1
EXHIBIT 10.2
NONEMPLOYEE DIRECTOR'S STOCK OPTION AGREEMENT
AGREEMENT made as of the ______ day of ________________, 1998, between
NATCO GROUP INC., a Delaware corporation (the "COMPANY") and
_________________________ ("DIRECTOR").
To carry out the purposes of the NATCO GROUP INC. DIRECTORS
COMPENSATION PLAN (the "PLAN"), a copy of which is attached hereto as Exhibit
A, by affording Director the opportunity to purchase shares of common stock,
$0.01 par value, of the Company ("STOCK"), and in consideration of the mutual
agreements and other matters set forth herein and in the Plan, the Company and
Director hereby agree as follows:
1. GRANT OF OPTION. The Company hereby irrevocably grants to
Director the right and option ("OPTION") to purchase all or any part of an
aggregate of 6,667 shares of Stock, on the terms and conditions set forth
herein and in the Plan, which Plan is incorporated herein by reference as a
part of this Agreement. This Option shall not be treated as an incentive stock
option within the meaning of section 422(b) of the Code.
2. PURCHASE PRICE. The purchase price of Stock purchased
pursuant to the exercise of this Option shall be $8.81 per share.
3. EXERCISE OF OPTION. Subject to the earlier expiration of this
Option as herein provided, this Option may be exercised, by written notice to
the Company at its principal executive office addressed to the attention of its
Chief Executive Officer, at any time and from time to time after the date of
grant hereof, but, except as otherwise provided below, this Option shall not be
exercisable for more than a percentage of the aggregate number of shares
offered by this Option determined by the calendar quarters ending after the
date of grant hereof and before the date of such exercise, in accordance with
the following schedule:
PERCENTAGE OF SHARES
CALENDAR QUARTER ENDING THAT MAY BE PURCHASED
----------------------- ---------------------
MARCH 31, 1998 10%
JUNE 30, 1998 20%
SEPTEMBER 30, 1998 30%
DECEMBER 31, 1998 40%
MARCH 31, 1999 50%
JUNE 30, 1999 60%
SEPTEMBER 30, 1999 70%
DECEMBER 31, 1999 80%
MARCH 31, 2000 90%
JUNE 30, 2000 100%
This Option is not transferable by Director otherwise than (a) by will
or the laws of descent and distribution, (b) pursuant to a qualified domestic
relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or (c) with the consent of
2
the Board. If a Director's membership on the Board terminates for any reason
other than Cause, this Option may be exercised at any time during the period of
three years following such termination by Director, by Director's designated
beneficiary or beneficiaries under the Plan, by the person who acquires this
Option pursuant to the terms of the Plan, or, in the event of Director's
disability, by Director's guardian or legal representative, but in each case
only as to the number of shares Director was entitled to purchase hereunder
upon exercise of this Option as of the date Director's membership on the Board
so terminates. If Director's membership on the Board terminates for Cause,
this Option shall terminate and cease to be exercisable as of the date
Director's membership on the Board so terminates. For purposes of this
paragraph, "Cause" shall mean Director's gross negligence or willful misconduct
in performance of his duties as a director of the Company, or Director's final
conviction of a felony or of a misdemeanor involving moral turpitude. This
Option shall not be exercisable in any event after the expiration of ten years
from the date of grant hereof.
The purchase price of shares as to which this Option is exercised
shall be paid in full at the time of exercise (1) in cash (including check,
bank draft or money order payable to the order of the Company), (2) by
delivering to the Company shares of Stock having a fair market value equal to
the purchase price, (3) any combination of cash or Stock, or (4) in a
broker-financed "cashless exercise" pursuant to the procedures established by
the Board. No fraction of a share of Stock shall be issued by the Company upon
exercise of an Option or accepted by the Company in payment of the purchase
price thereof; rather, Director shall provide a cash payment for such amount as
is necessary to effect the issuance and acceptance of only whole shares of
Stock. Unless and until a certificate or certificates representing such shares
shall have been issued by the Company to Director, Director (or the person
permitted to exercise this Option pursuant to the terms hereof) shall not be or
have any of the rights or privileges of a stockholder of the Company with
respect to shares acquirable upon an exercise of this Option.
4. WITHHOLDING OF TAX. To the extent that the exercise of this
Option or the disposition of shares of Stock acquired by exercise of this
Option results in compensation income to Director for federal or state income
tax purposes, Director shall deliver to the Company at the time of such
exercise or disposition such amount of money or shares of Stock as the Company
may require to meet its obligation, if any, under applicable tax laws or
regulations, and, if Director fails to do so, the Company is authorized to
withhold from any cash or Stock remuneration then or thereafter payable to
Director any tax required to be withheld by reason of such resulting
compensation income. Upon an exercise of this Option, the Company is further
authorized in its discretion to satisfy any such withholding requirement out of
any cash or shares of Stock distributable to Director upon such exercise.
5. STATUS OF STOCK. Director understands that at the time of the
execution of this Agreement the shares of Stock to be issued upon exercise of
this Option have not been registered under the Securities Act of 1933, as
amended (the "Act"), or any state securities law, and that the Company does not
currently intend to effect any such registration. Until the shares of Stock
acquirable upon the exercise of this Option have been registered for issuance
under the Act, the Company will not issue such shares unless the holder of this
Option provides the Company with a written opinion of legal counsel, who shall
be satisfactory to the Company, addressed to the Company and satisfactory in
form and substance to the Company's counsel, to the effect that the
-2-
3
proposed issuance of such shares to such Option holder may be made without
registration under the Act. In the event exemption from registration under the
Act is available upon an exercise of this Option, Director (or the person
permitted to exercise this Option in the event of Director's death), if
requested by the Company to do so, will execute and deliver to the Company in
writing an agreement containing such provisions as the Company may require to
assure compliance with applicable securities laws.
Director agrees that the shares of Stock which Director may acquire by
exercising this Option shall be acquired for investment without a view to
distribution, within the meaning of the Act, and shall not be sold,
transferred, assigned, pledged or hypothecated in the absence of an effective
registration statement for the shares under the Act and applicable state
securities laws or an applicable exemption from the registration requirements
of the Act and any applicable state securities laws. Director also agrees that
the shares of Stock which Director may acquire by exercising this Option will
not be sold or otherwise disposed of in any manner which would constitute a
violation of any applicable securities laws, whether federal or state.
In addition, Director agrees (i) that the certificates representing
the shares of Stock purchased under this Option may bear such legend or legends
as the Company deems appropriate in order to assure compliance with applicable
securities laws, (ii) that the Company may refuse to register the transfer of
the shares of Stock purchased under this Option on the stock transfer records
of the Company if such proposed transfer would in the opinion of counsel
satisfactory to the Company constitute a violation of any applicable securities
law and (iii) that the Company may give related instructions to its transfer
agent, if any, to stop registration of the transfer of the shares of Stock
purchased under this Option.
6. STOCKHOLDERS AGREEMENT. In the event Director exercises this
Option and purchases shares of Stock prior to the initial public offering of
the Stock, Director shall be subject to the terms of the Stockholders Agreement
dated the 30th day of June, 1997, by and among Capricorn Investors, L.P.,
Capricorn Investors II, L.P. and Xxxxxxxx Point Industries, Inc., a copy of
which is attached hereto. Further, Director shall not sell any of the shares
purchased under this Option within six months after the initial public offering
of the Stock.
7. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of any successors to the Company and all persons lawfully
claiming under Director.
8. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
-3-
4
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officer thereunto duly authorized, and Director has executed
this Agreement, all as of the day and year first above written.
NATCO GROUP, INC.
By:
-----------------------------------
Title:
-----------------------------------
Director
-4-
