REEVES INDUSTRIES, INC.
Non-Qualified Stock Option Agreement
THIS AGREEMENT is entered into by and between REEVES INDUSTRIES, INC.,
a Delaware corporation (the "Company"), and JAMES W. HART (the "Optionee").
W I T N E S S E T H
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WHEREAS, Optionee has provided continuous and valuable service to the
Company as an officer and/or director since 1986;
WHEREAS, the Board of Directors of the Company has determined that it
is in the Company's best interest to issue to the Optionee an Option in
consideration of his continued service to the Company;
WHEREAS, to secure the continued loyal services of Optionee into the
future, the Board of Directors of the Company has granted to Optionee, effective
January 15, 1994 (the "Grant Date"), a non-qualified stock option (the "Option")
to purchase shares of the Common Stock, par value One Cent ($.01) per share (the
"Common Stock"), of the Company upon the terms and conditions hereinafter
stated;
WHEREAS, Optionee has agreed to continue to provide services to the
Company as Chairman of the Board and in such other capacity as requested by the
Board of Directors on such terms and conditions as are agreed to by Optionee and
the Company for three years following the Grant Date;
NOW, THEREFORE, in consideration of the covenants herein set forth,
the parties agree as follows:
1. SHARES; PRICE. This Agreement hereby evidences the Option
granted to Optionee effective as of the Grant Date, to purchase, upon and
subject to the terms and conditions herein stated all or any part of any
aggregate of Three Million Eight Hundred Thousand (3,800,000) shares of Common
Stock of the Company. This Option shall (i) be immediately exercisable (in
whole or in part) for 1,400,000 shares at the exercise price of $.56; (ii) be
exercisable (in whole or in part) for an additional 1,400,000 shares on or after
the first anniversary of the Grant Date at the exercise price of $.75 per share;
and (iii) be exercisable (in whole or in part) for an additional 1,000,000
shares on or after the second anniversary of the Grant Date at the exercise
price of $1.00 per share.
2. TERM OF OPTION. This Option and all rights hereunder shall
expire on December 31, 2023.
3. EXERCISE. This Option may be exercised, as to any or all shares
covered by this Option, at any time after the exercise dates set forth in
Paragraph 1 above and prior to the expiration or termination of this Option by
delivery to the Company at its principal office of (a) written notice of
exercise of this Option, stating the number of shares then being purchased
hereunder; (b) a check or cash in the amount of the full purchase price of such
shares; (c) the written statement provided for in Section 7 hereof; and (d) such
other documents or instruments as
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may be required by any then applicable federal or state laws or regulations, or
regulatory agencies pertaining to this Option, any exercise thereof and/or any
offer, issue, sale or purchase of any shares covered by this Option. At the
time of the exercise of this Option, Optionee shall make arrangements which are
acceptable to the Board of Directors of the Company, in its sole discretion, for
the withholding of federal and state taxes required by law to be withheld with
respect to such exercise. Not less than 5,000 shares may be purchased at any
one time. After the Company has received all of the foregoing, the Company
shall proceed with reasonable promptness to issue the shares so purchased upon
such exercise of the Option.
4. TERMINATION OF EMPLOYMENT OR SERVICE. The Option granted
hereunder shall survive any termination of Optionee's employment or service with
the Company or a subsidiary and may be exercised by Optionee in accordance with
Section 3 hereof, notwithstanding such termination of employment or service, for
a period ending (i) ten years after such termination or until December 31, 2023,
whichever first occurs if such termination is prior to Optionee's 65th birthday
and (ii) December 31, 2023, if such termination is on or after Optionee's 65th
birthday; provided however, if Optionee shall quit the employ of the Company
without cause prior to the second anniversary of the Grant Date the total number
of shares of Common Stock subject to this Option shall be reduced to the number
of shares that the Option is exercisable for at the time of Optionee's
resignation.
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Notwithstanding any other provision contained herein, if Optionee shall die or
become unable to perform service for the Company as a result of a physical or
mental disability, this Option shall become immediately exercisable in its
entirety, and his personal representative or the person entitled to succeed to
his rights hereunder shall have the right, at any time prior to December 31,
2023, to exercise this Option in full. However, in no event shall this Option
extend beyond the period of its expiration or termination as described in
Section 2 hereof. No provision of this Option shall confer any right to
continue in the employ or service of the Company or any of its subsidiaries or
interfere in any way with the right of the Company and its subsidiaries to
terminate any employment or service at any time.
5. NO ASSIGNMENT. This Option shall not be assignable or
transferable except by will or by the laws of descent and distribution and shall
be exercisable during his lifetime only by Optionee.
6. NO RIGHTS AS STOCKHOLDER. Optionee shall have no right as a
stockholder with respect to the Common Stock covered by the Option until the
date of the issuance of a stock certificate or stock certificates to him. Except
as provided in Section 10 hereof, no adjustment will be made for dividends or
other rights for which the record date (or if there is no record date
established, then the date established for the distribution of such dividend or
right) is prior to the date such stock certificates are issued.
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7. SHARES PURCHASED FOR INVESTMENT. Optionee represents and agrees
that if he exercises this Option in whole or in part, he will acquire the shares
upon such exercise for the purpose of investment and not with a view to their
resale or distribution, and Optionee agrees that, if requested by the Company so
to do, upon each exercise of this Option, Optionee or any person or persons
entitled to exercise this Option pursuant to the provisions of Section 4 hereof
shall furnish to the Company a written statement that Optionee or such person or
persons are acquiring such shares upon exercise for purposes of investment and
not with a view to their resale or distribution. No shares shall be purchased
and the Company shall have no obligation to issue any shares, upon any exercise
of this Option unless and until: (a) any then applicable requirement of state
and federal laws and regulatory agencies pertaining to this Option, and exercise
thereof and/or the offer, issue, sale or purchase of any shares covered by this
Option shall have been fully complied with to the satisfaction of the Company
and its counsel; and (b) if requested by the Company so to do, upon each
exercise of this Option, Optionee or any person or persons entitled to exercise
this Option pursuant to the provisions of Section 4 hereof, shall have furnished
to the Company a written statement to the effect that such shares are being
acquired upon such exercise for the purpose of investment and not with a view to
their resale or distribution, such written statement to be satisfactory in form
and substance to the Company. The Company
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may, at its option, place a legend on each certificate representing shares
purchased upon exercise of this Option, stating, in effect, that such shares
have not been registered under the Securities Act of 1933, as amended (the
"Act"), and that the transferability thereof is restricted. If the shares
represented by this Option are registered under the Act, either before or after
any exercise of this Option (in whole or in part), the Board of Directors shall
relieve Optionee of the foregoing investment representations and agreements.
8. BONUS. In connection with the exercise of all or any part of
this Option pursuant to Section 3, Optionee or any person or persons entitled to
exercise this Option under Section 4 hereof may, in the discretion of the Board
of Directors, be paid a cash bonus equal to an amount up to the excess, if any,
of the fair market value per share of the Common Stock of the Company on the
date of exercise over the Option price per share multiplied by the number of
shares of Common Stock acquired pursuant to such exercise. Such bonus shall be
paid not later than 90 days after the date of the exercise of the Option. The
Company shall have the right to deduct all applicable federal and state taxes
required by law to be withheld from all payments made hereunder with respect to
such bonus. A bonus in such amount shall, in the discretion of the Board of
Directors, be paid in connection with each exercise of this Option otherwise
allowable hereunder.
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9. MODIFICATIONS AND TERMINATION. The rights of Optionee are not
subject to modification and termination except with the written consent of the
Optionee, or, after his death, his successor or heir.
10. ANTI-DILUTION RIGHTS. In the event of any change in outstanding
Common Stock of the Company by reason of a stock dividend, recapitalization,
merger, consolidation, split-up, combination or exchange or shares, or the
issuance on a pro rata basis to stockholders of any rights, warrants or options
to acquire stock, or any other change in the capitalization of the Company, the
aggregate number of shares subject to this Option, and the Option price, shall
be appropriately adjusted by the Board of Directors of the Company, whose
determination shall be conclusive.
11. REGISTRATION RIGHTS. The holders of the shares issuable under
the Option shall have the registration rights set forth in Appendix 1 hereto
with respect to such shares.
12. PURPOSE OF THIS OPTION. The Company is of the opinion that the
granting of the Option to Optionee will stimulate the effort of Optionee,
strengthen his desire to remain in the active service of the Company and provide
him with a more direct interest in the Company and thereby further the objective
of the Company for the benefit of all the stockholders.
13. MISCELLANEOUS. Section and other headings are included herein
for reference purposes only and shall not be construed or interpreted as part of
this Agreement. Wherever and
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whenever the context of this Agreement shall so require, the gender of any noun
or pronoun shall include both the masculine and feminine and the singular shall
include the plural and the plural shall include the singular.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 26th day of January, 1994.
REEVES INDUSTRIES, INC.
By:________________________________
Title: Chairman
OPTIONEE
___________________________________
James W. Hart
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