Exhibit 10.2
XXXXXX XXXXXXX INC.
STOCK OPTION AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of the 24th day of
September, 2002, between Xxxxxx Xxxxxxx Inc. located at Perryville Corporate
Park, Clinton, New Jersey (the "Company") and Xxxxxxx X. Xxxxxxxxxx
("Optionee").
WHEREAS, the Optionee previously entered into an employment agreement
("Employment Agreement") with Xxxxxx Xxxxxxx Ltd. (the "Parent"), and
WHEREAS, in accordance with the First Amendment to the Employment
Agreement Between Xxxxxx Xxxxxxx Ltd. and Xxxxxxx X. Xxxxxxxxxx, the Company
wishes to grant to the Optionee an option to purchase common shares of Xxxxxx
Xxxxxxx Ltd.
NOW, THEREFORE, it is agreed as follows:
1. OPTION. Pursuant to this Agreement and subject to the terms and
conditions hereof, the Company hereby grants to Optionee this non-qualified
stock option ("Option") to purchase 1,000,000 common shares of Parent at
$1.64 per share, which is the mean of the high and low sale prices of the
Common Shares of Parent on the New York Stock Exchange on the date of grant of
this Option.
2. EXERCISE OF OPTION. Except as provided in Section 4 hereof, this
Option shall become exercisable ("vest") in stages. A portion of the Option
representing 20,849 shares shall vest on the date of this grant and 20,833
shares shall vest on the first day of each successive month hereafter through
and including August 1, 2006. This Option expires ten (10) years from the date
hereof.
This Option may be exercised, to the extent exercisable in accordance
with this Agreement in whole or part by written notice to the Company, except
that this Option shall not be exercisable if, in the opinion of counsel for the
Company, exercise of this Option or delivery of shares pursuant thereto might
(i) result in a violation of any law or regulation of an agency of government or
(ii) have an adverse effect on the listing status or qualification of Parent
shares on any securities exchange; provided that the Company shall take or cause
to be taken all action necessary to satisfy any requirement of law or such
regulation, or to avoid any such adverse effect.
3. PAYMENT OF PURCHASE PRICE. Payment for shares as to which this
Option is exercised shall be made at the time written notice of exercise is
given. The option price shall be paid upon exercise (i) in cash in U.S. dollars,
or (ii) common shares of Parent owned of record by the Optionee and purchased or
held for the requisite period of time as necessary to avoid a charge to the
Company's, Parent's or any of their affiliate's earnings for financial reporting
purposes. Such common shares shall be valued at the mean of the high and low
sale prices of such shares on the New York Stock Exchange on the day of
exercise. At the time of receipt of common shares upon exercise of the Option,
the Optionee shall be required to pay to, or as directed by, the Company in cash
any taxes of any kind required by law to be withheld with respect to such
shares, or make arrangements satisfactory to the Board of Directors of the
Company (the "Board") regarding payment of such taxes, and the Company and
Parent shall have the right to deduct any such taxes from any payment of any
kind otherwise due to the Optionee.
4. TERMINATION OF EMPLOYMENT. If the Optionee is terminated because
the Optionee is physically or mentally disabled and is unable to perform the
Optionee's principal services pursuant to the Employment Agreement, or is
terminated Without Cause (as defined in the Employment Agreement) by Parent, the
Company, or a subsidiary or affiliate of Parent, or the Optionee terminates
employment for Good Reason (as defined in the Employment Agreement), this
Option shall vest with respect to all of the shares subject to this Option, and
shall remain exercisable through the second anniversary of such termination.
If the Optionee dies while employed by Parent, the Company or a
subsidiary or affiliate of Parent, this Option shall vest with respect to all of
the shares subject to this Option, and shall remain exercisable by a legatee or
legatees of the Optionee under the last will, or by the Optionee's personal
representatives or distributees, as applicable, through the second anniversary
of the Optionee's death.
If the Optionee retires under a pension plan of Parent, the Company
or a subsidiary or affiliate of Parent, this Option shall vest with respect to
all of the shares subject to this Option, and shall remain exercisable until the
earlier of one year from the date of grant, and the expiration date of the
Option.
In the event that the Optionee's employment is terminated for Cause
(as defined in the Employment Agreement) by the Parent, the Company or a
subsidiary or affiliate of Parent or the Optionee terminates his employment
other than for Good Reason (as defined in the Employment Agreement), this
Option, to the extent unvested, shall be immediately forfeited and the remainder
of this Option, to the extent unexercised on the date which is ninety (90) days
after such termination, shall be forfeited.
Notwithstanding the foregoing provisions of this Section 4, under no
circumstances shall this Option be exercised after the expiration date stated in
Section 2 hereof.
5. INVESTMENT REPRESENTATIONS. If at the time of exercise of all or
part of the Option the common shares of Parent are not registered under the
Securities Act and/or there is no current prospectus in effect under the
Securities Act with respect to common shares, the Optionee shall execute, prior
to the issuance of any such shares to the Optionee, an agreement (in such form
as the Board may specify) in which the Optionee, among other things, represents,
warrants and agrees that the Optionee is purchasing or acquiring the shares
acquired under this Agreement for the Optionee's own account, for investment
only and not with a view to the resale or distribution thereof, that the
Optionee has knowledge and experience in financial and business matters, that
the Optionee is capable of evaluating the merits and risks of owning any such
shares purchased or acquired under this Agreement, that the Optionee is a person
who is able to bear the economic risk of such ownership and that any subsequent
offer for sale or distribution of any of such shares shall be made only pursuant
to (a) a registration statement on an appropriate form under the Securities Act,
which registration statement has become effective and is current with regard to
the shares being offered or sold, or (b) a specific exemption from the
registration requirements of the Securities Act, it being understood that to the
extent any such exemption is claimed, the Optionee shall, prior to any offer for
sale of such shares, obtain a prior favorable written opinion, in form and
substance satisfactory to the Board, from counsel acceptable to the Board, as to
the applicability of such exemption thereto.
6. RECAPITALIZATION. In the event of changes in Parent common shares
by reason of share dividends, split-ups or combination of shares,
reclassifications, recapitalizations, mergers, consolidations, reorganizations
or liquidations, appropriate adjustments shall be made by the Board of Directors
of the Company (the "Board") in (a) the number and class of shares to which
Optionee will thenceforth be entitled upon exercise of this Option, and (b) the
price which the Optionee shall be required to pay upon exercise. Whether any
adjustment or modification is required as a result of the occurrence of any of
the events heretofore specified, and the amount thereof, shall be determined, in
good faith, by the Board, which determination shall be final, binding and
conclusive.
7. CONTINUED EMPLOYMENT. So long as the Optionee shall continue to be
an employee of Parent, the Company or a subsidiary or affiliate of Parent, the
Option shall not be affected by (i) any change of duties or position, or (ii)
any temporary leave of absence approved by each employing corporation and by the
Board. Nothing in this Agreement shall confer upon the Optionee any right to
continue in the employ of Parent, the Company or a subsidiary or affiliate of
Parent or interfere in any way with the right of Parent, the Company or each
such subsidiary or affiliate to terminate the Optionee's employment at any time,
with or without cause.
8. TRANSFERABILITY. This Option is not transferable by Optionee
except by will or by the laws of descent and distribution and is exercisable
during Optionee's lifetime only by him or a court appointed guardian. No
assignment or transfer by Optionee of this Option, or of the rights represented
thereby, whether voluntary or involuntary, by operation of law or otherwise,
except by will or by the laws of descent and distribution, shall vest in the
assignee or transferee any interest or right herein whatsoever. Upon any attempt
to assign or transfer this Option, the Option shall forthwith terminate.
Notwithstanding the foregoing, Optionee may transfer this Option to
any one or more of the following: Optionee's descendant, spouse, descendant of a
spouse, spouse of any of the foregoing, a trust established primarily for the
benefit of any of the foregoing, or of Optionee, or to an entity which is a
corporation, partnership, or limited liability company (or any other similar
entity) the owners of which are primarily the aforementioned persons or trusts.
If the Option is so transferred to the aforementioned persons, trusts or
entities in respect of Optionee, the transferee shall be subject to the
provisions of Paragraph 4 concerning the exercisability following Optionee's
termination of employment.
9. RIGHTS AS A SHAREHOLDER. Optionee shall not be deemed for any
purpose to be a shareholder of Parent except to the extent that this Option
shall have been exercised in accordance with this Agreement.
10. CORPORATE ACTION BY PARENT. Existence of this Option shall not
impair the right of Parent or its shareholders to make adjustments,
recapitalizations, reorganizations or other changes in its capital structure or
business, to consummate any merger or consolidation of Parent, to issue bonds,
debentures, preferred or prior preference stocks ahead of or affecting the
common shares or the rights thereof, to dissolve or liquidate Parent, to sell or
transfer all or any part of its assets or business, or to do or take any other
corporate act or proceeding it or they might have done or taken if this Option
was not in existence.
11. CHANGE OF CONTROL. If during the Term, as defined in the
Employment Agreement, Parent, the Company or a subsidiary or affiliate of Parent
terminates the Optionee's employment Without Cause (as defined in the Employment
Agreement) or the Optionee terminates his employment with Good Reason (as
defined in the Employment Agreement), in each case following a Change of Control
(as defined in the Employment Agreement), or if the Optionee terminates his
employment for any reason during the thirty (30) day period commencing on the
date which is twelve months following such Change of Control, this Option shall
vest with respect to all of the shares subject to this Option, and shall remain
exercisable through the second anniversary of such termination.
Notwithstanding any other provision of this Agreement to the
contrary, in the event of a Change of Control, as defined in the Employment
Agreement, this Option, to the extent not exercisable and vested as of the date
such Change of Control is determined to have occurred, shall become fully
exercisable and vested.
12. DISPUTES. Issues arising out of this Option shall be resolved in
accordance with the Dispute Resolution Procedure set forth in Section 11 of the
Employment Agreement.
13. TERMS AND CONDITIONS. This Agreement is subject to all terms and
conditions of the Employment Agreement.
14. GOVERNING LAW. This Agreement and the rights and obligations of
the parties hereto shall be governed by the laws of the State of New Jersey
without regard to the principles of conflicts of law which might otherwise
apply.
15. NOTICE. Any notice which either party hereto may be required or
permitted to give to the other shall be in writing, and may be delivered
personally or by mail to the Company at the office of the Secretary of Xxxxxx
Xxxxxxx Inc., Xxxxxxxxxx Xxxxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000-0000, and to
the Optionee at his principal residence as reflected in the records of the
Parent.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized Officers and Optionee has hereunto set his hand,
as of the day and year first above written.
XXXXXX XXXXXXX INC.
BY:/S/ XXXXXX X. XXXXX
-----------------------------------
Xxxxxx X. Xxxxx
Senior Vice President and CFO
/S/XXXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxxxxxx
Optionee
ATTEST:
/S/ XXXX XXXXX XXXXXXX
------------------------
Secretary
