1
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
BETWEEN
XXXXX PRODUCTS COMPANY
AND
XXXXXX X. XXXXXXXXXX
THIS EMPLOYMENT AGREEMENT dated March 3, 1997 is made between Xxxxx
Products Company (the "Company"), a Delaware Corporation, and Xxxxxx X.
Xxxxxxxxxx (the "Executive"). This Agreement is made with reference to the
following facts and objectives:
RECITALS:
A. The Executive shall be the Senior Vice President in charge of
Finance, MIS and Administration of the Company.
B. The Executive acknowledges that the services to be performed
by him under this Agreement are of a special and unique character; the business
of the Company is currently national in scope; the Company has plans to expand
its business throughout the world; and the Company competes with other persons
that are or could be located in any part of the world; and in order to assure
the Company that the Company will retain its value and the Company's business
as a going concern, it is necessary that the Executive undertake not to utilize
his special knowledge of the Company, its business and its relationships with
customers and suppliers to compete with the Company if the Executive were to
leave the Company.
C. The Executive further acknowledges that during his employment
with the Company he will occupy a position of trust and confidence with the
Company and during such employment, the Company will compensate him, among
other purposes, to develop and preserve customer relationships and other
goodwill exclusively for the Company's benefit and that as a result, he will
become familiar with the Company's trade secrets, including, without
limitation, its profit margins, customer preferences and requirements, and with
other proprietary and confidential information concerning the Company and its
business.
D. The Executive further acknowledges that the use by him for his
own benefit or that of others of such goodwill, trade secrets or proprietary
and confidential information, or the solicitation of and/or doing business with
any of the Company's customers and potential customers would have a material
adverse effect on the Company and its business, and would place the Company at
a substantial competitive disadvantage.
E. The Executive further acknowledges that the agreements and
covenants contained in the Agreement, and in particular sections 6
(Non-Competition Covenants) and 7 (Confidentiality and Proprietary
Information), are essential to protect the Company and the goodwill of the
Company's business, are a condition precedent to the Company's willingness to
enter this Agreement and to pay
2
the consideration set forth in this Agreement, and are necessary and reasonable
in light of the particular business of the Company, his knowledge thereof and
the services he will perform under the Agreement.
THE PARTIES ACCORDINGLY AGREE AS FOLLOWS:
AGREEMENT
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and
the Executive hereby accepts employment by the Company, on the terms and
conditions of this Agreement.
2. EMPLOYMENT TERM.
(a) Subject to Section 9 (Termination of Employment), the
term of the Executive's employment under this Agreement begins on the date of
this Agreement and ends on the third anniversary of that date; provided,
however, that commencing on the third anniversary of the date of this Agreement
and each subsequent anniversary the term shall be extended for an additional
one year period unless either Executive or the Company gives the other party
written notice at least ninety (90) days before such anniversary that this
Agreement shall terminate on the then scheduled expiration date. If such notice
is given, this Agreement shall automatically terminate on such expiration date.
(b) The actual term of the Executive's employment under
this Agreement, including any earlier termination of the original term, is
referred to in this Agreement as the "employment term".
3. RESPONSIBILITIES. During the employment term, the Executive shall
serve as Senior Vice President in charge of Finance, MIS and Administration or
in any other position or capacity to which he may from time to time be elected
or appointed and shall perform such services for the Company as are reasonably
required by the Company and may be required by virtue of the offices and
positions held by the Executive. The Executive agrees that as a part of his
duties under this Agreement, he may be required from time to time to perform
services for affiliates of the Company. The Executive shall devote his full
time and best efforts to the performance of all responsibilities to the Company
and its affiliates and to further their respective businesses and interests.
4. COMPENSATION.
(a) The Company agrees to pay the Executive throughout
the employment term an annual salary of $175,000.00 (the "base salary") payable
in equal installments in accordance with Company payroll practices from time to
time in effect. The Board of Directors of the Company at its discretion from
time to time may review the base salary for increase.
2
3
(b) Subject to Section 9 (Termination of Employment), the
Company agrees to pay the Executive throughout the employment term an annual
bonus (the "annual bonus") calculated pursuant to Exhibit A attached hereto.
The amount of the annual bonus payable to Executive shall be prorated for the
portion of a year employed by Executive by multiplying the annual bonus
determined pursuant to Exhibit A by a fraction with a numerator equal to the
number of days of the year during which the Executive was employed by the
Company and with a denominator of 365.
(c) The Company agrees to issue to Executive a stock
option for 50,000 shares of DPC Acquisition Corp. common stock pursuant to the
form of option agreement attached hereto as Exhibit B within three months of
the effective date of the Agreement.
(d) The Company agrees to offer the Executive the
opportunity to purchase 40,000 shares of DPC Acquisition Corp. common stock at
a price of $10.00 per share subject to the same terms as contained in the stock
offering to the employees of the Company in November and December 1996 within
six months of the effective date of this Agreement.
(e) To compensate the Executive for certain costs and
expense of relocating Executive and his family to the Joplin, Missouri area,
the Company shall reimburse Executive for (i) direct moving and packing
expenses, (ii) certain closing costs for the sale of Executive's existing home
including real estate commissions, legal and miscellaneous closing expenses
(but excluding repairs to the home and any loss on the sale of the home), (iii)
certain closing costs for the purchase of a new home, including legal and
miscellaneous closing costs including financial fees (points), (iv) temporary
housing expenses for up to sixty days from commencement of employment with the
Company, (v) transportation expenses for three trips from the east coast to
Joplin, Missouri for house hunting, (vi) transportation expense for three
return trips to the east coast during the first year of employment, and (vii)
an allowance of $2,000 for miscellaneous expenses incurred in Executive's
relocation. To the extent that any of the reimbursements listed in this Section
4(e) are includible as gross income by Executive for federal or state income
tax purposes and are not deductible by Executive, the Company shall pay
Executive an additional amount equal to the federal and state income taxes on
such amounts at the applicable marginal tax rate.
5. OTHER EXECUTIVE BENEFITS.
(a) The Executive shall, during the employment term, be
eligible to participate in such pension, profit sharing, bonus, life insurance,
hospitalization and major medical and other employee benefit plans of the
Company in effect from time to time, to the extent he is eligible under and
complies with the terms of those plans, but the allocation of benefits under
any bonus or other plan that provides that allocations thereunder shall be in
the discretion of the Board of Directors shall be determined from time to time
solely by the Board of Directors in its discretion.
(b) Executive shall be entitled to four weeks of paid
vacation each year. Vacation not used by the end of a year shall be forfeited
and shall not be eligible to be carried over to another year or eligible for
reimbursement except as otherwise provided by Company policies.
3
4
6. NON-COMPETITIVE COVENANTS. Throughout the employment term and
during any period Executive receives compensation from the Company pursuant to
Section 9, the Executive promises and agrees that he will not: (a) directly or
indirectly assist in, engage in, have any financial interest in, or participate
in any way in, as an owner, partner, employee, agent, board member or
shareholder, any business that involves, in whole or in part, the design,
manufacture, distribution or sale of dry pet foods (or any other business in
which the Company may engage or begin preparation to engage during the
employment term) or make preparation with any person to do any of the
foregoing; provided, however, that the Executive may own, solely as an
investment, up to 1.0% of any class of securities as are listed on any national
or regional securities exchange; (b) call upon or have any contact with any
person or any successor in interest to any person who was at any time during
the Executive's last three years of employment with the Company, a customer of
the Company, or call upon or have any contact with any person or any successor
in interest to any person who is a prospective customer of the Company and with
whom the Executive deals, or on whose account the Executive worked, at any time
during Executive's last three years of employment with the Company, for the
purpose of (i) diverting any business of such person from the Company, or (ii)
selling or offering to sell to any such customer any product or service that is
of the same general type or that performs similar functions as any product or
service which has been sold, provided or offered for sale by the Company at any
time during the Executive's last three years of employment with the Company, or
(c) without prior written consent of the Company's Board of Directors, acquire
or discuss the acquisition of any ownership interest in or warrant or right to
acquire any such interest, or acquire any employment or other pecuniary benefit
from any person that, at the time, is a prospective candidate for or was a
party to a control transaction. The Executive acknowledges and agrees that the
consideration and benefits to be provided to the Executive under this Agreement
have been bargained and negotiated in exchange for, and in consideration of,
Executive's agreement to abide by the terms and provisions of this section 6
and section 7(confidentiality and Proprietary Information). The Executive
acknowledges and agrees that all of the Executive's duties and obligations
under this section 6 shall survive the expiration or termination of the
Executive's employment with the Company, regardless of the cause therefor.
7. CONFIDENTIALITY AND PROPRIETARY INFORMATION. In addition to any
common-law restriction upon the Executive's use, disclosure or exploitation of
confidential, proprietary or secret information of the Company, the Executive
covenants and agrees that without the prior written consent of the Company he
will not at any time during or after the employment term use for himself or
disclose to or use for any other person, directly or indirectly, any secret,
confidential or proprietary information of the Company, including, without
limitation, the Company's processes, formulas, techniques, customer identities,
preferences, requirements, reports and other sensitive customer information,
servicing methods, profit margins, analyses, employee, vendor and supplier
information, business or marketing plans or strategies, financial data and
presentation or sales materials, technologies, computer programs, software,
designs and inventions (collectively, the "confidential information");
provided, however, that the term confidential information does not include or
refer to any information that is in the public domain (other than by a breach
of this Agreement). The Executive acknowledges that the confidential
information is vital, sensitive,
4
5
confidential and proprietary to the Company. The Executive covenants and agrees
that all files, reports, lists, materials, records, documents notes, memoranda,
specifications, product or other formulas, equipment and other items, and any
originals, copies, recordings, abstracts or notes thereof, relating to the
confidential information or the Company business that the Executive is or was
either provided, prepares or prepared himself, uses or used or simply acquires
or acquired during this employment with the Company (either before or during
the employment term), are and shall remain the sole and exclusive property of
the Company and shall be immediately returned to the Company at any time upon
demand, and in all events, immediately at the end of the employment term. The
Executive acknowledges and agrees that all of the Executive's duties and
obligations under this section 7 shall survive the expiration or termination of
the Executive's employment with the Company, regardless of the cause therefor,
8. REMEDIES FOR BREACH. In the event of a breach or threatened breach
of any of the Executive's duties and obligations under section 6
(Non-Competition Covenants) or 7 (Confidentiality and Proprietary Information),
the Company shall be entitled, in addition to any other legal or equitable
remedies the Company may have in that connection (including any right to
damages that the Company may suffer), to a temporary, preliminary and/or
permanent injunction restraining such breach or threatened breach. The
Executive hereby expressly acknowledges that the harm that might result to the
Company's goodwill or its relationships with customers, or as a result of the
disclosure or use of the confidential information, is largely irreparable. The
Executive specifically agrees that, in the event there is a question as to the
enforceability of section 6 (Non-Competition Covenants) or 7 (Confidentiality
and Proprietary Information), the Executive will not engage in any conduct
inconsistent with or contrary to either of such sections until after the
question has been resolved by a non-appealable final judgment.
9. TERMINATION OF EMPLOYMENT.
(a) The employment term and the Executive's employment by the
Company shall terminate: (i) upon the death of the Executive; (ii) upon the
disability of the Executive (as defined in section 9(b)(2)) upon 30 days' prior
written notice given by the Company to the Executive; (iii) for cause (as
defined in section 9(b)(1)), immediately upon the giving of written notice
thereof by the Company to the Executive or at such later time as the notice may
specify; (iv) without cause, upon not less than 30 days' prior written notice
given by the Company to the Executive, or (v) voluntarily by Executive upon not
less than fifteen (15) days' prior written notice given to the Company by the
Executive.
(b) In this Section 9:
(1) "Cause" exists whenever the Executive (a) has
been grossly derelict in his duty (other than
by reason of death or disability) to the
Company after Executive has been advised by
the Board of Directors of the Company or the
President and Chief Executive Officer of the
Company of any such dereliction and has been
given an opportunity
5
6
to correct his performance; (b) has been
charged with any felony or committed any
financial dishonesty, unethical or fraudulent
acts against the Company; or (c) has
committed any willful malfeasance,
misfeasance or gross negligence in the
discharge of duties to the Company having a
material adverse effect on the Company, its
business or reputation.
(2) "Disability" refers to any circumstances in
which the Executive, by reason of illness,
incapacity or other disability, has failed to
perform his duties or fulfill his obligations
under this Agreement for a cumulative total
of 180 days in any 12-month period.
(c) Upon the termination of the Executive's employment
under the Agreement, the employment term shall end and all rights of the
Executive under this Agreement shall terminate, except that the Executive shall
nonetheless be entitled to receive the following:
(1) If the termination occurs by reason of the
death or disability of the Executive, the
Executive shall be entitled to receive the
base salary accrued through the date of
termination and annual bonus prorated through
the date of termination.
(2) If the termination is made by the Company
without cause, the Executive shall be
entitled to receive for the remainder of the
original three-year employment term his base
salary and annual bonus, if and as each would
have been payable if the Executive had not
been so terminated.
(3) If the termination is made by the Company for
cause or voluntarily by Executive, the
Executive shall be entitled to receive his
base salary through the date of termination.
If any termination for cause made by the Company is ever ultimately
determined by any court, agency or other tribunal to have been without cause,
then the Company's sole liability under the Agreement or otherwise at law or in
equity shall be to pay the Executive those amounts that would have otherwise
been paid to the Executive under section 9(c)(2) (Termination of Employment,
without cause) and the reasonable attorneys' fees and costs incurred by the
Executive in successfully obtaining this determination from the court, agency
or other tribunal.
10. NOTICE. Any notice required or permitted to be given under this
Agreement must be in writing and is effectively given:
6
7
(1) To the Company, when signed by the Executive
and delivered in person to the Chairman of
the Board, President or Secretary (excluding
the Executive) of the Company, or,
(2) To the Executive, when signed by an officer
of the Company (excluding the Executive) and
delivered to the Executive in person, or one
day after the date sent by national
commercial courier for next day delivery, or
two days after the date mailed, by certified
or registered mail, postage prepaid, in
either case to the address set forth under
the Executive's signature at the end of this
Agreement or at such other address as the
Executive may designate for that purpose in a
notice given to the Company.
11. INVALIDITY OF PROVISIONS. If any provision of this Agreement is
adjudicated to be invalid or unenforceable under applicable law, the validity
or enforceability of the remaining provisions shall be unaffected. To the
extent that any provision of this Agreement is adjudicated to be invalid or
unenforceable because it is over broad, that provision shall not be void but
rather shall be limited only to the extent required by applicable law and
enforced as so limited.
12. ENTIRE AGREEMENT; WRITTEN MODIFICATIONS. This Agreement contains
the entire agreement between the parties and supersedes all prior or
contemporaneous representations, promises, understanding and agreements between
the Executive and the Company. This Agreement may not be changed except by
written agreement of the parties.
13. GOVERNING LAW. In light of the Company's contacts with the State
of Missouri and its significant interest in insuring that disputes as to the
validity and enforceability of sections 6 (Non-Competition Covenants) and 7
(Confidentiality and Proprietary Information) of this Agreement are resolved on
a uniform basis, the Executive and the Company agree that any litigation
involving any noncompliance with or alleged breach of section 6
(Non-Competition Covenants) or 7 (Confidentiality and Proprietary Information)
must be filed and conducted in Missouri and the Executive and the Company
consent to the personal jurisdiction of the federal and state courts sitting in
Missouri for purposes of any such litigation. This Agreement shall be governed
by the internal laws of the State of Missouri without regard to Missouri
conflict of laws principles.
14. CERTAIN DEFINED TERMS. IN THIS AGREEMENT:
(1) "Affiliate" of the Company means any person
controlling, controlled by or under common control
with the Company.
(2) "Base salary" is defined in section 4(a).
(3) "Company", as used in section 6 (Non-Competition
Covenants) and 7 (Confidentiality and Proprietary
Information), includes each affiliate of the
7
8
Company for which the Executive performs services at
any time during his employment if the affiliate is
engaged in any business that involves, in whole or in
part, the design, manufacture, distribution or sale
of dry pet foods (or any other business in which the
Company may engage or begin preparation to engage in
during the employment term).
(4) "Employment term" is defined in section 2(b).
(5) "Person" includes any individual, trust, estate,
business trust, partnership, corporation,
unincorporated association, governmental entity,
limited liability company and any other judicial
person.
15. COMPANY'S RIGHT TO RECOVER COSTS. The Executive undertakes and
agrees that if the Executive breaches or threatens to breach any provision of
the Agreement, the Executive shall be liable for any attorneys' fees and costs
incurred by the Company in enforcing its rights under this Agreement.
16. RULE OF CONSTRUCTION. The rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be employed
in interpreting this Agreement.
17. TOLLING. In view of the parties' recognition and agreement that
the Company is entitled after the expiration of termination of the employment
term to certain limited protection from competition by the Executive, the
Executive and the Company agree that the running of the period set forth in
section 6 (Non-Competition Covenants) shall be tolled during any period of time
in which the Executive violates that section.
18. SUCCESSOR AND ASSIGNS. The Company may assign this Agreement or
any right or interest under this Agreement to any person that hereafter becomes
an affiliate of the Company or to any person to which the Company sells all or
any substantial part of its assets and, in such event, the Company shall,
automatically upon the assignee's assumption of the Company's obligations
hereunder, be released from any such obligations. This Agreement shall inure to
the benefit of the Company, and its successor and assigns.
19. NONWAIVER OF RIGHTS. The Company's failure to enforce at any time
of the provisions of this Agreement or to require at any time performance by
the Executive of any of the provisions hereof shall in no way be construed to
be a waiver of such provisions or to affect either the validity of this
Agreement, or any part hereof, or the right of the Company thereafter to
enforce each and every provision in accordance with the terms of this
agreement.
PLEASE NOTE: BY SIGNING THIS AGREEMENT, THE EXECUTIVE IS HEREBY
CERTIFYING THAT THE EXECUTIVE (A) RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW
AND STUDY BEFORE EXECUTING IT; (B) READ THIS AGREEMENT CAREFULLY BEFORE SIGNING
IT; (C) HAD SUFFICIENT
8
9
OPPORTUNITY BEFORE SIGNING THIS AGREEMENT TO ASK ANY QUESTIONS THE EXECUTIVE
HAD ABOUT THIS AGREEMENT AND RECEIVED SATISFACTORY ANSWERS TO ALL SUCH
QUESTIONS; (D) UNDERSTANDS THE EXECUTIVE'S RIGHTS AND OBLIGATIONS UNDER THIS
AGREEMENT; AND (E) EXECUTED AND DELIVERED THIS AGREEMENT AT THE OFFICES OF THE
COMPANY IN JOPLIN, MISSOURI.
EXECUTED AND EFFECTIVE AS OF THE DATE FIRST WRITTEN ABOVE.
WITNESSES: XXXXX PRODUCTS COMPANY
XXXXX XXXX XXXXXX X. XXXXX
________________________________ ____________________________________
Xxxxxx X. Xxxxx
XXXXX XXX
________________________________
WITNESSES: EXECUTIVE:
XXXXXXX X. XXXXX X.X. XXXXXXXXXX
_______________________________ ____________________________________
X.X. Xxxxxxxxxx
XXXXX XXXXXXX 000 Xxxxxxxxxxxx Xxxxxx
________________________________ ____________________________________
Xxxxx Xxxxxxx STREET ADDRESS
Xxxxxxxxxx, XX 00000
____________________________________
CITY, STATE, ZIP CODE
9
10
EXHIBIT A
ANNUAL BONUS CALCULATION
The bonus will be earned each year based upon the operating
performance of Xxxxx Products Company (the "Company"), as measured by earnings
before interest, taxes, depreciation and amortization ("EBITDA"), as compared
to budget. The budget will be the annual financial budget of the Company as
approved by the Board of Directors at the start of each year except that for
1997 the amount to be used to calculate earning 100% of the bonus will be
$44,000,000. The specific bonus will be calculated as follows:
--------------------------------------------------------------------------
Percentage Percentage of
EBITDA Achieved Bonus Earned Actual Bonus Earned
--------------------------------------------------------------------------
100 100 $87,500
--------------------------------------------------------------------------
96 75 $65,625
--------------------------------------------------------------------------
92 50 $43,750
--------------------------------------------------------------------------
88 25 $21,875
--------------------------------------------------------------------------
84 10 $ 8,750
--------------------------------------------------------------------------
11
EXHIBIT B
INCENTIVE STOCK OPTION AGREEMENT
AGREEMENT made this 3rd day of March, 1997, between DPC ACQUISITION
CORP., a Delaware corporation (the "Company"), and XXXXXX X. XXXXXXXXXX
("Employee").
To carry out the purposes of the DPC ACQUISITION CORP. 1996 STOCK
OPTION PLAN (the "Plan"), by affording Employee the opportunity to purchase
shares of the Class A Common Stock of the Company ("Stock"), and in
consideration of the mutual agreements and other matters set forth herein and
in the Plan, the Company and Employee hereby agree as follows:
1. GRANT OF OPTION. The Company hereby irrevocably grants to
Employee the right and option ("Option") to purchase all or any part of an
aggregate of 50,000 shares of Stock, on the terms and conditions set forth
herein and in the Plan, which Plan is incorporated herein by reference as a
part of this Agreement. This Option is intended to constitute an incentive
stock option, within the meaning of section 422(b) of the Internal Revenue Code
of 1986, as amended (the "Code").
2. PURCHASE PRICE. The purchase price of Stock purchased pursuant
to the exercise of this Option shall be $10.00 per share, which has been
determined to be not less than the fair market value of the Stock at the date
of grant of this Option. For all purposes of this Agreement, fair market value
of Stock shall be determined in accordance with the provisions of the Plan.
3. EXERCISE OF OPTION. Subject to the earlier expiration of this
Option as herein provided, this Option may be exercised, by written notice to
the Company at its principal executive office addressed to the attention of its
Chief Executive Officer at any time and from time to time after the date of
grant hereof, but, except as otherwise provided below, this Option shall not be
exercisable for more than a percentage of the aggregate number of shares
offered by this Option determined by the performance criteria set forth below
which have been met from
12
the date of grant hereof to the date of such exercise, in accordance with the
following requirements:
Volume Goals:
Tons Sold (Millions) and EBITDA of $35.0 Million
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
1.252 1.353 1.434 1.502 1.575
EBITDA Goals:
EBITDA
(Millions)
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
$52.8 $58.1 $63.9 $70.3 $75.0
Vesting Levels:
Percentage of Volume Goal Percentage of Shares That
Achieved for a Year May Be Purchased
------------------------- -------------------------
110% or more 11%
100% 10%
90% 7.5%
85% 5%
Less than 85% 0%
Percentage of EBITDA Goal Percentage of Shares That
Achieved for a Year May be Purchased
------------------------- -------------------------
120% or more 12%
110% 11%
100% 10%
90% 9%
80% 8%
Less than 80% 0%
-2-
13
The percentage of shares that may be purchased after the end of a
calendar year shall be determined by the Committee based upon the Committee's
determination of the amount of the Volume Goals and EBITDA Goals that are met
for a particular year and all previous years. In order for a Volume Goal to be
satisfied for any year the Company must have achieved an EBITDA of $35.0
million for such year and achieved 85% or more of the Volume Goal. In order for
an EBITDA Goal to be satisfied for a year, the Company must have achieved 80%
or more of the EBITDA Goal. No more than 50% of the aggregate number of shares
offered by this Option shall become exercisable due to attaining the Volume
Goals and no more than 50% of the aggregate number of shares offered by this
Option shall become exercisable due to attaining the EBITDA Goals.
In determining, the amount of the Volume Goals or EBITDA Goals that
are met for a year, the Committee shall make the determination on a
consolidated group basis. The figures set forth above are based on the Company
as it exists at the time this Option is granted, and in the event the Company
acquires additional assets, entities or subsidiaries that produce the same or
similar products, the Committee shall increase the Volume Goals and EBITDA
Goals to reflect the acquisition of the new assets, entities or subsidiaries.
For purposes of the preceding performance criteria, EBITDA shall mean
earnings before interest income and expense, income taxes, depreciation and
amortization as presented in the Company's consolidated annual financial
statements.
Notwithstanding the foregoing, this Option may be exercised in full
after eight years from the date of grant hereof if Employee is still an
employee of the Company at such time.
This Option may be exercised only while Employee remains an employee
of the Company and will terminate and cease to be exercisable upon Employee's
termination of employment with the Company, except that:
(a) If Employee's employment with the Company terminates
by reason of disability (within the meaning of section 22(e)(3) of the
Code), this Option may be exercised by Employee (or Employee's estate
or the person who acquires this Option by will or the laws of descent
and distribution or otherwise by reason of the death of Employee) at
any time during the period of three months following such termination,
but only as to the number of shares Employee was entitled to purchase
hereunder as of the date Employee's employment so terminates.
(b) If Employee dies while in the employ of the Company,
Employee's estate, or the person who acquires this Option by will or
the laws of descent and distribution or otherwise by reason of the
death of Employee, may exercise this Option at any time during the
period of one year following the date of Employee's death, but only as
to the number of shares Employee was entitled to purchase hereunder as
of the date of Employee's death.
-3-
14
(c) If Employee's employment with the Company terminates
for any reason other than as described in (a) or (b) above, this
Option may be exercised by Employee at any time during the period of
three months following such termination, or by Employee's estate (or
the person who acquires this Option by will or the laws of descent and
distribution or otherwise by reason of the death of Employee) during a
period of one year following Employee's death if Employee dies during
such three-month period, but in each case only as to the number of
shares Employee was entitled to purchase hereunder as of the date
Employee's employment so terminates.
This Option shall not be exercisable in any event after the expiration of ten
years from the date of grant hereof. The purchase price of shares as to which
this Option is exercised shall be paid in full at the time of exercise (a) in
cash (including check, bank draft or money order payable to the order of the
Company), or (b) by delivering to the Company shares of Stock having a fair
market value equal to the purchase price, or (c) a combination of cash and
Stock. No fraction of a share of Stock shall be issued by the Company upon
exercise of an Option or accepted by the Company in payment of the exercise
price thereof; rather, Employee shall provide a cash payment for such amount as
is necessary to effect the issuance and acceptance of only whole shares of
Stock. Unless and until a certificate or certificates representing such shares
shall have been issued by the Company to Employee, Employee (or the person
permitted to exercise this Option in the event of Employee's death) shall not
be or have any of the rights or privileges of a shareholder of the Company with
respect to shares acquirable upon an exercise of this Option.
4. EMPLOYEE SHAREHOLDER RESTRICTIONS. Any shares of Stock
acquired by exercise of this Option are subject to the requirements of the
Employee Stockholder Agreement which is attached hereto as Exhibit A and which
must be executed by Employee and Employee's spouse, if any.
5. WITHHOLDING OF TAX. To the extent that the exercise of this
Option or the disposition of shares of Stock acquired by exercise of this
Option results in compensation income to Employee for federal or state income
tax purposes, Employee shall deliver to the Company at the time of such
exercise or disposition such amount of money or shares of Stock as the Company
may require to meet its obligation under applicable tax laws or regulations,
and, if Employee fails to do so, the Company is authorized to withhold from any
cash or Stock remuneration then or thereafter payable to Employee any tax
required to be withheld by reason of such resulting compensation income. Upon
an exercise of this Option, the Company is further authorized in its discretion
to satisfy any such withholding requirement out of any cash or shares of Stock
distributable to Employee upon such exercise.
6. STATUS OF STOCK. Employee understands that at the time of the
execution of this Agreement the shares of Stock to be issued upon exercise of
this Option have not been registered under the Securities Act of 1933, as
amended (the "Act"), or any state securities law, and that the Company does not
currently intend to effect any such registration. Until the shares of Stock
acquirable upon the exercise of the Option have been registered for issuance
under the Act, the Company will not issue such shares unless the holder of the
Option provides the Company with
-4-
15
a written opinion of legal counsel, who shall be satisfactory to the Company,
addressed to the Company and satisfactory in form and substance to the
Company's counsel, to the effect that the proposed issuance of such shares to
such Option holder may be made without registration under the Act. In the event
exemption from registration under the Act is available upon an exercise of this
Option, Employee (or the person permitted to exercise this Option in the event
of Employee's death or incapacity), if requested by the Company to do so, will
execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require to assure compliance with applicable
securities laws.
Employee agrees that the shares of Stock which Employee may acquire by
exercising this Option shall be acquired for investment without a view to
distribution, within the meaning of the Act, and shall not be sold,
transferred, assigned, pledged or hypothecated in the absence of an effective
registration statement for the shares under the Act and applicable state
securities laws or an applicable exemption from the registration requirements
of the Act and any applicable state securities laws. Employee also agrees that
the shares of Stock which Employee may acquire by exercising this Option will
not be sold or otherwise disposed of in any manner which would constitute a
violation of any applicable securities laws, whether federal or state.
In addition, Employee agrees (i) that the certificates representing
the shares of Stock purchased under this Option may bear such legend or legends
as the Committee deems appropriate in order to assure compliance with
applicable securities laws, (ii) that the Company may refuse to register the
transfer of the shares of Stock purchased under this Option on the stock
transfer records of the Company if such proposed transfer would in the opinion
of counsel satisfactory to the Company constitute a violation of any applicable
securities law and (iii) that the Company may give related instructions to its
transfer agent, if any, to stop registration of the transfer of the shares of
Stock purchased under this Option.
7. EMPLOYMENT RELATIONSHIP. For purposes of this Agreement,
Employee shall be considered to be in the employment of the Company as long as
Employee remains an employee of either the Company, a parent or subsidiary
corporation (as defined in section 424 of the Code) of the Company, or a
corporation or a parent or subsidiary of such corporation assuming or
substituting a new option for this Option. Any question as to whether and when
there has been a termination of such employment, and the cause of such
termination, shall be determined by the Committee and its determination shall
be final.
8. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of any successors to the Company and all persons lawfully
claiming under Employee.
9. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
-5-
16
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officer thereunto duly authorized, and Employee has executed
this Agreement, all as of the day and year first above written.
DPC ACQUISITION CORP.
BY: XXXXXX X. XXXXX
------------------------------
X.X. XXXXXXXXXX
------------------------------
EMPLOYEE
-6-
