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Exhibit 10.7
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT ("Agreement") is made and
entered into effective as of the 25th day of June, 1997, by and between FLORAFAX
INTERNATIONAL, INC., a Delaware corporation (the "Company") and James J. Pagano
(the "Optionee").
BACKGROUND
A. The Company has determined to reward and to provide incentives to
those who are primarily responsible for the operations of the Company and for
shaping and carrying out the long-range plans of the Company and aiding in its
continued growth and financial success.
B. In furtherance of these purposes, the Board of Directors of the
Company has authorized the grant to Optionee of a stock option to purchase
certain shares of the common stock, par value $.01 per share, of the Company
("Common Stock") by resolution dated June 25, 1997.
C. The Company and Optionee wish to confirm the terms, conditions, and
restrictions of this option.
For and in consideration of the premises, the mutual covenants
contained herein, and other good and valuable consideration, the parties hereto
agree as follows:
ARTICLE 1
GRANT AND EXERCISE OF OPTION
1.1 GRANT OF OPTION. Subject to the terms, restrictions, limitations,
and conditions stated herein, the Company hereby grants to Optionee an option
(the "Option") to purchase 50,000 shares of Common Stock (the "Option Shares").
The date first written above shall be the date on which the Option has been
granted (the "Grant Date").
1.2 EXERCISE OF THE OPTION.
(a) The Option may be exercised with respect to all or any
portion of the Option Shares at any time during the Option Period (as
defined below) by the delivery to the Company, at its principal place
of business, of (i) a written notice of exercise which shall be
delivered to the Company no earlier than thirty (30) days and no later
than ten (10) days prior to the date upon which Optionee desires to
exercise all or any portion of the Option (the "Exercise Date"); (ii)
a certified check payable to the Company in the amount of the Exercise
Price (as defined below) multiplied by the number of Option Shares
being purchased (the "Purchase Price") OR by delivery of a number of
shares of Common Stock, which have been held by Optionee for at least
six months, having a fair market value, as of the date the Option is
exercised, at least equal to the Purchase Price OR by a certified
check payable to the Company in an amount less than the Exercise Price
and by delivery of a number of shares of Common Stock, which have been
held by Optionee for at least six months, having a fair market value,
as of the date the Option is exercised, at least equal to the balance
of the Purchase Price; and (iii) except as permitted in Paragraph
1.2(b) below, a certified check payable to the Company in the amount
of all withholding tax obligations (whether federal state or local),
imposed on the Company by reason of the exercise of the Option, or the
Withholding Election described in Section 1.2(b). Upon acceptance of
such notice, receipt of payment in full, the Company shall cause a
certificate representing the shares of Common Stock as to which the
Option has been exercised to be issued and delivered to the Optionee.
(b) In lieu of paying the withholding tax obligation in cash,
as described in Section 1.2(a) (iii), the Optionee may elect to have
the actual number of shares issuable upon exercise of the Option
reduced by the smallest number of whole shares of Common Stock which,
when multiplied by the fair market value of the Common Stock as of the
date the Option is exercised, is sufficient to satisfy the amount of
the
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withholding tax obligations imposed on the Company by reason of the
exercise thereof (the "Withholding Election"). The Optionee may take a
Withholding Election only if all of the following conditions are met:
(i) the Withholding Election must be made by electing the
Withholding Election in the written notice of exercise; and by
executing and delivering to the Company a properly completed
Notice of Withholding Election; and
(ii) any Withholding Election made will be irrevocable;
however, the Company may, in its sole discretion, disapprove and
not give effect to any Withholding Election.
1.3 EXERCISE PRICE. The exercise price for each share of Common
Stock shall be $4.00 (the "Exercise Price").
1.4 "TERM AND TERMINATION OF OPTION. Except as otherwise provided
herein, the term of the Option ("Option Period") shall commence on the Grant
Date and terminate on June 25, 2006. Subject to paragraph 1.6 below, this Option
shall become exercisable as to one-fourth (1/4) of the total number of Option
Shares at such time as the Fair Market Value (as defined below) of the Common
Stock of the Company Is equal to or greater than Five Dollars ($5.00) per share,
for twenty (20) consecutive trading days. This Option shall become exercisable
as to an additional one-fourth (1/4) of the total number of Option Shares at
such time as the Fair Market Value of the Common Stock of the Company is equal
or greater than Seven and 50/100 Dollars ($7.50) per share, for twenty (20)
consecutive trading days. This Option shall become exercisable as to an
additional one-fourth (1/4) of the total number of Option Shares at such time as
the Fair Market Value of the Common Stock of the Company is equal or greater
than Ten and No/100 Dollars ($10.00) per share, for twenty (20) consecutive
trading days. This Option shall become exercisable as to the remaining
one-fourth (1/4) of the total number of Option Shares at such time as the Fair
Market Value of the Common Stock of the Company is equal to or greater than
Twelve and 50/100 Dollars ($12.50) per share, for twenty (20) consecutive
trading days. Once the right to purchase shares has accrued, such shares may
thereafter be purchased at any time, or in part from time to time, until the
termination date of this Option, subject to the provisions of Paragraph 1.6
below. In no case may this Option be exercised for a fraction of a share."
Upon the expiration of the Option Period as set forth above,
this Option, and all unexercised rights granted to the Optionee hereunder shall
terminate, and thereafter be null and void.
1.5 RIGHTS AS STOCKHOLDER. Optionee, or, if applicable, any
Transferee (as defined in Section 3.13 (d)) shall have no rights as a
stockholder with respect to any shares covered by the Option until a stock
certificate for the shares is issued in Optionee's or Transferee's name. No
adjustment to the Option shall be made pursuant to Section 3.1 hereof for
dividends paid or declared on or with respect to Common Stock in cash,
securities other than Common Stock, or other property, for which the record date
is prior to the date of exercise hereof.
1.6 "EARLY TERMINATION OF OPTION. The Option Period shall terminate
on the date of the first to occur of the following:
(a) June 25, 2006;
(b) June 25, 2002, in the event all Option Shares have not
vested;
(c) the date immediately preceding the consummation of: (i)
dissolution or liquidation of the Company; (ii) merger of the Company into
another corporation, or any consolidation, share exchange, combination,
reorganization, or like transaction in which the Company is not the survivor; or
(iii) sale or transfer (other than as security of the Company's obligations) of
at least a majority of the assets of the Company. The Company will use its best
efforts to provide written notice to Optionee of such dissolution, liquidation,
merger, consolidation, acquisition, separation, reorganization, sale, transfer,
or like transaction, at least (30) days prior to the closing of such transaction
to permit Optionee to exercise the Option."
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ARTICLE 2
RESTRICTION ON OPTION AND OPTION SHARES
2.1 RESTRICTIONS ON TRANSFER OF OPTION. The Option evidenced hereby is
non transferable other than by will or the laws of descent and distribution, and
shall be exercisable during the lifetime of Optionee only by Optionee (or, in
the event of Optionee's death or Disability, by a permitted Transferee).
2.2 RESTRICTIONS ON TRANSFER OF OPTION SHARES. Any Option Share
acquired upon exercise of the Option shall be subject to the following
restrictions:
(a) Except for transfers made in compliance with Section 2.2(b)
below, or as otherwise required or permitted hereunder, none of the
Option Shares may be conveyed, pledged, assigned, transferred,
hypothecated, encumbered, or otherwise disposed of by the Optionee, or
in the case of exercise of an Option by a Transferee, by such
Transferee. The foregoing notwithstanding, the Company may, but shall
not be obligated to, approve the transfer of such Option Shares upon
the condition that the transferee thereof execute and deliver to the
Company such documents and agreements as the Company shall reasonably
require to evidence the fact that the Option Shares to be owned,
either directly or beneficially, by such transferee shall continue to
be subject to all the restrictions set forth elsewhere herein, and
that such transferee is subject to and bound by such restrictions and
provisions. Any Option Shares transferred by bequest or by operation
of the laws of descent and distribution shall remain subject to the
restrictions set forth in this Section 2.2 and all applicable rights
in favor of the Company set forth elsewhere herein in the hands of any
transferee thereof. Nothing contained herein, however, shall be deemed
to impose any requirement that any transferee be an officer, director,
or employee of, or consultant to, the Company.
(b) The Option Shares may be transferred by the Optionee to a
Transferee upon the death or Disability of the Optionee, provided that
all such Option Shares shall remain subject to the restrictions set
forth in this Section 2.2 and all applicable rights in favor of the
Company set forth elsewhere herein in the hands the Transferee and of
any subsequent transferee of the Transferee.
ARTICLE 3
GENERAL PROVISIONS
3.1 CHANGE IN CAPITALIZATION. If the number of outstanding shares of
the Common Stock shall be increased or decreased by a change in par value,
split-up, stock split, reverse stock split, reclassification, distribution of
common stock dividend, or other similar capital adjustment, an appropriate
adjustment shall be made by the Board of Directors in the number and kind of
shares as to which the Option, or the portion thereof then unexercised, shall be
or become exercisable, such that Optionee's proportionate interest shall be
maintained as before the occurrence of the event. The adjustment shall be made
without change in the total price applicable to the unexercised portion of the
Option and with a corresponding adjustment in the Exercise Price. No fractional
shares shall be issued or made subject to the Option in making such adjustment.
All adjustments made by the Board of Directors under this Section shall be
final, binding, and conclusive.
3.2 LEGENDS. Each certificate representing the Option Shares purchased
upon exercise of the Option shall be endorsed with the following legend and
Optionee shall not make any transfer of the Option shares without first
complying with the restrictions on transfer described in such legend:
TRANSFER IF RESTRICTED
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE
"SECURITIES ACT") OR SIMILAR STATE SECURITIES LAWS
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APPLICABLE TO SUCH SECURITIES (COLLECTIVELY THE "ACTS") AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OR HYPOTHECATED UNLESS
(1) THERE IS AN EFFECTIVE REGISTRATION UNDER SUCH ACTS
COVERING SUCH SECURITIES, (2) THE TRANSFER IS MADE IN
COMPLIANCE WITH RULE 144 PROMULGATED UNDER THE SECURITIES ACT,
OR SIMILAR STATE SECURITIES LAW, OR (3) THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE ACTS.
Optionee agrees that the Company may also include any other
legends required by applicable federal or state securities laws.
3.3 GOVERNING LAWS. This Agreement shall be construed, administered
and enforced according to the laws of the State of Delaware.
3.4 SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the heirs, legal representatives, successors, and permitted assigns
of the parties.
3.5 NOTICE. Except as otherwise specified herein, all notices and other
communications under this Agreement shall be in writing and shall be deemed to
have been given if personally delivered or if sent by registered or certified
United States mail, return receipt requested, postage prepaid, addressed to the
proposed recipient at the last known address of the recipient. Any party may
designate any other address to which notices shall be sent by giving notice of
the address to the other parties in the same manner as provided herein.
3.6 SEVERABILITY. In the event that any one or more of the provisions
or portion thereof contained in this Agreement shall for any reason be held to
be invalid, illegal, or unenforceable in any respect, the same shall not
invalidate or otherwise affect any other provisions of this Agreement, and this
Agreement shall be construed as if the invalid, illegal or unenforceable
provision or portion thereof had never been contained herein.
3.7 ENTIRE AGREEMENT. This Agreement expresses the entire understanding
and Agreement of the parties with respect to the subject matter hereof. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
instrument.
3.8 VIOLATION. Any transfer, pledge, sale, assignment, or hypothecation
of the Option or any portion thereof made in violation of the terms of this
Agreement shall be void and without effect.
3.9 HEADINGS. Paragraph headings used herein are for convenience of
reference only and shall not be considered in construing this Agreement.
3.10 SPECIFIC PERFORMANCE. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement, the party or parties who are thereby aggrieved shall have the right
to specific performance and injunction in addition to any and all other rights
and remedies at law or in equity, and all such rights and remedies shall be
cumulative.
3.11 NO EMPLOYMENT RIGHTS CREATED. The grant of the Option hereunder
shall not be construed as giving Optionee the right to continued employment with
the Company.
3.12 SPECIAL LIMITATION ON EXERCISE. Notwithstanding anything contained
herein to the contrary, no purported exercise of the Option shall be effective
without the written approval of the Company, which approval may be withheld if
the exercise of this Option, together with the exercise of other previously
exercised stock options and/or offers and sales pursuant to any prior or
contemplated offering of securities, would, in the sole and absolute judgment of
the Company, require the filing of a registration statement with the United
States Securities and Exchange
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Commission, or with the securities commission of any state. The Company shall
avail itself of any exemptions from registration contained in applicable federal
and state securities laws which are reasonably available to the Company on terms
which, in its sole and absolute discretion, it deems reasonable and not unduly
burdensome or costly. If the Option cannot be exercised at the time it would
otherwise expire due to the restrictions contained in this Section 3.12, the
exercise period may, upon request of Optionee, be extended for successive
one-year periods until it can be exercised in accordance with this Section 3.12.
Optionee shall deliver to the Company, prior to the exercise of the Option, such
information, representations, and warranties as the Company may reasonably
request in order for the Company to be able to satisfy itself that the Option
Shares to be acquired pursuant to the exercise of the Option are being acquired
in accordance with the terms of an applicable exemption from the securities
registration requirements of applicable federal and state securities laws.
3.13 CERTAIN DEFINITIONS. The capitalized terms listed below are used
herein with the meaning thereafter ascribed:
(a) "Cause" means conduct amounting to (1) fraud or
dishonesty against the Company, (2) repeated intoxication with
alcohol or drugs while on the Company's premises or otherwise in
a manner which materially interferes with Optionee's performance
of duties of employment, or (3) a conviction or plea of guilty or
nolo contendere to a felony or a crime involving dishonesty.
(b) "Disability" means (1) the inability of Optionee to
perform the duties of Optionee's employment with the Company due
to physical or emotional incapacity or illness, where such
inability is expected to be of long-continued and indefinite
duration or (2) Optionee shall be entitled to (i) disability
retirement benefits under the federal Social Security Act or (ii)
recover benefits under any long-term disability plan or policy
maintained by the Company. In the event of a dispute, the
determination of Disability shall be made by the Board of
Directors and shall be supported by advice of a physician
competent in the area to which such Disability relates.
(c) "Fair Market Value" means of the applicable prices
selected from the following alternatives for the date as of which
Fair Market Value is to be determined as quoted in the Wall
Street Journal (or in such other reliable publication as the
committee, in it's discretion, may determine to rely upon): (i)
if the common stock is listed on the New York Stock Exchange, the
highest and lowest sales prices per share of the Common Stock as
quoted in the NYSE - Composite transactions listing for such
date, (ii) if the common Stock is not listed on such exchange,
the highest and lowest sales prices per share of Common stock for
such date on (or on any composite index including) the principal
United States Securities Exchange registered under the 1934 Act
on which the Common Stock is listed, or (iii) if the Common Stock
is not listed on any such exchange, the highest and lowest sales
prices per share of the Common Stock for such date on the
National Associates of Securities Dealers Automated Quotations
Systems or any successor system then in use ("NASDAQ"). If there
are no such sales price quotations for the date as of which Fair
Market Value is to be determined but there are such sales price
quotations within a reasonable period both before and after such
date, then Fair Market Value shall be determined by taking a
weighted average of the means between the highest and lowest
sales prices per share of the Common Stock as so quoted on the
nearest date before, and the nearest date after, the date as of
which Fair Market Value is to be determined. The average should
be weighted inversely by the respective numbers of trading days
between the selling dates and the date as of which Fair Market
Value is to be determined. If there are no such sales price
quotations on, or within a reasonable period both before and
after, the date as of which Fair Market Value is to be
determined, then Fair Market Value of the Common Stock shall be
the mean between the bonafide bid and asked prices per share of
Common Stock as so quoted for such date on NASDAQ, or if none,
the weighted average of the means between such bonafide bid and
asked prices on the nearest trading date before, and the nearest
trading date after, the date as of which Fair Market Value is to
be determined, if both such dates are within a reasonable period.
If the Fair Market Value of the Common Stock cannot be determined
on the basis set forth in this definition for the date as of
which Fair Market Value is to be determined, the Committee shall
in good faith determine the Fair Market Value of the Common Stock
on such date. Fair Market Value shall be determined without
regard to any restriction, other than a restriction which, by its
terms, will never lapse."
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(d) "Transferee" means the estate, or the executor or
administrator of the estate, of a deceased Optionee, or the
personal representative of an Optionee suffering a Disability.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the day and year first set forth above.
ATTEST: FLORAFAX INTERNATIONAL, INC.
/s/ Kelly S. McMakin By: /s/ James H. West
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Kelly S. McMakin, Secretary James H. West, President
ACCEPTED:
/s/ James J. Pagano
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James J. Pagano
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