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EXHIBIT 10.13
EXHIBIT A
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF
THE OPTIONS GRANTED HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR
SALE, TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
THIS STOCK OPTION AGREEMENT, dated as of this 31st day of July, 1997, by
and between Xxxxxxxx Point Industries, a corporation existing under the laws of
the State of Delaware (hereinafter referred to as "NATCO") and Xxxxxxxxx X.
Xxxxxxx (hereinafter referred to as "the Executive").
W I T N E S S E T H
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WHEREAS, the Executive and a subsidiary of NATCO entered into an
employment agreement dated March 15, 1994, as amended on the 31st day of July,
1996 (the "Previous Employment Agreement"), under which the Executive has
agreed to employment by such subsidiary under certain terms and conditions, and
under which the Executive is entitled to certain compensation, including
various provisions for special bonus compensation, under certain terms and
conditions;
WHEREAS, the Executive and NATCO wish to update, clarify, and amend the
Previous Employment Agreement, primarily to substitute employment by NATCO in
place of existing employment by a subsidiary, to specify terms and conditions
for such employment and for Executive's compensation, including various
provisions for special bonus compensation, and to further modify other
provisions as necessary;
WHEREAS, the Executive and NATCO are therefore simultaneously herewith
entering into an Employment Agreement (the "Employment Agreement") which
supersedes the Previous Employment Agreement;
WHEREAS, the Executive and NATCO entered into a stock option agreement
dated March 15, 1994, as amended on the 31st day of July, 1996 (the "Previous
Stock Option Agreement"), under which the Executive received options to
purchase shares of common stock in a subsidiary of NATCO under certain terms
and conditions;
WHEREAS, the Executive and NATCO wish to update, clarify and amend the
Previous Stock Option Agreement, primarily to substitute options to purchase
shares of common stock in NATCO in place of existing options to purchase
subsidiary stock, to specify terms and conditions for such options and to
further modify other provisions as necessary;
and WHEREAS, in order to provide the Executive with an incentive to
devote his best skills and efforts to the success of NATCO, NATCO deems it to
be in its best interests to provide the Executive with Options to purchase
shares of NATCO;
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NOW, THEREFORE, in consideration of the representations, warranties,
covenants and conditions herein and in the Employment Agreement contained, the
parties hereto hereby agree as follows:
1. Options.
(a) Subject to the terms and upon the conditions contained herein, the
Executive shall have the right, privilege, and option to purchase 416,666 shares
of common stock of NATCO at a purchase price of $1.96 per share (the "First
Option"). The Executive may partially exercise the First Option.
(b) Subject to the terms and upon the conditions contained herein, the
Executive shall have the additional right, privilege, and option to purchase
138,889 shares of common stock of NATCO at a purchase price of $4.77 per share
(the "Second Option"). The Executive may partially exercise the Second Option.
(c) Subject to the terms and upon the conditions contained herein, the
Executive shall have the additional right, privilege, and option to purchase
123,272 shares of common stock of NATCO at a purchase price of $6.71 per share
(the "Third Option"). The Executive may partially exercise the Third Option.
(d) If, at any time during the Period of Active Employment, capital is
raised by NATCO through the offer and sale of Equity Securities to an
Unaffiliated Party, the Executive shall have the option to purchase Equity
Securities of the type being offered and sold equivalent to an additional five
(5) percent of the aggregate amount of Equity Securities being sold to
Unaffiliated Parties other than the Executive at a purchase price equal to the
purchase price at which such Equity Securities are sold (the "Fourth Option",
and together with the First, Second and Third Option, the "Options"). For
purposes of this Section 1(d), an "Unaffiliated Party" is any person other than
Capricorn Investors, L.P., or Capricorn Investors II, L.P., or any of their
affiliates, and "Equity Securities" shall mean any stock or similar security or
any security convertible, with or without consideration, into such security, or
carrying any warrant, option or right to subscribe for or purchase such a
security, or any such warrant, option or right. The Executive may exercise this
option in whole or in part.
(e) If subsequent to the date of this Agreement the Company shall declare
and pay any stock dividend or shall divide or combine the outstanding Common
Stock through any stock split, stock combination or other recapitalization, the
number of shares and purchase price for shares under the Options shall be
appropriately adjusted to reflect such stock dividend, stock split, stock
combination or other recapitalization.
(f) If the Company shall at any time issue (i) shares of common stock
(other than common stock issued to the Company's employees and directors
pursuant to stock option agreements), (ii) rights or warrants to subscribe for
or purchase shares of common stock (other than options issued to the Company's
employees and directors) or other securities of the Company convertible into or
exchangeable for shares of common stock ("Convertible Securities"), or (iii)
Convertible Securities, in each case at a purchase, exercise or conversion price
per share (taking into account, in cases (ii) and (iii), any consideration
received by the Company for such rights, warrants or Convertible Securities, the
value of such consideration, if
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other than cash, to be determined in good faith by the Board of Directors) less
than the fair value or average market price per share of the common stock on
the applicable record date (in cases where the issuance is to all shareholders)
or issuance date (in other cases), then in each such case, the number of shares
thereafter issuable upon exercise of the Options after such record or issuance
date, as the case may be, shall be determined by multiplying the number of
shares issuable upon exercise of the Options on the date immediately preceding
such record or issuance date, as the case may be, by a fraction, the numerator
of which shall be the sum of the number of shares of common stock outstanding
on such record or issuance date and the number of additional shares of common
stock so offered for subscription or purchase in connection with such rights or
warrants or issuable upon conversion of such Convertible Securities, and the
denominator of which shall be the sum of the number of shares of common stock
outstanding on such record or issuance date and the number of shares of common
stock which the aggregate offering price of the total number of shares so
offered or so issuable would purchase at such average market price; provided,
however, if all the shares of common stock offered in cases (i), (ii) or (iii),
as the case may be, are not delivered (whether upon their offering, the
exercise of such rights or warrants or the conversion of such Convertible
Securities) upon the termination of the offering or the expiration of such
rights or warrants or the conversion option of such Convertible Securities, as
the case may be, the number of shares issuable upon exercise of the Options
shall thereafter be readjusted to the number of shares which would have been in
effect had the numerator and the denominator of the foregoing fraction and the
resulting adjustment been made based upon the number of shares of common stock
actually delivered rather than upon the number of shares of common stock
offered for subscription or purchase or issuable upon conversion. Such
adjustment shall be made whenever common stock or any such rights, warrants or
Convertible Securities are issued to all holders of the common stock, and shall
become effective, as the case may be, on the date of issuance or retroactive to
the record date for determination of shareholders entitled to receive the
common stock or such warrants, rights or Convertible Securities.
2. TIME OF EXERCISE OPTIONS.
Subject to the terms and upon the conditions contained herein, the Options
may be exercised at any time prior to the earlier to occur of termination of the
Options pursuant to Section 5 hereof and (i) seven (7) years from the 31st day
of July 1996 in the case of the First and Second Options, (ii) seven (7) years
from the 31st day of July 1997 in the case of the Third Option, or (iii) seven
(7) years from the date on which Equity Securities are sold in the case of the
Fourth Option (the "Option Period").
3. METHOD OF EXERCISE.
(a) The Options may be exercised only within the Option Period and
only (1) by notice in writing of the Executive's exercise of the Options,
delivered to the Chief Financial Officer of NATCO or mailed by registered or
certified mail, return receipt requested, postage pre-paid, addressed to the
Chief Financial Officer of NATCO, c/o National Tank Company, Brookhollow Central
III, Suite 750, 0000 Xxxxx Xxxx Xxxx, Xxxxxxx, Xxxxx 00000, and (2) by
contemporaneous payment to NATCO of the full amount of the purchase price of the
common stock being purchased by the Executive pursuant to these Options
(together with any amount which is necessary to satisfy any applicable federal,
state or local tax requirements), by certified check or official bank check
payable to the order of NATCO.
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(b) NATCO may require of the Executive at the time the Options are
exercised, that the Executive make or enter into representations and agreements
as may be necessary or desirable, in the opinion of NATCO, in order to assure
compliance with the terms of this Stock Option Agreement and all applicable
federal and state securities laws and stock exchange regulations.
(c) NATCO shall make immediate delivery of all shares purchased by the
Executive upon the exercise of the Option, provided that if any law or
regulation requires NATCO to take any action with respect to the shares being
purchased by the Executive pursuant to these Options, then the date of delivery
of such shares shall be extended for the period necessary to take such action.
4. STOCKHOLDERS AGREEMENT.
In the event the Executive exercises the Options and purchases shares of
common stock of NATCO, the Executive shall be subject to the terms of the
Stockholders Agreement dated the 30th day of June, 1997, by and among Capricorn
Investors, L.P., Capricorn Investors II, L.P. and Xxxxxxxx Point Industries,
Inc., attached hereto as Exhibit B.
5. TERMINATION OF OPTIONS.
(a) The Options, to the extent not heretofore exercised, shall terminate
and cease to be exercisable on the date on which the first of the following
events occurs:
(l) one year after the termination of the Executive's employment with
NATCO pursuant to Section 1(e)(l) or Section 1(e)(2) of the Employment
Agreement;
(2) the termination of the Executive's employment with NATCO pursuant
to Section 11(a) of the Employment Agreement;
(3) the sale of all of the common stock of NATCO to any party or
parties other than the Executive, regardless of whether such sale is
effected in a single transaction or a series of related or unrelated
transactions and provided that NATCO gives the Executive written notice at
least 30 days prior to any transaction that would result in the termination
of the Executive's Options pursuant to this Section 5(a)(3); or
(4) expiration of the Option Period as provided in Section 2 of this
Stock Option Agreement.
6. NON-TRANSFERABILITY OF OPTIONS.
The Options may not be sold, hypothecated, transferred or otherwise
disposed of, and may only be exercised by the Executive, or his estate
provided that the estate exercises such Options within two years of the
Executive's death. If the Executive's estate exercises the Options, the estate
shall be bound by all conditions, restrictions, and limitations that otherwise
would have applied to the Executive had the Executive exercised the Options.
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7. NO RIGHTS AS STOCKHOLDER.
The Executive shall have none of the rights of a stockholder of NATCO with
respect to any of the shares of common stock issuable under the Options unless
and until such shares of common stock have been purchased by the Executive in
accordance with the terms and conditions of this Stock Option Agreement.
8. REPRESENTATION AS TO INVESTMENT.
The Executive represents and warrants to NATCO that all shares purchased
under this Stock Option Agreement shall be acquired for the Executive's own
account and not with a view to distribution. The Executive acknowledges that the
Executive may not sell, assign, transfer or otherwise dispose of any shares
purchased under this Stock Option Agreement, or of any of his right, title or
interest therein, in the absence of either a registration statement under the
Securities Act of 1933, as amended (the "Act") or an exemption from the
registration provisions of the Act, and agrees that certificates representing
the shares may contain a legend to such effect. The exercise of these Options
and the delivery of shares hereunder is contingent upon NATCO being furnished by
the Executive with a statement in writing at the time of such exercise
confirming the accuracy of the foregoing representation and warranty.
9. NOTICE.
All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive, to him at:
Xxxxxxxxx X. Xxxxxxx
Xxxxx Road
Greenwich, Connecticut 06830
If to NATCO, to it at:
Xxxxxxxx Point Industries
00 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: President
With a copy to:
O'Melveny & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Drake Tempest, Esq.
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With a further copy to:
Xxxxxx & Xxxxxx (to be provided)
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications hereunder (including
without limitation, notice of the Executive's election to purchase the Options)
shall be effective when actually received by the addressee.
10. Amendment.
This Stock Option Agreement may only be modified, supplemented or amended
by a written instrument executed by the party against whom which enforcement of
such modification, supplement or amendment is sought.
11. Headings.
The headings contained herein are for the sole purpose of convenience of
reference, and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this Stock Option Agreement.
12. Governing Law.
This Stock Option Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to
principles of conflict of laws.
In witness whereof, the parties hereto have executed this Agreement as of
the date first above written.
XXXXXXXX POINT INDUSTRIES XXXXXXXXX X. XXXXXXX
By /s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxxxxxx X. Xxxxxxx
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Title:
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AMENDMENT NO. 1
TO
STOCK OPTION AGREEMENT
This AMENDMENT NO. 1 (this "Amendment") to that certain STOCK OPTION
AGREEMENT (the "Stock Option Agreement") dated as of July 31, 1997 by and
between Xxxxxxxx Point Industries, Inc. (now NATCO Group Inc.), a Delaware
corporation ("NATCO") and Xxxxxxxxx X. Xxxxxxx (the "Executive") is itself dated
as of May __, 1998 by and between NATCO and the Executive.
RECITALS:
As of July 31, 1997, NATCO and the Executive entered into an Employment
Agreement (the "Employment Agreement") that amended and restated a prior
employment agreement between NATCO and the Executive dated as of July 31, 1996.
In connection with the execution and delivery of the Employment
Agreement, NATCO and the Executive entered into the Stock Option Agreement which
amended and restated a prior stock option agreement between NATCO and the
Executive dated as of July 31, 1996.
NATCO is currently planning to effect an initial public offering of its
common stock, par value $0.01 per share (the "Common Stock") and NATCO and the
Executive have determined that certain provisions of the Stock Option Agreement,
while appropriate in the context of a privately owned company, are inconsistent
with the Executive's responsibilities as the chief executive officer of a
publicly owned company.
Accordingly, the Executive is voluntarily agreeing to delete those
provisions from the Stock Option Agreement effective as of the Effective Date
(as hereinafter defined).
NOW, THEREFORE, the parties hereto, for and in consideration of the
premises, the mutual covenants and agreements hereinafter set forth and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, agree as follows:
1. Amendments. Effective as of the Effective Date, the Stock Option
Agreement shall be amended in the following respects:
(a) The first sentence of subsection (c) of Section 1 of the
Stock Option Agreement is hereby amended so as to be and read,
in its entirety, as follows:
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"Subject to the terms and upon the conditions contained
herein, the Executive shall have the additional right,
privilege and option to purchase 123,272 shares of common
stock of NATCO at a purchase price of $6.71 per share (the
"Third Option", and, together with the First and Second
Options, the "Options")."
(b) Subsection (d) of Section 1 of the Stock Option Agreement
is hereby deleted in its entirety from the Stock Option
Agreement and such provision shall, from and after the
Effective Date, be null and void and of no further force or
effect.
2. Definitions.
(a) "Commission" shall mean the United States Securities and
Exchange Commission.
(b) "Effective Date" shall mean the effective date, as ordered
by the Commission, of that certain Registration Statement on
Form S-1 filed by NATCO with the Commission with respect to
the offering, sale and delivery of the Common Stock to be sold
in the Initial Public Offering.
3. Confirmation of Other Provisions. The parties hereto confirm that
each provision of the Stock Option Agreement, other than those expressly amended
hereby, is hereby ratified and shall remain in full force and effect.
4. Headings. The headings contained herein are for the sole purpose of
convenience of reference and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this Amendment.
In Witness Whereof, the parties hereto have executed this Amendment as
of the date first above written.
NATCO GROUP INC.
(formerly Xxxxxxxx Point Industries, Inc.)
By:
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Name:
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Title:
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Xxxxxxxxx X. Xxxxxxx
