Fill and Sign the Proxy Statements Strategy Amp Form 490234628

§15.906PROXY STATEMENTS : STRATEGY & FORMS 15-186  1994 Jefren Publishing Company, Inc. EXHIBIT B THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR ANY SUCCESSOR RULE UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. KEY TRONIC CORPORATIONStock Option AgreementFebruary 29, 1992 1. Grant of Option; Shareholder Approval. Key Tronic Corporation, a Washington corporation (the "Company"), for value received, hereby grants Hiller Key Tronic Partners, a California limited partnership, (the "Optionee"), subject to the terms set forth below, an Option to purchase from the Company, 2,396,923 fully paid and nonassessable shares of Common Stock, no par value, of the Company (the "Option"), at a purchase price of $4.50 per share (the "Purchase Price"). The number of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. This Option may be exercised only after approval by the Company's shareholders. If the Option is not approved by the Company's shareholders on or before December 2, 1992, it shall terminate without notice. 2. Exercise Date; Expiration Date. This Option is first exercisable as to fifty percent (50%) of the common stock on or after one (1) year from the date hereof and as to the other fifty percent (50%) of the common stock two (2) years from the date hereof; except that this Option shall only be exercisable on or after such dates if Stanley Hiller, the general partner of Optionee, has been involved in the manageme nt of the Company as an officer or director from the date of this Option until the dat e on which each fifty percent (50%) of this Option shall become exercisable; provided, however, that if Stanley Hiller dies or becomes physically or mentally incapabl e of performing the duties of a director of the Company during the first two (2) years following the date of this Option, then this Option shall become exercisable upon the dates set forth above without regard to Stanley Hiller's involvement in the managem ent of the Company. In the event of a change of control of the Company this Option shall become immediately exercisable in its entirety. For purposes of this Agreement, "Change in Control" shall mean: OFFICERS AND EMPLOYEES§15.906 October/November 1994 15-187 2.1 the direct or indirect sale or exchange by the shareholders of the Company of all or substantially all of the stock of the Company where the shareholders of the Company before such sale or exchange do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the Company; 2.2 a merger in which the shareholders of the Company before such merger do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the surviving company; or 2.3 the sale, exchange, or transfer of all or substantially all of the Company's assets (other than a sale, exchange, or transfer to one or more corporations where the shareholders of the Company before such sale, exchange, or transfer retain, directly or indirectly at least a majority of the beneficia l interest in the voting stock of the corporation(s) to which the assets were transferred). This Option shall expire five (5) years from the date hereof (the "Expiration Date"). 2. Exercise of Option. This Option may be exercised in full or in part by the holder hereof by transmitting the form of exercise at the end hereof duly executed by such holder, to the Secretary of the Company at its principal office, accompanied by payment, by check or wire transfer, of the purchase price for the shares of Common Stock to be purchased. To the extent unexercised, this Option shall continue in full force and effect until the Expiration Date. 3. Delivery of Stock Certificates, Etc. As soon as practicable after any exercise of this Option and in any event within ten (10) days thereafter, the Company at its expense (including the payment by it of any applicable issuance fee s) will cause to be issued in the name of and delivered to the holder hereof, or as suc h holder (upon payment by such holder of any applicable transfer taxes) may direct, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled upon such exercise, together with any other stock or securitie s or property to which such holder is entitled. 4. Adjustment of Purchase Price and Number of Shares. The number of shares of Common Stock issuable upon exercise of this Option, and the Purchase Price, are subject to adjustment upon the occurrence of the following events: 4.1 Adjustment for Stock Splits, Dividends, Recapitalizations, Etc. The Purchase Price shall be subject to adjustment, upward or downward, pro rata, to reflect any stock dividend, stock split, combination of shares, recapitalization or other similar event. The number of shares issuable upon exercise shall be adjusted such that the dollar amount determined by multiplyi ng the Purchase Price by the number of shares purchasable upon exercise of the Option shall be the same after the event necessitating the adjustment as before. Thus, in t he event of a 2- for-1 stock split, the Purchase Price shall be divided by two and the number of shares shall be doubled. §15.906PROXY STATEMENTS : STRATEGY & FORMS 15-188  1994 Jefren Publishing Company, Inc. 4.2 Adjustment for Reorganization, Consolidation, Merger, Etc. In case the Company after the date hereof shall (a) effect a reorganization, (b) consolidate with or merge into any other entity, or (c) tra nsfer all or substantially all of its properties or assets to any other entity under any plan or arrangement contemplating the dissolution of the Company, then, in each such case, the holder of this Option, on exercise hereof at any time after the consummation of such reorganization, consolidation or merger or the effective date of such dissolution, shall receive, in lieu of the Common Stock issuable upon exercise prior to such consummati on or effective date, the stock and other securities and property (including cash) to whi ch such holder would have been entitled upon such consummation or in connection with such dissolution if such holder had exercised this Option immediately prior there to. Upon any such reorganization, consolidation, merger or transfer, and any dissolution following any event, referred to in this Section 4.2, this Option shall continue in full force and effect and the terms thereof shall be applicable to the shares of stoc k and other securities and property receivable upon exercise after the consummation of such reorganization, consolidation, merger or transfer, or the effective date of any dissolution following any such event, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the entity acquiring all or substantially all of the properties or assets of the Company. 4.3 No Dilution or Impairment. The Company will not, by amendment of its Articles of Incorporation or through any reorganization, consolidation, merger, transfer of assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Option, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Option against dilution or other impairment. Without limiting the generality of the foregoing, the Company (a) will not set the par value of any shares of stock receivable upon the exercise of this Option above the amount payable therefor upon such exercise, and (b) will take all such action as m ay be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of stock upon exercise. 4.4 Certificate as to Adjustments. In case of any adjustment or readjustment in the price or number or kind of securities issuable on the exercise of this Option, the Company will compute such adjustment or readjustment in accordance with the terms hereof and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company will mail a copy of each such certificate to the holder hereof. 5 Notices of Record Date, Etc. In the event of any of the following events: (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right; or (b) any capital reorganization of the Company, any reclassification or reorganization of the Company, any reclassification or recapitali zation OFFICERS AND EMPLOYEES§15.906 October/November 1994 15-189 of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or consolidation or merger of the Company with or into any other person; or (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company; then and in each such event the Company will mail to the holder here of a notice specifying (x) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (y) the date on which any such reorganization, reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if one is to be fixed, as of which the holde rs of record of Common Stock or other securities shall be entitled to exchange their sha res of Common Stock or other securities for securities or other property deliverable on such reorganization, reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such notice shall be mailed at least ten (10) days prior to the date therein specified. 6. Reservation of Shares, Etc. The Company will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issue upon exercise of this Option as herein provided, such number of shares of Common Stock as shall then be issuable upon exercise of this Option in full. The Company covenants that all shares of Common Stock that shall be so issuable shall be duly and validly issued and fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof; and without limiting the generality of the foregoing, the Company covenants that it will from time to time take all such act ion as may be required to ensure that the par value, if any, per share of the Common Stock will at all times be equal to or less than the then effective Purchase Price. 7. Registration Rights. The holder of this Option is entitled to the benefit of the registration rights set forth in that certain Registration Right s Agreement of even date herewith between the Company and Optionee (the "Registration Rights Agreement"). 8. Assignment. This Option shall be assignable without the consent of the Board of Directors of Company in whole or in part by the Optionee to any partner of Optionee, as of the date of this Option, whose name arid address has been provided to the Company prior to date of this Option, to any employee, officer, or director of Company, to the spouse or lineal ancestors or descendants of any partner of Optionee on the list provided to the Company, outright or in trust. Any other assignment of this Option shall require a 2/3 vote in favor of such assignment by the Board of Directors of Company, which consent shall not be unreasonably withheld. Any such assignment shall be made in accordance with Section 9 of the Registration Rights Agreement. 9. Miscellaneous. This Option and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Option is being delivered in the State of Washington and shall be construed and enforced in accordance with and governed by its laws. The headings in this Option are for purposes of reference only, and shall not limit or otherwise affect any of the term s §15.906PROXY STATEMENTS : STRATEGY & FORMS 15-190  1994 Jefren Publishing Company, Inc. hereof. 10. Recovery of Litigation Costs. If any legal action or any other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation connection with any of the provision of this Agreement, the prevailing party or parties shall be entitled to recover reasonabl e attorneys' fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled. KEY TRONIC CORPORATION,a Washington corporation By: /s/ Wendell J. Satre Wendell J. Satre Chairman HILLER KEY TRONIC PARTNERS, a California Limited Partnership By /s/ Stanley Hiller Stanley Hiller General Partner