EXHIBIT 4
ROCK OF AGES CORPORATION
Incentive Stock Option Agreement
Rock of Ages Corporation, a Vermont corporation
(the "Company"), hereby grants as of this 31st day of
December, 1996, to Xxxx X. Xxxxxxx (the "Employee"), an
option to purchase a maximum of 25,000 shares of its
Common Stock, no par value per share, at the price of
$1.65 per share. To the extent the option granted hereby
is exercisable pursuant to the terms hereof, such option
may be exercised for a period of up to five years from
the date granted. The option granted hereby is subject
to the following terms and conditions:
1. Grant Under Amended and
Restated 1994 Stock Plan. This option is granted
pursuant to and is governed by the Company's Amended and
Restated 1994 Stock Plan (the "Plan") and, unless the
context otherwise requires, terms used herein shall have
the same meaning as in the Plan.
2. Grant as Incentive Stock
Option; Other Options. This option is intended to
qualify as an incentive stock option under Section 422(b)
of the Internal Revenue Code of 1986, as amended (the
"Code"). This option is in addition to any other options
heretofore or hereafter granted to the Employee by the
Company.
3. Extent of Option If
Employment Continues. So long as the Employee continues
to be employed by the Company on the following dates, the
Employee may exercise this option for the number of
shares set opposite the applicable date:
On or after December 31, 1996
and before December 31, 1997 - 5,000 shares
On or after December 31, 1997 - an additional
and before December 31, 1998 5,000 shares
On or after December 31, 1998 - an additional
and before December 31, 1999 5,000 shares
On or after December 31, 2000 - an additional
and before December 31, 2001 5,000 shares
On or after December 31, 2001 - an additional
5,000 shares.
All of the foregoing rights are subject to Articles 4 and
5, as appropriate, if the Employee ceases to be employed
by the Company or dies or becomes disabled while in the
employ of the Company.
4. Termination of Employment.
If the Employee ceases to be employed by the Company, no
further installments of this option shall become
exercisable and, except as provided in Article 5, this
option shall terminate after the passage of ninety (90)
days from the date employment ceases, but in no event
later than the scheduled expiration date. In such a
case, the Employee's only rights hereunder shall be those
which are properly exercised before the termination of
the option.
5. Death; Disability. If the
Employee dies while in the employ of the Company, this
option may be exercised, to the extent of the number of
shares with respect to which the Employee could have
exercised it on the date of his death, by his estate,
personal representative or beneficiary to whom this
option has been assigned pursuant to Article 10, at any
time within 180 days after the date of death, but not
later than the scheduled expiration date. If the
Employee ceases to be employed by the Company by reason
of his disability (as defined in the Plan), this option
may be exercised, to the extent of the number of shares
with respect to which he could have exercised it on the
date of the termination of his employment, at any time
within 180 days after such termination, but not later
than the scheduled expiration date. At the expiration of
such 180-day period or the scheduled expiration date,
whichever is the earlier, this option shall terminate and
the only rights hereunder shall be those as to which the
option was properly exercised before such termination.
6. Partial Exercise. Exercise
of this option up to the extent above stated may be made
in part at any time and from time to time within the
above limits, except that this option may not be
exercised for a fraction of a share unless such exercise
is with respect to the final installment of stock subject
to this option and, absent the provisions of this Article
6, a fractional share would be required to be issued to
permit the Employee to exercise completely such final
installment. Any fractional share with respect to which
an installment of this option cannot be exercised because
of the limitation contained in the preceding sentence
shall remain subject to this option and shall be
available for later purchase by the Employee in
accordance with the terms hereof. No fractional shares
shall be issued under the Plan, and the Employee shall
receive from the Company cash in lieu of such fractional
shares.
7. Payment of Price. The
option price is payable in United States dollars and may
be paid (i) in cash, (ii) by check, (iii) by delivery of
shares of the Company's Common Stock having an aggregate
fair market value (as determined by the Board of
Directors) equal as of the date of exercise to the option
price, (iv) at the discretion of the Committee at the
time of exercise, by delivery of the Employee's personal
recourse note bearing interest payable not less than
annually at no less than 100% of the lowest applicable
Federal rate, as defined in Section 1274(d) of the Code,
or (v) subject to clause (iv), by any combination of the
foregoing, equal in amount to the option price.
Notwithstanding the foregoing, the Employee may
not pay any part of the exercise price hereof by
transferring Common Stock to the Company if such Common
Stock is both subject to a substantial risk of forfeiture
and not transferable within the meaning of Section 83 of
the Code. If the Employee delivers a personal recourse
note as provided above, the Employee shall concurrently
execute and deliver to the Company a pledge agreement in
a form reasonably satisfactory to the Company, together
with a stock certificate or certificates representing
shares of the Company's Common Stock (having an aggregate
fair market value (as determined by the Board of
Directors) equal as of the date of exercise to at least
the value of the principal amount of the note), duly
endorsed or accompanied by a stock power or powers duly
endorsed, to secure the Employee's obligations under such
personal recourse note.
8. Agreement to Purchase for
Investment. By acceptance of this option, the Employee
agrees that a purchase of shares under this option will
not be made with a view to their distribution, as that
term is used in the Securities Act of 1933, as amended
(the "Act"), unless in the opinion of counsel to the
Company, such distribution is in compliance with or
exempt from the registration and prospectus requirements
of the Act, and the Employee agrees to sign a certificate
to such effect at the time of exercising this option and
agrees that the certificate for the shares so purchased
may be inscribed with a legend to ensure compliance with
the Act.
9. Method of Exercising
Option. Subject to the terms and conditions of this
Agreement, this option may be exercised by written notice
to the Company, at the principal executive office of the
Company at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, XX 00000, or
to such transfer agent as the Company shall designate.
Such notice shall state the election to exercise this
option and the number of shares in respect of which it is
being exercised and shall be signed by the person or
persons so exercising this option. Such notice shall be
accompanied by payment of the full purchase price of such
shares, and the Company shall deliver a certificate or
certificates representing such shares as soon as
practicable after the notice shall be received. The
certificate or certificates for the shares as to which
this option shall have been so exercised shall be
registered in the name of the person or persons so
exercising this option (or, if this option shall be
exercised by the Employee and if the Employee shall so
request in the notice exercising this option, shall be
registered in the name of the Employee and another person
jointly, with right of survivorship) and shall be
delivered as provided above to or upon the written order
of the person or persons exercising this option. In the
event this option shall be exercised pursuant to Article
5 hereof by any person or persons other than the
Employee, such notice shall be accompanied by appropriate
proof of the right of such person or persons to exercise
this option. All shares that shall be purchased upon the
exercise of this option as provided herein shall be fully
paid and non-assessable.
10. Option Not Transferable.
This option is not transferable or assignable except by
will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as
defined under the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder.
During the Employee's lifetime, only the Employee or his
or her guardian or legal representative can exercise this
option.
11. No Obligation to Exercise
Option. The grant and acceptance of this option imposes
no obligation on the Employee to exercise it.
12. No Obligation to Continue
Employment. The Company and any Related Corporation (as
defined in the Plan) are not by the Plan or this option
obligated to continue the Employee in employment.
13. No Rights as Shareholder
until Exercise. The Employee shall have no rights as a
shareholder with respect to shares subject to this
Agreement until a stock certificate therefor has been
issued to the Employee and is fully paid for. Except as
is expressly provided in the Plan with respect to certain
changes in the capitalization of the Company, no
adjustment shall be made for dividends or similar rights
for which the record date is prior to the date such stock
certificate is issued.
14. Capital Changes and
Business Successions. The Plan contains provisions
covering the treatment of options in a number of
contingencies such as stock splits and mergers.
Provisions in the Plan for adjustment with respect to
stock subject to options and the related provisions with
respect to successors to the business of the Company are
hereby made applicable hereunder and are incorporated
herein by reference. In general, you should not assume
that options necessarily would survive the acquisition of
the Company. In particular, without affecting the
generality of the foregoing, it is understood that for
the purposes of Articles 3 through 5 hereof, both
inclusive, employment by the Company includes employment
by a Related Corporation as defined in the Plan.
15. Early Disposition. The
Employee agrees to notify the Company in writing
immediately after the Employee makes a Disqualifying
Disposition of any Common Stock received pursuant to the
exercise of this option. A Disqualifying Disposition is
any disposition (including any sale) of such Common Stock
before the later of (a) two years after the date the
Employee was granted this option or (b) one year after
the date the Employee acquired Common Stock by exercising
this option. If the Employee has died before such stock
is sold, these holding period requirements do not apply
and no Disqualifying Disposition can occur thereafter.
The Employee also agrees to provide the Company with any
information which it shall request concerning any such
disposition. The Employee acknowledges that he or she
will forfeit the favorable income tax treatment otherwise
available with respect to the exercise of this incentive
stock option if he or she makes a Disqualifying
Disposition of the stock received on exercise of this
option.
16. Withholding Taxes. If the
Company in its discretion determines that it is obligated
to withhold tax with respect to a Disqualifying
Disposition (as defined in Article 15) of Common Stock
received by the Employee on exercise of this option, the
Employee hereby agrees that the Company may withhold from
the Employee's wages the appropriate amount of federal,
state and local withholding taxes attributable to such
Disqualifying Disposition. If any portion of this option
is treated as a Non-Qualified Option, the Employee hereby
agrees that the Company may withhold from the Employee's
wages the appropriate amount of federal, state and local
withholding taxes attributable to the Employee's exercise
of such Non-Qualified Option. At the Company's
discretion, the amount required to be withheld may be
withheld in cash from such wages, or (with respect to
compensation income attributable to the exercise of this
option) in kind from the Common Stock otherwise
deliverable to the optionee on exercise of this Option.
The Employee further agrees that, if the Company does not
withhold an amount from the Employee's wages sufficient
to satisfy the Company's withholding obligation, the
Employee will reimburse the Company on demand, in cash,
for the amount underwithheld.
17. Company's Right of First
Refusal.
(a) Exercise of
Right: If the Employee desires to sell all or any part
of the shares acquired under this option (including any
securities received in respect thereof pursuant to any
stock dividend, stock split, reclassification,
reorganization, recapitalization or the like), and an
offeror (the "Offeror") has made an offer therefor, which
offer the Employee desires to accept, the Employee shall:
(i) obtain in writing an irrevocable and unconditional
bona fide offer (the "Bona Fide Offer") for the purchase
thereof from the Offeror; and (ii) give written notice
(the "Option Notice") to the Company setting forth his or
her desire to sell such shares, which Option Notice shall
be accompanied by a photocopy of the original executed
Bona Fide Offer and shall set forth at least the name and
address of the Offeror and the price and terms of the
Bona Fide Offer. Upon receipt of the Option Notice, the
Company shall have an assignable option to purchase any
or all of such shares (the "Option Shares") specified in
the Option Notice, such option to be exercisable by
giving, within 30 days after receipt of the Option
Notice, a written counter-notice to the Employee. If the
Company elects to purchase any or all of such Option
Shares, it shall be obligated to purchase, and the
Employee shall be obligated to sell to the Company, such
Option Shares at the price and terms indicated in the
Bona Fide Offer within 60 days from the date of receipt
by the Company of the Option Notice.
(b) Sale of Option
Shares to Offeror: The Employee may sell, pursuant to
the terms of the Bona Fide Offer, any or all of such
Option Shares not purchased or agreed to be purchased by
the Company for 60 days after the expiration of the 30-
day period during which the Company may give the
aforesaid counter-notice; provided, however, that the
Employee shall not sell such Option Shares to the Offeror
if the Offeror is a competitor of the Company and the
Company gives written notice to the Employee, within 30
days of its receipt of the Option Notice, stating that
the Employee shall not sell his or her Option Shares to
the Offeror; and provided, further, that prior to the
sale of such Option Shares to the Offeror, the Offeror
shall execute an agreement with the Company pursuant to
which the Offeror agrees to be subject to the
restrictions set forth in this Article 17. If any or all
of such Option Shares are not sold pursuant to a Bona
Fide Offer within the time permitted above, the unsold
Option Shares shall remain subject to the terms of this
Article 17.
(c) Adjustments for
Changes in Capital Structure: If there shall be any
change in the Common Stock of the Company through merger,
consolidation, reorganization, recapitalization, stock
dividend, split-up, combination or exchange of shares or
the like, the restrictions contained in this Article 17
shall apply with equal force to additional or substitute
securities, if any, received by the Employee in exchange
for, or by virtue of his or her ownership of, Option
Shares.
(d) Failure to
Deliver Option Shares: In the event the Employee fails
or refuses to deliver on a timely basis duly endorsed
certificates representing Option Shares to be sold to the
Company pursuant to this Article 17, the Company shall
have the right to deposit the purchase price for the
Option Shares in a special account with any bank or trust
company in the State of New Hampshire giving notice of
such deposit to the Employee, whereupon such Option
Shares shall be deemed to have been purchased by the
Company. All such monies shall be held by the bank or
trust company for the benefit of the Employee. All
monies deposited with the bank or trust company but
remaining unclaimed for two (2) years after the date of
deposit shall be repaid by the bank or trust company to
the Company on demand, and the Employee shall thereafter
look only to the Company for payment. The Company may
place a legend on any stock certificate delivered to the
Employee reflecting the restrictions on transfer provided
in this Article 17.
(e) Expiration of
Company's Right of First Refusal: The refusal rights of
the Company set forth above shall remain in effect until
such time, if ever, when there is a registration of any
of the Company's stock under the Exchange Act or the
Company otherwise becomes subject to the reporting
requirements of the Exchange Act, at which time the
refusal rights of the Company set forth herein will
automatically expire.
18. No Exercise of Option if
Employment Terminated for Misconduct. If the employment
of the Employee is terminated for "Misconduct," this
option shall terminate on the date of such termination of
employment and shall thereupon not be exercisable to any
extent whatsoever. "Misconduct" is conduct, as
determined by the Board of Directors, involving one or
more of the following: (i) the substantial and
continuing failure of the Employee to render services to
the Company in accordance with his or her assigned
duties; (ii) a determination by two-thirds of the members
of the Board of Directors that the Employee has
inadequately performed the duties of his or her
employment; (iii) disloyalty, gross negligence,
dishonesty or breach of fiduciary duty to the Company;
(iv) the commission of an act of embezzlement, fraud,
disloyalty, dishonesty or deliberate disregard of the
rules or policies of the Company which results in loss,
damage or injury to the Company, whether directly or
indirectly; (v) the unauthorized disclosure of any trade
secret or confidential information of the Company; or
(vi) the commission of an act which constitutes unfair
competition with the Company or which induces any
customer of the Company to break a contract with the
Company. In making such determination, the Board of
Directors shall act fairly and in utmost good faith and
shall give the Employee an opportunity to appear and to
be heard at a hearing before the Board of Directors or
any Committee and present evidence on his or her behalf.
For the purposes of this Article 18, termination of
employment shall be deemed to occur when the Employee
receives notice that his or her employment is terminated.
19. Company's Right of
Repurchase.
(a) Rights of
Repurchase. If any of the events specified in Article
19(b) below occur, then:
(i) with
respect to shares acquired
upon exercise of this option
prior to the occurrence of
such event, within 60 days
after the Company receives
actual knowledge of the event,
and
(ii) with
respect to shares acquired
upon exercise of this option
after the occurrence of such
event, within 60 days
following the later of the
date of such exercise or the
date the Company receives
actual knowledge of such
event,
(in either case, the "Repurchase Period"), the Company
shall have the option, but not the obligation, to
repurchase all, but not a portion of, such shares from
the Employee, or his or her guardian or legal
representatives, as the case may be (the "Repurchase
Option"). The Repurchase Option shall be exercised by
the Company by giving the Employee, or his or her
guardian or legal representatives, written notice of its
intention to exercise the Repurchase Option on or before
the last day of the Repurchase Period, and, together with
such notice, tendering to the Employee, or his or her
guardian or legal representatives, an amount equal to the
aggregate option exercise price with respect to such
shares. The Company may, in exercising the Repurchase
Option, designate one or more nominees, whether or not
affiliated with or employed by the Company, to purchase
the shares. Upon timely exercise of the Repurchase
Option in the manner provided in this Article 19(a), the
Employee, or his or her guardian or legal
representatives, shall deliver to the Company the stock
certificate or certificates representing the shares being
repurchased, duly endorsed and free and clear of any and
all liens, charges and encumbrances.
If shares are not purchased under the
Repurchase Option, the Employee and his or her successor
in interest, if any, will hold any such shares in his or
her possession subject to all of the provisions of this
Agreement.
(b) Company's Right
to Exercise Repurchase Option: The Company shall have
the Repurchase Option in the event that any of the
following events shall occur:
(i) the
termination of the Employee's
employment with the Company or
any Related Corporation,
voluntarily or involuntarily,
for any reason whatsoever,
including death or permanent
disability, prior to the time
this option shall be fully
vested as provided in Article
3 hereof;
(ii) the
receivership, bankruptcy or
other creditor's proceeding
regarding the Employee or the
taking of any of Employee's
shares acquired upon exercise
of this option by legal
process, such as a levy of
execution;
(iii)
distribution of shares held by
the Employee to his or her
spouse as such spouse's joint
or community interest pursuant
to a decree of dissolution,
operation of law, divorce,
property settlement agreement
or for any other reason,
except as may be otherwise
permitted by the Company; or
(iv) the
termination of the Employee's
employment by the Company for
Misconduct.
(c) Determination of
Fair Market Value: The fair market value of the shares
subject to this option shall be, for purposes of this
Article 19, an amount per share determined on the basis
of the price at which shares of the Common Stock could
reasonably be expected to be sold in an arms-length
transaction, for cash, other than on an installment
basis, to a person not employed by, controlled by, in
control of or under common control with the Company.
Fair market value shall be determined by the Board of
Directors, giving due consideration to recent grants of
ISOs for shares of Common Stock, recent transactions
involving shares of the Common Stock, if any, earnings of
the Company, the effect of the transfer restrictions to
which the shares are subject under law and this
Agreement, the absence of a public market for the Common
Stock and such other matters as the Board of Directors
deems pertinent. The determination by the Board of
Directors of the fair market value shall be conclusive
and binding. The fair market value of the shares shall
be determined as of the day on which the event occurs.
(d) Expiration of
Company's Repurchase Option. The Company's Repurchase
Option set forth above shall remain in effect until such
time, if ever, when there is a registration of any of the
Company's stock under the Exchange Act or the Company
otherwise becomes subject to the reporting requirements
of the Exchange Act, at which time the Repurchase Option
of the Company set forth herein will automatically
expire.
20. Lock-up Agreement. In the
event of an underwritten public offering of the Company's
securities, the Employee (or any permitted transferee
pursuant to Article 10), whether or not such Employee's
shares issuable upon exercise of the option granted
herein are included in such registration, hereby agrees
not to effect any public sale or distribution, including
any sale pursuant to Rule 144 under the Act, of any
equity securities of the Company (other than as part of
such underwritten offering), without the consent of the
managing underwriter(s) for such offering (the "Managing
Underwriter"), during a period commencing on the
effective date of such registration and ending 180
calendar days thereafter, or such lesser period as the
Board of Directors and the Managing Underwriter shall
reasonably determine is required to effect a successful
offering.
21. Incorporation of Plan. The
Plan is hereby incorporated herein by reference and made
a part hereof and the option and this Agreement are
subject to all terms and conditions of the Plan.
22. Provision of Documentation
to Employee. By signing this Agreement, the Employee
acknowledges receipt of a copy of this Agreement and a
copy of the Plan.
23. Failure to Enforce Not a
Waiver. The failure of the Company to enforce at any
time any provision of this Agreement shall in no way be
construed to be a waiver of such provision or of any
other provision hereof.
24. Governing Law. This
Agreement shall be governed by and interpreted in
accordance with the laws of the State of Vermont, without
regard to the conflicts of laws provisions thereof.
25. Counterparts. This
Agreement may be executed in counterparts, each of which
shall be an original but all of which shall represent one
and the same agreement.
IN WITNESS WHEREOF, the Company and the
Employee have caused this Agreement to be executed, and
the Employee whose signature appears below acknowledges
receipt of a copy of the Plan incorporated herein by
reference and acceptance of an original copy of the
Agreement.
ROCK OF AGES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title:
Xxxx X. Xxxxxxx
Employee
Xxxx X. Xxxxxxx
Print Name of Employee
000 Xxxxxx Xxxx Xxxx
Xxxxxx Xxxxxxx
Hopkinton, N.H. 03229
City State Zip Code
