EXHIBIT 10(b)
1998 Plan Stock Option Agreement for Non-Employee Directors
Stock Option No. 00-000
THE XXXXXX & SESSIONS CO.
Non-Qualified Stock Option Agreement
This Non-Qualified Stock Option Agreement (this "Agreement")
dated as of [Date of Grant] by and between The Xxxxxx & Sessions Co., an Ohio
corporation (the "Company"), and [Optionee Name], a Non-Employee Director of the
Company (the "Optionee").
WITNESSETH:
WHEREAS, Section 9(a)(i) of the Xxxxxx & Sessions Co. 1998
Incentive Equity Plan (As Amended and Restated as of April 30, 2004) (the "
Plan") provides for the automatic annual grant of options to purchase Common
Shares of the Company ("Common Shares") to Non-Employee Directors of the Company
on the Monday following the Company's annual meeting of shareholders, subject to
the terms and conditions of the Plan;
WHEREAS, the execution of a Non-Qualified Stock Option
Agreement substantially in the form hereof has been authorized by a resolution
of the Governance, Nominating and Compensation Committee (the "Committee") of
the Company's Board of Directors (the "Board") duly adopted on April 29, 2004
and ratified by the Committee on May 28, 2004; and
NOW, THEREFORE, the Company hereby grants to the Optionee this
Non-Qualified Stock Option (this "Option") to purchase Four thousand Common
Shares (4,000) Common Shares, at a purchase price of [Dollars and 000/1000
[$____]] per share (the "Option Price"), which is the Market Value Per Share on
the Date of Grant. The Company agrees to cause certificates for any Common
Shares purchased hereunder to be delivered to the Optionee upon payment of the
Option Price in full, all subject, however, to the terms and conditions of the
Plan and the terms and conditions hereinafter set forth. This Option is intended
to be a non-qualified stock option and shall not be treated as an "incentive
stock option" within the meaning of that term under Section 422 of the Code, or
any successor provision thereto.
1. DEFINITIONS. Capitalized terms not otherwise defined herein shall have
the meanings assigned to them in the Plan, unless the context clearly indicates
otherwise. For purposes of this Agreement, the following additional terms are
defined as set forth below:
(a) "Retirement" means termination of service on the Board after
reaching 70 years of age.
2. VESTING OF OPTION. This Option (until terminated or exercised as
hereinafter provided) shall be exercisable on the first anniversary of the Date
of Grant if during the one-year period commencing on the Date of Grant and
ending on the first anniversary thereof, the Optionee shall continue to serve as
a Director of the Company. To the extent then exercisable, this Option may be
exercised in whole or in part from time to time.
3. ACCELERATION OF OPTION. Notwithstanding Section 2 of this Agreement,
upon a "Change in Control" as defined in Section 14 of the Plan and upon
termination of employment of the Optionee's service as a Director of the Company
by reason of the Optionee's death, disability or Retirement, this Option shall
become immediately exercisable and vested in full.
4. TERMINATION OF OPTION. This Option, to the extent not exercisable at
such time, shall terminate contemporaneously with the termination of the
Optionee's service on the Board. Notwithstanding any other provision of this
Agreement, this Option, to the extent exercisable upon the date of the
termination of the Optionee's service on the Board, shall terminate upon the
earliest to occur of the following:
(a) 90 days following the date of the Optionee's termination of
service on the Board, if such termination of service is other than by reason of
the Optionee's death, disability or Retirement;
(b) 36 months from the date of the Optionee's termination of
service on the Board, if such termination is by reason of the Optionee's
Retirement;
(c) one year from the date of the Optionee's termination of
service on the Board, if such service on the Board is by reason of the
Optionee's death or disability; or
(d) the close of business on [Expiration Date], which is ten years
from the Date of Grant.
5. TRANSFERABILITY OF OPTION.
(a) Except as provided in Section 5(b) below, this Option is not
transferable by the Optionee other than by will or the laws of descent and
distribution, and is exercisable, during the lifetime of the Optionee only by
the Optionee, or in the event of the Optionee's legal incapacity, by the
Optionees's guardian or legal representative acting in a fiduciary capacity on
behalf of the Optionee under state law and court supervision, subject to the
provisions of Section 4 hereof.
(b) Notwithstanding Section 5(a) above, this Option is
transferable by the Optionee, with the prior consent of the Committee, without
payment of consideration therefor by the transferee, to any one or more of the
Family Members of the Optionee, except that (i) no such transfer will be
effective unless reasonable prior notice of such transfer is delivered to the
Company and such transfer is thereafter effected in accordance with any terms
and conditions that have been made applicable to such transfer by the Company or
the Committee and (ii) any such transferee shall be subject to the same terms
and conditions under the Plan and this Agreement as the Optionee. For purposes
of this Section 5(b), "Family Member" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the employee's household (other than
a tenant or employee), a trust in which these persons have more than fifty
percent of the beneficial interest, a foundation in which these persons (or the
Optionee) control the management of assets, and any other entity in which these
persons (or the Optionee) own more than fifty percent of the voting interest.
6. CONTINUITY OF SERVICE ON THE BOARD. If the Optionee becomes an employee
of the Company or any Subsidiary after the Date of Grant while remaining a
member of the Board, any Options held under the Plan by the Optionee at the time
of commencement of such employment shall not be affected thereby.
7. NOTICE AND MANNER OF PAYMENT.
(a) This Option may be exercised by giving written notice to the
Company specifying the number of Common Shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price, either by (i)
certified or official bank check, (ii) in nonforfeitable unrestricted Common
Shares that are already owned by the Optionee for at least six months, or (iii)
a combination of 7(a)(i) and (ii).
2
(b) Any notice to the Company provided for herein shall be in
writing to the Company, marked Attention: Corporate Secretary at The Xxxxxx &
Sessions Co., 00000 Xxxxxxx Xxxx Xxxxx, Xxxxxxxxx, Xxxx 00000, and any notice to
the Optionee shall be addressed to said Optionee at his or her address currently
on file with the Company. Except as otherwise provided herein, any written
notice shall be deemed to be duly given if and when hand delivered, or five (5)
business days after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or three (3) business days
after having been sent by a nationally recognized overnight courier service such
as Federal Express, UPS or DHL, addressed as aforesaid. Any party may change the
address to which notices are to be given hereunder by written notice to the
other party as herein specified, except that notices of changes of address shall
be effective only upon receipt.
8. INTERPRETATION AND ADMINISTRATION OF THE PLAN. The Committee shall have
authority to interpret the provisions of this Agreement and the Plan, to adopt,
alter and repeal such administrative rules, guidelines, and practices governing
the Plan as it shall, from time to time, deem advisable, and to otherwise
supervise the administration of the Plan. All decisions made in good faith by
the Committee pursuant to the provisions hereof shall be made in the Committee's
sole discretion and shall be final and binding on all persons.
9. COMPLIANCE WITH LAW. The Company shall make reasonable efforts to
comply with all applicable federal and state securities laws; provided, however,
-------- -------
that notwithstanding any other provision of this Agreement, this Option shall
not be exercisable if the exercise thereof would result in a violation of any
such law.
10. ADJUSTMENTS. The Committee shall make or provide for such adjustments
in the number of Common Shares covered by this Option, in the Option Price
applicable to such Option, and in the kind of shares covered thereby, as the
Committee may determine is equitably required to prevent dilution or enlargement
of the Optionee's rights that otherwise would result from (a) any stock
dividend, stock split, combination of shares, recapitalization, or other change
in the capital structure of the Company, (b) any merger, consolidation,
spin-off, split-off, spin-out, split-up, reorganization, partial or complete
liquidation, or other distribution of assets or issuance of rights or warrants
to purchase securities, or (c) any other corporate transaction or event having
an effect similar to any of the foregoing. In the event of any such transaction
or event, the Committee may provide in substitution for this Option such
alternative consideration as it may determine to be equitable in the
circumstances and may require in connection therewith the surrender of this
Option.
11. AVAILABLE SHARES. The Company shall at all times until the expiration
of this Option, reserve and keep available, either in its treasury or out of its
authorized but unissued shares of Common Stock, the full number of Common Shares
deliverable upon the exercise of this Option.
12. AMENDMENTS. Any amendment to the Plan shall be deemed to be an
amendment to this Agreement to the extent that the amendment is applicable
hereto; provided, however, that no amendment shall adversely affect the rights
-------- -------
of the Optionee under this Agreement without the Optionee's consent.
13. RIGHTS AS A SHAREHOLDER. The Optionee shall have none of the rights of
a shareholder with respect to the shares of Common Stock subject to this Option
until such shares are issued to the Optionee upon exercise of this Option.
14. SEVERABILITY. In the event that one or more of the provisions of this
Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
15. RELATION TO PLAN. This Agreement is subject to the terms and conditions
of the Plan. In the event of any inconsistent provisions between this Agreement
and the Plan, the Plan shall govern. The Committee acting pursuant to the Plan,
as constituted from time to time, shall, except as expressly provided otherwise
herein, have the right to determine any questions that arise in connection with
this Option or its exercise.
3
16. SUCCESSORS AND ASSIGNS. Without limiting Section 5 hereof, the
provisions of this Agreement shall inure to the benefit of, and be binding upon,
the successors, administrators, heirs, legal representatives and assigns of the
Optionee, and the successors and assigns of the Company.
17. GOVERNING LAW. The interpretation, performance, and enforcement of this
Agreement shall be governed by the internal substantive laws of the State of
Ohio, without giving effect to the principles of conflict of laws thereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officer as of the day and year
first above written.
THE XXXXXX & SESSIONS CO.
By:______________________________
Xxxx X. Xxxxxxx
Chairman of the Board and
Chief Executive Officer
The undersigned Optionee hereby acknowledges receipt of an executed
original of this Agreement and accepts this Option granted thereunder, and the
terms and conditions set forth in this Agreement.
_________________________________
[Optionee's Name]
Dated: __________________________
4