EXHIBIT 10.38
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.
XXXXXX INDUSTRIES, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") effective as of the
5th day of March, 1997, by and among the XXXXXX-XXXXX CHOICE HOLDINGS MANAGEMENT
TRUST under agreement dated January 29, 1997, Xxxxxx X. Xxxxxx, settlor, and
Xxxx X. Xxxxx and Xxxxxx X. Xxxxxx, trustees, and the XXXXXX-XXXXX CHOICE
HOLDINGS MANAGEMENT TRUST under agreement dated January 29, 1997, Xxxxxx X.
Xxxxxx, settlor, and Xxxx X. Xxxxx and Xxxxxx X. Xxxxxx, trustees (such trusts
are referred to herein as the "Grantors"), XXXXXX X. XXXXXXXX, an individual,
(the "Optionee") and XXXXXX INDUSTRIES, INC., a Florida corporation (the
"Company").
WITNESSETH:
WHEREAS, the settlors of Grantors were founders of Smart Choice Holdings,
Inc., a Delaware corporation that intends to establish a network of
"neighborhood stores" for the financed sales of motor vehicles in the
Southeastern United States; and
WHEREAS, Smart Choice Holdings, Inc. became a wholly-owned subsidiary of
the Company pursuant to a merger that closed on January 28, 1997; and
WHEREAS, the Grantors and the Company believe 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 the Company's Chairman,
the Grantors hereby provide 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 Grantors hereby grant to Optionee, the option to purchase from
the Grantors (the "Option"), 210,000 shares of the Class A Common Stock (the
"Common Stock") of the Company (the "Option Shares"), at the exercise price per
share of $1.00 (the "Option Price"). The Option shall be exerciseable, in whole
or in part, for a period of five (5) years (the "Exercise Period"), which period
shall commence on December 1, 1997. The Option shall vest immediately so that
the Optionee may exercise the Option as to all the Option Shares on the
execution and delivery of this Agreement.
The Grantors agree that on any exercise of the Option, the Option shall be
exercised as to an equal number of Option Shares for each Grantor.
None of the Options are intended to be "incentive stock options" as defined
in Section 422(b) of the Internal Revenue Code. Grantors and the Company
represent and warrant that no action required of them under this Agreement or
any other agreements or understandings, written or oral, entered into with
Optionee will conflict with, breach or otherwise impair any previously existing
agreements or understandings, whether written or oral, into which the Company
and Grantors have entered with other persons or entities.
2. TERMINATION OF THE OPTION.
(a) The Option shall terminate and no longer be exercisable upon the
occurrence of the following:
(i) In accordance with the expiration of the Exercise Period set
forth above;
(ii) Involuntary dissolution of the Company.
(b) Termination in the event of death, 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 Optionee's death, whichever
is earlier.
(ii) If Optionee's status as an employee of the Company shall
terminate because of his total 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 (A) 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 at the
date of such termination.
(c) "Termination for cause" shall be defined as set forth in the Employment
Agreement between Company and Optionee effective as of December 1, 1996.
"Permanent disability" shall be defined as set forth in the Employment Agreement
between Company and Optionee effective as of December 1, 1996.
3. EXERCISE. Optionee (or in the case of Optionee's death or disability,
the legal representative of Optionee) may execute the Option only by giving
timely notice of the exercise of an Option prior to the expiration or
termination of the Exercise Period to the Grantors at 0000 Xxxxx Xxxxxxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxx. 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 Grantors shall permit
payment of the purchase price in another manner.
4. DELIVERY OF OPTION SHARES. As soon as possible after receipt by the
Grantors of a timely notice of exercise of any of the Options hereunder, of
payment therefor, the Grantors shall transfer 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 immediately terminate this Agreement, all
the Options granted hereunder shall be of no further force or effect and no
interest or right hereunder shall vest in any other person.
(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, or any applicable state statute, with
respect to the shares is then in effect or an exemption from the
registration requirements of such Act or state statute is then in
fact applicable to the shares."
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 and until such respective shares attributable to such Option shall
have been issued to Optionee.
(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 any 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 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) 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 for
cash. No fractional shares shall be issued for any such adjustment. No
adjustments under this Section shall be applicable in the event the Company
takes any of the aforementioned actions in order to complete a merger, stock for
stock exchange, reorganization or other transaction with Xxxxxx Industries, Inc.
(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 and the Grantors at least fifteen (15) days prior to such proposed
action. To the extent it has not been exercised during such fifteen (15) day
period, these Options will terminate as to any unexercised portion thereof
immediately prior to the consummation of such proposed action.
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 or the Grantors may request in order to comply with the Act, any
applicable state securities laws and this Option Agreement.
8. RESERVATION. The Grantors agree, at all times during the term of the
Options, to reserve and keep available such number of shares of the Common Stock
as will be sufficient to satisfy the requirements of the Options.
9. TAX CONSEQUENCES AND WITHHOLDING. Optionee agrees that the Grantors are
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.
10. GENERAL PROVISIONS.
(a) AGREEMENT TO BE BOUND BY CONTRACT. This Agreement shall be binding not
only by 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 or registered, return receipt requested, addressed to the
respective parties at the following addresses and telecopier numbers:
If to Company or
Grantors: 0000 X. Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxx
Telecopier: (000) 000-0000
If to Optionee: Xxxxxx Xxxxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
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 until such time s the Changed Party shall have properly
notified the other party in accordance with this Section 10.(d).
(e) VALIDITY. In the event that any provision of this Agreement shall be
held to be invalid, the same shall not effect, in any respect, the validity of
the remainder of this Agreement.
(f) INTEGRATED AGREEMENT. This 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, restriction, representations or
warranties among the parties other than those set forth herein. Nothing in this
Agreement shall alter, amend, modify, delete, rescind or otherwise waive any
transfer conditions to which Holder, or the Securities held by such Holder, may
be subject.
(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.
(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 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 Non-Qualified Stock
Option Agreement under seal as of the date first above written.
THE COMPANY:
XXXXXX INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxx
---------------------
Xxxx X. Xxxxx
THE GRANTORS:
XXXXXX-XXXXX CHOICE HOLDINGS
MANAGEMENT TRUST UNDER AGREEMENT
DATED JANUARY 29, 1997
By: /s Xxxx X. Xxxxx
--------------------
Xxxx X. Xxxxx, Trustee
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Xxxxxx X. Xxxxxx, Trustee
XXXXXX-XXXXX CHOICE HOLDINGS
MANAGEMENT TRUST UNDER AGREEMENT
DATED JANUARY 29, 1997
By: /s/ Xxxx X. Xxxxx
---------------------
Xxxx X. Xxxxx, Trustee
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Xxxxxx X. Xxxxxx, Trustee
THE OPTIONEE:
/s/ Xxxxxx X. Xxxxxxxx
----------------------
Xxxxxx X. Xxxxxxxx
