Exhibit 10.2
X. X. XXXXX ARTS & CRAFTS, INC.
FORM OF OPTION AGREEMENT
AGREEMENT made ________, between X.X. XXXXX ARTS & CRAFTS, INC. (the
"Company"), a Pennsylvania corporation having a principal place of business in
Berlin, New Jersey and Xxxx Xxxxxx (the "Participant").
WHEREAS, the Company desires to grant to the Participant an Option to
purchase shares of its common stock, no par value (the "Shares") subject to the
terms and conditions of the 2002 Stock Option Plan of the Company (the "Plan");
WHEREAS, the Company and the Participant understand and agree that any
terms used and not defined herein have the same meanings as in the Plan;
WHEREAS, the Company and the Participant each intend that the Option
granted herein shall be a Non-Qualified Stock Option;
THEREFORE, in consideration of the mutual covenants hereinafter set forth
and for other good and valuable consideration, the parties hereto agree as
follows:
1. GRANT OF OPTION.
The Company hereby irrevocably grants on the date of this Agreement
(the "grant date") to the Participant the right and option to purchase all or
any part of an aggregate of ______ Shares, which Option must be exercised based
upon the earliest date granted and on the terms and conditions and subject to
all the limitations set forth herein and in the Plan, which is incorporated
herein by reference. The Participant acknowledges receipt of a copy of the Plan.
2. PURCHASE PRICE.
The purchase price of the Shares covered by the Option shall be at the
closing price per Share on the exchange or market on which the Shares are traded
on the grant date hereof. Payment shall be made in accordance with Paragraph 7
of the Plan.
3. EXERCISE OF OPTION.
Subject to the terms and conditions set forth in this Agreement and
the Plan, the Option granted hereby shall be exercisable as follows:
On the first anniversary of the date of this Agreement up to 1/3 of the Shares
On the second anniversary of the date of this Agreement an additional 1/3 of the Shares
On the third anniversary of the date of this Agreement an additional 1/3 of the Shares
Notwithstanding any other term or condition in the Plan, this Option shall
also vest and become exercisable pursuant to the terms and conditions of the
Change of Control Provisions of the Employment Agreement effective June 1, 2006
between the Company and Participant.
4. TERM OF OPTION
The Option shall terminate ten (10) years from the date of this
Agreement, but shall be subject to earlier termination as provided herein or in
the Plan.
In the event the Participant's employment or directorship is
terminated for "Cause" (as defined in the Employment Agreement effective June 1,
2006), the Participant's right to exercise any unexercised portion of this
Option shall cease forthwith, and this Option shall thereupon terminate.
In the event of Disability of the Participant, as determined in
accordance with the Plan, the Option shall be exercisable any time within one
(1) year after the date that the Participant became Disabled pursuant to the
terms of the Plan.
In the event of the death of the Participant while an employee or
director of the Company or of an Affiliate, the Option shall be exercisable
within one year after the date of death pursuant to the terms of the Plan.
In the event the Participant's employment is voluntarily terminated by
Participant without Good Reason (as defined in the Employment Agreement), as
determined in accordance with the Plan, the Option shall be exercisable any time
within three months of termination of employment.
5. METHOD OF EXERCISING OPTION.
Subject to the terms and conditions of this Agreement, the method to
exercise an Option shall be by written notice to the Company, at the principal
executive office of the Company. Such notice shall state the election to
exercise the Option and the number of Shares in respect of which it is being
exercised, shall be signed by the person or persons so exercising the Option,
and shall be in substantially the form attached hereto as Exhibit A. Payment of
the full purchase price for such Shares shall be made in accordance with
Paragraph 7 of the Plan, and the Company shall deliver a certificate or
certificates representing such Shares as soon as practicable after the notice
shall be received; provided, however, that the Company may delay issuance of
such Shares until completion of any action or obtaining of any consent, which
the Company deems necessary under any applicable law (including, without
limitation, federal or state securities laws). The certificate or certificates
for the Shares as to which the Option shall have been so exercised shall be
registered in the name of the Participant (or, if the Option shall be exercised
by the Participant and if the Participant shall so request in the notice
exercising the Option, with another person jointly, with right of survivorship)
and shall be delivered as provided above to or upon the written order of the
person or persons exercising the Option. In the event the Option shall be
exercised, pursuant to Section 4 hereof, by any person or persons other than the
Participant, such notice shall be accompanied by appropriate proof of the right
of such person or persons to exercise the Option. All Shares that shall be
purchased upon the exercise of the Option as provided herein shall be fully paid
and non-assessable.
6. PARTIAL EXERCISE.
Exercise of this Option to the extent above stated may be made in part
at any time and from time-to-time within the above limits, except that no
fractional share shall be issued pursuant to this Option.
7. NON-ASSIGNABILITY.
The Option shall not be transferable by the Participant otherwise than
by will or by the laws of descent and distribution and shall be exercisable,
during the Participant's lifetime, only by the Participant. Except as provided
in the preceding sentence, the Option shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process. Any attempted transfer,
assignment, pledge, hypothecation or other disposition of the Option or of any
rights granted hereunder contrary to the provisions of this Section 7, or the
levy of any attachment or similar process upon the Option or such rights, shall
be null and void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.
The Participant shall have no rights as a stockholder with respect to
Shares subject to this Agreement until a stock certificate therefore has been
issued to the Participant and is fully paid for. Except as is expressly provided
in the Plan with respect to certain changes in the capitalization of the
Company, no adjustment shall be made for dividends or similar rights for which
the record date is prior to the date such stock certificate is issued.
9. CAPITAL CHANGES.
The Plan contains provisions covering the treatment of Options in a
number of contingencies such as stock splits.
10. TAXES AND WITHHOLDING.
The Participant acknowledges that upon exercise of the Option the
Participant will be deemed to have taxable income. The Participant acknowledges
that any income or other taxes due from him with respect to this Option or the
Shares issuable pursuant to this Option shall be the Participant's
responsibility.
If the Company in its discretion determines that it is obligated to
withhold income taxes with respect to the exercise of the Option, the
Participant hereby agrees that the Company may withhold from the Participant's
remuneration or compensation, the appropriate amount of federal, state and local
withholding taxes.
11. NO OBLIGATION TO EMPLOY.
The Company is not by the Plan or this Option obligated to continue
the Participant as an employee or director of the Company.
12. NOTICES.
Any notices required or permitted by the terms of this Agreement or
the Plan shall be given by personal delivery or certified mail, return receipt
requested, addressed as follows:
To the Company: X.X. XXXXX ARTS & CRAFTS, INC.
130 X.X. Xxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
To the Participant: At his most recent address as reflected in the
employment records of the Company.
or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given when
delivered or mailed in accordance with the foregoing provisions.
13. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with the
law of the Commonwealth of Pennsylvania.
14. BENEFIT OF AGREEMENT.
Subject to the provisions of the Plan and the other provisions
thereof, this Agreement shall be for the benefit of and shall be binding upon
the heirs, executors, administrators, successors and assigns of the parties
hereto.
15. ENTIRE AGREEMENT.
This Agreement, together with the Plan and the Employment Agreement
effective June 1, 2006, embodies the entire agreement and understanding between
the parties hereto with respect to the subject matter hereof and supersedes all
prior oral or written agreements and understandings relating to the subject
matter hereof. No statement, representation, warranty, covenant or agreement not
expressly set forth in this Agreement or said Employment Agreement shall affect
or be used to interpret, change or restrict, the express terms and provisions of
this Agreement, provided, however, in any event, this Agreement shall be subject
to and governed by the Plan.
16. MODIFICATIONS AND AMENDMENTS.
The terms and provisions of this Agreement may be modified or amended only by
written agreement executed by all parties hereto.
17. WAIVERS AND CONSENTS.
The terms and provisions of this Agreement may be waived, or consent
for the departure therefrom granted, only by written document executed by the
party entitled to the benefits of such terms or provisions. No such waiver or
consent shall be deemed to be or shall constitute a waiver or consent with
respect to any other terms or provisions of this Agreement, whether or not
similar. Each such waiver or consent shall be effective only in the specific
instance and for the purpose for which it was given, and shall not constitute a
continuing waiver or consent.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its Chairman of the Board and the Participant has hereunto set his or her hand
and seal, all as of the day and year first above written.
X. X. XXXXX ARTS & CRAFTS, INC.
By:
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Xxxxxxx Xxxxxx, Chairman of the
Board of Directors
PARTICIPANT
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Xxxx Xxxxxx
EXHIBIT A
NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTION
To: X.X. XXXXX ARTS & CRAFTS, INC.
Ladies and Gentlemen:
I hereby exercise my Option to purchase _____ shares (the "Shares") of the
common stock, no par value, of X.X. XXXXX ARTS & CRAFTS, INC. (the "Company"),
at the exercise price of $________ per share, pursuant to and subject to the
terms of that certain Option Agreement between the undersigned and the Company
dated ____ day of __________________.
I understand that the nature of the investment I am making and the
financial risks thereof. I am aware that it is my responsibility to have
consulted with competent tax and legal advisors about the relevant federal,
state and local income tax and securities laws affecting the exercise of the
Option and the purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
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Please issue the stock certificate for the Shares (check one):
[_] to me
[_] to me and ____________ as joint tenants with right of survivorship
and mail the certificate to me at the following address:
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Participant Name (please print) Participant (signature) Date
