EXHIBIT 10.9B
EXHIBIT B
To Agreement between
The Xxxxx Xxxxxx Companies Inc.
and
Xxxxxx X. Xxxxxx
and dated as of November 16, 1995
OPTION AGREEMENT (this "Agreement") dated this 16th day of
November, 1995 providing for the granting of options by The Xxxxx Xxxxxx
Companies Inc., a Delaware corporation (the "Company"), to Xxxxxx X. Xxxxxx, an
Executive employee of the Company (the "Executive").
By agreement dated as of November , 1995, the Company has
employed the Executive in the position of Chairman of the Board of Directors of
each of Clinique Laboratories, Inc. and Xxxxx Xxxxxx International, Inc. (the
"Employment Agreement"). As contemplated by the Employment Agreement, and as set
out at Section 3(b) therein, the Board of Directors of the Company has
determined that the Executive is to be granted options to purchase shares of the
Company's Class A Common Stock, par value $.01 per share (the "Shares"), on the
terms and subject to the conditions hereinafter provided.
The stock options to be granted pursuant hereto shall not be
Incentive Stock Options as defined in Section 422A of the Internal Revenue Code
of 1986, as amended, (the "Code").
1. NUMBER OF SHARES. Provided that Shares shall have been
offered for sale to the public in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), on or prior to December 31, 1995, the Company
hereby awards to the Executive options to purchase 650,000 Shares (the "Stock
Options") as follows:
(a) 150,000 Stock Options shall be awarded as of the date
that Shares are first offered for sale to the public (the "Initial Award");
(b) 125,000 Stock Options shall be awarded as of July 1,
1996 (the "1996 Award");
(c) 125,000 Stock Options shall be awarded as of July 1,
1997 (the "1997 Award");
(d) 125,000 Stock Options shall be awarded as of July 1,
1998 (the "1998 Award"), and
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(e) 125,000 Stock Options shall be awarded as of July 1,
1999 (the "1999 Award").
Notwithstanding the foregoing, no award shall be made if the
Employment Agreement shall have been terminated for any reason on or prior to
the date scheduled for such award.
2. EXERCISE PRICE. For each Stock Option granted
hereunder, the per-share exercise price shall be equal to 100% of the closing
price of the Class A Common Stock on the New York Stock Exchange or any other
national securities exchange or other market system as reported by The Wall
Street Journal on the date of grant or, if there shall be no trading on such
date, the date next preceding on which trading occurred (the "Market Value").
3. PAYMENT OF EXERCISE PRICE. The Stock Option exercise
price may be paid in cash, by the delivery of shares of Class A Common Stock of
the Company then owned by the Executive, or by a combination of these methods.
Payment may also be made by delivering a properly executed exercise notice to
the Company together with a copy of irrevocable instructions to a broker to
deliver promptly to the Company the amount of sale or loan proceeds to pay the
exercise price. The Company may prescribe any other method of paying the
exercise price that it determines to be consistent with applicable law,
including, without limitation, in lieu of the exercise of a Stock Option by
delivery of shares of Class A Common Stock of the Company then owned by the
Executive, providing the Company with a notarized statement attesting to the
number of shares owned, where upon verification by the Company, the Company may
issue to the Executive only the number of incremental shares to which the
Executive is entitled upon exercise of the Stock Option.
4. EXERCISE PERIOD. Stock Options granted hereunder
shall be exercisable as set forth below.
(a) With respect to Stock Options granted in the Initial
Award:
(i) 50,000 of such Stock Options may be exercised
from and after January 1, 1999;
(ii) 50,000 of such Stock Options may be exercised
from and after January 1, 2000; and
(iii) 50,000 of such Stock Options may be exercised
from and after January 1, 2001.
(b) With Respect to Stock Options granted in the 1996
Award:
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(i) 41,667 of such Stock Options may be exercised
from and after January 1, 2000;
(ii) 41,667 of such Stock Options may be exercised
from and after January 1, 2001; and
(iii) 41,666 of such Stock Options may be exercised
from and after January 1, 2002.
(c) With respect to Stock Options granted in the 1997
Award:
(i) 41,667 of such Stock Options may be exercised
from and after January 1, 2001;
(ii) 41,667 of such Stock Options may be exercised
from and after January 1, 2002; and
(iii) 41,6664 of such Stock Options may be exercised
from and after January 1, 2003.
(d) With respect to Stock Options granted in the 1998
Award:
(i) 41,667 of such Stock Options may be exercised
from and after January 1, 2002;
(ii) 41,667 of such Stock Options may be exercised
from and after January 1, 2003; and
(iii) 41,666 of such Stock Options may be exercised
from and after January 1, 2004.
(e) With respect to Stock Options granted in the 1999
Award:
(i) 41,667 of such Stock Options may be exercised
from and after January 1, 2003;
(ii) 41,667 of such Stock Options may be exercised
from and after January 1, 2004; and
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(iii) 41,666 of such Stock Options may be exercised
from and after January 1, 2005.
No Stock Option awarded hereunder shall be exercisable
later than ten years after the date it is awarded except in the event of the
Executive's death, in which case, the exercise period of Stock Options awarded
but unexercised as of the date of death may be extended beyond such period but
no later than one year after the date of death. Stock Options awarded hereunder
shall not be transferrable otherwise then by will or the laws of descent and
distribution, and shall be exercisable during the Executive's lifetime only by
the Executive. Any attempted transfer contrary to the foregoing shall be null
and void and without effect.
5. POST-EMPLOYMENT EXERCISES. The exercise of any Stock
Option after termination of the Executive's employment with the Company shall be
subject to satisfaction of the conditions precedent that the Executive neither
(i) competes with, or takes other employment with or renders services to a
competitor of, the Company, its subsidiaries or affiliates without the written
consent of the Company, nor (ii) conducts himself in a manner adversely
affecting the Company.
6. ADJUSTMENT PROVISIONS; CHANGE IN CONTROL.
(a) If there shall be any change in the Class A
Common Stock of the Company, through merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, reverse stock split, split up,
spinoff, combination of shares, exchange of shares, dividend in kind or other
like change in capital structure or distribution (other than normal cash
dividends) to all holders of Class A Common Stock of the Company, an adjustment
shall be made to each outstanding Stock Option such that each such Stock Option
shall thereafter be exercisable for such securities, cash and/or other property
as would have been received in respect of the Class A Common Stock subject to
such Stock Option had it been exercised in full immediately prior to such change
or distribution, and such an adjustment shall be made successively each time any
such change shall occur. In addition, in the event of any such change or
distribution, in order to prevent dilution or enlargement of the Executive's
rights hereunder, the Company will have authority to adjust, in an equitable
manner, the number and kind of shares that may be issued with respect to any
Stock Option hereunder, the number and kind of shares subject to outstanding
Stock Options, the exercise price applicable to outstanding Stock Options, and
the Market Value of the Class A Common Stock and other value determinations
applicable to outstanding Stock Options. Appropriate adjustments may also be
made by the Company in the terms of any Stock Options to reflect such changes or
distributions and to modify any other terms of outstanding Stock Options on an
equitable basis. In addition, the Company is authorized to make adjustments to
the terms and conditions of Stock Options, in recognition of unusual or
nonrecurring events affecting the Company or the financial statements of the
Company, or in response to changes in applicable laws, regulations, or
accounting principles.
(b) Notwithstanding any other provision hereunder, if
there is a "Change
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in Control" (as hereinafter defined) of the Company, all then outstanding Stock
Options shall immediately become exercisable. For purposes of this Section 6(b),
a "Change in Control" of the Company shall be deemed to have occurred upon any
of the following events:
(i) A change in control of the direction and
administration of the Company's business of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); or
(ii) During any period of two (2) consecutive years,
the individuals who at the beginning of such period constitute the Company's
Board of Directors or any individuals who would be "Continuing Directors" (as
hereinafter defined) cease for any reason to constitute at least a majority
thereof; or
(iii) The Company's Class A Common Stock shall cease
to be publicly traded; or
(iv) The Company's Board of Directors shall approve a
sale of all or substantially all of the assets of the Company, and such
transaction shall have been consummated; or
(v) The Company's Board of Directors shall approve
any merger, consolidation, or like business combination or reorganization of the
Company, the consummation of which would result in the occurrence of any event
described in Section 6(b)(ii) or (b)(iii) above, and such transaction shall have
been consummated.
Notwithstanding the foregoing, (A) changes in the relative
beneficial ownership among members of the Lauder family and family-controlled
entities shall not, by themselves, constitute a Change in Control of the
Company, (B) any spin-off of a division or subsidiary of the Company to its
stockholders and (C) any event listed in clauses (i) through (v) above that the
Board of Directors determines not to be a Change in Control of the Company,
shall not constitute a Change in Control of the Company.
For purposes of this Section 6(b), "Continuing Directors"
shall mean (x) the directors of the Company in office on the date that shares of
the Company's Class A Common Stock are first offered for sale to the public and
(y) any successor to any such director and any additional director who after
such date was nominated or selected by a majority of the Continuing Directors in
office at the time of his or her nomination or selection.
The Company, in its discretion, may determine that, upon the
occurrence of a Change in Control of the Company, each Stock Option outstanding
hereunder shall terminate within a
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specified number of days after notice to the Executive, and the Executive shall
receive, with respect to each share of Class A Common Stock subject to such
Stock Option, an amount equal to the excess of the Market Value of such shares
of Common Stock immediately prior to the occurrence of such Change in Control
over the exercise price per share of such Stock Option; such amount to be
payable in cash, in one or more kinds of property (including the property, if
any, payable in the transaction) or in a combination thereof, as the Company, in
its discretion, shall determine. The provisions contained in the preceding
sentence shall be inapplicable to any Stock Option awarded hereunder within six
(6) months before the occurrence of a Change in Control if the Executive is
subject to the reporting requirements of Section 16(c) of the Exchange Act and
no exception from liability under Section 16(b) of the Exchange Act is otherwise
available to the Executive.
7. WITHHOLDING. All payments or distributions of Stock
Options made hereunder shall be net of any amounts required to be withheld
pursuant to applicable Federal, state and local tax withholding requirements.
The Company may require the Executive to remit to it an amount sufficient to
satisfy such tax withholding requirements prior to the delivery of any
certificates for such Class A Common Stock. The Company may, in its discretion
and subject to such rules as it may adopt (including any as may be required to
satisfy applicable tax and/or non-tax regulatory requirements), permit the
Executive to pay all or a portion of the federal, state and local withholding
taxes arising in connection with any Stock Option by electing to have the
Company withhold shares of Class A Common Stock having a Market Value equal to
the amount of tax to be withheld, such tax calculated at rates required by
statute or regulation.
8. TENURE. The Executive's right to continue to serve
the Company or any of its subsidiaries as an officer, employee, or otherwise,
shall not be enlarged or otherwise affected by his award hereunder.
9. INVESTMENT REPRESENTATION AND RELATED MATTERS. The
Executive hereby represents that Stock Options awarded hereunder are being
acquired for investment purposes and not for sale or with a view to distribution
thereof. The Executive hereby acknowledges that as of the date hereof there does
not exist a Registration Statement on an appropriate form under the Securities
Act and applicable state securities laws that has become effective and includes
a prospectus which is current with respect to shares of Class A Common Stock
subject to Stock Options awarded hereunder. Accordingly, the Executive
acknowledges and agrees that any subsequent offer for sale or sale of any such
shares of Class A Common Stock shall be made either pursuant to (i) a
Registration Statement on appropriate form under the Securities Act and, where
applicable, state securities laws, which Registration Statement shall have
become effective and shall be current with respect to the shares of Class A
Common Stock being offered and sold, or (ii) a specific exemption from the
registration requirements of the Securities Act and any applicable securities
laws, but in claiming such exemption, the Executive shall, prior to any offer
for sale or sale of such shares, obtain a favorable written opinion of counsel,
in form and substance satisfactory to counsel for the Company, as to the
applicability of such exemption.
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The Executive agrees that the Company shall have the
authority to endorse upon the certificate or certificates representing the
Shares acquired hereunder such legends referring to the foregoing restrictions
and any other applicable restrictions, as it may deem appropriate.
10. NOTICES. Any notice required or permitted under this
Option Agreement shall be deemed to have been duly given if delivered,
telecopied or mailed, certified or registered mail, return receipt requested to
the Executive, in any case, in accordance with Section 16 of the Employment
Agreement.
11. FAILURE TO ENFORCE NOT A WAIVER. The failure of the
Company to enforce at any time any provision of the this Option Agreement shall
in no manner be construed to be a waiver of such provision or of any other
provision hereof.
12. GOVERNING LAW. This Option Agreement shall be
governed by and construed according to the laws of the State of New York,
applicable to agreements made and performed in that state.
13. PARTIAL INVALIDITY. The invalidity or illegality of
any provision herein shall not be deemed to affect the validity of any other
provision.
14. COUNTERPARTS. This Option Agreement may be executed
in counterparts each of which taken together shall constitute one and the same
instrument.
15. AMENDMENT. This Option Agreement may not be amended
except by an instrument in writing making specific reference hereto signed by
each of the parties hereto; PROVIDED, HOWEVER, the provisions of Section 1
hereof may not be amended more than once every six (6) months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act of
1974 or the rules thereunder.
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IN WITNESS WHEREOF, the Company has executed this Option
Agreement in duplicate on the date and year first above written.
THE XXXXX XXXXXX COMPANIES INC.
By: /s/ XXXXXX X. XXXXXXXXX
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Name: Xxxxxx X. Xxxxxxxxx
Title: Senior Vice President - Corporate Human
Resources
The undersigned hereby accepts, and agrees to, all terms
and provisions of the foregoing Option Agreement.
/s/ XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx
[Signature page to Option Agreement, dated as of
November , 1995, between The Xxxxx Xxxxxx Companies Inc. and Xxxxxx Xxxxxx.]
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