NON-QUALIFIED STOCK OPTION AGREEMENT
(Xxxxxxx X. XxXxxxxx)
Xx. Xxxxxxx X. XxXxxxxx
0000 Xxxxx XxxxxXxx Xxx
Xxxxx, Xxxxxxx 00000
Dear Xxxx:
Pursuant to action taken by the Compensation Committee (the
"Committee") of the Board of Directors of MicroAge, Inc. ("MicroAge") on May 2,
1998 (the "Grant Date") and action by written consent of the sole director of
MCCI Holding Company ("Holding Company"), you are hereby granted the option
(hereinafter the "Option") to purchase a total of sixty (60) shares of common
stock of Pinacor, Inc. ("Pinacor") owned by Holding Company as of the Grant Date
(the "Common Stock"), representing six percent (6%) of Pinacor's outstanding
Common Stock as of the Grant Date, at an exercise price of *** per share,
subject to the provisions and conditions set forth below. The Option granted
under this Agreement is not intended to be an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended.
Moreover, the Option is not being granted pursuant to any stock option or other
plan. For purposes of this Agreement, MicroAge and Holding Company are referred
to collectively as the "Company."
1. You may purchase all or any of the shares of Common Stock included
in any installment under this Option on or after the date the installment vests
in accordance with the schedule below:
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NUMBER OF SHARES
EXERCISABLE IN DATE
INSTALLMENT INSTALLMENT VESTS
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20 May 2, 1999
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20 May 2, 2000
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20 May 2, 2001
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2. In the event of your death or Disability, any portion of your Option
that is not exercisable shall become fully exercisable. Notwithstanding the
above, you may not exercise the Option at any time after the Expiration Date
hereinafter set forth.
3. The Option may be exercised by making payment in full to the
Treasurer of Holding Company, 0000 Xxxxx XxxxxXxx Xxx, Xxxxx, Xxxxxxx 00000, for
the shares which you so elect
--------------------
*** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for
confidential treatment.
to purchase, at the price per share herein prescribed, whereupon you will
receive a stock certificate representing the shares for which you have made
payment. Holding Company, however, will not be obligated to deliver any stock
unless and until:
(a) there has been compliance with any federal or state laws
or regulations or national securities exchange requirements which
Holding Company may deem applicable; and
(b) all legal matters in connection with the sale and delivery
of the Common Stock have been approved by Holding Company's legal
counsel.
4. Upon the exercise of an Option, the purchase price will be paid in
cash or, in the sole discretion of the Committee, in Common Stock, or a
combination thereof, unless the Committee approves an alternative arrangement,
including a loan to you from the Company for all or a portion of the purchase
price. Each share of Common Stock received by Holding Company in payment of all
or a portion of the purchase price specified in this Option will be valued at
its Fair Market Value on the date of exercise.
5. The Committee may require, in its sole discretion, that you satisfy
the payment of any federal, state, or local tax withholding amount due as a
result of your exercise of an Option by:
(a) requiring you to deliver to Holding Company that number of
shares of Common Stock then owned by you, duly endorsed for transfer to
Holding Company and free and clear of any liens, claims, security
interests or encumbrances whatsoever (based on the Fair Market Value of
the Common Stock on the date such Option is exercised), which are
required to satisfy the payment of such tax withholding amount; or
(b) requiring you to deliver to Holding Company a check, made
payable to the order of Holding Company, in the aggregate amount
required to satisfy the payment of such tax withholding amount.
The right described in (a) or (b) above shall be exercised in a written
notice by the Committee delivered to you as soon as practicable after receipt of
your written exercise of any Option hereunder.
6. The Committee may suspend or postpone the receipt of shares in
payment of the exercise price specified in this Agreement if at any time:
(a) it has knowledge of information concerning Pinacor which
upon disclosure to the public might, in its opinion, materially affect
the market price of the Common Stock;
(b) non-Pinacor events of an extraordinary nature occur which,
in its opinion, may not have been effectively reflected in the market;
or
(c) such suspension or postponement for any other reason
would, in its opinion, be in the best interests of Pinacor or the
Company.
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7. The Committee hereby reserves and will have the right, by written
notice to you, to change the provisions of this Option in any manner that it may
deem necessary or advisable to carry out the purpose of this grant as a result
of, or to comply with, any change in applicable regulations, interpretations or
statutory enactments, provided that any such change will be applicable only to
shares for which payment will not then have been made as herein provided.
8. This Option will terminate upon the earliest to occur of:
(a) May 2, 2008 at 5:00 p.m. Arizona time (the "Expiration
Date");
(b) the date you cease to be employed by the Company or any of
its subsidiaries for any reason other than your retirement, death or
Disability; or
(c) one (1) year after the date you cease to be employed by
the Company or any of its subsidiaries by reason of your retirement,
death or Disability.
9. Anything herein to the contrary notwithstanding, the following
provisions will apply:
(a) If, at any time within the term of this Option or within
one (1) year after termination of employment or within one (1) year
after you exercise any portion of this Option, whichever is the latest,
you engage in any activity in competition with any activity of the
Company, or inimical, contrary, or harmful to the interests of the
Company, including, but not limited to: (i) conduct related to your
employment for which either civil or criminal penalties against you may
be sought, (ii) violation of Company policies, including, without
limitation, the Company's xxxxxxx xxxxxxx policy, (iii) failing to give
the Company at least thirty (30) days' written notice of your intent to
terminate your employment with the Company, (iv) accepting employment
with or serving as a consultant, advisor, or in any other capacity to
an employer that is in competition with or acting against the interests
of the Company, including employing or recruiting any present, former,
or future employee of the Company, (v) disclosing or misusing any
confidential information or material concerning the Company, or (vi)
participating in a hostile takeover attempt of MicroAge, then (A) this
Option shall terminate effective the date upon which you enter into
such activity, unless terminated sooner by operation of another term or
condition of this Agreement, (B) you will return any shares of Common
Stock that you then own if the Company tenders to you, in the exercise
of its discretion, the amount you paid to acquire those shares, and (C)
you will pay the Company an amount equal to the difference between the
amount you paid for said shares and the amount you received for a sale
of any shares that you have disposed of in an arms length transaction.
If you dispose of any shares in other than an arms length transaction,
you will pay to the Company an amount equal to the difference between
the amount you paid for the shares and the Fair Market Value of the
shares.
(b) By accepting this Option, you consent to a deduction from
any amounts the Company owes you from time to time (including amounts
owed to you as wages or other compensation, fringe benefits, or
vacation pay, as well as any other amounts owed to you by the Company),
to the extent of the amounts you owe the Company under clause (a) of
this Section 9. Whether or not the Company elects to make any set-off
in whole or in part, if the Company does not recover by means of
set-off the full amounts you owe it, calculated as set forth above, you
agree to pay immediately the unpaid balance to the Company.
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(c) You may be released from your obligations under clause (a)
of this Section 9 only if the Committee determines, in its sole
discretion, that such action is in the best interests of the Company.
10. The Committee will have the discretion to accelerate the vesting in
whole or in part with respect to any Options that may otherwise not be
exercisable on the date you cease to be employed by the Company or any of its
subsidiaries for any reason other than your death or Disability, upon such terms
and conditions established by the Committee at that time, or upon such other
dates that the Committee will determine in its sole and absolute discretion.
11. In the event of a stock dividend, stock split, combination or
exchange of shares, recapitalization or other change in the capital structure of
Pinacor, any merger, consolidation, spin-off, spin-out, split-off, split-up,
reorganization, partial or complete liquidation, or other distribution of assets
(other than a normal cash dividend), issuance of rights or warrants to purchase
securities or any other corporate transaction or event having an effect similar
to any of the foregoing, the Committee shall make such adjustments in the number
of unpurchased shares subject to this Option and in the exercise price per share
as it may determine to be appropriate and equitable to preserve your
proportionate interest in this Option and to prevent dilution or enlargement of
your rights hereunder. The Committee may, in its discretion, upon the occurrence
of any of the foregoing events, provide in substitution for any or all
outstanding shares subject to this Option such alternative consideration as it
may in good faith determine to be equitable under the circumstances and may
require your surrender of this Option in connection with such substitution.
12. This Option will be exercisable until the Expiration Date as
defined in Section 8(a) and, except as provided in Section 8 above, only by you
during your lifetime and only while you are employed by the Company. Unless
otherwise provided in writing by the Committee in its sole discretion, the
Option shall not be transferable by you, expressly or by operation of law, other
than by will or the laws of descent and distribution. Any other attempted
transfer or other disposition of this Option by you will be void and will
constitute valid grounds for cancellation of this Option by the Company.
13. In the event that a "Disposition" of Pinacor is approved by the
Board of Directors of MicroAge, Holding Company, or Pinacor or a proposed
Disposition is submitted to the shareholders of MicroAge, Holding Company, or
Pinacor for approval, all of the Options will become immediately exercisable,
despite any provisions in Section 1 to the contrary. Additionally, upon a Change
of Control, your Options will automatically become immediately exercisable,
despite any provisions in Section 1 to the contrary.
14. The term "Disposition" as used in Section 13, means and includes
each of the following:
(a) the sale or other transfer of all or substantially all of
the Common Stock of Pinacor or Holding Company to any individual or
entity other than an "Affiliate." For this purpose, an "Affiliate" is
any entity that is part of the same controlled group of corporations as
MicroAge within the meaning of Section 1563 of the Internal Revenue
Code of 1986 (the "Code").
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(b) Pinacor or Holding Company is merged, consolidated, or
otherwise combined with any entity other than an Affiliate of MicroAge.
15. The term "Change of Control" means and includes each of the
following:
(a) A change of control of MicroAge of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of the
Securities Exchange Act of 1934, as amended ("1934 Act"), regardless of
whether MicroAge is subject to such reporting requirement;
(b) A change of control of MicroAge through a transaction or
series of transactions, such that any person (as that term is used in
Section 13 and 14(d)(2) of the 1934 Act), excluding affiliates of
MicroAge as of the Grant Date, is or becomes the beneficial owner (as
that term is used in Section 13(d) of the 1934 Act), directly or
indirectly, of securities of MicroAge representing twenty percent (20%)
or more of the combined voting power of MicroAge's then outstanding
securities;
(c) The individuals who, as of the Grant Date, constitute the
Board of Directors of MicroAge (the "Incumbent Board") cease for any
reason to constitute at least eighty percent (80%) of the Board of
Directors of MicroAge; provided, however, that any person becoming a
member of the Board of Directors of MicroAge subsequent to the Grant
Date whose election, or nomination for election by MicroAge's
stockholders, was approved by a vote of at least eighty percent (80%)
of the members then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest
relating to the election of directors of MicroAge, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the 1934 Act or
any successor provision thereto) shall be, for purposes of this
paragraph, considered as though such person were a member of the
Incumbent Board;
(d) Any consolidation or liquidation of MicroAge in which
MicroAge is not the continuing or surviving corporation or pursuant to
which common stock of MicroAge would be converted into cash, securities
or other property, other than a merger of MicroAge in which the holders
of the shares of MicroAge's common stock immediately before the merger
have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger;
(e) The shareholders of MicroAge approve any plan or proposal
for the liquidation or dissolution of MicroAge; or
(f) Substantially all of the assets of MicroAge are sold or
otherwise transferred to parties that are not Affiliates (as such term
is defined in Section 14(a) above).
16. The term "Disability" shall mean any illness or other physical or
mental condition which renders you incapable of performing your customary and
usual duties for the Company, or any medically determinable illness or other
physical or mental condition resulting from a bodily injury, disease or mental
disorder which in the judgment of the Committee is permanent and continuous in
nature. The Committee may require such medical or other evidence as it deems
necessary to judge the nature and permanency of your condition.
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17. The term "Fair Market Value" with respect to the Common Stock shall
mean as of any given date, the fair market value of the Common Stock determined
by such methods or procedures as may be established from time to time by the
Committee.
18. This Agreement shall be governed in all respects by the laws of the
state of Delaware.
19. No Option gives you any of the rights of a shareholder of Pinacor
unless and until shares of Common Stock are in fact issued to you.
20. The Agreement is intended to be an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to you pursuant to an
Option, nothing contained in this Agreement shall give you any rights that are
greater than those of a general creditor of the Company or any subsidiary.
21. No payment under this Agreement shall be taken into account in
determining any benefits under any pension, retirement, savings, profit sharing,
group insurance, welfare or other benefit plan of the Company or any subsidiary.
22. The expenses of administering this Agreement shall be borne by
MicroAge.
23. With respect to any person who is, on the relevant date, obligated
to file reports under Section 16 of the 1934 Act, transactions pursuant to this
Agreement are intended to comply with all applicable conditions of Rule 16b-3 or
its successors under the 1934 Act. To the extent any provision of this Agreement
or action by the Committee fails to so comply, it shall be void to the extent
permitted by law and voidable as deemed advisable by the Committee.
24. Neither the Company nor Pinacor shall be under any obligation to
register under the Securities Act of 1933, as amended (the "1933 Act"), any of
the shares of Common Stock. If the shares may in certain circumstances be exempt
from registration under the 1933 Act, the Committee may restrict the transfer of
such shares in such manner as it deems advisable to ensure the availability of
any such exemption.
25. The Company shall not be required to deliver any shares of Common
Stock pursuant to the exercise of all or any part of the Option if, in the
opinion of counsel for MicroAge, such issuance would violate the Securities Act
of 1933 or any other applicable federal or state securities or other laws or
regulations. The Board of Directors of MicroAge may require that you, prior to
the issuance of any such shares pursuant to exercise of the Option, sign and
deliver to MicroAge a written statement ("Investment Letter") stating (a) that
you are purchasing the shares for investment and not with a view to the sale or
distribution thereof; (b) that you will not sell any shares received upon
exercise of the Option or any other shares of Pinacor that you may then own or
thereafter acquire except either (i) through a broker on a national securities
exchange or (ii) with the prior written approval of MicroAge; and (c) containing
such other terms and conditions as counsel for MicroAge may reasonably require
to assure compliance with the Securities Act of 1933 or other applicable federal
or state securities laws and regulations. Such Investment Letter shall be in
form and content acceptable to the Board of Directors of MicroAge in its sole
discretion.
26. This Agreement may be amended only by a written agreement executed
by MicroAge, Holding Company, and you.
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27. This Agreement shall be effective as of May 2, 1998.
Please acknowledge receipt of this Option and acceptance of its terms by
completing the bottom portion of both letters, then return one of the letters to
Xxxxx Xxxxx in the Legal Department.
MICROAGE, INC. I hereby acknowledge receipt of the
foregoing Option and accept its terms.
By: /s/ Xxxxxxx X. Xxxxxxxxx Signature: /s/ Xxxxxxx X. XxXxxxxx
--------------------------- --------------------------
Xxxxxxx X. Xxxxxxxxx Xxxxxxx X. XxXxxxxx
Chairman, Compensation Social Security No.___________
Committee
MCCI Holding Company
By: /s/ Xxxxxxx X. XxXxxxxx
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Xxxxxxx X. XxXxxxxx
Chairman of the Board and
President
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