EYE CARE CENTERS OF AMERICA, INC.
STOCK OPTION AGREEMENT
UNDER 1998 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
NON-QUALIFIED STOCK OPTION
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AGREEMENT entered into as of this 8th day of January, 2002 (the "Date of
Grant"), by and between EYE CARE CENTERS OF AMERICA, INC., a Texas corporation
(the "Company"), and the undersigned director of the Company (the "Optionee").
Capitalized terms used herein as defined terms which are not otherwise defined
herein shall have the meanings given to them in the Stockholders' Agreement
dated as of April 24, 1998 among the Company, certain affiliates of Xxxxxx X.
Xxx Company, and certain other stockholders of the Company (the "Stockholders'
Agreement").
WHEREAS, on or about June 15, 2001, the Company and the Optionee agreed to
cancel the existing options then held by the Optionee in exchange for the
commitment of the Company to grant new options in January 2002 (at a date more
than six months and a day after the effective date of the cancellation of the
Options), subject to certain conditions and restrictions contained in the Option
Cancellation Agreement executed by the Company and Optionee.
WHEREAS, in satisfaction of its commitment to grant new option pursuant to
the Option Cancellation Agreement, the Company desires to grant the Optionee a
non-qualified stock option under the Company's 1998 Stock Option Plan for
Non-Employee Directors (the "Plan") to acquire shares of the Company's common
stock, par value $.01 per share ("Common Stock").
WHEREAS, Section 6 of the Plan provides that each option is to be evidenced
by an option agreement, setting forth the terms and conditions of the option.
NOW, THEREFORE, the Company and the Optionee hereby agree as follows:
1. Grant of Option. The Company hereby irrevocably grants under the
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Plan and subject to the terms and conditions of the Plan to the Optionee a
non-qualified stock option (the "Option") to purchase up to 111,412 shares (the
"Shares") of Common Stock on the terms and conditions hereinafter set forth.
This option shall not be treated as an incentive stock option under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code").
2. Purchase Price. The purchase price payable upon exercise of the
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Option shall be $5.00 per Share.
3. Vesting.
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(a) Time Based Vesting. Subject to paragraph (b) below, the Option
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shall become exercisable ("vest") as follows:
(i) 50% on the Date of Grant;
(ii) 25% on the first anniversary of the Date of Grant; and
(iii) 25% on the second anniversary of the Date of Grant.
; provided in each case that the Optionee is a director of the Company on
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such anniversary date; provided, further, that the Option shall become fully
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vested upon the Optionee's death or Disability prior to such fourth anniversary
if his death or disability occurs while a director of the Company.
(b) Acceleration.
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(i) Sale.
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(A) Notwithstanding any provision to the contrary in this Section 3,
but subject to the other restrictions in the Plan and this Agreement, in the
event of a Sale (as defined below), a portion of the unvested Shares subject to
the Option shall become vested and immediately exercisable in the event the Xxx
IRR (as defined below) is greater than or equal to twenty percent (20%). The
portion thereof which shall become vested and immediately exercisable shall
range from zero percent (0%) to one hundred percent (100%) in proportion to the
amount by which the Xxx IRR exceeds twenty (20%) (up to thirty-five percent
(35%)) compared to the difference between twenty percent (20%) and thirty-five
percent (35%). The term "Xxx IRR" shall mean the internal rate of return
achieved by the Xxx Holders on their aggregate investment in the Company,
determined as of consummation of the Sale; provided that Xxx IRR shall not
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include any management, transaction or structuring fees (or the like) paid to
the Xxx Holders or any affiliate of the Xxx Holders. In the event Optionee
holds more than one option pursuant to separate option agreements with the
Company, and the aggregate number of Shares which vest by operation of this
Section 3(b)(i) and substantially similar provisions in such other option
agreements is less than the aggregate number of shares subject to vesting under
all such option agreements, then the vesting of Shares pursuant to this Section
3(b)(i) and such other provisions shall be applied first with respect to the
options with the earliest Date of Grant, and then to each succeeding Option in
chronological order of Dates of Grant.
(B) For purposes hereof, the term "Sale" shall mean:
(1) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of voting securities of (a) the Company or (b) the surviving
entity in any reorganization, merger or consolidation involving the Company (any
such entity referred to herein as the "Corporation") where such acquisition
causes such Person to own more than fifty percent (50%) of the combined voting
power of the then outstanding voting securities of the Corporation entitled to
vote generally in the election of directors, other than acquisitions by the
Xxxxxx X. Xxx Company or its Affiliates (as defined in the Stockholders'
Agreement);
(2) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company; or
(3) the acquisition by a third party not affiliated with the Company of
all or substantially all of the Company's assets (without regard to cash or
accounts receivable).
(C) The accelerated vesting provided in this Section 3(b)(i) shall
take effect immediately prior to but contingent upon the Sale giving rise to
such accelerated vesting. The phrase "immediately prior to the Sale" shall be
understood to mean sufficiently in advance of a Sale to permit the Optionee to
take all steps reasonably necessary to permit the Optionee to become a
shareholder of the Company as of the consummation of such Sale with respect to
the Shares subject to the accelerated vesting provided in this Section 3(b)(i).
(ii) Initial Public Offering. Notwithstanding any provision to the
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contrary in this Section 3, but subject to the other restrictions in the Plan
and this Agreement, in event of the completion of the Company's initial Public
Offering (as defined below) a fraction of the total Shares subject to the Option
shall become vested and immediately exercisable, such fraction to have a
numerator equal to the aggregate number of shares of Common Stock sold by the
Xxx Holders pursuant to the initial Public Offering, and a denominator equal to
the aggregate number of shares of Common Stock owned by the Xxx Holders
immediately following consummation of the Recapitalization (as adjusted for
stock splits, stock dividends, reclassifications and the like); provided,
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however, that to the extent any of the Shares subject to the Option shall have
become exercisable prior to the Company's initial Public Offering (the
"Previously Vested Option Shares"), then the number of Shares which become
vested and exercisable pursuant to this Section 3(b)(ii) shall be reduced by the
number of Previously Vested Option Shares (but not below zero, with the result
that the number of Previously Vested Option Shares shall remain unchanged). The
term "Public Offering" shall mean the completion of a sale of Common Stock
pursuant to a registration statement which has become effective under the 1933
Act, excluding registration statements on Form X-0, X-0 or similar limited
purpose forms. The term "Recapitalization" shall mean the transactions
contemplated by the Recapitalization Agreement dated March 6, 1998, among ECCA
Merger Corp., the Company and the sellers named therein, as amended from time to
time.
4. Term of Options.
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(a) Each Option shall expire on the 10th anniversary of the Date of
Grant, but shall be subject to earlier termination as herein provided.
(b) Except as otherwise provided in this Section 4, the Option shall
terminate on the 30th day following the date the Optionee ceases to be a
director of the Company.
(c) The Option shall terminate immediately upon termination of
Optionee's directorship for Cause by the Company.
(d) The Option shall terminate on the 60th day following the date the
Optionee ceases to be a director of the Company due to Optionee's Disability.
(e) The Option shall terminate on the 180th day following the date of the
Optionee's death if the Optionee ceases to be a director of the Company due to
Optionee's death.
5. Exercisability.
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(a) If the Optionee ceases to be a director of the Company, the Option
granted to the Optionee hereunder shall be exercisable only to the extent that
the right to purchase Shares under the Option has accrued and is in effect on
the date the Optionee ceases to be a director of the Company; provided that in
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the event of a Sale or a Public Offering in which the Xxx Holders sell any
shares of Common Stock, the binding contract with respect to which was entered
into within three months following a termination of the Optionee's directorship
by the Company without Cause, the vesting of the Optionee's unvested options
shall be governed by Section 3(b)(i) or Section 3(b)(ii) above, as the case may
be. A binding contract in respect of a Public Offering shall be deemed to mean
only a definitive underwriting agreement with respect thereto.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the Option may not be exercised in whole or in part prior to the
earlier to occur of the following: (i) completion of the Company's initial
Public Offering; or (ii) immediately prior to a Sale (and contingent upon
completion thereof).
6. Manner of Exercise of Option.
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(a) To the extent that the right to exercise the Option has accrued and
is in effect, the Option may be exercised in full or in part by giving written
notice to the Company stating the number of Shares to be purchased, together
with payment in full of the purchase price for such Shares. Payment may be in
the form of (i) cash or a check payable to the order of the Company in an amount
equal to the purchase price for the Shares being purchased, (ii) shares of
Common Stock owned by the Optionee having a fair market value equal in amount to
the purchase price for the Shares being purchased, or (iii) any combination of
(i) and (ii). With the consent of the Committee, payment also may be made by
delivery of a properly executed exercise notice to the Company, together with a
copy of irrevocable instruments to a broker to deliver promptly to the Company
the amount of sale or loan proceeds to pay the purchase price for the Shares
being purchased. To facilitate the foregoing, the Company may enter into
agreements for coordinated procedures with one or more brokerage firms. Upon
such exercise, delivery of a certificate for paid-up, non-assessable Shares
shall be made at the principal office of the Company to the person exercising
the Option, not more than thirty (30) days from the date of receipt of such
notice and payment by the Company.
(b) The Company shall at all times during the term of the Option reserve
and keep available such number of Shares as will be sufficient to satisfy the
requirements of the Option.
7. Limited Transferability.
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(a) The right of the Optionee to exercise the Option shall not be
assignable or transferable by the Optionee otherwise than (i) by will or the
laws of descent and distribution, and (ii) as specifically set forth in Section
7(b) below.
(b) If approved by the Committee, the Optionee may transfer by gift all
or a portion of the Option to one or more of the Optionee's Immediate Family
Members (as defined below) or to a trust established for the exclusive benefit
of one or more of the Optionee's Immediate Family Members. Transfers to any one
transferee under this Section 7(b) may be made only with respect to at least 500
Shares subject to the Option. If less than the entire Option is transferred to
any one transferee under this Section 7(b), than the Shares so transferred shall
be drawn first from the unvested Shares which will be the last to vest and so on
until all unvested Shares shall have been transferred; thereafter the Shares to
be transferred will be those that have vested. Transfers under this Section
7(b) may e made only on dates specified by the Committee. In order to transfer
all or any portion of the Option, the Optionee must complete, sign and deliver
to the Committee an "Election to Transfer Stock Options", in the form attached
hereto as Exhibit 1, and must obtain from each proposed transferee and deliver
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to the Company a completed and signed "Notice to Option Transferee", in the form
attached hereto as Exhibit 2. The Company, at its option, may engage a
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recognized appraisal firm to value for gift tax purposes any Options to be
transferred hereunder.
(c) As used herein, the term "Immediate Family Member" shall mean a
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, sister-in-law, or brother-in-law, including
adoptive relationships.
(d) The Option shall be null and void and without effect upon the
bankruptcy of the Optionee (or, with respect to any portion of the Option held
by a transferee, upon the bankruptcy of such transferee) or upon any attempted
assignment or transfer, except as hereinabove provided, including without
limitation any purported assignment, whether voluntary or by operation of law,
pledge, hypothecation or other disposition contrary to the provision hereof, or
levy of execution, attachment, trustee process or similar process, whether legal
or equitable, upon the Option.
8. Representation Letter and Investment Legend.
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(a) In the event that for any reason the Shares to be issued upon
exercise of the Option shall not be effectively registered under the federal
Securities Act of 1933, as amended, when the Option is exercised in whole or in
part, the person exercising the Option shall give a written representation to
the Company in the form attached hereto as Exhibit 3 and the Company shall place
an "investment legend", so-called, as described in Exhibit 3, upon any
certificate for the Shares issued by reason of such exercise.
(b) The Company shall be under no obligation to qualify Shares or to
cause a registration statement or a post-effective amendment to any registration
statement to be prepared for the purposes of covering the issue of Shares.
9. Adjustments on Changes in Recapitalization, Reorganization and the
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Like. Adjustments on changes in recapitalization, reorganization and the like
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shall be made in accordance with Section 12 of the Plan, as in effect on the
date of this Agreement.
10. No Special Rights. Nothing contained in the Plan or this Agreement
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shall be construed or deemed by any person under any circumstances to bind the
Company (or any of its subsidiaries) to employ, maintain on the Board, or to
continue the employment of the Optionee (or any consulting relationship with the
Company) for the period within which this Option may be exercised. However,
during the period of the Optionee's service to the Company, the Optionee shall
render diligently and faithfully the services which are assigned to the Optionee
and shall at no time take any action which directly or indirectly would be
inconsistent with the best interests of the Company or its subsidiaries.
11. Rights as a Stockholder. Neither the Optionee or the transferee of the
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Options shall not have any rights as a stockholder of the Company with respect
to any Shares which may be purchased by exercise of this Option unless and until
a stock certificate representing such Shares is executed and delivered to the
Optionee or such transferee, as the case may be. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date such stock
certificate is issued.
12. Withholding Taxes. Whenever Shares are to be issued upon exercise
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of this Option (whether by the Optionee or by any transferee of the Optionee),
the Company shall have the right to withhold (or to cause one of the Company's
subsidiaries to withhold) from compensation otherwise payable to the Optionee,
or to require the Optionee to remit to the Company an amount sufficient to
satisfy all federal, state and local withholding tax requirements in respect of
the Shares being purchased by the Optionee prior to the issuance of such Shares
and the delivery of any certificate or certificates for such Shares, and from
time to time thereafter.
13. Stockholders' Agreement. As a condition to the grant of the
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Option, and to any exercise of the Option, the Optionee (and any transferee of
the Optionee) shall join in the Stockholders' Agreement. The Option and the
Shares issuable upon exercise of the Option are subject to restrictions on
transfer, voting agreements, co-sale agreements and other matters more fully
described therein.
* * * * * * *
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its corporate seal to be hereto affixed by its officer thereunto duly
authorized, and the Optionee has hereunto set his or her hand and seal, all as
of the day and year first above written.
EYE CARE CENTERS OF AMERICA, INC.
By:_______________________________________
Name: Xxxxx X. XxXxxxx
Title: President - CEO
OPTIONEE:
__________________________________________
Name: Xxxxxx X. Xxxxxxxx
Address: 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
