January 11, 2000
NON-QUALIFIED STOCK OPTION PLAN AND AGREEMENT
Anthony T. Castor, III
2702 Hemmingway Lane
Mahwah, New Jersey 07430
Dear Mr. Castor:
To induce you to agree to become employed by The Morgan Group, Inc.
("Morgan") as its Chief Executive Officer, you are hereby granted the option to
purchase a total of 120,000 shares of Morgan's Class A Common Stock, $.015 par
value per share ("Class A Common Stock"). This agreement is a separate stock
option plan and agreement not made pursuant to Morgan's Incentive Stock Plan
(the "Plan"); provided, that the terms and conditions of that Plan which govern
grants thereunder shall nevertheless govern the terms of this plan and
agreement, except as otherwise expressly provided herein, and, for such purpose,
the Plan is incorporated herein by reference.
1. The term of this option (the "Option Term") shall be for a period of
ten years and one day from the date of this letter, subject to earlier
termination as provided in paragraphs 3 and 4 hereof. This option shall vest and
become exercisable in three installments with different prices as follows:
INSTALLMENT ONE:
For 40,000 shares shall have an exercise price of $5.625, exercisable
after the date 6 months from the date of this agreement.
INSTALLMENT TWO:
For 40,000 shares shall have an exercise price of $7.625, exercisable
after the date 18 months from the date of this agreement.
INSTALLMENT THREE:
For 40,000 shares shall have an exercise price of $9.625, exercisable
after the date 30 months from the date of this agreement.
Notwithstanding the forgoing, this option may not be exercised unless and until
this plan and agreement has been approved by Morgan's stockholders in the manner
and to the extent required by the rules of the American Stock Exchange. Except
as otherwise provided above, the option may be
exercised at any time, or from time to time, in whole or in part, until the
Option Term expires, but in no case may fewer than 100 such shares be purchased
at any one time, except to purchase a residue of fewer than 100 shares.
2. You must pay the exercise price in cash at the time this option is
exercised; provided, however that, with the approval of Morgan's Compensation
Committee (the "Committee"), you may exercise your option by tendering to Morgan
whole shares of Morgan's Class A Common Stock owned by you, or any combination
of whole shares of Morgan's Class A Common Stock owned by you and cash, having a
fair market value equal to the cash exercise price of the shares with respect to
which the option is exercised by you. For this purpose, any shares so tendered
shall be deemed to have a fair market value as determined by the Committee
consistent with the requirements of Treas. Reg. ss.20.2031-2 and ss.422 of the
Internal Revenue Code of 1986, as amended. To exercise this option, you must
send written notice to Morgan's Secretary at the address noted in Section 10
hereof. Such notice shall state the number of shares in respect of which the
option is being exercised, shall identify the option exercised as a
non-qualified stock option, and shall be signed by the person or persons so
exercising the option. Such notice shall be accompanied by payment of the full
cash option price for such shares or, if the Committee has authorized the use of
the stock swap feature provided for above, such notice shall be followed as soon
as practicable by the delivery of the option price for such shares. Certificates
evidencing shares of Class A Common Stock will not be delivered to you until
payment has been made.
3. If you are no longer an employee of Morgan (or its subsidiary)
because of any reason other than death or permanent disability, this option
shall automatically terminate on the date sixty (60) days after your termination
of employment.
Any installment of this option that is not vested in accordance with
paragraph 1 at the time of your termination of employment shall terminate and be
forfeited; provided, that if your employment is terminated by Morgan without
cause (as defined in your employment agreement with Morgan dated on or about the
date hereof ("Employment Letter")):
(a) prior to the date 6 months after the date of this agreement,
Installment One shall become and remain exercisable until the
date sixty (60) days after your termination of employment;
(b) after the date 12 months after the date of this agreement,
Installment Two shall become and remain exercisable until the
date sixty (60) days after your termination of employment;
(c) after the date 24 months after the date of this agreement,
Installment Three shall become and remain exercisable until
the date sixty (60) days after your termination of employment.
4. If you die while serving as an employee of Morgan (or its
subsidiary), this option, to the extent otherwise vested and exercisable at the
time of your death, may be exercised in whole or in part by your executor,
administrator, or estate beneficiaries at any time within one (1) year after
the date of your death but not later than the date upon which this option would
otherwise expire. If your employment with Morgan (or its subsidiary) should
terminate by reason of permanent disability (as determined by the Committee)
this option, to the extent otherwise vested and exercisable at the time of such
termination, may be exercised in whole or in part at any time within six (6)
months after your date of termination, but not later than the date upon which
this option would otherwise expire.
5. This option is non-transferable otherwise than by will or the laws
of descent and distribution or pursuant to a qualified domestic relations order.
It may be exercised only by you or your guardian, if any, or, if you die, by
your executor, administrator, or beneficiaries of your estate who are entitled
to your option.
6. All rights to exercise this option will expire, in any event, ten
years and one day from the date of this letter.
7. Certificates evidencing shares issued upon exercise of this option
may bear a legend setting forth among other things such restrictions on the
disposition or transfer of the shares of Morgan as Morgan may deem consistent
with applicable federal and state laws.
8. Nothing in this option plan and agreement shall restrict the right
of Morgan (or its subsidiary by which you are employed) to terminate your
employment at any time with or without cause, subject to the terms of your
Employment Letter.
9. This option plan and agreement is subject to such regulations as may
from time to time be adopted by the Committee. A copy of The Morgan Group, Inc.
Incentive Stock Plan has been furnished to you and an additional copy may be
obtained from Morgan. No amendment to such Plan shall be deemed to apply to this
plan and agreement if such amendment would conflict with the express terms
hereof.
10. All notices by you to Morgan and your exercise of the option herein
granted, shall be addressed to The Morgan Group, Inc., 28651 U.S. 20 West,
Elkhart, Indiana 46514, Attention: Secretary, or such other address as Morgan
may, from time to time, specify.
Very truly yours,
THE MORGAN GROUP, INC.
By:/s/ Charles C. Baum
---------------------------------
Charles C. Baum, Chairman of the
Board and Chief Executive Officer
Accepted as of the date above written
Anthony T. Castor, III