THE OPTION AND COMMON STOCK REFERRED TO HEREIN HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, THE FLORIDA SECURITIES ACT, AS AMENDED, OR THE LAWS
OF ANY OTHER STATE, AND ARE BEING GRANTED PURSUANT TO EXEMPTIONS FROM
REGISTRATION UNDER THAT ACT AND SUCH STATE LAWS. OPTIONS OR SHARES OF STOCK
ACQUIRED BY OPTIONEE MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE OPTIONS OR SHARES OF STOCK UNDER THAT
ACT OR SUCH STATE LAWS AS MAY BE APPLICABLE, OR PURSUANT TO EXEMPTIONS FROM SAID
REGISTRATION UNDER SAID ACT AND SAID LAWS. FURTHER, THIS AGREEMENT CONTAINS
SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY OF THE OPTIONS AND SHARES OF STOCK.
SMART CHOICE AUTOMOTIVE GROUP, INC.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (the "Agreement") effective as of the 29th day of
July, 1997, by and between Smart Choice Automotive Group, Inc., a Florida
corporation (the "Company") and Xxxxxx X. Xxxxxxx, an individual (the
"Optionee").
WITNESSETH:
WHEREAS, the Company believes that the attraction and retention of key
employees such as Optionee is essential to the Company's growth and success; and
WHEREAS, in order to induce Optionee to serve as an Employee of the
Company, the Company hereby provides Optionee with the following additional
incentives, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby covenant and agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth in
this Agreement, the Company hereby grants to Optionee, the option (the "Option")
to purchase 25,000 shares (the "Option Shares")of the Company's common stock,
par value $.01 per share (the "Common Stock") at the exercise price of $4.50 per
share (the "Option Price"). The Option shall be exercisable, in whole or in
part, for a period of five (5) years (the "Exercise Period"), which period shall
commence on the date of execution of this Agreement (the "Execution Date"). The
Option shall be fully vested and exercisable as to all the Option Shares on the
Execution Date for the entire Exercise Period.
2. TERMINATION OF THE OPTION.
(a) The Option shall terminate and no longer be exercisable upon
the expiration of the Exercise Period set forth above.
(b) Termination in the event of death, permanent disability or
termination of status as an employee.
(i) If Optionee dies while an employee of the Company or
within three (3) months after termination of his status as an employee because
of his permanent disability (as defined below), his Option may be exercised, to
the extent that the Optionee shall have been entitled to do so on the date of
his death, by the person or persons to whom the Optionee's right under the
Option passes by will or applicable law, or if no such person has such right, by
his executors or administrators, at any time or from time to time, but not later
than the expiration date specified in Section 1 or three (3) months after the
appointment or qualification of an executor of Optionee's estate, whichever is
earlier.
(ii) If Optionee's status as an employee of the Company shall
terminate because of his permanent disability, he may exercise his Option to the
extent that he shall have been entitled to do so at the date of such
termination, at any time or from time to time, but not later than the expiration
date specified in Section 1 or three (3) months after termination of employment,
whichever date is earlier.
(iii) If Optionee's status as an employee of the Company shall
terminate involuntarily other than for cause, death, or total disability, all
rights to exercise his Option, to the extent that he shall have been entitled to
do so at the date of such termination, shall terminate at the expiration date
specified in Section 1 or three months after termination of employment,
whichever date is earlier.
(iv) If Optionee's status as an employee of the Company shall
terminate for cause (as defined below), all rights to exercise his Options shall
terminate no later than sixty (60) days after such termination.
(c) "TERMINATION FOR CAUSE" shall be defined as set forth in the
Employment Agreement between Company and Optionee. "PERMANENT DISABILITY" shall
be defined as set forth in the Employment Agreement between Company and
Optionee.
3. EXERCISE. Optionee (or in the case of Optionee's death or
disability, the legal representative of Optionee) may exercise the Option only
by giving timely notice to the Company of exercise of an Option prior to the
expiration or termination of the Exercise Period. Such notice shall state the
number of shares to be purchased which are attributable to the Option which is
being exercised, and shall be accompanied by the full purchase price for such
shares, payable in U.S. dollars by certified check or bank draft, unless the
Company shall permit payment of the purchase price in another manner.
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4. DELIVERY OF OPTION SHARES. As soon as reasonably practicable after
receipt by the Company of a timely notice of exercise of any of the Options
hereunder, and payment therefor, the Company shall issue to Optionee or his
legal representative(s), as the case may be, one or more certificate(s) for the
number of shares with respect to which the Options shall have been so exercised.
5. RESTRICTIONS UPON TRANSFER.
(a) Neither the Optionee nor any other person or entity shall
have any interest in any specific asset or assets or stock of the Company by
reason of the granting of the Options. Any attempt to assign or to transfer this
Agreement or the Options granted hereunder, whether voluntarily or
involuntarily, by operation of law or otherwise, shall be of no further force or
effect and no interest or right hereunder shall vest in any other person.
Nothing in this Agreement shall be deemed to limit Optionee's right to transfer
this Agreement or the Option Shares by will or in accordance with the laws of
devise, descent and distribution.
(b) Nothing in this Agreement shall be construed in limitation
of any restrictions upon transfer of any of the Option Shares contained
elsewhere, including any restrictions that may be contained in the Certificate
of Incorporation or the By-Laws of the Company.
(c) Nothing in this Agreement shall be construed as a
modification of any existing agreements with respect to the gift, sale,
purchase, transfer, pledge, hypothecation, or other disposition or encumbrance
of the Option Shares between the parties to this Agreement, or between or among
either or both of the parties to this Agreement and one or more persons not
party to this Agreement.
(d) The Optionee acknowledges that the certificate evidencing
ownership of the Common Stock will be stamped or otherwise imprinted on the face
thereof with a legend in substantially the following form:
"The shares represented by this Certificate have not been
registered under the federal Securities Act of 1933, as
amended (the "Act") or any state securities act. No sale,
offer to sell or transfer of the shares shall be made unless a
registration statement under the Act, and any applicable state
statute, with respect to the shares is then in effect or an
exemption from the registration requirements of such Act or
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state statute is then in fact applicable to the shares."
(e) Any legend endorsed on a certificate pursuant to Section
5(d) hereof and the stop transfer instructions with respect to the Option Shares
shall be removed and the Company shall issue a certificate without such legend
to the holder thereof if such Option Shares are registered under the Securities
Act and a prospectus meeting the requirements of Section 10 of the Securities
Act is available.
(f) The restrictions described in any legend endorsed on a
certificate pursuant to Section 5(d) hereof shall be removed at such time as
permitted by Rule 144(k) promulgated under the Securities Act.
(g) (1) If the Company at any time elects or proposes to
register any of its shares of Common Stock (the "Registration Shares") under the
1933 Act on forms X-0, X-0, X-0 or XX-0, XX-0 or any other form in effect at
such time for the registration of securities to be sold for cash (a
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") pursuant to which shares of Common Stock owned by any other shareholder
of the Company are to be registered, the Company shall give prompt written
notice (the "Registration Notice") to the Optionee of its intention to register
the Registration Shares.
(2) Within fifteen (15) days after the Registration
Notice shall have been given to the Optionee, the Optionee may give written
notice to the Company of exercise of all, or a portion of the Option (the
"Optionee Notice"), accompanied by payment of the Option Price in accordance
with Section 1 hereof, stating the number of shares Optionee elects to be
included among the Registration Shares (which number may include shares held by
Optionee as a result of prior exercises of this Option, or otherwise) (the
"Optionee's Included Shares").
(3) The Company shall use reasonable efforts to register
the Optionee's Included Shares under the Securities Act of 1933 and any state
securities acts, if necessary, designated by the Optionee in the Optionee
Notice. The Company shall have the right to withdraw and discontinue
registration of the Optionee's Included Shares at any time prior to the
effective date of such Registration Statement if the registration of the
Registration Shares is withdrawn or discontinued.
(4) The Company shall not be required to include any of
the Optionee's Included Shares in any Registration Statement unless the Optionee
agrees, if so requested by the Company, to: (i) offer and sell the Optionee's
Included Shares to or through an underwriter selected by the Company and, to the
extent possible, on substantially the same terms and conditions under which the
Registration Shares are to be offered and sold;
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(ii) comply with any arrangements, terms and conditions with respect to the
offer and sale of the Optionee's Included Shares to which the Company may be
required to agree; and (iii) enter into any underwriting agreement containing
customary terms and conditions.
(5) If the offering of the Registration Shares by the
Company is, in whole or in part, an underwritten public offering, and if the
managing underwriter determines and advises the Company in writing that the
inclusion in such Registration Statement of all of the Shares, together with the
stock of other persons who have a right to include their stock in the
Registration Statement (collectively referred to as the "Aggregate Shares"),
would adversely affect the marketability of the offering of the Registration
Shares, then the Optionee and such other holders shall be entitled to register
the portion of such number of Aggregate Shares as the managing underwriter
determines may be included without such adverse effects (collectively,
"Aggregate Underwriter Shares"), subject to the terms, exceptions and conditions
of this Section 5(g). The number of Aggregate Underwriter Shares which the
Optionee shall be entitled to register shall be equal to the number of Aggregate
Underwriter Shares multiplied by a fraction, the numerator of which is the
number of Optionee's Included Shares and the denominator of which is the number
of Aggregate Shares.
(6) The Company shall bear all costs and expenses of
registration of the Registration Shares, including Optionee's Included Shares.
(7) It shall be a condition precedent to the Company's
obligation to register any of Optionee's Included Shares that the Optionee shall
provide the Company with all information and documents, and shall execute,
acknowledge, seal and deliver all documents reasonably necessary, to enable the
Company to comply with the 1933 Act, the State Acts, and all applicable laws,
rules and regulations of the SEC or of any state securities law authorities.
6. RIGHTS AS STOCKHOLDER.
(a) Optionee shall have none of the rights of a stockholder with
respect to any of the Option Shares until any Option granted herein shall have
been exercised.
(b) Nothing in this Agreement shall affect in any way the rights
or powers of the Company, or any parent or subsidiary Company, or any of the
directors or stockholders of the Company, to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or business, or any merger or consolidation of the
Company, or any issue of bonds, debentures, preferred or prior preference stocks
or other classes of securities ahead of or
5
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of the
Company's assets or business, or any grant of options to purchase securities of
the Company otherwise than under this Agreement, or to effect any other
corporate act or proceeding, whether of a similar character or otherwise.
(c) (i) If the outstanding shares of Common Stock of the Company
are increased, decreased, changed into or exchanged for a different number or
kind of shares or securities of the Company or of another corporation or entity
or shares of a different par value or without par value through a
recapitalization, stock dividend, stock split, reverse stock split or a
reorganization under which the Company is not the surviving entity, an
appropriate or proportionate adjustment shall be made in the number and/or kind
of securities allocated to the Options, without change in the aggregate Option
Price applicable to the unexercised portion of the outstanding Option but with a
corresponding adjustment in the Option Price for each share or other unit of any
security covered by the Option. No adjustment shall occur under this Section 6
by virtue of the fact that the Company purchases or sells Common Stock or any
securities of the Company at its fair market value (other than pursuant to
compensatory Stock Options) for cash.
(ii) In case the Company shall issue rights or warrants to
all holders of its shares of Common Stock entitling them to subscribe for or to
purchase shares of Common Stock at a price per share which, when added to the
amount of consideration received or receivable by the Company for such rights or
warrants is less than the Current Market Price (as hereinafter defined) per
share at the record date, the number of Option Shares purchasable upon the
exercise of the Option shall be increased so that thereafter, until further
adjusted, this Option shall entitle the Optionee to purchase an additional
number of shares determined as if the Option had been fully exercised and the
Optionee were a record holder entitled to receive such rights or warrants at an
option price which is the same as the per share consideration payable pursuant
to such rights or warrants. Such adjustment shall be made whenever such rights
or warrants are issued, but shall also be effective retroactively as to portions
of the Option exercised between the record date for the determination of
shareholders entitled to receive such rights or warrants and the date such
rights or warrants are issued.
(iii) For the purpose of any computation under Section
6(c)(ii), the Current Market Price per share of Common Stock at any date shall
be (i) if the shares of Common Stock are listed on any national securities
exchange, the average of the daily closing prices for the fifteen (15)
consecutive business days commencing twenty (20) business days before the date
of determination (the "Trading Period"); (ii) if the shares of
6
Common Stock are not listed on any national securities exchange but are quoted
or reported on the National Association of Securities Dealers, Inc., Automated
Quotation System ("NASDAQ"), the last quoted price or, if not quoted, the
average of the high bid and low asked price as reported by NASDAQ for the
Trading Period, or the daily closing prices for the Trading Period as reported
by NASDAQ, as the case may be; and (iii) if the shares of Common Stock are
neither listed on any national securities exchange nor quoted or reported on
NASDAQ, the higher of (x) the Exercise Price then in effect, or (y) the tangible
book value per share of Common Stock as of the end of the Company's immediately
preceding fiscal year.
(d) In the event of the proposed dissolution or liquidation of
the Company, the Company shall cause the Board of Directors of the Company to
notify the Optionee at least thirty (30)days prior to such proposed action. To
the extent it has not been exercised during such thirty (30) day period, the
Options will terminate as to any unexercised portion thereof immediately prior
to the consummation of such proposed action.
(e) In lieu of paying in cash any withholding tax obligation
imposed on any exercise of an Option hereunder, Optionee may elect to have the
actual number of shares issuable upon exercise of the Option reduced by the
smallest number of whole shares of Common Stock which, when multiplied by the
fair market value of the Common Stock as of the date the Option is exercised, is
sufficient to satisfy the amount of the withholding tax obligations imposed by
reason of the exercise hereof (the "Withholding Elections"). Optionee may make a
Withholding Election only if all of the following conditions are met:
(i) the Withholding Election must be made on or prior
to the date on which the amount of tax required to be withheld is determined
(the "Tax Date") by executing and delivering to the Company a properly completed
Notice of Withholding Election, in substantially the form of Exhibit "A"
attached hereto;
(ii) any Withholding Election made will be
irrevocable; and
(iii) if Optionee is required to file beneficial
ownership reports pursuant to Subsection (a) of Section 16 of the Securities
Exchange Act of 1934, at any time during the period in which the Option is
exercisable, then the Withholding Election must be made either (A) at least six
(6) months prior to the Tax Date applicable to the exercise of the Option, or
(B) prior to the Tax Date and in any ten day period beginning on the third day
following the release of the Company's quarterly or annual summary statement of
sales and earnings.
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7. REPRESENTATIONS. Optionee will acquire Optionee's shares for
Optionee's own account, for investment only and without a view to resale or
distribution except in compliance with the Securities Act of 1933, as amended,
("Act") and any applicable state securities laws, and upon the acquisition of
the shares, Optionee will enter into such written representations, warranties
and agreements as the Company may request in order to comply with the Act, any
applicable state securities laws and this Option Agreement. The Company
represents and warrants that it owns sufficient Common Stock to issue the Option
Shares to the Optionee on exercise of the Option and agrees that it will reserve
sufficient Common Stock to issue the Option Shares to the Optionee on exercise
of the Option.
8. TAX CONSEQUENCES AND WITHHOLDING. Optionee agrees that the Company
is not responsible for the tax consequences to Optionee of the granting of the
Options or its subsequent exercise by Optionee, and that it is the
responsibility of Optionee to consult with Optionee's personal tax advisor
regarding all matters with respect to the tax consequences of the granting of
the Options and its exercise by Optionee.
9. NON-EMPLOYMENT. Nothing in this Agreement, shall confer on Optionee,
nor imply in favor of Optionee any right to continue as a contractor to or
employee of the Company or of any parent or subsidiary company of the Company or
prevent, or in any way impair the right of the stockholders or Board to
terminate Optionee's relationship with the Company pursuant to the Employment
Agreement.
10. GENERAL PROVISIONS.
(a) AGREEMENT TO BE BOUND BY CONTRACT. This Agreement shall be
binding not only on the parties hereto, but also upon their heirs, executors,
administrators, successors or assigns. The parties hereto agree for themselves
and their heirs, executors, administrators, successors or assigns, to execute
any instruments and to perform any acts which may be necessary or proper to
carry out the purposes of this Agreement.
(b) AMENDMENT OR ALTERATION. This Agreement may be altered or
amended, in whole or in part, at any time, only by a written instrument setting
forth such changes signed by all parties hereto.
(c) WAIVER. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party.
(d) NOTICES. Any notices permitted or required hereunder shall
be delivered to the parties personally, by telecopier, or by United States Mail,
with postage prepaid, certified
8
or registered, return receipt requested, addressed to the respective parties at
the following addresses and telecopier numbers:
If to Company: Smart Choice Automotive Group, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxx Xxxxxxxxxx, Jr.
Corporate Counsel
Telecopier: (000) 000-0000
If to Optionee: At the address and telecopier
number for the Optionee on file
with the Company
The date of service of any notice or communication hereunder shall be the date
of the hand delivery or receipt of telecopy, or three (3) days after the
mailing, if mailed by certified mail, return receipt requested. A party whose
address or telecopy number changes shall notify the other party, in accordance
with this Section, within five (5) business days of such change (the "Changed
Party"). Failure of the Changed Party to notify the other party of such a change
shall constitute a waiver of any right to receive notice under this Agreement by
the Changed Party.
(e) VALIDITY. In the event that any provision of this Agreement
shall be held to be invalid, the same shall not affect, in any respect, the
validity of the remainder of this Agreement.
(f) INTEGRATED AGREEMENT. This Agreement and the Employment
Agreement and all agreements executed in accordance with the terms hereof
constitutes the entire understanding and agreement among the parties hereto with
respect to the subject matter hereof, and there are no agreements,
understandings, restrictions, representations or warranties among the parties
other than those set forth herein.
(g) ATTORNEYS' FEES. In the event any litigation including any
appeals is instituted in connection with the breach, enforcement or
interpretation of this Agreement, including, without limitation, any action
seeking declaratory relief, equitable relief, injunctive relief, or damages, the
prevailing party shall be entitled to recover from the non-prevailing party all
costs, expenses and attorneys' fees incurred in connection therewith, including
any costs of collection.
(h) STATE LAW GOVERNING CONTRACTS. This Agreement shall be
governed by the laws of the State of Florida.
9
(i) NO CONSTRUCTION AGAINST DRAFTING PARTY. Each party to this
Agreement expressly recognizes that it results from a negotiated process in
which each party was given the opportunity to consult with counsel and
contributed to the drafting of this Agreement. Given this fact, no legal or
other presumptions against the party drafting this Agreement concerning its
construction, interpretation or otherwise shall accrue to the benefit of any
party to this Agreement and each party expressly waives the right to assert such
a presumption in any proceedings or disputes connected with, arising out of, or
involving this Agreement.
IN WITNESS WHEREOF, the parties have executed this Stock Option Agreement
under seal as of the date first above written.
THE COMPANY:
SMART CHOICE AUTOMOTIVE GROUP,INC.
By:______________________________
THE OPTIONEE:
----------------------------------
Xxxxxx X. Xxxxxxx
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EXHIBIT A
NOTICE OF WITHHOLDING ELECTION
TO: Smart Choice Automotive Group, Inc.
FROM: Optionee (or other party specified in (2) below)
RE: Withholding Election
* * * * * * * * * * * * * * *
This election relates to the Option identified in Paragraph 3 below. I hereby
certify that:
(1) My correct name and social security number and my current
address are set forth at the end of this document.
(2) I am (check one, whichever is applicable).
[ ] the original recipient of the Option.
[ ] the legal representative of the estate of the
original recipient of the Option.
[ ] a legatee of the original recipient of the Option.
[ ] the legal guardian of the original recipient of the
Option.
(3) The Option pursuant to which this election is made in the name
of ____________________________ for __________ shares of
Common Stock and dated __________________ (the "Option"). This
election relates to ___________ shares of Common Stock
issuable upon whole or partial exercise(s) of the Option (the
"Option Shares"); provided that the numbers set forth above
shall be deemed changed as appropriate to reflect stock splits
and other adjustments contemplated by the applicable
provisions of the Option.
(4) In connection with any future exercise of the Option with
respect to the Option Shares, I hereby elect to have certain
of the shares issuable pursuant to the exercise withheld by
the Company for the purpose of having the value of the shares
applied to pay federal, state, and local, if any, taxes
arising from the exercise. The shares to be withheld shall
have, as of the Tax Date (as defined in the Option Agreement
applicable to the Option (the "Option Agreement")), applicable
to the exercise, a fair market value equal to the minimum
statutory tax withholding requirement
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under federal, state, and local law in connection with the
exercise.
(5) This Withholding Election is made prior to the Tax Date and is
otherwise timely made pursuant to the Option Agreement.
(6) I further understand that the Company shall withhold from the
Option Shares a number of shares of Common Stock having the
value specified in Paragraph 4 above.
(7) Capitalized terms used in this Notice of Withholding Election
without definition shall have the meanings given to them in
the Option Agreement.
Dated: ____________________ ___________________________________
Legal Signature
___________________________ ___________________________________
Social Security Number Name (Printed)
___________________________________
Street Address
___________________________________
City, State, Zip Code
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