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EXHIBIT C-3
NONQUALIFIED STOCK OPTION AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
AM International, Inc., a Delaware corporation (the "Company"), hereby
grants to (the "Optionee") as of , 1996 (the "Option Date"), pursuant to the
provisions of the AM International, Inc. 1994 Long Term Incentive Plan (the
"Plan"), a non-qualified option to purchase from the Company (the "Option")
shares of its Common Stock, $.01 par value ("Stock"), at the price of $ per
share upon and subject to the terms and conditions set forth below.
Capitalized terms not defined herein shall have the meanings specified in the
Plan.
1. Option Subject to Acceptance of Agreement.
The Option shall become null and void unless the Optionee shall accept
this Agreement by executing it in the space provided below and returning it to
the Company.
2. Time and Manner of Exercise of Option.
2.1. Maximum Term of Option. In no event may the Option be exercised,
after February 7, 2006 (the "Expiration Date").
2.2. Exercise of Option. (a) The Option shall become exercisable as to
100% of the Stock subject to the Option on the date hereof, and as otherwise
provided pursuant to Section 2.2(b) hereof or in accordance with Section 5.2 of
the Plan.
(b) If the Optionee's service as a director of the Company terminates for
any reason the Option shall be exercisable by the Optionee or the Optionee's
Legal Representative for a period extending from the effective date of such
termination until (1) three months after the effective date of such termination
as a director, or (2) the Expiration Date.
2.3 Method of Exercise. (a) Subject to the limitations set forth in this
Agreement, the Option may be exercised by the Optionee (1) by giving written
notice to the Company specifying the number of whole shares of Stock to be
purchased and accompanied by payment therefor in full (or arrangement made for
such payment to the satisfaction of the Company) either (i) in cash, (ii) in
previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares and for which the
Optionee has good title free and clear of all liens and encumbrances) having a
Fair Market Value determined as of the date of exercise, (iii) by authorizing
the Company to withhold whole shares of Stock which would otherwise be
deliverable upon exercise of the Option having a Fair Market Value determined
as of the date of exercise, (iv) in cash by a broker-dealer acceptable to the
Company to whom the Optionee has submitted an irrevocable notice of exercise,
or (v) a combination of (i), (ii) and (iii), and (2) by executing such
documents as the Company may reasonably request. The Committee shall have sole
discretion to disapprove of an election pursuant to any of clauses (ii) - (v).
No shares of Stock shall be delivered until the full purchase price therefor
has been paid.
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(b) Unless the Committee otherwise determines, if the Optionee is subject
to Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act"), the
following provisions shall apply to the Optionee's election to authorize the
Company to withhold whole shares of Stock purchasable upon exercise of the
Option in payment of all or a portion of the option price:
(1) Such election may apply only to the Option or any or all options held
by the Optionee, shall be filed with the Secretary of the Company (the "Company
Officer") at least six months prior to the exercise date of the Option and may
not take effect during the six-month period beginning on the date of grant of
the Option (other than in the event of the Optionee's death) or (2) such
election (i) shall be subject to approval by the Committee, (ii) may not take
effect during the six-month period beginning on the date of grant of the Option
(other than in the event of the Optionee's death), (iii) must be filed with
Company Officer during (or must be filed with Company Officer in advance of,
but take effect during) the ten business day period beginning on the third
business day following the date of release of the Company's quarterly or annual
summary statements of sales and earnings and (iv) the exercise of the Option
must occur during such ten business day period. Unless the Committee otherwise
determines, any election pursuant to clause (1) may be revoked or changed only
if such revocation or change is made at least six months prior to the exercise
of the Option. Any election made pursuant to clause (2) may be revoked or
changed prior to the exercise of the Option during the ten business day period.
2.4 Termination of Option. (a) In no event may the Option be exercised
after it terminates as set forth in this Section 2.4. The Option shall
terminate, to the extent not exercised pursuant to Section 2.3 or earlier
terminated pursuant to Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of the shares
of Stock subject to the Option expire or are exercised, cancelled or forfeited,
the Optionee shall promptly return this Agreement to the Company for full or
partial cancellation, as the case may be. Such cancellation shall be effective
regardless of whether the Optionee returns this Agreement. If the Optionee
continues to have rights to purchase shares of Stock hereunder, the Company
shall, within 10 days of the Optionee's delivery of this Agreement to the
Company, either (i) xxxx this Agreement to indicate the extent to which the
Option has expired or been exercised, cancelled or forfeited or (ii) issue to
the Optionee a substitute option agreement applicable to such rights, which
agreement shall otherwise be substantially similar to this Agreement in form
and substance.
3. Additional Terms and Conditions of Option.
3.1. Nontransferability of Option. The Option may not be transferred by
the Optionee other than by will or the laws of descent and distribution.
During the Optionee's lifetime the Option is exercisable only by the Optionee
or the Optionee's Legal Representative. Except as permitted by the foregoing,
the Option may not be sold, transferred, assigned, pledged, hypothecated,
encumbered or otherwise disposed of (whether by operation of law or otherwise)
or be subject to execution, attachment or similar process. Upon any attempt to
so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose
of the Option, the Option and all rights hereunder shall immediately become
null and void.
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3.2. Investment Representation. The Optionee hereby represents and
covenants that (a) any share of Stock purchased upon exercise of the Option
will be purchased for investment and not with a view to the distribution
thereof within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), unless such purchase has been registered under the
Securities Act and any applicable state securities law; (b) any subsequent sale
of any such shares shall be made either pursuant to an effective registration
statement under the Securities Act and any applicable state securities laws, or
pursuant to an exemption from registration under the Securities Act and such
state securities laws; and (c) if requested by the Company, the Optionee shall
submit a written statement, in form satisfactory to the Company, to the effect
that such representation (x) is true and correct as of the date of purchase of
any shares hereunder or (y) is true and correct as of the date of any sale of
any such shares, as applicable. As a further condition precedent to any
exercise of the Option, the Optionee shall comply with all regulations and
requirements of any regulatory authority having control of or supervision over
the issuance or delivery of the shares and, in connection therewith, shall
execute any documents which the Board of the Committee shall in its sole
discretion deem necessary or advisable.
3.3 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be appropriately adjusted by the Committee
without a change in the aggregate purchase price, other than a change in the
aggregate purchase price resulting from rounding. If any adjustment would
result in a fractional security being subject to the Option, the Company shall
pay the Optionee, in connection with the first exercise of the Option, in whole
or in part, occurring after such adjustment, an amount in cash determined by
multiplying (i) the fraction of such security (rounded to the nearest
hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on the
exercise date over (B) the exercise price of the Option. The decision of the
Committee regarding the amount and timing of any adjustment pursuant to this
Section 3.3 shall be final, binding and conclusive.
3.4. Compliance with Applicable Law. The Option is subject to the
condition that if the listing, registration or qualification of the shares
subject to the Option upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the
purchase or delivery of shares hereunder, the Option may not be exercised,
unless such listing, registration, qualification, consent or approval shall
have been effected or obtained, free of any conditions not acceptable to the
Company. The Company agrees to use reasonable efforts to effect or obtain any
such listing, registration, qualification, consent or approval.
3.5. Delivery of Certificates. Upon the exercise of the Option, in whole
or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.
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3.6. Option Confers No Rights as Stockholder. The Optionee shall not be
entitled to any privileges of ownership with respect to shares of Stock subject
to the Option unless and until purchased and delivered upon the exercise of the
Option, and the Optionee becomes a stockholder of record with respect to such
delivered shares; and the Optionee shall not be considered a stockholder of the
Company with respect to any such shares not so purchased and delivered.
3.7. Company to Reserve Shares. The Company shall at all times prior to
the expiration or termination of the Option reserve and keep available, either
in its treasury or out of its authorized but unissued shares of Stock, the full
number of shares subject to the Option from time to time.
3.8. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan, and shall be interpreted in accordance therewith. The
Optionee hereby acknowledges receipt of a copy of the Plan.
4. Miscellaneous Provisions.
4.1. Designation as Nonqualified Stock Option. The Option is hereby
designated as not constituting an "incentive stock option" within meaning of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code"); this
Agreement shall be interpreted and treated consistently with such designation.
4.2. Meaning of Certain Terms. (a) References in this Agreement to
sections of the Code shall be deemed to refer to any successor section of the
Code or any successor internal revenue law.
(b) As used herein, the term "Legal Representative" shall include an
executor, administrator, guardian, legal representative or other person acting
in a similar capacity.
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4.3. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.4. Notices. All notices, requests or other communications provided for
in this Agreement shall be made in writing either (a) by actual delivery to the
party entitled thereto, (b) by mailing in the United States mails to the last
known address of the party entitled thereto, via certified or registered mail,
postage prepaid and return receipt requested, or (c) by telecopy with
confirmation of receipt. The notice shall be deemed to be received in case of
delivery, on the date of its actual receipt by the party entitled thereto, in
case of mailing by certified or registered mail, five days following the date
of such mailing, and in the case of telecopy, on the date of confirmation of
receipt.
4.5. Governing Law. The Option, this Agreement, and all determinations
made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the State of
Delaware and construed in accordance therewith without regard to principles of
conflicts of laws.
4.6. Counterparts. This Agreement may be executed in two counterparts
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
AM INTERNATIONAL, INC.
By:________________________________
Accepted this __day of
_________________, 199_.
______________________
Optionee
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