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EXHIBIT 10(aa)
Form of Stock Option Agreement
used in connection with the grant of
non-qualified stock options
pursuant to the
X. X. Xxxxx Corporation
1997 Incentive Stock Plan
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STOCK OPTION AGREEMENT
(Non-Qualified Stock Option)
THIS AGREEMENT is made to be effective as of __________,
199__, by and between X. X. Xxxxx Corporation, an Ohio corporation (the
"COMPANY"), and ____________________ (the "OPTIONEE").
WITNESSETH:
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WHEREAS, the Board of Directors and the shareholders of the
COMPANY have adopted the X. X. Xxxxx Corporation 1997 Incentive Stock Plan (the
"PLAN"); and
WHEREAS, pursuant to the provisions of the PLAN, the Board of
Directors of the COMPANY has appointed a Compensation Committee (the
"COMMITTEE") to administer the PLAN and the COMMITTEE has determined that an
option to acquire common shares, $1.00 par value (the "COMMON SHARES"), of the
COMPANY should be granted to the OPTIONEE upon the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the parties
hereto make the following agreement, intending to be legally bound thereby:
(1) Grant of OPTION. The COMPANY hereby grants to the
OPTIONEE an option (the "OPTION") to purchase ________ COMMON SHARES of the
COMPANY. The OPTION is not intended to qualify as an incentive stock option
under Section 422 of the Internal Revenue Code of 1986, as amended (the "CODE").
(2) Terms and Conditions of the OPTION.
(A) OPTION Price. The purchase price (the "OPTION
PRICE") to be paid by the OPTIONEE to the COMPANY upon the exercise of the
OPTION shall be $_______ per share, subject to adjustment as provided in Section
3.
(B) Exercise of the OPTION. The OPTION may not be
exercised until the OPTIONEE shall have completed twelve months of continuous
employment with the COMPANY and/or its subsidiaries immediately following the
date hereof. Thereafter, except as otherwise provided in this Agreement, the
OPTION may be exercised as follows:
(i) at any time after such twelve-month period as
to ________ of the COMMON SHARES subject to the OPTION (subject to adjustment as
provided in Section (3)); and
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(ii) at any time after twenty-four months from the
date of this Agreement as to the remaining ____ of the COMMON SHARES subject to
the OPTION (subject to adjustment as provided in Section (3)).
Subject to the other provisions of this Agreement, if the
OPTION becomes exercisable as to certain COMMON SHARES, it shall remain
exercisable as to those COMMON SHARES until the date of expiration of the OPTION
term. The COMMITTEE may, but shall not be required to (unless otherwise provided
in this Agreement), accelerate the schedule of the time or times when the OPTION
may be exercised.
(C) OPTION Term. The OPTION shall in no event be
exercisable after the expiration of ten (10) years from the date of this
Agreement.
(D) Method of Exercise. The OPTION may be exercised by
giving written notice of exercise to the COMPANY in care of the Treasurer of the
COMPANY stating the number of COMMON SHARES subject to the OPTION in respect of
which it is being exercised. Payment for all such COMMON SHARES shall be made to
the COMPANY at the time the OPTION is exercised in United States dollars in cash
(including check, bank draft or money order). Payment for such COMMON SHARES
also may be made (i) by delivery of COMMON SHARES of the COMPANY already owned
by the OPTIONEE and having a Fair Market Value (as that term is defined in the
PLAN) on the date of delivery equal to the OPTION PRICE, or (ii) by delivery of
a combination of cash and already owned COMMON SHARES. After payment in full for
the COMMON SHARES purchased under the OPTION has been made, the COMPANY shall
take all such action as is necessary to deliver appropriate share certificates
evidencing the COMMON SHARES purchased upon the exercise of the OPTION as
promptly thereafter as is reasonably practicable.
(E) Tax Withholding. OPTIONEE will pay to the COMPANY the
amount of any taxes the COMPANY is required by law to withhold with respect to
the exercise of the OPTION. Unless otherwise instructed by OPTIONEE, the COMPANY
will withhold from the COMMON SHARES issuable upon exercise of the OPTION that
number of COMMON SHARES having a fair market value on the date of exercise
(based upon the closing price of the COMMON SHARES as reported on The New York
Stock Exchange) equal to the amount of any taxes the COMPANY is required by law
to withhold with respect to the exercise of the OPTION.
(3) Adjustments and Changes in the COMMON SHARES.
(A) In the event that the outstanding COMMON SHARES of the
COMPANY shall be changed into or exchanged for a
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different kind of shares or other securities of the COMPANY or of another
corporation (whether by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares or otherwise) or if the number
of such COMMON SHARES shall be increased through the payment of a stock
dividend, then unless such change results in the termination of all outstanding
options granted pursuant to the PLAN, there shall be substituted for or added to
each COMMON SHARE of the COMPANY subject to the OPTION, the number and kind of
shares or other securities into which each outstanding COMMON SHARE of the
COMPANY shall be changed, or for which each such COMMON SHARE shall be
exchanged, or to which the holder of each such COMMON SHARE shall be entitled,
as the case may be. The OPTION shall also be appropriately amended as to the
OPTION PRICE and other terms as may be necessary to reflect the foregoing
events. The number of COMMON SHARES that will vest on the dates set forth in
Section (2)(B) shall be appropriately adjusted to reflect any such change in the
outstanding COMMON SHARES. In the event there shall be any other change in the
number or kind of the outstanding shares of the COMPANY, or of any shares or
other securities into which such shares shall have been changed, or for which
they shall have been exchanged, then if the COMMITTEE shall, in its sole
discretion, determine that such change equitably requires an adjustment in the
OPTION, such adjustment shall be made by the COMMITTEE in accordance with such
determination. Fractional shares resulting from any adjustment in the OPTION
pursuant to this Section (3)(A) shall be rounded down to the nearest whole
number of shares.
(B) Notice of any adjustment pursuant to this Section (3)
shall be given by the COMPANY to the OPTIONEE.
(C) The grant of this OPTION shall not affect in any way
the right of the COMPANY to adjust, reclassify, reorganize, or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
(4) Acceleration of OPTIONS. In the event that the COMPANY
or its shareholders enter into one or more agreements to dispose of all or
substantially all of the assets or fifty percent (50%) or more of the
outstanding capital stock of the COMPANY by means of sale (whether as a result
of a tender offer or otherwise), merger, reorganization or liquidation in one or
a series of related transactions (each, an "ACCELERATION EVENT"), then the
OPTION shall become exercisable during the fifteen (15) days immediately prior
to the scheduled consummation of the ACCELERATION EVENT with respect to the full
number of COMMON SHARES subject to the OPTION; provided, however, that no such
ACCELERATION EVENT will occur in the event that (i) the primary purpose of the
transaction is to change the COMPANY's domicile solely within the United States,
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(ii) the terms of the agreement(s) require as a prerequisite for the
consummation of the transaction that each option granted by the COMPANY pursuant
to the PLAN either be assumed by the successor corporation or parent thereof or
be replaced with a comparable option to purchase shares of capital stock of the
successor corporation or parent thereof, or (iii) the transaction is approved by
a majority of the members of the Board of Directors of the COMPANY who had
either been in office for more than twelve (12) months prior to such transaction
or had been elected, or nominated for election by the COMPANY's shareholders, by
the vote of three-fourths of the directors then still in office who were
directors at the beginning of such twelve-month period; and provided further
that any exercise of the OPTION during such fifteen (15) day period shall be
conditioned upon the consummation of such transaction and shall be effective
only immediately before such consummation, except to the extent that the
OPTIONEE may indicate, in writing, that such exercise is unconditional with
regard to all or part of the unaccelerated portion of the OPTION. Upon
consummation of the ACCELERATION EVENT, the OPTION, whether or not accelerated,
will terminate and cease to be exercisable, unless assumed by the successor
corporation or parent thereof.
(5) Non-Assignability of OPTION. Unless otherwise permitted
by the COMMITTEE, the OPTION shall not be assignable or otherwise transferable
by the OPTIONEE except by will or by the laws of descent and distribution. The
OPTION may not be exercised during the lifetime of the OPTIONEE except by him,
his guardian or legal representative. If the COMMITTEE permits the assignment of
the OPTION, it shall be assignable only to the extent permitted by Section 19 of
the PLAN.
(6) Substitution for OPTION. The COMMITTEE shall have the
authority to effect, at any time and from time to time, with the consent of the
OPTIONEE, the cancellation of the OPTION and the grant in substitution therefor
of one or more new options under the PLAN covering the same or a different
number of COMMON SHARES at an OPTION PRICE per share not less than the fair
market value of the COMMON SHARES on the new grant date.
(7) Exercise After Termination of Employment.
(A) Except as otherwise provided in this Agreement, the
OPTION shall be exercisable only while the OPTIONEE is in the employment of the
COMPANY and then only if the OPTION has become exercisable by its terms, and if
not exercisable by its terms at the time the OPTIONEE ceases to be in the
employment of the COMPANY, shall immediately expire on the date of termination
of employment.
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(B) If the OPTION is exercisable by its terms at the time
the OPTIONEE ceases to be in the employment of the COMPANY other than by reason
of the death, permanent disability or normal retirement of the OPTIONEE, the
OPTION must be exercised on or before the earlier of three (3) months after the
date of termination of employment or the fixed expiration date of the OPTION
after which period the OPTION shall expire. Notwithstanding the foregoing, if
the OPTIONEE's employment is terminated for willful, deliberate or gross
misconduct (such as, for example, dishonesty), the OPTION shall, to the extent
not previously exercised, expire immediately upon such termination.
(C) In the event of the death of the OPTIONEE (i) while in
the employment of the COMPANY or (ii) within three (3) months after his
termination of employment other than for willful, deliberate or gross
misconduct, the unexercised portion of the OPTION (whether or not then
exercisable by its terms) shall become immediately exercisable in full by his
estate for a period ending on the earlier of the fixed expiration date of the
OPTION or twelve months after the date of death, after which period the OPTION
shall expire. For purposes hereof, the estate of an OPTIONEE shall be defined to
include the legal representatives thereof or any person who has acquired the
right to exercise the OPTION by reason of the death of the OPTIONEE.
(D) In the event of the termination of employment of the
OPTIONEE by reason of the "permanent disability" of the OPTIONEE, the
unexercised portion of the OPTION (whether or not then exercisable by its terms)
shall become exercisable for a period ending on the earlier of the fixed
expiration date of the OPTION or twelve (12) months from the date of
termination, after which period the OPTION shall expire. For purposes hereof,
"permanent disability" shall be deemed to be the inability of the OPTIONEE to
perform the duties of his job with the COMPANY because of a physical or mental
disability as evidenced by the opinion of a COMPANY-approved doctor of medicine
licensed to practice medicine in the United States of America.
(E) In the event of the termination of employment of the
OPTIONEE by reason of the "normal retirement" of the OPTIONEE, the unexercised
portion of the OPTION (whether or not then exercisable by its terms) shall
become immediately exercisable for a period ending on the earlier of the fixed
expiration date of the OPTION or twelve (12) months after the date of death,
after which period the OPTION shall expire. For purposes hereof, "retirement"
shall be deemed to be "normal retirement" if the OPTIONEE is at least 65 years
of age at the date of retirement and has completed at least five (5) consecutive
years of employment with the COMPANY at the date of retirement.
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(8) Restrictions on Transfers of COMMON SHARES. Anything
contained in this Agreement or elsewhere to the contrary notwithstanding, the
COMPANY may postpone the issuance and delivery of COMMON SHARES upon any
exercise of the OPTION until completion of any stock exchange listing or
registration or other qualification of such COMMON SHARES under any state or
federal law, rule or regulation as the COMPANY may consider appropriate; and may
require the OPTIONEE when exercising the OPTION to make such representations and
furnish such information as the COMPANY may consider appropriate in connection
with the issuance of the COMMON SHARES in compliance with applicable law.
COMMON SHARES issued and delivered upon exercise of the OPTION
shall be subject to such restrictions on trading, including appropriate
legending of certificates to that effect, as the COMPANY, in its discretion,
shall determine are necessary to satisfy applicable legal requirements and
obligations.
(9) Rights of OPTIONEE. The OPTIONEE shall have no rights as a
shareholder of the COMPANY with respect to any COMMON SHARES of the COMPANY
covered by the OPTION until the date of issuance of a certificate to him
evidencing such COMMON SHARES.
(10) PLAN as Controlling. All terms and conditions of the PLAN
applicable to the OPTION which are not set forth in this Agreement shall be
deemed incorporated herein by reference. In the event that any term or condition
of this Agreement is inconsistent with the terms and conditions of the PLAN, the
PLAN shall be deemed controlling.
(11) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio.
(12) Rights and Remedies Cumulative. All rights and remedies
of the COMPANY and of the OPTIONEE enumerated in this Agreement shall be
cumulative and, except as expressly provided otherwise in this Agreement, none
shall exclude any other rights or remedies allowed by law or in equity, and each
of said rights or remedies may be exercised and enforced concurrently.
(13) Captions. The captions contained in this Agreement are
included only for convenience of reference and do not define, limit, explain or
modify this Agreement or its interpretation, construction or meaning and are in
no way to be construed as a part of this Agreement.
(14) Severability. If any provision of this Agreement or the
application of any provision hereof to any person or any circumstance shall be
determined to be invalid or unenforceable, then such determination shall not
affect any other provision of
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this Agreement or the application of said provision to any other person or
circumstance, all of which other provisions shall remain in full force and
effect, and it is the intention of each party to this Agreement that if any
provision of this Agreement is susceptible of two or more constructions, one of
which would render the provision enforceable and the other or others of which
would render the provision unenforceable, then the provision shall have the
meaning which renders it enforceable.
(15) Number and Gender. When used in this Agreement, the
number and gender of each pronoun shall be construed to be such number and
gender as the context, circumstances or its antecedent may required.
(16) Entire Agreement. This Agreement constitutes the entire
agreement between the COMPANY and the OPTIONEE in respect of the subject matter
of this Agreement, and this Agreement supersedes all prior and contemporaneous
agreements between the parties hereto in connection with the subject matter of
this Agreement. No officer, employee or other servant or agent of the COMPANY,
and no servant or agent of the OPTIONEE is authorized to make any
representation, warranty or other promise not contained in this Agreement. No
change, termination or attempted waiver of any of the provisions of this
Agreement shall be binding upon any party hereto unless contained in a writing
signed by the party to be charged.
(17) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns (including successive,
as well as immediate, successors and assigns) of the COMPANY.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the date first above written.
COMPANY:
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X. X. XXXXX CORPORATION
By:______________________________
Its:__________________________
OPTIONEE:
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