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EXHIBIT 10.28
EYE CARE CENTERS OF AMERICA, INC.
STOCK OPTION AGREEMENT
UNDER 1998 STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION
AGREEMENT entered into as of this _____ day of _____, 1999 (the "Date
of Grant"), by and between EYE CARE CENTERS OF AMERICA, INC., a Texas
corporation (the "Company"), and the undersigned employee of the Company (the
"Optionee"). Capitalized terms used herein as defined terms which are not
otherwise defined herein shall have the meanings given to them in the
Stockholders' Agreement dated as of April 24, 1998 among the Company, certain
affiliates of Xxxxxx X. Xxx Company, and certain other stockholders of the
Company (the "Stockholders' Agreement").
WHEREAS, the Company desires to grant the Optionee a non-qualified
stock option under the Company's 1998 Stock Option Plan (the "Plan") to acquire
shares of the Company's common stock, par value $.01 per share ("Common Stock").
WHEREAS, Section 6 of the Plan provides that each option is to be
evidenced by an option agreement, setting forth the terms and conditions of the
option.
NOW, THEREFORE, the Company and the Optionee hereby agree as follows:
1. Grant of Option. The Company hereby irrevocably grants under the
Plan and subject to the terms and conditions of the Plan to the Optionee a
non-qualified stock option (the "Option") to purchase up to ______ shares (the
"Shares") of Common Stock on the terms and conditions hereinafter set forth.
This option shall not be treated as an incentive stock option under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code").
2. Purchase Price. The purchase price payable upon exercise of the
Option shall be $10.41 per Share.
3. Vesting.
(a) Time Based Vesting. Subject to paragraph (b) below, the Option
shall become exercisable ("vest") as follows:
(i) 10% on the first anniversary of the Date of Grant;
(ii) 15% on the second anniversary of the Date of Grant;
(iii) 25% on the third anniversary of the Date of Grant; and
(iv) 50% on the fourth anniversary of the Date of Grant.
; provided in each case that the Optionee is an employee of the Company
on such anniversary date; provided, further, that the Option shall become fully
vested upon the Optionee's death or Disability prior to such fourth anniversary.
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(b) Acceleration.
(i) Sale.
(A) Notwithstanding any provision to the contrary in this
Section 3, but subject to the other restrictions in the Plan and this Agreement,
in the event of a Sale (as defined below), a portion of the unvested Shares
subject to the Option shall become vested and immediately exercisable in the
event the Xxx IRR (as defined below) is greater than or equal to twenty percent
(20%). The portion thereof which shall become vested and immediately exercisable
shall range from zero percent (0%) to one hundred percent (100%) in proportion
to the amount by which the Xxx IRR exceeds twenty (20%) (up to thirty-five
percent (35%)) compared to the difference between twenty percent (20%) and
thirty-five percent (35%). The term "Xxx IRR" shall mean the internal rate of
return achieved by the Xxx Holders on their aggregate investment in the Company,
determined as of consummation of the Sale; provided that Xxx IRR shall not
include any management, transaction or structuring fees (or the like) paid to
the Xxx Holders or any affiliate of the Xxx Holders. In the event Optionee holds
more than one option pursuant to separate option agreements with the Company,
and the aggregate number of Shares which vest by operation of this Section
3(b)(i) and substantially similar provisions in such other option agreements is
less than the aggregate number of shares subject to vesting under all such
option agreements, then the vesting of Shares pursuant to this Section 3(b)(i)
and such other provisions shall be applied first with respect to the options
with the earliest Date of Grant, and then to each succeeding Option in
chronological order of Dates of Grant.
(B) For purposes hereof, the term "Sale" shall mean:
(1) the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
(a "Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of voting securities of (a) the Company or
(b) the surviving entity in any reorganization, merger or consolidation
involving the Company (any such entity referred to herein as the "Corporation")
where such acquisition causes such Person to own more than fifty percent (50%)
of the combined voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors, other than
acquisitions by the Xxxxxx X. Xxx Company or its Affiliates (as defined in the
Stockholders' Agreement);
(2) approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company; or
(3) the acquisition by a third party not affiliated
with the Company of all or substantially all of the Company's assets (without
regard to cash or accounts receivable).
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(C) The accelerated vesting provided in this Section 3(b)(i)
shall take effect immediately prior to but contingent upon the Sale giving rise
to such accelerated vesting. The phrase "immediately prior to the Sale" shall be
understood to mean sufficiently in advance of a Sale to permit the Optionee to
take all steps reasonably necessary to permit the Optionee to become a
shareholder of the Company as of the consummation of such Sale with respect to
the Shares subject to the accelerated vesting provided in this Section 3(b)(i).
(ii) Initial Public Offering. Notwithstanding any provision to
the contrary in this Section 3, but subject to the other restrictions in the
Plan and this Agreement, in event of the completion of the Company's initial
Public Offering (as defined below) a fraction of the total Shares subject to the
Option shall become vested and immediately exercisable, such fraction to have a
numerator equal to the aggregate number of shares of Common Stock sold by the
Xxx Holders pursuant to the initial Public Offering, and a denominator equal to
the aggregate number of shares of Common Stock owned by the Xxx Holders
immediately following consummation of the Recapitalization (as adjusted for
stock splits, stock dividends, reclassifications and the like); provided,
however, that to the extent any of the Shares subject to the Option shall have
become exercisable prior to the Company's initial Public Offering (the
"Previously Vested Option Shares"), then the number of Shares which become
vested and exercisable pursuant to this Section 3(b)(ii) shall be reduced by the
number of Previously Vested Option Shares (but not below zero, with the result
that the number of Previously Vested Option Shares shall remain unchanged). The
term "Public Offering" shall mean the completion of a sale of Common Stock
pursuant to a registration statement which has become effective under the 1933
Act, excluding registration statements on Form X-0, X-0 or similar limited
purpose forms. The term "Recapitalization" shall mean the transactions
contemplated by the Recapitalization Agreement dated March 6, 1998, among ECCA
Merger Corp., the Company and the sellers named therein, as amended from time to
time.
4. Term of Options.
(a) Each Option shall expire on the 10th anniversary of the Date of
Grant, but shall be subject to earlier termination as herein provided.
(b) Except as otherwise provided in this Section 4, the Option
shall terminate on the 30th day following the date the Optionee ceases to be an
employee of the Company or one of its subsidiaries.
(c) The Option shall terminate immediately upon termination of
Optionee's employment for Cause by the Company or one of its subsidiaries.
(d) The Option shall terminate on the 60th day following the date
the Optionee ceases to be an employee of the Company or one of its subsidiaries
due to Optionee's Disability.
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(e) The Option shall terminate on the 180th day following the date
of the Optionee's death if the Optionee ceases to be an employee of the Company
or one of its subsidiaries due to Optionee's death.
5. Exercisability.
(a) If the Optionee ceases to be an employee of the Company, the
Option granted to the Optionee hereunder shall be exercisable only to the extent
that the right to purchase Shares under the Option has accrued and is in effect
on the date the Optionee ceases to be an employee of the Company; provided that
in the event of a Sale or a Public Offering in which the Xxx Holders sell any
shares of Common Stock, the binding contract with respect to which was entered
into within three months following a termination of the Optionee's employment by
the Company without Cause, the vesting of the Optionee's unvested options shall
be governed by Section 3(b)(i) or Section 3(b)(ii) above, as the case may be. A
binding contract in respect of a Public Offering shall be deemed to mean only a
definitive underwriting agreement with respect thereto.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the Option may not be exercised in whole or in part prior to the
earlier to occur of the following: (i) completion of the Company's initial
Public Offering; or (ii) immediately prior to a Sale (and contingent upon
completion thereof).
6. Manner of Exercise of Option.
(a) To the extent that the right to exercise the Option has accrued
and is in effect, the Option may be exercised in full or in part by giving
written notice to the Company stating the number of Shares to be purchased,
together with payment in full of the purchase price for such Shares. Payment may
be in the form of (i) cash or a check payable to the order of the Company in an
amount equal to the purchase price for the Shares being purchased, (ii) shares
of Common Stock owned by the Optionee having a fair market value equal in amount
to the purchase price for the Shares being purchased, or (iii) any combination
of (i) and (ii). With the consent of the Committee, payment also may be made by
delivery of a properly executed exercise notice to the Company, together with a
copy of irrevocable instruments to a broker to deliver promptly to the Company
the amount of sale or loan proceeds to pay the purchase price for the Shares
being purchased. To facilitate the foregoing, the Company may enter into
agreements for coordinated procedures with one or more brokerage firms. Upon
such exercise, delivery of a certificate for paid-up, non-assessable Shares
shall be made at the principal office of the Company to the person exercising
the Option, not more than thirty (30) days from the date of receipt of such
notice and payment by the Company.
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(b) The Company shall at all times during the term of the Option
reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of the Option.
7. Non-Transferability. The right of the Optionee to exercise the
Option shall not be assignable or transferable by the Optionee otherwise than by
will or the laws of descent and distribution, and the Option may be exercised
during the lifetime of the Optionee only by him or her. The Option shall be null
and void and without effect upon the bankruptcy of the Optionee or upon any
attempted assignment or transfer, except as hereinabove provided, including
without limitation any purported assignment, whether voluntary or by operation
of law, pledge, hypothecation or other disposition contrary to the provisions
hereof, or levy of execution, attachment, trustee process or similar process,
whether legal or equitable, upon the Option.
8. Representation Letter and Investment Legend.
(a) In the event that for any reason the Shares to be issued upon
exercise of the Option shall not be effectively registered under the federal
Securities Act of 1933, as amended, when the Option is exercised in whole or in
part, the person exercising the Option shall give a written representation to
the Company in the form attached hereto as Exhibit 1 and the Company shall place
an "investment legend", so-called, as described in Exhibit 1, upon any
certificate for the Shares issued by reason of such exercise.
(b) The Company shall be under no obligation to qualify Shares or to
cause a registration statement or a post-effective amendment to any registration
statement to be prepared for the purposes of covering the issue of Shares.
9. Adjustments on Changes in Recapitalization, Reorganization and the
Like. Adjustments on changes in recapitalization, reorganization and the like
shall be made in accordance with Section 12 of the Plan, as in effect on the
date of this Agreement.
10. No Special Employment Rights. Nothing contained in the Plan or this
Agreement shall be construed or deemed by any person under any circumstances to
bind the Company (or any of its subsidiaries) to continue the employment of the
Optionee for the period within which this Option may be exercised. However,
during the period of the Optionee's employment, the Optionee shall render
diligently and faithfully the services which are assigned to the Optionee from
time to time by the Board, officers or management of the Company or its
subsidiaries, and shall at no time take any action which directly or indirectly
would be inconsistent with the best interests of the Company or its
subsidiaries.
11. Rights as a Stockholder. The Optionee shall not have any rights as
a stockholder of the Company with respect to any Shares which may be purchased
by exercise of this Option unless and until a stock certificate representing
such Shares is executed and delivered to the Optionee. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for
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dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
12. Withholding Taxes. Whenever Shares are to be issued upon exercise
of this Option, the Company shall have the right to withhold (or to cause one of
the Company's subsidiaries to withhold) from compensation otherwise payable to
the Optionee, or to require the Optionee to remit to the Company an amount
sufficient to satisfy all federal, state and local withholding tax requirements
in respect of the Shares being purchased by the Optionee prior to the issuance
of such Shares and the delivery of any certificate or certificates for such
Shares, and from time to time thereafter.
13. Stockholders' Agreement. As a condition to the grant of the Option,
and to any exercise of the Option, the Optionee shall join in the Stockholders'
Agreement. The Option and the Shares issuable upon exercise of the Option are
subject to restrictions on transfer, voting agreements, co-sale agreements and
other matters more fully described therein.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its corporate seal to be hereto affixed by its officer thereunto
duly authorized, and the Optionee has hereunto set his or her hand and seal, all
as of the day and year first above written.
EYE CARE CENTERS OF AMERICA, INC.
By:
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Name: Xxxxxxx X. Xxxxxxx
Title: Chairman - Chief Executive Officer
OPTIONEE:
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Name:
Address:
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Social Security No.:
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EXHIBIT 1
TO STOCK OPTION AGREEMENT
Eye Care Centers of America, Inc.
00000 Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
I hereby exercise my option to purchase ________ shares of common
stock, par value $.01 per share, of Eye Care Centers of America, Inc., a Texas
corporation (the "Company"), under the non-qualified stock option dated
________, 1999, granted to me under the Company's 1998 Stock Option Plan. In
connection with such exercise, I am delivering herewith the full exercise price
with respect to the shares being purchased, and I hereby acknowledge and agree
to the following:
1. The shares of common stock of the Company to be issued to me
pursuant to the exercise of said option have not been registered under the
Securities Act of 1933, as amended (the "Act"), and accordingly, must be held
indefinitely unless such shares are subsequently registered under the Act, or an
exemption from such registration is available.
2. Routine sales of securities made in reliance upon Rule 144
promulgated under the Act can be made only after the expiration of the
applicable holding period and only in limited amounts in accordance with the
terms and conditions provided by that Rule. Any sale to which such Rule is not
applicable will require registration or compliance with some other exemption
under the Act.
3. The Company is under no obligation to me to register the shares or
to comply with any exemptions from registration under the Act.
4. The availability of Rule 144 is dependent upon the availability of
adequate current public information with respect to the Company. At the time
that I may desire to make a sale pursuant to Rule 144, the Company may not wish
nor be able to comply with such information requirement.
In consideration of the issuance to me of certificates for the shares,
I hereby represent and warrant that I am acquiring such shares for my own
account for investment, and that I will not sell, pledge or transfer such shares
in the absence of an effective registration statement covering the same, except
as permitted by the provisions of Rule 144, if applicable, or some other
applicable exemption under the Act. In view of this representation and warranty,
I agree that
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there may be affixed to the certificates for the shares to be issued to me, and
to all certificates issued hereafter representing such shares (until in the
opinion of counsel, which opinion must be reasonably satisfactory in form and
substance to counsel for the Company, it is no longer necessary or required) a
legend as follows:
"The securities represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, and may not be
sold, pledged, or hypothecated in the absence of an effective
registration statement under the said Act or an opinion of counsel
satisfactory to the Company and its counsel that such registration is
not required."
I further agree that the Company may place a stop order with its
transfer agent, prohibiting the transfer of such shares, so long as the legend
remains on the certificates representing the shares.
Very truly yours,
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