EXHIBIT 1
STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of this 29th day of
December, 1999, by and between XXXXX X. XXXXXXX, a resident of Arizona
("Acridge") and XXXXXX X. XXXXX, a resident of Arizona ("XxXxx").
WITNESSETH:
WHEREAS, Acridge has this day executed a Promissory Note (the
"Note"), in the principal amount of EIGHT HUNDRED SEVENTY TWO THOUSAND
SIX HUNDRED FORTY NINE DOLLARS ($872,649), in favor of XxXxx evidencing
a loan made to Acridge by XxXxx; and
WHEREAS, the Note is secured by a pledge of Ninety Six Thousand,
Nine Hundred and Sixty One (96,961) shares (the "Pledged Stock") of the
common stock of Giant Industries, Inc., a Delaware corporation ("Giant
Industries"), pursuant to a Stock Pledge Agreement of even date
herewith (the "Stock Pledge Agreement"); and
WHEREAS, as additional consideration for extending the loan
evidenced by the Note, Acridge is willing to xxxxx XxXxx an option, on
the terms and conditions contained in this Agreement, to purchase the
Pledged Stock, and XxXxx is willing to accept such an option;
NOW, THEREFORE, in consideration of the foregoing recitals, the
mutual covenants hereinafter contained and other good and valuable
consideration, the parties hereto agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Acridge hereby grants to XxXxx the option to purchase from
Acridge, as herein more specifically stated (the "Option"), at a price
of the lower of $12.00 per share or the average daily closing price on
the New York Stock Exchange from December 30, 1999 to the date the
option is exercised (the "Option Price"), all, but not less than all,
of the Pledged Stock, as identified on EXHIBIT A hereto, subject to
adjustment as provided herein. Such Option may be exercised at any time
after the earliest of (i) December 29, 2001; (ii) the execution by
Giant Industries of a letter of intent, agreement or other document
with respect to a transaction or series of transactions relating to a
corporate reorganization or other fundamental event that would lead to
the de-listing of the capital stock of Giant on the New York Stock
Exchange. This Option shall expire on December 29, 2001, except as
provided in Section 2 hereof, or as otherwise agreed in writing by the
parties hereto. Until the Option expires or is exercised, Acridge
agrees that he shall not sell, assign, transfer, make a gift of,
donate, pledge otherwise encumber or dispose of any of the shares of
the Pledged Stock, other than pursuant to the Stock Pledge Agreement.
2. EXERCISE. The Option shall be exercised by XxXxx delivering to
Acridge, on any business day prior to the expiration of the Option, a
written notice to such effect signed by XxXxx or his permitted
successor. Payment in full for the Pledged Stock shall be made at the
time to Option is exercised by payment in immediately available funds,
or offset from the amount due from Acridge under the Note, of an amount
in U.S. dollars equal to the Option Price multiplied by the number of
the shares of Pledged Stock to be acquired. If at any time Acridge
tenders payment in full of all principal and accrued but unpaid
interest under the Note, XxXxx shall have five (5) business days to
elect, in his sole discretion, by written notice to Acridge to either
(i) accept such payment and surrender any rights under this Stock
Option Agreement, or (ii) exercise the Option as an offset of the
amount due under the Note as provided above. Upon exercise of the
Option, Acridge shall remain liable for any remaining indebtedness
thereunder, including, without limitation, indebtedness for accrued but
unpaid interest, to the extent that the aggregate indebtedness under
the Note, including accrued but unpaid interest, prior to such offset
exceeds to greater of (i) the closing price of the common stock of
Giant Industries on the New York Stock Exchange on the day prior to the
date XxXxx provides notice of exercise of the Option multiplied by the
number of shares of Pledged Stock being acquired upon exercise of the
Option and (ii) the Option Price multiplied by the number of pledged
shares to be acquired. This Option is terminated and of no further
force or effect if XxXxx exercises the Option.
3. TRANSFER OF OPTION. This Option may be assigned by XxXxx (or
his assignee); provided that if any indebtedness for principal or
accrued and unpaid interest remains due under the Note at the time of
such assignments, this Option may be only be assigned together with an
assignment of all right, title and interest of XxXxx (or his assignee)
under the Note and the Stock Pledge Agreement.
4. STATUS OF SHAREHOLDER. XxXxx shall not be deemed to be a
shareholder of Giant Industries for any purpose with respect to the
Pledged Stock unless, and then only to the extent that, this Option
shall have been exercised and the Option Price paid in the manner
provided herein, or as otherwise provided under the Stock Pledge
Agreement. No adjustment will be made for dividends or other rights
where the record date is prior to the date of exercise and payment.
5. ADJUSTMENT IN NUMBER OF SHARES AND OPTION PRICE.
(a) RECAPITALIZATION. The shares with respect to which this
Option is granted are shares of Pledged Stock as constituted on the
date of this Agreement, but if, and whenever, prior to the delivery by
Acridge of all of the shares of Pledged Stock with respect to which
this Option is granted, Giant Industries shall effect a subdivision or
consolidation of the shares covered by this Option, or other similar
capital readjustment with respect to the shares covered by this Option,
then (i) in the event of any increase in the number of such shares
outstanding, the number of shares of Pledged Stock then remaining
subject to Option hereunder shall be proportionately increased, and the
Option Price payable per share shall be proportionately reduced, and
(ii) in the event of a reduction in the number of such shares
outstanding, the number of shares of Pledged Stock then remaining in
the number of such shares outstanding, the number of shares of Pledged
Stock then remaining subject to Option hereunder shall be
proportionately reduced (except that any fractional share resulting
from any such adjustment shall be excluded from the operation of this
Agreement), and the Option Price per share shall be proportionately
increased.
(b) MERGER OF GIANT INDUSTRIES. After the merger of one or
more corporations into Giant Industries, any merger of Giant Industries
into another corporation, any consolidation of Giant Industries and one
or more other corporations, or any other corporate reorganization of
any form involving Giant Industries as a party thereto involving any
exchange, conversion, adjustment or other modification of the
outstanding shares of Pledged Stock, XxXxx at the time of such
corporate reorganization shall, at no additional cost, be entitled,
upon any exercise of this Option, to receive from Acridge in lieu of
the number of shares as to which this Option shall then be so
exercised, the number and class of shares of stock or other securities
or such other property to which XxXxx would have been entitled pursuant
to the terms of the agreement of merger or consolidation, if at the
time of such merger or consolidation XxXxx had been a holder of record
of a number of shares of Pledged Stock equal to the number of shares
exercisable under this Option. Comparable rights shall accrue to XxXxx
in the event of successive mergers or consolidations of the character
described above.
6. NOTICES. Any notice which either party hereto may be required
or permitted to give to the other shall be in writing, and may be
delivered personally or by mail, postage prepaid, addressed as follows:
If to Acridge:
Xxxxx X. Xxxxxxx
c/o Giant Industries, Inc.
00000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
If to XxXxx:
Xxxxxx X. XxXxx
00 Xxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
The addresses, and persons for attention shown above, may be changed
from time to time by notice in the form required by, and delivered to
the other party in accordance with this Section as in effect prior to
such change.
7. SPECIFIC PERFORMANCE. The parties hereby declare that it may
be impossible to measure in money the damages that will accrue in the
event of a breach of this Agreement. Therefore, if any party hereto, or
any person acting on his behalf, shall institute any action or
proceeding to enforce the provisions hereof, any person against whom
such action or proceeding is brought hereby waives, on behalf of
himself and his personal representatives, heirs, successors and
assigns, the claim or defense therein that such party has an adequate
remedy at law, and each party acknowledges that the person asserting a
violation of this Agreement shall be entitled to the remedy of specific
performance. Said remedy of specific performance, however, shall be in
addition to, and not in limitation of, any other rights and remedies at
law or in equity that may be available with respect to a breach hereof.
8. CONSTRUCTION OF AGREEMENT. This agreement represents the
entire integrated agreement among the parties hereto with respect to
the subject matter hereof, and supersedes all prior negotiations or
agreements, whether written or oral. Whenever the context of this
Agreement permits, the masculine gender shall include the feminine and
neuter genders and any reference to singular or plural shall be
interchangeable with the other. If any one or more provisions of this
Agreement are invalid or unenforceable it shall not affect any other
provisions and the Agreement shall be construed in all respects as if
any such invalid or unenforceable provisions were omitted.
9. BINDING EFFECT. This Agreement shall be binding upon the
parties hereto and their respective legal representatives, and
permitted successors and assigns.
10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
/s/ XXXXX X. XXXXXXX
--------------------------------
Xxxxx X. Xxxxxxx
/s/ XXXXXX X. XXXXX
--------------------------------
Xxxxxx X. XxXxx
