STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 23, 1999 (this "Agreement"), by
and between Safety Components International, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxxx (the "Optionee"), residing at 00 Xxxx 00xx
Xxxxxx, Xxxxxxxxx 00X, Xxx Xxxx, XX 00000.
R E C I T A L S:
WHEREAS, the Company desires to grant to the Optionee a stock option (the
"Option") in consideration for the provision of certain consulting services,
said Option to be on the terms and conditions set forth herein and Optionee
desires to accept such Option.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Company and the Optionee hereby
agree as follows:
Section 1. Grant of Option. The Company hereby grants to the Optionee the Option
exercisable for the period and upon the terms hereinafter set forth, to purchase
75,000 shares (each a "Share" and collectively the "Shares") of the Company's
common stock, $.01 par value per share (the "Common Stock"), at an exercise
price equal to $ 5.6875 per share (the "Per Share Exercise Price"), subject to
adjustment as provided in Section 5 below. The Option is not intended to satisfy
the requirement for an incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and this Agreement shall be
construed and interpreted in accordance with such intention.
Section 2. Vesting. Subject to the provisions of Section 3 relating to
termination of the Option, the Option shall be fully vested and exercisable as
of the date hereof. Each exercise of the Option may be effected either in whole
or in part up to (but not more than) the maximum number of Shares as to which
the Option is exercisable on each respective date of exercise.
Section 3. Term of the Option. The Option granted hereunder shall terminate ten
years from the date hereof (the "Expiration Date").
Section 4. Non-Transferability. The Optionee may not transfer the Option except
by will or the laws of descent and distribution. Subject to the terms of this
Agreement, the Option may not be otherwise transferred, assigned, pledged,
hypothecated or disposed of in any way, whether by operation of law or
otherwise, and may be exercised during the Optionee's lifetime only by the
Optionee; provided, that upon the Optionee's death or disability prior to the
Expiration Date, such Option may be exercised by the Optionee's duly appointed
legal guardian or conservator in accordance with the terms of this Agreement.
Section 5. Protection Against Dilution; Significant Transactions.
(a) If the outstanding shares of Common Stock are affected by any (i)
subdivision or consolidation of shares, (ii) dividend or other distribution
(whether in the form of cash, shares of Common Stock, other securities, or other
property), (iii) recapitalization or other capital adjustment of the Company or
(iv) merger, consolidation or other reorganization of the Company or other
rights to purchase shares of Common Stock or other securities of the Company, or
other similar corporate transaction or event, such that an adjustment is
determined by the Compensation Committee of the Board of Directors of the
Corporation (the "Committee") to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made hereunder,
then the Committee shall, in such manner as it may deem necessary to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made hereunder, adjust any or all of (x) the number and type of shares of Common
Stock subject to the unexercised portion of the Option, and (y) the exercise
price with respect to the unexercised portion of the Option, or if deemed
appropriate, make provision for a cash payment with respect to the unexercised
portion of the Option. Any determination made by the Committee under this
Section shall be final, binding and conclusive. In computing any adjustment
under this Section, any fractional share shall be eliminated. Nothing contained
in this Agreement shall be construed to affect in any way the right or power of
the Company to
make any adjustment, reclassification, reorganization or changes to its capital
or business structure or to merge or to consolidate or to dissolve, liquidate or
transfer all or any part of its business or assets.
(b) In the event of (i) a merger or consolidation to which the Company is a
party or
(ii) a sale by the Company of all or substantially all of its assets, the Option
shall, after such merger, consolidation or sale, be exercisable into the kind
and number of shares of stock and/or securities, cash or other property which
Optionee would have been entitled to receive if Optionee had held the Common
Stock issuable upon the exercise of the Option immediately prior to such merger,
consolidation or sale.
Section 6. Exercise. The Option shall be exercised when written notice of such
exercise, signed by the person entitled to exercise the Option, has been
delivered or transmitted by registered or certified mail, to the Secretary of
the Company at its principal office. Said written notice shall specify the
number of Shares purchasable under the Option which such person then wishes to
purchase and shall be accompanied by such documentation, if any, as may be
required by the Company as provided in Section 8 below and be accompanied by
payment of the aggregate Option price equal to the product of the Per Share
Exercise Price and the number of Shares being purchased (the "Aggregate Exercise
Price"). Such payment shall be, without limitation, in the form of (i) cash or
shares of Common Stock, or any combination thereof, having a Fair Market Value
on the exercise date equal to the Aggregate Exercise Price or (ii) a
broker-assisted cashless exercise program established by the Company's Stock
Option Plan Committee. For purposes of this Agreement, "Fair Market Value" shall
mean, with respect to the Common Stock (i) the closing price per share of the
Common Stock on the principal exchange on which the Common Stock is then
trading, if any, on such date, or, if the Common Stock was not traded on such
date, then on the next preceding trading day during which a sale occurred; or
(ii) if the Common Stock is not traded on an exchange but is quoted on NASDAQ
or a successor quotation system, (1) the last sales price (if the Common Stock
is then listed as a National Market Issue under the NASDAQ National Market
System) or (2) the mean between the closing representative bid and asked prices
(in all other cases) for the Common Stock on such date as reported by NASDAQ or
such successor quotation system; or (iii) if the Common Stock is not publicly
traded on an exchange and not quoted on NASDAQ or a successor quotation system,
the mean between the closing bid and asked prices for the Common Stock on such
date as determined in good faith by the Committee; or (iv) if the Common Stock
is not publicly traded, the fair market value established by the Committee
acting in good faith. Delivery of said notice and such documentation shall
constitute an irrevocable election to purchase the Shares specified in said
notice and the date on which the Company receives said notice and documentation
shall, subject to the provisions of Sections 7 and 8, be the date as of which
the Shares so purchased shall be deemed to have been issued. The person entitled
to exercise the Option shall not have the right or status as a holder of the
Shares to which such exercise relates prior to receipt by the Company of such
payment, notice and documentation.
Section 7. Limit on Exercise. Anything in this Agreement to the contrary
notwithstanding, in no event may the Option be exercisable if the Company shall,
at any time and in its sole discretion, determine that (i) the listing,
registration or qualification of any Shares otherwise deliverable upon such
exercise, upon any securities exchange or under any state or federal law, or
(ii) the consent or approval of any regulatory body or the satisfaction of
withholding tax or other withholding liabilities is necessary or desirable in
connection with such exercise. In such event, such exercise shall be held in
abeyance and shall not be effective unless and until such listing, registration,
qualification, consent, approval or withholding shall have been affected or
obtained free of any conditions not acceptable to the Company.
Section 8. Additional Assurances. The Committee may require as a condition to
the right to exercise the Option hereunder that the Company receive from the
person exercising the
Option, representations, warranties and agreements, at the time of any such
exercise, to the effect that the Shares are being purchased for investment only
and without any present intention to sell or otherwise distribute such Shares
and that the Shares will not be disposed of in transactions which, in the
opinion of counsel to the Company, would violate the registration provisions of
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations thereunder (the "Act"). The certificate issued to evidence such
Shares shall bear appropriate legends summarizing such restrictions on the
disposition thereof.
Section 9. Legend. All certificates representing any Shares shall have endorsed
thereon the following legend, unless such Shares have been previously registered
under the Act (in addition to any other legend required under any other
agreement):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT COVERING THESE SECURITIES, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO
THE COMPANY, STATING THAT THE SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT."
Section 1. Representations and Warranties.
(a) In connection with the granting of the Option and upon each exercise of the
Option, the Optionee agrees, represents and warrants for himself and for all
other persons that may be permitted to exercise the Option hereunder as follows:
(i) The Optionee is acquiring the Option and upon exercise of the Option, the
Shares (together, the Option and Shares being referred to herein as the
"Securities"), solely for his own account for investment without a view to, or
for resale in connection with, any distribution thereof within the meaning of
the Act. The Optionee further represents that he does not have any present
intention of selling, offering to sell or otherwise disposing of or distributing
the Securities or any portion thereof; and that he is purchasing the entire
legal and beneficial interest in the Securities for his own account and neither
in whole nor in part for the account of any other person.
(ii) The Company has disclosed to the Optionee that the Shares have not been
registered under the Act and must be held indefinitely unless the Shares are
subsequently registered under the Act or an exemption from the registration
requirements is available. The Company hereby agrees that upon the receipt of a
written notice from the Optionee requesting
that the Shares be registered under the Act, the Company shall effect the
registration of such Shares under the Act by filing a Form S-8 with the
Securities and Exchange Commission within 120 days of the receipt of such
written notice.
(iii)
(iv) The Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities.
(v) The Optionee understands that his acquisition of the Securities will be a
highly speculative investment and, without impairing his financial condition, he
is able to hold the Securities for an indefinite period of time and to suffer a
complete loss of his investment.
(vi) The Company represents and warrants that this Agreement has been duly
authorized, executed and delivered on behalf of the Company, that all corporate
action required in connection with such authorization, execution and delivery
has been duly taken, that all corporate action required to reserve the Shares as
provided herein has been duly taken, that no consent of any third party is
required in connection with the authorization, execution and delivery of this
Agreement and that this Agreement when executed will be a legal, valid and
binding obligation of the Company, enforceable in accordance with its terms.
(vii) The Company further represents and warrants that all shares of Common
Stock which may be issued upon the exercise of the Option, upon issuance and
assuming payment in full by the Optionee of the Aggregate Exercise Price, will
be validly issued, fully paid and nonassessable, and free of all taxes, liens
and charges with respect to the issuance thereof.
(viii) The Company makes no representations or warranties as to the income,
estate or other tax consequences to the Optionee of the grant or exercise of the
Option or the sale or other disposition of the Shares of Common Stock acquired
pursuant to the exercise thereof.
Section 2. Withholding of Tax. To the extent that the exercise of this Option or
the disposition of the Shares of Common Stock acquired by exercise of this
Option results in compensation income to the Optionee for federal or state
income tax purposes, the Optionee shall deliver to the Company at the time of
such exercise or disposition such amount of money or shares of Company Common
Stock as the Company may require to meet its obligation under applicable tax
laws or regulations, and, if the Optionee fails to do so, the Company is
authorized to withhold from any cash or Company Common Stock remuneration then
or thereafter payable to the Optionee an amount of cash or Common Stock equal to
the tax required to be withheld by reason of such resulting compensation income.
Upon an exercise of this Option, the Company is further authorized in its
discretion to satisfy any such withholding requirement out of any cash or Shares
of Common Stock distributable to the Optionee upon such exercise.
Section 3. Rights in Shares Before Issuance and Delivery. The Optionee shall not
be deemed for any purpose to be the owner of any Shares of Common Stock unless
and until (a) the Option shall be exercised pursuant to the terms hereof, (b)
the Company shall have issued and delivered Shares of Common Stock to the
Optionee and (c) the Optionee's name shall have been entered as a stockholder of
record on the books of the Company. Thereupon, the Optionee shall have full
voting, dividend and other ownership rights with respect to such Shares of
Common Stock.
Section 4. Transfers in Violation of Agreement. The Company shall not be
required to transfer on its books any Shares which have been sold or transferred
in violation of any of the provisions set forth in this Agreement or to treat as
the owner of any Shares, accord the right to vote any Common Stock as the owner
thereof or pay dividends to any transferee to whom any Shares shall have been so
transferred.
Section 5. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.
Section 6. Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered personally or sent
by facsimile transmission, overnight courier, or certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally or sent by facsimile transmission (provided that a
confirmation copy is sent by overnight courier), one day after deposit with an
overnight courier, or if mailed, five (5) days after the date of deposit in the
United States mails, as follows:
If to the Company, to: Safety Components International, Inc.
0000 Xxxxx Xxxxxxx Xxxx
Xxxx Xxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
If to the Optionee, to: Xxxxxxx X. Xxxxxx
00 Xxxx 00xx Xxxxxx
Xxxxxxxxx 00X
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Section 1. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the matters contemplated herein and
supersedes all prior agreements or understandings among the parties related to
such matters.
Section 2. Binding Effect. Subject to the restrictions on transfer herein set
forth, this Agreement shall be binding upon and inure to the benefit of the
Company and its successors and assigns and upon the Optionee and his assigns,
heirs, executors, administrators and legal representatives. "Successors and
assigns" shall mean, in the case of the Company, any
successor pursuant to a merger, consolidation, or sale, or other transfer of all
or substantially all of the assets of the Company.
Section 3. Amendment or Modification; Waiver. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms or covenants
hereof may be waived, only by a written instrument executed by all of the
parties hereto or, in the case of a waiver, by the party waiving compliance.
Except as otherwise specifically provided in this Agreement, no waiver by either
party hereto of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of a similar or dissimilar provision or condition at the same or at any
prior or subsequent time.
Section 4. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Delaware, without giving effect to the principles of conflicts of
law thereof, and applicable federal law.
Section 5. Headings. Headings to the Sections in this Agreement are intended
solely for convenience and no provision of this Agreement is to be construed by
reference to the heading of any Section.
Section 6. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same agreement.
Section 7. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms and
provisions of this Agreement in any other jurisdiction. Section 8.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
SAFETY COMPONENTS INTERNATIONAL, INC.
By:
--------------------------------
Name:
Title:
OPTIONEE:
--------------------------------
Xxxxxxx X. Xxxxxx
EXHIBIT I
Notice of Exercise
(to be signed only upon exercise of the Option)
TO: Safety Components International, Inc. (the "Company")
I hereby irrevocably elect to exercise the purchase right represented by
the Option Agreement, dated as of ________, 1999, between the Company and me
(the "Option"), for, and to purchase thereunder, shares of the common stock, par
value $.01 per share, of the Company on_______________, at the Company's
principal executive offices.
Further, I certify that the representation and the warranties of the
Optionee (as defined in the Option) set forth in the Option are true and correct
on and as of the date hereof.
Dated: __________________
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Xxxxxxx X. Souzzi
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Address
