10.3 Incentive Stock Option Agreement between Tollycraft and X.X. Xxxxxx
TOLLYCRAFT YACHT CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
January 11, 1996
(Date of Grant)
TOLLYCRAFT YACHT CORPORATION, a Minnesota corporation ("Company"),
pursuant to its desire to create employee benefit plans to retain and motivate
outstanding employees and to align such employees interests with the interests
of the Company, hereby grants to X. X. Xxxxxx("Optionee"), an option
("Option") to purchase a total of 1,000,000 shares of the common stock of the
Company ("Common Stock") at the price of per share on the terms and conditions
set forth herein.
1. Exercisable in Installments. This Option is effective as of the date of
grant set forth above and shall be exercisable as follows:
1.1 Up to 250,000 shares at $.37 per share, which is the fair value at
the time this option is granted, on or before 12-31-96.
1.2 Any unexercised shares issuable pursuant to Section 1.1 herein and
up to 250,000 additional shares, all at $.50 per share on or before 12-31-97.
1.3 Any unexercised shares issuable pursuant to Sections 1.1 and 1.2
herein and up to 250,000 additional shares, all at 50% of the bid price of the
stock as quoted at the time notice of exercise is given, on or before 12-31-98
1.4 Any unexercised shares issuable pursuant to Sections 1.1, 1.2, and
1.3 herein and up to 250,000 additional shares, all at 50% of the bid price of
the stock as quoted at the time notice of exercise is given, on or before 12-
31-99
In no event shall this Option be exercisable in whole or in part after
December 31, 1999.
2. Restrictions on Transfer and Legend of Certificates. The Company intends
to register the Common Stock subject to this Option with the Securities and
Exchange Commission using Form S-8 when appropriate, although the Company
makes no assurance of such registration. Accordingly, the Optionee warrants,
represents and agrees that unless a registration statement under the
Securities Act of 1933 is effective with respect to the Option and/or the
Common Stock, he has acquired the Option and will acquire any of the Common
Stock underlying this Option for his own account, with no view to any
distribution thereof, and that he will not make any distribution thereof other
than pursuant to an exemption from registration under the Securities Act of
1933. The Company shall have the right to place upon any certificate
evidencing shares issuable upon the exercise of this Option such legend as the
Board of Directors may prescribe restricting the transferability of such
shares.
3. Certain Rights Not Conferred by Option. The Optionee shall not, by virtue
of holding this Option, be entitled to any of the rights of a stockholder in
the Company.
4. Expenses. The Company shall pay all original issue and transfer taxes with
respect to the issuance and transfer of shares of Common Stock pursuant to
this Agreement and all other fees and expenses necessarily incurred by the
Company in connection therewith.
5. Exercise of Option.
5.1 The Option shall be exercisable only by delivering written notice of
exercise in a form specified by the Company to the Secretary of the Company at
its principal office within the time specified in Section 1 hereof, together
with payment as hereinafter described. Payment shall be in cash, except that
the Board of Directors, may, upon application of the Optionee, permit the
Optionee to pay the option price all or in part with shares of Common Stock
(other than shares acquired within the preceding two-year period by way of
exercise of an incentive stock option). The fair market value of the shares as
of the date of delivery of the certificates therefor to the Secretary of the
Company (as determined by the Board of Directors), accompanied by a stock
power executed in blank with signature guaranteed by a national bank, shall be
utilized as the basis for determining how much of the option price was paid
with such shares. The notice shall specify the number of shares for which the
Option is being exercised (which number, if less than all of the shares then
subject to exercise under the Option, shall be 100 or a multiple thereof not
resulting in any fractional shares) and shall be accompanied by payment in
full of the purchase price of the shares of Common Stock with respect to which
the Option is being exercised. No shares shall be delivered upon any exercise
of the Option until there has been compliance with all applicable laws, rules
and regulations. If a registration statement under the Securities Act of 1933
is not then in effect with respect to the shares issuable upon such exercise,
the person exercising the Option shall represent and warrant at the time of
any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required under
the Securities Act of 1933 or any other applicable federal, state or foreign
law, or any regulation or rule of any governmental agency, and make such other
representations as the Company reasonably may determine to be necessary.
Except as provided in Section 6 hereof, the Option may be exercised only if,
at all times during the period beginning on the date of the granting of the
Option and ending on the day of exercise, the Optionee was an employee of
either the Company (or a parent or subsidiary corporation of the Company) or a
corporation (or a parent or subsidiary corporation of such corporation).
5.2 Upon and after any exercise of the Option, the Company shall be
entitled to withhold such amounts from any wages or other sums due the
Optionee necessary in order for the Company to satisfy any federal, state or
foreign income, employment or other withholding tax requirements. If the
amount required to be withheld exceeds 30% of the wages and other amounts then
owed to the Optionee, the Company at its election may determine that the
exercise of the Option shall not apply to some portion or all of the number of
shares designated in the notice of exercise unless the Optionee pays to the
Company in cash the amount necessary in order for the Company to satisfy the
withholding requirements.
5.3 Until the Optionee becomes a shareholder of record, no right to vote
or to receive dividends or any other rights as a shareholder shall exist with
respect to shares of Common Stock notwithstanding the exercise of the Option.
No adjustment shall be made for dividend or other rights as to which the
record date precedes the date the Optionee becomes a shareholder of record,
except as provided in Section 9 hereof.
6. Termination of Option. To the extent it is not exercised, the Option
granted hereunder shall terminate (i) upon breach by the Optionee of any
provision of this Agreement or (ii) upon the termination of Optionee's
employment for any reason, including voluntary or involuntary termination with
or without cause, with the Company, a parent or subsidiary corporation of the
Company, or a corporation (or a parent or subsidiary corporation of such
corporation).
6.1 In the case of death of the Optionee who was employed by the Company
at the date of death, the Option may be exercised (to the extent accrued at
the date of death) within six months after the death of the Optionee, by (and
only by) the person or persons to whom the rights of the Optionee under the
Option shall have passed by will or by the applicable laws of descent and
distribution.
6.2 In the event of termination of employment of the Optionee for any
reason, this Option shall be deemed to have terminated thirty days after the
date such Optionee ceases, for any reason, to be an employee of the Company,
its parents or subsidiaries.
7. The Effect of Sale or Other Disposition of the Company. In the event the
Company or its shareholders enter into an agreement, plan of reorganization or
other arrangement to dispose of all or substantially all of the assets or
stock of the Company by means of a sale, reorganization, liquidation, or
otherwise, the Option shall become exercisable with respect to the full number
of shares subject to the Option, whether or not otherwise then accrued, during
the period commencing as of the date of such agreement, plan of reorganization
or other arrangement and ending the day before its consummation or
termination. All options which have not been exercised upon such consummation
thereupon shall terminate.
8. Non-assignability of Option. Neither this Option nor any part thereof or
interest therein may be sold, pledged, assigned or transferred in any manner
otherwise 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.
9. Adjustments Upon Changes in Capitalization. If all or any portion of the
Option is exercised subsequent to any stock dividend, split up,
recapitalization, combination or exchange of shares, merger, consolidation,
acquisition of property or stock, separation, reorganization, or liquidation,
as a result of which shares of Common Stock shall be changed into the same or
a different number of shares of the same or another class or classes, the
person or persons exercising the Option shall receive for the aggregate price
payable upon such exercise of the Option, the aggregate number and class of
shares which, if shares of Common Stock (as authorized at the date of grant of
the Option) had been purchased at the date of grant of the Option for the same
aggregate price (on the basis of the price per share provided in the Option)
and had not been disposed of, such person or persons would be holding at the
time of such exercise, as a result of such purchase and any such stock
dividend, split up, recapitalization, combination or exchange of shares,
merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation; provided, however, that no fractional share
shall be issued upon any such exercise, and the aggregate price paid shall be
appropriately reduced on account of any fractional share not issued. In the
event of any such change in the outstanding Common Stock of the Company, the
aggregate number and class of shares remaining available under the Option
shall be that number and class which a person, to whom an option had been
granted for all of the available shares under the Option on the date preceding
such change, would be entitled to receive as provided in the first sentence of
the second paragraph of this Section 9.
10. Reservation of Shares and Common Stock. The Company, during the term of
the Option, shall at all times reserve and keep available, and shall seek or
obtain from any regulatory body having jurisdiction any requisite authority in
order to issue and sell such number of the shares of Common Stock as shall be
sufficient to satisfy the requirements of the Option. Inability of the
Company to obtain from any regulatory body having jurisdiction authority
deemed by counsel for the Company to be necessary to the lawful issuance and
sale of any shares of its stock hereunder shall relieve the Company of any
liability with respect to the nonissuance or sale of such share(s) as to which
such requisite authority shall not have been obtained.
TOLLYCRAFT YACHT CORPORATION
By /s/ Xxxx Xxxxxxxxx
Title: Chairman of the Board
Accepted as of the date set forth above
_____/s/___________________________
X. X. Xxxxxx
