NON-QUALIFIED STOCK OPTION AGREEMENT
(▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇)
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇▇:
Pursuant to action taken by the Compensation Committee (the
"COMMITTEE") of the Board of Directors of MicroAge, Inc. ("MICROAGE") on May 2,
1998 (the "GRANT DATE") and action by written consent of the sole director of
MCCI Holding Company ("HOLDING COMPANY"), you are hereby granted the option
(hereinafter the "OPTION") to purchase a total of sixty (60) shares of common
stock of Pinacor, Inc. ("PINACOR") owned by Holding Company as of the Grant Date
(the "COMMON STOCK"), representing six percent (6%) of Pinacor's outstanding
Common Stock as of the Grant Date, at an exercise price of One Hundred Fifty
Thousand Dollars ($150,000.00) per share, subject to the provisions and
conditions set forth below. The Option granted under this Agreement is NOT
intended to be an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended. Moreover, the Option is not being
granted pursuant to any stock option or other plan. For purposes of this
Agreement, MicroAge and Holding Company are referred to collectively as the
"Company."
1. You may purchase all or any of the shares of Common Stock included
in any installment under this Option on or after the date the installment vests
in accordance with the schedule below:
NUMBER OF SHARES
EXERCISABLE IN DATE
INSTALLMENT INSTALLMENT VESTS
----------- -----------------
20 May 2, 1999
20 May 2, 2000
20 May 2, 2001
2. In the event of your death or Disability, any portion of your Option
that is not exercisable shall become fully exercisable. Notwithstanding the
above, you may not exercise the Option at any time after the Expiration Date
hereinafter set forth.
3. The Option may be exercised by making payment in full to the
Treasurer of Holding Company, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, for
the shares which you so elect to purchase, at the price per share herein
prescribed, whereupon you will receive a stock certificate representing the
shares for which you have made payment. Holding Company, however, will not be
obligated to deliver any stock unless and until:
(a) there has been compliance with any federal or state laws or
regulations or national securities exchange requirements which Holding
Company may deem applicable; and
(b) all legal matters in connection with the sale and delivery of the
Common Stock have been approved by Holding Company's legal counsel.
4. Upon the exercise of an Option, the purchase price will be paid in
cash or in Common Stock, or a combination thereof, unless the Committee approves
an alternative arrangement, including a loan to you from the Company for all or
a portion of the purchase price. Each share of Common Stock received by Holding
Company in payment of all or a portion of the purchase price specified in this
Option will be valued at its Fair Market Value on the date of exercise.
5. The Committee may require, in its sole discretion, that you satisfy
the payment of any federal, state, or local tax withholding amount due as a
result of your exercise of an Option by:
(a) requiring you to deliver to Holding Company that number of shares
of Common Stock then owned by you, duly endorsed for transfer to Holding
Company and free and clear of any liens, claims, security interests or
encumbrances whatsoever (based on the Fair Market Value of the Common Stock
on the date such Option is exercised), which are required to satisfy the
payment of such tax withholding amount; or
(b) requiring you to deliver to Holding Company a check, made payable
to the order of Holding Company, in the aggregate amount required to
satisfy the payment of such tax withholding amount.
The right described in (a) or (b) above shall be exercised in a written
notice by the Committee delivered to you as soon as practicable after receipt of
your written exercise of any Option hereunder.
6. The Committee may suspend or postpone the receipt of shares in
payment of the exercise price specified in this Agreement if at any time:
(a) it has knowledge of information concerning Pinacor which upon
disclosure to the public might, in its opinion, materially affect the
market price of the Common Stock;
(b) non-Pinacor events of an extraordinary nature occur which, in its
opinion, may not have been effectively reflected in the market; or
2
(c) such suspension or postponement for any other reason would, in its
opinion, be in the best interests of Pinacor or the Company.
7. The Committee hereby reserves and will have the right, by written
notice to you, to change the provisions of this Option in any manner that it may
deem necessary or advisable to carry out the purpose of this grant as a result
of, or to comply with, any change in applicable regulations, interpretations or
statutory enactments, provided that any such change will be applicable only to
shares for which payment will not then have been made as herein provided.
8. This Option will terminate upon the earliest to occur of:
(a) May 2, 2008 at 5:00 p.m. Arizona time (the "EXPIRATION DATE");
(b) the date you cease to be employed by the Company or any of its
subsidiaries for any reason other than your retirement, death or
Disability; or
(c) one (1) year after the date you cease to be employed by the
Company or any of its subsidiaries by reason of your retirement, death or
Disability.
9. Anything herein to the contrary notwithstanding, the following
provisions will apply:
(a) If, at any time within the term of this Option or within one (1)
year after termination of employment or within one (1) year after you
exercise any portion of this Option, whichever is the latest, you engage in
any activity in competition with any activity of the Company, or inimical,
contrary, or harmful to the interests of the Company, including, but not
limited to: (i) conduct related to your employment for which either civil
or criminal penalties against you may be sought, (ii) violation of Company
policies, including, without limitation, the Company's ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
policy, (iii) failing to give the Company at least thirty (30) days'
written notice of your intent to terminate your employment with the
Company, (iv) accepting employment with or serving as a consultant,
advisor, or in any other capacity to an employer that is in competition
with or acting against the interests of the Company, including employing or
recruiting any present, former, or future employee of the Company, (v)
disclosing or misusing any confidential information or material concerning
the Company, or (vi) participating in a hostile takeover attempt of
MicroAge, then (A) this Option shall terminate effective the date upon
which you enter into such activity, unless terminated sooner by operation
of another term or condition of this Agreement, (B) you will return any
shares of Common Stock that you then own if the Company tenders to you, in
the exercise of its discretion, the amount you paid to acquire those
shares, and (C) you will pay the Company an amount equal to the difference
between the amount you paid for said shares and the amount you received for
a sale of any shares that you have disposed of in an arms length
transaction. If you dispose of any shares in other than an arms length
transaction, you will pay to the Company an amount equal to the difference
between the amount you paid for the shares and the Fair Market Value of the
shares.
3
(b) By accepting this Option, you consent to a deduction from any
amounts the Company owes you from time to time (including amounts owed to
you as wages or other compensation, fringe benefits, or vacation pay, as
well as any other amounts owed to you by the Company), to the extent of the
amounts you owe the Company under clause (a) of this Section 9. Whether or
not the Company elects to make any set-off in whole or in part, if the
Company does not recover by means of set-off the full amounts you owe it,
calculated as set forth above, you agree to pay immediately the unpaid
balance to the Company.
(c) You may be released from your obligations under clause (a) of this
Section 9 only if the Committee determines, in its sole discretion, that
such action is in the best interests of the Company.
10. The Committee will have the discretion to accelerate the vesting in
whole or in part with respect to any Options that may otherwise not be
exercisable on the date you cease to be employed by the Company or any of its
subsidiaries for any reason other than your death or Disability, upon such terms
and conditions established by the Committee at that time, or upon such other
dates that the Committee will determine in its sole and absolute discretion.
11. In the event of a stock dividend, stock split, combination or
exchange of shares, recapitalization or other change in the capital structure of
Pinacor, any merger, consolidation, spin-off, spin-out, split-off, split-up,
reorganization, partial or complete liquidation, or other distribution of assets
(other than a normal cash dividend), issuance of rights or warrants to purchase
securities or any other corporate transaction or event having an effect similar
to any of the foregoing, the Committee shall make such adjustments in the number
of unpurchased shares subject to this Option and in the exercise price per share
as it may determine to be appropriate and equitable to preserve your
proportionate interest in this Option and to prevent dilution or enlargement of
your rights hereunder. The Committee may, in its discretion, upon the occurrence
of any of the foregoing events, provide in substitution for any or all
outstanding shares subject to this Option such alternative consideration as it
may in good faith determine to be equitable under the circumstances and may
require your surrender of this Option in connection with such substitution.
12. This Option will be exercisable until the Expiration Date as
defined in Section 8(a) and, except as provided in Section 8 above, only by you
during your lifetime and only while you are employed by the Company. Unless
otherwise provided in writing by the Committee in its sole discretion, the
Option shall not be transferable by you, expressly or by operation of law, other
than by will or the laws of descent and distribution. Any other attempted
transfer or other disposition of this Option by you will be void and will
constitute valid grounds for cancellation of this Option by the Company.
13. In the event that a "Disposition" of Pinacor is approved by the
Board of Directors of MicroAge, Holding Company, or Pinacor or a proposed
Disposition is submitted to the shareholders of MicroAge, Holding Company, or
Pinacor for approval, all of the Options will become immediately exercisable,
despite any provisions in Section 1 to the contrary. Additionally, upon a Change
of Control, your Options will automatically become immediately exercisable,
despite any provisions in Section 1 to the contrary.
4
14. The term "Disposition" as used in Section 13, means and includes
each of the following:
(a) the sale or other transfer of all or substantially all of the
Common Stock of Pinacor or Holding Company to any individual or entity
other than an "Affiliate." For this purpose, an "Affiliate" is any entity
that is part of the same controlled group of corporations as MicroAge
within the meaning of Section 1563 of the Internal Revenue Code of 1986
(the "CODE").
(b) Pinacor or Holding Company is merged, consolidated, or otherwise
combined with any entity other than an Affiliate of MicroAge.
15. The term "Change of Control" means and includes each of the
following:
(a) A change of control of MicroAge of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of the Securities
Exchange Act of 1934, as amended ("1934 ACT"), regardless of whether
MicroAge is subject to such reporting requirement;
(b) A change of control of MicroAge through a transaction or series of
transactions, such that any person (as that term is used in Section 13 and
14(d)(2) of the 1934 Act), excluding affiliates of MicroAge as of the Grant
Date, is or becomes the beneficial owner (as that term is used in Section
13(d) of the 1934 Act), directly or indirectly, of securities of MicroAge
representing twenty percent (20%) or more of the combined voting power of
MicroAge's then outstanding securities;
(c) The individuals who, as of the Grant Date, constitute the Board of
Directors of MicroAge (the "INCUMBENT BOARD") cease for any reason to
constitute at least eighty percent (80%) of the Board of Directors of
MicroAge; provided, however, that any person becoming a member of the Board
of Directors of MicroAge subsequent to the Grant Date whose election, or
nomination for election by MicroAge's stockholders, was approved by a vote
of at least eighty percent (80%) of the members then comprising the
Incumbent Board (other than an election or nomination of an individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of directors of
MicroAge, as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the 1934 Act or any successor provision thereto) shall
be, for purposes of this paragraph, considered as though such person were a
member of the Incumbent Board;
(d) Any consolidation or liquidation of MicroAge in which MicroAge is
not the continuing or surviving corporation or pursuant to which common
stock of MicroAge would be converted into cash, securities or other
property, other than a merger of MicroAge in which the holders of the
shares of MicroAge's common stock immediately before the merger have the
same proportionate ownership of common stock of the surviving corporation
immediately after the merger;
5
(e) The shareholders of MicroAge approve any plan or proposal for the
liquidation or dissolution of MicroAge; or
(f) Substantially all of the assets of MicroAge are sold or otherwise
transferred to parties that are not Affiliates (as such term is defined in
Section 14(a) above).
16. The term "Disability" shall mean any illness or other physical or
mental condition which renders you incapable of performing your customary and
usual duties for the Company, or any medically determinable illness or other
physical or mental condition resulting from a bodily injury, disease or mental
disorder which in the judgment of the Committee is permanent and continuous in
nature. The Committee may require such medical or other evidence as it deems
necessary to judge the nature and permanency of your condition.
17. The term "Fair Market Value" with respect to the Common Stock shall
mean as of any given date, the fair market value of the Common Stock determined
by such methods or procedures
as may be established from time to time by the Committee.
18. This Agreement shall be governed in all respects by the laws of the
state of Delaware.
19. No Option gives you any of the rights of a shareholder of Pinacor
unless and until shares of Common Stock are in fact issued to you.
20. The Agreement is intended to be an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to you pursuant to an
Option, nothing contained in this Agreement shall give you any rights that are
greater than those of a general creditor of the Company
or any subsidiary.
21. No payment under this Agreement shall be taken into account in
determining any benefits under any pension, retirement, savings, profit sharing,
group insurance, welfare or other benefit plan of the Company or any subsidiary.
22. The expenses of administering this Agreement shall be borne by
MicroAge.
23. With respect to any person who is, on the relevant date, obligated
to file reports under Section 16 of the 1934 Act, transactions pursuant to this
Agreement are intended to comply with all applicable conditions of Rule 16b-3 or
its successors under the 1934 Act. To the extent any provision of this Agreement
or action by the Committee fails to so comply, it shall be void to the extent
permitted by law and voidable as deemed advisable by the Committee.
24. Neither the Company nor Pinacor shall be under any obligation to
register under the Securities Act of 1933, as amended (the "1933 Act"), any of
the shares of Common Stock. If the shares may in certain circumstances be exempt
from registration under the 1933 Act, the Committee may restrict the transfer of
such shares in such manner as it deems advisable to ensure the availability of
any such exemption.
6
25. The Company shall not be required to deliver any shares of Common
Stock pursuant to the exercise of all or any part of the Option if, in the
opinion of counsel for MicroAge, such issuance would violate the Securities Act
of 1933 or any other applicable federal or state securities or other laws or
regulations. The Board of Directors of MicroAge may require that you, prior to
the issuance of any such shares pursuant to exercise of the Option, sign and
deliver to MicroAge a written statement ("INVESTMENT LETTER") stating (a) that
you are purchasing the shares for investment and not with a view to the sale or
distribution thereof; (b) that you will not sell any shares received upon
exercise of the Option or any other shares of Pinacor that you may then own or
thereafter acquire except either (i) through a broker on a national securities
exchange or (ii) with the prior written approval of MicroAge; and (c) containing
such other terms and conditions as counsel for MicroAge may reasonably require
to assure compliance with the Securities Act of 1933 or other applicable federal
or state securities laws and regulations. Such Investment Letter shall be in
form and content acceptable to the Board of Directors of MicroAge in its sole
discretion.
26. This Agreement may be amended only by a written agreement executed
by MicroAge, Holding Company, and you.
27. This Agreement shall be effective as of May 2, 1998.
PLEASE ACKNOWLEDGE RECEIPT OF THIS OPTION AND ACCEPTANCE OF ITS TERMS BY
COMPLETING THE BOTTOM PORTION OF BOTH LETTERS, THEN RETURN ONE OF THE LETTERS TO
▇▇▇▇▇ ▇▇▇▇▇ IN THE LEGAL DEPARTMENT.
MICROAGE, INC. I HEREBY ACKNOWLEDGE RECEIPT OF THE
FOREGOING OPTION AND ACCEPT ITS TERMS.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Signature: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------- ---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman, Compensation Social Security No. ###-##-####
Committee
MCCI HOLDING COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman of the Board and
President
7
