XXXXXXX XXXXXX ASSOCIATES GROUP, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
THIS NONSTATUTORY STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into by and between XXXXXXX XXXXXX ASSOCIATES GROUP, INC., a Delaware
corporation (the "Corporation"), and Xxxxxx X. Xxxxxxxx, Xx. (the "Optionee"),
to be effective as of March 19, 1999 (the "Effective Date").
RECITALS
A. This Agreement is entered into pursuant to the Employment Agreement
between the Corporation and the Optionee dated March 19, 1999 (the "Employment
Agreement").
B. As used herein, the term "Subsidiary" shall mean any present or
future corporation which is a wholly owned subsidiary of the Corporation.
C. The option(s) subject to this Agreement shall be Nonstatutory Stock
Options covering shares of the Corporation's authorized but unissued or
reacquired $0.01 par value Common Stock (the "Shares").
D. Although this agreement is not being entered into pursuant to the
Xxxxxxx Xxxxxx Associates 1998 Stock Option Plan (the "Plan"), all provisions of
this Agreement are subject to, and shall be interpreted in accordance with, the
Plan. In the event that there are any provisions of this Agreement that are
contrary to the Plan, the terms of the Agreement shall supersede the provisions
of the Plan.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the parties do hereby
agree as follows:
1. Grant of Option.
The Corporation hereby grants to the Optionee the right and
option (the "Option") to purchase all or any part of an aggregate of One Hundred
Thousand (100,000) Shares (the "Option Shares"), such number being subject to
adjustment as provided in Section 11 hereof, on the terms and conditions set
forth herein and in the Plan. The Option is intended to be a Nonstatutory Stock
Option, and not an "incentive stock option" within the meaning of Section 422A
of the Internal Revenue Code of 1986, as amended (the "Code").
2. Exercise Price.
The exercise price (the "Exercise Price") of the Option Shares
shall be Ten Dollars ($10.00) per Share, which price has been determined by the
Corporation to be not less than the fair market value of the Option Shares as of
the date on which the Option was granted to the Optionee.
3. Terms of Option.
(a) The Option is exercisable up to the date ten (10) years
from the Effective Date, subject to earlier termination as provided in Sections
6, 7, 8, and 9 hereof or when the Option has been exercised in full pursuant to
the terms of this Agreement. The Optionee shall have the right and option to
purchase the following number of Option Shares at the Exercise Price:
Cumulative Percent
of Options Exercisable Cumulative Number
Vest Date (Vested) of Shares Exercisable
March 18, 2000 0% 0
March 18, 2001 50% 50,000
March 18, 2002 75% 75,000
March 18, 2003 100% 100,000
(b) The Option may be exercised as to any or all of the vested
Option Shares. Except as provided in Sections 6, 7, and 9 hereof the Option may
not be exercised at any time unless the Optionee is then serving the Corporation
and shall have been continuously serving the Corporation since the Effective
Date. The Exercise Price of those Option Shares as to which the Option may be
exercised shall be paid in full at the time of exercise, as provided in Section
12 of this Agreement, below.
4. Rights as a Stockholder.
The holder of the Option shall have no rights as a stockholder
with respect to any Option Shares until he shall have exercised this Option in
accordance with its terms and certificates or electronic transfer evidencing the
Option Shares shall have been delivered to him or her by the Corporation. No
adjustment, except as provided in Section 11 hereof, shall be made for
dividends, distributions, or other rights in respect to such Option Shares for
which the record date is prior to the date on which the Optionee or his
transferee became the holder of record.
5. Nontransferability.
(a) During the Optionee's lifetime, the Option (i) shall not
be transferable or assignable and (ii) may be exercised only by the Optionee.
More particularly (but without limiting the generality of the foregoing), the
Option may not be assigned, transferred (except as provided above), pledged, or
hypothecated in any way, shall not be assignable by operation of law, and shall
not be subject to execution, attachment, or similar process. Any attempted
assignment, transfer, pledge, hypothecation, or other disposition of the Option
contrary to the provisions hereof, and the levy of any execution, attachment, or
similar process upon the Option, shall be null and void and without effect.
(b) The foregoing paragraph notwithstanding, the Option may be
assigned or transferred by will or by laws of the descent and distribution to
the extent provided in Section 6, below; provided, however, that no such
transfer or assignment shall be effective unless the Corporation shall have been
furnished with written notice thereof and such other evidence as the Corporation
may deem necessary to establish compliance with any laws or regulations
pertaining thereto.
6. Death of Optionee.
In the event of the death of the Optionee while he or she is
in the service of the Corporation, his personal representatives, executors,
trustees, or legatees shall have the right for a period of twelve (12) months
from the date of death to exercise the Option to the extent the Optionee was
entitled to exercise the Option on the date of his death; provided, however,
that in no event may the Option be exercised after the date on which it would
normally have expired under its terms. If no such exercise is made within such
twelve (12) month period following death, the Option shall become no longer
exercisable.
7. Disability of Optionee.
In the event that the Optionee becomes permanently disabled
while he or she is serving the Corporation, any unexercised portion of the
Option which may be otherwise exercisable by the Optionee at the date of
termination due to such disability shall be exercisable for a period of twelve
(12) months from the date of termination; provided, however, that in no event
may the Option be exercised after the date on which it would normally have
expired under its terms. If no such exercise is made within said twelve (12)
month period following such termination by reason of disability, the Option
shall become no longer exercisable.
8. Termination of Employment for Cause.
If an Optionee is determined by the Board of Directors to have
committed an act of theft, embezzlement, fraud, dishonesty, a breach of
fiduciary duty to the Corporation or a Subsidiary, a deliberate disregard of the
rules of the Corporation which resulted in loss, damage, or injury to the
Corporation or a Subsidiary, engages in any conduct which constitutes unfair
competition with the Corporation or a Subsidiary, or induces any customer,
consultant, employee, or supplier of the Corporation or Subsidiary to breach any
contract with the Corporation or a Subsidiary, neither the Optionee nor his
estate shall be entitled to exercise any Option with respect to any Option
Shares whatsoever after termination of employment, whether or not after such
termination of employment the Optionee may receive payment from the Corporation
for services rendered prior to termination, for fees or payments. In making such
determination, the Corporation shall give the Optionee an opportunity to present
evidence on his behalf. Termination of employment shall be deemed to occur when
the Corporation provides written notice to the Optionee that his employment is
terminated.
9. Termination of Employment For Any Reason Other Than Death,
Disability, Or Cause.
In the event the Optionee, during his life, ceases to be
employed by the Corporation, and such employment was terminated (whether at the
initiative of the Optionee or the decision of the Board for any reason other
than as described in Sections 6, 7, and 8 above, the Optionee shall have the
right to exercise the unexpired portion of this Option (to the extent that he or
she was entitled to do so at the date of termination) at any time within thirty
(30) days after such termination, but thereafter the Option shall become no
longer exercisable; provided, however, that in no event may any portion of this
Option be exercised after the date on which it would otherwise normally have
expired under its terms had the Optionee remained in the Corporation's service.
10. No Rights Conferred.
Nothing in this Agreement shall confer upon the Optionee any
right to continue in the service of the Corporation.
11. Adjustments Upon Changes in Capital Structure.
(a) In the event of any changes in the outstanding Common
Stock of the Corporation by reason of any stock dividend, stock split or reverse
stock split, combination, reclassification, recapitalization, merger,
consolidation, reorganization, or liquidation of or involving the Corporation,
the aggregate number and/or the class of shares subject to this Agreement, and
the exercise price of the Option prior to such event, shall be appropriately
adjusted by the Board of Directors of the Corporation in accordance with the
terms of the Plan, and such adjustment shall be conclusive.
(b) The exercisability of the options covered hereby in the
event of a change of control of the Corporation shall be governed by the
provisions in Section 3 (a) of the Employment Agreement.
12. Method of Exercising Option.
(a) Subject to the terms and conditions of this Agreement, the
Option may be exercised by written notice to the Corporation at its main office.
Such notice shall (i) be in form satisfactory to the Corporation, (ii) state the
election to exercise the Option and the number of Option Shares in respect of
which it is being exercised, (iii) be signed by the person or persons exercising
the Option, and (iv) be accompanied by payment of the full purchase price of the
Option Shares being purchased, and the Corporation shall deliver a certificate
or certificates or electronic transfer representing such Option Shares as soon
as practicable after the notice shall be received.
(b) Payment upon exercise of the Option may be (i) in cash or
by a certified or bank cashier's check, (ii) in stock of the Corporation at such
value as the Board of Directors in its sole discretion shall determine, provided
that such determination shall be final and binding on both the Corporation and
the Optionee, (iii) by a full recourse promissory note secured by the Shares
being purchased bearing an interest rate greater than or equal to the applicable
federal rate prescribed in Section 1274(d) of the Code, or (iv) by any
combination of the above methods of payment.
(c) The certificate or certificates or electronic transfer for
the Shares as to which the Option shall have been so exercised shall be
registered in the name of the Optionee and shall be delivered as provided above
to or upon the written order of the person or persons exercising the Option. In
the event the Option shall be exercised pursuant to Section 6 hereof, the notice
described in paragraph (a), above, shall be accompanied by appropriate proof to
the right of such person or persons to exercise the Option. All Option Shares
purchased as provided herein shall be fully paid and nonassessable.
13. Notice.
Any notice required or permitted by this Agreement shall be
deemed given to (a) the Optionee, an authorized transferee or assignee of the
Optionee, or a stockholder when delivered personally or three (3) days after it
is deposited in the U.S. mail, postage prepaid and addressed to such person at
his address appearing on the stock records of the Corporation; or (b) the
Corporation, when delivered personally to its President or Secretary or three
(3) days after it is deposited in the mail, postage prepaid, and addressed to
the Corporation, attention its President, at the Corporation's principal place
of business. It shall be the duty of both the Corporation and the Optionee (or
his transferee or assignee) to notify the other of any change of address.
14. Restrictive Legends.
Limitations on the transferability of shares of Common Stock
as may be required by state and federal securities laws and regulations may
appear on legends on share certificates issued pursuant to Options granted
pursuant to this Agreement, and the Corporation will make notations in its
records and make other arrangements so as to ensure compliance with these
restrictions on transferability.
15. Income Taxation.
The Optionee acknowledges that he or she has been informed
that the exercise of this option, in whole or in part, will result in the
imposition of federal income taxation at the time of exercise based on the
spread between the exercise price and the fair market value of the shares on the
date of exercise. Additionally, at the time the Option Shares are sold the
Optionee will recognize income or loss associated with gains or losses in an
amount equal to the difference between the fair market value of the Option
Shares at the time of exercise and the sale price of the shares.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
duly executed by its officer thereunto fully authorized, and the Optionee has
hereunto set his hand, as of the day and year first above written.
XXXXXXX XXXXXX ASSOCIATES GROUP, INC.
By /s/ Xxxxxxxx X. England
Xxxxxxxx X. England, Secretary
OPTIONEE
/s/ Xxxxxx X. Xxxxxxxx, Xx.
(Signature of Optionee)
Xxxxxx X. Xxxxxxxx, Xx.
(Please Print Name Above)
