Option which by its terms is to
be treated as an "incentive stock option" within the meaning of Section
422 of the Code.
1.8 Initial Public Offering Date means the date of the closing
of the Company's initial public offering of Stock.
1.9 Non-statutory Option means any Option that is not an
Incentive Option.
1.10 Option means an option to purchase shares of Stock
granted under the Plan.
1.11 Option Agreement means an agreement between the Company
and an Optionee, setting forth the terms and conditions of an Option.
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1.12 Option Price means the price paid by an Optionee for a
share of Stock upon exercise of an Option.
1.13 Optionee means a person eligible to receive an Option, as
provided in Section 6, to whom an Option shall have been granted under
the Plan.
1.14 Plan means this 1999 Stock Option Plan of the Company, as
amended from time to time.
1.15 Stock means common stock, par value $0.01 per share, of
the Company.
1.16 Stock Restriction Agreements means, collectively, the
Stock Restriction Agreements, by and among the Company and each of the
stockholders party thereto (individually, a "Stock Restriction
Agreement"), as amended, modified and supplemented from time to time.
1.17 Ten Percent Owner means a person who owns, or is deemed
within the meaning of Section 422(b)(6) of the Code to own, stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company (or its parent or subsidiary
corporations). Whether a person is a Ten Percent Owner shall be
determined with respect to each Option based on the facts existing
immediately prior to the Grant Date of such Option.
1.18 Vesting Year for any portion of any Incentive Option
means the calendar year in which that portion of the Option first
becomes exercisable.
2. Purpose. This Plan is intended to encourage ownership of Stock by
employees and consultants of the Company and its subsidiaries and to provide
additional incentives for them to promote the success of the Company's business.
The Plan is intended to be an incentive stock option plan within the meaning of
Section 422 of the Code but not all Options granted hereunder are required to be
Incentive Options.
3. Term of the Plan. Options may be granted hereunder at any time in
the period commencing on the approval of the Plan by the Board and ending
December 31, 2009.
4. Stock Subject to the Plan. At no time shall the number of shares of
Stock then outstanding which are attributable to the exercise of Options granted
under the Plan, plus the number of shares then issuable upon exercise of
outstanding Options granted under the Plan, exceed 590,900 shares, subject,
however, to the provisions of Section 17 of the Plan. Shares to be issued upon
the exercise of Options granted under the Plan may be either authorized but
unissued shares or shares held by the Company in its treasury. If any Option
expires or terminates for any reason without having been exercised in full, the
shares not purchased thereunder shall again be available for Options thereafter
to be granted.
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5. Administration. The Plan shall be administered by the Committee.
Subject to the provisions of the Plan, the Committee shall have complete
authority, in its discretion, to make or to select the manner of making the
following determinations with respect to each Option to be granted by the
Company: (a) the employee, director or consultant to receive the Option; (b)
whether the Option (if granted to an employee) will be an Incentive Option or
Non-statutory Option; (c) the time of granting the Option; (d) the number of
shares subject to the Option; (e) the Option Price; (f) the Option period; (g)
the Option exercise date or dates; and (h) the effect of termination of
employment, directorship, consulting or association with the Company on the
subsequent exercisability of the Option. In making such determinations, the
Committee may take into account the nature of the services rendered by the
respective employees and consultants, their present and potential contributions
to the success of the Company and its subsidiaries, and such other factors as
the Committee in its discretion shall deem relevant. Subject to the provisions
of the Plan, the Committee shall also have complete authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to it, to
determine the terms and provisions of the respective Option Agreements (which
need not be identical), and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's determinations on
the matters referred to in this Section 5 shall be conclusive.
6. Eligibility. An Option shall be granted only to an employee,
director or consultant of the Company or any subsidiary thereof.
7. Time of Granting Options. The granting of an Option shall take place
at the time specified in the Option Agreement. Only if expressly so provided in
the Option Agreement, shall the Grant Date be the date on which an Option
Agreement shall have been duly executed and delivered by the Company and the
Optionee.
8. Option Price. The Option Price under each Incentive Option shall be
not less than 100% of the Fair Market Value of Stock on the Grant Date, or not
less than 110% of the Fair Market Value of Stock on the Grant Date if the
Optionee is then a Ten Percent Owner. The Option Price under each Non-statutory
Option shall riot be so limited solely by reason of this Section 8.
9. Option Period. No Incentive Option may be exercised later than the
tenth anniversary of the Grant Date, but in any case not later than the fifth
anniversary of the Grant Date, if the Optionee is a Ten Percent Owner on the
Grant Date. The Option period under each Non-statutory Option shall not be so
limited solely by reason of this Section 9. An Option may become exercisable in
such installments, cumulative or non-cumulative, as the Committee may determine.
In the case of an Option not otherwise immediately exercisable in full, the
Committee may accelerate the exercisability of such Option in whole or in part
at any time, provided the acceleration of the exercisability of any Incentive
Option would not cause the Option to fail to comply with the provisions of
Section 422 of the Code.
10. Limit on Incentive Option Characterization. No Incentive Option
shall be considered an Incentive Option to the extent that pursuant to its terms
it would permit the
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Optionee to purchase for the first time in any Vesting Year under that Incentive
Option more than the number of shares of Stock calculated by dividing the
current limit by the Option Price. The current limit for any Optionee for any
Vesting Year shall be $100,000 minus the aggregate Fair Market Value at the
applicable Grant Date of the number of shares of Stock available for purchase
for the first time in the Vesting Year under each other Incentive Option granted
to the Optionee under the Plan after December 31, 1986 and each other incentive
stock option granted to the Optionee after December 31, 1986 under any other
incentive stock option plan of the Company (and any parent and subsidiary
corporations).
11. Exercise of Option. An Option may be exercised by the Optionee
giving written notice, in the manner provided in Section 21, specifying the
number of shares with respect to which the Option is then being exercised. In
the event that such notice of exercise is given prior to the Initial Public
Offering Date, such notice shall be accompanied by (x) payment in the form of
cash, or certified or bank check payable to the order of the Company, in an
amount equal to the aggregate Option Price of the shares of Stock to be
purchased, and (y) if the exercising Optionee is not already a party to a Stock
Restriction Agreement, an executed Stock Restriction Agreement. In the event
that such notice of exercise is given on or after the Initial Public Offering
Date, such notice of exercise shall be accompanied by (x) payment in the form of
(A) cash, or certified or bank check payable to the order of the Company, in an
amount equal to the aggregate Option Price of the shares of Stock to be
purchased, or (B) shares of Stock having a Fair Market Value on the date the
Option is exercised equal to the aggregate Option Price of the shares of Stock
to be purchased (provided that the use of shares of Stock to exercise an option
shall be subject to such restrictions as the Committee may reasonably require to
avoid adverse accounting effects), and (y) if the exercising Optionee is not
already a party to a Stock Restriction Agreement, an executed Stock Restriction
Agreement. Receipt by the Company of such notice, payment and, if applicable,
executed counterparts shall constitute the exercise of the Option. Within 30
days thereafter but subject to the remaining provisions of the Plan, the Company
shall deliver or cause to be delivered to the Optionee or his agent a
certificate or certificates for the number of shares then being purchased. Such
shares shall be fully paid and nonassessable.
12. Restrictions on Issue of Shares.
(a) Notwithstanding any other provision of the Plan, if, at
any time, in the reasonable opinion of the Company the issuance of shares of
Stock covered by the exercise of any Option would constitute a violation of law
(including, without limitation, a violation of federal or state securities law),
the Company shall not be required to issue such shares of Stock unless and until
the Company and/or the exercising holder of such Option shall have taken any and
all steps reasonably necessary or required to ensure that such issuance would
not cause or result in any such violation of law. Such reasonably necessary or
required steps may include, without limitation, (i) seeking and obtaining any
approvals from, or making filings with, such governmental agencies as may be
required under any applicable law, rule, or regulation, (ii) registering under
the Securities Act of 1933, as amended (the "Securities Act"), the shares of
Stock to be issued upon exercise of such Option or (iii) causing any such
proposed issuance to qualify for or come within
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any exemption from the registration requirements of the Securities Act or any
applicable state securities laws.
(b) Each certificate representing shares issued upon the
exercise of an Option will bear restrictive legends which may refer to this Plan
and to applicable restrictions under the Stock Restriction Agreement.
13. Investment Representations; Subsequent Registration.
(a) Unless the shares to be issued upon exercise of an Option
granted under the Plan have been effectively registered under the Securities
Act, the Company may, as a condition precedent to the exercise of such Option,
require that the exercising holder of such Option make such written
representations and warranties to the Company as the Company shall deem
necessary or appropriate for purposes of confirming that the issuance of such
shares shall be exempt from the registration requirements of the Securities Act
or any applicable state securities laws and that the issuance of such shares is
otherwise in compliance with all applicable laws, rules and regulations,
including, without limitation, federal and state securities laws. The Company
shall be under no obligation to issue any of such shares unless and until the
exercising holder of such Option makes such written representations and
warranties to the Company, and the Company shall also be under no obligation to
issue any of such shares if any of such written representations and warranties
are not true, correct or complete when made.
(b) Each share of Stock issued pursuant to the exercise of an
Option granted pursuant to this Plan may bear a reference to the fact that no
registration statement has been filed with the Securities and Exchange
Commission in respect such share and that the ability to resell such share will
be subject to certain restrictions on transfer imposed under applicable federal
and state securities laws.
(c) If the Company shall deem it necessary or desirable to
register under the Securities Act or other applicable statutes any shares with
respect to which an Option shall have been granted, or to qualify any such
shares for exemption from the Securities Act or other applicable statutes, then
the Company shall take such action at its own expense. The Company may require
from each Option holder, or each holder of shares of Stock acquired pursuant to
the Plan, such information in writing for use in any registration statement,
prospectus, preliminary prospectus or offering circular as is reasonably
necessary for such purpose and may require reasonable indemnity to the Company
and its officers and directors from such holder against all losses, claims,
damage and liabilities arising from such use of the information so furnished and
caused by any untrue statement of any material fact therein or caused by the
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made.
14. Withholding; Notice of Disposition of Stock Prior to Expiration of
Specified Holding Period.
(a) Whenever shares are to be issued in satisfaction of an
Option
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granted hereunder, the Company shall have the right to require the Optionee to
remit to the Company an amount sufficient to satisfy federal, state, local or
other withholding tax requirements if and to the extent required by law (whether
so required to secure for the Company an otherwise available tax deduction or
otherwise) prior to the delivery of any certificate or certificates for such
shares.
(b) The Company may require as a condition to the issuance of
shares covered by any Incentive Option that the party exercising such Option
give a written representation to the Company which is satisfactory in form and
substance to its counsel and upon which the Company may reasonably rely, that he
or she will report to the Company any disposition of such shares prior to the
expiration of the holding periods specified by Section 422(a)(1) of the Code. If
and to the extent that the realization of income in such a disposition imposes
upon the Company federal, state, local or other withholding tax requirements, or
any such withholding is required to secure for the Company an otherwise
available tax deduction, the Company shall have the right to require that the
recipient remit to the Company an amount sufficient to satisfy those
requirements; and the Company may require as a condition to the issuance of
shares covered by an Incentive Option that the party exercising such option give
a satisfactory written representation promising to make such a remittance.
15. Termination of Association with the Company. If the Optionee's
employment or consulting relationship with the Company is terminated, whether
voluntarily or otherwise, the Option, to the extent the Option is exercisable on
the date of termination, may be exercised by the Optionee, but only within 90
days after he or she ceases to be an employee of or consultant to the Company,
unless terminated earlier by its terms. Notwithstanding the foregoing, in the
event that the applicable Option Agreement with respect to an Option shall
contain specific provisions governing the effect that any such termination shall
have on the exercisability of such Option, such provisions in the Option
Agreement shall, to the extent that they are inconsistent with the provisions of
this Section 15, control and deem to supersede the provisions of this Section
15. For purposes of this Section 15, military or sick leave shall not be deemed
a termination of employment, provided that it does not exceed the longer of 120
days or the period during which the absent Optionee's reemployment rights, if
any, are guaranteed by statute or by contract.
16. Transferability of Options. Incentive Options shall not be
transferable, 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.
Nonstatutory Options shall not be transferable, 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; provided, however, that Nonstatutory Options may
be transferred to a third party if and to the extent authorized and permitted by
the Committee, whereupon any such third party may exercise such Nonstatutory
Option, at any time and from time to time thereafter, subject to and upon the
terms and conditions set forth in this Plan and the Option Agreement relating to
such Nonstatutory Option. In granting its authorization and permission to any
proposed transfer of a Nonstatutory Option to a third party, the Committee may
impose conditions or requirements that must be satisfied by the transferor or
the third party transferee prior
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to or in connection with such transfer, including, without limitation, any
conditions or requirements that may be necessary or desirable, in the sole and
absolute discretion of the Committee, to ensure that such proposed transfer
complies with applicable securities laws or to prevent the Company, such
transferor or such third party transferee from violating or otherwise not being
in compliance with applicable securities laws as a result of such transfer. For
purposes of this Section 16, the term Nonstatutory Option shall include an
Option that, was an Incentive Option at the time of grant, but that has been
subsequently been disqualified or otherwise lost its status as an Incentive
Option.
17. Adjustment of Number and Kind of Option Shares. In the event of any
stock dividend payable in Stock or any split-up or contraction in the number of
shares of Stock after the date of an Option Agreement and prior to the exercise
in full of the Option, the; number of shares subject to such Option Agreement
and the price to be paid for each share subject to the Option shall be
proportionately adjusted. In the event of any reclassification, exchange,
conversion or change of outstanding shares of stock, or in case of any
consolidation or merger of the Company with or into another company, or in case
of any sale or conveyance to another company or entity of the property of the
Company as a whole or substantially as a whole, shares of stock or other
securities equivalent in kind and value to those shares an Optionee would have
received if he or she had held the full number of shares of Stock subject to the
Option immediately prior to such reclassification, exchange, conversion, change,
consolidation, merger, sale or conveyance and had continued to hold those shares
(together with all other shares, stock and securities thereafter issued in
respect thereof) to the time of the exercise of the Option shall thereupon be
subject to the Option. Upon dissolution or liquidation of the Company, the
Option shall terminate, but the Optionee (if at the time in the employ of or
retained as a consultant to the Company or any of its subsidiaries) shall have
the right, immediately prior to such dissolution or liquidation, to exercise the
Option to the extent exercisable on the date of such dissolution or liquidation.
No fraction of a share shall be purchasable or deliverable upon exercise, but in
the event any adjustment hereunder of the number of shares covered by the Option
shall cause such number to include a fraction of a share, such number of shares
shall be adjusted to the nearest smaller whole number of shares. In the event of
changes in the outstanding Stock by reason of any stock dividend, split-up,
contraction, reclassification, or change of outstanding shares of Stock of the
nature contemplated by this Section 17, the number of shares of Stock available
for the purpose of the Plan as stated in Section 4 shall be correspondingly
adjusted.
18. Reservation of Stock. The Company shall at all times during the
term of each Option reserve or otherwise keep available such number of shares of
Stock as will be sufficient to satisfy the requirements of the Plan and shall
pay all fees and expenses necessarily incurred by the Company in connection
therewith.
19. Limitation of Rights in Stock; No Special Employment or Other
Rights. The Optionee shall not be deemed for any purpose to be a stockholder of
the Company with respect to any of the shares of Stock covered by an Option,
except to the extent that such Option shall have been exercised with respect
thereto and, in addition, a certificate shall have been issued therefor and
delivered to the Optionee or his agent. Any Stock issued pursuant to the
exercise of any Option shall be subject to all restrictions upon the
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transfer thereof which may be now or hereafter imposed by the Certificate of
Incorporation, the By-laws of the Company, or the Stock Restriction Agreements.
Nothing contained in the Plan or in any Option shall confer upon any Optionee
any right with respect to the continuation of his or her employment with, or
retention as a consultant by, the Company (or any subsidiary), or interfere in
any way with the right of the Company (or any subsidiary), subject to the terms
of any separate employment or consulting agreement or provision of law or
corporate articles or by-laws to the contrary, at any time to terminate such
employment or consulting agreement or to Increase or decrease the compensation
of the Optionee from the rate in existence at the time of the grant of an
Option.
20. Termination and Amendment of the Plan. The Board may at any time
terminate the Plan or make such modifications of the Plan as it shall deem
advisable. No termination or amendment of the Plan may, without the consent of
the Optionee to whom any Option shall theretofore have been granted, adversely
affect the rights of such Optionee under such Option.
21. Notices and Other Communications. Any notice, demand, request or
other communication hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or duly sent by first
class, registered, certified or overnight mail, postage prepaid, or telecopied
with a confirmation copy by regular, certified or overnight mail, postage
prepaid, or sent by electronic mail with a confirmation copy by regular,
certified or overnight mail, postage prepaid, to such party at the address,
telecopier number or email address, as the case may be, set forth below or such
other address, telecopier number or email address, as the case may be, as may
hereafter be designated in writing by the addressee to the addressor listing all
parties:
(i) if to the Company, to:
Avid Sports, Inc.
55 Technology Drive
Lowell, MA 01851
Attention: Mark J. Zarrow, Vice President
Facsimile: (978) 275-0202
email: [email protected]
with a copy to:
Bingham Dana LLP
150 Federal Street
Boston, MA 02110
Attention: Julio E. Vega, Esq.
Facsimile: (617) 951-8736
email: [email protected]
(ii) If to any Optionee, to the address, telecopier
number, or email address thereof as set forth in the books and records of the
Company.
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All such notices, requests and other communications shall be deemed to
have been received: (i) in the case of personal delivery, on the date of such
delivery; (ii)in the case of mail other than overnight mail, on the third day
following deposit into the mall; (iii) in the case of overnight mall, on the
next day following deposit into the mail; (iv)in the case of facsimile
transmission, when confirmed by facsimile machine report; and (v) in the case of
electronic mail, upon receipt of an electronic message confirming delivery.
