Exhibit 4
XXXXXXX SHOE COMPANY INC.
EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE 1994 STOCK INCENTIVE PLAN
This Employee Nonqualified Stock Option Agreement (this "Agreement")
is made and entered into as of the Date of Grant indicated below by and between
Xxxxxxx Shoe Company Inc., a Delaware corporation (the "Company"), and the
person named below as Employee.
WHEREAS, Employee is an employee of the Company and/or one or more of
its subsidiaries; and
WHEREAS, pursuant to the Company's 1994 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 Class A Common Stock, par value $.01 per share, 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:
1. Grant of Option; Certain Terms and Conditions. The Company hereby
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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 o'clock p.m., Boston 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"). The Option shall become exercisable to purchase
("Vesting Rate") that number of Option Shares (rounded to the nearest whole
share) equal to the total number of Option Shares multiplied by the Vesting Rate
indicated below.
Employee: Xxxx X. Xxxxxxx
Date of Grant: April 27, 1998
Number of shares purchasable: 75,000
Exercise Price per share: $17.50
Expiration Date: April 27, 2008
Vesting Rate:
(A) With respect to 35,000 Option Shares, the Vesting Rate shall be
as follows: 17% on 4/27/1999, 17% on 4/27/2000, 33% on 4/27/2001 and
33% on 4/27/2002.
(B) With respect to 40,000 Option Shares, the Vesting Rate shall be
as follows:
(i) 13,333 Option Shares shall vest on that date, if ever, when
the last sale price of the Common Stock equals or exceeds the sum of
(x) the average of the last sale prices of the Common Stock during the
period commencing on the Date of Grant and ending on May 27, 1998
(thirty days after the Date of Grant) and (y) two dollars.
(ii) 13,333 Option Shares shall vest on that date, if ever, when
the last sale price of the Common Stock equals or exceeds the sum of
(x) the average of the last sale prices of the Common Stock during the
period commencing on the Date of Grant and ending on May 27, 1998
(thirty days after the Date of Grant) and (y) four dollars.
(iii) 13,334 Option Shares shall vest on that date, if ever, when
the last sale price of the Common Stock equals or exceeds the sum of
(x) the average of the last sale prices of the Common Stock during the
period commencing on the Date of Grant and ending on May 27, 1998
(thirty days after the Date of Grant) and (y) six dollars.
The Option is not intended to qualify as an incentive stock option under Section
422 of the Internal Revenue Code.
2. Acceleration of Vesting and Termination of Option.
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(a) Termination of Employment.
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(i) Retirement. If Employee ceases to be employed by reason of
Employee's retirement in accordance with the Company's then-current
retirement policy ("Retirement"), 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 upon the earlier of the Expiration Date or the first anniversary
of the date of such Retirement.
(ii) Death or Permanent Disability. If Employee ceases to be
employed by reason of the death or Permanent Disability (as hereinafter
defined) of Employee, 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 Employee's death or Permanent Disability.
"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
which 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.
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(iii) Termination for Cause. If Employee is terminated for Cause,
both the vested and unvested portions of the Option shall terminate
immediately. "Cause" shall mean Employee's (A) conviction by a court of
competent jurisdiction of a felony or serious misdemeanor involving moral
turpitude, (B) willful disregard of any written directive of the Board that
is not inconsistent with the Certificate of Incorporation or Bylaws of the
Company or applicable law, (C) breach of his or her fiduciary duty
involving personal profit, or (D) neglect of his or her duties that has a
material adverse effect on the Company.
(iv) Other Termination. If Employee is terminated without Cause,
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 90th day following the date of such
termination of employment; provided, however, that if Employee is
terminated without Cause within one year after a Change of Control, then
(x) the portion of the Option that has not vested on or prior to the date
on which Employee is terminated shall fully vest as of such date and (y)
the Option shall terminate upon the earlier of the Expiration Date or the
90th day following the date on which Employee is terminated. A "Change of
Control" shall mean the first to occur of the following:
(1) the date upon which the directors of the Company who
were nominated by the Board for election as directors cease to
constitute a majority of the directors of the Company;
(2) the consummation of 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) (a) as a result of which the
outstanding securities of the class then subject to the Option are
exchanged for or converted into cash, property and/or securities not
issued by the Company and (b) the terms of which provide that the
Option shall continue in effect thereafter; or
(3) 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
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 more than 50% of the voting power of the Company
(a "50% Stockholder"); provided, however, that the term "50%
Stockholder" shall not include (a) the Company or any of its
subsidiaries, (b) any employee benefit plan of the Company or any of
its subsidiaries, (c) any entity holding voting securities of the
Company for or pursuant to the terms of any such plan, (d) any person
or entity who held shares of the Company's Class B Common Stock, par
value $.01 per share, as of the completion of an initial public
offering of shares of the Common Stock and any
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Permitted Transferee (as defined in the Company's Certificate of
Incorporation) of such person or entity, or (e) any person or entity
if the transaction that resulted in such person or entity becoming a
50% Stockholder was approved in advance by the Board.
(b) Death Following Termination of Employment. Notwithstanding
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anything to the contrary in this Agreement, if Employee shall die at any time
after the termination of his or her employment and prior to the date on which
the Option is terminated pursuant to Section 2(a), then the vested portion of
the Option shall terminate on the earlier of the Expiration Date or the first
anniversary of the date of Optionee's death.
(c) Acceleration of Option of Option by Committee. The Committee, in
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its sole discretion, may accelerate the exercisability of the Option at any time
and for any reason.
(d) Other Events Causing Acceleration and Termination of Option.
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Notwithstanding anything to the contrary in this Agreement, the Option shall
become fully exercisable immediately prior to, and shall terminate upon, the
consummation of any of the following events:
(i) the dissolution or liquidation of the Company;
(ii) 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 and/or a different kind of securities, unless such
reorganization, merger or consolidation shall have been affirmatively
recommended to the stockholders of the Company by the Board and the terms
of such reorganization, merger or consolidation shall provide that the
Option shall continue in effect thereafter on terms substantially similar
to those under the Plan; or
(iii) a sale of all or substantially all of the property and
assets of the Company, unless the terms of such sale shall provide
otherwise.
3. Adjustments. In the event that the outstanding securities of the
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class then subject to the Option are increased, decreased or exchanged for or
converted into cash, property and/or a different number or kind of securities,
or cash, property and/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, quarterly 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.
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4. Exercise. The Option shall be exercisable during Employee's
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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 (the "Exercise Notice"), which notice shall specify the number of
Option Shares to be purchased (the "Purchased Shares") and the aggregate
Exercise Price for such shares, 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 one or more of the following means:
(a) by the delivery to the Company of a promissory note in a
form and amount satisfactory to the Committee, provided that the principal
amount of such note shall not exceed the excess of such aggregate Exercise
Price over and above the aggregate par value of the Purchased Shares; or
(b) by (i) 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) and/or (ii)
"pyramiding" of shares issuable upon exercise of the Option, provided that
the Company is not then prohibited from purchasing or acquiring such shares
of Common Stock.
5. Payment of Withholding Taxes. If the Company becomes obligated
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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 (the "Withholding Liability"), then Employee shall, on the date of exercise
and as a condition to the issuance of the Option Shares, pay the Withholding
Liability to the Company in cash or by check payable to the Company. Employee
hereby consents to the Company withholding the full amount of the Withholding
Liability from any compensation or other amounts otherwise payable to Employee
if Employee does not pay the Withholding Liability to the Company on the date of
exercise of the Option, and Employee agrees that the withholding and payment of
any such amount by the Company to the relevant taxing authority shall constitute
full satisfaction of the Company's obligation to pay such compensation or other
amounts to Employee.
6. Notices. All notices and other communications required or
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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 Xxxxxxx Xxxxxx, X.X. Xxx 00, Xxxxxxxxx (Boston), Massachusetts 02137,
Attention: President, 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.
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7. Stock Exchange or NASDAQ Requirements; Applicable Laws.
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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 (a) 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 (b) 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.
8. Non-transferability. Neither the Option nor any interest therein
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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
9. Plan. The Option is granted pursuant to the Plan, as in effect
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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.
10. Stockholder Rights. No person or entity shall be entitled to
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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.
11. Employment Rights. No provision of this Agreement or of the
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Option granted hereunder shall (a) confer upon Employee any right to continue in
the employ of the Company or any of its subsidiaries, (b) affect the right of
the Company and each of its subsidiaries to terminate the employment of
Employee, with or without cause, or (c) 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.
12. Governing Law. This Agreement and the Option granted hereunder
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shall be governed by and construed and enforced in accordance with the laws of
the State of Delaware.
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IN WITNESS WHEREOF, the Company and Employee have duly executed this
Agreement as of the Date of Grant.
XXXXXXX SHOE COMPANY INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Executive Vice President
EMPLOYEE:
/s/ Xxxx X. Xxxxxxx
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Signature
00 Xxxxxxx Xxxxxxx Xxxx Xxxx
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Street Address
Andover, Mass. 01810
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City, State and Zip Code
###-##-####
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Social Security Number
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