EYE CARE CENTERS OF AMERICA, INC.
STOCK OPTION AGREEMENT
UNDER 1998 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
NON-QUALIFIED STOCK OPTION
----------------------------
AGREEMENT entered into as of this 31st day of October, 2002 (the "Date of
Grant"), by and between EYE CARE CENTERS OF AMERICA, INC., a Texas corporation
(the "Company"), and the undersigned director 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 for Non-Employee Directors
(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 5,000 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 $5.00 per Share.
3. Vesting.
(a) Time Based Vesting. Subject to paragraph (b) below, the Option
shall become exercisable ("vest") as follows:
(i) 25% on the first anniversary of the Date of Grant;
(ii) 25% on the second anniversary of the Date of Grant;
(iii) 25% on the third anniversary of the Date of Grant; and
(iv) 25% on the fourth anniversary of the Date of Grant;
provided in each case that the Optionee is a director 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
if his death or disability occurs while a director of the Company.
(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), all of the unvested Shares subject to the
Option shall become vested and immediately exercisable.
(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).
(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 a
director of the Company.
(c) The Option shall terminate immediately upon termination of
Optionee's directorship for Cause by the Company.
(d) The Option shall terminate on the 60th day following the date the
Optionee ceases to be a director of the Company due to Optionee's
Disability.
(e) The Option shall terminate on the 180th day following the date of
the Optionee's death if the Optionee ceases to be a director of the Company
due to Optionee's death.
5. Exercisability.
(a) If the Optionee ceases to be a director 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 a director 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 directorship
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 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.
(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. Limited Transferability.
(a) The right of the Optionee to exercise the Option shall not be
assignable or transferable by the Optionee otherwise than (i) by will or the
laws of descent and distribution, and (ii) as specifically set forth in Section
7(b) below.
(b) If approved by the Committee, the Optionee may transfer by gift all or a
portion of the Option to one or more of the Optionee's Immediate Family
Members (as defined below) or to a trust established for the exclusive benefit
of one or more of the Optionee's Immediate Family Members. Transfers to any one
transferee under this Section 7(b) may be made only with respect to at least 500
Shares subject to the Option. If less than the entire Option is transferred to
any one transferee under this Section 7(b), then the Shares so transferred shall
be drawn first from the unvested Shares which will be the last to vest in
accordance with the provisions of Section 3(a), then from the next to last to
vest and so on until all unvested Shares shall have been transferred; thereafter
the Shares to be transferred will be those that have vested. Transfers under
this Section 7(b) may be made only on dates specified by the Committee. In
order to transfer all or any portion of the Option, the Optionee must complete,
sign and deliver to
the Committee an "Election to Transfer Stock Options", in the form attached
hereto as Exhibit 1, and must obtain from each proposed transferee and deliver
to the Company a completed and signed "Notice to Option Transferee", in the form
attached hereto as Exhibit 2. The Company, at its option, may engage a
recognized appraisal firm to value for gift tax purposes any Options to be
transferred hereunder.
(c) As used herein, the term "Immediate Family Member" shall mean a
child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, sister-in-law, or brother-in-law,
including adoptive relationships.
(d) The Option shall be null and void and without effect upon the
bankruptcy of the Optionee (or, with respect to any portion of the Option
held by a transferee, upon the bankruptcy of such transferee) 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 3 and
the Company shall place an "investment legend", so-called, as described in
Exhibit 3, 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 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 employ, maintain on the Board, or 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 services to the
Company, the Optionee shall render diligently and faithfully the services which
are assigned to the Optionee 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. Neither the Optionee or the transferee of the
Optionee shall 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 or such transferee, as the case may be. Except as otherwise expressly
provided in the Plan, no adjustment shall be made for 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 (whether by the Optionee or by any transferee of the Optionee),
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 (and any transferee of
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.
* * * * * * *
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:_______________________________________
Name: Xxxxx X. XxXxxxx
Title: President, Chief Executive Officer
OPTIONEE:
__________________________________________
Name: Xxxxxxx X. Xxxxxxxx
Address: ________________________
________________________
________________________
Social Security No.:
________________________
EXHIBIT 1
TO STOCK OPTION AGREEMENT
ELECTION TO TRANSFER STOCK OPTIONS
1. Eye Care Centers of America, Inc. (the "Company") has granted Xxxxxxx X.
Xxxxxxxx ("Participant") the following non-qualified option(s) ("Options") to
purchase common stock of the Company ("Stock"):
Option to purchase ______ shares of Stock [at $ per share], granted on
______________;
Option to purchase ______ shares of Stock [at $ per share], granted on
______________;
2. The participant hereby irrevocably transfers all rights with respect to
the Options to _____________ ("Transferee"), effective on the Transfer Date (as
specified below). The Participant also irrevocably transfers any right he or
she may have to consent to amendments to the Options.
3. The Transferee's address is__________________________________________.
The Transferee's Social Security or other tax identification number is
_________________.
The Transferee's birth date (or date of trust) is ______________.
The Transferee's relationship to the Participant is ______________.
4. The Participant warrants that the transfer reflected by this document is
a gift, and that the Participant has received no consideration in return for the
transfer.
5. The Participant acknowledges that upon exercise of an Option by the
transferee, income will be imputed to the Participant. The Participant
understands that he or she is responsible for any taxes payable to any taxing
authority as a result of the exercise and agrees that the Company must collect
withholding tax on the income imputed to the Participant as a result of the
exercise and report such income on Form W-2.
6. The Participant further acknowledges that any prior death beneficiary
designation for the Options is void and of no further force or effect.
IN WITNESS WHEREOF, the Participant has hereunto set his or her hand on
this _____ day of ____________, 200__ ("Transfer Date").
[Name of Participant]
________________________
Signature of Participant
EXHIBIT 2
TO STOCK OPTION AGREEMENT
NOTICE TO OPTION TRANSFEREE
You have received (or are expected to receive) a gift of one or more
options ("Options") granted by Eye Care Centers of America, Inc. ("Company") to
purchase Company common stock ("Stock"). The options originally provided
certain rights to ______________, an executive or director of the Company and/or
it subsidiaries ("Participant"), and the Participant's rights under the Options
were subject to certain restrictions, as set forth in the option agreement and
the plan under which the option was granted. Any request by you for a copy of
the option agreement(s), the plan, or any other information regarding the
Options should be directed to the Participant, rather than the Company, and,
except as otherwise required by applicable securities laws, the Company cannot
assume responsibility for keeping you informed about the Options.
Your rights under the Options are not greater than the rights provided
to the Participant. In addition, the Options continue to be subject to the
restrictions that were applicable to the Participant, and are subject to such
additional restriction as may be imposed by the Company from time to time. You
are not permitted to transfer the Options to any other person without the
written consent of the Compensation Committee of the Board of Directors of the
Company.
IN WITNESS WHEREOF, the Transferee has hereunto set his or her hand on
this ____ day of _________, 200__.
[Name of Transferee]
_______________________
Signature of Transferee
EXHIBIT 3
TO STOCK OPTION AGREEMENT
Eye Care Centers of America, Inc.
00000 Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
I do 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 May 11,
1999, granted to me under the Company's 1998 Stock Option Plan for Non-Employee
Directors. 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
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,
