EXHIBIT 10.3
X. XXXXXXXXX'X CORPORATION
FORM OF INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT (this "Agreement") is made and
entered into as of this _____ day of ______, 200__ (the "Grant Date"), by and
between X. Xxxxxxxxx'x Corporation, a Tennessee corporation (together with its
Subsidiaries and Affiliates, the "Company"), and __________________ (the
"Optionee"). Capitalized terms not otherwise defined herein shall have the
meaning ascribed to such terms in the X. Xxxxxxxxx'x Corporation 2004 Equity
Incentive Plan (the "Plan").
WHEREAS, the Company has adopted the Plan, which permits the issuance
of stock options for the purchase of shares of the common stock, par value $.05
per share, of the Company (the "Shares"); and
WHEREAS, the Company desires to afford the Optionee an opportunity to
purchase Shares as hereinafter provided in accordance with the provisions of the
Plan;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
1. Grant of Option.
(a) The Company grants as of the date of this Agreement the right
and option (the "Option") to purchase __________ Shares, in whole or in part
(the "Option Stock"), at an exercise price of $_________ per Share, on the terms
and conditions set forth in this Agreement and subject to all provisions of the
Plan. The Optionee, holder or beneficiary of the Option shall not have any of
the rights of a shareholder with respect to the Option Stock until such person
has become a holder of such Shares by the due exercise of the Option and payment
of the Option Payment (as defined in Section 3 below) in accordance with this
Agreement.
(b) The Option shall be an incentive stock option within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and this Agreement shall be interpreted in a manner consistent therewith. In
order to provide the Company with the opportunity to claim the benefit of any
income tax deduction which may be available to it upon the exercise of the
Option, and in order to comply with all applicable federal or state tax laws or
regulations, the Company may take such action as it deems appropriate to insure
that, if necessary, all applicable federal, state or other taxes are withheld or
collected from the Optionee.
2. Exercise of Option. The Optionee may exercise the Option beginning
on the [FIRST] anniversary of the date of this Agreement with respect to
[ONE-THIRD] of the Shares and with respect to [AN ADDITIONAL ONE-THIRD OF THE
SHARES ON THE SECOND AND THIRD ANNIVERSARIES OF THE DATE OF THIS AGREEMENT],
provided that Optionee has been an employee of the Company at all times from the
Grant Date to such anniversary (such [THREE]-year period being referred to as
the "Vesting Period"). [YEARLY VESTING IN INSTALLMENTS; ONE-THIRD OF SHARES
SUBJECT TO GRANT VESTS ON EACH ANNIVERSARY OF GRANT DATE] Notwithstanding the
above, each outstanding Option
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shall vest and become exercisable upon the occurrence of a Change in Control and
shall be governed by the provisions of Section 13 of the Plan. In the event that
the Optionee dies, is Disabled or elects Normal Retirement (as defined below)
before the expiration of the Vesting Period, the Option shall vest as of the
date of such death, disability or Normal Retirement, as the case may be, on a
pro rata basis with respect to the amount of the Vesting Period that has
elapsed, rounded to the nearest whole share. If Optionee elects Early Retirement
(as defined below) prior to the expiration of the Vesting Period, this Option
shall vest as though Optionee had elected Normal Retirement, provided that the
Optionee's Early Retirement is with the consent of the Committee. "Early
Retirement" means retirement, for purposes of the Plan with the express consent
of the Company at or before the time of such retirement, from active employment
with the Company prior to age 65, in accordance with any applicable early
retirement policy of the Company then in effect. "Normal Retirement" means
retirement from active employment with the Company on or after age 65. For
purposes of this Agreement, "Disabled" means that the Optionee is permanently
unable to perform the essential duties of the Optionee's occupation.
3. Manner of Exercise. The Option may be exercised in whole or in part
at any time within the period permitted hereunder for the exercise of the
Option, with respect to whole Shares only, by serving written notice of intent
to exercise the Option delivered to the Company at its principal office (or to
the Company's designated agent), stating the number of Shares to be purchased,
the person or persons in whose name the Shares are to be registered and each
such person's address and social security number. Such notice shall not be
effective unless accompanied by payment in full of the Option Price for the
number of Shares with respect to which the Option is then being exercised (the
"Option Payment") and cash equal to the required withholding taxes as set forth
by Internal Revenue Service and applicable State tax guidelines for the
employer's minimum statutory withholding. The Option Payment shall be made in
cash or cash equivalents or in whole Shares that have been held by the Optionee
for at least six months prior to the date of exercise valued at the Shares' Fair
Market Value on the date of exercise (or next succeeding trading date if the
date of exercise is not a trading date), together with any applicable
withholding taxes, or by a combination of such cash (or cash equivalents) and
Shares. The Optionee shall not be entitled to tender Shares pursuant to
successive, substantially simultaneous exercises of the Option or any other
stock option of the Company. Subject to applicable securities laws, the Optionee
may also exercise the Option by delivering a notice of exercise of the Option
and by simultaneously selling the Shares of Option Stock thereby acquired
pursuant to a brokerage or similar agreement approved in advance by proper
officers of the Company, using the proceeds of such sale as payment of the
Option Payment, together with any applicable withholding taxes. The Optionee
shall notify the Company of any disposition of shares acquired under this
Agreement if such disposition occurs within two years after the date of grant or
one year after the date of exercise of the Option. For purposes of this
Agreement, "Fair Market Value" means the closing sales price of the Shares on
the American Stock Exchange.
4. Termination of Option. The Option will expire ten years from the
date of grant of the Option (the "Term") with respect to any then unexercised
portion thereof, unless terminated earlier as set forth below:
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(a) Termination by Death. If the Optionee's employment by the
Company terminates by reason of death, or if the Optionee dies within three
months after termination of such employment for any reason other than Cause,
this Option may thereafter be exercised, to the extent the Option was
exercisable at the time of such termination, by the legal representative of the
estate or by the legatee of the Optionee under the will of the Optionee, for a
period of one year from the date of death or until the expiration of the Term of
the Option, whichever period is the shorter.
(b) Termination by Reason of Disability. If the Optionee's
employment by the Company terminates by reason of Disability, this Option may
thereafter be exercised, to the extent the Option was exercisable at the time of
such termination, by the Optionee or personal representative or guardian of the
Optionee, as applicable, for a period of three years from the date of such
termination of employment or until the expiration of the Term of the Option,
whichever period is the shorter; provided, however, that if the Option is
exercised following the one-year anniversary of the date of termination, the
Option shall thereafter be treated as a Non-Qualified Stock Option.
(c) Termination by Normal Retirement or Early Retirement. If
Optionee's employment by the Company terminates by reason of Normal Retirement
or Early Retirement, this Option may thereafter be exercised by the Optionee, to
the extent the Option was exercisable at the time of such termination, for a
period of three years from the date of such termination of employment or until
the expiration of the Term of the Option, whichever period is the shorter;
provided, however, that if the Option is exercised following the three-month
anniversary of the date of termination, the Option shall thereafter be treated
as a Non-Qualified Stock Option.
(d) Termination for Cause. If the Optionee's employment by the
Company is terminated for Cause, this Option shall terminate immediately and
become void and of no effect.
(e) Other Termination. If the Optionee's employment by the Company
terminates voluntarily or is involuntarily terminated for any reason other than
for Cause, death, Disability or Normal Retirement or Early Retirement, this
Option may be exercised, to the extent the Option was exercisable at the time of
such termination, by the Optionee for a period of three months from the date of
such termination of employment or the expiration of the Term of the Option,
whichever period is the shorter.
5. No Right to Continued Employment. The grant of the Option shall not
be construed as giving Optionee the right to be retained in the employ of the
Company, and the Company may at any time dismiss Optionee from employment, free
from any liability or any claim under the Plan.
6. Adjustment to Option Stock. The Committee may make adjustments in
the terms and conditions of, and the criteria included in, this Option in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4.2 of the Plan) affecting the Company or the
financial statements of the Company or of changes in applicable laws,
regulations, or accounting principles, whenever the Committee determines that
such adjustments are appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan.
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7. Amendments to Option. Subject to the restrictions contained in
Sections 6.2 and 14 of the Plan, the Committee may waive any conditions or
rights under, amend any terms of, or alter, suspend, discontinue, cancel or
terminate, the Option, prospectively or retroactively; provided that any such
waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would adversely affect the rights of the Optionee or any holder
or beneficiary of the Option shall not to that extent be effective without the
consent of the Optionee, holder or beneficiary affected.
8. Limited Transferability. During the Optionee's lifetime this Option
can be exercised only by the Optionee, except as otherwise provided in Section
4(a) above or in this Section 8. This Option may not be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by Optionee other
than (i) to a Permitted Transferee or (ii) by will or the laws of descent and
distribution. Any attempt to otherwise transfer this Option shall be void. No
transfer of this Option by the Optionee by will or by laws of descent and
distribution shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and an authenticated copy of the
will and/or such other evidence as the Committee may deem necessary or
appropriate to establish the validity of the transfer. Any transfer of this
Option by the Optionee to a Permitted Transferee must be for no consideration
and, after the transfer, the Permitted Transferee shall have the sole
responsibility for determining whether and when to exercise the Option. A
Permitted Transferee may not transfer any such Option other than by will or the
laws of descent and distribution. For purposes of this Agreement, "Permitted
Transferee" means the Optionee's Immediate Family, a Permitted Trust or a
partnership of which the only partners are members of the Optionee's Immediate
Family. For purposes of this Agreement, "Immediate Family" means the Optionee's
children and grandchildren, including adopted children and grandchildren,
stepchildren, parents, stepparents, grandparents, spouse, siblings (including
half brothers and sisters), father-in-law, mother-in-law, daughters-in-law and
sons-in-law. For purposes of this Agreement, a "Permitted Trust" means a trust
solely for the benefit of the Optionee or Optionee's Immediate Family.
9. Reservation of Shares. At all times during the term of this Option,
the Company shall use its best efforts to reserve and keep available such number
of Shares as shall be sufficient to satisfy the requirements of this Agreement.
10. Plan Governs. The Optionee hereby acknowledges receipt of a copy of
the Plan and agrees to be bound by all the terms and provisions thereof. The
terms of this Agreement are governed by the terms of the Plan, and in the case
of any inconsistency between the terms of this Agreement and the terms of the
Plan, the terms of the Plan shall govern.
11. Severability. If any provision of this Agreement is, or becomes, or
is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to
any Person or the Award, or would disqualify the Plan or Award under any laws
deemed applicable by the Committee, such provision shall be construed or deemed
amended to conform to the applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, Person or Award, and the remainder of the Plan and
Award shall remain in full force and effect.
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12. Notices. All notices required to be given under this Option shall
be deemed to be received if delivered or mailed as provided for herein to the
parties at the following addresses, or to such other address as either party may
provide in writing from time to time.
To the Company: X. Xxxxxxxxx'x Corporation
Suite 260
0000 Xxxx Xxx Xxxxxx
Xxxxxxxxx XX 00000
Attn: Chief Financial Officer
To the Optionee: The address then maintained with respect to
the Optionee in the Company's records.
13. Governing Law. The validity, construction and effect of this
Agreement shall be determined in accordance with the laws of the State of
Tennessee without giving effect to conflicts of laws principles.
14. Resolution of Disputes. Any dispute or disagreement which may arise
under, or as a result of, or in any way related to, the interpretation,
construction or application of this Agreement shall be determined by the
Committee. Any determination made hereunder shall be final, binding and
conclusive on the Optionee and the Company for all purposes.
15. Successors in Interest. This Agreement shall inure to the benefit
of and be binding upon any successor to the Company. This Agreement shall inure
to the benefit of the Optionee's legal representative and assignees. All
obligations imposed upon the Optionee and all rights granted to the Company
under this Agreement shall be binding upon the Optionee's heirs, executors,
administrators, successors and assignees.
16. Excessive Shares. In the event that the number of Shares subject to
this Option exceeds any maximum established under the Code for Incentive Stock
Options that may be granted to Optionee, or in the event that this Option
becomes first exercisable in any calendar year to obtain Common Stock having a
Fair Market Value (determined at the time of grant) in excess of $100,000, this
Option shall be treated as a Non-Qualified Stock Option to the extent of such
excess. The proceeding sentence shall be interpreted consistently with the
provisions of Section 422(d) of the Code.
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IN WITNESS WHEREOF, the parties have caused this Incentive Stock Option
Agreement to be duly executed effective as of the day and year first above
written.
X. XXXXXXXXX'X CORPORATION
By:
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Optionee:
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Please Print
Optionee:
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Signature
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