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Exhibit 10
STOCK RIGHTS
AWARD AGREEMENT
This Stock Rights Award Agreement is made and entered into between
Xxxxx Xxxxxxx ("Xx. Xxxxxxx") and Xxxxxx X.X. Xxxx XX ("Xx. Xxxx") as of
December 9, 1997.
WHEREAS, Xx. Xxxxxxx was one of the principle shareholders and was the
former chief executive officer of Royal Grip, Inc.
WHEREAS, Xx. Xxxx was the former President of Royal Grip, Inc.
WHEREAS, on August 29, 1997, the shareholders of Royal Grip, Inc.
approved the merger of Royal Grip, Inc. into Royal Precision, Inc. a subsidiary
of FM Precision Golf Corp. ("FM").
WHEREAS, Xx. Xxxxxxx is currently serving as the Vice Chairman of, and
consultant to, FM and Xx. Xxxx is currently serving as the Vice President of
Royal Precision, Inc.
WHEREAS, in consideration for Xx. Xxxx'x loyal service to both Royal
Grip, Inc. and to Xx. Xxxxxxx, Xx. Xxxxxxx, in his individual capacity and not
in his capacity as the Vice Chairman of, or consultant to, FM, would like to
grant to Xx. Xxxx certain stock rights, based on the value of FM stock, all as
described in more detail below.
1. AWARD. Subject to the terms in this Agreement, Xx. Xxxxxxx, in his
individual capacity and not in his capacity as the Vice Chairman of, or
consultant to, FM, hereby grants to Xx. Xxxx the right to exercise the
following:
x. XXXXX A. Stock Rights measured by 50,000 shares of the
common stock of FM (the "Stock"); and
x. XXXXX B. Stock Rights measured by 50,000 shares of the
Stock.
2. STOCK RIGHTS DEFINES; FAIR MARKET VALUE.
x. XXXXX A. The Grant A Stock Rights granted to Xx. Xxxx
pursuant to this agreement entitle Xx. Xxxx to receive, upon exercise of such
Stock Rights pursuant to paragraph 4 and subject to the terms of this Agreement,
a payment from Xx. Xxxxxxx based on the Fair Market Value of the share of Sock
used to measure the exercise Grant A Stock Rights.
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x. XXXXX B. The Grant B Stock Rights granted to Xx. Xxxx
pursuant to this Agreement entitle Xx. Xxxx to receive, upon exercise of such
Stock Rights pursuant to paragraph 4 and subject to the terms of this Agreement,
a payment from Xx. Xxxxxxx based on the increase in the Fair Market Value of the
share of Stock used to measure the exercised Grant B Stock Rights.
As provided in paragraph 5, the payment from Xx. Xxxxxxx may
be made in shares of Stock, or at Xx. Xxxxxxx election, cash or a combination of
cash and shares of Stock. The number of shares of Stock used to measure the
Grant A and B Stock Rights grantee pursuant to this Agreement is specified in
paragraph 1, and Xx. Xxxx shall be considered as having a number of Stock Rights
equal to such number of shares. For purposes of this Agreement, the term "Fair
Market Value" means the closing price at which the Stock shall have been sold
regular way on the New York Stock Exchange-Composite Transactions on a specified
date.
3. GRANT PERIOD DEFINED. Xx. Xxxx may exercise the Grant A and Grant B
Stock Rights, and such Stock Rights shall be and remain in full force and
effect, during the "Grant Period." The Grant Period shall begin on December 9,
1997 and shall end on December 8, 2007.
4. EXERCISE OF AWARD. Xx. Xxxx may exercise all or any portion of the
either the Grant A or Grant B Stock Rights during the Grant Period specified in
paragraph 3 by delivering to Xx. Xxxxxxx a written notice of paragraph 3 by
delivering to Xx. Xxxxxxx a written notice of exercise signed by Xx. Xxxx. In
the notice of exercise, Xx. Xxxx shall express his intention to exercise all of
a portion of either the Grant A or Grant B Stock Rights granted to him under the
is Agreement and shall specify the number of either the Grant A or Grant B Stock
Rights that he is exercising, and the exact name or names in which any shares of
Stock delivered to Xx. Xxxx should be registered. IF the Stock Rights are
exercised by a person or persons other than Xx. Xxxx pursuant to paragraph 6,
the notice shall be signed by such person or persons and shall be accom0panied
by proof acceptable to Xx. Xxxxxxx of the legal right of such person or persons
to exercise the Stock Right.
Any Grant A Stock Rights remaining unexercised on the last day
of the Grant Period shall be deemed to be exercised by Xx. Xxxx, or the person
or persons claiming thro0ugh Xx. Xxxx pursuant to paragraph 6.
If the Fair Market Value of one share of the Stock on the last
day of the Grant Period exceeds $8.00 (subject to any adjustment as provided in
paragraph 8, any Grant B Stock Rights remaining unexercised on the last day of
the Grant Period shall be deemed to be exercised by Xx. Xxxx, or the person or
persons claiming through XX. Xxxx pursuant to paragraph 6. If on the last day of
the Grant Period the Fair Market Value of one share of Stock is $8.00 or less
(subject to any adjustment as provided in paragraph 8), any Grant B Stock Rights
remaining unexerciesd on the last day of the Grant Period shall be canceled
without the payment of any amounts by Xx. Xxxxxxx.
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5. PAYMENTS BY XX. XXXXXXX.
x. XXXXX A. Upon Xx. Xxxx'x exercise of all or a portion of
his Grant A Stock Rights, Xx. Xxxxxxx shall pay to Xx. Xxxx an amount determined
by multiplying (a) the Fair Market Value of one share of Stock as of the trading
day next preceding the date on which the Stock Rights are exercised, by (b) the
number of Grant A Stock Rights being exercised.
x. XXXXX B. Upon Xx. Xxxx'x exercise of all or a portion of
his Grant B Stock Rights, Xx. Xxxxxxx shall pay to XX. Xxxx an amount determined
by multiplying (a) the excess of the Fair Market Value of one share of the
trading day next preceding the date on which the Grant B Stock Rights are
exercised over $8.00 (subject to any adjustment as provided in paragraph 8), by
(b) the number of Grant B Stock Rights being exercised.
Xx. Xxxxxxx shall make payment by delivering to Xx. Xxxx shares of
Stock having an aggregate Fair Market Value (determined as of the trading day
next proceeding the date on which the Stock Rights are exercised) equal to the
amount of the payment that is due. Alternatively, Xx. Xxxxxxx shall be entitled
to settle his obligation arising out of Xx. Xxxx'x exercise of either the Grant
A or B Stock Rights by paying Xx. Xxxx cash or a combination of cash and shares
of Stock, the total value of which shall equal the aggregate value of the shares
of Stock he would be obligated to deliver if Xx. Xxxxxxx chose to settle his
obligations entirely by delivering shares of Stock.
6. DEATH OF XX. XXXX. In the event of Xx. Xxxx'x death during the Grant
Period, the Grant Period shall end on the earlier of (a) the last day of the
Grant Period, or (b) the date 15 months after the date of Xx. Xxxx'x death. The
unexercised Stock Rights granted to Xx. Xxxx under this Agreement may be
exercised during the remaining Grant Period by Xx. Xxxx'x designated
beneficiary, or if no beneficiary is designated or all designated beneficiaries
predecease Xx. Xxxx, by Xx. Xxxx'x legal representative.
7. NONTRANSFERABILITY. The Stock Rights granted under this Agreement
shall be exercisable only during the Grant Period specific in paragraph 3 and,
except as provided in paragraph 6 above, only by Xx. Xxxx during his lifetime.
NO Stock Rights granted by this Agreement shall be transferable by Xx. Xxxx
other than by will or pursuant to applicable laws of descent and distribution.
This Grant the Stock Rights granted under this Agreement and any rights and
privileges in connection therewith shall not be transferred, assigned, pledged
or hypothecated by Xx. Xxxx, or by any other person or persons, in any way,
whether by operation of law, or otherwise, and shall not be subject to
execution, attachment, garnishment or similar process.
8. ADJUSTMENTS. In the event a stock dividend is declared upon the
Stock, the number of shares of Stock then used to measure the remaining Stock
Rights and the number of remaining Stock Rights shall be increased
proportionately. In the event the Stock shall be changed into or
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exchanged for a different number or class of shares of stock of FM or of
another corporation, whether through reorganization, recapitalization, stock
split-up, combination of shares, merger or consolidation, there shall be
substituted for each such shares of stock then used to measure the remaining
Stock Rights the number and class of shares of Stock into which each
outstanding share of Stock shall be so exchanged. The number of Stock Rights
shall also be adjusted accordingly.
9. DELIVERY OF SHARES. No shares of Stock shall be delivered upon
exercise of the Stock Rights Until (a) all applicable taxes required to be
withheld, if any have been paid or withheld in full, and (b) approval of any
governmental authority required in connection with the Stock Rights, or the
issuance of shares of Stock thereunder, has been obtained or an exemption from
such approval has been confirmed by counsel to either Xx. Xxxx or Xx. Xxxxxxx.
10. GOVERNING LAW. This Agreement shall be interpreted and administered
under the laws of the State of Arizona.
11. AMENDMENTS. This Agreement may be amended only by a written
agreement signed by Xx. Xxxxxxx and Xx. Xxxx.
Xx. Xxxxxxx and Xx. Xxxx both acknowledge and agree to the terms and
conditions set forth in this Agreement by having signed their names below.
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
/s/ Xxxxxx X.X. Xxxx Xx
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Xxxxxx X.X. Xxxx XX
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