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EXHIBIT 10m
ZENITH ELECTRONICS CORPORATION
EMPLOYEE STOCK OPTION AGREEMENT
Zenith Electronics Corporation, a Delaware corporation (the "Company"),
hereby grants to <> <> (the "Optionee") as of <>,
<>(the "Option Date"), pursuant to the provisions of the Zenith
Electronics Corporation Long-Term Equity Compensation Plan (the "Plan"), a
non-qualified option to purchase from the Company (the "Option")
<> shares of its Common Stock, $1.00 par value ("Stock"), at the
price of $<> per share upon and subject to the terms and conditions set
forth below. References to employment by the Company shall also mean employment
by a subsidiary of the Company. Capitalized terms not defined herein shall have
the meanings specified in the Plan.
1. Option Subject to Acceptance of Agreement. The Option shall be null and
void unless the Optionee shall accept this Agreement by executing it in the
space provided below and returning such original execution copy to the Company.
2. Time and Manner of Exercise of Option.
2.1. Maximum Term of Option. In no event may the Option be exercised, in
whole or in part, after <>, 2007 (the "Expiration Date"). 2007
2.2. Exercise of Option. (a) Except as otherwise provided by Section 3.5
hereof, the Option shall become exercisable (i) on <>, 1998 with respect
to one-third of the number of shares of Stock subject to the Option on the
Option Date, (ii) on <>, 1999 with respect to an additional one-third of
the number of shares of Stock subject to the Option on the Option Date and
(iii) on <>, 2000 with respect to the remaining one-third of the shares
of Stock subject to the Option on the Option Date.
(b) If the Optionee's employment with the Company terminates by reason of
Disability or Retirement, as such terms are hereinafter defined, or by reason
of death, the Option shall be exercisable only to the extent it is exercisable
on the effective date of the Optionee's termination of employment and may
thereafter be exercised by the Optionee or the Optionee's Legal Representative
or Permitted Transferees until and including the earlier to occur of (i) the
date which is two years after the effective date of the Optionee's termination
of employment and (ii) the Expiration Date. For purposes of this Agreement,
Disability shall mean a determination by a physician designated by the Company
that the Optionee is permanently and totally disabled, and Retirement shall
mean the Optionee's voluntary termination of employment on or after attaining
age 55 or completing at least 20 years of employment with the Company.
(c) If the Optionee's employment with the Company terminates for any
reason other than Disability, Retirement or death, the Option shall be
exercisable only to the extent it is exercisable on the effective date of the
Optionee's termination of employment and may thereafter be exercised by the
Optionee or the Optionee's Legal
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Representative or Permitted Transferees until and including the earlier to
occur of (i) the date which is three months after the effective date of the
Optionee's termination of employment and (ii) the Expiration Date; provided
that if the Optionee's employment is terminated for Serious Misconduct, as
hereinafter defined, the Option shall terminate automatically at the effective
time of the Optionee's termination of employment. For purposes of this
Agreement, "Serious Misconduct" means a material breach by the Optionee of his
or her duties and responsibilities to the Company, other than as a result of
incapacity due to physical or mental illness, which is demonstrably willful and
deliberate, which is committed in bad faith or without a reasonable belief that
the breach is in the Company's best interests and which is not remedied within
a reasonable period of time after receipt of written notice of breach; or a
commission by the Optionee of a felony involving moral turpitude.
(d) If the Optionee dies during the period set forth in Section 2.2(b)
following termination of employment by reason of Disability or Retirement, the
Option shall be exercisable only to the extent it is exercisable on the date of
death and may thereafter be exercised by the Optionee's Legal Representative or
Permitted Transferees until and including the later to occur of (i) the date
which is one year after the date of death and (ii) two years after the
effective date of the Optionee's termination of employment, but in no event
later than the Expiration Date.
(e) If the Optionee dies during the period set forth in Section 2.2(c)
following termination of employment for any reason other than Disability or
Retirement, the Option shall be exercisable only to the extent it is
exercisable on the date of death and may thereafter be exercised by the
Optionee's Legal Representative or Permitted Transferees until and including
the earlier to occur of (i) the date which is two years after the date of death
and (ii) the Expiration Date.
(f) Notwithstanding the exercise periods set forth above in this Section
2.2, in the event the Company is involved in a business combination which is
intended to be treated as a pooling of interests for financial accounting
purposes (a "Pooling Transaction") in connection with which the Optionee
receives a substitute option to purchase securities of any entity, including an
entity directly or indirectly acquiring the Company:
(i) if the acquisition of the substitute option by the Optionee may be
treated as a purchase for purposes of Section 16(b) of the Securities Exchange
Act of 1934 (the "Exchange Act") and the Optionee's employment with the Company
is terminated for any reason described in Section 2.2(c) other than Serious
Misconduct during the nine-month period beginning three months prior to the
consummation of such business combination, then the Option (or option in
substitution thereof) shall be exercisable to the extent set forth above in
this Agreement until and including the later to occur of (i) the date set forth
pursuant to Section 2.2(c) and (ii) the date which is seven months after the
consummation of such business combination, but in no case later than the
Expiration Date; or
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(ii) if the Optionee is restricted from disposing of a security (or
security underlying a security) issued in connection with the Pooling
Transaction and the purpose of such restriction is to ensure that the Pooling
Transaction is accounted for as a pooling of interests (the "Pooling
Restriction") and the Optionee's employment with the Company is terminated for
any reason described in Section 2.2(c) other than Serious Misconduct during the
nine-month period beginning three months prior to the consummation of such
business combination, then the Option (or option in substitution thereof shall
be exercisable to the extent set forth above in this Agreement until and
including the later to occur of (i) the date set forth pursuant to Section
2.2(c) and (ii) the date which is one month after the date of expiration of the
Pooling Restriction, but in no case later than the Expiration Date.
2.3. Method of Exercise. Subject to the limitations set forth in this
Agreement, the Option may be exercised by the Optionee (1) by giving written
notice to the Treasurer of the Company specifying the number of whole shares of
Stock to be purchased and accompanied by payment therefor in full (or
arrangement made for such payment to the Company's satisfaction) either (i) in
cash, (ii) by delivery of previously owned whole shares of Stock (which the
Optionee has held for at least six months prior to the delivery of such shares
or which the Optionee purchased on the open market and in each case for which
the Optionee has good title, free and clear of all liens and encumbrances)
having a Fair Market Value, determined as of the date of exercise, equal to the
aggregate purchase price payable pursuant to the Option by reason of such
exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom
the Optionee has submitted an irrevocable notice of exercise or (iv) a
combination of (i) and (ii), and (2) by executing such documents as the Company
may reasonably request. The Committee shall have sole discretion to disapprove
of an election pursuant to any of clauses (ii)-(iv) and in the case of an
Optionee who is subject to Section 16 of the Exchange Act, the Company may
require that the method of making such payment be in compliance with Section 16
and the rules and regulations thereunder. Any fraction of a share of Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Stock shall be delivered until the full purchase price
therefor has been paid.
2.4. Cancellation of Agreement. In the event that rights to purchase all
or a portion of the shares of Stock subject to the Option expire or are
exercised, cancelled or forfeited, the Optionee shall, upon the Company's
request, promptly return this Agreement to the Company for full or partial
cancellation, as the case may be. Such cancellation shall be effective
regardless of whether the Optionee returns this Agreement. If the Optionee
continues to have rights to purchase shares of Stock hereunder, the Company
shall, within 10 days of the Optionee's delivery of this Agreement to the
Company, either (i) xxxx this Agreement to indicate the extent to which the
Option has expired or been exercised, cancelled or forfeited or (ii) issue to
the Optionee a substitute option agreement applicable to such rights, which
agreement shall otherwise be substantially similar to this Agreement in form
and substance.
3. Additional Terms and Conditions of Option.
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3.1. Nontransferability of Option. The Option may not be transferred by
the Optionee other than (i) by will or the laws of descent and distribution or
(ii) as otherwise permitted under Rule 16b-3 under the Exchange Act. Except to
the extent permitted by the foregoing sentence, during the Optionee's lifetime
the Option is exercisable only by the Optionee or the Optionee's Legal
Representative. Except to the extent permitted by the foregoing, the Option may
not be sold, transferred, assigned, pledged, hypothecated, encumbered or
otherwise disposed of (whether by operation of law or otherwise) or be subject
to execution, attachment or similar process. Upon any attempt to so sell,
transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the
Option, the Option and all rights hereunder shall immediately become null and
void.
3.2. Investment Representation. The Optionee hereby represents and
covenants that (a) any share of Stock purchased upon exercise of the Option
will be purchased for investment and not with a view to the distribution
thereof within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), unless such purchase has been registered under the
Securities Act and any applicable state securities laws; (b) any subsequent
sale of any such shares shall be made either pursuant to an effective
registration statement under the Securities Act and any applicable state
securities laws, or pursuant to an exemption from registration under the
Securities Act and such state securities laws; and (c) if requested by the
Company, the Optionee shall submit a written statement, in form satisfactory to
the Company, to the effect that such representation (x) is true and correct as
of the date of purchase of any shares hereunder or (y) is true and correct as
of the date of any sale of any such shares, as applicable. As a further
condition precedent to any exercise of the Option, the Optionee shall comply
with all regulations and requirements of any regulatory authority having
control of or supervision over the issuance or delivery of the shares and, in
connection therewith, shall execute any documents which the Board or the
Committee shall in its sole discretion deem necessary or advisable.
3.3. Withholding Taxes. (a) As a condition precedent to the delivery of
Stock upon exercise of the Option, the Optionee shall, upon request by the
Company, pay to the Company in addition to the purchase price of the shares,
such amount as the Company may be required, under all applicable federal,
state, local or other laws or regulations, to withhold and pay over as income
or other withholding taxes (the "Required Tax Payments") with respect to such
exercise of the Option. If the Optionee shall fail to advance the Required Tax
Payments after request by the Company, the Company may, in its discretion,
deduct any Required Tax Payments from any amount then or thereafter payable by
the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to advance the
Required Tax Payments by any of the following means: (i) a cash payment to the
Company, (ii) delivery to the Company of previously owned whole shares of Stock
(which the Optionee has held for at least six months prior to the delivery of
such shares or which the Optionee purchased on the open market and in each case
for which the Optionee has good title, free and clear of all liens and
encumbrances) having a Fair
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Market Value, determined as of the date the obligation to withhold or pay taxes
first arises in connection with the Option (the "Tax Date"), equal to the
Required Tax Payments, (iii) authorizing the Company to withhold whole shares
of Stock which would otherwise be delivered upon exercise of the Option having
an aggregate Fair Market Value determined as of the Tax Date equal to the
Required Tax Payments, (iv) a cash payment by a broker-dealer acceptable to the
Company to whom the Optionee has submitted an irrevocable notice of exercise or
(v) any combination of (i), (ii) and (iii); provided, however, that the
Committee shall have sole discretion to disapprove of an election pursuant to
any of clauses (ii)-(v) and that in the case of an Optionee who is subject to
Section 16 of the Exchange Act, the Company may require that the method of
satisfying any such obligation be in compliance with Section 16 and the rules
and regulations thereunder. Shares of Stock to be delivered may not have a Fair
Market Value in excess of the minimum amount of the Required Tax Payments. Any
fraction of a share of Stock which would be required to satisfy any such
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Optionee. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
3.4. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be appropriately adjusted by the Committee
without an increase in the aggregate purchase price. If any adjustment would
result in a fractional security being subject to the Option, the Company shall
pay the Optionee, in connection with the first exercise of the Option occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the
excess, if any, of (A) the Fair Market Value on the exercise date over (B) the
exercise price of the Option. The decision of the Committee regarding any such
adjustment shall be final, binding and conclusive.
3.5. Change in Control. (a) Notwithstanding any provision in this
Agreement to the contrary, in the event of a Change in Control, the Option
shall immediately become exercisable in full.
(b) "Change in Control" shall mean:
(1) the acquisition by any individual, entity or group (a "Person"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act, of beneficial ownership within the meaning of Rule 1 3d-3
promulgated under the Exchange Act, of 25% or more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"), provided such
ownership interest is greater than the interest then owned by LG Electronics,
Inc. ("LGE"); excluding, however, the following: (A) any acquisition
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directly from the Company (excluding any acquisition resulting from the
exercise of an exercise, conversion or exchange privilege unless the security
being so exercised, converted or exchanged was acquired directly from the
Company), (B) any acquisition by the Company or LGE, (C) any acquisition by an
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, (D) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (3) of this Section 3.5(b); provided further, that for
purposes of clause (B), if any Person (other than the Company, LGE or any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company) shall become the beneficial owner
of 25% or more of the Outstanding Company Common Stock or 25% or more of the
Outstanding Company Voting Securities by reason of an acquisition by the
Company (and which ownership interest is greater than the interest then owned
by LGE), and such Person shall, after such acquisition by the Company, become
the beneficial owner of any additional shares of the Outstanding Company Common
Stock or any additional Outstanding Company Voting Securities and such
beneficial ownership is publicly announced, such additional beneficial
ownership shall constitute a Change in Control:
(2) individuals who, as of May 21, 1996, constitute the Board of Directors
(the "Incumbent Board") cease for any reason to constitute at least a majority
of such Board; provided that any individual who becomes a director of the
Company subsequent to May 21, 1996 whose election, or nomination for election
by the Company's stockholders, was approved by the vote of at least a majority
of the directors then comprising the Incumbent Board shall be deemed a member
of the Incumbent Board; and provided further, that any individual who was
initially elected as a director of the Company as a result of an actual or
threatened election contest, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act, or any other actual or
threatened solicitation of proxies or consents by or on behalf of any Person
other than the Board shall not be deemed a member of the Incumbent Board;
(3) approval by the stockholders of the Company of a reorganization,
merger or consolidation or sale or other disposition of all or substantially
all of the assets of the Company (a "Corporate Transaction"); excluding,
however, a Corporate Transaction pursuant to which (i) all or substantially all
of the individuals or entities who are the beneficial owners, respectively, of
the Outstanding Company Common Stock and the Outstanding Company Voting
Securities immediately prior to such Corporate Transaction will beneficially
own, directly or indirectly, more than 60% of, respectively, the outstanding
shares of common stock, and the combined voting power of the outstanding
securities of such corporation entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Corporate
Transaction (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or indirectly) in substantially the same proportions
relative to each other as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be, (ii) no Person (other than: the
Company or LGE; any employee benefit plan
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(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company; the corporation resulting from such Corporate
Transaction; and any Person which beneficially owned, immediately prior to such
Corporate Transaction, directly or indirectly, 25% or more of the Outstanding
Company Common Stock or the Outstanding Company Voting Securities, as the case
may be) will beneficially own, directly or indirectly, 25% or more of,
respectively, the outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined voting power of the
outstanding securities of such corporation entitled to vote generally in the
election of directors and (iii) individuals who were members of the Incumbent
Board will constitute at least a majority of the members of the board of
directors of the corporation resulting from such Corporate Transaction; or
(4) approval by the stockholders of the Company of a plan of complete
liquidation or dissolution of the Company.
3.6. Compliance with Applicable Law. The Option is subject to the
condition that if the listing, registration or qualification of the shares
subject to the Option upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the
purchase or delivery of shares hereunder, the Option may not be exercised, in
whole or in part, unless such listing, registration, qualification, consent or
approval shall have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable efforts to
effect or obtain any such listing, registration, qualification, consent or
approval.
3.7. Delivery of Certificates. Upon the exercise of the Option, in whole
or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.
3.8. Option Confers No Rights as Stockholder. The Optionee shall not be
entitled to any privileges of ownership with respect to shares of Stock subject
to the Option unless and until purchased and delivered upon the exercise of the
Option, in whole or in part, and the Optionee becomes a stockholder of record
with respect to such delivered shares; and the Optionee shall not be considered
a stockholder of the Company with respect to any such shares not so purchased
and delivered.
3.9. Option Confers No Rights to Continued Employment. In no event shall
the granting of the Option or its acceptance by the Optionee give or be deemed
to give the Optionee any right to continued employment by the Company or any
subsidiary or affiliate of the Company.
3. 10. Decisions of Board or Committee. The Board of Directors or the
Committee shall have the right to resolve all questions which may arise in
connection with the option or its exercise. Any interpretation, determination
or other action made
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or taken by the Board of Directors or the Committee regarding the Plan or this
Agreement shall be final, binding and conclusive.
3.11. Company to Reserve Shares. The Company shall at all times prior to
the expiration or termination of the Option reserve and keep available, either
in its treasury or out of its authorized but unissued shares of Stock, the full
number of shares subject to the Option from time to time.
3.12. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Optionee hereby acknowledges receipt of a copy of the Plan.
4. Miscellaneous Provisions.
4.1. Designation as Nonqualified Stock Option. The Option is hereby
designated as not constituting an "incentive stock option" within meaning of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code"); this
Agreement shall be interpreted and treated consistently with such designation.
4.2. Meaning of Certain Terms. (a) As used herein, employment by the
Company shall include employment by a corporation which is a "subsidiary
corporation" of the Company, as such term is defined in section 424 of the
Code. References in this Agreement to sections of the Code shall be deemed to
refer to any successor section of the Code or any successor internal revenue
law.
(b) As used herein, the term "Legal Representative" shall include an
executor, administrator, legal representative, guardian or similar person and
the term "Permitted Transferees" shall include any transferees pursuant to a
transfer permitted under Section 3.2 of the Plan and Section 3.1 hereof.
(c) As used herein, the term "Fair Market Value" shall mean the closing
transaction price of a share of Common Stock as reported in The Wall Street
Journal as New York Stock Exchange Composite Transactions for the date as of
which such value is being determined or, if there shall be no reported
transaction on such date, on the next preceding date for which a transaction
was reported; provided that if Fair Market Value for any date cannot be
determined as above provided, Fair Market Value shall be determined by the
Committee by whatever means or method as the Committee, in the good faith
exercise of its discretion, shall at such time deem appropriate.
4.3. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.4. Notices. All notices, requests or other communications provided for
in this Agreement shall be made, if to the Company, to Zenith Electronics
Corporation, 0000 Xxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000-0000, Attention:
Treasurer, and if to
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the Optionee, to the Optionee's last known address set forth in the records of
the Company, or such other address as shall be provided to the Company in
writing by the Optionee. All notices, requests or other communications provided
for in this Agreement shall be made in writing either (a) by personal delivery
to the party entitled thereto, (b) by facsimile with confirmation of receipt,
(c) by mailing in the United States mails to the last known address of the
party entitled thereto or (d) by express courier service. The notice, request
or other communication shall be deemed to be received upon personal delivery,
upon confirmation of receipt of facsimile transmission or upon receipt by the
party entitled thereto if by United States mail or express courier service;
provided, however, that if a notice, request or other communication sent to the
Company is not received during regular business hours, it shall be deemed to be
received on the next succeeding business day of the Company.
4.5. Governing Law. This Agreement, the Option and all determinations made
and actions taken pursuant hereto and thereto, to the extent not governed by
the laws of the United States, shall be governed by the laws of the State of
Illinois and construed in accordance therewith without giving effect to
principles of conflicts of laws.
4.6. Counterparts. This Agreement may be executed in two counterparts each
of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
ZENITH ELECTRONICS CORPORATION
By:_________________________
Name: Xxxxxx Xxxxxxxxx
Title: VP Human Resources
Accepted this ____ of
__________________, 1997
______________________________
Optionee
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