EXHIBIT 4.2
MISONIX, INC.
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. GENERAL
1.1 Purpose Of The Plan
The purpose of the MISONIX, INC. 1996 Non-Employee Director Stock
Option Plan (the "Plan") is to enable MISONIX, INC. (the "Company") to
attract and retain persons of exceptional ability to serve as directors
of the Company and to align the interests of directors and shareholders
in enhancing the value of the Company's common stock, par value $.01
per share (the "Common Stock").
1.2 Administration Of The Plan
The Plan shall be administered by the Board of Directors (the "Board")
which shall have full and final authority in its discretion to
interpret, administer and amend the provisions of the Plan; to adopt
rules and regulations for carrying out the Plan; to decide all
questions of fact arising in the application of the Plan; and to make
all other determinations necessary or advisable for the administration
of the Plan.
1.3 Eligible Participants
Commencing March 27, 1996 each member of the Board who is not an
employee of the Company or any of its subsidiaries shall be a
participant (a "Participant") in the Plan.
1.4 Grants Under The Plan
Grants under the Plan shall be in the form of stock options as
described in Section II (an "Option" or "Options").
1.5 Shares
The aggregate number of shares of Common Stock, including shares
reserved for issuance pursuant to the exercise of Options, which may be
issued under the terms of the Plan may not exceed 750,000 shares and
hereby are reserved for such purpose. Whenever any outstanding grant or
portion thereof expires, is canceled or forfeited or is otherwise
terminated for any reason without having been exercised, the Common
Stock allocable to the expired, canceled, forfeited or otherwise
terminated portion of the grant may again be the subject of further
grants hereunder.
Notwithstanding the foregoing, the number of shares of Common Stock
available for grants at any time under the Plan shall be reduced to
such lesser amount as may be required pursuant to the methods of
calculation necessary so that the exemptions provided pursuant
23
to Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") will continue to be available for transactions
involving all current and future grants. In addition, during the period
that any grants remain outstanding under the Plan, the Committee may
make good faith adjustments with respect to the number of shares of
Common Stock attributable to such grants for purposes of calculating
the maximum number of shares of Common Stock available for the granting
of future grants under the Plan, provided that following such
adjustments the exemptions provided pursuant to Rule 16b-3 under the
Exchange Act will continue to be available for transactions involving
all current and future grants.
1.6 Definitions
The following definitions shall apply to the Plan:
(a) "Disability" shall have the meaning Provided in the Company's
applicable disability plan or, in the absence of such a
definition, when a Participant becomes totally disabled (as
determined by a physician mutually acceptable to the
Participant and the Company) before termination of his or her
service on the Board if such total disability continues for
more than three (3) months.
(b) "Fair Market Value" of the Common Stock on any day shall be
(a) if the principal market for the Common Stock is a national
securities exchange, the average between the high and low
sales prices of the Common Stock on such day as reported by
such exchange or on a consolidated tape reflecting
transactions on such exchange, (b) if the principal market for
the Common Stock is not a national securities exchange and the
Common Stock is quoted on the National Association of
Securities Dealers Automated Quotations System ("NASDAQ"), and
(i) if actual sales price information is available with
respect to the Common Stock, the average between the high and
low sales prices of the Common Stock on such day on NASDAQ, or
(ii) if such information is not available, the average between
the highest bid and the lowest asked prices for the Common
Stock on such day on NASDAQ, or (c) if the principal market
for the Common Stock is not a national securities exchange and
the Common Stock is not quoted on NASDAQ, the average between
the highest bid and lowest asked prices for the Common Stock
on such day as reported on the NASDAQ OTC Bulletin Board
Service or by National Quotation Bureau, Incorporated or a
comparable service; provided that if clauses (a), (b) and (c)
of this Paragraph are all inapplicable, or if no trades have
been made or no quotes are available for such day, the fair
market value of the Common Stock shall be determined by the
Board by any method consistent with applicable regulations
adopted by the Treasury Department relating to stock options.
The determination of the Board shall be conclusive in
determining the fair market value of the Common Stock.
24
2. OPTIONS
2.1 Terms And Conditions Of Options
Each Participant shall be granted such number of Options as determined
from time to time during the term of the Plan by the Board.
2.2 Nonqualified Stock Options
The terms of the Options shall, at the time of grant, provide that the
Options will not be treated as incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code").
2.3 Option Price
The Option price per Share shall be determined by the Board of
Directors but shall not be less than the Fair Market Value of the
Common Stock on the date the Option is granted.
2.4 Term And Exercise Of Options
(a) The term of an Option shall not exceed ten (10) years from the date
of grant. Except as provided in this Section 2.4, after a Participant
ceases to serve as a director of the Company for any reason, including,
without limitation, retirement, or any other voluntary or involuntary
termination of a Participant's service as a director (a "Termination"),
the unexercisable portion of an Option shall immediately terminate and
be null and void, and the unexercised portion of any outstanding
Options held by such Participant shall terminate and be null and void
for all purposes after three (3) months have elapsed from the date of
the Termination unless extended by the Board, in its sole discretion,
within thirty (30) days from the date of the Termination. Upon a
Termination as a result of death or Disability, any outstanding Options
may be exercised by the Participant or the Participant's legal
representative within twelve (12) months after such death or
Disability; provided, however, that in no event shall the period extend
beyond the expiration of the Option term.
(b) Options shall become exercisable in whole or in part immediately
from the date of grant. In no event, however, shall an Option be
exercised after the expiration of ten (10) years from the date of
grant.
(c) A Participant, by written notice to the Company, may designate one
or more persons (and from time to time change such designation)
including his legal representative, who, by reason of his or her death,
shall acquire the right to exercise all or a portion of the Option. If
no designation is made before the death of the Participant, the
Participant's Option may be exercised by the personal representative of
the Participant's estate or by a person who acquired the right to
exercise such option by will or the laws of descent and
25
distribution. If the person with exercise rights desires to exercise
any portion of the Option, such person must do so in accordance with
the terms and conditions of this Plan.
2.5 Notice Of Exercise
When exercisable pursuant to the terms of the Plan and the governing
stock option agreement, an Option shall be exercised by the Participant
as to all or part of the shares subject to the Option by delivering
written notice of exercise to the Company at its principal business
office or such other office as the Company may from time to time
direct, (a) specifying the number of shares to be purchased, (b)
accompanied by cash or a certified check payable to the Company in an
amount equal to the full exercise price of the number of shares being
exercised or with previously acquired shares of Common Stock having an
aggregate Fair Market Value, on the date of exercise, equal to the
aggregate exercise price of all Options being exercised (provided that
such shares were not acquired less than six (6) months prior to such
exercise date) or with any combination of cash, certified check or
shares of Common Stock, and (c) containing such further provisions
consistent with the provisions of the Plan as the Company may from time
to time prescribe. No Option may be exercised after the expiration of
the term specified in Section 2.4 hereof.
2.6 Limitation Of Exercise Periods
The Board may limit the time periods within which an Option may be
exercised if a limitation on exercise is deemed necessary in order to
effect compliance with applicable law.
3. GENERAL PROVISIONS
3.1 General Restrictions
Each grant under the Plan shall be subject to the requirement that if
the Board shall determine, at any time, that (a) the listing,
registration or qualification of the shares of Common Stock subject or
related thereto upon any securities exchange or under any state or
federal law, or (b) the consent or approval of any government
regulatory body, or (c) an agreement by the Participant with respect to
the disposition of shares of Common Stock, is necessary or desirable
as a condition of, or in connection with, the granting or the issuance
or purchase of shares of Common Stock thereunder, such grant may not be
consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected
or obtained free of any conditions not acceptable to the Board.
3.2 Adjustments For Changes In Capitalization
Notwithstanding any other provisions of the Plan, in the event of any
change in the outstanding Common Stock by reason of a stock dividend,
recapitalization, merger or consolidation in which the Company is the
surviving corporation, split-up, combination or exchange of shares or
the like, the aggregate number and kind of shares subject to the
26
Plan, the aggregate number and kind of shares subject to each
outstanding option and the exercise price thereof shall be
appropriately adjusted by the Board, whose determination shall be
conclusive.
In the event of (a) the liquidation or dissolution of the Company, (b)
a merger or consolidation in which the Company is not the surviving
corporation, or (c) any other capital reorganization in which more than
50% of the shares of Common Stock of the Company entitled to vote are
exchanged, any outstanding options shall then remain exercisable within
the period of thirty (30) days commencing upon the date of the action
of the shareholders (or the Board of Directors if shareholders' action
is not required) is taken to approve the transaction and upon the
expiration of that period all options and all rights thereto shall
automatically terminate, unless other provision is made therefor in the
transaction.
3.3 Amendments
Without further approval of the shareholders, the Board may discontinue
the Plan at any time and may amend it from time to time in such respect
as the Board may deem advisable, unless shareholder or regulatory
approval is required by law or regulation, and subject to any
conditions established by the terms of such amendment; provided,
however, that the Plan may not be amended more than once every six (6)
months other than to comport with changes in the Code, the Employee
Retirement Income Security Act or the rules thereunder.
3.4 Modification, Substitution Or Cancellation Of Grants
No rights or obligations under any outstanding Option may be altered or
impaired without the Participant's consent. Any grant under the Plan
may be canceled at any time with the consent of the Participant, and a
new grant may be provided to such Participant in lieu thereof.
3.5 Shares Subject To The Plan
Shares distributed pursuant to the Plan shall be made available from
authorized but unissued shares or from shares purchased or otherwise
acquired by the Company for use in the Plan, as shall be determined
from time to time by the Board.
3.6 Rights Of A Shareholder
Participants under the Plan, unless otherwise provided by the Plan,
shall have no rights as shareholders by reason thereof unless and until
certificates for shares of Common Stock are issued to them; provided,
however, that until such stock certificate is issued, any Option holder
using previously acquired shares of Common Stock in payment of an
Option exercise price shall continue to have the rights of a
shareholder with respect to such previously acquired shares.
27
3.7 Withholding
If a Participant is to experience a taxable event in connection with
the receipt of shares of Common Stock pursuant to an Option exercise,
the Participant shall pay the amount equal to the federal, state and
local income taxes and other amounts as may be required by law to be
withheld to the Company prior to the issuance of such shares of Common
Stock.
3.8 Non-assignability
Except as expressly provided in the Plan, no grant shall be
transferable except by will, the laws of descent and distribution or a
qualified domestic relations order ("QDRO") as defined by the Code or
Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder. During the lifetime of the
Participant, except as expressly provided in the Plan, grants under the
Plan shall be exercisable only by such Participant or by the guardian
or legal representative of such Participant or pursuant to a QDRO.
3.9 Nonuniform Determinations
Determinations by the Board under the Plan (including, without
limitation, determinations of the persons to receive grants, the form,
amount and timing of such grants, and the terms and provisions of such
grants and the agreements evidencing the same) need not be uniform and
may be made by it selectively among persons who receive, or are
eligible to receive, awards under the Plan, whether or not such persons
are similarly situated.
3.10 Effective Date; Duration
The Plan shall be subject to approval by the holders of a majority of
the Company's stock outstanding and entitled to vote thereon at the
next meeting of its shareholders. No Options granted hereunder may be
exercised prior to such approval, provided that the date of grant of
any Options granted hereunder shall be determined as if the Plan had
not been subject to such approval. Notwithstanding the foregoing, if
the Plan is not approved by a vote of the shareholders of the Company
on or before March 26, 1997, the Plan and any Options granted hereunder
shall terminate.
3.11 Governing Law
The Plan and all actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of New York.
28