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 31st day
of December, 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 SMART CHOICE AUTOMOTIVE GROUP, INC., a Florida corporation
(the "Company").
WITNESSETH:
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 an Employee of the
Company, 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 a
total of 12,025 shares (the "Option Shares")of the Company's common stock, par
value $.01 per share (the "Common Stock"), 6,012.5 shares from each Grantor (the
"Option"), at the exercise price of $2.00 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. None of the Options are intended to
be "incentive stock options" as defined in Section 422(b) of the Internal
Revenue Code.
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.
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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 of exercise of an Option prior to the expiration or
termination of the Exercise Period to the Grantor c/o Smart Choice Automotive
Group, Inc., 0000 Xxxxx Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000. 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 Grantor shall permit payment of the purchase price in
another manner.
4. DELIVERY OF OPTION SHARES. As soon as reasonably practicable after
receipt by the Grantor of a timely notice of exercise of any of the Options
hereunder, and payment therefor, the Grantor 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.
The Grantor represents to Optionee that it has sufficient shares to grant the
Option set forth herein.
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.
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(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
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
4
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; (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.
5
(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 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.
6
(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 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 and the Grantor 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.
7
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 Grantor may request in order to comply with
the Act, any applicable state securities laws and this Option Agreement. Grantor
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 Grantor
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.
8
(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: 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 Grantor: Xxxxxx X. Xxxxxx, Trustee
000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxx 00000
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,
9
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 shall accrue to the benefit of any
party to this Agreement and each party shall 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 GRANTORS:
XXXXXX-XXXXX CHOICE HOLDINGS
MANAGEMENT TRUST under agreement
dated January 29, 1997
By:_______________________________
Xxxx X. Xxxxx, Trustee
By:_______________________________
Xxxxxx X. Xxxxxx, Trustee
10
XXXXXX-XXXXX CHOICE HOLDINGS
MANAGEMENT TRUST under agreement
dated January 29, 1997
By:_____________________________
Xxxx X. Xxxxx, Trustee
By:_____________________________
Xxxxxx X. Xxxxxx, Trustee
THE OPTIONEE:
------------------------------
Xxxxxx X. Xxxxxxxx
