OLYMPIC FINANCIAL LTD.
NON-STATUTORY STOCK OPTION AGREEMENT
Olympic Financial Ltd., a Minnesota corporation (the "Company"), hereby
grants to Xxxxxx Xxxxxx (the "Optionee"), an option (the "Option") to
purchase a total of 125,000 shares of the $.01 par value common stock
("Common Stock") of the Company (the "Shares"), at the price determined as
provided herein, and in all respects subject to the terms, definitions and
provisions hereof. The grant of this Option is subject to the approval
thereof by the shareholders of the Corporation (if such approval is required
by applicable laws or regulations) and by the Board of Directors of the
Corporation.
1. NATURE OF THE OPTION. This Non-Statutory Stock Option is not
intended to qualify as an Incentive Stock Option as defined in Section 422A
of the Code.
2. EXERCISE PRICE. The exercise price is $14.87 for each share of
Common Stock, which price the Board of Directors of the Company (the "Board")
has determined is not less than the fair market value per share of the Common
Stock on the date of grant.
3. EXERCISE OF OPTION. The Option shall be exercisable during its term
as follows:
(i) RIGHT TO EXERCISE.
(a) Subject to subsections 3(i)(b),(c) and (d) below, this
Option shall be exercisable to the extent of one hundred percent (100%) of
the Shares subject to the Option commencing on December 31, 1997. Provided,
however, as of the date prior to the date of the occurrence of the first to
occur of any of the following events prior to December 31, 1997,
notwithstanding the previous sentence of this subsection 3(i)(a), this Option
shall be exercisable cumulatively to the extent of one hundred percent (100%)
of the Shares subject to the Option regardless of whether otherwise
exercisable by the Optionee:
x) the death or disability of Optionee; or
y) the termination by the Company of the Consulting
Agreement dated as of December 18, 1996, by and between the Company
and the Optionee (the "Consulting Agreement") without Cause as such
term is defined in the Consulting Agreement; or the termination of
the Consulting Agreement by Optionee due to the material breach
thereof by the Company; or
z) a "Change of Control" of the Company. As used
herein the term "Change of Control" shall mean the closing of any
transaction or series of transactions by which the Company shall
merge with or consolidate into any other person or lease or sell
substantially all of its and its subsidiaries assets (other than
asset sales in connection with automobile loan securitization
transactions)
1
substantially as an entirety to any other person or by which any
person or group (within the meaning of Rule 13d-5 under the
Securities Exchange Act of 1934) acquires, directly or indirectly,
51% or more of the Company's outstanding common stock (calculated
on a fully diluted basis); or
and, provided further, in the event the Consulting Agreement is terminated
prior to December 18, 1997 by the mutual agreement of the Company and the
Optionee, notwithstanding the previous sentence of this subsection 3(i)(a),
this Option shall be exercisable cumulatively to the extent of that fraction
of the Shares subject to the Option the numerator of which shall be the
number of days elapsed in 1997 as of the date of such termination and the
denominator of which shall be 365, rounded down to the next lower full share
amount.
(b) This Option may not be exercised for a fraction
of a share.
(c) In the event of Optionee's death, disability or
other termination of the Consulting Agreement, the exercisability of the
Option is governed by Sections 7, 8 and 9 below, subject to the limitations
contained in subsection 3(i)(d).
(d) In no event may this Option be exercised after
the date of expiration of the term of this Option as set forth in Section 11
below.
(ii) METHOD OF EXERCISE. This Option shall be exercisable by
written notice which shall state the election to exercise the Option, the
number of Shares in respect of which the Option is being exercised, and such
other representations and agreements as to the holder's investment intent
with respect to such shares of Common Stock as may be required by the
Company. Such written notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of the Company. The
written notice shall be accompanied by payment of the exercise price. Until
certificates for the Shares are issued to the Optionee, such Optionee shall
not have any rights as a shareholder of the Company.
No Shares will be issued pursuant to the exercise of an Option unless
such issuance and such exercise shall comply with all relevant provisions of
law and the requirements of any stock exchange upon which the Shares may then
be listed. Assuming such compliance, for income tax purposes the Shares shall
be considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.
4. OPTIONEE'S REPRESENTATIONS. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, concurrently with the exercise of all or any portion of this
Option, deliver to the Company his Investment Representation Statement in the
form attached hereto as Exhibit A.
5. METHOD OF PAYMENT. Payment of the exercise price shall be by (i)
cash; (ii) check; or (iii) if authorized by the Board of Directors of the
Company, the surrender of other shares of Common Stock of the Company which
(A) either have been owned by the Optionee for more
2
that six (6) months on the date of surrender or were not acquired, directly
or indirectly, from the Company and (B) have a fair market value (as
determined by the Board) on the date of surrender equal to the exercise price
of the Shares as to which the Option is being exercised.
6. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule
under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation
G") as promulgated by the Federal Reserve Board. As a condition to the
exercise of this Option, the Company may require Optionee to make any
representation and warranty to the Company as may be required by any
applicable law or regulation.
7. TERMINATION OF CONSULTING AGREEMENT. In the event of termination of
the Consulting Agreement (i) by Optionee other than due to the material
breach of the terms thereof by the Company or (ii) by the Company for Cause,
the Option shall terminate.
8. DISABILITY OF OPTIONEE. In the event of termination of the
Consulting Agreement, as a result of Optionee's disability, he may, but only
within one year from the date of such termination (but in no event later than
the date of expiration of the term of this Option as set forth in Section 11
below), exercise his Option to the extent he was entitled to exercise it at
the date of such termination. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if he does not exercise
such Option (which he was entitled to exercise) within the time specified
herein, the Option shall terminate.
9. DEATH OF OPTIONEE. In the event of the death of Optionee during the
term of this Option, the Option may be exercised, at any time within one (1)
year following the date of death (but in no event later than the date of
expiration of the term of this Option as set forth in Section 11 below), by
Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent Optionee was
entitled to exercise the Option at the date of death.
10. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by him. The terms
of this Option shall be binding upon the Optionee and his or her personal
representatives, heirs, successors and assigns.
11. TERM OF OPTION. This Option may not be exercised after December
18, 2006, and may be exercised only in accordance with the terms of this
Option.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. The number
of shares of Common Stock covered by this Option and the exercise price shall
be proportionately adjusted for any increase or decrease in the number of
issued and outstanding shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that
3
conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment
shall be made by the Board, whose determination in that respect shall be
final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, or options or rights to
purchase shares of stock of any class shall affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to this Option.
In the event of the proposed dissolution or liquidation of the Company,
the Option will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in
the exercise of its sole discretion in such instances, declare that the
Option shall terminate as of a date fixed by the Board and give the Optionee
the right to exercise his Option as to all or any part of the Shares. In the
event of a change of control of the Company, the Board shall notify the
Optionee that the Option shall be fully exercisable for a period of ten (10)
days from the date of such notice, and the Option will terminate upon the
expiration of such period.
13. NO RIGHTS AS SHAREHOLDER. The Optionee shall have no rights as a
shareholder with respect to any Shares subject to this Option prior to the
date of issuance to him of a certificate or certificates for such shares.
DATE OF GRANT: December 18, 1996
OLYMPIC FINANCIAL LTD.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxx
Title: Vice Chairman
4
OPTIONEE ACKNOWLEDGES RECEIPT OF A COPY OF THE OPTION AGREEMENT AND
CERTAIN INFORMATION RELATED THERETO AND REPRESENTS THAT HE IS FAMILIAR WITH
THE TERMS AND PROVISIONS THEREOF, AND HEREBY ACCEPTS THIS OPTION SUBJECT TO
ALL OF THE TERMS AND PROVISIONS THEREOF. OPTIONEE HAS REVIEWED THIS OPTION IN
ITS ENTIRETY, HAS HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF COUNSEL PRIOR TO
EXECUTING THIS OPTION AND FULLY UNDERSTANDS ALL PROVISIONS OF THE OPTION.
OPTIONEE HEREBY AGREES TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL
DECISIONS OR INTERPRETATIONS OF THE BOARD UPON ANY QUESTIONS ARISING UNDER
THE OPTION. OPTIONEE FURTHER AGREES TO NOTIFY THE COMPANY UPON ANY CHANGE IN
THE RESIDENCE ADDRESS INDICATED BELOW.
Optionee:
Dated: December 18, 1996 /s/ Xxxxxx Xxxxxx
----------------------------------
Xxxxxx Xxxxxx
Residence Address:
000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
5
EXHIBIT A
INVESTMENT REPRESENTATION STATEMENT
PURCHASER: Xxxxxx Xxxxxx
ISSUER: OLYMPIC FINANCIAL LTD.
SECURITY: COMMON STOCK
AMOUNT: 125,000 SHARES
DATE: __________________,_________
In connection with the purchase of the Common Stock ("Securities") of OLYMPIC
FINANCIAL LTD. (the "Company"), the undersigned represents to the Company the
following:
(a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Securities. I am
purchasing these Securities for my own account for investment purposes only
and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as amended
(the "Securities Act").
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of my
investment intent as expressed herein. In this connection, I understand that,
in the view of the Securities and Exchange Commission (the "SEC"), the
statutory basis for such exemption may be unavailable if my representation
was predicated solely upon a present intention to hold these Securities for
the minimum capital gains period specified under tax statutes, for a deferred
sale, for or until an increase or decrease in the market price of the
Securities, or for a period of one year or any other fixed period in the
future.
(c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an
exemption from registration is otherwise available. Moreover, I understand
that the Company is under no obligation to register the Securities. In
addition, I understand that the certificate evidencing the Securities will be
imprinted with a legend which prohibits the transfer of the Securities unless
they are registered or such registration is not required in the opinion of
counsel for the Company.
(d) I am familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly,
from the issuer thereof, in a non-public
6
offering subject to the satisfaction of certain conditions. Rule 701 provides
that if the issuer qualifies under Rule 701 at the time of issuance of the
Securities, such issuance will be exempt from registration under the
Securities Act. In the event the Company later becomes subject to the
reporting requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, ninety (90) days thereafter the securities exempt under Rule 701 may
be resold, subject to the satisfaction of certain of the conditions specified
by Rule 144, including among other things: (1) the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly
with a market maker (as said term is defined under the Securities Exchange
Act of 1934); and, in the case of an affiliate, (2) the availability of
certain public information about the Company, and the amount of securities
being sold during any three month period not exceeding the limitations
specified in Rule 144(e), if applicable. Notwithstanding this paragraph (d),
I acknowledge and agree to the restrictions set forth in paragraph (e) hereof.
In the event that the Company does not qualify under Rule 701 at the
time of issuance of the Securities, then the Securities may be resold in
certain limited circumstances subject to the provisions of Rule 144, which
requires among other things: (1) the availability of certain public
information about the Company, (2) the resale occurring not less than two
years after the party has purchased, and made full payment for, within the
meaning of Rule 144, the securities to be sold; and, in the case of an
affiliate, or of a non-affiliate who has held the securities less than three
years, (3) the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934) and the amount of
securities being sold during any three month period not exceeding the
specified limitations stated therein, if applicable.
(e) I further understand that in the event all of the applicable
requirements of Rule 144 or Rule 701 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact Rule 144 and
Rule 701 are not exclusive, the staff of the SEC has expressed its opinion
that persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 or Rule 701 will
have a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their
own risk.
Signature of Purchaser:
--------------------------------------
Xxxxxx Xxxxxx
Date: _________________, 199___
7