EXHIBIT 10.31
STOCK OPTION AGREEMENT
(Non-Qualified Stock Option - 2002 Stock Incentive Plan)
THIS AGREEMENT is made to be effective as of __________, 200__, by and
between X. X. Xxxxx Corporation, an Ohio corporation (the "COMPANY"), and
____________________ (the "OPTIONEE").
WITNESSETH:
WHEREAS, pursuant to the provisions of the X. X. Xxxxx Corporation 2002
Stock Incentive Plan (the "PLAN"), the Board of Directors of the COMPANY has
appointed a Compensation Committee (the "COMMITTEE") to administer the PLAN and
the COMMITTEE has determined that an option to acquire common shares, $1.00 par
value (the "COMMON SHARES"), of the COMPANY should be granted to the OPTIONEE
upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the parties
hereto make the following agreement, intending to be legally bound thereby:
1. Grant of OPTION. The COMPANY hereby grants to the OPTIONEE an option
(the "OPTION") to purchase __________ COMMON SHARES of the COMPANY (subject to
adjustment as provided in Section 3). The OPTION is not intended to qualify as
an incentive stock option under Section 422 of the Internal Revenue Code of
1986, as amended (the "CODE").
2. Terms and Conditions of the OPTION.
(A) OPTION Price. The purchase price (the "OPTION PRICE") to
be paid by the OPTIONEE to the COMPANY upon the exercise of the OPTION shall be
$_______ per share, subject to adjustment as provided in Section 3.
(B) Exercise of the OPTION. Except as provided under Section 4
hereof, the OPTION may not be exercised until the OPTIONEE shall have completed
twelve months of continuous employment with the COMPANY and/or its subsidiaries
immediately following the date hereof. Thereafter, except as otherwise provided
in this Agreement, the OPTION may be exercised as follows:
(i) at any time after such twelve-month period, as
to ________ of the COMMON SHARES subject to the OPTION (subject to adjustment as
provided in Section 3);
(ii) at any time after twenty-four months from the
date of this Agreement, as to an additional ________ of the COMMON SHARES
subject to the OPTION (subject to adjustment as provided in Section 3);
(iii) at any time after thirty-six-months from the
date of this Agreement, as to an additional ____________ of the COMMON SHARES
subject to the OPTION (subject to adjustment as provided in Section 3);
(iv) at any time after forty-eight months from the
date of this Agreement, as to an additional ___________ of the COMMON SHARES
subject to the OPTION (subject to adjustment as provided in Section 3); and
(v) at any time after sixty months from the date of
this Agreement, as to the remaining ___________ of the COMMON SHARES subject
to the OPTION (subject to adjustment as provided in Section 3).
Subject to the other provisions of this Agreement, if the
OPTION becomes exercisable as to certain COMMON SHARES, it shall remain
exercisable as to those COMMON SHARES until the date of expiration of the OPTION
term. The COMMITTEE may, but shall not be required to (unless otherwise provided
in this Agreement), accelerate the schedule of the time or times when the OPTION
may be exercised.
The grant of the OPTION shall not confer upon the OPTIONEE any
right to continue in the employment of the COMPANY or any of its subsidiaries
nor limit in any way the right of the COMPANY or any of its subsidiaries to
terminate the employment of the OPTIONEE at any time in accordance with
applicable law or the COMPANY's or the subsidiary's governing corporate
documents.
(C) OPTION Term. The OPTION shall in no event be
exercisable after the expiration of ten years from the date of this Agreement.
(D) Method of Exercise. The OPTION may be exercised
by giving written notice of exercise to the COMPANY in care of the Treasurer of
the COMPANY stating the number of COMMON SHARES subject to the OPTION in respect
of which the OPTION is being exercised. Payment for all such COMMON SHARES shall
be made to the COMPANY at the time the OPTION is exercised in United States
dollars in cash (including check, bank draft or money order). Payment for such
COMMON SHARES may also be made (i) by tender of COMMON SHARES of the COMPANY
already owned by the OPTIONEE for at least six months (either by actual delivery
of the already-owned COMMON SHARES or by attestation) and having a fair market
value (based on the closing sale price of the COMMON SHARES as reported on the
New York Stock Exchange) on the date of tender equal to the OPTION PRICE, (ii)
by a combination of the delivery of cash and the tender of already-owned COMMON
SHARES, or (iii) in such other manner as may be permitted by the COMMITTEE, in
its sole discretion. After payment in full for the COMMON SHARES purchased under
the OPTION has been made, the COMPANY shall take all such actions as are
necessary to deliver appropriate share certificates evidencing the COMMON SHARES
purchased upon the exercise of the OPTION as promptly thereafter as is
reasonably practicable.
(E) Tax Withholding. The COMPANY shall withhold from
other amounts owned to the OPTIONEE, or require the OPTIONEE to remit to the
COMPANY, an amount sufficient to satisfy federal, state and local withholding
tax requirements in respect of the
-2-
exercise of the OPTION. These withholding tax requirements may be satisfied in
one of several ways, including:
(i) The COMPANY may withhold the required amount from
other amounts owed to the OPTIONEE (e.g., salary);
(ii) The OPTIONEE may give the COMPANY cash equal to
the amount required to be withheld or tender COMMON SHARES of the COMPANY
already owned by the OPTIONEE for at least six months (either by actual delivery
of the already-owned COMMON SHARES or by attestation) and having a fair market
value (based on the closing sale price of the COMMON SHARES as reported on the
New York Stock Exchange) on the exercise date equal to the amount required to be
withheld; or
(iii) The COMPANY may withhold COMMON SHARES
otherwise issuable upon exercise of the OPTION having a fair market value (based
on the closing sale price of the COMMON SHARES as reported on the New York Stock
Exchange) on the exercise date equal to the amount required to be withheld (but
only to the extent of the minimum amount that must be withheld to comply with
applicable state, federal and local income, employment and wage tax laws).
(F) Limits on Exercisability. Notwithstanding any other
provision of this Agreement, the unexercised portion of the OPTION shall be
forfeited by the OPTIONEE if the OPTIONEE, before termination of the OPTIONEE's
employment with the COMPANY and its subsidiaries or after termination of such
employment but while any portion of the OPTION remains exercisable: (i) without
the COMMITTEE's written consent, which may be withheld for any reason or for no
reason, serves (or agrees to serve) as an officer, director or employee of any
proprietorship, partnership or corporation or becomes the owner of a business or
a member of a partnership that competes with any portion of the COMPANY's or any
subsidiary of the COMPANY's business or renders any service (including business
consulting) to any entity that competes with any portion of the COMPANY's or any
subsidiary of the COMPANY's business; (ii) refuses or fails to consult with,
supply information to, or otherwise cooperate with, the COMPANY or any
subsidiary of the COMPANY after having been requested to do so; or (iii)
deliberately engages in any action that the COMMITTEE concludes has caused
substantial harm to the interests of the COMPANY or any subsidiary of the
COMPANY.
3. Adjustments and Changes in the COMMON SHARES.
(A) If there is a share dividend or share split,
recapitalization (including payment of an extraordinary dividend), merger,
consolidation, combination, spin-off, distribution of assets to shareholders,
exchange of shares, or similar corporate change affecting the COMMON SHARES, the
COMMITTEE shall appropriately adjust the number of COMMON SHARES subject to the
OPTION as well as the OPTION PRICE and any other limitations or terms of the
OPTION as may be necessary to reflect such event. The number of COMMON SHARES
that will vest on the date(s) set forth in Section 2(B) shall be appropriately
adjusted to reflect any such change in the COMMON SHARES. Fractional shares
resulting from any adjustment in the OPTION pursuant to this Section 3(A) shall
be rounded down to the nearest whole number of shares.
-3-
(B) Notice of any adjustment pursuant to this Section 3 shall
be given by the COMPANY to the OPTIONEE.
4. Acceleration of OPTION. If the COMPANY undergoes a merger or
consolidation of the COMPANY with another entity or reclassification of the
COMMON SHARES or the exchange of the COMMON SHARES for the securities of another
entity (other than a subsidiary of the COMPANY) that has acquired the COMPANY's
assets or which is in control (as defined in Section 368(c) of the CODE) of an
entity that has acquired the COMPANY's assets and the terms of the plan or
agreement in respect of such event are binding on all holders of COMMON SHARES
(except to the extent that dissenting shareholders are entitled to relief under
applicable law), then the OPTION shall become fully exercisable and the OPTIONEE
shall receive, upon payment of the OPTION PRICE, securities or cash, or both,
equal to those the OPTIONEE would have been entitled to receive under the plan
or agreement if the OPTIONEE had already exercised the OPTION.
5. Non-Assignability of OPTION. Unless otherwise permitted by the
COMMITTEE, the OPTION shall not be assignable or otherwise transferable by the
OPTIONEE except by will or by the applicable laws of descent and distribution.
During the lifetime of the OPTIONEE, the OPTION may only be exercised by the
OPTIONEE or the OPTIONEE's guardian or legal representative. If the COMMITTEE
permits the assignment of the OPTION, the OPTION shall be assignable only to the
extent permitted by Section 10.01 of the PLAN.
6. Substitution for OPTION. The COMMITTEE shall have the authority to
effect, at any time and from time to time, with the consent of the OPTIONEE, the
cancellation of the OPTION and the grant in substitution therefor of one or more
new options under the PLAN covering the same or a different number of COMMON
SHARES at an option price per share in all events not less than 100% of the
closing sale price for the COMMON SHARES of the COMPANY as reported on the New
York Stock Exchange on the new grant date.
7. Exercise After Termination of Employment.
(A) Except as otherwise provided in this Agreement, the OPTION
shall be exercisable only while the OPTIONEE is employed by the COMPANY and/or
one of its subsidiaries and then only if the OPTION has become exercisable by
its terms, and if not exercisable by its terms at the time the OPTIONEE
terminates service with the COMPANY and all of its subsidiaries, shall
immediately expire on the date of termination of service.
(B) If the OPTION is exercisable by its terms at the time the
OPTIONEE terminates service with the COMPANY and all of its subsidiaries other
than by reason of the OPTIONEE's death, disability or retirement, the
exercisable portion of the OPTION must be exercised on or before the earlier of
(i) three months after the date of the termination of service or (ii) the fixed
expiration date of the OPTION, after which period the OPTION shall expire.
Notwithstanding the foregoing, if the OPTIONEE's service with the COMPANY and
all of its subsidiaries is terminated for "Cause" (as that term is defined in
Section 2.00 of the PLAN), the OPTION shall, to the extent not previously
exercised, expire immediately upon such termination of service.
-4-
(C) In the event of the death of the OPTIONEE (i) while
employed by the COMPANY and/or one of its subsidiaries or (ii) within three
months after the OPTIONEE's termination of service with the COMPANY and all of
its subsidiaries other than for Cause, the unexercised portion of the OPTION
(whether or not then exercisable by its terms) shall become immediately
exercisable in full by the OPTIONEE's beneficiary for a period ending on the
earlier of (x) the fixed expiration date of the OPTION or (y) twelve months
after the OPTIONEE's termination of service, after which period the OPTION shall
expire. For purposes hereof, the beneficiary of an OPTIONEE shall be determined
in accordance with Section 10.02 of the PLAN.
(D) In the event of the termination of the OPTIONEE's service
with the COMPANY and all of its subsidiaries by reason of the "disability" of
the OPTIONEE, the unexercised portion of the OPTION (whether or not then
exercisable by its terms) shall become immediately exercisable in full for a
period ending on the earlier of (i) twelve months after the OPTIONEE's
termination of service or (ii) the fixed expiration date of the OPTION, after
which period the OPTION shall expire. For purposes hereof, a "disability" shall
constitute a disability as defined in Section 22(e)(3) of the CODE.
(E) In the event of the termination of the OPTIONEE's service
with the COMPANY and all of its subsidiaries by reason of the "retirement" of
the OPTIONEE, the unexercised portion of the OPTION (whether or not then
exercisable by its terms) shall become immediately exercisable in full for a
period ending on the earlier of (i) twelve months after the OPTIONEE's
termination of service or (ii) the fixed expiration date of the OPTION, after
which period the OPTION shall expire. For purposes hereof, the OPTIONEE shall be
deemed to have retired upon termination of service with the COMPANY and all of
its subsidiaries on or after the date the OPTIONEE both reaches age 65 and
completes at least five consecutive years of vesting service as defined in the
COMPANY's tax-qualified defined benefit retirement plan.
(F) For purposes of this Agreement, the OPTIONEE shall be
deemed to have terminated service with the COMPANY and its subsidiaries upon
termination of the employee-employer relationship between the OPTIONEE and the
COMPANY and all of the subsidiaries of the COMPANY for any reason.
8. Buy Out of OPTION. At any time, the COMMITTEE, in its sole
discretion and without the consent of the OPTIONEE, may cancel any portion of
the OPTION by providing to the OPTIONEE written notice (a "BUY OUT NOTICE") of
the COMPANY's intention to exercise the right reserved in this Section 8. If a
BUY OUT NOTICE is given, the COMPANY shall pay to the OPTIONEE, in respect of
each COMMON SHARE covered by the OPTION and subject to the BUY OUT NOTICE, the
difference between (i) the fair market value (based on the closing sale price of
the COMMON SHARES as reported on the New York Stock Exchange) on the date of the
BUY OUT NOTICE and (ii) the OPTION PRICE. However, no payment shall be made with
respect to that portion of the OPTION which is not exercisable on the date of
the BUY OUT NOTICE. The COMPANY shall complete any buy out made under this
Section 8 as soon as administratively possible after the date of the BUY OUT
NOTICE. At the COMMITTEE's option, payment of the buy out amount may be made in
cash, in whole COMMON SHARES or partly in cash and partly in whole COMMON
SHARES. The number of whole COMMON SHARES, if any, included in the buy out
amount shall be determined by dividing the amount of the payment to
-5-
be made in COMMON SHARES by the fair market value of the COMMON SHARES on the
date of the BUY OUT NOTICE.
9. Restrictions on Transfers of COMMON SHARES. Anything contained in
this Agreement or elsewhere to the contrary notwithstanding, the COMPANY may
postpone the issuance and delivery of COMMON SHARES upon any exercise of the
OPTION until completion of any stock exchange listing or registration or other
qualification of such COMMON SHARES under any state or federal law, rule or
regulation as the COMPANY may consider appropriate; and may require the OPTIONEE
when exercising the OPTION to make such representations and furnish such
information as the COMPANY may consider appropriate in connection with the
issuance of the COMMON SHARES in compliance with applicable law.
COMMON SHARES issued and delivered upon exercise of the OPTION shall be
subject to such restrictions on trading, including appropriate legending of
certificates to that effect, as the COMPANY, in its discretion, shall determine
are necessary to satisfy applicable legal requirements and obligations.
10. Rights of the OPTIONEE. The OPTIONEE shall have no rights as a
shareholder of the COMPANY with respect to any COMMON SHARES of the COMPANY
covered by the OPTION until the date of issuance of a certificate to the
OPTIONEE evidencing such COMMON SHARES.
11. PLAN as Controlling. All terms and conditions of the PLAN
applicable to the OPTION which are not set forth in this Agreement shall be
deemed incorporated herein by reference. In the event that any term or condition
of this Agreement is inconsistent with the terms and conditions of the PLAN, the
PLAN shall be deemed controlling.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
13. Rights and Remedies Cumulative. All rights and remedies of the
COMPANY and of the OPTIONEE enumerated in this Agreement shall be cumulative
and, except as expressly provided otherwise in this Agreement, none shall
exclude any other rights or remedies allowed by law or in equity, and each of
said rights or remedies may be exercised and enforced concurrently.
14. Captions. The captions contained in this Agreement are included
only for convenience of reference and do not define, limit, explain or modify
this Agreement or its interpretation, construction or meaning and are in no way
to be construed as a part of this Agreement.
15. Severability. If any provision of this Agreement or the application
of any provision hereof to any person or any circumstance shall be determined to
be invalid or unenforceable, then such determination shall not affect any other
provision of this Agreement or the application of said provision to any other
person or circumstance, all of which other provisions shall remain in full force
and effect, and it is the intention of each party to this Agreement that if any
provision of this Agreement is susceptible of two or more constructions, one of
which would render
-6-
the provision enforceable and the other or others of which would render the
provision unenforceable, then the provision shall have the meaning which renders
it enforceable.
16. Number and Gender. When used in this Agreement, the number and
gender of each pronoun shall be construed to be such number and gender as the
context, circumstances or its antecedent may required.
17. Entire Agreement. This Agreement constitutes the entire agreement
between the COMPANY and the OPTIONEE in respect of the subject matter of this
Agreement, and this Agreement supersedes all prior and contemporaneous
agreements between the parties hereto in connection with the subject matter of
this Agreement. No officer, employee or other servant or agent of the COMPANY,
and no servant or agent of the OPTIONEE, is authorized to make any
representation, warranty or other promise not contained in this Agreement. No
change, termination or attempted waiver of any of the provisions of this
Agreement shall be binding upon any party hereto unless contained in a writing
signed by the party to be charged.
18. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns (including successive, as well
as immediate, successors and assigns) of the COMPANY.
[Remainder of page intentionally left blank;
signatures on following page.]
-7-
IN WITNESS WHEREOF, the OPTIONEE has executed this Agreement, and the
COMPANY has caused this Agreement to be executed, to be effective as of the date
first above written.
COMPANY:
-------
X. X. XXXXX CORPORATION
By:
------------------------------------
Its:
-----------------------------------
OPTIONEE:
--------
---------------------------------------
Name
---------------------------------------
Xxxxxx Xxxxxxx
---------------------------------------
Xxxx, Xxxxx, Zip Code
---------------------------------------
Social Security Number
-8-
