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EXHIBIT 10.2
XXXXXXX FINANCIAL SERVICES CORPORATION
PARTICIPANTS OPTIONS
STOCK OPTION AGREEMENT
Xxxxxxx Financial Services Corporation, a Michigan corporation (the
"Company"), upon the recommendation of the Company's Board of Directors (the
"Board") and pursuant to that certain Participants Support Agreement adopted by
the Company's Board of Directors (the "Participants Support Agreement"), and in
consideration of the services rendered to the Company by Sun Communities, Inc.,
a Maryland corporation ("Sun"), hereby grants to Sun, as of September 30, 1997
(the "Date of Grant"), the option to purchase Three Hundred Thirty Thousand
(330,000) shares (the "Participants Options") of the Company's common stock,
(the "Shares"), at a price per share as detailed in Section I (the "Option
Price"), on the terms and subject to the conditions contained in this Stock
Option Agreement (the "Agreement") and subject to all the terms and conditions
of the Participants Support Agreement, which are incorporated by reference
herein.
I. EXERCISE OF PARTICIPANTS OPTIONS
The Participants Options will vest if, and only if, Sun is a party
to and in compliance with the terms of the Participants Support
Agreement on the vesting date and on December 31st of the previous year.
Provided that Sun meets such requirements, the Participants Options
will vest in the following manner:
(a) The Participants Options will vest in eight equal
annual amounts, each consisting of 41,250 Participants
Options, on January 31 in 2001 through 2008, and may be
exercised at any time after vesting until expiration ten
years after the date of vesting;
(b) Each Participants Option vesting on January 31, 2001,
2002 and 2003 will entitle the holder to purchase one share
of Common Stock for a purchase price of $10;
(c) Each Participants Option vesting on January 31, 2004,
2005 and 2006 will entitle the holder to Purchase one share
of Common Stock for a purchase price of $12; and
(d) Each Participants Option vesting on January 31, 2007
and 2008 will entitle the holder to purchase one share of
Common Stock for a purchase price of $14.
Sun may exercise the Participants Options at any time on or after
the date of vesting, but in no event later than the tenth anniversary of
the vesting date. Once vested, the Participants Options may be
exercised in whole or in part, in denominations of not fewer than 5,000
shares until expiration.
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II. TRANSFERABILITY
The Participants Options may only be transferred by Sun in compliance with
all applicable requirements of state and federal securities laws as evidenced
by an opinion of counsel for Sun, reasonably acceptable to the Company, to the
effect that any such proposed transfer complies with such laws.
III. MANNER OF EXERCISE
The Participants Options may be exercised, in accordance with Section I
above, by delivery (personally or by certified or registered mail in accordance
with Section VIII below) of a written notice to the Company's Secretary
specifying the number of Shares to be purchased and accompanied by payment for
those Shares and any applicable withholding taxes. At the election of the
holder, such payment may be made in cash, check, or by delivery of
certificate(s) representing Shares of the Company's common stock previously
held, duly endorsed for transfer, or shares issuable to the holder pursuant to
the exercise of the Participants Options. The Company may also permit payment
to be made in such other manner as the Company deems appropriate and in
compliance with applicable law. Any shares delivered to the Company in payment
of the Option Price shall be valued at the fair market value of the Company's
shares, such valuation to be equal to the average of the highest and lowest
selling price for the Company's stock quoted on the NASD OTC Bulletin Board, or
other market or exchange on which the shares are then traded, for the date of
exercise of the Participants Options or any part thereof (or if no sales are
reported on that date, for the first date prior to the exercise date upon which
a sale was reported).
IV. EXPIRATION
All unexercised rights under the Option shall expire on the expiration
date specified in Section I above.
V. NON-ISSUANCE
The Company shall not be required to issue or deliver any Shares upon
exercise of the Participants Options:
(a) Prior to the admission of such Shares to listing on any public
exchange on which the Company's common stock may be listed; or
(b) Prior to the completion of any proceedings under any applicable
state or federal securities law, rule or regulation that the Company or
its counsel determines to be necessary or advisable to the issuance of
the Shares; or
(c) Unless such issuance, in the opinion of the Company's counsel,
is exempt from federal and state securities registration requirements.
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The Company may require the holder to represent and agree in writing that if
such Shares are issuable under an exemption from registration requirements, the
Shares will be "restricted". The holder shall not have the rights of a
shareholder with respect to the Shares until certificates evidencing the Shares
have been issued and delivered. While the Company will attempt to process the
exercise of the Participants Options as promptly as possible, it cannot
guarantee a delivery date for the certificates.
VI. REORGANIZATION
If prior to the expiration of the Participants Options, the Shares then
subject to the Participants Options shall be affected by any recapitalization,
merger, consolidation, reorganization, stock dividend, stock split or other
change in capitalization affecting the common stock of the Company, the Company
will appropriately adjust the number and kind of Shares covered by the
Participants Options and the Option Price per share as is necessary to prevent
dilution or the enlargement of rights which might otherwise result.
VII. REGISTRATION RIGHTS
Section VII.1 Required Registration.
(a) Subject to the provisions of subsection (e) of this Section
VII.1, the holder may at any time after the fourth anniversary of the initial
public offering of the common stock of the Company request in writing that the
Company register the Shares under the Securities Act of 1993, as amended (the
"Act") for sale in the manner specified in such notice; provided, that the
Company shall have no obligation to register the Shares pursuant to this
subsection (a) unless the number of Shares for which registration has been
requested constitutes at least five percent (5%) of the Company's common
stock then outstanding; and provided further, that the Company shall not be
obligated to register the Shares pursuant to this subsection (a) on more than
two occasions.
(b) Following receipt of any notice delivered in compliance
with subsection (a) of this Section VII.1 (a "Demand"), the Company
shall use its best efforts to register under the Act, for public sale in
accordance with the method of disposition specified in such Demand, the number
of Shares specified in such Demand. The holder may designate the managing
underwriter or underwriters if the offering is to be underwritten, which shall
be of national standing, subject to the approval of the Company, which approval
shall not be unreasonably withheld or delayed. The Company shall be deemed to
have satisfied an obligation to register the Shares pursuant to a Demand only
when a registration statement covering the Shares specified in the Demand and
any written requests delivered under this subsection (b), for sale in
accordance with the method of disposition specified in the Demand, shall have
become effective and the period of distribution of the Shares contemplated
thereby shall have been completed (determined as hereinafter provided).
(c) The Company shall be entitled to include in any
registration statement filed in response to a Demand made in accordance with
this Section VII.1, for sale in accordance with the method of disposition
specified by the holder in such Demand, shares of common stock to be sold by
the Company for its own account, except as and to the extent that, in the
opinion of the managing underwriter(s), if any, such inclusion would adversely
affect the marketing of the Shares for which registration has been requested in
connection with such Demand, which Shares
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shall be registered prior to the shares that the Company and any other
shareholders propose to register. Except for registration statements on form
S-4, S-8 or any successor forms thereto, the Company will not file with the
Securities and Exchange Commission (the "Commission") any other registration
statement with respect to its securities, whether for its own account or that
of other security holders, from the date of receipt of a Demand pursuant to
this Section VII.1 until 30 days following the completion of the period of
distribution of the Shares contemplated thereby (determined as hereinafter
provided).
(d) The Company may at its option elect that any requested
registration pursuant to this Section VII.1 be delayed for a period not
in excess of 120 days from the date of such Demand; provided, that such right to
delay a Demand may not be exercised by the Company pursuant to this Section
VII.1 more than once in any twelve-month period (so that no such election by the
Company may be made within twelve months of a previous election by the Company
under this subsection (d)).
(e) Notwithstanding anything to the contrary contained in
subsection (a) of this Section VII.1, no Demand may be made under this
Section VII.1 within 90 days after the effective date of a registration
statement filed by the Company covering a public offering in which the holders
of the Shares shall have been entitled to join pursuant to Section VII.2 and in
which there shall have been effectively registered all the Shares as to which
registration shall have been requested in accordance with Section VII.2.
Section VII.2 Incidental Registration. Subject to certain limitations set
forth in subsection (b) of this Section, each time that the Company proposes to
file under the Act a registration statement relating, in whole or in part, to
any of its equity securities, the Company shall at least thirty (30) days prior
to such filing give written notice of such proposed filing to the holder of
outstanding Shares not theretofore registered under the Act. Upon receipt by
the Company not more than ten (10) days thereafter of a written request from
the holder for registration of Shares under this subsection, subject to the
provisions of the succeeding sentence, the Company shall include in such filing
and shall use its best efforts to register the Shares as to which the holder
requested registration, provided, however, if at any time after giving written
notice of its intention to register any equity securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register such
equity securities, the Company may, at its election, give written notice of
such determination to the holder of the Shares and, thereupon, shall be
relieved from its obligation with such registration (but not from its
obligation to pay the registration expenses in connection therewith). If the
managing or principal underwriters named in the registration statement shall
advise the Company and the holder that has requested the Shares to be
registered that, in the good faith judgment of such managing or principal
underwriters, the number of shares of common stock which the holder, the Company
and all other shareholders have requested be included in such registration
statement exceed the number of shares it is advisable to offer and to sell at
such time, then the Company shall include in such registration, to the extent of
the number of shares of common stock which the Company is so advised can be sold
in such offering, the shares of common stock that the Company proposes to issue
and sell for its own account and the number of shares of common stock to be
registered and sold by the holder and all other shareholders requesting
registration pursuant to such registration statement shall be appropriately
reduced. In such case the number of shares of common stock to be sold after
such reduction shall be ratably allocated among the holder and such other
shareholders in the same proportion as the original number of shares requested
by such Person to be registered bears to a fraction, the numerator of which is
the aggregate number of shares to be registered and the denominator of which is
the aggregate number of shares requested to be registered.
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Section VII.3 Other Provisions Relating to Registration Rights. In
connection with any registration pursuant to this Section VII.3:
(a) Upon the request of the holder of the Shares then being
registered, the Company shall cooperate with any underwriters (as
defined in the Act) for the requesting party approved by the Company (which
approval shall not be unreasonably withheld), including, without limitation,
providing such information, certificates, comfort letters of accountants and
opinions of counsel as may be customarily and reasonably requested by such
underwriters.
(b) The Company shall furnish to the holder of the Shares being
registered, at the Company's sole cost and expense, such number of prospectuses
conforming to the requirements of the Act, and the rules and regulations
thereunder, relating to the Shares subject thereto as may from time to time be
reasonably requested by such holders.
(c) All fees, disbursements and expenses incident to the
Company's performance of or compliance with its obligations under this
Section VII shall be borne by the Company, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company and expenses of complying with applicable securities or
blue sky laws.
(d) The Company agrees to use its best efforts at its own
expense to effect and to keep effective necessary registrations or
qualifications under the securities or Blue Sky laws of such jurisdictions as
may be reasonably requested by any of the holders of the Shares or by any
underwriters for such holders so as to permit the disposition of the Shares
being registered.
(e) The holder agrees to provide in an expeditious manner
whatever information and undertakings are reasonably requested by the
Company in order to comply with the requirements of the Act and of the
Securities Exchange Act of 1934, as amended, the rules and regulations
thereunder and the guides and other pronouncements of the Commission in
connection with the registration of the holder's Shares.
(f) The Company shall indemnify and hold harmless the holder and any
underwriter (as defined in the Act) who participates in such registration for
such holder and each person, if any, who controls the holder or any underwriter
against any losses, claims, damages or liabilities, joint or severally, or
actions in respect thereof to which the holder or any underwriter or
controlling person may become subject under the Act, or otherwise, insofar as
such losses, claims damages, liabilities or actions in respect thereof arise
out of, or are based upon, any untrue statement or alleged untrue statement of
any material fact contained in any registration statement under which such
Shares were registered under the Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or arise
out of, or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the holder or any underwriter or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall have the right,
at its option, to defend at its expense and by its own counsel against any
losses, claims, damages or liabilities, provided that (i) such counsel is
reasonably satisfactory to the holder of the Shares; (ii) the holder of the
Shares is kept fully informed of all developments, and is furnished with copies
of all documents and papers, related thereto and is given the right to
participate in the defense and investigation thereof at the expense of the
Company if (A) in the written opinion of counsel to such holders, use of
counsel of the Company's choice would be expected to give rise to a conflict of
interest; (B)
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there are or may be legal defenses available to the holder that
are different from or additional to those available to the Company; (C) the
Company shall not have employed counsel to represent the holder within a
reasonable time after notice of such claim is given to the Company or notice
that the Company intends to assume the defense of such claim is given to the
holder; or (D) the Company shall authorize the holder to employ separate
counsel at the expense of the Company; and provided, further, that to the
extent that any such loss, claim, damage or liability arises out of, or is
based upon, an untrue statement or alleged untrue statement or omission or
alleged omission made in said registration statement, said preliminary
prospectus or said final prospectus or in conformity with, written information
furnished to the Company by the holder or by any underwriter for the holder
specifically for use in the preparation thereof, the Company will not be so
liable to the holder or underwriter and the holder agrees to indemnify and hold
the Company harmless from any loss, claim, damage, liability or action arising
from such information furnished to the Company by it and to use its best
efforts to cause any underwriter for the holder to indemnify and hold the
Company harmless from any loss, claim, damage, liability or action arising from
information furnished to the Company by such underwriter.
(g) The holder shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than customary representations, warranties or agreements
regarding the holder, the holder's Shares and the holder's intended method of
distribution and any other representation required by law.
VIII. NOTICE
All notices given pursuant to or in connection with this Agreement shall
be in writing and shall be deemed to be duly given when personally delivered
or when mailed, if sent by certified or registered mail, postage prepaid,
return receipt requested, and addressed as follows, or to such other address as
the parties may indicate:
If to the Company: Xxxxxxx Financial Services Corporation
00000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
ATTN: Xx. Xxxxxxx X. Xxxxxxxx
With a Required Copy
of any Notice to: Xxxxx Xxxxx, Esq.
Xxxxx, Raitt, Heuer & Xxxxx
Professional Corporation
Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
If to Sun: Sun Communities, Inc.
00000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
ATTN: Xx. Xxxx X. Xxxxxxxx
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IX. SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable, the
remaining provisions shall continue to be in full force and effect to the
maximum extent permitted by law. If the implementation or presence of any
provision of this Agreement would or will cause the Plan and thereby the Shares
purchased thereunder to not be in compliance with Rule 16b-3 under the
Securities Exchange Act of 1934 or any other statutory provision, such
Agreement provision shall not be implemented or, at the Company's option
following notice, such provision shall be severed from the Agreement as is
appropriate or necessary to achieve statutory compliance; provided, however,
that the parties hereby agree to negotiate in good faith as may be necessary to
modify this Agreement to achieve statutory compliance or otherwise effectuate
the intent of the parties following a severance permitted by this Section IX.
X. AMENDMENT
This instrument contains the entire Agreement of the parties and may only
be amended by written agreement executed by the parties hereto or their
respective successors, as permitted by Section II above.
XI. GOVERNING LAW
This Agreement is made and entered into and shall be construed and
enforced in accordance with the laws of the State of Michigan.
XII. HEADINGS
The section numbers and headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
XIII. ACCEPTANCE OF PARTICIPANTS OPTIONS
The exercise of the Participants Options is conditioned upon the
acceptance by Xxx and any transferee hereof of the terms hereof as evidenced by
the execution of this Agreement and the return of an executed copy to the
Secretary of the Company no later than sixty days after the date set forth in
the following paragraph.
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IN WITNESS WHEREOF, this Stock Option Agreement is hereby executed as of
_______________________, 1997.
"COMPANY"
XXXXXXX FINANCIAL SERVICES
CORPORATION, a Michigan corporation
By: _______________________________________
Xxxxxxx X. Xxxxxxxx, President
"SUN"
SUN COMMUNITIES, INC., a Maryland
corporation
By: _______________________________________
Xxxx X. Xxxxxxxx, President
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