Exhibit 10.13 NQSO
STOCK OPTION GRANT AGREEMENT
This STOCK OPTION GRANT AGREEMENT (the "Agreement") is dated effective
March 23, 1999 (the "Grant Date"), between Repap Enterprises Inc., a Canadian
corporation (the "Company") and F. Xxxxxx Xxxx (the"Executive").
W I T N E S S E T H
WHEREAS, the Company and the Executive have entered into an employment
agreement, effective as of January 27, 1999 (the "Employment Agreement");
WHEREAS, pursuant to the terms of the Employment Agreement, the Company
agreed to grant to the Executive an option to purchase 75 million of the
Company's Common Shares on such terms and conditions as set forth in the
Employment Agreement and as may be agreed to by the parties;
WHEREAS, the parties hereto desire to set forth in writing the terms
and conditions of the portion of the option which is intended to constitute a
nonqualified stock option to purchase 75 million of the Company's Common Shares
(the "Option").
NOW THEREFORE, in consideration of the foregoing, of the mutual
promises contained in the Employment Agreement and herein, the parties hereto
hereby agree that the terms and conditions of the Option are as follows:
1. Grant of Option. The Executive is hereby granted an Option to
purchase from the Company 75 million of the Company's Common Shares, at a price
per share of U.S. $.05 (the "Option Price").
2. Tax Matters. No part of the Option granted hereby is intended to
qualify as an "incentive stock option" under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
3. Exercisability. Subject to Sections 4 and 5 below, the Option shall
become vested and exercisable in two installments as follows: 50% on the first
anniversary of the Grant Date and the remaining 50% on the second anniversary of
the Grant Date.
4. Termination of Option. Except as provided in the following sentence,
the Option shall expire on the tenth (10th) anniversary of the Grant Date and,
to the extent vested, shall be exercisable by the Executive (or, in the event of
the Executive's death, the legal representative of the Executive's estate), in
whole or in part, and at any time during such ten (10) year term without regard
to the Executive's termination of employment. Notwithstanding the foregoing, in
the event the Executive is terminated for "Cause" (as such term is defined in
the Employment Agreement), the Option shall immediately terminate and shall be
null and void.
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5. Acceleration of Vesting.
(a) If the Executive's employment by the Company is terminated (i) by
the Company without Cause, or (ii) by the Executive for "Good Reason" (as such
term is defined in the Employment Agreement), the Option shall become fully
vested and exercisable in accordance with the terms of this Agreement.
(b) Upon a "Change of Control" (as such term is defined in the
Employment Agreement) or within six (6) months prior to a Change of Control
(whether by the Executive with or without Good Reason or by the Company without
Cause), the Option shall become fully vested and exercisable in accordance with
the terms of this Agreement.
(c) The Compensation Committee of the Company's Board of Directors (the
"Committee") may, in its sole discretion, accelerate the vesting and
exercisability of the Option at any time and for any reason.
6. Method of Exercise. Subject to Sections 3, 4 and 5 above, the Option
may be exercised in whole or in part at any time during the Option term, by
giving written notice of exercise to the Company specifying the number of Common
Shares to be purchased, accompanied by payment in full of the Option Price.
Common Shares purchased pursuant to the exercise of the Option shall be paid for
at the time of exercise as follows: (a) in cash or by check, bank draft or money
order payable to the order of Company; (b) if the Common Shares are traded on a
national securities exchange, the Nasdaq Stock Market, Inc. or quoted on a
national quotation system sponsored by the National Association of Securities
Dealers or, to the extent permissible, on an international securities exchange,
through a "cashless" exercise procedure through a broker where the Executive
delivers irrevocable instructions to the broker to deliver promptly to the
Company an amount equal to the Option Price; (c) by payment in full or part in
the form of Common Shares owned by the Executive for a period of at least six
(6) months (and for which the Executive has good title free and clear of any
liens and encumbrances) based on the fair market value of the Common Shares on
the payment date; or (d) on such other terms and conditions as may be acceptable
to the Committee (which may include the surrender of a vested portion of the
Option).
7. Restriction on Transfer of Option. Subject to the following
sentence, the Option granted hereby is not transferable other than by will or by
the laws of descent and distribution and may be exercised only by the Executive
during his lifetime. Notwithstanding the foregoing, the Option may be
transferred, subject to applicable regulatory compliance, if required, by the
Executive to: (a) the Executive's spouse, children, stepchildren, grandchildren,
great-grandchildren and later generations of issue, step-parents or parents (the
"Immediate Family Members"); (b) a trust or trusts for the exclusive benefit of
such Immediate Family Members and/or the Executive; (c) partnerships in which
such Immediate Family Members are the only partners; or (d) a limited liability
company in which such Immediate Family Members are the only members. Any attempt
to transfer the Option, except as described in the prior sentence, shall be
void. The Option shall not, in any manner, be used for the payment of, subject
to, or otherwise encumbered by or hypothecated for the debts, contracts,
liabilities, engagements or torts of any person who shall be entitled to such
Option, nor shall it be subject to attachment or legal process for or against
such person.
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8. Rights as a Stockholder. The Executive shall have no rights as a
stockholder with respect to any Common Shares covered by the Option until the
Executive shall have become the holder of record of the shares, and no
adjustments shall be made for dividends in cash or other property, distributions
or other rights in respect of any such shares, except as otherwise provided
herein.
9. Changes in Common Shares.
(a) In the event of any change in the capital structure or business of
the Company by reason of any stock dividend or extraordinary dividend, stock
split or reverse stock split, recapitalization, reorganization, merger,
consolidation, amalgamation, split-up, combination or exchange of shares,
non-cash distributions with respect to its outstanding Common Shares or capital
stock other than Common Shares, reclassification of its capital stock, any sale
or transfer of all or part of the Company's assets or business, or any similar
change affecting the Company's capital structure or business and the Committee
determines in good faith that an adjustment is necessary or appropriate to
prevent substantial dilution or enlargement of the Executive's rights under this
Agreement or as otherwise necessary to reflect the change, then the aggregate
number and kind of shares to be issued upon exercise of the Option and the
Option Price shall be appropriately adjusted consistent with such change in such
manner as the Committee may deem equitable to prevent substantial dilution or
enlargement of the Executive's rights under this Agreement or as otherwise
necessary to reflect the change.
(b) Fractional Common Shares resulting from any adjustment in Options
pursuant to Section 9(a) shall be aggregated until, and eliminated at, the time
of exercise. No fractional Common Shares shall be issued hereunder and, the
Company shall pay the Executive cash in lieu any fractional Common Shares in
settlement of the Option granted hereunder. The Committee shall promptly notify
the Executive in the event any adjustment under this Section 9 is made.
10. Termination or Amendment. This Agreement may at any time, and from
time to time, be amended, in whole or in part, or suspended or terminated
entirely, retroactively or otherwise; provided, however, that, unless otherwise
required by law or specifically provided herein, the rights of Executive with
respect to the Option, may not be impaired without the consent of the Executive.
11. Administration. This Agreement shall be administered and
interpreted by the Committee. The determinations of the Committee in connection
with this Agreement shall be final, conclusive and binding on the Company and on
the Executive and their respective executors, administrators, successors and
assigns.
12. Legend. Certificates for Common Shares delivered hereunder shall be
subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Shares are then listed or any national securities association system upon whose
system the Common Shares are then quoted, any applicable Federal, state or
provincial securities law, and any applicable corporate law, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
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13. Withholding of Taxes. The Company shall have the right to deduct
from any payment to be made to the Executive, or to otherwise require, prior to
the issuance or delivery of any Common Shares or the payment of any cash
hereunder, payment by the Executive of, any Federal, state, provincial or local
taxes required by law to be withheld. The Company may permit any such
withholding obligation to be satisfied by reducing the number of Common Shares
otherwise deliverable or by delivering Common Shares already owned. Any fraction
of a Common Share required to satisfy such tax obligations shall be disregarded
and the amount due shall be paid instead in cash by the Executive.
14. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Connecticut (regardless of the law that
might otherwise govern under applicable Connecticut principles of conflict of
laws).
15. Other Benefits. The Option granted hereunder shall not be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or its affiliates and it shall not affect any benefits under any other
benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation, except as may be
specifically set forth in the documents governing such plan.
16. Death. The Company may in its discretion require the transferee of
the Executive's Option to supply it with written notice of the Executive's death
and to supply it with a copy of the will or such other evidence as the Committee
deems necessary to establish the validity of the transfer of the Option. The
Company may also require the agreement of the transferee to be bound by all of
the terms and conditions of this Agreement.
17. Severability of Provisions. If any provision of this Agreement
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof, and the Agreement shall be
construed and enforced as if such provisions had not been included.
18. Section Headings. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
19. Notices. Any notice or communication given hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person or,
in the case of notice to the Company, by facsimile to the facsimile number set
forth below confirmed by simultaneous notice by mail, or when dispatched by
telecopy, or one business day after having been dispatched by a nationally
recognized courier service or three business days after having been mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, to the appropriate party at the address (or, in the case of notice to
the Company, facsimile number) set forth below (or such other facsimile number
or address as the Company or you shall hereafter from time to time specify).
If to the Company, to:
Repap Enterprises Inc.
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000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxxx 00000
If to the Executive, to:
F. Xxxxxx Xxxx
X.X. Xxx 0000
Xxxxxxxxxxx, Xxxxxxx 00000
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
REPAP ENTERPRISES INC.
By: /s/
----------------------------
Xxxxxxx X. Xxxxxxxx
Chairman of the Compensation Committee
of the Board of Directors
F. XXXXXX XXXX
/s/
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