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EXHIBIT 10.17(a)
AGREEMENT
This Nonqualified Stock Option Agreement ("Agreement") dated as of March 3,
1997 by and between COMPLETE BUSINESS SOLUTIONS, INC. ("Company"), a Michigan
corporation, having an office at 00000 Xxxx 00 Xxxx Xxxx, Xxxxx 000, Xxxxxxxxxx
Xxxxx, Xxxxxxxx 00000 and XXXXX XXXXXX ("Holder"), an individual.
W I T N E S S E T H :
WHEREAS, the Company is a privately held Subchapter S corporation;
WHEREAS, the Company has the authority to issue additional shares of
the Company's common stock (all of the Company's shares of common stock being
hereinafter referred to as "Common Stock");
WHEREAS, Holder has provided valuable services to the Company by
serving as a director on its Board of Directors;
WHEREAS, the Company desires to document its previous commitment to
xxxxx Xxxxxx an option to purchase a portion of the Company's Common Stock,
upon the price, terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the terms and covenants contained
herein, and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Option.
Holder shall have the right, at his sole and absolute option, to
purchase on terms and conditions hereinafter set forth, all or any part of the
aggregate of 14,856 shares of Common Stock of the Company (collectively, the
"Option Shares") at the purchase price of $4.21 per share (the "Option Price").
Such right is hereinafter referred to as the "Option". The Option Shares and
the Option Price have been adjusted from the 2.5 shares at $25,000 per share
granted to the Holder on October 27, 1995 (the "Grant Date"), to reflect the
10,000 to one split of the Company's outstanding shares of Common Stock which
occurred on September 10, 1996 and the .5942275 to one combination of the
Company's outstanding shares of Common Stock which occurred on February 3,
1997.
2. Exercise; Expiration Date.
(a) EXERCISE: The Option shall be exercisable in full three years after
the Grant Date. On each anniversary of the Grant Date, the Holder may purchase
a cumulative installment of one third of the Option Shares, so that from and
after the third anniversary of the Grant Date the Holder may purchase all of
the Option Shares. The Option may be exercised in whole or in
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part, at the option of Holder, on or before the Expiration Date (hereinafter
defined) by delivering to the Company written notice of Holder's exercise
("Exercise Notice") stating the amount of Option Shares to be purchased
thereby, accompanied by a check ("Check") made payable to the order of the
Company for the aggregate sum due for the Option Shares then being purchased.
As soon as practicable thereafter, and in any event within ten (10) business
days of the Company's receipt of the Exercise Notice and a Check, the Company
shall issue and deliver to Holder a certificate representing the Option Shares
being purchased pursuant to such Exercise Notice. Each such certificate shall
bear the legend or legends required by applicable securities laws as well as
such other legends the Company requires to be included on certificates for its
Common Stock. Such certificate or certificates shall be deemed to have been
issued and Holder or any other persons so designated to be named therein shall
be deemed for all purposes to have become a holder of record of such shares as
of the date the Exercise Notice is delivered to the Company. In the case of an
exercise for less than all of the Option Shares permitted to be purchased
hereunder, the Holder shall reserve the right to exercise the Option at any
time and from time to time prior to the Expiration Date for the remainder of
the Option Shares.
(b) EXPIRATION DATE: The term "Expiration Date" shall mean ten (10)
years from the Grant Date, at 5:00 P.M. Detroit time on such date or if such
date shall be a federal holiday, a Saturday or a Sunday, then 5:00 P.M. Detroit
time the next following day which is not a federal holiday, a Saturday or a
Sunday.
3. Anti-Dilution Provisions.
(a) The number of shares of Option Shares and the exercise price per
share shall be subject to adjustment from time to time as provided for in this
Section 3(a). Notwithstanding any provision contained herein, the aggregate
Option Price for the total number of Option Shares issuable pursuant to the
Option shall remain unchanged. In case the Company shall at any time change as
a whole, by subdivision, combination, acquisition or sale in any manner or by
the making of a stock split or stock dividend or by changing the number of
outstanding shares of Common Stock into a different number of shares, (i) the
number of shares which Holder shall have been entitled to purchase pursuant to
this Agreement shall be increased or decreased in direct proportion to such
increase or decrease of shares, as the case may be, and (ii) the Option Price
(but not the aggregate Option Price of all such shares) in effect immediately
prior to such change shall be increased or decreased in inverse proportion to
such increase or decrease of shares, as the case may be. In addition, and
without limiting the foregoing, it is the parties' intention hereto that the
Option Price respective to the Option Shares shall at all times be equal to or
less than the lowest price per share for additional shares of Common Stock
hereafter issued at less than fair market value or deemed to be hereafter
issued at less than fair market value upon the issuance of any warrants,
options or other subscription rights with respect to Common Stock or other
securities convertible into Common Stock or the issuance of any warrants,
options or any similar rights with respect to such convertible securities (all
such shares or instruments of the Company being referred to herein collectively
as "Securities"). Accordingly, upon any issuance or deemed issuance of
Securities at a price per share which is less than the then current fair market
value of such Securities and less than the lowest price per share of the Option
Shares, the per share price of the Option Shares shall be forthwith reduced to
an amount equal to the lowest price per share of Securities so issued. If the
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Company shall in any manner grant, issue or sell any Securities whether or not
same or the right to convert or exchange any of same are immediately
exercisable, the Company will be deemed to have issued or sold Common Stock.
(b) If, under this Paragraph 3, the purchase price provided for in any
Securities, the additional consideration, if any, payable upon the conversion
or exchange of any such Securities, or the rate at which any of same are
convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution), the Option Price in effect at the time of such event shall forthwith
be readjusted to the respective Option Price which would have been in effect at
such time had such Securities still remained outstanding provided for such
changed purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold. If the purchase
price provided for in any such Securities shall be reduced at any time under or
by reason of provisions with respect thereto designed to protect against
dilution, then, in case of the delivery of Common Stock upon the exercise of
any such Securities or upon conversion or exchange of any such Securities, the
Option Price in effect hereunder shall forthwith be adjusted to such respective
amounts as would have been effective upon the issuance of the shares of Common
Stock delivered as aforesaid.
(c) Upon the expiration of any Securities or the termination of any
right to convert or exchange any Securities without the exercise of a stock
option or right, the Option Price then in effect will be adjusted to the
respective Option Price which would have been in effect at the time of such
expiration or termination had such Securities, to the extent outstanding
immediately prior to such expiration or termination, never been issued.
(d) In case any shares of Common Stock and Securities shall be issued
or sold for cash, the consideration received therefor shall be deemed to be the
amount received upon such issuance or sale, without deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid or
allowed by the Company in connection therewith. In case any shares of Common
Stock and Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the Company
shall be deemed to be the fair value of such consideration as determined in
good faith by the Board of Directors of the Company, without deduction of any
expenses incurred or any underwriting commissions or concessions paid or
allowed by the Company in connection therewith. In case any shares of Common
Stock or Securities shall be issued in connection with the issue and sale of
other securities of the Company, together comprising one integral transaction
in which no specific consideration is allocated to such shares of Common Stock
or Securities by the parties thereto, such shares of Common Stock or Securities
shall be deemed to have been issued at a rate of $.01 per share of Common
Stock.
(e) The number of shares of Common Stock outstanding at any given time
shall not include shares owned or held by or for the account of the Company,
and the disposition of any such shares shall be considered an issue or sale of
Common Stock for the purposes of this Paragraph 3.
(f) Upon any adjustment of an Option Price, then and in each such case
the Company shall give written notice thereof to Holder, which notice shall
state the Option Price
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resulting from such adjustment and the increase or decrease, if any, in the
number of shares of Common Stock purchasable at such price upon the exercise of
the Option, setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based.
(g) In case of any capital reorganization or any reclassification of
the Common Stock of the Company or in case of the consolidation or merger of
the Company with another corporation (or in the case of any sale, transfer, or
other disposition to another corporation of all or substantially all the
property, assets, business, and goodwill of the Company), Holder shall
thereafter be entitled to purchase the same kind and amount of shares of
capital stock which the Option entitled Holder to purchase immediately prior to
such capital reorganization, reclassification of capital stock, consolidation,
merger, sale, transfer, or other disposition; and in any such case appropriate
adjustments shall be made in the application of the provisions of this
Paragraph 3 with respect to rights and interests thereafter of Holder to the
end that the provisions of this Paragraph 3 shall thereafter be applicable, as
near as reasonably may be, in relation to any shares or other property
thereafter purchasable upon the exercise of the Option.
(h) No certificate for fractional shares shall be issued upon the
exercise of the Option, but in lieu thereof the Company shall purchase any such
fractional shares calculated to the nearest cent.
(i) In addition to the foregoing, if the Company shall acquire any
entity and Holder shall in its sole discretion consider that the acquisition is
made at other than fair value, an adjustment should fairly and appropriately be
made to the Common Stock and the Option Shares so that the value of Common
Stock and Option Shares is, in the agreed opinion of Holder and Company, the
same as it would have been if such acquisition had been made at fair value.
Such adjustment shall become effective (if appropriate) retroactively, on the
day on which the acquisition in question is completed. If Holder and the
Company cannot agree on an appropriate adjustment as required to reflect the
fair value, the independent auditor of the Company shall choose a nationally
recognized valuation firm to make the determination of the required adjustment
(if any). The choice of the valuation firm and the determination of the
valuation firm shall be final and binding.
4. Repurchase Obligation.
At Holder's option the Company shall repurchase any Option Shares of
the Company owned by Holder at any time. The repurchase price shall be
equivalent to the option price as set forth in Paragraph 1 of this Agreement.
This repurchase obligation shall be terminated at the time the Company
completes an initial public offering of its common stock.
5. Holder's Income Tax Coverage,
For so long as the Company shall be a Subchapter S corporation, the
Company agrees that notwithstanding any of its distributions, dividends or
payments made to the shareholders of the Company, the Company shall pay to
Holder after any exercise of the Option, an amount not less xx Xxxxxx'x
federal, state and local personal income tax liability in the aggregate as a
result of the Company's income for the preceding calendar year. Distributions
will be made on a pro rata
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basis based upon percentage ownership of stock of the Company. Nothing in this
Agreement is intended to create a second class of stock in accordance with
Section 1361 (b) (1) (D) of the Internal Revenue Code of 1986 as amended which
would result in the termination of the Company's S Corporation election. Any
provision in this Agreement which is deemed to create such a second class of
stock is null and void.
6. Change of Ownership Protection.
If fifty percent (50%) or more of the ownership of the Company is
transferred, sold or otherwise disposed of in one (1) or more transactions,
then as part of such transfer, sale or other disposition; then, at Holder's
request, any and all shares of Common Stock held by Holder shall be
simultaneously transferred, sold or disposed of therewith at a per share price
no less than the highest per share price paid for the other shares of Common
Stock then being transferred, sold or otherwise disposed of..
7. Assignability.
The Option granted herein may not be pledged, assigned, transferred, sold
or otherwise disposed of by Holder without the prior written consent of the
Company other than to Holder's family trusts, family members, household
members, estate trusts, retirement plans or by Will or by the laws of descent
and distribution.
8. Reservation of Shares.
The Company covenants that it will, at all times, reserve and keep
available out of its authorized Common Stock solely for the purpose of issuance
upon exercise of the Option, such number of shares of Common Stock as shall
then be issuable upon the exercise of the Option. The Company agrees that,
upon issuance in accordance with the terms and conditions of this Agreement,
all Option Shares shall be duly and validly issued and fully paid and
non-assessable and free from all taxes, liens and charges with respect to the
issue thereof.
9. Loss or Mutilation.
Upon receipt by the Company of reasonable evidence of the loss, theft,
destruction, or mutilation of this Agreement, the Company shall execute and
deliver in lieu thereof a new Agreement representing an equal number of Option
Shares exercisable thereunder.
10. Transfer Taxes; Expenses.
The Company shall pay any and all brokerage fees, transfer taxes and
expenses incidental to the exercise of the Option and shall pay all the fees
and expenses of any special attorneys or accountants retained by it in
connection therewith.
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11. Notice.
Any notice and other communication given pursuant to the provisions of
this Agreement shall be in writing and shall be given (i) by mailing the same
by certified mail or registered mail, return receipt requested, postage
prepaid, (ii) by hand, providing for receipted delivery, or (iii) by reputable
overnight courier providing for receipted delivery. Except as may be expressly
otherwise provided in this Agreement, any such notice or other communication
given by mail shall be deemed given two (2) business days after same is mailed
and any such notice or other communication given by hand or overnight courier
as aforesaid shall be deemed given when received or when receipt is refused.
If sent to the Company, such notices or other communication shall be sent to
the Company at 00000 Xxxx 00 Xxxx Xxxx, Xxxxx 000, Xxxxxxxxxx Xxxxx, Xxxxxxxx
00000, or at such other address or addresses as the Company may hereafter
designate by notice to Holder. If sent to Holder, such notices or other
communications shall be sent to Holder at 0000 Xxxxxxx, Xxxxxxx, Xxxxxxxx
00000, or at such other address or addresses as Holder may hereafter designate
by notice to the Company.
12. Governing Law.
This Agreement shall be governed by and construed in accordance with, the
laws of the State of Michigan, without giving effect to any conflicts of laws.
[Paragraphs 13 and 14 were intentionally omitted.]
15. Indemnity.
(a) To the full extent permitted by law the Company shall save Holder
harmless from and indemnify Holder and his heirs, executors and administrators
against any and all injury, loss, damage, costs, expenses, claims, suits,
actions or proceedings (including, without limitation, reasonable attorney's
fees) and against any payments in settlement of any such claims, suits, actions
or proceedings or in satisfaction of any related judgment, fine or penalty
caused by or resulting from any act, omission, negligence or willful conduct of
Holder or Holder's agents no matter how caused from Holder's involvement with
the Company its subsidiaries and affiliates, including, without limitation,
being a shareholder, member of board of directors, trustee of a Company benefit
plan, officer or consultant of the Company its subsidiaries and affiliates.
(b) To the full extent permitted by law the Company shall advance all
reasonable expenses incurred by or on behalf of Holder in connection with any
proceeding by reason of Holder's corporate status within ten (10) days after
the receipt by the Company of a statement or statements from Holder requesting
such advance or advances from time to time, whether prior to or after final
disposition of such proceeding. Such statement or statements shall reasonably
evidence the expenses incurred by Holder and shall include or be preceded or
accompanied by an undertaking by or on behalf of Holder to repay any
expenses advanced if it shall ultimately
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be determined that Holder is not entitled to be indemnified against such
expenses. Any advances and undertakings to repay pursuant to this Paragraph 15
shall be unsecured and interest free.
(c) The obligations of the Company contained in this indemnity clause
shall continue during the period Holder is a director or employee of the
Company (or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise) and shall continue thereafter so long as Holder
shall be subject to any proceeding by reason of his corporate status, whether
or not he is acting or serving in any such capacity at the time any liability
or expense is incurred for which indemnification can be provided under this
Agreement. Such rights of indemnification and reimbursement shall not be
deemed exclusive of any other rights to which Holder may be entitled under any
statute, agreement, vote of shareholders or otherwise.
16. Successors and Assigns.
This Agreement shall inure to the benefit of the Company and Holder and
their respective successors and permitted assigns.
17. Entire Agreement.
This Agreement constitutes the entire agreement of the Company and Holder
as to its subject matter and supersedes any previous written or oral agreement
or understanding between the Company and Holder with respect to such subject
matter.
18. Counterparts.
This Agreement may be executed in duplicate originals, each of which when
taken together shall be deemed an original.
19 Amendment.
This Agreement may not be modified except in a writing signed by both
parties hereto.
COMPLETE BUSINESS SOLUTIONS, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxxx X. Xxxxxxxxx
Title: President
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
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