EMPLOYMENT AGREEMENT
AGREEMENT made as of this 13th day of April, 2000 and effective as of the
14th day of February, 2000, by and between The Grand Union Company, a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxx (the "Executive").
WHEREAS, the Company desires to retain the exclusive services of Executive
and Executive desires to be employed by the Company for the term of this
Agreement;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants contained herein, the parties hereto agree as follows:
1. Duties.
(a) The Executive shall serve as Senior Vice President, General
Counsel and Corporate Secretary of the Company or such other position as may be
agreed between the Executive and the Company, and shall perform such duties,
services and responsibilities as are consistent with such positions, including
the general management and supervision of the business and personnel of the
Company and its subsidiaries. The duties, services and responsibilities will be
performed under the overall supervision of the Chairman of the Board and the
Chief Executive Officer of the Company, consistent with the policies of the
Board of Directors of the Company (the "Board of Directors").
(b) During the Employment Term (as hereinafter defined), the
Executive shall devote his full business time, attention and skill to the
performance of his duties, services and responsibilities, and will use his best
efforts to promote the interests of the Company. The Executive will not, without
the prior written approval of the Board of Directors, engage in any other
business activity which would interfere with the performance of his duties,
services and responsibilities hereunder or which is in violation of policies
established from time to time by the Company. The foregoing shall not be
construed to prohibit (i) the Executive's service as a member of the board of
directors or as an officer of any non-profit trade association or civic,
educational or charitable organization, or (ii) subject to the following proviso
and the provisions of Section 8(b), the Executive from making personal
investments of a passive nature; provided that such service or investments by
the Executive do not materially interfere with the performance by the Executive
of his duties, services and responsibilities hereunder.
(c) During the Employment Term, the Executive shall be based at the
Company's principal executive offices in Wayne, New Jersey, which executive
offices may be relocated within a 100-mile radius of the Company's existing
executive offices (such 100 mile radius of Wayne, New Jersey, constituting the
"Principal Office City"), except for reasonably required travel in the
performance of his duties, services and responsibilities hereunder.
2. Term. This Agreement and the term of employment of the Executive
hereunder shall commence as of February 14, 2000 ("Effective Date") and shall
continue in full force and
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effect until the fourth anniversary of the Effective Date (the "Employment
Term"), unless earlier terminated or extended as provided herein.
3. Compensation.
(a) In consideration of the performance by the Executive of the
Executive's obligations during the Employment Term (including any services as an
officer, director, employee, member of any committee of the Company or any of
its subsidiaries, or otherwise), the Company will, during the Employment Term,
pay the Executive a salary (the "Salary") at no less than an annual rate of
$225,000. The Salary shall be reviewed annually and may be increased at the
discretion of the Compensation Committee of the Board of Directors.
(b) During the term of this Agreement, Executive shall be eligible
to receive bonus compensation at the end of each fiscal year of the Company in
an amount to be determined by the Compensation Committee of the Board of
Directors. The Bonus Plan (as hereinafter defined) shall provide for bonus
compensation of up to 75% of the Salary for each fiscal year in which the
Company achieves the designated performance targets. Such bonus compensation
shall be prorated (based on the number of weeks elapsed during the fiscal year
in question) for the fiscal year ending in March 2004. The amount of bonus
compensation in any year shall be determined pursuant to the Company's Executive
Annual Incentive Bonus Plan (the "Bonus Plan") and shall be calculated based on
achievement against performance targets in such fiscal years, which performance
targets shall be established by the Compensation Committee of the Board of
Directors pursuant to the Bonus Plan.
(c) The Salary shall be payable in accordance with the normal
payroll practices of the Company then in effect. The Salary, and all bonuses or
other forms of compensation paid to the Executive hereunder, shall be subject to
all applicable taxes and withholdings required to be withheld by the Company
pursuant to federal, state or local law. The Executive shall be solely
responsible for income taxes imposed on the Executive by reasons of any cash or
non-cash compensation and benefits provided hereunder, unless otherwise so
indicated.
(d) Executive shall be eligible to participate in the Company's
Supplemental Retirement Plan for Key Executives (the "Plan").
(e) The Executive shall be eligible to participate in any employee
benefit or other plans (including any life insurance plans) or perquisites in
effect for other senior managers at his level as of February 13, 2000 to the
extent the Executive meets the eligibility requirements for any such benefit
plan or perquisite.
(f) The Executive shall be eligible for four weeks vacation (in
addition to the usual holidays) during each year during which the Executive
serves hereunder. Vacation not taken during any year during the Employment Term
may be carried forward with the written permission of the Chairman of the Board.
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(g) If (i) the Executive is absent from work for more than 180
consecutive calendar days in any twelve-month period by reason of illness or
incapacity (whether physical or otherwise) or (ii) the Company reasonably
determines that the Executive has been unable to perform his duties, services
and responsibilities hereunder by reason of illness or incapacity (whether
physical or otherwise) for more than 180 calendar days in any twelve-month
period during the Employment Term ("Disability"), the Company shall not be
obligated to pay the Executive any compensation (Salary or bonus) for any period
in excess of such 180 days and until Executive returns to his duties on a
regular full time basis; furthermore, any such payments during such 180-day
period shall be reduced by any amount the Executive is entitled to receive as a
result of such disability under any plan provided through the Company or under
state or federal law.
4. Stock Option.
(a) Pursuant to the Company's 1995 Equity Incentive Plan (the "EIP")
and subject to confirmation of the stock option grant in a letter from the
Company's Chief Executive Officer in the form attached hereto as Exhibit A,
effective as of the date approved by the Compensation Committee of the Board of
Directors (the "Grant Date"), the Company hereby grants Executive options (the
"Options") to purchase 125,000 shares of Grand Union Common Stock issued
according to the following exercise prices and vesting schedule: Vesting - 25%
on the Grant Date, 25% on February 14, 2001, 25% on February 14, 2002, and 25%
on February 14, 2003; Exercise Price - 20% at $4.65, 30% at $5.72, 30% at $7.72,
and 20% at $9.72. Options granted pursuant to this paragraph, which have not
been exercised, will expire on May 14, 2004. The vested Options and shares
received upon exercise of Options ("Option Shares") will become transferable in
tranches of 20%, 20%, 30% and 30% (expressed as a percentage of the total of
vested and unvested Options) on each of the first four anniversaries,
respectively, of the Effective Date. Except as described in the preceding
sentence, and except for transfers in connection with estate planning, the
Options and Option Shares will not be transferable during the term of
Executive's employment.
(b) All existing stock option grants to Executive made prior to the
Effective Date shall be canceled.
(c) Treatment of Options Upon A Change of Control or Upon
Termination Within 180 Days Preceding a Change of Control . For purposes of this
Agreement, a "Change of Control" shall mean, after the Effective Date, the
acquisition by any person or entity, directly or indirectly, of more than 50% of
the Common Stock of the Company. If (x) a Change of Control occurs or (y)
Executive's employment terminates within 180 days preceding a Change of Control
by Executive for "Good Reason" or by the Company without "Cause," then the
Options shall vest and become exercisable on the date of the Change of Control
and transferable by Executive (or Executive's executor or administrator or the
person or persons to whom the Options are transferred by will or the applicable
laws of descent and distribution) at any time after the Change of Control up to
and including ninety (90) days after the effective date of such Change of
Control, after which all unexercised Options shall terminate
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(d) Treatment of Options Upon Termination Not Within 180 Days
Preceding a Change of Control If the employment of Executive with the Company
shall terminate for any reason other than as specifically provided in paragraph
(c) of this Section 4, including, without limitation, termination by the Company
for "Cause" or termination by the Executive for any reason other than Good
Reason, all vested Options shall remain exercisable by Executive through and
until May 14, 2004 and all unvested Options shall terminate and become null and
void, as of the effective date of such termination, except in such case as
provided in paragraph (c) of this Section 4 in the event of a subsequent Change
of Control within 180 days.
5. Relocation and Relocation Expenses.
The Executive agrees that, during the Employment Term, he shall
maintain, at his own cost and expense, his principal residence within a 100-mile
radius of Wayne, New Jersey. Executive shall continue to be eligible for the
full benefits available, if any, under the Company's Executive Relocation
Program. The reimbursement of expenses under this sub-paragraph shall be taxable
income to Executive and shall be subject to appropriate gross-up procedures in
order to make Executive whole for such expenses.
6. Termination.
(a) Except as otherwise provided in this Agreement, the employment
of Executive hereunder and the Employment Term shall terminate upon the earliest
to occur of the dates specified below:
(i) the close of business on the date of expiration of
the Employment Term;
(ii) the close of business on the date of the Executive's
death;
(iii) the close of business on an early termination date
mutually agreed to in writing by the Company and the
Executive;
(iv) the close of business on the day on which the Company
shall have delivered to the Executive a written notice
of the Company's election to terminate his employment
for "Cause" (as defined in Section 6(c) hereof);
(v) the close of business on the day on which the Company
shall have delivered to the Executive a written notice
of the Company's election to terminate his employment
because of Disability;
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(vi) the close of business on the day following the date on
which the Board of Directors shall have adopted a
resolution terminating the employment of the Executive
hereunder and such termination is not for death, Cause
or Disability; or
(vii) the close of business on the date which is five business
days after the date on which the Executive delivers to
the Company a written notice of the Executive's election
to terminate his employment hereunder (x) for "Good
Reason" (as defined in Section 6(d) hereof) or (y) for
any other reason.
(b) Any purported termination by the Company or by the Executive
pursuant to Section 6(a) (iv)-(vii) hereof shall be communicated by written
"Notice of Termination" to the other party. For purposes of this Agreement, a
"Notice of Termination" shall mean a written notice which indicates the specific
termination provision in this Agreement relied upon and which sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated. For
purposes of this Agreement, no such purported termination shall be effective
without delivery of such Notice of Termination.
(c) For purposes of this Agreement, termination of Executive for
"Cause" shall mean termination based on (i) the Executive's material breach of
this Agreement; (ii) willful misconduct or gross negligence by Executive with
regard to the Company or its business, assets or employees; (iii) the refusal of
Executive to follow the proper direction of the Chairman of the Board or the
Board of Directors; (iv) substantial and continuing refusal by the Executive to
attempt to perform the duties required of him hereunder (other than any such
failure resulting from incapacity due to physical or mental illness); (v) the
Executive being convicted of a felony or pleading nolo contendere to a felony
(other than a felony involving a motor vehicle); (vi) the breach by Executive of
any fiduciary duty owed by Executive to the Company; or (vii) Executive's
dishonesty, misappropriation or fraud with regard to the Company (other than
good faith expense account disputes).
(d) For purposes of this Agreement, the term "Good Reason" shall
mean any material breach by the Company of this Agreement; provided, however,
that Executive first delivers written notice thereof to the Board of Directors
of the Company with a copy to the Chief Executive Officer of the Company and the
Company shall have failed to cure such breach within thirty (30) days after
receipt of such written notice.
(e) In the event of termination of this Agreement, for whatever
reason, the Executive agrees to cooperate with the Company and to be reasonably
available to the Company with respect to continuing and/or future matters
arising out of the Executive's employment or any other relationship with the
Company, whether such matters are business-related, legal or otherwise. The
Company agrees to reimburse the Executive for the Executive's reasonable
expenses incurred in complying with the terms of this paragraph upon delivery by
the Executive
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to the Company of valid receipts for such expenses. The provisions of this
paragraph shall survive termination of this Agreement.
7. Termination Payments
(a) Upon Termination Within Twelve Months of a Change of
Control. If, within 12 months following a "Change of Control," the Executive's
employment with the Company terminates for whatever reason, the Company will pay
the Executive any portion of the Salary accrued hereunder on or prior to the
date of such termination, but not paid. If, within 12 months following a "Change
of Control," the Executive's employment with the Company terminates pursuant to
Section 6(a)(vi) or Section 6(a)(vii)(x) hereof, the Company will pay the
Executive any portion of Executive's bonus compensation pursuant to Section 3(b)
hereof which has accrued hereunder on or prior to the date of termination but
has not been paid (the "Prorata Bonus"). The Prorata Bonus shall be calculated
by: (i) annualizing the Company's performance through the date of termination
for the fiscal year in question; (ii) determining the bonus compensation due to
the Executive pursuant to Section 3(b) hereof on the basis of the Company's
annualized results for the fiscal year in question; and (iii) prorating the
bonus compensation based on the portion of the fiscal year elapsed at the date
of termination. Except for purposes of this Section 7, the Executive's bonus
compensation pursuant to Section 3(b) for any fiscal year shall not be deemed to
have been accrued prior to the completion of the fiscal year in question. If,
within 12 months following a "Change of Control," the Executive's employment
with the Company terminates pursuant to Section 6(a)(vi) or Section 6(a)(vii)(x)
hereof, the Company will, within 30 days of such termination, pay the Executive
lump sum severance pay in an amount equal to two (2) times the Executive's
annual Salary (at the Salary rate in effect on the date of termination of the
Executive's employment hereunder), less all applicable taxes and withholdings.
(b) Upon Termination Not Within Twelve Months of a Change of
Control. If the Executive's employment with the Company terminates for whatever
reason where paragraph 7(a) does not apply, the Company will pay the Executive
any portion of the Salary accrued hereunder on or prior to the date of
termination but not paid. If the Executive's employment with the Company
terminates pursuant to Section 6(a)(vi) or Section 6(a)(vii)(x) hereof, but not
within twelve months of a Change of Control, the Company will pay the Executive
his Prorata Bonus as calculated in the manner described in paragraph 7(a).
Except for purposes of this Section 7, the Executive's bonus compensation
pursuant to Section 3(b) for any fiscal year shall not be deemed to have been
accrued prior to the completion of the fiscal year in question. If the
Executive's employment with the Company terminates pursuant to Section 6(a)(vi)
or Section 6(a)(vii)(x) hereof, but not within twelve months of a Change of
Control, the Company will, within 30 days of such termination, pay the Executive
lump sum severance pay in an amount equal to one and three-fourths (1.75) times
the Executive's annual Salary (at the Salary rate in effect on the date of
termination of the Executive's employment hereunder), less all applicable taxes
and withholdings.
(c) In the event the employment of Executive is terminated for
any reason set forth in paragraph (a) or (b) of this Section 7, Executive shall
be paid an additional
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lump sum equal to the then current lease buyout price (including taxes) of
Executive's Company leased automobile. Thereupon, Executive shall directly
purchase said vehicle from the leasing company that leases said vehicle to the
Company.
(d) The foregoing payments (except for accrued but unused
vacation pay) upon termination shall constitute the exclusive payments due the
Executive upon termination under this Agreement, but shall have no effect on any
benefits which may be due the Executive under any plan of the Company which
provides benefits after termination of employment, except that the Executive
shall not be eligible for benefits under The Grand Union Company Severance Plan
for Exempt Personnel.
8. Executive Covenants.
(a) Unauthorized Disclosure. The Executive agrees and
understands that in the Executive's position with the Company, the Executive
will be exposed to and receive information relating to the confidential affairs
of the Company, including but not limited to technical information, business and
marketing plans, strategies, customer information, other information concerning
the Company's products, promotions, development, financing, expansion plans,
business policies and practices, and other forms of information considered by
the Company to be confidential and in the nature of trade secrets. Except to the
extent that the proper performance of the Executive's duties, services and
responsibilities hereunder may require disclosure, and except as such
information (i) was known to the Executive prior to his employment by the
Company or (ii) was or becomes generally available to the public other than as a
result of a disclosure by the Executive in violation of the provisions of this
Section 8(a), the Executive agrees that during the Employment Term and
thereafter the Executive will keep such information confidential and not
disclose such information, either directly or indirectly, to any third person or
entity without the prior written consent of the Company. This confidentiality
covenant has no temporal, geographical or territorial restriction. Upon
termination of the Executive's employment under this Agreement, the Executive
will promptly supply to the Company all property, keys, notes, memoranda,
writings, lists, files, reports, customer lists, correspondence, tapes, disks,
cards, surveys, maps, logs, machines, technical data or any other tangible
product or document which has been produced by, received by or otherwise
submitted to the Executive during or prior to the Employment Term.
(b) Non-competition. By and in consideration of the Company's
entering into this Agreement and the Salary and benefits to be provided by the
Company hereunder, and further in consideration of the Executive's exposure to
the proprietary information of the Company, the Executive agrees that, subject
to the provisions of the last two sentences of Section 1(b), the Executive will
not, during the Employment Term, directly or indirectly own, manage, operate,
join, control, be employed by, or participate in the ownership, management,
operation or control of or be connected in any manner, including but not limited
to holding the positions of shareholder, director, officer, consultant,
independent contractor, employee, partner, or investor, with any Competing
Enterprise. For purposes of this paragraph, the term "Competing Enterprise"
shall mean any person, corporation, partnership or other entity operating one or
more supermarkets within a ten (10) mile radius of any Company store if the
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aggregate of such Company stores (x) represent ten percent (10%) or more of the
total number of Company stores operating at the date of termination (or other
applicable date invoking the application of this non-compete clause) or (y)
account for ten percent (10%) or more of the annual sales volume of the Company
for the fiscal year immediately preceding the year of termination (or other
applicable date invoking application of this non-compete clause). For this
purpose, (1) "supermarket" means any store which is part of a supermarket or
combination store chain or is a warehouse club selling grocery and perishable
items to the public and (2) any entity operating supermarkets includes any
wholesaler to independently-owned supermarkets operating under the same trade
name. The prohibition of this clause (b) shall not be deemed to prevent
Executive from owning 1% or less of any class of equity securities of an entity
that has a class of equity securities registered under Section 12 of the
Securities Exchange Act of 1934, as amended. Notwithstanding anything to the
contrary in this Section 8(b), the non-competition clause contained in this
Section 8(b) shall immediately terminate on the effective date of termination of
the Executive's employment with the Company unless such termination is by the
Company for Cause or is by the Executive without Good Reason, in which case the
non-competition clause contained in this Section 8(b) shall remain in full force
and effect until the fourth anniversary of the Effective Date.
(c) Non-solicitation. During the Employment Term and for a
period of two years thereafter, the Executive shall not interfere with the
Company's relationship with, or endeavor to entice away from the Company, any
person who at any time during the Employment Term was an employee of the
Company.
(d) Transactions Offered to the Corporation; Proprietary
Materials. During the term of his employment hereunder, Executive agrees to
bring to the attention of the Board of Directors or the Chief Executive Officer,
all proposals, business opportunities or investments of whatever nature, in
areas in which the Company and/or any of its subsidiary companies is active or
may be interested in becoming active, which are created or devised by Executive
or come to the attention of Executive and which might reasonably be expected to
be of interest to the Company and/or any its subsidiary companies. Without
limiting the generality of the foregoing, Executive acknowledges and agrees that
memoranda, notes, records and other documents made or compiled by Executive or
made available to Executive during the term of this Agreement concerning the
business and/or activities of the Company and/or any of its subsidiary companies
shall be the Company's property and shall be delivered by Executive to the Chief
Executive Officer upon termination of this Agreement or at any other time at the
request of the Board of Directors.
(e) Remedies. The Executive agrees that any breach of the terms
of this Section 8 would result in irreparable injury and damage to the Company
for which the Company would have no adequate remedy at law; the Executive
therefore also agrees that in the event of said breach or any threat of breach,
the Company shall be entitled to an immediate injunction and restraining order
to prevent such breach and/or threatened breach and/or continued breach by the
Executive and/or any and all persons and/or entities acting for and/or with the
Executive, without having to prove damages, in addition to any other remedies to
which the Company may be entitled at law or in equity. The terms of this
paragraph shall not
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prevent the Company from pursuing any other available remedies for any breach or
threatened breach hereof, including but not limited to the recovery of damages
from the Executive.
The provisions of subsections (a), (b), (c), (d) and (e) of this
Section 8 shall survive any termination of this Agreement and the Employment
Term. The existence of any claim or cause of action by the Executive against the
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of the covenants and agreements of
this Section 8.
9. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been given (i) if
personally delivered, when so delivered, or (ii) if mailed, three (3) business
days after having been placed in the United States mail, registered or
certified, postage prepaid, return receipt requested, addressed to the party to
whom it is directed at the address set forth below:
If to the Company:
The Grand Union Company
000 Xxxxxxxxxxx Xxxxxxxxx
Xxxxx, Xxx Xxxxxx 00000
Attention: one copy to the Chief Executive Officer and
one copy to the Chief Financial Officer
one copy to the Chairman of the Board of Directors
If to the Executive:
Xxxxx X. Xxxxx
(at his local address as reflected in the Company's records)
or to such other address as to which notice is given pursuant hereto.
10. Binding Effect/Assignment. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, executors,
personal representatives, estates, successors (including, without limitation, by
way of merger or change of control) and assigns. Notwithstanding the provisions
of the immediately preceding sentence, the Executive shall not assign all or any
portion of this Agreement without the prior written consent of the Company.
11. Entire Agreement. This Agreement sets forth the entire understanding
of the parties hereto with respect to the subject matter hereof and supersedes,
as of the Effective Date, all prior agreements, written or oral, between them as
to such subject matter. This Agreement may not be amended, nor may any provision
hereof be modified or waived, except by an instrument in writing duly signed by
the party to be charged.
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12. Severability. If any provision of this Agreement, or any application
thereof to any circumstances, is invalid, in whole or in part, such provision or
application shall to that extent be severable and shall not affect other
provisions or applications of this Agreement.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New Jersey, without reference
to the principles of conflict of laws.
14. Modifications and Waivers. No provisions of this Agreement may be
modified, altered or amended except by an instrument in writing executed by the
parties hereto. No waiver by either party hereto of any breach by the other
party hereto of any provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions at the time
or at any prior or subsequent time.
15. Headings. The headings contained herein are solely for the purposes of
reference, are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by authority of its Board of Directors, and the Executive has hereunto set his
hand, as of the day and year first above written.
THE GRAND UNION COMPANY
By:
-----------------------------------------
Xxxx X. Xxxxxxx
President and Chief Executive Officer
as authorized by the Board of Directors
By:
-----------------------------------------
Xxxxx X. Xxxxx
Original ____ of 2
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EXHIBIT A
April 13, 2000
Xxxxx X. Xxxxx
Senior Vice President,
General Counsel and Corporate Secretary
The Grand Union Company
000 Xxxxxxxxxxx Xxxxxxxxx
Xxxxx, Xxx Xxxxxx 00000
Re: Stock Option Grant
Dear Xx. Xxxxx:
This is to confirm the stock option grant made to you by action of the
Compensation Committee of the Board of Directors on April 13, 2000, and as a
part of your Employment Agreement effective as of February 14, 2000 (the
"Effective Date").
In this regard, effective April 13, 2000 (the "Grant Date"), you have been
granted 125,000 Non-Qualified Stock Options (NQSO) giving you the right to
purchase a total of 125,000 Option Shares of Grand Union Common Stock (i.e., one
share of Common Stock per Option). The particular terms governing your Option
Grant as set forth in the Employment Agreement are confirmed below.
Additionally, attached hereto is a copy of the 1995 Equity Incentive Plan
("EIP"), as modified and amended, which covers the standard terms and conditions
of Option Grants to our Company's associates. Any terms set forth below, which
differ from or modify the terms contained in the EIP shall take precedence over
the terms of the EIP.
Exercise Prices - Your Options are exercisable pursuant to the following
schedule:
1. 25,000 Options (20% of the total granted) are exercisable
at an exercise price of $4.65 per Option;
2. 37,500 Options (30% of the total granted) are exercisable at
an exercise price of $5.72 per Option;
3. 37,500 Options (30% of the total granted) are exercisable at
an exercise price of $7.72 per Option; and
4. 25,000 Options (20% of the total granted) are exercisable at
an exercise price of $9.72 per Option;
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Vesting, Forfeiture and Transferability
1. Options under this NQSO will vest ratably across each of the
four exercise tranches listed above, as follows:
a. one-fourth on the Grant Date, and
b. one-fourth each on February 14, 2001, February 14, 2002
and February 14, 2003.
2. Forfeiture of Options under this NQSO shall be governed by
paragraph 4 of the Employment Agreement.
3. Vested Options and Option Shares under this NQSO will
become transferable as set forth below:
a. Prior to the first anniversary of the Effective
Date - 0 Options and Option Shares;
b. On and after the first anniversary of the Effective
Date - 25,000 Options and Option Shares;
c. On and after the second anniversary of the Effective
Date - 25,000 additional Options and Option Shares;
d. On and after the third anniversary of the Effective
Date - 37,500 additional Options and Option Shares;
and
e. On and after the fourth anniversary of the Effective
Date - 37,500 additional Options and Option Shares.
4. Except as set forth in paragraph 3 above, and except for
agreed-upon family estate planning transfers, Options and
Option Shares under this NQSO will not be transferred prior to
the fourth anniversary of the Effective Date. Thereafter,
vested Options and Option Shares will be freely transferable,
subject to applicable securities laws.
Duration of Options - The latest date on which your Options may be exercised is
May 14, 2004.
Events Affecting Your Options - Sections 4(c) and 4(d) of the Employment
Agreement explain the status of your Options in the event of your termination of
employment.
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Please acknowledge your receipt and acceptance of your Stock Option Grant
by signing in the space provided below and returning the document to me.
Very truly yours,
Xxxx X. Xxxxxxx
President and
Chief Executive Officer
Acknowledged and Accepted
---------------------------
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