exv4w2



 





Exhibit 4.2




BEVOCAL, INC.

STOCK OPTION AGREEMENT




RECITALS




     A. The Board has adopted the Plan for the purpose of retaining the services of selected
Employees, non-employee members of the Board or the board of directors of any Parent or Subsidiary
and consultants and other independent advisors in the service of the Corporation (or any Parent or
Subsidiary).



     B. Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and
this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Corporation’s grant of an option to Optionee.



     C. All capitalized terms in this Agreement shall have the meaning assigned to them in the
attached Appendix.



     NOW, THEREFORE, it is hereby agreed as follows:



     1. Grant of Option. The Corporation hereby grants to Optionee, as of the Grant Date,
an option to purchase up to the number of Option Shares specified in the Grant Notice. The Option
Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at
the Exercise Price.



     2. Option Term. This option shall have a term of ten (10) years measured from the
Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless
sooner terminated in accordance with Paragraph 5 or 6.



     3. Limited Transferability. During Optionee’s lifetime, this option shall be
exercisable only by Optionee and shall not be assignable or transferable other than by will or by
the laws of descent and distribution following Optionee’s death.



     4. Dates of Exercise. This option shall become exercisable for the Option Shares in
one or more installments as specified in the Grant Notice. As the option becomes exercisable for
such installments, those installments shall accumulate, and the option shall remain exercisable for
the accumulated installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.



     5. Cessation of Service. The option term specified in Paragraph 2 shall terminate
(and this option shall cease to be outstanding) prior to the Expiration Date should any of the
following provisions become applicable:



 









 






     (a) Should Optionee cease to remain in Service for any reason (other than death, Disability or
Misconduct) while this option is outstanding, then Optionee shall have a period of three (3) months
(commencing with the date of such cessation of Service) during which to exercise this option, but
in no event shall this option be exercisable at any time after the Expiration Date.




     (b) Should Optionee die while this option is outstanding, then the personal representative of
Optionee’s estate or the person or persons to whom the option is transferred pursuant to Optionee’s
will or in accordance with the laws of inheritance shall have the right to exercise this option.
Such right shall lapse, and this option shall cease to be outstanding, upon the earlier of
(i) the expiration of the twelve (12)-month period measured from the date of Optionee’s death or
(ii) the Expiration Date.




     (c) Should Optionee cease Service by reason of Disability while this option is outstanding,
then Optionee shall have a period of twelve (12) months (commencing with the date of such cessation
of Service) during which to exercise this option. In no event shall this option be exercisable at
any time after the Expiration Date.




Note: Exercise of this option on a date later than three
(3) months following cessation of Service due to Disability will
result in loss of favorable Incentive Option treatment,
unless such Disability constitutes Permanent Disability. In
the event that Incentive Option treatment is not available, this
option will be taxed as a Non-Statutory Option upon exercise.




     (d) During the limited period of post-Service exercisability, this option may not be exercised
in the aggregate for more than the number of Option Shares in which Optionee is, at the time of
Optionee’s cessation of Service, vested pursuant to the Vesting Schedule specified in the Grant
Notice or the special vesting acceleration provisions of Paragraph 6. Upon the expiration of such
limited exercise period or (if earlier) upon the Expiration Date, this option shall terminate and
cease to be outstanding for any vested Option Shares for which the option has not been exercised.
To the extent Optionee is not vested in one or more Option Shares at the time of Optionee’s
cessation of Service, this option shall immediately terminate and cease to be outstanding with
respect to those shares.




     (e) Should Optionee’s Service be terminated for Misconduct or should Optionee otherwise engage
in Misconduct while this option is outstanding, then this option shall terminate immediately and
cease to remain outstanding.



          6. Accelerated Vesting.




     (a) In the event of any Corporate Transaction, the Option Shares at the time subject to this
option but not otherwise vested shall automatically vest in full so that this option shall,
immediately prior to the effective date of the Corporate Transaction, become exercisable for all of
the Option Shares as fully vested shares and may be exercised for any or all of those Option Shares
as vested shares. However, the Option Shares shall not vest on such an



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accelerated basis if and to the extent: (i) this option is assumed by the successor
corporation (or parent thereof) in the Corporate Transaction and the Corporation’s repurchase
rights with respect to the unvested Option Shares are assigned to such successor corporation (or
parent thereof) or (ii) this option is to be replaced with a cash incentive program of the
successor corporation that preserves the spread existing on the unvested Option Shares at the time
of the Corporate Transaction (the excess of the Fair Market Value of those Option Shares over the
Exercise Price payable for such shares) and provides for subsequent payout in accordance with the
same Vesting Schedule applicable to those unvested Option Shares as set forth in the Grant Notice.




     (b) Immediately following the Corporate Transaction, this option shall terminate and cease to
be outstanding, except to the extent assumed by the successor corporation (or parent thereof) in
connection with the Corporate Transaction.




     (c) If this option is assumed in connection with a Corporate Transaction, then this option
shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the
number and class of securities that would have been issuable to Optionee in consummation of such
Corporate Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided
the aggregate Exercise Price shall remain the same. To the extent the actual holders of the
Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in
consummation of the Corporate Transaction, the successor corporation may, in connection with the
assumption of the outstanding options under this Plan, substitute one or more shares of its own
common stock with a fair market value equivalent to the cash consideration paid per share of Common
Stock in such Corporate Transaction.




     (d) This Agreement shall not in any way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.



     7. Adjustment in Option Shares. Should any change be made to the Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without the Corporation’s
receipt of consideration, appropriate adjustments shall be made to (i) the total number and/or
class of securities subject to this option and (ii) the Exercise Price in order to reflect such
change and thereby preclude a dilution or enlargement of benefits hereunder.



     8. Stockholder Rights. The holder of this option shall not have any stockholder
rights with respect to the Option Shares until such person shall have exercised the option, paid
the Exercise Price and become the record holder of the purchased shares.



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       9. Manner of Exercising Option.




     (a) In order to exercise this option with respect to all or any part of the Option Shares for
which this option is at the time exercisable, Optionee (or any other person or persons exercising
the option) must take the following actions:




     (i) Execute and deliver to the Corporation a Purchase Agreement for the Option
Shares for which the option is exercised.




     (ii) Pay the aggregate Exercise Price for the purchased shares in one or more
of the following forms:




     (A) cash or check made payable to the Corporation; or




     (B) a promissory note payable to the Corporation, but only to the
extent authorized by the Plan Administrator in accordance with Paragraph 14.




     Should the Common Stock be registered under Section 12 of the 1934 Act
at the time the option is exercised, then the Exercise Price may also be
paid as follows:




     (C) in shares of Common Stock held by Optionee (or any other person or
persons exercising the option) for the requisite period necessary to avoid a
charge to the Corporation’s earnings for financial reporting purposes and
valued at Fair Market Value on the Exercise Date; or




     (D) to the extent the option is exercised for vested Option Shares,
through a special sale and remittance procedure pursuant to which Optionee
(or any other person or persons exercising the option) shall concurrently
provide irrevocable instructions (a) to a Corporation-designated brokerage
firm to effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate Exercise Price payable for the
purchased shares plus all applicable Federal, state and local income and
employment taxes required to be withheld by the Corporation by reason of
such exercise and (b) to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete the
sale.




     Except to the extent the sale and remittance procedure is utilized in
connection with the option exercise, payment of the Exercise Price must
accompany the Purchase Agreement delivered to the Corporation in connection
with the option exercise.



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     (iii) Furnish to the Corporation appropriate documentation that the person or
persons exercising the option (if other than Optionee) have the right to exercise
this option.




     (iv) Execute and deliver to the Corporation such written representations as may
be requested by the Corporation in order for it to comply with the applicable
requirements of Federal and state securities laws.




     (v) Make appropriate arrangements with the Corporation (or Parent or Subsidiary
employing or retaining Optionee) for the satisfaction of all Federal, state and
local income and employment tax withholding requirements applicable to the option
exercise.




     (b) As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf
of Optionee (or any other person or persons exercising this option) a certificate for the purchased
Option Shares, with the appropriate legends affixed thereto.




     (c) In no event may this option be exercised for any fractional shares.



     10. REPURCHASE RIGHTS. ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION
SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE CORPORATION AND ITS ASSIGNS TO REPURCHASE THOSE SHARES IN
ACCORDANCE WITH THE TERMS SPECIFIED IN THE PURCHASE AGREEMENT.



     11. Compliance with Laws and Regulations.




     (a) The exercise of this option and the issuance of the Option Shares upon such exercise shall
be subject to compliance by the Corporation and Optionee with all applicable requirements of law
relating thereto and with all applicable regulations of any stock exchange (or the Nasdaq National
Market, if applicable) on which the Common Stock may be listed for trading at the time of such
exercise and issuance.




     (b) The inability of the Corporation to obtain approval from any regulatory body having
authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common
Stock pursuant to this option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such approvals.



     12. Successors and Assigns. Except to the extent otherwise provided in Paragraphs 3
and 6, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the
Corporation and its successors and assigns and Optionee, Optionee’s assigns and the legal
representatives, heirs and legatees of Optionee’s estate.



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     13. Notices. Any notice required to be given or delivered to the Corporation under
the terms of this Agreement shall be in writing and addressed to the Corporation at its principal
corporate offices. Any notice required to be given or delivered to Optionee shall be in writing
and addressed to Optionee at the address indicated below Optionee’s signature line on the Grant
Notice. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S.
mail, postage prepaid and properly addressed to the party to be notified.



     14. Financing. The Plan Administrator may, in its absolute discretion and without any
obligation to do so, permit Optionee to pay the Exercise Price for the purchased Option Shares by
delivering a full-recourse, interest-bearing promissory note secured by those Option Shares. The
payment schedule in effect for any such promissory note shall be established by the Plan
Administrator in its sole discretion.



     15. Construction. This Agreement and the option evidenced hereby are made and granted
pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All
decisions of the Plan Administrator with respect to any question or issue arising under the Plan or
this Agreement shall be conclusive and binding on all persons having an interest in this option.



     16. Governing Law. The interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of California without resort to that State’s
conflict-of-laws rules.



     17. Stockholder Approval. If the Option Shares covered by this Agreement exceed, as
of the Grant Date, the number of shares of Common Stock that may be issued under the Plan as last
approved by the stockholders, then this option shall be void with respect to such excess shares,
unless stockholder approval of an amendment sufficiently increasing the number of shares of Common
Stock issuable under the Plan is obtained in accordance with the provisions of the Plan.



     18. Additional Terms Applicable to an Incentive Option. In the event this option is
designated an Incentive Option in the Grant Notice, the following terms and conditions shall also
apply to the grant:




     (a) This option shall cease to qualify for favorable tax treatment as an Incentive Option if
(and to the extent) this option is exercised for one or more Option Shares: (i) more than three (3)
months after the date Optionee ceases to be an Employee for any reason other than death or
Permanent Disability or (ii) more than twelve (12) months after the date Optionee ceases to be an
Employee by reason of Permanent Disability.




     (b) This option shall not become exercisable in the calendar year in which granted if (and to
the extent) the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for
which this option would otherwise first become exercisable in such calendar year would, when added
to the aggregate value (determined as of the respective date or dates of grant) of the Common Stock
and any other securities for which one or more other Incentive Options granted to Optionee prior to
the Grant Date (whether under the Plan or



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any other option plan of the Corporation or any Parent or Subsidiary) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate. To
the extent the exercisability of this option is deferred by reason of the foregoing limitation, the
deferred portion shall become exercisable in the first calendar year or years thereafter in which
the One Hundred Thousand Dollar ($100,000) limitation of this Paragraph 18(b) would not be
contravened, but such deferral shall in all events end immediately prior to the effective date of a
Corporate Transaction in which this option is not to be assumed, whereupon the option shall become
immediately exercisable as a Non-Statutory Option for the deferred portion of the Option Shares.




     (c) Should Optionee hold, in addition to this option, one or more other options to purchase
Common Stock that become exercisable for the first time in the same calendar year as this option,
then the foregoing limitations on the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are granted.




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APPENDIX




          The following definitions shall be in effect under the Agreement:



     A. Agreement shall mean this Stock Option Agreement.



     B. Board shall mean the Corporation’s Board of Directors.



     C. Code shall mean the Internal Revenue Code of 1986, as amended.



     D. Common Stock shall mean the Corporation’s common stock.



     E. Corporate Transaction shall mean either of the following stockholder-approved
transactions to which the Corporation is a party:




     (i) a merger or consolidation in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation’s outstanding
securities are transferred to a person or persons different from the persons holding
those securities immediately prior to such transaction, or




     (ii) the sale, transfer or other disposition of all or substantially all of the
Corporation’s assets in complete liquidation or dissolution of the Corporation.



     F. Corporation shall mean BeVocal, Inc., a Delaware corporation.



     G. Disability shall mean the inability of Optionee to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment and shall be
determined by the Plan Administrator on the basis of such medical evidence as the Plan
Administrator deems warranted under the circumstances. Disability shall be deemed to constitute
Permanent Disability in the event that such Disability is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or more.



     H. Employee shall mean an individual who is in the employ of the Corporation (or any
Parent or Subsidiary), subject to the control and direction of the employer entity as to both the
work to be performed and the manner and method of performance.



     I. Exercise Date shall mean the date on which the option shall have been exercised in
accordance with Paragraph 9 of the Agreement.



     J. Exercise Price shall mean the exercise price payable per Option Share as specified
in the Grant Notice.



     K. Expiration Date shall mean the date on which the option expires as specified in the
Grant Notice.



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     L. Fair Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:




     (i) If the Common Stock is at the time traded on the Nasdaq National Market,
then the Fair Market Value shall be the closing selling price per share of Common
Stock on the date in question, as the price is reported by the National Association
of Securities Dealers on the Nasdaq National Market. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such quotation
exists.




     (ii) If the Common Stock is at the time listed on any Stock Exchange, then the
Fair Market Value shall be the closing selling price per share of Common Stock on
the date in question on the Stock Exchange determined by the Plan Administrator to
be the primary market for the Common Stock, as such price is officially quoted in
the composite tape of transactions on such exchange. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such quotation
exists.




     (iii) If the Common Stock is at the time neither listed on any Stock Exchange
nor traded on the Nasdaq National Market, then the Fair Market Value shall be
determined by the Plan Administrator after taking into account such factors as the
Plan Administrator shall deem appropriate.



     M. Grant Date shall mean the date of grant of the option as specified in the Grant
Notice.



     N. Grant Notice shall mean the Notice of Grant of Stock Option accompanying the
Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced
hereby.



     O. Incentive Option shall mean an option that satisfies the requirements of Code
Section 422.



     P. Misconduct shall mean the commission of any act of fraud, embezzlement or
dishonesty by Optionee, any unauthorized use or disclosure by Optionee of confidential information
or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional
misconduct by Optionee adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be
inclusive of all the acts or omissions that the Corporation (or any Parent or Subsidiary) may
consider as grounds for the dismissal or discharge of Optionee or any other individual in the
Service of the Corporation (or any Parent or Subsidiary).



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     Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.



     R. Non-Statutory Option shall mean an option not intended to satisfy the requirements
of Code Section 422.



     S. Option Shares shall mean the number of shares of Common Stock subject to the
option.



     T. Optionee shall mean the person to whom the option is granted as specified in the
Grant Notice.



     U. Parent shall mean any corporation (other than the Corporation) in an unbroken chain
of corporations ending with the Corporation, provided each corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain.



     V. Plan shall mean the Corporation’s 1999 Stock Option/Stock Issuance Plan.



     W. Plan Administrator shall mean either the Board or a committee of the Board acting
in its capacity as administrator of the Plan.



     X. Purchase Agreement shall mean the stock purchase agreement in substantially the
form of Exhibit B to the Grant Notice.



     Y. Service shall mean the Optionee’s performance of services for the Corporation (or
any Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of
directors or an independent consultant.



     Z. Stock Exchange shall mean the American Stock Exchange or the New York Stock
Exchange.



     AA. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation, provided each corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.



     BB. Vesting Schedule shall mean the vesting schedule specified in the Grant Notice
pursuant to which the Optionee is to vest in the Option Shares in a series of installments over his
or her period of Service.




A-3.