Exhibit (d)(3)
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of the ____ day of ________, ____ (the
"Grant Date"), between Aldila, Inc., a Delaware corporation (the
"Company"), and _________________ (the "Optionee"). All capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in
the Aldila, Inc. 1994 Stock Incentive Plan (the "Plan").
WHEREAS, the Company has adopted the Plan in order to provide
additional incentives to certain directors, officers and employees of the
Company and its Subsidiaries; and
WHEREAS, the Committee responsible for administration of the Plan
has determined to grant an option to the Optionee as provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
---------------
1.1 The Company hereby grants to the Optionee the right and
option (the "Option") to purchase all or any part of an aggregate of ______
whole Shares subject to, and in accordance with, the terms and conditions
set forth in this Agreement.
1.2 The Option is not intended to qualify as an Incentive Stock
Option within the meaning of Section 422 of the Code.
1.3 This Agreement shall be construed in accordance and
consistent with, and subject to, the provisions of the Plan (the provisions
of which are incorporated herein by reference) and, except as otherwise
expressly set forth herein, the capitalized terms used in this Agreement
shall have the same definitions as set forth in the Plan.
2. Purchase Price.
--------------
The price at which the Optionee shall be entitled to purchase
Shares upon the exercise of the Option shall be $_____ per Share.
3. Duration of Option.
------------------
The Option shall be exercisable to the extent and in the manner
provided herein until ___________ (the "Exercise Term"); provided, however,
that the Option may be earlier terminated as provided in Section 6 hereof.
4. Exercisability of Option.
------------------------
Unless otherwise provided in this Agreement or the Plan, the
Option shall entitle the Optionee to purchase, in whole at any time or in
part from time to time one third of the total number of Shares covered by
the Option on or after _____________, and an additional one third of the
number of Shares covered by the Option on or after each of _____________
and _____________, and each such right of purchase shall be cumulative and
shall continue, unless sooner exercised or terminated as herein provided,
during the remaining period of the Exercise Term. Any fractional number of
Shares resulting from the application of the foregoing percentages shall be
rounded to the next higher whole number of Shares.
5. Manner of Exercise and Payment.
------------------------------
5.1 Subject to the terms and conditions of this Agreement and the
Plan, the Option may be exercised by delivery of written notice to the
Secretary of the Company, at its principal executive office. Such notice
shall state that the Optionee is electing to exercise the Option and the
number of Shares in respect of which the Option is being exercised and
shall be signed by the person or persons exercising the Option. If
requested by the Committee, such person or persons shall (i) deliver this
Agreement to the Secretary of the Company who shall endorse thereon a
notation of such exercise and (ii) provide satisfactory proof as to the
right of such person or persons to exercise the Option.
5.2 The notice of exercise described in Section 5.1 hereof shall
be accompanied by the full purchase price for the Shares in respect of
which the Option is being exercised, in cash, by check or by transferring
Shares to the Company having a Fair Market Value on the day preceding the
date of exercise equal to the cash amount for which such Shares are
substituted.
5.3 Upon receipt of notice of exercise and full payment for the
Shares in respect of which the Option is being exercised, the Company
shall, subject to the terms and conditions of the Plan, take such action as
may be necessary to effect the transfer to the Optionee of the number of
Shares as to which such exercise was effective.
5.4 The Optionee shall not be deemed to be the holder of, or to
have any of the rights of a holder with respect to any Shares subject to
the Option until (i) the Option shall have been exercised pursuant to the
terms of this Agreement and the Optionee shall have paid the full purchase
price for the number of Shares in respect of which the Option was
exercised, (ii) the Company shall have issued and delivered the Shares to
the Optionee, and (iii) the Optionee's name shall have been entered as a
stockholder of record on the books of the Company, whereupon the Optionee
shall have full voting and other ownership rights with respect to such
Shares.
6. Termination of Employment.
-------------------------
6.1 Death, Disability, Retirement or Change in Control. If the
employment (or service as a director) of the Optionee is terminated as a
result of his death, Disability, Retirement, or within two (2) years
following a Change in Control, the Option shall continue to be exercisable
in whole or in part (to the extent exercisable on the date of the
Optionee's termination of employment (or service as a director)) at any
time within one (1) year after the date of such termination of employment
(or service as a director), but in no event after the expiration of the
Exercise Term. In the event of the Optionee's death, the Option shall be
exercisable, to the extent provided in the Plan and this Agreement, by the
legatee or legatees under his will, or by his personal representatives or
distributees and such person or persons shall be substituted for the
Optionee each time the Optionee is referred to herein.
6.2 Other Termination of Employment. If the employment (or
service as a director) of the Optionee is terminated for any reason other
than the reasons set forth in Section 6.1 hereof (including the Optionee's
ceasing to be employed by a Subsidiary or Division as a result of the sale
of such Subsidiary or Division or an interest in such Subsidiary or
Division), the Option shall terminate on the earlier of the expiration of
the Exercise Term and the 30th day following the date of the Optionee's
termination of employment (or service as a director), whether or not
exercisable.
7. Effect of Change in Control.
---------------------------
Notwithstanding anything contained in this Agreement to the
contrary (other than the last sentence of this Section 7), in the event of
a Change in Control, (A) the Option shall become immediately and fully
exercisable and (B) upon termination of the Optionee's employment (or
service as a director) with the Company following a Change in Control, the
Option shall remain exercisable until the later of (x) one year after
termination and (y) sixty (60) days following the expiration of the Pooling
Period (in the event the Change of Control constitutes a Pooling
Transaction), but in no event beyond the stated term of the Option. In
addition, the Optionee will be permitted to surrender for cancellation
within sixty (60) days after such Change in Control, the Option or portion
of the Option, to the extent not yet exercised, and the Optionee will be
entitled to receive a cash payment in an amount equal to the excess, if
any, of (A) the greater of (x) the Fair Market Value, on the date preceding
the date of the surrender, of the Shares subject to the Option or portion
of the Option surrendered or (y) the Adjusted Fair Market Value of the
Shares subject to the Option or the portion of the Option surrendered, over
(B) the aggregate purchase price for such Shares under the Option;
provided, however, if the Option was granted within six (6) months prior to
the Change in Control and the Optionee may be subject to liability under
Section 16(b) of the Exchange Act, the Optionee shall be entitled to
surrender the Option for cancellation during the sixty (60) day period
commencing upon the expiration of six (6) months from the Grant Date. In
the case of a Change in Control which also constitutes a Pooling
Transaction, the Board may take such actions which it determines after
consultation with its advisors that are reasonably necessary in order to
assure that the Pooling Transaction will qualify as such, including, but
not limited to, providing that (i) the Option shall not become immediately
and fully exercisable on the date of the Change in Control but rather shall
become immediately and fully exercisable on the date following the last day
of the Pooling Period (whether or not the Optionee is then an employee of
the Company), (ii) the Optionee shall only have the right to surrender the
Option (or any portion of the Option) for cancellation in return for the
payment specified above in this Section 7 for a period of sixty (60) days
commencing on the date following the last day of the Pooling Period, but in
no event beyond the stated term of the Option, and/or (iii) the payment
specified above in this Section 7 shall be paid in the form of cash, Shares
or securities of a successor of the Company, or a combination of the
foregoing.
8. Nontransferability.
------------------
The Option shall not be transferable other than by will or by the
laws of descent and distribution. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee.
9. No Right to Continued Employment.
--------------------------------
Nothing in this Agreement or the Plan shall be interpreted or
construed to confer upon the Optionee any right with respect to continuance
of employment by the Company, nor shall this Agreement or the Plan
interfere in any way with the right of the Company to terminate the
Optionee's employment at any time.
10. Adjustments.
-----------
In the event of a Change in Capitalization, the Committee may
make appropriate adjustments to the number and class of Shares or other
stock or securities subject to the Option and the purchase price for such
Shares or other stock or securities. The Committee's adjustment shall be
made in accordance with the provisions of Section 12 of the Plan and shall
be effective and final, binding and conclusive for all purposes of the Plan
and this Agreement.
11. Effect of a Merger Consolidation or Liquidation.
-----------------------------------------------
Subject to Section 7 hereof, upon the effective date of (i) the
liquidation or dissolution of the Company or (ii) a merger or consolidation
of the Company (a "Transaction"), the Option shall continue in effect in
accordance with its terms and the Optionee shall be entitled to receive in
respect of all Shares subject to the Option, upon exercise of the Option,
the same number and kind of stock, securities, cash, property or other
consideration that each holder of Shares was entitled to receive in the
Transaction.
12. Withholding of Taxes.
--------------------
The Company shall have the right to deduct from any distribution
of cash to the Optionee an amount equal to the federal, state and local
income taxes and other amounts as may be required by law to be withheld
(the "Withholding Taxes") with respect to the Option. If the Optionee is
entitled to receive Shares upon exercise of the Option, the Optionee shall
pay the Withholding Taxes to the Company in cash prior to the issuance of
such Shares. In satisfaction of the Withholding Taxes, the Optionee may
make a written election (the "Tax Election"), which may be accepted or
rejected in the discretion of the Committee, to have withheld a portion of
the Shares issuable to him or her upon exercise of the Option, having an
aggregate Fair Market Value, on the date preceding the date of such
issuance, equal to the Withholding Taxes, provided that if the Optionee may
be subject to liability under Section 16(b) of the Exchange Act either (i)
(A) the Tax Election is made at least six (6) months prior to the date the
Option is exercised and (B) the Tax Election is irrevocable with respect to
the exercise of all Options which are exercised prior to the expiration of
six (6) months following a revocation of the Tax Election or (ii) (A) the
Optionee makes the Tax Election at least six (6) months after the Grant
Date, (B) the Option is exercised during the ten-day period beginning on
the third business day and ending on the tenth business day following the
release for publication of the Company's quarterly or annual statement of
sales and earnings (a "Window Period") and (C) the Tax Election is made
during the Window Period in which the Option is exercised or prior to such
Window Period and subsequent to the immediately preceding Window Period.
13. Optionee Bound by the Plan.
--------------------------
The Optionee hereby acknowledges receipt of a copy of the Plan
and agrees to be bound by all the terms and provisions thereof.
14. Modification of Agreement.
-------------------------
This Agreement may be modified, amended, suspended or terminated,
and any terms or conditions may be waived, but only by a written instrument
executed by the parties hereto.
15. Severability.
------------
Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such
holding and shall continue in full force in accordance with their terms.
16. Governing Law.
-------------
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware
without giving effect to the conflicts of laws principles thereof.
17. Successors in Interest.
----------------------
This Agreement shall inure to the benefit of and be binding upon
any successor to the Company. This Agreement shall inure to the benefit of
the Optionee's legal representatives. All obligations imposed upon the
Optionee and all rights granted to the Company under this Agreement shall
be final, binding and conclusive upon the Optionee's heirs, executors,
administrators and successors.
18. Resolution of Disputes.
----------------------
Any dispute or disagreement which may arise under, or as a result
of, or in any way relate to, the interpretation, construction or
application of this Agreement shall be determined by the Committee in good
faith. Any determination made hereunder shall be final, binding and
conclusive on the Optionee and Company for all purposes.
ALDILA, INC.
Attest:
By:
-------------------------------------
----------------------------------
Secretary
---------------------------------------
Optionee:
