EXHIBIT 10.19.4
XXXXX XXXXXXXX CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated _______________, is made by and between Xxxxx Xxxxxxxx
Corporation, a Delaware corporation, hereinafter referred to as the "Company,"
and *, an employee of Company or a Subsidiary of Company, hereinafter referred
to as "Employee".
WHEREAS, Company wishes to afford Employee the opportunity to purchase shares of
its $1.00 par value common stock under the terms of The 1990 Stock Option and
Incentive Plan for Key Employees of Xxxxx Xxxxxxxx Corporation; and
WHEREAS, the Compensation Committee of the Company's Board of Directors
(hereinafter referred to as the "Committee"), appointed to administer said Plan,
has determined that it would be to the advantage and best interest of Company
and its shareholders to grant the Option provided for herein to Employee as an
inducement to remain in the service of Company or its Subsidiaries and as an
incentive for increased efforts during such service;
WHEREAS, the Committee has advised the Company of its determination and
instructed the undersigned officers to issue said Option, which the Committee
has determined should be a Non-Qualified Stock Option, as authorized under the
Plan;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, Company and Employee do hereby agree as follows:
ARTICLE I
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DEFINITIONS
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Whenever the following terms are used in this Agreement they shall have the
meaning specified below unless the context clearly indicates to the contrary.
1.1 Option
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"Option" shall mean the option to purchase common stock of the Company
granted under the Stock Option Agreement.
1.2 Plan
----
The "Plan" shall mean The 1990 Stock Option and Incentive Plan for Key
Employees of Xxxxx Xxxxxxxx Corporation.
1.3 Pronouns
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The masculine pronoun shall include the feminine and neuter, and the
singular and plural, where the context so indicates.
* Refer to attached Notice.
1.4 Secretary
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"Secretary" shall mean the Secretary of the Company.
1.5 Subsidiary
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"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other
than the last corporation in the unbroken chain then owns stock possessing
50 percent or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
1.6 Termination of Employment
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"Termination of Employment" shall mean the time when the employee-employer
relationship between the Employee and the Company or a Subsidiary is
terminated for any reason, including, but not limited to, a termination by
resignation, discharge, death or retirement, but excluding terminations
where there is a simultaneous reemployment or continuing employment by the
Company or a Subsidiary, and, at the discretion of the Committee,
terminations which result in the severance of the employee-employer
relationship that do not exceed one year. The Committee, in its absolute
discretion, shall determine the effect of all other matters and questions
relating to Termination of Employment.
1.7 Change of Control
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"Change of Control" shall mean a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A, Regulation 240.14a-101, promulgated under the Securities
Exchange Act of 1934 as in effect on the date of this Agreement or, if Item
6(e) is no longer in effect, any regulation issued by the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934 which
serves similar purposes; provided that, without limitation, a Change of
Control shall be deemed to have occurred if and when:
(a) Any "person" (as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934) is or becomes a beneficial owner,
directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the combined voting power of the
Company's then outstanding securities, or
(b) Individuals who were members of the Board of Directors of the Company
immediately prior to a meeting of the shareholders of the Company
involving a contest or the election of the directors shall not
constitute a majority of the Board of Directors following such
election.
1.8 Beneficiary
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"Beneficiary" shall mean a person properly designated by the Employee,
including his/her spouse or heirs at law, to exercise such Employee's
rights under the Plan. Designation, revocation and redesignation of
Beneficiaries must be made in writing in accordance with rules established
by the Committee and shall be effective upon delivery to the Committee.
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ARTICLE II
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GRANT OF OPTION
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2.1 Grant of Option
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In consideration of Employee's agreement to remain in the employ of Company
or its subsidiaries and for other good and valuable consideration, on the
date hereof the Company irrevocably grants to Employee the option to
purchase any part or all of an aggregate of * shares of its $1.00 par value
common stock upon the terms and conditions set forth in this Agreement.
Such Option is granted pursuant to the Plan and shall also be subject to
the terms and conditions set forth in the Plan.
2.2 Purchase Price
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The purchase price of the shares of stock covered by the Option shall be
dollars ($ ) per share without commission or other charge.
2.3 Consideration to Company
------------------------
In consideration of the granting of this Option by the Company, the
Employee agrees to render faithful and efficient service to the Company or
a Subsidiary, with such duties and responsibilities as the Company shall
from time to time prescribe, for a period of at least one (1) year from the
date this Option is granted. Nothing in this Agreement or in the Plan shall
confer upon the Employee any right to continue in the employ of the Company
or any Subsidiary or shall interfere with or restrict in any way the rights
of the Company and its Subsidiaries, which are hereby expressly reserved,
to discharge the Employee at any time for any reason whatsoever, with or
without good cause. Nor shall it interfere with or restrict in any way,
other than the forfeiture of all rights under this Agreement, the right of
the Employee voluntarily to terminate his employment with the Company or a
Subsidiary.
2.4 Adjustments in Option
---------------------
In the event that the outstanding shares of the stock subject to the Option
are changed into or exchanged for a different number or kind of shares of
the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split-up, stock
dividend, or combination of shares, the Committee shall make an appropriate
and equitable adjustment in the number and kind of shares as to which the
Option, or portions thereof then unexercised, shall be exercisable. Such
adjustment shall be made with the intent that after the change or exchange
of shares, the Employee's proportionate interest shall be maintained as
before the occurrence of such event. Such adjustment in the Option may
include a necessary corresponding adjustment in the option price per share,
but shall be made without change in the total price applicable to the
unexercised portion of the Option (except for any change in the aggregate
price resulting from rounding-off of share quantities or prices).
* Refer to the attached Notice
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ARTICLE III
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PERIOD OF EXERCISABILITY
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3.1 Commencement of Exercisability
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(a) The Option will vest (become available for exercise) nine years and
nine months from the date the Option was granted. However, if certain
conditions are met, the Option will become eligible for accelerated or
early vesting three years from the date the Option was granted or on
subsequent anniversary dates thereafter.
Such early vesting will occur provided that the Company's return on
total capital as reported in the annual report to shareholders (or
other report) for the most recently completed fiscal year equals or
exceeds the return on total capital of the median company among the
peer group (as listed in the Company's proxy statement) for that year
(for example, the performance test for accelerated vesting for options
granted in 1999 will be based on the return on total capital for
2002).
To facilitate the peer group performance comparison needed to
determine whether option vesting is accelerated, the figures for peer
group companies' return on total capital will be based upon the
twelve-month performance for each company in the peer group closest to
the Company's fiscal year end, using the most recent publicly
available financial information for such companies.
If the Company meets the performance test described above, all prior
non-vested Options eligible for accelerated vesting will become
available for exercise as soon as possible following the Committee's
certifications of the Company's performance and the performance of the
median company among the peer group.
If the Company fails to meet the performance test described above, all
prior non-vested Options eligible for early vesting will be subject to
a similar performance test following the end of the next fiscal year.
The test for early vesting of Options will continue to "roll" in the
manner described above until the Company passes the performance test,
or until nine years and nine months have elapsed from the date of
grant.
(b) No portion of the Option which is unexercisable under Subsection (a)
above at Termination of Employment shall thereafter become
exercisable.
(c) Notwithstanding Subsections 3.1(a) and 3.1(b) above, and Section 3.4
below, upon a Change of Control, all Option installments not yet
exercisable shall become immediately exercisable; provided, however,
that if all or a portion of the Option installments which otherwise
would become exercisable pursuant to this Subsection 3.1(c) is
determined by the Committee to constitute, when exercised, a
"parachute payment" as defined by Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), such Option installments or
portion thereof shall not become exercisable upon the Change of
Control. In making this determination pursuant to the preceding
sentence the Committee shall first take into account any payments to
the Employee contingent on a change in the ownership or control of the
Company or its assets (as provided in said Section 280G) under any
other agreement or arrangement between the Company and Employee,
exclusive of any agreement which is not subject to Section 280G
because of Section 67(e) of the Tax Reform Act of 1984. Subsection
3.1(c) shall be final and binding upon Employee.
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3.2 Term of Option
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The Option will expire and will not, under any condition, be exercisable
after the tenth (10th) anniversary of the date the Option was granted. Such
date shall be the Option's Expiration Date.
3.3 Exercise of Option after Termination of Employment
--------------------------------------------------
This Option is exercisable by the Employee only while he is employed by the
Company or a Subsidiary, subject to the following exceptions:
(a) If the Employee dies while the Option is exercisable under the terms
of this Agreement, the Employee's Beneficiary may exercise such
rights, subject to the limitation in Subsection 3.1(b). The Option
must be exercised within twelve (12) months after the Employee's
death, and the Committee may in its discretion extend the Expiration
Date of the Option to accommodate such exercise.
(b) If the Employee's employment is terminated due to his permanent and
total disability, as defined in Section 22(c)(3) of the Code, the
Employee may exercise the Option, subject to the limitation in
Subsection 3.1(b), within twelve (12) months after Termination of
Employment, but not later than the Option's Expiration Date.
(c) If the Employee's employment is terminated due to his retirement, the
Employee may exercise the Option, subject to the limitations of
Subsection 3.1(b), within sixty (60) months after Termination of
Employment, but not later than the Option's Expiration Date.
(d) If the Employee's employment is terminated due to his retirement at or
after age fifty-five (55) and such Employee continues as a director of
the Company, the Employee may exercise the Option to the same extent
as he would be able to exercise it if he continued to be employed,
until the earlier of two (2) years after he ceases to be a director of
the Company or the Option's Expiration Date.
(e) If the Employee's employment is terminated other than for good cause
or the reasons set forth in Subsections (a) through (d) above, the
Employee may exercise the Option, subject to the limitations of
Subsection 3.1(b), within three (3) months after Termination of
Employment, but not later than the Option's Expiration Date.
3.4 Exercise of Option Upon Merger or Consolidation
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(a) Notwithstanding Section 3.3, the Option may not be exercised to any
extent by anyone after the effective date of either the merger or
consolidation of the Company into another corporation, the exchange of
all or substantially all of the assets of the Company for the
securities of another corporation, the acquisition by another
corporation of 80% or more of the Company's then outstanding voting
stock, or the liquidation or dissolution of the Company. At least ten
(10) days prior to the effective date of such merger, consolidation,
exchange, acquisition, liquidation, or dissolution, the Committee
shall give the Employee notice of such event if the Option has then
neither been fully exercised nor become unexercisable due to the
passage of the specified time period in Subsection (b) below.
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(b) In the event of such merger, consolidation, exchange, liquidation, or
dissolution, the Committee may, in its absolute discretion and on such
terms and conditions as it deems appropriate, provide by resolution
adopted prior to such event and incorporated in the notice referred to
in Subsection (a) above, that for a specified period of time prior to
the effective date of such event, the Option shall be exercisable as
to all shares covered hereby, notwithstanding that the Option may not
yet have become fully exercisable under Subsection 3.1(a).
ARTICLE IV
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EXERCISE OF OPTIONS
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4.1 Partial Exercise
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Any exercisable portion of the Option or the entire Option, if then wholly
exercisable, 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
3.2. Each partial exercise shall be for not less than twenty-five (25)
shares (or a smaller number, if it is the maximum number which may be
exercised under Section 3.1), and shall be for whole shares only.
4.2 Manner of Exercise
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The Option, or any exercisable portion thereof, may be exercised solely by
delivery to the Secretary or his office of all of the following:
(a) A written notice, complying with the applicable rules established by
the Committee, stating that the Option or portion is thereby
exercised. The notice shall be signed by the Employee or the other
person then entitled to exercise the Option; and
(b) Full payment for the shares with respect to which the option or
portion thereof is exercised. Payment may be made in cash (or by
certified or bank cashier's check), or by actual or constructive
delivery to the Company, in accordance with the procedures established
by the Company, of Company Common Stock then owned by the Employee
with a fair market value on the date the option is exercised equal to
the aggregate exercise purchase price of the shares with respect to
which the option or portion thereof is exercised, or by a combination
of cash and surrender of stock in the manner herein specified; and
(c) Full payment to the Company of any federal, state or local taxes
required to be withheld in connection with the exercise, which payment
may be made in cash (or by certified or bank cashier's check) or by
actual or constructive delivery and surrender to the Company in
accordance with procedures established by the Company, of Company
Common Stock then owned by the Employee with a fair market value on
the date the option is exercised equal to the total of such taxes due
in connection with the exercise, or by a combination of cash and
surrender of stock in the manner herein specified; and
(d) In the event the Option or portion thereof shall be exercised by any
person or persons other than the Employee, appropriate proof of the
right of such person or persons to exercise the Option.
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4.3 Conditions to Issuance of Stock Certificates
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The shares of stock deliverable upon the exercise of the Option, or any
part thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares
shall be fully paid and nonassessable. The Company shall not be required to
issue or deliver any certificate or certificates for shares of stock
purchased upon the exercise of the Option or part thereof prior to
fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed;
(b) The completion of any registration or other qualification of such
shares under any state or federal law, or under rulings or regulations
of the Securities and Exchange Commission or any other governmental
regulatory body which the Committee shall, in its absolute discretion,
deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the exercise of
the Option as the Committee may from time to time establish for
reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such shares.
4.4 Rights as Shareholders
----------------------
The holder of the Option shall not be, nor have any of the rights or
privileges of, a shareholder of the Company in respect of any shares
purchasable upon the exercise of any part of the Option unless and until
certificates representing such shares shall have been issued by the Company
to such holder.
ARTICLE V
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MISCELLANEOUS
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5.1 Administration
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The Committee shall have the power to interpret the Plan and this Agreement
and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and
binding upon the Employee, the Company and all other interested persons. No
member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan
or the Option. In its absolute discretion, the Board of Directors of the
Company may at any time and from time to time exercise any and all rights
and duties of the Committee under the Plan and this Agreement.
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5.2 Option Not Transferable
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Neither the Option nor any interest or right therein or part thereof may be
sold, pledged, assigned or transferred in any manner other than by will or
by the applicable laws of descent and distribution. The Option shall be
exercised during the Employee's lifetime only by the Employee, or his
guardian or legal representative.
5.3 Notices
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Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary and any notice
to be given to the Employee shall be addressed to him at the address given
beneath his signature hereto. By a notice given pursuant to this Section,
either party may hereafter designate a different address for notices to be
given to him. Any notice which is required to be given to Employee shall,
if Employee is then deceased, be given to Employee's personal
representative if such representative has previously informed the Company
of his status and address by written notice under this Section. Any notice
shall have been deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid, deposited (with postage
prepaid) in a post office or branch post office regularly maintained by the
United States Postal Service.
5.4 Titles
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Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
5.5 Construction
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This Agreement shall be administered and interpreted under the laws of the
State of California.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
XXXXX XXXXXXXX CORPORATION
by: *
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Chairman & Chief Executive Officer
by:
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Secretary
by: *
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Optionee
*
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*
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Address
* Refer to attached Notice.
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