STOCK OPTION AGREEMENT
This Option Agreement (the "Agreement") is made as of the 13th day
of February, 2003, between Xxxxxxx Industries, Inc., a Delaware corporation
(the "Company"), and Xxxxxxx X. X'Xxxxx (the "Optionee).
WHEREAS, the Company desires to afford the Optionee the
opportunity to purchase shares of Common Stock, par value $.01 per share
(the "Common Stock"), of the Company.
NOW, THEREFORE, in connection with the mutual covenants
hereinafter set forth and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Grant of Option. By action of its Board of Directors dated
February 13, 2003, the Company hereby grants to the Optionee the right and
option (the "Option") to purchase up to, but not exceeding in the aggregate,
100,000 shares of Common Stock, on the terms and conditions herein set
forth. Provided that the Compensation Committee of the Board of Directors
of the Company gives its prior written approval, Optionee shall have the
right to transfer all or part of the options granted hereunder to family
members or family trusts.
2. Definitions; Conflicts. The Option is not being granted
pursuant to the Xxxxxxx Industries, Inc. 2002 Stock Option Plan (the
"Plan"), and shall be exercisable only for shares of Common Stock held in
treasury by the Company. The Company shall at all times maintain a
sufficient number of treasury shares to allow for the exercise of the vested
and exercisable portion of the Option. Notwithstanding that the Option is
not being granted under the Plan, the terms and provisions of the Plan are
incorporated herein by reference as if it had been so granted, except for
the provisions of Sections 4(a) and 8 thereof.
3. Purchase Price. The purchase price of each share of Common
Stock covered by the Option shall be $25.10 (the "Purchase Price").
4. Term of Options. The term of the Option shall be ten (10)
years from the date hereof, subject to earlier termination as provided in
Section 6 hereof.
5. Vesting of Options. The Option, subject to the terms,
conditions and limitations contained herein, shall vest and become
exercisable with respect to the shares of Common Stock in accordance with
the following installments: 20% on the first anniversary of the date
hereof, and an additional 20% on each of the succeeding four anniversaries
of the date hereof; provided that, with respect to each such installment,
the Optionee has remained in continuous employment with the Company from the
date hereof through the date such installment is designated to vest.
Notwithstanding the foregoing, if there is a "Change in Control," as such
term is defined in the Amended and Restated Employment Agreement, effective
September 17, 1997, as amended May 12, 2000, between Optionee and the
Company, all remaining options shall become exercisable as provided in said
Employment Agreement, as amended.
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6. Termination of Employment. Except as otherwise provided in
Optionee's existing employment agreement with the Company:
(a) In the event the Optionee's employment with the Company is
terminated for any reason other than death or disability (within the meaning
of Section 22(e) (3) of the Internal Revenue Code of 1986, as amended (the
"Code")), the Option shall immediately lapse as of the date of such
termination whether or not exercisable on such date.
(b) In the event that the Optionee's employment with the
Company is terminated by reason of the Optionee's death or disability
(within the meaning of Section 22(e) (3) of the Code), the Option shall
remain exercisable for a period of up to twelve months after termination of
employment, to the extent exercisable at the time of termination of
employment, and shall lapse as to any shares of Common Stock for which it
has yet to become exercisable as of the date of such termination of
employment.
7. No Rights as a Shareholder. The Optionee shall have no
rights as a shareholder with respect to any shares of Common Stock issuable
upon the exercise of an Option until the date of issuance to the Optionee of
a certificate evidencing such shares of Common Stock. No adjustments, other
than as provided in Section 7 of the Plan, shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property)
or distributions for which the record date is prior to the date the
certificate for such shares of Common Stock issued.
8. Method of Exercising Option. Subject to the terms and
conditions of this Agreement, the Option may be exercised by written notice
to the Company at its principal executive offices, presently located at 0000
Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000, Attn: General Counsel.
Such notice shall state the election to exercise the Option and the number
of shares of Common Stock in respect of which the Option is being exercised,
shall be signed by the person or persons so exercising the Option and shall
either:
(a) be accompanied by payment in full of the Purchase Price
for such shares of Common Stock; or
(b) fix a date, not less than five (5) nor more than ten (10)
business days from the date such notice shall be delivered to the Company,
for the payment in full of the Purchase Price for such shares of Common
Stock.
Payment of such Purchase Price shall be made in United States
dollars by certified check or bank cashier's check payable to the order of
the Company. Subject to such procedures and rules as may be adopted from
time to time by the Option Plan Committee of the Board of Directors, the
Optionee may also pay such Purchase Price by (i) tendering to the Company
shares of Common Stock with an aggregate Fair Market Value (as defined in
the Plan) on the date of exercise equal to such Purchase Price, (ii)
delivery to the Company of a copy of irrevocable instructions to a
stockbroker to sell shares of Common Stock and to deliver promptly to the
Company an amount sufficient to pay such Purchase Price, or (iii) any
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combination of the methods of payment described in clauses (i) and (ii) and
in the preceding sentence. The certificate for shares of Common Stock as to
which the Option shall have been so exercised shall be registered in the
name of the person or persons so exercising the Option. All shares of
Common Stock purchased upon the exercise of the Option as provided herein
shall be fully paid and non-assessable.
9. Income Tax Withholding. The Company may make such provisions
and take such steps as it may deem necessary or appropriate for the
withholding of all federal, state, local and other taxes required by law to
be withheld with respect to the exercise of the Option and the issuance of
the shares of Common Stock, including, but not limited to, deducting the
amount of any such withholding taxes from any other amount then or
thereafter payable by the Company, or any subsidiary thereof, to the
Optionee, or requiring the Optionee, or the beneficiary or legal
representative of the Optionee, to pay to the Company the amount required to
be withheld or to execute such documents as the Company deems necessary or
desirable to enable it to satisfy its withholding obligations.
10. Non-Incentive Stock Option. The Option granted hereunder is
not intended to be an "incentive stock option" within the meaning of Section
422 of the Code.
11. Registration. The Company shall file a registration
statement on Form S-8 under the Securities Act of 1993, as amended (the
"Act"), with respect to the sale of shares of Common Stock subject to the
Option and shall take such other action as may be required to complete the
registration of such shares under the Act and to comply with applicable blue
sky laws.
12. Binding Effect. This Agreement shall be binding upon the
heirs, executors, administrators and successors of the parties hereto.
13. Governing Law. This Agreement shall be construed and
interpreted in accordance with the laws of the State of Delaware applicable
to contracts made and to be performed in such State.
14. Headings. Headings are for the convenience of the parties
and are not deemed to be part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first written above.
XXXXXXX INDUSTRIES, INC.
By: /s/Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Chairman of the Board
OPTIONEE
/s/Xxxxxxx X. X'Xxxxx
Name: Xxxxxxx X. X'Xxxxx
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