EXHIBIT 10.7
STOCK OPTION AGREEMENT
[Executive Non-Qualified]
AGREEMENT made as of the 11th day of January, 1999, by and
between XXXXXX HOLDING CORP., a Delaware corporation (the "Company"), and Xxxxx
X. Xxxxxxx (the "Executive").
WHEREAS, on January 11, 1999 (the "Grant Date"), pursuant to
the terms and conditions of the Xxxxxx Holding Corp. 1996 Stock Plan (the
"Plan"), the Board of Directors of the Company authorized the grant to the
Executive of an option (the "Option") to purchase an aggregate of 66,000 shares
of the authorized but unissued Common Stock of the Company, $.0001 par value
(the "Common Stock"), conditioned upon the Executive's acceptance thereof upon
the terms and conditions set forth in this Agreement and subject to the terms of
the Plan; and
WHEREAS, the Executive desires to acquire the Option on the
terms and conditions set forth in this Agreement and subject to the terms of the
Plan;
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants the
Executive the Option to purchase all or any part of an aggregate of 66,000
shares of Common Stock (the "Option Shares") on the terms and conditions set
forth herein and subject to the provisions of the Plan.
2. Non-Incentive Stock Option. The Option represented hereby
is not intended to be an Option which qualifies as an "Incentive Stock Option"
under Section 422 of the Internal Revenue Code of 1986, as amended.
3. Exercise Price. The exercise price of the Option shall be
$3.875 per share, subject to adjustment as hereinafter provided.
4. Exercisability. This Option is exercisable, subject to the
terms and conditions of the Plan, as follows: (i) the right to purchase 33-1/3%
of the Option Shares shall be exercisable on and after January 1, 2000 (ii) the
right to purchase an additional 33-1/3% of the Option Shares shall be
exercisable on and after January 1, 2001; and (iii) the right to purchase the
remaining 33-1/3% shall be exercisable on or after January 1, 2002. After a
portion of the Option becomes exercisable, it shall remain exercisable except as
otherwise provided herein, until the close of business on January 10, 2009 (the
"Exercise Period").
5. Effect of Termination of Employment.
5.1. Termination Due to Death. If Executive's
employment by the Company terminates by reason of death, the portion of the
Option, if any, that was exercisable as of the date of death may thereafter be
exercised by the legal representative of the estate or by the legatee of the
Executive under the will of the Executive, for a period of one year from the
date of such death or until the expiration of the Exercise Period, whichever
period is shorter. The portion of the Option, if any, that was not exercisable
as of the date of death shall immediately terminate upon death.
5.2. Termination Due to Disability. If
Executive's employment by the Company terminates by reason of Disability (as
such term is defined in the Plan), the portion of the Option, if any, that was
exercisable as of the date of termination of employment may thereafter be
exercised by the Executive or legal representative for a period of one year from
the date of the termination of employment or until the expiration of the
Exercise Period, whichever period is shorter. The portion of the Option, if any,
that was not exercisable as of the date of the termination of employment shall
immediately terminate upon the termination of employment.
5.3. Other Termination.
(a) If Executive's employment is
terminated by the Company for "cause" as defined below (or, if there is a
written employment agreement then in effect between the Company and the
Executive ("Employment Agreement") and such Employment Agreement provides for
termination for "cause", the definition of "for cause" in such Employment
Agreement shall control), or the Executive for any reason other than the
Company's breach of an Employment Agreement, if any, the Option, whether or not
then exercisable, shall immediately expire upon such termination.
(b) The Company may, in the event the
Executive's employment is terminated for "cause", require the Executive to
return to the Company the economic value of any Option Shares purchased
hereunder by the Executive within the six month period prior to the date of
termination. In such event, the Executive hereby agrees to remit to the Company,
in cash, an amount equal to the difference between the Fair Market Value of the
Option Shares on the date of termination (or the sales price of such Shares if
the Option Shares were sold during such six month period) and the Exercise Price
of such Shares.
(c) If Executive's employment is
terminated by the Company for any reason other than as specified in Section 5.1,
5.2 or 5.3(a) hereof, then the Option shall not terminate, whether or not then
exercisable, and it shall continue to become exercisable pursuant to the
schedule provided in Section 4 hereof and once exercisable shall continue in
full force and effect during the Exercise Period.
(d) For purposes of this Agreement,
termination for "cause" shall mean termination as a result of (i) Executive's
conviction for, or plea of guilty or nolo contendere to, a felony or a crime
involving moral turpitude (which, through lapse of time or otherwise, is not
subject to appeal); (ii) the imposition of a permanent bar from association with
a securities or member firm by any federal, state, regulatory agency or
self-regulatory body against Executive and after exhaustion of all judicial and
administrative appeals therefrom; (iii) willful misconduct as an employee of the
Company, or willful or reckless disregard of his responsibilities as an officer,
director and employee of the Company, provided, however, if termination is a
result of the circumstances described in this clause (iii), the Company must
provide written notice to Executive specifying the conduct with reasonable
particularity and termination cannot result if Executive shall have cured such
conduct within 60 days after Executive shall have received such notice or shall
have taken reasonable steps to cure such conduct and shall have diligently
proceeded thereafter to eliminate it.
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5.4. Non-Solicitation of Employees. If at any
time while Executive is employed by the company or during a period of six months
from the date of termination of said employment for any reason other than
Executive's voluntary termination as a result of the Company's failure to
perform all of its then existing employment obligations to Executive (the
"Restricted Period"), Executive causes or influences any employee then employed
by the Company or any subsidiary of the Company to work in any way for Executive
or in any business enterprise in which Executive is participating, whether as an
employee, consultant, advisor, agent, owner, partner, co-venturer, principal,
stockholder, director or otherwise, directly or indirectly, the Board, in its
sole discretion, may require such Executive to return to the Company the
economic value of any Option Shares purchased hereunder by the Executive within
the six month period prior to the date of termination of employment and may
cancel any unexercised options. In such event, Executive agrees to remit the
economic value to the Company in accordance with Section 5.3(b).
6. Withholding Tax. Not later than the date as of which an
amount first becomes includible in the gross income of the Executive for Federal
income tax purposes with respect to the Option, the Executive shall pay to the
Company, or make arrangements satisfactory to the Committee regarding the
payment of, any Federal, state and local taxes of any kind required by law to be
withheld or paid with respect to such amount. The obligations of the Company
under the Plan and pursuant to this Agreement shall be conditional upon such
payment or arrangements with the Company and the Company shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the Executive from the Company.
7. Adjustments. In the event of any merger, reorganization,
consolidation, recapitalization, consolidation, recapitalization, dividend
(other than cash dividend), stock split, reverse stock split, or other change in
corporate structure affecting the number of issued shares of Common Stock, the
Company shall proportionally adjust the number and kind of Option Shares and the
exercise price of the Option in order to prevent the dilution or enlargement of
the Executive's proportionate interest in the Company and her rights hereunder,
provided that the number of Option Shares shall always be a whole number.
8. Method of Exercise.
8.1. Notice to the Company. The Option shall be
exercised in whole or in part by written notice in substantially the form
attached hereto as Exhibit A directed to the Company at its principal place of
business accompanied by full payment as hereinafter provided of the exercise
price for the number of Option Shares specified in the notice.
8.2. Delivery of Option Shares. The Company
shall deliver a certificate for the Option Shares to the Executive as soon as
practicable after payment therefor.
8.3. Payment of Purchase Price.
8.3.1. Cash Payment. The Executive shall
make cash payments by wire transfer, certified or bank check or personal check,
in each case payable to the order of the Company; the Company shall not be
required to deliver certificates for Option Shares until the Company has
confirmed the receipt of good and available funds in payment of the purchase
price thereof.
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8.3.2. Cashless Payment. At the election
of the Executive, the purchase price for any or all of the Option Shares to be
acquired may be paid by: (i) the surrender of shares of Common Stock of the
Company held by or for the account of the Executive with a fair market value
equal to the purchase price multiplied by the number of Option Shares to be
purchased, or (ii) the surrender of any exercisable but unexercised portion of
the Option having a fair market value equal to the purchase price multiplied by
the number of Option Shares to be purchased. In either case, the fair market
value of the surrendered shares or options shall be determined as of the date of
exercise as follows: "Fair market value" of the Common Stock means, as of the
exercise date: (i) if the Common Stock is listed on a national securities
exchange or quoted on the Nasdaq National Market or Nasdaq SmallCap Market, the
last sale price of the Common Stock in the principal trading market for the
Common Stock on the last day trading day preceding such date, as reported by the
exchange or Nasdaq, as the case may be; (ii) if the Common Stock is not listed
on a national securities exchange or quoted on the Nasdaq National Market or
Nasdaq SmallCap Market, but is traded in the over-the-counter market, the
closing bid price of the Common Stock on the last trading day preceding such
date for which such quotations are reported by the National Quotation Bureau,
Incorporated or similar publisher of such quotations; and (iii) if the fair
market value of the Common Stock cannot be determined pursuant to clause (i) or
(ii) above, such price as the Company shall determine, in good faith. The "fair
market value" of a surrendered portion of the Option means, as of the exercise
date, an amount equal to the excess of the total fair market value of the shares
of Common Stock underlying the surrendered portion of the Option (as determined
in accordance with the immediately preceding sentence) over the total purchase
price of such shares of Common Stock underlying the surrendered portion of the
Option. The Company shall issue a certificate or certificates evidencing the
Option Shares as soon as practicable after the notice and payment is received.
The certificate or certificates evidencing the Option Shares shall be registered
in the name of the person or persons so exercising the Option.
8.3.3. Payment Price of Withholding Tax.
Any required withholding tax may be paid in cash or with Common Stock in
accordance with Sections 8.3.1. and 8.3.2.
8.3.4. Exchange Act Compliance.
Notwithstanding the foregoing, the Company shall have the right to reject
payment in the form of Common Stock if in the opinion of counsel for the
Company, (i) it could result in an event of "recapture" under Section 16(b) of
the Securities Exchange Act of 1934; (ii) such shares of Common Stock may not be
sold or transferred to the Company; or (iii) such transfer could create legal
difficulties for the Company.
9. Nonassignability. The Option shall not be assignable or
transferable except by will or by the laws of descent and distribution in the
event of the death of the Executive. No transfer of the Option by the Executive
by will or by the laws of descent and distribution shall be effective to bind
the Company unless the Company shall have been furnished with written notice
thereof and a copy of the will and such other evidence as the Company may deem
necessary to establish the validity of the transfer and the acceptance by the
transferee or transferees of the terms and conditions of the Option.
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10. Company Representations. The Company hereby represents and
warrants to the Executive that:
(i) the Company, by appropriate and all required
action, is duly authorized to enter into this Agreement and consummate
all of the transactions contemplated hereunder; and
(ii) the Option Shares, when issued and delivered by
the Company to the Executive in accordance with the terms and
conditions hereof, will be duly and validly issued and fully paid and
non-assessable.
11. Executive Representations. The Executive hereby
represents and warrants to the Company that
(i) he or she is acquiring the Option and shall
acquire the Option Shares for his or her own account and not with a
view towards the distribution thereof;
(ii) he or she has received a copy of all reports and
documents required to be filed by the Company with the Commission
pursuant to the Exchange Act within the last 24 months and all reports
issued by the Company to its stockholders;
(iii) he or she understands that he or she must bear
the economic risk of the investment in the Option Shares, which cannot
be sold by his or her unless they are registered under the Securities
Act of 1933 (the "1933 Act") or an exemption therefrom is available
thereunder and that the Company is under no obligation to register the
Option Shares for sale under the 1933 Act;
(iv) in his or her position with the Company, he or
she has had both the opportunity to ask questions and receive answers
from the officers and directors of the Company and all persons acting
on its behalf concerning the terms and conditions of the offer made
hereunder and to obtain any additional information to the extent the
Company possesses or may possess such information or can acquire it
without unreasonable effort or expense necessary to verify the accuracy
of the information obtained pursuant to clause (ii) above;
(v) he or she is aware that the Company shall place
stop transfer orders with its transfer agent against the transfer of
the Option Shares in the absence of registration under the 1933 Act or
an exemption therefrom as provided herein; and
(vi) in the absence of registration under the 1933
Act, the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said
Act."
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12. Restriction on Transfer of Option Shares. Anything in this
Agreement to the contrary notwithstanding, the Executive hereby agrees that he
or she shall not sell, transfer by any means or otherwise dispose of the Option
Shares acquired by him or her without registration under the 1933 Act, or in the
event that they are not so registered, unless (i) an exemption from the 1933 Act
registration requirements is available thereunder, and (ii) the Executive has
furnished the Company with notice of such proposed transfer and the Company's
legal counsel, in its reasonable opinion, shall deem such proposed transfer to
be so exempt.
13. Miscellaneous.
13.1. Notices. All notices, requests, deliveries,
payments, demands and other communications which are required or permitted to be
given under this Agreement shall be in writing and shall be either delivered
personally or sent by registered or certified mail, or by private courier,
return receipt requested, postage prepaid to the Company at its principal
executive office and to the Executive at his address set forth below, or to such
other address as either party shall have specified by notice in writing to the
other. Notice shall be deemed duly given hereunder when delivered or mailed as
provided herein.
13.2. Plan Paramount; Conflicts with Plan. This
Agreement and the Option shall, in all respects, be subject to the terms and
conditions of the Plan, whether or not stated herein. In the event of a conflict
between the provisions of the Plan and the provisions of this Agreement, the
provisions of the Plan shall in all respects be controlling.
13.3. Stockholder Rights. The Executive shall not
have any of the rights of a stockholder with respect to the Option Shares until
such shares have been issued after the due exercise of the Option.
13.4. Waiver. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any other or subsequent breach.
13.5. Entire Agreement. This Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof. This Agreement may not be amended except by writing executed by
the Executive and the Company.
13.6. Binding Effect; Successors. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and, to the
extent not prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
13.7. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
(without regard to choice of law provisions).
13.8. 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 Agreement.
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IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the day and year first above written.
Executive: XXXXXX HOLDING CORP.
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxxxxx
____________________________ By: ____________________________
Xxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxxx, President
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EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
--------------------
DATE
Xxxxxx Holding Corp.
Attention: Board of Directors
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of
January 11, 1999 ("Agreement") with Xxxxxx Holding Corp. (the "Company"), I
hereby irrevocably elect to exercise the right to purchase _________ shares of
the Company's common stock, par value $.0001 per share ("Common Stock"), which
are being purchased for investment and not for resale.
As payment for my shares, enclosed is (check and complete
applicable box[es]):
|_| a [personal check] [certified check] [bank check]
payable to the order of "Xxxxxx Holding Corp." in the
sum of $_________;
|_| confirmation of wire transfer in the amount of
$_____________; and/or
|_| certificate for ____ shares of the Company's Common
Stock, free and clear of any encumbrances, duly
endorsed, having a Fair Market Value (as such term is
defined in the Company's 1994 Stock Plan) of
$_________.
|_| I hereby surrender that portion of the unexercised,
but exercisable, portion of the Option having a fair
market value equal to the purchase price multiplied
by the number of shares of Common Stock being
purchased hereunder, to wit: the Option to purchase
_____ Option Shares.
I hereby represent, warrant to, and agree with, the Company
that
(i) I am acquiring the Option Shares for my own account and
not with a view towards the distribution thereof;
(ii) I have received a copy of all reports and documents
required to be filed by the Company with the Commission pursuant to the Exchange
Act within the last 24 months and all reports issued by the Company to its
stockholders;
(iii) I understand that I must bear the economic risk
of the investment in the Option Shares, which cannot be sold by me unless they
are registered under the Securities Act of 1933 (the "1933 Act") or an exemption
therefrom is available thereunder and that the Company is under no obligation to
register the Option Shares for sale under the 1933 Act;
(iv) in my position with the Company, I have had both
the opportunity to ask questions and receive answers from the officers and
directors of the Company and all persons act ing on its behalf concerning the
terms and conditions of the offer made hereunder and to obtain any additional
information to the extent the Company possesses or may possess such information
or can acquire it without unreasonable effort or expense necessary to verify the
accuracy of the information obtained pursuant to clause (ii) above;
(v) I am aware that the Company shall place stop
transfer orders with its transfer agent against the transfer of the Option
Shares in the absence of registration under the 1933 Act or an exemption
therefrom as provided herein;
(vi) my rights with respect to the Option Shares
shall, in all respects, be subject to the terms and conditions of this Company's
1996 Stock Plan and this Agreement; and
(vii) in the absence of registration under the 1933
Act, the certificates evidencing the Option Shares shall bear the following
legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said Act."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
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(Signature) (Address)
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(Print Name) (Address)
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(Social Security Number)
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