KIT MANUFACTURING COMPANY
EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the ___ day of ____ 199_,
between KIT Manufacturing Company (the "Corporation"), and
_____________ (the "Employee").
W I T N E S S E T H
WHEREAS, pursuant to the KIT Manufacturing Company 1994
Stock Option Plan (the "Plan"), the Corporation has granted to
the Employee effective as of the ___ day of ____, 199_ (the
"Award Date") a nonqualified stock option to purchase all or any
part of ______ authorized but unissued or treasury shares of
Common Stock, no par value, of the Corporation upon the terms and
conditions set forth herein and in the Plan.
NOW, THEREFORE, in consideration of the mutual promises
and covenants made herein and the mutual benefits to be derived
herefrom, the parties agree as follows:
1. Defined Terms. Capitalized terms used herein and
not otherwise defined herein shall have the meaning assigned to
such terms in the Plan.
2. Grant of Option. This Agreement evidences the
Corporation's grant to the Employee of the right and option to
purchase, on the terms and conditions set forth herein and in the
Plan, all or any part of an aggregate of ______ shares of the
Common Stock at the price of $_____ per share (the "Option"),
exercisable from time to time, subject to the provisions of this
Agreement and the Plan, prior to the close of business on the day
before the seventh anniversary of the Award Date (the "Expiration
Date"). Such price equals the Fair Market Value of the
Corporation's Common Stock as of the Award Date.
3. Exercisability of Option. Except as earlier
permitted by or pursuant to the Plan or by resolution of the
Committee adopted after the date hereof, no shares may be
purchased by exercise of the Option until the expiration of six
months after the Award Date. The Option may be exercised in
installments as to 25% of the aggregate number of shares set
forth in Section 2 hereof (subject to adjustment) on and after
the first anniversary of the Award Date and as to an additional
25% of such aggregate number of such shares (subject to
adjustment) on and after each of the second, third and fourth
anniversaries of the Award Date.
To the extent the Employee does not in any year
purchase all or any part of the shares to which the Employee is
entitled, the Employee has the right cumulatively thereafter to
purchase any shares not so purchased and such right shall
continue until the Option terminates or expires. Fractional
share interests shall be disregarded, but may be cumulated. No
fewer than 100 shares may be purchased at any one time, unless
the number purchased is the total number at the time available
for purchase under the Option.
4. Method of Exercise of Option. The Option shall be
exercisable by the delivery to the Corporation of a written
notice stating the number of shares to be purchased pursuant to
the Option and accompanied by payment made in accordance with and
in a form permitted in Section 2.2(b) of the Plan for the full
purchase price of the shares to be purchased, subject to such
further limitations and rules or procedures as the Committee may
from time to time establish as to any non-cash payment and as to
the tax withholding requirements of Section 3.5 of the Plan.
Shares delivered in payment of the exercise price must have been
owned by Employee for at least six months prior to the exercise.
In addition, the Employee (or the Employee's Beneficiary or
Personal Representative) shall furnish any written statements
required pursuant to Section 3.4 of the Plan.
5. Effect of Termination of Employment or Death;
Change in Subsidiary Status. The Option and all other rights
hereunder, to the extent not exercised, shall terminate and
become null and void at such time as the Employee ceases to be
employed by either the Corporation or any Subsidiary, except
that:
(a) if the Employee terminates by reason other
than by death, Total Disability or for cause (as determined
by the Committee in its sole discretion), the Employee may
at any time within a period of three months after such
termination exercise the Option to the extent the Option was
exercisable at the date of such termination;
(b) if the Employee terminates by reason of Total
Disability, or if the Employee becomes Totally Disabled
within three months after a termination described in
subsection (a), then the Option may be exercised within a
period of one year after the date Employee becomes Totally
Disabled (or, if earlier, the Employee's termination from
employment), to the extent that the Option was exercisable
on such date; and
(c) if the Employee dies prior to a termination
of employment, or within three months after a termination of
employment under subsection (a) or (b) above, then the
Option may be exercised within a period of one year after
the Employee's termination of employment, to the extent that
the Option was exercisable on such date;
provided, however, that in no event may the Option be exercised
by anyone under this Section or otherwise after the Expiration
Date. If Employee is employed by an entity which ceases to be a
Subsidiary, such event shall be deemed for purposes of this
Section 5 to be a termination of employment described in
subsection (a) in respect of Employee.
6. Consideration to Corporation. In consideration of
the granting of this Option by the Corporation, Employee agrees
to render faithful and efficient services to the Corporation or
its subsidiaries, with such duties and responsibilities as the
Corporation or its subsidiaries shall from time to time
prescribe, for a period of at least one (1) year from the date
this Option is granted.
7. Termination of Option Under Certain Events. As
permitted by Section 3.2(c) of the Plan, the Committee retains
the right to terminate the Option to the extent not previously
exercised upon an event or transaction which the Corporation does
not survive.
8. Non-Transferability of Option. The Option and any
other rights of the Employee under this Agreement or the Plan are
nontransferable as provided in Section 1.9 of the Plan.
9. Notices. Any notice to be given under the terms
of this Agreement shall be in writing and addressed to the
Corporation at its principal office located at 530 East Wardlow
Road, Long Beach, California 90801, to the attention of the
Corporate Treasurer and to the Employee at the address given
beneath the Employee's signature hereto, or at such other address
as either party may hereafter designate in writing to the other.
10. Plan. The Option and all rights of Employee
thereunder are subject to, and the Employee agrees to be bound
by, all of the terms and conditions of the provisions of the
Plan, incorporated herein by this reference. The Employee
acknowledges receipt of a copy of the Plan, which is made a part
hereof by this reference, and agrees to be bound by the terms
thereof. Unless otherwise expressly provided in other Sections
of this Agreement, provisions of the Plan that confer
discretionary authority on the Committee do not (and shall not be
deemed to) create any rights in the Employee unless such rights
are expressly set forth herein or are otherwise in the sole
discretion of the Committee so conferred by appropriate action of
the Committee under the Plan after the date hereof.
11. Shareholder Approval. The Option, this Agreement
and all rights hereunder are subject to approval of the Plan by
the shareholders of the Corporation as provided therein.
IN WITNESS WHEREOF, the Corporation has caused this
Agreement to be executed on its behalf by a duly authorized
officer and the Employee has hereunto set his or her hand.
KIT MANUFACTURING COMPANY
___________________________
By_________________________
Title______________________
EMPLOYEE
___________________________
(Signature)
___________________________
(Print Name)
___________________________
(Address)
___________________________
(City, State, Zip Code)
CONSENT OF SPOUSE
In consideration of the execution of the foregoing
Nonqualified Stock Option Agreement by KIT Manufacturing Company,
I, ___________________________, the spouse of the Employee herein
named, do hereby join with my spouse in executing the foregoing
Nonqualified Stock Option Agreement and do hereby agree to be
bound by all of the terms and provisions thereof and of the Plan.
DATED: ______________________, 19__. ________________________
Signature of Spouse