EXHIBIT 10.1
STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into as of January 22, 1998, by and
between New Horizons Worldwide, Inc., (f/k/a Handex Corporation and Handex
Environmental Recovery, Inc.), a Delaware corporation (the "Company"), and
Xxxxxx X. XxXxxxxx (the "Optionee").
WITNESSETH:
WHEREAS, the Committee is currently charged with administering
the New Horizons Worldwide, Inc. Key Employees Stock Option Plan (the
"Plan"); and
WHEREAS, the Committee has determined that the Optionee, as a Key
Employee (as such term is defined in the Plan), should be granted a stock option
under the Plan upon the terms and conditions set forth in this Agreement, and
for the number of shares of the $.01 par value common stock of the Company set
forth hereinbelow (the "Shares");
NOW, THEREFORE, the Company and the Optionee hereby agree as
follows:
1. DEFINITIONS. The following terms shall have the meanings set
forth below whenever used in this instrument:
(a) The word "Affiliate" shall mean any corporation which is, within
the meaning of Section 1563(a) of the Code, a member of a controlled group of
corporations which includes the Company.
(b) The word "Agreement" shall mean this instrument. (c) The word
"Board" shall mean the Board of Directors of the Company.
(d) The word "Code" shall mean the United States Internal Revenue
Code (Title 26 of the United States Code).
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(e) The word "Committee" shall mean the Compensation Committee
appointed by the Board or the Board if no such committee exists or is acting
with respect to the Plan.
(f) The word "Company" shall mean New Horizons Worldwide, Inc., a
Delaware corporation, and any successor thereto which shall maintain the Plan.
(g) The word "Disability" shall mean the Optionee's inability, due
to a mental or physical condition, to perform services for the Company
substantially consistent with past practice, as determined by the Committee
pursuant to written certification of such condition from a physician acceptable
to the Committee.
(h) The word "Employee" shall mean any person who is an employee of
either the Company or any Subsidiary.
(i) The words "1999 Exercise Date" shall mean the third business day
following the day the Company receives its audited financial statements for
calendar year 1998 from its independent certified public accountants.
(j) The word "Option" shall mean the right and option of the
Optionee to purchase Shares pursuant to the terms of this Agreement.
(k) The words "Option Price" shall mean the price at which Shares
may be acquired upon the exercise of any Option.
(l) The word "Optionee" shall mean the person to whom an Option has
been granted pursuant to this Agreement.
(m) The words "Personal Representative" shall mean, following the
Optionee's death, the person who shall have acquired, by Will or by the laws of
descent and distribution, the right to exercise any Option.
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(n) The word "Plan" shall mean the New Horizons Worldwide, Inc. Key
Employees Stock Option Plan, as it was originally adopted and as it may later be
amended.
(o) The words "Pre-Tax Net Income" shall mean the Net Income Before
Tax of the Company for 1998 as determined by the Company for purposes of the
Incentive Bonus described in the letter attached hereto as Exhibit A.
(p) The words "Reporting Company" shall mean any entity with a class
of equity securities which is registered under Section 12 of the Securities
Exchange Act of 1934, as amended.
(q) The word "Shares" shall mean shares of the $.01 par value common
stock of the Company.
(r) The word "Subsidiary" shall mean any corporation at least 50% of
the common stock of which is owned directly or indirectly by the Company.
2. GRANT OF OPTION. Effective as of the date of this Agreement, the
Company grants to the Optionee, upon the terms and conditions set forth
hereinafter, the right and option to purchase all or any lesser whole number of
an aggregate of Six Thousand Five Hundred (6,500) Shares at an Option Price of
$12.78 per Share.
3. TERM OF OPTION. Except as otherwise provided herein, the Option
shall expire at the close of regular business hours at the Company's principal
office at 000 Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxx Xxxxxx 00000, on January 2, 2004,
or, if earlier, on the applicable expiration date provided for in Section 6, or
7, or 8, or 9 hereof.
4. EXERCISE DATES. Except as otherwise provided herein, the Optionee
shall be entitled to exercise the Option with respect to the number of Shares
indicated below on or after the date indicated opposite such number below:
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INITIAL AND ADDITIONAL TOTAL SHARES WITH
NUMBER OF SHARES WITH RESPECT TO WHICH DATE BEGINNING
RESPECT TO WHICH THE THE OPTION MAY ON WHICH OPTION
OPTION MAY BE EXERCISED BE EXERCISED MAY BE EXERCISED
----------------------- ----------------- ----------------
2,500 2,500 1999 Exercise Date
2,500 5,000 January 1, 2000
Except as provided in Sections 6 and 7 hereof, the Option may not be exercised
at any time unless the Optionee shall be an Employee at such time.
5. LIMITATION UPON RIGHT TO EXERCISE OPTION. Notwithstanding Section
4 hereof:
(a) if the Pre-Tax Net Income is less than $7,807,000, the Option
may not be exercised in respect of any Shares;
(b) if the Pre-Tax Net Income is at least $7,807,000, but less
than $9,185,000, the number of Shares for which the Option may
be exercised as set forth in the Table in Section 4 shall be
reduced (to the nearest whole Share) by the percentage
(rounded down to the nearest whole percent) derived from the
formula set forth below:
$9,185,000 minus Pre-Tax Net Income
_______________________________ x 75%
$1,378,000
(c) if the Pre-Tax Net Income is at least $9,185,000 the number of
Shares for which the Option may be exercised as set forth in
the Table in Section 4 shall not be reduced.
PROVIDED, that the amounts of Pre-Tax Net Income shown above in this Section 5
may be equitably adjusted by the Committee to take account of (i) any material
expansion or contraction
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of the Company's business operations during calendar year 1998, or (ii) any
extraordinary events which occur during 1998, or (iii) any changes in the
Company's accounting methodology that became effective in respect of calendar
year 1998. Any such adjustment shall be made no later than the 1999 Exercise
Date and shall be final and binding upon the Company and the Optionee. The
Committee shall inform the Optionee of any such adjustment no later than the
1999 Exercise Date.
6. TERMINATION OF EMPLOYMENT OTHER THAN BECAUSE OF DEATH OR
DISABILITY. So long as the Optionee shall continue to be an Employee, the Option
shall not be affected by (a) any temporary leave of absence approved in writing
by the Company or a Subsidiary and described in Section 1.421-7(h) of the
Federal Income Tax Regulations or any lawful successor regulations thereto, or
(b) any change of duties or position (including transfer to or from a
Subsidiary). Subject to Section 8 hereof, if the Optionee ceases to be an
Employee for any reason other than death or Disability, the Option may be
exercised only to the extent of the purchase rights, if any, which, pursuant to
Section 4 hereof, after giving effect to Section 5 hereof, existed as of the
date the Optionee ceases to be an Employee (assuming, for this purpose only,
that the 1999 Exercise Date was January 1, 1999) and which have not theretofore
been exercised; PROVIDED, however, that the Committee may in its absolute
discretion determine (but shall not be under any obligation to determine) that
such purchase rights shall be deemed to include additional Shares which are
subject to the Option. Upon an Optionee's ceasing to be an Employee, such
purchase rights shall in any event terminate upon the earlier of either (a)
three (3) months after the date the Optionee ceased to be an Employee (one (1)
year if the Optionee dies or becomes Disabled during the three (3) month
period), or (b) the last day of the term of the Option.
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7. OPTIONEE'S DEATH OR DISABILITY. If, after 1998, while the
Optionee is an Employee, the Optionee dies or becomes Disabled, the Optionee or
the Optionee's Personal Representative may, on or after the 1999 Exercise Date,
exercise the Option with respect to all of the Shares for which the Optionee
could have exercised the Option had he survived and continued to be an Employee
until January 1, 2000. The Option shall in any event terminate upon the earlier
of either (a) the first anniversary of the date the Optionee ceased to be an
Employee, or (b) the last day of the term of the Option.
8. EVENTS OF FORFEITURE. Notwithstanding any other provision of this
Agreement, unless the Committee shall otherwise determine, upon (a) the
Optionee's ceasing to be an Employee for any reason prior to January 1, 1999, or
(b) the Optionee's ceasing to be an Employee by reason of an involuntary
termination of such status for good cause, as determined by the Committee, or
(c) the Optionee's voluntary termination with the intention of rendering
services to a competitor of the Company or any of its Subsidiaries or otherwise
entering into competition with the Company or any of its Subsidiaries, directly
or indirectly, or (d) the commission by the Optionee of a material breach of his
obligations under any agreement with the Company or any of its Subsidiaries, the
Optionee's right to purchase Shares pursuant to the exercise of the Option shall
terminate. Nothing in this Agreement shall confer upon any Optionee any right to
continue in the employ of the Company or a Subsidiary, or to serve as a member
of the Board of Directors of the Company or a Subsidiary, or to interfere with
or limit either the right of the Company or a Subsidiary to terminate his
employment at any time or the right of the shareholders of the Company to remove
him as a member of the Board of Directors of the Company or a Subsidiary with or
without cause.
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9. CHANGE OF CONTROL, DISSOLUTION, LIQUIDATION AND CERTAIN MERGERS.
Upon the occurrence of a "change of control" (as defined herein), or immediately
prior to a dissolution or liquidation of the Company (but only if the
distributee of substantially all of the Company's assets upon the liquidation of
the Company was not, immediately prior to the liquidation, an Affiliate) or a
merger or consolidation in which the Company is not the surviving corporation
(but only if the corporation which is the surviving corporation in such merger
or consolidation was not, immediately prior to the merger or consolidation, an
Affiliate), the Optionee shall have the immediate and nonforfeitable right to
exercise the Option with respect to all Shares for which the Option could have
been exercised prior to its expiration, and any such exercise shall be
irrevocable. The Optionee shall be entitled to exercise the Option as provided
in the immediately preceding sentence regardless of whether the other
corporation which is the surviving corporation in a merger or consolidation
shall adopt and maintain the Plan. In the event the Option becomes exercisable
pursuant to this Section 9, the Company shall notify the Optionee of his right
to exercise the Option. The term "change of control" shall mean the acquisition
(other than from the Company) by any person, entity or "group" (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934
(the "Exchange Act")) but excluding for this purpose the Company or any
Subsidiary or any employee benefit plan of the Company or any Subsidiary which
acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of voting securities of the Company of 50% or more (35%
or more if the Company is a Reporting Company) of either the then outstanding
Shares or the combined voting power of the Company's then outstanding voting
securities entitled to vote generally in the election of Directors. Upon either
the dissolution or liquidation of the Company (but only if the distributee of
substantially all of the Company's assets upon the liquidation of the
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Company was not, immediately prior to the liquidation, an Affiliate) or upon the
occurrence of a merger or consolidation in which the Company is not the
surviving corporation (but only if the corporation which is the surviving
corporation in such merger or consolidation was not, immediately prior to the
merger or consolidation, an Affiliate) and immediately following which the
surviving corporation fails to maintain the Plan, the Option shall terminate
unless the surviving corporation assumes the Option.
10. ADJUSTMENT OF NUMBER OF SHARES, ETC. In the event that
subsequent to the date of this Agreement, the outstanding Shares are, as a
result of a stock split, stock dividend, combination or exchange of shares,
exchange for other securities, reclassification, reorganization, redesignation,
merger, consolidation, recapitalization, spin-off, split-off or split-up or
other such change (including, without limitation, any transaction described in
Section 424(a) of the Code), or a special dividend or other distribution to the
Company's shareholders, increased or decreased or changed into or exchanged for
a different number or kind of shares of stock or other securities of the
Company, then (i) there shall automatically be substituted for each Share
subject to the Option the number and kind of shares of stock or other securities
into which each outstanding Share shall be exchanged, (ii) the option price per
Share or unit of securities shall be increased or decreased proportionately so
that the aggregate purchase price for the securities subject to the Option shall
remain the same as immediately prior to such event, and (iii) the Committee
shall make such other adjustments to the securities subject to the Option as may
be appropriate, equitable and in compliance with the provisions of Section
424(a) of the Code to the extent applicable and any such adjustment shall be
final, binding and conclusive as to the Optionee. Any such adjustment shall
provide for the elimination of fractional shares if the Committee shall so
direct.
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11. EXERCISE OF OPTION. The Option may be exercised by delivering to
the Chairman, President or Chief Financial Officer of the Company at its
principal office, 000 Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxx Xxxxxx, 00000, a completed
Notice of Exercise of Option (obtainable from the Chief Financial Officer of the
Company) setting forth the number of Shares with respect to which the Option is
being exercised. Such Notice shall be accompanied by payment in full for the
Shares, unless other arrangements satisfactory to the Company for prompt payment
of such amount are made. Payments shall be made by such type of check or other
means of funds transfer as is acceptable to the Company in the amount of the
aggregate purchase price for such Shares or, with the consent of the Committee,
payment may be made in whole or in part in Shares having a fair market value on
the date the Option is exercised equal to that portion of the purchase price for
which payment in cash is not made; provided, however, that payment in Shares
held by the Optionee less than one (1) year may be made only with the consent of
the Committee.
12. ISSUANCE OF SHARE CERTIFICATES. Subject to the last sentence of
this Section 12, upon receipt by the Company prior to expiration of the Option
of a duly completed Notice of Exercise of Option to either exercise the Option
accompanied by full payment for the Shares being purchased pursuant to such
Notice (and, with respect to any Option exercised pursuant to Section 12 hereof
by someone other than the Optionee, accompanied in addition by proof
satisfactory to the Committee of the right of such person to exercise the
Option), the Company shall cause to be made or otherwise delivered to the
Optionee, within thirty (30) days of such receipt, a certificate for the number
of Shares so purchased. The Optionee shall not have any of the rights of a
shareholder with respect to the Shares which are subject to the Option unless
and until a certificate representing such Shares is issued to the Optionee. The
Company
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shall not be required to issue any certificates for Shares upon the exercise of
the Option prior to (i) obtaining any approval from any governmental agency
which the Committee shall, in its sole discretion, determine to be necessary or
advisable, and/or (ii) the admission of such Shares to listing on any national
securities exchange on which the Shares may be listed, and/or (iii) completion
of any registration or other qualification of the Shares under any state or
federal law or ruling or regulations of any governmental body which the
Committee shall, in its sole discretion, determine to be necessary or advisable,
or the determination by the Committee, in its sole discretion, that any
registration or other qualification of the Shares is not necessary or advisable.
13. SUCCESSORS IN INTEREST, ETC. This Agreement shall be binding
upon and inure to the benefit of any successor of the Company and the heirs,
estate, and Personal Representative of the Optionee. The Option shall not be
transferable other than by Will or the laws of descent and distribution, and the
Option may be exercised during the lifetime of the Optionee only by the Optionee
provided that a guardian or other legal representative who has been duly
appointed for such Optionee may exercise the Option on behalf of the Optionee. A
deceased Optionee's Personal Representative shall act in the place and stead of
the deceased Optionee with respect to exercising an Option or taking any other
action pursuant to this Agreement.
14. PROVISIONS OF PLAN CONTROL. This Agreement is subject to all of
the terms, conditions, and provisions of the Plan and to such rules,
regulations, and interpretations relating to the Plan as may be adopted by the
Committee and as may be in effect from time to time. A copy of the Plan is
attached hereto as Exhibit "B" and is incorporated herein by reference. In the
event and to the extent that this Agreement conflicts or is inconsistent with
the terms, conditions,
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and provisions of the Plan, the Plan shall control, and this Agreement shall be
deemed to be modified accordingly.
15. NO LIABILITY UPON DISTRIBUTION OF SHARES. The liability of the
Company under this Agreement and any distribution of Shares made hereunder is
limited to the obligations set forth herein with respect to such distribution
and no term or provision of this Agreement shall be construed to impose any
liability on the Company or the Committee in favor of any person with respect to
any loss, cost or expense which the person may incur in connection with or
arising out of any transaction in connection with this Agreement.
16. WITHHOLDING. The Optionee agrees that the Company may make
appropriate provision for tax withholding with respect to the transactions
contemplated by this Agreement.
17. CAPTIONS. The captions and section numbers appearing in this
Agreement are inserted only as a matter of convenience. They do not define,
limit, construe or describe the scope or intent of the provisions of this
Agreement.
18. NUMBER. The use of the singular or plural herein shall not be
restrictive as to number and shall be interpreted in all cases as the context
shall require.
19. GENDER. The use of the feminine, masculine or neuter pronoun
shall not be restrictive as to gender and shall be interpreted in all cases as
the context may require.
20. INVESTMENT REPRESENTATION. Optionee hereby represents and
warrants that any Shares which he may acquire by virtue of the exercise of the
Option shall be acquired for investment purposes only and not with a view to
distribution or resale; provided, however, that this restriction shall become
inoperative in the event the Shares which are subject to the Option shall be
registered under the Federal Securities Act of 1933, as amended, or in the event
there is
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presented to the Company evidence satisfactory to the Company to the effect that
the offer or sale of the Shares which were acquired upon exercise of the Option
may lawfully be made without registration under the Federal Securities Act of
1933, as amended.
21. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware and any applicable federal
law.
22. NONQUALIFIED OPTION. The Option shall for all purposes be a
nonqualified stock option subject to the federal income tax treatment described
in Section 1.83-7 of the Federal Income Tax Regulations. Both the Company and
the Optionee shall, on their respective federal income tax returns, report any
transaction relating to the Option in a manner consistent with the preceding
sentence.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officer, and the Optionee has
hereunto set his hand, all as of the day and year first above written.
_____________________________________
("Optionee")
NEW HORIZONS WORLDWIDE, INC.
("Company")
By:__________________________________
Xxxxxx X. Xxxxxxx, President
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