Exhibit 10.4
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is dated as of August
3, 1999, and is entered into between United Auto Group, Inc., a Delaware
corporation (the "Company"), and Xxxxxxxx X. Xxxxx ("Optionee").
W I T N E S S E T H:
WHEREAS, the Company and the Optionee entered into a
Non-Competition and Standstill Agreement, dated as of April 12, 1999 (the
"Xxxxx Agreement");
WHEREAS, in consideration for Optionee entering into the Xxxxx
Agreement, the Company is, among other things, granting Optionee an option
to purchase shares of the Company's voting Common Stock, par value $.0001
per share (the "Common Stock"), on the terms and subject to the conditions
set forth herein and in the Xxxxx Agreement.
NOW, THEREFORE, the parties hereby agree:
1. Grant of Options. The Company hereby grants to Optionee an
option (the "Option") to purchase, at the exercise price of $10.00 per
share, up to 400,000 shares of the Company's Voting Common Stock, par value
$0.0001 per share ("Common Stock"), such number to be adjusted as provided
in Section 7(b).
2. Exercisability of Options. The Option will fully vest and
become exercisable on the date hereof.
3. Method of Exercising Options. (a) Optionee may exercise the
Option by delivering to the Company a written notice stating the number of
shares that Optionee has elected to purchase at that time from the Company
and full payment of the purchase price of the shares then to be purchased.
Payment of the purchase price of the shares (the "Exercise Price") may be
made (i) by certified or bank cashier's check payable to the order of the
Company, or (ii) in the discretion of the Board of Directors of the Company
or duly authorized committee thereof, by such other method as may be
approved by such board or committee from time to time.
(b) At the time of exercise, Optionee shall pay in cash to
the Company such amount as is necessary to satisfy the Company's obligation
to withhold Federal, state or local income or other taxes incurred by
reason of the exercise or the transfer of shares thereupon.
4. Issuance of Shares. As promptly as practicable after receipt
of notification of exercise, full payment of purchase price and
satisfaction of tax withholding as provided in Section 3, the Company shall
issue or transfer to Optionee the number of shares as to which the Options
have been so exercised and shall deliver to Optionee a certificate or
certificates therefor, registered in his name.
5. Terms and Conditions of Exercise. (a) The Option shall have a
term expiring ten years from the date hereof.
(b) The Option shall not be transferable, except by will or
the laws of descent and distribution, provided that Optionee may at any
time transfer all or a portion of the Option to members of his immediate
family, trusts solely for the benefit of Optionee and/or such family
members and partnerships in which the Optionee, such family members and/or
trusts are the only partners (each, a "Permitted Transferee" and,
collectively, the "Permitted Transferees"). For this purpose, "immediate
family" of a Person or a Person's spouse means the Person's spouse,
parents, children, stepchildren and grandchildren and spouses of such
parents, children, stepchildren and grandchildren or trusts for the benefit
of Optionee or such persons, subject to all of the terms and conditions of
the Option.
(c) Whenever the word "Optionee" is used in any provision of
this Agreement under circumstances where the provision should logically be
construed to apply to the executors, the administrators, personal
representatives, or the person or persons to whom the Option may be
transferred pursuant to clause (iv) of this Section 5, the word "Optionee"
shall be deemed to include such person or persons.
6. Rights as Stockholder. Optionee or a transferee of the Option
shall have no rights as a stockholder with respect to any shares of Common
Stock covered by the Option until he shall have become the holder of record
of such shares.
7. Recapitalizations, Reorganizations, Etc. (a) The existence of
the Option shall not affect the power of the Company or its stockholders to
accomplish adjustments, recapitalizations, reorganizations or other changes
in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of stock or of options, warrants
or rights to purchase stock or securities ahead of or affecting any of the
shares of Common Stock or the rights thereof or convertible into or
exchangeable for shares of Common Stock, or the dissolution or liquidation
of the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act.
(b) Upon any change in the outstanding shares of Common
Stock by reason of any recapitalization, merger, consolidation, spin-off,
combination or exchange of shares or other corporate change, or any
distributions to common shareholders other than ordinary cash dividends,
the Company shall make such substitutions or adjustments as are appropriate
and equitable to preserve the economic value of the Option to the Optionee,
as to the number or kind of shares of Common Stock or other securities
covered by the Option and the Exercise Price; provided that such
substitution or adjustment shall be equivalent to the adjustment of the
Conversion price for the Company's Series B Convertible Preferred Stock,
par value $.0001 per share, pursuant to the Certificate of Designation for
such preferred stock as in effect as of the date hereof.
8. Trace Shelf Registration Statement. The Company will approve
any request by the Optionee to include shares issued upon exercise of the
Option in the registration statement referred to in Section 5.4 of the
Stockholders Agreement, dated as of May 3, 1999, by and among AIF II, L.P.,
Aeneas Venture Corporation, International Motor Cars Group I, L.L.C.,
International Motor Cars Group II, L.L.C., Trace International Holdings,
Inc. ("Trace") and the Company, provided that the Optionee shall reimburse
the Company for its reasonable out-of-pocket expenses incurred in
connection with including such shares on such registration statement, to
the extent such expenses are not reimbursed by Trace. The foregoing shall
be subject to the approval, if any is required, of Trace or any other party
that holds rights with respect to any such registration statement. The
Optionee shall have the right to cause the Company to update a prospectus
relating to any such registration statement, subject to the expense
provision set forth in this Section 8.
9. Notice. Any notice required or permitted hereunder shall be in
writing and shall be sufficiently given if personally delivered or if sent
by telegram, telex, facsimile transmission or by registered or certified
mail, postage prepaid, with return receipt requested, as follows:
(a) If to the Company:
United Auto Group, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: General Counsel
or to such other address or to the attention of such other person as the
Company shall designate by written notice to Optionee; and
(b) If to Optionee:
Xx. Xxxxxxxx X. Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
or to such other address as Optionee shall designate by written notice to
the Company. Any notice given hereunder shall be deemed to have been given
at the time of receipt thereof by the party to whom such notice is given.
10. Non-Qualified Option. The Option is not an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended.
11. Modification. This Agreement may be modified, amended,
suspended or terminated, and any conditions may be waived, but only by a
written instrument executed by the parties hereto.
12. Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be unenforceable or invalid for any
reason, the remaining provisions of this Agreement shall not be affected by
such holding and shall continue in full force in accordance with their
terms.
13. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
New York without giving effect to the conflicts of laws principles thereof.
14. Successors in Interest. This Agreement shall be binding upon
any successor to the Company. This Agreement shall inure to the benefit of
the Optionee's legal representatives.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute on and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
UNITED AUTO GROUP, INC.
By:/s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
Title: Vice President and Secretary
/s/ Xxxxxxxx X. Xxxxx
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Xxxxxxxx X. Xxxxx
