STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made as of January 15, 2004,
by and between Xxxxxx Natural Corporation, a Delaware corporation (the
"Company"), and Xxxx X. Xxxx ("Holder").
Preliminary Recitals
A. Holder is an employee of the Company or one of its subsidiaries or
affiliates.
B. Pursuant to the Xxxxxx Natural Corporation 2001 Stock Option Plan (the
"Plan"), the Company desires to xxxxx Xxxxxx an incentive stock option to
purchase shares of the Company's common stock, par value $.005 per share (the
"Common Stock").
NOW, THEREFORE, the Company and Holder agree as follows:
1. Grant of Incentive Stock Option. The Company hereby grants to Holder,
subject to the terms and conditions set forth herein, the incentive stock option
("ISO") to purchase up to 60,000 shares of Common Stock, at the purchase price
of $8.15 per share, such ISO to be exercisable and exercised as hereinafter
provided.
2. Exercise Period. The ISO shall expire three months after the termination
of the Holder's employment with the Company and its subsidiaries and affiliates
(the "Xxxxxx Natural Group") unless the employment is terminated by a member of
the Xxxxxx Natural Group for Cause (as defined below) or unless the employment
is terminated by reason of the death or Total Disability (as defined below) of
Holder. If the Holder's employment is terminated by a member of the Xxxxxx
Natural Group for Cause, the ISO shall expire as of the date employment
terminates. If the Holder's employment terminates due to his death or Total
Disability, then the ISO may be exercised by Holder or the person or persons to
which Holder's rights under this Agreement pass by will, or if no such person
has such right, by his executors or administrators, within six months after the
date of death or Total Disability, but no later than the expiration date
specified in Section 3(c) below. "Cause" means the Holder's act of fraud
dishonesty, knowing and material failure to comply with applicable laws or
regulations or satisfactorily perform his duties of employment, insubordination
or drug or alcohol abuse, as determined by the Committee of the Xxxxxx Natural
Corporation Stock Option Plan (the "Committee"). "Total Disability" means the
complete and permanent inability of Holder to perform all of his duties of
employment with the Company, as determined by the Committee upon the basis of
such evidence, including independent medical reports and data, as the Committee
deems appropriate or necessary.
3. Exercise of Option
(a) Subject to the other terms of this Agreement regarding
the exercisability of the ISO, and provided that Holder is employed by a member
of the Xxxxxx Natural Group on the relevant date, the ISO may only be exercised
in respect of the number of shares listed in column A from and after the
exercise dates listed in column X,
Xxxxxx "X" Xxxxxx "X"
Number of Shares Exercise Date
---------------- ----------------
12,000 January 15, 2005
12,000 January 15, 2006
12,000 January 15, 2007
12,000 January 15, 2008
12,000 January 15, 2009
(b) This ISO may be exercised, to the extent exercisable by its terms,
from time to time in whole or in part at any time prior to the expiration
thereof. Any exercise shall be accompanied by a written notice to the Company
specifying the number of shares as to which this ISO is being exercised (the
"Option Shares"). Notations of any partial exercise or installment exercise,
shall be made by the Company on Schedule A hereto.
(c) Notwithstanding anything else herein to the contrary, this ISO
shall expire ten years from the date of this agreement.
(d) The Holder hereby agrees to notify the Company in writing in the
event shares acquired pursuant to the exercise of this ISO are transferred,
other than by will or by the laws of descent and distribution, within two years
after the date of this agreement or within one year after the issuance of such
shares pursuant to such exercise.
4. Payment of Purchase Price Upon Exercise. At the time of any exercise of
the ISO the purchase price of the ISO shall be paid in full to the Company in
any of the following ways or in any combination of the following ways:
(a) By check or other immediately available funds.
(b) With property consisting of shares of Common Stock. (The shares of
Common Stock to be used as payment shall be valued as of the date of exercise of
the ISO at the Closing Price as defined below. For example, if Holder exercises
the option for 4,000 shares at a total Exercise Price of $8,000, assuming
exercise price of $2.00 per share, and the Closing Price is $5.00, he may pay
for the 4,000 Option Shares by transferring 1,600 shares of Common Stock to the
Company.)
(c) By delivering a properly executed exercise notice together with
irrevocable instructions to a broker to deliver promptly to the company the
amount of sale or loan proceeds necessary to pay the purchase price and
applicable withholding taxes, and such other documents as the Committee may
determine.
(d) For purposes of this Agreement, the term "Closing Price" means,
with respect to the Company's Common Stock, the last sale price regular-way or,
in case no such sale takes place on such date, the average of the closing bid
and asked prices regular-way on the principal national securities exchange on
which the securities are listed or admitted to trading; or, if they are not
listed or admitted to trading on any national securities exchange, the last sale
price of the securities on the consolidated transaction reporting system of the
National Association of Securities Dealers ("NASD"), if such last sale
information is reported on such system or, if not so reported, the average of
the closing bid and asked prices of the securities on the National Association
of Securities Dealers Automatic Quotation System ("NASDAQ") or any comparable
system or, if the securities are not listed on NASDAQ or a comparable system,
the average of the closing bid and asked prices as furnished by two members of
NASD selected from time to time by the Company for that purpose.
5. Purchase for Investment; Resale Restrictions. Unless at the time of
exercise of the ISO there shall be a valid and effective registration statement
under the Securities Act of 1933 ("'33 Act") and appropriate qualification and
registration under applicable state securities laws relating to the Option
Shares being acquired, Holder shall upon exercise of the ISO give a
representation that he is acquiring such shares for his own account for
investment and not with a view to, or for sale in connection with, the resale or
distribution of any such shares. In the absence of such registration statement,
Holder shall execute a written affirmation, in a form reasonably satisfactory to
the Company, of such investment intent. Holder further agrees that he will not
sell or transfer any Option Shares until he requests and receives an opinion of
the Company's counsel or other counsel reasonably satisfactory to the Company to
the effect that such proposed sale or transfer will not result in a violation o
the '33 Act, or a registration statement covering the sale or transfer of the
shares has been declared effective by the Securities and Exchange Commission, or
he obtains a no-action letter from the Securities and Exchange Commission with
respect to the proposed transfer.
6. Nontransferability. This ISO shall not be transferable other than by
will or by the laws of descent and distribution. During the lifetime of Holder,
this ISO shall be exercisable only by Holder.
7. Adjustments.
(a) In the event of any change in the outstanding Common Stock of
the Company by reason of any stock recapitalization, merger, consolidation,
combination or exchange of shares, the kind of shares subject to the ISO and
their purchase price per share (but not the number of shares) shall be
appropriately adjusted consistent with such change in such manner as the Board
of Directors of the Company may deem equitable. In the event of a stock dividend
or stock split the kind of shares, their purchase price per share and the number
of shares shall be appropriately adjusted, consistent with such change in such
manner as the Board of Directors may deem equitable. Any adjustment so made
shall be final and binding on Holder. No adjustments shall be made that would
have the effect of modifying an ISO under Internal Revenue Code Sections 422 and
424.
(b) Notwithstanding anything else herein to the contrary, upon the
occurrence of a change in control (as defined in 7(c) below), any portion of the
option not theretofore excercisable, shall immediately become exercisable in its
entirety and the option (being the Option to purchase shares of Common Stock
subject to the applicable provisions of the Plan and awarded in accordance with
the Plan in terms of section 1 above) may, with the consent of Holder, be
purchased by the Company for cash at a price equal to the fair market value (as
defined in 7(c) below) less the purchase price payable by Holder to exercise the
option as set out in Article 1 above for one (1) share of Common Stock of the
Company multiplied by the number of shares of Common Stock which Holder has the
option to purchase in terms of Article 1 above.
(c) For the purposes of this Agreement
(i) "Change in Control" means;
(A) the acquisition of "Beneficial Ownership" by any person
(as defined in rule 13(d) - 3 under the Securities Exchange Act 1934),
corporation or other entity other than the Company or a wholly owned subsidiary
of the Company of 50% or more of the outstanding Stock,
(B) the sale or disposition of substantially all of the
assets of the Company, or
(C) the merger of the Company with another corporation in
which the Common Stock of the Company is no longer outstanding after such
merger.
(ii) "Fair Market Value" means, as of any date, the Closing Price
for one share of the common Stock of the company on such date.
8. No Rights as Stockholder. Holder shall have no rights as a stockholder
with respect to any shares of Common Stock subject to this ISO prior to the date
of issuance to him of a certificate or certificates for such shares.
9. No Right to Continue Employment. This Agreement shall not confer upon
Holder any right with respect to continuance of employment with any member of
the Xxxxxx Natural Group nor shall it interfere in any way with the right of any
such member to terminate his employment at any time.
10. Compliance With Law and Regulation. This Agreement and the obligation
of the Company to sell and deliver shares of Common Stock hereunder shall be
subject to all applicable federal and state laws, rules and regulations and to
such approvals by any government or regulatory agency as may be required. If at
any time the Board of Directors of the Company shall determine that (i) the
listing, registration or qualification of the shares of Common Stock subject or
related thereto upon any securities exchange or under any state or federal law,
or (ii) the consent or approval of any government regulatory body, is necessary
or desirable as a condition of or in connection with the issue or purchase of
shares of Common Stock hereunder, this ISO may not be exercised in whole or in
part unless such listing, registration, qualification, consent, approval or
agreement shall have been effected or obtained free of any conditions not
acceptable to the Board of Directors.
11. Tax Withholding Requirements. The Company shall have the right to
require Holder to remit to the Company an amount sufficient to satisfy any
federal, state or local withholding tax requirements prior to the delivery of
any certificate or certificates for Common Stock.
12. Fractional Shares. Notwithstanding any other provision of this
Agreement, no fractional shares of stock shall be issued upon the exercise of
this ISO and the Company shall not be under any obligation to compensate Holder
in any way for such fractional shares.
13. Notices. Any notice hereunder to the Company shall be addressed to it
at its office at 0000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, Attention:
Xxxxxx X. Xxxxx with a copy to Xxxxxxxx Xxxx, Xxxxxxx & Xxxxxx, 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, and any notice hereunder to Holder shall be addressed
to him at 00000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxx 00000, subject to the right
of either party to designate at any time hereafter in writing some other
address.
14. Amendment. No modification, amendment or waiver of any of the
provisions of this Agreement shall be effective unless in writing specifically
referring hereto, and signed by both parties.
15. Governing Law. This Agreement shall be construed according to the laws
of the State of Delaware and all provisions hereof shall be administered
according to and its validity shall be determined under, the laws of such State,
except where preempted by federal laws.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, Xxxxxx Natural Corporation has caused this Agreement to
be executed by a duly authorized officer and Holder has executed this Agreement
both as of the day and year first above written. XXXXXX NATURAL CORPORATION
By:s/Xxxxxx X. Xxxxx
--------------------------
Title: Chairman of the Board
/s/Xxxx X. Xxxx
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Xxxx X. Xxxx
