EXHIBIT 10.2
NONQUALIFIED STOCK OPTION AGREEMENT
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NONQUALIFIED STOCK OPTION AGREEMENT, dated as of March 22, 1997
(this "Agreement"), between Xxxxxx X. Xxxxx (the "Optionee") and Stimsonite
Corporation, a Delaware corporation (the "Company").
W I T N E S S E T H:
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WHEREAS, the Optionee has agreed to become President and Chief
Executive Officer of the Company pursuant to the terms of an Employment
Agreement dated as of March 22, 1997 between Optionee and the Company (the
"Employment Agreement"); and
WHEREAS, Section 10 of the Employment Agreement provides that
the Optionee will receive certain options from the Company; and
WHEREAS, the execution of a Nonqualified Stock Option Agreement
in the form hereof was approved by a resolution of the Board of Directors of the
Company (the "Board") duly adopted on March 12, 1997 and is incorporated herein
by reference; and
WHEREAS, the option granted hereby is intended as a nonqualified
stock option and shall not be treated as an "incentive stock option" within the
meaning of that term under Section 422 of the Internal Revenue Code of 1986.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein contained, the parties hereto hereby agree as follows:
1. Option.
(a) Pursuant to Section 10(a) of the Employment Agreement, the
Company hereby grants to the Optionee an option (the "Option") to purchase
100,000 shares of Common Stock, $.01 par value of the Company (the "Option
Shares") at a purchase price per share of $6.00 (the "Option Price"), and agrees
to cause certificates for any shares purchased hereunder to be delivered to the
Optionee upon payment of the Option Price in full, all subject, however, to the
terms and conditions hereinafter set forth.
(b) Subject to Section 3(a) hereof, this Option (until
terminated as hereinafter provided) shall be exercisable only to the extent of
33% of the shares covered hereby after the Optionee shall have been in the
continuous employ of the Company or any Subsidiary through the first anniversary
of March 22, 1997 (the "Date of Grant") to the extent of an additional 33% of
the shares covered hereby after the Optionee shall have been in the continuous
employ of the Company or any Subsidiary through the second anniversary of the
Date of Grant and to the extent of an additional 34% of the shares covered
hereby after the Optionee shall have been in the continuous employ of the
Company or any Subsidiary through the third anniversary of the Date of Grant.
For purposes of this Agreement, the employment of the Optionee with the Company
or a Subsidiary shall not be deemed interrupted, and the Optionee shall not be
deemed to have ceased to be an employee of the Company or any Subsidiary by
reason of the transfer of his employment among or between the Company and its
Subsidiaries. For the purpose of this paragraph, leaves of absence approved by
the Board of Directors of the Company, or any committee thereof, for illness,
military or government service, or other cause, shall be considered as
employment.
(c) To the extent exercisable, the Option may be exercised in
whole, or in part from time to time, until expiration as provided in Section
1(d).
(d) This Option shall terminate on the earliest of the following
dates:
(i) On the date on which the Optionee ceases to be an employee
of the Company or a Subsidiary unless he ceases to be such an employee in a
manner described in (ii) or (iii) below.
(ii) On the later to occur of (A) the second anniversary of the
Commencement Date (as defined in the Employment Agreement) or (B) 60 days after
the Optionee ceases to be an employee of the Company or any Subsidiary if (I)
Optionee retires from employment with the Company or any Subsidiary after
reaching the age of 65 years, or (II) Optionee's employment is terminated
pursuant to Section 7(d) of the Employment Agreement.
(iii) On the later to occur of (A) the second anniversary of the
Commencement Date (as defined in the Employment Agreement) or (B) 90 days after
the date on which Optionee's employment is terminated as a result of Optionee's
death or Disability (as defined in the Employment Agreement).
(iv) Ten years from the Date of Grant.
In the event the Optionee shall intentionally commit an act
materially inimical to the interests of the Company or a Subsidiary, and the
Board shall so find, the Option shall terminate at the time of such act,
notwithstanding any other provision of this Agreement.
Nothing in this Section 1(d) shall be construed to modify or
enlarge the rights of the Optionee and the conditions of exercising this Option
as set forth in Section 1(b) hereof, and at no time shall any right to exercise
this Option accrue to the Optionee unless and to the extent that the conditions
set forth in Section 1(b) shall have been satisfied.
(e) Nothing contained in this Agreement shall limit whatever
right the Company or any Subsidiary might otherwise have to terminate the
employment of the Optionee.
2. Exercise; Payment for Shares.
(a) This Option shall be exercised by Optionee by delivery to
the Company of (i) an Exercise Notice in the form attached to this Agreement as
Annex A, appropriately completed and duly executed and dated by the Optionee,
(ii) payment in full of the Option Price for the number of shares which the
Optionee is purchasing hereunder as required by Section 2(b), and (iii) payment
in full to the Company of any amounts required to be paid pursuant to Section
2(c).
(b) The Option Price shall be payable (i) in cash or by check
(certified, personal or bank check) acceptable to the Company, (ii)
nonforfeitable unrestricted shares of Common Stock which are already owned by
the Optionee and have a value at the time of exercise that is equal to the
Option Price, or (iii) a combination of the foregoing.
(c) If the Company shall be required to withhold any Federal,
state, local or foreign tax in connection with exercise of the Option, it shall
be a condition to such exercise that the Optionee pay or make provision
satisfactory to the Company for payment of all such taxes.
3. Change in Control; Adjustments.
(a) Upon the earlier to occur of (i) Optionee's death or
Disability, (ii) Optionee's termination of employment pursuant to Section 7(d)
of the Employment Agreement or (iii) a Change in Control (as hereinafter
defined), the Option shall, notwithstanding Section 1(b), become immediately
exercisable in full. If any event or series of events constituting a Change in
Control shall be abandoned, the effect thereof shall be null and of no further
force and effect and the provisions of Section 1(b) shall be reinstated but
without prejudice to any exercise of the Option that may have occurred prior to
such nullification.
(b) (i) The Board may make or provide for such adjustments in
the number and kind of shares of the Company's Common Stock covered by the
Option and in the Option Price, as the Board may in good faith determine to be
equitably required in order to prevent dilution or expansion of the rights of
the Optionee that otherwise would result from (a) any stock dividend, stock
split, combination of shares, recapitalization or other change in the capital
structure of the Company, or (b) any merger, consolidation, spin-off, spin-out,
split-off, split-up, reorganization, partial or complete liquidation or other
distribution of assets, issuance of warrants or other rights to purchase
securities or any other corporate transaction or event having an effect similar
to the foregoing.
(ii) In the event of any such transaction or event, the Board
may provide in substitution for the Option such alternative consideration as it
may in good faith determine to be equitable under the circumstances and may
require in connection therewith the surrender of this Option.
4. No Transfer of Option.
The Option may not be transferred by the Optionee except by will
or the laws of descent and distribution. The Option may not be exercised during
the Optionee's lifetime except by the Optionee or, in the event of the
Optionee's legal incapacity, by his guardian or legal representative acting in a
fiduciary capacity on behalf of the Optionee under state law and court
supervision.
5. Modification of Option.
The Option may be amended by the Board; provided that no such
amendment that adversely affects the Optionee shall be effective without the
consent of the Optionee.
6. Limitations on Exercise of Option.
The Option shall not be exercisable if such exercise would
involve a violation of any applicable Federal or state securities law and unless
under such laws at the time of exercise the shares purchasable upon exercise are
exempt, are the subject matter of an exempt transaction, are registered by
description or by qualification, or at such time are the subject matter of a
transaction which has been registered by description.
7. Rights as Stockholder.
The holder of this Option shall not be, nor have any of the
rights or privileges of, a holder of the Company's Common Stock in respect of
any shares purchasable upon the exercise of any part of the Option unless and
until certificates representing such shares shall have been issued by the
Company to such holder.
8. Fractional Shares.
The Company shall not be required to issue any fractional shares
of Common Stock pursuant to the Option.
9. Defined Terms. As used in this Agreement,
(a) "Change in Control" means the occurrence of any of the
following events:
(i) The execution by the Company of an agreement for the merger,
consolidation or reorganization into or with another corporation or other legal
person; provided, however, that no such merger, consolidation or reorganization
shall constitute a Change in Control if as a result of such merger,
consolidation or reorganization not less than a majority of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
securities entitled to vote generally in the election of directors of the
Company ("Voting Stock") immediately prior to such transaction;
(ii) The execution by the Company of an agreement for the sale
or other transfer of all or substantially all of its assets to another
corporation or other legal person; provided, however, that no such sale or other
transfer shall constitute a Change in Control if as a result of such sale or
transfer not less than a majority of the combined voting power of the
then-outstanding securities of such corporation or person immediately after such
sale or transfer is held in the aggregate by the holders of Voting Stock of the
Company immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule 14D-1
(or any successor schedule, form or report), each as promulgated pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act") disclosing that
any person (as the term "person" is used in Section 13(d)(3) or Section 14(d)(2)
of the Exchange Act) other than Xxxxxxxx X. Xxxxxxx or any of his affiliates has
or intends to become the beneficial owner (as the term "beneficial owner" is
defined under Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act) of securities representing a majority or more of the combined
voting power of the then-outstanding Voting Stock, including, without
limitation, pursuant to a tender offer or exchange offer;
(iv) If, during any period of two consecutive years, individuals
who at the beginning of any such period constitute the directors of the Company
cease for any reason to constitute at least a majority thereof; provided,
however, that for purposes of this subsection (iv) each director who is first
elected, or first nominated for election by the Company's stockholders, by a
vote of at least two-thirds of the directors of the Company (or a committee
thereof) then still in office who were directors of the Company at the beginning
of any such period shall be deemed to have been a director of the Company at the
beginning of such period; or
(v) Except pursuant to a transaction described in the proviso to
subsection (i) of this definition, the Company adopts a plan for the liquidation
or dissolution of the Company.
(b) "Subsidiary" means a corporation, partnership, joint
venture, unincorporated association or other entity in which the Corporation has
a direct or indirect ownership or other equity interest.
EXECUTED at Niles, Illinois as of the 22nd day of March, 1997.
STIMSONITE CORPORATION
By /s/Xxxxxxxx X. Xxxxxxx
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Xxxxxxxx X. Xxxxxxx
Chairman of the Board
ACCEPTED AND AGREED
By /s/Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
ANNEX A
to
Nonqualified Stock Option Agreement
Form of Exercise Notice
Pursuant to the Non-Qualified Stock Option Agreement dated as of
March __, 1997 between the undersigned and Stimsonite Corporation (the
"Company"), the undersigned hereby elects to exercise his option as follows:
(a) Number of shares purchased:
(b) Total purchase price ((a) x Option Exercise Price): $
Please issue a single certificate for the shares being purchased
in the name of the undersigned. The registered address on such certificate
should be:
The undersigned's social security number is: .
Date: ________________ ____________________________________
Optionee
