Exhibit 10.6
STOCK OPTION AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of March 20, 2002, by and
between TIMCO Aviation Services, Inc., a Delaware corporation (the "Company")
and Xxx X. Xxxxxx, Xx. (the "Optionee"). Unless otherwise defined herein,
capitalized terms shall have the meanings given to them in the Employment
Agreement (as defined below).
WHEREAS, Optionee and the Company have on the date hereof entered into
an Employment Agreement (the "Employment Agreement") pursuant to which Optionee
shall be employed by the Company; and
WHEREAS, Optionee would not have entered into the Employment Agreement
but for, among other things, the Company entering into this Agreement; and
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereby
agree as follows:
1. Grant of Stock Option
Subject to the terms and conditions of this Agreement, the Company
hereby grants to the Optionee the option to purchase, at any time prior to 5:00
p.m. on March 20, 2007 (the "Option Expiration Date"), an aggregate of 800,000
shares of the authorized but unissued common stock (the "Common Stock") of the
Company (the "Options").
2. Exercise Price.
The Options shall be exercisable at an exercise price of $1.02 per
share of Common Stock (the "Exercise Price"). The Optionee shall pay all
transfer taxes, if any, upon the exercise of the Options. The Exercise Price
shall be subject to adjustment in the event of changes in the capitalization of
the Company, as set forth in Section 5 hereto.
3. Exercisability of Options.
a. Vesting of Right to Exercise. The right to exercise the Options
shall vest over a three-year period, with one-third of the Options vesting on
the date of this Agreement, 1/3 vesting on the first anniversary of this
Agreement and 1/3 vesting on the second anniversary of this Agreement. If,
however, the employment of the Optionee is terminated by the Company for Cause
or in case of the death or Disability of the Optionee pursuant to the Employment
Agreement, then all Options which have not vested on or prior to the date of
such termination shall not vest and shall be automatically forfeited by the
Optionee without any further action. Vested options shall be exercisable, in
whole or in part, until the Option Expiration Date, regardless of whether the
Optionee remains an employee, officer or director of the Company during that
period. Notwithstanding the foregoing, the Options shall automatically vest upon
a Change in Control, as that term is defined in the Employment Agreement.
b. Manner of Exercise. The Options granted hereunder as to which the
right to exercise has vested may be exercised by the delivery by the holder
thereof to the Company at its principal office (to the attention of the
Secretary of the Company) of written notice of the number of full shares of
Common Stock with respect to which the Option is being exercised, accompanied by
payment in full of the price for such shares of Common Stock: (i) in cash or by
certified or bank check payable to the order of the Company, (ii) by delivery of
shares of Common Stock already owned by the Optionee and having a fair market
value equal to the Exercise Price, or (iii) by a combination of cash and Common
Stock.
c. Termination. Subject to the vesting provisions in subparagraph 3(a)
above, Optionee shall have the right to exercise the Options until the Option
Expiration Date, regardless of whether Optionee is an employee, officer or
director of the Company at the time that he seeks to exercise the Options.
d. Death. Upon the death of the Optionee, the personal representatives,
heirs, legatees or distributees of the Optionee, as appropriate, shall have the
right to exercise all of the Options then exercisable under this Agreement at
any time prior to the Option Expiration Date.
e. Exercise of Vested Options. An Option may not be exercised pursuant
to this Section 3 unless the holder was entitled to exercise the Option at the
time of such exercise.
f. Transfer of Options. Options granted hereunder shall not be
transferable or assignable, other than by will or the laws of descent and
distribution.
4. The Optionee's Investment Representations.
The Optionee hereby agrees, acknowledges, represents and warrants to
the Company the following:
a. The Optionee is acquiring the Options hereunder for investment
purposes only and without the intent toward the further sale and/or distribution
thereof. In addition, the Optionee hereby agrees, acknowledges, represents and
warrants, that in the event of the exercise of any of the Options hereunder, the
shares of Common Stock issuable upon exercise of the Options (the "Option
Shares") shall be acquired for investment purposes only and without the intent
toward the further sale and/or distribution thereof.
b. Unless the shares of Common Stock underlying the Options are
registered in compliance with the registration requirements of the Securities
Act of 1933, as amended (the "Act"), and with other applicable securities laws,
the certificates evidencing the Option Shares will bear a restrictive legend
with respect to the sale or transfer thereof. Any subsequent sale, transfer,
assignment or disposition of the Option Shares, must be made in compliance with
the registration requirements of the Act, and with other applicable securities
laws or pursuant to an applicable exemption from such registration requirements,
in the opinion of counsel reasonably satisfactory to the Company.
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c. The Optionee is familiar with the business and financial condition
of the Company, and the Optionee has been afforded the opportunity to ask all
relevant questions of the Company's management with respect to the business and
financial condition of the Company. The Optionee further agrees to re-assert any
of said representations and warranties and to make any other representations and
warranties, as reasonably requested by the Company, as of the date of exercise
of any of said Options.
d. The Optionee hereby further acknowledges, agrees, represents and
warrants that the issuance of the Option Shares upon the exercise of the Options
is conditioned, in part, upon the compliance with applicable securities laws.
The Optionee agrees to deliver to the Company any reasonable documentation
requested with respect thereto and further acknowledges and agrees that any said
exercise of the Options and the issuance of the Option Shares may only be
effectuated provided said exercise is in compliance with applicable laws and
regulations. In addition, the Optionee further acknowledges that the Company is
relying upon the representations and warranties of the Optionee hereunder with
respect to compliance by the Company with applicable securities laws and
regulations.
5. Adjustments Upon Changes in Capitalization.
a. In the event of a merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, or other change in corporate
structure affecting the shares of Common Stock of the Company, such adjustment
shall be made in the number of Option Shares, and the Exercise Price shall be
correspondingly adjusted to equitably reflect such change.
b. Any adjustment in the number of Option Shares shall apply
proportionately to only the unexercised portion of the Options granted
hereunder. If fractions of an Option Share would result from any such
adjustment, the adjustment shall be revised to the next lower whole number of
Option Shares.
6. No Rights as a Shareholder.
The Optionee shall have no rights as a shareholder of the Company with
respect to the Option Shares issuable upon the exercise of Options granted
hereunder that have not been exercised and for which payment in full of the
applicable Exercise Price has not been made as provided herein.
7. Registration.
a. Form S-8 Registration. The Company hereby agrees to file a Form S-8
Registration Statement to register the Option Shares for public sale. Such
registration statement will be filed within 6 months after the date of this
Option Agreement. The Company hereby agrees to use its best efforts to keep such
registration statement current until all of the Option Shares are resold in
public market.
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8. Further Conditions of Exercise
a. Delivery of Shares by Company. The Company shall not be obligated to
deliver any shares of Common Stock until they have been listed on each
securities exchange on which the shares of Common Stock may then be listed or
until there has been qualification under or compliance with such state or
federal laws, rules or regulations as the Company may deem applicable. The
Company shall use its best efforts to obtain such listing, qualification and
compliance.
b. Withholdings. The Company may make such provisions and take such
steps as it may deem necessary or appropriate for the withholding of any taxes
that the Company is required by any law or regulation of any governmental
authority, whether federal, state or local, domestic or foreign, to withhold in
connection with the exercise of any Option, including, but not limited to, (i)
the withholding of delivery of shares of Common Stock upon exercise of Options
until the holder reimburses the Company for the amount the Company is required
to withhold with respect to such taxes, (ii) the canceling of any number of
shares of Common Stock issuable upon exercise of such Options in an amount
sufficient to reimburse the Company for the amount it is required to so
withhold, or (iii) withholding the amount due from any such person's wages or
compensation due such person.
9. Miscellaneous.
a. Indulgences, Etc. Neither the failure nor any delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
b. Controlling Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be governed by
and construed in accordance with the laws of the State of North Carolina,
without application to the principles of conflict of laws.
c. Notices. All notices, requests, claims, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been given or made upon the earliest to occur of: (a) receipt, if made by
personal service, (b) to (2) days after dispatch if made by reputable overnight
courier service, (c) upon the delivering party's receipt of a written
confirmation of a transmission made by cable, by telecopy, by facsimile, by
telegram or by telex, or (d) seven (7) days after being mailed by registered
mail (postage prepaid, return receipt requested) to the respective parties at
the addresses on the face of this Agreement.
d. Binding Nature of Agreement; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal
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representatives, successors and assigns, except that no party may assign or
transfer its rights under this Agreement without the prior written consent of
the other parties hereto.
e. Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
f. Section Headings. The section headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
g. Number of Days. In computing the number of days for purposes of this
Agreement, all days shall be counted, including Saturdays, Sundays and holidays;
provided, however that if the final day of any time period falls on a Saturday,
Sunday or holiday on which federal banks are or may elect to be closed, then the
final day shall be deemed to be the next day which is not a Saturday, Sunday or
such holiday.
h. No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
i. Entire Agreement; Amendments. This Agreement (including the
Employment Agreement referred to herein) constitutes the entire agreement among
the parties and supersedes any prior understandings, agreements, or
representations by or among the parties, written or oral, that may have related
in any way to the subject matter hereof. This Agreement may not be amended,
supplemented or modified in whole or in part except by an instrument in writing
signed by the party or parties against whom enforcement of any such amendment,
supplement or modification is sought.
j. Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and
thereof strict construction shall be applied against any party. Any reference to
any federal, state, local or foreign statute or law shall be deemed also to
refer to the rules and regulations promulgated thereunder, unless the context
requires otherwise. The parties intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any party has
breached any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty or covenant
relating to the same subject matter (regardless of the relative levels of
specificity) which the party has not breached shall not detract from or mitigate
the fact that the party is in breach of the first representation, warranty or
covenant. This Agreement shall be neither construed against nor in favor of any
of the parties hereto, but rather in accordance with the fair meaning of its
content.
k. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
TIMCO AVIATION SERVICES, INC.
By: /s/ Xxx Xxxx
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Name (print): Xxx Xxxx
Title: President
OPTIONEE:
/s/ Xxx X. Xxxxxx, Xx.
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Xxx X. Xxxxxx, Xx.
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