NON-STATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into and effective as of this 1st day of June,
1998 (the "Date of Grant"), by and between Xxxx Xxxxx Company (the "Company")
and Xxx Xxxxxxxx (the "Optionee").
WHEREAS, the Company desires to give the Optionee an inducement to acquire
a proprietary interest in the Company and an added incentive to advance the
interests of the Company by granting to the Optionee an option to purchase
shares of common stock of the Company.
Accordingly, the parties agree as follows:
ARTICLE 1. GRANT OF OPTION.
The Company hereby grants to the Optionee the right, privilege, and option
(the "Option") to purchase Two Hundred Thousand (200,000) shares (the "Option
Shares") of the Company's common stock, $1.66-2/3 par value per share (the
"Common Stock"), according to the terms and subject to the conditions
hereinafter set forth. The Option is not intended to qualify as an "incentive
stock option," as that term is used in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").
ARTICLE 2. OPTION EXERCISE PRICE.
The per share price to be paid by Optionee in the event of an exercise of
the Option will be $16.84.
ARTICLE 3. DURATION OF OPTION AND TIME OF EXERCISE
3.1 INITIAL PERIOD OF EXERCISABILITY. The Option will become exercisable
with respect to the Option Shares in four (4) installments. The following table
sets forth the initial dates of exercisability of each installment and the
number of Option Shares as to which this Option will become exercisable on such
dates:
Initial Date of Number of Option Shares
Exercisability Available for Exercise
--------------- -----------------------
June 1, 1999 50,000
June 1, 2000 50,000
June 1, 2001 50,000
June 1, 2002 50,000
Notwithstanding the foregoing, however, in the event that the Fair Market Value
(as defined in the Company's 1994 Stock Incentive Plan, as amended) of the
Common Stock reaches and remains at or
over $30 per share for 30 consecutive trading days, the Option will become
immediately exercisable with respect to 100,000 Option Shares(or such portion
thereof as shall not then have become exercisable in accordance with the
foregoing table) and if the Fair Market Value of the Common Stock reaches and
remains at or over $40 per share for 30 consecutive trading days, the Option
will become immediately exercisable in full.
The number of Option Shares available for exercise on any date during the term
of this Option shall be equal to the sum of the number of Option Shares having
become exercisable on or prior to such date, less the number of Option Shares
previously exercised. In no event, however, will this Option be exercisable
after, and this Option will become void and expire as to all unexercised Option
Shares at, 4:30 p.m. (Minneapolis,
Minnesota time) on May 31, 2007 (the "Time of
Termination").
3.2 TERMINATION OF EMPLOYMENT OR OTHER SERVICE.
(a) In the event that the Optionee's employment with the Company and all
Subsidiaries is terminated by reason of the Optionee's death, Disability or
Retirement (as such terms are defined in the Company's 1994 Stock Incentive
Plan, as amended), this Option will become immediately exercisable in full and
will remain exercisable until the earlier of the Time of Termination or one year
after such termination of employment.
(b) In the event the Optionee's employment with the Company and all
Subsidiaries is terminated for any reason other than death, Disability or
Retirement, all rights of the Optionee under this Agreement will immediately
terminate without notice of any kind, and this Option will no longer be
exercisable; provided, however, that upon the Optionee's termination of
employment with the Company and all Subsidiaries, the Compensation Committee of
the Board of Directors of the Company (the "Committee") may, in its sole
discretion, cause this Option to become or continue to become exercisable and/or
remain exercisable following such termination of employment (but in no event
beyond the Time of Termination).
3.3 CHANGE IN CONTROL. If any events constituting a Change in Control (as
defined in Section 11.1 of the Company's 1994 Stock Incentive Plan, as amended)
of the Company occur, then, if approved by the Committee in its sole discretion,
this Option will become immediately exercisable in full and will remain
exercisable until the Time of Termination, regardless of whether the Optionee
remains in the employ or service of the Company or any Subsidiary. In addition,
if a Change in Control of the Company occurs, the Committee, in its sole
discretion and without the consent of the Optionee, may determine that the
Optionee will receive, with respect to some or all of the Option Shares, as of
the effective date of any such Change in Control of the Company, cash in an
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amount equal to the excess of the Fair Market Value of such Option Shares
immediately prior to the effective date of such Change in Control of the Company
over the option exercise price per share of this Option.
ARTICLE 4. MANNER OF OPTION EXERCISE.
4.1 NOTICE. This Option may be exercised by the Optionee in whole or in
part from time to time, subject to the conditions contained in this Agreement,
by delivery, in person, by facsimile or electronic transmission or through the
mail, to the Company at its principal executive office in Minneapolis,
Minnesota
(Attention: Secretary), of a written notice of exercise. Such notice will be in
a form satisfactory to the Committee, will identify the Option, will specify the
number of Option Shares with respect to which the Option is being exercised, and
will be signed by the person or persons so exercising the Option. Such notice
will be accompanied by payment in full of the total purchase price of the Option
Shares purchased. In the event that the Option is being exercised, as provided
by Section 5 below, by any person or persons other than the Optionee, the notice
will be accompanied by appropriate proof of right of such person or persons to
exercise the Option. As soon as practicable after the effective exercise of the
Option, the Optionee will be recorded on the stock transfer books of the Company
as the owner of the Option Shares purchased, and the Company will deliver to the
Optionee one or more duly issued stock certificates evidencing such ownership.
4.2 PAYMENT. At the time of exercise of this Option, the Optionee will pay
the total purchase price of the Option Shares to be purchased entirely in cash
(including a check, bank draft or money order, payable to the order of the
Company); provided, however, that the Committee, in its sole discretion, may
allow such payment to be made, in whole or in part, by tender of a Broker
Exercise Notice, Previously Acquired Shares, a promissory note or by a
combination of such methods. For purposes of this Agreement, the terms "Broker
Exercise Notice" and "Previously Acquired Shares" will have the meanings set
forth in the Company's 1994 Stock Incentive Plan, as amended. In the event the
Optionee is permitted to pay the total purchase price of this Option in whole or
in part with Previously Acquired Shares, the value of such Previously Acquired
Shares will be equal to their Fair Market Value on the date of exercise of this
Option.
ARTICLE 5. NONTRANSFERABILITY.
This Option may not be transferred by the Optionee, either voluntarily or
involuntarily, or subjected to any lien, directly or indirectly, by operation of
law or otherwise, except pursuant to testamentary will or the laws of descent
and distribution. Any
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attempt to transfer or encumber this Option other than in accordance with this
Agreement will be null and void and will void this Option.
ARTICLE 6. LIMITATION OF LIABILITY.
Nothing in this Agreement will be construed to (a) limit in any way the
right of the Company to terminate the employment or service of the Optionee at
any time, or (b) be evidence of any agreement or understanding, express or
implied, that the Company will retain the Optionee in any particular position,
at any particular rate of compensation or for any particular period of time.
ARTICLE 7. WITHHOLDING TAXES.
The Company is entitled to (a) withhold and deduct from future wages of the
Optionee (or from other amounts which may be due and owing to the Optionee from
the Company), or make other arrangements for the collection of, all legally
required amounts necessary to satisfy any federal, state or local withholding
and employment-related tax requirements attributable to the grant or exercise of
this Option or otherwise incurred with respect to this Option, or (b) require
the Optionee promptly to remit the amount of such withholding to the Company
before acting on the Optionee's notice of exercise of this Option. In the event
that the Company is unable to withhold such amounts, for whatever reason, the
Optionee hereby agrees to pay to the Company an amount equal to the amount the
Company would otherwise be required to withhold under federal, state or local
law.
ARTICLE 8. ADJUSTMENTS.
In the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or extraordinary dividend
(including a spin-off), or any other change in the corporate structure or shares
of the Company, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the surviving
corporation), in order to prevent dilution or enlargement of the rights of the
Optionee, will make appropriate adjustment (which determination will be
conclusive) as to the number, kind and exercise price of securities subject to
this Option.
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ARTICLE 9. MISCELLANEOUS.
9.1 BINDING EFFECT. This Agreement will be binding upon the heirs,
executors, administrators and successors of the parties to this
Agreement.
9.2 GOVERNING LAW. This Agreement and all rights and obligations under this
Agreement will be construed in accordance with and governed by the
laws of the State of
Minnesota.
9.3 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and
understanding of the parties to this Agreement with respect to the grant and
exercise of this Option and supersedes all prior agreements, arrangements, plans
and understandings relating to the grant and exercise of this Option.
9.4 AMENDMENT AND WAIVER. This Agreement may be amended, waived, modified
or canceled only by a written instrument executed by the parties hereto or, in
the case of a waiver, by the party waiving compliance.
The parties to this Agreement have executed this Agreement effective the
day and year first above written.
XXXX XXXXX COMPANY
By /s/ XXX XXXXXXXX
---------------------------
Its President
OPTIONEE
/s/ XXX XXXXXXXX
-----------------------------
(Signature)
XXX XXXXXXXX
0000 XXXXXX XXXXXX XXXXX
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(Xxxxxxx)
XXXXXXXXXXX, XXXXXXXXX 00000
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