EXHIBIT 10.36
STOCK OPTION AGREEMENT
THIS AGREEMENT ("Agreement") made as of the 18th day of
February, 2000 by and between Xxxxxxxxx.xxx Incorporated, a Delaware
corporation with its principal United States office at 000 Xxxxxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000 (the "Company"), and Xx. Xxxxx X. Xxxxxx
residing at 00 Xxxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000 ("Executive").
WITNESSETH:
Executive has been granted on February 18, 2000 (the "Grant
Date"), subject to execution of this agreement, a non-qualified stock
option (the "Option") to purchase the number of shares of the Company's
common stock, par value $.01 per share ("Shares") set forth below, pursuant
to the terms of the Employment Agreement, dated as of February 18, 2000, by
and between the Company and Executive (the "Employment Agreement"). Unless
otherwise indicated, any capitalized term used herein, but not defined
herein, shall have the meaning ascribed to such term in the Employment
Agreement. References to the "Board" shall mean the Board of Directors of
the Company and references to "Committee" shall mean the Compensation
Committee of the Board.
1. Grant of Options
(a) Subject to the terms and conditions set forth herein, the
Executive is granted an Option to purchase 2,500,000 Shares at a per Share
exercise price with respect to 1,000,000 Shares subject to the Option of
$55.00 (the "FMV Shares") and with respect to the remaining 1,500,000
Shares subject to the Option, a per Share exercise price of $90.00 (the
"Premium Shares"). No part of the Option is intended to be an "incentive
stock option" within the meaning of section 422 of the Internal Revenue
Code of 1986, as amended.
(b) The term of the Option shall be ten (10) years from the Grant
Date, subject to earlier termination as provided in Section 3 herein. Upon
expiration of the Option, the Option shall be canceled and no longer
exercisable.
(c) Subject to Section 3 hereof, the Option will vest and become
exercisable as to one sixth (1/6) of the Shares subject to the Option on
the Commencement Date; as to one sixth (1/6) of the Shares subject to the
Option on December 31, 2000; as to one-third (1/3) of the Shares subject to
the Option on December 31, 2001; and as to the remaining one-third (1/3) of
the Shares subject to the Option on December 31, 2002 (each such date
hereinafter referred to as a "Vesting Date"); provided, that on each of
such Vesting Dates, Executive has been continuously employed by the Company
through such date. On any Vesting Date, forty percent (40%) of the Shares
subject to the Option vesting on such Vesting Date shall be FMV Shares and
sixty percent (60%) of the Shares subject to the Option vesting on such
Vesting Date shall be Premium Shares. For avoidance of doubt, there shall
be no proportionate or partial vesting in the periods prior to each Vesting
Date and vesting shall occur only on the appropriate Vesting Date pursuant
to this Section 1(c). To the extent the Option has become vested and
exercisable, the Option may thereafter be exercised by Executive, in whole
or in part, at anytime or from time to time prior to the expiration of the
Option as provided herein.
(d) To the extent vested hereunder, the Option may be exercised by
Executive by delivering notice to the Company's principal office, to the
attention of its Secretary. Such notice shall be accompanied by a copy of
this Agreement, shall specify the number of Shares with respect to which
the Option is being exercised and the effective date of the proposed
exercise and shall be signed by Executive or other person then having the
right to exercise the Option. Payment for Shares purchased upon the
exercise of the Option shall be made on or before the effective date of
such exercise by one or a combination of the following means: (i) in cash
or by personal check, certified check, bank cashier's check or wire
transfer; (ii) if Shares are traded on a national securities exchange or
the Nasdaq Stock Market, Inc. or quoted on a national quotation system
sponsored by the National Association of Securities Dealers, or a
comparable national market system (a "Public Market"), through a "cashless
exercise" procedure whereby Executive delivers irrevocable instructions to
a broker to deliver promptly to the Company an amount equal to the purchase
price; (iii) subject to the approval of the Committee, in Shares owned by
Executive for at least six months prior to the date of exercise (or such
other period required by accounting standards to avoid a charge to Company
earnings) and valued at their "Fair Market Value" on the effective date of
such exercise; (iv) subject to the approval of the Committee, by such other
means as the Committee may from time to time authorize or (v) in any other
means then generally available to holders of stock options issued under the
Company's 1999 Omnibus Plan (the "Omnibus Plan"). For purposes of this
Agreement, Fair Market Value shall have the same meaning as in the Omnibus
Plan as in effect on the date hereof, provided, however that, if Shares are
no longer traded on a Public Market (which shall be deemed equivalent to
being traded on a national securities exchange for purposes of the
definition of Fair Market Value as used in the Omnibus Plan) at a time when
their Fair Market Value is to be determined pursuant to this Agreement,
then Fair Market Value shall mean value as determined in good faith by the
Committee without discount for being a minority interest.
(e) Subject to the terms in this Agreement, certificates for Shares
purchased upon the exercise of an Option shall be issued in the name of
Executive or other person entitled to receive such Shares, and delivered to
Executive or such other person as soon as practicable following the
effective date on which the Option is exercised.
2. Shares; Adjustment Upon Certain Events
(a) Shares to be issued under this Agreement shall be made available,
at the discretion of the Board, either from authorized but unissued Shares,
from issued Shares reacquired by the Company or from Shares purchased by
the Company on the open market specifically for this purpose.
(b) The existence of this Agreement and the Option granted hereunder
shall not affect in any way the right or power of the Board or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company or
any affiliate, any issue of bonds, debentures, preferred or prior
preference stocks ahead of or affecting the Shares, the authorization or
issuance of additional Shares, the dissolution or liquidation of the
Company or any affiliate or sale or transfer of all or part of the assets
or business of the Company or any affiliate, or any other corporate act or
proceeding.
(c) In the event that the Committee shall determine that any dividend
or other distribution (whether in the form of cash, Shares or other
property), recapitalization, stock split, reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase, or share
exchange, or other similar corporate transaction or event, affects Shares
such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Executive under the Option, then the Committee
shall make such equitable changes or adjustments as it deems necessary or
appropriate to the Option's exercise price, to the number and kind of
Shares, securities or other property (including cash) issued or issuable
upon exercise of the Option, and to other terms and conditions of the
Option, provided that the Option shall in no respect be treated less
favorably with respect to such changes and adjustments than any stock
option issued heretofore under the Omnibus Plan. The determination of the
Committee, if made in good faith, shall be final and binding on the Company
and the Executive.
3. Effect of Termination of Employment; Change in Control
(a) In the event of Executive's Termination without Cause or
Termination for Good Reason, the Option will immediately vest and become
exercisable (to the extent not then vested and exercisable) upon any such
termination with respect to (i) 1,625,000 Shares if the termination takes
place prior to the first anniversary of the Commencement Date; (ii)
2,062,500 Shares if the termination takes place on or after the first
anniversary of the Commencement Date and prior to the second anniversary of
the Commencement Date; and (iii) 2,500,000 Shares if the termination takes
place anytime on or after the second anniversary of the Commencement Date.
(b) In the event of Executive's termination of employment as the
result of his death or a Termination for Disability, the Option shall
immediately vest as to fifty percent (50%) of the then unvested Shares
thereunder.
(c) In the event of a Change in Control while the Executive is
employed by the Company, the Option will vest and become exercisable (to
the extent not then vested and exercisable) with respect to (i) 1,625,000
Shares if the Change in Control takes place prior to the first anniversary
of the Commencement Date; (ii) 2,062,500 Shares if the Change in Control
takes place on or after the first anniversary of the Commencement Date and
prior to the second anniversary of the Commencement Date; and (iii)
2,500,000 Shares, if the Change in Control takes place on or after the
second anniversary of the Commencement Date, provided that any remaining
unvested Shares shall vest and become exercisable (to the extent not
otherwise vested and exercisable prior thereto under this Agreement) six
(6) months after the Change in Control if the Executive is then employed by
the Company or, if earlier but at, after or in connection with the Change
in Control, upon a Termination without Cause, Termination for Good Reason,
Termination as the result of death, Termination for Disability or, in the
event the Option is not continued, assumed or substituted for upon a Change
in Control upon the Change in Control. For this purpose, the Option will
not be considered substituted for unless the terms and conditions of the
substitute option are no less favorable to the Executive than those of the
Option (within the constraints of Internal Revenue Code Regulation
1.425-1(a)(4)(i)).
(d) Notwithstanding anything in this Agreement to the contrary, forty
percent (40%) of the Shares subject to the Option that vest as a
consequence of the application of Section 3(a), 3(b) or 3(c) or otherwise
shall be FMV Shares and the remaining sixty percent (60%) of such Shares
that so vest shall be Premium Shares.
(e) In the event of Executive's Termination for Cause or voluntary
Termination without Good Reason, the unvested portion of the Option shall
be immediately forfeited and canceled.
(f) Upon termination of Executive's employment with the Company, the
portion of the Option that is not, and does not become, vested in
accordance with the terms hereof shall be immediately forfeited and the
vested portion of the Option shall expire on the earlier of (i) the tenth
(10th) anniversary of the Grant Date, or (ii)(A) eighteen (18) months after
such termination if the termination is as of the result of Executive's
death, Termination for Disability, Termination without Cause, non-extension
of the Employment Term in accordance with Section 1 of the Employment
Agreement as a result of notice from the Company or Termination for Good
Reason, and (B) ninety (90) days after such termination if such termination
is a result of Executive's Termination for Cause, voluntary Termination by
Executive without Good Reason, or non-extension of the Employment Term in
accordance with Section 1 of the Employment Agreement as a result of notice
by Executive.
4. Nontransferability of Option
Neither the Option nor any other rights hereunder shall be
transferable by Executive otherwise than by will or under applicable laws
of descent and distribution. The Option shall be exercisable, during
Executive's lifetime only by Executive or her Permitted Transferees (as
defined below). In addition, neither the Option nor any other rights
hereunder shall, except as otherwise provided herein, be assigned,
negotiated, pledged, or hypothecated in any way or be subject to execution,
attachment or similar process. Notwithstanding the forgoing, Executive may,
upon providing written notice to the Company, elect to transfer all or any
portion of the Option to members of her immediately family, including, but
not limited to, children, grandchildren and spouse, or to trusts for the
benefit of such immediate family members or to partnerships in which such
family members are the only partners ("Permitted Transferees"), provided,
however, that no such transfer by Executive may be made in exchange for
consideration.
5. Rights as a Stockholder
Neither Executive nor her Permitted Transferees shall have any rights
as a stockholder with respect to any Shares subject to the Option until
Executive or her Permitted Transferees, as the case may be, shall have
become the holder of record of such Shares, and no adjustments shall be
made for dividends in cash or other property or distributions or other
rights in respect to any such Shares, except as otherwise specifically
provided for herein.
6. Determinations
Each determination, interpretation and other action made or taken
pursuant to the provisions of this Agreement by the Committee or the Board
in good faith shall be final, conclusive and binding for all purposes and
upon all persons, including, without limitation, the Executive and the
Company, and their respective heirs, executors, administrators, personal
representatives and other successors in interest.
7. Securities Representations
If the Committee determines that the law so requires, the holder of
the Option granted hereunder shall, upon any exercise or conversion
thereof, execute and deliver to the Company a written statement, in a form
satisfactory to the Company, representing and warranting that:
(a) holder has been advised that holder may be an "affiliate" within
the meaning of Rule 144 under the Securities Act of 1933 (the "Act") and in
this connection the Company is relying in part on holder's representations
set forth in this Section;
(b) holder understands that Shares received on any exercise of the
Option must be held indefinitely unless an exemption from any applicable
resale restrictions is available or the Company files an additional
registration statement (or a "re-offer prospectus") with regard to such
Shares and the Company is under no obligation to register such Shares (or
to file a "reoffer prospectus"), except as otherwise permitted herein;
(c) holder understands that the exemption from registration under
Rule 144 will not be available unless (i) a public trading market then
exists for Shares of the Company, (ii) adequate information concerning the
Company is then available to the public, and (iii) other terms and
conditions of Rule 144, or any exemption therefrom, are complied with and
that any sale of Shares acquired pursuant to the Option may be made only in
limited amounts in accordance with such terms and conditions;
(d) Shares acquired pursuant to the Option are being acquired for
holder's own account and not with a view to, or for sale in connection
with, the distribution thereof, nor with any present intention of
distributing or selling any such Shares;
(e) in the event that holder is permitted to sell, transfer, pledge,
hypothecate, assign or otherwise dispose of Shares acquired pursuant to the
Option, holder may only do so pursuant to a registration statement under
the Act and qualification under applicable state securities laws or
pursuant to an opinion of counsel satisfactory to the Company that such
registration is not required, and that the transaction (if it involves a
sale in the over-the-counter market or on a securities exchange) complies
with the provisions of Rule 144 under the Act. A stop-transfer order will
be placed on the books of the Company respecting the certificates
evidencing Shares acquired pursuant to the Option, and such certificates
shall bear any required legends until such time as the Shares evidenced by
such certificates shall have been registered under the Act or shall have
been transferred in accordance with an opinion of counsel for the Company
that such registration is not required;
(f) holder has been advised that holder may be subject to the
reporting requirements of Section 16(a) of the Securities Exchange Act of
1934 (the "Securities Act") and that holder may be subject to xxxxxxx
xxxxxxx restrictions and reporting requirements on the purchase and sale of
securities of the Company imposed under the Securities Act.
8. Other Conditions
(a) Except as otherwise provided herein, the Company shall be under
no obligation to effect the registration of the Option or any Shares
acquired pursuant to the Option, pursuant to the Act or under any state
laws, provided that, to the extent that stock options issued under the
Omnibus Plan heretofore are then currently effectively registered on Form
S-8 (or a successor form thereto), the Company shall use its best
reasonable efforts to similarly register the Option and the Shares acquired
pursuant to the Option and, if it cannot , shall (after consultation with
Executive) use reasonable business efforts based in good faith
consideration of other Company business activities and concerns and the
available alternatives to take such other steps as are reasonably available
to register the Shares acquired pursuant to the Option for resale by the
Executive at such time as Executive wishes to sell them. Notwithstanding
anything herein to the contrary, the Company shall not be obligated to
cause to be issued or delivered any certificates evidencing Shares acquired
pursuant to the Option unless and until the Company is advised by its
counsel that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental authority
and the requirements of any securities exchange on which Shares are traded.
(b) The transfer of any Shares acquired pursuant to the Option shall
be effective only at such time as counsel to the Company shall have
determined that the issuance and delivery of such Shares is in compliance
with all applicable laws, regulations of governmental authority and the
requirements of any securities exchange on which Shares are traded. The
Committee, may in its good faith discretion, defer the effectiveness of any
transfer of Shares hereunder in order to allow the issuance of such Shares
to be made pursuant to registration or an exemption from registration or
other methods for compliance available under federal or state securities
laws. The Committee shall inform the Executive in writing of its decision
to defer the effectiveness of a transfer. During the period of such
deferral, Executive may, by written notice, withdraw the portion of the
Option exercise subject to the deferral and obtain the refund of any amount
paid with respect thereto.
9. Withholding Taxes
(a) Upon any exercise of the Option, Executive will pay to the
Company, or make arrangements satisfactory to the Company that are in
compliance with applicable law regarding payment of, any U.S. federal,
state or local taxes of any kind required by law to be withheld with
respect of such exercise ("Tax Obligations"). If the Committee generally
permits Tax Obligations with regard to stock options issued heretofore
under the Omnibus Plan to be satisfied in a particular manner, to the
extent legally permitted Executive may satisfy her Tax Obligations under
this Section 9(a) in the same manner.
(b) The Company shall, to the extent permitted by law, have the right
to deduct from any payment of any kind otherwise due to Executive any Tax
Obligations not timely satisfied pursuant to Section 9(a).
(c) In the event that any Tax Obligations are not satisfied on a
timely basis pursuant to Sections 9(a) or 9(b), the Company may, but shall
not be required to, pay such required withholding and treat such amount as
a demand loan to Executive at the maximum rate permitted by law, with such
loan, at the Company's sole discretion and, provided the Company so
notifies Executive within thirty (30) days of the making of the loan,
secured by Shares to which such Tax Obligations relate and any failure by
Executive to pay the loan upon demand shall entitle the Company to all of
the rights at law of a creditor secured by such Shares. The Company may
hold as security any certificates representing such Shares and, upon demand
of the Company, Executive shall deliver to the Company any certificates in
Executive's possession representing such Shares together with a stock power
duly endorsed in blank.
10. Miscellaneous
(a) This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, personal legal
representatives, successors, trustees, administrators, distributees,
devisees and legatees. The Company shall assign to, and require, any
successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of
the Company to expressly assume and agree in writing to perform this
Agreement. Notwithstanding the foregoing, this Agreement may not be
assigned by the Executive.
(b) No modification or waiver of any of the provisions of this
Agreement shall be effective unless in writing and signed by the party
against whom it is sought to be enforced.
(c) This Agreement may be executed in one or more counterparts, all
of which taken together shall constitute one contract.
(d) The failure of any party hereto at any time to require
performance by another party of any provision of this Agreement shall not
affect the right of such party to require performance of that provision,
and any waiver by any party of any breach of any provision of this
Agreement shall not be construed as a waiver of any continuing or
succeeding breach of such provision, a waiver of the provision itself, or a
waiver of any right under this Agreement.
(e) The headings of the sections of this Agreement have been inserted
for convenience of reference only and shall in no way restrict or modify
any of the terms or provisions hereof.
(f) The Company shall pay all fees and expenses necessarily incurred
by the Company in connection with this Agreement and will from time to time
use its reasonable efforts to comply with all laws and regulations which,
in the opinion of counsel to the Company, are applicable thereto.
(g) All notices, consents, requests, approvals, instructions and
other communications provided for herein shall be in writing and validly
given or made when delivered, or on the second succeeding business day
after being mailed by registered or certified mail, whichever is earlier,
to the persons entitled or required to receive the same, at the addresses
set forth at the heading of this Agreement or to such other address as
either party may designate by like notice. Notices to the Company shall be
addressed to its principal office, attention of the Executive Vice
President and General Counsel.
(h) To the extent not inconsistent with this Agreement or the
Employment Agreement, the provisions of the Omnibus Plan shall apply to the
Options granted herein as if the grant was under such Omnibus Plan and the
Committee shall have the right to interpret and administer the grants made
herein in the same manner as grants made under such Omnibus Plan. Sections
10 and 20 of the Omnibus Plan shall not apply to the Options.
(i) This Agreement shall be governed and construed and the legal
relationships of the parties determined in accordance with the laws of the
state of Delaware without reference to principles of conflict of laws.
(j) The Company represents and warrants that it is duly authorized by
its Board of Directors and/or the Committee (and by any other person or
body whose authorization is required) to enter into this Agreement, that
there is no agreement or other legal restriction which would prevent it
from entering into, and carrying out its obligations under, this Agreement,
and that the officer signing this Agreement is duly authorized and
empowered to sign this Agreement on behalf of the Company.
(k) Any dispute arising under, or relating to, this Agreement shall
be resolved in accordance with Section 14 of the Employment Agreement. day
and year first above written.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
XXXXXXXXX.XXX INCORPORATED
By________________________
(Title)
__________________________
Xxxxx X. Xxxxxx
