Exhibit 10.3
STOCK OPTION AGREEMENT
UNDER
REFAC'S 2003 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT (this "Agreement") entered into as of April 1,
2005, pursuant to the REFAC 2003 Stock Incentive Plan (the "Plan"), by and
between REFAC, a Delaware corporation, and Xxxxxx X. Xxxxxxx (the "Optionee").
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Plan.
WHEREAS, the Optionee is currently employed by REFAC subject to an
employment agreement to be entered into by and between Optionee and REFAC dated
as of April 1, 2005 (the "Employment Agreement"); and
WHEREAS, REFAC desires, by affording the Optionee an opportunity to
purchase shares of its Stock as hereinafter provided and subject to the terms
and conditions hereof, to carry out the purpose of the Plan;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
have agreed and do hereby agree as follows:
1. Number of Shares. REFAC hereby grants to the Optionee an Incentive
Stock Option (the "Option") to purchase an aggregate of 100,000 shares of
Stock, subject to adjustment as provided in Section 2 hereof, on the terms and
conditions herein set forth. To the extent the Option does not qualify as an
Incentive Stock Option under the Code, it shall be treated as a Nonqualified
Stock Option.
2. Adjustments. In the event that the Board shall determine that any
dividend or other distribution (whether in the form of cash, Stock or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, spin-off, combination, repurchase, or share exchange, or
other similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of the Optionee hereunder, then the Board shall make such equitable
changes or adjustments as it deems necessary or appropriate to any or all of
(i) the number and kind of shares of stock issued or issuable in respect of the
Option, and (ii) the Exercise Price (as defined below) of the Option.
3. Option Price. The purchase price of the Stock subject to the Option
shall be $4.12 per share (the "Exercise Price"), subject to adjustment as
provided in Section 2 hereof.
4. Term and Exercisability of Option.
(a) Unless the Option is previously cancelled pursuant to this
Agreement, the Option Term shall commence on the date hereof (the "Date of
Grant") and terminate on the tenth anniversary of the Date of Grant. Upon the
termination of the Option, all rights of the Optionee hereunder shall cease.
(b) Exercisability of Option. The Option shall be exercisable as to
33?% of the aggregate number of shares covered hereby upon the Date of Grant.
Subject to Section 6 hereof, the Option will become exercisable in cumulative
fashion as to 33? of the aggregate number of shares of Stock covered hereby on
the first and second anniversaries of the Date of Grant. Subject to Section 6
hereof, the right of the Optionee to purchase shares with respect to which this
Option has become exercisable as herein provided may be exercised in whole or
in part at any time or from time to time, prior to the tenth anniversary of the
Date of Grant.
5. Payment. Upon the exercise of all or any portion of the Option, the
Exercise Price of the shares being purchased shall be paid in full either (a)
in cash or by check, (b) by tendering previously acquired shares of Stock, that
if acquired from REFAC has been held by the Optionee for at least six months,
having an aggregate fair market value at the time of exercise equal to the
total Exercise Price, (c) by a combination of (a) and (b), or (d) with approval
by the Board, through a broker cashless exercise procedure, if such procedure
has been established by REFAC at the time of exercise.
6. Termination.
(a) In the event that the Optionee's employment with REFAC is
terminated (i) by the Optionee for Good Reason (as defined in the Employment
Agreement), (ii) by the Company without Cause (as defined in the Employment
Agreement), (iii) due to the Optionee's death or disability, or (iv) on or
after the expiration of the term of the Employment Agreement, then the Option
shall immediately become exercisable as to all shares subject thereto and shall
remain exercisable by the Optionee (or his heirs, distributees, or legal
representatives, as applicable) for the remainder of the term of the Option and
shall thereafter expire; provided, however, that in the event of a termination
for Good Reason solely as a result of a Change in Control (as defined in the
Employment Agreement), the Option shall remain exercisable for a period of one
year following the date of such termination and shall thereafter expire.
(b) In the event that the Optionee's employment with REFAC shall be
terminated by REFAC for Cause (as defined in the Employment Agreement) prior to
the expiration of the term of the Employment Agreement, then the Option shall
immediately terminate as to any shares subject thereto.
(c) In the event that the Optionee's employment with REFAC is
terminated for any reason other than those described in (a) and (b), then the
Option shall immediately terminate as to any shares that have not previously
become exercisable as of the date of the Optionee's termination of employment.
Any portion of the Option that is exercisable as of the date of the Optionee's
termination of employment may be exercised by the Optionee for ninety days
following the termination of his employment. Upon expiration of such ninety-day
period, any unexercised portion of the Option shall terminate in full.
(d) Notwithstanding anything to the contrary in this Section 6, the
Option shall not be exercisable later than the date of its termination as set
forth in Section 4(a) hereof.
7. Rights of Optionee.
(a) The Optionee shall have none of the rights of a stockholder with
respect to the shares covered by the Option until the shares are issued or
transferred to such Optionee upon exercise of the Option.
(b) The Option shall not interfere with or limit in any way the
right the Board may have to terminate the employment of the Optionee with REFAC
nor confer upon the Optionee any right to continue to be employed by REFAC.
8. Nontransferability of Option. The Option shall not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution and shall be
exercisable during the Optionee's lifetime only by the Optionee.
9. Notification.
(a) The Option shall be exercised by written notification of
exercise substantially in the form of Exhibit A hereto and delivered to the
Secretary of REFAC in accordance with subsection (c) of this Section 9. Such
notification shall specify the number of shares of Stock to be purchased and
the manner in which payment is to be made.
(b) The Optionee shall notify the Company promptly following any
sale of shares of Stock purchased pursuant to the exercise of the Option that
is a "disqualifying disposition" within the meaning of section 421(b) of the
Code.
(c) Any notification required or permitted hereunder shall be
addressed to REFAC, to the attention of the Secretary, Xxx Xxxxxx Xxxxx, Xxxxx
000, Xxxx Xxx, Xxx Xxxxxx 00000 or to the Optionee at the address set forth
below, as the case may be, and deposited, postage prepaid, in the United States
mail; provided, however, that a notification of exercise pursuant to subsection
(a) of this Section 9 shall be effective only upon receipt by the Secretary of
REFAC of such notification and all necessary documentation, including full
payment for the shares. Either party may, by notification to the other given in
the manner aforesaid, change the address for future notices.
10. Tax Withholding. REFAC shall have the power and the right to
require the Optionee to remit to it an amount sufficient to satisfy any
Federal, state, local, employment and other taxes required by law to be
withheld as a result of any taxable event arising in connection with the Option
in accordance with the terms of the Plan.
11. Conditions to Issuance. The Option and exercise of the Option, and
the other obligations of REFAC under the Plan and the Option shall be subject
to all applicable federal and state laws, rules and regulations and to such
approvals by any regulatory or governmental agency as may be required. REFAC,
in its discretion, may postpone the issuance or delivery of Stock under the
Option as REFAC may consider appropriate and may require the Optionee to make
such representations and furnish such information as it may consider
appropriate in connection with the issuance or delivery of Stock in compliance
with applicable laws, rules and regulations.
12. Incorporation of Plan; Governing Law; Interpretation.
(a) The Plan is hereby incorporated by reference and made a part
hereof, and the Option and this Agreement are subject to all terms and
conditions of the Plan. To the extent that any provision in this Agreement is
inconsistent with the Plan, the provisions of the Plan shall control.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to its principles of
conflicts of laws.
(c) The Board shall have final authority to interpret and construe
the Plan and this Agreement and to make any and all determinations under them,
and its determination and decisions shall be final, conclusive and binding upon
the Optionee and his legal representative in respect of any questions arising
under the Plan or this Agreement.
13. Miscellaneous.
(a) This Agreement shall bind and inure to the benefit of REFAC,
its successors and assigns, and the Optionee and his personal representatives
and assigns.
(b) The failure of REFAC 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.
(c) This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument. In the event that any signature is
delivered via facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original signature.
14. Amendment. This Agreement may be amended or modified at any time
by an instrument in writing signed by the parties hereto.
IN WITNESS WHEREOF, REFAC has caused this Agreement to be duly
executed by its officer thereunder duly authorized and the Optionee has
hereunto set his hand, all as of the day and year set forth above.
REFAC
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Director
ACCEPTED:
/s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx
Exhibit A
Page 1
INSERT DATE
NAME OF OPTIONEE
ADDRESS OF OPTIONEE
________________
_______
NOTICE OF EXERCISE OF STOCK OPTION
PURSUANT TO 2003 STOCK INCENTIVE PLAN
DATE
REFAC
Xxx Xxxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Attn: Secretary
Gentlemen:
Reference is made to the stock option that REFAC (the "Company")
granted to me by Agreement dated __________. Let this letter serve as my Notice
of Exercise of such option with respect to __________ shares of the Company's
Common Stock at the exercise price of $__________ per share.
I wish to make payment of the exercise price for the shares as
indicated below (check one or more boxes):
____ Cash; my check in the amount of $_________ is
enclosed herewith.
____ Previously acquired shares of Stock; __________
such shares with a total fair market value of $__________
are enclosed herewith.
____ ["Broker cashless exercise"; I understand that
of the __________ shares I am purchasing by this
method, the net number that I will receive is _________.
Note: This method of exercise may not be permitted by the
Board.]
In exercising this stock option, if the option shares are not
registered under the Securities Act of 1933, as amended, I hereby agree,
warrant and represent to the Company that:
1. The certificate evidencing said shares will bear the following
legend in conspicuous type:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be
sold, transferred, pledged, hypothecated or offered for sale in
the absence of an effective registration statement relating to
such shares under such Act or a written opinion of counsel to
REFAC that such registration is not required."
2. I am acquiring said shares for my investment account and do not
have the present intention of reselling or distributing any of said shares.
3. I have no contract, understanding, agreement, or arrangement with
any person to sell or transfer to such person or to any third person any of
said shares, and I have no present plan to enter into any such contract,
understanding, agreement or arrangement.
4. I do not presently have in mind any future sale or other
disposition of any of said shares, upon the occurrence or nonoccurrence of any
predetermined event or circumstance.
5. I have had access to the Company's reports as filed with the
Securities and Exchange Commission and to its press releases.
6. I have sufficient knowledge and experience in financial and
business matters to be able to evaluate the merits and risks of this investment
and to bear the economic risks of this investment.
7. I acknowledge that the Company has no obligation to issue a
certificate evidencing any shares owned by me until the purchase price of said
shares is fully paid as set forth herein.
8 I am enclosing cash and/or a certified or bank check payable to the
Company in an amount equal to the sum of any local, state and federal
withholding taxes due.
Sincerely,
NAME OF OPTIONEE
REQUIRED INFORMATION
Name and Address ____________________
Lane ____________________
____________________
Telephone Number ____________________
Social Security Number ____________________
