EXHIBIT 99.2
Form of Incentive Stock Option Agreement
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
1996 EMPLOYEE STOCK INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered into as
of the Date of Grant indicated below by and between Keystone Automotive
Industries, Inc., a California corporation (the "Company"), and the person named
below ("Employee").
WHEREAS, Employee is an employee of the Company or one or more of its
subsidiaries; and
WHEREAS, pursuant to the Company's 1996 Employee Stock Incentive Plan
(the "Plan"), the committee of the Board of Directors of the Company
administering the Plan (the "Committee") has approved the grant to Employee of
an option to purchase shares of the common stock of the Company (the "Common
Stock"), on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
11. GRANT OF OPTION; CERTAIN TERMS AND CONDITIONS. The Company
hereby grants to Employee, and Employee hereby accepts, as of the Date of Grant,
an option to purchase the number of shares of Common Stock indicated below (the
"Option Shares") at the Exercise Price per share indicated below, which option
shall expire at 5:00 p.m., California time, on the Expiration Date indicated
below and shall be subject to all of the terms and conditions set forth in this
Agreement (the "Option"). On each anniversary of the Date of Grant, the Option
shall become exercisable to purchase, and shall vest with respect to, that
number of Option Shares (rounded to the nearest whole share) equal to the total
number of Option Shares multiplied by the Annual Vesting Rate indicated below.
Employee:
-----------------------------------
Date of Grant:
------------------------------
Number of shares purchasable:
---------------
Exercise Price per share:
-------------------
Expiration Date:
----------------------------
Annual Vesting Rate: %
---------
The Option is intended to qualify as an incentive stock option under Section 422
of the Internal Revenue Code of 1986, as amended (an "Incentive Stock Option"),
and consequently:
(i) the Expiration Date shall not be more than ten years
after the Date of Grant and the Exercise Price per share shall not be less
than the Fair Market Value (as defined in the Plan) per share on the Date
of Grant; PROVIDED, HOWEVER, that if, on the Date of Grant, Employee owns
(after application of the family and other attribution rules of
Section 425(d) of the Internal Revenue Code of 1986, as amended) more than
10% of the total combined voting power of all classes of stock of the
Company or of its parent or subsidiary corporations, then the Expiration
Date shall not be more than five years after the Date of Grant and the
Exercise Price per share shall not be less than 110% of the Fair Market
Value per share on the Date of Grant; and
(ii) the aggregate Fair Market Value (determined as of the
date such options are granted) of the shares of Common Stock with respect
to which Incentive Stock Options are exercisable for the first time by
Employee during any calendar year (under the Plan and all other stock
option plans of the Company and its parent and subsidiary corporations)
shall not exceed $100,000.
1
12. ACCELERATION AND TERMINATION OF OPTION.
(a) Termination of Employment.
(i) TERMINATION WITHIN ONE YEAR AFTER CHANGE OF CONTROL. In
the event that Employee shall cease to be an employee of the Company or any
of its subsidiaries (such event shall be referred to herein as the
"Termination" of Employee's "Employment") for any reason, or for no reason,
within one year after a Change of Control (as hereinafter defined), then
(A) the portion of the Option that has not vested on or prior to the date
of such Termination of Employment shall fully vest on such date and (B) the
Option shall terminate upon the earlier of the Expiration Date or three
months after the date of such Termination of Employment. "Change of
Control" shall mean the first to occur of the following events:
(A) any date upon which the directors of the Company who
were last nominated by the Board of Directors (the "Board") for
election as directors cease to constitute a majority of the
directors of the Company;
(B) the date of the first public announcement that any
person or entity, together with all Affiliates and Associates (as
such capitalized terms are defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of such person or entity, shall have become the
Beneficial Owner (as defined in Rule 13d-3 promulgated under the
Exchange Act) of voting securities of the Company representing
25% or more of the voting power of the Company (a "25%
Stockholder"); PROVIDED, HOWEVER, that the terms "person" and
"entity," as used in this clause (B), shall not include (1) the
Company or any of its subsidiaries, (2) any employee benefit plan
of the Company or any of its subsidiaries, (3) any entity holding
voting securities of the Company for or pursuant to the terms of
any such plan, (4) any person or entity if the transaction that
resulted in such person or entity becoming a 25% Stockholder was
approved in advance by the Board or (5) any person or entity who
was a 25% Stockholder on the date of adoption of the Plan by the
Board; or
(C) a reorganization, merger or consolidation of the
Company (other than a reorganization, merger or consolidation the
sole purpose of which is to change the Company's domicile solely
within the United States) the consummation of which results in
the outstanding securities of any class then subject to the
Option being exchanged for or converted into cash, property or a
different kind of securities.
(ii) RETIREMENT. If Employee's Employment is Terminated by
reason of Employee's retirement in accordance with the Company's
then-current retirement policy ("Retirement"), and a Change of Control
shall not have occurred within one year prior thereto, then (A) the portion
of the Option that has not vested on or prior to the date of such
Retirement shall terminate on such date and (B) the remaining vested
portion of the Option shall terminate on the date three (3) months after
the date of such Termination of Employment.
(iii) DEATH OR PERMANENT DISABILITY. If Employee's Employment is
Terminated by reason of the death or Permanent Disability (as hereinafter
defined) of Employee, and a Change of Control shall not have occurred
within one year prior thereto, then (A) the portion of the Option that has
not vested on or prior to the date of such Termination of Employment shall
terminate on such date and (B) the remaining vested portion of the Option
shall terminate upon the earlier of the Expiration Date or the first
anniversary of the date of such Termination of Employment. "Permanent
Disability" shall mean the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or that has lasted or
can be expected to last for a continuous period of not less than 12
months. Employee shall not be deemed to have a Permanent Disability
until proof of the existence thereof shall have been furnished to the
Board in such form and manner, and at such times, as the Board may
require. Any determination by the Board that Employee does or does
not have a Permanent Disability shall be final and binding upon the
Company and Employee.
2
(iv) OTHER TERMINATION. If Employee's Employment is Terminated
for no reason, or for any reason other than Retirement, death or Permanent
Disability, and a Change of Control shall not have occurred within one year
prior thereto, then the Option shall terminate upon the date of such
Termination of Employment.
(b) DEATH FOLLOWING TERMINATION OF EMPLOYMENT. Notwithstanding
anything to the contrary contained in this Agreement, if Employee shall die at
any time after the Termination of his or her Employment and prior to the
Expiration Date, then (i) the portion of the Option that has not vested on or
prior to the date of such death shall terminate on such date and (ii) the
remaining vested portion of the Option shall terminate on the earlier of the
Expiration Date or the first anniversary of the date of such death.
(c) OTHER EVENTS CAUSING ACCELERATION OF OPTION. The Committee, in
its sole discretion, may accelerate the exercisability of the Option at any time
and for any reason.
(d) OTHER EVENTS CAUSING TERMINATION OF OPTION. Notwithstanding
anything to the contrary contained in this Agreement, the Option shall terminate
upon the consummation of any of the following events, or, if later, the
thirtieth day following the first date upon which such event shall have been
approved by both the Board and the shareholders of the Company:
(i) the dissolution or liquidation of the Company; or
(ii) a sale of substantially all of the property and assets of
the Company, unless the terms of such sale shall provide otherwise.
13. ADJUSTMENTS. In the event that the outstanding securities of the
class then subject to the Option are increased, decreased or exchanged for or
converted into cash, property or a different number or kind of securities, or
cash, property or securities are distributed in respect of such outstanding
securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, dividend (other than a
regular cash dividend) or other distribution, stock split, reverse stock split
or the like, or in the event that substantially all of the property and assets
of the Company are sold, then, unless such event shall cause the Option to
terminate pursuant to Section 2(d) hereof, the Committee shall make appropriate
and proportionate adjustments in the number and type of shares or other
securities or cash or other property that may thereafter be acquired upon the
exercise of the Option; PROVIDED, HOWEVER, that any such adjustments in the
Option shall be made without changing the aggregate Exercise Price of the then
unexercised portion of the Option.
14. EXERCISE.
(a) The Option shall be exercisable during Employee's lifetime only
by Employee or by his or her guardian or legal representative, and after
Employee's death only by the person or entity entitled to do so under Employee's
last will and testament or applicable intestate law. The Option may only be
exercised by the delivery to the Company of a written notice of such exercise,
which notice shall specify the number of Option Shares to be purchased (the
"Purchased Shares") and the aggregate Exercise Price for such shares (the
"Exercise Notice"), together with payment in full of such aggregate Exercise
Price in cash or by check payable to the Company; PROVIDED, HOWEVER, that
payment of such aggregate Exercise Price may instead be made, in whole or in
part, by the delivery to the Company of a certificate or certificates
representing shares of Common Stock, duly endorsed or accompanied by a duly
executed stock powers, which delivery effectively transfers to the Company good
and valid title to such shares, free and clear of any pledge, commitment, lien,
claim or other encumbrance (such shares to be valued on the basis of the
aggregate Fair Market Value (as defined in the Plan) thereof on the date of such
exercise), provided that the Company is not then prohibited from purchasing or
acquiring such shares of Common Stock.
15. PAYMENT OF WITHHOLDING TAXES. If the Company becomes obligated
to withhold an amount on account of any tax imposed as a result of the exercise
of the Option, including, without limitation, any federal, state, local or other
income tax, or any F.I.C.A., state disability insurance tax or other employment
tax, then Employee shall, on the first day upon which the Company becomes
obligated to pay such amount to the appropriate taxing authority, pay such
amount to the Company in cash or by check payable to the Company.
3
16. NOTICES. All notices and other communications required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed given if delivered personally or five days after mailing by certified
or registered mail, postage prepaid, return receipt requested, to the Company at
000 Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, Attention: Xx X. Xxxxx, or to
Employee at the address set forth beneath his or her signature on the signature
page hereto, or at such other addresses as they may designate by written notice
in the manner aforesaid.
17. STOCK EXCHANGE REQUIREMENTS; APPLICABLE LAWS. Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if (i) such shares have not been admitted
to listing upon official notice of issuance on each stock exchange upon which
shares of that class are then listed or (ii) in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation of
or to incur liability under any federal, state or other securities law, or any
requirement of any stock exchange listing agreement to which the Company is a
party, or any other requirement of law or of any administrative or regulatory
body having jurisdiction over the Company.
18. NONTRANSFERABILITY. Neither the Option nor any interest therein
may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner other than by will or the laws of descent and
distribution.
19. PLAN. The Option is granted pursuant to the Plan, as in effect
on the Date of Grant, and is subject to all the terms and conditions of the
Plan, as the same may be amended from time to time; PROVIDED, HOWEVER, that no
such amendment shall deprive Employee, without his or her consent, of the Option
or of any of Employee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon Employee. Until the
Option shall expire, terminate or be exercised in full, the Company shall, upon
written request therefor, send a copy of the Plan, in its then-current form, to
Employee or any other person or entity then entitled to exercise the Option.
20. SHAREHOLDER RIGHTS. No person or entity shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such option
Shares in accordance with the provisions of this Agreement.
21. EMPLOYMENT RIGHTS. No provision of this Agreement or of the
Option granted hereunder shall (i) confer upon Employee any right to continue in
the employ of the Company or any of its subsidiaries, (ii) affect the right of
the Company and each of its subsidiaries to terminate the employment of
Employee, with or without cause, or (iii) confer upon Employee any right to
participate in any employee welfare or benefit plan or other program of the
Company or any of its subsidiaries other than the Plan. Employee hereby
acknowledges and agrees that the Company and each of its subsidiaries may
terminate the employment of Employee at any time and for any reason, or for no
reason, unless Employee and the Company or such subsidiary are parties to a
written employment agreement that expressly provides otherwise.
22. GOVERNING LAW. This Agreement and the option granted hereunder
shall be governed by and construed and enforced in accordance with the laws of
the State of California without reference to choice or conflict of law
principles.
4
IN WITNESS WHEREOF, the Company and Employee have duly executed this
Agreement as of the Date of Grant.
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
By
------------------------------------
Authorized Representative
EMPLOYEE
--------------------------------------
Signature
--------------------------------------
Printed Name
--------------------------------------
Xxxxxx Xxxxxxx
--------------------------------------
Xxxx, Xxxxx and Zip Code
--------------------------------------
Social Security Number
5
