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Exhibit 10.18
XXXXXX, XXXXXXXX & ASSOC., INC.
INCENTIVE STOCK OPTION AGREEMENT
Name of Optionee:
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Position:
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Date of Grant:
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Expiration Date:
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Number of Optioned
Shares:
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Option Price: $4.67
Right to Exercise: On each anniversary of the Date of Grant the number
of Optioned Shares equal to 20% multiplied by the
initial number of Optioned Shares.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officer and Optionee has also
executed this Agreement in duplicate, as of the day and year first above
written.
XXXXXX, XXXXXXXX & ASSOC., INC.
By:
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Title:
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Optionee
THIS AGREEMENT SHALL BE VOID IF IT HAS NOT BEEN EXECUTED AND RETURNED TO THE
COMPANY WITHIN 30 DAYS AFTER THE DATE OF GRANT.
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THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THIS OPTION AGREEMENT AND THE SECURITIES UNDERLYING
THIS OPTION AGREEMENT MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS SUCH SALE, PLEDGE, HYPOTHECATION, TRANSFER OR OTHER
DISPOSITION SHALL HAVE BEEN REGISTERED UNDER SAID ACT AND IN COMPLIANCE WITH ANY
APPLICABLE STATE SECURITIES LAWS OR UNTIL THE COMPANY SHALL HAVE RECEIVED A
LEGAL OPINION SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY, THAT SUCH
SECURITIES MAY BE LEGALLY SOLD OR OTHERWISE TRANSFERRED WITHOUT SUCH
REGISTRATION AND COMPLIANCE.
INCENTIVE STOCK OPTION AGREEMENT
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This AGREEMENT (the "Agreement") is made as of the date of grant on the
cover page hereof (the "Date of Grant") by and between Xxxxxx, Xxxxxxxx &
Assoc., Inc., an Ohio corporation (the "Company"), and the individual named on
the cover page hereto (the "Optionee").
1. GRANT OF STOCK OPTION. Subject to and upon the terms, conditions,
and restrictions set forth in this Agreement and in the Company's 1997 Equity
and Performance Incentive Plan (the "Plan"), the Company hereby grants to the
Optionee as of the Date of Grant a stock option (the "Option") to purchase the
number of shares of the Company's common stock without par value shown on the
cover page hereof (the "Optioned Shares"). The Option may be exercised from time
to time in accordance with the terms of this Agreement. The price at which the
Optioned Shares may be purchased pursuant to this Option shall be as set forth
on the cover page hereof subject to adjustment as hereinafter provided (the
"Option Price"). The Option is intended to be an "incentive stock option" within
the meaning of that term under Section 422 of the Code, or any successor
provision thereto; this Agreement shall be construed in a manner that will
enable this Option to be so qualified.
2. TERM OF OPTION. The term of the Option shall commence on the Date of
Grant and, unless earlier terminated in accordance with Section 6 hereof, shall
expire seven (7) years from the Date of Grant.
3. RIGHT TO EXERCISE. Subject to the expiration or earlier termination,
this Option shall become exercisable as set forth on the cover page hereof. To
the extent the Option is exercisable, it may be exercised in whole or in part.
In no event shall the Optionee be entitled to acquire a fraction of one Optioned
Share pursuant to this Option. The Optionee shall be entitled to the privileges
of ownership with respect to Optioned Shares purchased and delivered to him upon
the exercise of all or part of this Option.
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4. OPTION NONTRANSFERABLE. The Option granted hereby shall be neither
transferable nor assignable by the Optionee other than by will or by the laws of
descent and distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee, or in the event of his or her legal incapacity,
by his or her guardian or legal representative acting on behalf of the Optionee
in a fiduciary capacity under state law and court supervision.
5. NOTICE OF EXERCISE; PAYMENT. To the extent then exercisable, the
Option may be exercised by written notice to the Company stating the number of
Optioned Shares for which the Option is being exercised and the intended manner
of payment. Payment equal to the aggregate Option Price of the Optioned Shares
for which the Option is being exercised shall be tendered in full with the
notice of exercise to the Company in cash in the form of currency or check or
other cash equivalent acceptable to the Company. The Optionee may also tender
the Option Price by (a) the actual or constructive transfer to the Company of
nonforfeitable, nonrestricted Common Shares that have been owned by the Optionee
for (i) more than one year prior to the date of exercise and for more than two
years from the date on which the option was granted, if they were originally
acquired by the Optionee pursuant to the exercise of an incentive stock option,
or (ii) more than six months prior to the date of exercise, if they were
originally acquired by the Optionee other than pursuant to the exercise of an
incentive stock option, or (b) by any combination of the foregoing methods of
payment, including a partial tender in cash and a partial tender in
nonforfeitable, nonrestricted Common Shares. Within ten (10) days thereafter,
the Company shall direct the due issuance of the Optioned Shares so purchased.
Nonforfeitable, nonrestricted Common Shares that are transferred by the Optionee
in payment of all or any part of the Option Price shall be valued on the basis
of their Fair Market Value per Common Share. The requirement of payment in cash
shall be deemed satisfied if the Optionee makes arrangements that are
satisfactory to the Company with a bank or broker that is a member of the
National Association of Securities Dealers, Inc. to sell on the exercise date a
sufficient number of Optioned Shares that are being purchased pursuant to the
exercise, so that the net proceeds of the sale transaction will at least equal
the amount of the aggregate Option Price plus payment of any applicable
withholding taxes, and pursuant to which the bank or broker undertakes to
deliver to the Company the amount of the aggregate Option Price plus payment of
any applicable withholding taxes, on a date satisfactory to the Company, but not
later than the date on which the sale transaction will settle in the ordinary
course of business. As a further condition precedent to the exercise of this
Option, the Optionee shall comply with all regulations and requirements of any
regulatory authority having control of, or supervision over, the issuance of
Common Shares and in connection therewith shall execute any documents which the
Board or a Committee thereof shall in its sole discretion deem necessary or
advisable. The date of such notice shall be the exercise date.
6. TERMINATION OF AGREEMENT. This Agreement and the Option granted
hereby shall terminate automatically and without further notice on the earliest
of the following dates:
(a) One (1) year after the Optionee's death or permanent and
total disability, if the Optionee dies or becomes permanently and totally
disabled while in the employ of the Company;
(b) One (1) year after the Optionee's retirement under a
retirement plan of the Company or one of its Subsidiaries at or after the
earliest voluntary retirement age provided for in such retirement plan or
retirement at any earlier age with the consent of the Board or a Committee
thereof;
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(c) Except as provided on a case-by-case basis, thirty (30)
calendar days after the Optionee ceases to be an employee, advisor or consultant
of the Company and its Subsidiaries for any reason other than as described in
Section 6(a) or 6(b) hereof; or
(d) Seven (7) years from the Date of Grant.
In the event that the Optionee's employment is terminated for cause, this
Agreement shall terminate at the time of such termination notwithstanding any
other provision of this Agreement. For purposes of this provision, "cause" shall
mean the Optionee shall have committed prior to termination of employment any of
the following acts:
(i) an intentional act of fraud, embezzlement, theft,
or any other material violation of law in connection with the Optionee's duties
or in the course of the Optionee's employment;
(ii) intentional wrongful damage to material assets
of the Company;
(iii) intentional wrongful disclosure of material
confidential information of the Company;
(iv) intentional wrongful engagement in any
competitive activity that would constitute a material breach of the duty of
loyalty; or
(v) intentional breach of any stated material
employment policy of the Company.
This Agreement shall not be exercisable for any number of Optioned Shares in
excess of the number of Optioned Shares for which this Agreement is then
exercisable, pursuant to Sections 3 and 7 hereof, on the date of termination of
employment. For the purposes of this Agreement, the continuous employment of the
Optionee with the Company shall not be deemed to have been interrupted, and the
Optionee shall not be deemed to have ceased to be an employee of the Company, by
reason of the transfer of his or her employment among the Company and its
Subsidiaries or a leave of absence of not more than thirty (30) days unless
otherwise approved by the Board or a Committee of the Board.
7. ACCELERATION OF OPTION AND EFFECT OF CERTAIN TRANSACTIONS. (a)
Notwithstanding anything herein to the contrary, as of the effective date of any
Sale Event (as defined below), one half of each 20% annual tranche of the Option
Shares that vest pursuant to Section 3 hereof, which are then unvested shall
vest and be deemed vested. Further, notwithstanding anything herein to the
contrary but without limitation of Section 7(b), in the event that this Stock
Option is assumed in the sole discretion of the parties to a Sale Event and
thereafter remains in effect following such Sale Event as contemplated by
Section 7(b), then this Stock Option shall be deemed vested and exercisable in
full upon the date on which the Optionee's employment with the Company and its
Subsidiaries or successor entity terminates if (i) such termination occurs
within eighteen (18) months of such Sale Event and (ii) such termination is by
the Company without cause or by the Optionee if such termination by Optionee is
preceded during such 18-month period by any material adverse
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modification of the duties, principal employment location or compensation of the
Optionee without his or her consent.
(b) In the case of (i) the dissolution or liquidation of the
Company, (ii) the sale of all or substantially all of the assets of the Company
on a consolidated basis to another person or entity, (iii) a merger,
reorganization or consolidation in which the holders of the Company's
outstanding voting power immediately prior to such transaction do not own a
majority of the outstanding voting power of the surviving or resulting entity
immediately upon completion of such transaction, (iv) the sale of all of the
outstanding stock of the Company to an unrelated person or entity or (v) any
other transaction where the owners of the Company's outstanding voting power
prior to such transaction do not own at least a majority of the outstanding
voting power of the relevant entity after the transaction (in each case, a "Sale
Event"), this Stock Option shall terminate on the effective date of such
transaction or event, unless provision is made in such transaction in the sole
discretion of the parties thereto for the assumption of this Stock Option or the
substitution for this Stock Option of a new stock option of the successor person
or entity or a parent or subsidiary thereof, with appropriate adjustment as to
the number and kind of shares and the per share exercise price, as provided in
Section 13 of this Agreement. In the event of any transaction which will result
in such termination, the Company shall give to the Optionee written notice
thereof at least fifteen (15) days prior to the effective date of such
transaction. Until such effective date, the Optionee may exercise any portion of
this Stock Option which is or becomes vested as of such effective date (as
contemplated by Section 3, but after such effective date, the Optionee may not
exercise this Stock Option unless it is assumed or substituted by the successor
entity (or a parent or subsidiary thereof) as provided above.
8. COMPANY'S RIGHT OF REPURCHASE. The Company shall have the right (the
"Repurchase Right") to repurchase some or all of the Option Shares which the
Optionee has elected to exercise from the Optionee, upon the occurrence of any
of the events specified in Section 8(b) below (the "Repurchase Event"). The
Repurchase Right may be exercised by the Company within 180 days following the
date of such event (the "Repurchase Period"). The Repurchase Right shall be
exercised by the Company by giving the holder written notice on or before the
last day of the Repurchase Period of its intention to exercise the Repurchase
Right, and, together with such notice, tendering to the holder an amount equal
to the greater of the option price or the fair market value of the shares,
determined as provided in Section 8(c). The Company may assign the Repurchase
Right to one or more persons. Upon exercise of the Repurchase Right in the
manner provided in this Section 8(a), the Optionee shall deliver to the Company
the stock certificate or certificates representing the Option Shares being
repurchased, duly endorsed and free and clear of any and all liens, charges and
encumbrances.
If Option Shares are not purchased under the Repurchase Right,
the Optionee and his or her successor in interest, if any, will hold any such
shares in his or her possession subject to all of the provisions of this Section
8 and Section 9 hereof.
(b) COMPANY'S RIGHT TO EXERCISE REPURCHASE RIGHT. The Company
shall have the Repurchase Right in the event that any of the following events
shall occur:
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(i) The termination of the Optionee's employment
with the Company and its subsidiaries for
any reason whatsoever, regardless of the
circumstances thereof, and including without
limitation upon death, disability,
retirement, discharge or resignation for any
reason, whether voluntary or involuntarily;
or
(ii) The (x) filing of a voluntary petition under
any bankruptcy or insolvency law, or a
petition for the appointment of a receiver
or the making of an assignment for the
benefit of creditors, with respect to the
Optionee, or (y) the Optionee being
subjected involuntarily to a petition or
assignment or to an attachment or other
legal or equitable interest with respect to
his or her assets, which involuntary
petition or assignment or attachment is not
discharged within 60 days after its date and
(z) the Optionee being subject to a transfer
of Option Shares by operation of law, except
by reason of death.
(c) DETERMINATION OF FAIR MARKET VALUE. The fair market value
of the Option Shares shall be, for purposes of this Section 8, determined as of
the date of the Repurchase Event by a Special Committee of the Company's Board
of Directors. The Special Committee shall meet annually and determine the
Company's fair market value in the event the Company has not conducted an
initial public offering of its equity securities.
(d) EXPIRATION OF COMPANY'S REPURCHASE RIGHT. The Repurchase
Right shall remain in effect until the closing of the first public offering of
the Company's equity securities registered under the Securities Act of 1933, as
amended, or any successor statute, or such other event as a result of which
outstanding equity securities of the Company (or any successor entity) shall be
publicly traded (an "Initial Public Offering").
9. COMPANY'S RIGHT OF FIRST REFUSAL.
(a) EXERCISE OF RIGHT. If the Company does not elect to
purchase any Option Shares within the period specified in Section 8(a) and
thereafter the Optionee desires to transfer all or any part of the Option Shares
to any person other than the Company (an "Offeror"), the Optionee shall: (i)
obtain in writing an irrevocable and unconditional bona fide offer (the "Offer")
for the purchase thereof from the Offeror; and (ii) give written notice (the
"Option Notice") to the Company setting forth the Optionee's desire to transfer
such shares, which Option Notice shall be accompanied by a photocopy of the
Offer and shall set forth the name and address of the Offeror and the price and
terms of the Offer. Upon receipt of the Option Notice, the Company shall have an
assignable option to purchase any or all of such Option Shares (the "Company
Option Shares") specified in the Option Notice, such option to be exercisable by
giving, within 10 days after receipt of the Option Notice, a written counter
notice to the Optionee. If the Company elects to purchase any or all of such
Company Option Shares, it shall be obligated to purchase, and the Optionee shall
be obligated to sell to the Company, such Company Option Shares at the price and
terms indicated in the Offer within 30 days from the date of delivery by the
Company of such counter-notice.
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(b) SALE OF OPTION SHARES TO OFFEROR. The Optionee may, for 60
days after the expiration of the 10-day option period as set forth in Section
9(a), sell to the Offeror, pursuant to the terms of the Offer, any or all of
such Company Option Shares not purchased or agreed to be purchased by the
Company or its assignee. If any or all of such Company Option Shares are not
sold pursuant to an Offer within the time permitted above, the unsold Company
Option Shares shall remain subject to the terms of this Section 9.
(c) ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. If there
shall be any change in the Common Stock of the Company through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
combination or exchange of shares, or the like, the restrictions contained in
this Section 9 shall apply with equal force to additional and/or substitute
securities, if any, received by the Optionee in exchange for, or by virtue of
his or her ownership of, Option Shares.
(d) FAILURE TO DELIVER OPTION SHARES. If the Optionee fails or
refuses to deliver on a timely basis duly endorsed certificates representing
Company Option Shares to be sold to the Company or its assignee pursuant to this
Section 9, the Company shall have the right to deposit the purchase price for
such Company Option Shares in a special account with any bank or trust company,
giving notice of such deposit to the Optionee, whereupon such Company Option
Shares shall be deemed to have been purchased by the Company. All such monies
shall be held by the bank or trust company for the benefit of the Optionee. All
monies deposited with the bank or trust company but remaining unclaimed for two
years after the date of deposit shall be repaid by the bank or trust company to
the Company on demand, and the Optionee shall thereafter look only to the
Company for payment. The Company may place a legend on any certificate for
Option Shares delivered to the Optionee reflecting the restrictions on transfer
provided in this Section 9.
(e) EXPIRATION OF COMPANY'S RIGHT OF FIRST REFUSAL. The first
refusal rights of the Company set forth above shall remain in effect until the
closing of an Initial Public Offering.
10. NO EMPLOYMENT CONTRACT. Nothing contained in this Agreement shall
confer upon the Optionee any right with respect to continuance of employment by
the Company, nor limit or affect in any manner the right of the Company to
terminate the employment or adjust the compensation of the Optionee.
11. TAXES AND WITHHOLDING. To the extent that the Company shall be
required to withhold any federal, state, local or foreign taxes in connection
with the exercise of the Option, and the amounts available to the Company for
such withholding are insufficient, it shall be a condition to the exercise of
the Option that the Optionee shall pay such taxes or make provisions that are
satisfactory to the Company for the payment thereof. The Optionee may elect to
satisfy all or any part of any such withholding obligation by (a) surrendering
to the Company a portion of the Optioned Shares that are issued or transferred
to the Optionee upon the exercise of the Option, and the Optioned Shares so
surrendered by the Optionee shall be credited against any such withholding
obligation at the Fair Market Value per Common Share of such shares on the date
of such surrender, or (b) utilizing the bank or broker assistance arrangement
provided in Section 5. The Company will pay any and all issue and other taxes in
the nature thereof which may be payable by the Company in respect of any issue
or delivery upon a purchase pursuant to this Option.
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12. COMPLIANCE WITH LAW. The Company shall make reasonable efforts to
comply with all applicable federal and state securities laws; provided, however,
notwithstanding any other provision of this Agreement, the Option shall not be
exercisable if the exercise thereof would result in a violation of any such law.
13. ADJUSTMENTS. The Board may make or provide for such adjustments in
the number of Optioned Shares covered by this Option, in the Option Price
applicable to such Option, and in the kind of shares covered thereby, as the
Board, in its sole discretion, exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of the Optionee's rights
that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization, or other change in the capital
structure of the Company, (b) any merger, consolidation, spin-off, split-off,
spin-out, split-up, reorganization, partial or complete liquidation, or other
distribution of assets or issuance of rights or warrants to purchase securities,
or (c) any other corporate transaction or event having an effect similar to any
of the foregoing; provided, however, that no adjustment may be made without the
prior written consent of the Optionee if the adjustment would constitute a
"modification" within the meaning of Section 424(h) of the Code or any successor
provision thereto. In the event of any such transaction or event, the Board, in
its discretion, may provide in substitution for this Option such alternative
consideration as it may determine to be equitable in the circumstances and may
require in connection therewith the surrender of this Option.
14. AVAILABILITY OF COMMON SHARES. The Company shall at all times until
the expiration of the Option reserve and keep available, either in its treasury
or out of its authorized but unissued Common Shares, the full number of Optioned
Shares deliverable upon the exercise of this Option.
15. MANDATORY NOTICE OF DISQUALIFYING DISPOSITION. Without limiting any
other provision hereof, the Optionee hereby agrees that if the Optionee disposes
(whether by sale, exchange, gift or otherwise) of any of the Optioned Shares
within two (2) years of the Date of Grant or within one (1) year after the
transfer of such share or shares to the Optionee, the Optionee shall notify the
Company of such disposition in writing within thirty (30) days from the date of
such disposition. Such written notice shall state the principal terms of such
disposition and the type and amount of the consideration received for such share
or shares by the Optionee in connection therewith.
16. AMENDMENTS. Any amendment to the Plan shall be deemed to be an
amendment to this Agreement to the extent that the amendment is applicable
hereto; provided, however, that no amendment shall adversely affect the rights
of the Optionee under this Agreement without the Optionee's consent.
17. SEVERABILITY. In the event that one or more of the provisions of
this Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
18. RELATION TO PLAN. This Agreement is subject to the terms and
conditions of the Plan. In the event of any inconsistency between the provisions
of this Agreement and the Plan, the Plan shall govern. Capitalized terms used
herein without definition shall have the meanings assigned to
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them in the Plan. The Board acting pursuant to the Plan, as constituted from
time to time, shall, except as expressly provided otherwise herein, have the
right to determine any questions which arise in connection with this Option or
its exercise.
19. SUCCESSORS AND ASSIGNS. Without limiting Section 4 hereof, the
provisions of this Agreement shall inure to the benefit of, and be binding upon,
the successors, administrators, heirs, legal representatives and assigns of the
Optionee, and the successors and assigns of the Company.
20. GOVERNING LAW. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of Ohio, without
giving effect to the principles of conflict of laws thereof.
21. NOTICES. Any notice to the Company provided for herein shall be in
writing to the Company, marked Attention: Xxxxxxxx X. Xxxxxxxx, and any notice
to the Optionee shall be addressed to the Optionee at his or her address on file
with the Company. Except as otherwise provided herein, any written notice shall
be deemed to be duly given if and when delivered personally or deposited in the
United States mail, first class certified or registered mail, postage and fees
prepaid, return receipt requested, and addressed as aforesaid. Any party may
change the address to which notices are to be given hereunder by written notice
to the other party as herein specified (provided that for this purpose any
mailed notice shall be deemed given on the third business day following deposit
of the same in the United States mail).
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