EXHIBIT 10.2
XXXXXXXX INDUSTRIES, INC.
STOCK OPTION AGREEMENT
This Stock Option Agreement is entered into by and between Xxxxxxx X.
Xxxxx (the "Optionee") and Xxxxxxxx Industries, Inc., a Delaware corporation
(the "Company").
W I T N E S S E T H:
WHEREAS, Optionee is the President and Chief Executive Officer of the
Company;
WHEREAS, in connection with and consideration for Optionee's
performance of services for the Company, the Board of Directors of the Company
("Board") desires to grant to Optionee certain stock options to purchase shares
of Class A Common Stock of the Company ("Common Stock") pursuant to the terms
and conditions of this Agreement;
NOW THEREFORE, the Company and Optionee hereby agree as follows:
1. Option: Basic Terms. The Optionee is hereby granted an option to
purchase the number of fully paid and non-assessable shares of the
Common Stock of the Company at the option price hereinbelow set
forth, subject to the following additional terms and conditions:
X. Xxxxx of Option.
1. The Company hereby grants to the Optionee an
option (the "Option") to purchase Ninety
Thousand (90,000) shares of Common Stock of
the Company, upon the terms and conditions
set forth below. The date of grant of the
Option is June 3, 1999 (the "Grant Date").
2. The Option granted under this Agreement is a
nonqualified stock option as described in
the regulations under Section 83 of the
Internal Revenue Code of 1986, as amended
(the "Code"), with the transfer of the
Common Stock upon exercise of the Option
being governed by Code Section 83 and the
regulations thereunder. The effect of the
grant and exercise of the Option, as well as
the sale or other disposition of any Common
Stock acquired upon the exercise of the
Option in whole or in part, for federal,
state and local income tax purposes, shall
be Optionee's responsibility.
B. Duration of Option.
The Option shall expire on the tenth anniversary of the Grant
Date (the "Expiration Date")
C. Purchase Price.
The purchase price for the shares subject to the Option
shall be $8.25 per share (the "Option Price").
2. Exercisability. This Option shall not be exercisable in whole or in
part until June 3, 2002. Subject to Section 6, regarding termination of
Optionee's employment, and Section 8, regarding acceleration of the
exercise date, this Option shall be exercisable at any time after the
third anniversary of the Grant Date.
Notwithstanding the provisions of Section 2, if the Optionee ceases
to be employed by the Company by reason of the Optionee's death or
Disability (defined below), the Option hereunder may be exercised
immediately as to all shares of Common Stock covered hereby, by
Optionee, his guardian or legal representative or the person or
persons to whom such rights under the Option hereunder shall pass by
will or by the laws of descent and distribution, as the case may be;
provided, however, in no event shall such Options become exercisable
prior to the expiration of three (3) years from the Grant Date.
3. Method of Exercise and Payment. This Option may be exercised from time
to time, in whole or in part, to the extent exercisable, only by
giving written notice (the "Exercise Notice") to the Treasurer of the
Company at the offices of the Company, of the election to exercise
the Option and the total number of full shares to be purchased,
and shall be signed by the person or persons exercising the Option.
Such notice shall be accompanied by payment of the full Option Price
and shall duly signed by the holder; provided, however, that this
Option may not be exercised if such exercise would violate any law or
governmental order or regulation. If the offer and sale of the shares
subject to the Option has not been registered under the Securities
Act of 1933, as amended (the "Securities Act"), Optionee shall deliver
to the Company, at the time of exercise, an appropriate "investment
letter" in form and content satisfactory to the Company unless, in the
opinion of counsel for the Company, the shares issued would not be
deemed "restricted securities" within the meaning of such Securities
Act or the rules and regulations promulgated thereunder. Payment for
the shares purchased pursuant to any exercise shall be made in full
at the time of such exercise, in any of the following methods: (i)
in cash or by check payable to the order of the Company; (ii) in Common
Stock of the Company already owned by the Optionee for a period of six
(6) months prior to such exercise, valued as of the date of exercise
of the Option at its "Fair Market Value" (as defined below); or (iii)
a combination of (i) and (ii).
Optionee agrees to have withheld from any remuneration payable to
him by the Company and/or to pay to the Company, at the time of
exercise of the Option, an amount which is required to be withheld or
paid pursuant to any federal, state or local tax or revenue laws or
regulation, as may be determined by the Company. The Optionee may
satisfy such tax withholding by instructing the Company to withhold
such number of option shares exercised which, when valued at "Fair
Market Value" (defined below) on the date of Exercise, equal the total
tax obligations required to be withheld. For purposes of this
Agreement, the term "Fair Market Value" shall mean the mean of the
high and low prices at which the Common Stock is reported to have
traded on the relevant date as reported on the NASDAQ Electronic
Interdealer Quotation System ("NASDAQ System"); and if there is no
trade on the relevant date, the Fair Market Value shall mean the mean
of the low asked and high bid prices on that date as reported on the
NASDAQ System. If the principal market for the Common Stock shall
become a national securities exchange then the Fair Market Value shall
mean the mean of the high and low prices at which the Common Stock is
reported to have traded on the relevant date; and if there is no trade
on the relevant date, the Fair Market Value shall mean the mean of the
low asked and high bid prices on that date. If no Fair Market Value
has been established in accordance with the foregoing, Fair Market
Value shall be the value established by the Board in good faith.
4. Non-Transferability. This Option shall not be transferred,
sold, pledged, assigned, hypothecated, or disposed of in any manner by
Optionee other than by will or the laws of descent and distribution to
the extent hereinafter set forth. This Option may be exercised during
the holder's lifetime only by the holder hereof or, upon the holder's
legal incapacity to act on his/her own behalf, by the holder's
conservator or other lawful representative. The Option shall be null
and void and without effect 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 provisions
hereof, or levy of execution, attachment, trustee process or similar
process, whether legal or equitable, upon the Option.
5. Termination. To the extent that this Option shall not have
been exercised in full prior to its termination or Expiration Date,
whichever shall be sooner, it shall terminate and become void and of
no effect.
6. Termination of Employment. For purposes of this Agreement, the
term "Retirement" shall mean the termination of employment of the
Optionee with the Company, or any subsidiary of the Company, by reason
of the attainment of the age which the Company, by policy or
otherwise, has established as the age at which salaried employees may
or shall be required to terminate their employment and receive
retirement benefits (other than benefits provided pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985) from the
Company. For purposes of this Agreement, the term "Disability" shall
mean that, for a period of six (6) consecutive months, the Optionee is
unable to engage in any substantial activity required by his
employment by reason of any medically determinable, physical or mental
impairment, which, in the opinion of qualified physicians, is likely
to continue for an indefinite period or result in the death of the
individual within the near future.
A. Termination of Employment Due to Retirement or Voluntary or
Involuntary Separation. In the event the employment of the Optionee is
terminated by reason of Retirement, any outstanding Options granted to
the Optionee which are then exercisable shall continue to be
exercisable at any time prior to the earlier of the Expiration Date of
the Options and one (1) year after the date of Retirement, or in the
event that the employment of the Optionee is terminated for any reason
other than Retirement, death, Disability or Cause (defined below), any
outstanding options granted to the Optionee which are then exercisable
may continue to be exercisable until the earlier of the Expiration
Date of such Options and three months after the date of termination.
Notwithstanding the preceding provisions, in no event shall such
Options become exercisable prior to the expiration of three (3) years
from the Grant Date. Any Options not exercisable upon Retirement or
other termination except due to death or Disability shall terminate
immediately.
B. Termination of Employment Due to Death or Disability. In the
event the employment of the Optionee is terminated by reason of death
or Disability, the rights under any then outstanding Option granted to
the Optionee pursuant to the Agreement shall become fully exercisable
until the earlier of the Expiration Date of the Option and one (1)
year after the date of such termination. Notwithstanding the preceding
provisions, in no event shall such Options become exercisable prior to
the expiration of three (3) years from the Grant Date.
C. Termination of Employment for Cause. Notwithstanding anything
to the contrary herein, if the employment of the Optionee shall
terminate for Cause (as defined herein), any then any outstanding
Options granted pursuant to the Agreement to the Optionee shall
terminate immediately. For purposes of this Agreement, "Cause" means
the Optionee's knowingly or recklessly causing material injury to the
Company, the Optionee's willful misconduct in the performance of (or
failure to perform) his duties hereunder, or the Optionee's dishonest,
fraudulent or unlawful behavior involving moral turpitude whether or
not in connection with his employment. Whether the Option has been
terminated for "Cause" shall be determined by the a majority of the
directors of the Board, in its sole discretion.
7. Stock Splits and Capital Adjustments. If, prior to the
complete exercise of this Option, there is any increase or reduction
in the number of shares of Common Stock, or any change (including, but
not limited to, a change in value) in the shares of Common Stock or
exchange of shares of Common Stock for a different number or kind of
shares or other securities of the Company or any other corporation or
other entity, by reason of a reclassification, recapitalization,
merger, consolidation, reorganization, spin-off, split-up, issuance
(other than pursuant to the plan of reorganization) of warrants or
rights or debentures, stock dividend, stock split or reverse stock
split, extraordinary dividend, property dividend, combination or
exchange of shares or otherwise (collectively, a "Change in
Capitalization"), this Option, to the extent that it has not been
exercised, shall entitle the holder, upon the future exercise of this
Option, to such number and kind of securities or other property,
subject to the terms of the Option, to which the holder would be
entitled had he actually owned the stock subject to the unexercised
portion of the Option at the time of the occurrence of the Change in
Capitalization; and the aggregate purchase price upon the future
exercise of the Option shall be the same as if shares of Common Stock
of the Company originally optioned were being purchased as provided
herein.
8. Acceleration of Exercise Date.
A. Reorganization. Without limiting the authority of the
Compensation Committee ("Committee") of the Board of the Directors,
the Committee, shall have the authority to accelerate in whole or in
part the exercisability of Option upon a "Change in Control." A
"Change in Control" is an event or series of events after the Grant
Date by which (i) any "person" or "group" (as such terms are used in
Section 13 (d) and 14(d) of the Securities Act) becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities
Act), directly or indirectly, of more than fifty (50%) percent of the
aggregate voting power of all the capital stock of the Company
normally entitled to vote in the election of directors, or (ii) during
any period of two consecutive calendar years individuals who at the
beginning of such period constituted the Board (together with any new
directors whose election by the Board or whose nomination for election
by the Company's stockholders was approved by a vote of at least a
majority of the directors then still in office who either were
directors at the beginning of such period or whose election or
nomination was previously so approved) cease for any reason to
constitute a majority of the directors of the Board then in office.
Provided, however, such Option shall not become fully vested or
immediately exercisable (1) if, in its sole discretion, the Committee
has affirmatively determined that such immediate vesting or
exercisability is not in the best interests of the Company, in which
event the Option shall be assumed or an equivalent option shall be
substituted by the successor corporation or a parent or subsidiary
thereof, or (2) if such transaction is effected by the Company for the
principal purpose of changing the Company's state of incorporation.
B. Time of Exercise. In the event of such accelerated vesting
pursuant to Section 8.A. above, the Option shall be fully exercisable
during a period to be designated by the Board (but not less than ten
(10) nor more than sixty (60) days prior to the closing date of any
such transaction).
9. Compliance With Securities Laws.
A. Postponed Issuance. Notwithstanding any provision of this
Option to the contrary, the Company may postpone the issuance and
delivery of shares upon any exercise of this Option until one of the
following conditions shall be met:
1. The shares with respect to which such Option
has been exercised are at the time of the
issue of such shares effectively registered
under applicable Federal and State
securities laws now in force or hereafter
enacted or amended; or
2. Counsel for the Company shall have given an
opinion that registration of such shares
under applicable Federal and State
securities laws, as now in force or
hereafter enacted or amended, is not
required.
B. Investment Representation. In the event that for any reason
the shares to be issued upon exercise of the Option shall not be
effectively registered under the Securities Act, upon any date on
which the Option is exercised in whole or in part, the Company shall
be under no further obligation to issues shares covered by the Option,
unless the Optionee shall give a written representation to the
Company, in form satisfactory to the Company, that such person is
acquiring the shares issued pursuant to such exercise of the Option
for investment and not with a view to, or for sale in connection with,
the distribution of any such shares, and that he will make no transfer
of the same except in compliance with the Securities Act and the rules
and regulations promulgated thereunder and then in force, and in such
event, the Company may place an "investment legend" upon any
certificate for the shares issued by reason of such exercise.
10. No Agreement of Employment. Neither the grant of this Option
nor this Agreement shall be deemed to create any agreement with, or
obligation by, the Company to employ the Optionee for any period of
time, it being understood that employment is strictly "at will" in the
absence of any written agreement to the contrary and, in the absence
of such written agreement, such person may be terminated by the
Company at any time, with or without cause.
11. Severability. If any condition, term or provision of this
Agreement is determined by a court to be illegal or in conflict with
any law, State or Federal, the validity of the remaining portions or
provisions shall not be affected, and the rights and obligations of
the parties shall be construed and enforced as if this Agreement did
not contain the particular condition, terms or provisions determined
to be unenforceable.
12. Entire Agreement; Governing Law. This Agreement contains the
entire understanding and agreement between the parties hereto
respecting the within subject matter, and there are no
representations, agreements, arrangements or understandings, oral or
written, between the parties hereto relating to the subject matter of
this Agreement that are not fully expressed herein. This Agreement
shall be governed by and construed in accordance with the laws and the
State of Delaware.
WITNESS the signature of its duly authorized office of the Company as
of the date of grant hereof.
XXXXXXXX INDUSTRIES, INC.
By: /S/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title:Vice President Finance and Administration
OPTIONEE
/S/ Xxxxxxx X. Xxxxx
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Signature
Xxxxxxx X. Xxxxx
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Name
(1)
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Street Address
(1)
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City, State, Zip Code
(1)
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Social Security No.
(1) - Confidential treatment requested.
