Exhibit (d)(3)
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement"), dated as
of [DATE] is made by and between Xxxxx Xxxxx Inc., a Delaware corporation (the
"Company"), and [NAME] (the "Optionee").
WHEREAS, the Company has adopted the 1997 Equity Participation Plan of
Xxxxx Xxxxx Holding Corp. (the "Plan") to provide an additional incentive for
directors, Employees and consultants to further the growth, development and
financial success of the Company by personally benefiting through the ownership
of Company stock and/or rights which recognize such growth, development and
financial success; and
WHEREAS, the Company considers the Optionee to be a key employee,
views the services provided by the Optionee essential to the long-range success
of the Company and wishes to obtain and retain such services.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, receipt of which is hereby
acknowledged, the Company and the Optionee do hereby agree as follows:
ARTICLE I
DEFINITIONS
The following terms shall have the meanings specified below unless the
context clearly indicates to the contrary. The singular pronoun shall include
the plural, where the context so indicates. Other capitalized terms not defined
in this Agreement shall have the meanings specified in the Plan. The Options
granted pursuant to this Agreement are subject to all of the terms and
provisions of the Plan which is incorporated herein by reference. In the event
of any conflict between this Agreement and the Plan, the terms of the Plan shall
control.
Section 1.1 Affiliate. "Affiliate" with respect to any person shall
mean any other person or entity directly or indirectly controlling, controlled
by or under common control with, such person where "control" shall have the
meaning given such term under Rule 405 of the Securities Act.
Section 1.2 Board. "Board" shall mean the Board of Directors of the
Company.
Section 1.3 Code. "Code" shall mean the Internal Revenue Code of 1986,
as amended.
Section 1.4 Committee. "Committee" shall mean the Compensation
Committee of the Board, or another committee of the Board, appointed as provided
in Section 9.1 of the Plan, or if no such committee is so appointed, "Committee"
shall mean the Board.
Section 1.5 Common Stock. "Common Stock" shall mean the Class B common
stock of the Company, par value $0.01 per share.
Section 1.6 Company. "Company" shall mean Xxxxx Xxxxx Inc. In
addition, "Company" shall mean any corporation assuming, or issuing a new
incentive stock option in substitution for, an option in a transaction to which
Section 424(a) of the Code applies.
Section 1.7 Date of Grant. The "Date of Grant" is ________________.
Section 1.8 Director. "Director" shall mean a member of the Board.
Section 1.9 Disability. "Disability" shall mean permanent and total
disability within the meaning of Code Section 22(e) (3).
Section 1.10 Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
Section 1.11 Fair Market Value. "Fair Market Value" of a share of
Common Stock as of any given date shall be (i) the average closing price of a
share of Common Stock on the principal exchange on which shares of Common Stock
are then trading, if any (or as reported on any composite index which includes
such principal exchange), over the five trading days immediately preceding the
date of determination, or (ii) if Common Stock is not traded on an exchange but
is quoted on NASDAQ or a successor quotation system, the average mean between
the closing representative bid and asked prices for the Common Stock over the
five trading days immediately preceding the date of determination as reported by
NASDAQ or such successor quotation system or (iii) if Common Stock is not
publicly traded on an exchange and not quoted on NASDAQ or a successor quotation
system, the fair market value of a share of Common Stock determined, without
regard to any minority discount or control premium, in good faith by the
Committee.
Section 1.12 Independent Third Party. "Independent Third Party" shall
mean any entity other than (i) the Company or (ii) any Affiliate or Subsidiary
of the Company.
Section 1.13 Options. "Options" shall mean the Options to purchase
Common Stock granted to the Optionee pursuant to this Agreement.
Section 1.14 Plan. "Plan" shall mean the 1997 Equity Participation
Plan of Xxxxx Xxxxx Holding Corp.
Section 1.15 QDRO. "QDRO" shall mean a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the regulations and rules promulgated
thereunder.
Section 1.16 Retirement. "Retirement" has the meaning ascribed to the
term under the Xxxxx Xxxxx 401(k) Profit Sharing Plan, as amended from time to
time.
Section 1.17 Rule 16b-3. "Rule 16b-3" shall mean that certain Rule
16b-3 under the Exchange Act, as such Rule may be amended from time to time.
Section 1.18 Sale of the Company. "Sale of the Company" shall mean the
consummation of one of the following events:
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(a) any Independent Third Party is or becomes the Beneficial Owner (as
defined below), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company's then
outstanding securities. For purposes of this Agreement, the term "Beneficial
Owner" shall have the meaning given to such term in Rule 13d-3 under the
Exchange Act;
(b) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation (or other entity), other than a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; provided, however, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no person acquires more than 25% of the combined voting power of the
Company's then outstanding securities shall not constitute a Sale of the
Company; or
(c) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
Section 1.19 Securities Act. "Securities Act" shall mean the
Securities Act of 1933, as amended.
Section 1.20 Subsidiary. "Subsidiary" of any person shall mean any
entity of which
(a) if a corporation, a majority of the total voting power of shares
of stock entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is at the time of
determination owned or controlled, directly or indirectly, collectively or
individually, by such person or by one or more Subsidiaries of such person, and
(b) if a partnership, association, limited liability company or other
entity, a majority of the partnership, membership or other similar ownership
interest thereof is at the time of determination owned or controlled, directly
or indirectly, collectively or individually, by such person or by one or more
Subsidiaries of such person.
For purposes of this Agreement, each of the Company and its
Subsidiaries shall be deemed to own a majority ownership interest in a
partnership, association, limited liability company or other entity if the
Company and its Subsidiaries are allocated a majority of partnership,
association, limited liability company or other entity gains or losses or shall
control the general partner or managing member or managing director of such
entity.
Section 1.21 Termination of Employment. "Termination of Employment"
shall mean the time when the engagement of the Optionee as an employee of the
Company and its Subsidiaries is terminated for any reason; but excluding a
termination where there is a simultaneous commencement of employment with the
Company or any Subsidiary. The Board,
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in its sole discretion, shall determine the effect of all matters and questions
relating to Termination of Employment, including, but not by way of limitation,
the question of whether a Termination of Employment was at the initiative of the
Company or the Optionee, and all questions of whether a particular leave of
absence constitutes a Termination of Employment.
ARTICLE II
GRANT OF OPTIONS
Section 2.1 Grant of Options. The Company irrevocably grants to the
Optionee, subject to the terms and conditions set forth in this Agreement, [ ]
Options, each representing the right to purchase one share of Common Stock.
Section 2.2 Option Price. The purchase price of the shares of Common
Stock covered by the Options shall be $[ ] per share without commission or other
charge.
Section 2.3 Consideration to the Company. In consideration of the
granting of the Options, the Optionee agrees to render faithful and efficient
services to the Company or a Subsidiary, with such duties and responsibilities
as such entity shall from time to time prescribe, and to agree to abide by the
covenant set forth in Article 6.2 of this Agreement. Nothing in the Plan or this
Agreement shall confer upon the Optionee any right to continue as an employee of
the Company or any Subsidiary or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge the Optionee at any time for any reason whatsoever.
Section 2.4 Adjustments to Option. The Options shall be subject to
adjustment pursuant to Section 10.3 of the Plan.
ARTICLE III
VESTING; PERIOD OF EXERCISABILITY
Section 3.1 Vesting.
(a) Subject to subsection (b) and Sections 3.3 and 3.4, the Options
shall vest and become exercisable in three (3) cumulative annual installments as
follows:
(i) The first installment shall consist of one third (1/3)
of the shares of Common Stock covered by the Option and shall become
exercisable on the first anniversary of the Date of Grant;
(ii) The second installment shall consist of one third (1/3)
of the shares of Common Stock covered by the Option and shall become
exercisable on the second anniversary of the Date of Grant;
(iii) The third installment shall consist of one third (1/3)
of the shares of Common Stock covered by the Option and shall become
exercisable on the third anniversary of the Date of Grant.
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(b) Upon the Optionee's Termination of Employment due to Retirement,
the Options shall continue to vest in accordance with Section 3.1(a) and remain
exercisable in accordance with Section 3.3.
(c) Except as set forth in Section 3.1(b), no portion of the Option
which is unexerciseable upon the Optionee's Termination of Employment shall
thereafter become exercisable.
Section 3.2 Duration of Exercisability. Upon vesting in accordance
with Section 3.1, the Option shall remain exercisable until it expires pursuant
to Section 3.3.
Section 3.3 Expiration of Options. The Options may not be exercised
after the first to occur of the following events and all Options (vested and
unvested) shall expire as of such date:
(a) [Insert tenth anniversary of Date of Grant];
(b) The opening of business on the date of the Optionee's Termination
of Employment by the Company for cause, as determined by the Committee;
(c) The first business day which is thirty calendar days after the
Optionee's Termination of Employment for any reason other than death,
Disability, Retirement or cause;
(d) Upon the occurrence of any event described in Section 10.3(b) of
the Plan, the date specified by the Committee pursuant to exercise of its
discretion as set forth in Section 10.3(b) of the Plan; or
(e) The first business day which is 180 days after Optionee's
Termination of Employment by reason of his death or Disability.
ARTICLE IV
EXERCISE OF OPTIONS
Section 4.1 Person Eligible to Exercise. During the lifetime of the
Optionee, only the Optionee may exercise and Option or any portion thereof,
unless it has been disposed of pursuant to a QDRO. After the death of the
Optionee, any exercisable portion of the Options may, prior to the time when the
Options (or portion thereof) become unexercisable under Section 3.3, be
exercised by his personal representative or by any person empowered to do so
under the Optionee's will or under the then applicable laws of descent and
distribution.
Section 4.2 Partial Exercise. An exercisable Option may be exercised
in whole or in part at any time prior to the time when the Option or portion
thereof becomes unexercisable under Section 3.3; provided, however, that an
Option shall not be exercisable with respect to fractional shares and that each
partial exercise shall be for not less than 10 shares.
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Section 4.3 Manner of Exercise. All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or his or her office prior to the Option expiration of
the Option pursuant to under Section 3.3:
(a) A written notice complying with the applicable rules established
by the Committee from time to time stating that the Option, or a portion
thereof, is exercised. The notice shall be signed by the Optionee or other
person then entitled to exercise the Options or such portion;
(b) Such representations and documents as the Committee, in its sole
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act, and, any other federal or state
securities laws or regulations;
(c) In the event that the Options shall be exercised by any person or
persons other than the Optionee, appropriate proof of the right of such person
or persons to exercise the Options; and
(d) Full cash payment to the Secretary of the Company for the shares
with respect to which the Options, or portion thereof, are exercised. However,
the Committee may, in its sole discretion, (i) allow a delay in payment up to
thirty (30) days from the date the Options, or portion thereof, are exercised;
(ii) allow payment, in whole or in part through the delivery of shares of Common
Stock owned by the Optionee, duly endorsed for transfer to the Company with a
Fair Market Value on the date of delivery equal to the aggregate exercise price
of the Options or exercised portion thereof; (iii) allow payment, in whole or in
part, through the surrender of shares of Common Stock then issuable upon
exercise of the Options having a Fair Market Value on the date of exercise equal
to the aggregate exercise price of the Options or exercised portion thereof;
(iv) allow payment, in whole or in part, through the delivery of property of any
kind which constitutes good and valuable consideration; (v) allow payment, in
whole or in part, through the delivery of a full recourse promissory note
bearing interest (at no less than such rate as shall then preclude the
imputation of interest under the Code) and payable upon such terms as may be
prescribed by the Committee; (vi) allow payment, in whole or in part, through
the delivery of a notice that the Optionee has placed a market sell order with a
broker with respect to shares of Common Stock then issuable upon exercise of the
Options, and that the broker has been directed to pay a sufficient portion of
the net proceeds of the sale to the Company in satisfaction of the exercise
price for the Options; or (vii) allow payment through any combination of the
consideration provided in the foregoing subparagraphs (ii), (iii), (iv), (v) and
(vi).
In the case of a promissory note, the Committee may also prescribe the
form of such note and the security to be given for such note. The Options may
not be exercised, however, by delivery of a promissory note or by a loan from
the Company when or where such loan or other extension of credit is prohibited
by law.
Section 4.4 Conditions to Issuance of Stock Certificates. An option
may not be exercised and the Company shall not be required to issue or deliver
any certificate or certificates for shares of stock purchased upon the exercise
of the Options or portion thereof prior to fulfillment of all of the following
conditions:
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(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed; and
(b) (i) The completion, filing and effectiveness of a registration
statement under the Securities Act with respect to the shares of Common Stock
subject to the Option and the qualification of the Option and the underlying
Common Stock under any state "blue-sky" laws or (ii) the determination by the
Committee, in its sole discretion, that such registration and qualification are
not required as a result of the availability of an exemption from such
registration and qualification;
(c) The obtaining of any approval or other clearance from any state,
federal or local governmental agency which the Committee shall, in its sole
discretion, determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time following the exercise
of the Options as the Committee may establish from time to time for reasons of
administrative convenience; and
(e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax in accordance with Section
5.5.
Section 4.5 Rights as a Stockholder. The Optionee shall not be, nor
have any of the rights or privileges of, a stockholder of the Company in respect
of any shares purchasable upon the exercise of any part of the Options unless
and until certificates representing such shares have been issued by the Company
to the Optionee.
Section 4.6 Employee Trading Policy. The exercise of an Option or the
disposition of any shares of Common Stock issuable upon exercise of an Option
shall be subject to the Company's policies and procedures relating to employee
trading in the Company's securities.
ARTICLE V
TRANSFER OF OPTIONS AND RESTRICTED SHARES
Section 5.1 Not Transferable. No Option may be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of descent
and distribution or pursuant to a QDRO. None of the Options nor any interest or
right therein shall be liable for the debts, contracts or engagements of the
Optionee or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted, disposition thereof shall
be null and void and of no effect, except to the extent that such disposition is
permitted by the preceding sentence.
Section 5.2 Representations and Warranties. The Optionee is aware of
and familiar with the restrictions imposed on the transfer of the Options. The
Optionee represents that (i) this Agreement has been duly executed and delivered
by the Optionee and constitutes a
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legal, valid and binding agreement of the Optionee, enforceable against the
Optionee in accordance with its terms, except as limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors' rights generally and by general principles of equity, and (ii) the
Optionee is acquiring shares of Common Stock hereunder for investment, solely
for his own account and not with a view to, or for resale with, the distribution
or other disposition thereof.
ARTICLE VI
SALE OF THE COMPANY
Section 6.1 Sale of the Company. If the Board and the holders of a
majority of the Company's common stock then outstanding approve a Sale of the
Company (an "Approved Sale"), the Optionee hereby agrees to consent to and raise
no objection to such Approved Sale, and to take all actions determined by the
Committee to be necessary or appropriate in connection with the consummation of
such Approved Sale.
Section 6.2 Acceleration of Exercisability. In the event of a Sale of
the Company, all outstanding Options (to the extent not expired pursuant to
Section 3.3) shall vest and become immediately exercisable in full for all
shares of Common Stock covered thereby.
Section 6.3. No Restriction on Right of Company to Effect Corporate
Changes. Neither the Plan nor this Agreement shall affect or restrict in any way
the right or power of the Company or its shareholders to make or authorize any
adjustment, recapitalization, reorganization or other change in the capital
structure or business of the Company, or any merger or consolidation of the
Company, or dividend or other distribution, any issue of stock or of options,
warrants or rights to purchase stock or of bonds, debentures, preferred or prior
preference stocks whose rights are superior to or affect the Common Stock or the
rights thereof or which are convertible into or exchangeable for Common Stock,
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 proceeding,
whether of a similar character or otherwise.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Tax Withholding. The Company shall be entitled to require
payment in cash or deduction from other compensation payable to the Optionee of
any sums required by federal, state or local tax law to be withheld with respect
to the issuance, vesting or exercise of the Options. The Committee may, in its
sole discretion, allow the Optionee to elect to have the Company withhold shares
of Common Stock otherwise issuable under the Options (or allow the return of
shares of Common Stock) having a Fair Market Value, equal to the sums required
to be withheld.
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Section 7.2 At-will Employment. The Optionee is employed on an at-will
basis, meaning that the Optionee or the Company may terminate the employment
relationship for any reason or no reason, with or without cause, without notice.
Nothing in this Agreement is to be construed as altering the at-will nature of
the Optionee's employment.
Section 7.3 Compliance with Rule 16b-3. It is the intent of the
Company that this Agreement comply in all respects with applicable provisions of
Rule 16b-3 under the Exchange Act in connection with any grant of Stock Options.
Accordingly, if any provision of this Agreement does not comply with the
requirements of Rule 16b-3 as then applicable to the Optionee, such provision
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee. Moreover, in the event that this Agreement does not
include a provision required by Rule 16(b)(3) to be stated herein, such
provision (other than one relating to eligibility requirements, or the price and
amount of Awards) shall be deemed automatically to be incorporated by reference
into this Agreement insofar as the Optionee is concerned.
Section 7.4 Compliance with Laws. The Optionee acknowledges that the
Plan, this Agreement, the Options and the issuance and delivery of shares of
Common Stock under the Options granted hereunder are subject to compliance with
all applicable federal and state laws, rules and regulations (including but not
limited to state and federal securities law and federal margin requirements) and
to such approvals by any listing, regulatory or governmental authority as may,
in the opinion of counsel for the Company, be necessary or advisable in
connection therewith. Any securities delivered under this Agreement shall be
subject to such restrictions, and the person acquiring such securities shall, if
requested by the Committee, provide such assurances and representations to the
Company as the Committee may deem necessary or desirable to assure compliance
with all applicable legal requirements. The Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions. No shares of Common Stock shall be issued pursuant to this
Agreement unless the Committee shall have determined that such issuance is in
compliance with, or pursuant to an exemption from, all applicable federal and
state securities laws. To the extent permitted by applicable law, this
Agreement, the Plan and the Options granted hereunder shall be deemed amended to
the extent necessary to conform to such laws, rules and regulations.
Section 7.5 Governing Law. This Agreement shall be administered,
interpreted and enforced under the internal laws of the state of New York
without regard to conflicts of laws thereof.
Section 7.6 Shares to Be Reserved. The Company shall at all times
during the term of the Options reserve and keep available such number of shares
of Common Stock as will be sufficient to satisfy the requirements of this
Agreement.
Section 7.7 Notices. Any notice, request, claim, demand, document and
other communication hereunder to any party will be effective upon receipt (or
refusal of receipt) and will be in writing and delivered personally or sent by
telex, telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Company, addressed to:
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Secretary of Xxxxx Xxxxx Inc.
Xxxxx Xxxxx Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
(b) If to the Optionee, to him at the address set forth below under
his signature, or at such other address as the Optionee will have specified by
notice in writing to the Company.
Section 7.8 Titles. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of this
Agreement.
Section 7.9 Counterparts. This Agreement may be executed in one or
more counterparts, which together shall constitute one and the same original.
Section 7.10 Invalid Provision. The invalidity or unenforceability of
any particular provision hereof shall not affect the other provisions hereof,
and this Agreement shall be construed in all respects as if such invalid or
unenforceable provision was omitted.
Section 7.11 Effect of Options upon Other Compensation Plans. The
Options and any payments with respect thereto shall not constitute
"compensation" for purposes of any pension, welfare or other benefit plan or
policy of the Company unless provided for therein.
Section 7.12 Waiver. The waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement
Section 7.13 Assignment. Except as otherwise provided herein, no party
may assign this Agreement or any of his or its rights, interests or obligations
hereunder without the prior written consent of the other parties, provided that
the Company's rights and obligations hereunder may be assigned to any Subsidiary
or Affiliate of the Company or to any successor to any of such pursuant to a
merger, consolidation or similar event. Subject to the foregoing, this Agreement
and the respective rights and obligations of the parties hereto shall inure to
the benefit of and be binding upon, the successors and assigns of the parties.
Section 7.14 Amendment. This Agreement may not be modified, amended or
waived except by an instrument in writing signed by both parties hereto. The
waiver by either party of compliance with any provision of this Agreement shall
not operate or be construed as a waiver of any other provision of this
Agreement, or of any subsequent breach by such party of a provision of this
Agreement.
Section 7.15 Entire Agreement. This Agreement, and the Plan set forth
the entire agreement and understanding between the parties hereto with respect
to the matters covered herein, and supersede any prior agreements and
understandings concerning such matters.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.
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XXXXX XXXXX INC.
By: ___________________________
Its: ___________________________
______________________________
(Optionee Name)
______________________________
Address
______________________________
______________________________
Taxpayer Identification Number
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