Top Air Manufacturing, Inc.
September 12, 1996
Mr. Xxxxxxx Xxxxxx
00 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Dear Xx. Xxxxxx:
This letter will confirm our agreement with respect to certain services to be
performed by you on behalf of Top Air Manufacturing, Inc. ("Top Air") in
connection with Top Air's interest in pursuing its discussions with Xxxxx
Xxxxxx, the sole shareholder of Xxxxxxx Machine Co., Inc.
("Xxxxxxx") regarding Top Air's acquisition of Xxxxxxx.
We have agreed that you, either independently or through your investment
advisory firm, will perform and render certain investment advisory services,
assist Top Air in its due diligence review of Xxxxxxx and its negotiation with
Xx. Xxxxxx and other representatives of Xxxxxxx, with respect to such an
acquisition.
Your fee for the performance of the services mentioned in the preceding
paragraph shall be: (a) the sum of $10,000, payable upon the signing of a letter
of intent for a proposed acquisition of Xxxxxxx by Top Air; (b) out of pocket
expenses incurred in providing such services; and (c) an option to acquire
50,000 shares of the no par value common stock which option (i) shall be granted
as of the closing date of the acquisition, (ii) shall be for a term of ten
years, (iii) shall provide for a per share option price equal to the closing bid
price of the Top Air common stock on the Nasdaq Bulletin Board on such closing
date, and (iv) shall contain such other terms as are reasonably acceptable to
Top Air and you.
Please indicate your agreement with all of the foregoing by signing a copy
hereof in the space provided below for such purpose.
Very truly yours,
Top Air Manufacturing, Inc.
By: /s/ Xxxxxx X. Xxxx
Title: President
Agreed to this 12th day of September, 1996.
/s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx
THIS OPTION AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF (i)
RECEIPT BY THE COMPANY OF AN OPINION OF ITS COUNSEL, OR OTHER COUNSEL REASONABLY
ACCEPTABLE TO IT, THAT NO SUCH REGISTRATIONS ARE REQUIRED, OR (ii) REGISTRATION
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK OPTION AGREEMENT
Grant Date: January 15, 1997. Number of Shares to Which Option Relates: 50,000
Option Price Per Share: $1.375
THIS OPTION AGREEMENT is made and effective as of the Grant Date set
forth above between TOP AIR MANUFACTURING, INC., an Iowa corporation (the
"Company"), and XXXXXXX XXXXXX, an individual currently residing at 00 Xxxx
Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx ("Optionee").
1. Grant of Option. As of the Grant Date identified above, the Company
grants to Optionee, subject to the conditions set forth herein, the right,
privilege and option (the "Option") to purchase up to an aggregate of Fifty
Thousand (50,000) shares (the "Shares") of the no par value common stock of the
Company (the "Common Stock"), at the per share price of One Dollar and
Thirty-Seven and One-Half Cents ($1.375).
2. Term and Exercise of Option. Subject to the exceptions and
limitations noted elsewhere herein, the Option may be exercised in whole, or
from time to time in part, only during the period commencing as of the Grant
Date and ending on the tenth anniversary of the Grant Date (such period to be
referred to hereinafter as the "Option Period").
3. Method of Exercise of Option. Optionee, or, to the extent permitted
herein, his personal representative, guardian, heirs, legatees, or any other
person authorized to exercise the Option on Optionee's behalf ("Authorized
Representative"), may exercise the Option, at any time and from time to time
during the Option Period, by delivery to the Secretary of the Company of a
written notice of election to exercise, identifying that number of whole Shares
as to which exercise is then being sought, which number may not exceed the
number of Shares as to which the Option may then be exercised taking into
account any and all prior partial exercises of the Option. If the person giving
such written notice is not Optionee, the notice also shall identify the nature
of such person's authority to exercise the Option. In all cases, such written
notice of election must be accompanied by surrender of the original of this
Agreement. The Exercise Date shall be the date on which the Secretary receives
the written notice of election, unless all required conditions to exercise are
not then satisfied within such period, in which case the Exercise Date shall be
the first subsequent date on which all such conditions are satisfied. If
postponement of the Exercise Date becomes necessary, the Secretary shall give
Optionee reasonable advance notice of such postponement. At any time prior to
the Exercise Date, Optionee or such other person who submitted the written
notice of election to exercise may revoke such election by notice to the
Secretary, such revocation to become effective upon receipt. In the event of any
partial exercise of the Option and surrender of this Agreement to the Company,
the Secretary of the Company will make the appropriate notation of the partial
exercise on this Agreement, and return the original Agreement to Optionee or his
Authorized Representative, as the case may be.
Payment in full for that number of Shares as to which the Option is
being exercised must be received by the Secretary of the Company concurrent with
the written notice of election. Payment shall be in cash or by certified or
cashiers' check, payable and acceptable to the Company, for the Shares with
respect to which the Option is being exercised or in lieu of cash, optionee may
request the Company withhold the number of shares, upon exercise of the option,
having a "Fair Market Value" (as hereinafter defined) on the first trading day
immediately preceding the Exercise Date equal to the aggregate purchase price.
As used herein, the term "Fair Market Value" shall equal the closing price of
the Common Stock on the principal national exchange on which such shares are
traded or if not so listed, then the average of the closing ask and bid prices
in the over-the-counter market or if not so reported, then the Fair Market Value
as reasonably determined by the Company's Board of Directors.
On the Exercise Date, the Company shall make delivery to Optionee of
the number of Shares as to which the Option has been exercised. To the extent
that the exercise of the Option obligates the Company to pay withholding taxes
on behalf of Optionee, the Company will pay the minimum amount of such
withholding taxes then due and at the option of Optionee (i) be reimbursed by
the Optionee simultaneously with the delivery of the number of Shares as to
which the Option has been exercised, in cash or by certified or cashiers check
for the amount of the withholding obligation or (ii) withhold from the Shares
then issuable to Optionee a number of Shares having a Fair Market Value on the
on the first trading day immediately preceding the Exercise Date equal to the
amount of such payment, in which event Optionee shall have no further rights to
such withheld Shares.
4. Nontransferability of Option. The Option may not be transferred by
the Optionee and Optionee agrees not to transfer the Option, other than (i) by
will or the laws of descent and distribution, or (ii) by transfer to one or more
revocable living trusts created during his lifetime of which Optionee is the
primary beneficiary, provided that Optionee is either a trustee or a co-trustee
of such trust and the trustee or all co-trustees confirm in writing his or their
agreement to be bound by the terms of this Option.
If Optionee dies or becomes incapacitated while entitled to exercise
the Option, Optionee's personal representative, guardian, heir or legatee, as
the case may be, shall have the full right to exercise the Option, but, in
either case, only to the extent that Optionee was entitled to exercise the
Option on the day immediately prior to Optionee's death or incapacity.
5. Stockholder Rights. Neither Optionee nor any Authorized
Representative shall have any rights as a stockholder with respect to any of the
Shares until the Option shall have been exercised with respect to such Shares
and such Shares have been issued in the name of Optionee or Authorized
Representative, as the case may be.
6. Adjustments. In the event of any change in the outstanding shares of
Common Stock, whether the number of Shares are increased or decreased, or such
shares are exchanged for a different number or kind of shares or securities of
the Company or other entity through a reorganization, merger, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, combination
or exchange of shares or other similar transaction, the aggregate number of
Shares subject to issuance under the Option shall be appropriately and
proportionately adjusted. Any such adjustment in the Option shall be made
without change in the aggregate purchase price applicable to the unexercised
portion of the Option but with an appropriate adjustment in the Exercise Price
for each Share or other security covered by the Option. The provisions of this
paragraph shall not apply to shares of Common Stock issued pursuant to an
employee or director stock option plan, or other stock based plans of the
Company for the benefit of its officers, directors or employees, or any Shares
issued pursuant to an exercise of the Option.
7. Agreement to Hold Shares; Securities Law Restrictions. Optionee
acknowledges his understanding that neither this Option or the Shares issuable
upon the exercise hereof have been registered under the Securities Act of 1933,
as amended (the "Act"), and that subject to paragraph 12 below, the Company is
under no obligation to register this Option or such Shares. Optionee further
acknowledges his understanding and agreement that as a result of the foregoing,
neither this Option nor any of the Shares may be transferred in the absence of
(i) receipt by the Company of an opinion of its counsel, or other counsel
reasonably acceptable to it that no such registration is required, or (ii)
registration under the "Act" and all applicable state securities laws.
Accordingly, if, at the time of the exercise of the Option (whether in whole or
in part), in the opinion of counsel for the Company, it is necessary or
desirable, in order to comply with any then applicable laws or regulations
relating to the sale of securities, for Optionee to agree to hold any Shares
issued to Optionee for investment purposes only and without intention to resell
or distribute same and for Optionee to agree to dispose of such Shares only in
compliance with such laws and regulations, Optionee agrees, upon the request of
the Company, and at the Company's expense, to execute and deliver to the Company
an agreement to such effect.
8. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Iowa.
9. Nonqualified Stock Option. This Option is not intended to be, and
will not be treated as, an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended and in effect from
time to time.
10. Consideration. This Option is granted as partial payment to
Optionee in connection with certain services performed by Optionee for the
Company.
11. Representations of the Company. The Company hereby represents to
Optionee that (i) it has sufficient authorized and unissued shares of Common
Stock available for issuance to Optionee upon the exercise of the Option, and
(ii) this Option and the Shares issuable hereunder have been duly authorized,
and the Shares, when so issued to Optionee pursuant to the Option, will be
validly issued, fully paid and nonassessable.
12. Registration Rights. (a) If, at any time during the Option Period,
the Company proposes to file a registration statement on form S-8 (or any
successor form) relating to stock based plans or to amend any such registration
statement to increase the number of shares of Common Stock subject to such plan,
it will, prior to such filing, give written notice to Optionee of its intention
to do so and, upon the written request of Optionee given within ten (10) days
after the Company provides such notice, the Company shall use all reasonable
efforts to cause all of the Shares then remaining subject to the Option and the
Option to be registered under the Act; provided, that, (i) in the opinion of
counsel for the Company, the Option and the Shares remaining issuable on the
exercise thereof are permitted to be so registered; and (ii) the Company shall
have the right to postpone or withdraw any such registration proposed or filed
without obligation to Optionee. Further, Optionee shall do all things reasonably
requested by the Company to effect the registration of the Option and Shares,
including, without limitation, providing the Company with all necessary
information required to be included in any such registration statement and
giving the Company appropriate representations, warranties and undertakings as
reasonably requested by the Company.
(b) If, at any time during the Option Period, the Company proposes
to file a "Qualifying Registration Statement" (as hereinafter defined), it will,
prior to such filing, give written notice to Optionee of its intention to do so
(the "Notice") and, upon the written request of Optionee, specifying the number
of "Registrable Shares" (as hereinafter defined) Optionee wishes to be included
in such Qualifying Registration Statement, given within ten days after the
Company provides such Notice, the Company shall use all reasonable efforts to
cause such Registrable Shares to be included in such Qualifying Registration
Statement for registration under the Act; provided, however, that no shares of
Common Stock will be registered pursuant to this subparagraph (b) if (i) such
shares are not held of record and beneficially by Optionee, (ii) such shares
were issued to Optionee pursuant to an exercise of this Option which occurred
more than twelve (12) months prior to the giving of the Notice by the Company to
Optionee, (iii) in the case of an underwritten offering by the Company, the
underwriter advises the Company that the inclusion of all or a portion of the
Registrable Shares will have a material adverse impact upon the sale of the
shares of Common Stock to be covered by the Qualifying Registration Statement
(other than the Registrable Shares); or (iv) Optionee does not enter into an
agreement with the Company and/or underwriter, if applicable, with respect to
customary representations and warranties of Optionee and such other matters as
may be reasonable under the circumstances. The Company shall be responsible for
all costs and expenses associated with the inclusion of the Registrable Shares
in the Qualifying Registration Statement other than any underwriting discounts
and commissions and the registration fees associated therewith. As used herein,
the term: (i) "Registrable Shares" means shares of Common Stock which have been
issued to and are then held of record and beneficially by Optionee pursuant to
an exercise of this Option, and shall also include any other shares of Common
Stock of the Company issued in respect of such shares (because of stock splits,
stock dividends, reclassifications, recapitalizations, or similar events); and
(ii) "Qualifying Registration Statement" means a registration statement in which
the Company intends to register shares of Common Stock for sale by the Company
other than (A) for issuance under any stock-based plan for officers, directors,
employees and/or consultants of the Company, or (B) in connection with any
business combination or other transaction described in Part A of the General
Instructions to Form S-4. For the purposes of this Section 12(b) Optionee shall
include Optionee or an Authorized Representative.
IN WITNESS WHEREOF, the parties hereto have, by a duly authorized
representative, executed this Agreement as of the 15th of January, 1997.
TOP AIR MANUFACTURING, INC.
By------------------------------------
Title---------------------------------
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Xxxxxxx Xxxxxx
