AMENDMENT TO STOCK OPTION AGREEMENTS
THIS AMENDMENT TO STOCK OPTION AGREEMENTS is made this 20th
day of November, 1996 by and between THE XXXXX CORPORATION
("Xxxxx") and SYDNEY X. XXXXX ("Grantee").
RECITAL
Xxxxx has granted Grantee stock options (the "Outstanding
Options") for an aggregate of 125,231 shares (after stock
dividends) of common stock (the "Xxxxx Shares"), consisting of
30,388 Xxxxx Shares subject to an option originally granted on
April 27, 1989 (the "1989 Option"), 12,155 Xxxxx Shares subject to
an option originally granted on October 18, 1991 (the "1991
Option") and 82,688 Xxxxx Shares subject to an option originally
granted on April 2, 1995 (the "1995 Option").
AGREEMENTS
In consideration of the recital above and for good and
valuable consideration, the receipt and sufficiency of which are
hereby knowledged, and subject to the amendments which follow, the
parties agree as follows:
1. Amendment to Outstanding Options.
(a) The following paragraph shall be added to the 1989
Option and 1991 Option:
The Company agrees to maintain effectiveness of the Form S-8
registration statement currently in effect covering the exercise of
the stock options and to permit delivery by a broker of the
proceeds from the sale of the underlying stock to pay the option
exercise price and satisfy the Company's tax withholding
obligations. In connection with any such option exercise and sale
of stock, the Company agrees to execute any agreements, documents
and certificates requested by Grantee or his broker which are
reasonably necessary or desirable to effectuate the exercise and
sale. The Company agrees to deliver the underlying stock
certificates upon exercise of the stock options, free and clear of
any restrictive legends, registered as designated by Grantee, no
later than the third business day after Grantee's notice of
exercise. The Company further agrees that in connection with the
proposed spinoff currently
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contemplated by Xxxxx, the adjustment to stock options held by
Grantee will be in accordance with the adjustments set forth in the
proxy statement filed with the Securities and Exchange Commission
on November 22, 1996. The stock issuable upon exercise of the
stock option shall be entitled to the Registration Rights attached
hereto as Schedule A.
(b) The following paragraph shall be added to the 1995
Option:
Xxxxx agrees to maintain effectiveness of the Form S-8
registration statement currently in effect covering the exercise of
the stock options and to permit delivery by a broker of the
proceeds form the sale of the underlying stock to pay the option
exercise price and satisfy Diana's tax withholding obligations. In
connection with any such option exercise and sale of stock, Xxxxx
agrees to execute any agreements, documents and certificates
requested by Grantee or his broker which are reasonably necessary
or desirable to effectuate the exercise and sale. Xxxxx agrees to
deliver the underlying stock certificates upon exercise of the
stock options, free and clear of any restrictive legends,
registered as designated by Grantee, no later than the third
business day after Grantee's notice of exercise. The Company
further agrees that in connection with the proposed spinoff
currently contemplated by Xxxxx, the adjustment to stock options
held by Grantee will be in accordance with the adjustments set
forth in the proxy statement filed with the Securities and Exchange
Commission on November 22, 1996. The stock issuable upon exercise
of the stock option shall be entitled to the Registration Rights
attached hereto as Schedule A.
(c) All stock issuable upon exercise of stock options
held by Grantee will be entitled to the registration rights
attached hereto as Schedule A which rights shall supersede all
previously granted registration rights. All of such previous
registration rights will be of no further force and effect.
2. Representations, Warranties and Covenants. Xxxxx
represents and warrants to Grantee and agrees, as follows:
(a) A Form S-8 Registration Statement is currently in
effect covering the sale of stock to Grantee upon exercise of the
Outstanding Options under the 1989 Option, the 1991 Option and the
1995 Option.
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(b) Xxxxx currently satisfies the Registrant
Requirements to file a Form S-3 Registration Statement with the
Securities and Exchange Commission and will take all actions
necessary to continue to meet such requirements at all times while
Grantee holds any options, or common stock received upon exercise
of any options, under the 1989 Option, the 1991 Option or the 1995
Option.
(c) Xxxxx has taken all corporate and other action
necessary to amend the 1989 Option, 1991 Option and 1995 Option to
conform with the provisions of this Amendment and to permit
exercise of the Outstanding Options until December 31, 1997.
3. Construction. If any provision of this Amendment to
Stock Option Agreements conflicts with the provisions of any
Outstanding Options or of Diana's 1986 Nonqualified Stock Option
Plan, the terms of this Amendment to Stock Option Agreements shall
control.
Executed as of the date first above written.
THE XXXXX CORPORATION
BY /s/ Xxxxxxx X. Xxxxxx
President
GRANTEE:
/s/ Sydney X. Xxxxx
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SCHEDULE A
AMENDMENT TO STOCK OPTION
REGISTRATION RIGHTS
1. Initial Registration. Promptly (but in no event later
than 20 days after request from Grantee submitted at any time on or
after March 1, 1997, Xxxxx shall file with the Securities and
Exchange Commission (the "Commission") and use its reasonable best
efforts to cause to become effective a Registration Statement or
post-effective amendment (the "Registration Statement") on Form S-3
or Form S-8, in Diana's sole discretion, (or if Form S-3 or Form
S-8 is unavailable, a proper form to be selected by Xxxxx with the
consent of Grantee, which consent shall not be unreasonably
withheld, under and complying with the Securities Act of 1933 as
amended (the "Securities Act")) with respect to the offering by
Grantee of the Xxxxx Shares. Xxxxx shall keep the Registration
Statement effective until the earlier of the date on which Grantee
has transferred all of the Xxxxx Shares or the date on which
Grantee could freely sell all of the Xxxxx Shares which he then
holds or has the option to purchase without any restriction under
applicable securities laws. Grantee shall not be entitled to sell
his shares in an underwritten transaction. Notwithstanding the
foregoing, Grantee shall notify Xxxxx of, and obtain confirmation
from Xxxxx of the absence of any Blackout Condition prior to, any
offers or sales by Grantee under the Registration Statement of
Xxxxx Shares. If Xxxxx determines, in its reasonable good faith
judgment based on an opinion of its attorneys, that because of the
existence of, or in anticipation of, any material acquisition or
financing activity not then disclosed to the public, the
unavailability of any required financial statements as the result
of an actual, or proposed, acquisition or disposition, or the
existence of any other material non-public information (a "Blackout
Condition"), it would be materially adverse to Xxxxx for the
registration of the Xxxxx Shares to be maintained effective, or to
be filed and become effective, or for the Xxxxx Shares to be sold
under the Registration Statement, then Xxxxx shall be entitled,
until such Blackout Condition no longer exists, or is terminated as
provided herein, to (i) if required by law, cause the Registration
Statement to be withdrawn and the effectiveness of the Registration
Statement to be delayed or terminated; (ii) direct that Grantee not
make any public sales of Xxxxx Shares under the Registration
Statement; or (iii) in the event the Registration Statement has not
yet been filed, to delay or not file the Registration Statement.
Xxxxx shall have one business day after the receipt of notice from
Grantee to declare the existence of a Blackout Condition. Diana's
response shall be communicated via personal delivery, telecopy or
overnight courier. If no timely response is received by Grantee
from Xxxxx, Xxxxx shall be
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deemed to have permitted such sale. In the event Xxxxx causes the
Registration Statement to be withdrawn, delayed or terminated
pursuant to clause (i) or clause (iii), of the preceding sentence
as a result of a Blackout Condition, Xxxxx shall file and use its
reasonable best efforts to cause the Registration Statement to
become effective promptly after a Blackout Condition ceases to
exist. In all other cases, Xxxxx shall use its reasonable best
efforts to cause the Blackout Condition to be terminated at the
earliest date possible. For purposes hereof, a Blackout Condition
other than the unavailability of any required financial statements
shall be deemed to terminate on the earlier of (i) the date such
Blackout Condition ceases to exist or (ii) 30 days after Diana's
initial determination that the Blackout Condition existed, and a
Blackout Condition which is the unavailability of any required
financial statements as the result of an actual or proposed
acquisition shall be deemed to terminate on the earlier of (i) the
date such Blackout Condition ceases to exist or (ii) 75 days after
the closing date of such acquisition or disposition. Grantee shall
not make any offers or sales of Xxxxx Shares to the public under
the Registration Statement until the Blackout Condition no longer
exists or is terminated and shall comply with any prospectus
delivery requirements in connection with Grantee's offer and sale
of Xxxxx Shares under the Registration Statement. Grantee shall
offer and sell the Xxxxx Shares only in accordance with the plan of
distribution described in the Registration Statement.
2. Registration Procedures. Promptly after Grantee's
request for registration hereunder, Xxxxx shall:
(a) Prepare and file with the Commission the
Registration Statement, and use its reasonable best efforts to
cause such Registration Statement to become and remain effective
all as set forth in paragraph 1;
(b) Prepare and file with the Commission such amendments
to such Registration Statement and supplements to the prospectus
contained therein as may be necessary to keep such Registration
Statement effective for such period as may be reasonably necessary
to effect the sale of such securities;
(c) [Reserved];
(d) Use its best efforts to register or qualify the
securities covered by such Registration Statement under such state
securities or blue sky laws of such jurisdictions as Grantee may
reasonably request in writing except that Xxxxx shall not for any
purpose be required to execute a general consent to service or
process or to qualify to do business as a foreign corporation in
any jurisdiction wherein it is not so qualified;
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(e) Notify Grantee promptly after it shall receive
notice thereof, of the time when such Registration Statement has
become effective or a supplement to any prospectus forming a part
of such Registration Statement has been filed;
(f) Notify Grantee promptly of any request by the
Commission for the amending or supplementing of such Registration
Statement or prospectus or for additional information;
(g) Prepare and file with the Commission, promptly upon
the request of Grantee, any amendments or supplements to such
Registration Statement or prospectus which, in the opinion of
counsel for Grantee, is required under the Securities Act or the
rules and regulations thereunder in connection with the
distribution of the Xxxxx Shares of Grantee, including any
amendments or supplements requested by Grantee related to a change
in the plan of distribution of securities by Grantee;
(h) Prepare and promptly file with the Commission and
promptly notify Grantee of the filing of such amendment or
supplement to such Registration Statement or prospectus as may be
necessary to correct any statements or omissions if, at the time
when a prospectus relating to such securities is required to be
delivered under the Securities Act, any event shall have occurred
as the result of which any such prospectus or any other prospectus
as then in effect would include an untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they
were made, not misleading;
(i) Advise Grantee promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop
order by the Commission suspending the effectiveness of such
Registration Statement or the initiation or threatening of any
proceeding for that purpose and promptly use its reasonable best
efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued;
(j) Not file any amendment or supplement to such
Registration Statement or prospectus to which Grantee shall have
reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the
requirements of the Securities Act or the rules and regulations
thereunder, after having been furnished with a copy thereof at
least five business days prior to the filing thereof, unless in the
opinion of counsel for Xxxxx the filing of such amendment or
supplement is reasonably necessary to
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protect Xxxxx from any liabilities under any applicable federal or
state law and such filing will not violate applicable law; and
3. Expenses. With respect to the registration of the Xxxxx
Shares pursuant to the Registration Statement, Xxxxx shall bear the
following fees, costs and expenses: all registration and filing
fees, printing expenses, fees and disbursements of counsel and
accountants for Xxxxx, all internal Xxxxx expenses, all legal fees
and disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which the
securities to be offered are to be registered or qualified, and the
premiums and other costs of policies of insurance against liability
(if any) arising out of such public offering. Fees and
disbursements of counsel and accountants for Grantee, underwriting
discounts and commissions and transfer taxes relating to Xxxxx
Shares and any other expenses incurred by Grantee not expressly
included above, shall be borne by Grantee.
4. Indemnification. Pursuant to the registration of the
Xxxxx Shares hereunder:
(a) Xxxxx will indemnify and hold harmless Grantee and
any underwriter (as defined in the Securities Act) for Grantee and
each person, if any, who controls Grantee or such underwriter
within the meaning of the Securities Act, from and against, and
will reimburse Grantee and each such underwriter and controlling
person with respect to, any and all loss, damage, liability, cost
and expense to which Grantee or any such underwriter or controlling
person may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement, any
prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading;
provided, however, that Xxxxx will not be liable in any such case
to the extent that any such loss, damage, liability, cost or
expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by Grantee, such underwriter
or such controlling person in writing specifically for use in the
preparation thereof; provided, however, that the foregoing
indemnity with respect to any preliminary prospectus shall not
inure to the benefit of any underwriter from whom the person
asserting any such loss, damage, liability, cost or expense
purchased Xxxxx Shares, or any persons controlling such
underwriter, if a copy of the prospectus (as then amended or
supplemented if Xxxxx shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of
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such underwriter to such person at or prior to the written
confirmation of the sale of Xxxxx Shares to such person and if the
prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, damage, liability, cost or
expense.
(b) Grantee will indemnify and hold harmless Xxxxx, its
directors and officers, any controlling person and any underwriter
from and against, and will reimburse Xxxxx, its directors and
officers, any controlling person and any underwriter with respect
to, any and all loss, damage, liability, cost or expense to which
Xxxxx or any controlling person and/or any underwriter may become
subject under the Securities Act or otherwise, insofar as such
losses damages, liabilities, costs or expenses are caused by any
untrue or alleged untrue statement of any material fact contained
in such Registration Statement, any prospectus contained therein or
any amendment or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they
were made, not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was so made in reliance upon
written information furnished by Grantee specifically for use in
the preparation thereof.
(c) Promptly after receipt by an indemnified party
pursuant to the provisions of paragraph (a) or (b) of this
paragraph 4 of notice of the commencement of any action involving
the subject matter of the foregoing indemnity provisions such
indemnified party will, if a claim thereof is to be made against
the indemnifying party pursuant to the provisions of said paragraph
(a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the
indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than hereunder nor will
it relieve the indemnifying party from liability hereunder except
to the extent the indemnifying party is prejudiced by the failure
to so notify and then only to the extent of the prejudice caused by
the delay in notice. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right
to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such
indemnified party, provided, however, if the defendants in any
action include both the indemnified party and the indemnifying
party and if there is a conflict of interest which would prevent
counsel for the indemnifying party from also representing the
indemnified party, the indemnified party or parties shall have the
right to select separate counsel to participate in the defense of
such action
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on behalf of such indemnified party or parties, at the indemnifying
party's cost, but in no event shall the indemnifying parties be
responsible for more than one such additional firm for all
indemnified parties unless the rights of more than one indemnified
party are adverse. After notice from the indemnifying party to
such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such
indemnified party pursuant to the provisions of said paragraph (a)
or (b) for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless (i) the indemnified party
shall have employed counsel in accordance with the proviso of the
preceding sentence, (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after the notice of
the commencement of the action, or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at
the expense of the indemnifying party.
(d) If the indemnification provided for in this
paragraph 4 is unavailable or insufficient to hold harmless an
indemnified party under paragraph (a) or (b) above, then each
indemnifying party shall contribute to the amount paid or payable
to such indemnified party as a result of the losses, claims,
damages or liabilities referred to in paragraph (a) or (b) above,
in such proportion as is appropriate to reflect the relative fault
of Xxxxx, Grantee and the underwriters in connection with the
statements or omissions that resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by Xxxxx, Grantee or the underwriters and the parties' relevant
intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. Xxxxx, Grantee and
the underwriters agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined
by pro rata allocation (even if the underwriters were treated as
one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations
referred to in the first and second sentence of this paragraph (d).
The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of
this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending against any action or
claim which is the subject of this paragraph (d). No person guilty
of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
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5. Grantee Cooperation. Xxxxx may require Grantee to
xxxxxxx Xxxxx in a timely manner such information with respect to
Grantee and the distribution of Xxxxx Shares as Xxxxx may from time
to time reasonably request. In connection with the registration of
Xxxxx Shares, Grantee will (a) cooperate with Xxxxx, if any, in
preparing the Registration Statement, (b) promptly supply Xxxxx
with all information and documents as the underwriter or Xxxxx may
deem reasonably necessary, (c) discontinue sales of Xxxxx Shares
under the Registration Statement upon notification of any stop
order or suspension of the effectiveness of the Registration
Statement, (d) notify Xxxxx immediately upon any change in the plan
of distribution or other information concerning Grantee described
in the prospectus, (e) discontinue use of any prospectus following
notification by Xxxxx that the prospectus must be amended or
supplemented, (f) comply with the applicable requirements of Rules
10b-5 and 10b-6 under the Securities Exchange Act of 1934, as
amended, (g) not use any prospectus other than the most recent
prospectus included in the Registration Statement, (h) dispose of
the Xxxxx shares only in accordance with the Plan of Distribution
described in the Registration Statement and so certify to Xxxxx
upon request and (i) otherwise comply with the prospectus delivery
requirements under the Securities Act.
6. Assignment. Grantee's rights under this agreement may be
assigned, in whole or in part, to any subsequent transferee of the
Xxxxx Shares, including, without limitation, any pledgee of such
Xxxxx Shares.
7. Notices. All notices hereunder shall be in writing and
shall be deemed to have been duly given upon delivery if delivered
personally, 24 hours after transmission by telecopy with
answerback, 12 p.m. (noon) of the next business day after being
sent via overnight courier, and five days after being mailed,
certified return receipt requested. Actual notice, however given,
shall always be effective.
8. Defined Terms. The term "Grantee" shall refer to Sydney
X. Xxxxx. The term "Xxxxx" shall refer to The Xxxxx Corporation.
The term "Xxxxx Shares" shall refer to the shares of common stock
Xxxxx issued upon exercise of the stock options to which this
Schedule A relates.
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