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Exhibit 10.3
FORM OF
NON-STATUTORY STOCK OPTION AGREEMENT
THIS NON-STATUTORY STOCK OPTION AGREEMENT ("Agreement") is entered into
as of this _____ day of __________, _____, by and between HAWK CORPORATION, a
Delaware corporation (the "Company"), and _______________ (the "Optionee").
WHEREAS, the Company has adopted the 1997 Stock Option Plan (as amended
from time to time, the "Plan");
WHEREAS, capitalized terms used herein without definition have the
meanings assigned to them in the Plan;
WHEREAS, the Optionee is [A NON-EMPLOYEE DIRECTOR OF THE COMPANY OR
{INSERT DESCRIPTION OF OTHER TYPE OF NON-EMPLOYEE}] [AN EMPLOYEE DIRECTOR,
OFFICER AND/OR KEY EMPLOYEE OF THE COMPANY];
WHEREAS, the Company believes that it would advance the interests of
the Company and its stockholders to afford an opportunity to the Optionee to
acquire or increase the Optionee's proprietary interest in the Company through
the grant of Non-Statutory Options;
WHEREAS, the Committee has granted Non-Statutory Options to purchase
shares of Class A Common Stock, par value $0.01 per share, of the Company
("Common Stock") to the Optionee pursuant to the Plan on the terms and subject
to the conditions set forth herein; and
WHEREAS, the Optionee desires to accept said Non-Statutory Options
pursuant to the terms and subject to the conditions set forth herein;
NOW, THEREFORE, the parties agree as follows:
1. GRANT OF OPTIONS. The Company hereby grants Non-Statutory
Options to purchase up to __________ (_____) shares of Common Stock
(collectively, the "Option Shares") to the Optionee, subject to all of the
terms and conditions contained in this Agreement and the Plan. The
Non-Statutory Options are not "incentive stock options" within the meaning of
Section 422 of the Code.
2. TIMING OF EXERCISE.
[(a) EXCEPT AS PROVIDED IN SECTION 2(b) BELOW, THE
NON-STATUTORY STOCK OPTIONS SHALL BECOME EXERCISABLE IN FULL AS FOLLOWS:
(i) ON THE DATE THAT THE COMPANY ACHIEVES ANNUAL
PRIMARY EARNINGS PER SHARE OF COMMON STOCK OF $_____ AFTER TAX BUT
WITHOUT GIVING EFFECT TO ANY FAS 109 VALUATION ADJUSTMENTS; OR
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(ii) IF THE NON-STATUTORY STOCK OPTIONS HAVE NOT
ALREADY BECOME EXERCISABLE PURSUANT TO CLAUSE (I) ABOVE, ON __________,
_____.
AT ANY TIME AFTER THE NON-STATUTORY STOCK OPTIONS BECOME EXERCISABLE, THE
OPTIONEE MAY EXERCISE THE NON-STATUTORY STOCK OPTIONS, IN WHOLE OR IN PART,
UNTIL EXPIRATION OF THE NON- STATUTORY STOCK OPTIONS PURSUANT SECTION 5 BELOW.]
OR:
[(a) EXCEPT AS PROVIDED IN SECTION 2(B) BELOW, THE
NON-STATUTORY STOCK OPTIONS SHALL VEST OVER A THREE (3) YEAR PERIOD AND SHALL
BECOME EXERCISABLE FROM TIME TO TIME AS FOLLOWS: _____ (___) OPTION SHARES ON
THE FIRST ANNIVERSARY OF THIS AGREEMENT; _____ (___) ON THE SECOND ANNIVERSARY
OF THIS AGREEMENT; AND _____ (___) OPTION SHARES ON THE THIRD ANNIVERSARY OF
THIS AGREEMENT. AT ANY TIME AFTER EACH PORTION OF THE NON-STATUTORY STOCK
OPTIONS BECOME EXERCISABLE, THE OPTIONEE MAY EXERCISE SUCH PORTION OF THE
NON-STATUTORY STOCK OPTIONS, IN WHOLE OR IN PART, UNTIL EXPIRATION OF THE
NON-STATUTORY STOCK OPTIONS PURSUANT TO SECTION 5 BELOW.]
OR:
[(a) INSERT SUCH VESTING TERMS AS DETERMINED BY THE
COMPENSATION COMMITTEE.]
(b) Notwithstanding anything to the contrary in Section 2(a)
above, the Non-Statutory Options shall become immediately fully vested and
fully exercisable:
(i) if there occurs any transaction (which shall
include a series of transactions occurring within sixty (60) days or
occurring pursuant to a plan), that has the result that stockholders of
the Company immediately before such transaction cease to own at least
fifty-one percent (51%) of the voting stock of the Company or of any
entity that results from the participation of the Company in a
reorganization, consolidation, merger, liquidation or any other form of
corporate transaction;
(ii) if the stockholders of the Company approve a
plan of merger, consolidation, reorganization, liquidation or
dissolution in which the Company does not survive (unless the approved
merger, consolidation, reorganization, liquidation or dissolution is
subsequently abandoned); or
(iii) if the stockholders of the Company approve a
plan for the sale, lease, exchange, transfer, assignment or other
disposition of all or substantially all the property and assets of the
Company (unless such plan is subsequently abandoned).
3. EXERCISE PRICE. The exercise price for the Non-Statutory
Options shall be $_____ per Option Share (the "Exercise Price"), and shall be
due and payable, in cash, by certified or official bank check, by money order,
in shares of Common Stock or, in the sole discretion of the Committee, by
personal check in full or partial payment of any Option Shares. Pursuant to
the terms
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of the Plan, the Company may, in its sole discretion, lend money to the
Optionee, guarantee a loan to the Optionee or otherwise assist the Optionee to
obtain the cash necessary to exercise all or a portion of the Option or to pay
any tax liability of the Optionee attributable to such exercise. The Optionee
shall remit the withholding tax, if any, owed by the Optionee under Section 10
below with respect to the exercise of the Non-Statutory Options to the Company
along with the Exercise Price.
4. PROCEDURE FOR EXERCISE. In order to exercise the Non-Statutory
Options, the Optionee shall deliver to the Chairman of the Board or Secretary of
the Company or such agent as such officers may delegate in their stead, the
following: (i) the aggregate Exercise Price and any withholding tax required
under Section 10 below; (ii) a completed and executed Exercise of Stock Option
in the form attached hereto as Exhibit A; and (iii) if required, the written
representation and/or other information described in Section 6 below. The
Company shall cause certificates for Option Shares purchased hereunder to be
delivered to the Optionee as soon as reasonably practicable thereafter.
5. EXPIRATION OF OPTIONS. The unexercised portion, if any, of the
Non-Statutory Options shall automatically and without notice terminate and
become null and void at the time of the earliest to occur of the following: [IF
NOT EMPLOYED BY THE COMPANY: (i) THREE (3) MONTHS AFTER THE DATE THAT THE
OPTIONEE CEASES TO BE {A DIRECTOR OF THE COMPANY} FOR ANY REASON; OR (ii) THE
DATE THAT IS TEN (10) YEARS FROM THE DATE THAT THE COMMITTEE GRANTS THE NON-
STATUTORY OPTIONS TO THE OPTIONEE.] [IF EMPLOYED BY THE COMPANY:
(i) THREE (3) MONTHS AFTER THE DATE THAT THE
OPTIONEE'S EMPLOYMENT WITH THE COMPANY OR ANY OF ITS SUBSIDIARIES IS
TERMINATED FOR ANY REASON OTHER THAN BY REASON OF (A) "CAUSE," WHICH,
SOLELY FOR PURPOSES OF THIS AGREEMENT, SHALL MEAN THE TERMINATION OF
THE OPTIONEE'S EMPLOYMENT BY REASON OF THE OPTIONEE'S WILLFUL
MISCONDUCT OR NEGLIGENCE, (B) THE MENTAL OR PHYSICAL DISABILITY (WITHIN
THE MEANING OF SECTION 22(e)(3) OF THE CODE) OF THE OPTIONEE AS
DETERMINED BY A MEDICAL DOCTOR SATISFACTORY TO THE COMMITTEE OR (C)
THE DEATH OF THE OPTIONEE;
(ii) IMMEDIATELY UPON THE TERMINATION OF THE
OPTIONEE'S EMPLOYMENT WITH THE COMPANY OR ANY OF ITS SUBSIDIARIES FOR
CAUSE;
(iii) ONE (1) YEAR AFTER THE DATE THAT THE OPTIONEE'S
EMPLOYMENT WITH THE COMPANY IS TERMINATED BY REASON OF A MENTAL OR
PHYSICAL DISABILITY (WITHIN THE MEANING OF SECTION 22(e)(3) OF THE
CODE) AS DETERMINED BY A MEDICAL DOCTOR SATISFACTORY TO THE COMMITTEE;
(iv) (A) ONE (1) YEAR AFTER THE DATE OF TERMINATION
OF THE OPTIONEE'S EMPLOYMENT WITH THE COMPANY BY REASON OF DEATH OF THE
OPTIONEE, OR (B) THREE (3) MONTHS AFTER THE DATE THAT THE OPTIONEE DIES
IF SUCH DEATH OCCURS DURING THE ONE (1) YEAR PERIOD SPECIFIED IN
SECTION 5(a)(III) ABOVE; OR
(v) THE DATE THAT IS TEN (10) YEARS FROM THE DATE
THAT THE COMMITTEE GRANTS THE NON-STATUTORY OPTIONS TO THE OPTIONEE.]
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6. REPRESENTATIONS AND WARRANTIES OF THE OPTIONEE. The Optionee
represents and warrants that:
(a) The Optionee is aware that no federal or state agency has
made any finding or determination as to the fairness for public or private
investment in, nor any recommendation or endorsement of, the Option Shares.
(b) The Optionee is aware that the Shares are not registered
under the Securities Act of 1933, as amended (the "Act"), or the securities or
"blue sky" laws of any state or jurisdiction (the "Blue Sky Laws") as of the
date of this Agreement, and the Company is under no obligation to cause the
Option Shares to be registered under the Act or the Blue Sky Laws; and that in
the event that the Option Shares are not registered under the Act or the Blue
Sky Laws for any reason at a time when the Optionee desires to exercise all or
any part of the Non-Statutory Options, then, in addition to the other terms and
conditions of this Agreement, such exercise shall be conditioned upon
determination by the Committee that the Option Shares may be issued to the
Optionee without registration under the Act or the Blue Sky Laws. The Committee
may require the Optionee to deliver to the Company an agreement or undertaking
setting forth any factual information that the Committee deems necessary to
determine whether the Option Shares may be issued to the Optionee without
registration under the Act or the Blue Sky Laws, including, without limitation,
a representation and warranty that the Optionee is acquiring the Option Shares
for investment and not with a view to, or for sale in connection with, the
distribution of any the Option Shares.
(c) The Optionee is aware that the Option Shares issuable upon
exercise of the Non-Qualified Options may be subject to the terms of the Lock-Up
Agreement between the Optionee and [SCHRODER & CO. INC., DONALDSON, LUFKIN &
JENRETTE SECURITIES CORPORATION AND MCDONALD & COMPANY SECURITIES, INC.]
7. NON-REGISTRATION AND LEGEND. Nothing contained in this
Agreement shall require the Company to register the Option Shares under the Act
or the Blue Sky Laws or to continue any such registration which may be in
effect on or after the date of this Agreement. If any such Option Shares are
not so registered when issued hereunder, then the certificate(s) for the Option
Shares shall bear a legend, in a form satisfactory to the Committee,
restricting the transfer of the Option Shares unless such transfer is
registered or exempt from registration under the Act or the Blue Sky Laws, and
the Option Shares shall not be transferred except in accordance with such
legend.
8. TRANSFERABILITY. The Optionee or any beneficiary thereof
shall have the power or right to sell, exchange, pledge, transfer, assign or
otherwise encumber or dispose of the Optionee's or such beneficiary's
Non-Statutory Stock Options only as follows: (i) to the spouse or any children
or grandchildren of the Optionee or such beneficiary receiving the
Non-Statutory Stock Options; (ii) as a charitable contribution or gift to or
for the use of any person or entity described in Section 170(c) of the Code;
(iii) to any Controlled Entity; or (iv) by will or the laws of intestate
succession.
9. RIGHTS PRIOR TO EXERCISE OF OPTION. The Optionee shall not
have any rights as a stockholder with respect to any Option Shares subject to
the Non-Statutory Options prior
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to the date on which the Optionee is recorded as the holder of such Option
Shares on the records of the Company; provided that the foregoing shall not
diminish or affect any rights the Optionee has under the Plan.
10. TAXES. The Company may make such provisions and take such
steps as it may deem necessary or appropriate for the withholding of all
federal, state, local and other taxes required by law to be withheld with
respect to the Non-Statutory Options including, but not limited to: (i)
reducing the number of Option Shares otherwise deliverable, based upon their
fair market value on the date of exercise, to permit deduction of the amount of
any such withholding taxes from the amount otherwise payable under this
Agreement; (ii) deducting the amount of any such withholding taxes from any
other amount then or thereafter payable to the Optionee; or (iii) requiring the
Optionee, beneficiary or legal representative to pay to the Company the amount
required to be withheld or to execute such documents as the Company deems
necessary or desirable to enable it to satisfy its withholding obligations as a
condition of releasing the Option Shares.
11. GENERAL PROVISIONS.
(a) The Company shall at all time during the term of the
Non-Statutory Options reserve and keep available such number of shares of Common
Stock as will be sufficient to satisfy the requirements of this Agreement in
respect of vested Option Shares, shall pay all fees and expenses necessarily
incurred by the Company in connection therewith, and shall use its best efforts
to comply with all laws and regulations that, in the reasonable opinion of
counsel for the Company, are applicable thereto.
(b) Any notice to be given hereunder by either party to the
other shall be in writing and shall be given either by personal delivery,
telecopied with confirmed receipt, or sent by certified, registered or express
mail, postage pre-paid, or sent by a national next-day delivery service, postage
pre-paid, return receipt requested, addressed to the parties at the following
addresses, or at any other address as such party may hereafter specify in
writing and shall be deemed given when so delivered personally, or telecopied,
or if mailed, two (2) days after the date of mailing, or if by national next-day
delivery service, on the date after delivery to such service as follows:
(i) if to the Company, to:
Hawk Corporation
Suite 30-5000, 200 Public Square
Cleveland, Ohio 44114
Telecopier: 216-861-4546
ATTN: Chairman of the Board
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with a copy to:
Kohrman Jackson & Krantz P.L.L.
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
Telecopier: 216-621-6536
ATTN: Marc C. Krantz, Esq.
(ii) if to the Optionee, to:
[INSERT NAME, ADDRESS AND TELECOPIER NUMBER]
(c) The headings and other captions in this Agreement are for
convenience of reference only and shall not be used in interpreting, construing
or enforcing any of the provisions of this Agreement.
IF EMPLOYED BY THE COMPANY:
[(d) THE PROVISIONS OF THIS AGREEMENT RELATE SOLELY TO
GRANTING OF THE NON-STATUTORY STOCK OPTIONS TO THE OPTIONEE PURSUANT TO THE PLAN
AS OF THE DATE HEREOF AND DO NOT ADDRESS OR RELATE TO ANY CONDITIONS OF THE
OPTIONEE'S EMPLOYMENT WITH THE COMPANY. NOTHING IN THIS AGREEMENT OR THE PLAN
SHALL CONFER UPON THE OPTIONEE ANY RIGHT OR ENTITLEMENT WITH RESPECT TO
CONTINUATION OF EMPLOYMENT BY THE COMPANY NOR INTERFERE IN ANY WAY WITH THE
RIGHT OR POWER OF THE COMPANY TO TERMINATE THE OPTIONEE'S EMPLOYMENT AT ANY
TIME, WITH OR WITHOUT CAUSE.]
(d) No change or modification of this Agreement shall be valid
unless the same is in writing and signed by the Company and the Optionee.
(e) No waiver of any provision of this Agreement shall be
valid unless in writing and signed by the person against whom it is sought to be
enforced. The failure of any party at any time to insist upon strict performance
of any condition, promise, agreement or understanding set forth herein shall not
be construed as a waiver or relinquishment of the right to insist upon strict
performance of the same or other condition, promise, agreement or understanding
at a future time.
(f) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective heirs, legal representatives,
successors and permitted assigns of the parties hereto. Nothing in this
Agreement is intended, and it shall not be construed, to give any person or
entity other than the parties hereto any right, remedy or claim under or in
respect of this Agreement or any provisions hereof.
(g) This Agreement and all rights hereunder shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
Ohio applicable to contracts made and
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to be performed entirely within that State. In the event of any conflict between
this Agreement and the Plan, the provisions of the Plan shall govern.
(h) This Agreement and the Plan set forth all of the
agreements, warranties and representations among the parties hereto and thereto
with respect to the Non-Statutory Options, and there are no other promises,
agreements, conditions, understandings, representations or warranties, oral or
written, express or implied, among them with respect to the Non-Statutory
Options other than as set forth herein and therein. Any and all prior agreements
with respect to the Non-Statutory Options are hereby revoked.
(i) This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Optionee has executed this
Agreement, all as of the date first written above.
HAWK CORPORATION
By:
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Its:
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[INSERT NAME OF THE OPTIONEE]
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EXHIBIT A
FORM OF EXERCISE OF NON-STATUTORY STOCK OPTION
Hawk Corporation
Suite 30-5000, 200 Public Square
Cleveland, Ohio 44114
Attention: Chairman of the Board
Gentlemen:
The undersigned Optionee hereby exercises all or a portion of the
Non-Statutory Options granted to him pursuant to the Non-Statutory Stock Option
Agreement dated as of __________, _____, between Hawk Corporation (the
"Company") and the Optionee with respect to __________ shares of Class A Common
Stock, par value $0.01 per share, of the Company covered by said Non-Statutory
Options, and tenders herewith at the price of $__________ per share, of which
$__________ represents payment of the exercise price thereof and $__________
represents payment of any withholding tax due.
The registered address on the share certificate to be issued to the
Optionee should be:
_______________________________________________________________________________.
The Optionee's social security number is: _________________________.
Optionee:
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Signature
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Typed or Printed Name
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Date of Exercise