UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
________________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE PERIOD ENDED MARCH 31, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO _________
Commission file number 0-3041
JUSTIN INDUSTRIES, INC.
-----------------------
(Exact name of registrant as specified in its charter)
Texas 75-0102185
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2821 West 7th Street
Fort Worth, TX 76107
---------------------
(Address of principal executive officers)
(Zip Code)
(817) 336-5125
--------------
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES XX NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 25,440,487 shares of the
Company's Common Stock ($2.50 par value) were outstanding as of April 30, 1999.
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JUSTIN INDUSTRIES, INC.
Table of Contents
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheet
March 31, 1999 and December 31, 1998 3
Consolidated Statement of Income
Three Months Ended March 31, 1999 and 1998 4
Consolidated Statement of Shareholders' Equity
Three Months Ended March 31, 1999 and 1998 4
Consolidated Statement of Cash Flows
Three Months Ended March 31, 1999 and 1998 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURE 13
All other schedules and compliance information called for by the instructions to
Form 10-Q have been omitted since the required information is not present or not
present in amounts sufficient to require submission.
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
<CAPTION>
In Thousands of Dollars
March 31, December 31,
1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash $ 2,686 $ 5,100
Accounts receivable, less allowance for doubtful
accounts of $3,556 and $3,534, respectively 76,098 80,155
Inventories:
Finished goods 102,678 106,706
Work-in-process 4,330 4,663
Raw materials 30,225 25,206
------------ ------------
Total inventories 137,233 136,575
Income taxes 3,944 7,093
Prepaid expenses 2,343 2,472
------------ ------------
Total current assets 222,304 231,395
Other assets, at cost 39,505 40,766
Assets held for sale 2,809 2,809
Property, plant, and equipment, at cost:
Land 20,704 20,704
Buildings and equipment 288,354 277,134
Construction-in-progress 17,380 10,913
------------ ------------
326,438 308,751
Less accumulated depreciation 189,083 186,829
------------ ------------
Net property, plant, and equipment 137,355 121,922
------------ ------------
$ 401,973 $ 396,892
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Trade accounts payable $ 15,754 $ 18,925
Other accrued items 35,077 36,575
------------ ------------
Total current liabilities 50,831 55,500
Long-term debt, less current portion 45,750 30,750
Deferred income taxes 18,074 18,074
Shareholders' equity:
Voting preferred stock, $2.50 par value; 1,000,000
shares authorized - Series Two convertible, 100
shares issued and outstanding - -
Common stock, $2.50 par value; 100,000,000 shares
authorized, 27,869,888 shares issued 69,674 69,674
Capital in excess of par value 15,673 15,685
Retained earnings 228,303 223,915
Treasury stock, at cost, 2,452,201 and 1,565,736
shares, respectively (26,332) (16,706)
------------ ------------
Total shareholders' equity 287,318 292,568
------------ ------------
$ 401,973 $ 396,892
============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
3
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<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
In Thousands of Dollars (Except Per Share Data)
Three Months Ended
March 31,
------------------------------
1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
Net sales:
Building materials $ 77,892 $ 63,915
Footwear 35,135 39,865
------------ ------------
113,027 103,780
Costs and expenses:
Cost of goods sold 70,394 67,183
Selling, general, and administrative expenses 33,251 29,194
Interest expense 471 387
------------ ------------
104,116 96,764
------------ ------------
Income before income taxes 8,911 7,016
Provision for income taxes 3,253 2,561
------------ ------------
Net income $ 5,658 $ 4,455
============ ============
Earnings per share:
Basic $ .22 $ .17
============ ============
Diluted $ .22 $ .17
============ ============
</TABLE>
<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Three Months Ended March 31, 1999 and 1998
<CAPTION>
In Thousands of Dollars (Except Share and Per Share Data)
Capital In
Preferred Common Excess of Retained Treasury
Stock Stock Par Value Earnings Stock
- ------------------------ ---------- ---------- ---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Balance January 1, 1999 $ - $ 69,674 $ 15,685 $223,915 $(16,706)
Net income - - - 5,658 -
Purchase of 887,800 shares of
stock for treasury - - - - (9,636)
Exercise of stock options - - (12) - 10
Cash dividends declared
($.05 per share) - - - (1,270) -
---------- ---------- ---------- ---------- ----------
Balance March 31, 1999 $ - $ 69,674 $ 15,673 $228,303 $(26,332)
========== ========== ========== ========== ==========
Balance January 1, 1998 $ - $ 69,674 $ 16,040 $202,645 $(15,379)
Net income - - - 4,455 -
Exercise of stock options - - (6) - 5
Cash dividends declared
($.05 per share) - - - (1,319) -
---------- ---------- ---------- ---------- ----------
Balance March 31, 1998 $ - $ 69,674 $ 16,034 $205,781 $(15,374)
========== ========== ========== ========== ==========
<FN>
See notes to consolidated financial statements.
</TABLE>
4
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<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
In Thousands of Dollars
Three Months Ended
March 31,
-----------------------------
1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,658 $ 4,455
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation 4,348 4,349
Amortization 555 123
Provision for losses on accounts receivable 424 418
Gain on sale of property, plant, and equipment (127) (27)
Changes in assets and liabilities:
Decrease in accounts receivable 4,877 3,715
(Increase)decrease in inventories 293 (7,895)
Decrease in other current assets 3,278 3,646
Decrease in accounts payable
and accrued expenses (5,318) (4,222)
------------ ------------
Net cash provided from operating activities 13,988 4,563
Cash flows from investing activities:
Proceeds from the sale of property, plant,
and equipment 130 57
Capital expenditures (9,215) (3,989)
(Increase) decrease in other long-term assets 708 (1,038)
Acquisition of Texas Clay, net of cash acquired (12,070) -
------------ ------------
Net cash used in investing activities (20,447) (4,970)
Cash flows from financing activities:
Borrowings 21,000 6,000
Repayment of borrowings (6,000) (3,000)
Dividends paid (1,317) (1,319)
Purchase of treasury stock (9,636) -
Exercise of stock options (2) (1)
------------ ------------
Net cash provided from financing activities 4,045 1,680
------------ ------------
Net increase (decrease) in cash (2,414) 1,273
Cash at beginning of period 5,100 5,113
------------ ------------
Cash at end of period $ 2,686 $ 6,386
============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
5
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JUSTIN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. Interim results are not necessarily indicative of results
for a full year.
A summary of the company's significant accounting policies is presented on
page 24 of its 1998 Annual Report to Shareholders. Users of financial
information produced for interim periods are encouraged to refer to the
footnotes contained in the Annual Report to Shareholders when reviewing interim
financial results. There has been no material change in the accounting policies
followed by the company during 1999.
In the opinion of management, the accompanying interim financial statements
contain all material adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the consolidated financial position,
results of operations, cash flows, and shareholders' equity of Justin
Industries, Inc. for interim periods.
Long-Term Debt
Certain loan agreements contain minimum requirements as to working capital,
cash flow from operations, and tangible net worth, redemption of outstanding
stock, and change in control of the company. As of March 31, 1999, the company
was in compliance with all such requirements and restrictions.
Earnings Per Share
The following table sets forth the computation of basic and diluted earnings
per share: (in thousands, except per share data1)
Three Months Ended
March 31
----------------------
1999 1998
---------- ----------
Numerator for basic and diluted
earnings per share $ 5,658 $ 4,455
========== ==========
Denominator for basic earnings per share--
weighted average shares 25,753 26,384
Effect of dilutive securities:
Employee stock options 185 263
Convertible preferred stock 3 3
---------- ----------
Dilutive potential common shares 188 266
---------- ----------
Denominator for diluted earnings per share--
adjusted weighted average shares
and assumed conversions 25,941 26,650
========== ==========
Basic earnings per share $ .22 $ .17
========== ==========
Diluted earnings per share $ .22 $ .17
========== ==========
6
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Segment Disclosures
The following information is presented as required by Statement No. 131: (in
thousands of dollars)
<TABLE>
<CAPTION>
Three Months Ended Building
March 31, 1999 Materials Footwear All Other Total
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 77,892 $ 35,135 $ - $113,027
Operating profit (loss) 13,757 (2,725) (1,650) 9,382
Depreciation and amortization expense 3,652 1,187 64 4,903
Identifiable assets 215,867 154,444 31,662 401,973
Expenditures for long-lived assets 8,473 591 151 9,215
Expenditure for acquisition of Texas Clay 12,070 - - 12,070
- --------------------------------------------------------------------------------------------
Three Months Ended
March 31, 1998
- --------------------------------------
Net sales (1) $ 62,378 $ 39,865 $ 1,537 $103,780
Operating profit (loss) 7,600 596 (793) 7,403
Depreciation and amortization expense 3,318 1,020 134 4,472
Identifiable assets 182,691 152,625 42,665 377,981
Expenditures for long-lived assets 2,563 1,416 10 3,989
- --------------------------------------------------------------------------------------------
</TABLE>
Three Months Ended
March 31
----------------------
Reconciliation 1999 1998
---------- ----------
Total operating profit above $ 9,382 $ 7,403
Interest expense 471 387
---------- ----------
Consoldiated income before income taxes $ 8,911 $ 7,016
========== ==========
(1) Net sales from reportable segments below the quantitative thresholds are
attributable to the Company's evaporative cooler business. This segment has
never met the quantitative thresholds for determining reportable segments. This
business was sold effective December 31, 1998.
Acquisitions and Disposition
Effective December 31, 1998, the Company sold its evaporative cooler
business, Tradewinds Technologies, Inc., for cash of approximately $3.2 million.
The effects of the sale and the operations of Tradewinds, which are included in
All Other in the reportable segments disclosures, are immaterial to consolidated
operations.
Effective July 1, 1998, the Company's subsidiary, Acme Brick Company,
purchased Witt Brick for a total purchase price of approximately $2,400,000.
Assets acquired primarily included accounts receivable and inventory. Witt
Brick is a brick distributor in Temple, Texas. Operations of the business,
which are immaterial to consolidated operations, are included in the
Consolidated Statement of Income from date of acquisition.
In early January 1999, Acme Brick Company acquired the assets of Texas Clay
Industries, a division of Temtex Industries, Inc. The total purchase price of
approximately $13.3 million was paid $12.3 million in cash plus assumption of
approximately $1 million in liabilities. The assets acquired consisted of
approximately $1.2 million in accounts receivable, $1 million in inventory and
supplies, and $11.1 million in land, buildings and equipment related to one
brick plant and associated clay reserves in Malakoff, Texas, approximately 70
miles southeast of the Fort Worth/Dallas metroplex area. Sales generated by
this plant in 1998 approximated $11.7 million, which are considered immaterial
to consolidated operations. The acquisition has been accounted for as a
purchase in 1999, and as such, the results of operations of the plant, which are
immaterial to consolidated operations, are included with that of the Company
from the date of closing, January 5, 1999.
7
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Commitments and Contingencies
Commitment to Construct New Brick Plant - Acme is currently constructing a
new brick plant in South Texas. At March 31, 1999, the remaining commitment for
this capital project was approximately $18 million.
Footwear Computer System - As previously reported in the Company's 1998 third
quarter Form 10-Q and in the Company's 1998 Annual Report to Shareholders, the
Footwear division has had significant difficulties with new computer systems
activated at the beginning of October, 1998. A portion of the warehouse systems
that controls barcode scanning devices and certain other warehouse related
functions have not performed as expected. Problems in the warehousing systems
and shipping systems caused a significant slow-down in shipping during the last
quarter of 1998, and a less severe, but noticeable slow-down in shipping during
the first quarter of 1999. The vendors responsible for these systems and
company employees are diligently working on the problems. While management
believes that the problems with the systems will be corrected and normal
operations will resume in mid-1999, it is unlikely that the Company will make up
the shipment shortfalls encountered during the first quarter. The remaining
cost of remediation cannot be reasonably determined at this time and depends, in
part, on how long it takes to implement corrective actions.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Sales - Consolidated net sales for the three months ended March 31, 1999 of
$113 million were 8.9% over the $103.8 million in 1998's first quarter.
Building Materials Segment Sales - Sales in the Building Materials
segment increased approximately 21.9% from the first quarter of 1998. A
strong regional economy and mild weather led to very strong housing
starts during the fourth quarter of 1998 compared to the same period in
1997--up 35%. Since brick delivery generally trails three to four
months behind the recorded start of new residential construction, the
effect of these higher starts was felt in the first quarter of 1999. In
this environment, Acme Brick Company ("Acme") shipped 23.9% more brick
in 1999's first quarter than the previous year while average pricing per
unit increased 3.6%. Approximately one third of the increased brick
volume was attributable to the acquisition of Texas Clay Industries. At
the end of March 1999, backlogs were at an all time high and were 63%
higher than a year ago.
American Tile Supply Company's ("American Tile") revenues grew 16.1%
compared to last year's first three months--a record quarter for the
company. Four new locations opened during various times in 1998
accounted for about 60% of this increase, while same store sales grew
about 6.3%. Another new location in Little Rock, Arkansas will open in
May of 1999.
Healthy commercial construction activity in most of Featherlite
Building Products Corporation's ("Featherlite") market areas facilitated
a 21.3% increase in sales over the same period a year ago. Both units
shipped and average selling price per unit were higher. The expansion
of Featherlite's Dallas plant, completed in early 1998, and higher
construction activity in the Austin and San Antonio areas accounted for
most of the improvements.
The sale of Tradewinds Technologies, Inc., effective December 31,
1998, had an insignificant impact on sales comparisons for these
periods.
Footwear Segment Sales - Total Footwear sales for the three months
ended March 31, 1999 declined 11.9% from 1998's first quarter. Justin
Boot Company's ("Justin") net revenues for the period were down more
than 20.4%, while net orders declined 5.3% compared to 1998. Start-up
issues and delays related to new western products manufactured by third
parties in Mexico; unusually high returns; and computer system problems
that continued to hamper normal shipping significantly impacted Justin's
shipments. Management is diligently addressing these issues. Despite
the shipping problems during the first quarter, sales of the Justin
Original Workboot approximated those of 1998. Tony Lama's net shipments
increased 10.5%; however, lower average selling prices due to changes in
product mix caused net sales to decline 1.8%. Nocona's net sales were
up 13.9% compared to 1998's first quarter, as new western products at
popular price points were well accepted by dealers. In addition, Nocona
experienced fewer shipping problems in its distribution center. While
Chippewa's net orders for the quarter were up 8.1% over last year at the
same time, net revenues declined 8% primarily because of inventory-to-
orders imbalances and shipping problems. Overall, comparing the first
quarter of 1999 to the same period in 1998, gross footwear units shipped
for all divisions declined 3.5%, while average pricing decreased .5% due
to changes in product mix.
Costs and Expenses - The consolidated ratio of cost of goods sold to sales
improved to 62.3% in the first quarter of 1999 versus 64.7% in the 1998
comparable period. Building Materials posted significant margin improvements in
first quarter 1999 compared to first quarter 1998. This segment's ratio of cost
of sales to sales was 57.9% in the 1999 period compared to 61.3% in 1998 due to
both higher sales volumes and 3.6% higher average brick selling prices. The
ratio of cost of goods sold to sales in the Footwear business was 72.0% in 1999
versus 70.3% in 1998. This increase is attributable to abnormally high returns
and lower sales volumes for coverage of fixed overhead.
9
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Selling, general and administrative expenses were 29.4% of sales in the first
quarter of 1999 compared to 28.1% in the first quarter of 1998. Building
Materials' percentage improved in 1999's first quarter due to significant
increases in sales, while Footwear's percentage worsened in 1999 because of
lower volume and additional costs associated with computer problems incurred in
1999 that were absent in 1998's first quarter.
While average effective interest rates decreased about one half of 1% in the
first quarter of 1999 compared to 1998, average debt levels increased during the
same period, resulting in an increase in interest expense of 21.7%, from
$387,000 in 1998's first quarter to $471,000 in the first three months of 1999.
Provision for Income Taxes - The Company's provision for income tax was
36.5% of pre-tax income in the first quarter of 1999 and 1998, which is the
current estimated effective rate for the full year.
The information above contains forward-looking statements, including, without
limitation, statements relating to the Company's plans, strategies, objectives,
expectations, intentions, and adequate resources that are made pursuant to the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Readers are cautioned that forward-looking statements about the Company's
future business prospects, including the successful remediation of problems with
its computer systems, should be read in conjunction with the Company's
disclosures under the heading Forward Looking Information.
FINANCIAL CONDITION AND LIQUIDITY
At March 31, 1999, working capital amounted to $171.5 million versus $175.9
million at December 31, 1998. Cash decreased from $5.1 million at year-end to
$2.7 million at the end of 1999's first quarter. Normal seasonal changes
occurred between year-end and the end of the first quarter resulting in reduced
accounts receivable, primarily due to payments by Footwear customers early in
the year. A small increase in inventories was due to the seasonal build-up of
Footwear inventories.
Cash provided by operating activities in the first quarter of 1999 totaled
$14 million. These funds and additional bank financing were used primarily to
acquire Texas Clay Industries for approximately $12.1 million, net of cash
obtained; purchase $9.2 million of capital assets; buy 887,800 shares of
treasury stock totaling $9.6 million; and pay $1.3 million in dividends.
In the first quarter of 1999, total interest-bearing debt increased $15
million to $45.75 million from $30.75 million at year-end 1998, and the ratio of
long-term debt-to-equity increased to .16 to 1 from .11 to 1 at year-end.
Borrowings may increase over the next two quarters to finance seasonal working
capital needs. At March 31, 1999, unused credit facilities approximated $51
million, an amount well above the company's estimated requirements.
Cash dividends declared in the first quarter of 1999 and 1998 was $.05 a
share.
GENERAL DESCRIPTION OF THE YEAR 2000 ISSUE AND THE NATURE AND EFFECTS OF THE
YEAR 2000 ON INFORMATION TECHNOLOGY (IT) AND NON-IT SYSTEMS
As more completely described on page 19 of the Company's 1998 Annual Report
to Shareholders, the Company has determined that only minor modifications or
replacement of portions of its IT software systems and non-IT systems, such as
those used in production, would be necessary in order to properly utilize dates
beyond December 31, 1999. Many of these changes have already been made.
Although the Company anticipates all remaining modifications or replacements
will be completed early in 1999, if such modifications and replacements were not
made, or were not completed timely, management believes the Year 2000 Issue
would still not have a material impact on the operations of the Company. To
date, the Company is not aware of any external agent with a Year 2000 issue that
would materially affect the Company's results of operations, liquidity, or
capital resources. However, the Company has no means of ensuring that external
agents will be Year 2000 ready. The inability of external agents to complete
their Year 2000 resolution process in a timely fashion could materially impact
the Company. The effect of non-compliance by external agents is not
determinable.
10
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The information above contains forward-looking statements, including, without
limitation, statements relating to the Company's plans, strategies, objectives,
expectations, intentions, and adequate resources that are made pursuant to the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Readers are cautioned that forward-looking statements about the Company's
computer systems and Year 2000 should be read in conjunction with the Company's
disclosures under the heading Forward Looking Information.
FORWARD LOOKING INFORMATION
Certain statements in this Item and elsewhere in this report are forward-
looking in nature and relate to trends and events that may affect the Company's
future financial position and operating results. Such statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The terms "expect," "anticipate," "intend," and "project"
and similar words or expressions are intended to identify forward-looking
statements. These statements speak only as of the date of this report. The
statements are based on current expectations, are inherently uncertain, are
subject to risks, and should be viewed with caution. Actual results and
experience may differ materially from the forward-looking statements as a result
of many factors, including changes in economic conditions in the markets served
by the Company, increasing competition, fluctuations in raw materials and energy
prices, increases in interest rates, and other unanticipated events and
conditions. It is not possible to foresee or identify all such factors. The
Company makes no commitment to update any forward-looking statement or to
disclose any facts, events, or circumstances after the date hereof that may
affect the accuracy of any forward-looking statement.
11
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The company is not presently involved in any lawsuits seeking damages
relating to the normal conduct of its business that if adversely determined
would have a material effect on the consolidated financial statements
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Agreement dated as of April 16, 1999 between Registrant
and John S. Justin
10.2 Agreement dated as of April 16, 1999 between Registrant
and John V. Roach
10.3 Employment Agreement dated as of April 16, 1999 between
Registrant and J. T. Dickenson
10.4 Employment Agreement dated as of April 16, 1999 between
Registrant and Richard J. Savitz
10.5 Stock Option Agreement dated as of April 16, 1999 between
Registrant and Judy B. Hunter
10.6 Amendment to Registrant's 1981 Stock Option Plan dated
April 16, 1999
10.7 Amendment to Registrant's 1984 Stock Option Plan dated
April 16, 1999
10.8 Amendment to Registrant's 1992 Stock Option Plan dated
April 16, 1999
27.1 Financial Data Schedule for the period ended
March 31, 1999
(b) Reports on Form 8-K
None.
12
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, The
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JUSTIN INDUSTRIES, INC.
/S/ RICHARD J. SAVITZ
Richard J. Savitz
Senior Vice President/
Chief Financial Officer
Dated this 13th day of May 1999.
13
AGREEMENT
This agreement (the "Agreement") is entered into as of the 16 day of April,
1999, by and between Justin Industries, Inc., a Texas corporation (the
"Company"), and John S. Justin, an individual ("Justin").
R E C I T A L S :
A. The Company and Justin are parties to an Employment Contract dated as
of the 14th day of September, 1994, as amended by Amendment No. 1 thereto, dated
as of December 18, 1997, and Amendment No. 2 thereto dated as of September 15,
1998 (collectively the "Employment Contract").
B. Pursuant to the terms of the Employment Contract, the Company agreed
to employ Justin and Justin agreed to be so employed by the Company for a term
ending on November 30, 1999 (the "Term").
C. Justin has now determined to retire from employment with the Company
effective April 16, 1999, and, in connection therewith, Justin and the Company
have mutually agreed to terminate the Employment Contract.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties hereby agree as follows:
1. Justin shall be paid, in a lump sum, the balance of the salary that
would have been paid under Section 2 of the Employment Contract through the end
of the Term. Such amount shall be payable in accordance with the Company's
standard payroll policies, practices and procedures.
2. The Company shall transfer ownership of the automobile, which was
previously furnished to Justin pursuant to Section 7 of the Employment Contract,
to Justin. Upon such transfer, Justin shall be responsible for all insurance,
maintenance and other expenses related to such automobile.
3. For so long as Justin desires, the Company shall furnish Justin with
use of the office space he currently occupies, equipped with a computer, and
secretarial assistance of his choosing. Justin shall be entitled to use of the
Company's airplanes for business and other purposes in accordance with the
Company's standard policies, practices and procedures in effect from time to
time.
4. Justin shall continue to be designated to use the Company's membership
at each of Shady Oaks Country Club and River Crest Country Club, and the Company
will reimburse Justin for any membership dues paid by him for such period as
Justin shall request. The Company shall arrange to transfer the Company's
membership to each of Ridglea Country Club, the Fort Worth Club and the City
Club to Justin. The Company shall pay all transfer fees associated with such
transfers, if any. Justin will be responsible for payment of dues and other
expenses associated with such memberships following such transfers.
===============================================================================
5. Justin shall be entitled to receive such further retirement benefits
and perquisites that the Company may have in effect and for which he qualifies
as a retiree as of the date of his retirement.
6. The Company shall take such action as may be necessary to cause all
stock options held by Justin to become fully vested as of the date hereof. In
addition, the Company shall take such further action as may be necessary to
cause all stock options held by Justin to remain exercisable until three years
after the date hereof; provided, however, that no such option shall be
exercisable after its expiration date.
7. Notwithstanding that Justin is retiring from employment with the
Company, it is contemplated that Justin may continue to be a member of the Board
of Directors of the Company and nothing herein shall be deemed to constitute
resignation by Justin as a member of the Board of Directors. For so long as
Justin serves on the Board of Directors, he shall hold the honorary title of
Chairman Emeritus.
8. It is recognized that certain paintings, sculptures, other artwork and
memorabilia located in the office space at the Company used by Justin (more
particularly described and listed on Exhibit A attached hereto) are the personal
property of Justin and may be removed by him at any time.
9. At such time that Justin ceases to be a member of the Board of
Directors of the Company, the Company shall reasonably endeavor to obtain, and
maintain in effect for Justin's benefit for a period of two years, continuation
of director and officer liability insurance coverage reasonably equivalent to
that, if any, provided for the members of the Board of Directors.
10. Any waiver by either party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach. No waiver shall be binding unless in writing and signed by the party
waiving the breach.
11. This Agreement shall be deemed to have been executed and delivered
within the State of Texas, and the rights and obligations of the parties
hereunder shall be construed and enforced in accordance with, and governed by,
the laws of the State of Texas without regard to principles of conflict of laws.
12. This Agreement is personal to Justin and Justin shall not assign,
transfer, or otherwise convey this Agreement or any right or interest herein.
This Agreement and all rights and obligations of the Company or any of its
successors may be assigned or otherwise transferred to any of its successors and
shall be binding upon and inure to the benefit of such persons or entities. As
used herein, the term "successor" shall mean any person, corporation or other
entity acquires all or substantially all of the Company's stock or with which
the Company merges or consolidates.
2
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13. If any provision of this Agreement or the application thereof is held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or application thereof
which can be given effect without the invalid provision or application and to
this end the provisions of this Agreement are declared to be severable.
14. This Agreement is being executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
15. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given and delivered if
delivered personally or sent by certified or registered mail, postage prepaid,
return receipt requested, or by express or other delivery service, if to Justin,
to his attention at the address recorded in Justin's personnel file and, if to
the Company, to the attention of the Secretary of the Company at 2821 West
Seventh Street, Fort Worth, Texas 76107 (or such other address as specified from
time to time by a party in a written notice to the other party given as provided
herein).
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first written above.
JUSTIN INDUSTRIES, INC.
By: /S/J. T. DICKENSON
--------------------------
Name: J. T. Dickenson
Title: President/CEO
/S/JOHN S. JUSTIN
-----------------------------
John S. Justin
3
AGREEMENT
This agreement (the "Agreement") is entered into as of the 16 day of April,
1999 (the "Effective Date"), by and between Justin Industries, Inc., a Texas
corporation (the "Company"), and JOHN V. ROACH ("Roach").
The Company desires that Roach accept employment by the Company and
election as Chairman of the Board of Directors of the Company, and Roach desires
to accept such position, upon the terms and subject to the conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Position. Upon the terms and subject to the conditions set forth
herein, Roach accepts employment by the Company and election by the Board of
Directors of the Company to serve as the Chairman of the Board of Directors of
the Company. Roach shall not be required to devote his exclusive and full time
services to the performance of his duties and obligations hereunder, but Roach
shall devote a reasonable amount of time to such duties.
2. Term. The term of this Agreement shall be for a period of two years
from the date hereof or such shorter period as Roach may remain in the position
of Chairman of the Board of Directors of the Company (the "Term"); provided,
however, that the Term may be extended thereafter by the mutual agreement of the
parties hereto in writing.
3. Compensation. As compensation for services to be rendered to the
Company by Roach:
(i) The Company shall pay to Roach a base salary (the "Base
Salary") at an annual rate of $18,000; paid in equal periodic installments
in accordance with the Company's standard payroll policies, practices and
procedures.
(ii) The Company shall grant to Roach options to purchase 100,000
shares of the Company's common stock, par value $2.50 per share (the
"Common Stock"). The options shall have a per share exercise price equal
to the fair market value of the Common Stock on the date hereof. The
options shall become exercisable on the second anniversary of the date of
this Agreement. The options shall be subject to the terms and conditions
of the Stock Option Agreement attached hereto as Exhibit A.
(iii) The Company shall grant to Roach 40,000 shares of the Common
Stock (the "Restricted Stock") in accordance with the terms and conditions
of the Restricted Stock Award Agreement attached hereto as Exhibit B.
===============================================================================
4. Other Benefits; Expense Reimbursement.
4.1 The Company shall reimburse Roach for all reasonable out-of-
pocket expenses incurred by Roach in the course of his duties hereunder, in
accordance with the Company's standard policies, practices and procedures
as in effect generally from time to time with respect to a person holding
an executive office with the Company.
4.2 Roach shall be entitled to use of the Company's airplanes for
business and other purposes in accordance with the Company's standard
policies, practices and procedures as in effect generally from time to
time.
5. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given and
delivered if delivered personally or sent by certified or registered mail,
postage prepaid, return receipt requested, or by express or other delivery
service, addressed:
If to Roach:
If to the Company:
2821 West Seventh Street
Fort Worth, Texas 76107
Attention: Secretary
(or such other address as specified from time to time by a party in a written
notice to the other party given as provided herein).
6. Governing Law. This Agreement shall be deemed to have been executed
and delivered within the State of Texas, and the rights and obligations of the
parties hereunder shall be construed and enforced in accordance with, and
governed by, the laws of the State of Texas without regard to principles of
conflict of laws.
7. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of any successor of the Company.
8. Amendment. This Agreement may not be amended without the written
consent of both the Company and Roach.
9. Execution. This Agreement is being executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2
===============================================================================
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date written above.
JUSTIN INDUSTRIES, INC.
By: /S/J. T. DICKENSON
--------------------------
Name: J. T. Dickenson
Title: President/CEO
/S/JOHN V. ROACH
-----------------------------
John V. Roach
3
===============================================================================
EXHIBIT A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated April 16, 1999 (the "Option Agreement"),
between Justin Industries, Inc., a Texas corporation (the "Company"), and John
V. Roach (the "Optionee").
WHEREAS, the Company and the Optionee have entered into an Agreement, dated
April 16, 1999 (the "Agreement"); and
WHEREAS, such Agreement provides for the Company to grant a stock option to
the Optionee.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee, subject
to the terms and conditions set forth hereinafter, in the Company's 1999
Performance Incentive Plan (the "Plan") and in the Agreement, an option (the
"Option") to purchase from the Company 100,000 shares (the "Option Shares") of
Common Stock, par value $2.50 per share, of the Company at a purchase price of
$13.0625 per share.
2. Term of Option. The Option shall expire, and all rights granted
hereunder to purchase the Option Shares shall terminate, 5 years from the date
of this Option Agreement.
3. Vesting of Option. The Option shall become fully exercisable on the
second anniversary of the date hereof; provided, however, that in the event of a
Change in Control (as defined in the Agreement), the Option shall become fully
vested and immediately exercisable.
A-1
===============================================================================
4. Exercise of Option. The Option shall be exercised, subject to the
conditions set forth in Section 5 hereof, by the Optionee's delivering written
notice of the exercise of the Option or any portion thereof to the Company's
Treasurer (or any other officer of the Company who is designated by the Company
to accept such notices on its behalf), specifying the number of shares for which
it is exercised. The Option price shall be paid in full at the time of exercise
either (i) in cash by United States currency or check, (ii) with the consent of
the Company, by tendering to the Company Mature shares of Common Stock of the
Company held by the Optionee having a fair market value equal to the Option
price, or (iii) any combination of (i) and (ii), above; at the election of the
Optionee, any tax due on the gain realized upon exercise of an Option may
likewise be paid, with the consent of the Company, as aforesaid, and in
addition, with the consent of the Company, through withholding by the Company of
Option shares being exercised and having a fair market value equal to the Option
price for an amount that is no more than the minimum required tax withholding.
Mature shares are defined as shares owned by the Optionee for at least six
months prior to the date tendered for use as payment for option shares or
minimum taxes owed. Upon exercise of the Option or any portion thereof, the
Company will, as promptly as practicable, issue and deliver at the Company's
corporate office a stock certificate or certificates representing the Option
Shares so purchased. If the Company shall determine that it is required to
withhold any federal, state or local taxes as a result of the Optionee's
exercise of the Option, the Company shall give notice thereof to the Optionee
and the Company shall not be obligated to issue any Option Shares until the
Optionee shall have paid to the Company by certified or cashier's check or paid
through withholding of Option Shares, as described above, the amount of such
withholding taxes.
5. Certain Conditions to Exercise of the Option. The Option Shares
delivered pursuant to the exercise of the Option may be subject to certain
restrictions as provided in the Plan.
6. Non-Assignability of Option. This Option shall not be transferable or
assignable by the Optionee otherwise than as permitted by the Plan.
7. Changes to Capital Structure. In the event of any stock dividend,
stock split, combination of shares, merger, consolidation, recapitalization,
reclassification or other similar capital or corporate structure change, the
number of Option Shares unpurchased and remaining subject to this Option and the
purchase price of such Option Shares shall be appropriately adjusted to reflect
such change.
8. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission or certified, registered or express mail or overnight
courier service (postage and other charges prepaid), addressed:
If to the Optionee to:
John V. Roach
If to the Company to:
Justin Industries, Inc.
2821 West Seventh Street
Fort Worth, Texas 76107
Attention: Secretary
or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above, and
such notice or communication shall be deemed given when received if personally
delivered or sent by facsimile transmission, or three days after being placed in
the U.S. mail if sent by registered or certified mail, or one day after being
sent by express mail or overnight courier.
9. Miscellaneous. The Optionee shall have no rights as a shareholder of
the Company or any claim to dividends with respect to any Option Shares until
such Option Shares are issued to the Optionee by the Company. Nothing contained
in this Option shall confer upon the Optionee any rights with respect to the
Company except as specifically set forth herein.
A-2
==============================================================================
10. Incorporation of Agreement Provisions. This Option Agreement is made
pursuant to the Plan and is subject to all of the terms and provisions of the
Plan as if the same were fully set forth herein. Capitalized terms not
otherwise defined herein shall have the same meanings set forth for such terms
in the Plan.
11. Governing Law. This Option Agreement shall be governed by and
construed in accordance with the law of the State of Texas.
12. Counterparts. This Option Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Option Agreement has been executed by the Company
and the Optionee as of the date first above written.
OPTIONEE:
/S/JOHN V. ROACH
-----------------------------
John V. Roach
JUSTIN INDUSTRIES, INC.
By: /S/J. T. DICKENSON
--------------------------
Name: J. T. Dickenson
Title: President/CEO
A-3
===============================================================================
EXHIBIT B
RESTRICTED STOCK AWARD AGREEMENT
RESTRICTED STOCK AWARD AGREEMENT, dated April 16, 1999, between Justin
Industries, Inc., a Texas corporation (the "Company"), and John V. Roach (the
"Executive").
WHEREAS, pursuant to the provisions of the Company's 1999 Performance
Incentive Plan (the "Plan"), the Compensation Committee of the Board of
Directors of the Company (the "Committee") administers the Plan; and
WHEREAS, the Committee has determined that the Executive be granted a
Restricted Stock Award under the Plan for the number of shares of Common Stock
and upon the terms set forth below;
NOW, THEREFORE, the Company and the Executive hereby agree as follows:
1. Grant of Award. The Executive is hereby granted an award under the
Plan (the "Award"), subject to the terms and conditions hereinafter set forth,
with respect to 40,000 shares of Common Stock (the "Restricted Stock"). The
Executive shall be issued stock certificates evidencing the shares of Restricted
Stock covered by this Award. Such certificates shall be registered in the name
of the Executive, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to this Award, substantially in the
following form:
The transferability of this certificate and the shares of Common
Stock represented hereby are subject to the terms, conditions and
restrictions (including forfeiture) contained in the 1999 Performance
Incentive Plan of Justin Industries, Inc. and the Restricted Stock
Award Agreement entered into between the registered owner and Justin
Industries, Inc. Copies of such Plan and Agreement are on file in the
offices of Justin Industries, Inc., 2821 West Seventh Street, Fort
Worth, Texas 76101.
The certificates evidencing the shares of Restricted Stock shall be held in
custody by the Company or its designee until the restrictions on such shares
shall have lapsed, and, as a condition of this Award, the Executive shall
deliver a stock power, duly endorsed in blank, relating to the shares of
Restricted Stock covered by this Award.
2. Transfer Restrictions. Except as expressly provided in the Plan, the
Restricted Stock issued with respect to this Award shall not be transferable or
assignable. This Award and the Restricted Stock issued with respect to this
Award may not be pledged or hypothecated or otherwise encumbered and shall not
be subject to execution, attachment or similar process. Upon any attempt to
effect any such disposition, or upon the levy of any such process, the Award
shall immediately become null and void and the shares of Restricted Stock
relating thereto shall be forfeited.
B-1
===============================================================================
3. Restrictions. The restrictions on the shares of Restricted Stock
shall lapse and such shares shall vest in accordance with the following
schedule:
(a) 20,000 shares of Restricted Stock shall vest at such time as the
last sale price of the Common Stock in the over-the-counter market as
reported by the Wall Street Journal is $16.00 per share for 10 consecutive
trading days;
(b) 10,000 shares of Restricted Stock shall vest at such time as the
last sale price of the Common Stock in the over-the-counter market as
reported by the Wall Street Journal is $18.00 per share for 10 consecutive
trading days; and
(c) 10,000 shares of Restricted Stock shall vest at such time as the
last sale price of the Common Stock in the over-the-counter market as
reported by the Wall Street Journal is $20.00 per share for 10 consecutive
trading days.
Notwithstanding the foregoing, the restrictions on the shares of Restricted
Stock, including vesting requirements, shall lapse at such time as a Change in
Control (as defined in the Plan) shall have occurred. Shares as to which
restrictions shall have lapsed shall no longer be deemed Restricted Stock. All
shares of Restricted Stock as to which the restrictions thereon shall not have
lapsed within five years following the date of this Agreement shall be
immediately forfeited to the Company.
4. Voting and Dividend Rights. During the period in which the
restrictions provided herein are applicable to the Restricted Stock, the
Executive shall have the right to vote the shares of Restricted Stock and to
receive any dividends paid or other distributions made with respect thereto;
provided, however, that any dividend or distribution payable with respect to
Restricted Stock shall be subject to the same restrictions and shall vest and
become payable or distributable to the Executive at the same time the related
Restricted Stock vests pursuant to Section 3 hereof. Any such dividend or
distribution shall be held by the Company for the account of the Executive,
subject to forfeiture pursuant to Section 3 hereof, until such time as the
related shares of Restricted Stock shall have become fully vested.
5. Distribution Following End of Restrictions. Upon the occurrence of
the vesting events provided in Section 3 hereof as to any portion of the
Restricted Stock, the Company will cause a new certificate evidencing such
number of vested shares of Common Stock to be delivered to the Executive, or in
the case of his death to his legal representative, beneficiary or heir, free of
the legend regarding transferability set forth in Section 1.
B-2
===============================================================================
6. Tax Withholding. The obligation of the Company to deliver any
certificate to the Executive pursuant to Sections 1 and 5 hereof shall be
subject to the receipt by the Company from the Executive of any withholding
taxes required as a result of the grant of the Award or lapsing of restrictions
thereon. Subject to the consent of the Committee, the Executive may satisfy all
or part of such withholding tax requirement by electing to require the Company
to purchase that number of unrestricted shares of Common Stock designated by the
Executive at a price equal to the last sale price or closing "asked" price of
the Common Stock in the over-the-counter market as reported by the National
Association of Securities Dealers Automatic Quotation System or other national
quotation service on the date of lapse of the restrictions or, if no such sale
of Common Stock is reported on such day, on the next preceding day on which
trading occurred.
7. Securities Laws Requirements. The Company shall not be required to
issue shares pursuant to the Award unless and until (a) such shares have been
duly listed upon each stock exchange, if any, on which the Common Stock is then
registered; and (b) the Company has complied with applicable federal and state
securities laws. The Committee may require the Executive to furnish to the
Company, prior to the issuance of any shares of Restricted Stock in connection
with this Award, an agreement, in such form as the Committee may from time to
time deem appropriate, in which the Executive represents that the shares
acquired by him under the Award are being acquired for investment and not with a
view to the sale or distribution thereof.
8. Incorporation of Plan Provisions. This Agreement is made pursuant to
the Plan and is subject to all of the terms and provisions of the Plan as if the
same were fully set forth herein, and receipt of a copy of the Plan is hereby
acknowledged by Executive. Capitalized terms not otherwise defined herein shall
have the same meanings set forth for such terms in the Plan.
9. Miscellaneous. This Agreement (a) shall be binding upon and inure to
the benefit of any successor of the Company, (b) shall be governed by the laws
of the State of Texas, and any applicable laws of the United States, and (c) may
not be amended without the written consent of both the Company and the
Executive. No contract or right of employment shall be implied by this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
JUSTIN INDUSTRIES, INC.
By: /S/J. T. DICKENSON
--------------------------
Name: J. T. Dickenson
Title: President/CEO
EXECUTIVE:
/S/JOHN V. ROACH
-----------------------------
John V. Roach
B-3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of April 16, 1999 (the
"Effective Date"), between JUSTIN INDUSTRIES, INC., a Texas corporation (the
"Company"), and J. T. DICKENSON ("Executive").
WHEREAS, the Company desires to employ Executive, and Executive desires to
be employed by the Company, upon the terms and subject to the conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
set forth in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Employment and Duties. Upon the terms and subject to the conditions
set forth herein, the Company hereby employs Executive during the Term (as such
term is hereinafter defined), and Executive accepts employment with the Company
during the Term, to serve as President and Chief Executive Officer of the
Company. Executive shall perform such additional executive duties and
responsibilities with the Company and/or its direct or indirect subsidiaries,
and shall enjoy such additional offices and powers, as may be assigned or
delegated to Executive from time to time by the Board of Directors of the
Company or its designee. The Executive shall report to the Board of Directors
of the Company or its designee.
2. Term. The initial term of this Agreement and Executive's employment
hereunder shall commence on the Effective Date and continue until December 31,
2000 (the "Initial Expiration Date"), unless sooner terminated pursuant to the
termination provisions hereof. The term of this Agreement and Executive's
employment hereunder is referred to herein as the "Term".
3. Exclusive Service. Executive shall devote his exclusive and full time
services to the performance of his duties and obligations hereunder during the
Term and to the business of the Company; provided, however, that, subject to
Executive's fiduciary duties and to the restrictions set forth in Sections 9
through 11 hereof, (i) Executive shall not be prohibited from investing his
assets in such form or manner as will not require his services in the operation
of the affairs of the entities in which such investments are made or, in the
aggregate, detract from the performance by Executive of his duties and
obligations hereunder, and (ii) Executive may engage in activities involving
charitable, educational, religious and similar types of organizations, speaking
engagements and similar type activities to the extent that such other activities
do not detract from the performance by Executive of his duties and obligations
hereunder.
4. Compensation. As compensation for services rendered to the Company
pursuant to this Agreement, the Company shall pay to Executive a base salary
(the "Base Salary"). The Base Salary shall be paid at an annual rate of
$425,000. The Base Salary will be paid in equal periodic installments in
accordance with the standard payroll policies, practices and procedures of the
Company as from time to time in effect, from which shall be deducted state and
federal income taxes, local income or earnings taxes, social security taxes, and
such other and similar payroll taxes and charges as may be required or
appropriate under applicable law. In addition to Base Salary, Executive shall
be entitled to participate in any bonus program for officers or key employees of
the Company, if and to the extent and for such period of time that the Company,
in its sole discretion, establishes such a program, subject to such performance
goals, targets and other terms and conditions as may be made applicable to
Executive under any such program, which terms and conditions may be different
from those offered to other officers and employees of the Company. Further, the
Company shall (a) grant to Executive an option to purchase 18,000 shares of the
common stock of the Company, in accordance with the terms of the Company's 1999
Performance Incentive Plan and the Stock Option Agreement attached hereto as
Exhibit A, and (b) grant to Executive 10,000 shares of restricted common stock
in accordance with the terms of the Company's 1999 Performance Incentive Plan
and the Restricted Stock Award Agreement attached hereto as Exhibit B.
===============================================================================
5. Expense Reimbursement. The Company shall pay or reimburse Executive
for all reasonable out-of-pocket expenses incurred or paid by the Executive in
the course of his duties hereunder in accordance with the Company's standard
policies, practices and procedures as in effect generally from time to time with
respect to a person holding an executive office with the Company.
6. Other Benefits. During the Term, Executive shall be entitled to such
holidays and sick leave as are consistent with the Company's standard policies
for a person holding an executive office with the Company. Executive shall also
be eligible, from and after the Effective Date, for participation in such group
insurance, hospitalization, major medical, dental and disability insurance as
such programs may be from time to time implemented, modified or maintained and
made available in the sole discretion of the Company for a person holding an
executive office with the Company.
7. Early Termination of Term of Agreement; Effect of Termination.
(a) The Term and the employment of Executive hereunder may be
terminated (a "Termination") prior to the Initial Expiration Date or any Renewal
Expiration Date in any of the following circumstances:
(i) immediately, if Executive dies; or
(ii) by the Company in the event of illness, accident or other
disability (physical or mental) of Executive as a result of which
Executive is unable to perform the duties required hereunder for such
period of time provided by the Company's then disability policy or, if
no such disability policy is in effect, for a period of 60 days during
any 12 month period. The Company may terminate the employment of
Executive by written notice to Executive, which notice shall be
effective upon the date of sending such notice.
(iii) by the Company at any time for its convenience and
without Cause upon 30 days' prior written notice thereof to Executive;
or
2
===============================================================================
(iv) by Executive for his convenience and without cause at any
time upon 30 days' prior written notice thereof to the Company; or
(v) at the option of the Company for "Cause" (as such term is
hereinafter defined) upon the Company providing written notice thereof
to the Company of the basis of such Termination.
(b) In addition to the foregoing, upon any expiration of the Term or
the occurrence of a Termination for any reason, then, except as otherwise
specified in this Agreement, the Company and Executive shall be released from
any further obligations hereunder, but the Company and Executive shall retain
and may exercise any and all remedies against the other, provided that
Executive's receipt of severance benefits pursuant to Section 8 hereof shall
constitute Executive's sole remedy with respect to this Agreement.
Notwithstanding the foregoing, the provisions of this Section 7(b) and Sections
8 through 18 hereof shall survive and continue after the effective date of any
expiration of the Term or any Termination.
(c) For purposes of this Agreement, "Cause" means (i) Executive shall
have committed an act of fraud, embezzlement, misappropriation or breach of
fiduciary duty against the Company, including without limitation the offer,
payment, solicitation or acceptance of any unlawful bribe or kickback with
respect to the Company's business, (ii) Executive shall have been convicted by a
court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any
felony or any crime involving moral turpitude, (iii) Executive's breach of any
of the provisions of Section 3 or 9 hereof, (iv) the failure or refusal on the
part of Executive to follow the legitimate directions of the Company, (v)
Executive shall have reported to work impaired by or under the influence of
alcohol or illegal drugs, (vi) Executive shall have engaged in sexual harassment
or otherwise violated any harassment or discrimination law, (vii) Executive
shall have engaged in the unlawful use (including being under the influence) or
possession of illegal drugs on the Company's premises, (viii) excessive
absenteeism by Executive not related to illness, sick leave or vacations (but
only after written notice from the Company followed by a repetition of such
excessive absenteeism), or (ix) dishonesty of Executive.
8. Severance Benefits. If Executive's employment is terminated by his
death or by Company for any reason other than for Cause, then Executive (or his
estate in the event of his death) shall be entitled to receive (i) payment of
the unpaid portion, if any, of the Base Salary attributable to the period ending
on the effective date of such expiration or Termination and (ii) payment of any
expense reimbursements under Section 5 hereof for expenses incurred in the
performance of his duties hereunder prior to such expiration or Termination.
Except as otherwise set forth in this Section 8, Executive shall not be entitled
to any severance or other compensation after expiration or any Termination.
9. Confidentiality. Executive recognizes and acknowledges that he will
have access to certain information of the Company and that such information is
confidential and constitutes valuable, special and unique property of the
Company. Executive shall not at any time, either during or subsequent to the
Term, disclose to others, use, copy or permit to be copied, except in pursuance
of his duties for and on behalf of the Company, its successors, assigns or
nominees, any Confidential Information of the Company (regardless of whether
developed by Executive) without the prior written consent of the Company.
3
===============================================================================
As used herein, "Confidential Information" means: (i) information submitted
by the Company in connection with the negotiation or performance of this
Agreement, (ii) all information designated by the Company as secret,
confidential, company private or other similar classifications, (iii) all
information in the Company's possession concerning or belonging to third parties
under a contractual or legal obligation to maintain confidentiality, (iv) all
data generated as a result of the services rendered by Executive hereunder, and
(v) any and all documents, cards, tapes, discs and other media upon which such
data or information is contained. Confidential Information excludes information
(x) in the public domain, (y) independently acquired or developed without breach
of any legal or contractual obligation, and (z) information commonly known among
parties familiar with the businesses similar to those conducted by the Company.
10. Delivery of Documents upon Expiration or Termination. Executive shall
deliver to the Company or its designee at the expiration or termination of his
employment all correspondence, memoranda, notes, records, and other documents
and all copies thereof, made, composed or received by Executive, solely or
jointly with others, that are in Executive's possession, custody, or control at
expiration or termination of his employment and that are related in any manner
to the past, present, or anticipated business of the Company. In this regard,
Executive hereby grants and conveys to the Company all right, title and interest
in and to, including without limitation, the right to possess, print, copy, and
sell or otherwise dispose of, any reports, records, papers, summaries, or other
documents, and writings, and copies, abstracts or summaries thereof, that may be
prepared by or under his direction or that may come into his possession in any
way during the term of his employment with the Company that relate in any manner
to the past, present or anticipated business of the Company.
11. Injunctive Relief. Executive acknowledges that a breach of Sections 9
and 10 would cause irreparable damage to the Company, and in the event of
Executive's breach of the provisions of Sections 9 or 10, the Company shall be
entitled to a temporary restraining order and an injunction restraining
Executive from breaching such covenants without the necessity of posting bond or
proving irreparable harm, such being conclusively admitted by Executive.
Nothing shall be construed as prohibiting the Company from pursuing any other
available remedies for such breach, including the recovery of damages from
Executive. Executive acknowledges that the restrictions set forth in Sections 9
and 10 are reasonable in scope and duration, given the nature of the business of
the Company. Executive agrees that issuance of an injunction restraining
Executive from breaching such covenants in accordance with their terms will not
pose an unreasonable restriction on Executive's ability to obtain employment or
other work following the effective date of any Termination.
12. Other Agreements. The provisions of Sections 9 through 11 shall be
independent of and in addition to any other agreement between Executive and the
Company or its subsidiaries or affiliates regarding the subject matter of
Sections 9 through 11.
13. Entire Agreement. This Agreement is the entire agreement between the
parties hereto with respect to the subject matter hereof and shall not be
amended, altered, or modified in any manner whatsoever, except by a written
instrument executed by the parties hereto. This Agreement supersedes all prior
agreements between the Company and Executive with respect to the subject matter
hereof and all such prior agreements shall be void and of no further force or
effect as of the Effective Date.
4
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14. Waiver. The waiver by any party hereto of a breach of any provision
of this Agreement by the other party shall not operate or be construed as a
waiver of any subsequent breach.
15. Governing Law. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE INTERPRETED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS.
16. Assignability. Executive shall not, without the prior written consent
of the Company, assign, transfer, or otherwise convey this Agreement or any
right or interest herein. This Agreement and all rights and obligations of the
Company or any of its successors may be assigned or otherwise transferred to any
of its successors and shall be binding upon and inure to the benefit of its
successors. As used herein, the term "successor" shall mean any person,
corporation or other entity that, by merger, consolidation, purchase of stock,
assets, liquidation, voluntary or involuntary assignment, or otherwise, acquires
all or a substantial part of the assets of the Company or succeeds to one or
more lines of business of the Company.
17. Interpretation. The parties hereto acknowledge and agree that each
party and its counsel has reviewed and negotiated the terms and provisions of
this Agreement and have contributed to its revision and that the rule of
construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement.
18. Notices. All notices hereunder shall be in writing, shall be
delivered personally or sent by certified or registered mail, postage prepaid,
return receipt requested, or by express or other delivery service, if to
Executive, to his attention at the address set forth below (or such other
address as designated from time to time by such party) and, if to the Company,
at the address set forth below (or such other address as designated from time to
time by such party). All notices hereunder shall be deemed effective when
received as set forth above. No notice shall be effective if given otherwise
than as provided herein.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the Effective Date.
ADDRESS: JUSTIN INDUSTRIES, INC.
2821 West Seventh Street By: /S/RICHARD J. SAVITZ
Fort Worth, Texas 76107 -------------------------
Attention: Secretary Printed Name: Richard J. Savitz
Title: Senior Vice President
ADDRESS:
/S/J. T. DICKENSON
----------------------------
J. T. Dickenson
5
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EXHIBIT A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated April 16, 1999 (the "Option Agreement"),
between Justin Industries, Inc., a Texas corporation (the "Company"), and J. T.
Dickenson (the "Optionee").
WHEREAS, the Company and the Optionee have entered into an Agreement, dated
April 16, 1999 (the "Agreement"); and
WHEREAS, such Agreement provides for the Company to grant a stock option to
the Optionee.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee, subject
to the terms and conditions set forth hereinafter, in the Company's 1999
Performance Incentive Plan (the "Plan") and in the Agreement, an option (the
"Option") to purchase from the Company 18,000 shares (the "Option Shares") of
Common Stock, par value $2.50 per share, of the Company at a purchase price of
$13.0625 per share.
2. Term of Option. The Option shall expire, and all rights granted
hereunder to purchase the Option Shares shall terminate, 5 years from the date
of this Option Agreement.
3. Vesting of Option. The Option shall become fully exercisable on the
second anniversary of the date hereof; provided, however, that in the event of a
Change in Control (as defined in the Agreement), the Option shall become fully
vested and immediately exercisable.
4. Exercise of Option. The Option shall be exercised, subject to the
conditions set forth in Section 5 hereof, by the Optionee's delivering written
notice of the exercise of the Option or any portion thereof to the Company's
Treasurer (or any other officer of the Company who is designated by the Company
to accept such notices on its behalf), specifying the number of shares for which
it is exercised. The Option price shall be paid in full at the time of exercise
either (i) in cash by United States currency or check, (ii) with the consent of
the Company, by tendering to the Company shares of Common Stock of the Company
held by the Optionee having a fair market value equal to the Option price, (iii)
with the consent of the Company, through withholding by the Company of Option
shares being exercised and having a fair market value equal to the Option price,
or (iv) any combination of (i), (ii), and (iii) above; at the election of the
Optionee, any tax due on the gain realized upon exercise of an Option may
likewise be paid, with the consent of the Company, as aforesaid. Upon exercise
of the Option or any portion thereof, the Company will, as promptly as
practicable, issue and deliver at the Company's corporate office a stock
certificate or certificates representing the Option Shares so purchased. If the
Company shall determine that it is required to withhold any federal, state or
local taxes as a result of the Optionee's exercise of the Option, the Company
shall give notice thereof to the Optionee and the Company shall not be obligated
to issue any Option Shares until the Optionee shall have paid to the Company by
certified or cashier's check the amount of such withholding taxes.
A-1
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5. Certain Conditions to Exercise of the Option. The Option Shares
delivered pursuant to the exercise of the Option may be subject to certain
restrictions as provided in the Plan.
6. Non-Assignability of Option. This Option shall not be transferable or
assignable by the Optionee otherwise than as permitted by the Plan.
7. Changes to Capital Structure. In the event of any stock dividend,
stock split, combination of shares, merger, consolidation, recapitalization,
reclassification or other similar capital or corporate structure change, the
number of Option Shares unpurchased and remaining subject to this Option and the
purchase price of such Option Shares shall be appropriately adjusted to reflect
such change.
8. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission or certified, registered or express mail or overnight
courier service (postage and other charges prepaid), addressed:
If to the Optionee to:
J. T. Dickenson
If to the Company to:
Justin Industries, Inc.
2821 West Seventh Street
Fort Worth, Texas 76107
Attention: Secretary
or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above, and
such notice or communication shall be deemed given when received if personally
delivered or sent by facsimile transmission, or three days after being placed in
the U.S. mail if sent by registered or certified mail, or one day after being
sent by express mail or overnight courier.
9. Miscellaneous. The Optionee shall have no rights as a shareholder of
the Company or any claim to dividends with respect to any Option Shares until
such Option Shares are issued to the Optionee by the Company. Nothing contained
in this Option shall confer upon the Optionee any rights with respect to the
Company except as specifically set forth herein.
A-2
===============================================================================
10. Incorporation of Agreement Provisions. This Option Agreement is made
pursuant to the Plan and is subject to all of the terms and provisions of the
Plan as if the same were fully set forth herein. Capitalized terms not
otherwise defined herein shall have the same meanings set forth for such terms
in the Plan.
11. Governing Law. This Option Agreement shall be governed by and
construed in accordance with the law of the State of Texas.
12. Counterparts. This Option Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Option Agreement has been executed by the Company
and the Optionee as of the date first above written.
OPTIONEE:
/S/J. T. DICKENSON
----------------------------
J. T. Dickenson
JUSTIN INDUSTRIES, INC.
By: /S/RICHARD J. SAVITZ
-------------------------
Name: Richard J. Savitz
Title: Senior Vice President
A-3
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EXHIBIT B
RESTRICTED STOCK AWARD AGREEMENT
RESTRICTED STOCK AWARD AGREEMENT, dated April 16, 1999, between Justin
Industries, Inc., a Texas corporation (the "Company"), and J. T. Dickenson (the
"Executive").
WHEREAS, pursuant to the provisions of the Company's 1999 Performance
Incentive Plan (the "Plan"), the Compensation Committee of the Board of
Directors of the Company (the "Committee") administers the Plan; and
WHEREAS, the Committee has determined that the Executive be granted a
Restricted Stock Award under the Plan for the number of shares of Common Stock
and upon the terms set forth below;
NOW, THEREFORE, the Company and the Executive hereby agree as follows:
1. Grant of Award. The Executive is hereby granted an award under the
Plan (the "Award"), subject to the terms and conditions hereinafter set forth,
with respect to 10,000 shares of Common Stock (the "Restricted Stock"). The
Executive shall be issued stock certificates evidencing the shares of Restricted
Stock covered by this Award. Such certificates shall be registered in the name
of the Executive, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to this Award, substantially in the
following form:
The transferability of this certificate and the shares of Common
Stock represented hereby are subject to the terms, conditions and
restrictions (including forfeiture) contained in the 1999 Performance
Incentive Plan of Justin Industries, Inc. and the Restricted Stock
Award Agreement entered into between the registered owner and Justin
Industries, Inc. Copies of such Plan and Agreement are on file in the
offices of Justin Industries, Inc., 2821 West Seventh Street, Fort
Worth, Texas 76101.
The certificates evidencing the shares of Restricted Stock shall be held in
custody by the Company or its designee until the restrictions on such shares
shall have lapsed, and, as a condition of this Award, the Executive shall
deliver a stock power, duly endorsed in blank, relating to the shares of
Restricted Stock covered by this Award.
2. Transfer Restrictions. Except as expressly provided in the Plan, the
Restricted Stock issued with respect to this Award shall not be transferable or
assignable. This Award and the Restricted Stock issued with respect to this
Award may not be pledged or hypothecated or otherwise encumbered and shall not
be subject to execution, attachment or similar process. Upon any attempt to
effect any such disposition, or upon the levy of any such process, the Award
shall immediately become null and void and the shares of Restricted Stock
relating thereto shall be forfeited.
B-1
===============================================================================
3. Restrictions. The restrictions on the shares of Restricted Stock
shall lapse and such shares shall vest in accordance with the following
schedule:
(a) 5,000 shares of Restricted Stock shall vest at such time as the
last sale price of the Common Stock in the over-the-counter market as
reported by the Wall Street Journal is $16.00 per share for 10 consecutive
trading days;
(b) 2,500 shares of Restricted Stock shall vest at such time as the
last sale price of the Common Stock in the over-the-counter market as
reported by the Wall Street Journal is $18.00 per share for 10 consecutive
trading days; and
(c) 2,500 shares of Restricted Stock shall vest at such time as the
last sale price of the Common Stock in the over-the-counter market as
reported by the Wall Street Journal is $20.00 per share for 10 consecutive
trading days.
Notwithstanding the foregoing, the restrictions on the shares of Restricted
Stock, including vesting requirements, shall lapse at such time as a Change in
Control (as defined in the Plan) shall have occurred. Shares as to which
restrictions shall have lapsed shall no longer be deemed Restricted Stock. All
shares of Restricted Stock as to which the restrictions thereon shall not have
lapsed within five years following the date of this Agreement shall be
immediately forfeited to the Company.
4. Voting and Dividend Rights. During the period in which the
restrictions provided herein are applicable to the Restricted Stock, the
Executive shall have the right to vote the shares of Restricted Stock and to
receive any dividends paid or other distributions made with respect thereto;
provided, however, that any dividend or distribution payable with respect to
Restricted Stock shall be subject to the same restrictions and shall vest and
become payable or distributable to the Executive at the same time the related
Restricted Stock vests pursuant to Section 3 hereof. Any such dividend or
distribution shall be held by the Company for the account of the Executive,
subject to forfeiture pursuant to Section 3 hereof, until such time as the
related shares of Restricted Stock shall have become fully vested.
5. Distribution Following End of Restrictions. Upon the occurrence of
the vesting events provided in Section 3 hereof as to any portion of the
Restricted Stock, the Company will cause a new certificate evidencing such
number of vested shares of Common Stock to be delivered to the Executive, or in
the case of his death to his legal representative, beneficiary or heir, free of
the legend regarding transferability set forth in Section 1.
6. Tax Withholding. The obligation of the Company to deliver any
certificate to the Executive pursuant to Sections 1 and 5 hereof shall be
subject to the receipt by the Company from the Executive of any withholding
taxes required as a result of the grant of the Award or lapsing of restrictions
thereon. Subject to the consent of the Committee, the Executive may satisfy all
or part of such withholding tax requirement by electing to require the Company
to purchase that number of unrestricted shares of Common Stock designated by the
Executive at a price equal to the last sale price or closing "asked" price of
the Common Stock in the over-the-counter market as reported by the National
Association of Securities Dealers Automatic Quotation System or other national
quotation service on the date of lapse of the restrictions or, if no such sale
of Common Stock is reported on such day, on the next preceding day on which
trading occurred.
B-2
===============================================================================
7. Securities Laws Requirements. The Company shall not be required to
issue shares pursuant to the Award unless and until (a) such shares have been
duly listed upon each stock exchange, if any, on which the Common Stock is then
registered; and (b) the Company has complied with applicable federal and state
securities laws. The Committee may require the Executive to furnish to the
Company, prior to the issuance of any shares of Restricted Stock in connection
with this Award, an agreement, in such form as the Committee may from time to
time deem appropriate, in which the Executive represents that the shares
acquired by him under the Award are being acquired for investment and not with a
view to the sale or distribution thereof.
8. Incorporation of Plan Provisions. This Agreement is made pursuant to
the Plan and is subject to all of the terms and provisions of the Plan as if the
same were fully set forth herein, and receipt of a copy of the Plan is hereby
acknowledged by Executive. Capitalized terms not otherwise defined herein shall
have the same meanings set forth for such terms in the Plan.
9. Miscellaneous. This Agreement (a) shall be binding upon and inure to
the benefit of any successor of the Company, (b) shall be governed by the laws
of the State of Texas, and any applicable laws of the United States, and (c) may
not be amended without the written consent of both the Company and the
Executive. No contract or right of employment shall be implied by this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
JUSTIN INDUSTRIES, INC.
By: /S/RICHARD J. SAVITZ
--------------------------
Name: Richard J. Savitz
Title: Senior Vice President
-
EXECUTIVE:
/S/J. T. DICKENSON
----------------------------
J. T. Dickenson
B-3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of April 16, 1999 (the
"Effective Date"), between JUSTIN INDUSTRIES, INC., a Texas corporation (the
"Company"), and RICHARD J. SAVITZ ("Executive").
WHEREAS, the Company desires to employ Executive, and Executive desires to
be employed by the Company, upon the terms and subject to the conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
set forth in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Employment and Duties. Upon the terms and subject to the conditions
set forth herein, the Company hereby employs Executive during the Term (as such
term is hereinafter defined), and Executive accepts employment with the Company
during the Term, to serve as Senior Vice President, Chief Financial Officer and
Secretary of the Company. Executive shall perform such additional executive
duties and responsibilities with the Company and/or its direct or indirect
subsidiaries, and shall enjoy such additional offices and powers, as may be
assigned or delegated to Executive from time to time by the Board of Directors
of the Company or its designee. The Executive shall report to the Chief
Executive Officer of the Company or his designee.
2. Term. The initial term of this Agreement and Executive's employment
hereunder shall commence on the Effective Date and continue until December 31,
2000 (the "Initial Expiration Date"), unless sooner terminated pursuant to the
termination provisions hereof. The term of this Agreement and Executive's
employment hereunder is referred to herein as the "Term".
3. Exclusive Service. Executive shall devote his exclusive and full time
services to the performance of his duties and obligations hereunder during the
Term and to the business of the Company; provided, however, that, subject to
Executive's fiduciary duties and to the restrictions set forth in Sections 9
through 11 hereof, (i) Executive shall not be prohibited from investing his
assets in such form or manner as will not require his services in the operation
of the affairs of the entities in which such investments are made or, in the
aggregate, detract from the performance by Executive of his duties and
obligations hereunder, and (ii) Executive may engage in activities involving
charitable, educational, religious and similar types of organizations, speaking
engagements and similar type activities to the extent that such other activities
do not detract from the performance by Executive of his duties and obligations
hereunder.
===============================================================================
4. Compensation. As compensation for services rendered to the Company
pursuant to this Agreement, the Company shall pay to Executive a base salary
(the "Base Salary"). The Base Salary shall be paid at an annual rate of
$275,000. The Base Salary will be paid in equal periodic installments in
accordance with the standard payroll policies, practices and procedures of the
Company as from time to time in effect, from which shall be deducted state and
federal income taxes, local income or earnings taxes, social security taxes, and
such other and similar payroll taxes and charges as may be required or
appropriate under applicable law. In addition to Base Salary, Executive shall
be entitled to participate in any bonus program for officers or key employees of
the Company, if and to the extent and for such period of time that the Company,
in its sole discretion, establishes such a program, subject to such performance
goals, targets and other terms and conditions as may be made applicable to
Executive under any such program, which terms and conditions may be different
from those offered to other officers and employees of the Company. Further, the
Company shall (a) grant to Executive an option to purchase 15,000 shares of the
common stock of the Company, in accordance with the terms of the Company's 1999
Performance Incentive Plan and the Stock Option Agreement attached hereto as
Exhibit A, and (b) grant to Executive 10,000 shares of restricted common stock
in accordance with the terms of the Company's 1999 Performance Incentive Plan
and the Restricted Stock Award Agreement attached hereto as Exhibit B.
5. Expense Reimbursement. The Company shall pay or reimburse Executive
for all reasonable out-of-pocket expenses incurred or paid by the Executive in
the course of his duties hereunder in accordance with the Company's standard
policies, practices and procedures as in effect generally from time to time with
respect to a person holding an executive office with the Company.
6. Other Benefits. During the Term, Executive shall be entitled to such
holidays and sick leave as are consistent with the Company's standard policies
for a person holding an executive office with the Company. Executive shall also
be eligible, from and after the Effective Date, for participation in such group
insurance, hospitalization, major medical, dental and disability insurance as
such programs may be from time to time implemented, modified or maintained and
made available in the sole discretion of the Company for a person holding an
executive office with the Company.
7. Early Termination of Term of Agreement; Effect of Termination.
(a) The Term and the employment of Executive hereunder may be
terminated (a "Termination") prior to the Initial Expiration Date or any Renewal
Expiration Date in any of the following circumstances:
(i) immediately, if Executive dies; or
(ii) by the Company in the event of illness, accident or other
disability (physical or mental) of Executive as a result of which
Executive is unable to perform the duties required hereunder for such
period of time provided by the Company's then disability policy or, if
no such disability policy is in effect, for a period of 60 days during
any 12 month period. The Company may terminate the employment of
Executive by written notice to Executive, which notice shall be
effective upon the date of sending such notice.
(iii) by the Company at any time for its convenience and
without Cause upon 30 days' prior written notice thereof to Executive;
or
2
===============================================================================
(iv) by Executive for his convenience and without cause at any
time upon 30 days' prior written notice thereof to the Company; or
(v) at the option of the Company for "Cause" (as such term is
hereinafter defined) upon the Company providing written notice thereof
to the Company of the basis of such Termination.
(b) In addition to the foregoing, upon any expiration of the Term or
the occurrence of a Termination for any reason, then, except as otherwise
specified in this Agreement, the Company and Executive shall be released from
any further obligations hereunder, but the Company and Executive shall retain
and may exercise any and all remedies against the other, provided that
Executive's receipt of severance benefits pursuant to Section 8 hereof shall
constitute Executive's sole remedy with respect to this Agreement.
Notwithstanding the foregoing, the provisions of this Section 7(b) and Sections
8 through 18 hereof shall survive and continue after the effective date of any
expiration of the Term or any Termination.
(c) For purposes of this Agreement, "Cause" means (i) Executive shall
have committed an act of fraud, embezzlement, misappropriation or breach of
fiduciary duty against the Company, including without limitation the offer,
payment, solicitation or acceptance of any unlawful bribe or kickback with
respect to the Company's business, (ii) Executive shall have been convicted by a
court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any
felony or any crime involving moral turpitude, (iii) Executive's breach of any
of the provisions of Section 3 or 9 hereof, (iv) the failure or refusal on the
part of Executive to follow the legitimate directions of the Company, (v)
Executive shall have reported to work impaired by or under the influence of
alcohol or illegal drugs, (vi) Executive shall have engaged in sexual harassment
or otherwise violated any harassment or discrimination law, (vii) Executive
shall have engaged in the unlawful use (including being under the influence) or
possession of illegal drugs on the Company's premises, (viii) excessive
absenteeism by Executive not related to illness, sick leave or vacations (but
only after written notice from the Company followed by a repetition of such
excessive absenteeism), or (ix) dishonesty of Executive.
8. Severance Benefits. If Executive's employment is terminated by his
death or by Company for any reason other than for Cause, then Executive (or his
estate in the event of his death) shall be entitled to receive (i) payment of
the unpaid portion, if any, of the Base Salary attributable to the period ending
on the effective date of such expiration or Termination and (ii) payment of any
expense reimbursements under Section 5 hereof for expenses incurred in the
performance of his duties hereunder prior to such expiration or Termination.
Except as otherwise set forth in this Section 8, Executive shall not be entitled
to any severance or other compensation after expiration or any Termination.
9. Confidentiality. Executive recognizes and acknowledges that he will
have access to certain information of the Company and that such information is
confidential and constitutes valuable, special and unique property of the
Company. Executive shall not at any time, either during or subsequent to the
Term, disclose to others, use, copy or permit to be copied, except in pursuance
of his duties for and on behalf of the Company, its successors, assigns or
nominees, any Confidential Information of the Company (regardless of whether
developed by Executive) without the prior written consent of the Company.
3
===============================================================================
As used herein, "Confidential Information" means: (i) information submitted
by the Company in connection with the negotiation or performance of this
Agreement, (ii) all information designated by the Company as secret,
confidential, company private or other similar classifications, (iii) all
information in the Company's possession concerning or belonging to third parties
under a contractual or legal obligation to maintain confidentiality, (iv) all
data generated as a result of the services rendered by Executive hereunder, and
(v) any and all documents, cards, tapes, discs and other media upon which such
data or information is contained. Confidential Information excludes information
(x) in the public domain, (y) independently acquired or developed without breach
of any legal or contractual obligation, and (z) information commonly known among
parties familiar with the businesses similar to those conducted by the Company.
10. Delivery of Documents upon Expiration or Termination. Executive shall
deliver to the Company or its designee at the expiration or termination of his
employment all correspondence, memoranda, notes, records, and other documents
and all copies thereof, made, composed or received by Executive, solely or
jointly with others, that are in Executive's possession, custody, or control at
expiration or termination of his employment and that are related in any manner
to the past, present, or anticipated business of the Company. In this regard,
Executive hereby grants and conveys to the Company all right, title and interest
in and to, including without limitation, the right to possess, print, copy, and
sell or otherwise dispose of, any reports, records, papers, summaries, or other
documents, and writings, and copies, abstracts or summaries thereof, that may be
prepared by or under his direction or that may come into his possession in any
way during the term of his employment with the Company that relate in any manner
to the past, present or anticipated business of the Company.
11. Injunctive Relief. Executive acknowledges that a breach of Sections 9
and 10 would cause irreparable damage to the Company, and in the event of
Executive's breach of the provisions of Sections 9 or 10, the Company shall be
entitled to a temporary restraining order and an injunction restraining
Executive from breaching such covenants without the necessity of posting bond or
proving irreparable harm, such being conclusively admitted by Executive.
Nothing shall be construed as prohibiting the Company from pursuing any other
available remedies for such breach, including the recovery of damages from
Executive. Executive acknowledges that the restrictions set forth in Sections 9
and 10 are reasonable in scope and duration, given the nature of the business of
the Company. Executive agrees that issuance of an injunction restraining
Executive from breaching such covenants in accordance with their terms will not
pose an unreasonable restriction on Executive's ability to obtain employment or
other work following the effective date of any Termination.
12. Other Agreements. The provisions of Sections 9 through 11 shall be
independent of and in addition to any other agreement between Executive and the
Company or its subsidiaries or affiliates regarding the subject matter of
Sections 9 through 11.
13. Entire Agreement. This Agreement is the entire agreement between the
parties hereto with respect to the subject matter hereof and shall not be
amended, altered, or modified in any manner whatsoever, except by a written
instrument executed by the parties hereto. This Agreement supersedes all prior
agreements between the Company and Executive with respect to the subject matter
hereof and all such prior agreements shall be void and of no further force or
effect as of the Effective Date.
4
===============================================================================
14. Waiver. The waiver by any party hereto of a breach of any provision
of this Agreement by the other party shall not operate or be construed as a
waiver of any subsequent breach.
15. Governing Law. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE INTERPRETED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS.
16. Assignability. Executive shall not, without the prior written consent
of the Company, assign, transfer, or otherwise convey this Agreement or any
right or interest herein. This Agreement and all rights and obligations of the
Company or any of its successors may be assigned or otherwise transferred to any
of its successors and shall be binding upon and inure to the benefit of its
successors. As used herein, the term "successor" shall mean any person,
corporation or other entity that, by merger, consolidation, purchase of stock,
assets, liquidation, voluntary or involuntary assignment, or otherwise, acquires
all or a substantial part of the assets of the Company or succeeds to one or
more lines of business of the Company.
17. Interpretation. The parties hereto acknowledge and agree that each
party and its counsel has reviewed and negotiated the terms and provisions of
this Agreement and have contributed to its revision and that the rule of
construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement.
18. Notices. All notices hereunder shall be in writing, shall be
delivered personally or sent by certified or registered mail, postage prepaid,
return receipt requested, or by express or other delivery service, if to
Executive, to his attention at the address set forth below (or such other
address as designated from time to time by such party) and, if to the Company,
at the address set forth below (or such other address as designated from time to
time by such party). All notices hereunder shall be deemed effective when
received as set forth above. No notice shall be effective if given otherwise
than as provided herein.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the Effective Date.
ADDRESS: JUSTIN INDUSTRIES, INC.
2821 West Seventh Street By: /S/J. T. DICKENSON
Fort Worth, Texas 76107 --------------------------
Attention: Secretary Printed Name: J. T. Dickenson
Title: President
ADDRESS:
/S/RICHARD J. SAVITZ
-----------------------------
Richard J. Savitz
5
===============================================================================
EXHIBIT A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated April 16, 1999 (the "Option Agreement"),
between Justin Industries, Inc., a Texas corporation (the "Company"), and
Richard J. Savitz (the "Optionee").
WHEREAS, the Company and the Optionee have entered into an Agreement, dated
April 16, 1999 (the "Agreement"); and
WHEREAS, such Agreement provides for the Company to grant a stock option to
the Optionee.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee, subject
to the terms and conditions set forth hereinafter, in the Company's 1999
Performance Incentive Plan (the "Plan") and in the Agreement, an option (the
"Option") to purchase from the Company 15,000 shares (the "Option Shares") of
Common Stock, par value $2.50 per share, of the Company at a purchase price of
$13.0625 per share.
2. Term of Option. The Option shall expire, and all rights granted
hereunder to purchase the Option Shares shall terminate, 5 years from the date
of this Option Agreement.
3. Vesting of Option. The Option shall become fully exercisable on the
second anniversary of the date hereof; provided, however, that in the event of a
Change in Control (as defined in the Agreement), the Option shall become fully
vested and immediately exercisable.
4. Exercise of Option. The Option shall be exercised, subject to the
conditions set forth in Section 5 hereof, by the Optionee's delivering written
notice of the exercise of the Option or any portion thereof to the Company's
Treasurer (or any other officer of the Company who is designated by the Company
to accept such notices on its behalf), specifying the number of shares for which
it is exercised. The Option price shall be paid in full at the time of exercise
either (i) in cash by United States currency or check, (ii) with the consent of
the Company, by tendering to the Company Mature shares of Common Stock of the
Company held by the Optionee having a fair market value equal to the Option
price, or (iii) any combination of (i) and (ii), above; at the election of the
Optionee, any tax due on the gain realized upon exercise of an Option may
likewise be paid, with the consent of the Company, as aforesaid, and in
addition, with the consent of the Company, through withholding by the Company of
Option shares being exercised and having a fair market value equal to the Option
price for an amount that is no more than the minimum required tax withholding.
Mature shares are defined as shares owned by the Optionee for at least six
months prior to the date tendered for use as payment for option shares or
minimum taxes owed. Upon exercise of the Option or any portion thereof, the
Company will, as promptly as practicable, issue and deliver at the Company's
corporate office a stock certificate or certificates representing the Option
Shares so purchased. If the Company shall determine that it is required to
withhold any federal, state or local taxes as a result of the Optionee's
exercise of the Option, the Company shall give notice thereof to the Optionee
and the Company shall not be obligated to issue any Option Shares until the
Optionee shall have paid to the Company by certified or cashier's check or paid
through withholding of Option Shares, as described above, the amount of such
withholding taxes.
A-1
===============================================================================
5. Certain Conditions to Exercise of the Option. The Option Shares
delivered pursuant to the exercise of the Option may be subject to certain
restrictions as provided in the Plan.
6. Non-Assignability of Option. This Option shall not be transferable or
assignable by the Optionee otherwise than as permitted by the Plan.
7. Changes to Capital Structure. In the event of any stock dividend,
stock split, combination of shares, merger, consolidation, recapitalization,
reclassification or other similar capital or corporate structure change, the
number of Option Shares unpurchased and remaining subject to this Option and the
purchase price of such Option Shares shall be appropriately adjusted to reflect
such change.
8. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission or certified, registered or express mail or overnight
courier service (postage and other charges prepaid), addressed:
If to the Optionee to:
Richard J. Savitz
If to the Company to:
Justin Industries, Inc.
2821 West Seventh Street
Fort Worth, Texas 76107
Attention: Secretary
or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above, and
such notice or communication shall be deemed given when received if personally
delivered or sent by facsimile transmission, or three days after being placed in
the U.S. mail if sent by registered or certified mail, or one day after being
sent by express mail or overnight courier.
9. Miscellaneous. The Optionee shall have no rights as a shareholder of
the Company or any claim to dividends with respect to any Option Shares until
such Option Shares are issued to the Optionee by the Company. Nothing contained
in this Option shall confer upon the Optionee any rights with respect to the
Company except as specifically set forth herein.
A-2
===============================================================================
10. Incorporation of Agreement Provisions. This Option Agreement is made
pursuant to the Plan and is subject to all of the terms and provisions of the
Plan as if the same were fully set forth herein. Capitalized terms not
otherwise defined herein shall have the same meanings set forth for such terms
in the Plan.
11. Governing Law. This Option Agreement shall be governed by and
construed in accordance with the law of the State of Texas.
12. Counterparts. This Option Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Option Agreement has been executed by the Company
and the Optionee as of the date first above written.
OPTIONEE:
/S/RICHARD J. SAVITZ
-----------------------------
Richard J. Savitz
JUSTIN INDUSTRIES, INC.
By: /S/J. T. DICKENSON
--------------------------
Name: J. T. Dickenson
Title: President
A-3
===============================================================================
EXHIBIT B
RESTRICTED STOCK AWARD AGREEMENT
RESTRICTED STOCK AWARD AGREEMENT, dated April 16, 1999, between Justin
Industries, Inc., a Texas corporation (the "Company"), and Richard J. Savitz
(the "Executive").
WHEREAS, pursuant to the provisions of the Company's 1999 Performance
Incentive Plan (the "Plan"), the Compensation Committee of the Board of
Directors of the Company (the "Committee") administers the Plan; and
WHEREAS, the Committee has determined that the Executive be granted a
Restricted Stock Award under the Plan for the number of shares of Common Stock
and upon the terms set forth below;
NOW, THEREFORE, the Company and the Executive hereby agree as follows:
1. Grant of Award. The Executive is hereby granted an award under the
Plan (the "Award"), subject to the terms and conditions hereinafter set forth,
with respect to 10,000 shares of Common Stock (the "Restricted Stock"). The
Executive shall be issued stock certificates evidencing the shares of Restricted
Stock covered by this Award. Such certificates shall be registered in the name
of the Executive, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to this Award, substantially in the
following form:
The transferability of this certificate and the shares of Common
Stock represented hereby are subject to the terms, conditions and
restrictions (including forfeiture) contained in the 1999 Performance
Incentive Plan of Justin Industries, Inc. and the Restricted Stock
Award Agreement entered into between the registered owner and Justin
Industries, Inc. Copies of such Plan and Agreement are on file in the
offices of Justin Industries, Inc., 2821 West Seventh Street, Fort
Worth, Texas 76101.
The certificates evidencing the shares of Restricted Stock shall be held in
custody by the Company or its designee until the restrictions on such shares
shall have lapsed, and, as a condition of this Award, the Executive shall
deliver a stock power, duly endorsed in blank, relating to the shares of
Restricted Stock covered by this Award.
2. Transfer Restrictions. Except as expressly provided in the Plan, the
Restricted Stock issued with respect to this Award shall not be transferable or
assignable. This Award and the Restricted Stock issued with respect to this
Award may not be pledged or hypothecated or otherwise encumbered and shall not
be subject to execution, attachment or similar process. Upon any attempt to
effect any such disposition, or upon the levy of any such process, the Award
shall immediately become null and void and the shares of Restricted Stock
relating thereto shall be forfeited.
B-1
===============================================================================
3. Restrictions. The restrictions on the shares of Restricted Stock
shall lapse and such shares shall vest in accordance with the following
schedule:
(a) 5,000 shares of Restricted Stock shall vest at such time as the
last sale price of the Common Stock in the over-the-counter market as
reported by the Wall Street Journal is $16.00 per share for 10 consecutive
trading days;
(b) 2,500 shares of Restricted Stock shall vest at such time as the
last sale price of the Common Stock in the over-the-counter market as
reported by the Wall Street Journal is $18.00 per share for 10 consecutive
trading days; and
(c) 2,500 shares of Restricted Stock shall vest at such time as the
last sale price of the Common Stock in the over-the-counter market as
reported by the Wall Street Journal is $20.00 per share for 10 consecutive
trading days.
Notwithstanding the foregoing, the restrictions on the shares of Restricted
Stock, including vesting requirements, shall lapse at such time as a Change in
Control (as defined in the Plan) shall have occurred. Shares as to which
restrictions shall have lapsed shall no longer be deemed Restricted Stock. All
shares of Restricted Stock as to which the restrictions thereon shall not have
lapsed within five years following the date of this Agreement shall be
immediately forfeited to the Company.
4. Voting and Dividend Rights. During the period in which the
restrictions provided herein are applicable to the Restricted Stock, the
Executive shall have the right to vote the shares of Restricted Stock and to
receive any dividends paid or other distributions made with respect thereto;
provided, however, that any dividend or distribution payable with respect to
Restricted Stock shall be subject to the same restrictions and shall vest and
become payable or distributable to the Executive at the same time the related
Restricted Stock vests pursuant to Section 3 hereof. Any such dividend or
distribution shall be held by the Company for the account of the Executive,
subject to forfeiture pursuant to Section 3 hereof, until such time as the
related shares of Restricted Stock shall have become fully vested.
5. Distribution Following End of Restrictions. Upon the occurrence of
the vesting events provided in Section 3 hereof as to any portion of the
Restricted Stock, the Company will cause a new certificate evidencing such
number of vested shares of Common Stock to be delivered to the Executive, or in
the case of his death to his legal representative, beneficiary or heir, free of
the legend regarding transferability set forth in Section 1.
6. Tax Withholding. The obligation of the Company to deliver any
certificate to the Executive pursuant to Sections 1 and 5 hereof shall be
subject to the receipt by the Company from the Executive of any withholding
taxes required as a result of the grant of the Award or lapsing of restrictions
thereon. Subject to the consent of the Committee, the Executive may satisfy all
or part of such withholding tax requirement by electing to require the Company
to purchase that number of unrestricted shares of Common Stock designated by the
Executive at a price equal to the last sale price or closing "asked" price of
the Common Stock in the over-the-counter market as reported by the National
Association of Securities Dealers Automatic Quotation System or other national
quotation service on the date of lapse of the restrictions or, if no such sale
of Common Stock is reported on such day, on the next preceding day on which
trading occurred.
B-2
===============================================================================
7. Securities Laws Requirements. The Company shall not be required to
issue shares pursuant to the Award unless and until (a) such shares have been
duly listed upon each stock exchange, if any, on which the Common Stock is then
registered; and (b) the Company has complied with applicable federal and state
securities laws. The Committee may require the Executive to furnish to the
Company, prior to the issuance of any shares of Restricted Stock in connection
with this Award, an agreement, in such form as the Committee may from time to
time deem appropriate, in which the Executive represents that the shares
acquired by him under the Award are being acquired for investment and not with a
view to the sale or distribution thereof.
8. Incorporation of Plan Provisions. This Agreement is made pursuant to
the Plan and is subject to all of the terms and provisions of the Plan as if the
same were fully set forth herein, and receipt of a copy of the Plan is hereby
acknowledged by Executive. Capitalized terms not otherwise defined herein shall
have the same meanings set forth for such terms in the Plan.
9. Miscellaneous. This Agreement (a) shall be binding upon and inure to
the benefit of any successor of the Company, (b) shall be governed by the laws
of the State of Texas, and any applicable laws of the United States, and (c) may
not be amended without the written consent of both the Company and the
Executive. No contract or right of employment shall be implied by this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
JUSTIN INDUSTRIES, INC.
By: /S/J. T. DICKENSON
--------------------------
Name: J. T. Dickenson
Title: President
EXECUTIVE:
/S/RICHARD J. SAVITZ
-----------------------------
Richard J. Savitz
B-3
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated April 16, 1999 (the "Option Agreement"),
between Justin Industries, Inc., a Texas corporation (the "Company"), and Judy
B. Hunter (the "Optionee").
WHEREAS, the Company and the Optionee have entered into an Agreement, dated
April 16, 1999 (the "Agreement"); and
WHEREAS, such Agreement provides for the Company to grant a stock option to
the Optionee.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee, subject
to the terms and conditions set forth hereinafter, in the Company's 1999
Performance Incentive Plan (the "Plan") and in the Agreement, an option (the
"Option") to purchase from the Company 6,000 shares (the "Option Shares") of
Common Stock, par value $2.50 per share, of the Company at a purchase price of
$13.0625 per share.
2. Term of Option. The Option shall expire, and all rights granted
hereunder to purchase the Option Shares shall terminate, 5 years from the date
of this Option Agreement.
3. Vesting of Option. The Option shall become fully exercisable on the
second anniversary of the date hereof; provided, however, that in the event of a
Change in Control (as defined in the Agreement), the Option shall become fully
vested and immediately exercisable.
4. Exercise of Option. The Option shall be exercised, subject to the
conditions set forth in Section 5 hereof, by the Optionee's delivering written
notice of the exercise of the Option or any portion thereof to the Company's
Treasurer (or any other officer of the Company who is designated by the Company
to accept such notices on its behalf), specifying the number of shares for which
it is exercised. The Option price shall be paid in full at the time of exercise
either (i) in cash by United States currency or check, (ii) with the consent of
the Company, by tendering to the Company Mature shares of Common Stock of the
Company held by the Optionee having a fair market value equal to the Option
price, or (iii) any combination of (i) and (ii), above; at the election of the
Optionee, any tax due on the gain realized upon exercise of an Option may
likewise be paid, with the consent of the Company, as aforesaid, and in
addition, with the consent of the Company, through withholding by the Company of
Option shares being exercised and having a fair market value equal to the Option
price for an amount that is no more than the minimum required tax withholding.
Mature shares are defined as shares owned by the Optionee for at least six
months prior to the date tendered for use as payment for option shares or
minimum taxes owed. Upon exercise of the Option or any portion thereof, the
Company will, as promptly as practicable, issue and deliver at the Company's
corporate office a stock certificate or certificates representing the Option
Shares so purchased. If the Company shall determine that it is required to
withhold any federal, state or local taxes as a result of the Optionee's
exercise of the Option, the Company shall give notice thereof to the Optionee
and the Company shall not be obligated to issue any Option Shares until the
Optionee shall have paid to the Company by certified or cashier's check or paid
through withholding of Option Shares, as described above, the amount of such
withholding taxes.
===============================================================================
5. Certain Conditions to Exercise of the Option. The Option Shares
delivered pursuant to the exercise of the Option may be subject to certain
restrictions as provided in the Plan.
6. Non-Assignability of Option. This Option shall not be transferable or
assignable by the Optionee otherwise than as permitted by the Plan.
7. Changes to Capital Structure. In the event of any stock dividend,
stock split, combination of shares, merger, consolidation, recapitalization,
reclassification or other similar capital or corporate structure change, the
number of Option Shares unpurchased and remaining subject to this Option and the
purchase price of such Option Shares shall be appropriately adjusted to reflect
such change.
8. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission or certified, registered or express mail or overnight
courier service (postage and other charges prepaid), addressed:
If to the Optionee to:
Judy B. Hunter
If to the Company to:
Justin Industries, Inc.
2821 West Seventh Street
Fort Worth, Texas 76107
Attention: Secretary
or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above, and
such notice or communication shall be deemed given when received if personally
delivered or sent by facsimile transmission, or three days after being placed in
the U.S. mail if sent by registered or certified mail, or one day after being
sent by express mail or overnight courier.
9. Miscellaneous. The Optionee shall have no rights as a shareholder of
the Company or any claim to dividends with respect to any Option Shares until
such Option Shares are issued to the Optionee by the Company. Nothing contained
in this Option shall confer upon the Optionee any rights with respect to the
Company except as specifically set forth herein.
2
===============================================================================
10. Incorporation of Agreement Provisions. This Option Agreement is made
pursuant to the Plan and is subject to all of the terms and provisions of the
Plan as if the same were fully set forth herein. Capitalized terms not
otherwise defined herein shall have the same meanings set forth for such terms
in the Plan.
11. Governing Law. This Option Agreement shall be governed by and
construed in accordance with the law of the State of Texas.
12. Counterparts. This Option Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Option Agreement has been executed by the Company
and the Optionee as of the date first above written.
OPTIONEE:
/S/JUDY B. HUNTER
-----------------------------
Judy B. Hunter
JUSTIN INDUSTRIES, INC.
By: /S/RICHARD J. SAVITZ
--------------------------
Name: Richard J. Savitz
Title: Senior Vice President
3
AMENDMENT TO THE
JUSTIN INDUSTRIES, INC.
1981 STOCK OPTION PLAN
WHEREAS, Justin Industries, Inc., a Texas corporation, with its principal
office and place of business in Tarrant County, Texas (the "Company"),
heretofore adopted the Justin Industries, Inc. 1981 Stock Option Plan (the
"Plan") and the related Stock Option Agreements; and
WHEREAS, the Company desires to amend the Plan with regard to the section
titled Exercise of Option; and
WHEREAS, the Board of Directors of the Company has authorized this
Amendment to the Plan;
NOW, THEREFORE, pursuant to the powers reserved in the Plan, the Company
does hereby amend and restate the Exercise of Option section of the Plan in its
entirety to read as follows:
Exercise of Option
Subject to the earlier expiration of the option, an option may be
exercised, by notice given to the Company in the form specified at any
time and from time to time on or after the date of grant thereof. The
option is not transferable and may be exercised only by the employee
originally granted the option ("optionee") during the optionee's lifetime
and while he remains an employee of the Company, except that:
(a) If the Optionee's employment with the Company terminates by
reason of disability or by reason of retirement with the consent
of the Company, an option may be exercised by the Optionee at any
time during the period of three months following such termination
or during such other period of time as may be approved by the
Board of Directors of the Company, but in no event shall such
options remain exercisable after the expiration of the term of
the option.
(b) If the Optionee dies while in the employ of the Company, his
estate, or the person who acquires the option by bequest or
inheritance or by reason of the death of the Optionee, may
exercise the option at any time during the period three months
following the date of the Optionee's death, to the extent that
Optionee could have exercised his option just prior to his death
or during such other period of time as may be approved by the
Board of Directors of the Company, but in no event shall such
options remain exercisable after the expiration of the term of
the option.
===============================================================================
If an Optionee's employment with the Company terminates other
than by reason of disability (a physical or mental condition
which, in the judgment of the Company, totally and presumably
permanently prevents the Employee from engaging in any
substantial gainful employment), retirement with the consent of
the Company, or death, the option (to the extent not exercised
prior thereto) shall terminate as of the date of the Optionee's
employment so terminates. For purposes of this Plan, employment
ceases on the last day that the employee actually reports to his
normal place of work and actually performs his normal duties,
regardless of any payments made by the Company as termination
benefits.
Except as amended by this instrument, the 1981 Plan shall remain in full
force and effect. This instrument may be executed in a number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, this Amendment has been executed this 16th day of
April, 1999.
JUSTIN INDUSTRIES, INC.
By: /S/RICHARD J. SAVITZ
--------------------------
Name: Richard J. Savitz
Title: Senior Vice President
AMENDMENT TO THE
JUSTIN INDUSTRIES, INC.
1984 INCENTIVE STOCK OPTION PLAN
WHEREAS, Justin Industries, Inc., a Texas corporation, with its principal
office and place of business in Tarrant County, Texas (the "Company"),
heretofore adopted the Justin Industries, Inc. 1984 Incentive Stock Option Plan
(the "1984 Plan") and the related Stock Option Agreements (the "Option
Agreements"); and
WHEREAS, the Company desires to amend the 1984 Plan with respect to the
section titled Termination of Employment, Disability or Death of Optionee; and
WHEREAS, the Board of Directors of the Company has authorized the amendment
to the 1984 Plan;
NOW, THEREFORE, pursuant to the powers reserved in the Plan, the Company
does hereby amend and restate Section 14 of the 1984 Plan, Termination of
Employment, Disability or Death of Optionee, in its entirety to read as follows:
14. Termination of Employment, Death or Disability of Optionee. Except as
may be otherwise expressly provided herein, all Options, whether or not
accrued pursuant to the terms of such Options, shall terminate immediately
upon the severance of the employment relationship between the Optionee and
the Company, or a parent or Subsidiary of the Company, for any reason,
voluntarily or involuntarily, for or without cause. Absence on leave
approved by the Committee shall not be considered the severance of
employment.
===============================================================================
If, before the date of expiration of the Option, the Optionee dies or
shall be retired from the employ of the Company, or a parent or Subsidiary
of the Company, for reasons of age or disability, the Option shall
terminate on the earlier of such date of expiration of the Option or on a
day which is one day less than three (3) months after the earlier of the
date of such death or retirement. Notwithstanding anything to the contrary
contained in this Section 14, with the written approval of the Board of
Directors of the Company or the Committee, such Options may be exercised,
subject to the condition that no Option shall be exercisable after the date
of expiration of such Option, during such period as the Board of Directors
of the Company or the Committee may determine. (In the case of an employee
who is disabled within the meaning of Section 105(d)(4) of the Code, the
three month (3) month period shall be one (1) year, or such other period of
time that the Board of Directors of the Company or the Committee may
determine; provided, however, that in no event shall an Option remain
exercisable after the expiration of the term of such Option.) In the event
of such death or retirement, the Optionee, or other person of authority in
the event of death, shall have the right prior to the termination of such
Option to exercise the Option to the extent to which he was entitled to
exercise such Option immediately prior to such death or retirement;
provided, however, that with the written approval of the Board of Directors
of the Company or the Committee, such Option may be exercised, subject to
the condition that no Option shall be exercisable after the date of
expiration of such Option, during such period and to such extent (whether
or not accrued pursuant to the terms of the Option)as the Board of
Directors of the Company or the Committee may determine.
Except as amended by this instrument, the 1984 Plan shall remain in full
force and effect. This instrument may be executed in a number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, this Amendment has been executed this 16 day of April,
1999.
JUSTIN INDUSTRIES, INC.
By: /S/RICHARD J. SAVITZ
--------------------------
Name: Richard J. Savitz
Title: Senior Vice President
AMENDMENT TO THE
JUSTIN INDUSTRIES, INC.
1992 STOCK OPTION PLAN
WHEREAS, Justin Industries, Inc., a Texas corporation, with its principal
office and place of business in Tarrant County, Texas (the "Company"),
heretofore adopted the Justin Industries, Inc. 1992 Stock Option Plan (the "1992
Plan") and the related Stock Option Agreements (the "Option Agreements"); and
WHEREAS, the Company desires to amend the 1992 Plan with respect to the
section titled Termination of Employment, Disability or Death of Optionee; and
WHEREAS, the Board of Directors of the Company has authorized the amendment
to the 1992 Plan;
NOW, THEREFORE, pursuant to the powers reserved in the Plan, the Company
does hereby amend and restate Section 13 of the 1992 Plan, Termination of
Employment, Disability or Death of Optionee, in its entirety to read as follows:
14. Termination of Employment, Disability or Death of Optionee. Except as
may be otherwise expressly provided herein, all Options, whether or not
accrued pursuant to the terms of such Options, shall terminate immediately
upon the severance of the employment relationship between the Optionee and
the Company, or a Subsidiary of the Company, for any reason, voluntarily or
involuntarily, for or without cause. Absence on leave approved by the
Committee shall not be considered the severance of employment.
If, before the date of expiration of the Option, the Optionee shall
become disabled or retire from the employ of the Company, or a Subsidiary
of the Company, the Option shall terminate on the earlier of such date of
expiration of the Option or on a day which is one day less than three (3)
months after the earlier of the date of such retirement. Notwithstanding
anything to the contrary contained in this Section 14, with the written
approval of the Board of Directors of the Company or the Committee, such
Options may be exercised, subject to the condition that no Option may be
exercised after the date of its expiration, during such period as the Board
of Directors of the Company or the Committee may determine. In the event
of such disability or retirement, the Optionee shall have the right prior
to the termination of such Option to exercise the Option to the extent to
which he was entitled to exercise such Option immediately prior to such
disablement or retirement; provided, however, that with the written
approval of the Board of Directors of the Company or the Committee, such
Option may be exercised, subject to the condition that no Option shall be
exercisable after the date of expiration of such Option, during such period
and to such extent (whether or not accrued pursuant to the terms of the
Option) as the Board of Directors of the Company or the Committee may
determine.
===============================================================================
In the event an Optionee dies while in the employ of the Company or a
Subsidiary of the Company or within a period of three (3) months after
the termination of his employment with the Company or a Subsidiary of the
Company, the Option may be exercised, subject to the condition that no
Option shall be exercisable after the date of expiration of such Option, to
the extent of the Optionee's right to exercise such option at the time of
his death by the executors or administrators of the Optionee, or by any
other person or persons who shall have acquired the Option by will or by
the laws of descent and distribution at any time prior to the earliest of
(i) the first anniversary of the Optionee's death, (ii) the first
anniversary of the prior termination of his employ, or (iii) the expiration
date specified in such Option. Notwithstanding anything to the contrary
contained in this Section 13, with the written approval of the Board of
Directors of the Company or the Committee, such Option may be exercised,
subject to the condition that no Option shall be exercisable after the date
of expiration of such Option, during such period and to such extent
(whether or not accrued pursuant to the terms of the Option) as the Board
of Directors of the Company or the Committee may determine.
Except as amended by this instrument, the 1992 Plan shall remain in full
force and effect. This instrument may be executed in a number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, this Amendment has been executed this 16 day of April,
1999.
JUSTIN INDUSTRIES, INC.
By: /S/RICHARD J. SAVITZ
--------------------------
Name: Richard J. Savitz
Title: Senior Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the March
31, 1999 Financial Statements included in the Company's Form 10-Q and is
qualified in its entirety by reference to such Form 10-Q.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 2686
<SECURITIES> 0
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