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NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT ("Option Agreement") is made and
entered into as of October 29, 1998 (the "Grant Date"), between Xxxxxxx
International, Ltd., a Delaware corporation (the "Company"), and Xxxxxxx X.
Xxxxxxx, an individual residing within the State of Connecticut (the
"Optionee").
RECITALS:
A. The Optionee and the Company have entered into an Employment Agreement,
effective as of the date hereof (the "Employment Agreement"), providing for the
employment of the Optionee by the Company on the terms and subject to the
conditions set forth in the Employment Agreement.
B. The Employment Agreement provides for the grant of a non-qualified
stock option (the "Option") entitling the Optionee to purchase up to Thirty-Five
Thousand (35,000) shares of the common stock, par value $.001 per share ("Common
Stock"), of the Company at an exercise price of $1.50 per share.
C. This is the Option contemplated by the Employment Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and promises contained in this Option Agreement, the Company hereby
grants the Optionee the Option on the terms and conditions hereinafter set
forth.
1. Number of Shares; Option Price and Non-Qualified Status of Option. The
Optionee shall have the right and option to purchase up to 35,000 shares of
Common Stock (the "Option Shares") at an exercise price of $1.50 per share (the
"Option Price"), which is not less than the fair market value of the Option
Shares as of the Grant Date. The Option shall constitute and be treated at all
times by the Optionee and the Company as a "non-qualified stock option" for
Federal income tax purposes and shall not constitute and shall not be treated as
an "incentive stock option" as defined under Section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Exercise of Option. The Option shall become exercisable one year after
the Grant Date to the extent of 33.33% of the Option Shares and, thereafter, on
each subsequent anniversary of the Grant Date to the extent of an additional
33.33% of the Option Shares, in cumulative installments, until the Option has
become exercisable as to all of the Option Shares or is otherwise terminated in
accordance with the terms and conditions hereinafter set forth. The Option may
be exercised only to purchase whole shares of Common Stock, and in no case may a
fraction of a share be purchased. To exercise the Option, the Optionee must
deliver a completed copy of the attached Option Exercise Form to the address
indicated on the form, specifying the number of Option Shares being purchased as
a result of such exercise, together
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with payment of the full Option Price for the Option Shares being purchased.
Payment of the Option Price must be made in cash or by check.
3. Term of Option and Termination of Employment.
(a) General. The term of the Option and this Option Agreement shall
commence as of the Grant Date. The right of the Optionee to exercise the Option
with respect to any Option Shares, to purchase any such Option Shares and all
other rights of the Optionee with respect to any such Option Shares shall
terminate on the fifth anniversary of the Grant Date, unless the Option has been
earlier terminated as provided either in paragraphs (b) through (f) below. This
Option Agreement shall terminate on October 29, 2003.
(b) Death of Optionee. If the Optionee shall die prior to the
exercise of the Option while the Optionee is employed by the Company, then the
Option may be exercised by the legatee(s) or personal representative(s) of the
Optionee at any time within one year after the Optionee's death; provided,
however, that (i) the Option may not be exercised after its expiration date; and
(ii) the Option may be exercised after the Optionee's death if and only to the
extent that the Option was exercisable at the time of the Optionee's death.
(c) Disability. If the Optionee's employment with the Company shall
terminate prior to the exercise of the Option as a result of the "disability" of
the Optionee (as defined in Section 6.2 of the Employment Agreement), then the
Option may be exercised by the Optionee (or his personal representative(s)) at
any time within one year after the Optionee's termination of employment;
provided, however, that (i) the Option may not be exercised after its expiration
date; and (ii) the Option may be exercised after the termination of the
Optionee's employment if and only to the extent that the Option was exercisable
at the time of termination of the Optionee's employment.
(d) Termination For Cause. If the Optionee's employment with the
Company shall terminate prior to the exercise of the Option because the Optionee
is terminated "For Cause" (as defined in Section 6.3 of the Employment
Agreement), then the Option shall immediately terminate upon the termination of
the Optionee's employment with the Company.
(e) Termination For Good Reason. If the Optionee's employment with
the Company shall terminate prior to the exercise of the Option For Good Reason
(as defined in Section 6.4 of the Employment Agreement), then the Option
(subject to clauses (i) and (ii) of paragraph (c) above) may be exercised by the
Optionee at any time within three months after the Optionee's termination of
employment.
(f) Termination for Other Reason. If the Optionee's employment with
the Company shall terminate prior to the exercise of the Option for any reason
other than as set forth in paragraphs (b) through (e) above, then the Option
(subject to clauses (i) and (ii) of paragraph (c) above) may be exercised by the
Optionee at any time within one month after the Optionee's termination of
employment.
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4. Notices. Any notice required or permitted under this Option Agreement
shall be deemed given when delivered personally, or when deposited in a United
States Post Office, postage prepaid, addressed, as appropriate, to the Company
at its principal executive offices located at Xxx Xxxxxxxxx Xxxx, Xxxxxxx,
Xxxxxxxxxxx 00000, or to the Optionee at the last known address of the Optionee
reflected in the personnel records of the Company or at such other address as
the parties may designate in writing.
5. Failure to Enforce Not a Waiver. The failure of the Company to enforce
at any time any provision of this Option Agreement shall in no way be construed
to be a waiver of such provision or of any other provision hereof.
6. Rights of a Stockholder. The Optionee shall have no rights as a
stockholder with respect to any Option Shares unless and until certificates for
shares of Common Stock are issued to the Optionee.
7. Rights to Terminate Employment. Nothing in this Option Agreement shall
confer upon the Optionee the right to continue in the employment of the Company
or affect any right which the Company may have to terminate the employment of
the Optionee.
8. Transferability of Option. This Option may not be transferred by the
Optionee (other than by will or the laws of descent and distribution) and may be
exercised during the Optionee's lifetime only by the Optionee.
9. Representations.
(a) The Optionee represents and warrants to the Company that, upon
exercise of this Option, the Optionee will be acquiring the Option Shares for
its own account for the purpose of investment and not with a view to or for sale
in connection with any distribution thereof, and the Optionee understands that
(i) neither the Option nor the Option Shares have been registered with the
Securities and Exchange Commission by reason of their issuance in a transaction
exempt from the registration requirements of the Securities Act of 1933, and
(ii) the Option Shares must be held indefinitely by the Optionee unless a
subsequent disposition thereof is registered under the Securities Act of 1933 or
is exempt from such registration. The stock certificates for any Option Shares
issued to the Optionee will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH
LAWS.
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(b) The Optionee further represents and warrants that it understands
the Federal, state and local income tax consequences of the granting of the
Option, the acquisition of rights to exercise the Option with respect to any
Option Shares, the exercise of the Option and purchase of Option Shares, and the
subsequent sale or other disposition of any Option Shares. In addition, the
Optionee understands that the Company will be required to withhold Federal,
state or local taxes in respect of any compensation income realized by the
Optionee upon exercise of the Option granted hereunder. To the extent that the
Company is required to withhold any such taxes, the Optionee hereby agrees that
the Company may deduct from any payments of any kind otherwise due to the
Optionee an amount equal to the total Federal, state and local taxes required to
be so withheld, or if such payments are inadequate to satisfy such Federal,
state and local taxes, or if no such payments are due or to become due to the
Optionee, then the Optionee agrees to provide the Company with cash funds equal
to the total Federal, state and local taxes required to be so withheld, or make
other arrangements satisfactory to the Company regarding such payment. It is
understood that all matters with respect to the total amount of taxes to be
withheld in respect of any such compensation income shall be determined by the
Company in its sole discretion.
10. Amendment. This Option Agreement may be amended only by a written
document signed by both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement
as of the date and year set forth above.
XXXXXXX INTERNATIONAL, LTD.
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
The undersigned hereby accepts and agrees to
all the terms and provisions of the
foregoing Option Agreement.
/s/ Xxxxxxx X. Xxxxxxx (Optionee)
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Xxxxxxx X. Xxxxxxx
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XXXXXXX INTERNATIONAL, LTD.
NON-QUALIFIED STOCK OPTION
OPTION EXERCISE FORM
I, Xxxxxxx X. Xxxxxxx, do hereby exercise the right to purchase
______________ shares of Common Stock, $.001 par value, of Xxxxxxx
International, Ltd. pursuant to the Non-Qualified Stock Option granted to me on
October 29, 1998.
Date: ___________________
Signature
Send a completed copy of this Option Exercise Form to:
Xxxxxxx International, Ltd.
Xxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Financial Officer
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