EXHIBIT (10)(b)
STOCK OPTION CONTRACT
FOR
KEY ASSOCIATES
IN THE
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, INC. 1991 STOCK OPTION PLAN
Pursuant to the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc. 1991 Stock Option Plan (the "Plan"), the
Option Committee has approved granting ____________, who as of the date of grant
is a salaried employee (the "Key Associate") of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc. (the
"Company") or a subsidiary corporation of the Company, an option to purchase
shares of Common Stock, par value $.02 per share ("Common Stock"), of the
Company on the terms and subject to the conditions set forth in the Plan and in
this Contract. Terms not defined in this Contract shall have the meanings
ascribed to them in the Plan.
Therefore, the Company and Key Associate hereby agree this 27th day of May, 1997
(the "Date of Grant") as follows:
1. GRANT OF OPTION. The Company hereby grants to the Key Associate, as a matter
of separate inducement and not in lieu of any salary or other compensation for
services, the right and option to purchase (the "Option"), in the aggregate,
______ shares of Common Stock, at the following exercise prices (hereinafter
referred to collectively as the "Exercise Prices" and singularly as an "Exercise
Price"): an exercise price of Nineteen Dollars and 75/100 ($19.75) per share
with respect to _______ Shares subject to the Option; an exercise price of
Twenty-One Dollars and 725/1,000 ($21.725) per share with respect to ______
Shares subject to the Option; and an exercise price of Twenty-Three Dollars and
70/100 ($23.70) per share with respect to ______ Shares subject to the Option.
The term of the Option shall be ten (10) years from the Date of Grant, subject
to earlier termination as provided in the Plan and in this Contract. Subject to
all other terms and conditions in the Plan and this Contract, the Option shall
be irrevocable. The Option is not intended to be an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. EXERCISE OF OPTION.
(a) Subject to all other terms of the Plan and this Contract, the Key
Associate may exercise the Option in whole at any time, or in part from time to
time, during a period of eight (8) years commencing two (2) years from the Date
of Grant and terminating at the close of business on May 27, 2007; PROVIDED,
HOWEVER, that the Option shall be exercisable with respect to thirty-three and
one-third percent (33 1/3%) of the aggregate number of Shares initially subject
to the Option during each of the third, fourth and fifth years of the Option;
and, PROVIDED FURTHER, that to the extent otherwise exercisable, the Option
shall be exercisable at any Exercise Price or at a combination of Exercise
Prices, except that in no event shall the number of Shares with respect to which
the Option is exercised at a given
Exercise Price exceed the number of Shares subject to the Option at such
Exercise Price. The term "year of the Option" shall mean a one (1) year period
commencing with the Date of Grant, or the anniversary of the Date of Grant, as
the case may be.
(b) The right to purchase Shares under the Option shall be cumulative,
so that if the full number of Shares purchasable in a period shall not be
purchased, the balance may be purchased at any time or from time to time
thereafter, but not after May 27, 2007. Notwithstanding the foregoing, in no
event (i) may the Option be exercised in whole or in part after the tenth
anniversary of the Date of Grant, or (ii) may a fraction of a Share be purchased
under the Option.
3. PAYMENT OF OPTION PRICE.
(a) The Key Associate shall exercise the Option by giving written
notice, in substantially the form attached hereto, to the Corporate Secretary of
the Company, at the Company's principal business office, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, specifying the number of Shares to be
purchased. Payment of the purchase price for the Shares purchased may be made by
delivery of (i) a check payable to the order of the Company, (ii) previously
acquired shares of Company Common Stock (in proper form for transfer and
accompanied by all requisite stock transfer tax stamps or cash in lieu thereof)
owned by such holder having a fair market value equal to the exercise price
applicable to that portion of the Option being exercised (such fair market value
to be determined in accordance with the Plan), or (iii) a combination of the
foregoing.
(b) The Option will be considered exercised on the date that the
Company receives full payment of the aggregate purchase price for the Shares at
the Company's principal business office, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Corporate Secretary.
4. TERMINATION OF EMPLOYMENT.
(a) Upon termination of employment of the Key Associate with the
Company and all subsidiary corporations and parent corporations of the Company,
the unexercised portion of the Option shall terminate and become null and void;
provided, however, that:
(i) if the Key Associate shall die while in the employ of such
corporation or during either the three (3) month or one (1) year
period, whichever is applicable, specified in clause (ii) below and at
a time when the Key Associate was entitled to exercise the Option as
provided herein or in the Plan, the legal representative of such
employee, or such person who acquired the Option by bequest or
inheritance or by reason of the death of the Key Associate, may, not
later than one (1) year from the date of death, exercise the
unexercised portion of the Option in respect of any or all of such
number of shares which the Key Associate would have been entitled to
under the Option at the date of death; and
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(ii) if the employment of the Key Associate shall terminate by
reason of the Key Associate's retirement (at such age or upon such
conditions as shall be specified by the Option Committee in its sole
discretion), disability (as described in Section 22(e)(3) of the Code)
or dismissal by the employer other than for Cause (as defined in the
Plan), and while such employee is entitled to exercise the Option, as
provided herein or in the Plan, the Key Associate or the Key
Associate's legal representative shall have the right to exercise the
unexercised portion of the Option in respect of any or all of such
number of Shares which the Key Associate would have been entitled to
under the Option, at any time up to and including (x) three (3) months
after the date of such termination of employment in the case of
termination by reason of retirement or dismissal other than for cause
and (y) one (1) year after the date of termination of employment in the
case of termination by reason of disability.
(b) If the Key Associate voluntarily terminates his employment, or is
discharged for cause, then the Option shall forthwith terminate with respect to
any unexercised portion thereof.
5. REGISTRATION AND LISTING OF SHARES.
(a) Unless there is in effect at the time of exercise a Registration
Statement under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Shares to be received upon the exercise of the Option (and,
if required, there is available for delivery a prospectus meeting the
requirements of Section (10)(a)(3) of the Securities Act), the Key Associate
shall, upon the exercise of the Option (i) represent and warrant to the Company
that the Shares to be issued upon the exercise of the Option are being acquired
by the Key Associate for his own account, for investment only and not with a
view to the resale or distribution thereof and (ii) acknowledge and confirm that
such Shares may not be sold unless registered for sale under the Securities Act
or pursuant to an exemption from the registration requirements of the Securities
Act, but in claiming such an exemption the Key Associate shall obtain a
favorable opinion of counsel, in form satisfactory to the Company, as to the
application of such exemption and (iii) agree that the certificates evidencing
such shares shall bear a legend to the effect of the foregoing.
(b) The Key Associate acknowledges that the Company may endorse a
legend upon the certificate evidencing the Shares as the Company, in its sole
discretion, determines to be necessary or appropriate to implement the terms of
the Plan and this Contract.
(c) Notwithstanding anything herein to the contrary, if at any time the
Option Committee shall determine in its sole discretion that the listing or
qualification of the Shares subject to the Option on any securities exchange or
under any applicable law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of an option, or the issuing of Shares thereunder, the Option
may not be exercised in whole or in part unless such listing, qualification,
consent
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or approval shall have been effected or obtained free of any conditions not
acceptable to the Option Committee.
6. ADJUSTMENT OF SHARES; CHANGE IN CONTROL.
(a) In the event of any change in the outstanding Common Stock of the
Company by reason of a stock dividend, reorganization, recapitalization, merger,
consolidation, stock split, split-up, split-off, spin-off, combination or
exchange of shares or other like change in capital structure of the Company, the
aggregate number of Shares subject to the Option and the exercise price per
Share shall be appropriately adjusted by the Option Committee, whose
determination shall be conclusive.
(b) Subject to the terms and conditions of the Plan, in the event of a
Change in Control of the Company, any unexercised portion of the Option shall
immediately become exercisable.
7. WITHHOLDING TAXES. As provided in the Plan, the Company may withhold from
sums due or to become due to the Key Associate from the Company an amount
necessary to satisfy its obligation to withhold taxes incurred by reason of the
grant or exercise of the Option, the disposition of the Option or the
disposition of the underlying shares of Common Stock, or require the Key
Associate to reimburse the Company in such amount. The Company may hold the
stock certificate to which the Key Associate is entitled upon the exercise of
the Option as security for the payment of withholding tax liability, until cash
sufficient to pay such liability has been accumulated.
8. NON-TRANSFERABILITY OF OPTION. The Option is not transferable other than by
will or the laws of descent and distribution and, except as expressly provided
in the Plan, the Option shall be exercisable during the lifetime of the Key
Associate only by the Key Associate.
9. COVENANT NOT TO COMPETE; CONFIDENTIALITY.
(a) The Key Associate acknowledges that by virtue of his
position with ▇▇▇▇▇▇▇▇, as defined herein, he has had and will continue to have
access at the highest level to, and intimate knowledge of, valuable confidential
and proprietary information relating to ▇▇▇▇▇▇▇▇'s businesses including, without
limitation, ▇▇▇▇▇▇▇▇'s trade secrets. Accordingly, in consideration of the
Option award evidenced by this Contract, which award the Key Associate
acknowledges is being made in the Company's discretion, the Key Associate hereby
undertakes and covenants that at all times during the continuation of his
employment with ▇▇▇▇▇▇▇▇ and during the Restrictive Period, as defined herein,
he shall:
(i) refrain, alone, or as a partner, member, employee
or agent of any partnership, or as an officer, employee, agent, director,
stockholder or investor (except as to not more than 5% of the outstanding stock
of any corporation, the securities
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of which are traded on a securities exchange or in the over-the-counter market)
of any corporation, or in any other individual or representative capacity, from
directly or indirectly owning, managing, operating or controlling, or
participating in the ownership, management, operation or control of, or working
for or providing consulting services to, or permitting the use of his name by,
any business or activity in competition with Guilford's Business, as defined
herein, within the Territory, as defined herein (the foregoing clause shall
prohibit, among other activities, soliciting or accepting the business of, for
himself or others (other than for ▇▇▇▇▇▇▇▇), any person or entity which is a
customer of Guilford's Business within the Territory); and
(ii) refrain, without first obtaining the written
consent of ▇▇▇▇▇▇▇▇, from directly or indirectly soliciting, enticing,
persuading, inducing or hiring any employee, consultant, agent, independent
contractor or other person (other than secretarial and clerical personnel) who
is employed by ▇▇▇▇▇▇▇▇ on the date the Key Associate's employment with ▇▇▇▇▇▇▇▇
terminates or who has been employed by ▇▇▇▇▇▇▇▇ during the 12 month period
preceding such date to become employed by any person, firm, entity or
corporation or approach any such person for any of the foregoing reasons.
The term "Business" shall mean (i) the business
(which the Key Associate acknowledges Guilford is engaged in as of the date
hereof) of developing, knitting, weaving, dyeing and finishing, designing,
printing, selling or marketing yarns, fabrics or lace for any of the following
applications: automotive (including, without limitation, headliner and bodycloth
fabric for cars, vans, sport utility vehicles, trucks and other passenger
vehicles), apparel (including, without limitation, linings, swimwear, intimate
apparel, activewear, outerwear, sleepwear, robewear, ready-to-wear and
shapewear), upholstery, home furnishings or industrial (including, without
limitation, "hook and loop" fastening systems, medical and health care products,
component parts of shoes and carpet backings) and (ii) any other business in
which Guilford becomes engaged during the Key Associate's employment with
Guilford.
The term "Territory" shall mean the United States of
America, its territories and possessions, Europe, the United Kingdom, the
Republic of Mexico, Brazil, Argentina, Japan and Canada; PROVIDED, HOWEVER, that
if the area described in the preceding clause shall be determined by judicial
action to define too broad a territory to be enforceable, then the term
"Territory" shall mean the United States of America, its territories and
possessions, the Republic of Mexico and Canada; and, PROVIDED FURTHER, that if
the area described in the immediately preceding clause shall be determined by
judicial action to define too broad a territory to be enforceable, then the term
"Territory" shall mean the United States of America, its territories and
possessions; and, PROVIDED FURTHER, that if the area described in the
immediately preceding clause shall be determined by judicial action to define
too broad a territory, then the term "Territory" shall mean those states in the
United States of America in which Guilford maintains operations at which it
conducts the Business. The Key Associate hereby acknowledges that ▇▇▇▇▇▇▇▇'s
Business is national and international in scope and that Guilford has customers
throughout the United States of America, its territories and possessions, the
Republic of
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Mexico, Canada, the United Kingdom, Europe and throughout other parts of the
world. Accordingly, the Key Associate acknowledges and agrees that the scope of
the covenants in this Section 9 are reasonable and necessary in order to protect
the interests of ▇▇▇▇▇▇▇▇'s Business sought to be protected hereby.
The term "Cause" shall mean, as determined by the
Board of Directors or the Compensation Committee, as the case may be, in its
sole discretion, (i) the willful commission by the Key Associate of an act that
causes or may cause substantial damage to ▇▇▇▇▇▇▇▇ (ii) the commission by the
Key Associate of an act of fraud in the performance of his duties on behalf of
▇▇▇▇▇▇▇▇, (iii) conviction of the Key Associate for commission of a felony in
connection with the performance of his duties on behalf of ▇▇▇▇▇▇▇▇, or (iv) the
continuing failure of the Key Associate to perform his duties to Guilford after
written notice thereof and a reasonable opportunity to be heard and cure such
failure are given to the Key Associate by the Board of Directors or the
Compensation Committee, as the case may be.
The term "Without Cause" shall mean termination of
the Key Associate's employment by ▇▇▇▇▇▇▇▇ for reasons other than Cause.
The term "Guilford" shall mean the Company or any of
its Subsidiaries, affiliated companies, successors or assigns.
The term "Restrictive Period" shall mean a period of
two years following the Key Associate's voluntary termination of his employment
with ▇▇▇▇▇▇▇▇ or the termination of his employment by ▇▇▇▇▇▇▇▇ for Cause.
(b) Recognizing that the knowledge of ▇▇▇▇▇▇▇▇'s customers,
suppliers, agents, business methods, systems, plans, policies, trade secrets,
knowledge, know-how, information, materials or documents are valuable and unique
assets, the Key Associate agrees that he shall not divulge, furnish or make
accessible to any person, firm, corporation or other entity (other than as is
necessary and appropriate in the regular course of ▇▇▇▇▇▇▇▇'s Business) for any
reason or purpose whatsoever, directly or indirectly, or use for the benefit of
himself or others (other than for ▇▇▇▇▇▇▇▇'s benefit), any such knowledge or
information. The provisions of this Section 9(b) shall not apply to information
which is or shall become generally known to the public (except by reason of the
Key Associate's breach of his obligations hereunder) and information which the
Key Associate is required to disclose by law or by an order of a court of
competent jurisdiction. If the Key Associate is required by law or a court order
to disclose such information, he shall notify Guilford of such requirement and
provide Guilford an opportunity (if it so elects) to contest such law or court
order.
(c) The Key Associate acknowledges that all developments,
including, without limitation, inventions, patentable or otherwise, discoveries,
improvements, patents, trade secrets, designs, reports, computer software, flow
charts and diagrams, procedures, data, documentation, ideas and writings and
applications thereof relating to
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▇▇▇▇▇▇▇▇'s Business or planned business of Guilford that, alone or jointly with
others, the Key Associate may conceive, create, make, develop, reduce to
practice or acquire during his employment with Guilford (collectively, the
"Developments") are works made for hire and shall remain the sole and exclusive
property of ▇▇▇▇▇▇▇▇ and the Key Associate hereby assigns to Guilford all of his
right, title and interest in and to all such Developments. The Key Associate
agrees that he will, at any time upon request and at the expense of ▇▇▇▇▇▇▇▇,
promptly execute all instruments and papers and perform all acts whatsoever,
which are necessary or desired by ▇▇▇▇▇▇▇▇ to vest and confirm in Guilford, and
its successors, assigns and nominees, fully and completely, all rights created
by this section and which may be necessary or desirable to enable ▇▇▇▇▇▇▇▇, and
its successors, assigns and nominees, to secure and enjoy the full benefits and
advantages thereof.
(d) In the event of any breach or threatened breach of the
provisions of this Section 9 by the Key Associate, Guilford, in addition to any
other rights and remedies it may have, shall be entitled to an injunction
(and/or other equitable relief) restraining such breach or threatened breach, it
being stipulated and agreed that a breach by the Key Associate would cause
irreparable damage to Guilford and that its remedies at law would be inadequate.
The existence of any claim or cause of action on the part of the Key Associate
against ▇▇▇▇▇▇▇▇ shall not constitute a defense to the enforcement of these
provisions. The Key Associate agrees that the terms of the foregoing covenants,
including, without limitation, the Restrictive Period and the Territory, are
reasonable in all respects and necessary for the protection of ▇▇▇▇▇▇▇▇, and
represents and warrants to Guilford that he will be able to support himself and
his dependents notwithstanding the covenants. If any court of competent
jurisdiction shall finally adjudicate that any of the covenants provided for
herein are too broad as to area, activity or time covered, such area, activity
or time covered may be reduced to whatever extent the court deems reasonable and
the covenants herein and the remedy of injunctive and/or other equitable relief
may be enforced as to such reduced area, activity or time.
10. NOTICES. Any notice to be given under this Contract shall be given in
writing by hand delivery or sent by overnight courier or registered or certified
mail, return receipt requested, postage prepaid, addressed to the party to
receive the same at his or its respective address as follows: if to the Company,
at its principal business office, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Corporate Secretary; and if to the Key Associate, his
current address as reflected in the personnel records of the Company. Either
party may, by notice given to the other in accordance with the provisions of
this Section, change the address to which subsequent notices shall be sent.
11. GOVERNING LAW. This Contract shall be governed by, and construed in
accordance with, the laws of the State of Delaware. Any controversy or dispute
arising out of or relating to this Agreement shall be settled exclusively in the
courts (federal and state) situated in the State of North Carolina, Guilford
County. The Key Associate consents to personal jurisdiction in the State of
North Carolina and in the courts thereof for the enforcement of this Agreement
and waives any rights he may have under the law of any jurisdiction to object on
any basis (including, without limitation, inconvenience of forum) to
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jurisdiction or venue within the State of North Carolina for purposes of
litigation to enforce this Agreement.
12. MISCELLANEOUS.
(a) At least six months must elapse from the Date of Grant of the
Option to the date of disposition of the Option (other than upon exercise) or
the Shares underlying the Option if the Key Associate is subject to the
reporting requirements of Section 16(a) of the Securities Exchange Act of 1934,
as amended.
(b) Nothing in the Plan or in this Contract shall confer upon the Key
Associate any right to continue in the employ of the Company, or any parent or
subsidiary thereof, or interfere in any way with the right of the Company, or
any parent or subsidiary thereof, to terminate such employment at any time for
any reason whatsoever without liability to the Company, or any parent or
subsidiary thereof.
(c) The Company and the Key Associate agree that they will both be
subject to and bound by all the terms and conditions of the Plan, which is
incorporated herein and made a part hereof. In the event of a conflict or
inconsistency between the terms of this Contract and the terms of the Plan, the
terms of the Plan shall govern. The provisions of Section 9 of this Contract
supersede any and all prior similar covenants contained in any agreement entered
into prior to the date hereof between the Key Associate and the Company.
(d) The Key Associate represents and agrees that he will comply with
all applicable laws relating to the Plan and the grant and exercise of the
Option and the disposition of the Shares acquired upon exercise of the Option,
including without limitation, federal and state securities laws.
(e) This Contract shall be binding upon and inure to the benefit of any
successor or assign of the Company and to any heir, distributee, executrix,
administrator or legal representative entitled by law to the Key Associate's
rights hereunder.
(f) The invalidity or illegality of any provision herein shall not
affect the validity of any other provision.
(g) The Key Associate agrees that the Company may amend the Plan and
any options granted to the Key Associate under the Plan, subject to the
limitations contained in the Plan.
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc. has caused this Contract to be executed in its
corporate name and the Key Associate has executed the same in evidence of the
Key Associate's acceptance hereof upon the terms and conditions herein set forth
as of the Date of ▇▇▇▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, INC.
___________________________ By:___________________________
Signature of Key Associate
Name:_________________________
___________________________
Print Name of Key Associate Title:________________________
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