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Title: |
Stock Option Agreement [Form] |
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Entities: |
Lynch Corp.; Ralph R. Papitto; Mario J. Gabelli |
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Date: |
2001 |
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Size: |
38KB total |
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Price: |
$40 |
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ID: |
#224042 |
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Agreement dated as of August 17, 2001 among Lynch Corporation (the
"Company"), Ralph R. Papitto ("Papitto") and Mario J. Gabelli ("Gabelli").
WHEREAS, the Board of Directors (the "Board") of the Company has appointed
Papitto Chief Executive Officer of the Company; and
WHEREAS, the Board currently consists of Messrs. Gabelli, Papitto, Gray and
Cerutti, with three vacancies resulting from the resignations of Messrs.
Guzzetti, Dolan and Castor; and
WHEREAS, it is contemplated that Papitto will designate three nominees to
fill such vacancies; and, if such nominees are reasonably acceptable to the
Company, the Company will recommend that the Board elect such nominees.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the parties agree as follows:
1. Papitto agrees to serve as the Company's Chief Executive Officer and
Chairman of the Board. Gabelli agrees to serve as Vice Chairman of the
Board.
2. Subject to approval by the shareholders of the Company, the Company hereby
grants Papitto a nontransferable option (the "Option") to purchase
374,471shares of Common Stock, par value $.01 per share (the "Common
Stock") (representing 20% on a fully-diluted basis of the shares of Common
Stock outstanding on the date hereof), at an initial exercise price of $30
per share and having the other terms and conditions set forth in Exhibit A
hereto.
3. The base salary, bonus and benefits payable to Papitto shall be as
determined from time to time by the Board in relation to the size and scale
of the Company's operations. The Company shall not compensate Papitto in
respect of any tax consequences of the grant, holding or exercise of the
Option.
4. The Company will move its executive offices from Rye, New York to
Providence, Rhode Island at such time as may be determined by Papitto.
5. Subject to approval by the shareholders of the Company of the Option,
Papitto agrees that he will present to the Company all acquisition
opportunities presented to or secured by him or any of his affiliated
companies prior to the date hereof and that neither he nor his affiliated
companies will after the date hereof acquire direct or indirect control of
any company (other than through acquisition by the Company) without the
prior approval of a majority of the Board (excluding Papitto and any other
director who is an officer of the Company or is or has been an officer of
any other company managed by Papitto). The Company will reimburse Papitto
for documented out-of -pocket costs incurred by Papitto in connection with
acquisition opportunities secured by him prior to the date hereof that
following the date hereof are pursued by the Company.
6. The Company will call a special meeting of shareholders to be held as
promptly as practicable and will use its reasonable efforts to hold such
meeting prior to October 31, 2001, at which meeting shareholders shall
consider approval of the option attached as Exhibit A hereto. The Company
hereby agrees to use all reasonable efforts to obtain shareholder approval
of the foregoing.
7. Gabelli hereby agrees to vote all shares of Common Stock personally owned
by him in favor of the Option.
8.
(a) This Agreement may be amended, altered or modified only by written
instrument executed by each of the parties.
(b) This Agreement and the Exhibit hereto constitute the entire
understanding and agreement of the parties, and supersede all prior
agreements and understandings, written and oral, among the parties, on
the other hand, with respect to the subject matter hereof.
(c) Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability
without rendering invalid or unenforceable the remaining terms and
provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
(d) All notices and other communications hereunder shall be in writing and
shall be deemed given if (i) delivered in person, (ii) transmitted by
telecopy (with confirmation), (iii) mailed by certified or registered
mail (return receipt requested and obtained) or (iv) delivered by an
express courier (with confirmation) to the parties at the following
addresses (or at such other address for a party as shall be specified
by like notice):
{PAGE}
If to the Company:
Lynch Corporation
401 Theodore Fremd Avenue
Rye, NY 10580
Telecopy: 914-921-6410
Attention: Chairman of the Board of Directors
and
If to Papitto:
Ralph R. Papitto
c/o AFC Cable Systems
50 Kennedy Plaza
Suite 1250
Providence, RI 02903
Telecopy: 401-453-2009
and
If to Gabelli:
Mario J. Gabelli
c/o Gabelli Group Capital Partners Inc.
One Corporate Center
Rye, New York 10580-1434
Telecopy: 914-921-5384
(e) This Agreement shall inure to the benefit of and be binding upon the
parties hereto and the respective successors, heirs, executors,
representatives and permitted assigns of the parties. Nothing in this
Agreement is intended or shall be construed to confer upon any entity
or person other than the parties hereto and their respective
successors and permitted assigns any right, remedy or claim under or
by reason of this Agreement or any part hereof. Without the prior
written consent of each of the other parties hereto, this Agreement
and the rights hereunder may not be assigned by any of the parties
hereto.
(f) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which taken together
shall constitute one and the same agreement, it being understood that
all of the parties need not sign the same counterpart.
(g) THIS AGREEMENT, THE LEGAL RELATIONS BETWEEN THE PARTIES AND THE
ADJUDICATION AND THE ENFORCEMENT THEREOF, SHALL BE GOVERNED BY AND
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS
OF LAW THEREOF.
(h) All actions arising under or relating to this Agreement shall be
brought exclusively in the Federal District Court for the Southern
District of New York or in any New York State Court sitting in the
County of New York and having subject matter jurisdiction over such
matters, and each of the parties hereto consents and agrees to
personal jurisdiction, and waives any objection as to the venue, of
such courts for purposes of such action. The parties to this Agreement
agree to waive any right to a jury trial as to all disputes and any
right to seek punitive or consequential damages.
{PAGE}
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Agreement as of the date appearing in the opening paragraph hereof.
LYNCH CORPORATION
By: /s/ Roger J. Dexter
Name: Roger J. Dexter
Title: Chief Financial
Officer
/s/Ralph R. Papitto
Ralph R. Papitto
/s/Mario J. Gabelli
Mario J. Gabelli
{PAGE}
Exhibit A
FORM OF STOCK OPTION AGREEMENT
THIS OPTION AGREEMENT AND ANY SHARES ACQUIRED UPON EXERCISE OF ANY OPTIONS
PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED
UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS, IN
THE OPINION OF COUNSEL TO THE ISSUER, SUCH OFFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION OR IS
OTHERWISE IN COMPLIANCE WITH THE SECURITIES ACT AND SUCH LAWS.
THIS OPTION AGREEMENT AND ANY OPTIONS HEREUNDER ARE SUBJECT TO RESTRICTIONS ON
OFFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, GIFT, TRANSFER OR OTHER
DISPOSITION, AS SPECIFIED HEREIN.
Stock Option Agreement, dated as of ______, 2001, between Lynch Corporation
and Ralph R. Papitto ("Papitto").
WHEREAS, Papitto has agreed to serve as the Chief Executive Officer and
Chairman of the Board of Directors of the Company, and the Company desires that
he remain in such employ and that he increase his equity ownership in the
Company in order to increase his incentive and personal interest in the welfare
of the Company and its subsidiaries;
NOW, THEREFORE, the parties hereby, subject to the terms and conditions of
this Agreement as set forth herein, agree as follows:
1. The Company grants to Papitto an option (the "Option") to purchase
from the Company all or any part of an aggregate of 374,471 shares (as
adjusted, the "Optioned Shares") of common stock, par value $.01 per
share (the "Common Stock"). The Option is not intended to be an
incentive stock option within the meaning of Section 422A of the
Internal Revenue Code of 1986, as amended, and this Agreement shall be
construed and interpreted in accordance with such intention.
2. Subject to adjustment as provided herein, the purchase price upon any
exercise of the Option shall be $30.00 per share (the "Option Price").
3. The Option shall not be assignable or transferable by Papitto except
by will or intestacy to the executors or administrators of Papitto's
estate and, during the life of Papitto, the Option may be exercised
only by him or his legal representative (any such person, the "Option
Holder").
4. The Option shall expire on and no longer be exercisable to any extent
whatsoever after the earlier of (a) the tenth anniversary of the date
of this Agreement or (b) the fifth anniversary of the date on which
Papitto ceases for any reason to serve as the Chief Executive Officer
of the Company. Any exercise of the Option may be either in whole or
in part at any time and from time to time.
5. Neither Papitto nor Papitto's legal representative or executors or
administrators shall be or be deemed to be the holder of any of the
Optioned Shares unless and until a certificate or other authorized
evidence for such shares shall have been issued. Upon payment of the
Option Price thereof, each share issued upon exercise of the Option
shall be fully paid and nonassessable.
6. In order to exercise the Option, the Option Holder shall give written
notice of intent to exercise the Option to the Chief Financial Officer
of the Company or his designee, specifying the number of the Optioned
Shares with respect to which the Option is being exercised, and
accompanied by payment to the Company of the amount of the Option
Price for the number of the Optioned Shares so specified.
7. Unless the shares to be issued upon the exercise of the Option shall
be registered prior to the issuance thereof under the Securities Act
of 1933, the Option Holder shall, as a condition of the Company's
obligation to issue such shares, give a representation in writing that
he is acquiring such shares for his own account as an investment and
not with a view to, or for sale in connection with, the distribution
of any thereof. In the event of the death of Papitto, an additional
condition of exercising the Option shall be the delivery to the
Company of such tax waivers and other documents as the Company shall
determine.
8. Upon any exercise of the Option, the Company may, in lieu of issuing
the Optioned Shares covered by such exercise, cancel such portion of
the Option in exchange for a cash payment to the Option Holder of an
amount equal to the product of (a) the excess of the Closing Price (as
defined below) of the Common Stock on the date the Company receives
notice of such exercise over the Option Price then in effect
multiplied times (b) the number of Optioned Shares covered by such
exercise, less applicable withholding taxes.
9. The Company shall at all times reserve and keep available, free from
preemptive rights out of its authorized but unissued Common Stock,
solely for the purpose of effecting exercises of the Option, the full
number of shares of Common Stock that would then be deliverable upon
the exercise of the entire then unexercised portion of the Option. If
the Common Stock is quoted on the American Stock Exchange or any other
U.S. national securities exchange and such shares shall have become
freely transferable by the Option Holder under the federal securities
laws, the Company will, if permitted by the rules of such exchange,
list and keep listed on such exchange, upon official notice of
issuance, all such shares of Common Stock.
10.
(a) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company payable
in Common Stock, the Option Price in effect at the opening of
business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend
or other distribution shall be reduced by multiplying such Option
Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on
the date fixed for such determination and the denominator shall
be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such
reduction to become effective immediately after the opening of
business on the day following the date fixed for such
determination. (For purposes of determining adjustments to the
Option Price as set forth herein, shares of capital stock held in
the treasury of the Company or any of its subsidiaries, and
distributions or issuances in respect thereof, shall be
disregarded.)
(b) In case the Company shall issue rights or warrants to all or
substantially all holders of its Common Stock entitling them, for
a period of not more than 45 days, to subscribe for or purchase
shares of Common Stock at a price per share less than the Current
Market Price (as hereinafter defined) on the date fixed for the
determination of stockholders entitled to receive such rights or
warrants, the Option Price in effect at the opening of business
on the day following the date fixed for termination of such
subscription or purchase period shall be reduced by multiplying
such Option Price by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number
of shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock actually
purchased upon exercise of such rights or warrants have purchased
at such Current Market Price and the denominator shall be the
number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number
of shares of Common Stock actually purchased upon exercise of
such rights or warrants, such reduction to become effective
immediately after the opening of business on the day following
the date fixed for such termination.
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