Exhibit 10.174
THE XXXXXXX XXXXXX CORPORATION
1992 STOCK INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into as of _____________________ between THE
XXXXXXX XXXXXX CORPORATION, a Delaware corporation (the "Company"), and
___________ (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Board has adopted and the stockholders of the Company have
approved The Xxxxxxx Xxxxxx Corporation 1992 Stock Incentive Plan, as amended
(the "Plan") in order to provide selected Key Employees and Non-Employee
Directors with an opportunity to acquire Common Shares; and
WHEREAS, the Committee has determined that the Optionee is a Key Employee
and that it would be in the best interests of the Company and its stockholders
to grant the stock option described in this Agreement (the "Option") to the
Optionee as an inducement to enter into or remain in the service of the Company
or its subsidiaries and as an incentive for extraordinary efforts during such
service:
NOW, THEREFORE, the Optionee and the Company agree to the provisions set
forth in this Agreement. The Optionee signifies agreement with all of the terms
and conditions of this Agreement by failing to provide written objection to the
Company to any of the terms hereunder within 30 days of receipt of this
Agreement, and in any event by exercising an Option granted hereunder.
SECTION 1. GRANT OF OPTION.
(a) Option. On the terms and conditions stated below, the Company hereby
grants to the Optionee the option to purchase _____ Common Shares for the amount
of $_____ per Common Share (the "Exercise Price"), which is agreed to be 100% of
the Fair Market Value thereof on the Date of Grant. The number of Common Shares
subject to this Option and the Exercise Price shall be subject to adjustment
under certain limited circumstances as provided in Article 10 of the Plan.
(b) 1992 Stock Incentive Plan. This Option is granted pursuant to the Plan,
the provisions of which are incorporated into this Agreement by reference, and a
copy of which is available upon request at no charge to the Optionee from the
Company. In the event of any inconsistency between the provisions of the Plan
and the provisions of this Agreement, the provisions of the Plan shall prevail.
(c) Tax Treatment. This Option is intended to qualify as an incentive stock
option described in Section 422(b) of the Code.
(d) Expiration Date. Notwithstanding any other provision contained herein,
this Option shall expire not later than the date immediately preceding the tenth
anniversary of the Date of Grant.
SECTION 2. NO TRANSFER OR ASSIGNMENT OF OPTION.
Except as otherwise provided in this Agreement or as permitted by the Plan,
this Option, and any interest therein, shall not be transferred, assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise)
and shall not be subject to sale under execution, attachment or similar process.
SECTION 3. RIGHT TO EXERCISE OPTION.
(a) Vesting. This Option shall become exercisable by the Optionee with
respect to the total number of Common Shares subject to this Option as set forth
under Section 1(a) above (the "Total Award Common Shares"), subject to the
continued employment of the Optionee by the Company or its subsidiaries on each
date either set forth below, and subject to the provisions of Section 3(e)
hereof, in annual increments of the Total Award Common Shares beginning on the
first anniversary of the Date of Grant, such that (i) no portion of this Option
will be exercisable prior to such first anniversary of the Date of Grant; (ii)
upon and after such first anniversary of the Date of Grant, the Optionee may
purchase up to twenty-five percent (25%) of the Total Award Common Shares,
provided the optionee has been continually employed by the Company or its
subsidiaries since the date of grant; (iii) upon and after the second, third and
fourth anniversaries of the Date of Grant, respectively, the Optionee may
purchase an additional twenty-five percent (25%) of the Total Award Common
Shares, provided in each case that the Optionee has been continually employed by
the Company or its subsidiaries since the Date of Grant.
(b) Minimum Number of Shares. This Option shall be exercisable for at least
100 Common Shares (without regard to adjustments to the number of Common Shares
subject to this Option pursuant to Article 10 of the Plan) or, if less, (i) the
number of shares with respect to which this Option has become vested under
Section 3(a) above, or (ii) all of the remaining Common Shares subject to this
Option.
(c) Full Vesting on Change in Control. Notwithstanding subparagraph (a)
hereof, this Option shall become fully exercisable as to the Total Award Common
Shares immediately preceding any Change in Control with respect to the Company.
In the event that the Committee determines that a Change in Control is likely to
occur, the Company shall so advise the Optionee, and the provisions of this
subparagraph (c) shall take effect as of the date ten (10) days prior to the
anticipated date of such Change in Control.
(d) Accelerated Vesting on Retirement in Certain Cases. Notwithstanding
subparagraph (a) hereof, if the Optionee terminates employment with the Company
and its subsidiaries on account of Retirement, all options granted hereunder
shall become fully exerciseable, but only if such retirement occurs at least two
(2) years after the date of grant.
(e) Vesting Contingent on Satisfactory Performance. Notwithstanding
subparagraph (a) hereof, the continued accrual of vesting pursuant to
subparagraph (a) is contingent upon the Optionee's satisfactory job performance,
and the Company may, in its sole discretion, upon notice to the Optionee suspend
or delay the vesting of Options hereunder for any period of time in the event
that the Company determines, within its sole discretion, that the Optionee's
performance is unsatisfactory.
SECTION 4. EXERCISE OF OPTION.
(a) Notice of Exercise. The Optionee or the Optionee's representative may
exercise this Option by giving written notice to the Company (or its designee)
pursuant to Section 9(d). The notice shall specify the election to exercise this
Option, the date of exercise, the number of Common Shares for which it is being
exercised and the form of payment. The notice shall be signed by the person or
persons exercising this Option. In the event that this Option is being exercised
by the representative of the Optionee, the notice shall be accompanied by proof
satisfactory to the Company of the representative's right to exercise this
Option. The Purchase Price for Common Shares shall be paid in a form that
conforms to Sections 6.1 through 6.3 of the Plan at the time such notice is
given.
(b) Issuance of Shares. After receiving a proper notice of exercise, the
Company shall cause to be issued a certificate or certificates for the Common
Shares so purchased, registered in the name of the person exercising this
Option. The Company shall cause such certificate or certificates to be delivered
to or upon the order of the person exercising this Option.
SECTION 5. TERM.
(a) Basic Term. This Option shall in any event expire on the date specified
in Section 1(d).
(b) Termination of Employment. Subject only to the provisions of Section
3(d), upon the Optionee's termination of employment with the Company and its
subsidiaries for any reason, whether as a result of death, Permanent Disability
or any other involuntary or voluntary event of termination of employment
(including a termination of employment as may be provided for or determined
under an employment contract, if any, entered into between the Company or its
subsidiary and the Optionee) (each, a "Termination Event"), no unvested portion
of the Total Award Common Shares thereafter shall vest or become exercisable.
With respect to the vested or exercisable portion of the Total Award Common
Shares as of the date of such a Termination Event, this Option shall expire on
the earlier of (i) the expiration date specified in Section 1(d) or (ii)
whichever of the following is applicable: (A) in the case of a Termination Event
resulting from death or Permanent Disability, the date one year following such
Termination Event; or (B) in all other cases, the date three (3) months
following such Termination Event.
(c) Divestment of Options. Notwithstanding anything to the contrary
contained herein, this Option shall immediately become forfeited and expire in
the event that the Company terminates the Optionee's employment on account of
conduct inimical to the best interests of the Company, including, without
limitation, conduct constituting a violation of law or Company policy, fraud,
theft, conflict of interest, dishonesty or harassment. The determination whether
the Optionee's employment has been terminated on account of conduct inimical to
the best interests of the Company shall be made by the Company in its sole
discretion.
SECTION 6. LEGALITY OF INITIAL ISSUANCE.
No Common Shares shall be issued upon the exercise of this Option unless
and until the Company has determined that:
(a) A registration statement for the Common Shares is effective under
the Securities Act or an exemption from the registration requirements
thereof has been perfected;
(b) Any applicable listing requirement of any stock exchange on which
Common Shares are listed has been satisfied; and
(c) Any other applicable provisions of state or federal law have been
satisfied.
SECTION 7. NO REGISTRATION RIGHTS.
The Company may, but shall not be obligated to, register or qualify the
Common Shares for resale or other disposition by the Optionee under the
Securities Act or any other applicable law.
SECTION 8. RESTRICTIONS ON TRANSFER OF SHARES.
(a) Restrictions. Regardless of whether the offering and sale of Common
Shares under the Plan have been registered under the Securities Act or have been
registered or qualified under the securities laws of any state, the Company may
impose restrictions upon the sale, pledge or other transfer of such Common
Shares (including the placement of appropriate legends on stock certificates)
if, in the judgment of the Company and its counsel, such restrictions are
necessary or desirable in order to achieve compliance with the provisions of the
Securities Act, the securities laws of any state or any other law.
(b) Investment Intent at Exercise. If the Common Shares under the Plan are
not registered under the Securities Act but an exemption is available which
requires an investment representation or other representation, the Optionee
shall represent and agree at the time of exercise that the Common Shares being
acquired upon exercising this Option are being acquired for investment, and not
with a view to the sale or distribution thereof, and shall make such other
representations as are deemed necessary or appropriate by the Company and its
counsel.
(c) Administration. Any determination by the Company and its counsel in
connection with any of the matters set forth in this Section 8 shall be
conclusive and binding on the Optionee and all other persons.
SECTION 9. MISCELLANEOUS PROVISIONS.
(a) Withholding Taxes. To the extent required by applicable federal, state,
local or foreign law the Optionee shall make arrangements satisfactory to the
Company for the satisfaction of any withholding tax obligations that arise by
reason of the exercise of an Option hereunder and no Option may be exercised
unless such obligation is satisfied.
(b) Rights as a Stockholder. Neither the Optionee nor the Optionee's
representative shall have any rights as a stockholder with respect to any Common
Shares subject to this Option until certificates for such Common Shares have
been issued in the name of the Optionee or the Optionee's representative.
(c) No Employment Rights. Nothing in this Agreement shall be construed as
giving the Optionee the right to be retained as an employee of the Company or
its subsidiaries. The Company reserves the right to terminate the Optionee's
employment at any time for any reason, subject only to the terms of any written
employment contract entered into between the Company and the Optionee.
(d) Notice. Any notice required by the terms of this Agreement shall be
given in writing and shall be deemed effective upon personal delivery or upon
deposit with the appropriate postal service, by registered or certified mail
with postage and fees prepaid and addressed to the party entitled to such notice
at the address shown below such party's signature on this Agreement, or at such
other address as such party may designate by ten (10) days advance written
notice to the other party to this Agreement. Notwithstanding the foregoing, no
notice of exercise, as required by Section 4(a), shall be effective until actual
receipt thereof by the Company or its designee.
(e) Entire Agreement. This Agreement and the Plan constitute the entire
agreement between the parties hereto with regard to the subject matter hereof;
provided, however, that in the event of any inconsistency or conflict between
any provision hereof and the terms of the Plan, the terms of the Plan shall
control.
(f) Choice of Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California, as such laws are applied
to contracts entered into and performed in such State.
SECTION 10. DEFINITIONS.
(a) Capitalized terms defined in the Plan shall have the same meaning when
used in this Agreement.
(b) "Change in Control" shall mean the occurrence of any of the following
events after the effective date of the Plan as set out in Section 15.1 of the
Plan:
(1) A change in control required to be reported pursuant to Item 6(e)
of Schedule 14A of Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act");
(2) A change in the composition of the Company's Board of Directors
(the "Board"), as a result of which fewer than two-thirds of the incumbent
directors are directors who either (i) had been directors of the Company 24
months prior to such change or (ii) were elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of
the directors who had been directors of the Company 24 months prior to such
change and who were still in office at the time of the election or
nomination;
(3) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 20 percent or more of the combined
voting power of the Company's then outstanding securities ordinarily (and
apart from rights accruing under special circumstances) having the right to
vote at elections of directors (the "Base Capital Stock"); provided,
however, that any change in the relative beneficial ownership of securities
of any person resulting solely from a reduction in the aggregate number of
outstanding shares of Base Capital Stock, and any decrease thereafter in
such person's ownership of securities, shall be disregarded until such
person increases in any manner, directly or indirectly, such person's
beneficial ownership of any securities of the Company.
(c) "Common Share" shall mean one share of the common stock of the Company.
(d) "Date of Grant" shall mean the date of this Agreement, which is the
date first written above.
(e) "Fair Market Value" shall mean the market price of a Common Share,
determined by the Committee as follows:
(1) If the Common Share was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing price
reported by the applicable composite-transactions report for such date;
(2) If the Common Share was traded over-the-counter on the date in
question and was classified as a national market issue, then the Fair
Market Value shall be equal to the last transaction price quoted by the
NASDAQ system for such date;
(3) If the Common Share was traded over-the-counter on the date in
question but was not classified as a national market issue, then the Fair
Market Value shall be equal to the mean between the last reported
representative bid and asked prices quoted by the NASDAQ system for such
date; and
(4) If none of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith on such
basis as it deems appropriate.
(f) "Permanent Disability" shall mean that the Optionee is unable to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which has lasted, or can be expected to last, for
a continuous period of not less than twelve (12) months or which can be expected
to result in death.
(g) "Purchase Price" shall mean the Exercise Price multiplied by the number
of Common Shares with respect to which this Option is being exercised.
(h) "Retirement" shall mean a termination of employment of the Optionee
occurring at any time after the Optionee (i) has attained fifty (50) years of
age, and (ii) completed seven (7) years of service, as determined pursuant to
the terms of the Xxxxxxx Xxxxxx Profit Sharing and Employee Stock Ownership
Plan.
(i) "Securities Act" shall mean the Securities Act of 1933, as amended.
