Exhibit 10.2
GRACO INC.
AMENDED AND RESTATED STOCK INCENTIVE PLAN (2006)
EXECUTIVE OFFICER
STOCK OPTION AGREEMENT
(Non-Qualified)
THIS AGREEMENT,
made this «Day_of_Month_» day of «Month_and_Year», by and between
Graco Inc., a Minnesota corporation (the “Company”) and «F_Name_MI»
«L_Name» (the “Employee”).
WITNESSETH THAT:
WHEREAS, the
Company pursuant to the Graco Inc. Amended and Restated Stock Incentive Plan (2006) (the
“Plan”) wishes to grant this stock option to Employee;
NOW THEREFORE, in
consideration of the premises and of the mutual covenants contained in this Agreement, the
parties agree as follows:
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The
Company grants to Employee, the right and option (the “Option”) to purchase all
or any part of an aggregate of «Words» («Number») shares of Common
Stock of the Company, par value USD 1.00 per share, at the price of USD
«Price» per share on the terms and conditions set forth in this Agreement. The
date of grant of the Option is «Date» (the “Date of Grant”). |
| 2. |
Duration
and Exercisability |
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A. |
No portion of this Option may be exercised by Employee until the first
anniversary of the Date of Grant and then only in accordance with the Vesting
Schedule set forth below. In no event shall this Option or any portion of this
Option be exercisable following the tenth anniversary of the Date of Grant. |
| Vesting Date |
Portion of Option
Exercisable |
| First Anniversary of Date of Grant |
25% |
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| Second Anniversary of Date of Grant |
50% |
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| Third Anniversary of Date of Grant |
75% |
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| Fourth Anniversary of Date of Grant |
100% |
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If
Employee does not purchase in any one year the full number of shares of Common Stock of
the Company to which he/she is entitled under this Option, he/she may, subject to the
terms and conditions of Section 3, purchase such shares of Common Stock in any subsequent
year during the term of this Option. This Option shall expire as of the close of trading
at the national securities exchange on which the Common Stock is traded
(“Exchange”) on the tenth anniversary of the Date of Grant or if the Exchange is
closed on the anniversary date or the Common Stock of the Company is not trading on said
anniversary date, such earlier business day on which the Common Stock is trading on the
Exchange. |
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B. |
During the lifetime of Employee, the Option shall be exercisable only by him/her
and shall not be assignable or transferable by him/her otherwise than by will or
the laws of descent and distribution. |
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C. |
Under no circumstances may the Option or any portion of the Option granted by
this Agreement be exercised after the term of the Option expires. |
| 3. |
Effect
of Termination of Employment |
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A. |
If Employee’s employment terminates for any reason other than
Employee’s gross and willful misconduct, death, retirement (as defined in
Section 3D), or disability (as defined in Section 3D), Employee shall have the
right to exercise that portion of the Option exercisable upon the date of
termination of employment at any time within the period beginning on the day
after termination of employment and ending at the close of trading on the
Exchange thirty (30) days later. |
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B. |
If Employee’s employment terminates by reason of Employee’s gross and
willful misconduct during employment, including, but not limited to, wrongful
appropriation of Company funds, serious violations of Company policy, breach of
fiduciary duty or the conviction of a felony, the unexercised portion of the
Option shall terminate as of the time of the misconduct. If the Company
determines subsequent to the termination of Employee’s employment for
whatever reason, that Employee engaged in conduct during employment that would
constitute gross and willful misconduct justifying termination, the Option shall
terminate as of the time of such misconduct. Furthermore, if the Option is
exercised in whole or in part and the Company thereafter determines that
Employee engaged in gross and willful misconduct during employment which would
have justified termination at any time prior to the date of such exercise, the
Option shall be deemed to have terminated as of the time of the misconduct and
the Company may elect to rescind the Option exercise. |
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C. |
If Employee shall die while employed by the Company or an affiliate and shall
not have fully exercised the Option, all shares remaining under the Option shall
become immediately exercisable. If Employee shall die within thirty (30) days
after a termination of employment which meets the criteria of Section 3A above,
only those shares vested as of the date of termination shall be exercisable. The
executor or administrator of Employee’s estate, or any person(s) to whom
the Option was transferred by will or the applicable laws of distribution and
descent may exercise such exercisable shares at any time during a period
beginning on the day after the date of Employee’s death and ending at the
close of trading on the Exchange on the anniversary of death one (1) year later. |
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D. |
If Employee’s termination of employment is due to retirement or disability,
all shares remaining under the Option shall become immediately exercisable.
Employee shall be deemed to have retired if the termination of employment occurs
for reasons other than the Employee’s gross and willful misconduct, death,
or disability after Employee (i) has attained age 55 and 10 years of service
with the Company or an affiliate, or (ii) has attained age 65. Employee shall be
deemed to be disabled if the termination of employment occurs because Employee
is unable to work due to an impairment which would qualify as a disability under
the Company’s long term disability program. Employee may exercise the
shares remaining unexercised at any time during a period beginning on the day
after the date of Employee’s termination of employment and ending at the
close of trading on the Exchange on the tenth anniversary of the Date of Grant.
If Employee should die during the period between the date of Employee’s
retirement or disability and the expiration of the Option, the executor(s) or
administrator(s) of the Employee’s estate, or any person(s) to whom the
Option was transferred by will or the applicable laws of distribution and
descent may exercise the unexercised portion of the Option at any time during a
period beginning the day after the date of Employee’s death and ending at
the close of trading on the Exchange on the anniversary of death one (1) year
later, provided, however, in no event shall the Option be exercisable following
the tenth anniversary of the Date of Grant. |
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E. |
Notwithstanding anything to the contrary contained in this Section 3, if the
Employee’s employment is terminated by retirement (as defined in Section
3D) and Employee has not given the Company written notice to his/her immediate
supervisor and the Chief Executive Officer, of Employee’s intention to
retire not less than six (6) months prior to the date of his/her retirement,
then in such event, for purposes of this Agreement only, said termination of
employment shall be deemed to be not a retirement but a termination subject to
the provisions of Section 3A, provided, however, that in the event that
the Chief Executive Officer determines that said termination of employment
without six (6) months prior written notice is in the best interests of the
Company, such termination shall be deemed to be a retirement and shall be
subject to Section 3D. |
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F. |
If the Option is exercised by the executors, administrators, legatees, or
distributees of the estate of a deceased optionee, the Company shall be under no
obligation to issue stock hereunder unless and until the Company is satisfied
that the person(s) exercising the Option is the duly appointed legal
representative of the deceased optionee’s estate or the proper legatee or
distributee thereof. |
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G. |
For purposes of this Section 3, if the last day of the relevant period is a day
upon which the Exchange is not open for trading or the Common Stock is not
trading on that day, the relevant period will expire at the close of trading on
such earlier business day on which the Exchange is open and the Common Stock is
trading. |
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A. |
Employee or other proper party may exercise the Option only by delivering within
the term of the Option written notice to the Company at its principal office in
Minneapolis, Minnesota, stating the number of shares as to which the Option is
being exercised and, except as provided in Sections 4B(2) and 4C, accompanied by
payment-in-full of the Option price for all shares designated in the notice. |
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B. |
The
Employee may, at Employee’s election, pay the Option price as follows: |
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(1) |
by
cash or check (bank check, certified check, or personal check) |
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(2) |
by
delivering to the Company for cancellation, shares of Common Stock of the
Company which have been held by the Employee for not less than six (6) months
with a fair market value equal to the Option price. |
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For
purposes of Section 4B(2), the fair market value of the Company’s Common Stock shall
be the closing price of the Common Stock on the day immediately preceding the date of
exercise on the Exchange. If there is not a quotation available for such day, then the
closing price on the next preceding day for which such a quotation exists shall be
determinative of fair market value. If the shares are not then traded on an exchange, the
fair market value shall be the average of the closing bid and asked prices of the Common
Stock as reported by the National Association of Securities Dealers Automated Quotation
System. If the Common Stock is not then traded on NASDAQ or on an exchange, then the fair
market value shall be determined in such manner as the Company shall deem reasonable. |
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C. |
The Employee may, with the consent of the Company, pay the Option price by
delivering to the Company a properly executed exercise notice, together with
irrevocable instructions to a broker to promptly deliver to the Company from
sale or loan proceeds the amount required to pay the exercise price. |
| 5. |
Payment
of Withholding Taxes |
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Upon
exercise of any portion of this Option, Employee shall pay to the Company an amount
sufficient to satisfy any federal, state, or local withholding tax requirements which
arise as a result of the exercise of the Option or provide the Company with satisfactory
indemnification for such payment. Employee may pay such amount by delivering to the
Company for cancellation shares of Common Stock of the Company with a fair market value
equal to the minimum amount of such withholding tax requirement by (i) electing to have
the Company withhold shares otherwise to be delivered with a fair market value equal to
the minimum statutory amount of such taxes required to be withheld by the Company, or (ii)
electing to surrender to the Company previously owned shares with a fair market value
equal to the amount of such minimum tax obligation. |
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A. |
Notwithstanding Section 2A hereof, the entire Option shall become immediately
and fully exercisable upon a “Change of Control” and shall remain
fully exercisable until either exercised or expiring by its terms. A
“Change of Control” means: |
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(1) |
an
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“1934 Act”)), (a “Person”), of beneficial ownership (within
the meaning of Rule 13d-3 of the 0000 Xxx) which, together with other
acquisitions by such Person, results in the aggregate beneficial ownership by
such Person of 30% or more of either |
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(a) |
the
then outstanding shares of Common Stock of the Company (the “Outstanding
Company Common Stock”) or |
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(b) |
the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); |
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provided,
however, that the following acquisitions will not result in a Change of Control: |
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(i) |
an
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, |
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(ii) |
an acquisition by the Employee or any group that includes the Employee, or |
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(iii) |
an
acquisition by any entity pursuant to a transaction that complies with clauses
(a), (b) and (c) of Section 6A(3) below; or |
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(2) |
Individuals
who, as of the date hereof, constitute the Board of Directors of the Company
(the “Incumbent Board”) cease for any reason to constitute at least a
majority of said Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board will be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial membership on
the Board occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies by or on behalf of a Person other than the Board; or |
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(3) |
Consummation
of a reorganization, merger or consolidation of the Company with or into
another entity or a statutory exchange of Outstanding Company Common Stock or
Outstanding Company Voting Securities or sale or other disposition of all or
substantially all of the assets of the Company (“Business
Combination”); excluding, however, such a Business Combination pursuant to
which |
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(a) |
all
or substantially all of the individuals and entities who were the beneficial
owners of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, a majority of, respectively, the
then outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors (or comparable equity interests), as the case may
be, of the surviving or acquiring entity resulting from such Business
Combination (including, without limitation, an entity that as a result of
such transaction beneficially owns 100% of the outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities (or comparable equity securities) or all or substantially all
of the Company’s assets either directly or indirectly) in
substantially the same proportions (as compared to the other holders of
the Company’s common stock and voting securities prior to the
Business Combination) as their respective ownership, immediately prior to
such Business Combination, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, |
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(b) |
no
Person (excluding (i) any employee benefit plan (or related trust) sponsored
or maintained by the Company or such entity resulting from such Business
Combination or any entity controlled by the Company or the entity
resulting from such Business Combination, (ii) any entity beneficially
owning 100% of the outstanding shares of common stock and the combined
voting power of the then outstanding voting securities (or comparable
equity securities) or all or substantially all of the Company’s
assets either directly or indirectly and (iii) the Employee and any group
that includes the Employee) beneficially owns, directly or indirectly, 30%
or more of the then outstanding shares of common stock (or comparable
equity interests) of the entity resulting from such Business Combination
or the combined voting power of the then outstanding voting securities (or
comparable equity interests) of such entity, and |
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(c) |
immediately
after the Business Combination, a majority of the members of the board of
directors (or comparable governors) of the entity resulting from such
Business Combination were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or |
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(4) |
approval
by the shareholders of the Company of a complete liquidation or dissolution of
the Company. |
| 7. |
Adjustments;
Fundamental Change |
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A. |
If there shall be any change in the number or character of the Common Stock of
the Company through merger, consolidation, reorganization, recapitalization,
dividend in the form of stock (of whatever amount), stock split or other change
in the corporate structure of the Company, and all or any portion of the Option
shall then be unexercised and not yet expired, appropriate adjustments in the
outstanding Option shall be made by the Company, in order to prevent dilution or
enlargement of Employee’s Option rights. Such adjustments shall include,
where appropriate, changes in the number of shares of Common Stock and the price
per share subject to the outstanding Option. |
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B. |
In the event of a proposed (i) dissolution or liquidation of the Company, (ii) a
sale of substantially all of the assets of the Company, (iii) a merger or
consolidation of the Company with or into any other corporation, regardless of
whether the Company is the surviving corporation, or (iv) a statutory share
exchange involving the capital stock of the Company (each, a “Fundamental
Change”), the Management Organization and Compensation Committee (the
“Committee”) may, but shall not be obligated to: |
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(1) |
with
respect to a Fundamental Change that involves a merger, consolidation or
statutory share exchange, make appropriate provision for the protection of the
Option by the substitution of options and appropriate voting common stock of
the corporation surviving any such merger or consolidation or, if appropriate,
the “parent corporation” (as defined in Section 424(e) of the
Internal Revenue Code of 1986, as amended from time to time, and any
regulations promulgated thereunder, or any successor provision) of the Company
or such surviving corporation, in lieu of the Option and shares of Common Stock
of the Company, or |
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(2) |
with
respect to any Fundamental Change, including, without limitation, a merger,
consolidation or statutory share exchange, declare, prior to the occurrence of
the Fundamental Change, and provide written notice to the holder of the Option
of the declaration, that the Option, whether or not then exercisable, shall be
canceled at the time of, or immediately prior to the occurrence of, the
Fundamental Change in exchange for payment to the holder of the Option, within
20 days after the Fundamental Change, of cash (or, if the Committee so elects
in lieu of solely cash, of such form(s) of consideration, including cash and/or
property, singly or in such combination as the Committee shall determine, that
the holder of the Option would have received as a result of the Fundamental
Change if the holder of the Option had exercised the Option immediately prior
to the Fundamental Change) equal to, for each share of Common Stock covered by
the canceled Option, the amount, if any, by which the Fair Market Value (as
defined in this Section 7B) per share of Common Stock exceeds the exercise
price per share of Common Stock covered by the Option. At the time of the
declaration provided for in the immediately preceding sentence, the Option
shall immediately become exercisable in full and the holder of the Option shall
have the right, during the period preceding the time of cancellation of the
Option, to exercise the Option as to all or any part of the shares of Common
Stock covered thereby in whole or in part, as the case may be. In the event of
a declaration pursuant to this Section 7B, the Option, to the extent that it
shall not have been exercised prior to the Fundamental Change, shall be
canceled at the time of, or immediately prior to, the Fundamental Change, as
provided in the declaration. Notwithstanding the foregoing, the holder of the
Option shall not be entitled to the payment provided for in this Section 7B if
such Option shall have expired or been forfeited. For purposes of this Section
7B only, “Fair Market Value” per share of Common Stock means the fair
market value, as determined in good faith by the Committee, of the
consideration to be received per share of Common Stock by the shareholders of
the Company upon the occurrence of the Fundamental Change, notwithstanding
anything to the contrary provided in this Agreement. |
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A. |
This Option is issued pursuant to the Plan and is subject to its terms. The
terms of the Plan are available for inspection during business hours at the
principal offices of the Company. |
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B. |
This Agreement shall not create an employment relationship between Employee and
the Company and shall not confer on Employee any right with respect to
continuance of employment by the Company or any of its affiliates or
subsidiaries, nor will it interfere in any way with the right of the Company to
terminate such employment at any time. |
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C. |
Neither Employee, the Employee’s legal representative, nor the executor(s)
or administrator(s) of the Employee’s estate, or any person(s) to whom the
Option was transferred by will or the applicable laws of distribution and
descent shall be, or have any of the rights or privileges of, a shareholder of
the Company in respect of any shares of Common Stock receivable upon the
exercise of this Option, in whole or in part, unless and until such shares shall
have been issued upon exercise of this Option. |
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D. |
This option has been granted to Employee as a purely discretionary benefit and
shall not form part of Employee’s salary or entitle Employee to receive
similar option grants in the future. Benefits received under the Plan shall not
be used in calculating severance payments, if any. |
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E. |
The Company shall at all times during the term of the Option reserve and keep
available such number of shares as will be sufficient to satisfy the
requirements of this Agreement. |
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F. |
The internal law, and not the law of conflicts, of the State of Minnesota, USA,
shall govern all questions concerning the validity, construction and effect of
this Agreement, the Plan and any rules and regulations relating to the Plan or
this Option |
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G. |
Employee hereby consents to the transfer by his/her employer or the Company of
information relating to his/her participation in the Plan, including the
personal data set forth in this Agreement, between them or to other related
parties in the United States or elsewhere, or to any financial institution or
other third party engaged by the Company, but solely for the purpose of
administering the Plan and this Option. Employee also consents to the storage
and processing of such data by such persons for this purpose. |
IN WITNESS
WHEREOF, the parties have caused this Agreement to be executed on the day and year
first above written.
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GRACO INC. |
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By |
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«CEO_Name» |
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President and Chief Executive Officer |
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EMPLOYEE |
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«F_Name_MI» «L_Name» |
GRACO INC.
AMENDED AND RESTATED STOCK INCENTIVE PLAN (2006)
CHIEF EXECUTIVE OFFICER
STOCK OPTION AGREEMENT
(Non-Qualified)
THIS AGREEMENT,
made this XXth day of February, 2008, by and between Graco Inc., a Minnesota corporation
(the “Company”) and <<NAME>> (“<<SNAME>>” or
the “Employee”).
WITNESSETH THAT:
WHEREAS, the
Company pursuant to the Graco Inc. Amended and Restated Stock Incentive Plan (2006) (the
“Plan”) wishes to grant this stock option to Employee;
NOW THEREFORE, in
consideration of the premises and of the mutual covenants contained in this Agreement, the
parties agree as follows:
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The
Company grants to Employee, the right and option (the “Option”) to purchase all
or any part of an aggregate of «Words» («Number») shares of Common
Stock of the Company, par value USD 1.00 per share, at the price of USD
«Price» per share on the terms and conditions set forth in this Agreement. The
date of grant of the Option is <<DATE>> (the “Date of Grant”). |
| 2. |
Duration
and Exercisability |
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A. |
No portion of this Option may be exercised by Employee until the first
anniversary of the Date of Grant and then only in accordance with the Vesting
Schedule set forth below. In no event shall this Option or any portion of this
Option be exercisable following the tenth anniversary of the Date of Grant. |
| Vesting Date |
Portion of Option
Exercisable |
| First Anniversary of Date of Grant |
25% |
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| Second Anniversary of Date of Grant |
50% |
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| Third Anniversary of Date of Grant |
75% |
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| Fourth Anniversary of Date of Grant |
100% |
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If
Employee does not purchase in any one year the full number of shares of Common Stock of
the Company to which he/she is entitled under this Option, he/she may, subject to the
terms and conditions of Section 3, purchase such shares of Common Stock in any subsequent
year during the term of this Option. This Option shall expire as of the close of trading
at the national securities exchange on which the Common Stock is traded
(“Exchange”) on the tenth anniversary of the Date of Grant or if the Exchange is
closed on the anniversary date or the Common Stock of the Company is not trading on said
anniversary date, such earlier business day on which the Common Stock is trading on the
Exchange. |
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B. |
During the lifetime of Employee, the Option shall be exercisable only by him/her
and shall not be assignable or transferable by him/her otherwise than by will or
the laws of descent and distribution. |
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C. |
Under no circumstances may the Option or any portion of the Option granted by
this Agreement be exercised after the term of the Option expires. |
| 3. |
Effect
of Termination of Employment |
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A. |
If Employee’s employment terminates for any reason other than
Employee’s gross and willful misconduct, death, retirement (as defined in
Section 3D), or disability (as defined in Section 3D), Employee shall have the
right to exercise that portion of the Option exercisable upon the date of
termination of employment at any time within the period beginning on the day
after termination of employment and ending at the close of trading on the
Exchange thirty (30) days later. |
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B. |
If Employee’s employment terminates by reason of Employee’s gross and
willful misconduct during employment, including, but not limited to, wrongful
appropriation of Company funds, serious violations of Company policy, breach of
fiduciary duty or the conviction of a felony, the unexercised portion of the
Option shall terminate as of the time of the misconduct. If the Company
determines subsequent to the termination of Employee’s employment for
whatever reason, that Employee engaged in conduct during employment that would
constitute gross and willful misconduct justifying termination, the Option shall
terminate as of the time of such misconduct. Furthermore, if the Option is
exercised in whole or in part and the Company thereafter determines that
Employee engaged in gross and willful misconduct during employment which would
have justified termination at any time prior to the date of such exercise, the
Option shall be deemed to have terminated as of the time of the misconduct and
the Company may elect to rescind the Option exercise. Gross and willful
misconduct shall not include any action or inaction by <<SNAME>>
contrary to the direction of the Board with respect to any initiative, strategy
or action of the Company, which action or inaction <<SNAME>>
believes is in the best interest of the Company. |
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C. |
If Employee shall die while employed by the Company or an affiliate and shall
not have fully exercised the Option, all shares remaining under the Option shall
become immediately exercisable. If Employee shall die within thirty (30) days
after a termination of employment which meets the criteria of Section 3A above,
only those shares vested as of the date of termination shall be exercisable. The
executor or administrator of Employee’s estate, or any person(s) to whom
the Option was transferred by will or the applicable laws of distribution and
descent may exercise such exercisable shares at any time during a period
beginning on the day after the date of Employee’s death and ending at the
close of trading on the Exchange on the anniversary of death one (1) year later. |
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D. |
If Employee’s termination of employment is due to retirement or disability,
all shares remaining under the Option shall become immediately exercisable.
Employee shall be deemed to have retired if the termination of employment occurs
for reasons other than the Employee’s gross and willful misconduct, death,
or disability after Employee (i) has attained age 55 and 10 years of service
with the Company or an affiliate, or (ii) has attained age 65. Employee shall be
deemed to be disabled if the termination of employment occurs because Employee
is unable to work due to an impairment which would qualify as a disability under
the Company’s long term disability program. Employee may exercise the
shares remaining unexercised at any time during a period beginning on the day
after the date of Employee’s termination of employment and ending at the
close of trading on the Exchange on the tenth anniversary of the Date of Grant.
If Employee should die during the period between the date of Employee’s
retirement or disability and the expiration of the Option, the executor(s) or
administrator(s) of the Employee’s estate, or any person(s) to whom the
Option was transferred by will or the applicable laws of distribution and
descent may exercise the unexercised portion of the Option at any time during a
period beginning the day after the date of Employee’s death and ending at
the close of trading on the Exchange on the anniversary of death one (1) year
later, provided, however, in no event shall the Option be exercisable following
the tenth anniversary of the Date of Grant. Notwithstanding anything to the
contrary contained in Section 3, if the Employee’s employment is terminated
by retirement (as defined in this Section 3D) and Employee has not given written
notice to the Chair of the Management Organization and Compensation Committee of
the Board of Directors (the “Committee”), of Employee’s intention
to retire not less than six (6) months prior to the date of his retirement, then
in such event, for purposes of this Agreement only, said termination of
employment shall be deemed to be not a retirement but a termination subject to
the provisions of Section 3A, provided, however, that in the event that
the Committee determines that said termination of employment without six (6)
months prior written notice is in the best interests of the Company, such
termination shall be deemed to be a retirement and shall be subject to this
Section 3D. |
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E. |
If the Option is exercised by the executors, administrators, legatees, or
distributees of the estate of a deceased optionee, the Company shall be under no
obligation to issue stock hereunder unless and until the Company is satisfied
that the person(s) exercising the Option is the duly appointed legal
representative of the deceased optionee’s estate or the proper legatee or
distributee thereof. |
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F. |
For purposes of this Section 3, if the last day of the relevant period is a day
upon which the Exchange is not open for trading or the Common Stock is not
trading on that day, the relevant period will expire at the close of trading on
such earlier business day on which the Exchange is open and the Common Stock is
trading. |
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A. |
Employee or other proper party may exercise the Option only by delivering within
the term of the Option written notice to the Company at its principal office in
Minneapolis, Minnesota, stating the number of shares as to which the Option is
being exercised and, except as provided in Sections 4B(2) and 4C, accompanied by
payment-in-full of the Option price for all shares designated in the notice. |
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B. |
The
Employee may, at Employee’s election, pay the Option price as follows: |
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(1) |
by cash or check (bank check, certified check, or personal check) |
| |
(2) |
by delivering to the Company for cancellation, shares of Common Stock of the
Company which have been held by the Employee for not less than six (6) months
with a fair market value equal to the Option price. |
| |
For
purposes of Section 4B(2), the fair market value of the Company’s Common Stock shall
be the closing price of the Common Stock on the day immediately preceding the date of
exercise on the Exchange. If there is not a quotation available for such day, then the
closing price on the next preceding day for which such a quotation exists shall be
determinative of fair market value. If the shares are not then traded on an exchange, the
fair market value shall be the average of the closing bid and asked prices of the Common
Stock as reported by the National Association of Securities Dealers Automated Quotation
System. If the Common Stock is not then traded on NASDAQ or on an exchange, then the fair
market value shall be determined in such manner as the Company shall deem reasonable. |
| |
C. |
The Employee may, with the consent of the Company, pay the Option price by
delivering to the Company a properly executed exercise notice, together with
irrevocable instructions to a broker to promptly deliver to the Company from
sale or loan proceeds the amount required to pay the exercise price. |
| 5. |
Payment
of Withholding Taxes |
| |
Upon
exercise of any portion of this Option, Employee shall pay to the Company an amount
sufficient to satisfy any federal, state, or local withholding tax requirements which
arise as a result of the exercise of the Option or provide the Company with satisfactory
indemnification for such payment. Employee may pay such amount by delivering to the
Company for cancellation shares of Common Stock of the Company with a fair market value
equal to the minimum amount of such withholding tax requirement by (i) electing to have
the Company withhold shares otherwise to be delivered with a fair market value equal to
the minimum statutory amount of such taxes required to be withheld by the Company, or (ii)
electing to surrender to the Company previously owned shares with a fair market value
equal to the amount of such minimum tax obligation. |
| |
A. |
Notwithstanding Section 2A hereof, the entire Option shall become immediately
and fully exercisable upon a “Change of Control” and shall remain
fully exercisable until either exercised or expiring by its terms. A
“Change of Control” means: |
| |
(1) |
an
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“1934 Act”)), (a “Person”), of beneficial ownership (within
the meaning of Rule 13d-3 of the 0000 Xxx) which, together with other
acquisitions by such Person, results in the aggregate beneficial ownership by
such Person of 30% or more of either |
| |
(a) |
the
then outstanding shares of Common Stock of the Company (the “Outstanding
Company Common Stock”) or |
| |
(b) |
the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); |
| |
provided,
however, that the following acquisitions will not result in a Change of Control: |
| |
(i) |
an
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, |
| |
(ii) |
an acquisition by the Employee or any group that includes the Employee, or |
| |
(iii) |
an acquisition by any entity pursuant to a transaction that complies with clauses
(a), (b) and (c) of Section 6A(3) below; or |
| |
(2) |
Individuals
who, as of the date hereof, constitute the Board of Directors of the Company
(the “Incumbent Board”) cease for any reason to constitute at least a
majority of said Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board will be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial membership on
the Board occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies by or on behalf of a Person other than the Board; or |
| |
(3) |
Consummation
of a reorganization, merger or consolidation of the Company with or into
another entity or a statutory exchange of Outstanding Company Common Stock or
Outstanding Company Voting Securities or sale or other disposition of all or
substantially all of the assets of the Company (“Business
Combination”); excluding, however, such a Business Combination pursuant to
which |
| |
(a) |
all
or substantially all of the individuals and entities who were the beneficial
owners of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, a majority of, respectively, the
then outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors (or comparable equity interests), as the case may
be, of the surviving or acquiring entity resulting from such Business
Combination (including, without limitation, an entity that as a result of
such transaction beneficially owns 100% of the outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities (or comparable equity securities) or all or substantially all
of the Company’s assets either directly or indirectly) in
substantially the same proportions (as compared to the other holders of
the Company’s common stock and voting securities prior to the
Business Combination) as their respective ownership, immediately prior to
such Business Combination, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, |
| |
(b) |
no
Person (excluding (i) any employee benefit plan (or related trust) sponsored
or maintained by the Company or such entity resulting from such Business
Combination or any entity controlled by the Company or the entity
resulting from such Business Combination, (ii) any entity beneficially
owning 100% of the outstanding shares of common stock and the combined
voting power of the then outstanding voting securities (or comparable
equity securities) or all or substantially all of the Company’s
assets either directly or indirectly and (iii) the Employee and any group
that includes the Employee) beneficially owns, directly or indirectly, 30%
or more of the then outstanding shares of common stock (or comparable
equity interests) of the entity resulting from such Business Combination
or the combined voting power of the then outstanding voting securities (or
comparable equity interests) of such entity, and |
| |
(c) |
immediately
after the Business Combination, a majority of the members of the board of
directors (or comparable governors) of the entity resulting from such
Business Combination were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or |
| |
(4) |
approval
by the shareholders of the Company of a complete liquidation or dissolution of
the Company. |
| 7. |
Adjustments;
Fundamental Change |
| |
A. |
If there shall be any change in the number or character of the Common Stock of
the Company through merger, consolidation, reorganization, recapitalization,
dividend in the form of stock (of whatever amount), stock split or other change
in the corporate structure of the Company, and all or any portion of the Option
shall then be unexercised and not yet expired, appropriate adjustments in the
outstanding Option shall be made by the Company, in order to prevent dilution or
enlargement of Employee’s Option rights. Such adjustments shall include,
where appropriate, changes in the number of shares of Common Stock and the price
per share subject to the outstanding Option. |
| |
B. |
In the event of a proposed (i) dissolution or liquidation of the Company, (ii) a
sale of substantially all of the assets of the Company, (iii) a merger or
consolidation of the Company with or into any other corporation, regardless of
whether the Company is the surviving corporation, or (iv) a statutory share
exchange involving the capital stock of the Company (each, a “Fundamental
Change”), the Management Organization and Compensation Committee (the
“Committee”) may, but shall not be obligated to: |
| |
(1) |
with
respect to a Fundamental Change that involves a merger, consolidation or
statutory share exchange, make appropriate provision for the protection of the
Option by the substitution of options and appropriate voting common stock of
the corporation surviving any such merger or consolidation or, if appropriate,
the “parent corporation” (as defined in Section 424(e) of the
Internal Revenue Code of 1986, as amended from time to time, and any
regulations promulgated thereunder, or any successor provision) of the Company
or such surviving corporation, in lieu of the Option and shares of Common Stock
of the Company, or |
| |
(2) |
with
respect to any Fundamental Change, including, without limitation, a merger,
consolidation or statutory share exchange, declare, prior to the occurrence of
the Fundamental Change, and provide written notice to the holder of the Option
of the declaration, that the Option, whether or not then exercisable, shall be
canceled at the time of, or immediately prior to the occurrence of, the
Fundamental Change in exchange for payment to the holder of the Option, within
20 days after the Fundamental Change, of cash (or, if the Committee so elects
in lieu of solely cash, of such form(s) of consideration, including cash and/or
property, singly or in such combination as the Committee shall determine, that
the holder of the Option would have received as a result of the Fundamental
Change if the holder of the Option had exercised the Option immediately prior
to the Fundamental Change) equal to, for each share of Common Stock covered by
the canceled Option, the amount, if any, by which the Fair Market Value (as
defined in this Section 7B) per share of Common Stock exceeds the exercise
price per share of Common Stock covered by the Option. At the time of the
declaration provided for in the immediately preceding sentence, the Option
shall immediately become exercisable in full and the holder of the Option shall
have the right, during the period preceding the time of cancellation of the
Option, to exercise the Option as to all or any part of the shares of Common
Stock covered thereby in whole or in part, as the case may be. In the event of
a declaration pursuant to this Section 7B, the Option, to the extent that it
shall not have been exercised prior to the Fundamental Change, shall be
canceled at the time of, or immediately prior to, the Fundamental Change, as
provided in the declaration. Notwithstanding the foregoing, the holder of the
Option shall not be entitled to the payment provided for in this Section 7B if
such Option shall have expired or been forfeited. For purposes of this Section
7B only, “Fair Market Value” per share of Common Stock means the fair
market value, as determined in good faith by the Committee, of the
consideration to be received per share of Common Stock by the shareholders of
the Company upon the occurrence of the Fundamental Change, notwithstanding
anything to the contrary provided in this Agreement. |
| |
A. |
This Option is issued pursuant to the Plan and is subject to its terms. The
terms of the Plan are available for inspection during business hours at the
principal offices of the Company. |
| |
B. |
This Agreement shall not confer on Employee any right with respect to
continuance of employment by the Company or any of its subsidiaries, nor will it
interfere in any way with the right of the Company to terminate such employment
at any time. |
| |
C. |
Neither Employee, the Employee’s legal representative, nor the executor(s)
or administrator(s) of the Employee’s estate, or any person(s) to whom the
Option was transferred by will or the applicable laws of distribution and
descent shall be, or have any of the rights or privileges of, a shareholder of
the Company in respect of any shares of Common Stock receivable upon the
exercise of this Option, in whole or in part, unless and until such shares shall
have been issued upon exercise of this Option. |
| |
D. |
The Company shall at all times during the term of the Option reserve and keep
available such number of shares as will be sufficient to satisfy the
requirements of this Agreement. |
| |
E. |
The internal law, and not the law of conflicts of the State of Minnesota shall
govern all questions concerning the validity, construction and effect of this
Agreement, the Plan and any rules and regulations relating to the Plan or this
Option. |
| |
F. |
Employee hereby consents to the transfer to his employer or the Company of
information relating to his/her participation in the Plan, including the
personal data set forth in this Agreement, between them or to other related
parties in the United States or elsewhere, or to any financial institution or
other third party engaged by the Company, but solely for the purpose of
administering the Plan and this Option. Employee also consents to the storage
and processing of such data by such persons for this purpose. |
IN WITNESS WHEREOF, the
Company, by the Management Organization and Compensation Committee of the Board of
Directors, and the Employee have caused this Agreement to be executed and delivered, all
as of the day and year first above written.
| |
GRACO INC. |
| |
Management Organization and Compensation Committee |
| |
|
| |
|
| |
By |
| |
«Chair_Name» |
| |
Its Chairman |
| |
|
| |
EMPLOYEE |
| |
|
| |
|
| |
|
| |
By |
| |
«NAME» |
