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Exhibit 99.e
ROCKFORD CORPORATION
NON-QUALIFIED
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") made as of the
19 day of March, 1997, by and between Rockford Corporation ("Corporation") and
Xxxxxxx X. Xxxxxx ("Optionee").
INTRODUCTION
Optionee is director of the Corporation and the Corporation
considers it in its best interests that Optionee be given an inducement to
acquire a proprietary interest in the Corporation.
AGREEMENTS
The parties agree as follows:
1. Grant of Option.
The Corporation grants to Optionee the option to purchase
2,000 shares of its common stock ("Stock") at a price of $14.85 per share,
pursuant to the Rockford Corporation 1994 Stock Option Plan ("Plan"). This
Option is not an "incentive option" as that term is defined in Section 422 of
the Internal Revenue Code of 1986.
2. Time of Exercise.
The Option shall be exercisable on the Grant Date (as defined
in the Plan), as to 25% of the shares. Thereafter, an additional 25% of the
original number of shares subject to the Option may be purchased after the
completion of each additional one year of employment measured from the Grant
Date. After three years of employment from the Grant Date, the Option shall be
fully exercisable. Notwithstanding the preceding exercisability schedule, if at
any time before the Option becomes fully exercisable (a) the Corporation's
shares become registered under the Securities Act of 1933, the Option shall
become fully exercisable upon the effective date of the registration and (b) the
Corporation enters into an agreement to sell all or substantially all of the
Corporation's shares or assets, the Option shall become fully exercisable upon
the date of Closing of the agreement to sell. An agreement for merger or
consolidation will be considered an "agreement to sell" under this section if,
after the merger, Corporation's shareholders do not continue to hold a
controlling interest in the surviving corporation.
3. Method of Exercise.
The Option shall be exercised by delivery of the notice in the
form attached as Exhibit A to the Secretary of the Corporation together with a
check in payment of the Option price for the number of shares specified plus
applicable federal and state withholding taxes. At
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the discretion of the Board, Optionee may pay for the Stock through delivery of
Stock with a fair market value equal to the Option price, plus applicable
federal and state withholding taxes. Options may be exercised only with respect
to whole shares. Fair market value shall be determined in good faith by the
Board of Directors of the Corporation.
4. Termination of Option.
The Option, to the extent not exercised, shall terminate upon
the first to occur of:
(a) termination of Corporation's agreement with
Grisanti, Galef, and Goldress (the "3G Agreement"); provided, however,
that the Option, to the extent exercisable on the date of termination
of the 3G Agreement, may be exercised by Optionee for a period of
ninety days after termination on account of Xxxxxx'x death; or
(b) ten years from the date of this Agreement.
5. Non-Transferability of Option.
Except as provided in Section 4(a), the Option is not
transferable by the Optionee.
6. Rights Prior to Exercise.
The Optionee shall have no rights as a shareholder with
respect to any Stock issued to the Optionee as a result of the exercise of an
Option under this Agreement and any Stock owned by the Optionee as a result of
Stock splits, Stock dividends or otherwise on the Stock issued as a result of
the exercise of an Option under this Agreement ("Option Stock") until the date
of issuance of a share certificate to the Optionee for such Option Stock.
7. Restrictions on Stock.
Option Stock shall be subject to the following restrictions:
(a) During the period beginning with the termination
of the 3G Agreement for any reason except death and ending six months
thereafter, the Corporation shall have the right to call any of the
Option Stock from the then current holder of the Option Stock at the
purchase price equal to the fair market value of the Stock as
determined in good faith by the Board. If the 3G Agreement is
terminated by Xxxxxx'x death, the Corporation's call option shall
expire nine months after Xxxxxx'x death. If the Corporation calls any
of the Option Stock, the then current holder of the Option Stock shall
surrender such Stock, duly endorsed for transfer, upon payment of the
purchase price.
(b) Each share certificate issued for Option Stock
shall bear a legend evidencing the restrictions contained in this
Section 7.
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8. Repurchase in Certain Cases. If Optionee exercises
any Options and later his or her service as a director and within one year
thereafter engages in any activities, directly or indirectly, either as a
consultant, employee, shareholder, partner or otherwise with any business that
competes with the Corporation, Optionee, upon demand of the Corporation at any
time thereafter, shall surrender to the Corporation for repurchase, all shares
purchased on exercise of Options under this Agreement. The repurchase price,
payable in cash, shall be the lesser of the price Optionee paid for the shares
or the fair market value of the shares, as determined by the Board in its
discretion at the date of repurchase.
9. Miscellaneous.
This Agreement is subject to all the provisions of the
Rockford Corporation 1994 Stock Option Plan as it may be amended from time to
time.
10. Execution.
The parties hereto have executed this Agreement on the dates
shown below.
ROCKFORD CORPORATION
By: W. Xxxx Xxxxxx
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President
OPTIONEE
/s/ Xxxxxxx X. Xxxxxx
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EXHIBIT A
NOTICE OF EXERCISE
OF
NON-QUALIFIED STOCK OPTION
I hereby exercise the Option granted to me by Rockford
Corporation ("Corporation") pursuant to the Stock Option Agreement and notify
you of my desire to purchase 2,000 shares of Stock of the Corporation.
Enclosed is:
(a) my check in the amount of $__________, in full
payment for such shares and the federal and state withholding taxes due as a
result of such purchase; or
(b) a certificate for, or my binding and irrevocable
request that you withhold from the shares to be delivered pursuant to this
notice, shares of Stock of the Corporation having a fair market value on the
date of exercise equal to the full Option price for the shares purchased under
this notice and the federal and state withholding taxes due as a result of such
purchase.
I represent and warrant to the Corporation and agree as
follows:
1. Information, Experience and Economic Ability. I have
received a copy of the Plan, and as an employee, I have access to information
regarding the Corporation and have been afforded the opportunity to ask
questions and receive additional information from the Corporation regarding the
terms of an investment in the Stock, and my requests for information have been
satisfied. I have business experience and knowledge adequate to evaluate the
risks of an investment in the Stock, and I can bear the economic risk of losing
my entire investment in the Stock and can afford to hold the Stock for an
indefinite period of time. I have adequate means of providing for my current
needs and personal contingencies and have no need for liquidity in the Stock for
which I am exercising the Option. My overall commitment to investments which are
not readily marketable is not disproportionate to my net worth, and my
investment in the Stock will not cause such overall commitments to become
excessive. I acknowledge that I have been advised to consult my tax and legal
advisors regarding my investment in the Stock.
2. Restrictions on Transfer. I acknowledge that there are
substantial restrictions on the transferability of the Stock under securities
laws unless they are registered or an exemption from such registration is
available and established to the satisfaction of the Corporation; that investors
in the Stock have no rights to require that the Stock be registered under
federal or state securities laws or to require the Corporation to make available
the information that would enable the Stock to be sold pursuant to Rule 144
under the Act; that there may never be a public market for the Stock so that it
may never be possible for me to liquidate my investment in the Stock; and that
the certificates representing the Stock will bear a legend referring to the
foregoing transfer restrictions.
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3. No Distribution. The Stock to be delivered pursuant to the
exercise of the Option is being acquired solely for my own account, and not with
a view to or for the resale, distribution, subdivision or fractionalization
thereof.
4. Accuracy of Representations. I understand that the
Corporation will have the right to reject this Notice of Exercise if it believes
for any reason that the undersigned is unsuitable to invest in the Stock under
federal or state securities laws; that the Corporation is relying upon the
representations in this notice in determining my suitability as an investor in
the Stock; that I would not be permitted to purchase the Stock if any
representation or warranty were known to be materially false; that a false
representation may constitute a violation of law; and that any person who
suffers damage as a result of a false representation may have a claim against
me.
OPTIONEE
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Xxxxxxx X. Xxxxxx
Dated
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