EXHIBIT 10.3
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STOCK OPTION AGREEMENT
(NON-QUALIFIED STOCK OPTION)
THIS AGREEMENT is made to be effective as of July 2, 2001, by
and between X.X. Xxxxx Corporation, an Ohio corporation (the "Company") and
Xxxxxxx XxXxxx (the "Optionee").
WITNESSETH:
WHEREAS, the Compensation Committee (the "Compensation
Committee") of the Board of Directors (the "Board") of the Company has
determined that an option to acquire shares of common stock, $1.00 par value per
share, 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. DEFINED TERMS. When used in this Agreement, the
following capitalized terms have the respective meanings set forth in this
Section:
(a) ACT: The Securities Exchange Act of 1934, as amended,
or any successor thereto.
(b) ADMINISTRATOR: The Board or the Compensation
Committee if the Board has delegated to the
Compensation Committee such responsibility.
(c) APPLICABLE LAWS: the requirements relating to the
administration of stock option plans under U.S. state
corporate laws, U.S. federal and state securities
laws, the Code, any stock exchange or quotation
system on which the common shares of the Company are
listed or quoted and the applicable laws of any
foreign country or jurisdiction where Options are
granted under the Plan.
(d) CHANGE IN CONTROL: (i) the sale or disposition, in
one or a series of related transactions, of all or
substantially all of the assets of the Company to any
"person" or "group" (as such terms are defined in
Sections 13(d)(3) and 14(d)(2) of the Act) or (ii)
any person or group is or becomes the
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"beneficial owner" (as such term is defined in Rule
13d-3 under the Act), directly or indirectly, of more
than 50% of the total voting power of the voting
stock of the Company, including by way of merger,
consolidation or otherwise.
(e) CODE: The Internal Revenue Code of 1986, as amended,
or any successor thereto.
(f) FAIR MARKET VALUE: On a given date, the closing sale
price for the Company's common shares as reported on
any securities exchange on which the Company's common
shares may be listed on such date or, if no such sale
occurred on that date, then for the next preceding
date on which a sale was made. If the Company's
common shares should be no longer listed on a
securities exchange, the fair market value shall be
determined by the Administrator.
2. GRANT OF OPTION. Subject to adjustment pursuant to
Section 4 of this Agreement, the Company hereby grants to the Optionee an option
(the "Option") to purchase 33,681 common shares, par value $1.00 per share, of
the Company (the "Shares"). The Option is not intended to qualify as an
incentive stock option under Section 422 of the Code.
3. 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 $4.65 per Share, subject to adjustment as provided in Section 4
of this Agreement.
(b) EXERCISE OF THE OPTION. Except as otherwise
provided in this Agreement, the Option may be exercised by the Optionee as
follows:
(i) The Option shall vest and become exercisable
six (6) months from the Option grant date. The portion of the Option which has
become vested and exercisable pursuant to this Section 3 is hereinafter referred
to as the "Vested Portion."
(ii) In the event of a Change of Control, any
portion of the Option that is not then exercisable shall vest and become
exercisable prior to such Change in Control.
The grant of the Option shall not confer upon the Optionee any
right to continue in any employment or consulting
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relationship with the Company nor limit in any way the right of the Company to
terminate any such relationship at any time.
(c) METHOD OF EXERCISE OF OPTION. At any time prior
to the Expiration Date (as defined in Section 6), the Optionee may exercise all
or a portion of the Option by delivering written notice of exercise to the
Company, together with payment in full for the Shares in an amount equal to the
product of the Option Price multiplied by the number of Shares to be acquired.
Such payment may be made in cash or its equivalent (e.g., by check) or in
previously issued and currently held shares of the Company, which shares shall
be valued at Fair Market Value on the date of exercise.
(d) TAX WITHHOLDING. The Company shall be entitled to
withhold (or secure payment from the Optionee in lieu of withholding) the amount
of any withholding or other payment required of the Company under the tax
withholding provisions of the Code, any state's income tax act or any other
applicable law with respect to the exercise of the Option, and the Company may
defer issuance of the Shares unless indemnified to its satisfaction with respect
to payment of such withholding or other tax.
4. ADJUSTMENTS AND CHANGES IN THE SHARES.
The following provisions shall apply to the Option:
(a) GENERALLY. In the event of any change in the
outstanding shares of common stock of the Company by reason of any share
dividend or split, reorganization, recapitalization, merger, consolidation,
spin-off, combination or exchange of shares or other corporate exchange, or any
distribution to holders of shares of the Company other than regular cash
dividends or any transaction similar to the foregoing, the Administrator in its
sole discretion and without liability to any person may make such substitution
or adjustment, if any, as it deems to be equitable, as to (i) the number or kind
of shares or other securities issuable pursuant to this Option and (ii) the
Option Price and/or any other affected terms of this Option.
(b) CHANGE IN CONTROL. In the event of a Change in
Control, the Administrator may, but shall not be obligated to, make provision
for a cash payment to the Optionee in consideration for the cancellation of the
Option which shall equal the excess, if any, of the Fair Market Value of the
Shares subject to the Option over the Option Price of the Option.
(c) NO RESTRICTIONS ON COMPANY. The grant of the
Option shall not affect in any way the right of the Company to
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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.
5. NON-ASSIGNABILITY OF OPTION. Unless otherwise
permitted by the Administrator, 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.
6. EXERCISE AFTER TERMINATION OF EMPLOYMENT. Subject to
the provisions of this Agreement, the Optionee may exercise all or any part of
the Vested Portion of this Option at any time prior to the earliest to occur of:
(a) one (1) year following the date of Optionee's
death; or
(b) two (2) years following the date of this
Agreement.
Upon the earliest to occur of any of the events described in
clauses (a) or (b) above (the "Expiration Date"), the Option shall terminate,
and Optionee shall have no further rights under this Agreement.
7. 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 Shares upon any exercise of
the Option until completion of any stock exchange listing or registration or
other qualification of such 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 Shares in compliance with applicable law.
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.
8. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued
pursuant to the exercise of the Option unless the exercise of such Option and
the issuance and delivery of such Shares shall
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comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(b) INVESTMENT REPRESENTATIONS. Optionee acknowledges
that the Shares have not been registered under the Securities Act of 1933 or
under the securities laws of any state. Consequently, as a condition to the
exercise of the Option, the Administrator may require the person exercising the
Option to represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required.
9. BUY OUT OF OPTION GAINS. At any time after the date
hereof, the Administrator shall have the right to elect, in its sole discretion
and without the consent of the Optionee, to cancel the Option and pay to the
Optionee the excess of the Fair Market Value of the Shares over the Option Price
at the date the Administrator provides written notice (the "Buy Out Notice") of
the intention to exercise the right. A buy out pursuant to this Section shall be
effected by the Company as promptly as possible after the date of the Buy Out
Notice. Payment of the buy out amount may be made in cash, in common shares of
the Company, or partly in cash and partly in common shares as the Administrator
deems advisable. To the extent payment is made in common shares, the number of
shares shall be determined by dividing the amount of the payment to be made by
the Fair Market Value of a common share at the date of the Buy Out Notice.
Payment of such buy out amount shall be made net of any applicable foreign,
federal (including Federal Insurance Contributions Act), state and local
withholding taxes.
10. RIGHTS OF OPTIONEE. The Optionee shall have no rights
as a stockholder of the Company with respect to any Shares of the Company
covered by the Option until (a) the Optionee has given written notice of
exercise of the Option, (b) the Optionee has paid in full for such Shares and,
if applicable, satisfied any other conditions imposed by the Administrator and
(c) the date of issuance of a certificate to him evidencing such Shares.
11. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Ohio without regard to
conflict of law provisions.
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
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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 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. 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 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.
16. 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.
17. TERMINATION OF ALL OTHER STOCK OPTIONS. The Optionee
agrees that any and all stock options previously granted to him by the Company
(other than this Option and the stock option for 5,000 shares granted March 23,
2000) which are outstanding on the date hereof and any rights that he may have
to receive the grant of a stock option are hereby terminated.
Optionee has reviewed this Agreement in its entirety, has had
an opportunity to obtain the advice of counsel prior to executing this Agreement
and fully understands all provisions of this Agreement. Optionee hereby agrees
to accept as binding,
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conclusive and final all decisions or interpretations of the Administrator upon
any questions arising under this Agreement.
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:/s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
Chairman and Chief Executive Officer
OPTIONEE:
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/s/ Xxxxxxx Xxxxxx
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Xxxxxxx XxXxxx
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
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Street Address
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
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City, State, Zip Code
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
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Social Security Number
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