Exhibit 4.2
CORONADO INDUSTRIES, INC.
1999 MANAGEMENT STOCK OPTION PLAN
I. PURPOSE
This 1999 Management Stock Option Plan is intended to aid in
maintaining and developing strong management through encouraging the ownership
of common stock of Coronado Industries, Inc. by employees of and consultants to
the Corporation through stimulating their efforts by giving suitable
recognition, in addition to salaries and bonuses, to their ability and industry
which contribute materially to the success of the Corporation's business
interests.
II. DEFINITIONS
In this Plan, except where the context otherwise clearly indicates,
the following definitions apply:
(1) "Board" means the Board of Directors of the Corporation.
(2) "Corporation" means Coronado Industries, Inc., a Nevada
corporation, or any entity that, directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with
Coronado Industries, Inc.
(3) "Date of Grant" means the date on which the Board approves the
grant of the Option under this Plan to the Optionee.
(4) "Incentive Stock Option" means any Option granted under this Plan
which complies with the provisions of Section 422A of the Internal Revenue Code
of 1986, as amended from time to time (herein called the "Code").
(5) "Key Employee" means any employee who is an officer or is employed
in a managerial, professional or other key position (including directors who
provide services beyond the normal activities of a director); provided, however,
the term "Key Employee" shall not include any employee (hereinafter called
"Shareholder Employee") of the Corporation who, at the date of grant, owns more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation (or its parent or subsidiary, if applicable). For the
purposes of this limitation, an employee shall be considered as owning Shares
owned directly or indirectly by or for his brothers and sisters, spouse,
ancestors and lineal descendants; and stock owned directly or indirectly by or
for a corporation, partnership, estate or trust shall be considered as being
owned proportionately by or for its shareholders, partners or beneficiaries.
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(6) "Non-Qualified Stock Option" means any Option granted under this
Plan which does not qualify in whole or in part as an "incentive stock option"
under the provisions of Section 422A of the Code.
(7) "Option" means a common stock option granted pursuant to the Plan.
(8) "Optionee" means a person or entity to whom a common stock option
is granted under this Plan, including, but not limited to, a Key Employee.
(9) "Plan" means this 1999 Management Stock Option Plan.
(10) "Share" means a share of the $.001 par value common stock of the
Corporation that has been previously authorized but unissued, or issued and
reacquired by the Corporation.
(11) "Value" means the arithmetic mean between the bid and asked price
published by the National Association of Securities Dealers,Inc. (or registered
securities exchange or NASDAQ, if appropriate) of the Shares on the date of
grant, or if not available for that day, then the next earliest preceding day in
which the price is available. If the Shares should become listed on a national
registered securities exchange, then the Value shall be the reported closing
price for the day in question. In all other cases, the Value shall be the fair
market value determined by the method the Board deems reasonable. Value shall be
determined without regard to securities law restrictions, or any other
restriction which by its terms will lapse.
III. TERM OF PLAN
This Plan shall become effective upon its adoption by the Board. It
shall continue in effect for a term of ten years unless sooner terminated under
Article XII. This Plan shall remain in effect after its term for the purpose of
administration of any Option granted pursuant to its provisions. No Option
granted during the term of the Plan shall be adversely affected by the end of
the term of this Plan. Options must be granted within ten years of the date on
which the Plan is adopted or the date the Plan is approved by the stockholders,
whichever is earlier.
IV. SHARES TO BE OPTIONED
The maximum number of Shares which may be optioned and sold under this
Plan is 1,400,000 Shares. If Options granted under this Plan shall terminate or
expire without being wholly exercised, new Options may be granted under this
Plan covering the number of Shares to which such termination or expiration
relates.
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V. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board of Directors of the
Corporation, or a committee of Board members, if such is appointed.
VI. INCENTIVE STOCK OPTIONS
One or more Incentive Stock Options may be granted to any Optionee
under this Plan. Each Incentive Stock Option granted under this Article VI shall
be subject to the following conditions except as provided in Article VI(7)
below:
(1) The aggregate Value (determined at the time the Incentive Stock
Option is granted) of the Shares for which any Key Employee may be granted
Incentive Stock Options in any calendar year under all Incentive Stock Option
plans of the Corporation shall not exceed $100,000.
(2) The Option price shall be at least one hundred percent (100%) of
the Value of the Share at the date of grant; or, in the case of a Shareholder
Employee as defined in Article II(5), the Option price shall be at least one
hundred ten percent (110%) of the Value of the Share at the Date of Grant.
(3) During the Optionee's lifetime, Incentive Stock Options granted
under this Article VI may not be sold, pledged, assigned or transferred in any
manner, and may be exercised during lifetime only by the Optionee. Any Incentive
Stock Option that is exercisable after the Optionee's death is exercisable by
the person or persons to whom his rights under the Option shall have passed by
will or the laws of descent and distribution.
(4) Each Incentive Stock Option granted under this Article VI shall be
exercised during the period beginning one year from the Date of Grant and ending
on the ten (10) year anniversary of the Date of Grant; provided, however, that a
Shareholder Employee as defined in Article II(5) must exercise each Incentive
Stock Option during the period beginning one year from Date of Grant and ending
on the five (5) year anniversary of the Date of Grant.
(5) An Incentive Stock Option shall be exercised when written notice
of such exercise is given to the Corporation at its principal business office by
the Optionee and full payment for the Shares with respect to which the Option is
exercised has been received by the Corporation. Until the Incentive Stock Option
is properly exercised and the exercise price paid to the Corporation, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the optioned Shares notwithstanding the exercise of the Option.
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No adjustment will be made for a dividend or other rights for which the record
date is prior to the date that the stock certificate is issued. Payment for the
Shares shall be made with cash, previously acquired Shares having a Value equal
to the Option price, or previously acquired Shares having a Value less than the
Option price, plus cash. Upon exercise of an Incentive Stock Option and payment
of the purchase price, the Corporation shall promptly issue the Shares to the
Optionee.
(6) In the event an Optionee who is an Employee of the Corporation who
during his lifetime ceases to be employed by the Corporation for any reason, any
Incentive Stock Option or unexercised portion thereof which was otherwise
exercisable on the date of termination of employment shall expire unless
exercised within a period of three (3) months from the date his employment
terminates, but in no event later than ten (10) years from the Date of Grant. In
the event of the death of an Optionee (who is an employee of the Corporation)
during the three (3) month period, the Incentive Stock Option may be exercised
by the person or persons to whom his rights under the Option passed by will or
laws of descent and distribution to the same extent and during the same period
that the Optionee could have exercised the Incentive Stock Option had the
Optionee not died. If an Optionee dies while employed by the Corporation, any
Option or unexercised portion thereof which was otherwise exercisable at the
time of the Optionee's death may be exercised within twelve (12) months of the
Optionee's death, but in no event later than ten (10) years from the Date of
Grant, by the person or persons to whom his rights under the Option passed by
will or laws of descent of distribution. In the event an Optionee who is an
Employee of the Corporation ceases to be employed by the Corporation because he
has become "disabled" as defined by Section 22(e)3 of the Internal Revenue Code,
as amended, such Optionee may exercise any Option or unexercised portion thereof
within 12 months from the date his employment terminates, but in no event later
than ten (10) years from the Date of Grant. An Optionee's continuous employment
shall not be deemed interrupted by a leave of absence approved by the
Corporation.
(7) All of the above notwithstanding, in the event that any Incentive
Stock Option granted under this Article VI fails to qualify as an incentive
stock option as defined in Section 422A of the Internal Revenue Code of 1954, as
amended, for any reason whatsoever, such option shall automatically, effective
as of the date of grant, be a Non-qualified Stock Option, with the same exercise
terms as originally granted except that all limitations herein which apply to
qualification as an Incentive Stock Option, including but not limited to, terms
concerning employment and valuation, shall be inapplicable.
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VII. NON-QUALIFIED STOCK OPTIONS
One or more Non-qualified Stock Options may be granted to any Optionee
under this Plan. Each Non-qualified Stock Option granted under this Article VII
shall be subject to the following conditions:
(1) The number of Shares which may be acquired pursuant to any
Non-qualified Stock Option or Options granted to an Optionee during any calendar
year shall not exceed 750,000 Shares.
(2) The Option price shall be at least fifty percent (50%) of the
Value of the Share at the Date of Grant.
(3) During the Optionee's lifetime, Non-qualified Stock Options
granted under this Article VII may not be sold, pledged, assigned or transferred
in any manner, and may be exercised during the Optionee's lifetime only by the
Optionee. Any Option that is exercisable after the Optionee's death is
exercisable by the person or persons to whom his rights under the Option shall
have passed by will or the laws of descent and distribution.
(4) Each Non-qualified Stock Option granted under this Article VII
shall be exercised during the period beginning on the Date of Grant and ending
on the ten (10) year anniversary of the Date of Grant.
(5) A Non-qualified Stock Option shall be exercised when written
notice of such exercise is given to the Corporation at its principal business
office by the Optionee and full payment for the Shares with respect to which the
option is exercised has been received by the Corporation. Until the issuance of
the stock certificates, no right to vote or to receive dividends or any other
rights as a stockholder shall exist with respect to the optioned Shares
notwithstanding the exercise of the Option. No adjustment will be made for a
dividend or other rights for which the record date is prior to the date that the
stock certificate is issued. Payment for the Shares shall be made with cash,
previously acquired Shares having a Value equal to the Option price, or
previously acquired Shares having a Value less than the Option price, plus cash.
Upon exercise of Non-qualified Stock Option and payment of the purchase price,
the Corporation shall promptly issue the Shares to the Optionee.
(6) In the event an Optionee who is an Employee of the Corporation who
during his lifetime ceases to be employed by the Corporation for any reason, any
Non-qualified Stock Option or unexercised portion thereof which was otherwise
exercisable on the date of termination of employment shall expire unless
exercised within a period of three (3) months from the date his employment
terminates, but in no event later than ten (10) years from the Date of Grant. In
the event of the death of an Optionee (who is an employee of the Corporation)
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during the three (3) month period, the Non-qualified Stock Option may be
exercised by the person or persons to whom his rights under the Option passed by
will or laws of descent and distribution to the same extent and during the same
period that the Optionee could have exercised the Non-qualified Stock Option had
the Optionee not died. If an Optionee dies while employed by the Corporation,
any Non-qualified Stock Option or unexercised portion thereof which was
otherwise exercisable at the time of the Optionee's death may be exercised
within twelve (12) months of the Optionee's death, but in no event later than
ten (10) years from the Date of Grant, by the person or persons to whom his
rights under the Option passed by will or laws of descent or distribution. An
Optionee's continuous employment shall not be deemed interrupted by a leave of
absence approved by the Corporation.
VIII. EXERCISE OF OPTIONS - STOCK APPRECIATION RIGHTS
(1) The Board may by separate agreement, in conjunction with all or
part of any Option granted under the Plan, either at the time of grant of such
Option or at any subsequent time during the term of the Option, permit an
Optionee to exercise the Option in an alternative manner based on the
appreciated value of the Corporation's common stock subject to Option ("Stock
Appreciation Right"); provided, however, that no Stock Appreciation Right
granted to an Optionee who is an officer of the Corporation shall be exercisable
during the twelve month period following the Date of Grant, except that such
limitation shall not apply in the event of death or physical disability of such
Optionee occurring prior to the expiration of such twelve month period. Stock
Appreciation Rights may be exercised by an Optionee by surrendering the related
Option or applicable portion thereof. Upon such exercise and surrender, the
Optionee shall be entitled to receive the value of such Stock Appreciation
Rights determined in the manner prescribed in this Article VIII. Options which
have been so surrendered, in whole or in part, shall no longer be exercisable.
(2) The agreement evidencing Stock Appreciation Rights shall contain
such terms and conditions not inconsistent with other provisions of the Plan as
shall be determined from time to time by the Board, which may include the
following or the agreement evidencing Stock Appreciation Rights may merely refer
to this Article VIII:
(a) Stock Appreciation Rights shall be exercisable at such time
or times and only to the extent that the Option to which they relate
shall be exercisable.
(b) Upon the exercise of Stock Appreciation Rights, an Optionee
shall be entitled to receive the Value thereof, which Value shall be
equal to the excess of the Value on the date of exercise of one share
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of common stock over the Option price per share specified in the
related Option multiplied by the number of Shares in respect of which
the Stock Appreciation Rights shall have been exercised. The Value of
Shares on the date of exercise of Stock Appreciation Rights shall be
determined in the same manner as the Value of the Shares on the Date
of Grant of an Option is determined pursuant to Article II(4) above.
(c) Upon an exercise of Stock Appreciation Rights, the Optionee
shall notify the Corporation of the form in which payment of the value
thereof will be made (i.e., cash, common stock, or any combination
thereof); provided however, in the case of Optionee who is an officer
of the Corporation or other person subject to Section 16(b) of the
Securities Exchange Act of 1934, the Board may at any time impose any
limitations upon the exercise of Stock Appreciation Rights which, in
the Board's sole discretion, are necessary or desirable in order to
comply with Section 16(b) and the rules and regulation thereunder, or
in order to obtain any exemption therefrom.
(3) Upon the exercise of Stock Appreciation Rights, the Option or part
thereof to which such Stock Appreciation Rights is related shall be deemed to
have been exercised for the purpose of the limitation of the number of Shares of
common stock to be issued under the Plan as set forth in Article IV above. Stock
Appreciation Rights shall be deemed exercised on the date written notice of
exercise is received by the secretary of the Corporation.
IX. Adjustments Upon Changes in Capitalization
Whenever a stock split or stock dividend occurs, (1) the number of
Shares that can thereafter be purchased, and the Option price per Share, under
each Option that has been granted under this Plan and not exercised, and (2)
every number of Shares used in determining whether a particular Option is
grantable thereafter, shall be appropriately adjusted.
X. Corporate Transactions
(1) If the Corporation is dissolved or liquidated, or is merged or
consolidated into or with another corporation, other than by a merger or
consolidation in which the Company is the surviving corporation, the then
exercisable and unexercised Options granted under the Plan may or may not be
exercisable after the date of such dissolution, liquidation, merger or
consolidation, as determined by the Board at the time of such event or at the
Date of Grant of the Option.
(2) Notwithstanding any provision of this Plan, the Board is
authorized to take such action upon the Date of Grant of an Option or at any
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time thereafter as it determines to be necessary or advisable, and fair and
equitable to Optionees, with respect to Options held by Optionees in the event
of a sale or transfer of all or substantially all of the Company's assets, or
merger or consolidation (other than a merger or consolidation in which the
Company is the surviving corporation and no shares are converted into or
exchanged for securities, cash or any other thing of value). Such action may
include (but is not limited to) the following:
(a) Accelerating the exercisability of any Option to permit its
exercise in full during such period as the Committee in its sole
discretion shall prescribe following the public announcement of a sale
or transfer of assets or merger or consolidation.
(b) Permitting an Optionee, at any time during such period as the
Committee in its sole discretion shall prescribe following the
consummation of such a merger, consolidation or sale or transfer of
assets, to surrender any Option (or any portion thereof) to the
Company for cancellation.
(c) Requiring any Optionee, at any time following the
consummation of such a merger, consolidation or sale or transfer of
assets, if required by the terms of the agreements relating thereto,
to surrender any Option (or any portion thereof) to the Company in
return for a substitute Option which is issued by the corporation
surviving such merger or consolidation or the corporation which
acquired such assets (or by an affiliate of such corporation) and
which the Committee, in its sole discretion, determines to have a
value to the Optionee substantially equivalent to the value to the
Optionee of the Option (or portion thereof) so surrendered.
(3) Subject to any action which the Committee may take pursuant to the
provisions of this Article X, in the event of any merger, consolidation or sale
or transfer of assets referred to in this Article X, upon any exercise
thereafter of an Option, and Optionee shall, at no additional cost other than
payment of the Option price, be entitled to receive in lieu of Shares, (i) the
number and class of Shares or other security, or (ii) the amount of cash, or
(iii) property, or (iv) a combination of the foregoing, to which the Optionee
would have been entitled pursuant to the terms of such merger, consolidation or
sale or transfer of assets, if immediately prior thereto the Optionee had been
the holder of record of the number of Shares for which such Option shall be so
exercised.
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XI. ADDITIONAL PROVISIONS APPLICABLE TO OPTIONS AND CERTAIN POWERS OF THE
BOARD
The Board, in addition to any other powers granted it hereunder, shall
have the power, subject to the express provisions of the Plan:
(1) To determine the provisions of the respective Options other than
those provisions expressly stated or limited herein, which terms and provisions
may be set forth in Option agreements:
(2) Without limiting the generality of the foregoing, to provide in
Option agreements, in its discretion:
(a) For an agreement by the Optionee to render services to the
Corporation upon such terms and conditions as shall be specified in
the agreement.
(b) For restrictions on the transfer, sale, or disposition of the
stock to be issued to the Optionee upon the exercise of his Option.
(3) To require, whether or not provided for in the pertinent Option or
Option agreement of any person exercising an Option granted under the Plan, at
the time of such exercise, the execution of any paper or the making of any
representation or the giving of any commitment when the Board shall, in its
discretion, deem necessary or advisable by reason of the securities laws of the
United States or of any State.
(4) To amend Options previously granted and outstanding under this
Plan, but no amendment to any Option agreement shall be made without the consent
of the Optionee if such amendment would adversely affect the Optionee; and no
amendment shall be made to any Option agreement which would cause the inclusion
therein of any term or provisions inconsistent with the Plan or Section 422A of
the Internal Revenue Code, as amended (if applicable).
(5) To grant Options after the date the Plan is adopted provided the
Options granted are specifically contingent upon approval of this Plan by
holders of a majority of the Corporation's outstanding common stock.
XII. POWER TO AMEND OR TERMINATE THE PLAN
(1) The Board may terminate this Plan at any time, or amend or modify
the Plan without shareholder approval in such respects as it shall deem
advisable in order that Options granted to Key Employees shall be "Incentive
Stock Options" as defined in Section 422A of the Internal Revenue Code of 1954,
as amended, or to conform to any change in the law, or in order to comply with
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the provisions of any rule or regulations of the Securities and Exchange
Commission or other applicable governmental agency required to exempt the Plan
or any transactions under this Plan from the operation of Section 16(b) of the
Securities Exchange Act of 1934, as amended, or in any other respect which shall
not be inconsistent with the provisions of Section 422A of the Internal Revenue
Code of 1954, as amended, or Section 16(b) of the Securities Exchange Act of
1934, as amended.
(2) The Board may terminate this Plan. Any termination shall not
affect stock options already granted as those Options shall remain in force and
effect as if this Plan had not been terminated. The termination or any
modification or amendment of this Plan shall not, without the consent of the
Optionee, affect his rights under an Option previously granted to him.
(3) Only with shareholder approval can the Board amend the Plan in the
following areas:
(a) Increasing the maximum number of Shares that may be
effectively optioned, otherwise than through the making of an
adjustment pursuant to Article IX.
(b) Changing the class of employees eligible for Options.
(c) Decreasing the prices at which previously granted Options may
be exercised.
XIII. STOCKHOLDER APPROVAL
This Plan shall become effective upon receipt by the Corporation of
approval from the holders of a majority of the shares of common stock of the
Corporation entitled to vote thereon. This Plan shall not be effective unless
such consents are obtained within twelve (12) months before or after the Plan is
adopted.
CORONADO INDUSTRIES, INC.
ATTEST:
By: /s/ Gary R. Smith
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Gary R. Smith, President
/s/ G. Richard Smith
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G. Richard Smith, Secretary
Date Approved By Shareholders: November 3, 1999
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