EXHIBIT 10.4
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EXHIBIT A
PACIFIC SCIENTIFIC COMPANY
NONSTATUTORY STOCK OPTION AGREEMENT
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THIS NONSTATUTORY STOCK OPTION AGREEMENT (the "Agreement")
between PACIFIC SCIENTIFIC COMPANY, a California corporation
(the "Company"), and XXXXXXX X. XXXXXXX ("Employee") is entered
into as of the 7th day of July, 1997.
RECITALS
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A. Pursuant to an Employment Agreement dated as of July 7,
1997, between the Company and Employee (the "Employment
Agreement"), the Company has agreed to grant to Employee an
option to purchase shares of the Company's common stock.
B. The Company and Employee desire to enter into this
Agreement to memorialize the grant of the option to Employee.
NOW, THEREFORE, the parties hereto agree as follows:
1. GRANT. The Company hereby grants to Employee the right to
purchase up to 50,000 shares of common stock of the Company at a
price of $13.94 per share (which price equals the closing price
of the Company's common stock on the New York Stock Exchange as
of the date of this Agreement), on the terms and conditions set
forth herein. This option is not intended to qualify as an
incentive stock option under Section 422 of the Internal Revenue
Code, as amended, and is not made pursuant to any Company stock
option plan. Employee agrees that Employee and any other person
who may be entitled hereunder to exercise this option shall be
bound by all terms and conditions of this Agreement.
2. EXERCISABILITY. Subject to the terms of this Agreement,
the option granted herein shall become exercisable at the
following times and in the following amounts:
The option shall become exercisable in cumulative increments of
12,500 shares on each of July 7, 1998, July 7, 1999, July 7,
2000, and July 7, 2001. The option granted hereunder shall
lapse and expire on the tenth (10th) anniversary of the date
hereof.
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If Employee does not purchase the full number of shares he is
entitled to purchase in any one year, the right to purchase such
shares carries over to the subsequent years during the term of
this option.
Notwithstanding the foregoing, this option shall automatically
become fully exercisable upon a "Change of Control of the
Company," as such term is defined below.
For purposes of this Agreement, a "Change of Control of the
Company" shall be deemed to have occurred if:
(a) the shareholders of the Company approve a definitive
agreement to sell, transfer, or otherwise dispose of all or
substantially all of the Company's assets and properties; or
(b) any "person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), 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; provided, however, that the following
shall not constitute a "Change in Control" of the Company:
(i) any acquisition directly from the Company (excluding any
acquisition resulting from the exercise of a conversion or
exchange privilege in respect of outstanding convertible or
exchangeable securities); or
(ii) any acquisition by an employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company;
(c) the shareholders of the Company approve the dissolution or
liquidation of the Company; or
(d) the shareholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into
another entity or entities, the result of which merger or
consolidation less than 50% of the outstanding voting securities
of the surviving or resulting entity are, or are to be, owned by
holders of the Company's common stock immediately prior to the
merger.
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3. EXERCISE. This option may be exercised on the terms and
conditions contained herein by giving one (1) day's prior
written notice of exercise to the Company, specifying the number
of shares to be purchased and the price to be paid therefor and
by delivering a check in the amount of the purchase price
payable to the Company. The purchase price may also be paid, in
whole or in part, by delivery to the Company of outstanding
shares of the Company's common stock previously held by the
Employee valued at "Fair Market Value".
For the purposes of this Agreement, "Fair Market Value" as of a
certain date (the "Determination Date") means: (a) the closing
price of a share of the Company's common stock on the principal
exchange on which shares of the Company's common stock are then
trading, if any, on the Determination Date, or, if shares were
not traded on the Determination Date, then on the nearest
preceding trading day during which a sale occurred; or (b) if
such stock is not traded on an exchange but is quoted on NASDAQ
or a successor quotation system, (i) the last sales price (if
the stock is then listed as a National Market Issue under The
Nasdaq National Market System) or (ii) the mean between the
closing representative bid and asked prices (in all other cases)
for the stock on the Determination Date as reported by NASDAQ or
such successor quotation system; or (c) if such stock is not
publicly traded on an exchange and not quoted on NASDAQ or a
successor quotation system, the mean between the closing bid and
asked prices for the stock, on the Determination Date, as
determined in good faith by the Board; or (d) if the Company's
stock is not publicly traded, the fair market value established
in good faith by the Board.
Provided that a public market in the Company's common stock
exists, Employee will be entitled to exercise this option
through a "same day sale" commitment from Employee and a broker-
dealer that is a member of the National Association of
Securities Dealers (an "NASD Dealer") whereby the Employee
irrevocably elects to exercise the option and to sell a portion
of the shares so purchased to pay the exercise price and any
applicable tax withholding and whereby the NASD Dealer
irrevocably commits upon receipt of such shares to forward the
exercise price and the payment of all required taxes directly to
the Company.
4. TERMINATION OF EMPLOYMENT
(a) Termination by Employee. If Employee's employment is
terminated by Employee, Employee shall have ninety (90) days
following the "Date of Termination" (as defined in Section 6(j)
of the Employment Agreement) to exercise this option, but only
to the extent that this option was exercisable on such Date of
Termination.
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(b) Termination for Cause. If Employee's employment is
terminated by the Company for "Cause" (as defined in Section
6(b) of the Employment Agreement) the Employee shall have ninety
(90) days following the Date of Termination to exercise this
option, but only to the extent that this option was exercisable
on such Date of Termination.
(c) Death. If Employee's employment is terminated for death,
or having ceasing to be an employee, but during the period
during which Employee could have exercised this option in
accordance with the terms of this Agreement, Employee should
die, Employee's executor or administrator of Employee's estate
shall have the right for twelve (12) months following such death
to exercise this option, but only to the extent that this option
was exercisable on the date of Employee's death.
(d) Disability. If Employee's employment is terminated for
"disability" (as defined in Section 6(d) of the Employment
Agreement), Employee or his administrator or legal guardian,
shall have the right for six (6) months following such Date of
Termination to exercise this option, but only to the extent that
this option was exercisable on such Date of Termination.
(e) Other. If Employee's employment is terminated for any
reason other than as set forth in Sections 4(a), (b), (c) and
(d) above, Employee shall have ninety (90) days following such
Date of Termination to exercise this option, but only to the
extent that this option was exercisable on such Date of
Termination.
5. TRANSFERABILITY. This option shall be transferable only by
will or by the laws of descent and distribution to the estate
(or other personal representative) of Employee and shall be
exercisable during Employee's lifetime only by him. Except as
otherwise provided herein, any attempt at alienation,
assignment, pledge, hypothecation, transfer, sale, attachment,
execution or similar process, whether voluntary or involuntary,
with respect to all or any part of this option or any right
under this Agreement, shall be null and void and, at the
Company's option, shall cause Employee's rights under this
Agreement to terminate.
6. WITHHOLDING REQUIREMENTS. In the event the Company
determines that it is required to withhold state or Federal
income taxes as a result of the exercise of this option,
Employee shall be required, as a condition to the exercise
hereof, to make arrangements satisfactory to the Company to
enable it to satisfy such withholding requirements.
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7. RIGHTS AS A STOCKHOLDER. Employee, or any permitted
transferee of Employee, shall have no rights as a stockholder
with respect to any shares covered by this option until the date
of the issuance of a stock certificate for such shares. No
adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior
to the date such stock certificate is issued, except as provided
in Section 8 of this Agreement. This Agreement shall not confer
upon Employee any right of continued employment by the Company
or interfere in any way in the Company's right to terminate
Employee.
8. RECAPITALIZATION. The number of shares of Common Stock
covered by this option and the exercise price thereof shall be
proportionately adjusted for any increase or decrease in the
number of issued shares of common stock resulting from a
subdivision or consolidation of such shares or the payment of a
stock dividend (but only of common stock) or any other increase
or decrease in the number of issued shares of common stock
effected without receipt of consideration by the Company.
Subject to any required action by stockholders, if the Company
is the surviving corporation in any merger or consolidation,
this option shall pertain and apply to the securities to which a
holder of the number of shares of common stock subject to the
option would have been entitled.
The foregoing adjustments shall be made by the Company's Board
of Directors, whose determination shall be conclusive and
binding on the Company and Employee.
Except as expressly provided in this Section 8, Employee shall
have no rights by reason of any subdivision or consolidation of
shares of stock of any class, the payment of any stock dividend
or any other increase or decrease in the number of shares of
stock of any class, or by reason of any dissolution,
liquidation, merger, consolidation or spin-off of assets or
stock of another corporation, and any issue by the Company of
shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the
number of shares subject to this option or the exercise price
thereof.
This option shall not affect in any way the right or power of
the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure,
to merge or consolidate or to dissolve, liquidate, sell or
transfer all or any part of its business or assets.
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9. SECURITIES ACT AND OTHER REGULATORY REQUIREMENTS. If
through any act or omission of Employee the exercise of this
option or the sale of any of the underlying shares of stock
would, in the opinion of counsel for the Company, violate the
Securities Act of 1933 (or any other federal or state statutes
having similar requirements) as it may be in effect at that
time, then this option shall not be exercisable and the Company
shall not be obligated to sell any shares subject to this
option.
Further, the Board of Directors of the Company may require as a
condition of issuance of any shares under this option that
Employee furnish a written representation that he is acquiring
the shares for investment and not with a view to distribution to
the public. The certificate evidencing any shares issued
pursuant to this option shall bear such restrictive legends as
required by federal or state law.
The Company agrees to (a) file with the Securities and Exchange
Commission a Registration Statement on Form S-8 for the purpose
of registering the shares of common stock subject to this option
under the Securities Act of 1933, and (b) file with New York
Stock Exchange, Inc. a Supplemental Listing Application for the
purpose of listing the shares of common stock subject to this
option on the New York Stock Exchange.
10. EFFECT OF EXERCISE. Upon the exercise of all or any part
of this option, the number of shares of common stock subject to
the option under this Agreement shall be reduced by the number
of shares with respect to which such exercise is made.
11. NOTICES. Any notice or other communication required or
permitted hereunder or by law shall be validly given or made
only if in writing and delivered in person to an officer or duly
authorized representative of the other party, or deposited in
the United States mail, duly certified or registered, return
receipt requested, postage prepaid, and addressed to the party
to whom intended. If sent to the Company, it shall be addressed
in care of the Secretary, Pacific Scientific Company, 000
Xxxxxxx Xxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, and if
sent to Employee, it shall be addressed to Employee's address on
file with the Company on the date of such notice. If sent by
mail, notice shall be deemed given two days after deposit of
such notice in the mail and in accordance with this section.
Any party may from time to time, by written notice to the other,
designate a different address for notice which shall be
substituted for that specified above.
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12. CHOICE OF LAW; COUNTERPARTS. This Agreement, and all
rights and obligations hereunder, shall be governed by the laws
of the State of California. This Agreement may be executed in
one or more counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
13. SUCCESSOR. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors, heirs, beneficiaries, executors and administrators.
14. PARAGRAPH HEADINGS; EMPLOYMENT. Paragraph headings are
for convenience only and are not part of the context. In
exchange for this Agreement, Employee agrees to remain in the
employ of the Company for a period of at least one year after
the date hereof. This Agreement, however, shall not obligate
the Company or any affiliate to employ Employee for any period
of time nor does this Agreement constitute a contract or
agreement for employment.
IN WITNESS WHEREOF, this Agreement is executed as of the date
first written above.
PACIFIC SCIENTIFIC COMPANY
a California corporation
By: /s/ Xxxxxx Xxxx
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Name: Xxxxxx Xxxx
Title: President and Chief Executive Officer
EMPLOYEE:
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
