XXXXXX XXXXXXX INC.
STOCK OPTION AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of the 22nd day of October,
2001, between Xxxxxx Xxxxxxx Inc. located at Perryville Corporate Park, Clinton,
New Jersey (the "Company") and Xxxxxxx X. Xxxxxxxxxx ("Optionee").
WHEREAS, the Company wishes to grant an option to the Optionee as a
material inducement to enter into an employment contract with Xxxxxx Xxxxxxx
Ltd. (the "Parent") and to encourage Optionee to remain in the employ of the
Company or a direct or indirect subsidiary or affiliate of Parent, and
WHEREAS, the Optionee is simultaneously entering into an employment
contract with Parent (the "Contract").
NOW, THEREFORE, it is agreed as follows:
1. OPTION. The Company hereby grants to Optionee this non-qualified
stock option ("Option") to purchase 1,300,000 common shares of Parent at $4.985
per share, which is the mean of the high and low sale prices of the Common
Shares of Parent on the New York Stock Exchange on the date of grant of this
Option.
2. EXERCISE OF OPTION. This Option shall become exercisable, or shall
("vest"), with respect to one-fifth of the shares subject to this Option one
year after the date of this Agreement, this Option shall become exercisable with
respect to two-fifths of the shares subject to this Option two years after the
date of this Agreement, this Option shall become exercisable with respect to
three-fifths of the shares subject to this Option three years after the date of
this Agreement, this Option shall become exercisable with respect to four-fifths
of the shares subject to this Option four years after the date of this Agreement
and this Option shall become exercisable with respect to the remainder of the
shares subject to the Option five years after the date of this Agreement. This
Option expires ten (10) years from the date hereof.
This Option may be exercised, to the extent exercisable in accordance
with this Agreement, in whole or part by written notice to the Company, except
that this Option shall not be exercisable if, in the opinion of counsel for the
Company, exercise of this Option or delivery of shares pursuant thereto would
directly (i) result in a violation of any law or regulation of an agency of
government or (ii) have an adverse effect on the listing status or qualification
of Parent shares on any securities exchange; provided that the Company shall
take or cause to be taken all action necessary to satisfy any requirement of law
or such regulation, or to avoid any such adverse effect.
3. PAYMENT OF PURCHASE PRICE. Payment for shares as to which this
Option is exercised shall be made at the time written notice of exercise is
given. The option price shall be paid upon exercise (i) in U.S. dollars, or (ii)
in shares of common shares of Parent owned of record by the
Optionee. Such common shares shall be valued at the mean of the high and low
sale prices of such shares on the New York Stock Exchange on the day of
exercise.
4. TERMINATION OF EMPLOYMENT. If the Optionee is terminated because the
Optionee is physically or mentally disabled and is unable to perform the
Optionee's principal services pursuant to the Contract, or is terminated Without
Cause (as defined in the Contract) by Parent, the Company, or a subsidiary or
affiliate of Parent, or the Optionee terminates employment for Good Reason (as
defined in the Contract), this Option shall vest with respect to all of the
shares subject to this Option, and shall remain exercisable through the second
anniversary of such termination.
If the Optionee dies while employed by Parent, the Company or a
subsidiary or affiliate of Parent, this Option shall vest with respect to all of
the shares subject to this Option, and shall remain exercisable by a legatee or
legatees of the Optionee under the last will, or by the Optionee's personal
representatives or distributees, through the second anniversary of the
Optionee's death.
If the Optionee retires under a pension plan of Parent, the Company or
a subsidiary or affiliate of Parent, this Option shall vest with respect to all
of the shares subject to this Option, and shall remain exercisable until the
earlier of one year from the date of grant, and the expiration date of the
Option.
In the event that the Optionee's employment is terminated for Cause (as
defined in the Contract) by the Parent, the Company or a subsidiary or affiliate
of Parent or the Optionee terminates his employment other than for Good Reason
(as defined in the Contract), this Option, to the extent unvested, shall be
immediately forfeited and the remainder of this Option, to the extent
unexercised on the date which is ninety (90) days after such termination, shall
be forfeited. This Option expires ten (10) years from the date hereof.
5. RECAPITALIZATION. In the event of changes in Parent common shares by
reason of share dividends, split-ups or combination of shares,
reclassifications, recapitalizations, mergers, consolidations, reorganizations
or liquidations, appropriate adjustments shall be made by the Board of Directors
of the Company (the "Board") in (a) the number and class of shares to which
Optionee will thenceforth be entitled upon exercise of this Option, and (b) the
price which the Optionee shall be required to pay upon exercise. Whether any
adjustment or modification is required as a result of the occurrence of any of
the events heretofore specified, and the amount thereof, shall be determined, in
good faith, by the Board, which determination shall be final, binding and
conclusive.
6. CONTINUED EMPLOYMENT. So long as the Optionee shall continue to be
an employee of Parent, the Company or a subsidiary or affiliate of Parent, the
Option shall not be affected by (i) any change of duties or position, or (ii)
any temporary leave of absence approved by each employing corporation and by the
Board. Nothing in this Agreement shall confer upon the Optionee any right to
continue in the employ of Parent, the Company or a subsidiary or affiliate of
Parent or interfere in any way with the right of Parent, the Company or each
such subsidiary or affiliate to terminate the Optionee's employment at any time,
with or without cause.
7. TRANSFERABILITY. This Option is not transferable by Optionee except
by will or by the laws of descent and distribution and is exercisable during
Optionee's lifetime only by him or a court appointed guardian. No assignment or
transfer by Optionee of this Option, or of the rights represented thereby,
whether voluntary or involuntary, by operation of law or otherwise, except by
will or by the laws of descent and distribution, shall vest in the assignee or
transferee any interest or right herein whatsoever. Upon any attempt to assign
or transfer this Option, the Option shall forthwith terminate.
Notwithstanding the foregoing, Optionee may transfer this Option to any
one or more of the following: Optionee's descendant, spouse, descendant of a
spouse, spouse of any of the foregoing, a trust established primarily for the
benefit of any of the foregoing, or of Optionee, or to an entity which is a
corporation, partnership, or limited liability company (or any other similar
entity) the owners of which are primarily the aforementioned persons or trusts.
If the Option is so transferred to the aforementioned persons, trusts or
entities in respect of Optionee, the transferee shall be subject to the
provisions of Paragraph 4 concerning the exercisability following Optionee's
termination of employment.
8. RIGHTS AS A SHAREHOLDER. Optionee shall not be deemed for any
purpose to be a shareholder of Parent except to the extent that this Option
shall have been exercised.
9. CORPORATE ACTION BY PARENT. Existence of this Option shall not
impair the right of Parent or its shareholders to make adjustments,
recapitalizations, reorganizations or other changes in its capital structure or
business, to consummate any merger or consolidation of Parent, to issue bonds,
debentures, preferred or prior preference stocks ahead of or affecting the
common shares or the rights thereof, to dissolve or liquidate Parent, to sell or
transfer all or any part of its assets or business, or to do or take any other
corporate act or proceeding it or they might have done or taken if this Option
was not in existence.
10. CHANGE OF CONTROL. If during the Term, as defined in the Contract,
Parent, the Company or a subsidiary or affiliate of Parent terminates the
Optionee's employment Without Cause (as defined in the Contract) or the Optionee
terminates his employment with Good Reason (as defined in the Contract), in each
case following a Change of Control (as defined in the Contract), or if the
Optionee terminates his employment for any reason during the thirty (30) day
period commencing on the date which is twelve months following such Change of
Control, this Option shall vest with respect to all of the shares subject to
this Option, and shall remain exercisable through the second anniversary of such
termination.
Notwithstanding any other provision of this Agreement to the contrary,
in the event of a Change of Control, as defined in the Contract, this Option, to
the extent not exercisable and vested as of the date such Change of Control is
determined to have occurred, shall become fully exercisable and vested.
11. DISPUTES. Issues arising out of this Option shall be resolved in
accordance with the Dispute Resolution Procedure set forth in the Contract.
12. TERMS AND CONDITIONS. This Agreement is subject to all terms and
conditions of the Contract.
13. GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereto shall be governed by the laws of the State of New Jersey without
regard to the principles of conflicts of law which might otherwise apply.
14. NOTICE. Any notice which either party hereto may be required or
permitted to give to the other shall be in writing, and may be delivered
personally or by mail to the Company at the office of the Secretary of Xxxxxx
Xxxxxxx Inc., Xxxxxxxxxx Xxxxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000-0000, and to
the Optionee at such address as he has designated.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized Officers and Optionee has hereunto set his hand,
as of the day and year first above written.
XXXXXX XXXXXXX INC.
BY:/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
Senior Vice President and CFO
BY: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxxx
Senior Vice President - Human
Resources and Administration
/s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxxxx
ATTEST:
/s/Xxxx Xxxxx Xxxxxxx
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Secretary
