EXHIBIT 3
ROCK OF AGES CORPORATION
Incentive Stock Option Agreement
Rock of Ages Corporation, a Vermont corporation
(the "Company"), hereby grants as of this 21st day of
November, 1994, to Xxxx X. Xxxxxxx (the "Employee"), an
option to purchase a maximum of 200,000 shares of its
Common Stock, no par value per share, at the price of
$2.42 per share, on the following terms and conditions:
1. Grant Under 1994 Stock Plan. This option
is granted pursuant to and is governed by the Company's
1994 Stock Plan (the "Plan") and, unless the context
otherwise requires, terms used herein shall have the same
meaning as in the Plan. Determinations made in
connection with this option pursuant to the Plan shall be
governed by the Plan as it exists on this date.
2. Grant as Incentive Stock Option; Other
Options. This option is intended to qualify as an
incentive stock option under Section 422A of the Internal
Revenue Code of 1986, as amended (the "Code"). This
option is in addition to any other options heretofore or
hereafter granted to the Employee by the Company, but a
duplicate original of this instrument shall not effect
the grant of another option.
3. Extent of Option If Employment Continues.
If the Employee has continued to be employed by the
Company on the following dates, the Employee may exercise
this option for the number of shares set opposite the
applicable date:
On or after November 21, 1994
and before November 21, 1995 - 40,000 shares
On or after November 21, 1995 an additional
and before November 21, 1996 - 40,000 shares
On or after November 21, 1996 an additional
and before November 21, 1997 - 40,000 shares
On or after November 21, 1997 an additional
and before November 21, 1998 - 40,000 shares
On or after November 21, 1998 - an additional
40,000 shares.
The foregoing rights are cumulative and, while the
Employee continues to be employed by the Company, such
option may be exercised on or before November 21, 1999.
All of the foregoing rights are subject to Articles 4 and
5, as appropriate, if the Employee ceases to be employed
by the Company or dies or becomes disabled while in the
employ of the Company.
4. Termination of Employment. If the
Employee ceases to be employed by the Company, other than
by reason of death or disability as defined in Article 5,
no further installments of this option shall become
exercisable and this option shall terminate after the
passage of ninety (90) days from the date employment
ceases, but in no event later than the scheduled
expiration date. In such a case, the Employee's only
rights hereunder shall be those which are properly
exercised before the termination of the option.
5. Death; Disability. If the Employee dies
while in the employ of the Company, this option may be
exercised, to the extent of the number of shares with
respect to which the Employee could have exercised it on
the date of his death, by his estate, personal
representative or beneficiary to whom this option has
been assigned pursuant to Article 10, at any time within
180 days after the date of death, but not later than the
scheduled expiration date. If the Employee ceases to be
employed by the Company by reason of his disability (as
defined in the Plan), this option may be exercised, to
the extent of the number of shares with respect to which
he could have exercised it on the date of the termination
of his employment, at any time within 180 days after such
termination, but not later than the scheduled expiration
date. At the expiration of such 180-day period or the
scheduled expiration date, whichever is the earlier, this
option shall terminate and the only rights hereunder
shall be those as to which the option was properly
exercised before such termination.
6. Partial Exercise. Exercise of this option
up to the extent above stated may be made in part at any
time and from time to time within the above limits,
except that this option may not be exercised for a
fraction of a share unless such exercise is with respect
to the final installment of stock subject to this option
and a fractional share (or cash in lieu thereof) must be
issued to permit the Employee to exercise completely such
final installment. Any fractional share with respect to
which an installment of this option cannot be exercised
because of the limitation contained in the preceding
sentence shall remain subject to this option and shall be
available for later purchase by the Employee in
accordance with the terms hereof.
7. Payment of Price. The option price is
payable in United States dollars and may be paid in cash,
by check, by delivery of shares of the Company's Common
Stock having an aggregate fair market value (as
determined by the Board of Directors) equal as of the
date of exercise to the option price, by delivery of the
Employee's personal recourse note bearing interest
payable not less than annually at no less than 100% of
the lowest applicable Federal rate, as defined in Section
1274(d) of the Code, or by any combination of the
foregoing, equal in amount to the option price.
Notwithstanding the foregoing, the Employee may not pay
any part of the exercise price hereof by transferring
Common Stock to the Company if such Common Stock is both
subject to a substantial risk of forfeiture and not
transferable within the meaning of Section 83 of the
Code. If the Employee delivers a personal recourse note
as provided above, the Employee shall concurrently
execute and deliver to the Company a pledge agreement in
a form reasonably satisfactory the Company, together with
a stock certificate or certificates representing shares
of the Company's Common Stock (having an aggregate fair
market value (as determined by the Board of Directors)
equal as of the date of exercise to at least the value of
the principal amount of the note), duly endorsed or
accompanied by a stock power or powers duly endorsed, to
secure the Employee's obligations under such personal
recourse note.
8. Agreement to Purchase for Investment. By
acceptance of this option, the Employee agrees that a
purchase of shares under this option will not be made
with a view to their distribution, as that term is used
in the Securities Act of 1933, as amended (the "Act"),
unless in the opinion of counsel to the Company, such
distribution is in compliance with or exempt from the
registration and prospectus requirements of the Act, and
the Employee agrees to sign a certificate to such effect
at the time of exercising this option and agrees that the
certificate for the shares so purchased may be inscribed
with a legend to ensure compliance with the Act.
9. Method of Exercising Option. Subject to
the terms and conditions of this Agreement, this option
may be exercised by written notice to the Company, at the
principal executive office of the Company at 000 Xxxxx
Xxxxx Xxxxxx, Xxxxxxx, XX 00000, or to such transfer
agent as the Company shall designate. Such notice shall
state the election to exercise this option and the number
of shares in respect of which it is being exercised and
shall be signed by the person or persons so exercising
this option. Such notice shall be accompanied by payment
of the full purchase price of such shares, and the
Company shall deliver a certificate or certificates
representing such shares as soon as practicable after the
notice shall be received. The certificate or
certificates for the shares as to which this option shall
have been so exercised shall be registered in the name of
the person or persons so exercising this option (or, if
this option shall be exercised by the Employee and if the
Employee shall so request in the notice exercising this
option, shall be registered in the name of the Employee
and another person jointly, with right of survivorship)
and shall be delivered as provided above to or upon the
written order of the person or persons exercising this
option. In the event this option shall be exercised
pursuant to Article 5 hereof by any person or persons
other than the Employee, such notice shall be accompanied
by appropriate proof of the right of such person or
persons to exercise this option. All shares that shall
be purchased upon the exercise of this option as provided
herein shall be fully paid and non-assessable.
10. Option Not Transferable. This option is
not transferable or assignable (a) except by will or by
the laws of descent and distribution or, if then
permitted under Rule 16b-3 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), pursuant to a
qualified domestic relations order as defined under the
Code or Title I of the Employee Retirement Income
Security Act, or the rules thereunder and (b) if such
assignment or transfer violates Section 162(m) of the
Code. During the Employee's lifetime, only the Employee
or his or her guardian or legal representative can
exercise this option.
11. No Obligation to Exercise Option. The
grant and acceptance of this option imposes no obligation
on the Employee to exercise it.
12. No Obligation to Continue Employment. The
Company and any Related Corporation (as defined in the
Plan) are not by the Plan or this option obligated to
continue the Employee in employment.
13. No Rights as Shareholder until Exercise.
The Employee shall have no rights as a shareholder with
respect to shares subject to this Agreement until a stock
certificate therefor has been issued to the Employee and
is fully paid for. Except as is expressly provided in
the Plan with respect to certain changes in the
capitalization of the Company, no adjustment shall be
made for dividends or similar rights for which the record
date is prior to the date such stock certificate is
issued.
14. Capital Changes and Business Successions.
The Plan contains provisions covering the treatment of
options in a number of contingencies such as stock splits
and mergers. Provisions in the Plan for adjustment with
respect to stock subject to options and the related
provisions with respect to successors to the business of
the Company are hereby made applicable hereunder and are
incorporated herein by reference. In general, you should
not assume that options necessarily would survive the
acquisition of the Company. In particular, without
affecting the generality of the foregoing, it is
understood that for the purposes of Articles 3 through 5
hereof, both inclusive, employment by the Company
includes employment by a Related Corporation as defined
in the Plan.
15. Early Disposition. The Employee agrees to
notify the Company in writing immediately after the
Employee makes a Disqualifying Disposition of any Common
Stock received pursuant to the exercise of this option.
A Disqualifying Disposition is any disposition (including
any sale) of such Common Stock before the later of (a)
two years after the date the Employee was granted this
option or (b) one year after the date the Employee
acquired Common Stock by exercising this option. If the
Employee has died before such stock is sold, these
holding period requirements do not apply and no
Disqualifying Disposition can occur thereafter. The
Employee also agrees to provide the Company with any
information which it shall request concerning any such
disposition. The Employee acknowledges that he or she
will forfeit the favorable income tax treatment otherwise
available with respect to the exercise of this incentive
stock option if he or she makes a Disqualifying
Disposition of the stock received on exercise of this
option.
16. Withholding Taxes. If the Company in its
discretion determines that it is obligated to withhold
tax with respect to a Disqualifying Disposition (as
defined in Article 15) of Common Stock received by the
Employee on exercise of this option, the Employee hereby
agrees that the Company may withhold from the Employee's
wages the appropriate amount of federal, state and local
withholding taxes attributable to such Disqualifying
Disposition. If any portion of this option is treated as
a Non-Qualified Option, the Employee hereby agrees that
the Company may withhold from the Employee's wages the
appropriate amount of federal, state and local
withholding taxes attributable to the Employee's exercise
of such Non-Qualified Option. At the Company's
discretion, the amount required to be withheld may be
withheld in cash from such wages, or (with respect to
compensation income attributable to the exercise of this
option) in kind from the Common Stock otherwise
deliverable to the optionee on exercise of this Option.
The Employee further agrees that, if the Company does not
withhold an amount from the Employee's wages sufficient
to satisfy the Company's withholding obligation, the
Employee will reimburse the Company on demand, in cash,
for the amount underwithheld.
17. Company's Right of First Refusal.
(a) Exercise of Right: If the Employee
desires to sell all or any part of the shares acquired
under this option (including any securities received in
respect thereof pursuant to any stock dividend, stock
split, reclassification, reorganization, recapitalization
or the like), and an offeror (the "Offeror") has made an
offer therefor, which offer the Employee desires to
accept, the Employee shall: (i) obtain in writing an
irrevocable and unconditional bona fide offer (the "Bona
Fide Offer") for the purchase thereof from the Offeror;
and (ii) give written notice (the "Option Notice") to the
Company setting forth his or her desire to sell such
shares, which Option Notice shall be accompanied by a
photocopy of the original executed Bona Fide Offer and
shall set forth at least the name and address of the
Offeror and the price and terms of the Bona Fide Offer.
Upon receipt of the Option Notice, the Company shall have
an assignable option to purchase any or all of such
shares (the "Option Shares") specified in the Option
Notice, such option to be exercisable by giving, within
30 days after receipt of the Option Notice, a written
counter-notice to the Employee. If the Company elects to
purchase any or all of such Option Shares, it shall be
obligated to purchase, and the Employee shall be
obligated to sell to the Company, such Option Shares at
the price and terms indicated in the Bona Fide Offer
within 60 days from the date of receipt by the Company of
the Option Notice.
(b) Sale of Option Shares to Offeror:
The Employee may sell, pursuant to the terms of the Bona
Fide Offer, any or all of such Option Shares not
purchased or agreed to be purchased by the Company for 60
days after the expiration of the 30-day period during
which the Company may give the aforesaid counter-notice;
provided, however, that the Employee shall not sell such
Option Shares to the Offeror if the Offeror is a
competitor of the Company and the Company gives written
notice to the Employee, within 30 days of its receipt of
the Option Notice, stating that the Employee shall not
sell his or her Option Shares to the Offeror; and
provided, further, that prior to the sale of such Option
Shares to the Offeror, the Offeror shall execute an
agreement with the Company pursuant to which the Offeror
agrees to be subject to the restrictions set forth in
this Article 17. If any or all of such Option Shares are
not sold pursuant to a Bona Fide Offer within the time
permitted above, the unsold Option Shares shall remain
subject to the terms of this Article 17.
(c) Adjustments for Changes in Capital
Structure: If there shall be any change in the Common
Stock of the Company through merger, consolidation,
reorganization, recapitalization, stock dividend, split-
up, combination or exchange of shares or the like, the
restrictions contained in this Article 17 shall apply
with equal force to additional or substitute securities,
if any, received by the Employee in exchange for, or by
virtue of his or her ownership of, Option Shares.
(d) Failure to Deliver Option Shares: In
the event the Employee fails or refuses to deliver on a
timely basis duly endorsed certificates representing
Option Shares to be sold to the Company pursuant to this
Article 17, the Company shall have the right to deposit
the purchase price for the Option Shares in a special
account with any bank or trust company in the State of
New Hampshire giving notice of such deposit to the
Employee, whereupon such Option Shares shall be deemed to
have been purchased by the Company. All such monies
shall be held by the bank or trust company for the
benefit of the Employee. All monies deposited with the
bank or trust company but remaining unclaimed for two (2)
years after the date of deposit shall be repaid by the
bank or trust company to the Company on demand, and the
Employee shall thereafter look only to the Company for
payment. The Company may place a legend on any stock
certificate delivered to the Employee reflecting the
restrictions on transfer provided in this Article 17.
(e) Expiration of Company's Right of
First Refusal: The refusal rights of the Company set
forth above shall remain in effect until such time, if
ever, when there is a registration of any of the
Company's stock under the Exchange Act or the Company
otherwise becomes subject to the reporting requirements
of the Exchange Act, at which time the refusal rights of
the Company set forth herein will automatically expire.
18. No Exercise of Option if Employment
Terminated for Misconduct. If the employment of the
Employee is terminated for "Misconduct," this option
shall terminate on the date of such termination of
employment and shall thereupon not be exercisable to any
extent whatsoever. "Misconduct" is conduct, as
determined by the Board of Directors, involving one or
more of the following: (i) the substantial and
continuing failure of the Employee to render services to
the Company in accordance with his or her assigned
duties; (ii) a determination by two-thirds of the members
of the Board of Directors that the Employee has
inadequately performed the duties of his or her
employment; (iii) disloyalty, gross negligence,
dishonesty or breach of fiduciary duty to the Company;
(iv) the commission of an act of embezzlement, fraud,
disloyalty, dishonesty or deliberate disregard of the
rules or policies of the Company which results in loss,
damage or injury to the Company, whether directly or
indirectly; (v) the unauthorized disclosure of any trade
secret or confidential information of the Company; or
(vi) the commission of an act which constitutes unfair
competition with the Company or which induces any
customer of the Company to break a contract with the
Company. In making such determination, the Board of
Directors shall act fairly and in utmost good faith and
shall give the Employee an opportunity to appear and to
be heard at a hearing before the Board of Directors or
any Committee and present evidence on his or her behalf.
For the purposes of this Article 18, termination of
employment shall be deemed to occur when the Employee
receives notice that his or her employment is terminated.
19. Company's Right of Repurchase.
(a) Rights of Repurchase. If any of the
events specified in Article 19(b) below occur, then:
(i) with respect to shares
acquired upon exercise of this option prior to the
occurrence of such event, within 60 days after the
Company receives actual knowledge of the event, and
(ii) with respect to shares
acquired upon exercise of this option after the
occurrence of such event, within 60 days following
the later of the date of such exercise or the date
the Company receives actual knowledge of such event,
(in either case, the "Repurchase Period"), the Company
shall have the option, but not the obligation, to
repurchase all, but not a portion of, the shares from the
Employee, or his or her guardian or legal
representatives, as the case may be (the "Repurchase
Option"). The Repurchase Option shall be exercised by
the Company by giving the Employee, or his or her
guardian or legal representatives, written notice of its
intention to exercise the Repurchase Option on or before
the last day of the Repurchase Period, and, together with
such notice, tendering to the Employee, or his or her
guardian or legal representatives, an amount equal to the
higher of the option exercise price or the fair market
value of the shares. The Company may, in exercising the
Repurchase Option, designate one or more nominees,
whether or not affiliated with or employed by the
Company, to purchase the shares. Upon timely exercise of
the Repurchase Option in the manner provided in this
Article 19(a), the Employee, or his or her guardian or
legal representatives, shall deliver to the Company the
stock certificate or certificates representing the shares
being repurchased, duly endorsed and free and clear of
any and all liens, charges and encumbrances.
If shares are not purchased under the
Repurchase Option, the Employee and his or her successor
in interest, if any, will hold any such shares in his or
her possession subject to all of the provisions of this
Agreement.
(b) Company's Right to Exercise
Repurchase Option: The Company shall have the Repurchase
Option in the event that any of the following events
shall occur:
(i) the termination of the
Employee's employment with the Company or any
Related Corporation, voluntarily or involuntarily,
for any reason whatsoever, including death or
permanent disability, prior to the time this option
shall be fully vested as provided in Article 3
hereof;
(ii) the receivership, bankruptcy
or other creditor's proceeding regarding the
Employee or the taking of any of Employee's shares
acquired upon exercise of this option by legal
process, such as a levy of execution;
(iii) distribution of shares held by
the Employee to his or her spouse as such spouse's
joint or community interest pursuant to a decree of
dissolution, operation of law, divorce, property
settlement agreement or for any other reason, except
as may be otherwise permitted by the Company; or
(iv) the termination of the
Employee's employment by the Company for Misconduct.
(c) Determination of Fair Market Value:
The fair market value of the shares subject to this
option shall be, for purposes of this Article 19, an
amount per share determined on the basis of the price at
which shares of the Common Stock could reasonably be
expected to be sold in an arms-length transaction, for
cash, other than on an installment basis, to a person not
employed by, controlled by, in control of or under common
control with the Company. Fair market value shall be
determined by the Board of Directors, giving due
consideration to recent grants of ISOs for shares of
Common Stock, recent transactions involving shares of the
Common Stock, if any, earnings of the Company, the effect
of the transfer restrictions to which the shares are
subject under law and this Agreement, the absence of a
public market for the Common Stock and such other matters
as the Board of Directors deems pertinent. The
determination by the Board of Directors of the fair
market value shall be conclusive and binding. The fair
market value of the shares shall be determined as of the
day on which the event occurs.
(d) Expiration of Company's Repurchase
Option. The Company's Repurchase Option set forth above
shall remain in effect until such time, if ever, when
there is a registration of any of the Company's stock
under the Exchange Act or the Company otherwise becomes
subject to the reporting requirements of the Exchange
Act, at which time the Repurchase Option of the Company
set forth herein will automatically expire.
20. Incorporation of Plan. The Plan is hereby
incorporated herein by reference and made a part hereof
and the option and this Agreement are subject to all
terms and conditions of the Plan.
21. Provision of Documentation to Employee.
By signing this Agreement, the Employee acknowledges
receipt of a copy of this Agreement and a copy of the
Plan.
22. Failure to Enforce Not a Waiver. The
failure of the Company to enforce at any time any
provision of this Agreement shall in no way be construed
to be a waiver of such provision or of any other
provision hereof.
23. Governing Law. This Agreement shall be
governed by and interpreted in accordance with the laws
of the State of Vermont, without regard to the conflicts
of laws provisions thereof.
24. Counterparts. This Agreement may be
executed in counterparts, each of which shall be an
original but all of which shall represent one and the
same agreement.
IN WITNESS WHEREOF, the Company and the
Employee have caused this instrument to be executed, and
the Employee whose signature appears below acknowledges
receipt of a copy of the Plan incorporated herein by
reference and acceptance of an original copy of the
Agreement.
ROCK OF AGES CORPORATION
By:_________________________
Name:
Title:
___________________________
Employee
___________________________
Print Name of Employee
___________________________
Street Address
___________________________
City State Zip Code
