Exhibit 10.4
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
This Non-Qualified Stock Option Agreement (this "Agreement") is entered
into as of _______________ by and between ACCURIDE CORPORATION, a Delaware
corporation hereinafter referred to as the "Company," and __________________, an
employee of the Company or a Subsidiary (as defined below) of the Company,
hereinafter referred to as the "Optionee."
WHEREAS, the Company wishes to afford the Optionee the opportunity to
purchase shares of its $.01 par value Common Stock ("Common Stock");
WHEREAS, the Company wishes to carry out the Plan (as defined below), the
terms of which are hereby incorporated by reference and made a part of this
Agreement; and
WHEREAS, the Committee (as defined below) appointed to administer the Plan
has determined that it would be to the advantage and best interest of the
Company and its stockholders to grant the Non-Qualified Stock Option(s) provided
for herein to the Optionee as an incentive for increased efforts during his or
her term of employment with the Company or its Subsidiaries, and has advised the
Company thereof and instructed the undersigned officers to issue said Options;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have
the meaning specified in the Plan or below unless the context clearly indicates
to the contrary.
Section 1.1 AFFILIATE
"Affiliate" shall mean (a) with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person, and (b) with respect to the Company, also any entity designated by
the Board of Directors of the Company in which the Company or one of its
Affiliates has an interest, and (c) with respect to Kohlberg Kravis Xxxxxxx &
Co., L.P. ("KKR"), also any Affiliate of any partner of KKR. For purposes of
this Agreement, "Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature, and "control" shall have the meaning given such term under Rule 405 of
the Securities Act of 1933.
Section 1.2 CAUSE
"Cause" shall mean (i) the Optionee's willful and continued failure to
perform his or her duties with respect to the Company or its Subsidiaries which
continues beyond ten days after a written demand for substantial performance is
delivered to the Optionee by the Company or (ii) conduct by the Optionee
involving (x) dishonesty or breach of trust in connection with his or her
employment or (y) conduct which would be a reasonable basis for an indictment of
the Optionee for a felony or for a misdemeanor involving moral turpitude.
Section 1.3 CHANGE OF CONTROL
A "Change of Control" means (i) a sale of all or substantially all of the
assets of the Company to a Person who is not an Affiliate of KKR or an entity in
which the shareholders of the Company immediately prior to such transaction do
not control more than 50% of the voting power immediately following the
transaction, (ii) a sale by KKR or any of its Affiliates resulting in more than
50% of the voting stock of the Company being held by a Person or Group that does
not include KKR or any of its Affiliates or (iii) a merger or consolidation of
the Company into another Person which is not an Affiliate of KKR or an entity in
which the shareholders of the Company immediately prior to such transaction do
not control more than 50% of the voting power immediately following the
transaction. "Group" means two or more Persons acting together as a
partnership, limited partnership, syndicate or other group for the purpose of
acquiring, holding or disposing of securities of the Company.
Section 1.4 CODE
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.5 COMMITTEE
"Committee" shall mean the committee appointed to administer the Plan.
Section 1.6 OPTIONS
"Options" shall mean the Non-Qualified Stock Options, which may include a
Time Option and/or a Performance Option, to purchase Common Stock granted under
this Agreement.
Section 1.7 PERFORMANCE OPTION
"Performance Option" shall mean an Option with respect to which the
commencement of exercisability is governed by Section 3.1(b) hereof.
Section 1.8 PERMANENT DISABILITY
The Optionee shall be deemed to have a "Permanent Disability" if the
Optionee is unable to engage in the activities required by employment by reason
of any medically determined physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months, as reasonably determined by the
Board of Directors of the Company in good faith and in its discretion.
Section 1.9 PERMITTED RETIREMENT
"Permitted Retirement" shall mean termination of employment with the
Company (and its Subsidiaries) at age 65 or over (or such other age as may be
approved by the Board of Directors of the Company) after having been employed by
the Company or one of its Subsidiaries for at least three years after the
Purchase Date, and other than by reason of termination for Cause, death, or
Permanent Disability.
Section 1.10 PLAN
"Plan" shall mean the 1998 Stock Purchase and Option Plan for Employees of
Accuride Corporation and Subsidiaries, as the same may be amended from time to
time.
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Section 1.11 PRONOUNS
The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.12 PURCHASE DATE
"Purchase Date" shall mean the "Purchase Date" as defined in the
Stockholder's Agreement.
Section 1.13 SECRETARY
"Secretary" shall mean the Secretary of the Company.
Section 1.14 STOCKHOLDER'S AGREEMENT
"Stockholder's Agreement" shall mean that certain Stockholder's Agreement
dated as of ___________ by and among the Company, the Optionee and Hubcap
Acquisition L.L.C., as the same may be amended from time to time.
Section 1.15 SUBSIDIARY
"Subsidiary" with respect to any entity shall mean any corporation (or
other entity) in an unbroken chain of entities beginning with such corporation
(or entity) if each of the entities, or group of commonly controlled entities,
other than the last entity in the unbroken chain, then owns stock (or other
equity interest) possessing 50% or more of the total combined voting power of
all classes of equity in one of the other entities in such chain.
Section 1.16 TIME OPTION
"Time Option" shall mean an Option with respect to which the commencement
of exercisability is governed by Section 3.1(a) hereof.
ARTICLE II.
GRANT OF OPTIONS
SECTION 2.1 GRANT OF OPTIONS
For good and valuable consideration, on and as of the date hereof the
Company irrevocably grants to the Optionee a Time Option and/or a Performance
Option to purchase any part or all of an aggregate of the number of shares set
forth with respect to each such Option on the signature page hereof of its
Common Stock upon the terms and conditions set forth in this Agreement.
Section 2.2 EXERCISE PRICE
The exercise price of the shares of stock covered by the Option(s) shall be
$5,000.00 per share without commission or other charge.
Section 2.3 CONSIDERATION TO THE COMPANY
In consideration of the granting of these Option(s) by the Company, the
Optionee agrees to render faithful and efficient services to the Company or one
of its Subsidiaries, with such duties and
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responsibilities as the Company shall from time to time prescribe, subject to
the terms and conditions hereof and of the Plan, the Stockholder's Agreement and
any other agreement or document relating to the Optionee's employment. Nothing
in this Agreement or in the Plan shall confer upon the Optionee any right to
continue in the employ of the Company or any of its Subsidiaries or shall
interfere with or restrict in any way the rights of the Company and its
Subsidiaries, which are hereby expressly reserved, to terminate the employment
of the Optionee at any time for any reason whatsoever, with or without Cause.
Section 2.4 ADJUSTMENTS IN OPTIONS
Subject to Section 9 of the Plan, in the event that the outstanding shares
of the stock subject to an Option are, from time to time, changed into or
exchanged for cash or a different number or kind of shares of the Company or
other securities of the Company by reason of a merger, consolidation,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, combination of shares, or otherwise, the Committee shall make an
appropriate and equitable adjustment in the number and kind of shares or other
consideration and the exercise price as to which such Option, or portions
thereof then unexercised, shall be exercisable in order to prevent dilution or
enlargement of the benefits intended to be made available with respect to any
Option. Any such adjustment made by the Committee shall be final and binding
upon the Optionee, the Company and all other interested persons.
ARTICLE III.
PERIOD OF EXERCISABILITY
Section 3.1 COMMENCEMENT OF EXERCISABILITY
(a) Subject to subsection (c), the Time Option shall become exercisable
with respect to an additional 20% of the total shares of Common Stock subject to
such Option as set forth herein on each Determination Date. Notwithstanding the
foregoing, the Time Option shall become exercisable as to 100% of the shares of
Common Stock subject to such Option immediately prior to the consummation of a
Change of Control (but only to the extent such Option has not otherwise
terminated); provided, however, that as a condition subsequent to the
acceleration of the exercisability of the Time Option pursuant to this
subsection, the Change of Control shall be consummated. In the event the
contemplated Change of Control is not consummated, the acceleration of
exercisability and any resulting exercise of the Option shall be void AB INITIO.
(b) Subject to subsection (c), the Performance Option shall become
exercisable with respect to an additional 20% of the total shares of Common
Stock subject to such Option as set forth herein on each Determination Date as
of which (A) Cumulative EBITDA equals or exceeds the Cumulative EBITDA Target
through such Determination Date and (B) actual EBITDA for the Plan Year ending
immediately prior to such Determination Date equals or exceeds the EBITDA Target
for that Plan Year. If EBITDA for a Plan Year is less than 100% of the EBITDA
Target for such Plan Year or Cumulative EBITDA is less than the Cumulative
EBITDA Target as of the last day of such Plan Year (a "Missed Year"), no portion
of the Performance Option shall become exercisable pursuant to this subsection
3.1(b) on the Determination Date for such Plan Year. If, in any Plan Year
subsequent to a Missed Year, EBITDA exceeds the EBITDA Target for such Plan Year
AND Cumulative EBITDA as of the last day of such Plan Year exceeds the
Cumulative EBITDA Target through such date, then any prior percentage of
Performance Options in respect of prior Missed Years shall become exercisable
(but only to the extent such Option has not otherwise terminated).
Notwithstanding the foregoing, in the event that as of the Determination Date
immediately preceding the consummation of a Change of Control the Performance
Option has become exercisable as to the entire portion for which such Option was
eligible to become
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exercisable, the Performance Option shall become exercisable as to 100% of the
shares of Common Stock subject to such Option immediately prior to the
consummation of Change of Control (but only to the extent such Option has not
otherwise terminated); provided, however, that as a condition subsequent to the
acceleration of the exercisability of the Performance Option pursuant to this
subsection, the Change of Control shall be consummated. In the event the
contemplated Change of Control is not consummated, the acceleration of
exercisability and any resulting exercise of the Option shall be void AB INITIO.
Further notwithstanding the above, the Performance Option shall become
exercisable as to 100% of the shares of Common Stock subject to such Option
after seven years and eleven months after the Purchase Date (but only to the
extent such Option has not otherwise terminated.)
(i) For purposes of this Section 3.1:
(ii) "Cumulative EBITDA" means with respect to any given
Determination Date, the sum of the EBITDA for the Company and its
consolidated Subsidiaries during the period commencing on the EBITDA Start
Date and ending on the last day of the Plan Year preceding the
Determination Date.
(iii) "Cumulative EBITDA Target" means with respect to any
Determination Date, the sum of the EBITDA Targets for the period commencing
on the EBITDA Start Date and ending on the last day of the Plan Year
preceding the Determination Date.
(iv) "Determination Date" means the first December 31 following
(and not coincident with) the Purchase Date and each of the next four
anniversaries thereof.
(v) "EBITDA" for a Plan Year shall be calculated with respect to
the Company and its consolidated Subsidiaries as set forth in the Company's
primary bank credit agreement dated January 21, 1998 among the Company,
Citicorp USA, Inc., as Administrative Agent, and the other parties named
therein; PROVIDED, that there shall be excluded from EBITDA (as an expense)
"board and management fees."
(vi) "EBITDA Start Date" means the January 1 preceding the first
Determination Date.
(vii) "EBITDA Target" for each Plan Year 1998 through 2002 shall be
the amount set forth on Exhibit A; PROVIDED, that to the extent that the
Company or any of its Subsidiaries or disposes of or acquires assets out of
the ordinary course of business, the Board of Directors of the Company will
equitably, in good faith, adjust the EBITDA Target to account for such
dispositions or acquisitions.
(viii) "Plan Year" is the twelve month period commencing on January 1
each year.
(c) Notwithstanding the foregoing, no Option or portion thereof shall
become exercisable as to any additional shares of Common Stock following the
termination of employment of the Optionee for any reason.
Section 3.2 EXPIRATION OF OPTIONS
Except as otherwise provided in Section 5 or 6 of the Stockholder's
Agreement, the Options may not be exercised to any extent by anyone after the
first to occur of the following events:
(a) The tenth anniversary of the date hereof; or
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(b) The first anniversary of the date of the Optionee's termination of
employment by reason of death, Permanent Disability or Permitted Retirement; or
(c) The first business day which is fifteen calendar days after the
earlier of (i) 75 days after termination of employment of the Optionee for any
reason other than for Cause, death, Permanent Disability or Permitted Retirement
or (ii) the delivery of notice by the Company that it does not intend to
exercise its call right under Section 6 of the Stockholder's Agreement;
PROVIDED, HOWEVER, that in any event the Options shall remain exercisable under
this subsection 3.2(c) until at least 45 days after termination of employment of
the Optionee for any reason other than for death, Permanent Disability or
Permitted Retirement; or
(d) The date the Option is terminated pursuant to Section 5, 6 or 10(b) of
the Stockholder's Agreement;
(e) The opening of business on the date of the Optionee's termination of
employment by the Company for Cause; or
(f) If the Committee so determines pursuant to Section 9 of the Plan, the
effective date of either the merger or consolidation of the Company into another
Person, or the exchange or acquisition by another Person of all or substantially
all of the Company's assets or 80% or more of its then outstanding voting stock,
or the recapitalization, reclassification, liquidation or dissolution of the
Company.
ARTICLE IV
EXERCISE OF OPTIONS
Section 4.1. PERSON ELIGIBLE TO EXERCISE
During the lifetime of the Optionee, only he or she may exercise an Option
or any portion thereof. After the death of the Optionee, any exercisable
portion of an Option may, prior to the time when an Option becomes unexercisable
under Section 3.2, be exercised by his or her 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
Any exercisable portion of an 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.
Section 4.3 MANNER OF EXERCISE
An Option, or any exercisable portion thereof, may be exercised solely by
delivering to the Secretary or his or her office all of the following prior to
the time when the Option or such portion becomes unexercisable under Section
3.2:
(a) Notice in writing signed by the Optionee or the other person then
entitled to exercise the Option or portion thereof, stating that the Option or
portion thereof is thereby exercised, such notice complying with all applicable
rules established by the Committee;
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(b) Full payment (in cash, by check, with the consent of the Committee in
shares of Common Stock duly endorsed for transfer to the Company, or by a
combination thereof) for the shares with respect to which such Option or portion
thereof is exercised;
(c) A bona fide written representation and agreement, in a form reasonably
satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the shares of
stock are being acquired for his or her own account, for investment and without
any present intention of distributing or reselling said shares or any of them
except as may be permitted under the Securities Act of 1933, as amended (the
"Act"), and then applicable rules and regulations thereunder, and that the
Optionee or other person then entitled to exercise such Option or portion
thereof will indemnify the Company against and hold it free and harmless from
any loss, damage, expense or liability resulting to the Company if any sale or
distribution of the shares by such person is contrary to the representation and
agreement referred to above; provided, however, that the Committee may, in its
absolute discretion, take whatever additional actions it deems appropriate to
ensure the observance and performance of such representation and agreement and
to effect compliance with the Act and any other federal or state securities laws
or regulations;
(d) Full payment to the Company (in cash, by check, with the consent of
the Committee in shares of Common Stock duly endorsed for transfer to the
Company, or by a combination thereof) of all amounts which, under federal, state
or local law, it is required to withhold upon exercise of the Option; and
(e) In the event the Option or portion thereof shall be exercised pursuant
to Section 4.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option.
Without limiting the generality of the foregoing, the Committee may require an
opinion of counsel acceptable to it to the effect that any subsequent transfer
of shares acquired on exercise of an Option does not violate the Act, and may
issue stop-transfer orders covering such shares. Share certificates evidencing
stock issued on exercise of this Option shall bear an appropriate legend
referring to the provisions of subsection (c) above and the agreements herein.
The written representation and agreement referred to in subsection (c) above
shall, however, not be required if the shares to be issued pursuant to such
exercise have been registered under the Act, and such registration is then
effective in respect of such shares.
Section 4.4 CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES
The shares of stock deliverable upon the exercise of an Option, or any
portion 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 an Option or portion thereof prior to fulfillment of all of the
following conditions:
(a) The obtaining of 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; and
(b) 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.
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Section 4.5 RIGHTS AS STOCKHOLDER
The holder of an Option 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 the Option or any portion thereof unless and until
certificates representing such shares shall have been issued by the Company to
such holder.
ARTICLE V.
MISCELLANEOUS
Section 5.1 ADMINISTRATION
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 shall be final and binding upon the Optionee, 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 Options. In its absolute discretion, the Board of Directors
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.
Section 5.2 OPTIONS NOT TRANSFERABLE
Except as provided in the Stockholder's Agreement, neither the Options nor
any interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Optionee or his or her 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; provided,
however, that this Section 5.2 shall not prevent transfers by will or by the
applicable laws of descent and distribution.
Section 5.3 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 stock as will be sufficient to satisfy
the requirements of this Agreement.
Section 5.4 NOTICES
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 Optionee shall be addressed to the Optionee at his or her most
recent address as reflected in the Company's records. By a notice given
pursuant to this Section 5.4, either party may hereafter designate a different
address for notices to be given to him, her or it. Any notice which is required
to be given to the Optionee shall, if the Optionee is then deceased, be given to
the Optionee's personal representative if such representative has previously
informed the Company of his or her status and address by written notice under
this Section 5.4. Any notice shall have been deemed duly given when enclosed in
a properly sealed envelope or wrapper addressed as aforesaid, and delivered by
hand (whether by courier or otherwise) or sent by registered or certified mail,
return receipt requested (with postage prepaid).
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Section 5.5 TITLES
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or Construction of this Agreement.
Section 5.6 APPLICABILITY OF PLAN AND STOCKHOLDER'S AGREEMENT
The Options and the shares of Common Stock issued to the Optionee upon
exercise of the Options shall be subject to all of the terms and provisions of
the Plan and the Stockholder's Agreement, to the extent applicable to the
Options and such shares. In the event of any conflict between this Agreement
and the Plan, the terms of the Plan shall control. In the event of any conflict
between this Agreement or the Plan and the Stockholder's Agreement, the terms of
the Stockholder's Agreement shall control.
Section 5.7 AMENDMENT
This Agreement may be amended only by a writing executed by the parties
hereto which specifically states that it is amending this Agreement.
Section 5.8 GOVERNING LAW
The laws of the State of Delaware shall govern the interpretation, validity
and performance of the terms of this Agreement regardless of the law that might
be applied under principles of conflicts of laws.
Section 5.9 JURISDICTION
Any suit, action or proceeding against the Optionee with respect to this
Agreement, or any judgment entered by any court in respect of any thereof, may
be brought in any court of competent jurisdiction in the State of Delaware, and
the Optionee hereby submits to the non-exclusive jurisdiction of such courts for
the purpose of any such suit, action, proceeding or judgment. The Optionee
hereby irrevocably waives any objections which he or she may now or hereafter
have to the laying of the venue of any suit, action or proceeding arising out of
or relating to this Agreement brought in any court of competent jurisdiction in
the State of Delaware, and hereby further irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in
any inconvenient forum. No suit, action or proceeding against the Company with
respect to this Agreement may be brought in any court, domestic or foreign, or
before any similar domestic or foreign authority other than in a court of
competent jurisdiction in the State of Delaware, and the Optionee hereby
irrevocably waives any right which he or she may otherwise have had to bring
such an action in any other court, domestic or foreign, or before any similar
domestic or foreign authority. The Company hereby submits to the jurisdiction
of such courts for the purpose of any such suit, action or proceeding.
[signature page follows]
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto as of the date first written above.
NAME, OPTIONEE ACCURIDE CORPORATION
By
------------------------- --------------------------
Signature Its
--------------------------
Optionee's Taxpayer
Identification Number:
---------------------------------
Aggregate number of shares of Common Stock
for which the Time Option granted hereunder is exercisable:
Aggregate number of shares of Common Stock for which
the Performance Option granted hereunder is exercisable:
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EXHIBIT A
PLAN YEAR $ EBITDA TARGET (MILLIONS)
1998 86.1
1999 91.2
2000 105.8
2001 112.6
2002 115.2
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