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EXHIBIT 10.4
FORM OF
THE GNI GROUP, INC.
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement ("Option Agreement") is between
The GNI Group, Inc., a Delaware corporation (the "Company"), and
______________________________________________________ (the "Optionee"), who
agree as follows:
1. INTRODUCTION. The Company has heretofore adopted The GNI
Group, Inc. 1995 Management Equity Incentive/Stock Option Plan (the "Plan") for
the purpose of providing executive officers of the Company and its Affiliates
(as defined in the Plan) with increased incentive to render services, to exert
maximum effort for the business success of the Company and to strengthen the
identification of employees with the stockholders. The Company, acting through
the Compensation Committee of its Board of Directors (the "Committee"), has
determined that its interests will be advanced by the issuance to Optionee of
an incentive stock option under the Plan.
2. OPTION. Subject to the terms and conditions contained herein,
the Company hereby irrevocably grants to Optionee the right and option
("Option") to purchase from the Company ______ shares of the Company's common
stock, $.01 par value ("Common Stock"), at a price of _____ per share, which is
deemed to be not less than the fair market value of the Common Stock at the
date of grant of this Option.
3. OPTION PERIOD. The Option herein granted may be exercised by
Optionee in whole or in part at any time during a ten year period, which period
shall in no event exceed a ten year period beginning on ______________ (the
"Option Period"), subject to the limitation that said Option shall not be
exercisable for more than a percentage of the aggregate number of shares
offered by this Option determined by the number of full years of employment
with the Company or its affiliates from the effective date of the Optionee's
grant, to the date of such exercise, in accordance with the following schedule:
Number of Percentage of
Full Years Shares Purchasable
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Notwithstanding anything in this Option Agreement to the contrary, the
Committee, in its sole discretion may waive the foregoing schedule of vesting
and upon written notice to the Optionee, accelerate the earliest date or dates
on which any of the Options granted hereunder are exercisable.
4. PROCEDURE FOR EXERCISE. The Option herein granted may be
exercised by the delivery by Optionee of written notice to the Secretary of the
Company setting forth the number of shares of Common Stock with respect to
which the Option is being exercised. The notice shall be accompanied (i) at
the election of the Optionee, by cash, cashier's check, bank draft, or postal
or express money order payable to the order of the Company or (ii) as allowed
by the Committee, by
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certificates representing shares of Common Stock theretofore owned by Optionee
duly endorsed for transfer to the Company or any combination of Common Stock
and the forms of payment stated in (i), equal in value to the aggregate
exercise price. Notice may also be delivered by fax or telecopy provided that
the exercise price of such shares is received by the Company via wire transfer
on the same day the fax or telecopy transmission is received by the Company.
The notice shall specify the address to which the certificates for such shares
are to be mailed. An option to purchase shares of Common Stock in accordance
with this Plan shall be deemed to have been exercised immediately prior to the
close of business on the date (i) written notice of such exercise and (ii)
payment in full of the exercise price for the number of shares for which
Options are being exercised, are both received by the Company and Optionee
shall be treated for all purposes as the record holder of such shares of Common
Stock as of such date.
As promptly as practicable after receipt of such written notice and
payment, the Company shall deliver to Optionee certificates for the number of
shares with respect to which such Option has been so exercised, issued in
Optionee's name or such other name as Optionee directs; provided, however, that
such delivery shall be deemed effected for all purposes when a stock transfer
agent of the Company shall have deposited such certificates in the United
States mail, addressed to Optionee at the address specified pursuant to this
Section 4.
5. TERMINATION OF EMPLOYMENT. If Optionee ceases to be employed
by the Company or its Affiliates for any reason other than death or disability,
any Option which is exercisable on the date of such termination of employment
shall expire upon the end of three months (such period not to exceed three
months after such termination of employment). If Optionee's employment is
terminated because of Optionee's theft or embezzlement from the Company,
disclosure of trade secrets of the Company or the commission of a willful,
felonious act while in the employment of the Company, (such reasons shall
hereinafter be collectively be referred to as "for cause"), then any Option or
unexercised portion thereof granted to Optionee shall expire upon such date of
such termination of employment; provided, however, the Committee, in its sole
discretion, may allow an Optionee to exercise all or a portion of the Options
granted but unexercised for a period of time after Optionee's termination of
employment.
6. DISABILITY OR DEATH. In the event Optionee dies or is
determined to be disabled while Optionee is employed by the Company, the
options previously granted to Optionee may be exercised (to the extent Optionee
would have been entitled to do so at the date of death or the determination of
disability) at any time and from time to time, within a one year period (not to
exceed one year) after such death or determination of disability, by the
Optionee, the guardian of Optionee's estate, the executor or administrator of
Optionee's estate or by the person or persons to whom Optionee's rights under
this Option Agreement shall pass by will or the laws of descent and
distribution, but in no event may the Option be exercised after its expiration
under the terms of this Option Agreement. An Optionee shall be deemed to be
disabled if, in the opinion of a physician selected by the Committee, Optionee
is incapable of performing services for the Company of the kind Optionee was
performing at the time the disability occurred by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or to be of long, continued and indefinite
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duration. The date of determination of disability for purposes hereof shall be
the date of such determination by such physician.
7. TRANSFERABILITY. This Option shall not be transferable by
Optionee otherwise than by Optionee's will or by the laws of descent and
distribution. During the lifetime of Optionee, the Option shall be exercisable
only by Optionee or his or her authorized legal representative. Any heir or
legatee of Optionee shall take rights herein granted subject to the terms and
conditions hereof. No such transfer of this Option Agreement to heirs or
legatees of Optionee shall be effective to bind the Company unless the Company
shall have been furnished with written notice thereof and a copy of such
evidence as the Committee may deem necessary to establish the validity of the
transfer and the acceptance by the transferee or transferees of the terms and
conditions hereof.
8. NO RIGHTS AS STOCKHOLDER. Optionee shall have no rights as a
stockholder with respect to any shares of Common Stock covered by this Option
Agreement until the Option is exercised by written notice and accompanied by
payment as provided in Section 4 of this Option Agreement.
9. EXTRAORDINARY CORPORATE TRANSACTIONS. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or
any issuance of Common Stock or subscription rights thereto, or any issuance of
bonds, debentures, preferred or prior preference stock ahead of or affecting
the Common Stock or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceedings, whether of a similar
character or otherwise. If the Company recapitalizes or otherwise changes its
capital structure, or merges, consolidates, sells all of its assets or
dissolves (each of the foregoing a "Fundamental Change"), then thereafter upon
any exercise of the Option, Optionee shall be entitled to purchase under the
Option, in lieu of the number of shares of Common Stock as to which the Option
shall then be exercisable, the number and class of shares of stock and
securities to which Optionee would have been entitled pursuant to the terms of
the Fundamental Change if, immediately prior to such Fundamental Change,
Optionee had been the holder of record of the number of shares of Common Stock
as to which the Option is then exercisable. If the Company goes through a
"Corporate Change" (as defined in subparagraph 6(j) of the Plan), the Options
granted hereunder shall be governed by subparagraph 6(j) of the Plan.
10. CHANGES IN CAPITAL STRUCTURE. If the outstanding shares of
Common Stock or other securities of the Company, or both, for which the Option
is then exercisable shall at any time be changed or exchanged by declaration of
a stock dividend, stock split, combination of shares, or recapitalization, the
number and kind of shares of Common Stock or other securities subject to the
Plan or subject to the Option and the exercise price, shall be appropriately
and equitably adjusted so as to maintain the proportionate number of shares or
other securities without changing the aggregate exercise price.
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11. COMPLIANCE WITH SECURITIES LAWS. Upon the acquisition of any
shares pursuant to the exercise of the Option herein granted, Optionee (or any
person acting under Section 7) will enter into such written representations,
warranties and agreements as the Company may reasonably request in order to
comply with applicable securities laws or with this Option Agreement.
12. COMPLIANCE WITH LAWS. Notwithstanding any of the other
provisions hereof, Optionee agrees that he or she will not exercise the Option
granted hereby, and that the Company will not be obligated to issue any shares
pursuant to this Option Agreement, if the exercise of the Option or the
issuance of such shares of Common Stock would constitute a violation by
Optionee or by the Company of any provision of any law or regulation of any
governmental authority.
13. NO RIGHT TO EMPLOYMENT. Optionee who is an employee shall be
considered to be in the employment of the Company so long as he or she remains
an employee of the Company or its Affiliates. Any questions as to whether and
when there has been a termination of such employment and the cause of such
termination shall be determined by the Committee, and its determination shall
be final. Nothing contained herein shall be construed as conferring upon
Optionee the right to continue in the employ of the Company, nor shall anything
contained herein be construed or interpreted to limit the "employment at will"
relationship between Optionee and the Company.
14. RESOLUTION OF DISPUTES. As a condition of the granting of the
Option hereby, Optionee, and Optionee's heirs, personal representatives and
successors agree that any dispute or disagreement which may arise hereunder
shall be determined by the Committee in its sole discretion and judgment, and
that any such determination and any interpretation by the Committee of the
terms of this Option Agreement shall be final and shall be binding and
conclusive, for all purposes, upon the Company, Optionee, and Optionee's heirs,
personal representatives and successors.
15. LEGENDS ON CERTIFICATE. The certificates representing the
shares of Common Stock purchased by exercise of the Option will be stamped or
otherwise imprinted with legends in such form as the Company or its counsel may
require with respect to any applicable restrictions on sale or transfer and the
stock transfer records of the Company will reflect stop-transfer instructions
with respect to such shares.
16. NOTICES. Every notice hereunder shall be in writing and shall
be given by registered or certified mail. All notices of the exercise of any
Option hereunder shall be directed to The GNI Group, Inc., 0000 Xxxxxxxxxxxx
Xxxx, Xxxx Xxxx, Xxxxx 00000, Attention: Secretary. Any notice given by the
Company to Optionee directed to Optionee at the address on file with the
Company shall be effective to bind Optionee and any other person who shall
acquire rights hereunder. The Company shall be under no obligation whatsoever
to advise Optionee of the existence, maturity or termination of any of
Optionee's rights hereunder and Optionee shall be deemed to have familiarized
himself or herself with all matters contained herein and in the Plan which may
affect any of Optionee's rights or privileges hereunder.
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17. CONSTRUCTION AND INTERPRETATION. Whenever the term "Optionee"
is used herein under circumstances applicable to any other person or persons to
whom this award, in accordance with the provisions of Section 7 hereof, may be
transferred, the word "Optionee" shall be deemed to include such person or
persons.
18. NOTICE OF DISPOSITION. If Optionee disposes of any shares of
Common Stock acquired pursuant to the exercise of an Option granted hereunder
prior to the earlier of (i) two years from the date of this Option Agreement or
(ii) one year from the date the shares of Common Stock were acquired, Optionee
shall notify the Company of such disposition within ten days of its occurrence
and deliver to the Company any amount of federal or state income tax
withholding required by law. Payment of the withholding shall be made in
accordance with Section 11 of the Plan. If the Optionee fails to pay the
withholding tax, the Company is authorized to withhold from any cash
remuneration then or thereafter payable to the Optionee any tax required to be
withheld by reason of any disposition named herein.
19. AGREEMENT SUBJECT TO PLAN. This Option Agreement is subject
to the Plan. The terms and provisions of the Plan (including any subsequent
amendments thereto) are hereby incorporated herein by reference thereto. In
the event of a conflict between any term or provision contained herein and a
term or provision of the Plan, the applicable terms and provisions of the Plan
will govern and prevail. All definitions of words and terms contained in the
Plan shall be applicable to this Option Agreement.
20. BINDING EFFECT. This Option Agreement shall be binding upon
and inure to the benefit of any successors to the Company and all persons
lawfully claiming under Optionee as provided herein.
IN WITNESS WHEREOF, this Incentive Stock Option Agreement has been
executed as of the ____ day of ___________, 19__.
THE GNI GROUP, INC.
ATTEST:
By:
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Name:
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Title:
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OPTIONEE
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