EXHIBIT 10.4
STOCK OPTION AGREEMENT
AGREEMENT, made as of May 9, 1997, between Individual Investor Group, Inc.,
a corporation organized and existing under the laws of the State of Delaware
corporation, having a principal address at 1633 Broadway, 38th Floor, New York,
New York 10019 (the "Company"), and __________________________, an individual
residing at __________________________, ____________________, ________________
____________ ("Executive").
WHEREAS, as of May 9, 1997, the Board of Directors of the Company: (i)
authorized the grant to Executive of an option to purchase shares of the common
stock of the Company, par value $.01 per share (the "Common Stock"), and (ii)
directed the consolidation, restatement and amendment of all options heretofore
granted to Executive by the Company, including the immediate grant; all pursuant
to the terms and conditions set forth in this Agreement, and;
WHEREAS, Executive desires the options granted and restated in this
Agreement;
IT IS AGREED:
1. Restatement, Consolidation, Amendment and Additional Grant.
The Company hereby acknowledges, consolidates, amends and restates the
options heretofore granted to Executive by this consolidated Agreement, which
shall be deemed to supersede any and all other agreements with respect to such
prior grants. Additionally, the Company hereby grants Executive the option to
purchase all or any part of an aggregate of the number of authorized but as yet
unissued shares of Common Stock indicated under the Date of Grant 5/9/97 header
on the Option Schedule attached hereto as Exhibit A and made a part hereof (the
"Option Schedule"). Further, the restated and consolidated options shall be
deemed amended, and the additional grant options shall be issued, pursuant to
the terms and conditions set forth herein and on the Option Schedule and, if
applicable, the terms of the Company's stock option plans as indicated on the
Option Schedule. (Any grants to be included in the terms of this Option
Agreement where the grants are made after the date hereof may be so included by
the addition of such grant with relevant information on the Option Schedule,
signed by the Company and Executive, and; the consolidated options described by
this Agreement and any such subsequently approved options shall hereinafter be
referred to as the "Option", and all shares of Common Stock issuable thereunder
shall hereinafter be referred to as the "Option Shares".)
2. Defined Terms
"Act" Securities Act of 1933, as amended.
"Beneficial As defined in Rule 13d-3 under the
Owner(s)"
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Exchange Act, except that the provisions of Ruled
13d-3(d)(2) which exclude certain persons from the Rule
shall not exclude those persons from being deemed Beneficial
Owner(s) for purposes of this Agreement.
"Change of Control" A transaction after the date hereof which would be required
to be reported in response to Item 6(e) of Schedule 14A (or
in response to any similar item on any similar schedule or
form for reporting to the government) of Regulation 14A
promulgated under the Exchange Act, whether or not the
Company is then subject tffo such reporting requirement;
provided that, without limitation, such a change in control
shall be deemed to have occurred if after the date hereof:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than Jonathan Steinberg
and/or Saul Steinberg, becomes the "beneficial owner",
directly or indirectly, of securities of the Company
representing Forty percent (40%) or more of the combined
voting power of the Company's then outstanding securities
ordinarily having the right to vote at elections of
directors, or (ii) individuals other than those who
constitute the Board on the date of this Agreement and/or
Saul Steinberg (the "Incumbent Board") shall constitute or
have the right to nominate (other than the general right to
nominate that holders of the Company's outstanding voting
securities may possess), appoint or constitute a majority of
the members of the Board; provided however, that any person
becoming a Director subsequent to the date of this Agreement
whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least Two-Thirds
(2/3) of the Directors comprising the then current Board
shall be considered a member of the Incumbent Board.
Notwithstanding the foregoing, no "Change of Control" shall
be deemed to have occurred if it arises from a transaction
directly involving Executive.
"Disability" If Executive shall have been unable substantially to perform
his usual duties due to physical or mental illness for a
period in excess of Two Hundred Forty (240) days (whether or
not consecutive) or One Hundred Twenty (120) days
consecutively during any Twelve (12) month period.
"Exchange Act" Securities Exchange Act of 1934, as amended
"Exercise Period" Ten (10) years from the date of grant indicated on the
Option Schedule
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"Fair Market Value" Determined as of the date of exercise, as follows: (i) if
the Common Stock is listed on a national securities exchange
or quoted on the Nasdaq National Market or Nasdaq SmallCap
Market, the last sale price of the Common Stock in the
principal trading market for the Common stock on the last
trading day preceding such date, as reported by the exchange
or Nasdaq, as the case may be; (ii) if the Common Stock is
not listed on a national securities exchange or quoted on
the Nasdaq National Market or Nasdaq SmallCap Market, but is
traded in the over-the-counter market, the closing bid price
of the Common Stock on the last trading day preceding such
date for which such quotations are reported by the national
Quotation Bureau, Inc. or similar publisher of such
quotations, and; (iii) if the fair market value of the
Common Stock cannot be determined pursuant to clause (i) or
(ii) above, such price as the Company shall reasonably
determine in good faith.
"Good Reason" Without the written consent of Executive, either: (i)
Executive's authorities, duties, job title or position of
responsibility, or the nature of Executive's duties or the
scope of his responsibilities, is materially diminished, and
that diminution is not corrected by the Company within
Fifteen (15) days after written notice from Executive
describing the diminution alleged to constitute Good Reason,
or; (ii) Executive's base salary is reduced.
"Just Cause" Conviction of, or plea of nolo contendere to, a felony
directly involving the Company.
"Premium Value" The amount, if any, by which th e Fair Market Value
exceeds the exercise price of Option Shares.
"Substantial
Transaction" Any transaction: (i) involving the sale, issuance or
reservation of a number of shares of capital stock which
would result in any "person" (as such term is used in
sections 13(d) and 14(d) of the Exchange act) becoming a
"beneficial owner", directly or indirectly, of securities of
the Company representing Twenty percent (20%) or more of the
combined voting power of the Company's then outstanding
securities ordinarily having the right to vote at elections
of directors and, in connection with such transaction, such
"person" shall obtain the right to appoint, nominate (other
than the general right of nomination that holders of the
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Company's outstanding voting securities may possess) or
elect (other than the general right to vote that holders of
the Company's outstanding voting securities may possess) at
least One-Third (1/3) of the members of the Company's Board;
(ii) involving the grant or sale of an option or other right
to conduct a Change of Control transaction at any time in
the future, and/or; (iii) any retention by the Company of an
investment banking or other consulting firm, which retention
has been approved by the Company's Board, for the purpose of
seeking to effect a Substantial Transaction (within the
meaning of clause (i) or (ii) above) or a Change of Control
transaction; provided, however, that if Executive remains in
the employ of the Company One (1) year after the initial
retention of such investment banking or consulting firm and
a Substantial Transaction (within the meaning of clause (i)
or (ii) above) or a change of Control transaction has not
occurred within One (1) year of such initial retention, the
mere retention of such investment banking or consulting firm
shall thereafter no longer de deemed a Substantial
Transaction, unless and to the extent that the Board,
effective following the expiration of such One (1) year
period, affirmatively approves the continued retention of
such investment banking or consulting firm. Notwithstanding
the foregoing, no transaction directly involving Executive
shall be deemed a "Substantial Transaction".
3. Termination of Employment / Change of Control
(A) If Executive's employment is terminated by the Company for any reason
or for no reason but without Just Cause, or is terminated by Executive for any
reason or for no reason but without Good Reason, the portion of the Option, if
any, that was exercisable as of the date of termination of employment, may be
exercised for a period of One (1) year from the termination of employment or
until the expiration of the Exercise Period, whichever is shorter; unless
specifically provided otherwise in the Option Schedule. The portion of the
Option, if any, that is not exercisable as of the date of termination of
employment, as above provided, shall immediately terminate upon the termination
of employment.
(B) If Executive's employment is terminated by the Company for Just Cause
the Option, including vested and unvested aspects, shall thereupon terminate,
and the Company may also require Executive to return to the Company the Premium
Value of any Option Shares purchased under this Agreement by Executive within
the Six (6) month period prior to the date of such termination.
(C) In the event of Executive's death or Disability, the portion, if any,
of the Option that was exercisable as of the date of death may thereafter be
exercised by Executive's guardian, legal representative or legatee under the
will, as the case may be, of Executive for a period of One (1) year from the
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date of death or Disability, or 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 shall immediately terminate upon Executive's death or
Disability. (D) In the event (i) of a Change of Control, (ii) following a
Substantial Transaction, Executive is terminated by the Company for any reason
or for no reason but other than for Just Cause, and/or (iii) Executive
terminates employment at any time for Good Reason; the Option shall be
accelerated and be immediately exercisable as to all the Option Shares under
this Option and remain exercisable throughout the Exercise Period.
4. Exercise and Company Option to Acquire
(A) Subject to the terms and conditions of the Agreement, during the
Exercise Period the Option, once vested in whole or in part, may be exercised in
whole or in part to the extent it has become vested, and on such occasion or
occasions as Executive may desire, by written notice to the Company, in
substantially the form attached hereto as Exhibit B, 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. Such notice shall state the election to exercise the Option and the
number of Option Shares in respect to which it is being exercised, and shall
contain a representation and agreement by the person or persons so exercising
the Option that the Option Shares are being purchased for investment and not
with a view to the distribution or resale thereof, and shall be signed by the
person or persons so exercising the Option.
(B) Payment of the purchase price shall be made by wire transfer, check,
bank draft or money order payable to the order of the Company; provided however,
that at the election of Executive and in Executive's sole discretion, the
purchase price for any or all of the Option Shares to be acquired may be paid in
whole or in parts by: (i) the surrender of shares of Common Stock of the Company
held by or for the account of Executive with a Fair Market Value equal to the
exercise price multiplied by the number of Option Shares to be purchased, or
(ii) the surrender of an exercisable but unexercised portion of the Option in
addition to that portion of the Option being exercised, having a Premium Value
equal to the Option exercise price of the Option being exercised multiplied by
the number of Option Shares to be purchased, or (iii) the surrender of only the
Option being exercised (with no further consideration as to the exercise price),
whereupon Executive shall receive from the Company a number of shares of Common
Stock with a Fair Market Value equal to the Premium Value of the Option Shares
being so tendered (rather than the Fair Market Value of the Option Shares).
Notwithstanding the foregoing, the Company shall have the right to reject
payment in the form of Common Stock if in the opinion of counsel for the
Company, (i) it could result in an event of "recapture" under Section 16(b) of
the Exchange Act; (ii) such tendered shares of Common Stock may not be sold or
transferred to the Company or counsel to the Company otherwise determines that
such transfer is illegal or objectionable.
(C) Company Option to Acquire
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In the case of each Option exercise hereunder, the Company shall have the
superseding option and right of acquiring the Option rights being exercised and
the Option Shares to be otherwise issued thereunder at a price equal to the
Premium Value of the exercised Option Shares on the date of Notice of Exercise.
To elect this option/right, the Company shall tender such payment to Executive
within Five (5) business days of the Notice of Exercise.
(D) The Company shall promptly issue Common Stock certificates for any
Option Shares purchased hereunder, after the Five (5) business day period
following exercise set forth in paragraph (C) above. Executive shall have all of
the rights of a stockholder with respect to the Option Share Common Stock
purchased hereunder as of the close of business on the date of exercise,
provided such exercise is in accordance with the terms of this Agreement subject
to forfeiture if the Company shall have elected to exercise its option/right in
paragraph (C) above.
(E) The Company hereby represents and warrants to Executive that the Option
Shares, when issued and delivered by the Company to Executive in accordance with
the terms and conditions hereof, will be fully paid, duly and validly issued,
and non-assessable.
5. Non-Transferability and Registration
(A) The Option shall not be assignable or transferable except in the event
of the death of Executive by will or by the laws of descent and distribution. No
transfer of the Option by Executive by will or by the laws of descent and
distribution shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and a copy of the will 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.
(B) Anything in this Agreement to the contrary notwithstanding, Executive
hereby agrees that Executive shall not sell, transfer by any means, or otherwise
dispose of the Option Shares acquired by Executive without registration under
the Act, or in the event that they are not so registered, unless an exemption
from the Act is available thereunder and same is evidenced by an opinion of
counsel to Executive satisfactory to the Company
(C) Executive hereby acknowledges that:
(i) All reports and documents required to be filed by the Company with
the Securities and Exchange Commission pursuant to the Exchange Act within
the last Twelve (12) months have been made available to Executive for
inspection;
(ii) In Executive's position with the Company, Executive has had both
the opportunity to ask questions of and receive answers from the Officers
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
subparagraph (i) above;
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(iii) 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 Act or an exemption therefrom, and;
(iv) The certificate evidencing the Option Shares may bear an
appropriate legend as reasonably determined by counsel to the Company. . 7.
Miscellaneous
(A) Anti-Dilution
In the event of any change in the number of outstanding shares of Common
Stock or other capital stock of the Company occurring as the result of a
reorganization, recapitalization, combination or exchange of shares, stock
split, reverse stock split or stock dividend on the Common Stock or other
capital stock, or similar change in the corporate structure or capitalization of
the Company or in its shares, then in any such event, the number of shares of
Common Stock that may be purchased upon exercise of the Option shall be
appropriately adjusted in number, exercise price and/or kind as determined in
good faith by the Board of Directors of the Company so as to avoid any dilutive
effect any such transaction(s) may have on the holding and relative position and
rights of the shares underlying the Option. If the Company shall not be the
surviving corporation in any merger, combination or consolidation, then, as a
condition of such merger, combination or consolidation, lawful and fair
provision shall be made whereby the Executive shall thereafter have the right to
purchase and receive, upon the terms and conditions specified in the Agreement
and in lieu of the Common Stock of the Company immediately theretofore
purchasable upon the exercise of the rights represented thereby, such shares of
stock or other securities of the surviving corporation(s) as may be issued or
payable with respect to or in exchange of the number of shares of Common Stock
of the Company immediately theretofore purchasable upon the exercise of the
rights represented hereby. The Company shall not effect any such merger,
combination or consolidation unless prior to or at the consummation thereof the
surviving corporation shall assume by written instrument executed and delivered
to the Executive evidence of the surviving corporation's obligation to deliver
such shares of stock or other securities of the surviving corporation in
accordance with the foregoing provisions. If the Company shall be the surviving
corporation in any merger, combination or consolidation, this Option shall
pertain and apply to the Option Shares to which the Executive is entitled
hereunder, without adjustment for issuance by the Company of any securities in
the merger, combination or consolidation. In the event of a change in the par
value of the shares of Common Stock which are subject to this Option, this
Option will be deemed to pertain to the shares resulting from any such change.
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(B) Withholding Tax
Not later than the date as of which an amount first becomes includible in
the gross income of Executive for Federal income tax purposes with respect to
the Option, Executive shall pay to the Company, or make arrangements
satisfactory to the Company, 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 obligation of the Company to issue Option Shares pursuant to
this Agreement shall be conditioned upon such payment or arrangements with the
Company and the Company shall, to the extent permitted law, have the right to
deduct any such taxes from any payment of any kind otherwise due to Executive
from the Company.
(C) Notices
All notices, requests, deliveries, payments, demands and other
communications which are required or permitted to be given under this Agreement
shall be in writing and shall either be delivered personally or sent by
certified mail, return receipt requested, postage prepaid, or by Federal Express
next business day service with signed receipt required, to the parties at their
respective addresses set forth below, or to such other address as either shall
have specified by notice in the writing to the other, and shall be deemed duly
given hereunder when so delivered.
(D) 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.
(E) Binding Effect
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, assigns and representatives. Nothing in this Agreement, expresses or
implied, is intended to confer on any person other than the parties hereto,
their respective heirs, successors, assignees and representatives, any rights,
remedies, obligations or liabilities.
(F) Choice of Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to conflict of law principles.
(G) Entire Agreement
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
date first above written.
INDIVIDUAL INVESTOR GROUP, INC.:
-----------------------------------
Jonathan Steinberg, Chairman and CEO
EXECUTIVE:
------------------------------------
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JONATHAN STEINBERG
OPTION SCHEDULE
Date of Number of Vested as of Date Number Per Share Special
Grant Shares 5/9/97 Additional Vesting Exercise Terms
4/7/94 500,000 250,000 4.9375
4/7/98 125,000 6.65
4/7/99 125,000 7.50
6/23/95 80,000 26,667 5.75
6/23/97 26,667 5.75
6/23/98 26,666 5.75
11/4/96 100,000 (1)
11/4/97 33,333 7.50
11/4/98 33,333 7.50
11/4/99 33,334 7.50
5/9/97 Not Applicable
(1) Issued under the 1996 Management Incentive Program.
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ROBERT SCHMIDT
OPTION SCHEDULE
Date of Number of Vested as of Date Number Per Share Special
Grant Shares 5/9/97 Additional Vesting Exercise Terms
7/27/94 400,000 283,333.33 5.25 (1)
6/1/97 8,333.33 5.25 (1)
7/1/97 8,333.33 5.25 (1)
8/1/97 8,333.33 5.75 (1)
9/1/97 8,333.33 5.75 (1)
10/1/97 8,333.33 5.75 (1)
11/1/97 8,333.33 5.75 (1)
12/1/97 8,333.33 5.75 (1)
1/1/98 8,333.33 5.75 (1)
2/1/98 8,333.33 5.75 (1)
3/1/98 8,333.33 5.75 (1)
4/1/98 8,333.33 5.75 (1)
5/1/98 8,333.33 5.75 (1)
6/1/98 8,333.33 5.75 (1)
7/1/98 8,333.33 5.75 (1)
6/23/95 80,000 26,667 5.75
6/23/97 26,667 5.75
6/23/98 26,666 5.75
11/4/96 80,000
11/4/97 26,667 7.50 (2)
11/4/98 26,667 7.50 (2)
11/4/99 26,666 7.50 (2)
5/9/97 80,000
5/9/98 26,667 5.88 (2)
5/9/99 26,667 5.88 (2)
5/9/00 26,666 5.88 (2)
(1) In the event of a termination of Mr. Schmidt's employment pursuant to
the conditions of Sections 3(A) and/or 3(D)(iii) above, the then vested
portion of the Option, plus the lesser of (i) One Hundred Thousand
(100,000) additional Option Shares, or (ii) the total number of Option
Shares scheduled to become exercisable under the Option on and after
the date of termination of employment, may be exercised until the
expiration of the Exercise Period; provided that the remainder, if any,
of the Option that was not exercisable as of the date of termination of
employment, as hereinbefore qualified, shall immediately terminate upon
the termination of employment.
(2) Issued under the 1996 Management Incentive Plan.
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SCOT ROSENBLUM
OPTION SCHEDULE
Date of Number of Vested as of Date Number Per Share Special
Grant Shares 5/9/97 Additional Vesting Exercise Terms
10/3/90 20,935 20,935 0.24
29,728 29,728 0.41
12/4/91 135,000 135,000 3.00 (1)
8/31/94 100,000 66,666.33 4.25
6/1/97 2,083.33 4.25
7/1/97 2,083.33 4.25
8/1/97 2,083.33 4.25
9/1/97 2,083.33 6.75
10/1/97 2,083.33 6.75
11/1/97 2,083.33 6.75
12/1/97 2,083.33 6.75
1/1/98 2,083.33 6.75
2/1/98 2,083.33 6.75
3/1/98 2,083.33 6.75
4/1/98 2,083.33 6.75
5/1/98 2,083.33 6.75
6/1/98 2,083.33 6.75
7/1/98 2,083.33 6.75
8/1/98 2,083.33 6.75
9/1/98 2,083.33 6.75
6/23/95 50,000 16,667 5.75
6/23/97 16,667 5.75
6/23/98 16,666 5.75
11/4/96 60,000
11/4/97 20,000 7.50 (2)
11/4/98 20,000 7.50 (2)
11/4/99 20,000 7.50 (2)
5/9/97 75,000
5/9/98 25,000 5.88 (2)
5/9/99 25,000 5.88 (2)
5/9/00 25,000 5.88 (2)
(1) Issued under the 1991 Stock Option Plan, and intended to qualify as an
Incentive Stock Option with respect to 99,999 shares (35,001
non-qualified shares).
(2) Issued under the 1996 Management Incentive Plan.
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MICHAEL KAPLAN
OPTION SCHEDULE
Date of Number of Vested as of Date Number Per Share Special
Grant Shares 5/9/97 Additional Vesting Exercise Terms
9/30/96 25,000
9/30/97 8,333.33 8.00 (1)
9/30/98 8,333.33 8.00 (1)
9/30/99 8,333.33 8.00 (1)
1/1/97 25,000
1/1/98 8,333.33 7.25 (1)
1/1/99 8,333.33 7.25 (1)
1/1/00 8,333.33 7.25 (1)
5/9/97 50,000
12/31/97 16,667 5.88 (2)
12/31/98 16,667 5.88 (2)
12/31/99 16,666 5.88 (2)
5/9/97 50,000
5/9/98 16,667 5.88 (2)
5/9/99 16,667 5.88 (2)
5/9/00 16,666 5.88 (2)
(1) Issued under the 1996 Performance Equity Plan, and intended to qualify as
Incentive Stock Options.
(2) Issued under the 1996 Management Incentive Plan.
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