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Exhibit 10(D)(2)
SERVOTRONICS, INC.
STOCK OPTION AGREEMENT
FOR
XXXXXX X. XXXXXX
DATED MARCH 24, 1998
1. Definitions.
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As used in this Agreement:
(a) "Company" means Servotronics, Inc.
(b) "Common Stock" means the common stock, $.20 par value, of the
Company.
(c) "Fair Market Value" of a share of Common Stock on a given date
means the average of the highest and lowest quoted sales prices of a share of
Common Stock on the American Stock Exchange on that date or, if no such shares
were traded on the American Stock Exchange on that date, on the next preceding
date on which such shares were so traded. However, if shares of Common Stock
have not been traded on the American Stock exchange for more than ten days
immediately preceding the given date, the Fair Market Value of a share of Common
Stock shall be determined by the Committee in such manner as it may deem
appropriate.
(d) "Option" means the option granted pursuant to this Agreement to
purchase 12,600 shares of Common Stock, which option is intended to be a
non-qualified stock option.
(e) "Committee" means the Board of Directors of the Company or any
committee of the Board that the Board has appointed to administer the Plan.
(f) "Date of Grant" means March 24, 1998.
(g) "Optionee" means Xxxxxx X. Xxxxxx.
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2. Administration.
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The Committee shall have all the powers vested in it by the terms of
this Agreement to administer this Agreement. The Committee is authorized to
interpret this Agreement.
3. Grant of Option.
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The Company grants to Optionee an option to purchase 12,600 shares of
Common Stock pursuant to this Agreement.
4. Terms of Option.
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(a) The purchase price of each share of Common Stock subject to the
Option is the Fair Market Value of a share of Common Stock on the Date of Grant
of the Option, which is $8.50.
(b) The Option may be exercised with respect to 3,150 shares of Common
Stock on or after September 24, 1998, and with respect to an additional 3,150
shares of Common Stock on or after each of the first three anniversaries of the
Date of Grant, on a cumulative basis, provided that the Option shall not be
exercisable later than the day preceding the tenth anniversary of the Date of
Grant.
(c) By executing this Agreement, the Optionee agrees on behalf of
himself, his executor, administrator, heirs and distributees that any shares of
Common Stock purchased pursuant to the Option are being acquired for investment
and not with a view to distribution.
(d) To exercise the Option, written notice should be given to the
Secretary of the Company in the form attached to this Agreement.
(e) The purchase price of any shares with respect to which the Option
is exercised is payable in full on the date the Option is exercised, in cash or
in shares of Common Stock or in a combination of cash and such shares. The value
of a share of Common Stock delivered in payment of the purchase price shall be
its Fair Market Value on the date the Option is exercised.
(f) The Option is not assignable or transferable by the Optionee
except by will or the laws of descent and distribution and is exercisable,
during the Optionee's lifetime, only by him.
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(g) If the Option has not already expired, it shall expire upon the
termination of the Optionee's service as a director of the Company, whether by
death or otherwise, and no shares of Common Stock may thereafter be purchased
pursuant to the Option, except that:
(1) The Optionee may, within three months after the date of the
termination of his service as a director of the Company, purchase any shares of
Common Stock that the Optionee was entitled to purchase under the Option on the
date of the termination of his service as a director.
(2) Upon the death of any Optionee while serving as a director of
the Company or within the three-month period referred to in Section 4(g)(1)
above, the Optionee's estate or the person to whom such Optionee's rights under
the Option are transferred by will or the laws of descent and distribution may,
within one year after the date of the Optionee's death, purchase any shares of
Common Stock that the Optionee was entitled to purchase under the Option on the
date of his death.
Nothing in this subsection shall allow the exercise of the Option
later than the day before the tenth anniversary of the Date of Grant of the
Option.
5. Adjustment of Shares Available.
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If there is any change in the number of outstanding shares of Common
Stock of the Company through the declaration of stock dividends or through stock
splits, then the number of shares subject to the Option and the purchase price
of the shares subject to the Option shall be automatically adjusted. If there is
any change in the number of outstanding shares of Common Stock of the Company
through any change in the capital account of the Company or through any other
transaction referred to in section 424(a) of the Internal Revenue Code, then the
number of shares subject to the Option and the purchase price of the shares
subject to the Option shall be appropriately adjusted by the Committee, except
to the extent the Committee takes other action pursuant to the following
paragraph.
Notwithstanding the provision of any other Section of this Agreement,
if the Company shall not be the surviving corporation in any merger or
consolidation, or if the Company is to sell all or substantially all of its
assets, or if the ownership of more than 25 percent of the outstanding shares of
Common Stock shall change as the result of a concerted action by one or more
persons or corporations or if an attempt is so made to effect such a change of
ownership, or if the Company is to be dissolved and liquidated (each such event
shall be referred to in this paragraph as a "Corporate Change"), then the Option
shall become exercisable in full as of the Change in Control, and the Committee
may, subject to the agreement of the Optionee, (i) further accelerate the time
at which the Option may be exercised
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so that the Option may be exercised in full on or before a date fixed by the
Committee, (ii) provide for and offer the purchase of the Option to the extent
then outstanding for an amount of cash equal to the excess of the Fair Market
Value of the shares subject to the Option (which in the event of a change in the
ownership of more than 25 percent of the outstanding shares of Common Stock
shall not be less than the amount of cash and the fair market value of other
consideration tendered for such outstanding shares) over the aggregate purchase
price of the shares subject to the Option, (iii) make such adjustments to the
Option as the Committee finds appropriate to reflect such Corporate Change,
provided such adjustments are not to the disadvantage of the Optionee, or (iv)
cause any surviving corporation in such Corporate Change to assume the Option or
substitute a new option (of equal or greater value) for such Option.
6. No Right to Continue as Director.
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Nothing in this Agreement shall confer upon the Optionee the right to
continue as a director of the Company.
7. Rights as Stockholder.
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No person shall have the rights of a stockholder with respect to
shares of Common Stock subject to the Option until the date of issuance, if any,
of a stock certificate pursuant to the exercise of the Option.
8. Regulatory Approvals and Listing.
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The Company shall not be required to issue any certificate or
certificates for shares of Common Stock upon the exercise of the Option prior to
(a) the obtaining of any approval from any government agency that the Company
shall, in its sole discretion reasonably, determine to be necessary, (b) the
admission of such shares to listing on any stock exchange on which the Common
Stock may then be listed, and (c) the completion of any registration or other
qualification of such shares under any state or Federal law or rulings or
regulations of any governmental body that the Company shall, in its sole
discretion, reasonably determine to be necessary or advisable. The Company
agrees to use its best efforts to accomplish the above expeditiously and at no
cost to the Optionee.
9. Satisfaction of Tax Liabilities.
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The Company shall not be required to issue any certificate for shares
of Common Stock upon the exercise of the Option unless any Federal, state, or
local tax withholding obligation incurred by the Company in connection with the
exercise of the Option has been provided for by the Optionee through the
Optionee's delivery of a sufficient amount
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of cash or shares of Common Stock to the Company or through the Company's
retention of shares of Common Stock otherwise issuable on the exercise of the
Option.
The value of a share of Common Stock delivered or retained to provide
for the tax withholding obligation incurred by the Company shall be its Fair
Market Value on the date the Option is exercised.
10. Construction.
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This Agreement shall be construed in accordance with the law of the
State of Delaware.
SERVOTRONICS, INC.
By
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Xxxxxxxx X. Xxxxxxxx
President
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Xxxxxx X. Xxxxxx
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