MARLTON TECHNOLOGIES, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Option Agreement") is granted as of the
15th day of March, 2005, by MARLTON TECHNOLOGIES, INC., a Pennsylvania
corporation ("Marlton") to Xxxxx X. Xxxxxxx (the "Optionee").
W I T N E S S E T H:
1. Grant. In connection with Optionee's initial employment by Marlton's
subsidiary on the date of this Option Agreement, Marlton hereby grants to the
Optionee stock options (the "Options") to purchase on the terms and conditions
set forth herein, an aggregate of Five Hundred Thousand (500,000) shares
(appropriately adjusted for any subsequent stock splits, stock combinations or
similar capital restructuring) of Marlton's Common Stock, no par value per share
(the "Option Shares"), at a purchase price per share of One Dollar Thirty-One
Cents ($1.31) (the "Option Price").
2. Term. This Option Agreement and Optionee's right to exercise Options
vested in accordance with Paragraph 3 shall terminate on the earlier of (i)
March 14, 2011, or (ii) upon termination of Optionee's employment or employment
agreement dated March 15, 2005 ("Employment Agreement") with Marlton's
wholly-owned subsidiary Sparks Exhibits & Environments Corp. ("Subsidiary"),
provided that in the event of termination (A) due to Optionee's death or
disability, Optionee (or Optionee's spouse or estate) may exercise this Option
Agreement for a period of twelve months following the date of termination as to
Options fully vested on or before the date of termination, and (B) by the
Subsidiary without "Cause" or by the Optionee with "Good Reason" or by either
party after the "Initial Term" (in each case as defined in the Employment
Agreement), the term shall remain unchanged.
3. Vesting. The Options will vest 100,000 on March 15, 2006, and as
provided in the following table, provided Optionee continues to be employed by
the Subsidiary on each of such dates.
Annual
Annual Revenue Shares Vested
-------------- -------------
$12,500,000 50,000
$13,750,000 55,000
$15,000,000 60,000
$16,125,000 65,000
$17,500,000 70,000
$18,750,000 75,000
$20,000,000 80,000
$21,250,000 85,000
$22,500,000 90,000
$23,750,000 95,000
$25,000,000 100,000
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Annual vesting is based on annual Revenues from SMT Customers over each of the
years ending March 31, 2006, 2007, 2008 and 2009. If a salesperson of Marlton,
Subsidiary or any other affiliate of Marlton is terminated without Cause (as
defined in the Employment Agreement) and this results in loss of a SMT Customer,
Marlton and Optionee will consider in good faith the effect on the vesting
schedule, including whether a replacement salesperson should be hired, the
volume of accounts and leads transferred by the Company and its affiliates to
Subsidiary, and/or adjustment to the vesting schedule. Notwithstanding the
foregoing, the vesting and term of the Options will accelerate upon the
consummation of a Change of Control (as such term is defined in the Plan
(defined below)) by Marlton or on the date that Marlton is no longer a publicly
traded company; in either of which event Optionee may elect to exercise the
Options within the thirty (30) day period immediately preceding such
transaction. The accelerated vesting will be calculated in accordance with the
above table, based on the assumption that the Revenues for each of the remaining
years of the four year vesting period would equal the Revenues for the most
recently completed annual period prior to the effective date of such
transaction.
"SMT Customers" means all sales originating from Showtime Enterprises, Inc. and
Showtime Enterprises West, Inc. (collectively, the "Entities") customers listed
on Annex 1 to this Exhibit A and any new customers generated by any of the
account executives listed on Annex 2 to this Exhibit A on or after the Effective
Date.
"Revenues" means collection of amounts from SMT Customers on Company sales
recognized after the Effective Date in accordance with the Company's revenue
recognition policies, excluding taxes, storage and specifically-designated
admin/cad surcharges.
4. Method of Exercise and Payment. Vested Options may be exercised from
time to time, in whole or in part. When exercisable under Paragraph 3, the
Option may be exercised by written notice to Marlton specifying the total number
of Option Shares to be exercised. The notice shall be accompanied by payment in
cash or by check equal to the aggregate Option Price of all Option Shares
covered by such notice.
5. Notices. Any notice to be given to Marlton shall be addressed to
Marlton at its principal executive office, and any notice to be given to the
Optionee shall be addressed to the Optionee at the address then appearing on the
records of Marlton or the Subsidiary or at such other address as either party
hereafter may designate in writing to the other. Any such notice shall be deemed
to have been duly given when deposited in the United States mail, addressed as
aforesaid, registered or certified mail, and with proper postage and
registration or certification fees prepaid.
6. General. This Option shall not be assignable by Optionee, except upon
death or disability as provided in Paragraph 2. Stock certificates representing
the Option Shares acquired shall bear any legends required by applicable state
and federal securities laws. Company stock issuances are unregistered, requiring
a one year holding period.
7. Tax Provision. This Option Agreement shall be interpreted and construed
in a manner consistent with, and to satisfy the requirements of, the provisions
of the Internal Revenue Code of 1986, as it may be amended from time to time
(the "Code"). This Option Agreement shall not be subject to the provisions and
restrictions of Section 421, 422A(b) et. seq. of the Code.
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8. Other Provisions. While this Option Agreement is not issued under
Marlton's 2001 Equity Incentive Plan ("Plan"), this Option Agreement shall be
subject to the same terms and conditions as those contained in the Plan (as if
issued thereunder), except to the extent of any inconsistent express provisions
contained herein.
IN WITNESS WHEREOF, the parties have executed this Option Agreement as of
the day and year first above written.
MARLTON TECHNOLOGIES, INC.
Attest:
______________________________ By: _______________________________
Secretary Vice Chairman
Witness:
______________________________ ___________________________________
Optionee: Xxxxx X. Xxxxxxx
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