Exhibit 10.3
STOCK OPTION AGREEMENT
(1993 Stock Option Plan)
STOCK OPTION AGREEMENT, dated _________________, between
XXXXXX DODGE CORPORATION, a New York corporation (the "Corporation"), and
____________________________ (the "Employee").
The Compensation and Management Development Committee of the
Board of Directors of the Corporation (such Committee, and any successor
committee appointed by the Board of Directors of the Corporation to administer
the Corporation's 1993 Stock Option and Restricted Stock Plan (the "Plan"), is
hereinafter referred to as the "Committee") has granted to the Employee (a) an
option under the Plan to purchase Common Shares of the Corporation and (b)
limited stock appreciation rights on the terms set forth below.
To evidence the option and limited stock appreciation rights
so granted, and to set forth their terms and conditions as provided in the Plan,
the Corporation and the Employee hereby agree as follows:
1. Confirmation of Grant of Option and Rights; Option Price.
The Corporation hereby evidences and confirms its grant to the
Employee of (i) an option (the "Option") to purchase ______ of the Corporation's
Common Shares at an option price of $______ per share and (ii) limited stock
appreciation rights (the "Rights") appertaining to the Option which, if
exercisable pursuant to Section 2, shall enable the Employee to elect, in the
manner described in Section 6 hereof, to relinquish the Option with respect to
any or all of the Common Shares as to which the Option is exercisable at such
time for a cash payment from the Corporation. The amount of cash payable upon
the exercise of any Rights shall be equal to the excess of (x) the product of
(A) the price paid or payable for a Common Share of the Corporation in the
transaction described in Section 2(b) below (a "Transaction") which causes the
Rights to become exercisable multiplied by (B) the number of Common Shares with
respect to which the Employee shall have made such election, over (y) the
purchase price for that number of Common Shares. (In the event that the price
paid or payable with respect to such a Transaction is in a consideration other
than cash or in an amount not readily determinable at such time, such price
shall be determined by the Committee). The Option and the Rights granted hereby
shall be subject to the provisions of the Plan.
2. Term for Exercise.
(a) The Option shall become exercisable, subject to the
provisions of this Section 2 and Sections 3 and 4 hereof, in installments of
__________ Common Shares on the first anniversary of the date of grant of the
Option, _____________ Common Shares on the second anniversary and _____________
Common Shares on the third anniversary. Unless an earlier expiration date is
specified by this Agreement (or, if applicable, in Supplement A), the Option and
the Rights shall expire at 5:00 P.M., Arizona Mountain time (such time shall
hereinafter be referred to as the "End of Business"), on the day after the tenth
anniversary of the date on which the Option was granted (the "Termination
Date").
(b) Without limiting the generality of the foregoing, in the
event:
(i) the Corporation's stockholders holding at least 50% (or
such greater percentage as may be required by the Certificate of
Incorporation or By-Laws of the Corporation or by law) of the voting
stock of the Corporation approve any merger, consolidation, sale of
assets, liquidation or reorganization in which the Corporation will not
survive as a publicly owned corporation (such approval hereinafter
referred to as a "Merger Approval"); or
(ii) any of the Corporation's Common Shares are purchased
pursuant to a tender or exchange offer other than an offer by the
Corporation, any Subsidiary of the Corporation (as defined in the Plan
and hereinafter referred to as a "Subsidiary"), or any employee benefit
plan maintained by the Corporation or a Subsidiary (such purchase
hereinafter referred to as a "Tender Purchase");
then the Option and the Rights shall become exercisable during the period
beginning on the date of the Merger Approval or Tender Purchase, as the case may
be, and ending on the thirtieth day following such date (but in no event shall
the Option or the Rights become exercisable under this paragraph earlier than
six months from the date on which the Option was granted (the "Grant Date")). If
any Rights or any portion of the Option shall be exercised, the Rights or the
Option shall thereafter remain exercisable, according to their terms, only with
respect to the number of Common Shares as to which the Rights or the Option, as
the case may be, would otherwise be exercisable less the number of Common Shares
with respect to which the Rights and the Option have previously been exercised.
3. Who May Exercise.
During the Employee's lifetime the Option and the Rights may
be exercised only by him. If the Employee dies while in the employ of the
Corporation or one of its Subsidiaries, the Option and, if exercisable under
Section 2, the Rights may be exercised for the full number of Common Shares
specified in Section 1 hereof less the number of Common Shares for or respect to
which the Option and the Rights have previously been exercised, by the
Employee's estate, personal representative or beneficiary who acquired the right
to exercise the Option and the Rights by will or by the laws of descent and
distribution, at any time prior to the End of Business on the earlier of the
Termination Date or the fifth anniversary of the Employee's death. If the
Employee dies while he is no longer employed by the Corporation or a Subsidiary,
his Options and, if exercisable under Section 2, the Rights may be exercised for
the full number of Common Shares as to which he could have exercised them on the
date of his death, by his estate, personal representative or beneficiary who
acquired the right to exercise the Option and the Rights by will or by the laws
of descent and distribution, at any time prior to the termination date provided
by Section 4 thereof. Following the End of Business on the earlier of such
Termination Date, the fifth anniversary of the Employee's death or the
termination date provided by Section 4, as the case may be, the Option and
Rights shall expire.
4. Exercise after Termination of Employment.
If the Employee shall cease to be employed by the Corporation
or a Subsidiary other than by reason of death, Disability (as defined below),
Retirement (as defined in the Plan) or the Employee's termination for Cause (as
defined in the Plan), the Option shall remain exercisable, to the extent
exercisable on the date of such termination, until the End of Business on the
earlier of the Termination Date or the date which is one month after the day his
employment ends. If the Employee's employment shall terminate due to Disability
or Retirement, the Option shall remain exercisable, to the extent exercisable on
the date of the Employee's termination of employment, until the End of Business
on the earlier of the Termination Date or the fifth anniversary of the date of
such termination of employment; provided, however, that, in the event the
Employee's employment with the Corporation terminates not earlier than six
months from the Grant Date as a result of the Employee's Disability or
Retirement, immediately prior to the End of Business on the date the Employee's
employment terminates the Option shall become exercisable for the purchase of
the full number of Common Shares specified in Section 1 of the Agreement less
the number of Common Shares with respect to which the Option and the Rights have
previously been exercised. Disability means the inability of a Participant to
perform his duties for a period of at least 180 days due to mental or physical
infirmity, as determined pursuant to the Corporation's policies. If the
Employee's employment is terminated for Cause, all Options granted to the
Employee which are then outstanding shall be forfeited as of the effective time
of such termination but in no event later than the End of Business on such
termination date. Any portion of the Option or the Rights which is not
exercisable on the date the Employee's employment terminates for any reason
other than death, Disability, Approved Retirement shall expire at the End of
Business on such termination date. Any portion of the Option which did not
expire on the date the Employee's employment terminates and which is not
exercised within the period established under this Section 4 shall expire
following the End of Business on the last day on which the Option could have
been exercised. Following termination of the Employee's employment for any
reason (including death), the Rights (i) shall remain outstanding with respect
to that number of Common Shares as to which the Option is exercisable, (ii) will
become exercisable pursuant to Section 2 as to that number of Common Shares as
to which the Option is then exercisable if a Transaction occurs while the Option
remains exercisable and (iii) shall expire at the same time as the Option
expires.
5. Restrictions on Exercise.
The Option and Rights may be exercised only with respect to
full Common Shares. No fractional shares shall be issued. The Option (and, if
applicable, the Rights) may not be exercised in whole or part:
(a) if any requisite approval or consent of any governmental
authority of any kind having jurisdiction over the exercise of options
shall not have been secured; or
(b) unless the Common Shares subject to the Option shall be
effectively listed on the New York Stock Exchange and registered under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
which listing and registration may be upon official notice of issuance
of such Common Shares.
The Corporation may require that, as a condition to any exercise of the Option,
the Employee represent to the Corporation in writing that he is acquiring the
Common Shares subject to such exercise for his own account for investment only
and not with a view to the distribution thereof.
6. Manner of Exercise.
To the extent the Option and the Rights shall be exercisable
in accordance with the terms hereof, and subject to such administrative
regulations as the Committee may have adopted:
(a) The Option may be exercised in whole or from time to time
in part by written notice to the Committee, (i) identifying the Option
by Grant Date, the option price and whether or not the Agreement
includes Supplement A, (ii) specifying the number of Common Shares with
respect to which the Option is being exercised, and (iii) accompanied
by full payment of the option price for such Common Shares (1) in
United States dollars by personal check or cash, including an
assignment of the right to receive cash proceeds of the sale of Common
Shares subject to the Option, (2) in Common Shares of the Corporation
owned by the Employee for at least three months prior to the day of
exercise, represented by certificates duly endorsed to the Corporation
or its nominee with any requisite transfer tax stamps attached, the
market value of which shall be equal to the option price for the Common
Shares with respect to which the Option is being exercised, or (3) in a
combination of (1) and (2) above. The market value of any Common Shares
delivered pursuant to the immediately preceding sentence shall be the
mean of the high and low prices of such Common Shares on the
Consolidated Trading Tape on the day of exercise or, if there was no
such sale on such day, on the day next preceding the day of exercise on
which there was a sale.
(b) Rights may be exercised when exercisable under Section 2
in whole or in part by written notice to the Committee, (i) identifying
the Rights by Grant Date and option price, and (ii) specifying the
number of Common Shares with respect to which such Rights are being
exercised.
For valuation purposes, the day of exercise of the Option or
the Rights shall be deemed to be the day on which notice, addressed to the
Committee, either to exercise the Option in whole or in part by the payment of
Common Shares (together with duly endorsed certificates as provided above and
any other required payment) or to exercise the Rights is received at the
Corporation's principal office, except that if such notice (together with
certificates and other payment if required) is received on a Saturday or Sunday
or on a holiday observed by the Corporation's principal office, or after the End
of Business on any other day, the day of exercise shall be deemed to be the next
business day. "Written notice" shall include, without limitation, notice by
telegram, telex, cable or telecopy facsimile.
In the event that the Option or the Rights shall be exercised
by a person other than the Employee in accordance with the provisions of Section
3 hereof, such person shall furnish the Corporation with evidence satisfactory
to it of his or her right to exercise the same and of payment or provision for
payment of any estate, transfer, inheritance or death taxes payable with respect
to the Option or the Rights or with respect to any related Common Shares or
payment. The Corporation may require the Employee or other person exercising the
Option or the Rights to furnish or execute such documents as the Corporation
shall deem necessary to evidence such exercise, to determine whether
registration is then required under the Securities Act of 1933, as amended, or
to comply with or satisfy the requirements of the Exchange Act, or any other
law.
7. Nonassignability.
Unless the Committee shall otherwise so specify by a
supplement to this Agreement approved in connection with the award hereof or at
any subsequent time, neither the Option nor the Rights are assignable or
transferable except by will or by the laws of descent and distribution to the
extent contemplated by Section 3 hereof. At the request of the Employee, Common
Shares purchased on exercise of the Option may be issued or transferred in the
name of the Employee and another person jointly with the right of survivorship.
8. Rights as Stockholder.
The Employee shall have no rights as a stockholder with
respect to any Common Shares covered by the Option until the issuance of a
certificate or certificates to him for such Common Shares. No adjustment shall
be made for dividends or other rights for which the record date is prior to the
issuance of such certificate or certificates.
9. Capital Adjustments.
The number and price of the Common Shares covered by the
Option shall be proportionately adjusted to reflect, as deemed equitable and
appropriate by the Committee, any stock dividend, stock split or share
combination of, or extraordinary cash dividend on, the Corporation's Common
Shares or any recapitalization of the Corporation. To the extent deemed
equitable and appropriate by the Committee, subject to any required action by
the stockholders of the Corporation, in any merger, consolidation,
reorganization, liquidation, dissolution, or other similar transaction, the
Option shall pertain to the securities and other property, if any, which a
holder of the number of Common Shares covered by the Option would have been
entitled to receive in connection with such event.
10. Withholding.
(a) The Corporation's obligation to deliver Common Shares upon
the exercise of the Option shall be subject to payment by the Employee
of any amount required to be withheld with respect to such exercise
pursuant to any applicable federal, state or local tax withholding
requirements. The Corporation shall withhold from any cash payable in
connection with the exercise of any Rights any amount required to be
withheld pursuant to any applicable federal, state or local tax
withholding requirement (including, without limitation, FICA).
(b) Unless this Agreement includes Supplement A (making it an
incentive stock option), the Employee may elect to satisfy all or any
part of his federal, state and local tax obligations (including,
without limitation, FICA) with respect to such exercise by having the
Corporation withhold from any Common Shares otherwise deliverable to
him in connection with the exercise of the Option a number of Common
Shares, or by delivering Common Shares already owned by the Employee,
having a market value equal in amount to the obligations to be so
satisfied. The market value of Common Shares withheld or delivered
shall be the mean of the high and low prices of such Common Shares on
the Consolidated Trading Tape on the day of exercise or, if there was
no such sale on such day, on the next preceding day on which there was
a sale.
11. Governing Law.
This Agreement shall be construed and enforced in accordance
with, and governed by, the laws of the State of New York.
12. Supplements.
Attached hereto are the following supplements:
[Supplement A -- Incentive Stock Option]
Supplement B -- Change of Control
Supplement D -- Reload Option
Any such supplements so attached are incorporated herein and constitute a part
of this Agreement as though set forth in full herein. Additional supplements may
be added to this Agreement at a later date by the Committee; provided however
that if any such additional supplement adversely affects the rights of the
Employee under this Agreement, such supplement shall not be or become effective
unless and until the Employee consents to its addition in writing. All
capitalized terms used in such supplements without definition shall have the
meaning determined under this Agreement.
IN WITNESS WHEREOF, the Corporation and the Employee have duly
executed this Agreement as of the date set forth above.
XXXXXX DODGE CORPORATION
By___________________________
Vice President
_____________________________
Employee
Supplement A
[Incentive Stock Option --
1993 Stock Option Plan]
Supplement A to the Stock Option Agreement (the "Agreement")
dated __________________ between Xxxxxx Dodge Corporation (the "Corporation")
and ___________________ (the "Employee").
1. Term of the Option. Each incentive stock option shall
expire on the tenth anniversary of the date of its grant.
2. Disposition of Shares. If the Employee disposes of any
Common Shares received upon exercise of the Option within two years after the
Option was granted to him or within one year after the Common Shares were
transferred to him upon exercise of the Option, whether by sale, gift, or
otherwise, the Employee shall notify the Secretary of the Corporation of the
number of such Common Shares disposed of, the date on which disposed of, the
manner of disposition and the amount, if any, realized upon such disposition,
and shall promptly pay to the Corporation the amount, if any, that the
Corporation specifies in a written notice to the Employee as required to be
withheld with respect to such exercise and disposition pursuant to any
applicable federal, state or local tax withholding requirements.
3. Interpretation of Agreement. The Option is intended to be
an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended.
Supplement B
[Change of Control --
1993 Stock Option Plan]
Supplement B to the Stock Option Agreement (the "Agreement")
dated _____________________, between Xxxxxx Dodge Corporation (the
"Corporation") and __________________ (the "Employee").
1. Additional Trigger Event For Exercisability. In addition to
the provisions of Section 2 of the Agreement, in the event the Employee's
employment with the Corporation or any Subsidiary terminates by reason of a
Qualifying Termination (as defined below) not earlier than six months from the
date on which the Option was granted and within two years after a Change of
Control (as defined below) of the Corporation, the Option shall become
exercisable, no later than the date of such termination, for the purchase of the
full number of Common Shares specified in Section 1 of the Agreement.
For the purpose of this Supplement:
(a) A "Change of Control" shall be deemed to have taken place
at the time
(i) when any "person" or "group" of persons (as such
terms are used in Section 13 and 14 of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act")), other than the Corporation or any employee
benefit plan sponsored by the Corporation, becomes
the "beneficial owner" (as such term is used in
Section 13 of the Exchange Act) of 25% or more of the
total number of the Corporation's Common Shares at
the time outstanding;
(ii) of any Merger Approval (as defined in the Agreement);
or
(iii) when, as the result of a tender offer, exchange
offer, merger, consolidation, sale of assets or
contested election or any combination of the
foregoing transactions, the persons who were
directors of the Corporation immediately before such
transaction shall cease to constitute a majority of
the Board of Directors of the Corporation or of any
successor to the Corporation.
(b) A "Qualifying Termination" means a termination of the
Employee's employment with the Corporation or any Subsidiary (under
circumstances where the Employee is no longer employed by the
Corporation or any Subsidiary) for any reason other than
(i) death;
(ii) disability;
(iii) willful misconduct in the performance of the
Employee's duties as an employee which results in a
material adverse effect on the Corporation's business
or reputation;
(iv) Retirement; or
(v) a termination by the Employee unless
(1) such termination occurs more than 180 days
following the time when a Change of Control
takes place and such Change of Control has
not been approved by a resolution adopted by
the Board of Directors of the Corporation as
constituted immediately prior to such Change
of Control or
(2) the Employee terminates his employment for
one or more of the following reasons (and
the Employee has not agreed thereto in
writing):
(x) the assignment to the Employee of any
duties inconsistent, in a way
significantly adverse to the Employee,
with his positions, duties,
responsibilities and status with the
Corporation and its Subsidiaries
immediately prior to such Change of
Control, or a significant reduction in
the duties and responsibilities held by
the Employee immediately prior to such
Change of Control; a change in the
Employee's reporting responsibilities,
titles or offices as in effect
immediately prior to such Change of
Control; or any removal of the Employee
from or any failure to re-elect the
Employee to any position with the
Corporation or any Subsidiary that the
Employee held immediately prior to such
Change of Control except in connection
with the Employee's promotion or the
termination of his employment for any
of the reasons specified in paragraphs
(i) through (iv) above; or
(y) a reduction by the Corporation in the
Employee's base salary as in effect
immediately prior to such Change of
Control; the failure by the Corporation
to continue in effect any employee
benefit plan or compensation plan in
which the Employee is participating
immediately prior to such Change of
Control unless the Employee is
permitted to participate in other plans
providing him with substantially
comparable benefits; or the taking of
any action by the Corporation which
would adversely affect the Employee's
participation in or materially reduce
his benefits under such plan; or
(z) the Corporation's requiring the
Employee to be based anywhere other
than his location immediately prior to
such Change of Control; or the
Corporation's requiring the Employee to
travel on the Corporation's business to
an extent substantially more burdensome
than his travel obligations immediately
prior to such Change of Control.
Supplement D
[Reload Option -- 1993 Plan]
Supplement D to the Stock Option Agreement (the "Agreement")
dated ___________________ between Xxxxxx Dodge Corporation (the "Corporation")
and ____________________ (the "Employee").
1. Issuance of Reload Option. In the event that the Employee
exercises this Option (a) at least six months prior to the expiration date of
this Option, (b) while still employed by the Corporation or a Subsidiary, (c)
prior to the expiration date of the Plan using, in whole or in part, and (d)
prior to any determination by the Committee to terminate the right of the
Employee (including, without limitation, by terminating such rights for all
employees or all employees of a class of employees which includes the Employee)
to receive upon the exercise of this Option an additional Option in accordance
with the terms of this Supplement, using, in whole or in part, Common Shares
owned by the Employee for at least three months prior to the day of exercise
(the "Exercise Date"), the Employee shall be granted a new option (the "Reload
Option") under the Plan on the Exercise Date for the number of Common Shares of
the Corporation equal to the number of Common Shares exchanged by the Employee
to exercise this Option. No Reload Option shall be granted if the Exercise Date
is (a) within six months of the expiration date of the Option, (b) a date when
the Employee is not employed by the Corporation or a Subsidiary, (c) after the
expiration date of the Plan or (d) after the date, if any, the Committee decides
to terminate the right of the Employee (including, without limitation, by
terminating such rights as to all employees or all employees of a class of
employees which includes the Employee) to receive upon the exercise of this
Option an additional Option in accordance with the terms of this Supplement.
2. Terms of Reload Option. The Reload Option shall be
exercisable on the same terms and conditions as apply to the Option as set forth
in this Agreement (including, without limitation, the terms and conditions
providing to the Employee certain additional benefits in the event of a Change
of Control, as defined in Supplement B hereto), except that (a) the Reload
Option shall become exercisable in full on the day which is six months after the
Exercise Date, (b) the option price per share shall be the fair market value of
a Common Share on the Exercise Date, which shall be the mean of the high and low
prices of a Common Share on the Consolidated Trading Tape on that day, or, if no
sale of Common Shares is recorded on such tape on that day, then on the next
preceding day on which there was such a sale and (c) the expiration date of the
Reload Option shall be the date of expiration of the Option under this
Agreement. The Corporation may issue a new agreement to evidence the Reload
Option and, if it does, that agreement shall supersede this Agreement in all
respects insofar as the Reload Option is concerned.
