AGREEMENT TO CANCEL STOCK OPTION
This AGREEMENT TO CANCEL STOCK OPTIONS ("Agreement") is executed and
effective this 19th day of December, 2001 (the "Effective Date"), between
TREMONT CORPORATION, a Delaware corporation (the "Corporation"), and J. Xxxxxx
Xxxxxx ("Optionholder").
WHEREAS, the Corporation, acting through its Management Development &
Compensation Committee, previously granted Optionholder one or more options to
purchase shares of common stock in the Corporation (the "Options") pursuant to
the 1988 Long Term Performance Incentive Plan of Tremont Corporation (the
"Plan"), as set forth on Exhibit A ;
WHEREAS, Optionholder agrees to deliver the Options to the Corporation and
to forfeit all rights pursuant to the Options granted under the Plan on the
Effective Date of this Agreement; and
WHEREAS, the Board of Directors of the Corporation believes it is in the
best interest of the Corporation to cancel the Options granted to Optionholder.
NOW, THEREFORE, in consideration of the agreements set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. The Corporation agrees to pay Optionholder the amount (the "Deferred
Amount") shown on Exhibit A on the terms and dates (each, a "Payment Date") set
forth on Exhibit A; provided, however, if the payment of any such amount on the
given Payment Date would not be deductible by the Corporation for tax purposes
under the provision of Section 162(m) of the Internal Revenue Code of 1986
("Code"), as amended, or any successor provision, the Corporation may, in its
sole discretion, defer such payment until the earliest time at which the payment
of such amount would be deductible by the Corporation. The Corporation, acting
through its Management Development & Compensation Committee, may elect, in its
sole discretion, to make payment of all or any portion of the Deferred Amount
prior to the Payment Date on which due without penalty or premium.
2. In the event Optionholder dies or separates from service with the
Corporation due to total and permanent disability (as that term is defined in
the disability policy or plan provided by the Corporation covering Executive,
or, if no such policy is in effect covering Executive, the term "total and
permanent disability" shall have the meaning set forth in Section 22(e)(3) of
the Internal Revenue Code), the amounts due and payable under this Agreement
shall become immediately payable. In the event of Executive's death, the amounts
payable under this Agreement shall be paid to the Executive's estate unless a
beneficiary has been duly and properly designated by Executive in the manner and
form prescribed by the Corporation.
3. The Deferred Amount shall accrue interest commencing on the Effective
Date as provided in Exhibit A until such time as the Deferred Amount is paid to
Optionholder.
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4. The Corporation shall withhold, either from the Deferred Amount (or any
portion thereof) in the year such amount is paid to Optionholder pursuant to
Section 1 hereof, or from any salary, bonus or other compensatory payment made
to Optionholder as the Corporation in its sole discretion may determine, such
amounts as are required by law to be withheld pursuant to the Code and any other
applicable withholding requirements.
5. Any right of Optionholder or any of his designated beneficiaries to
receive payments from the Corporation under this Agreement shall be no greater
than the right of any unsecured general creditor of the Corporation.
6. The rights of Optionholder under this Agreement may not be assigned,
transferred, pledged or encumbered.
7. The Corporation agrees to indemnify Optionholder for any interest and
penalties assessed by the Internal Revenue Service ("IRS") resulting from the
examination of this Agreement and a finding that the difference between the
exercise price of the Options and the fair market value of the Corporation's
common stock subject to the Options on the date of cancellation was properly
includible in Optionholder's gross income for the taxable year in which the
Options were cancelled.
8. If the Internal Revenue Service determines that any amount payable under
this Agreement is includible in Optionholder's gross income in any taxable year
prior to the taxable year in which such amount is actually paid to Optionholder,
then such amount shall become immediately due and payable to Optionholder. In
the event that payments are made pursuant to this paragraph, such amounts can be
paid, in the sole discretion of the Corporation, either in cash or in stock of
the Corporation.
9. Nothing contained herein shall be construed as conferring upon
Optionholder the right to continue in the employ of the Corporation, whether as
an employee, Optionholder officer, or in any other capacity.
10. This Agreement shall be binding upon and inure to the benefit of the
Corporation, its successors and assigns, and Optionholder and his heirs,
designated beneficiaries, executors, administrators and legal representatives.
11. This Agreement contains the entire agreement of and between the parties
with respect to the subject matter hereof, and supersedes any prior
understanding, agreements, or representations by or between the parties, written
or oral, which may have related to the subject matter hereof in any way. In the
event of any conflict between the terms and provisions of this Agreement and the
terms and provisions of any employment or severance agreement entered into by
the parties hereto, the terms and provisions of this Agreement shall govern.
12. This Agreement shall be governed by the laws of the State of Colorado
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Colorado or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Colorado.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
TREMONT CORPORATION
By: s/s Xxxxxx X. Xxxxxxxxx
------------------------------------------
Its: Vice President and General Counsel
OPTIONHOLDER
s/s J. Xxxxxx Xxxxxx
-------------------------------------------------
J. Xxxxxx Xxxxxx
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EXHIBIT A
Option(s):
Grant Date Number Exercise Price
------------------ -------------- --------------------
2/15/94 20,000 $8.125
2/15/94 20,000 $9.625
2/15/94 20,000 $11.125
Market Price of Common Stock on Effective Date: $27.94 per share
Deferred Amount: $1,098,900.00
Payment Schedule: Deferred Amount is payable on such dates and in such amounts
as directed by the Corporation's Management Development & Compensation
Committee, but in any event no later than December 19, 2006
Interest Rate on Unpaid Deferred Amount: Seven percent (7%) per annum,
compounded quarterly as of each January 1, April 1, July 1, and October 1
Interest Payable: Accrued unpaid interest is payable on such dates and in such
amounts as directed by the Corporation's Management Development &
Compensation Committee, with any amount remaining unpaid to be paid at the
same time as the Deferred Amount is finally paid, but in any event no later
than December 19, 2006
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