EXHIBIT 2
NONQUALIFIED STOCK OPTION AGREEMENT
Nonqualified Stock Option Agreement (the "Agreement") dated as of the
31st day of May, 1996, by and between HYDRON TECHNOLOGIES, INC., a New York
corporation (the "Company") with its executive offices at 0000 Xxxxxx Xxxx,
Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000 and DTR ASSOCIATES LIMITED PARTNERSHIP
(the "Option Holder"), a Massachusetts limited partnership at with its
principal place of business at 0 Xxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
W I T N E S S E T H :
Whereas, as a part of a series of transactions relating to a
modification of the relationship among the Company, QVC, Inc. and the
Option Holder, the Board of Directors of the Company (the "Board") has
determined that it is in the best interest of the Company to grant a
nonqualified option to the Option Holder to purchase shares of the
Company's Common Stock;
Whereas, this Nonqualified Stock Option Agreement is being executed
simultaneously with the execution and delivery of a series of other
agreements, documents and instruments to effectuate the aforementioned
transactions; and
Whereas, the option granted hereby is not intended to qualify either
as an "incentive stock option" under Section 422A of the Internal Revenue
Code of 1986, as amended or to be granted under any stock option plan of
the Company.
NOW, THEREFORE, in consideration of the mutual covenants conditions
and promises contained herein, the parties hereto hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Option Holder
the right and option to purchase on the terms and conditions hereinafter
set forth, all or any part of an aggregate of 1,500,000 shares (the
"Shares") of Common Stock, $.01 par value per share (the "Common Stock"),
at the purchase price equal to $.01 per share, exercisable at any time and
from time to time in accordance with the provisions of this Agreement,
expiring at 5:00, New York City time, on May 31, 2001 (the "Option").
2. Method of Exercise. Each exercise of this Option shall be by
means of a notice of exercise delivered to the Company: (i) containing the
written statement set forth in Exhibit A hereof, (ii) specifying the number
of Shares to be purchased and (iii) accompanied by payment to the Company
of the full purchase price of the Shares to be purchased either by cash or
check payable to the order of the Company. Notwithstanding anything to the
contrary contained herein, in no event shall this Option be exercised for
the lesser of 500,000 Shares or the then number of Shares remaining to be
issued upon proper exercise of this Option if less than 500,000 Shares, and
no fractional Shares will be issued upon exercise of this Option.
3. Issuance of Shares. The Option Holder hereby warrants and
represents to, and covenants and agrees with, the Company as follows.
(a) Unless the Shares have been registered under Section 5 of the
Securities Act of 1933, as amended (the "Act") for resale to the public;
(i) the Shares issuable upon exercise of this Option are being
purchased for the Option Holder's own account for investment only, and not
with a view toward the distribution or resale to others;
(ii) the Option Holder has been advised and is aware that (k)
it may be impossible to readily liquidate this investment, and (ii) the
Option Holder must bear the economic risk of this investment in the Shares
for an indefinite period of time because the Shares have not been
registered under Section 5 of the Act, and therefore, cannot be sold unless
they are subsequently registered under the Act or an exemption from such
registration is available; and
(iii) the Option Holder understands that the Company has no
obligation to register the Shares, except as expressly set forth herein.
(b) Prior to the issuance of any Shares, the Option Holder shall
provide to the Company the written Option Exercise Form, a copy of which is
annexed hereto as Exhibit A.
4. Registration Rights.
(a) The Company covenants and agrees with the Option Holder to
register the Shares under Section 5 of the Act for resale to the public by
the preparation and filing of a registration statement with the Securities
and Exchange Commission, and to have such registration statement declared
effective not later than the close of business on November 19, 1996.
Notwithstanding the foregoing, the Company shall not be liable for any and
all fees and expenses incurred, if any, by the Option Holder for the fees
and expenses of attorneys or other representatives of the Option Holder, or
for any selling or brokerage commissions, if any, incurred in connection
with the registration and sale to the public of the Shares. The Company
further covenants and agrees with the Option Holder to use its best efforts
to have such registration statement declared effective, maintained
effective for the shorter of three (3) years thereafter.
(b) In the event such registration statement is not declared
effective prior to the close of business on November 19, 196, then in such
event and as the sole remedy for and in full satisfaction of any and all
claims for the failure to have the Shares registered for resale to the
public, the Company agrees to pay to Option Holder the sum of $637,500,
which shall be used immediately and solely to exercise the outstanding
Option held by the Option Holder dated March 9, 1992, as amended, and to
thereby purchase 212,500 shares underlying such Option.
5. Restrictions Upon Sale. The Option Holder shall not sell into
the public market more Shares than the volume that would be permissible for
sales of restricted or affiliate shares under Rule 144 promulgated under
Act.
6. No Transfer. This Option and the rights and privileges granted
hereby shall not be transferred, assigned, pledged or hypothecated in any
way, whether by operation of the law, or otherwise, except by will or the
laws of descent and distribution. Upon any attempt to so transfer, assign,
pledge, hypothecate or otherwise dispose of this Option or any right or
privileges granted hereby contrary to the provisions hereof, this Option
and all rights and privileges contained herein shall immediately become
null and void and of no further force and effect.
7. Adjustments.
(a) If the outstanding shares of the Common Stock are increased,
decreased, changed into, or exchanged for a different number or kind of
Shares or securities of the Company through reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse
stock split or the like, an appropriate and proportionate adjustment shall
be made in the number and kind of securities receivable upon the exercise
of this Option, without change in the total price applicable to the
unexercised portion of this Option but with a corresponding adjustment in
the price for each unit of any security covered by this Option.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving
corporation, or upon the sale of substantially all of the assets of the
Company, the Board shall provide in writing in connection with such
transaction for one or more of the following alternatives, separately or in
combination: (i) the assumption by the successor entity of the Options
theretofore granted or the substitution by such entity for such Options of
new Options covering the stock of the successor entity, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind
of shares and prices; or (ii) the continuance of the Agreement by such
successor entity in which this Option shall remain in full force and effect
under the terms so provided.
(c) Any adjustments under this paragraph no. 7 shall be made by the
Board, whose good faith determination as to what adjustments shall be made,
and the extent thereof, shall be final, binding and conclusive.
8. No Stockholder Rights; Proxy for the Shares.
(a) Neither the Option Holder nor any other person legally entitled
to exercise this Option shall be entitled to any of the rights or
privileges of a stockholder of the Company with respect to any Shares
issuable upon any exercise of this Option, unless and until a certificate
or certificates representing such Shares shall have actually be issued and
delivered to the Option Holder.
(b) The Option Holder hereby grants to Xxxxxx Xxxxxx, the Chairman of
the board, Chief Executive Officer and President of the Company, in his
individual capacity, an irrevocable proxy to vote the Shares in any and all
matters in the discretion of Xxxxxx Xxxxxx. This proxy shall lapse as to
such Shares that are sold to an unaffiliated third party upon the
consummation of such sale.
9. Standstill. Option Holder hereby covenants and agrees with the
Company that without the prior written consent of the Company, which may in
its absolute discretion be withheld, it shall not
(a) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, beneficial ownership of any Voting
Securities (including, without limitation, non-Voting Securities
convertible into or with appertaining rights to acquire Voting Securities),
of the Company; or
(b) make, or in any way participate, directly or indirectly, in any
Solicitation of Proxies to vote, or seek to advise or influence any person,
entity or Group with respect to the voting of, any Voting Securities of the
Company, or initiate or propose any stockholder proposal with respect to
the Company described in Rule 14a-8 promulgated under the Exchange Act; or
(c) form, join or in any way participate in, or in any manner provide
any form of assistance to, a Group with respect to any Voting Securities of
the Company; or
(d) otherwise act, alone or in concert with others, to seek to, or
assist or encourage any other person, entity or Group in seeking to,
control or influence the management, board of directors or policies of the
Company or propose or effect any form of business combination with the
Company or any of its Affiliates or any restructuring, recapitalization or
similar transaction with respect to the Company or any of its Affiliates.
(e) The terms "Affiliate" and "Associate" shall mean any present or
future Affiliate or Associate within the meaning of Rule 12b-2 promulgated
under the Exchange Act; the term "Common Stock" shall mean Company's Common
Stock, $.01 par value per share; the term "Group" means a Group within the
meaning of Section 13(d) of the Exchange Act; the term "Voting Securities"
shall mean Company's Common Stock, and any other securities of Company
entitling the holder to vote for the election of directors of the Company;
the term "Exchange Act" shall mean the Securities Exchange Act of 1934; and
the terms "Solicitation" and "Proxies" shall have the meanings used in the
proxy rules of the Securities and Exchange Commission under the Exchange
Act.
10. No Waiver. The failure of any of the parties hereto to enforce
any provision hereof on any occasion shall not be deemed to be a waiver of
any preceding or succeeding breach of such provision or any other
provision.
11. Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto and no amendment,
modification or waiver of any provision herein shall be effective unless in
writing, executed by the party charged therewith.
12. Governing Law. This Agreement shall be construed, interpreted
and enforced in accordance with and shall be governed by the laws of the
State of New York without regard to the principles of conflicts of laws.
13. Binding Effect. This Agreement shall bind and inure to the
benefit of the parties, their successors and assigns.
14. Assignment. Except as set forth in paragraph no.7(b) hereof,
this Agreement may not be assigned by the parties hereto, and any attempted
assignment hereof shall be void and of no effect.
15. Paragraph Headings. The paragraph headings herein have been
inserted for convenience of reference only, and shall in no way modify or
restrict any of the terms or provisions hereof.
16. Notices. Any notice or other communication under the provisions
of this Agreement shall be in writing, and shall be given by postage
prepaid, registered or certified mail, return receipt requested; by hand
delivery with an acknowledgement copy requested; or by the Express Mail
service offered by the United States Post Office or any reputable overnight
delivery service, directed to the addresses set forth above, or to any new
address of which any party hereto shall have informed the others by the
giving of notice in the manner provided herein. Such notice or
communication shall be effective, if sent by postage prepaid, registered or
certified mail, return receipt requested, three (3) days after it is mailed
within the continental United States; if sent by Express Mail or any
reputable overnight delivery service, one (1) day after it is forwarded; or
by hand delivery, upon receipt.
17. Unenforceability; Severability. If any provision of this
Agreement is found to be void or unenforceable by a court of competent
jurisdiction, then the remaining provisions of this Agreement, shall,
nevertheless, be binding upon the parties with the same force and effect as
though the unenforceable part had been severed and deleted.
18. Broker's Fees. No party has incurred nor will incur any
liability for brokerage fees or agents' commissions in connection with the
transactions contemplated hereby, and all parties warrant that no agent or
broker was instrumental in consummating this transaction so as to earn any
such fee.
19. Counterparts. This Agreement may be executed in counterparts,
all of which shall be deemed to be duplicate originals.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date above written.
HYDRON TECHNOLOGIES, INC.
by: /s/ Xxxxxx Xxxxxx, President
__________________________________
Xxxxxx Xxxxxx, President
DTR ASSOCIATES LIMITED PARTNERSHIP
by: /s/ Xxxxxx X. Xxxxxx, President
__________________________________
Xxxxxx Xxxxxx, President of
the General Partner
EXHIBIT A -- OPTION EXERCISE FORM
Date:________, 199___
Hydron Technologies, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Att.: President
Re: Option Exercise
Gentlemen:
The undersigned ("Option Holder") hereby exercises the Nonqualified
Stock Option Agreement dated as of May 31, 1996 (the "Agreement") and
hereby subscribes to purchase _______ shares (the "Shares") of common
stock, $.01 par value per share, of Hydron Technologies, Inc. ("Company")
at the exercise price of $.01 per share. As payment for such exercise, the
Option Holder hereby tenders the sum of $_______________.
In accordance with the terms of paragraph no. 3 of the Agreement, and
in order to induce you to issue the Shares, the Option Holder hereby
represents and warrants to the Company as follows:
1. The Option Holder has had the opportunity to as questions of, and
receive answers from, the Company concerning the business and financial
condition of the Company; (ii) the Option Holder has had the opportunity to
review all reports filed by the Company pursuant to Section 13 of the
Securities Exchange Act of 1934 during the fiscal year of the Company prior
to the date of the exercise of this Option; (iii) no warranties or
representations have been made to the Option Holder by any officer,
director, employee or agent of the Company; (iv) the Option Holder has
evaluated the risks of purchasing the Shares; (v) the Option Holder has
determined that the purchase of the Shares is a suitable investment; (vi)
the Option Holder has adequate financial resources for an investment of
such character; (vii) the Option Holder alone or with the Option Holder's
representative, has such knowledge and experience in financial and business
matters that the Option Holder is capable of evaluating the merits and
risks of the purchase of the Shares; and (viii) the warranties and
representations made herein by the Option Holder are accurate, true and
correct, and may be relied upon by the Company in connection with the
issuance of the Shares hereunder to the Option Holder.
2. If the Shares have been registered under Section 5 of the
Securities Act of 1933, as amended (the "Act") for resale to the public,
then the Option Holder requests that certificates for such shares be issued
in the name of one or more parties other than the Option Holder, as
follows:
_______________________________________
(Please type or print name and address)
_______________________________________
_______________________________________
_______________________________________
(Social Security or tax identification number)
and delivered to
_______________________________________
_______________________________________
_______________________________________
(Please type or print name and address)
and, if such number of Options shall not be all the Options evidenced by
this Agreement, that a new Agreement for the balance of such Options be
registered in the name of, and delivered to, the Option Holder at the
address stated below.
Very truly yours,
DTR ASSOCIATES LIMITED PARTNERSHIP
by: ______________________________
Xxxxxx Xxxxxx, President of
the General Partner
Address: 0 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Tax I.D. No.:______________
