EXHIBIT 99.2
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STOCK OPTION AGREEMENT
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THIS STOCK OPTION AGREEMENT MADE as of this 7th day of August, 1996 between
XXXX, INC., a New York business corporation (herein referred to as the
"Company"), and XXXXXX X. XXXXX, XX. (herein referred to as the "Optionee");
WITNESSETH:
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1. The Company hereby grants to the Optionee an Option (herein referred
to as the "Option") to purchase an aggregate of 10,000 shares of the $.01 par
value Common Stock of the Company (herein referred to as the "Shares") at a
price of $10.125 per Share to be paid by the Optionee with cash, a certified
check, a cashier's check or bank draft check made payable to the order of the
Company. Alternatively, provided the Company's Board of Directors shall approve
the specific transfer, the Optionee may pay for the Shares, either in whole or
in part, by the delivery of Common Stock of the Company already owned by him as
payment for the Shares, based upon such Common Stock's fair market value on the
date of exercise. However, payment for the Shares by means of Common Stock
obtained by the Optionee pursuant to this Agreement or any other stock option
plan of the Company is prohibited. Fair market value shall be the closing price
for the Company's Common Stock on the National Over-The-Counter Market in the
NASDAQ National Market System on the date of exercise.
2. The term during which the Option shall be exercisable shall commence
on August 7, 1996 and shall expire on the close of business on August 7, 2006,
subject to earlier termination as provided in the XXXX, Inc. 1996 Nonemployee
Directors Stock Option Plan (herein referred to as the "Plan"). The Option to
purchase the number of Shares granted under this Agreement may be exercised,
either in whole or in part, by the Optionee at any time and from time to time
during the Option Term. This Option may be exercised by the Optionee even
though, at the time of such exercise, whether in whole or in part, the Optionee
is no longer a Director of the Company.
3. This Option is not transferable by the Optionee other than by Will or
the laws of descent and distribution and is exercisable, during his lifetime,
only by the Optionee. In the event that the right to exercise the Option passes
to the Optionee's estate, or to a person to whom such right devolves by reason
of the Optionee's death, then the Option shall be nontransferable in the hands
of the Optionee's executor or administrator or of such person, except that the
Option may be distributed by the Optionee's executor or administrator to the
distributees of the Optionee's estate as a part thereof.
4. In order for the Option to be exercised, in whole or in part, the
notice by the Optionee to the Company in the form attached hereto must be
accompanied by payment in full of the option price for the Shares being
purchased. In addition, the Optionee agrees to tender to the Company an
additional amount, in cash, certified check, cashier's check or bank draft,
equal to the amount of any taxes required to be collected or withheld by the
Company in connection with the exercise of his Option.
5. The Company agrees that it will use its best efforts to register the
sale of the Shares to be issued upon the exercise of the Option with the
Securities and Exchange Commission under the Securities Act of 1933. Upon the
effectiveness of the Registration Statement covering the Shares, the Optionee
shall be able to sell the Shares in "open market transactions" free of Federal
Securities Law restrictions, provided that at the time of sale, or within the
three month period immediately prior to such sale, he is not nor has he been an
"affiliate" of the Company. The Optionee further understands that, in
accordance with applicable Commission rules governing controlling persons of
public companies, members of the board of directors of a public company, such as
the Company, are deemed to be "affiliates" during their term of office. The
Optionee, therefore, agrees that he will consult with the Company's counsel as
to any Securities Law restrictions, including a limitation on the number of
Shares which may be sold at any one time, on his ability to sell the Shares
prior to any sale thereof.
6. The Company agrees to provide the Optionee with a copy of the
Prospectus prepared by the Company in connection with the Registration Statement
filed to register the Shares, together with its exhibits, and the Company hereby
acknowledges its obligation to provide the Optionee with all proxy and other
shareholder communications, including the annual report to security holders, for
the most recently completed fiscal year of the Company and all updates thereof.
The Optionee agrees that prior to exercise, either in whole or in part of the
Option granted to him hereunder, he shall have read such materials, including
the most recent annual and quarterly reports to shareholders, and shall have
received, if requested, and read all the documents incorporated by reference in
the Prospectus and Registration Statement filed with the Securities and Exchange
Commission.
7. The Optionee understands that except as provided in Paragraph 5 above,
the Company has not agreed to register either the issuance or the resale of the
Shares in accordance with the provisions of the Securities Act of 1933 or to
register either the issuance or the resale of the Shares under any applicable
State Securities Laws. Hence, the Optionee agrees that by virtue of the
provision of certain rules respecting "restricted securities" promulgated under
such Federal and/or State Laws, unless the resale of the Shares is registered as
provided in Paragraph 5 above, and until the registration of such Shares in
accordance with Paragraph 5 above shall have been declared effective by order of
the Commission, the Shares which the Optionee shall purchase upon the exercise
of this Option must be held indefinitely and may not be sold, transferred,
pledged, hypothecated, or otherwise encumbered for value, unless and until a
secondary distribution and/or resale of such Shares is subsequently registered
under such Federal and/or State Securities Laws, or unless an exemption from
registration is available, in which case the Optionee still may be limited as to
the amount of the Shares that may be sold, transferred, pledged and/or
encumbered for value. The Optionee therefore agrees that, until the
registration of such Shares shall have been declared effective by order of the
Commission, the Company may affix upon any certificate representing the Shares,
a legend that such Shares may not be transferred in violation of Section 5 of
the Securities Act of 1933.
8. The Optionee understands and agrees that the Shares to be acquired
upon the exercise of the Option may not be sold, transferred, exchanged,
hypothecated, encumbered, pledged or otherwise disposed of for value for a
period of six (6) months from the date of the grant of this Option.
9. The Optionee understands that the Company has established certain
policies and procedures governing trading in the Company's securities, including
the Shares to be acquired upon the exercise of this Option, while in possession
of material, inside information regarding the Company and/or any of its
subsidiaries, receipt of which is hereby acknowledged. The Optionee agrees that
upon exercise of this Option, either in whole or in part, he will comply with
all of the terms and conditions of such policy, including the procedures and
guidelines established for its implementation. In particular, the Optionee
agrees that where required under such guidelines and procedures, he will obtain
permission of the Company's Clearinghouse Committee composed of senior
management prior to effectuating any sale or other transfer for value of the
Shares to be acquired by virtue of the exercise of this Option.
10. All the terms and provisions of the Plan, duly adopted at a meeting of
the Company's Board of Directors on June 5, 1996 and approved by a majority vote
of the Company's shareholders either in person or by proxy at a duly called
meeting of such shareholders held on August 7, 1996 and as amended to date, are
hereby expressly incorporated into this Stock Option Agreement and made a part
hereof as if printed herein and the Optionee, by the Optionee's signature
hereon, acknowledges receipt of a certified copy of said Plan. If there shall
be any conflict between this Agreement and the Plan, the provisions of the Plan
shall control.
11. In accordance with certain terms and conditions of the Plan, the
aggregate number and kind of shares that may be purchased pursuant to the grant
of the Option under this Agreement shall be proportionately adjusted for any
increase, decrease or change in the total number of the outstanding shares of
the Company resulting from a stock dividend, stock-split or other corporate
reorganization which would result in or have the effect of the Optionee being
treated differently (but for the adjustment) than he would be treated had he
been the beneficial owner of the Shares subject to the Option on the record date
for such dividend, split or reorganization, as the case may be.
12. The Optionee understands that the Option granted hereunder constitutes
a "nonqualified stock option" for federal, and if applicable, state income tax
purposes. Consequently, the Optionee understands that under current provisions
of federal tax law, for regular as well as for purposes to the federal
alternative minimum income tax, no gain or loss generally is recognized to the
Optionee upon the grant of the Option. In addition, the Company will receive no
business expense deduction as a result of the grant of the Option.
For federal income tax purposes, upon the exercise of the Option, the
difference between the exercise price and the fair market value of the Shares on
the date of exercise constitutes ordinary income to the Optionee and is taxed to
the Optionee at normal, ordinary tax rates, except to the extent the Shares are
not transferable and are subject to a substantial risk of forfeiture. To the
extent such difference is required to be included as income by the Optionee, the
Company is entitled to a business expense deduction. Upon the later sale of the
Shares, long or short term capital gain or loss will be recognized by the
Optionee, depending upon the holding period (one year for long term capital gain
or loss) and the extent to which the selling price exceeds or is less than the
Optionee's basis in the stock. The amount of gain will be taxed at normal,
ordinary tax rates, with a maximum rate of 28% in the case of long term capital
gain.
The Optionee also understands that the provisions of federal tax law
described herein are subject to change and, consequently, the Optionee agrees to
consult with his or her own tax advisor with respect to the tax treatment to be
accorded the grant of the Option herein, the exercise of such Option, and the
disposition of the Shares.
13. Consistent with the provisions of the Plan, this Agreement shall be
binding upon and inure to the benefit of any successor or assignee of the
Company and to any executor, administrator, legal representative, legatee, or
distributee entitled by law to the Optionee's right hereunder.
14. Except insofar as an interpretation of federal securities law
otherwise is required, or is controlling, this Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer and the Optionee has hereunto set his
hand, as of the day and year first above written.
XXXX, INC.
By:
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Xxxxxx X. Xxxxx, Xx., Optionee
NOTICE OF EXERCISE OF STOCK OPTION
AND
RECORD OF STOCK TRANSFER
XXXX, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Gentlemen:
I hereby exercise my Stock Option granted to me by XXXX, Inc. under an
Stock Option Agreement dated as of August 7, 1996, subject to all the terms and
provisions thereof and of the XXXX, Inc. 1996 Nonemployee Directors Stock Option
Plan referred to therein and notify you of my desire to purchase Shares
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of the $.01 par value Common Stock of the Company which were offered to me
pursuant to the Stock Option Agreement. Enclosed is my payment in the sum of
in full payment of such Shares.
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I also understand that under the Plan, and in accordance with the terms of
the Stock Option Agreement, I may not sell, assign, alienate, pledge, encumber
or otherwise transfer for value the Shares unless a period of six (6) months has
elapsed from the date of the grant of the Option to me.
I acknowledge that I have received, read and understand the Company's
policies and procedures with respect to trading in its securities while in
possession of material inside information regarding the Company and/or its
subsidiaries, and that, in accordance with certain guidelines and procedures
designed to implement such policies, I may be required to obtain permission from
a Clearinghouse Committee, composed of Senior Management, prior to any sale or
other transfer for value of the Shares hereby acquired.
I also acknowledge that I have received and have read all proxy and other
shareholder communications, including the annual report to security holders, for
the most recently completed fiscal year and all quarterly and current updates
thereof. I acknowledge that I have had the opportunity to ask questions of and
receive answers from the Company's management concerning the information set
forth in such proxy, reports and updates and have been satisfied with the
answers provided regarding the same.
Finally, I acknowledge that there are significant federal income tax
consequences resulting from my exercise of this Option, that I have consulted
with and received advice from qualified tax counsel both as to the nature of
such tax consequences and their impact upon my own personal income tax situation
as the result of such exercise, and that I fully understand such impact and have
planned accordingly.
DATED:
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Receipt is hereby acknowledged of the delivery to me by XXXX, Inc. on
, 19 of stock certificates for shares of $.01 par value
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common stock purchased by me pursuant to the terms and conditions of the XXXX,
Inc. 1996 Nonemployee Directors Stock Option Plan referred to above.
DATED:
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