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FORM OF AGREEMENT
REGARDING REPURCHASE OF STOCK UPON
CHANGE IN CONTROL EVENT
THIS AGREEMENT is entered into as of August 20, 1997,
by and between APA OPTICS, INC., a Minnesota corporation
(herein called the "Company"), and
_______________________________ (herein called the
"Executive").
WHEREAS, Executive has been employed by the Company for
several years and is currently its
___________________________________________; and
WHEREAS, Executive owns __________________________
shares (the "Shares") of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), which represents
_____% of the Common Stock outstanding as of the date
hereof; and
WHEREAS, Executive has refrained from selling Shares
for his own account, having been advised that such sales
might have an adverse impact on the public market for the
Common Stock; and
WHEREAS, the Company desires to provide Executive an
opportunity to dispose of a reasonable number of his Shares
of Common Stock in the event of a "Change in Control Event"
as defined herein;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants contained herein, the parties hereto
agree as follows:
l. Change in Control Event. For the purposes of this
Agreement, "Change in Control Event" shall mean:
(a) the consummation of any consolidation or
merger of the Company in which the Company is the
continuing or surviving corporation, other than a
merger of the Company in which the holders of the
Company's Common Stock immediately prior to the merger
have the same proportionate ownership immediately after
the merger, or
(b) any person (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) shall become the
beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of 30% or more of the Company's
outstanding stock; or
(c) during any period of two consecutive years,
individuals who at the beginning of such period
constitute the entire Board of Directors shall cease
for any reason to constitute a majority thereof unless
the election, or the nomination for election by the
Company's shareholders, of each new director was
approved by a vote of at least two-thirds of the
directors then still in office who were directors at
the beginning of the two-year period; or
(d) an event described in Paragraph 1(a), (b) or
(c) has occurred and an individual other than the
Executive holds the position held by Executive as of
the date hereof or as of the date of the Change in
Control Event or other changes have been made to the
terms and conditions of Executive's employment without
Executive's consent; provided, however, that a Change
in Control shall not be deemed to have occurred if
Executive has voluntarily resigned from or changed his
position with the Company prior to or following a
Change in Control.
2. Effective Date of Change in Control. A Change in
Control Event shall be deemed to have occurred,
(a) in the case of a transaction requiring Board
or shareholder approval, on the date of such approval;
(b) in the case of acquisition of shares, on the
date of the acquisition of the shares resulting in the
acquirer's becoming the holder of the stated amount;
(c) in the case of board membership, on the date
of election of the director(s) that results in a Change
in Control Event as defined in Section 1(c) hereof; and
(d) in the case of a change in the terms of
Executive's employment, on the date the notice of such
change is given to Executive.
3. Purchase of Stock. In the event of a Change in
Control Event, and at the option of Executive, the Company
shall purchase from Executive a number of Shares equal to up
to 4% of the shares of Common Stock outstanding immediately
prior to the Change in Control Event (or, if greater, 4% of
the shares of Common Stock outstanding at the time this
option is exercised) at a price per share equal to the
highest per share price paid in connection with the Change
in Control Event or the highest price paid in the public
market within the twelve months preceding the exercise of
this option (as adjusted to reflect any stock split, reverse
stock split, stock dividend or similar event occurring
during such period). This option shall be exercised by
Executive by delivery of written notice of the intent to
exercise, indicating the number of Shares to be purchased
(if less than the full amount permitted hereunder) and the
purchase price (as determined by Executive). The Company
shall complete such purchase within 30 days of receipt of
such notice, at which time the purchase price shall be paid
in full, in cash.
4. Term of Option. The option granted herein to
Executive shall be exercisable for a period of twelve months
from the Effective Date of the Change in Control.
5. Aggregate Shares to be Sold. This option may be
exercised more than one time during its term, but the total
number of Shares purchased by the Company shall not exceed
the maximum stated in Paragraph 3 hereof. If the Executive
has sold Shares within the twelve months preceding the
Effective Date of the Change in Control, the number of
Shares subject to this option shall be reduced by 150% of
the number of Shares sold. To the extent the full number of
Shares subject to this option is not tendered to the Company
pursuant hereto during the twelve months during which this
option is effective, Executive may sell such number of
Shares in the open market.
6. Determination of Price. The price per Share to be
paid hereunder shall be the highest of the following (in
each case, as adjusted to reflect any stock split, reverse
stock split, stock dividend, or similar event occurring
during the twelve-month period):
(a) (i) If the Company's Common Stock is
traded on an exchange or is quoted on The
Nasdaq Stock Market ("Nasdaq"), the highest
sale price reported during the twelve months
immediately preceding the date of exercise of
the option, or
(ii) If the Company's Common Stock is
not traded on an exchange or on Nasdaq, but
is traded in the over-the-counter market,
then the highest asked price reported during
the twelve months immediately preceding the
date of exercise of the option; or
(b) The highest price per share paid or
offered in any bona fide transaction related to
the Change in Control Event at any time during the
twelve-month period immediately preceding the
Effective Date of the Change in Control.
7. Resolution of Disputes. Any dispute or claim
arising out of this Agreement, or breach thereof, shall be
decided by arbitration, under the commercial arbitration
rules of the American Arbitration Association (the "AAA"),
and shall be conducted in the Minneapolis, Minnesota
metropolitan area. Demand for arbitration hereunder may be
made by either party hereto upon written notification to the
other party. The arbitration shall be by a single
arbitrator mutually selected by Executive and the Company.
If the parties do not agree upon an arbitrator within 20
days after the date of a demand for arbitration, the
selection of the single arbitrator shall be made in
accordance with the rules of the AAA. This agreement to
arbitrate shall be specifically enforceable. Any decision
rendered by the arbitrator shall be final and binding, and
judgment may be entered upon it by any court having
jurisdiction. The arbitrator shall assess arbitration fees,
expenses, attorneys' fees, and compensation in accordance
with the applicable AAA rules. Nothing herein contained
shall bar either party from seeking equitable remedies in a
court of appropriate jurisdiction.
8. Entire Agreement; Headings. This Agreement is the
entire agreement between the parties on its subject matter
and shall be deemed to supersede any other agreements
allegedly made between the parties regarding the subject
matter. The parties represent that no other such agreements
or understandings exist. Headings shall not be utilized in
any interpretation of this Agreement.
9. Notices. Any notice or other communication
provided for herein or given hereunder shall be in writing
and shall be delivered in person or, in the case of the
Company, to its Chairman, or mailed by first class
registered or certified mail, postage prepaid, addressed to
the Company at its registered office in the State of
Minnesota and addressed to the Executive or any other person
at the last known address of such person appearing on the
books of the Company.
10. Amendment. This Agreement may not be changed,
modified or amended except in writing signed by both
parties.
11. Invalidity of Any Provision. The provisions of
this Agreement are severable, it being the intention of the
parties hereto that should any provisions hereof be invalid
or unenforceable, such invalidity or unenforceability of any
provision shall not affect the remaining provisions hereof,
but the same shall remain in full force and effect as if
such invalid or unenforceable provision or provisions were
omitted.
12. Successors and Assigns. This Agreement shall be
binding upon, and inure to the benefit of, the Company, its
successors and assigns, and Executive, his heirs, legal
representatives and assigns.
13. Governing Law. This Agreement is being delivered
and is intended to be performed in the State of Minnesota
and shall be construed and enforced in accordance with the
laws of such state.
14. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which
shall be deemed an original, but all of which together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
APA Optics, Inc.
By
_________________________________
Its________________________________
EXECUTIVE
____________________________________
____________________________________