Exhibit 10.27
STOCK OPTION GRANT AGREEMENT
THIS AGREEMENT, made as of this 22nd day of November 1999 between
SCG Holding Corporation (the "Company") and Xxxxx Xxxxxxxx (the "Participant").
WHEREAS, the Company has adopted and maintains the SCG Holding
Corporation 1999 Founders Stock Option Plan (the "Plan") to promote the
interests of the Company and its Affiliates and stockholders by providing the
Company's key employees and others with an appropriate incentive to encourage
them to continue in the employ of the Company or its affiliates and to improve
the growth and profitability of the Company;
WHEREAS, the Plan provides for the Grant to Participants in the Plan
of Non-Qualified Stock Options to purchase shares of Common Stock of the
Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
1. Grant of Options. Pursuant to, and subject to, the terms and
conditions set forth herein and in the Plan, the Company hereby grants to the
Participant a NON-QUALIFIED STOCK OPTION (the "Option") with respect to 650,000
shares of Common Stock of the Company.
2. Grant Date. The Grant Date of the Option hereby granted is
September 9, 1999.
3. Incorporation of Plan. All terms, conditions and restrictions of
the Plan are incorporated herein and made part hereof as if stated herein. If
there is any conflict between the terms and conditions of the Plan and this
Agreement, the terms and conditions of this Agreement, as interpreted by the
Board in good faith, shall govern. For all purposes under this Agreement and the
Plan as applied to this Agreement, the following capitalized terms shall have
the following meanings:
(a) "Cause" shall have the meaning set forth in the employment
agreement dated as of October 27, 1999, between the Participant and the Company
(the "Participant's Employment Agreement").
(b) "Change in Control" shall have the meaning set forth in the
Participant's Employment Agreement.
(c) "Disability" shall have the meaning set forth in the
Participant's Employment Agreement.
(d) "Permitted Transferee" shall mean (i) any trust or custodianship
created by the Participant, the beneficiaries of which may include only the
Participant, the Participant's spouse or the Participant's lineal descendants
(by blood or adoption) and (ii) in the event of the Participant's death, the
Participant's beneficiaries or estate.
All other capitalized terms used and not defined herein shall have
the meaning given to such terms in the Plan.
4. Exercise Price. The exercise price of each share underlying the
Option hereby granted is $1.00 U.S. per share.
5. Vesting Date. The Option shall become exercisable as follows:
Approximately 8.4 percent of the Option shall become exercisable on the Grant
Date; an additional 8.3 percent of the Option shall become exercisable six
months following the Grant Date; an additional 8.3 percent of the Option shall
become exercisable on the first anniversary of the Grant Date; and on each
six-month anniversary following the first one-year anniversary of the Grant
Date, an additional 12.5 percent of the Option shall become exercisable until
100 percent of the Option is fully vested and exercisable; provided that, the
number of shares to become exercisable on any Vesting Date shall be rounded up
to the nearest share, but in no event shall more than 25 percent of the shares
underlying the Option become exercisable in any twelve-month period, nor shall
more than the total number of shares underlying the Option become exercisable.
Notwithstanding the foregoing, any portion of the Option which has not expired
pursuant to Section 6 below and which has not theretofore been exercised shall
become immediately exercisable in full upon a termination of the Participant's
Employment without Cause as described in Section 3(d) of the Participant's
Employment Agreement (including a deemed termination without Cause described in
Section 3(f) of the Participant's Employment Agreement) and upon the occurrence
of a Change in Control.
6. Expiration Date. Subject to the provisions of the Plan, with
respect to the Option or any portion thereof which has not become exercisable,
the Option shall expire on the date the Participant's Employment is terminated
for any reason, and with respect to any Option or any portion thereof which has
become exercisable, the Option shall expire on the earlier of: (i) 90 days after
the Participant's termination of Employment other than for Cause, death or
Disability; (ii) one year after termination of the Participant's Employment by
reason of death or Disability; (iii) the commencement of business on the date
the Participant's Employment is, or is deemed to have been, terminated for
Cause; or (iv) the tenth anniversary of the Grant Date.
7. Company Call Rights. Upon a termination of the Participant's
Employment for any reason prior to the existence of a Public Market, the Company
shall have the right, in its sole discretion, during the ninety-day period
immediately following the date of termination (the "Option Call Period"), to
purchase for cash any portion of the Option that has become exercisable on or
before the date of such termination of Employment for a purchase price equal to
the Option Spread, if any, determined as of the Valuation Date immediately
preceding the date that the Company exercises its right to purchase such Option
multiplied by the number of shares of Common Stock underlying such portion of
the Option. Upon notice that the Company is exercising its right to purchase
such portion of the Option, such Option shall no longer be exercisable by the
Participant (unless otherwise agreed by the Company) and, upon payment by the
Company, such Option shall immediately become void and cancelled, without any
further action by the Participant or the Company or otherwise. Such payment
shall be made within ten days after the date that the Company notifies the
Participant that it is exercising its right to purchase the Option hereunder,
provided that the Company may delay any such payment in the event such payment
will result in the violation of the terms or provisions of, or result in a
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default or event of default under, any guarantee, financing or security
agreement or document entered into by the Company or any of its Affiliates and
in effect on such date (hereinafter a "Financing Agreement"). In the event the
payment of the purchase price is delayed as a result of a restriction imposed by
a Financing Agreement as provided above, such payment shall be made without the
application of further conditions or impediments as soon as practicable after
the payment of such purchase price would no longer result in the violation of
the terms or provisions of, or result in a default or event of default under,
any Financing Agreement, and such payment shall equal the amount that would have
been paid to the Participant if no delay had occurred plus interest for the
period from the date on which the purchase price would have been paid but for
the delay in payment provided herein to the date on which such payment is made
(the "Delay Period"), calculated at an annual rate equal to the average annual
prime rate charged during the Delay Period by a nationally recognized bank
designated by the Board. The Company may deduct from any payment provided
hereunder an amount equal to the applicable federal, state and local withholding
taxes.
8. Construction of Agreement. Any provision of this Agreement (or
portion thereof) which is deemed invalid, illegal or unenforceable in any
jurisdiction shall, as to that jurisdiction and subject to this section, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions thereof in such
jurisdiction or rendering that or any other provisions of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction. If any covenant
should be deemed invalid, illegal or unenforceable because its scope is
considered excessive, such covenant shall be modified so that the scope of the
covenant is reduced only to the minimum extent necessary to render the modified
covenant valid, legal and enforceable. No waiver of any provision or violation
of this Agreement by the Company shall be implied by the Company's forbearance
or failure to take action.
9. Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party hereto upon any breach or default of any
party under this Agreement, shall impair any such right, power or remedy of such
party nor shall it be construed to be a waiver of any such breach or default, or
an acquiescence therein, or of or in any similar breach or default thereafter
occurring nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party or any provisions or conditions of this Agreement, shall be in
writing and shall be effective only to the extent specifically set forth in such
writing.
10. Limitation on Transfer. The Option shall be exercisable only by
the Participant or the Participant's Permitted Transferee(s). Each Permitted
Transferee shall be subject to all the restrictions, obligations, and
responsibilities as apply to the Participant under the Plan and this Stock
Option Grant Agreement and shall be entitled to all the rights of the
Participant under the Plan, provided that in respect of any Permitted Transferee
which is a trust or custodianship, the Option shall become exercisable and/or
expire based on the employment and termination of employment of the Participant.
All shares of Common Stock obtained pursuant to the Option granted herein shall
not be transferred except as provided in the Plan and, where applicable, the
Management Stockholders' Agreement.
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11. Integration. This Agreement, and the other documents referred to
herein or delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, representations, warranties, covenants or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein and in the Plan. This Agreement, including without
limitation the Plan, supersedes all prior agreements and understandings between
the parties with respect to its subject matter.
12. Term of Note in Event of Termination of Option. The term of any
note described in Section 4.13(a) of the Plan issued to the Participant shall
not exceed one (1) year without the prior written consent of the Participant,
unless the payment of such amounts are subject to any Financing Restriction(s),
in which case such note shall continue until such Financing Restriction(s) have
lapsed. Interest on any such note shall be paid not less frequently than
monthly.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
14. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware without regard
to the provisions governing conflict of laws. The parties hereto hereby agree
that any dispute, claim or cause of action related to this Agreement shall be
commenced in Maricopa County, Arizona, and the parties hereby submit to the
exclusive jurisdiction of such courts and waive any claim of forum non
conveniens.
15. Participant Acknowledgment. The Participant hereby acknowledges
receipt of a copy of the Plan. The Participant hereby acknowledges that all
decisions, determinations and interpretations of the Board made in good faith in
respect of the Plan, this Agreement and the Option shall be final and
conclusive. The Participant further acknowledges that, prior to the existence of
a Public Market, no exercise of the Option or any portion thereof shall be
effective unless and until the Participant has executed the Management
Stockholders' Agreement and the Participant hereby agrees to be bound thereby.
* * * * *
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its duly authorized officer and said Participant has hereunto signed
this Agreement on his own behalf, thereby representing that he has carefully
read and understands this Agreement, the Plan and the Management Stockholders'
Agreement as of the day and year first written above.
SCG Holding Corporation
/s/ Xxxxx Xxxxxxxxxx
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By: Xxxxx Xxxxxxxxxx
Title: Vice President Human Resources
/s/ Xxxxx Xxxxxxxx
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Participants Signature
Xxxxx Xxxxxxxx
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