EXHIBIT 10(q)
STOCK OPTION AGREEMENT
THIS AGREEMENT, made effective as of the 14th day of August,
1995 ("Date of Grant"), by and between SEALRIGHT CO., INC., a
Delaware corporation (hereinafter called the "Company"), and
XXXXXXX X. XXXXX (hereinafter called "Optionee"),
WITNESSETH THAT:
WHEREAS, Optionee is employed as the president and chief
executive officer of the Company; and
WHEREAS, in connection with such employment the Company
has agreed to grant to Optionee the option to purchase certain
shares of its stock in accordance with the terms set forth in this
Agreement;
NOW, THEREFORE, in consideration of the premises, and of
the mutual agreements hereinafter set forth, it is covenanted and
agreed as follows:
1. Grant and Terms of Option. As of the Date of Grant,
the Company has granted to Optionee the option to purchase all or
any part of seventy thousand (70,000) shares of the common stock of
the Company, par value $.01 per share ("Common Stock"), for a
period of ten (10) years from the Date of Grant, unless the option
is sooner terminated pursuant to Section 6 below, at the purchase
price per share equal to the last sale price of the Company's
Common Stock as reported on The Nasdaq Stock Market on August 11,
1995, the last trading day prior to the Date of Grant, $16.00 per
share (the "Option Price"); provided, however, that the right to
exercise such option shall be, and is hereby, restricted as
follows:
Cumulative Shares/Percentage
Commencing Exercisable (Vested)
8/14/95 (Grant Date) 0/0%
8/14/96 6,000/20%
8/14/97 28,000/40%
8/14/98 42,000/60%
8/14/99 56,000/80%
8/14/00 70,000/100%
Notwithstanding the foregoing, if prior to the fifth anniversary
(the "Relevant Period") of Optionee's date of employment with the
Company (August 14, 2000) a "change of control" occurs, then all
unvested options shall immediately vest and, if following such
"change of control" Optionee's employment with the Company or an
affiliate of the Company is voluntarily or involuntarily
terminated, any such option shall be settled by the payment to
Optionee of an amount equal to the excess, if any, of the aggregate
"fair market value" of the shares subject thereto on the "special
maturity date" over the aggregate exercise price of such option.
For purposes of this Agreement, a "change of control" shall be
deemed to have occurred upon (i) an acquisition of at least twenty-
five percent (25%) of the outstanding voting stock of the Company,
either pursuant to a single tender or exchange offer or through a
series of transactions, by a party which does not own at least
twenty-five percent (25%) of the Company's issued and outstanding
voting stock as of the Date of the Grant, or (ii) a transaction in
which the Company is a party to a merger, consolidation or similar
reorganization resulting in fifty percent (50%) or more of the
Company's issued and outstanding voting stock being beneficially
owned by a person other than the stockholders of the Company
immediately prior to the transaction, or (iii) a sale by the
Company of fifty percent (50%) or more of its assets to any other
person. For purposes of this Agreement, "fair market value", as of
a given date, means the price per share equal to the last sale
price of the Company's Common Stock as reported on the Nasdaq Stock
Market on the immediately preceding business day. For purposes of
an event described in (i) above, the "special maturity date" for
purposes hereof shall be the date on which the Company's Common
Stock had the highest "fair market value" during the period in
which the tender or exchange offer was outstanding, or, in the
event no tender or exchange offer was outstanding the date the
person has first acquired in the aggregate 25% of the Common Stock.
For purposes of an event specified in (ii) or (iii), the "special
maturity date" shall be the effective date of the liquidation,
dissolution, merger or consolidation. Settlement shall be made in
cash within not less than five (5) days following the Optionee's
termination of employment. In no event may this option or any part
thereof be exercised (a) at any time unless Optionee is then an
employee of the Company and has been so employed continuously since
the grant of the option, except as provided in Section 6, below or
(b) after the expiration of the tenth year from the Date of Grant.
It is intended that this option shall not qualify as an "incentive
stock option" as defined in Section 422A of the Internal Revenue
Code of 1986, as amended.
2. Payment of Option Price. The Option Price shall be
paid in full (a) in cash, (b) by the tender to the Company of
shares of Common Stock of the Company owned by Optionee and
registered in his name having a fair market value equal to the
Option Price, (c) by the tender to the Company of that portion of
Optionee's outstanding, vested option arising from the grant set
forth in this Agreement having a fair market value equal to the
aggregate Option Price for the shares being purchased, or (d) by
any combination of the payment methods specified in (a), (b) and
(c), above. The "fair market value" of a portion of this option,
for purposes of (c), above, shall be equal to the product of the
number of option shares for which such vested portion of the option
is exercisable, multiplied by the difference between (i) the last
sale price of the Company's Common Stock as reported on The Nasdaq
Stock Market on the first trading day preceding the date of the
option exercise on which a sale is reported and (ii) the Option
Price.
3. Anti-Dilution Provisions. In the event that, during
the term of this Agreement, there is any change in the number of
shares of outstanding Common Stock of the Company by reason of
stock dividends, recapitalizations, mergers, consolidations, split-
ups, combinations or exchanges of shares and the like, the number
of shares covered by this option agreement and the price thereof
shall be adjusted, to the same proportionate number of shares and
price as in this original agreement so that the value of the option
to the Optionee shall remain the same.
4. Investment Purpose. Optionee represents that, in
the event of the exercise by him of the option hereby granted, or
any part thereof, he intends to purchase the shares acquired on
such exercise for investment and not with a view to resale or other
distribution and Optionee agrees to execute and deliver to the
Company a letter or certificate containing such investment
representations, agreements restricting sale (including, without
limitation, provision for stop transfer orders and restrictive
legend on stock certificates) and confirmation of other relevant
facts to support any exemption from the registration requirements
under the Securities Act of 1933 and such state securities laws on
which the Company intends to rely, all as shall be deemed
reasonably necessary by counsel for the Company and in such form as
such counsel shall determine; except that the Company, at its
election, may waive or release this condition in the event the
shares acquired on exercise of the option are registered under the
Securities Act of 1933, or upon the happening of any other
contingency which the Company shall determine warrants the waiver
or release of this condition. Optionee agrees that the
certificates evidencing the shares acquired by him on exercise of
all or any part of this option, may bear a restrictive legend, if
appropriate, indicating that the shares have not been registered
under said Act and are subject to restrictions on the transfer
thereof, which legend may be in the following form (or such other
form as the Company shall determine to be proper), to-wit:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, but have been
issued or transferred to the registered owner pursuant to the
exemption afforded by Section 4(2) of said Act. No transfer
or assignment of these shares by the registered owner shall be
valid or effective, and the issuer of these shares shall not
be required to give any effect to any transfer or attempted
transfer of these shares, including without limitation, a
transfer by operation of law, unless (a) the issuer shall have
received an opinion of its counsel that the shares may be
transferred without requirement of registration under said
Act, or (b) there shall have been delivered to the issuer a
'no-action' letter from the staff of the Securities and
Exchange Commission, or (c) the shares are registered under
said Act."
5. Non-Transferability. Neither the option hereby
granted nor any rights thereunder or under this Agreement may be
assigned, transferred or in any manner encumbered except by will or
the laws of descent and distribution, and any attempted assignment,
transfer, mortgage, pledge or encumbrance except as herein
authorized, shall be void and of no effect.
6. Termination of Employment.
(a) If Optionee voluntarily or involuntarily
terminates employment with the Company this option shall
terminate three (3) months after the date of such termination
of employment, with respect to all vested or unvested options,
unless such termination is due to the death or disability of
Optionee, as provided for in Section 6(b), below. The
Company's Board of Directors shall determine in each case,
subject to applicable law, whether a leave of absence shall
constitute a termination of employment. Any such
determination of the Board of Directors shall be final and
conclusive.
(b) If Optionee's employment is terminated by
reason of death or disability, the Optionee, or his personal
representative, may exercise any or all of Optionee's
unexercised unexpired vested options, if otherwise eligible
for immediate exercise by the terms of this Agreement on the
date of Optionee's death or disability, provided such exercise
occurs on or before the expiration of the option on the tenth
anniversary of its grant. For purposes of this Agreement,
disability shall be as defined in the Sealright Co., Inc. 1995
Stock Option Plan.
7. Shares Issued on Exercise of Option. Upon any
exercise of this option, the Company will transfer to Optionee
shares of its Common Stock to satisfy its obligations to deliver
shares on any exercise hereof.
8. Administration. This option has been granted
pursuant to a determination by the Board of Directors, and the
Board of Directors, subject to the express terms of this option,
shall have plenary authority to interpret any provision of this
option and to make any determinations necessary or advisable for
the administration of this option and the exercise of the rights
herein granted, and may waive or amend any provisions hereof in any
manner not adversely affecting the rights granted to Optionee by
the express terms hereof.
9. Non-Waiver of Rights. The failure to enforce at any
time any of the provisions of this Agreement or to require at any
time performance by the other party of any of the provisions hereof
shall in no way be construed as a waiver of such provisions or to
affect either the validity of this Agreement, or any part hereof,
or the right of either party thereafter to enforce each and every
provision in accordance with the terms of this Agreement.
10. Invalidity of Provisions. If any provision of this
Agreement is declared invalid by any tribunal, then such provision
shall be deemed automatically adjusted to the minimum extent
necessary to conform to the requirements for validity as declared
at such time and, as so adjusted, shall be deemed a provision of
this Agreement as though originally included herein. In the event
that the provision invalidated is of such a nature that it cannot
be so adjusted, the provision shall be deemed deleted from this
Agreement as though such provision had never been included herein.
In either case, the remaining provisions of this Agreement shall
remain in effect.
11. Assignments. This Agreement shall be assignable
without Optionee's consent by the Company to, and upon such
assignment shall be binding upon and inure to the benefit of, any
other entity which shall succeed to the business presently being
operated by the Company.
12. Amendments. No modification, amendment or waiver of
any of the provisions of this Agreement shall be effective unless
in writing specifically referring hereto, and signed by the parties
hereto.
13. Governing Law. This Agreement shall be interpreted
in accordance with and governed by the laws of the State of Kansas
as applied to contracts to be wholly performed within such state.
IN WITNESS WHEREOF, the Company has caused this Agreement
to be executed on its behalf, pursuant to due authorization, and
Optionee has signed this Agreement to evidence his acceptance of
the option herein granted and of the terms hereof, effective as of
the Date of Grant.
SEALRIGHT CO., INC.
By /s/ Xxxx X. Xxxxxx 8-21-95
Xxxx X. Xxxxxx, Vice President-
Finance
/s/ Xxxxxxx X. Xxxxx 8-21-95
Xxxxxxx X. Xxxxx
