EXHIBIT 10.5
FORM
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XXXXXX FURNITURE COMPANY, INC.
Nonqualified Stock Option Agreement
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WHEREAS, (the "Optionee") is of Xxxxxx Furniture
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Company, Inc. (the "Company");
WHEREAS, the execution of a Nonqualified Stock Option Agreement substantially
in the form hereof has been duly authorized by a resolution of the Board of
Directors (the "Board") of the Company duly adopted as of
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"Date of Grant") and incorporated herein by reference; and
WHEREAS, the option granted hereby is intended as a nonqualified stock option
and shall not be treated as an "incentive stock option" within the meaning of
that term under Section 422 of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, pursuant to the Company's 1992 Stock Option Plan (the "Plan"),
the Company hereby grants to the Optionee an option to purchase shares
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of Common Stock, par value $.01 per share, of the Company at the exercise price
of ($ ) per share, and agrees to cause
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certificates for any shares purchased hereunder to be delivered to the Optionee
upon full payment of the option exercise price, subject to the terms and
conditions of the Plan and the terms and conditions hereinafter set forth.
1. This option (until terminated as hereinafter provided) shall be
exercisable in full at any time after the Date of Grant. To the extent
exercisable, this option may be exercised in whole or in part from time to time.
2. The option exercise price shall be payable (a) in cash or by check
acceptable to the Company, (b) by transfer to the Company of shares of Common
Stock that have
been owned by the Optionee for more than six months prior to the date of
exercise and have a fair market value on the date of exercise equal to the
option exercise price, or (c) by a combination of any of the foregoing methods
of payment. The requirement of payment in cash shall be deemed satisfied if the
Optionee shall have made arrangements satisfactory to the Company with a broker
who is a member of the National Association of Securities Dealers, Inc. to sell
a sufficient number of the shares being purchased so that the net proceeds of
the sale transaction will at least equal the option exercise price and pursuant
to which the broker undertakes to deliver the full option exercise price to the
Company not later than the date on which the sale transaction will settle in the
ordinary course of business. For the purposes of this Section 2 and Section 9
hereof, "fair market value" shall be as determined by the Committee from time to
time.
3. (a) If the Optionee desires to sell all or any portion of the shares
of Common Stock owned by him pursuant to any exercise of any option granted
under the Plan, the Optionee shall give written notice to the Company of his
intention to dispose of such shares, which notice shall specify the number of
shares of Common Stock proposed to be disposed of, the minimum price proposed to
be asked therefor on a per share basis (the "First Refusal Price"), in the case
of a private sale the intended purchaser of such shares, if known, and if not
known, a written explanation as to the reason the Optionee does not know the
identity of the intended purchaser, and the other terms and conditions of the
proposed sale. Such notice shall constitute an offer to sell to the Company all
of the shares of Common Stock set forth in such notice, at the aggregate First
Refusal Price and on the terms other than price set forth in such notice (the
"First Refusal Offer").
(b) The First Refusal Offer may be accepted, in whole only, by the
Company by giving notice of acceptance to the Optionee within 2 business days
after receiving the First
Refusal Offer, which notice of acceptance shall specify the number of shares of
Common Stock to be purchased by the Company.
(c) The closing of any purchase pursuant to this Paragraph 3 shall be
held within 10 business days following the date the Company gives its notice of
acceptance, at such date, time and/or place as the parties may agree. At any
such closing, the Optionee shall deliver to the Company a certificate or
certificates representing the number of shares of Common Stock specified in the
Company's notice of acceptance, duly endorsed or accompanied by stock powers
duly executed in blank and otherwise in proper form for transfer on the books of
the Company, together with stamps for any applicable stock transfer tax or
provision for payment thereof, and the Company shall deliver to the Optionee a
certified check or bank draft payable to the order of the Optionee in an amount
equal to the product of the First Refusal Price and the number of shares of
Common Stock being purchased by the Company.
(d) If the Company does not exercise the First Refusal Offer, the
Optionee may, within 10 business days immediately following the expiration of
such 2 business days, sell all or any portion of the balance of the shares of
Common Stock covered by the First Refusal Offer which are not covered by a
notice of acceptance of the Company at a price per share not less than the First
Refusal Price and on the same terms and conditions (including as to manner of
payment) as those set forth in the First Refusal Offer. If the Optionee does not
make such disposition within such 10 business days, no subsequent disposition of
any of the Optionee's shares of Common Stock may be made without again complying
with this Paragraph 3.
(e) If the Optionee fails to comply with this Paragraph 3 with respect
to any of his shares of Common Stock, any attempted or purported sale,
assignment, transfer, or other disposition of such shares shall be void and of
no effect, and all dividends and other distributions
of any kind whatsoever (whether pursuant to liquidation or otherwise) shall be
deemed to have been waived, and the voting rights of such shares on any matter
whatsoever shall be suspended, during the period commencing with the Optionee's
initial failure of compliance with this Paragraph 3 and ending when the Company
has agreed in writing to terminate such suspension and permit such sale,
assignment, transfer, hypothecation, pledge, encumbrance or other disposition.
4. Upon the Optionee's ceasing to be an employee of the Company or a
Subsidiary for any reason, including death or retirement or following permanent
disability (a "Termination"), the Company shall have the right upon a written
notice (the "Repurchase Notice") given to the Optionee within 30 days of such
Termination, to repurchase from the Optionee all or any portion of the Common
Stock then owned by the Optionee and acquired hereunder and to require the
Optionee to surrender to the Company for cancellation all or any portion of this
option then remaining exercisable upon payment to the Optionee, from any source
of funds legally available therefor, of the purchase price as hereinafter
provided.
If there is a public trading market for the Common Stock, the purchase
price for any repurchase shall be determined within 2 business days of the date
of the Repurchase Notice and shall be payable in cash within 10 business days
following the date of such determination. If there is not a public trading
market for the Common Stock, the purchase price for any repurchase shall be
determined within 90 days after the Repurchase Notice and shall be payable in
cash within 10 business days following the date of such determination. With
respect to the Common Stock, the purchase price shall be determined by (a)
multiplying the number of shares of Common Stock being repurchased by the
Company by (b) the Current Market Price (as defined below) per share of Common
Stock as of the date of the Repurchase Notice. With respect to the surrender of
options, the purchase price shall be determined by (a) multiplying the number of
shares of Common Stock subject to such options or portion thereof being
surrendered to the Company by (b) the difference between the Current Market
Price (as defined below) per share of Common Stock as of the date of the
Repurchase Notice and the option exercise price per share of Common Stock as of
the date of the Repurchase Notice.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the average of the daily market prices for
the previous 10 consecutive business days for a listing on the National Market
System ("NMS") or the previous 30 consecutive business days for a listing on
NASDAQ. The daily market price for each such business day shall be the last
reported closing price if listed on the NMS or the average of the last reported
closing bid and asked prices on such day on NASDAQ, as furnished by the National
Association of Securities Dealers Automatic Quotation System or the National
Quotation Bureau, Inc., or if neither corporation is reporting such prices, as
furnished by any member of the NASD which is making a market in the Common
Stock. In the event there is no market for the shares or the Committee, in its
sole discretion, determines that on account of the lack of trading volume, the
Current Market Price cannot be determined from the daily market prices, the
Current Market Price shall mean the amount determined by an investment banker
selected by the Optionee from a list of at least three disinterested qualified
investment bankers provided by the Committee.
5. This option shall terminate on the earliest of the following dates:
(a) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, ninety days after the date of a
Termination other than on account of death; provided, however, if the date
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of Termination occurs within the initial three
months and one day after the date of grant of the option, the ninety-day period
shall be extended through the fifth business day after the six-month anniversary
of the date of grant of the option;
(b) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, one year after the date of
Optionee's death; and
(c) Ten years from the Date of Grant.
Nothing contained in this option shall limit in any way whatsoever any
right that the Company or a Subsidiary may otherwise have to terminate the
employment of the Optionee at any time.
6. This option is not transferable by the Optionee except by will or
the laws of descent and distribution and may be exercised during the lifetime of
the Optionee only by the Optionee or, in the event of his legal incapacity to do
so, by his guardian or legal representative acting on behalf of the Optionee in
a fiduciary capacity under state law and court supervision.
7. Notwithstanding any other provision of this Nonqualified Stock
Option Agreement, this option shall not be exercisable if the exercise would
involve a violation of any applicable federal or state securities law, and the
Company hereby agrees to make reasonable efforts to comply with all such laws.
8. The Committee shall make such adjustments in the option price and in
the number or kind of shares of Common Stock or other securities covered by this
option as the Committee may in good faith determine to be equitably required in
order to prevent dilution or expansion of the rights of the Optionee that
otherwise would result from (a) any stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Company, (b) any merger, consolidation, spin-off, spin-out, split-off, split-up,
reorganization or
partial or complete liquidation or other distribution of assets involving the
Company or (c) any other corporate transaction or event having an effect similar
to any of the foregoing.
9. If the Company shall be required to withhold any federal, state or
local tax in connection with the Optionee's exercise of this option, it shall be
a condition to such exercise that the Optionee pay or make provision
satisfactory to the Company for payment of all such taxes. The Optionee may
elect with the consent of the Committee that all or any part of such withholding
requirement be satisfied by retention by the Company of a portion of the shares
purchased upon exercise of this option. If such election is made, the shares so
retained shall be credited against such withholding requirement at the then fair
market value on the date of exercise as defined in Section 2 hereof.
10. For the purposes of this Nonqualified Stock Option Agreement, (a)
the term "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 80% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain, and (b) the continuous
employment of the Optionee with the Company or a Subsidiary shall not be deemed
interrupted, and the Optionee shall not be deemed to have ceased to be an
employee of the Company or any Subsidiary, by reason of the transfer of his
employment among the Company and its Subsidiaries.
EXECUTED as of the ___ day of , .
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XXXXXX FURNITURE COMPANY, INC.
By _____________________________
Title:
The undersigned Optionee hereby acknowledges receipt of an executed
original of this Nonqualified Stock Option Agreement and accepts the option
granted hereunder.
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Optionee
