EXHIBIT 99.7
NON-QUALIFIED STOCK OPTION AGREEMENT
This NON-QUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is entered
into as of March 15, 2005 by and between VERSO TECHNOLOGIES, INC., a Minnesota
corporation (the "Company"), and Xxxxx Xxxxx ("Optionee"), and effective as of
November 3, 2004 (the "Date of Grant").
WITNESSETH
WHEREAS, the Board of Directors of the Company (the "Board") desires to
give Optionee an inducement to acquire a proprietary interest in the Company and
an added incentive to advance the interests of the Company by granting to
Optionee an option to purchase shares of common stock of the Company, par value
$.01 per share (the "Common Stock"); and
WHEREAS, Board desires to memorialize the grant of the Option (as
defined below) to the Optionee made on the Date of Grant;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, the parties hereto hereby agree as follows:
I. DEFINITIONS.
For purposes of this Agreement, the following terms will have the
meanings set forth below, unless the context clearly otherwise requires:
"Change of Control" means:
(i) the sale, lease, exchange or other transfer, directly
or indirectly, of substantially all of the assets of the Company (in one
transaction or in a series of related transactions) to a person or entity that
is not controlled by the Company;
(ii) the approval by the shareholders of the Company of
any plan or proposal for the liquidation or dissolution of the Company;
(iii) any person becomes after the Date of Grant a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act ), directly
or indirectly, of (a) 20% or more, but less than 50%, of the combined voting
power of the Company's outstanding securities ordinarily having the right to
vote at elections of directors, unless the transaction resulting in such
ownership has been approved in advance by the Incumbent Directors, or (b) 50% or
more of the combined voting power of the Company's outstanding securities
ordinarily having the right to vote at elections of directors (regardless of any
approval by the Incumbent Directors);
(iv) a merger or consolidation to which the Company is a
party if the shareholders of the Company immediately prior to effective date of
such merger or consolidation have "beneficial ownership" (as defined in Rule
13d-3 under the Exchange Act), immediately
following the effective date of such merger or consolidation, of securities of
the surviving corporation representing (a) more than 50%, but less than 80%, of
the combined voting power of the surviving corporation's then outstanding
securities ordinarily having the right to vote at elections of directors, unless
such merger or consolidation has been approved in advance by the Incumbent
Directors, or (b) 50% or less of the combined voting power of the surviving
corporation's then outstanding securities ordinarily having the right to vote at
elections of directors (regardless of any approval by the Incumbent Directors);
(v) the Incumbent Directors cease for any reason to
constitute at least a majority of the Board; or
(vi) any other change in control of the Company of a
nature that would be required to be reported pursuant to Section 13 or 15(d) of
the Exchange Act, whether or not the Company is then subject to such reporting
requirements.
"Code" means the Internal Revenue Code of 1986, as amended.
"Disability" means the disability of Optionee such as would entitle
Optionee to receive disability income benefits pursuant to the long-term
disability plan of the Company or Subsidiary then covering Optionee or, if no
such plan exists or is applicable to Optionee, the permanent and total
disability of Optionee within the meaning of Section 22(e)(3) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Incumbent Directors" means any individuals who are members of the
Board on the Date of Grant and any individual who subsequently becomes a member
of the Board whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the Incumbent
Directors (either by specific vote or by approval of the Company's proxy
statement in which such individual is named as a nominee for director without
objection to such nomination).
"Retirement" means termination of employment or service pursuant to and
in accordance with the regular (or, if approved by the Board, early)
retirement/pension plan or practice of the Company or Subsidiary then covering
Optionee, provided that if Optionee is not covered by any such plan or practice,
Optionee will be deemed to be covered by the Company's plan or practice for
purposes of this determination.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means any entity that is directly or indirectly controlled
by the Company or any entity in which the Company has a significant equity
interest, as determined by the Board.
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II. GRANT OF OPTION.
A. Option and Option Shares. The Company hereby grants to
Optionee the right, privilege and option (the "Option") to purchase 250,000
shares (the "Option Shares") of Common Stock according to the terms and subject
to the conditions hereinafter set forth. The Option is a "non-qualified stock
option," and the Option is not intended to be an "incentive stock option" within
the meaning of Section 422 of the Code.
B. Adjustment of Option. In the event of any reorganization,
merger, consolidation, recapitalization, reclassification, stock dividend, stock
split, rights offering, divestiture or extraordinary dividend (including a
spin-off) or any other change in the corporate structure or shares of the
Company, the Board (or, if the Company is not the surviving corporation in any
such transaction, the board of directors of the surviving corporation) will make
appropriate adjustment (which determination will be conclusive) as to, in order
to prevent dilution or enlargement of the rights of Optionee hereunder, (i) the
number and kind of securities or other property (including cash) issuable upon
exercise of the Option, and (ii) the exercise price of the Option.
III. OPTION EXERCISE PRICE.
The exercise price to be paid by Optionee upon exercise of the Option
or any portion thereof shall be $0.75 per Option Share purchased (the "Exercise
Price").
IV. EXERCISABILITY AND EXPIRATION OF OPTION.
A. Exercisability.
(i) The Option shall vest and first become exercisable
with respect to 25% of the Option Shares on each of November 3, 2005, November
3, 2006, November 3, 2007 and November 3, 2008, and once vested, shall be
exercisable any time thereafter until the Expiration Date (as defined below).
(ii) Notwithstanding anything herein to the contrary, upon
a Change of Control the Option will become immediately exercisable in full and
will remain exercisable through the Expiration Date, regardless of whether the
Optionee to whom such Options have been granted remains in the employ or service
of the Company or any Subsidiary.
B. Expiration. In no event shall the Option be exercisable after,
and this Option shall become void and expire as to all unexercised Option Shares
at, 11:59 p.m. Eastern Time on November 3, 2014 (the "Expiration Date"), unless
the Option shall be sooner terminated as provided herein.
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C. Termination of Employment.
(i) In the event Optionee's employment with the Company
and all Subsidiaries is terminated by reason of death, Disability or Retirement,
the Option will remain exercisable for a period of one (1) year after such
termination (but in no event may the Option be exercised after the Expiration
Date), at which time the Option shall terminate to the extent not then
exercised.
(ii) In the event Optionee's employment with the Company
and all Subsidiaries is terminated for any reason other than death, Disability
or Retirement, or Optionee is in the employ or service of a Subsidiary and the
Subsidiary ceases to be a Subsidiary of the Company (unless Optionee continues
in the employ or service of the Company or another Subsidiary), all rights of
Optionee hereunder will immediately terminate without notice of any kind, and
the Option will not thereafter be exercisable; provided, however, that (a) if
such termination is due to any reason other than termination by the Company or
any Subsidiary for "cause," the Option will remain exercisable for a period of
three (3) months after such termination (but in no event may the Option be
exercised after the Expiration Date), and (b) if such termination is due to
termination by the Company or any Subsidiary for "cause", the Option will remain
exercisable as of such termination for a period of one (1) month after such
termination (but in no event may the Option be exercised after the Expiration
Date.
(iii) For purposes of this Section IV.C., "cause" (as
determined by the Board) will be as defined in any employment or other agreement
or policy applicable to Optionee or, if no such agreement or policy exists, will
mean (a) fraud, misrepresentation, embezzlement or deliberate injury or
attempted injury, in each case related to the Company or any Subsidiary, (b) any
unlawful or criminal activity of a serious nature, (c) any intentional and
deliberate breach of a duty or duties that, individually or in the aggregate,
are material in relation to Optionee's overall duties, or (d) any material
breach of any employment, service or noncompete agreement entered into with the
Company or any Subsidiary.
(iv) Unless the Board otherwise determines in its sole
discretion, Optionee's employment will be deemed to have terminated on the date
recorded on the personnel or other records of the Company or the Subsidiary for
which Optionee provides employment, determined by the Board in its sole
discretion based upon such records.
V. MANNER OF OPTION EXERCISE.
A. Notice. This Option may be exercised by Optionee in whole or
in part from time to time, subject to the conditions contained herein, by
delivery in person, by facsimile, electronic transmission or through the mail,
of written notice of exercise to the Company at its office at 000 Xxxxxxxx
Xxxxxxx Xxxxx 000, Xxxxxxx, XX 00000, or such other office as the Company may
designate (Attention: Chief Financial Officer), and by paying in full the total
exercise price for the Option Shares purchased. The notice of Option exercise
shall be in the form determined from time to time by the Board. As soon as
practicable after such notice and payment are received, and subject to the terms
hereof, the Optionee shall be recorded on the books of the
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Company as the owner of the Option Shares purchased and the Company shall
deliver to Optionee one or more duly issued stock certificates evidencing such
ownership.
B. Payment. At the time of exercise of the Option, Optionee shall
pay the total exercise price of the Option Shares to be purchased in cash.
C. Payment of Withholding Taxes. As a condition of exercise of
the Option, the Company may, in its sole discretion, withhold and deduct from
future wages of Optionee (or from other amounts that may be due and owing to
Optionee from the Company or a Subsidiary), or require Optionee to pay or
reimburse the Company, for all legally required amounts necessary to satisfy any
and all federal, state and local withholding and employment-related tax
requirements attributable to any taxes which the Company determines are required
to be withheld in connection with the grant or any exercise of the Option.
VI. NONTRANSFERABILITY.
This Agreement shall not be assignable or transferable by Optionee
otherwise than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order, and the Option shall not be exercised by any
person other than Optionee (or Optionee's personal representative or
attorney-in-fact) during Optionee's lifetime. After the death of Optionee, the
person to whom Optionee's rights hereunder pass under Optionee's will or under
the laws of descent and distribution shall be deemed the holder of the Option.
Any attempt to transfer this Option except as authorized by this Section VI.
shall void this Option.
VII. LIMITATION OF RIGHTS.
A. Employment of Optionee. Nothing in this Agreement shall be
construed to be evidence of any agreement or understanding, express or implied,
that the Company or any of its Subsidiaries will employ Optionee in any
particular position at any particular rate of compensation or for any particular
period of time, and nothing herein will interfere with or limit in any way the
right of the Company or any Subsidiary to terminate the employment or service of
Optionee at any time.
B. Rights as a Shareholder. As a holder of the Option, Optionee
will have no rights as a shareholder of the Company unless and until the Option
is exercised for, or paid in the form of, Common Stock and Optionee becomes the
holder of record of such shares.
VIII. SECURITIES LAWS AND OTHER RESTRICTIONS.
Notwithstanding any other provision hereof, the Company will not be
required to issue any Option Shares, and Optionee may not sell, assign, transfer
or otherwise dispose of any Option Shares issued upon exercise of the Option,
unless (i) there is in effect with respect to such shares a registration
statement under the Securities Act and any applicable state securities laws or
an exemption from such registration under the Securities Act and applicable
state securities laws, and (ii) there has been obtained any other consent,
approval or permit from any other regulatory
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body which the Board, in its sole discretion, deems necessary or advisable. The
Company may condition such issuance, sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the placement of
any legends on certificates representing Option Shares, as may be deemed
necessary or advisable by the Company in order to comply with such securities
law or other restrictions.
IX. MISCELLANEOUS.
A. Governing Law. This Agreement and all rights and obligations
hereunder shall be governed by the laws of the State of Georgia, without regard
to its principles of conflicts of laws.
B. Binding Effect. This Agreement shall be binding upon the
heirs, executors, administrators and successors of the parties hereto.
C. Investment Intent. Optionee hereby represents that all Option
Shares purchased by Optionee pursuant to the exercise of all or any portion of
the Option will be acquired only for investment and not with a view to
distribution or resale.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be executed effective the day and year first above
written.
VERSO TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Its: Chief Financial Officer
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OPTIONEE
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Xxxxx Xxxxx
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