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EXHIBIT 4(A)
XXXXX CONTROL SYSTEMS, INC.
1993 STOCK OPTION PLAN
(AS AMENDED AND RESTATED EFFECTIVE MARCH 22, 1995)
THIS AMENDED AND RESTATED INDENTURE is made as of the ________ day of
March, 1995, by Xxxxx Control Systems, Inc., a corporation organized and doing
business under the laws of the State of Georgia (the "Company").
1. Purpose.
The Company is adopting the Xxxxx Control Systems, Inc. 1993 Stock
Option Plan (the "Plan") to secure and retain the services of directors and key
employees of the Company and any subsidiaries by giving them an opportunity to
invest in the future success of the Company. The Board of Directors of the
Company (the "Board of Directors") believes the Plan will promote personal
interest in the welfare of the Company by, and provide incentive to, the
individuals who are primarily responsible both for the regular operations of and
for shaping and carrying out the long-term plans of the Company, thus
facilitating the continued growth and financial success of the Company.
2. Administration.
The Board of Directors shall appoint at least two of its members to a
committee (the "Committee") who will administer the Plan on behalf of the
Company. Except as may otherwise be provided in Rule 16b-3 of the Securities
Exchange Act of 1934, no person shall be appointed as a member of the Committee
who is, or within one year prior to his becoming a member of the Committee was,
granted or awarded equity securities pursuant to the Plan or any other plan of
the Company or an affiliate, except that participation in a formula plan or
participation which does not disqualify a director from being disinterested as
provided in Rule 16b-3 of the Securities Exchange Act of 1934 shall not
disqualify a person from becoming a member of the Committee. Notwithstanding the
foregoing, it is intended that (i) insofar as the grants of options to directors
as contemplated by Section 7 hereof (the "Formula Options"), such grants are
being made pursuant to the formula stated therein and the participation of
directors pursuant thereto shall constitute "participation in a formula plan
which does not disqualify a director from being disinterested" as stated above
and (ii) prior to the initial public offering of common stock of the Company,
the Board of Directors shall serve as the Committee.
Each member of the Committee shall serve at the pleasure of the Board
of Directors, which may fill any vacancy, however caused, in the Committee. The
Committee shall select one of its members as a chairman and shall hold meetings
at the times and in the places as it may deem advisable. All actions the
Committee takes shall be made by majority decision. Any action evidenced by a
written instrument signed by all of the members of the Committee shall be as
fully effective as if the Committee had taken the action by majority vote at a
meeting duly called and held.
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Subject to the express provisions of the Plan, the Committee shall have
complete authority, in its discretion, to determine with respect to all options
other than Formula Options:
(a) the directors and key employees of the Company and any
subsidiaries to whom, the times when, and the prices at which it shall
grant options;
(b) the type of options to be granted, i.e., either incentive
stock options as defined in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") (the "Incentive Stock Options") or
non-qualified stock options (the "Non-Qualified Stock Options")
(collectively, the "Options");
(c) the total number of Options to grant to an optionee;
(d) the time and duration of the period of exercise of each
Option;
(e) the number of shares of common stock of the Company
subject to each Option; and
(f) the terms and conditions for payment.
Subject to the provisions of the Plan, the Committee shall have full
and conclusive authority (i) to interpret the Plan; (ii) to prescribe, amend and
rescind rules and regulations relating to the Plan; (iii) to determine the terms
and provisions of the respective stock option agreements in favor of optionees,
the terms of which need not be identical; and (iv) to make all other
determinations necessary or advisable for the proper administration of the Plan;
provided, however, that, the Committee may delegate to one or more officers of
the Company the authority to grant options to any prospective optionee who is
not and will not at the time of the option grant be a "reporting person" for
purposes of Section 16 of the Securities Exchange Act of 1934; provided that the
terms of any such option grant shall be consistent with the provisions of the
Plan and with any rules promulgated by the Committee with respect to any such
delegation of authority. The Committee's determinations on these matters shall
be conclusive.
In addition to any other rights of indemnification that they may have
as directors of the Company or as members of the Committee, the directors of the
Company and members of the Committee shall be indemnified by the Company against
the reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of action taken or failure to act under or in connection with the Plan
or any Option granted thereunder, and against all amounts paid by them in
settlement thereof (provided the settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any action, suit or proceeding, except in relation to matters as to which it
shall be adjudged in the action, suit or proceeding that the Committee member is
liable for gross negligence or misconduct in the performance of his duties;
provided that within 60 days after institution of any action, suit or
proceeding, a Committee member shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.
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3. Eligibility.
The Committee shall grant Options only to directors and key employees
of the Company or its subsidiaries; provided, however, that an Incentive Stock
Option may only be granted if such individual is an employee of the Company or a
subsidiary within the meaning of Code Section 424(f) (a "Subsidiary"). Subject
to the limits set forth in this Plan, the Committee at any time may grant
additional Options to directors or key employees to whom the Committee had
previously granted Options, so that an optionee may hold more than one Option at
the same time.
4. Stock Subject to Plan.
The Company has authorized and reserved for issuance upon the exercise
of Options and Formula Options pursuant to the Plan an aggregate of 800,000
shares of no par value common stock of the Company (the "Shares"). If any Option
or Formula Option is cancelled, expires or terminates without the respective
optionee exercising it in full, the Committee may grant Options with respect to
those unpurchased Shares to that same optionee or to another eligible individual
or individuals.
The Committee shall adjust the total number of Shares reserved for the
grant of Options and Formula Options and any outstanding Options and Formula
Options, both as to the number of Shares and the option price, for any increase
or decrease in the number of outstanding Shares resulting from a stock split or
a payment of a stock dividend on the Shares, a subdivision or combination of the
Shares, a reclassification of the Shares in accordance with the provisions of
the next paragraph, a merger or consolidation of the Shares or any other like
changes in the Shares or in their value. The Committee shall not issue
fractional shares as a result of any of these changes and shall eliminate from
the outstanding Options and Formula Options any fractional shares that result
from such a change. The Committee shall not adjust outstanding Options and
Formula Options for cash dividends or the issuance of rights to subscribe for
additional stock or securities of the Company.
Except as provided in the following paragraph, after any merger of one
or more corporations into the Company, any merger of the Company into another
corporation, any consolidation of the Company and one or more other
corporations, or any other corporate reorganization to which the Company is a
party that involves any exchange, conversion, adjustment or other modification
of the outstanding Options and Formula Options, each optionee shall receive at
no additional cost upon the exercise of his Option or Formula Option, as
applicable, subject to any required action by stockholders and in lieu of the
number of Shares as to which he would otherwise exercise the Option or Formula
Option, as applicable, the number and class of shares of stock or other
securities or any other property to which the terms of the agreement of merger,
consolidation, or other reorganization would entitle the optionee to receive,
if, at the time of the merger, consolidation, or other reorganization, the
optionee had been a holder of record of the number of Shares as to which he
could exercise the Option or Formula Option, as applicable. Comparable rights
shall accrue to each optionee in the event of successive mergers, consolidations
or other reorganizations.
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In the event of a sale of all or substantially all the Shares or
property of the Company or the merger or consolidation of the Company into
another corporation or any other reorganization in which the Company is not the
surviving corporation (a "Change in Control") where the purchaser of such common
stock or property or the corporation into which the Company is merged,
consolidated or reorganized does not agree to the assumption of the Options,
provisions shall be made to cause each outstanding Option and Formula Option to
become exercisable prior to the Change in Control and to terminate upon the
consummation of the Change in Control.
The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined by the Committee in its sole
discretion. Any adjustment may provide for the elimination of any fractional
Share which might otherwise become subject to an Option or Formula Option.
The grant of an Option by the Committee or of a Formula Option shall
not affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes in its capital or business
structure, or to merge, consolidate, dissolve, liquidate, sell or transfer all
or any part of its business or assets.
5. Terms and Conditions of Options.
Each Option granted pursuant to the Plan shall be authorized by the
Committee and shall be evidenced by an Agreement in the form and containing the
terms and conditions as the Committee from time to time may determine, provided
that each Agreement shall:
(a) state the number of Shares to which it pertains;
(b) state the exercise price;
(c) state the terms and conditions for payment, except as
otherwise provided by Plan Section 11;
(d) state the term of the Option, and the period or periods
during the term of the Option in which the optionee may exercise the
Option or portions thereof;
(e) provide that the Option is not transferable by the
optionee other than as (i) the will of the optionee, or (ii) the
applicable laws of descent and distribution permit, and is exercisable
during the optionee's lifetime only by the optionee except as provided
in Subsection (g) of this Section;
(f) provide that, with respect to any Options granted to an
employee, the Option shall terminate no later than 30 days after the
date the optionee ceases to be an employee of the Company or a
Subsidiary, other than by reason of death or disability (as defined in
Code Section 22(e)(3)) and shall provide that, with respect to any
Option granted to a nonemployee director, the Option shall terminate no
later than 30 days after the date the optionee ceases to be a director
of the Company or a Subsidiary, other than by reason of death or
disability (as defined in Code Section 22(e)(3)); and
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(g) provide that, if an optionee dies or becomes disabled (as
defined in Code Section 22(e)(3)) while he is a director or employee of
the Company or Subsidiary, as applicable, the Option may be exercised
by the optionee or (to the extent the optionee would have been entitled
to do so) by a legatee or legatees of the optionee under his last will,
or by his personal representative or representatives, until the
expiration of one year after the death or disability or, if earlier,
the expiration of the Option term.
The Committee may include in any Option it grants a condition that the
optionee shall agree to remain an employee of or to render services to the
Company or any of its subsidiaries for a specified period of time following the
date it grants the Option. This condition shall not impose on the Company or any
subsidiary any obligation to employ the optionee or retain the optionee as a
director for any period of time.
6. Additional Terms and Conditions of Incentive Stock Options.
In addition to the terms and conditions set forth in Section 5 of this
Plan, each Agreement evidencing the grant of an Incentive Stock Option shall:
(a) provide for an exercise price that shall not be less than
100% of the fair market value, as determined in good faith by the
Committee, of the Shares on the date of granting the Option, provided
that:
(i) if the Shares are actively traded on any
national securities exchange or reported by the National
Association of Securities Dealers Automated Quotation System
("NASDAQ") on a basis which reports closing sales prices, fair
market value shall be the closing sales price per share of the
Shares for the business day immediately preceding the date the
Option is granted;
(ii) if the Shares are otherwise traded over the
counter, fair market value shall be the arithmetic mean of the
bid and asked prices for the Shares, as reported by NASDAQ,
for the business day immediately preceding the date of the
grant of the Option;
(iii) if the Shares are not traded, fair market value
shall be determined by the Committee which shall, in making
such determination, consider, where applicable, among other
factors: the existence and extent of a private market for the
Shares and a public market for the Company's securities of the
same class, if any; the price at which the Shares were
acquired, if applicable, by the Company; the estimated period
of time, if any, during which the Shares will be freely
marketable; the estimated amount of floating supply of Shares
available; changes in the financial condition and prospects of
the Company; the existence of merger proposals or tender
offers affecting the Company; and any other factors affecting
fair market value; provided, however, that fair market value
shall be determined without regard to any restriction other
than a restriction which, by its terms, will never lapse;
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(iv) if the optionee owns (subject to applicable
ownership attribution rules of Code Section 424(d) and the
regulations promulgated thereunder by the Department of
Treasury) stock possessing more than 10% of the total combined
voting power of all Shares or of shares of any parent within
the meaning of Code Section 424(e) (a "Parent") or Subsidiary
of the Company at the time the Option is granted, the option
price shall not be less than 110% of the fair market value of
the pertinent number of Shares of the Company on the date of
the grant of the Option; and
(v) subject to the foregoing, the Committee, in
determining the fair market value, shall have full authority
and discretion and be fully protected in doing so;
(b) provide that the Option is not exercisable after the
expiration of ten years or less from the date the Option is granted,
except that, if the optionee owns (subject to applicable ownership
attribution rules of Code Section 424(d) and the regulations
promulgated thereunder by the Department of the Treasury) more than 10%
of the total combined voting power of all Shares or of shares of any
Parent or Subsidiary at the time the Option is granted, the Option is
not exercisable after the expiration of five years or less from the
date the Option is granted.
7. Formula Grants to Directors.
Each person who serves as a non-management director of the Company at
the time its initial public offering is effected or who is named in the
Company's Prospectus as a person who has agreed to become a director upon
consummation of the offering shall be granted a non-qualified stock option as of
the effective date of the initial public offering to acquire 2,000 shares of the
Company's Common Stock at an exercise price equal to the initial public offering
price and each person who becomes a director of the Company after the initial
public offering is consummated shall be granted a non-qualified stock option as
of the date he or she becomes a director to acquire 2,000 shares of the
Company's Common Stock at an exercise price equal to the last closing price of
the Company's Common Stock on the Company's primary public trading market on the
last date preceding the date on which such person becomes a director. For
purposes of establishing the exercise price for Formula Options granted to
persons named in the Company's Prospectus relating to its initial public
offering as persons who have agreed to become directors upon consummation of the
offering, the exercise price shall equal the initial public offering price
regardless of whether such persons actually become directors on the date
thereof. Formula Options shall be subject to such additional terms as set forth
in the form of stock option agreement attached hereto as Exhibit "A" and
incorporated herein by reference (the "Formula Option Agreement").
Notwithstanding any other provision of this Plan, the provisions of this Plan
Section 7 and of the Formula Option Agreement may not be amended more than once
every six months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, or any rules under either of the
foregoing.
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8. Compliance with Code for Incentive Stock Options.
All Incentive Stock Options are intended to comply with Code Section
422, and all provisions of the Plan and all Incentive Stock Options granted
hereunder shall be construed in such manner as to effectuate that intent.
9. Limitation on Incentive Stock Option Amounts.
An Incentive Stock Option may not be granted to the extent the
aggregate fair market value, determined at the time the Committee grants the
Option, of stock with respect to which stock options intended to meet the
requirements of Code Section 422 are exercisable for the first time by an
optionee during any calendar year under all plans of the Company and any Parent
or Subsidiary exceeds $100,000.
10. Term of Plan.
The effective date of the Plan shall be the earlier of the date on
which the shareholders of the Company or the Board of Directors approve the Plan
(the "Effective Date"). The Plan shall terminate 10 years after that date.
Options and Formula Options may be granted pursuant to the Plan at any time on
or between the Effective Date and that termination date, subject to Plan Section
18.
11. Exercise of Option by Optionee.
The optionee may purchase Shares pursuant to an Option only upon
receipt by the Company of a notice in writing from the optionee of his intent to
purchase a specific number of Shares and which notice contains such
representations regarding compliance with the federal and state securities laws
as the Committee may reasonably request. The purchase price shall be paid in
full upon the exercise of an Option and no Shares shall be issued or delivered
until full payment therefor has been made. Payment of the purchase price for all
Shares purchased pursuant to the exercise of an Option shall be made in cash or
by certified check or, alternatively, if the applicable Agreement so allows, as
follows:
(a) by delivery to the Company of a number of shares of common
stock of the Company which have been owned by the optionee for at least
six months prior to the date of the Option's exercise, having a fair
market value on the date of exercise, as determined by the Committee in
its sole discretion, either equal to the purchase price or in
combination with cash to equal the purchase price; or
(b) by receipt of the purchase price in cash from a broker,
dealer or other "creditor" as defined by Regulation T issued by the
Board of Governors of the Federal Reserve System following delivery by
the optionee to the Committee of instructions in a form acceptable to
the Committee regarding delivery to such broker, dealer or other
creditor of that number of shares of common stock with respect to which
the Option is exercised.
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Until stock certificates reflecting the Shares accruing to the optionee
upon the exercise of the Option are issued to the optionee, the optionee shall
have no rights as a shareholder with respect to the Shares the Option covers.
The Company shall make no adjustment to the Shares for any dividends or
distributions or other rights for which the record date is prior to the issuance
of that stock certificate, except as the Plan otherwise provides.
12. Withholding Taxes Attributable to Exercise of Non-Qualified Stock
Options.
Whenever the Company proposes or is required to issue Shares to an
optionee who is or was an employee of the Company or a subsidiary, or his
legatee or legal representative under the Plan, pursuant to the exercise of a
Non-Qualified Stock Option granted under the Plan, the Company shall have the
right to require the recipient to remit to the Company an amount sufficient to
satisfy any federal, state and local withholding tax requirement prior to the
delivery of any certificate or certificates for such Shares. An optionee may pay
the withholding tax (a) by making payment in cash or by certified check or, if
the applicable Agreement so provides, (b) by electing to tender to the Company
the smallest number of whole shares of common stock of the Company that have
been owned by the optionee for at least six months prior to the Tax Date
(defined below) and that, when multiplied by the fair market value of the shares
of common stock of the Company determined as of the Tax Date (defined below), is
sufficient to satisfy federal, state and local, if any, withholding taxes
arising from exercise of the Option, or (c) by electing to have the number of
Shares the optionee is to receive upon exercise reduced by the number of Shares
determined in (b) above (an optionee's election to tender or offset as described
in (b) or (c) above is referred to as a "Withholding Election"). An optionee may
make a Withholding Election only if the following conditions are met:
(i) the Withholding Election must be made no later than the
date on which the amount of tax required to be withheld is determined
(the "Tax Date") by executing and delivering to the Company a properly
completed notice of withholding election in the form prescribed by the
Committee;
(ii) any Withholding Election is irrevocably given; and
(iii) if the optionee is considered by the Committee to be
subject to Section 16 of the Securities Exchange Act of 1934, the
Withholding Election is delivered to the Company sufficiently in
advance of the Tax Date as the Committee determines is necessary or
appropriate to satisfy the conditions of the exemption provided under
Rule 16b-3 promulgated under the Securities Exchange Act of 1934.
Notwithstanding anything to the contrary herein, the Committee may in its sole
discretion disapprove and give no effect to any Withholding Election and no
Option to which any Withholding Election relates may be exercised prior to one
year after the Company has been subject to the reporting requirements of Section
13 of the Securities Exchange Act of 1934 and has filed all reports and
statements required to be filed pursuant to that Section during that year.
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13. Assignability.
Except as Plan Section 5(g) or the terms of the Formula Option
Agreement permit, no Option or Formula Option or any of the rights and
privileges thereof accruing to an optionee shall be transferred, assigned,
pledged or hypothecated in any way whether by operation of law or otherwise, and
no Option or Formula Option, right or privilege shall be subject to execution,
attachment or similar process.
14. The Right of the Company to Terminate Employment.
No provision in the Plan or any Option or Formula Option shall confer
upon any optionee any right to continue in the employment of the Company or any
subsidiary of the Company or to continue performing services for or to interfere
in any way with the right of the Company or any subsidiary of the Company to
terminate his employment or of the right of shareholders of the Company to
remove such optionee as a director at any time for any reason.
15. Amendment and Termination.
Except as set forth in Section 7 hereof, the Board of Directors may
amend or terminate the Plan at any time without shareholder approval; provided,
however, that the Board of Directors may condition any amendment on the approval
of the shareholders of the Company if such approval is necessary or advisable
with respect to tax, securities (which require such approval for a material
increase of the number of Shares subject to options, and for material
modifications to the eligibility requirements of the Plan, among others) or
other applicable laws to which the Company, the Plan, optionees or eligible
employees are subject. No amendment or termination of the Plan shall affect the
rights of an optionee with regard to his options without his consent.
16. General Restriction.
Notwithstanding anything contained herein or in any of the Agreements
to the contrary, no purported exercise of any option granted pursuant to the
Plan shall be effective without the written approval of the Company, which may
be withheld to the extent that the exercise, either individually or in the
aggregate together with the exercise of other previously exercised stock options
and/or offers and sales pursuant to any prior or contemplated offering of
securities, would, in the sole and absolute judgment of the Company, require the
filing of a registration statement with the United States Securities and
Exchange Commission or with the securities commission of any state. The Company
shall avail itself of any exemptions from registration contained in applicable
federal and state securities laws which are reasonably available to the Company
on terms which, in its sole and absolute discretion, it deems reasonable and not
unduly burdensome or costly. Each optionee shall, prior to the exercise of an
option, deliver to the Company such information, representations and warranties
as the Company may reasonably request in order for the Company to be able to
satisfy itself that the Shares to be acquired pursuant to the exercise of an
option is being acquired in accordance with the terms of an applicable exemption
from the securities registration requirements of applicable federal and state
securities laws.
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17. Choice of Law.
The laws of the State of Georgia shall govern the Plan.
18. Approval of Shareholders, etc.
The Company shall submit the Plan to its shareholders for approval no
later than 12 months after the adoption of the Plan, as amended and restated, by
the Board of Directors; provided further that unless shareholder approval is
obtained by the end of said twelve-month period, the adoption of this amendment
and restatement of the Plan and all outstanding options granting rights to
acquire Shares under the Plan in excess of the number of Shares originally
reserved for issuance hereunder shall be rendered immediately void and of no
effect.
IN WITNESS WHEREOF, the Company has caused this Plan, as amended and
restated, to be executed in the form and as of the date set forth above.
Attest: XXXXX CONTROL SYSTEMS, INC.
By:
-------------------------------- ------------------------------------
Title: Title:
-------------------------- ---------------------------------
[CORPORATE SEAL]
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EXHIBIT "A"
NON-QUALIFIED FORMULA STOCK OPTION AGREEMENT
PURSUANT TO
XXXXX CONTROL SYSTEMS, INC.
1993 STOCK OPTION PLAN
THIS AGREEMENT, made as of the ____ day of 199_ (the "Grant Date"), by
and between XXXXX CONTROL SYSTEMS, INC. (the "Company") and (the "Optionee"),
W I T N E S S E T H:
WHEREAS, the Optionee is eligible to receive the grant of a
non-qualified stock option to purchase shares of common stock of the Company
pursuant to Section 7 of the Xxxxx Control Systems, Inc. 1993 Stock Option Plan
(the "Plan");
WHEREAS, the Committee (as defined in the Plan), on behalf of the
Company, and Optionee wish to confirm the terms and conditions of the option;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, it is hereby agreed between the parties hereto as follows:
1. Grant of Option. Subject to the terms, restrictions,
limitations and conditions stated herein and in the Plan, the Company hereby
grants to the Optionee an option (the "Option") to purchase all or any part of
2,000 shares of common stock of the Company (the "Common Stock").
2. Term and Exercise of Option. Subject to the provisions of
this Agreement:
(a) The Option shall be exercisable during the Option Period
(as defined in Section 4 hereof) only to the extent of the number of
Vested Shares determined pursuant to the vesting schedule attached
hereto as Schedule I.
(b) The Option may be exercised with respect to all or any
portion of the Vested Shares at any time during the Option Period by
the delivery to the Company, at its principal place of business, of (i)
a written notice of exercise in substantially the form attached hereto
as Exhibit 1, which shall be actually delivered to the Company no
earlier than thirty (30) days and no later than ten (10) days prior to
the date upon which Optionee desires to exercise all or any portion of
the Option; (ii) payment to the Company of the Exercise Price, defined
in Section 3 below, multiplied by the number of shares being purchased
(the "Purchase Price") in the manner provided in Subsection (c) hereof;
and (iii) cash or a certified check representing payment of all
withholding tax obligations (whether federal, state or local), imposed
by reason of the exercise of the Option, if any. Upon acceptance of
such notice, receipt of payment in full of the Purchase Price and, if
applicable, receipt of payment of withholding tax obligations, the
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Company shall cause to be issued a certificate representing the shares
of Common Stock purchased.
(c) The Purchase Price shall be paid in full upon the
exercise of an option and no shares of Common Stock shall be issued or
delivered until full payment therefor has been made. Payment of the
Purchase Price for all shares of Common Stock purchased pursuant to the
exercise of an Option shall be made in cash or by certified check or,
alternatively, as follows:
(i) by delivery to the Company of a number of
shares of Common Stock which have been owned by the Optionee
for at least six months prior to the date of the Option's
exercise, having a fair market value on the date of exercise,
as determined by the Committee in its sole discretion, either
equal to the Purchase Price or in combination with cash to
equal the Purchase Price; or
(ii) by receipt of the Purchase Price in cash from a
broker, dealer or other "creditor" as defined by Regulation T
issued by the Board of Governors of the Federal Reserve System
following delivery by the Optionee to the Committee of
instructions in a form acceptable to the Committee regarding
delivery to such broker, dealer or other creditor of that
number of shares of Common Stock with respect to which the
Option is exercised.
(d) In lieu of paying the withholding tax obligation in
cash or by certified check to the Company, as described in Subsection
2(b) hereof, Optionee may elect (i) to have the actual number of whole
shares of Common Stock which, when multiplied by the fair market value
of the Common Stock as of the date the Option is exercised, is
sufficient to satisfy the amount of withholding tax; or (ii) to tender
to the Company the smallest number of whole shares of Common Stock that
have been owned by the Optionee for at least six months prior to the
Tax Date (defined below) and that when multiplied by the fair market
value of the shares of Common Stock determined as of the Tax Date (as
defined below), is sufficient to satisfy federal, state and local, if
any, withholding taxes arising from exercise of the option (a
"Withholding Election"). Optionee may make a Withholding Election only
if all of the following conditions are met:
(i) the Withholding Election must be made no later
than the date on which the amount of tax required to be
withheld is determined (the "Tax Date") by executing and
delivering to the Company a properly completed Notice of Tax
Withholding in substantially the form of Exhibit 2 attached
hereto;
(ii) any Withholding Election is irrevocably given;
and
(iii) the Withholding Election is delivered to the
Company sufficiently in advance of the Tax Date as necessary
to satisfy the conditions of the exemption provided under Rule
16b-3 promulgated under the Securities Exchange Act of 1934.
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No Option to which any Withholding Election relates may be exercised
prior to one year after the Company has been subject to the reporting
requirements of Section 13 of the Securities Exchange Act of 1934 and
has filed all reports and statements required to be filed pursuant to
that Section during that year.
3. Exercise Price. The exercise price for each share of Common Stock
for which the Option is exercised shall be $______, subject to adjustment as set
forth in Section 7 hereof (the "Exercise Price").
4. Term and Termination of Option. Except as otherwise provided below,
the term of the Option (the "Option Period") shall commence on the Grant Date
and terminate on the tenth anniversary of the Grant Date. Upon the expiration of
the Option Period, this Option and all unexercised rights granted to Optionee
hereunder shall terminate, and thereafter be null and void.
5. Rights as Shareholder. Until the stock certificates reflecting the
Common Stock accruing to the Optionee upon exercise of the Option are issued to
the Optionee, the Optionee shall have no rights as a shareholder with respect to
such Common Stock. The Company shall make no adjustment for any dividends or
distributions or other rights on or with respect to shares of Common Stock
purchased pursuant to the Option for which the record date is prior to the
issuance of that stock certificate, except as the Plan or this Agreement
otherwise provides.
6. Restriction on Transfer of Option. The Option evidenced hereby is
nontransferable other than by will or the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionee only by the Optionee
(or in the event of his disability, by his personal representative) and after
his death, only by his personal representative.
7. Changes Attributable to Recapitalizations or Reorganizations. The
number and type of shares of stock, or both, subject to the Option; the Exercise
Price; the Option Period; and the number of Vested Shares may be adjusted in the
event of certain recapitalizations or reorganizations affecting the Company in
the manner set forth in Section 4 of the Plan.
8. Special Limitation on Exercise. Notwithstanding anything contained
herein to the contrary, no purported exercise of the Option shall be effective
without the written approval of the Company, which may be withheld to the extent
that its exercise, either individually or in the aggregate together with the
exercise of other previously exercised stock options and/or offers and sales
pursuant to any prior or contemplated offering of securities, would, in the sole
and absolute judgment of the Company, require the filing of a registration
statement with the United States Securities and Exchange Commission, or with the
securities commission of any state. The Company shall avail itself of any
exemptions from registration contained in applicable federal and state
securities laws which are reasonably available to the Company on terms which, in
its sole and absolute discretion, it deems reasonable and not unduly burdensome
or costly. If the Option cannot be exercised at the time it would otherwise
expire due to the restrictions contained in this Section, the exercise period
shall be extended for successive one-year periods until it can be exercised in
accordance with this Section. The Optionee shall deliver to the Company, prior
to the exercise of the Option, such information, representations and warranties
as the Company
- 3 -
14
may reasonably request in order for the Company to be able to satisfy itself
that the Common Stock to be acquired pursuant to the exercise of the Option is
being acquired in accordance with the terms of an applicable exemption from the
securities registration requirements of applicable federal and state securities
laws.
9. Legend on Stock Certificates. Certificates evidencing Common
Stock to be distributed pursuant to the Agreement and the Plan shall, to the
extent appropriate at the time, have noted conspicuously on the certificates a
legend to the following effect, which is intended to give all persons full
notice of the existence of the conditions, restrictions, rights and obligations
set forth in this Agreement:
(a) That the securities evidenced by the certificate were
issued without registration under the Securities Act of 1933, as
amended (the "1933 Act"), or under the applicable laws of any state or
states (collectively referred to as the "State Acts"), in reliance upon
certain exemptive provisions of the 1933 Act or any applicable State
Acts;
(b) That the securities cannot be sold or transferred unless,
in the opinion of counsel reasonably acceptable to the Company, the
sale or transfer would be:
(1) Pursuant to an effective registration statement
under the 1933 Act or pursuant to an available exemption form
registration; and
(2) A transaction which is exempt under any
applicable State Acts or pursuant to an effective registration
statement under or in a transaction which is otherwise in
compliance with the State Acts; and
(c) That the securities evidenced by the certificate were
issued in accordance with the provisions of the Agreement and the Plan
and are subject to the provisions thereof and may not be sold or
transferred except in compliance with said provisions.
10. Governing Laws. This Agreement shall be construed,
administered and enforced according to the laws of the State of Georgia;
provided, however, no option may be exercised except, in the reasonable judgment
of the Board of Directors, in compliance with exemptions under applicable state
securities laws.
11. Successors. Agreement shall be binding upon and inure to the
benefit of the heirs, legal representatives, successors and permitted assigns of
the parties.
12. Notice. Except as otherwise specified herein, all notices and
other communications under this Agreement shall be in writing and shall be
deemed to have been given if personally delivered or if sent by registered or
certified United States mail, return receipt requested, postage prepaid,
addressed to the proposed recipient at the last known address of the recipient.
Any party may designate any other address to which notices shall be sent by
giving notice of the address to the other parties in the same manner as provided
herein.
- 4 -
15
13. Severability. In the event that any one or more of the
provisions or portion thereof contained in this Agreement shall for any reason
be held to be invalid, illegal or unenforceable in any respect, the same shall
not invalidate or otherwise affect any other provisions of this Agreement, and
this Agreement shall be construed as if the invalid, illegal or unenforceable
provision or portion thereof had never been contained herein.
14. Entire Agreement. Subject to the terms and conditions of
the Plan, this Agreement expresses the entire understanding and agreement of the
parties. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same instrument.
15. Violation. Any transfer, pledge, sale, assignment, or
hypothecation of the Option or any portion thereof shall be a violation of the
terms of this Agreement and shall be void and without effect.
16. Headings. Paragraph headings used herein are for convenience of
reference only and shall not be considered in construing this Agreement.
17. Specific Performance. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement, the party or parties who are thereby aggrieved shall have the right
to specific performance and injunction in addition to any and all other rights
and remedies at law or in equity, and all such rights and remedies shall be
cumulative.
18. No Rights Created. Neither the establishment of the Plan nor
the grant of the Option hereunder shall be construed as giving the Optionee the
right to continued employment with the Company or a subsidiary or to continued
service upon the Board of Directors of the Company or a subsidiary.
IN WITNESS WHEREOF, the parties have executed and sealed this
Agreement on the day and year first set forth above.
XXXXX CONTROL SYSTEMS, INC.
ATTEST:
By:
---------------------------------- -------------------------------
Title: Title:
---------------------------- ----------------------------
[CORPORATE SEAL]
OPTIONEE
(SEAL)
----------------------------------
- 5 -
16
EXHIBIT 1
NOTICE OF EXERCISE OF
XXXXX CONTROL SYSTEMS, INC.
STOCK OPTION TO PURCHASE
COMMON STOCK OF
XXXXX CONTROL SYSTEMS, INC.
Name
------------------------------------
Address
---------------------------------
----------------------------------------
Date
------------------------------------
Xxxxx Control Systems, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Re: Exercise of Non-Qualified Stock Option
Gentlemen:
Subject to acceptance hereof in writing by Xxxxx Control Systems, Inc.
(the "Company") pursuant to the provisions of the Xxxxx Control Systems, Inc.
1993 Stock Option Plan, I hereby give at least ten days but not more than thirty
days prior notice of my election to exercise options granted to me to purchase
__________ shares of Common Stock of the Company under the Xxxxx Control
Systems, Inc. Non-Qualified Formula Stock Option Agreement dated as of
_____________, 199__. The purchase shall take place as of _____________, 199__
(the "Exercise Date").
On or before the Exercise Date, I will pay the applicable purchase
price as follows:
[ ] by delivery of cash or a certified check for $____________, for the
full purchase price payable to the order of Xxxxx Control Systems, Inc.
[ ] by delivery of cash or a certified check for $______________,
representing a portion of the purchase price with the balance to consist of
shares of Common Stock that I have owned for at least six months and that are
represented by a stock certificate I will surrender to the Company with my
endorsement. If the number of shares of Common Stock represented by such stock
certificate exceed the number to be applied against the purchase price, I
understand that a new stock certificate will be issued to me reflecting the
excess number of shares.
[ ] by delivery of a stock certificate representing shares of Common
Stock that I have owned for at least six months which I will surrender to the
Company with my endorsement as payment of the purchase price. If the number of
shares of Common Stock represented by such
17
certificate exceed the number to be applied against the purchase price, I
understand that a new certificate will be issued to me reflecting the excess
number of shares.
[ ] by delivery of the purchase price by _________________, a broker,
dealer or other "creditor" as defined by Regulation T issued by the Board of
Governors of the Federal Reserve System. I hereby authorize the Company to issue
a stock certificate in number of shares indicated above in the name of said
broker, dealer or other creditor or its nominee pursuant to instructions
received by the Company and to deliver said stock certificate directly to that
broker, dealer or other creditor (or to such other party specified in the
instructions received by the Company from the broker, dealer or other creditor)
upon receipt of the purchase price.
The required federal, state and local income tax withholding, if any,
on the exercise of the option shall be paid on or before the Exercise Date in
cash or by certified check, or in the manner provided in the Withholding
Election previously tendered or to be tendered to the Company no later than the
Exercise Date.
As soon as the stock certificate is registered in my name, please
delivery it to me at the above address.
If the Common Stock being acquired is not registered for issuance to
and resale by the Optionee pursuant to an effective registration statement on
Form S-8 (or successor form) filed under the Securities Act of 1933, as amended
(the "1933 Act"), I hereby represent, warrant, covenant, and agree with the
Company as follows:
The shares of the Common Stock being acquired by me will be
acquired for my own account without the participation of any other
person, with the intent of holding the Common Stock for investment and
without the intent of participating, directly or indirectly, in a
distribution of the Common Stock and not with a view to, or for resale
in connection with, any distribution of the Common Stock, nor am I
aware of the existence of any distribution of the Common Stock;
I am not acquiring the Common Stock based upon any
representation, oral or written, by any person with respect to the
future value of, or income from, the Common Stock but rather upon an
independent examination and judgment as to the prospects of the
Company;
The Common Stock was not offered to me by means of publicly
disseminated advertisements or sales literature, nor am I aware of any
offers made to other persons by such means;
I am able to bear the economic risks of the investment in the
Common Stock, including the risk of a complete loss of my investment
therein;
I understand and agree that the Common Stock will be issued
and sold to me without registration under any state law relating to the
registration of securities for sale, and will be issued and sold in
reliance on the exemptions from registration under the
EXHIBIT 1 to Non-Qualified Formula Stock Option Agreement
Page - 2 -
18
1933 Act, provided by Sections 3(b) and/or 4(2) thereof and the rules
and regulations promulgated thereunder;
The Common Stock cannot be offered for sale, sold or
transferred by me other than pursuant to: (A) an effective registration
under the 1933 Act or in a transaction otherwise in compliance with the
1933 Act; and (B) evidence satisfactory to the Company of compliance
with the applicable securities laws of other jurisdictions. The Company
shall be entitled to rely upon an opinion of counsel satisfactory to it
with respect to compliance with the above laws;
The Company will be under no obligation to register the Common
Stock or to comply with any exemption available for sale of the Common
Stock without registration or filing, and the information or conditions
necessary to permit routine sales of securities of the Company under
Rule 144 under the 1933 Act are not now available and no assurance has
been given that it or they will become available. The Company is under
no obligation to act in any mariner so as to make Rule 144 available
with respect to the Common Stock;
I have and have had complete access to and the opportunity to
review and make copies of all material documents related to the
business of the Company, including, but not limited to, contracts,
financial statements, tax returns, leases, deeds and other books and
records. I have examined such of these documents as I wished and am
familiar with the business and affairs of the Company. I realize that
the purchase of the Common Stock is a speculative investment and that
any possible profit therefrom is uncertain;
I have had the opportunity to ask questions of and receive
answers from the Company and any person acting on its behalf and to
obtain all material information reasonably available with respect to
the Company and its affairs. I have received all information and data
with respect to the Company which I have requested and which I have
deemed relevant in connection with the evaluation of the merits and
risks of my investment in the Company;
I have such knowledge and experience in financial and business
matters that I am capable of evaluating the merits and risks of the
purchase of the Common Stock hereunder and I am able to bear the
economic risk of such purchase; and
The agreements, representations, warranties and covenants made
by me herein extend to and apply to all of the Common Stock of the
Company issued to me pursuant to this Option. Acceptance by me of the
certificate representing such Common Stock shall constitute a
confirmation by me that all such agreements, representations,
warranties and covenants made herein shall be true and correct at that
time.
EXHIBIT 1 to Non-Qualified Formula Stock Option Agreement -
Page - 3 -
19
I understand that the certificates representing the shares
being purchased by me in accordance with this notice shall bear a
legend referring to the foregoing covenants, representations and
warranties and restrictions on transfer, and I agree that a legend to
that effect may be placed on any certificate which may be issued to me
as a substitute for the certificates being acquired by me in accordance
with this notice.
Very truly yours,
----------------------------------
AGREED TO AND ACCEPTED:
XXXXX CONTROL SYSTEMS, INC.
By:
-------------------------
Title:
----------------------
Number of Shares
Exercised:
------------------
Number of Shares
Remaining: Date:
------------------ -----------------------------
EXHIBIT 2 to Non-Qualified Formula Stock Option Agreement -
Page - 4 -
20
EXHIBIT 2
NOTICE OF WITHHOLDING ELECTION
XXXXX CONTROL SYSTEMS, INC.
1993 STOCK OPTION PLAN
TO: Xxxxx Control Systems, Inc.
FROM: Name:
------------------------------
RE: Withholding Election
This election relates to the option identified in Paragraph 3 below. I
hereby certify that:
(1) My correct name and social security number and my
current address are set forth at the end of this
document.
(2) I am (check one, whichever is applicable):
[ ] the original recipient of the option.
[ ] the legal representative of the estate of
the original recipient of the option.
[ ] a legatee of the original recipient of the
option.
[ ] the legal guardian of the original recipient
of the option.
(3) The option pursuant to which this election relates
was issued under the Xxxxx Control Systems, Inc. 1993
Stock Option Plan (the "Plan") in the name of
__________________________ for the purchase of a
total of ___________ shares of Common Stock. This
election relates to ___________ shares of Common
Stock issuable upon exercise of the option (the
"Common Stock"), provided that the numbers set forth
above shall be deemed changed as appropriate to
reflect the applicable Plan provisions.
(4) In connection with any exercise of the option with
respect to the Common Stock, I hereby elect:
[ ] To have certain of the shares issuable
pursuant to the exercise withheld by the
Company for the purpose of having the value
of the shares applied to pay federal, state,
and local, if any, taxes arising from the
exercise; or
21
[ ] To tender shares of Common Stock held by
me for a period of at least six months prior
to the exercise of the option for the
purpose of having the value of the shares
applied to pay such taxes.
The shares to be withheld or tendered, as applicable,
shall have, as of the Tax Date applicable to the
exercise, a fair market value equal to the minimum
statutory tax withholding requirement under federal,
state, and local law in connection with the exercise.
(5) This Withholding Election is made no later than the
Tax Date and is otherwise timely made pursuant to
the Plan.
(6) I understand that this Withholding Election may not
be revised, amended or revoked by me (except in a
manner that satisfies the requirements of the
exemption provided under Rule 16b-3 promulgated
under the Securities Exchange Act of 1934).
(7) I further understand that the Company shall either
(a) withhold from the Common Stock a number of
shares of Common Stock having the value specified
in Paragraph 4 above, or (b) accept a number of
shares of Common Stock held by me for at least six
months prior to exercise and having the value
specified in Paragraph 4 above, as applicable.
(8) The Plan has been made available to me by the
Company, I have read and understand the Plan and I
have no reason to believe that any of the
conditions therein to the making of this
Withholding Election have not been met.
Capitalized terms used in this Notice of Withholding Election without
definition shall have the meanings given to them in the Plan.
Dated: ----------------------------------------
------------- Signature
------------------------------- ----------------------------------------
Social Security Number Name (Printed)
----------------------------------------
Street Address
----------------------------------------
City, State, Zip Code
EXHIBIT 2 to Non-Qualified Formula Stock Option Agreement -
Page - 2 -
22
SCHEDULE I
TO
XXXXX CONTROL SYSTEMS, INC.
NON-QUALIFIED FORMULA STOCK OPTION AGREEMENT
Vesting Schedule
"Vested Shares" means only that percentage of the number of shares of
Common Stock subject to the Option as to which the Option becomes exercisable
following completion of the years of service indicated in the schedule below.
Percentage of Shares Years of Service
Which are Vested Shares after Grant Date
----------------------- ----------------
0% less than 1 year
33% 1 year
67% 2 years
100% 3 years
--------------------
1. Construction.
(a) For purposes of the Vesting Schedule, Optionee shall be
granted a year of service for each consecutive twelve-consecutive-month period
following the Grant Date and during which Optionee remains, at all times,
employed on a full-time basis by the Company or a Subsidiary or, if applicable,
continues as a director of the Company or a Subsidiary.
(b) The right of Optionee to vest in the number of shares of
Common Stock subject to the Option shall cease on the later of the date the
Optionee is no longer employed by the Company or any Subsidiary or, if
applicable, the date the Optionee no longer serves as a director of the Company
or any Subsidiary; thereafter, no further shares shall become Vested Shares; and
the Option shall be exercisable during the Option Period specified in Section 4
of the Agreement.
Schedule 1 to Non-Qualified Formula Stock Option Agreement
