EXHIBIT 10(39)

Incentive Stock Option Agreement

 

This Incentive Stock Option Agreement (this “Agreement”) is entered into between
AZZ incorporated, a Texas corporation (the “Company”), and Clement Watson (the
“Optionee”) effective July 10, 2001 (the “Effective Date”), pursuant to the AZZ
incorporated 2001 Long-Term Incentive Plan (the “Plan) and pursuant to the
Employment Agreement entered into by and between the Company and the Optionee
effective as of July 10, 2001. Terms used herein with an initial capital letter
but not defined herein shall have the meaning ascribed to such terms in the
Plan. In consideration of the mutual promises and covenants made herein, the
parties hereby agree as follows:

 

1. Grant of Option. The Company grants to the Optionee an option (the “Option”)
to purchase from the Company all or any part of a total of 9,975 shares of the
Company’s Common Stock, par value $1.00 per share (“Common Stock”), at a
purchase price of $24.25 per share.

 

2. Character of Option. The Option is intended to be an “incentive stock option”
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”).

 

3. Term. The unexercised part of the Option will expire at 11:59 PM (CST) on
July 10, 2011.

 

4. Vesting. The right to purchase 20% of the shares underlying this Option shall
vest as the Effective Date of this Agreement and the right to purchase an
additional 20% of the shares underlying this Option shall vest on each of the
first four anniversaries of the Effective Date, provided, however, all options
shall become immediately vested upon the occurrence of a change in control. For
the purpose of this Agreement change in control shall mean a change in control
of a nature that would be required to be reported in response to Item 5(f) of
Schedule 14A of Regulation 14A under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) provided, however, a change of control shall be
deemed to have occurred if: (A) any “person” (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than a trustee or fiduciary holding
securities under an employee benefit plan of the Company, is or becomes the
“beneficial owner” (as defined in Rule 13(d)-3 under the Exchange Act), directly
or indirectly of securities of the Company representing 35% or more of the
combined voting power of the Company’s then outstanding voting securities; (B)
there is a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least 75% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or (C) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets.

 

5. Procedure for Exercise. Exercise of the Option or a portion thereof shall be
effected by the Optionee’s giving written notice of exercise to the Company and
the Optionee’s payment in full of the purchase price prescribed in Section 1
above for the shares to be acquired pursuant to the exercise. The purchase price
may be paid in any of the forms permitted by Section 1.11 of the Plan. To the
extent vested, this Option may be exercised in whole or in part, from time to
time, provided, however, that not less than one hundred shares may be purchased
at any one time, unless the number purchased includes all shares remaining under
this Option.

 

6. Payment of Purchase Price. Payment of the purchase price for any shares
purchased pursuant to the Option shall be in cash or in such other form of
consideration as the Compensation Committee of the Board of Directors of the
Company (the “Compensation Committee”) may permit.

 

7. Transfer of Options. The Option may not be transferred except by will or the
laws of descent and distribution and, during the lifetime of the Optionee, may
be exercised only by the Optionee or by the Optionee’s legally authorized
representative.

 

NONQUALIFIED STOCK OPTION AGREEMENT

 

1

--------------------------------------------------------------------------------

 

8. Termination. The Option shall terminate on the expiration date set forth in
Section 3 above or, in the event of the termination of the Optionee’s
employment, the date provided in Section 1.16 of the Plan pertaining to the
consequences of such termination.

 

9. Reservation of Shares. The Company shall at all times during the term of the
Option reserve and keep available a sufficient number of shares of its Common
Stock to satisfy the Company’s obligation to transfer shares to the Optionee
upon exercise of the Option.

 

10. Tax Withholding. If the Company determines that the issuance of shares of
Common Stock to the Optionee upon his exercise in whole or in part of the Option
is subject to any federal, state, or local tax withholding requirement, the
Company shall notify the Optionee of such requirement, and, as a condition to
the issuance of such shares, the Optionee shall pay to the Company, in cash or
in any other form of consideration the Compensation Committee may permit, the
amount required to be withheld.

 

11. Compliance with Securities Laws. Shares of Common Stock shall be issued
pursuant to the exercise of the Option only if the Company determines that the
issuance and delivery of the shares will comply with all relevant provisions of
state and federal law, including without limitation the Securities Act of 1933
and the rules and regulations promulgated there under, and the requirements of
any stock exchange upon which the Company’s Common Stock then is listed. The
Optionee consents to the imposition of a legend upon the certificate
representing such shares, restricting their transfer as required by law or by
this Agreement.

 

12. Antidilution. If the outstanding Common Stock is increased, decreased,
changed into, or exchanged for a different number or kind of shares or
securities through merger, consolidation, combination, exchange of shares, other
reorganization, recapitalization, reclassification, stock dividend, stock split,
or reverse stock split, an appropriate and proportionate adjustment shall be
made in the number and type of shares subject to the Option. Any such adjustment
in the Option shall be made without change in the aggregate purchase price
applicable to the unexercised portion of the Option, but with a corresponding
adjustment in the price for each share covered by the Option. The foregoing
adjustments and the manner of application of this section shall be determined
solely by the Compensation Committee.

 

13. Notices. All notices required or permitted by any party to this Agreement
shall be deemed to have been given if (i) delivered personally or by documented
courier or delivery service or (ii) mailed by registered or certified mail
(return receipt requested and postage prepaid) to the following listed persons
at the addresses specified below, or to such other persons or addresses as a
party entitled to notice shall give, in the manner hereinabove provided, to the
other entitled to notice:

 

Company:

  

AZZ incorporated

    

400 North Tarrant

    

P.O. Box 668

    

Crowley, Texas 76036

    

Attn: Dana L. Perry, Vice President and CFO

Optionee:

  

Clement Watson

    

1325 New Seabury Lane

    

Victor, NY 14564

 

14. Amendment. This Agreement may be amended only by an instrument in writing
signed by both the Company and the Optionee.

 

15. Miscellaneous. This Agreement will be construed and enforced in accordance
with the laws of the State of Texas and will be binding upon and inure to the
benefit of any successor or assign of the Company and any executor,
administrator, trustee, guarantor, or other legal representative of the
Optionee. The Option shall not be

 

NONQUALIFIED STOCK OPTION AGREEMENT

 

2

--------------------------------------------------------------------------------

transferable by Optionee in whole or in part other than by will or under the
laws of descent and distribution and shall be exercisable, during Optionee’s
lifetime, only by Optionee.

 

16. Acceptance of Plan. The Optionee hereby accepts and agrees to be bound by
all the terms and condition of the Plan.

 

EXECUTED as of the first day written above.

 

COMPANY:

AZZ incorporated

By:

/s/ David H. Dingus

--------------------------------------------------------------------------------

David H. Dingus, President and CEO

EMPLOYEE:

/s/ Clement Watson

--------------------------------------------------------------------------------

Clement Watson

Social Security No. ###-##-####

 

NONQUALIFIED STOCK OPTION AGREEMENT

 

3