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EXHIBIT 10.19
XXXXXXX TIRE GROUP, INC.
STOCK OPTION AGREEMENT
Number of shares subject to option: 10,000
This Agreement (the "Agreement") made this 10th day of December, 1999,
between Xxxxxxx Tire Group, Inc., a Delaware corporation (the "Company"), and
Xxx X. Xxxxxx (the "Optionee").
W I T N E S S E T H:
1. Grant of Option.
Pursuant to the provisions of the Xxxxxxx Tire Group, Inc. 1999 Stock
Option Plan (the "Plan"), the Company hereby grants to the Optionee, subject to
the terms and conditions of the Plan and subject further to the terms and
conditions herein set forth, the right and option (the "Option") to purchase
from the Company all or any part of an aggregate of 10,000 shares of the common
stock, par value $0.01 per share, of the Company (the "Common Stock" or the
"Shares") at a purchase price of $9.00 per Share (the "Exercise Price"), such
Option to be exercised as hereinafter provided.
2. Terms and Conditions.
It is understood and agreed that the Option evidenced hereby is subject
to the following terms and conditions:
(a) Expiration Date. The Option shall expire on the tenth
anniversary of the date hereof (the "Expiration Date").
(b) Type of Option. This option is eligible to be an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
(c) Exercise of Option. (i) Subject to the other terms of this
Agreement regarding the exercisability of this Option, this Option may be
exercised in accordance with the following vesting schedule:
Options Exercisable with respect to
On or After Cumulative Number of Shares
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November 25, 2000 10,000 x 25%
November 25, 2001 10,000 x 25%
November 25, 2002 10,000 x 25%
November 25, 2003 10,000 x 25%
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Options exercised in any one year shall be deducted from the number of Options
exercisable in any future year. Once vested, this Option shall be exercisable at
the following times prior to the expiration date: (A) if the Optionee is
employed by the Company at the time of exercise, at any time by giving the
Company 45 days' advance written notice or (B) if the Optionee is not employed
by the Company at the time of exercise but has the right to exercise after
termination in accordance with paragraph 2(d) of this Agreement, by giving the
Company written notice at any time during the period specified in paragraph 2(d)
of this Agreement, in which case the Option shall be deemed exercised as of the
end of the calendar month in which the Company received notice of exercise of
the Option. In either case, the notice of exercise shall specify the number of
Shares as to which the Option is being exercised.
(ii) Upon receipt of written notice of exercise by
the Company, the Company shall, upon full payment in cash to the Company of the
Exercise Price of the Shares as to which the Option shall be exercised, issue to
the Optionee the Shares subject to the Option. Any issuance of Shares to an
Optionee pursuant to the preceding sentence shall be made by the Company within
90 days after the date of exercise. For purposes of this Agreement, the fair
market value of Shares shall be determined by such methods or procedures as
shall be established from time to time by the Board of Directors of the Company
(the "Board") acting in its sole discretion and in good faith. In making such
determinations, the Board may rely on a valuation report by an investment
banking or valuation firm selected by the Board. The Committee established by
the Board to administer the Plan (the "Committee") may, in its sole discretion,
permit the Optionee to pay the Exercise Price in previously acquired Shares
rather than in cash.
(d) Exercise Upon Death or Termination of Employment.
(i) If the Optionee dies while an employee of the
Company, the Optionee's Designee may exercise the Option, to the extent it was
vested on the date of termination or otherwise would have vested in the 12
months thereafter in accordance with the vesting schedule in Section 2(c)
hereof, by giving the Company written notice of such exercise within 180 days
after the date of Optionee's death, but in no event later than the Expiration
Date. An Optionee's "Designee" means the person designated by the Optionee in
his or her most recently filed beneficiary designation filed with the Company to
receive the Optionee's rights under the Plan upon the Optionee's death, or if
there is no such designation or no such designated person survives the Optionee,
by the person or persons to whom the Optionee's rights pass by will or
applicable law, or if no such person has such right, by his executors or
administrators.
(ii) If the Optionee's employment with the Company
shall terminate because of permanent disability, the Optionee may exercise the
Option to the extent it was vested on the date of termination or otherwise would
have vested in the 12 months thereafter, in either event according to the
vesting schedule in Section 2(c), by giving the Company written notice of such
exercise within 180 days after the date of termination of employment, but in no
event later than the Expiration Date.
(iii) If the Optionee's employment shall terminate
for any reason other than death or permanent disability as aforesaid or for
Cause (as hereinafter defined), the Optionee may exercise the Option to the
extent it was vested on the date of termination or otherwise would have vested
in the 12 months thereafter, in either event according to the vesting schedule
in Section 2(c),
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by giving the Company written notice of such exercise within 180 days after the
date of termination of employment, but in no event later than the Expiration
Date.
(iv) If the Optionee's employment shall terminate for
Cause, all right to exercise the Option shall terminate at the date of such
termination of employment except that the Optionee may exercise the Option to
the extent vested as of the date of such termination by giving the Company
written notice thereof within 30 days after such termination. For purposes of
this Agreement, "Cause" shall mean (i) the Employee's conviction of, or plea of
guilty or nolo contendere to, a felony, (ii) the Employee's gross negligence in
the performance of his duties and obligations to the Company, which is not
corrected within 15 business days after written notice, (iii) the Employee's
knowingly dishonest act, or knowing bad faith or willful misconduct in the
performance of his duties and obligations to the Company to the material
detriment of the Company, which is not corrected within 15 business days after
written notice, or (iv) the Employee's other material breach of his obligations
under this Agreement, which is not corrected within a reasonable period of time
(determined in light of the cure appropriate to such material breach, but in no
event less than 15 business days) after written notice.
(e) Nontransferability. This Option shall not be transferable
other than by will or by the laws of descent and distribution. During the
lifetime of the Optionee, this Option shall be exercisable only by such
Optionee.
(f) Forfeiture of Option Gain. If at any time within 12 months
after the later of (i) termination of employment or (ii) the date on which the
Optionee exercises any portion of this Option, the Optionee violates the terms
of the covenants regarding confidential information, soliciting customer
accounts, non-competition or hiring of employees, currently set forth in
Sections 2 and 3 of the Employment Agreement between the Company and the
Optionee dated the date hereof (the "Employment Agreement"), (A) then any income
realized by the Optionee upon the exercise of this Option or upon the sale of
Shares acquired by exercise of this Option at any time, whether before or after
the date of termination of employment, shall promptly be paid by the Optionee to
the Company and (B) any unexercised Options shall be canceled. The Company shall
have the right to set off against any amount payable by the Company to the
Optionee, including, without limitation, salary, benefits or other amounts, any
amounts owed by the Optionee to the Company under this subparagraph (f). The
Committee may waive the requirements of this subparagraph (f) if it determines
in its sole discretion that such action is in the best interests of the Company.
(g) Adjustments. In the event that the Committee shall
determine, in its sole discretion, that any dividend or other distribution
(whether in the form of cash, Common Stock, or other property),
recapitalization, stock split, reverse split, any reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, license
arrangement, strategic alliance or other corporate transaction or event, affects
the Shares such that an adjustment is appropriate in order to prevent dilution
or enlargement of the rights of the Optionee under the Plan, then the Committee
shall make such equitable changes or adjustments as it deems necessary or
appropriate to any or all of (i) the number and kind of Shares which may
thereafter be issued in connection with Options, (ii) the number and kind of
Shares issued or issuable in respect of outstanding Options, and (iii) the
Exercise Price relating to any Option; provided that, with respect
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to incentive stock options, such adjustment shall be made in accordance with
Section 424(h) of the Code.
(h) No Rights as Stockholder. The Optionee shall have no
rights as a stockholder with respect to any Shares subject to the Option prior
to the date of issuance to the Optionee of a certificate or certificates for
such Shares.
(i) Optionee Acknowledgement. The Optionee acknowledges that:
(i) the future value of the Company is highly
speculative;
(ii) the Optionee is not relying on the value of this
Option as current compensation;
(iii) the Company has no obligation to the Optionee
to sell the Company or to sell Shares publicly (which may have the effect of
reducing the value of the Company);
(iv) upon exercise of this Option, unless the Shares
issuable upon exercise of the Options have been registered under applicable
securities laws, there will be substantial restrictions on the transferability
of the Shares; and
(v) the past performance or experience of the
Company, the Company's officers, directors, agents, or employees, will not in
any way indicate or predict the results of the ownership of Shares or of the
Company's activities.
(j) No Right to Continued Employment. The Option shall not
confer upon the Optionee any right with respect to continuance of employment by
the Company, nor shall it interfere in any way with the right of the Optionee's
employer to terminate the Optionee's employment at any time.
(k) Compliance With Law and Regulations. The Option herein
granted and the obligation of the Company to sell and deliver shares hereunder,
shall be subject to all applicable Federal and State laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
The Company shall not be required to issue or deliver any certificates for
Shares prior to (i) the listing of such Shares on any stock exchange or national
market quotations system on which the Shares may then be listed and (ii) the
completion of any registration or qualification of such Shares under any Federal
or State law, or any rule or regulation of any government body which the Company
shall, in its sole discretion, determine to be necessary or advisable. Moreover,
the Option herein granted may not be exercised if its exercise, or the receipt
of Shares pursuant hereto, would be contrary to applicable law.
(l) Condition Precedent. In consideration for and as a
condition precedent to being eligible to participate in the Plan, the Optionee
shall have executed and delivered to the Company the Employment Agreement.
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3. Optionee Bound by Plan.
The Optionee hereby acknowledges receipt of a copy of the Plan and
agrees to be bound by all the terms and provisions thereof.
4. Notices.
All notices or any other communications hereunder shall be in writing
and delivered personally or by registered or certified mail or overnight
courier, addressed, if to the Company, to Xxxxxxx Tire Group, Inc., 0000 Xxxxx
Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000; Attention: Chairman, and if to
the Optionee, at the address set forth below, subject to the right of either
party to designate at any time hereafter in writing some other address.
5. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina without regard to conflicts of laws
principles.
6. No Assignment.
Neither this Agreement nor any of the rights or obligations of the
Optionee hereunder may be transferred or assigned by the Optionee.
7. Benefits.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto. This Agreement is for the sole benefit of the parties hereto and
not for the benefit of any other party.
8. Severability.
If any provision of this Agreement shall be determined to be illegal
and unenforceable by any court of law, the remaining provisions shall be
severable and enforceable in accordance with their terms.
9. Amendments.
No modification, amendment or waiver of any provision of this
Agreement, other than as required under Section 2(g), shall be effective unless
it is in writing and signed by the parties hereto.
10. Counterparts.
This Agreement has been executed in two counterparts each of which
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its Chairman, Chief Executive Officer, Chief Operating Officer,
President or a Vice President and Optionee has executed this Agreement, both as
of the day and year first above written.
XXXXXXX TIRE GROUP, INC.
By: /s/ Xxxxxx X. Roof
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Name: Xxxxxx X. Roof
Title: President and Chief Executive Officer
/s/ Xxx X. Xxxxxx
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Xxx X. Xxxxxx
Address: 000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
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