EXHIBIT 10.2
FORM OF
NON-QUALIFIED STOCK OPTION AGREEMENT
(FOR EMPLOYEES, DIRECTORS AND CONSULTANTS)
THE ARISTOTLE CORPORATION
AGREEMENT made as of the __ day of _________ 2002, between The Aristotle
Corporation (the "Company"), a Delaware corporation having a principal place of
business in Stamford, Connecticut, and _______________ of ___________ (the
"Participant").
WHEREAS, the Company desires to grant to the Participant an Option to
purchase shares of its common stock, $ 0.01 par value per share (the "Shares"),
under and for the purposes set forth in the Company's 2002 Employee, Director
and Consultant Stock Plan (the "Plan");
WHEREAS, the Company and the Participant understand and agree that any
terms used and not defined herein have the same meanings as in the Plan; and
WHEREAS, the Company and the Participant each intend that the Option
granted herein shall be a Non-Qualified Option.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree as
follows:
1. GRANT OF OPTION.
The Company hereby grants to the Participant the right and option to
purchase all or any part of an aggregate of _______________ Shares, on the terms
and conditions and subject to all the limitations set forth herein, under United
States securities and tax laws, and in the Plan, which is incorporated herein by
reference. The Participant acknowledges receipt of a copy of the Plan.
2. PURCHASE PRICE.
The purchase price of the Shares covered by the Option shall be $[2.95] per
Share, subject to adjustment, as provided in the Plan, in the event of a stock
split, reverse stock split or other events affecting the holders of Shares (the
"Purchase Price"). Payment shall be made in accordance with Paragraph 8 of the
Plan.
3. EXERCISABILITY OF OPTION.
Subject to the terms and conditions set forth in this Agreement and the
Plan, the Option granted hereby shall become exercisable as follows:
The foregoing rights are cumulative and are subject to the other terms and
conditions of this Agreement and the Plan.
4. TERM OF OPTION.
The Option shall terminate five years from the date of this Agreement, but
shall be subject to earlier termination as provided herein or in the Plan.
If the Participant ceases to be an employee, director or consultant of the
Company or of an Affiliate (for any reason other than the death or Disability of
the Participant or termination of the Participant for "cause" (as defined in the
Plan)), the Option may be exercised, if it has not previously terminated, within
three months after the date the Participant ceases to be an employee, director
or consultant of the Company or an Affiliate, or within the originally
prescribed term of the Option, whichever is earlier, but may not be exercised
thereafter. In such event, the Option shall be exercisable only to the extent
that the Option has become exercisable and is in effect at the date of such
cessation of employment, directorship or consultancy.
Notwithstanding the foregoing, in the event of the Participant's Disability
or death within three months after the termination of employment, directorship
or consultancy, the Participant or the Participant's Survivors may exercise the
Option within one year after the date of the Participant's termination of
employment, directorship or consultancy, but in no event after the date of
expiration of the term of the Option.
In the event the Participant's employment, directorship or consultancy is
terminated by the Company or an Affiliate for "cause" (as defined in the Plan),
the Participant's right to exercise any unexercised portion of this Option shall
cease immediately as of the time the Participant is notified his or her
employment, directorship or consultancy is terminated for "cause," and this
Option shall thereupon terminate. Notwithstanding anything herein to the
contrary, if subsequent to the Participant's termination, but prior to the
exercise of the Option, the Board of Directors of the Company determines that,
either prior or subsequent to the Participant's termination, the Participant
engaged in conduct which would constitute "cause," then the Participant shall
immediately cease to have any right to exercise the Option and this Option shall
thereupon terminate.
In the event of the Disability of the Participant, as determined in
accordance with the Plan, the Option shall be exercisable within one year after
the Participant's termination of service or, if earlier, within the term
originally prescribed by the Option. In such event, the Option shall be
exercisable:
(a) to the extent that the Option has become exercisable but has not been
exercised as of the date of Disability; and
2
(b) in the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion through the date of Disability of any
additional vesting rights that would have accrued on the next vesting
date had the Participant not become Disabled. The proration shall be
based upon the number of days accrued in the current vesting period
prior to the date of Disability.
In the event of the death of the Participant while an employee, director or
consultant of the Company or of an Affiliate, the Option shall be exercisable by
the Participant's Survivors within one year after the date of death of the
Participant or, if earlier, within the originally prescribed term of the Option.
In such event, the Option shall be exercisable:
(x) to the extent that the Option has become exercisable but has not been
exercised as of the date of death; and
(y) in the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion through the date of death of any
additional vesting rights that would have accrued on the next vesting
date had the Participant not died. The proration shall be based upon
the number of days accrued in the current vesting period prior to the
Participant's date of death.
Notwithstanding anything to the contrary contained in this Agreement or the
Plan, if the Participant ceases to be an employee, director or consultant of the
Company or of an Affiliate (for any reason other than death or Disability of the
Participant or termination of the Participant for "cause" (collectively, a
"Termination") prior to September 16, 2003 or dies or becomes disabled prior to
September 16, 2003 and the Participant would, but for the restriction set forth
in Section 3 hereof on exercising the Option prior to September 16, 2003,
otherwise be entitled to exercise the Option during a pre-determined time frame
following such Termination, death or Disability, as the case may be, then the
Option shall, as of September 16, 2003, become exercisable for such
pre-determined time frame as if such Termination, death or Disability occurred
on such date. All other rights, restrictions and limitations applicable to the
Option shall otherwise remain in full force and effect.
5. METHOD OF EXERCISING OPTION.
Subject to the terms and conditions of this Agreement, the Option may be
exercised by written notice to the Company or its designee, in substantially the
form of EXHIBIT A attached hereto. Such notice shall state the number of Shares
with respect to which the Option is being exercised and shall be signed by the
person exercising the Option. Payment of the purchase price for such Shares
shall be made in accordance with Paragraph 8 of the Plan. The Company shall
deliver such Shares as soon as practicable after the notice shall be received,
provided, however, that the Company may delay issuance of such Shares until
completion of any action or obtaining of any consent, which the Company deems
necessary under any applicable law (including, without limitation, state
securities or "blue sky" laws). The Shares as to which the Option shall have
been so exercised shall be registered in the name of the person so exercising
the Option (or, if the Option shall be exercised by the Participant and if the
Participant shall so request in the notice exercising the Option, shall be
registered in the Company's share register in the name of the Participant and
another person jointly, with right of survivorship) and shall be delivered as
provided above to or upon the written order of the person exercising the Option.
In
3
the event the Option shall be exercised, pursuant to Section 4 hereof, by any
person other than the Participant, such notice shall be accompanied by
appropriate proof of the right of such person to exercise the Option. All Shares
that shall be purchased upon the exercise of the Option as provided herein shall
be fully paid and nonassessable.
6. PARTIAL EXERCISE.
Exercise of this Option to the extent above stated may be made in part at
any time and from time to time within the above limits, except that no
fractional share shall be issued pursuant to this Option.
7. NON-ASSIGNABILITY.
The Option shall not be transferable by the Participant otherwise than by
will or by the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act or the rules thereunder. However, the
Participant, with the approval of the Administrator, may transfer the Option for
no consideration to or for the benefit of the Participant's Immediate Family
(including, without limitation, to a trust for the benefit of the Participant's
Immediate Family or to a partnership or limited liability company for one or
more members of the Participant's Immediate Family), subject to such limits as
the Administrator may establish, and the transferee shall remain subject to all
the terms and conditions applicable to the Option prior to such transfer and
each such transferee shall so acknowledge in writing as a condition precedent to
the effectiveness of such transfer. The term "Immediate Family" shall mean the
Participant's spouse, former spouse, parents, children, stepchildren, adoptive
relationships, sisters, brothers, nieces, nephews and grandchildren (and, for
this purpose, shall also include the Participant.) Except as provided in the
previous sentence, the Option shall be exercisable, during the Participant's
lifetime, only by the Participant (or, in the event of legal incapacity or
incompetency, by the Participant's guardian or representative) and shall not be
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process.
Any attempted transfer, assignment, pledge, hypothecation or other disposition
of the Option or of any rights granted hereunder contrary to the provisions of
this Section 7, or the levy of any attachment or similar process upon the Option
shall be null and void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.
The Participant shall have no rights as a stockholder with respect to
Shares subject to this Agreement until registration of the Shares in the
Company's share register in the name of the Participant. Except as is expressly
provided in the Plan with respect to certain changes in the capitalization of
the Company, no adjustment shall be made for dividends or similar rights for
which the record date is prior to the date of such registration.
9. ADJUSTMENTS.
The Plan contains provisions covering the treatment of Options in a number
of contingencies such as stock splits and mergers. Provisions in the Plan for
adjustment with respect to stock subject to Options and the related provisions
with respect to successors to the
4
business of the Company are hereby made applicable hereunder and are
incorporated herein by reference.
10. TAXES.
The Participant acknowledges that upon exercise of the Option the
Participant will be deemed to have taxable income measured by the difference
between the then fair market value of the Shares received upon exercise and the
price paid for such Shares pursuant to this Agreement. The Participant
acknowledges that any income or other taxes due from him or her with respect to
this Option or the Shares issuable pursuant to this Option shall be the
Participant's responsibility.
The Participant agrees that the Company may withhold from the Participant's
remuneration, if any, the minimum statutory amount of federal, state and local
withholding taxes attributable to such amount that is considered compensation
includable in such person's gross income. At the Company's discretion, the
amount required to be withheld may be withheld in cash from such remuneration,
or in kind from the Shares otherwise deliverable to the Participant on exercise
of the Option. The Participant further agrees that, if the Company does not
withhold an amount from the Participant's remuneration sufficient to satisfy the
Company's income tax withholding obligation, the Participant will reimburse the
Company on demand, in cash, for the amount under-withheld.
11. PURCHASE FOR INVESTMENT.
Unless the offering and sale of the Shares to be issued upon the particular
exercise of the Option shall have been effectively registered under the
Securities Act of 1933, as now in force or hereafter amended (the "1933 Act"),
the Company shall be under no obligation to issue the Shares covered by such
exercise unless and until the following conditions have been fulfilled:
(a) The person(s) who exercise the Option shall warrant to the Company, at
the time of such exercise, that such person(s) are acquiring such
Shares for their own respective accounts, for investment, and not with
a view to, or for sale in connection with, the distribution of any
such Shares, in which event the person(s) acquiring such Shares shall
be bound by the provisions of the following legend which shall be
endorsed upon the certificate(s) evidencing the Shares issued pursuant
to such exercise:
"The shares represented by this certificate have been taken for
investment and they may not be sold or otherwise transferred by
any person, including a pledgee, unless (1) either (a) a
Registration Statement with respect to such shares shall be
effective under the Securities Act of 1933, as amended, or (b)
the Company shall have received an opinion of counsel
satisfactory to it that an exemption from registration under such
Act is then available, and (2) there shall have been compliance
with all applicable state securities laws;" and
(b) If the Company so requires, the Company shall have received an opinion
of its counsel that the Shares may be issued upon such particular
exercise in compliance with the 1933 Act without registration
thereunder. Without limiting the generality
5
of the foregoing, the Company may delay issuance of the Shares until
completion of any action or obtaining of any consent, which the
Company deems necessary under any applicable law (including without
limitation state securities or "blue sky" laws).
12. RESTRICTIONS ON TRANSFER OF SHARES.
12.1 If, in connection with a registration statement filed by the Company
pursuant to the Securities Act, the Company or its underwriter so requests, the
Participant will agree not to sell any Shares for a period not to exceed 180
days following the effectiveness of such registration.
12.2 The Participant acknowledges and agrees that neither the Company, its
shareholders nor its directors and officers, has any duty or obligation to
disclose to the Participant any material information regarding the business of
the Company or affecting the value of the Shares before, at the time of, or
following a termination of the employment of the Participant by the Company,
including, without limitation, any information concerning plans for the Company
to make a public offering of its securities or to be acquired by or merged with
or into another firm or entity.
13. NO OBLIGATION TO MAINTAIN RELATIONSHIP.
The Company is not by the Plan or this Option obligated to continue the
Participant as an employee, director or consultant of the Company or an
Affiliate. The Participant acknowledges: (i) that the Plan is discretionary in
nature and may be suspended or terminated by the Company at any time; (ii) that
the grant of the Option is a one-time benefit which does not create any
contractual or other right to receive future grants of options, or benefits in
lieu of options; (iii) that all determinations with respect to any such future
grants, including, but not limited to, the times when options shall be granted,
the number of shares subject to each option, the option price, and the time or
times when each option shall be exercisable, will be at the sole discretion of
the Company; (iv) that the Participant's participation in the Plan is voluntary;
(v) that the value of the Option is an extraordinary item of compensation which
is outside the scope of the Participant's employment contract, if any; and (vi)
that the Option is not part of normal or expected compensation for purposes of
calculating any severance, resignation, redundancy, end of service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments.
14. NOTICES.
Any notices required or permitted by the terms of this Agreement or the
Plan shall be given by recognized courier service, facsimile, registered or
certified mail, return receipt requested, addressed as follows:
If to the Company:
The Aristotle Corporation
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
6
If to the Participant:
or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given upon
the earlier of receipt, one business day following delivery to a recognized
courier service or three business days following mailing by registered or
certified mail.
15. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with the law
of the State of Delaware, without giving effect to the conflict of law
principles thereof.
16. BENEFIT OF AGREEMENT.
Subject to the provisions of the Plan and the other provisions hereof, this
Agreement shall be for the benefit of and shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
17. ENTIRE AGREEMENT.
This Agreement, together with the Plan, embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement not expressly set forth in this Agreement shall affect or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement, provided, however, in any event, this Agreement shall be subject
to and governed by the Plan.
18. MODIFICATIONS AND AMENDMENTS.
The terms and provisions of this Agreement may be modified or amended as
provided in the Plan.
19. WAIVERS AND CONSENTS.
Except as provided in the Plan, the terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
7
20. DATA PRIVACY.
By entering into this Agreement, the Participant: (i) authorizes the
Company and each Affiliate, and any agent of the Company or any Affiliate
administering the Plan or providing Plan recordkeeping services, to disclose to
the Company or any of its Affiliates such information and data as the Company or
any such Affiliate shall request in order to facilitate the grant of options and
the administration of the Plan; (ii) waives any data privacy rights he or she
may have with respect to such information; and (iii) authorizes the Company and
each Affiliate to store and transmit such information in electronic form.
[Remainder of Page Intentionally Left Blank]
8
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer, and the Participant has hereunto set his or her
hand, all as of the day and year first above written.
THE ARISTOTLE CORPORATION
By:
----------------------------------------
Name
Title
-------------------------------------------
Participant
9
EXHIBIT A
NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTION
TO: The Aristotle Corporation
IMPORTANT NOTICE: This form of Notice of Exercise may only be used at such time
as the Company has filed a Registration Statement with the Securities and
Exchange Commission under which the issuance of the Shares for which this
exercise is being made is registered and such Registration Statement remains
effective.
Ladies and Gentlemen:
I hereby exercise my Non-Qualified Stock Option to purchase _________
shares (the "Shares") of the common stock, $.01 par value, of The Aristotle
Corporation (the "Company"), at the exercise price of $________ per share,
pursuant to and subject to the terms of that certain Non-Qualified Stock Option
Agreement between the undersigned and the Company dated _______________, 200_.
I understand the nature of the investment I am making and the financial
risks thereof. I am aware that it is my responsibility to have consulted with
competent tax and legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the Option and the
purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
-----------------------------------------------------------------
Please issue the Shares (check one):
/ / to me; or
/ / to me and ____________________________, as joint tenants with right of
survivorship,
at the following address:
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
A-1
My mailing address for shareholder communications, if different from the
address listed above, is:
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
Very truly yours,
------------------------------------------
Participant (signature)
------------------------------------------
Print Name
------------------------------------------
Date
------------------------------------------
Social Security Number
A-2