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EXHIBIT 10.38
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (this "Option Agreement") is entered into
as of this 11th day of December, 1997 between GS INDUSTRIES, INC., a Delaware
corporation (the "Company"), and XXXX X. XXXXX (the "Optionee").
WHEREAS, the Company has adopted the GS Industries, Inc. 1997 Stock
Option Plan (the "Plan"), the terms and conditions of which are incorporated
herein by reference, and pursuant to which the Company may, from time to time,
make awards of Options (as defined below) and enter into Option Agreements with
eligible employees of the Company; and
WHEREAS, pursuant to the Plan, the Company has determined to grant to
the Optionee an Option to purchase Common Stock (as defined below) of the
Company, which Option shall be subject to the terms and conditions of this
Option Agreement; and
WHEREAS, a copy of such Plan has been delivered to the undersigned
Optionee.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereby agree as
follows:
1. DEFINITIONS. For purposes of this Option Agreement, the following
terms shall have the meanings indicated (all other capitalized terms used in
this Option Agreement but not defined herein shall have the meaning assigned to
such terms in the Plan):
(a) "Committee" shall mean the Compensation Committee of the
Board of Directors of the Company, or, in the event no such Committee
exists or is appointed, then the Board of Directors of the Company.
(b) "Common Stock" means the common stock of the Company, par
value $.01 per share.
(c) "Executive Option Shares" shall have the meaning provided
in paragraph 2 below.
(d) "Exercise Date" shall mean the business day, during the
Option Period, upon which the Option is exercised pursuant to the Plan.
(e) "Exercise Option Price" shall have the meaning provided in
paragraph 2 below.
(f) "Fair Market Value" shall mean:
(i) if shares of Common Stock are traded on an
established United States national stock exchange or in the
United States over-the-counter market with prices reported on
the NASDAQ, the average of the highest and lowest sales prices
for
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shares of Common Stock on the relevant date (or, if there were
no sales of shares of Common Stock on such date, the weighted
average of the mean between the highest and lowest sale prices
for shares of Common Stock on the nearest preceding trading
day on which there were sales of shares of Common Stock); and
(ii) if shares of Common Stock are not traded as
described in clause (i), the fair market value of shares of
Common Stock on the relevant date, as determined in good faith
by the Committee.
(g) "Option" shall mean the option to purchase shares of
Common Stock granted to the Optionee pursuant to this Option Agreement.
(h) "Option Agreement" shall mean this Stock Option Agreement
between the Company and the undersigned Optionee.
(i) "Option Period" shall have the meaning provided in
paragraph 3(b) below.
(j) "Plan" shall mean the GS Industries, Inc. 1997 Stock
Option Plan and any amendments thereto.
2. GRANT OF OPTION. Effective on the Commencement Date of the
Employment Agreement between Company and Optionee of even date herewith, and
subject to the terms and conditions set forth herein, the Company hereby grants
to the Optionee the Option to purchase from the Company, at an exercise price of
$7.00 per share (the "Exercise Option Price"), up to but not exceeding in the
aggregate four hundred fifty thousand (450,000) shares of Common Stock (the
"Executive Option Shares").
3. EXERCISABILITY.
(a) On the last day of each calendar quarter, beginning with
the quarter ending March 31, 1998, the Option will have vested and
become exercisable with respect to five percent (5%) of the Executive
Option Shares if the Optionee is employed by the Company or a
Subsidiary on such date; provided, however, that upon the occurrence of
an Acceleration Event (as defined in the Plan) during the Option Period
(as defined below), all of the Executive Option Shares will vest and
become exercisable.
(b) The Option will commence on the date hereof and will
expire on the earlier of December 31, 2007 or the date of the
termination of Optionee's employment with the Company or a Subsidiary
for any reason other than death or Disability (the "Option Period");
provided, however, that the Optionee will have until the tenth
anniversary of the date of this Option Agreement to exercise the Option
with respect to the Executive Option Shares as to which the Option has
vested pursuant to paragraph 3(a) above during the Option Period.
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(c) Unless otherwise provided herein, the Option may be
exercised by the Optionee only in accordance with the terms and
conditions of the Plan.
(d) The Exercise Option Price upon the exercise of the Option
shall be payable to the Company in full either (i) in cash or its
equivalent, or (ii) by tendering previously acquired shares of Common
Stock having an aggregate Fair Market Value at the time of exercise
equal to the total Exercise Option Price (provided that the shares of
Common Stock so tendered shall have been held by the Optionee for at
least six months prior to such tender), in proper form for transfer and
accompanied by all requisite stock transfer tax stamps or cash in lieu
thereof, or (iii) by a combination of (i) and (ii).
(e) The Committee, in its sole discretion, also may, where
applicable, allow the Optionee to make cashless exercises as permitted
under Federal Reserve Board Regulation T, subject to applicable
securities law restrictions, or by any other means which the Committee
determines to be consistent with the purpose of this Option Agreement,
the Plan and applicable law.
(f) Within 15 days after the Exercise Date, subject to the
receipt of payment of the Exercise Option Price and of any payment in
cash of federal, state or local income tax withholding or other
employment tax that may be due upon the issuance of the Executive
Option Shares as determined and computed by the Company pursuant to
paragraph 4 below, the Company shall issue to the Optionee the number
of shares of Common Stock with respect to which such Option shall be so
exercised and shall deliver to the Optionee a certificate or
certificates therefor.
(g) The Option is personal to the Optionee and is not
transferable by the Optionee except to a Permitted Transferee (as
defined in the Plan). Only the Optionee or a Permitted Transferee is
entitled to exercise the Option, except as permitted by the Plan.
(h) The Company will not be required (i) to transfer on its
books any Executive Option Shares which have been sold or transferred
in violation of any of the provisions set forth in this Option
Agreement, or (ii) to treat as owner of such shares, to accord the
right to vote as such owner or to pay dividends to any transferee to
whom such shares have been transferred in violation of this Option
Agreement.
4. PAYMENT OF WITHHOLDING TAXES. Upon the Optionee's exercise of his
Option with respect to any of the Executive Option Shares in accordance with the
provisions of paragraph 3 above, the Optionee shall pay to the Company upon
exercise of the Option, in addition to the Exercise Option Price, the amount of
any federal, state or local income tax withholding or other employment tax that
may be due upon such exercise. The determination of the amount of any such
federal, state or local income tax withholding or other employment tax due in
such event shall be made by the Company and shall be binding upon the Optionee.
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5. SECURITIES LAWS RESTRICTIONS. The Optionee hereby represents that
when the Optionee exercises the Option he will be purchasing Executive Option
Shares for the Optionee's own account and not on behalf of others. The Optionee
understands and acknowledges that federal and state securities laws govern and
restrict the Optionee's right to offer, sell or otherwise dispose of any
Executive Option Shares unless the Optionee's offer, sale or other disposition
thereof is registered under the 1933 Act and state securities laws or, in the
opinion of the Company's counsel, such offer, sale or other disposition is
exempt from registration thereunder. The Optionee agrees that he will not offer,
sell or otherwise dispose of any Executive Option Shares in any manner which
would: (i) require the Company to file any registration statement (or similar
filing under state law) with the Securities and Exchange Commission or to amend
or supplement any such filing or (ii) violate or cause the Company to violate
the 1933 Act, the rules and regulations promulgated thereunder or any other
state or federal law. The Optionee further understands that the certificates for
any Executive Option Shares the Optionee purchases will bear the legend set
forth in the Plan or such other legends as the Company deems necessary or
desirable in connection with the 1933 Act or other rules, regulations or laws.
6. RESOLUTION OF DISPUTES. Any dispute or disagreement that arises
under, or as a result of, or pursuant to, this Option Agreement shall be
determined by the Committee in its absolute and uncontrolled discretion, and any
such determination or other determination by the Committee under or pursuant to
this Option Agreement, and any interpretation by the Committee of the terms of
this Option Agreement, shall be final, binding and conclusive on all parties
affected thereby.
7. MISCELLANEOUS PROVISIONS.
(a) Notices. Any notice provided for in this Option Agreement
must be in writing and must be personally delivered, received by
certified mail, return receipt requested, or sent by guaranteed
overnight delivery service, to the Investors (as defined in the Plan)
at the addresses indicated in the Company's records and to the other
recipients at the address indicated below:
To the Company:
GS Industries, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Chief Financial Officer
To Optionee:
Xxxx X. Xxxxx
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
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With a copy to:
Xxxxxxx X. Xxxxxxxxx
Klett, Lieber, Rooney & Xxxxxxxxx
00xx Xxxxx
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
or such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the
sending party. Any notice under this Option Agreement will be deemed to
have been given when so delivered or mailed.
(b) Severability. Whenever possible, each provision of this
Option Agreement will be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Option
Agreement is held to be invalid, illegal or unenforceable in any
respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other
provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Option Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal
or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Option Agreement (including the
Plan which is incorporated herein) embodies the complete agreement and
understanding among the parties and supersedes and preempts any prior
understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in
any way.
(d) Counterparts. This Option Agreement may be executed in
separate counterparts, each of which will be deemed to be an original
and all of which taken together will constitute one and the same
agreement.
(e) Successors and Assigns. This Option Agreement is intended
to bind and inure to the benefit of and be enforceable by the Optionee,
the Company, the Investors and their respective successors and assigns;
provided, however, that the Optionee may not assign any of his rights
or obligations, except as expressly provided by the terms of this
Option Agreement.
(f) Governing Law. All issues concerning the enforceability,
validity and binding effect of this Option Agreement will be governed
by and construed in accordance with the laws of the State of Delaware,
without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the law of any jurisdiction other
than the State of Delaware.
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(g) Remedies. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the
provisions of this Option Agreement and that any party hereto will have
the right to injunctive relief, in addition to all of its other rights
and remedies at law or in equity, to enforce the provisions of this
Option Agreement.
(h) Third Party Beneficiaries. The parties hereto acknowledge
and agree that the Investors are third party beneficiaries of this
Option Agreement. This Option Agreement will inure to the benefit of
and be enforceable by the Investors and their respective successors and
assigns.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Option Agreement as
of the day and year first above written.
GS INDUSTRIES, INC.
By: /s/ Xxxxx Xxxxxxxxxxx
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Title: Chairman
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/s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
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