Exhibit 10.42
STOCK OPTION AND RESTRICTED STOCK AGREEMENT
THIS STOCK OPTION AND RESTRICTED STOCK AGREEMENT ("Agreement") made
as of the 20th day of November by and between ▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated, a
Delaware corporation, with its principal United States office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
("Executive").
W I T N E S S E T H:
As an inducement to Executive to join the Company, the Board of
Directors of the Company has authorized this Agreement. Executive has been
granted on November 20, 2000 (the "Grant Date"), subject to execution of this
Agreement, (a) a non-qualified stock option (the "Option") to purchase the
number of shares of the Company's common stock, par value $.01 per share (the
"Shares"), set forth below and (b) the number of restricted Shares (the
"Restricted Stock", and together with the Option, the "Grant") set forth below,
pursuant to the terms of the Employment Agreement, dated as of November 20,
2000, by and between the Company and Executive (the "Employment Agreement").
Unless otherwise indicated, any capitalized term used herein, but not defined
herein, shall have the meaning ascribed to such term in the Employment
Agreement. References to the "Board" shall mean the Board of Directors of the
Company and references to "Committee" shall mean the Compensation Committee of
the Board.
1. The Grant
(a) Subject to the terms and conditions set forth herein, the Executive is
granted (a) an Option to purchase five hundred thousand (500,000) Shares at a
per Share exercise price of $2.43750 and (b) seven hundred thousand (700,000)
Shares of Restricted Stock. No part of the Option is intended to be an
"incentive stock option" within the meaning of section 422 of the Internal
Revenue Code of 1986, as amended.
(b) The term of the Option shall be ten (10) years from the Grant Date,
subject to earlier termination as provided in Section 3 herein. Upon expiration
of the Option, the Option shall be canceled and no longer exercisable.
(c) Subject to Section 3 hereof, the Option will vest and become
exercisable, as to one-half (1/2) of the Shares subject to the Option on May 20,
2001 and as to the remaining one-half (1/2) of the Shares subject to the Option,
pro rata on the 20th day of each month over the eighteen (18) month period
immediately following May 20, 2001 (each such date hereinafter referred to as a
"Vesting Date"); provided, that on each of such Vesting Dates, Executive has
been continuously employed by the Company through such date. For avoidance of
doubt, there shall be no proportionate or partial vesting in the periods prior
to each Vesting Date and vesting shall occur only on the applicable Vesting Date
pursuant to this Section 1(c). To the extent the Option has become vested and
exercisable, the Option may thereafter be exercised by Executive, in whole or in
part, at anytime or from time to time prior to the expiration of the Option as
provided herein.
(d) Subject to Section 3 hereof, the Restricted Stock will vest as to
one-half (1/2) of the Shares on May 20, 2001 and as to the remaining one-half
(1/2) of the Shares pro rata on the 20th day of each month over the eighteen
(18) month period immediately following May 20, 2001 (the "Second
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Tranche"); provided, that on each such vesting date, Executive has been
continuously employed by the Company through such date. For avoidance of doubt,
there shall be no proportionate or partial vesting in the periods prior to each
vesting date and vesting shall occur only on the applicable vesting date
pursuant to this Section 1(d). In the event that the Company has positive
Adjusted Net Income (as defined below) for any twelve month period ending on the
last day of a calendar quarter, the Second Tranche of the Restricted Stock shall
immediately vest. Upon satisfaction of the vesting requirements set forth in
this Section 1(d), the restrictions on the vested Restricted Stock, as set forth
in Section 4 of this Agreement, shall lapse. Adjusted Net Income means the net
income (loss) of the Company and its subsidiaries, on a consolidated basis,
determined in accordance with GAAP, plus, to the extent deducted in computing
net income (loss), (a) supplier warrant costs, (b) option payroll taxes, (c)
stock compensation costs, (d) restructuring and other one-time charges and (e)
preferred stock dividends.
(e) To the extent vested hereunder, the Option may be exercised by
Executive by delivering notice to the Company's principal office, to the
attention of its Secretary. Such notice shall be accompanied by this Agreement,
shall specify the number of Shares with respect to which the Option is being
exercised and the effective date of the proposed exercise and shall be signed by
Executive or other person then having the right to exercise the Option. Payment
for Shares purchased upon the exercise of the Option shall be made on or before
the effective date of such exercise by one or a combination of the following
methods: (i) in cash or by personal check, certified check, bank cashier's check
or wire transfer; (ii) if the Shares are traded on a national securities
exchange, the Nasdaq Stock Market, Inc. or quoted on a national quotation system
sponsored by the National Association of Securities Dealers or a comparable
National Market System (a "Public Market"), through a "cashless exercise"
procedure whereby Executive delivers irrevocable instructions to a broker to
deliver promptly to the Company an amount equal to the aggregate exercise price;
(iii) subject to the approval of the Committee, in Shares owned by Executive for
at least six (6) months prior to the date of exercise (or such other period
required by accounting standards to avoid a charge to Company earnings) and
valued at their "Fair Market Value" on the effective date of such exercise; (iv)
subject to the approval of the Committee, by such other provisions as the
Committee may from time to time authorize; or (v) by any other method then
generally available to holders of stock options issued under the Company's 1999
Omnibus Plan (the "Omnibus Plan"). For purposes of this Agreement, Fair Market
Value shall have the same meaning as in the Omnibus Plan as in effect on the
date hereof; provided, however, that, if Shares are no longer traded on a Public
Market (which shall be deemed equivalent to being traded on a national
securities exchange for purposes of the definition of Fair Market Value as used
in the Omnibus Plan) at a time when their Fair Market Value is to be determined
pursuant to this Agreement, then Fair Market Value shall mean as determined in
good faith by the Committee without discount for being a minority interest.
(f) Subject to the terms in this Agreement, certificates for Shares
purchased upon the exercise of an Option shall be issued in the name of
Executive or other person entitled to receive such Shares, and delivered to
Executive or such other person as soon as practicable following the effective
date on which the Option is exercised.
2. Shares; Adjustment Upon Certain Events
(a) Shares to be issued under this Agreement shall be made available, at
the discretion of the Board, either from authorized but unissued Shares, from
issued Shares reacquired by the Company or from Shares purchased by the Company
on the open market specifically for this purpose.
(b) The existence of this Agreement and the Option and Restricted Stock
granted hereunder shall not affect in any way the right or power of the Board or
the stockholders of the Company to make or authorize
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any adjustment, recapitalization, reorganization or other change in the
Company's capital structure or its business, any merger or consolidation of the
Company or any affiliate, any issue of bonds, debentures, preferred or prior
preference stocks ahead of or affecting the Shares, the authorization or
issuance of additional Shares, the dissolution or liquidation of the Company or
any affiliate or sale or transfer of all or part of the assets or business of
the Company or any affiliate, or any other corporate act or proceeding.
(c) In the event that the Committee shall determine that any dividend or
other distribution (whether in the form of cash, Shares or other property),
recapitalization, stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects Shares such that an adjustment
is appropriate in order to prevent dilution or enlargement of the rights of
Executive under the Option, then the Committee shall make such equitable changes
or adjustments as it deems necessary or appropriate to the Option's exercise
price, to the number and kind of Shares, securities or other property (including
cash) issued or issuable upon exercise of the Option, and to other terms and
conditions of the Option, provided that the Option shall in no respect be
treated less favorably with respect to such changes and adjustments than any
stock option issued heretofore under the Omnibus Plan. The determination of the
Committee, if made in good faith, shall be final and binding on the Company and
the Executive.
3. Effect of Termination of Employment; Change in Control
(a) Upon Executive's Termination without Cause or Termination for Good
Reason, the Grant will immediately vest and, in the case of the Option, become
exercisable (to the extent not then vested and, in the case of the Option,
exercisable) with respect to (i) fifty percent (50%) of the Shares if the
termination takes place prior to May 20, 2001; (ii) eighty three point three
three percent (83.33%) of the Shares if the termination takes place on or after
May 20, 2001 and prior to May 20, 2002; and (iii) one hundred percent (100%) of
the Shares if the termination takes place thereafter.
(b) Upon Executive's Termination of employment as the result of his death
or a Termination for Disability, the Grant shall immediately vest as to fifty
percent (50%) of Executive's then unvested Shares thereunder.
(c) In the event of a Change in Control while the Executive is employed by
the Company, the Grant will fully vest and, in the case of the Option, become
exercisable in full (to the extent not then vested and, in the case of the
Option, exercisable) with respect to all Shares subject to the Grant (i) six (6)
months after the Change in Control if the Executive is then employed by the
Company or, (ii) if earlier, at, after or in connection with or anticipation of
the Change in Control, upon a Termination without Cause, Termination for Good
Reason, Termination as the result of death, Termination for Disability or, (iii)
immediately prior to the Change in Control, if the Grant is not continued,
assumed or substituted for upon a Change in Control. For this purpose, the Grant
will not be considered substituted for unless the terms and conditions of the
substitute Grant are no less favorable to the Executive than those of the Grant.
(d) Upon Executive's Termination for Cause or Termination without Good
Reason, the unvested portion of the Grant shall be immediately forfeited and
canceled.
(e) Upon Termination of Executive's employment with the Company, the
portion of the Grant that is not, and does not become, vested in accordance with
the terms hereof shall be immediately forfeited. The vested portion of the
Option shall expire on the earlier of (i) the tenth (10th) anniversary of the
Grant Date, or (ii)(A) eighteen (18) months after any such Termination if the
Termination is as of the result of
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Executive's death, Termination for Disability, Termination without Cause,
Termination for Good Reason, or non-extension of the Employment Term in
accordance with Section 1 of the Employment Agreement as a result of notice from
the Company, and (B) ninety (90) days after such Termination if such Termination
is a result of Executive's Termination for Cause, voluntary Termination by
Executive without Good Reason, or non-extension of the Employment Term in
accordance with Section 1 of the Employment Agreement as a result of notice by
Executive.
4. Nontransferability of Grant
Except as otherwise provided herein, neither the Option nor any other
rights hereunder shall be transferable by Executive otherwise than by will or
under applicable laws of descent and distribution. The Option shall be
exercisable, during Executive's lifetime only by Executive or his Permitted
Transferees (as defined below). In addition, neither the Option nor any other
rights hereunder shall, except as otherwise provided herein, be assigned,
negotiated, pledged, or hypothecated in any way or be subject to execution,
attachment or similar process. Notwithstanding the foregoing, Executive may,
upon providing written notice to the Company, elect to transfer all or any
portion of the Option to members of his immediate family, including, but not
limited to, children, grandchildren and spouse, or to trusts for the benefit of
such immediate family members or to partnerships in which such family members
are the only partners ("Permitted Transferees"), provided, however, that no such
transfer by Executive may be made in exchange for consideration. Prior to the
vesting of any Restricted Stock, no transfer of Executive's rights with respect
to such Restricted Stock, whether voluntary or involuntary, by operation of law
or otherwise, shall be permitted. Immediately upon any attempt to transfer such
rights, such Restricted Stock, and all of the rights related thereto, shall be
forfeited by Executive.
5. Rights as a Stockholder
Neither Executive nor his Permitted Transferees shall have any rights as a
stockholder with respect to any Shares subject to the Option until Executive or
his Permitted Transferees, as the case may be, shall have become the holder of
record of such Shares, and no adjustments shall be made for dividends in cash or
other property or distributions or other rights in respect of any such Shares,
except as otherwise specifically provided for herein.
6. Determinations
Each determination, interpretation or other action made or taken pursuant
to the provisions of this Agreement by the Committee or the Board in good faith
shall be final, conclusive and binding for all purposes and upon all persons,
including, without limitation, the Executive and the Company, and their
respective heirs, executors, administrators, personal representatives and other
successors in interest.
7. Securities Representations
If the Committee or Board determines that the law so requires, the holder
of the Restricted Stock granted hereunder and the holder of the Option granted
hereunder shall, upon any exercise or conversion thereof, execute and deliver to
the Company a written statement, in a form satisfactory to the Company,
representing and warranting that:
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(a) the holder has been advised that holder may be an "affiliate" within
the meaning of Rule 144 under the Securities Act of 1933 (the "Act") and in this
connection the Company is relying in part on the holder's representations set
forth in this Section;
(b) the holder understands that the Restricted Stock and Shares received
on any exercise of the Option must be held indefinitely unless an exemption from
any applicable resale restrictions is available or the Company files an
additional registration statement (or a "re-offer prospectus") with regard to
such Shares and the Company is under no obligation to register such Shares (or
to file a "re-offer prospectus"), except as otherwise permitted herein;
(c) the holder understands that the exemption from registration under Rule
144 will not be available unless (i) a public trading market then exists for the
Shares, (ii) adequate information concerning the Company is then available to
the public, and (iii) other terms and conditions of Rule 144, or any exemption
therefrom are complied with and that any sale of the Restricted Stock or Shares
acquired pursuant to the Option may be made only in limited amounts in
accordance with such terms and conditions;
(d) Shares acquired pursuant to the Option and/or the Restricted Stock are
for the holder's own account and not acquired or obtained with a view to, or for
sale in connection with, the distribution thereof, nor with any present
intention of distributing or selling any such Shares;
(e) in the event that the holder is permitted to sell, transfer, pledge,
hypothecate, assign or otherwise dispose of the Shares acquired pursuant to the
Option or the Restricted Stock, the holder may only do so pursuant to a
registration statement under the Act and qualification under applicable state
securities laws or pursuant to an opinion of counsel satisfactory to the Company
that such registration is not required, and that the transaction (if it involves
a sale in the over-the-counter market or on a securities exchange) complies with
the provisions of Rule 144 under the Act. A stop-transfer order will be placed
on the books of the Company with respect to the certificates evidencing the
Shares acquired pursuant to the Option or the Restricted Stock, and such
certificates shall bear any required legends until such time as the Shares
evidenced by such certificates shall have been registered under the Act or shall
have been transferred in accordance with an opinion of counsel satisfactory to
the Company that such registration is not required;
(f) the holder has been advised that holder may be subject to the
reporting requirements of Section 16(a) of the Securities Exchange Act of 1934
(the "Securities Act") and that the holder may be subject to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
restrictions and reporting requirements on the purchase and sale of securities
of the Company imposed under the Securities Act.
8. Other Conditions
(a) Except as otherwise provided herein, the Company shall be under no
obligation to effect the registration of the Restricted Stock or Option or any
Shares acquired pursuant to the Option, pursuant to the Act or under any state
laws, provided that, to the extent that stock options issued under the Omnibus
Plan heretofore are then currently effectively registered on Form S-8 (or a
successor form thereto), the Company shall use good faith efforts to similarly
register the Option and the Shares acquired pursuant to the Option and the
Restricted Stock and, if it cannot, shall (after consultation with Executive)
use good faith efforts based in good faith consideration of other Company
business activities and concerns and the available alternatives to take such
other steps as are reasonably available to register the Restricted Stock and
Shares acquired pursuant to the Option for resale by the Executive at such time
as Executive wishes to sell them. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause to be issued or delivered
any
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certificates evidencing Restricted Stock and Shares acquired pursuant to the
Option unless and until the Company is advised by its counsel that the issuance
and delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authority and the requirements of any securities
exchange on which Shares are traded.
(b) The transfer of any shares of Restricted Stock or Shares acquired
pursuant to the Option shall be effective only at such time as counsel to the
Company shall have determined that the issuance and delivery of such Shares is
in compliance with all applicable laws, regulations of governmental authority
and the requirements of any securities exchange on which Shares are traded. The
Committee, may in its good faith discretion, defer the effectiveness of any
transfer of Shares hereunder in order to allow the issuance of such Shares to be
made pursuant to registration or an exemption from registration or other methods
for compliance available under federal or state securities laws. The Committee
shall inform the Executive in writing of its decision to defer the effectiveness
of a transfer. During the period of such deferral, Executive may, by written
notice, withdraw the portion of the Option exercise subject to the deferral and
obtain the refund of any amount paid with respect thereto.
9. Withholding Taxes
(a) Upon any exercise of the Option or vesting of the Restricted Stock,
Executive will pay to the Company, or make arrangements satisfactory to the
Company that are in compliance with applicable law regarding payment of, any
U.S. federal, state or local taxes of any kind required by law to be withheld in
respect of such exercise ("Tax Obligations"). If the Committee generally permits
Tax Obligations with regard to stock options or restricted stock issued
heretofore under the Omnibus Plan to be satisfied in a particular manner, to the
extent legally permitted Executive may satisfy his Tax Obligations under this
Section 9(a) in the same manner;
(b) The Company shall, to the extent permitted by law, have the right to
deduct from any payment of any kind otherwise due to Executive the amount of any
Tax Obligations not timely satisfied pursuant to Section 9(a); and
(c) In the event that any Tax Obligations are not satisfied on a timely
basis pursuant to Sections 9(a) or 9(b), the Company may, but shall not be
required to, pay such required withholding and treat such amount as a demand
loan to Executive at the maximum rate permitted by law, with such loan, at the
Company's sole discretion and, provided the Company so notifies Executive within
thirty (30) days of the making of the loan, secured by the Shares to which such
Tax Obligations relate and any failure by Executive to pay the loan upon demand
shall entitle the Company to all of the rights at law of a creditor secured by
such Shares. The Company may hold as security any certificates representing such
Shares and, upon demand of the Company, Executive shall deliver to the Company
any certificates in Executive's possession representing such Shares together
with a stock power duly endorsed in blank.
10. Additional Terms Relating to Restricted Stock
(a) Issuance of Certificates.
(i) Reasonably promptly after the Grant Date, the Company shall
cause to be issued a certificate, registered in the name of Executive,
evidencing the Shares of Restricted Stock; provided that the Company shall not
cause such a certificate to be issued unless it has received a power of attorney
duly
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endorsed in blank with respect to such Shares of Restricted Stock. Each such
certificate shall bear the following legend:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE STOCK REPRESENTED
HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS
(INCLUDING FORFEITURE PROVISIONS AND RESTRICTIONS AGAINST TRANSFER)
CONTAINED IN THE STOCK OPTION AGREEMENT ENTERED INTO BETWEEN THE
REGISTERED OWNER OF SUCH STOCK AND ▇▇▇▇▇▇▇▇▇.▇▇▇. A COPY OF THE
STOCK OPTION AGREEMENT IS ON FILE WITH THE SECRETARY OF THE COMPANY.
Such legend shall not be removed until such Restricted Stock vests
pursuant to the terms hereof.
(ii) Each certificate issued pursuant to this Section 10(a),
together with the powers relating to the Restricted Stock evidenced by such
certificate, shall be held by the Company unless the Committee determines
otherwise.
(b) Consequences of Vesting. Upon the vesting of any Restricted Stock
pursuant to the terms hereof, the restrictions of Section 4 shall lapse with
respect to such Restricted Stock. Reasonably promptly after any Restricted Stock
vests, the Company shall cause to be delivered to the Executive a certificate
evidencing such Stock, free of the legend set forth in Section 10(a).
11. Miscellaneous
(a) This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, personal legal representatives,
successors, trustees, administrators, distributees, devisees and legatees. The
Company shall assign to, and require, any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree in
writing to perform this Agreement. Notwithstanding the foregoing, this Agreement
may not be assigned by the Executive.
(b) No modification or waiver of any of the provisions of this Agreement
shall be effective unless in writing and signed by the party against whom it is
sought to be enforced.
(c) This Agreement may be executed in one or more counterparts, all of
which taken together shall constitute one agreement.
(d) The failure of any party hereto at any time to require performance by
another party of any provision of this Agreement shall not affect the right of
such party to require performance of that provision, and any waiver by any party
of any breach of any provision of this Agreement shall not be construed as a
waiver of any continuing or succeeding breach of such provision, a waiver of the
provision itself, or a waiver of any right under this Agreement.
(e) The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall in no way restrict or modify any of the
terms or provisions hereof.
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(f) The Company shall pay all fees and expenses necessarily incurred by
the Company in connection with this Agreement and will from time to time use its
reasonable efforts to comply with all laws and regulations which, in the opinion
of counsel to the Company, are applicable thereto.
(g) All notices, consents, requests, approvals, instructions and other
communications provided for herein shall be in writing and validly given or made
when delivered, or on the second succeeding business day after being mailed by
registered or certified mail, whichever is earlier, to the persons entitled or
required to receive the same, at the addresses set forth at the heading of this
Agreement or to such other address as either party may designate by like notice.
Notices to the Company shall be addressed to its principal office, attention of
the Executive Vice President and General Counsel.
(h) To the extent not inconsistent with this Agreement or the Employment
Agreement, the provisions of the Omnibus Plan shall apply to the Restricted
Stock and Options granted herein as if the grant was under such Omnibus Plan and
the Committee shall have the right to interpret and administer the grants made
herein in the same manner as grants made under such Omnibus Plan.
(i) This Agreement shall be governed and construed and the legal
relationships of the parties determined in accordance with the laws of the state
of New York without reference to principles of conflict of laws.
(j) The Company represents and warrants that it is duly authorized by its
Board of Directors and/or the Committee (and by any other person or body whose
authorization is required) to enter into this Agreement, that there is no
agreement or other legal restriction which would prevent it from entering into,
and carrying out its obligations under, this Agreement, and that the officer
signing this Agreement is duly authorized and empowered to sign this Agreement
on behalf of the Company.
(k) Any dispute arising under, or relating to, this Agreement shall be
resolved in accordance with Section 14 of the Employment Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
▇▇▇▇▇▇▇▇▇.▇▇▇ INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chairman of the Board
▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇
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