EXHIBIT 10.4
BLUE RHINO CORPORATION
ID: 56-1870472
104 CAMBRIDGE PLAZA DRIVE
WINSTON-SALEM, NC 27104
NOTICE OF GRANT OF STOCK OPTIONS
AND OPTION AGREEMENT
D. SCOTT COWARD
3760 BURBANK LANE
WINSTON-SALEM, NC USA 27106
Effective 12/16/2003, you have been granted a(n) Non-Qualified Stock Option to
buy 50,000.00 shares of Blue Rhino Corporation (the Company) stock at $12.99000
per share.
The total option price of the shares granted is $649,500.00.
Shares in each period will become fully vested on the date shown.
Shares Vest Type Full Vest Expiration
10,000.00 On Vest Date 12/16/2004 12/16/2013
10,000.00 On Vest Date 12/16/2005 12/16/2013
10,000.00 On Vest Date 12/16/2006 12/16/2013
10,000.00 On Vest Date 12/16/2007 12/16/2013
10,000.00 On Vest Date 12/16/2008 12/16/2013
By your signature and the Company's signature below, you and the Company agree
that these options are granted under and governed by the terms and conditions of
the Company's Stock Option Plan as amended and the Option Agreement, all of
which are attached and made a part of this document.
/s/ Blue Rhino Corporation Date December 17, 2003
/s/ D. Scott Coward Date December 17, 2003
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STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, made as of the date indicated on Notice of
Grant of Stock Options and Option Agreement (the "Grant Letter") attached hereto
(the "Grant Date"), is between Blue Rhino Corporation, a Delaware Corporation
(the "Company") and the undersigned individual, an employee of the Company (the
"Participant").
WHEREAS, the Company desires, by affording the Participant an
opportunity to purchase shares of the Company's Common Stock as hereinafter
provided, to carry out the purposes of the Blue Rhino Corporation 1998 Employee
Stock Incentive Plan, as amended (the "Plan"); and
WHEREAS, the Compensation Committee (the "Committee") of Board of
Directors (the "Board") has duly made all determinations necessary or
appropriate to the grants hereunder;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto have agreed, and do hereby
agree, as follows:
1. Grant of Option, Option Price and Term.
(a) The Company hereby grants to the Participant the right and
option (the "Option") to purchase a certain number (see attached Grant
Letter(s)) of shares of the Common Stock of the Company (the "Option
Shares") on the terms and conditions herein set forth.
(b) For each of the Option Shares purchased, the Participant shall
pay
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to the Company a certain amount (see attached Grant Letter) per share
(the "Option Price"). Accordingly, the aggregate Option Price to
exercise all of the Option is set forth on the Grant Letter attached
hereto (the "Aggregate Option Price").
(c) The term of this Option shall be a period of ten (10) years
from the Grant Date (the "Option Period"). The termination of the
Option Period shall result in the termination and cancellation of the
Option. In no event shall the Option be exercisable for any period
greater than the Option Period. Subject to further terms of this
Section 1, during the Option Period, the Option shall be exercisable in
accordance with the following schedule:
Percentage of Option
Grant Date Anniversary Shares Exercisable
---------------------- ------------------
Prior to the first anniversary 0%
of the Grant Date
On or after the first anniversary 20%
of the Grant Date
On or after the second anniversary 40%
of the Grant Date
On or after the third anniversary 60%
of the Grant Date
On or after the fourth anniversary 80%
of the Grant Date
On or after the fifth anniversary 100%
of the Grant Date
The termination of a Participant's employment due to death or
Disability will result in the Option being fully exercisable. The
termination of a
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Participant's employment other than due to death or Disability will not
accelerate the percentage of Option Shares otherwise exercisable with
respect to the Participant. Any portion of the Option which is not
exercisable as of the termination of the Participant's employment other
than due to death or Disability will be canceled simultaneously with
the date of such termination of employment.
(d) Notwithstanding any other provision in this Agreement to the
contrary, the Option shall become fully exercisable immediately upon a
Change in Control. A "Change in Control" shall mean:
(1) The acquisition by any individual entity or group
(within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) or
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of 50% or more of the combined voting power of the
then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Voting
Securities"); provided, however, that the following acquisitions shall
not constitute a Change in Control: (A) any acquisition directly from
the Company or any of its subsidiaries, (B) any acquisition by the
Company of any of its subsidiaries, (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any of its subsidiaries, (D) any acquisition by any corporation with
respect to which, following such acquisition, more than 50% of,
respectively, the then outstanding shares
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of common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned,
directly or indirectly, by individuals, entities or groups who were the
beneficial owners, respectively, of at least 50% of the Outstanding
Voting Securities immediately prior to such acquisition in
substantially the same proportions as their ownership, immediately
prior to such acquisition, of the Outstanding Voting Securities, or (E)
the acquisition by any individual, entity or group which on the date
this Plan was adopted by the Board owned 50% or more of the Outstanding
Voting Securities;
(2) Approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Voting
Securities immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more than 50%
of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such reorganization, merger
or consolidation in substantially the same proporations as their
ownership, immediately prior to such reorganization, merger or
consolidation, of the Outstanding Voting Securities; or
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(3) Approval by the stockholders of the Company of (A) a
complete liquidation or dissolution of the Company or (B) the sale or
other disposition of all or substantially all of the assets of the
Company other than to a corporation, with respect to which following
such sale or other disposition, more than 50% of, respectively, the
then outstanding shares of common stock of such corporation and the
combined voting power for the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Voting Securities
immediately prior to such sale or other disposition in substantially
the same proportion as their ownership, immediately prior to such sale
or other disposition, of the Outstanding Voting Securities.
(e) The Option is designated as a nonqualified stock option.
(f) The Company shall not be required to issue any fractional
Option Shares.
2. Termination of Option.
(a) If the Participant's employment terminates due to death, any
unexpired and unexercised portion of the Option held by the Participant
shall thereafter be fully exercisable by the Participant for the period
of ninety (90) days immediately following the date of the appointment
of a Representative or until the expiration of the Option Period,
whichever
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period is shorter.
(b) If the Participant's employment terminates due to a
Disability, any unexpired and unexercised Option held by the
Participant shall thereafter be fully exercisable by the Participant
for the Period of ninety (90) days immediately following the date of
such termination or until the expiration of the Option Period,
whichever period is shorter.
(c) If the Participant's employment terminates due to Retirement
or by reason of the termination of the Participant's services which is
involuntary on the part of the Participant (but is not due to death,
disability or with Cause), any Option held by the Participant shall
thereupon terminate, except that such Option, to the extent then
exercisable, may be exercised by the Participant for the period of
ninety (90) days immediately following the date of such termination of
employment or until the expiration of the Option Period, whichever
period is shorter.
(d) If the Participant's employment terminates for any reason
other than as provided in Section 2(a), 2(b) and 2(c) above, the Option
shall terminate immediately.
The death or Disability of the Participant after the termination of the
Participant's employment otherwise provided herein shall not extend the time
permitted to exercise an Option. If at the time the Participant's employment is
terminated for a reason provided in Section 2 (a), 2 (b) or 2 (c) above, the
Participant is subject to Section 16 of the Exchange Act, any time period
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provided for in this Paragraph 2 shall be suspended or delayed during the period
the Participant would be subject to liability for engaging in "short-swing"
transactions under Section 16 of the Exchange Act, but such suspension or delay
shall not extend such time period more than six (6) months and one (1) day nor
beyond the original Option Period.
3. Exercise.
(a) The Option shall be exercisable during the Participant's
lifetime only by the Participant (or his or her guardian or legal
representative), and after the Participant's death only by a
Representative. The Option may only be exercised by the delivery to the
Company of a properly completed written notice, in form satisfactory to
the Board or Committee, which notice shall specify the number of whole
Option Shares to be purchased and the aggregate Option Price for such
shares, together with payment in full of such aggregate Option Price.
Payment shall be made to the Company:
(i) in cash or by check.
The Option shall not be exercised unless there has been
compliance with all the preceding provisions of this Paragraph 3(a),
and, for all purposes of this Stock Option Agreement, the date of the
exercise of the Option shall be the date upon which there is compliance
with all such requirements.
(b) Upon receipt of written notice of exercise, the
Committee may elect
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to cash out all or part of the portion of any Option to be exercised by
paying the Participant an amount, in cash or Common Stock, equal to the
excess of the Fair Market Value of the Common Stock that is subject to
the Option over the Option Price times the number of shares of common
stock subject to the Option on the effective date of such cash out.
4. Payment of Withholding Taxes. If the Company is obligated to withhold
an amount on account of any Federal, state, local or foreign tax imposed as
result of the exercise of the Option, the Participant shall pay such amount to
the Company, or make arrangements satisfactory to the Company regarding the
payment of such amount, as provided in the Plan.
5. Requirements of Law; Registration and Transfer Requirements. The
Company shall not be required to sell or issue any shares under the Option if
the issuance of such shares shall constitute a violation of any provision of any
law or regulation of any governmental authority. Specifically, in connection
with the Securities Act, upon exercise of the Option, unless a registration
statement under the Securities Act is in effect with respect to the shares of
Common Stock covered by the Option, the Company shall not be required to issue
such shares unless the Company has received evidence reasonably satisfactory to
it to the effect that the Participant is acquiring such shares for investment
and not with a view to the distribution thereof, and unless the
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certificate issued representing the shares of Common Stock bears the following
or similar legend:
"The shares of stock represented by this certificate (1) have
not been registered under the Securities Act of 1933, as amended, or
under the securities laws of any state and may not be sold or
transferred except upon such registration or upon receipt by the
Company of an opinion of counsel satisfactory to the Company, in form
and substance satisfactory to the Company, that registration is not
required for such sale or transfer; and (2) are subject to certain
restrictions upon the transfer thereof, and to certain rights and
obligations, all as more specifically set forth in a certain Blue Rhino
Corporation 1998 Employee Stock Incentive Plan, as amended, and in this
Stock Option Agreement, a copy of either of which is available for
inspection at the registered office of the Company."
Any reasonable determination in this connection by the Company shall be final,
binding and conclusive. At such time as, in the opinion of counsel for the
Company, the above or similar legend is no longer required for compliance with
applicable securities laws or otherwise, then the holders of such certificates
shall be entitled to exchange such certificates for certificates representing a
like number of shares but without such legend. The Company shall not be
obligated to deliver any shares of Common Stock upon exercise of the Option
until there has been compliance with any tax withholding requirements,
securities exchange listing or other requirements the Board or Committee deems
appropriate or as provided in this Agreement or in the Plan.
6. Adjustment/Change in Control. In the event of a Change in Control or
other corporate restructuring provided for in the Plan, the Participant shall
have such rights, and the Board or Committee shall take such actions, as are
provided for in the Plan and in this Stock Option Agreement.
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7. Non-transferability. Except as provided in the Plan, the Option and any
interest in the Option may not be sold, assigned, conveyed, gifted, pledged,
hypothecated or otherwise transferred in any manner other than by will or the
laws of descent and distribution. Notwithstanding any other provision of this
Stock Option Agreement, any such attempted sale, assignment, conveyance, gift,
pledge, hypothecation or transfer shall be null and void and shall nullify the
Option immediately.
8. Plan. The Option is granted pursuant to the Plan, as in effect on the
date hereof, and is subject to all terms and conditions of the Plan, as the same
may be amended from time to time; provided, however, that no such amendment
shall deprive the Participant, without the Participant's consent, of the Option
or of any of the Participant's rights under this Stock Option Agreement. The
interpretation and construction by the Board or Committee of the Plan, this
Stock Option Agreement and the Option, and such rules and regulations as may be
adopted by the Board or Committee for the purpose of administering the Plan,
shall be final and binding upon the Participant.
9. Stockholder Rights. Until the Option shall have been duly exercised to
purchase Option Shares and such shares have been officially recorded as issued
on the Company's official stockholder records, no person or entity shall be
entitled to vote, receive dividends or be deemed for any purpose the holder of
any Option Shares, and adjustments for dividends or otherwise shall be made only
if the record date therefor is subsequent to the date such shares are
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recorded and after the date of exercise and without duplication of any
adjustment.
10. Employee Rights. No provision of this Stock Option Agreement or of the
Option granted hereunder shall give the Participant any right to continue as an
employee of the Company, create any inference as to the length of employment of
the Participant, or give the Participant any right to participate in any
employee welfare or benefit plan or other program (other than the Plan) of the
Company.
11. Disclosure Rights. The Company shall have no duty or obligation to
affirmatively disclose to the Participant or a Representative, and the
Participant or Representative shall have no right to be advised of, any material
information regarding the Company at any time prior to, upon or in connection
with the exercise of an Option or the Company's issuance of Common Stock in
accordance with the terms of this Stock Option Agreement.
12. Changes in Company's Capital Structure. The existence of the Option
shall not affect in any way the right or authority of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of Common
Stock, bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
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assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
13. Investment Representation and Agreement. If, in the opinion of counsel
for the Company, a particular representation by the Participant is required
under the Securities Act or any other applicable federal or state law, or any
regulation or rule of any governmental agency, the Company may require the
Participant to make such representation and such other representations as the
Company reasonably may determine to be necessary.
14. Offset. Any amounts owed to the Company or an Affiliate by the
Participant of whatever nature may be offset by the Company from the value of
any shares of Common Stock, cash or other thing of value under this Stock Option
Agreement to be transferred to the Participant, and no shares of Common Stock or
other thing of value under this Stock Option Agreement will be transferred
unless and until all disputes between the Company and the Participant have been
fully and finally resolved and the Participant has waived all claims to such
against the Company or an Affiliate.
15. Governing Law. This Stock Option Agreement and the Option granted
hereunder shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware (other than its laws respecting choice of
law).
16. Entire Agreement. This Stock Option Agreement, together with the Plan,
constitute the entire obligation of the parties hereto with respect to the
subject matter hereof, provided that in the event of any inconsistency between
the Plan
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and this Stock Option Agreement, the terms and conditions of this Stock Option
Agreement shall control.
17. Definitions. Capitalized terms used but not defined in this Stock
Option Agreement shall have the meanings ascribed to such terms in the Plan.
18. Amendment. No amendment to this Stock Option Agreement shall be
effective unless in writing and signed by the Company.
19. Waiver; Cumulative Rights. The failure or delay of either party to
require performance by the other party of any provision hereof shall not affect
its right to require performance of such provision unless and until such
performance has been waived in writing. Each and every right hereunder is
cumulative and may be exercised in part or in whole from time to time.
20. Counterparts. This Stock Option Agreement may be signed in two
counterparts, each of which shall be an original, but both of which shall
constitute but one and the same instrument.
21. Notices. Any notice which either party hereto may be required or
permitted to give the other shall be in writing and may be delivered personally
or by mail, postage prepaid, addressed to the Treasurer of the Company, 104
Cambridge Park, Winston-Salem, North Carolina 27104 (or to such other address as
the Board or Committee may designate), and the Participant at his address as
shown on the Company's records, or to such other address as the Participant, by
notice to the Company, may designate in writing from time to time.
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22. Headings. The headings contained in this Stock Option Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Stock Option Agreement.
23. Severability. If any provision of this Stock Option Agreement shall for
any reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof, and this Stock
Option Agreement shall be construed as if such invalid or unenforceable
provision were omitted.
24. Successors and Assigns. This Stock Option Agreement shall inure to the
benefit of and be binding upon each successor and assign of the Company. All
obligations imposed hereunder upon the Participant or a Representative, and all
rights granted to the Company hereunder, shall be binding upon the Participant's
or the Representative's heirs, legal representatives and successors.
25. Tax Consequences. The Participant agrees to undertake to determine and
be responsible for any and all tax consequences to himself with respect to the
Option.
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IN WITNESS WHEREOF, the Company has caused this Stock Option Agreement
to be duly executed by an officer thereunto duly authorized, and the Participant
has hereunto set his hand, all as of the day and year first above written.
BLUE RHINO CORPORATION:
By: /s/ Billy D. Prim
Title: CEO
PARTICIPANT
D. Scott Coward
/s/ D. Scott Coward
[signature]
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