Exhibit 10.4
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of ___________, 1998, is made by and
between CORNING CONSUMER PRODUCTS COMPANY, a Delaware corporation (the
"Company"), and the undersigned, an employee of the Company or a Subsidiary (as
defined below) or Affiliate (as defined below) of the Company (hereinafter
referred to as "Optionee").
WHEREAS, the Company wishes to afford the Optionee the
opportunity to purchase shares of common stock of the Company (the "Common
Stock");
WHEREAS, the Company wishes to carry out the Plan (as
hereinafter defined), the terms of which are hereby incorporated by reference
and made a part of this Agreement; and
WHEREAS, the Committee (as hereinafter defined), appointed to
administer the Plan, has determined that it would be to the advantage and best
interest of the Company and its stockholders to grant the Non-Qualified Options
provided for herein to the Optionee as an incentive for increased efforts during
his term of office with the Company or its Subsidiaries or Affiliates, and has
advised the Company thereof and instructed the undersigned officers to issue
said Options;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they
shall have the meaning specified in the Plan or below unless the context clearly
indicates to the contrary.
Section 1.1 - Affiliate
"Affiliate" shall mean, with respect to the Company, any
corporation directly or indirectly controlling, controlled by, or under common
control with, the Company or any other entity designated by the Board of
Directors of the Company in which the Company or an Affiliate has an interest.
Section 1.2 - Cause
"Cause" shall mean (i) the Optionee's willful and continued
failure to perform the Optionee's duties with respect to the Company and its
subsidiaries which continues beyond ten days after a written demand for
substantial performance is delivered to the Optionee by the Company or (ii)
misconduct by the Optionee involving (x) dishonesty or breach of trust in
connection with the Optionee's employment or (y) conduct which would be a
reasonable basis for an indictment of the Optionee for a felony or for a
misdemeanor involving moral turpitude.
Section 1.3 - Code
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
Section 1.4 - Committee
"Committee" shall mean the Compensation Committee of the
Company, or any other committee duly authorized by the Board of Directors of the
Company to administer the Plan and this Agreement.
Section 1.5 - Good Reason
"Good Reason" shall mean (i) a reduction in the Optionee's
base salary, other than a reduction which is part of a general salary reduction
program affecting senior executives of the Company, or (ii) a material reduction
by the Company of any provision of the Optionee's employment agreement with the
Company, if any, including any material reduction in the Optionee's duties and
responsibilities.
Section 1.6 - Management Stockholder's Agreement
"Management Stockholder's Agreement" shall mean that certain
Management Stockholder's Agreement dated as of April 1, 1998 between the
Optionee and the Company.
Section 1.7 - Options
"Options" shall mean the non-qualified options to purchase
Common Stock granted under this Agreement.
Section 1.8 - Permanent Disability
The Optionee shall be deemed to have a "Permanent Disability"
if the Optionee is unable to engage in the activities required by the Optionee's
job by reason of any medically determined physical or mental impairment which
can be expected to result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months.
Section 1.9 - Plan
"Plan" shall mean the 1998 Stock Purchase and Option Plan for
Key Employees of the Company and its Subsidiaries.
Section 1.10 - Pronouns
The masculine pronoun shall include the feminine and neuter,
and the singular the plural, where the context so indicates.
Section 1.11 - Purchase Date
"Purchase Date" shall mean the date hereof.
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Section 1.12 - Retirement
"Retirement" shall mean retirement at age 65 or over (or such
other age as may be approved by the Board of Directors of the Company) after
having been employed by the Company or a Subsidiary for at least three years
after the Vesting Reference Date.
Section 1.13 - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.14 - Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain
of corporations beginning with the Company if each of the corporations, or group
of commonly controlled corporations, other than the last corporation in the
unbroken chain then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
Section 1.15 - Vesting Reference Date
"Vesting Reference Date" shall mean the date set forth on the
signature page hereof as the Vesting Reference Date.
ARTICLE II
GRANT OF OPTIONS
Section 2.1 - Grant of Options
For good and valuable consideration, on and as of the date
hereof the Company irrevocably grants to the Optionee an Option to purchase any
part or all of an aggregate of the number of shares of Common Stock set forth
with respect to each such Option on the signature page hereof upon the terms and
conditions set forth in this Agreement.
Section 2.2 - Exercise Price
The exercise price of the shares of stock covered by the
Options shall be $5.00 per share without commission or other charge.
Section 2.3 - Consideration to the Company
In consideration of the granting of these Options by the
Company, the Optionee agrees to render faithful and efficient services to the
Company or a Subsidiary or Affiliate, with such duties and responsibilities as
the Company shall from time to time prescribe. Nothing in this Agreement or in
the Plan shall confer upon the Optionee any right to continue in the employ of
the Company or any Subsidiary or Affiliate or shall interfere with or restrict
in any way the rights of the Company and its Subsidiaries or Affiliates, which
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are hereby expressly reserved, to terminate the employment of the Optionee at
any time for any reason whatsoever, with or without Cause.
Section 2.4 - Adjustments in Options
Subject to Section 9 of the Plan, in the event that the
outstanding shares of the stock subject to an Option are, from time to time,
changed into or exchanged for a different number or kind of shares of the
Company or other securities of the Company by reason of a merger, consolidation,
recapitalization, reclassification, stock split, stock dividend, combination of
shares, or otherwise, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares or other consideration as to which
such Option, or portions thereof then unexercised, shall be exercisable. Any
such adjustment made by the Committee shall be final and binding upon the
Optionee, the Company and all other interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1 - Commencement of Exercisability
(a) Options shall become exercisable as follows:
Percentage of Option
Date Option Shares Granted As to Which
Becomes Exercisable Option Is Exercisable
------------------- ------------------------
After the first anniversary
of the Vesting Reference Date 20%
After the second anniversary
of the Vesting Reference Date 40%
After the third anniversary
of the Vesting Reference Date 60%
After the fourth anniversary
of the Vesting Reference Date 80%
After the fifth anniversary
of the Vesting Reference Date 100%
Notwithstanding the foregoing, each Option shall become
immediately exercisable as to 100% of the shares of Common Stock subject to such
Option immediately prior to a Change of Control (but only to the extent such
Option has not otherwise terminated or become exercisable). A "Change of
Control" means (i) a sale of all or
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substantially all of the assets of the Company to a Person who is not an
Affiliate of Kohlberg Kravis Xxxxxxx & Co., L.P. ("KKR"), (ii) a sale by KKR or
any of its Affiliates resulting in more than 50% of the voting stock of the
Company being held by a Person or Group that does not include KKR or any of its
Affiliates or (iii) a merger or consolidation of the Company into another Person
which is not an Affiliate of KKR.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other entity of whatever nature.
"Group" means two or more Persons acting together as a
partnership, limited partnership, syndicate or other group for the purpose of
acquiring, holding or disposing of securities of the Company.
(c) Notwithstanding the foregoing, no Option shall become
exercisable as to any additional shares of Common Stock following the
termination of employment of the Optionee for any reason other than a
termination of employment because of death, Permanent Disability or Retirement
of the Optionee and any Option (other than as provided in the succeeding
sentence) which is non-exercisable as of the Optionee's termination of
employment shall immediately be cancelled. In the event of a termination of
employment because of death, Permanent Disability or Retirement of the Optionee,
the Options shall immediately become exercisable as to all shares of Common
Stock subject thereto.
Section 3.2 - Expiration of Options
Except as otherwise provided in Section 5 or 6 of the
Management Stockholder's Agreement, the Options may not be exercised to any
extent by the Optionee after the first to occur of the following events:
(a) The tenth anniversary of the Vesting Reference Date; or
(b) The first anniversary of the date of the Optionee's
termination of employment by reason of death, Permanent Disability or
Retirement; or
(c) The first business day which is fifteen calendar days
after the earlier of (i) 75 days after termination of employment of the
Optionee for any reason other than for Cause or without Good Reason or
(ii) the delivery of notice by the Company that it does not intend to
exercise its call right under Section 6 of the Management Stockholder's
Agreement; provided, however, that in any event the Options shall
remain exercisable under this subsection 3.2(c) until at least 45 days
after termination of employment of the Optionee for any reason other
than for death, Permanent Disability or Retirement; or
(d) The date the Option is terminated pursuant to Section 5, 6
or 8(b) of the Management Stockholder's Agreement;
(e) The date of an Optionee's termination of employment by the
Company for Cause or by the Optionee without Good Reason; or
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(f) If the Committee so determines pursuant to Section 9 of
the Plan, the effective date of either the merger or consolidation of
the Company into another Person, or the exchange or acquisition by
another Person of all or substantially all of the Company's assets or
80% or more of its then outstanding voting stock, or the
recapitalization, reclassification, liquidation or dissolution of the
Company. At least ten (10) days prior to the effective date of such
merger, consolidation, exchange, acquisition, recapitalization,
reclassification, liquidation or dissolution, the Committee shall give
the Optionee notice of such event if the Option has then neither been
fully exercised nor become unexercisable under this Section 3.2.
ARTICLE IV
EXERCISE OF OPTION
Section 4.1 - Person Eligible to Exercise
During the lifetime of the Optionee, only he may exercise an
Option or any portion thereof. After the death of the Optionee, any exercisable
portion of an Option may, prior to the time when an Option becomes unexercisable
under Section 3.2, be exercised by his personal representative or by any person
empowered to do so under the Optionee's will or under the then applicable laws
of descent and distribution.
Section 4.2 - Partial Exercise
Any exercisable portion of an Option or the entire Option, if
then wholly exercisable, may be exercised in whole or in part at any time prior
to the time when the Option or portion thereof becomes unexercisable under
Section 3.2; provided, however, that any partial exercise shall be for whole
shares of Common Stock only.
Section 4.3 - Manner of Exercise
An Option, or any exercisable portion thereof, may be
exercised solely by delivering to the Secretary or his office all of the
following prior to the time when the Option or such portion becomes
unexercisable under Section 3.2:
(a) Notice in writing signed by the Optionee or the other
person then entitled to exercise the Option or portion thereof, stating
that the Option or portion thereof is thereby exercised, such notice
complying with all applicable rules established by the Committee;
(b) Full payment (in cash, by check or by a combination
thereof) for the shares with respect to which such Option or portion
thereof is exercised;
(c) A bona fide written representation and agreement, in a
form satisfactory to the Committee, signed by the Optionee or other
person then entitled to exercise such Option or portion thereof,
stating that the shares of stock are being acquired for his own
account, for investment and without any present intention of
distributing or reselling said shares or any of them except as may be
permitted under the Securities
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Act of 1933, as amended (the "Act"), and then applicable rules and
regulations thereunder, and that the Optionee or other person then
entitled to exercise such Option or portion thereof will indemnify the
Company against and hold it free and harmless from any loss, damage,
expense or liability resulting to the Company if any sale or
distribution of the shares by such person is contrary to the
representation and agreement referred to above; provided, however, that
the Committee may, in its absolute discretion, take whatever additional
actions it deems appropriate to ensure the observance and performance
of such representation and agreement and to effect compliance with the
Act and any other federal or state securities laws or regulations;
(d) Full payment to the Company of all amounts which, under
federal, state or local law, it is required to withhold upon exercise
of the Option; and
(e) In the event the Option or portion thereof shall be
exercised pursuant to Section 4.1 by any person or persons other than
the Optionee, appropriate proof of the right of such person or persons
to exercise the option.
Without limiting the generality of the foregoing, the Committee may require an
opinion of counsel acceptable to it to the effect that any subsequent transfer
of shares acquired on exercise of an Option does not violate the Act, and may
issue stop-transfer orders covering such shares. Share certificates evidencing
stock issued on exercise of this Option shall bear an appropriate legend
referring to the provisions of subsection (c) above and the agreements herein.
The written representation and agreement referred to in subsection (c) above
shall, however, not be required if the shares to be issued pursuant to such
exercise have been registered under the Act, and such registration is then
effective in respect of such shares.
Section 4.4 - Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of an
Option, or any portion thereof, may be either previously authorized but unissued
shares or issued shares which have then been reacquired by the Company. Such
shares shall be fully paid and nonassessable. The Company shall not be required
to issue or deliver any certificate or certificates for shares of stock
purchased upon the exercise of an Option or portion thereof prior to fulfillment
of all of the following conditions:
(a) The obtaining of approval or other clearance from any
state or federal governmental agency which the Committee shall, in its
absolute discretion, determine to be necessary or advisable; and
(b) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish
for reasons of administrative convenience.
Section 4.5 - Rights as Stockholder
The holder of an Option shall not be, nor have any of the
rights or privileges of, a stockholder of the Company in respect of any shares
purchasable upon the exercise of the Option or any portion thereof unless and
until certificates representing such shares shall have been issued by the
Company to such holder.
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ARTICLE V
MISCELLANEOUS
Section 5.1 - Administration
The Committee shall have the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation
and application of the Plan as are consistent therewith and to interpret or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee shall be final and binding upon the
Optionee, the Company and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Options. In
its absolute discretion, the Board of Directors may at any time and from time to
time exercise any and all rights and duties of the Committee under the Plan and
this Agreement.
Section 5.2 - Options Not Transferable
Except as provided in the Management Stockholder's Agreement,
neither the Options nor any interest or right therein or part thereof shall be
liable for the debts, contracts or engagements of the Optionee or his successors
in interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that this Section 5.2 shall not
prevent transfers by will or by the applicable laws of descent and distribution.
Section 5.3 - Shares to Be Reserved
The Company shall at all times during the term of the Options
reserve and keep available such number of shares of stock as will be sufficient
to satisfy the requirements of this Agreement.
Section 5.4 - Notices
Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of its Secretary, and any
notice to be given to the Optionee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section
5.4, either party may hereafter designate a different address for notices to be
given to him. Any notice which is required to be given to the Optionee shall, if
the Optionee is then deceased, be given to the Optionee's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section 5.4. Any notice shall
have been deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.
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Section 5.5 - Titles
Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
Section 5.6 - Applicability of Plan and Management Stockholder's Agreement
The Options and the shares of Common Stock issued to the
Optionee upon exercise of the Options shall be subject to all of the terms and
provisions of the Plan and the Management Stockholder's Agreement, to the extent
applicable to the Options and such shares. In the event of any conflict between
this Agreement and the Plan, the terms of the Plan shall control. In the event
of any conflict between this Agreement or the Plan and the Management
Stockholder's Agreement, the terms of the Management Stockholder's Agreement
shall control.
Section 5.7 - Amendment
This Agreement may be amended only by a writing executed by
the parties hereto which specifically states that it is amending this Agreement.
Section 5.8 - Governing Law
The laws of the State of Delaware shall govern the
interpretation, validity and performance of the terms of this Agreement
regardless of the law that might be applied under principles of conflicts of
laws.
Section 5.9 - Consent to Jurisdiction; Waivers
The laws of the state of Delaware shall govern the
interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be applied under principles of conflicts of
law. Any suit, action or proceeding against the Optionee with respect to this
Agreement, or any judgment entered by any court in respect of any thereof, may
be brought in any court of competent jurisdiction in the State of Delaware or
New York, as the Company may elect in its sole discretion, and the Optionee
hereby submits to the non-exclusive jurisdiction of such courts for the purpose
of any such suit, action, proceeding or judgment. The Optionee hereby
irrevocably waives any objections which he may now or hereafter have to the
laying of the venue of any suit, action or proceeding arising out of or relating
to this Agreement brought in any court of competent jurisdiction in the State of
Delaware or New York, and hereby further irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in
any inconvenient forum. No suit, action or proceeding against the Company with
respect to this Agreement may be brought in any court, domestic or foreign, or
before any similar domestic or foreign authority other than in a court of
competent jurisdiction in the State of Delaware or New York, and the Optionee
hereby irrevocably waives any right which he may otherwise have had to bring
such an action in any other court, domestic or foreign, or before any similar
domestic or foreign authority. The Company hereby submits to the jurisdiction of
such courts for the purpose of any such suit, action or proceeding.
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IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto.
CORNING CONSUMER PRODUCTS
COMPANY
By
-----------------------------
Title:
--------------------------- Aggregate number of shares
Optionee of Common Stock for which
the Option granted hereunder
is exercisable:
---------------------------
---------------------------
Address
Optionee's Taxpayer
Identification Number:
---------------------------
Vesting Reference Date:
April 1, 1998
---------------------------
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