1 EXHIBIT 4.14
STOCK OPTION AGREEMENT
EFFECTIVE DATE: August 19, 1996
PLACE: Tempe, Arizona
PARTIES: RECONDITIONED SYSTEMS, INC., an Arizona
corporation (the "Company"), and Xxxx
Xxxxxxxx ("Optionee")
RECITALS:
The Company desires to issue to Optionee options to
acquire up to 83,334 shares of the Company's no par value common
stock ("Common Stock"). Capitalized terms not otherwise defined
herein shall have the same meaning as ascribed to them in the
Employment Agreement between the Company and Optionee dated
August 10, 1995.
AGREEMENTS:
In consideration of the mutual promises herein
contained, the parties agree as follows:
1. Grant of Option. Subject to the approval of
Norwest Business Credit, Inc., a Minnesota corporation
("Norwest"), pursuant to that certain Credit and Security
Agreement dated as of February 26, 1996 between the Company and
Norwest, the Company hereby irrevocably grants to Optionee the
right and option (the "Option") to purchase all or any part of an
aggregate of up to eighty-three thousand three hundred thirty
four (83,334) shares of Common Stock (the "Shares") on the terms
and conditions set forth herein.
2. Purchase Price. The purchase price of the Shares
acquired pursuant to the exercise of an Option shall be One
Dollar ($1.00) per Share, which equals the fair market value of
the Shares on the effective date of this grant. The purchase
price shall be paid in the manner set forth in Paragraph 11.
3. Vesting. Optionee's right to acquire Shares
pursuant to the exercise of the Option as provided herein shall
be fully vested as of the date hereof; provided, however, that
Optionee hereby agrees not to sell, assign, transfer, pledge,
hypothecate or otherwise dispose of any Shares acquired upon
exercise of this Option for a period of twelve (12) months
following the Effective Date of this Option.
4. Term of Option. Subject to early termination of
the Option as provided in Paragraphs 7, 8, and 9 hereof, the
Option shall terminate as the date ten (10) years after the date
hereof.
5. Exercise of the Option. Subject to earlier
termination of the Option as provided in Paragraphs 7, 8 and 9
hereof, and to the lock-up provisions contained in Paragraph 3
hereof, Optionee may exercise the Option from time to time as to
any part or all of the vested Shares covered hereby.
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6. Nontransferability. The Option shall not be
transferable otherwise than by will or the laws of descent and
distribution, and the Option may be exercised, during the
lifetime of Optionee, only by Optionee. More particularly, but
without limiting the generality of the foregoing, and except as
otherwise specified, the Option may not be sold, assigned,
transferred, pledged, hypothecated, or disposed of in any manner,
shall not be assignable by operation of law, and shall not be
subject to execution, attachment, or similar process. Any
attempted sale, assignment, transfer, pledge, hypothecation, or
other disposition contrary to the provisions hereof, and the levy
of execution, attachment, or similar process upon the Option,
shall be null and void and without effect.
7. Termination of Employment; Effect on Employment.
If the employment of Optionee is terminated (otherwise than by
reason of death), the Option may be exercised at any time within
three (3) months after the date of such termination, but not more
than ten (10) years from the date hereof. To the extent the
Option has not been exercised by such time, the Option shall
terminate. So long as Optionee shall continue to be an employee
of the Company or any parent or subsidiary of the Company, this
Option shall not be affected by any change of duties or position.
Nothing in this Agreement shall confer upon Optionee any right to
continue in the employ of the Company or any parent or subsidiary
of the Company or interfere in any way with the right of the
Company or any parent or subsidiary of the Company to terminate
Optionee's employment at any time.
8. Death of Optionee. If Optionee dies while
employed by the Company or within three (3) months after the
termination of his employment, the Option may be exercised by the
legal representative of his estate, or by any person or persons
who shall have acquired the Option directly from Optionee by
bequest or inheritance, at any time within one (1) year after the
date of his death, but not more than ten (10) years from the date
hereof. To the extent the Option has not been exercised by such
time, the Option shall terminate.
9. Dissolution or Liquidation of Company. In the
event of the proposed dissolution or liquidation of the Company,
or in the event of a proposed sale of substantially all of the
assets of the Company, or in the event of a merger or
consolidation with another corporation in any manner in which the
Company is not the surviving corporation and the surviving
corporation does not agree to assume the Option granted
hereunder, the Option will terminate immediately before the
consummation of such proposed action, unless sooner terminated as
of a date fixed by the Board of Directors, in which even Optionee
shall be given the right to exercise the Option as to all or any
part of the Shares subject to this Agreement.
10. Rights as Stockholder. Optionee shall not by
reason of the Option have any rights of a stockholder of the
Company until Optionee shall, from time to time, have exercised
the Option, and, upon each such exercise, Optionee shall have,
with respect to the number of Shares as to which the Option is
then exercised, all rights of a stockholder of record from the
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date of such exercise, irrespective of whether certificates to
evidence the Shares with respect to which the Option was
exercised shall have been issued on such date.
11. Method of Exercising.
(a) Notice of Exercise/Payment of Purchase Price.
Subject to the terms and conditions of this Agreement, the Option
may be exercised by written notice to the Secretary of the
Company, at the Company's main office, or at such other address
as the Company, by written notice to Optionee, may designate from
time to time. Such notice shall state the election to exercise
the Option and the number of Shares in respect of which the
Option is being exercised, and shall be signed by the person or
persons exercising the Option. Such notice shall be accompanied
by payment of the full purchase price of such Shares, by
cashier's or certified check, or by such other form of
consideration, if any, as may be approved by the Company's Board
of Directors. In addition to the foregoing, the purchase price
for the Shares may be paid through a sale and remittance
procedure by which Optionee shall provide concurrent irrevocable
written instructions to: (i) a Company designated brokerage firm
to effect the immediate sale of the purchased Shares and remit to
the Company, out of the sale proceeds available on the settlement
date, sufficient funds to cover the purchase price for the Shares
acquired pursuant to exercise of the Option, and (ii) the Company
to deliver the certificates for the purchased Shares directly to
such brokerage firm to complete the sale transaction.
(b) Stock Certificates. Upon the exercise of an
Option, the Company shall deliver a certificate or certificates
representing any Shares acquired hereunder as soon as practicable
after the notice and payment shall be received. Except if issued
through the sale and remittance procedure described in Paragraph
11(a), the certificate or certificates for the Shares as to which
the Option shall have been so exercised shall be registered in
the name of Optionee or in the name of any other person or entity
specified in writing by Optionee. If an Option shall be
exercised by the legal representative of Optionee's estate, or by
any person or persons who shall have acquired the Option directly
from Optionee as a result of Optionee's death, whether by
bequest, inheritance, or otherwise, such notice shall be
accompanied by appropriate proof of the right of such person or
persons to exercise the Option. All Shares that shall be
purchased upon the exercise of an Option as provided herein shall
be fully paid and nonassessable.
12. Reservation of Shares. The Company shall at all
times during the term of the Option reserve and keep available
such number of shares of Common Stock as will be sufficient to
satisfy the requirements of this Agreement, shall pay all fees,
expenses, and taxes necessarily incurred by the Company in
connection therewith, and shall, from time to time, use its good
faith efforts to comply with all laws, rules, and regulations
which, in the opinion of counsel for the Company, shall be
applicable thereto.
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13. Registration of Shares. The Company shall
register the Shares issuable upon exercise of the Option with the
Securities and Exchange Commission (the "Commission") by filing a
Registration Statement on Form S-8 with the Commission.
14. Adjustment for Recapitalization. In the event of
any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the
Company or any merger, consolidation, spin-off, split-off, split-
up, reorganization, partial or complete liquidation or other
distribution of assets, issuance of warrants or other rights to
purchase securities or any other corporate transaction or event
having an effect similar to any of the foregoing, appropriate
adjustments shall be made by the Board of Directors of the
Company to the number and kind of Shares and the price per Share
subject to this Agreement.
15. Taxes. Optionee agrees, no later than the date as
of which the value of any Option or Shares acquired pursuant to
this Agreement first becomes includible in the gross income of
Optionee for federal income tax purposes, to pay to the Company,
or make arrangements satisfactory to the Company regarding
payment of, any federal, state or local taxes of any kind
required by law to be withheld with respect to the Option or such
Shares. The obligations of the Company under this Agreement
shall be conditional on such payment or arrangements, and the
Company shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due
to Optionee.
16. Action Taken in Good Faith. No member of the
Board of Directors, nor any officer or employee of the Company
acting on behalf of the Board, shall be personally liable for any
action, determination or interpretation taken or made in good
faith with respect to this Agreement.
17. Miscellaneous.
(a) Waiver. The waiver of any provision of this
Agreement will not be effective unless in writing and executed by
the party against whom enforcement of the waiver is sought.
(b) Entire Agreement. This Agreement constitutes
the entire integrated agreement among the parties pertaining to
the subject matter hereof, and supersedes all prior and
contemporaneous agreements, representations, and understandings
of the parties. This Agreement may not be amended except by
written instrument executed by the parties.
(c) Arbitration. Any dispute or controversy
arising under or in connection with this Agreement shall be
settled exclusively by arbitration, conducted before a panel of
three (3) arbitrators in Phoenix, Arizona in accordance with the
rules of the American Arbitration Association then in effect.
The decision of the arbitrators shall be final and binding on the
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parties, and judgment may be entered on the arbitrators' award in
any court having jurisdiction. The costs and expenses of such
arbitration, including but not limited to attorneys' and other
professionals' fees, shall be borne in accordance with the
determination of the arbitrators.
(d) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Arizona without regard to its conflict of laws
principles.
(e) Severability. If any provision of this
Agreement is held to be unenforceable by a court of competent
jurisdiction, the remainder of this Agreement shall be severable
and not affected thereby.
(f) Counterparts. This Agreement may be executed
in one or more counterparts each of which shall be deemed an
original, but all of which shall constitute one and the same
instrument.
(g) Delays or Omissions. No delay or omission to
exercise any right, power, or remedy accruing to any party
hereunder or any breach or default under this Agreement shall
impair any such right, power, or remedy, nor shall it be
construed as a waiver of or acquiescence to any such breach or
default, or of or in any similar breach or default occurring
later; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default occurring before
or after the waiver. Any waiver, permit, consent, or approval of
any kind of any breach or default under this Agreement or of any
provision or condition of this Agreement must be in writing and
shall be effective only to the extent specifically stated in such
writing. All remedies, either under this Agreement or by law or
otherwise afforded to any party shall be cumulative.
(h) Headings. The headings in this Agreement
have been inserted for convenience only and shall not affect the
meaning or interpretation of any provision in this Agreement.
(i) Assignment. The rights and obligations of
the Company and Optionee hereunder shall inure to the benefit of
and shall be binding on their successors and assigns.
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement effective as of the day and year first above
written.
COMPANY: OPTIONEE:
RECONDITIONED SYSTEMS, INC.,
an Arizona corporation
By /s/ Xxxxx X. Xxxx /s/ Xxxx Xxxxxxxx
_____________________________ _________________
Xxxxx X. Xxxx, Xxxx Xxxxxxxx
Chairman
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