CROWN CRAFTS, INC. INCENTIVE STOCK OPTION AGREEMENT
Exhibit 4.2
CROWN CRAFTS, INC.
2006 OMNIBUS INCENTIVE PLAN
| Number of | Date of | |||||||||||||||
| Grantee: | Shares: | ▇▇▇▇▇: | ||||||||||||||
| Expiration | Exercise Price | |||||||||||||||
| Date*: | Per Share: | |||||||||||||||
| $ | ||||||||||||||||
| Vesting Dates and Amounts*: | Exercisability Dates*: | |||||||
|
|
|
|||||||
THIS INCENTIVE STOCK OPTION AGREEMENT (this “Agreement”) is made and entered into as of the
date of the grant set forth above (the “Grant Date”), by and between Crown Crafts, Inc., a Delaware
corporation (“Crown Crafts”), and the above-named individual (the “Grantee”).
W I T N E S S E T H:
WHEREAS, Crown Crafts has established the “Crown Crafts, Inc. 2006 Omnibus Incentive Plan”
(the “Plan”) to advance the interests of Crown Crafts and any parent or subsidiary corporation of
Crown Crafts (together with Crown Crafts, referred to collectively as the “Company”) by
strengthening the Company’s ability to attract and retain individuals of training, experience and
ability in the employ of the Company and to furnish additional incentive to such key employees to
promote the Company’s financial success; and
WHEREAS, pursuant to the provisions of the Plan, the Compensation Committee (the “Committee”)
of the Board of Directors (the “Board”) authorized a grant of an option to acquire capital stock of
Crown Crafts to the Grantee as reflected herein on the Grant Date, the Board approved such grant on
the Grant Date, and the Committee has the full power and authority to direct the execution and
delivery of this Agreement in the name and on behalf of Crown Crafts in order to evidence and to
set forth fully the terms of said grant.
NOW, THEREFORE, the parties hereto agree as follows:
| * | Subject to acceleration as provided in Sections 3 and 4 hereof. |
1. Grant of ISO. Subject and pursuant to all terms and conditions stated in this
Agreement and in the Plan, which is incorporated herein by this reference and made a part hereof as
though fully set forth herein, Crown Crafts grants to the Grantee on the Grant Date an incentive
stock option (the “ISO”, as defined in the Plan), within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”), to purchase the number of shares of Crown Crafts’
common stock, $0.01 par value per share (the “Common Stock”), set forth above (the “Option
Shares”), at the exercise price per share set forth above (the “Per-Share Price”), on or before the
expiration date set forth above (the “Expiration Date”). Unless sooner vested pursuant to Section
3 or 4 hereof, the ISO shall become vested to the Grantee in accordance with the vesting schedule
set forth above (each such date upon which all or any part of the ISO shall vest, a “Vesting Date”)
so long as (i) the Grantee remains employed with the Company throughout the period commencing on
the Grant Date and continuing through the applicable Vesting Date and (ii) the performance targets,
if any, set forth on Exhibit A attached hereto with respect to such Vesting Date have been
met. The Grantee hereby accepts the ISO on such terms and conditions. The Grantee shall, subject
to the limitations of this Agreement and the Plan, have the right to exercise the ISO under the
exercisability schedule set forth above (each such date upon which all or any part of the ISO shall
first become exercisable, an “Exercisability Date”) by purchasing all or any part of the Option
Shares then available for purchase under the vesting schedule set forth above.
2. Exercise of ISO. The Grantee may exercise all or any part of the ISO by delivering
written notice to the Committee (in the form attached hereto as Exhibit B) of the number of
Option Shares (in a multiple of 100, except in the case of a full exercise of the remaining vested
portion of the ISO) to be purchased together with payment in an amount equal to the product of the
Per-Share Price times the number of Option Shares to be purchased (the “Exercise Price”) made in
one of the following forms or a combination thereof:
(a) Payment in Cash. The Committee may require the Grantee to make a cash payment to
the Company equal to the amount of the Exercise Price; or
(b) Payment in Shares. The Grantee may request, in lieu of cash payment, that the
Company either accept shares (of the same class as the Option Shares) owned by the Grantee or
withhold Option Shares, each as more fully described below. If the Committee grants any such
request in whole or in part, in its sole and absolute discretion, any shares so accepted or
withheld by the Company under this paragraph (b) shall be valued at their fair market value, as
determined in good faith by the Board. In no such event shall any fractional shares be accepted or
withheld, and thus any deficiency remaining after the acceptance or withholding of whole shares
shall be satisfied by the Grantee in cash.
In the event the Committee has indicated to the Grantee that it will permit payment of the
Exercise Price to be made in whole or in part with previously issued stock owned by the Grantee,
the stock certificates evidencing the surrendered shares shall accompany the notice of exercise and
shall be duly endorsed or accompanied by duly executed stock powers to transfer the same to the
Company. In the event that the Committee has indicated to the Grantee that it will permit payment
of the Exercise Price to be made in whole or in part with Option Shares, the notice of exercise
need not be accompanied by any stock certificates but shall include a statement directing the
Company to
2
retain that number of Option Shares as shall equal the number of shares that would have
been surrendered to the Company by the Grantee if the Exercise Price had been paid with previously
issued stock.
In the event the Grantee does not make such payment when requested, the Company may refuse to
issue or cause to be delivered any shares under this Agreement or any other incentive plan
agreement entered into by the Grantee and the Company until such payment has been made or
arrangements for such payment satisfactory to the Company have been made.
Such notice of exercise shall be sent to the Committee at Crown Crafts, Inc., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. box 1028, Gonzales, LA 70737, Attention: Chairman. The ISO shall be deemed
to have been exercised on the date the written notice and required consideration are received on
behalf of the Committee.
3. Vesting and Exercisability of ISO Following Termination of Employment.
(a) Employment Termination Prior to Exercisability Date of ISO. In the case of any
termination of the Grantee’s employment with the Company, voluntarily or involuntarily, prior to an
Exercisability Date, and other than under the circumstances described in Section 4 hereof, the
following provisions shall apply:
(1) Unvested Portion of ISO. Any unvested portion of the ISO shall immediately
terminate upon the earlier of (i) the date the employment of the Grantee with the Company
terminates, or (ii) the date the Grantee is given written notice of his or her discharge
from such employment; provided, however, that in the event such termination
of employment occurs due to Retirement, Disability or Death (as each such term is defined in
the Plan), then the Committee, in its sole and absolute discretion, may cause all or any
part of such unvested portion of the ISO to become fully vested immediately upon the date of
such employment termination (and thus become immediately exercisable and otherwise subject
to the terms and conditions of subparagraph (2) immediately below).
(2) Vested Portion of ISO. Any vested but theretofore unexercisable portion of
the ISO (including any portion of the ISO that vests in the discretion of the Committee
pursuant to subparagraph (1) immediately above) shall become immediately exercisable but
shall terminate effective three (3) months after the earlier of (i) the date the employment
of the Grantee with the Company terminates, or (ii) the date the Grantee is given written
notice of his or her discharge from such employment; provided, however, that
in the event such termination of employment occurs due to either Disability or Death, such
vested portion of the ISO may be exercised at any time (i) within one (1) year from such
Disability (but in all events prior to the Expiration Date), or (ii) prior to the Expiration
Date in the case of employment termination by reason of Death.
(b) Employment Termination On or After Exercisability Date of ISO. In the case of any
termination of the Grantee’s employment with the Company, voluntarily or involuntarily, on or
after an Exercisability Date, any vested and theretofore exercisable (but unexercised) portion of
the ISO shall terminate effective three (3) months after the earlier of (i) the date the employment
of the
3
Grantee with the Company terminates, or (ii) the date the Grantee is given written notice of
his or her discharge from such employment; provided, however, that in the event
such employment termination occurs due to Disability or Death, the ISO may be exercised at any time
(i) within one (1) year from such Disability (but in all events prior to the Expiration Date) or
(ii) prior to the Expiration Date in the case of employment termination by reason of Death.
4. Vesting and Exercisability of ISO Following Change in Control. As provided in
Section 7.1 of the Plan, any unvested and/or unexercisable portion of the Option shall
automatically become fully and immediately vested and exercisable on the day immediately preceding
the date of the consummation of any Change in Control as defined in the Plan (or sooner, in the
discretion of the Committee).
5. Legal Restrictions. If in the opinion of legal counsel for the Company the
issuance or sale of any Option Shares would not be lawful for any reason, including, without
limitation, the inability of the Company to obtain from any governmental authority or regulatory
body having jurisdiction the authority deemed by such counsel to be necessary to such issuance or
sale, the Company shall not be obligated to issue or sell any Option Shares pursuant to the
exercise of this ISO to the Grantee or any other authorized person unless a registration statement
that complies with the provisions of the Securities Act of 1933, as amended (the “Act”), in respect
of such Option Shares is in effect at the time thereof, or other appropriate action has been taken
under and pursuant to the terms and provisions of the Act, or the Company receives evidence
satisfactory to such counsel that the issuance and sale of such Option Shares, in the absence of an
effective registration statement or other appropriate action, would not constitute a violation of
the Act or any applicable state securities law. It is further agreed that the Company is in no
event obligated to register any Option Shares, to comply with any exemption from registration
requirements or to take any other action which may be required in order to permit, or to remedy or
remove any prohibition or limitation on, the issuance or sale of such Option Shares to the Grantee.
The Grantee further acknowledges that the Act and/or applicable state securities laws may restrict
the right and govern the manner in which the Grantee may dispose of Option Shares, and the Grantee
agrees not to offer, sell or otherwise dispose of any such shares in a manner which would violate
the Act or any other federal or state law.
6. Option Shares Delivered in Escrow. All Option Shares issued upon any exercise of
the ISO shall be held in escrow for a period which ends on the later of (i) two (2) years from the
Grant Date or (ii) one (1) year after the issuance of such shares pursuant to the exercise of the
ISO. Such shares shall be held by the Company or its designee. During such escrow period, the
Grantee shall have all rights of a shareholder of the Company, including, but not limited to, the
rights to vote, receive dividends and transfer such shares. The sole purpose of the escrow is to
inform the Company of any disqualifying disposition (described in Section 422(a)(1) of the Code) of
the Option Shares and it shall be administered solely for this purpose.
7. No Rights as Shareholder or to Employment. Neither the Grantee nor any other
person authorized to purchase Common Stock upon exercise of this ISO shall have any interest in or
shareholder rights with respect to any shares of the Common Stock which are subject to this ISO
until such shares have been issued and delivered into escrow as provided in Section 6 hereof.
Furthermore, neither this Agreement nor the Plan shall confer upon the Grantee any rights of
4
employment with the Company, including, without limitation, any right to continue in the employ of
the Company, or shall affect the right of the Company to terminate the employment of the Grantee at
any time, with or without cause.
8. Withholding Taxes. As a condition of exercise of this ISO, the Committee may, in
its sole discretion, withhold or require the Grantee to pay or reimburse the Company for any taxes
which the Company determines are required to be withheld in connection with the grant or any
exercise of this ISO.
9. Heirs and Successors. This Agreement and all terms and conditions hereof shall be
binding upon the parties hereto, and their successors, heirs, legatees and legal representatives.
10. Nontransferability; Who May Exercise. Neither this Agreement nor the ISO granted
hereby may be transferred or assigned, other than by will or the laws of descent and distribution,
and the ISO may not be exercised by any person other than the Grantee during the Grantee’s
lifetime.
11. Plan Controls. Copies of the Plan will be made available to the Grantee upon
request. In the event of any conflict between the Plan and this Agreement, the Plan shall control
and this Agreement shall be deemed to be modified accordingly.
12. Governing Law. To the extent not superseded by federal law, the laws of the State
of Delaware shall control in all matters relating to this Agreement.
13. Counterparts; Facsimile Delivery. This Agreement may be executed simultaneously
in counterparts, each of which will be deemed an original, and all of which together will
constitute one and the same instrument. Executed counterparts may be delivered via facsimile
transmission.
14. Compliance with Section 409A. The Company expressly reserves the right to modify
or amend this Agreement without the consent of the Grantee if the Committee determines, in its sole
discretion, that such modification or amendment is necessary or desirable for purposes of
compliance with or exemption from the requirements of Section 409A of the Code or any regulations
or other guidance issued thereunder; provided, however, that the Company shall have
no liability whatsoever to the Grantee or any other person in the event that this Agreement is
determined to be subject to and not in compliance with Section 409A of the Code.
[Signatures on following page.]
5
IN WITNESS WHEREOF, the parties hereto have executed this Incentive Stock Option Agreement,
all as of the Grant Date set forth herein.
| CROWN CRAFTS, INC. | ||||||
| By: | ||||||
| GRANTEE | ||||||
EXHIBIT A
PERFORMANCE TARGETS
[To be completed as appropriate.]
EXHIBIT B
EXERCISE OF INCENTIVE
STOCK OPTION
STOCK OPTION
The undersigned Optionee under that certain Crown Crafts, Inc. Incentive Stock Option
Agreement dated as of _________________ (the “Agreement”), hereby exercises the
Incentive Stock Option granted under the Agreement for the following number of shares of Common
Stock, subject to the terms and conditions of the Agreement:
| Number of shares being purchased | ||||||||||
| (must be a multiple of 100 or full exercise): | ||||||||||
| Total purchase price submitted herewith: | $ | |||||||||
| (Signature) | ||||||||||
| (Date) | ||||||||||