EXHIBIT 10.2.2
[POST-IPO]
LITHIA MOTORS, INC.
1996 STOCK INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered into as of
the Date of Grant indicated below by and between Lithia Motors, Inc., an Oregon
corporation (the "Company"), and the person named below as Grantee.
WHEREAS, Grantee is an employee or consultant of the Company and/or one or
more of its subsidiaries; and
WHEREAS, pursuant to the Company's 1996 Stock Incentive Plan (the "Plan"),
the committee of the Board of Directors of the Company administering the Plan
(the "Committee") has approved the grant to Grantee of an option to purchase
shares of the Class A Common Stock of the Company, no par value (the "Common
Stock"), on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. GRANT OF OPTION; CERTAIN TERMS AND CONDITIONS. The Company hereby
grants to Grantee, and Grantee hereby accepts, as of the Date of Grant, an
option to purchase the number of shares of Common Stock indicated below (the
"Option Shares") at the Exercise Price per share indicated below, which option
shall expire at 5:00 o'clock p.m., Oregon time, on the Expiration Date indicated
below and shall be subject to all of the terms and conditions set forth in this
Agreement (the "Option"). On each anniversary of the Date of Grant, the Option
shall become exercisable to purchase, and shall vest with respect to, that
number of Option Shares (rounded to the nearest whole share) equal to the total
number of Option Shares multiplied by the Annual Vesting Rate indicated below.
Grantee:
-----------------------------------
Date of Grant:
----------------------------------------
Number of shares purchasable:
----------------------------------------
Exercise Price per share:$
---------------------------------------------
Expiration Date:
----------------------------------------
Annual Vesting Rate: %
--------------------------------------------
The Option is NOT intended to qualify as an incentive stock option under Section
422 of the Internal Revenue Code (an "Incentive Stock Option").
2. ACCELERATION AND TERMINATION OF OPTION.
(a) TERMINATION OF EMPLOYMENT.
(i) TERMINATION WITHIN ONE YEAR AFTER CHANGE OF CONTROL. In the
event that Grantee shall cease to be an employee or independent sales
representative of the Company or any of its subsidiaries (such event shall be
referred to herein as the "Termination" of Grantee's "Employment") for any
reason, or for no reason, within one year after a Change of Control (as
hereinafter defined), then (A) the portion of the Option that has not vested on
or prior to the date of such Termination of Employment shall fully vest on such
date and (B) the Option shall terminate upon the earlier of the Expiration Date
or the first anniversary of the date of such Termination of Employment. "Change
of Control" shall mean the first to occur of the following events:
(A) any date upon which the directors of the Company who
were last nominated by the Board of Directors (the "Board") for election as
directors cease to constitute a majority of the directors of the Company;
(B) the date of the first public announcement that any
person or entity, together with all Affiliates and Associates (as such
capitalized terms are defined in Rule 12b-2 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of such person or entity,
shall have become the Beneficial Owner (as defined in Rule 13d-3 promulgated
under the Exchange Act) of voting securities of the Company representing 25% or
more of the voting power of the Company (a "25% Stockholder"), provided,
however, that the terms "person" and "entity," as used in this clause (B), shall
not include (1) the Company or any of its subsidiaries, (2) any employee benefit
plan of the Company or any of its subsidiaries, (3) any entity holding voting
securities of the Company for or pursuant to the terms of any such plan, (4) any
person or entity if the transaction that resulted in such person or entity
becoming a 25% Stockholder was approved in advance by the Board or (5) any
person or entity who was a 25% Stockholder on the date of adoption of the Plan
by the Board; or
(C) a reorganization, merger or consolidation of the
Company (other than a reorganization, merger or consolidation the sole purpose
of which is to change the Company's domicile solely within the United States)
the consummation of which results in the outstanding securities of any class
then subject to the Option being exchanged for or converted into cash, property
and/or a different kind of securities.
(ii) RETIREMENT. If Grantee's Employment is Terminated by reason
of Grantee's retirement in accordance with the@ Company's then-current
retirement policy ("Retirement"), and a Change of Control shall not have
occurred within one year prior thereto, then (A) the portion of the Option that
has not vested on or prior to the date of such Retirement shall terminate on
such date and (B) the remaining vested portion of the Option shall terminate
three months after the date Grantee's Employment is Terminated.
(iii) WITHOUT CAUSE. If Grantee's Employment is Terminated by the
Company without "Cause" as defined below), then (A) if Xxxxxx X. XxXxxx is the
Chairman, President or Chief Executive Officer of the Company at the time of
such Termination, the Option shall terminate upon the date of such Termination
of Employment, or (B) if Xxxxxx X. XxXxxx is not the Chairman, President or
Chief Executive Officer of the Company at the time of such Termination, the
Option shall become exercisable to purchase, and shall vest with respect to, all
of the Option Shares on the date of such Termination of Employment and shall
terminate three months after the date of Termination. For purposes of this
Section 2(a)(iii), "Cause" shall mean Grantee's fraudulent or criminal behavior,
willful
misconduct, insubordination or violation of any duty of loyalty if the Chairman,
President, Chief Executive Officer, Board of Directors or Committee determines,
in its sole judgment, that such behavior, misconduct, insubordination or
violation has, or can be expected to have, an adverse effect on the Company or
any of its subsidiaries or any of their respective businesses.
(iv) DEATH OR PERMANENT DISABILITY. If Grantee's Employment is
Terminated by reason of the death or Permanent Disability (as hereinafter
defined) of Grantee, and a Change of Control shall not have occurred within one
year prior thereto, then (A) the portion of the Option that has not vested on or
prior to the date of such Termination of Employment shall terminate on such date
and (B) the remaining vested portion of the Option shall terminate upon the
earlier of the Expiration Date or the first anniversary of the date of such
Termination of Employment. "Permanent Disability" shall mean the inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or that has lasted or can be expected to last for a continuous period of
not less than 12 months. Grantee shall not be deemed to have a Permanent
Disability until proof of the existence thereof shall have been furnished to the
Board in such form and manner, and at such times, as the Board may require. Any
determination by the Board that Grantee does or does not have a Permanent
Disability shall be final and binding upon the Company and Grantee.
(v) OTHER TERMINATION. If Grantee's Employment is Terminated
for Cause, then the Option shall terminate upon the date of such Termination of
Employment. If Grantee's Employment is Terminated for any reason other than (A)
Retirement, (B) death, (C) Permanent Disability or (D) for Cause by the Company,
and a Change of Control shall not have occurred within one year prior thereto,
then (X) the portion of the Option that has not vested on or prior to the date
of such Termination of Employment shall terminate on such date and (Y) the
remaining vested portion of the Option shall terminate thirty (30) days after
the date of such Termination of Employment.
(b) OTHER EVENTS CAUSING ACCELERATION OF OPTION.
(i) Notwithstanding the other terms of the Option, the Option
shall become fully exercisable with respect to all Shares covered hereby upon
the first to occur of the following:
(A) the date of dissemination to the stockholders of the
Company of a proxy statement seeking stockholder approval of a reorganization,
merger or consolidation of the Company as a result of which the outstanding
securities of the class then subject to the Plan are exchanged for or converted
into cash, property and/or securities not issued by the Company, unless such
reorganization, merger or consolidation shall have been affirmatively
recommended to the stockholders of the Company by the Board;
(B) the first date upon which the directors of the Company
who were last nominated by the Board for election as directors shall cease to
constitute a majority of the authorized number of directors of the Company; or
(C) the date of dissemination to the stockholders of the
Company of a proxy statement disclosing a change of control (as defined by the
Company) of the Company.
(ii) The Committee, in its sole discretion, may accelerate the
exercisability of the Option at any time and for any reason.
(c) OTHER EVENTS CAUSING TERMINATION OF OPTION. Notwithstanding
anything to the contrary in this Agreement, the Option shall terminate upon the
consummation of any of the following
events, or, if later, the thirtieth day following the first date upon which such
event shall have been approved by both the Board and the stockholders of the
Company:
(i) the dissolution or liquidation of the Company; or
(ii) a sale of substantially all of the property and assets of
the Company, unless the terms of such sale shall provide otherwise;
provided that in connection with such transaction the Company shall pay to
Grantee in cash an amount equal to the excess of the Fair Market Value (on the
date of the applicable corporate transaction) of the Option Shares subject to
the then-unexercised vested portion of the Option over the exercise price of
such portion of the Option, unless, in the event of a sale of substantially all
of the property and assets of the Company, the acquiring corporation has granted
substitute options to purchase its shares on such terms and conditions as shall
substantially preserve the rights and economic benefits of the Option.
3. ADJUSTMENTS. Subject to Section 7 of the Plan, in the event that the
outstanding securities of the class then subject to the Option are increased,
decreased or exchanged for or converted into cash, property and/or a different
number or kind of securities, or if cash, property and/or securities are
distributed in respect of such outstanding securities, in either case as a
result of a reorganization, merger, consolidation, recapitalization,
reclassification, dividend (other than a regular, quarterly cash dividend) or
other distribution, stock split, reverse stock split or the like, or in the
event that substantially all of the property and assets of the Company are sold,
then, unless such event shall cause the Option to terminate pursuant to Section
2(c) hereof or unless the terms of the transaction shall provide otherwise, the
Committee shall make appropriate and proportionate adjustments in the number and
type of shares or other securities or cash or other property that may thereafter
be acquired upon the exercise of the Option; PROVIDED, HOWEVER, that
any such adjustments in the Option shall be made without changing the aggregate
Exercise Price of the then unexercised portion of the Option.
4. EXERCISE.
(a) The Option shall be exercisable during Grantee's lifetime only by
Grantee or by his or her guardian or legal representative, and after Grantee's
death only by the person or entity entitled to do so under Grantee's last will
and testament or applicable intestate law. The Option may only be exercised by
the delivery to the Company of a written notice of such exercise, which notice
shall specify the number of Option Shares to be purchased (the "Purchased
Shares") and the aggregate Exercise Price for such shares (the "Exercise
Notice"), together with payment in full of such aggregate Exercise Price in cash
or by check payable to the Company; PROVIDED, HOWEVER, that payment of such
aggregate Exercise Price may instead be made, in whole or in part, by the
delivery to the Company of a certificate or certificates representing shares of
Common Stock, duly endorsed or accompanied by a duly executed stock powers,
which delivery effectively transfers to the Company good and valid title to such
shares, free and clear of any pledge, commitment, lien, claim or other
encumbrance (such shares to be valued on the basis of the aggregate Fair Market
Value (as defined in the Plan) thereof on the date of such exercise), provided
that the Company is not then prohibited from purchasing or acquiring such shares
of Common Stock.
(b) If required by the Company, at the time of exercise, Grantee
shall give to the Company satisfactory assurance in writing, signed by Grantee
or his or her legal representative, as the case may be, that such shares are
being purchased for investment only and not with a view to the distribution
thereof; provided, however, that such assurance shall be deemed inapplicable to
(i) any sale
of such shares by Grantee subject to a registration statement covering such
sale, which has heretofore been (or may hereafter be) filed and become effective
under the Securities Act of 1933, as amended (the "Securities Act"), and is
current and with respect to which no stop order suspending the effectiveness
thereof has been issued, and (ii) any other sale of such shares with respect to
which, in the opinion of counsel for the Company, such assurance is not required
to be given in order to comply with the provisions of the Securities Act.
5. PAYMENT OF WITHHOLDING TAXES. If the Company becomes obligated to
withhold an amount on account of any tax imposed as a result of the exercise of
the Option, including, without limitation, any federal, state, local or other
income tax, or any F.I.C.A., Medicare, state disability insurance tax or other
employment tax, then Grantee shall, upon request of the Company but no later
than the first day upon which the Company becomes obligated to pay such amount
to the appropriate taxing authority, pay such amount to the Company in cash or
by check payable to the Company. Notwithstanding anything to the contrary in
Section 4, Grantee's rights to exercise any Option, and any transfer of Common
Stock to Grantee pursuant to the exercise of any Option, are conditioned upon
the payment in full by Grantee of the amounts determined by the Company to be
due hereunder.
6. NOTICES. All notices and other communications required or permitted
to be given pursuant to this Agreement shall be in writing and shall be deemed
given if delivered personally or five days after mailing by certified or
registered mail, postage prepaid, return receipt requested, to the Company in
care of its Secretary at the principal executive offices of the Company, or to
Grantee at the address set forth beneath his or her signature on the signature
page hereto, or at such other addresses as Grantee may designate by written
notice in the manner aforesaid.
7. STOCK EXCHANGE REQUIREMENTS; APPLICABLE LAWS. Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if (a) such shares have not been admitted
to listing upon official notice of issuance on each stock exchange upon which
shares of that class are then listed or (b) in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation of
or to incur liability under any federal, state or other securities law, or any
requirement of any stock exchange listing agreement to which the Company is a
party, or any other requirement of law or of any administrative or regulatory
body having jurisdiction over the Company.
8. NONTRANSFERABILITY. Neither the Option nor any interest therein may
be transferred in any manner by the Grantee to any person or entity other than
by will or the laws of descent and distribution. For purposes of this Paragraph
8, the term "transfer" shall mean and include any form of sale, exchange, gift,
disposition, alienation, assignment, pledge, hypothecation, encumbrance, levy of
attachment, levy of execution, conveyance in connection with bankruptcy
proceedings, conveyance upon divorce, and/or any other conveyance of any kind,
including both voluntary and involuntary conveyances, and also including
conveyances by operation of law. In the event of any attempt by Grantee to
transfer the Option or any right hereunder except as provided for herein, the
Option shall thereupon become null and void and of no effect. Notwithstanding
the foregoing, under such rules and regulations as the Board or the Committee
may establish pursuant to the terms of the Plan, a beneficiary may be designated
with respect to the Option in the event of the death of Grantee.
9. PLAN. The Option is granted pursuant to the Plan, as in effect on the
Date of Grant, and is subject to all the terms and conditions of the Plan, as
the same may be amended from time to time; PROVIDED, HOWEVER, that no such
amendment shall deprive Grantee, without his or her consent, of the Option or of
any of Grantee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by
the Committee for the purpose of administering the Plan shall be final and
binding upon Grantee. Until the Option shall expire, terminate or be exercised
in full, the Company shall, upon written request therefor, send a copy of the
Plan, in its then-current form, to Grantee or any other person or entity then
entitled to exercise the Option.
10. STOCKHOLDER RIGHTS. No person or entity shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of any Option Shares
until the Option shall have been duly exercised to purchase such Option Shares
in accordance with the provisions of this Agreement.
11. EMPLOYMENT OR CONTRACT RIGHTS. No provision of this Agreement or of
the Option granted hereunder shall (a) confer upon Grantee any right to continue
in the employ of or contract with the Company or any of its subsidiaries, (b)
affect the right of the Company and each of its subsidiaries to terminate the
employment or contract of Grantee, with or without cause, or (c) confer upon
Grantee any right to participate in any employee welfare or benefit plan or
other program of the Company or any of its subsidiaries other than the Plan.
Nothing herein shall limit Grantee's right to terminate his or her employment.
GRANTEE HEREBY ACKNOWLEDGES AND AGREES THAT THE COMPANY AND EACH OF IT'S
SUBSIDIARIES MAY TERMINATE THE EMPLOYMENT OR CONTRACT OF GRANTEE AT ANY TIME AND
FOR ANY REASON, OR FOR NO REASON, UNLESS GRANTEE AND THE COMPANY OR SUCH
SUBSIDIARY ARE PARTIES TO A WRITTEN EMPLOYMENT OR INDEPENDENT SALES
REPRESENTATIVE AGREEMENT THAT EXPRESSLY PROVIDES OTHERWISE.
12. PARTICIPATION IN OTHER PLANS. Nothing herein contained shall affect
Grantee's right to participate in and receive benefits from and in accordance
with the then current provisions of any pension, insurance, or other stock
option or employment welfare plan or program of the Company.
13. BINDING EFFECT OF AGREEMENT. Except as set forth in Section 8 hereof,
this Agreement shall be binding upon and inure to the benefit of any successors
or assigns of the Company or Grantee.
14. MISCELLANEOUS.
(a) WAIVER. No waiver of any right or obligation of either party
under this Agreement shall be effective unless in a writing, specifying such
waiver, executed by the party against which such waiver is being enforced. A
waiver by either party hereto of any of its rights under this Agreement on any
occasion shall not be a bar to the exercise of the same right on any subsequent
occasion or of any other right at any time.
(b) AMENDMENT OR MODIFICATION. This Agreement may be amended,
altered, or modified only by a writing, specifying such amendment, alteration or
modification, executed by the party against which it is being enforced.
(c) GOVERNING LAW. This Agreement and the Option granted hereunder
shall be governed by and construed and enforced in accordance with the laws of
the State of Oregon without reference to choice or conflict of law principles.
(d) COMPLETE AGREEMENT. This Agreement, along with the
Plan, constitutes the complete understanding of the parties hereto regarding the
subject matter thereof and supersedes all prior or contemporaneous agreements of
the parties, whether written or oral, with respect to such subject matter.
(e) ATTORNEYS' FEES. In the event a suit, arbitration or other
proceeding is brought to enforce or interpret any provision of this Agreement,
the prevailing party shall be entitled to recover
reasonable attorneys' fees to be fixed in amount by the court or the
arbitrator(s) (including without limitation, costs, expenses and fees on any
appeal). The prevailing party will be entitled to recover its costs of suit,
arbitration or other proceeding, regardless of whether such suit, arbitration or
other proceeding proceeds to a final judgment or award.
IN WITNESS WHEREOF, the Company and Grantee have duly executed this
Agreement as of the Date of Grant.
LITHIA MOTORS, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
GRANTEE:
--------------------------------------------------
Signature
--------------------------------------------------
Xxxxxx Xxxxxxx
--------------------------------------------------
Xxxx, Xxxxx and Zip Code
--------------------------------------------------
Social Security Number
