EXHIBIT 10.3
OUTSIDE DIRECTOR STOCK OPTION AGREEMENT
THIS OUTSIDE DIRECTOR STOCK OPTION AGREEMENT (this "Agreement") is made
as of _______________ (the "Grant Date"), between Central Freight Lines, Inc., a
Nevada corporation (the "Company"), and the undersigned, a non-employee director
of the Company (the "Optionee").
BACKGROUND
The Company has determined that to reward its non-employee directors
for their contributions to the profitable growth of the Company, the Company
should provide such directors a chance to participate financially in the success
of the Company by developing an equity interest in it. By this Agreement, the
Company and the Optionee desire to establish the terms upon which the Company is
willing to grant to the Optionee, and upon which the Optionee is willing to
accept from the Company, an option to purchase shares of Class A Common Stock of
the Company ("Common Stock").
AGREEMENTS
1. Grant of Stock Option. Subject to the terms and conditions in
this Agreement, the Company grants to the Optionee the right and option (the
"Option") to purchase from the Company all or any part of an aggregate twenty
thousand (20,000) shares of Common Stock, authorized but unissued or, at the
option of the Company, treasury stock if available (the "Option Shares"). The
exercise price for the Option Shares shall be ________ per share (the "Purchase
Price"). The Option shall be a nonstatutory stock option.
2. Exercise of Option. Subject to the terms and conditions of
this Agreement, the vested portion of the Option may only be exercised by
completing and signing a written notice in substantially the following form:
I hereby exercise [all/part of] the Option granted to me by
Central Freight Lines, Inc., a Nevada corporation, on
_____________, and elect to purchase _____________________
shares of the Company's Class A Common Stock for ________ per
share.
3. Exercise and Term of Options. The term of the Option shall be
ten (10) years from the Grant Date. The Option may be exercised in whole or in
part with respect to vested shares at any time during the term of the Option. No
fractional shares will be issued upon exercise of the Option and, if the
exercise results in a fractional interest, an amount will be paid in cash equal
to the value of such fractional interest based on the fair market value of the
Common Stock on the date of exercise. The Option shall be deemed to be exercised
upon receipt by the Company from the Optionee of written notice of exercise as
set forth in Section 2, accompanied by full payment for the shares subject to
such exercise. To the extent permitted by law, and consistent with Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), Optionee, in lieu of paying the Purchase Price in full in cash,
may make payment in Common Stock already owned by the Optionee, or in the value
of surrendered options to purchase Common Stock which are then exercisable,
valued at fair market value on the date of exercise, as partial or full payment
of the Purchase Price. As soon as practicable after receipt of full payment, the
Company shall deliver to the Optionee a certificate or certificates representing
the acquired shares of Common Stock.
4. Vesting and Exercisability of Option. Subject to the
provisions of Sections 5, 7, and 8 hereof, the Option shall vest irrespective of
whether Optionee continues as a director of the Company and may be exercised by
the Optionee in whole or in part from time to time, but only in accordance with
the following schedule:
Cumulative Percentage of Option Shares Vested and as
Date to which Option may be Exercised
---- --------------------------------
First Anniversary of Grant Date 20%
Second Anniversary of Grant Date 40%
Third Anniversary of Grant Date 60%
Fourth Anniversary of Grant Date 80%
Fifth Anniversary of Grant Date 100%
Notwithstanding anything herein to the contrary, no vesting shall occur in the
event the Option has been terminated under this Agreement prior to such date.
5. Termination of Option. The Option, to the extent not already
exercised, shall terminate upon the first to occur of the following dates:
(a) Death. If the Optionee dies during the term of the
Option, the Option may be exercised at any time within twelve (12)
months following the date of death, but only to the extent the Optionee
was entitled to exercise the Option on the date of death. To the extent
the decedent was not entitled to exercise the Option on the date of
death, or if the Optionee's estate, or person who acquired the right to
exercise the Option by bequest or inheritance, does not exercise that
portion of the Option that he was entitled to exercise within the time
specified herein, the Option shall terminate.
(b) End of Term. The Option shall terminate on the date
ten years after the Grant Date.
6. Adjustments. In the event of any stock split, reverse stock
split, stock dividend, business combination, reclassification, or similar event,
the number of Option Shares and the Purchase Price per share shall be
proportionately and appropriately adjusted without any change in the aggregate
Purchase Price to be paid therefor upon exercise of the Option. The
determination by the Board of Directors of the Company (the "Board") as to the
terms of any of the foregoing adjustments shall be final, binding, and
conclusive.
7. Acceleration Upon Certain Changes. In the event of the
proposed dissolution or liquidation of the Company, the Option shall terminate
immediately prior to the consummation of such proposed action. In the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, the Option shall
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become immediately exercisable with respect to all then outstanding Option
Shares (whether or not vested) and the Optionee may elect, during the period
commencing on the date that such sale or merger is consummated and ending at the
closing of business on the thirtieth (30th) day following the date of such sale
or merger, to exercise the Option in whole or in part. In the event the
thirtieth (30th) day referred to in this Section 7 shall fall on a day that is
not a business day, then the thirtieth (30th) day shall be deemed to be the next
following business day.
8. Acquisition. If any person, corporation, or other entity or
group thereof other than Xxxxx Xxxxx, Xxxxxx Xxxxx, and entities or trusts
controlled by either (the "Acquiror"), acquires (an "Acquisition"), other than
by merger or consolidation or purchase from the Company, the beneficial
ownership (as that term is used in Section 13(d)(1) of the Exchange Act and the
rules and regulations promulgated thereunder) of shares of the Company's stock
which, when added to any other shares, the beneficial ownership of which is held
by the Acquiror, shall have the right to cast more than 51% of the votes that
are entitled to be cast at meetings of stockholders, any portion of the Option
that was not currently exercisable prior to the date of the Acquisition shall
become immediately exercisable and the Optionee may elect, during the period
commencing on the date of the Acquisition and ending at the closing of business
on the thirtieth (30th) day following the date of the Acquisition, to exercise
the Option in whole or in part. In the event the thirtieth (30th) day referred
to in this Section 8 shall fall on a day that is not a business day, then the
thirtieth (30th) day shall be deemed to be the next following business day.
9. Notices. Any notice to be given under the terms of this
Agreement ("Notice") shall be addressed to the Company in care of its President
at 0000 X. Xxxx Xxxxx, Xxxx, Xxxxx 00000-0000, or at its then current corporate
headquarters. Notice to be given to the Optionee shall be addressed to him by
hand delivery or at his then current residential address as appearing on the
Company's records. Notice shall be deemed duly given when enclosed in a properly
sealed envelope and deposited by certified mail, return receipt requested, in a
post office or branch post office regularly maintained by the United States
Government.
10. Optionee Not a Stockholder. The Optionee shall not be deemed
for any purposes to be a stockholder of the Company with respect to any of the
Option Shares except to the extent that the Option has been exercised, payment
made, and a stock certificate issued.
11. Disputes or Disagreements. The Optionee agrees, for himself
and his personal representatives, that any disputes or disagreements which arise
under or as a result of or pursuant to this Agreement shall be determined by the
Board in its sole discretion, and that any interpretation by the Board of the
terms of this Agreement shall be final, binding, and conclusive.
12. Non-Transferability. The Option granted pursuant to this
Agreement is not transferable by the Optionee other than by will, under the laws
of descent and distribution, or pursuant to a qualified domestic relations
order, and is exercisable during the Optionee's lifetime only by the Optionee or
the Optionee's guardian or legal representative. Any transfer contrary to this
Section 12 shall nullify the Option.
13. Withholding. The Optionee acknowledges that the exercise of
the right to purchase all or any part of the Option Shares may require the
Optionee to recognize ordinary income, and, as a result, the Company shall incur
certain tax withholding and reporting obligations. The Company shall not be
obligated to issue any stock certificate upon the exercise
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of the right to purchase Option Shares until the Optionee has delivered
sufficient funds to cover all income, FICA, FUTA, and other applicable tax
withholding. At the Board's sole discretion, to satisfy the Company's
withholding obligations, the Company may retain such number of Option Shares as
have an aggregate fair market value on the date of exercise equal to the
Company's aggregate, federal, state, local, and foreign tax withholding
obligations as a result of the exercise of the Option by Optionee. The Board may
consider the Optionee's preference in making such determination, but the
Optionee acknowledges that the Board is under no obligation to follow or even
consider Optionee's preference, and that the Board will consider the Section 16
restrictions of the Exchange Act, including the holding period, advance notice,
and election windows required for any withholding of shares to be exempt.
14. Right of First Refusal. The Optionee may sell or transfer any
or all of the Common Stock owned by him to any person who makes a good faith,
bona fide offer therefor, but prior to an initial public offering of the Common
Stock of the Company, the Company shall have the right of first refusal to
purchase such Common Stock from the Optionee as set forth below. The Optionee
shall give prior notice in writing (the "Offer Notice") to the Company of each
intended sale or transfer, which Offer Notice shall contain all the terms of the
proposed transfer or disposition, including, without limitation, the name and
address of the prospective transferee, the purchase price and other terms and
conditions of payment, and the number of shares of Common Stock to be disposed
of by the Optionee (such shares being referred to herein as the "Offered
Stock"). The Optionee shall specifically represent and warrant in such Offer
Notice that the above terms reflect an actual bona fide offer that the Optionee
intends to accept, subject to compliance with the terms of this Agreement. The
Company shall have a prior right to purchase the Offered Stock on the terms and
conditions set forth in this Section 14. The price and terms to the Company
under this right of first refusal shall be the price and terms set forth in the
Offer Notice.
a. By notice (the "Company Notice") to the Optionee given not
more than thirty (30) days after the date of the mailing of
the Offer Notice, the Company shall specify if it desires to
purchase all, but not less than all, of the Offered Stock.
b. If, after following the procedures outlined in Section 14.a.
above, the Offered Stock is not subscribed for by the Company,
the Optionee, for a period of sixty (60) days following
expiration of the thirty (30) day period provided in Section
14.a., shall then be free to sell the Offered Stock, free and
clear of all the restrictions contained in this Agreement, but
only to the purchaser named in the Offer Notice and only upon
the terms specified therein. If the Optionee fails to
consummate such sale to such purchaser on such terms and
conditions within such sixty (60) day period, any sale or
other transfer by the Optionee to any person shall again be
subject to the right of first refusal specified in this
Section 14.
c. If the Company subscribes for the Offered Stock, then such
Offered Stock shall be sold to the Company. On a date no later
than fifteen (15) days following the date of the Company
Notice, the Company shall deliver to the Secretary of the
Company for delivery to the Optionee upon delivery of the
certificates provided herein, together with stock powers
attached thereto, the amount of the purchase price for the
Offered Stock.
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d. The Company's right of first refusal with respect to the
Offered Stock shall expire on the date of the initial public
offering of the Common Stock of the Company, and thereafter
any right of the Company to repurchase its outstanding stock
shall be governed by federal and state securities laws.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officer, and the Optionee has hereunto affixed
his signature.
CENTRAL FREIGHT LINES, INC., OPTIONEE
a Nevada corporation
By: __________________________________________ ______________________________
Xxxxxxx X. Xxxxx, Executive Vice President
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