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NON-QUALIFIED STOCK OPTION AGREEMENT
AGREEMENT, effective as of January 1, 1998, between CTB International
Corp., a Delaware corporation (the "Company"), and ___________________ (the
"Optionee").
W I T N E S S E T H :
WHEREAS, the Company, acting through its Board of Directors (the "Board")
has granted to the Optionee, effective as of the date of this Agreement, an
option to purchase shares of common stock, $.01 par value per share, of the
Company (the "Common Stock"), on the terms and subject to the conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained in this Agreement, the parties hereto agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following terms
have the meanings set forth below:
"Affiliate" of any Person means any other Person directly or
indirectly controlled by, controlling, or under common control with
such Person.
"Board" means the Board of Directors of the Company.
"Cause" means action by the Optionee that constitutes misconduct,
dishonesty, the failure to comply with specific directions of the Board
of Directors or any senior executive officer of the Company (after
having been given a reasonably detailed written notice of, and a period
of 20 days to cure, such misconduct or failure), a deliberate and
premeditated act against the Company or its Affiliates or the
commission of a felony. Any voluntary termination of employment by the
Optionee in anticipation of an involuntary termination of the
Optionee's employment for Cause shall be deemed to be a termination for
Cause.
"Fair Market Value" of a share of Common Stock on any date shall
be, if the Common Stock is listed on a national stock exchange, the
officially quoted closing price on such stock exchange, or if the
Common Stock is listed on the NASDAQ National Market, the officially
quoted closing price on NASDAQ, or, if the Common Stock is listed on
NASDAQ but not on the National Market, the average of the closing bid
and asked prices reported by NASDAQ, in each case on the date as of
which the value is to be determined (or if such date is not a trading
day, as of the preceding trading day), or if the Common Stock is not
so listed, the fair market value determined in good faith by the
Board.
"Option" has the meaning ascribed to such term in Section 2 of
this Agreement.
"Option Shares" has the meaning ascribed to such term in Section
2 of this Agreement.
"Person" means any individual, partnership, corporation, group,
trust or other legal entity.
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"Shares" means, collectively, the shares of Common Stock subject
to the Option, whether such shares are Option Shares or Vested Shares.
"Transaction" means (a) any consolidation or merger of the
Company in which the Company is not the surviving corporation other
than a merger solely to effect a reincorporation or a merger of the
Company as to which stockholder approval is not required pursuant to
Sections 251(f) or 253 of the Delaware General Corporation Law, or (b)
any sale, lease, exchange or other transfer (other than dividends) (in
one transaction or a series of related transactions) of all or
substantially all of the assets or earning power of the Company, or
(c) the adoption of any plan or proposal for the liquidation or
dissolution of the Company.
"Vested Shares" means the Option Shares with respect to which
the Option is exercisable at any particular time.
SECTION 2. Option; Option Price. On the terms and subject to the
conditions of this Agreement, the Optionee shall have the option (the "Option")
to purchase up to __________ shares (the "Option Shares") of Common Stock at
the price per Option Share equal to the closing price of publicly traded common
stock of the Company as listed on the NASDAQ National Market as of the close of
said market on December 31, 1997 (the "Option Price").
SECTION 3. Term. The term of the Option (the "Option Term") shall
commence on the date hereof and expire on the tenth anniversary of the date
hereof, unless the Option shall theretofore have been terminated in accordance
with the terms of this Agreement.
SECTION 4. Time of Exercise.
(a) The Option shall become vested and exercisable as to the following
portions of the Option Shares:
Vesting Date Vested and Exercisable Percent of Option Shares
------------ -----------------------------------------------
Three (3) Years Following 50%
the Date of This Agreement
Six (6) Years Following 50%
the Date of This Agreement
(b) Except as otherwise provided in Section 6, the Option shall remain
exercisable as to all such Vested Shares until the expiration of the Option
Term.
SECTION 5. Procedure for Exercise.
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(a) The Option may be exercised with respect to Vested Shares, from
time to time, in whole or in part (but for the purchase of whole shares only),
by delivery of a written notice (the "Exercise Notice") from the Optionee to the
Company, which Exercise Notice shall:
(i) state that the Optionee elects to exercise the Option;
(ii) state the number of Vested Shares with respect to which the
Optionee is exercising the Option;
(iii) include any representations of the Optionee required under Section
8 hereof;
(iv) in the event that the Option shall be exercised by the
representative of the Optionee's estate pursuant to Section 6, include
appropriate proof of the right of such Person to exercise the Option;
(v) state the date upon which the Optionee desires to consummate the
purchase of such Vested Shares (which date must be prior to the termination
of the Option); and
(vi) comply with such further provisions as the Company may reasonably
require.
(b) Payment of the Option Price for the Vested Shares to be purchased
on the exercise of the Option shall be made by certified or bank cashier's check
payable to the order of the Company, delivery of shares of Common Stock, valued
at their Fair Market Value as of the trading day immediately prior to the date
of exercise (including shares of Common Stock acquired upon exercise of this
Option) or by a combination of any of the foregoing means of payment.
(c) As a condition to the exercise of the Option and prior to the
issuance of any Vested Shares, the Optionee (or the representative of his
estate) shall be required to execute a Stockholders' Agreement (the
"Stockholders' Agreement") among the Company, the Optionee (or representative)
and the other stockholders of the Company, in the form attached hereto as Annex
I.
(d) The Company shall be entitled to require as a condition of
delivery of the Vested Shares that the Optionee agree to remit when due an
amount in cash sufficient to satisfy all current or estimated future federal,
state and local withholding and employment taxes relating thereto.
SECTION 6. Termination of Employment. All or any part of the Option,
to the extent unexercised, shall terminate immediately upon the Optionee's
termination of employment with the Company or any of its Affiliates, except that
the Optionee shall have until the end of the third month following the date of
such termination of employment to exercise any portion of the Option that he
could have exercised on the date of such termination of employment; provided,
however, that such exercise must be
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accomplished prior to the expiration of the Option Term. Notwithstanding the
foregoing, if the Optionee's termination of employment is due to his retirement,
total and permanent disability (as determined by the Board), or death, the
Optionee, or the representative of the estate of the Optionee, as the case may
be, may exercise any portion of the Option which the Optionee could have
exercised on the date of such termination of employment for a period of six
months thereafter; provided, however, that such exercise must be accomplished
prior to the expiration of the Option Term. Notwithstanding the foregoing, in
the event of a termination of the Optionee's employment with the Company or any
of its Affiliates for Cause, the unexercised portion of the Option shall
terminate immediately and the Optionee shall have no right thereafter to
exercise any part of the Option.
SECTION 7. No Rights as a Stockholder. The Optionee shall not have
any rights or privileges of a stockholder with respect to any Shares until the
date of acceptance by the Company of payment for such Shares pursuant to the
exercise of the Option.
SECTION 8. Additional Provisions Related to Exercise. In the event
of the exercise of the Option at a time when there is not in effect a
registration statement under the Securities Act of 1933, as amended, relating to
the Shares, the Optionee hereby represents and warrants, and by virtue of such
exercise shall be deemed to represent and warrant, to the Company that the
Option Shares are being acquired for investment only and not with a view to the
distribution thereof, and the Optionee shall provide the Company with such
further representations and warranties as the Board may reasonably require in
order to ensure compliance with applicable federal and state securities, "blue
sky" and other laws. No Shares shall be purchased upon the exercise of the
Option unless and until the Company and/or the Optionee shall have complied with
all applicable federal or state registration, listing and/or qualification
requirements and all other requirements of law or of any regulatory agencies
having jurisdiction.
SECTION 9. Restriction on Transfer.
(a) The Option may not be transferred, pledged, assigned, hypothecated
or otherwise disposed of in any way by the Optionee and may be exercised during
the lifetime of the Optionee only by the Optionee. If the Optionee dies, the
Option shall thereafter be exercisable, during the period specified in Section
6, by the representative of his estate to the full extent to which the Option
was exercisable by the Optionee at the time of his death. The Option shall not
be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.
(b) Any shares issued to the Optionee upon exercise of the Option
shall be subject to the restrictions contained in the Stockholders' Agreement
and shall be deemed Stock (as defined in the Stockholders' Agreement) for all
purposes thereunder.
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SECTION 10. Restrictive Legend. All stock certificates representing
shares issued upon exercise of the Option shall, unless otherwise determined by
the Board, have affixed thereto a legend substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SHARES
HAVE BEEN ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT OR AN OPINION OF
COUNSEL TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED. IN
ADDITION, THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE
IS RESTRICTED PURSUANT TO THE TERMS OF A STOCKHOLDERS' AGREEMENT AMONG
THE ISSUER, THE ORIGINAL HOLDER OF SUCH SHARES AND THE OTHER PARTIES
NAMED THEREIN. COPIES OF THE STOCKHOLDERS' AGREEMENT MAY BE OBTAINED
WITHOUT CHARGE FROM THE SECRETARY OF THE ISSUER."
SECTION 11. Noncompetition. In consideration for and as an express
condition of the Company's grant of the Option, Optionee hereby agrees to
execute and comply with the Noncompetition Agreement attached hereto as Annex II
and incorporated herein by reference.
SECTION 12. Optionee's Employment. Nothing in the Option shall
confer upon the Optionee any right to continue in the employ of the Company or
any of its Affiliates or interfere in any way with the right of the Company or
its Affiliates or stockholders, as the case may be, to terminate the Optionee's
employment or to increase or decrease the Optionee's compensation at any time.
SECTION 13. Adjustment.
(a) Subject to Section 9(b), if the Common Stock is changed by reason
of a stock split, reverse stock split, stock dividend or recapitalization, or
converted into or exchanged for other securities as a result of a merger,
consolidation or reorganization, the Board shall make such adjustments in the
number and class of shares of stock subject to the Option, and such adjustments
to the Option Price, as shall be equitable and appropriate in its good faith
judgment under the circumstances.
(b) The following rules shall apply in connection with the occurrence
of any Transaction:
(i) the Optionee shall be given (A) written notice of such
Transaction at least 20 days prior to its proposed effective date (as specified
in such notice) and (B) an opportunity, during the period commencing with
delivery of such notice and ending 10 days prior to such proposed effective
date, to exercise the Option in full; provided, however, that upon the
occurrence of a Transaction, the Option, to the extent not so exercised, shall
automatically terminate; and
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(ii) notwithstanding anything contained in Section 13(b)(i),
Section 13(b)(i) shall not be applicable if provision shall be made in
connection with such Transaction for the assumption of the Option by, or the
substitution for the Option of new options covering the stock of, the surviving,
successor or purchasing corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number, kind and Option Price of shares
subject to the Option.
(c) The following rules shall apply in connection with Section 13(a)
and (b) above:
(i) no fractional shares shall be issued as a result of any such
adjustment, and any fractional shares resulting from the computations pursuant
to Section 13(a) or (b) shall be eliminated without consideration from the
Option;
(ii) no adjustment shall be made for the issuance to stockholders
of rights to subscribe for additional shares of Common Stock or other
securities; and
(iii) any adjustments referred to in Section 13(a) or (b) shall be
made by the Board in its sole discretion and shall be conclusive and binding on
the Optionee.
SECTION 14. Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given and delivered if personally delivered or if sent
by nationally recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
(a) if to the Company, to it at:
CTB International Corp.
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Attention: J. Xxxxxxxxxxx Xxxxxxx
with a copy to:
Xxxxxxx X. Xxxxxxx
CTB International Corp.
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
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(b) if to the Optionee, to him at such Optionee's address as most
recently supplied to the Company and set forth in the Company's
records
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (i) in the case
of personal delivery, on the date of such delivery (or if such date is not a
business day, on the next business day after the date sent), (ii) in the case
of nationally-recognized overnight courier, on the next business day after the
date sent, (iii) in the case of telecopy transmission, when received (or if not
sent on a business day, on the next business day after the date sent), and (iv)
in the case of mailing, on the third business day following the date on which
the piece of mail containing such communication is posted.
SECTION 15. Waiver of Breach. The waiver by either party of a breach
of any provision of this Agreement must be in writing and shall not operate or
be construed as a waiver of any other or subsequent breach.
SECTION 16. Optionee's Undertaking. The Optionee hereby agrees to
take whatever additional actions and execute whatever additional documents the
Company may in its reasonable judgment deem necessary or advisable in order to
carry out or effect one or more of the obligations or restrictions imposed on
the Optionee pursuant to the provisions of this Agreement.
SECTION 17. Amendment. This Agreement may not be amended,
terminated, suspended or otherwise modified except in a written instrument, duly
executed by both parties.
SECTION 18. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware (without giving
effect to principles of conflicts of laws).
SECTION 19. Counterparts. This Agreement may be executed in one or
more counterparts, and each such counterpart shall be deemed to be an original,
but all such counterparts together shall constitute but one agreement.
SECTION 20. Entire Agreement. This Agreement (and the other writings
incorporated by reference herein) constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
written or oral negotiations, commitments, representations and agreements with
respect thereto.
SECTION 21. Severability. In the event any one or more of the
provisions of this Agreement should be held invalid, illegal or unenforceable in
any respect in any jurisdiction, such provision or provisions shall be
automatically deemed amended, but only to the extent necessary to render such
provision or provisions valid, legal and enforceable in such jurisdiction, and
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties hereto have executed this Non-Qualified
Stock Option Agreement as of the date first written above.
CTB International Corp.
By: ___________________________ ____________________________________
Name:
Title:
Date: _________________________ Date: ______________________________
