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EXHIBIT 10.21
AMERICA SERVICE GROUP INC.
NONQUALIFIED STOCK OPTION
THIS NONQUALIFIED STOCK OPTION, granted this 12th day of February, 1998 by
AMERICA SERVICE GROUP INC., a Delaware corporation (the "Company"), to Xxxxxx X.
Xxxxx (the "Optionee").
WITNESSETH:
WHEREAS, as an inducement to the Optionee to enter into an Employment
Agreement, the Company agreed to grant this option to the Optionee;
WHEREAS, the Board of Directors of the Company is of the opinion that the
interests of the Company will be advanced by encouraging and enabling those
individuals upon whose judgment, initiative and efforts the Company is largely
dependent for the successful conduct of the business of the Company, to acquire
or increase their proprietary interest in the Company, thus providing them with
a more direct stake in its welfare and assuring a closer identification of their
interests with those of the Company; and
WHEREAS, the Board believes that the acquisition of such an interest in the
Company will stimulate such individuals and strengthen their desire to remain
with the Company;
NOW, THEREFORE, in consideration of the premises and of the services to be
performed by the Optionee under paragraph 2 hereunder, the Company hereby grants
this nonqualified stock option to the Optionee on the terms hereinafter
expressed.
1. Option Grant. The Company hereby grants to the Optionee an option to
purchase a total of 75,000 shares of Common Stock of the Company at an option
exercise price of $9.375 per share, being not less than 100% of the Fair Market
Value of the Common Stock on the date of grant hereof. This option is not
intended to qualify as an incentive stock option within the meaning of Section
422 of the Internal Revenue Code of 1986.
2. Time of Exercise. This option may be exercised (in the manner provided
in paragraph 3 hereof) in whole or in part, and from time to time after the date
hereof, subject to the following limitations:
(a) This option may be exercised to a maximum extent of 33-1/3% of the
total shares covered by the option after one year from the date
hereof, 66-2/3% of the total shares after two years from the date
hereof, and 100% of the total shares after three years from the
date hereof.
(b) This option may not be exercised:
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(i) more than thirty days following the termination of the
Optionee's employment with the Company under Section 7(a) or
7(e) of his Employment Agreement;
(ii) more than one year after the termination of the Optionee's
employment with the Company for any reason (and then only to
the extent the Optionee could have exercised this option on
the date of such termination); or
(iii) more than 10 years from the date hereof whichever shall
first occur.
(c) This option may not be exercised to the extent such exercise would
result in the nondeductibility of any portion of the Optionee's
compensation under Section 162(m) of the Internal Revenue Code of
1986, except for exercise in the event of a change in control (as
defined in Section 7(d) of Optionee's Employment Agreement).
(d) This option shall be accelerated and become fully exercisable in
the event of a change in control (as defined in Section 7(d) of
Optionee's Employment Agreement) or following the termination of
the Optionee's employment with the Company for any reason other
than pursuant to Section 7(a) or 7(e) of his Employment Agreement.
3. Method of Exercise. This option may be exercised only by notice in
writing delivered to the Treasurer of the Company and accompanied by:
(a) The full purchase price of the shares purchased payable by a
certified or cashier's check payable to the order of the Company
and/or certificates of Common Stock of the Company equal in value
(based on their Fair Market Value on the date of surrender) to such
purchase price or the portion thereof so paid; provided, however,
that payment of the exercise price by delivery of Common Stock of
the Company then owned by the Optionee may be made only if such
payment does not result in a charge to earnings for financial
accounting purposes as determined by the Company; and
(b) Such other documents or representations as the Company may
reasonably request in order to comply with securities, tax or other
laws then applicable to the exercise of the option.
In the discretion of the Company, payment may also be made by delivering a
properly executed exercise notice to the Company together with a copy of
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds to pay the exercise price.
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To facilitate the foregoing, the Company may enter into agreements for
coordinated procedures with one or more brokerage firms.
4. Non-Transferability; Death. This option is not transferable by the
Optionee other than by will or the laws of descent and distribution and is
exercisable only by him. If the Optionee dies while an employee of the Company,
this option may be exercised during the period described in paragraph 2(b)(ii)
(but not later than 10 years from the date hereof) by his estate or the person
to whom the option passes by will or the laws of descent and distribution, but
only to the extent that the Optionee could have exercised this option on the
date of his death.
5. Registration. The Company shall not be required to issue or deliver any
certificate for its Common Stock purchased upon the exercise of this option
prior to the admission of such shares to listing on any stock exchange on which
shares may at that time be listed. In the event of the exercise of this option
with respect to any shares subject hereto, the Company shall make prompt
application for such listing. If at any time during the option period the
Company shall be advised by its counsel that shares deliverable upon exercise of
the option are required to be registered under the Federal Securities Act of
1933, as amended, or that delivery of the shares must be accompanied or preceded
by a prospectus meeting the requirements of the Act, the Company will use its
best efforts to effect such registration or provide such prospectus not later
than a reasonable time following each exercise of this option, but delivery of
shares by the Company may be deferred until registration is effected or a
prospectus available. This Optionee shall have no interest in shares covered by
this option until certificates for the shares are issued.
6. Adjustments. In the event that there is any increase in the number of
issued shares of the Common Stock of the Company without new consideration of
the Company therefor, by reason of stock dividends, stock split-ups or like
recapitalizations, the number of shares which may thereafter be purchased under
this option shall be increased in the same proportion as said increase in issued
shares of Common Stock. In such event, the per share purchase price specified in
paragraph 1 above shall be reduced so that the total consideration payable to
the Company for the increased number of issued shares of Common Stock remaining
subject to this option shall not be changed by reason of such increase in number
of shares.
In the case of any sale of assets, merger consolidation, combination or
other corporate reorganization or restructuring of the Company with or into
another corporation which results in the outstanding Common Stock being
converted into or exchanged for different securities, cash or other property, or
any combination thereof (an "Acquisition"), the Optionee shall have the right
thereafter and during the term of this option, to receive upon exercise thereof
the Acquisition Consideration (as defined below) receivable upon the Acquisition
by a holder of the number of shares of Common Stock which might have been
obtained upon exercise of the option or portion thereof as the case may be
immediately prior to the Acquisition.
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The term "Acquisition Consideration" shall mean the kind and amount of
securities, cash or other property or any combination thereof receivable in
respect of Common Stock, upon consummation of an Acquisition.
If during the term of this option the Common Stock of the Company shall be
combined or be changed into the same or another kind of stock of the Company or
into securities of another corporation,, whether through recapitalization,
reorganization, sale, merger, consolidation, etc., the Company shall cause
adequate provision to be made whereby the Optionee shall thereafter be entitled
to receive, upon the due exercise of any then-unexercised portion of this
option, the securities which we would have been entitled to receive for Common
Stock acquired through exercise of such portion of the option (regardless of
whether or to what extent the option would then have been exercisable)
immediately prior to the effective date of such recapitalization,
reorganization, sale, merger, consolidation, etc.
7. Withholdings. The Company may require the Optionee or other person
exercising this option to remit to it an amount sufficient to satisfy any
federal, state and local tax withholding requirements prior to the delivery of
any certificates for Common Stock issuable on exercise hereof. The Board may, in
its discretion and subject to such rules as it may adopt, permit the Optionee or
other person exercising this option to pay all or a portion of the federal,
state and local withholding taxes arising in connection with the exercise of
this option by electing to have the Company withhold shares of Common Stock
having a fair market value equal to the amount to be withheld.
8. Tenure. The Optionee's right, if any, to continue to serve the Company
as an officer or employee, or otherwise, shall not be enlarged or otherwise
affected by the award of this option.
9. Not Subject to Plan. This option is granted independently of and not
under or pursuant to the Company's Amended Incentive Stock Plan.
IN WITNESS WHEREOF, the Company has caused this nonqualified stock option
to be executed on the date first above written.
AMERICA SERVICE GROUP INC.
By: /s/ Xxxxx X. Mercy February 12, 1998
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Xxxxx X. Mercy Dated:
Receipt is hereby acknowledged: Attest:
(SEAL)
/s/ Xxxxxx X. Xxxxx February 12, 1998 /s/ Xxxxxxx Xxxxxxxx February 12, 1998
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Optionee Dated: Xxxxxxx Xxxxxxxx Dated:
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