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Exhibit 10.20
THE X.X. XXXXXXX COMPANY
STOCK OPTION AGREEMENT
Number of shares subject to option: _________
This Agreement (the "Agreement") made this ______ day of _____, 1997,
between The X. X. Xxxxxxx Company, a North Carolina corporation (the "Company"),
and _____________ (the "Optionee").
W I T N E S S E T H:
1. Grant of Option.
Pursuant to the provisions of the X.X. Xxxxxxx 1997 Stock Option Plan
(the "Plan"), the Company hereby grants to the Optionee, subject to the terms
and conditions of the Plan and subject further to the terms and conditions
herein set forth, the right and option (the "Option") to purchase from the
Company all or any part of an aggregate of _______ shares of the common stock,
par value $0.01 per share, of the Company (the "Common Stock" or the "Shares")
at a purchase price of $1.10 per Share (the "Exercise Price"), such Option to be
exercised as hereinafter provided.
2. Terms and Conditions.
It is understood and agreed that the Option evidenced hereby is subject
to the following terms and conditions:
(a) Expiration Date. The Option shall expire on the tenth anniversary
of the date hereof (the "Expiration Date").
(b) Type of Option. This option is eligible to be an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) Exercise of Option. (i) Subject to the other terms of this
Agreement regarding the exercisability of this Option, this Option may be
exercised in accordance with the following vesting schedule:
Options Exercisable with respect to
On or After Cumulative Number of Shares
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May 28, 1998 _____ x 10%
May 28, 1999 _____ x 30%
May 28, 2000 _____ x 60%
May 28, 2001 _____ x 100%
Options exercised in any one year shall be deducted from the number of Options
exercisable in any future year. Once vested, this Option shall be exercisable at
the following times prior to the expiration date: (A) if the Optionee is
employed by the Company at the time of exercise, at any time by giving the
Company 45 days' advance written notice or (B) if the Optionee is not employed
by the Company at the time of exercise but has the right to exercise after
termination in accordance with paragraph 2(d) of this Agreement, by giving the
Company written notice at any time during the period specified in paragraph 2(d)
of this Agreement, in which case the Option shall be deemed exercised as of the
end of the calendar month in which the Company received notice of exercise of
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the Option. In either case, the notice of exercise shall specify the number of
Shares as to which the Option is being exercised.
(ii) Upon receipt of written notice of exercise by the
Company, the Company shall, upon full payment in cash to the Company of the
Exercise Price of the Shares as to which the Option shall be exercised, issue to
the Optionee the Shares subject to the Option. Any issuance of Shares to an
Optionee pursuant to the preceding sentence shall be made by the Company within
90 days after the date of exercise. For purposes of this Agreement, the fair
market value of Shares shall be determined by such methods or procedures as
shall be established from time to time by the Board of Directors of the Company
(the "Board") acting in its sole discretion and in good faith. In making such
determinations, the Board may rely on a valuation report by an investment
banking or valuation firm selected by the Board. The Committee established by
the Board to administer the Plan (the "Committee") may, in its sole discretion,
permit the Optionee to pay the Exercise Price in previously acquired Shares
rather than in cash.
(d) Exercise Upon Death or Termination of Employment.
(i) If the Optionee dies while an employee of the Company, the
Optionee's Designee may exercise the Option, to the extent it was vested on the
date of termination or otherwise would have vested in the 12 months thereafter
in accordance with the vesting schedule in Section 2(c) hereof, by giving the
Company written notice of such exercise within 180 days after the date of
Optionee's death, but in no event later than the Expiration Date. An Optionee's
"Designee" means the person designated by the Optionee in his or her most
recently filed beneficiary designation filed with the Company to receive the
Optionee's rights under the Plan upon the Optionee's death, or if there is no
such designation or no such designated person survives the Optionee, by the
person or persons to whom the Optionee's rights pass by will or applicable law,
or if no such person has such right, by his executors or administrators.
(ii) If the Optionee's employment with the Company shall
terminate because of permanent disability, the Optionee may exercise the Option
to the extent it was vested on the date of termination or otherwise would have
vested in the 12 months thereafter, in either event according to the vesting
schedule in Section 2(c), by giving the Company written notice of such exercise
within 180 days after the date of termination of employment, but in no event
later than the Expiration Date.
(iii) If the Optionee's employment shall terminate for any
reason other than death or permanent disability as aforesaid or for Cause (as
hereinafter defined), the Optionee may exercise the Option to the extent it was
vested on the date of termination or otherwise would have vested in the 12
months thereafter, in either event according to the vesting schedule in Section
2(c), by giving the Company written notice of such exercise within 180 days
after the date of termination of employment, but in no event later than the
Expiration Date.
(iv) If the Optionee's employment shall terminate for Cause,
all right to exercise the Option shall terminate at the date of such termination
of employment except that the Optionee may exercise the Option to the extent
vested as of the date of such termination by giving the Company written notice
thereof within 30 days after such termination. For purposes of this Agreement,
"Cause" shall mean (i) the Employee's conviction of, or plea of guilty or nolo
contendere to, a felony, (ii) the Employee's gross negligence in the performance
of his duties and obligations to the Company, which is not corrected within 15
business days after written notice, (iii) the Employee's knowingly dishonest
act, or knowing bad faith or willful misconduct in the performance of his duties
and obligations to the Company to the material detriment of the Company, which
is not corrected within 15 business days after written notice, or (iv) the
Employee's other material breach of his obligations under this Agreement, which
is not corrected
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within a reasonable period of time (determined in light of the cure appropriate
to such material breach, but in no event less than 15 business days) after
written notice.
(e) Nontransferability. This Option shall not be transferable other
than by will or by the laws of descent and distribution. During the lifetime of
the Optionee, this Option shall be exercisable only by such Optionee.
(f) Forfeiture of Option Gain. If at any time within 12 months after
the later of (i) termination of employment or (ii) the date on which the
Optionee exercises any portion of this Option, the Optionee violates the terms
of the covenants regarding confidential information, soliciting customer
accounts, non-competition or hiring of employees, currently set forth in
Sections 5 and 6 of the Employment Agreement between the Company and the
Optionee dated the date hereof (the "Employment Agreement"), (A) then any income
realized by the Optionee upon the exercise of this Option or upon the sale of
Shares acquired by exercise of this Option at any time, whether before or after
the date of termination of employment, shall promptly be paid by the Optionee to
the Company and (B) any unexercised Options shall be canceled. The Company shall
have the right to set off against any amount payable by the Company to the
Optionee, including, without limitation, salary, benefits or other amounts, any
amounts owed by the Optionee to the Company under this subparagraph (f). The
Committee may waive the requirements of this subparagraph (f) if it determines
in its sole discretion that such action is in the best interests of the Company.
(g) Adjustments. In the event that the Committee shall determine, in
its sole discretion, that any dividend or other distribution (whether in the
form of cash, Common Stock, or other property), recapitalization, stock split,
reverse split, any reorganization, merger, consolidation, spin-off, combination,
repurchase, share exchange, license arrangement, strategic alliance or other
corporate transaction or event, affects the Shares such that an adjustment is
appropriate in order to prevent dilution or enlargement of the rights of the
Optionee under the Plan, then the Committee shall make such equitable changes or
adjustments as it deems necessary or appropriate to any or all of (i) the number
and kind of Shares which may thereafter be issued in connection with Options,
(ii) the number and kind of Shares issued or issuable in respect of outstanding
Options, and (iii) the Exercise Price relating to any Option; provided that,
with respect to incentive stock options, such adjustment shall be made in
accordance with Section 424(h) of the Code.
(h) No Rights as Stockholder. The Optionee shall have no rights as a
stockholder with respect to any Shares subject to the Option prior to the date
of issuance to the Optionee of a certificate or certificates for such Shares.
(i) Optionee Acknowledgement. The Optionee acknowledges that:
(i) the future value of the Company is highly speculative;
(ii) the Optionee is not relying on the value of this Option
as current compensation;
(iii) the Company has no obligation to the Optionee to sell
the Company or to sell Shares publicly (which may have the effect of reducing
the value of the Company);
(iv) upon exercise of this Option, unless the Shares issuable
upon exercise of the Options have been registered under applicable securities
laws, there will be substantial restrictions on the transferability of the
Shares; and
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(v) the past performance or experience of the Company, the
Company's officers, directors, agents, or employees, will not in any way
indicate or predict the results of the ownership of Shares or of the Company's
activities.
(j) No Right to Continued Employment. The Option shall not confer upon
the Optionee any right with respect to continuance of employment by the Company,
nor shall it interfere in any way with the right of the Optionee's employer to
terminate the Optionee's employment at any time.
(k) Compliance With Law and Regulations. The Option herein granted and
the obligation of the Company to sell and deliver shares hereunder, shall be
subject to all applicable Federal and State laws, rules and regulations and to
such approvals by any government or regulatory agency as may be required. The
Company shall not be required to issue or deliver any certificates for Shares
prior to (i) the listing of such Shares on any stock exchange or national market
quotations system on which the Shares may then be listed and (ii) the completion
of any registration or qualification of such Shares under any Federal or State
law, or any rule or regulation of any government body which the Company shall,
in its sole discretion, determine to be necessary or advisable. Moreover, the
Option herein granted may not be exercised if its exercise, or the receipt of
Shares pursuant hereto, would be contrary to applicable law.
(l) Condition Precedent. In consideration for and as a condition
precedent to being eligible to participate in the Plan, the Optionee shall have
executed and delivered to the Company the Employment Agreement.
3. Optionee Bound by Plan.
The Optionee hereby acknowledges receipt of a copy of the Plan and
agrees to be bound by all the terms and provisions thereof.
4. Notices.
All notices or any other communications hereunder shall be in writing
and delivered personally or by registered or certified mail or overnight
courier, addressed, if to the Company, to The X.X. Xxxxxxx Company, 000 Xxxx
Xxxx Xxxxxx, X.X. Xxx 000, Xxxxxxxxxx, XX 00000-0000; Attention: Chairman, and
if to the Optionee, at the address set forth below, subject to the right of
either party to designate at any time hereafter in writing some other address.
5. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina without regard to conflicts of laws
principles.
6. No Assignment.
Neither this Agreement nor any of the rights or obligations of the
Optionee hereunder may be transferred or assigned by the Optionee.
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7. Benefits.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto. This Agreement is for the sole benefit of the parties hereto and
not for the benefit of any other party.
8. Severability.
If any provision of this Agreement shall be determined to be illegal
and unenforceable by any court of law, the remaining provisions shall be
severable and enforceable in accordance with their terms.
9. Amendments.
No modification, amendment or waiver of any provision of this
Agreement, other than as required under Section 2(g), shall be effective unless
it is in writing and signed by the parties hereto.
10. Counterparts.
This Agreement has been executed in two counterparts each of which
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its Chairman, Chief Executive Officer, Chief Operating Officer,
President or a Vice President and Optionee has executed this Agreement, both as
of the day and year first above written.
THE X. X. XXXXXXX COMPANY
By:______________________________
Name:
Title:
________________________________
Address:________________________
________________________________
________________________________
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