Exhibit 10.7
MTC TECHNOLOGIES, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This AGREEMENT (this "Agreement") is made as of May 3, 2002 (the "Date of
Grant"), by and between MTC Technologies, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxxx (the "Optionee").
1. Grant of Stock Option. Subject to and upon the terms, conditions, and
restrictions set forth in this Agreement, the Company hereby grants to the
Optionee as of the Date of Grant a stock option (the "Option") to purchase
140 shares (the "Optioned Shares") of common stock, par value $.001 per
share of the Company (the "Common Shares"), subject to adjustment as set
forth in Section 10 (including, without limitation, upon any stock split
occurring in connection with the Company's first public offering conducted
by a nationally recognized underwriter pursuant to an effective
registration statement filed under the Securities Act of 1933, as amended,
covering the offer and sale of the Company's equity securities). The Option
may be exercised from time to time in accordance with the terms of this
Agreement. The price at which the Optioned Shares may be purchased pursuant
to the Option shall be $10,347.00 per share, subject to adjustment as
hereinafter provided (the "Option Price"). The Option is intended to be a
nonqualified stock option and shall not be treated as an "incentive stock
option" within the meaning of that term under Section 422 of the Internal
Revenue Code of 1986, as amended from time to time, or any successor
provision thereto.
2. Term of Option. The term of the Option shall commence on the Date of Grant
and, unless earlier terminated in accordance with Section 6 hereof, shall
expire ten (10) years from the Date of Grant.
3. Right to Exercise. The Option will be immediately exercisable on the Date
of Grant. The Option may be exercised in whole or in part. In no event
shall the Optionee be entitled to acquire a fraction of one Optioned Share
pursuant to the Option. The Optionee shall be entitled to the privileges of
ownership with respect to Optioned Shares purchased and delivered to the
Optionee upon the exercise of all or part of the Option.
4. Option Nontransferable. The Option granted hereby shall be neither
transferable nor assignable by the Optionee other than by will or by the
laws of descent and distribution and may be exercised, during the lifetime
of the Optionee, only by the Optionee, or in the event of his or her legal
incapacity, by his or her guardian or legal representative acting on behalf
of the Optionee in a fiduciary capacity under state or foreign law and
court supervision.
5. Notice of Exercise; Payment. The Option may be exercised by written notice
to the Company stating the number of Optioned Shares for which the Option
is being exercised and the intended manner of payment. The date of the
Optionee's written notice shall be the exercise date. Payment equal to the
aggregate Option Price of the Optioned Shares for which the Option is being
exercised shall be tendered in full with the notice of
exercise to the Company in cash in the form of currency or check or other
cash equivalent acceptable to the Company. The Optionee may also tender the
Option Price by (a) the actual or constructive transfer to the Company of
nonforfeitable, nonrestricted Common Shares that have been owned by the
Optionee for more than six months prior to the date of exercise, or (b) by
any combination of the foregoing methods of payment, including a partial
tender in cash and a partial tender in nonforfeitable, nonrestricted Common
Shares. Nonforfeitable, nonrestricted Common Shares that are transferred by
the Optionee in payment of all or any part of the Option Price shall be
valued on the basis of their Market Value per Share. After the Company's
first public offering conducted by a nationally recognized underwriter
pursuant to an effective registration statement filed under the Securities
Act of 1933, as amended, covering the offering and sale of the Company's
equity securities, the requirement of payment in cash shall be deemed
satisfied if the Optionee makes arrangements that are satisfactory to the
Company with a broker that is a member of the National Association of
Securities Dealers, Inc. to sell on the exercise date a sufficient number
of Optioned Shares that are being purchased pursuant to the exercise, so
that the net proceeds of the sale transaction will at least equal the
amount of the aggregate Option Price plus payment of any applicable
withholding taxes, and pursuant to which the broker undertakes to deliver
to the Company the amount of the aggregate Option Price plus payment of any
applicable withholding taxes on a date satisfactory to the Company, but not
later than the date on which the sale transaction will settle in the
ordinary course of business. As a further condition precedent to the
exercise of the Option, the Optionee shall comply with all regulations and
requirements of any regulatory authority having control of, or supervision
over, the issuance of Common Shares and in connection therewith shall
execute any documents that the Board of Directors of the Company shall in
its sole discretion deem necessary or advisable.
6. Termination of Agreement.
(a) This Agreement and the Option granted hereby shall terminate
automatically and without further notice on the earliest of the
following dates:
(i) Six (6) months after the Optionee's retirement at or after age
65;
(ii) Six (6) months after the Optionee's death if such death occurs
while the Optionee is employed by the Company or any subsidiary
of the Company;
(iii) Six (6) months after the Optionee's permanent and total
disability, if the Optionee becomes permanently and totally
disabled while an employee of the Company or any subsidiary of
the Company and ceases to be an employee as a result of such
disability;
(iv) Except as provided on a case-by-case basis, thirty (30) calendar
days after the Optionee ceases to be an employee of the Company
or any subsidiary of the Company for any reason other than as
described in Section 6(a)(i), 6(a)(ii) or 6(a)(iii) hereof; or
(v) Ten (10) years from the Date of Grant.
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(b) In the event that the Optionee's employment is terminated for just
cause, this Agreement shall terminate at the time of such termination
notwithstanding any other provision of this Agreement and the
Optionee's option will cease to be exercisable and will not become
exercisable after such termination. For purposes of this provision,
"just cause" shall mean, with respect to an Optionee, "just cause" (or
any similar term) as defined in any employment, severance or other
agreement between the Company or any subsidiary of the Company and the
Optionee, or if there is no such agreement in effect that contains a
definition of "just cause" (or any similar term), "just cause" shall
include the commission by the Optionee of any of the following acts
prior to termination of employment:
(i) an intentional act of fraud, embezzlement, theft, or any other
material violation of law in connection with the Optionee's
duties or in the course of the Optionee's employment;
(ii) intentional wrongful damage to material assets of the Company or
any subsidiary of the Company;
(iii) intentional wrongful disclosure of material confidential
information of the Company or any subsidiary of the Company;
(iv) intentional wrongful engagement in any competitive activity that
would constitute a material breach of the duty of loyalty to the
Company or any subsidiary of the Company;
(v) intentional breach of any stated material employment policy of
the Company or any subsidiary of the Company; or
(vi) any other conduct that constitutes "cause" at common law.
(c) For the purposes of this Agreement, the continuous employment of the
Optionee with the Company shall not be deemed to have been
interrupted, and the Optionee shall not be deemed to have ceased to be
an employee of the Company, by reason of the transfer of his or her
employment among the Company and the Company's subsidiaries or a leave
of absence approved by the Board of Directors of the Company.
7. No Employment Contract. Nothing contained in this Agreement shall confer
upon the Optionee any right with respect to continuance of employment by
the Company or any subsidiary of the Company, nor limit or affect in any
manner the right of the Company or any subsidiary of the Company to
terminate the employment or adjust the compensation of the Optionee.
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8. Taxes and Withholding. To the extent that the Company or any subsidiary of
the Company is required to withhold any federal, state, local or foreign
taxes in connection with the exercise of the Option, and the amounts
available to the Company or such subsidiary for such withholding are
insufficient, it shall be a condition to the exercise of the Option that
the Optionee shall pay such taxes or make provisions that are satisfactory
to the Company or the subsidiary, as the case may be, for the payment
thereof. The Optionee may elect to satisfy all or any part of any such
withholding obligation by (a) surrendering to the Company or the subsidiary
a portion of the Optioned Shares that are issued or transferred to the
Optionee upon the exercise of the Option, and the Optioned Shares so
surrendered by the Optionee shall be credited against any such withholding
obligation at the Market Value per Share of such shares on the date of such
surrender or (b) utilizing the broker assistance arrangement provided in
Section 5.
9. Compliance with Law. The Company shall make reasonable efforts to comply
with all applicable federal, state and provincial securities laws;
provided, however, notwithstanding any other provision of this Agreement,
the Option shall not be exercisable if the exercise thereof would result in
a violation of any such law.
10. Adjustments. The Board of Directors of the Company may make or provide for
such adjustments in the number of Optioned Shares covered by the Option, in
the Option Price applicable to the Option, and in the kind of shares
covered thereby, as the Board of Directors of the Company, in its sole
discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the Optionee's rights that otherwise
would result from (a) any stock dividend, stock split, combination of
shares, recapitalization, or other change in the capital structure of the
Company, (b) any merger, consolidation, spin-off, split-off, spin-out,
split-up, reorganization, partial or complete liquidation, or other
distribution of assets or issuance of rights or warrants to purchase
securities, or (c) any other corporate transaction or event having an
effect similar to any of the foregoing. In the event of any such
transaction or event, the Board of Directors of the Company, in its
discretion, may provide in substitution for the Option such alternative
consideration as it may determine to be equitable in the circumstances and
may require in connection therewith the surrender of the Option.
11. Availability of Common Shares; Fractional Shares. The Company shall at all
times until the expiration of the Option reserve and keep available, either
in its treasury or out of its authorized but unissued Common Shares, the
full number of Optioned Shares deliverable upon the exercise of the Option.
The Company will not be required to issue any fractional Common Shares
pursuant to this Agreement. The Board of Directors of the Company may
provide for the elimination of fractions or for the settlement of fractions
in cash.
12. Amendments; Interpretation. This Agreement may be amended from time to time
by agreement of the parties; provided, however, that no amendment shall
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adversely affect the rights of the Optionee under this Agreement without
the Optionee's consent. The Board of Directors of the Company, as
constituted from time to time, shall, except as expressly provided
otherwise herein, have the right to determine any questions which arise in
connection with the Option or its exercise.
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13. Severability. In the event that one or more of the provisions of this
Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable
from the other provisions hereof, and the remaining provisions hereof shall
continue to be valid and fully enforceable.
14. Definition. For purposes of this Agreement, "Market Value per Share" means,
as of any particular date, (i) the closing sale price per Common Share as
reported on the principal exchange on which Common Shares are then trading,
if any, or if applicable, the Nasdaq National Market System, or if there
are no sales on such date, on the next preceding trading day during which a
sale occurred, or (ii) if clause (i) does not apply, the fair market value
of a Common Share as determined by the Board of Directors of the Company.
15. Successors and Assigns. Without limiting Section 4 hereof, the provisions
of this Agreement shall inure to the benefit of, and be binding upon, the
successors, administrators, heirs, legal representatives and assigns of the
Optionee, and the successors and assigns of the Company.
16. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Delaware, without
giving effect to the principles of conflict of laws thereof. Each party to
this Agreement hereby consents and submits himself, herself or itself to
the jurisdiction of the courts of the State of Delaware for the purposes of
any legal action or proceeding arising out of this Agreement.
17. Notices. Any notice to the Company provided for herein shall be in writing
to the Company and any notice to the Optionee shall be addressed to the
Optionee at his or her address on file with the Company. Except as
otherwise provided herein, any written notice shall be deemed to be duly
given if and when delivered personally or sent by registered mail or
electronic means of communication, and addressed as aforesaid. Any party
may change the address to which notices are to be given hereunder by notice
to the other party as herein specified (provided that for this purpose any
mailed notice shall be deemed given on the third business day following
deposit of the same in the mail).
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer and Optionee has also executed this
Agreement in duplicate, as of the day and year first above written.
MTC TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
Title: Chairman of the Board
The undersigned Optionee hereby acknowledges receipt of an executed original of
this Stock Option Agreement and accepts the Option granted hereunder, subject to
the terms and conditions set forth herein.
/s/ Xxxxxxx X. Xxxxxx
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Optionee
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