EXHIBIT 10.22
AMERICAN TIRE DISTRIBUTORS, INC.
STOCK OPTION AGREEMENT
Number of shares subject to option: 357,140
This Agreement (the "Agreement") made this 12th day of June, 2002,
between American Tire Distributors, Inc., a Delaware corporation (the
"Company"), and William E. Berry (the "Optionee").
W I T N E S S E T H:
1. Grant of Option.
Pursuant to the provisions of American Tire Distributors, Inc. 2002
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 357,140 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 $1.40 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 intended to be eligible to
be an incentive stock option (an "Incentive Stock Option") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code");
provided that to the extent this Option does not qualify as an Incentive Stock
Option, it shall constitute a nonqualified stock option under the Code.
(c) Exercise of Option. (i) Subject to the other terms of this
Agreement regarding the exercisability of this Option, the Options will vest and
be exercisable in accordance with the following schedule, which shall continue
to apply from and after the occurrence of a Change in Control (as defined in
this Agreement or as defined in any employment, executive severance or similar
agreement to which the Optionee is a party):
Options Exercisable with respect to
On or After Cumulative Number of Shares
----------- -----------------------------------
the date of this Agreement 71,428
January 1, 2003 71,428
January 1, 2004 71,428
January 1, 2005 71,428
January 1, 2006 71,428
(ii) (A) Notwithstanding Section 2(c)(i), upon the termination
of Optionee's employment (1) by the Company without Cause (as defined below), by
the Optionee for Good Reason (as defined below) or due to the Optionee's death,
in each case, at any time after a Qualifying Change in Control (as defined
below) or (2) by the Company or the Optionee for any reason other than a
Specified Cause Event (as defined below) or due to the Optionee's death, in each
case, more than six months after a Qualifying Change in Control, the Optionee
shall be entitled to receive an amount (the "Unvested Option Amount"), payable
within five business days after demand by the Optionee or his personal
representative, equal to (x) the excess (if any) of (1) the fair market value of
all cash and freely tradable securities received by the Principal Shareholders
in exchange for each share of Common Stock or security convertible into or
exercisable or exchangeable for shares of Common Stock (giving effect to such
conversion, exercise or exchange for this purpose) sold by the Principal
Shareholders in connection with such Qualifying Change of Control over (2) the
Exercise Price multiplied by (y) the number of Shares not yet vested in
accordance with the above schedule as of the effective time of such Qualifying
Change in Control. For purpose of clause (x)(1) of the immediately preceding
sentence, the "fair market value" of a security on any date of determination
shall be the mean average of the daily closing prices or last sale prices of
such security for each of the 15 preceding days preceding such date during which
the securities exchange or market quotation system on which such security is
listed or quoted was open for business. Prior to the consummation of a
Qualifying Change in Control, the Company shall take all actions reasonably
necessary, in the good faith judgment of the Board, to ensure that (i) a
successor to the Company or transferee of assets of the Company, as appropriate,
(the "Successor Entity") assumes the obligations of the Company under this
Section 2(c)(ii)(A) and (ii) the Successor Entity provides for the issuance of a
letter of credit, establishment of an escrow account containing cash or
investment grade securities, grant of a security interest in specified property,
guaranty or similar security or credit support arrangement (in each case, on
terms reasonably satisfactory to the Optionee) to secure amounts that may become
due in respect of any Unvested Option Amount.
(B) Notwithstanding Section 2(c)(i), all of the Options shall
become fully vested
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and exercisable immediately upon the termination of Optionee's employment (1) by
the Company without Cause or by the Optionee for Good Reason at any time after a
Change in Control (other than a Qualifying Change in Control); (2) by the
Company or the Optionee for any reason other than a Specified Cause Event (as
defined below) more than six months after a Change in Control (other than a
Qualifying Change in Control); or (3) due to the Optionee's death.
(C) When used in this Agreement:
"Change in Control" means the first to occur of any
of the following: (i) the sale (including by merger, consolidation or
sale of stock of subsidiaries or any other method) of all or
substantially all of the assets of the Company and its consolidated
subsidiaries (taken as a whole) to any person or entity not directly or
indirectly controlled by the holders of at least 50% of the Combined
Voting Power (as defined in the Plan) of the then outstanding shares of
capital stock of the Company (excluding shares owned by employees of
the Company as of the date of determination), (ii) at any time prior to
the consummation of an initial public offering of Common Stock of the
Company or other common stock of the Company having the voting power to
elect directors, a transaction (except pursuant to such initial public
offering) resulting in the Principal Shareholders (as defined in the
Plan) owning, collectively, less than 50% of the Combined Voting Power
of the then outstanding shares of capital stock of the Company
(excluding shares owned by employees of the Company as of the date of
determination), (iii) at any time after the consummation of an initial
public offering of Common Stock of the Company or other common stock of
the Company having the voting power to elect directors, the acquisition
(except pursuant to such initial public offering) by any person or
entity (other than the Principal Shareholders) not directly or
indirectly controlled by the Company's stockholders of more than 30% of
the Combined Voting Power of the then outstanding shares of capital
stock of the Company (excluding shares owned by employees of the
Company as of the date of determination), (iv) individuals serving as
directors of the Company on the Effective Date (as defined in the Plan)
and who were nominated or selected to serve as directors by one or more
Principal Shareholders (together with any new directors whose election
was approved by a vote of (A) such individuals or directors whose
election was previously so approved or (B) Principal Shareholders
holding a majority of the aggregate voting power of the capital stock
of the Company held by all Principal Shareholders) cease for any reason
to constitute a majority of the Board of Directors of the Company (the
"Board"), (v) the adoption of a plan relating to the liquidation or
dissolution of the Company in connection with an equity investment or
sale or a business combination transaction or (vi) any other event or
transaction that the Board deems to be a Change in Control.
"Specified Cause Event" means (1) a proven or
admitted act of fraud, misappropriation or embezzlement by the Optionee
that is detrimental to the Company or (2) the Optionee's conviction of
or plea of guilty or nolo contendere to a felony that is related to the
Company or the performance of the Optionee's services for the Company.
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"Qualifying Change in Control" means a Change in
Control of the type specified in clause (i) or (ii) of the definition
thereof in which the Principal Shareholders receive cash or freely
tradable securities or both in exchange for shares of Common Stock (or
securities convertible into or exchangeable or exercisable for shares
of Common Stock) of the Company sold by the Principal Shareholders in
connection therewith.
(iii) 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 Section 2(d) of this Agreement, by giving
the Company written notice at any time during the period specified in Section
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.
(iv) 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 only, 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 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, by giving the Company written notice of such
exercise within 24 months 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 Company shall terminate Optionee's
employment with the Company because of disability, the Optionee may exercise the
Option to the extent it was vested on the date of termination, by giving the
Company written notice of such exercise within 24
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months after the date of termination of employment, but in no event later than
the Expiration Date.
(iii) If the Optionee terminates his employment with
the Company other than for Good Reason, the Optionee may exercise the Option to
the extent it was vested on the date of termination, by giving the Company
written notice of such exercise within 90 days after the date of termination of
employment, but in no event later then the Expiration Date. For purposes of this
Agreement, "Good Reason" has the meaning set forth in the executive severance or
employment agreement, if any, then in effect between the Company and the
Optionee or, in the absence of such agreement shall mean, if the basis for such
Good Reason is not cured within a reasonable period of time (determined in light
of the cure appropriate to the basis of such Good Reason, but in no event less
than 15 days), the failure of the Company to pay any undisputed amount due to
the Optionee in connection with his employment by the Company.
(iv) If the Optionee's employment shall terminate for
any reason other than death, disability or Cause (as hereinafter defined), or if
the Optionee shall terminate his employment with the Company for Good Reason,
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 applicable vesting schedule in Section 3(c)(i), by
giving the Company written notice of such exercise within 24 months after the
date of termination of employment, but in no event later than the Expiration
Date. Notwithstanding the foregoing, the Optionee shall forfeit his right to
exercise any Options that would have vested within the 12 months after
termination, if the Optionee violates the terms regarding non-competition set
forth in the Optionee's executive severance or employment agreement.
(v) 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. For purposes of this Agreement, "Cause" has the
meaning set forth in the executive severance or employment agreement, if any,
then in effect between the Company and the Optionee or, in the absence of such
agreement, shall mean (i) the Optionee's conviction of or plea of guilty or nolo
contendere to a felony, (ii) the Optionee's gross negligence in the performance
of his duties as an employee, officer, director or independent contractor of the
Company, (iii) the Optionee's knowingly dishonest act, or knowing bad faith or
willful misconduct in the performance of his duties as an employee, officer,
director or independent contractor of the Company, or (iv) the Optionee's
material breach of any confidentiality, non-competition, non-solicitation,
agreement to assign work product and inventions or similar covenant or agreement
of the Optionee.
(vi) In the event of termination of employment, if an
Incentive Stock Option is exercised after the expiration of the exercise periods
that apply for purposes of Section 422 of the Code, such stock option shall
thereafter be treated as a nonqualified stock option.
(e) Transferability. Except as otherwise provided in this
Section 2(e), the Option is not transferable other than as designated by the
Optionee in his or her most recently filed Beneficiary designation filed with
the Company, or if there is no such
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designation or no such designated person survives the Optionee, as designated by
the Optionee, by will or by the laws of descent and distribution, and during the
Optionee's life, may be exercised only by the Optionee. However, an Optionee,
with the approval of the Committee, may transfer the Option for no consideration
to or for the benefit of the Optionee's Immediate Family or to a partnership or
limited liability company for one or more members of the Optionee's Immediate
Family, subject to such limits as the Committee may establish, and the
transferee shall remain subject to all the terms and conditions applicable to
Options prior to such transfer. The foregoing right to transfer the Option shall
apply to the right to consent to amendments to this Agreement and, in the
discretion of the Committee, shall also apply to the right to transfer ancillary
rights associated with the Option. The term "Immediate Family" shall mean the
Optionee's spouse, parents, children, stepchildren, adoptive relationships,
sisters, brothers, nieces, nephews and grandchildren (and, for this purpose,
shall also include the Optionee).
(f) Adjustments. In the event of any change in corporate
capitalization (including, but not limited to, a change in the number of shares
of Common Stock outstanding), such as a stock split or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Section 368
of the Code) or any partial or complete liquidation of the Company, the
Committee or Board may make such substitution or adjustments in the number, kind
and option price of shares subject to the Option and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its sole
discretion; provided, however, that the number of shares subject to the Option
shall always be a whole number. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board shall be authorized to cause the Company to issue or
assume stock options, whether or not in a transaction to which Section 424(a) of
the Code applies, by means of substitution of new stock options for previously
issued stock options or an assumption of previously issued stock options.
(g) 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.
(h) 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);
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(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.
(i) 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.
(j) 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.
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. Disqualifying Disposition
If the Optionee disposes of Shares acquired upon exercise of this
Option within two year from the date of the grant of such Option or one year
after such Shares were acquired pursuant to exercise of this Option, the
Optionee shall notify the Company in writing of such disposition.
5. 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 American Tire Distributors, Inc.,
12200 Herbert Wayne Court, Suite 150, Huntersville, North Carolina 28078;
Attention: President, 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.
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6. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to conflicts of laws
principles.
7. No Assignment.
Except as provided in Section 2(e), neither this Agreement nor any of
the rights or obligations of the Optionee hereunder may be transferred or
assigned by the Optionee.
8. 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.
9. 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.
10. Amendments.
No modification, amendment or waiver of any provision of this
Agreement, other than as required under Section 2(f), shall be effective unless
it is in writing and signed by the parties hereto.
11. Counterparts.
This Agreement has been executed in two counterparts each of which
shall constitute one and the same instrument.
12. Stockholders' Agreement.
All Shares purchased pursuant to any exercise of this Option shall be
subject to the terms and conditions of, and constitute "Shares" for all purposes
under, the Stockholders' Agreement, dated as of the date hereof, between the
Company and the Purchaser, as amended from time to time in accordance with its
terms.
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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.
AMERICAN TIRE DISTRIBUTORS, INC.
By: /s/ Richard P. Johnson
----------------------
Richard P. Johnson
President and Chief Executive Officer
/s/ William E. Berry
- --------------------
William E. Berry
19016 Wildcat Trail
Davidson, NC 27036
EXHIBIT 10.22
AMERICAN TIRE DISTRIBUTORS, INC.
STOCK OPTION AGREEMENT
(NON-QUALIFIED)
Number of shares subject to option: 258,466
This Agreement (the "Agreement") made this 12th day of June, 2002,
between American Tire Distributors, Inc., a Delaware corporation (the
"Company"), and William E. Berry (the "Optionee").
W I T N E S S E T H:
1. Grant of Option.
Pursuant to the provisions of American Tire Distributors, Inc. 2002
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 258,466 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 $1.40 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 not intended to be 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, the Options will vest and
be exercisable in accordance with the following schedule, which shall continue
to apply from and after the occurrence of a Change in Control (as defined in
this Agreement or as defined in any employment, executive severance or similar
agreement to which the Optionee is a party):
Options Exercisable with respect to
On or After Cumulative Number of Shares
----------- -----------------------------------
the date of this Agreement 51,693
January 1, 2003 51,693
January 1, 2004 51,693
January 1, 2005 51,693
January 1, 2006 51,694
(ii) (A) Notwithstanding Section 2(c)(i), upon the termination
of Optionee's employment (1) by the Company without Cause (as defined below), by
the Optionee for Good Reason (as defined below) or due to the Optionee's death,
in each case, at any time after a Qualifying Change in Control (as defined
below) or (2) by the Company or the Optionee for any reason other than a
Specified Cause Event (as defined below) or due to the Optionee's death, in each
case, more than six months after a Qualifying Change in Control, the Optionee
shall be entitled to receive an amount (the "Unvested Option Amount"), payable
within five business days after demand by the Optionee or his personal
representative, equal to (x) the excess (if any) of (1) the fair market value of
all cash and freely tradable securities received by the Principal Shareholders
in exchange for each share of Common Stock or security convertible into or
exercisable or exchangeable for shares of Common Stock (giving effect to such
conversion, exercise or exchange for this purpose) sold by the Principal
Shareholders in connection with such Qualifying Change of Control over (2) the
Exercise Price multiplied by (y) the number of Shares not yet vested in
accordance with the above schedule as of the effective time of such Qualifying
Change in Control. For purpose of clause (x)(1) of the immediately preceding
sentence, the "fair market value" of a security on any date of determination
shall be the mean average of the daily closing prices or last sale prices of
such security for each of the 15 preceding days preceding such date during which
the securities exchange or market quotation system on which such security is
listed or quoted was open for business. Prior to the consummation of a
Qualifying Change in Control, the Company shall take all actions reasonably
necessary, in the good faith judgment of the Board, to ensure that (i) a
successor to the Company or transferee of assets of the Company, as appropriate,
(the "Successor Entity") assumes the obligations of the Company under this
Section 2(c)(ii)(A) and (ii) the Successor Entity provides for the issuance of a
letter of credit, establishment of an escrow account containing cash or
investment grade securities, grant of a security interest in specified property,
guaranty or similar security or credit support arrangement (in each case, on
terms reasonably satisfactory to the Optionee) to secure amounts that may become
due in respect of any Unvested Option Amount.
(B) Notwithstanding Section 2(c)(i), all of the Options shall
become fully vested
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and exercisable immediately upon the termination of Optionee's employment (1) by
the Company without Cause or by the Optionee for Good Reason at any time after a
Change in Control (other than a Qualifying Change in Control); (2) by the
Company or the Optionee for any reason other than a Specified Cause Event (as
defined below) more than six months after a Change in Control (other than a
Qualifying Change in Control); or (3) due to the Optionee's death.
(C) When used in this Agreement:
"Change in Control" means the first to occur of any
of the following: (i) the sale (including by merger, consolidation or
sale of stock of subsidiaries or any other method) of all or
substantially all of the assets of the Company and its consolidated
subsidiaries (taken as a whole) to any person or entity not directly or
indirectly controlled by the holders of at least 50% of the Combined
Voting Power (as defined in the Plan) of the then outstanding shares of
capital stock of the Company (excluding shares owned by employees of
the Company as of the date of determination), (ii) at any time prior to
the consummation of an initial public offering of Common Stock of the
Company or other common stock of the Company having the voting power to
elect directors, a transaction (except pursuant to such initial public
offering) resulting in the Principal Shareholders (as defined in the
Plan) owning, collectively, less than 50% of the Combined Voting Power
of the then outstanding shares of capital stock of the Company
(excluding shares owned by employees of the Company as of the date of
determination), (iii) at any time after the consummation of an initial
public offering of Common Stock of the Company or other common stock of
the Company having the voting power to elect directors, the acquisition
(except pursuant to such initial public offering) by any person or
entity (other than the Principal Shareholders) not directly or
indirectly controlled by the Company's stockholders of more than 30% of
the Combined Voting Power of the then outstanding shares of capital
stock of the Company (excluding shares owned by employees of the
Company as of the date of determination), (iv) individuals serving as
directors of the Company on the Effective Date (as defined in the Plan)
and who were nominated or selected to serve as directors by one or more
Principal Shareholders (together with any new directors whose election
was approved by a vote of (A) such individuals or directors whose
election was previously so approved or (B) Principal Shareholders
holding a majority of the aggregate voting power of the capital stock
of the Company held by all Principal Shareholders) cease for any reason
to constitute a majority of the Board of Directors of the Company (the
"Board"), (v) the adoption of a plan relating to the liquidation or
dissolution of the Company in connection with an equity investment or
sale or a business combination transaction or (vi) any other event or
transaction that the Board deems to be a Change in Control.
"Specified Cause Event" means (1) a proven or
admitted act of fraud, misappropriation or embezzlement by the Optionee
that is detrimental to the Company or (2) the Optionee's conviction of
or plea of guilty or nolo contendere to a felony that is related to the
Company or the performance of the Optionee's services for the Company.
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"Qualifying Change in Control" means a Change in
Control of the type specified in clause (i) or (ii) of the definition
thereof in which the Principal Shareholders receive cash or freely
tradable securities or both in exchange for shares of Common Stock (or
securities convertible into or exchangeable or exercisable for shares
of Common Stock) of the Company sold by the Principal Shareholders in
connection therewith.
(iii) 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 Section 2(d) of this Agreement, by giving
the Company written notice at any time during the period specified in Section
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.
(iv) 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 only, 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 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, by giving the Company written notice of such
exercise within 24 months 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 Company shall terminate Optionee's
employment with the Company because of disability, the Optionee may exercise the
Option to the extent it was vested on the date of termination, by giving the
Company written notice of such exercise within 24
4
months after the date of termination of employment, but in no event later than
the Expiration Date.
(iii) If the Optionee terminates his employment with
the Company other than for Good Reason, the Optionee may exercise the Option to
the extent it was vested on the date of termination, by giving the Company
written notice of such exercise within 90 days after the date of termination of
employment, but in no event later then the Expiration Date. For purposes of this
Agreement, "Good Reason" has the meaning set forth in the executive severance or
employment agreement, if any, then in effect between the Company and the
Optionee or, in the absence of such agreement shall mean, if the basis for such
Good Reason is not cured within a reasonable period of time (determined in light
of the cure appropriate to the basis of such Good Reason, but in no event less
than 15 days), the failure of the Company to pay any undisputed amount due to
the Optionee in connection with his employment by the Company.
(iv) If the Optionee's employment shall terminate for
any reason other than death, disability or Cause (as hereinafter defined), or if
the Optionee shall terminate his employment with the Company for Good Reason,
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 applicable vesting schedule in Section 3(c)(i), by
giving the Company written notice of such exercise within 24 months after the
date of termination of employment, but in no event later than the Expiration
Date. Notwithstanding the foregoing, the Optionee shall forfeit his right to
exercise any Options that would have vested within the 12 months after
termination, if the Optionee violates the terms regarding non-competition set
forth in the Optionee's executive severance or employment agreement.
(v) 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. For purposes of this Agreement, "Cause" has the
meaning set forth in the executive severance or employment agreement, if any,
then in effect between the Company and the Optionee or, in the absence of such
agreement, shall mean (i) the Optionee's conviction of or plea of guilty or nolo
contendere to a felony, (ii) the Optionee's gross negligence in the performance
of his duties as an employee, officer, director or independent contractor of the
Company, (iii) the Optionee's knowingly dishonest act, or knowing bad faith or
willful misconduct in the performance of his duties as an employee, officer,
director or independent contractor of the Company, or (iv) the Optionee's
material breach of any confidentiality, non-competition, non-solicitation,
agreement to assign work product and inventions or similar covenant or agreement
of the Optionee.
(e) Transferability. Except as otherwise provided in this
Section 2(e), the Option is not transferable other than as designated by the
Optionee in his or her most recently filed Beneficiary designation filed with
the Company, or if there is no such designation or no such designated person
survives the Optionee, as designated by the Optionee, by will or by the laws of
descent and distribution, and during the Optionee's life, may be exercised only
by the Optionee. However, an Optionee, with the approval of the Committee, may
transfer the Option for no consideration to or for the benefit of the Optionee's
Immediate Family or to a partnership or
5
limited liability company for one or more members of the Optionee's Immediate
Family, subject to such limits as the Committee may establish, and the
transferee shall remain subject to all the terms and conditions applicable to
Options prior to such transfer. The foregoing right to transfer the Option shall
apply to the right to consent to amendments to this Agreement and, in the
discretion of the Committee, shall also apply to the right to transfer ancillary
rights associated with the Option. The term "Immediate Family" shall mean the
Optionee's spouse, parents, children, stepchildren, adoptive relationships,
sisters, brothers, nieces, nephews and grandchildren (and, for this purpose,
shall also include the Optionee).
(f) Adjustments. In the event of any change in corporate
capitalization (including, but not limited to, a change in the number of shares
of Common Stock outstanding), such as a stock split or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Section 368
of the Code) or any partial or complete liquidation of the Company, the
Committee or Board may make such substitution or adjustments in the number, kind
and option price of shares subject to the Option and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its sole
discretion; provided, however, that the number of shares subject to the Option
shall always be a whole number. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board shall be authorized to cause the Company to issue or
assume stock options, whether or not in a transaction to which Section 424(a) of
the Code applies, by means of substitution of new stock options for previously
issued stock options or an assumption of previously issued stock options.
(g) 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.
(h) 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
6
(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.
(i) 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.
(j) 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.
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. Reserved.
5. 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 American Tire Distributors, Inc.,
12200 Herbert Wayne Court, Suite 150, Huntersville, North Carolina 28078;
Attention: President, 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.
6. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to conflicts of laws
principles.
7. No Assignment.
7
Except as provided in Section 2(e), neither this Agreement nor any of
the rights or obligations of the Optionee hereunder may be transferred or
assigned by the Optionee.
8. 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.
9. 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.
10. Amendments.
No modification, amendment or waiver of any provision of this
Agreement, other than as required under Section 2(f), shall be effective unless
it is in writing and signed by the parties hereto.
11. Counterparts.
This Agreement has been executed in two counterparts each of which
shall constitute one and the same instrument.
12. Stockholders' Agreement.
All Shares purchased pursuant to any exercise of this Option shall be
subject to the terms and conditions of, and constitute "Shares" for all purposes
under, the Stockholders' Agreement, dated as of the date hereof, between the
Company and the Purchaser, as amended from time to time in accordance with its
terms.
8
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.
AMERICAN TIRE DISTRIBUTORS, INC.
By: /s/ Richard P. Johnson
----------------------
Richard P. Johnson
President and Chief Executive Officer
/s/ William E. Berry
- --------------------
William E. Berry
19016 Wildcat Trail
Davidson, NC 28036
EXHIBIT 10.22
AMERICAN TIRE DISTRIBUTORS, INC.
STOCK OPTION AGREEMENT
Number of shares subject to option: 357,140
This Agreement (the "Agreement") made this 12th day of June, 2002,
between American Tire Distributors, Inc., a Delaware corporation (the
"Company"), and J. Michael Gaither (the "Optionee").
W I T N E S S E T H:
1. Grant of Option.
Pursuant to the provisions of American Tire Distributors, Inc. 2002
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 357,140 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 $1.40 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 intended to be eligible to
be an incentive stock option (an "Incentive Stock Option") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code");
provided that to the extent this Option does not qualify as an Incentive Stock
Option, it shall constitute a nonqualified stock option under the Code.
(c) Exercise of Option. (i) Subject to the other terms of this
Agreement regarding the exercisability of this Option, the Options will vest and
be exercisable in accordance with the following schedule, which shall continue
to apply from and after the occurrence of a Change in Control (as defined in
this Agreement or as defined in any employment, executive severance or similar
agreement to which the Optionee is a party):
Options Exercisable with respect to
On or After Cumulative Number of Shares
----------- -----------------------------------
the date of this Agreement 71,428
January 1, 2003 71,428
January 1, 2004 71,428
January 1, 2005 71,428
January 1, 2006 71,428
(ii) (A) Notwithstanding Section 2(c)(i), upon the termination
of Optionee's employment (1) by the Company without Cause (as defined below), by
the Optionee for Good Reason (as defined below) or due to the Optionee's death,
in each case, at any time after a Qualifying Change in Control (as defined
below) or (2) by the Company or the Optionee for any reason other than a
Specified Cause Event (as defined below) or due to the Optionee's death, in each
case, more than six months after a Qualifying Change in Control, the Optionee
shall be entitled to receive an amount (the "Unvested Option Amount"), payable
within five business days after demand by the Optionee or his personal
representative, equal to (x) the excess (if any) of (1) the fair market value of
all cash and freely tradable securities received by the Principal Shareholders
in exchange for each share of Common Stock or security convertible into or
exercisable or exchangeable for shares of Common Stock (giving effect to such
conversion, exercise or exchange for this purpose) sold by the Principal
Shareholders in connection with such Qualifying Change of Control over (2) the
Exercise Price multiplied by (y) the number of Shares not yet vested in
accordance with the above schedule as of the effective time of such Qualifying
Change in Control. For purpose of clause (x)(1) of the immediately preceding
sentence, the "fair market value" of a security on any date of determination
shall be the mean average of the daily closing prices or last sale prices of
such security for each of the 15 preceding days preceding such date during which
the securities exchange or market quotation system on which such security is
listed or quoted was open for business. Prior to the consummation of a
Qualifying Change in Control, the Company shall take all actions reasonably
necessary, in the good faith judgment of the Board, to ensure that (i) a
successor to the Company or transferee of assets of the Company, as appropriate,
(the "Successor Entity") assumes the obligations of the Company under this
Section 2(c)(ii)(A) and (ii) the Successor Entity provides for the issuance of a
letter of credit, establishment of an escrow account containing cash or
investment grade securities, grant of a security interest in specified property,
guaranty or similar security or credit support arrangement (in each case, on
terms reasonably satisfactory to the Optionee) to secure amounts that may
2
become due in respect of any Unvested Option Amount.
(B) Notwithstanding Section 2(c)(i), all of the Options shall
become fully vested and exercisable immediately upon the termination of
Optionee's employment (1) by the Company without Cause or by the Optionee for
Good Reason at any time after a Change in Control (other than a Qualifying
Change in Control); (2) by the Company or the Optionee for any reason other than
a Specified Cause Event (as defined below) more than six months after a Change
in Control (other than a Qualifying Change in Control); or (3) due to the
Optionee's death.
(C) When used in this Agreement:
"Change in Control" means the first to occur of any
of the following: (i) the sale (including by merger, consolidation or
sale of stock of subsidiaries or any other method) of all or
substantially all of the assets of the Company and its consolidated
subsidiaries (taken as a whole) to any person or entity not directly or
indirectly controlled by the holders of at least 50% of the Combined
Voting Power (as defined in the Plan) of the then outstanding shares of
capital stock of the Company (excluding shares owned by employees of
the Company as of the date of determination), (ii) at any time prior to
the consummation of an initial public offering of Common Stock of the
Company or other common stock of the Company having the voting power to
elect directors, a transaction (except pursuant to such initial public
offering) resulting in the Principal Shareholders (as defined in the
Plan) owning, collectively, less than 50% of the Combined Voting Power
of the then outstanding shares of capital stock of the Company
(excluding shares owned by employees of the Company as of the date of
determination), (iii) at any time after the consummation of an initial
public offering of Common Stock of the Company or other common stock of
the Company having the voting power to elect directors, the acquisition
(except pursuant to such initial public offering) by any person or
entity (other than the Principal Shareholders) not directly or
indirectly controlled by the Company's stockholders of more than 30% of
the Combined Voting Power of the then outstanding shares of capital
stock of the Company (excluding shares owned by employees of the
Company as of the date of determination), (iv) individuals serving as
directors of the Company on the Effective Date (as defined in the Plan)
and who were nominated or selected to serve as directors by one or more
Principal Shareholders (together with any new directors whose election
was approved by a vote of (A) such individuals or directors whose
election was previously so approved or (B) Principal Shareholders
holding a majority of the aggregate voting power of the capital stock
of the Company held by all Principal Shareholders) cease for any reason
to constitute a majority of the Board of Directors of the Company (the
"Board"), (v) the adoption of a plan relating to the liquidation or
dissolution of the Company in connection with an equity investment or
sale or a business combination transaction or (vi) any other event or
transaction that the Board deems to be a Change in Control.
3
"Specified Cause Event" means (1) a proven or
admitted act of fraud, misappropriation or embezzlement by the Optionee
that is detrimental to the Company or (2) the Optionee's conviction of
or plea of guilty or nolo contendere to a felony that is related to the
Company or the performance of the Optionee's services for the Company.
"Qualifying Change in Control" means a Change in
Control of the type specified in clause (i) or (ii) of the definition
thereof in which the Principal Shareholders receive cash or freely
tradable securities or both in exchange for shares of Common Stock (or
securities convertible into or exchangeable or exercisable for shares
of Common Stock) of the Company sold by the Principal Shareholders in
connection therewith.
(iii) 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 Section 2(d) of this Agreement, by giving
the Company written notice at any time during the period specified in Section
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.
(iv) 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 only, 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 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, by giving the Company written notice of such
exercise within 24 months 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
4
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 Company shall terminate Optionee's
employment with the Company because of disability, the Optionee may exercise the
Option to the extent it was vested on the date of termination, by giving the
Company written notice of such exercise within 24 months after the date of
termination of employment, but in no event later than the Expiration Date.
(iii) If the Optionee terminates his employment with
the Company other than for Good Reason, the Optionee may exercise the Option to
the extent it was vested on the date of termination, by giving the Company
written notice of such exercise within 90 days after the date of termination of
employment, but in no event later then the Expiration Date. For purposes of this
Agreement, "Good Reason" has the meaning set forth in the executive severance or
employment agreement, if any, then in effect between the Company and the
Optionee or, in the absence of such agreement shall mean, if the basis for such
Good Reason is not cured within a reasonable period of time (determined in light
of the cure appropriate to the basis of such Good Reason, but in no event less
than 15 days), the failure of the Company to pay any undisputed amount due to
the Optionee in connection with his employment by the Company.
(iv) If the Optionee's employment shall terminate for
any reason other than death, disability or Cause (as hereinafter defined), or if
the Optionee shall terminate his employment with the Company for Good Reason,
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 applicable vesting schedule in Section 3(c)(i), by
giving the Company written notice of such exercise within 24 months after the
date of termination of employment, but in no event later than the Expiration
Date. Notwithstanding the foregoing, the Optionee shall forfeit his right to
exercise any Options that would have vested within the 12 months after
termination, if the Optionee violates the terms regarding non-competition set
forth in the Optionee's executive severance or employment agreement.
(v) 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. For purposes of this Agreement, "Cause" has the
meaning set forth in the executive severance or employment agreement, if any,
then in effect between the Company and the Optionee or, in the absence of such
agreement, shall mean (i) the Optionee's conviction of or plea of guilty or nolo
contendere to a felony, (ii) the Optionee's gross negligence in the performance
of his duties as an employee, officer, director or independent contractor of the
Company, (iii) the Optionee's knowingly dishonest act, or knowing bad faith or
willful misconduct in the performance of his duties as an employee, officer,
director or independent contractor of the Company, or (iv) the Optionee's
material breach of any confidentiality, non-competition, non-solicitation,
agreement to assign work product and inventions or similar covenant or agreement
of the Optionee.
5
(vi) In the event of termination of employment, if an
Incentive Stock Option is exercised after the expiration of the exercise periods
that apply for purposes of Section 422 of the Code, such stock option shall
thereafter be treated as a nonqualified stock option.
(e) Transferability. Except as otherwise provided in this
Section 2(e), the Option is not transferable other than as designated by the
Optionee in his or her most recently filed Beneficiary designation filed with
the Company, or if there is no such designation or no such designated person
survives the Optionee, as designated by the Optionee, by will or by the laws of
descent and distribution, and during the Optionee's life, may be exercised only
by the Optionee. However, an Optionee, with the approval of the Committee, may
transfer the Option for no consideration to or for the benefit of the Optionee's
Immediate Family or to a partnership or limited liability company for one or
more members of the Optionee's Immediate Family, subject to such limits as the
Committee may establish, and the transferee shall remain subject to all the
terms and conditions applicable to Options prior to such transfer. The foregoing
right to transfer the Option shall apply to the right to consent to amendments
to this Agreement and, in the discretion of the Committee, shall also apply to
the right to transfer ancillary rights associated with the Option. The term
"Immediate Family" shall mean the Optionee's spouse, parents, children,
stepchildren, adoptive relationships, sisters, brothers, nieces, nephews and
grandchildren (and, for this purpose, shall also include the Optionee).
(f) Adjustments. In the event of any change in corporate
capitalization (including, but not limited to, a change in the number of shares
of Common Stock outstanding), such as a stock split or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Section 368
of the Code) or any partial or complete liquidation of the Company, the
Committee or Board may make such substitution or adjustments in the number, kind
and option price of shares subject to the Option and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its sole
discretion; provided, however, that the number of shares subject to the Option
shall always be a whole number. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board shall be authorized to cause the Company to issue or
assume stock options, whether or not in a transaction to which Section 424(a) of
the Code applies, by means of substitution of new stock options for previously
issued stock options or an assumption of previously issued stock options.
(g) 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.
(h) Optionee Acknowledgement. The Optionee acknowledges that:
(i) the future value of the Company is highly
speculative;
6
(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.
(i) 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.
(j) 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.
7
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. Disqualifying Disposition
If the Optionee disposes of Shares acquired upon exercise of this
Option within two year from the date of the grant of such Option or one year
after such Shares were acquired pursuant to exercise of this Option, the
Optionee shall notify the Company in writing of such disposition.
5. 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 American Tire Distributors, Inc.,
12200 Herbert Wayne Court, Suite 150, Huntersville, North Carolina 28078;
Attention: President, 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.
6. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to conflicts of laws
principles.
7. No Assignment.
Except as provided in Section 2(e), neither this Agreement nor any of
the rights or obligations of the Optionee hereunder may be transferred or
assigned by the Optionee.
8. 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.
9. 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.
8
10. Amendments.
No modification, amendment or waiver of any provision of this
Agreement, other than as required under Section 2(f), shall be effective unless
it is in writing and signed by the parties hereto.
11. Counterparts.
This Agreement has been executed in two counterparts each of which
shall constitute one and the same instrument.
12. Stockholders' Agreement.
All Shares purchased pursuant to any exercise of this Option shall be
subject to the terms and conditions of, and constitute "Shares" for all purposes
under, the Stockholders' Agreement, dated as of the date hereof, between the
Company and the Purchaser, as amended from time to time in accordance with its
terms.
9
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.
AMERICAN TIRE DISTRIBUTORS, INC.
By: /s/ Richard P. Johnson
----------------------
Richard P. Johnson
President and Chief Executive Officer
/s/ J. Michael Gaither
- ----------------------
J. Michael Gaither
8309 Merrimack Court
Charlotte, NC 28210
EXHIBIT 10.22
AMERICAN TIRE DISTRIBUTORS, INC.
STOCK OPTION AGREEMENT
(NON-QUALIFIED)
Number of shares subject to option: 86,097
This Agreement (the "Agreement") made this 12th day of June, 2002,
between American Tire Distributors, Inc., a Delaware corporation (the
"Company"), and J. Michael Gaither (the "Optionee").
W I T N E S S E T H:
1. Grant of Option.
Pursuant to the provisions of American Tire Distributors, Inc. 2002
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 86,097 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 $1.40 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 not intended to be 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, the Options will vest and
be exercisable in accordance with the following schedule, which shall continue
to apply from and after the occurrence of a Change in Control (as defined in
this Agreement or as defined in any employment, executive severance or similar
agreement to which the Optionee is a party):
Options Exercisable with respect to
On or After Cumulative Number of Shares
----------- -----------------------------------
the date of this Agreement 17,219
January 1, 2003 17,219
January 1, 2004 17,219
January 1, 2005 17,220
January 1, 2006 17,220
(ii) (A) Notwithstanding Section 2(c)(i), upon the termination
of Optionee's employment (1) by the Company without Cause (as defined below), by
the Optionee for Good Reason (as defined below) or due to the Optionee's death,
in each case, at any time after a Qualifying Change in Control (as defined
below) or (2) by the Company or the Optionee for any reason other than a
Specified Cause Event (as defined below) or due to the Optionee's death, in each
case, more than six months after a Qualifying Change in Control, the Optionee
shall be entitled to receive an amount (the "Unvested Option Amount"), payable
within five business days after demand by the Optionee or his personal
representative, equal to (x) the excess (if any) of (1) the fair market value of
all cash and freely tradable securities received by the Principal Shareholders
in exchange for each share of Common Stock or security convertible into or
exercisable or exchangeable for shares of Common Stock (giving effect to such
conversion, exercise or exchange for this purpose) sold by the Principal
Shareholders in connection with such Qualifying Change of Control over (2) the
Exercise Price multiplied by (y) the number of Shares not yet vested in
accordance with the above schedule as of the effective time of such Qualifying
Change in Control. For purpose of clause (x)(1) of the immediately preceding
sentence, the "fair market value" of a security on any date of determination
shall be the mean average of the daily closing prices or last sale prices of
such security for each of the 15 preceding days preceding such date during which
the securities exchange or market quotation system on which such security is
listed or quoted was open for business. Prior to the consummation of a
Qualifying Change in Control, the Company shall take all actions reasonably
necessary, in the good faith judgment of the Board, to ensure that (i) a
successor to the Company or transferee of assets of the Company, as appropriate,
(the "Successor Entity") assumes the obligations of the Company under this
Section 2(c)(ii)(A) and (ii) the Successor Entity provides for the issuance of a
letter of credit, establishment of an escrow account containing cash or
investment grade securities, grant of a security interest in specified property,
guaranty or similar security or credit support arrangement (in each case, on
terms reasonably satisfactory to the Optionee) to secure amounts that may become
due in respect of any Unvested Option Amount.
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(B) Notwithstanding Section 2(c)(i), all of the Options shall
become fully vested and exercisable immediately upon the termination of
Optionee's employment (1) by the Company without Cause or by the Optionee for
Good Reason at any time after a Change in Control (other than a Qualifying
Change in Control);(2) by the Company or the Optionee for any reason other than
a Specified Cause Event (as defined below) more than six months after a Change
in Control (other than a Qualifying Change in Control); or (3) due to the
Optionee's death.
(C) When used in this Agreement:
"Change in Control" means the first to occur of any
of the following: (i) the sale (including by merger, consolidation or
sale of stock of subsidiaries or any other method) of all or
substantially all of the assets of the Company and its consolidated
subsidiaries (taken as a whole) to any person or entity not directly or
indirectly controlled by the holders of at least 50% of the Combined
Voting Power (as defined in the Plan) of the then outstanding shares of
capital stock of the Company (excluding shares owned by employees of
the Company as of the date of determination), (ii) at any time prior to
the consummation of an initial public offering of Common Stock of the
Company or other common stock of the Company having the voting power to
elect directors, a transaction (except pursuant to such initial public
offering) resulting in the Principal Shareholders (as defined in the
Plan) owning, collectively, less than 50% of the Combined Voting Power
of the then outstanding shares of capital stock of the Company
(excluding shares owned by employees of the Company as of the date of
determination), (iii) at any time after the consummation of an initial
public offering of Common Stock of the Company or other common stock of
the Company having the voting power to elect directors, the acquisition
(except pursuant to such initial public offering) by any person or
entity (other than the Principal Shareholders) not directly or
indirectly controlled by the Company's stockholders of more than 30% of
the Combined Voting Power of the then outstanding shares of capital
stock of the Company (excluding shares owned by employees of the
Company as of the date of determination), (iv) individuals serving as
directors of the Company on the Effective Date (as defined in the Plan)
and who were nominated or selected to serve as directors by one or more
Principal Shareholders (together with any new directors whose election
was approved by a vote of (A) such individuals or directors whose
election was previously so approved or (B) Principal Shareholders
holding a majority of the aggregate voting power of the capital stock
of the Company held by all Principal Shareholders) cease for any reason
to constitute a majority of the Board of Directors of the Company (the
"Board"), (v) the adoption of a plan relating to the liquidation or
dissolution of the Company in connection with an equity investment or
sale or a business combination transaction or (vi) any other event or
transaction that the Board deems to be a Change in Control.
"Specified Cause Event" means (1) a proven or
admitted act of fraud, misappropriation or embezzlement by the Optionee
that is detrimental to the Company or (2) the Optionee's conviction of
or plea of guilty or nolo contendere to a felony that is related to the
Company or the performance of the Optionee's services for the Company.
3
"Qualifying Change in Control" means a Change in
Control of the type specified in clause (i) or (ii) of the definition
thereof in which the Principal Shareholders receive cash or freely
tradable securities or both in exchange for shares of Common Stock (or
securities convertible into or exchangeable or exercisable for shares
of Common Stock) of the Company sold by the Principal Shareholders in
connection therewith.
(iii) 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 Section 2(d) of this Agreement, by giving
the Company written notice at any time during the period specified in Section
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.
(iv) 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 only, 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 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, by giving the Company written notice of such
exercise within 24 months 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 Company shall terminate Optionee's
employment with the Company because of disability, the Optionee may exercise the
Option to the extent it was vested
4
on the date of termination, by giving the Company written notice of such
exercise within 24 months after the date of termination of employment, but in no
event later than the Expiration Date.
(iii) If the Optionee terminates his employment with
the Company other than for Good Reason, the Optionee may exercise the Option to
the extent it was vested on the date of termination, by giving the Company
written notice of such exercise within 90 days after the date of termination of
employment, but in no event later then the Expiration Date. For purposes of this
Agreement, "Good Reason" has the meaning set forth in the executive severance or
employment agreement, if any, then in effect between the Company and the
Optionee or, in the absence of such agreement shall mean, if the basis for such
Good Reason is not cured within a reasonable period of time (determined in light
of the cure appropriate to the basis of such Good Reason, but in no event less
than 15 days), the failure of the Company to pay any undisputed amount due to
the Optionee in connection with his employment by the Company.
(iv) If the Optionee's employment shall terminate for
any reason other than death, disability or Cause (as hereinafter defined), or if
the Optionee shall terminate his employment with the Company for Good Reason,
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 applicable vesting schedule in Section 3(c)(i), by
giving the Company written notice of such exercise within 24 months after the
date of termination of employment, but in no event later than the Expiration
Date. Notwithstanding the foregoing, the Optionee shall forfeit his right to
exercise any Options that would have vested within the 12 months after
termination, if the Optionee violates the terms regarding non-competition set
forth in the Optionee's executive severance or employment agreement.
(v) 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. For purposes of this Agreement, "Cause" has the
meaning set forth in the executive severance or employment agreement, if any,
then in effect between the Company and the Optionee or, in the absence of such
agreement, shall mean (i) the Optionee's conviction of or plea of guilty or nolo
contendere to a felony, (ii) the Optionee's gross negligence in the performance
of his duties as an employee, officer, director or independent contractor of the
Company, (iii) the Optionee's knowingly dishonest act, or knowing bad faith or
willful misconduct in the performance of his duties as an employee, officer,
director or independent contractor of the Company, or (iv) the Optionee's
material breach of any confidentiality, non-competition, non-solicitation,
agreement to assign work product and inventions or similar covenant or agreement
of the Optionee.
(e) Transferability. Except as otherwise provided in this
Section 2(e), the Option is not transferable other than as designated by the
Optionee in his or her most recently filed Beneficiary designation filed with
the Company, or if there is no such designation or no such designated person
survives the Optionee, as designated by the Optionee, by will or by the laws of
descent and distribution, and during the Optionee's life, may be exercised only
by the Optionee. However, an Optionee, with the approval of the Committee, may
transfer the Option for no
5
consideration to or for the benefit of the Optionee's Immediate Family or to a
partnership or limited liability company for one or more members of the
Optionee's Immediate Family, subject to such limits as the Committee may
establish, and the transferee shall remain subject to all the terms and
conditions applicable to Options prior to such transfer. The foregoing right to
transfer the Option shall apply to the right to consent to amendments to this
Agreement and, in the discretion of the Committee, shall also apply to the right
to transfer ancillary rights associated with the Option. The term "Immediate
Family" shall mean the Optionee's spouse, parents, children, stepchildren,
adoptive relationships, sisters, brothers, nieces, nephews and grandchildren
(and, for this purpose, shall also include the Optionee).
(f) Adjustments. In the event of any change in corporate
capitalization (including, but not limited to, a change in the number of shares
of Common Stock outstanding), such as a stock split or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Section 368
of the Code) or any partial or complete liquidation of the Company, the
Committee or Board may make such substitution or adjustments in the number, kind
and option price of shares subject to the Option and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its sole
discretion; provided, however, that the number of shares subject to the Option
shall always be a whole number. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board shall be authorized to cause the Company to issue or
assume stock options, whether or not in a transaction to which Section 424(a) of
the Code applies, by means of substitution of new stock options for previously
issued stock options or an assumption of previously issued stock options.
(g) 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.
(h) 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
6
(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.
(i) 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.
(j) 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.
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. Reserved.
5. 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 American Tire Distributors, Inc.,
12200 Herbert Wayne Court, Suite 150, Huntersville, North Carolina 28078;
Attention: President, 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.
6. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to conflicts of laws
principles.
7. No Assignment.
7
Except as provided in Section 2(e), neither this Agreement nor any of
the rights or obligations of the Optionee hereunder may be transferred or
assigned by the Optionee.
8. 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.
9. 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.
10. Amendments.
No modification, amendment or waiver of any provision of this
Agreement, other than as required under Section 2(f), shall be effective unless
it is in writing and signed by the parties hereto.
11. Counterparts.
This Agreement has been executed in two counterparts each of which
shall constitute one and the same instrument.
12. Stockholders' Agreement.
All Shares purchased pursuant to any exercise of this Option shall be
subject to the terms and conditions of, and constitute "Shares" for all purposes
under, the Stockholders' Agreement, dated as of the date hereof, between the
Company and the Purchaser, as amended from time to time in accordance with its
terms.
8
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.
AMERICAN TIRE DISTRIBUTORS, INC.
By: /s/ Richard P. Johnson
----------------------
Richard P. Johnson
President and Chief Executive Officer
/s/ J. Michael Gaither
- ----------------------
J. Michael Gaither
8309 Merrimack Court
Charlotte, NC 28210
EXHIBIT 10.22
AMERICAN TIRE DISTRIBUTORS, INC.
STOCK OPTION AGREEMENT
Number of shares subject to option: 295,491
This Agreement (the "Agreement") made this 12th day of June, 2002,
between American Tire Distributors, Inc., a Delaware corporation (the
"Company"), and Daniel K. Brown (the "Optionee").
W I T N E S S E T H:
1. Grant of Option.
Pursuant to the provisions of American Tire Distributors, Inc. 2002
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 295,491 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 $1.40 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 intended to be eligible to
be an incentive stock option (an "Incentive Stock Option") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code");
provided that to the extent this Option does not qualify as an Incentive Stock
Option, it shall constitute a nonqualified stock option under the Code.
(c) Exercise of Option. (i) Subject to the other terms of this
Agreement regarding the exercisability of this Option, the Options will vest and
be exercisable in accordance with the following schedule, which shall continue
to apply from and after the occurrence of a Change in Control (as defined in
this Agreement or as defined in any employment, executive severance or similar
agreement to which the Optionee is a party):
Options Exercisable with respect to
On or After Cumulative Number of Shares
----------- -----------------------------------
the date of this Agreement 59,099
January 1, 2003 59,098
January 1, 2004 59,098
January 1, 2005 59,098
January 1, 2006 59,098
(ii) (A) Notwithstanding Section 2(c)(i), upon the termination
of Optionee's employment (1) by the Company without Cause (as defined below) or
by the Optionee for Good Reason (as defined below) or due to the Optionee's
death, in each case, at any time after a Qualifying Change in Control (as
defined below) or (2) by the Company or the Optionee for any reason other than a
Specified Cause Event (as defined below) or due to the Optionee's death, in each
case, more than six months after a Qualifying Change in Control, the Optionee
shall be entitled to receive an amount (the "Unvested Option Amount"), payable
within five business days after demand by the Optionee or his personal
representative, equal to (x) the excess (if any) of (1) the fair market value of
all cash and freely tradable securities received by the Principal Shareholders
in exchange for each share of Common Stock or security convertible into or
exercisable or exchangeable for shares of Common Stock (giving effect to such
conversion, exercise or exchange for this purpose) sold by the Principal
Shareholders in connection with such Qualifying Change of Control over (2) the
Exercise Price multiplied by (y) the number of Shares not yet vested in
accordance with the above schedule as of the effective time of such Qualifying
Change in Control. For purpose of clause (x)(1) of the immediately preceding
sentence, the "fair market value" of a security on any date of determination
shall be the mean average of the daily closing prices or last sale prices of
such security for each of the 15 preceding days preceding such date during which
the securities exchange or market quotation system on which such security is
listed or quoted was open for business. Prior to the consummation of a
Qualifying Change in Control, the Company shall take all actions reasonably
necessary, in the good faith judgment of the Board, to ensure that (i) a
successor to the Company or transferee of assets of the Company, as appropriate,
(the "Successor Entity") assumes the obligations of the Company under this
Section 2(c)(ii)(A) and (ii) the Successor Entity provides for the issuance of a
letter of credit, establishment of an escrow account containing cash or
investment grade securities, grant of a security interest in specified property,
guaranty or similar security or credit support arrangement (in each case, on
terms reasonably satisfactory to the Optionee) to secure amounts that may become
due in respect of any Unvested Option Amount.
(B) Notwithstanding Section 2(c)(i), all of the Options shall
become fully vested
2
and exercisable immediately upon the termination of Optionee's employment (1) by
the Company without Cause or by the Optionee for Good Reason at any time after a
Change in Control (other than a Qualifying Change in Control); (2) by the
Company or the Optionee for any reason other than a Specified Cause Event (as
defined below) more than six months after a Change in Control (other than a
Qualifying Change in Control); or (3) due to the Optionee's death.
(C) When used in this Agreement:
"Change in Control" means the first to occur of any
of the following: (i) the sale (including by merger, consolidation or
sale of stock of subsidiaries or any other method) of all or
substantially all of the assets of the Company and its consolidated
subsidiaries (taken as a whole) to any person or entity not directly or
indirectly controlled by the holders of at least 50% of the Combined
Voting Power (as defined in the Plan) of the then outstanding shares of
capital stock of the Company (excluding shares owned by employees of
the Company as of the date of determination), (ii) at any time prior to
the consummation of an initial public offering of Common Stock of the
Company or other common stock of the Company having the voting power to
elect directors, a transaction (except pursuant to such initial public
offering) resulting in the Principal Shareholders (as defined in the
Plan) owning, collectively, less than 50% of the Combined Voting Power
of the then outstanding shares of capital stock of the Company
(excluding shares owned by employees of the Company as of the date of
determination), (iii) at any time after the consummation of an initial
public offering of Common Stock of the Company or other common stock of
the Company having the voting power to elect directors, the acquisition
(except pursuant to such initial public offering) by any person or
entity (other than the Principal Shareholders) not directly or
indirectly controlled by the Company's stockholders of more than 30% of
the Combined Voting Power of the then outstanding shares of capital
stock of the Company (excluding shares owned by employees of the
Company as of the date of determination), (iv) individuals serving as
directors of the Company on the Effective Date (as defined in the Plan)
and who were nominated or selected to serve as directors by one or more
Principal Shareholders (together with any new directors whose election
was approved by a vote of (A) such individuals or directors whose
election was previously so approved or (B) Principal Shareholders
holding a majority of the aggregate voting power of the capital stock
of the Company held by all Principal Shareholders) cease for any reason
to constitute a majority of the Board of Directors of the Company (the
"Board"), (v) the adoption of a plan relating to the liquidation or
dissolution of the Company in connection with an equity investment or
sale or a business combination transaction or (vi) any other event or
transaction that the Board deems to be a Change in Control.
"Specified Cause Event" means (1) a proven or
admitted act of fraud, misappropriation or embezzlement by the Optionee
that is detrimental to the Company or (2) the Optionee's conviction of
or plea of guilty or nolo contendere to a felony that is related to the
Company or the performance of the Optionee's services for the Company.
3
"Qualifying Change in Control" means a Change in
Control of the type specified in clause (i) or (ii) of the definition
thereof in which the Principal Shareholders receive cash or freely
tradable securities or both in exchange for shares of Common Stock (or
securities convertible into or exchangeable or exercisable for shares
of Common Stock) of the Company sold by the Principal Shareholders in
connection therewith.
(iii) 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 Section 2(d) of this Agreement, by giving
the Company written notice at any time during the period specified in Section
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.
(iv) 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 only, 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 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, by giving the Company written notice of such
exercise within 24 months 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 Company shall terminate Optionee's
employment with the Company because of disability, the Optionee may exercise the
Option to the extent it was vested on the date of termination, by giving the
Company written notice of such exercise within 24
4
months after the date of termination of employment, but in no event later than
the Expiration Date.
(iii) If the Optionee terminates his employment with
the Company other than for Good Reason, the Optionee may exercise the Option to
the extent it was vested on the date of termination, by giving the Company
written notice of such exercise within 90 days after the date of termination of
employment, but in no event later then the Expiration Date. For purposes of this
Agreement, "Good Reason" has the meaning set forth in the executive severance or
employment agreement, if any, then in effect between the Company and the
Optionee or, in the absence of such agreement shall mean, if the basis for such
Good Reason is not cured within a reasonable period of time (determined in light
of the cure appropriate to the basis of such Good Reason, but in no event less
than 15 days), the failure of the Company to pay any undisputed amount due to
the Optionee in connection with his employment by the Company.
(iv) If the Optionee's employment shall terminate for
any reason other than death, disability or Cause (as hereinafter defined), or if
the Optionee shall terminate his employment with the Company for Good Reason,
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 applicable vesting schedule in Section 3(c)(i), by
giving the Company written notice of such exercise within 24 months after the
date of termination of employment, but in no event later than the Expiration
Date. Notwithstanding the foregoing, the Optionee shall forfeit his right to
exercise any Options that would have vested within the 12 months after
termination, if the Optionee violates the terms regarding non-competition set
forth in the Optionee's executive severance or employment agreement.
(v) 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. For purposes of this Agreement, "Cause" has the
meaning set forth in the executive severance or employment agreement, if any,
then in effect between the Company and the Optionee or, in the absence of such
agreement, shall mean (i) the Optionee's conviction of or plea of guilty or nolo
contendere to a felony, (ii) the Optionee's gross negligence in the performance
of his duties as an employee, officer, director or independent contractor of the
Company, (iii) the Optionee's knowingly dishonest act, or knowing bad faith or
willful misconduct in the performance of his duties as an employee, officer,
director or independent contractor of the Company, or (iv) the Optionee's
material breach of any confidentiality, non-competition, non-solicitation,
agreement to assign work product and inventions or similar covenant or agreement
of the Optionee.
(vi) In the event of termination of employment, if an
Incentive Stock Option is exercised after the expiration of the exercise periods
that apply for purposes of Section 422 of the Code, such stock option shall
thereafter be treated as a nonqualified stock option.
(e) Transferability. Except as otherwise provided in this
Section 2(e), the Option is not transferable other than as designated by the
Optionee in his or her most recently filed Beneficiary designation filed with
the Company, or if there is no such designation or no such
5
designated person survives the Optionee, as designated by the Optionee, by will
or by the laws of descent and distribution, and during the Optionee's life, may
be exercised only by the Optionee. However, an Optionee, with the approval of
the Committee, may transfer the Option for no consideration to or for the
benefit of the Optionee's Immediate Family or to a partnership or limited
liability company for one or more members of the Optionee's Immediate Family,
subject to such limits as the Committee may establish, and the transferee shall
remain subject to all the terms and conditions applicable to Options prior to
such transfer. The foregoing right to transfer the Option shall apply to the
right to consent to amendments to this Agreement and, in the discretion of the
Committee, shall also apply to the right to transfer ancillary rights associated
with the Option. The term "Immediate Family" shall mean the Optionee's spouse,
parents, children, stepchildren, adoptive relationships, sisters, brothers,
nieces, nephews and grandchildren (and, for this purpose, shall also include the
Optionee).
(f) Adjustments. In the event of any change in corporate
capitalization (including, but not limited to, a change in the number of shares
of Common Stock outstanding), such as a stock split or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Section 368
of the Code) or any partial or complete liquidation of the Company, the
Committee or Board may make such substitution or adjustments in the number, kind
and option price of shares subject to the Option and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its sole
discretion; provided, however, that the number of shares subject to the Option
shall always be a whole number. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board shall be authorized to cause the Company to issue or
assume stock options, whether or not in a transaction to which Section 424(a) of
the Code applies, by means of substitution of new stock options for previously
issued stock options or an assumption of previously issued stock options.
(g) 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.
(h) 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);
6
(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.
(i) 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.
(j) 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.
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. Disqualifying Disposition
If the Optionee disposes of Shares acquired upon exercise of this
Option within two year from the date of the grant of such Option or one year
after such Shares were acquired pursuant to exercise of this Option, the
Optionee shall notify the Company in writing of such disposition.
5. 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 American Tire Distributors, Inc.,
12200 Herbert Wayne Court, Suite 150, Huntersville, North Carolina 28078;
Attention: President, 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.
7
6. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to conflicts of laws
principles.
7. No Assignment.
Except as provided in Section 2(e), neither this Agreement nor any of
the rights or obligations of the Optionee hereunder may be transferred or
assigned by the Optionee.
8. 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.
9. 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.
10. Amendments.
No modification, amendment or waiver of any provision of this
Agreement, other than as required under Section 2(f), shall be effective unless
it is in writing and signed by the parties hereto.
11. Counterparts.
This Agreement has been executed in two counterparts each of which
shall constitute one and the same instrument.
12. Stockholders' Agreement.
All Shares purchased pursuant to any exercise of this Option shall be
subject to the terms and conditions of, and constitute "Shares" for all purposes
under, the Stockholders' Agreement, dated as of the date hereof, between the
Company and the Purchaser, as amended from time to time in accordance with its
terms.
8
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.
AMERICAN TIRE DISTRIBUTORS, INC.
By: /s/ Richard P. Johnson
----------------------
Richard P. Johnson
President and Chief Executive Officer
/s/ Daniel K. Brown
- -------------------
Daniel K. Brown
17915 Jetton Road
Cornelius, NC 27031
EXHIBIT 10.22
AMERICAN TIRE DISTRIBUTORS, INC.
STOCK OPTION AGREEMENT
Number of shares subject to option: 295,491
This Agreement (the "Agreement") made this 12th day of June, 2002,
between American Tire Distributors, Inc., a Delaware corporation (the
"Company"), and Phillip E. Marrett (the "Optionee").
W I T N E S S E T H:
1. Grant of Option.
Pursuant to the provisions of American Tire Distributors, Inc. 2002
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 295,491 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 $1.40 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 intended to be eligible to
be an incentive stock option (an "Incentive Stock Option") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code");
provided that to the extent this Option does not qualify as an Incentive Stock
Option, it shall constitute a nonqualified stock option under the Code.
(c) Exercise of Option. (i) Subject to the other terms of this
Agreement regarding the exercisability of this Option, the Options will vest and
be exercisable in accordance with the following schedule, which shall continue
to apply from and after the occurrence of a Change in Control (as defined in
this Agreement or as defined in any employment, executive severance or similar
agreement to which the Optionee is a party):
Options Exercisable with respect to
On or After Cumulative Number of Shares
----------- -----------------------------------
the date of this Agreement 59,099
January 1, 2003 59,098
January 1, 2004 59,098
January 1, 2005 59,098
January 1, 2006 59,098
(ii) (A) Notwithstanding Section 2(c)(i), upon the termination
of Optionee's employment (1) by the Company without Cause (as defined below), by
the Optionee for Good Reason (as defined below) or due to the Optionee's death,
in each case, at any time after a Qualifying Change in Control (as defined
below) or (2) by the Company or the Optionee for any reason other than a
Specified Cause Event (as defined below) or due to the Optonee's death, in each
case, more than six months after a Qualifying Change in Control, the Optionee
shall be entitled to receive an amount (the "Unvested Option Amount"), payable
within five business days after demand by the Optionee or his personal
representative, equal to (x) the excess (if any) of (1) the fair market value of
all cash and freely tradable securities received by the Principal Shareholders
in exchange for each share of Common Stock or security convertible into or
exercisable or exchangeable for shares of Common Stock (giving effect to such
conversion, exercise or exchange for this purpose) sold by the Principal
Shareholders in connection with such Qualifying Change of Control over (2) the
Exercise Price multiplied by (y) the number of Shares not yet vested in
accordance with the above schedule as of the effective time of such Qualifying
Change in Control. For purpose of clause (x)(1) of the immediately preceding
sentence, the "fair market value" of a security on any date of determination
shall be the mean average of the daily closing prices or last sale prices of
such security for each of the 15 preceding days preceding such date during which
the securities exchange or market quotation system on which such security is
listed or quoted was open for business. Prior to the consummation of a
Qualifying Change in Control, the Company shall take all actions reasonably
necessary, in the good faith judgment of the Board, to ensure that (i) a
successor to the Company or transferee of assets of the Company, as appropriate,
(the "Successor Entity") assumes the obligations of the Company under this
Section 2(c)(ii)(A) and (ii) the Successor Entity provides for the issuance of a
letter of credit, establishment of an escrow account containing cash or
investment grade securities, grant of a security interest in specified property,
guaranty or similar security or credit support arrangement (in each case, on
terms reasonably satisfactory to the Optionee) to secure amounts that may become
due in respect of any Unvested Option Amount.
(B) Notwithstanding Section 2(c)(i), all of the Options shall
become fully vested
2
and exercisable immediately upon the termination of Optionee's employment (1) by
the Company without Cause or by the Optionee for Good Reason at any time after a
Change in Control (other than a Qualifying Change in Control) or (2) by the
Company or the Optionee for any reason other than a Specified Cause Event (as
defined below) more than six months after a Change in Control (other than a
Qualifying Change in Control).
(C) When used in this Agreement:
"Change in Control" means the first to occur of any
of the following: (i) the sale (including by merger, consolidation or
sale of stock of subsidiaries or any other method) of all or
substantially all of the assets of the Company and its consolidated
subsidiaries (taken as a whole) to any person or entity not directly or
indirectly controlled by the holders of at least 50% of the Combined
Voting Power (as defined in the Plan) of the then outstanding shares of
capital stock of the Company (excluding shares owned by employees of
the Company as of the date of determination), (ii) at any time prior to
the consummation of an initial public offering of Common Stock of the
Company or other common stock of the Company having the voting power to
elect directors, a transaction (except pursuant to such initial public
offering) resulting in the Principal Shareholders (as defined in the
Plan) owning, collectively, less than 50% of the Combined Voting Power
of the then outstanding shares of capital stock of the Company
(excluding shares owned by employees of the Company as of the date of
determination), (iii) at any time after the consummation of an initial
public offering of Common Stock of the Company or other common stock of
the Company having the voting power to elect directors, the acquisition
(except pursuant to such initial public offering) by any person or
entity (other than the Principal Shareholders) not directly or
indirectly controlled by the Company's stockholders of more than 30% of
the Combined Voting Power of the then outstanding shares of capital
stock of the Company (excluding shares owned by employees of the
Company as of the date of determination), (iv) individuals serving as
directors of the Company on the Effective Date (as defined in the Plan)
and who were nominated or selected to serve as directors by one or more
Principal Shareholders (together with any new directors whose election
was approved by a vote of (A) such individuals or directors whose
election was previously so approved or (B) Principal Shareholders
holding a majority of the aggregate voting power of the capital stock
of the Company held by all Principal Shareholders) cease for any reason
to constitute a majority of the Board of Directors of the Company (the
"Board"), (v) the adoption of a plan relating to the liquidation or
dissolution of the Company in connection with an equity investment or
sale or a business combination transaction or (vi) any other event or
transaction that the Board deems to be a Change in Control.
"Specified Cause Event" means (1) a proven or
admitted act of fraud, misappropriation or embezzlement by the Optionee
that is detrimental to the Company or (2) the Optionee's conviction of
or plea of guilty or nolo contendere to a felony that is related to the
Company or the performance of the Optionee's services for the Company.
3
"Qualifying Change in Control" means a Change in
Control of the type specified in clause (i) or (ii) of the definition
thereof in which the Principal Shareholders receive cash or freely
tradable securities or both in exchange for shares of Common Stock (or
securities convertible into or exchangeable or exercisable for shares
of Common Stock) of the Company sold by the Principal Shareholders in
connection therewith.
(iii) 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 Section 2(d) of this Agreement, by giving
the Company written notice at any time during the period specified in Section
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.
(iv) 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 only, 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 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, by giving the Company written notice of such
exercise within 24 months 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 Company shall terminate Optionee's
employment with the Company because of disability, the Optionee may exercise the
Option to the extent it was vested on the date of termination, by giving the
Company written notice of such exercise within 24
4
months after the date of termination of employment, but in no event later than
the Expiration Date.
(iii) If the Optionee terminates his employment with
the Company other than for Good Reason, the Optionee may exercise the Option to
the extent it was vested on the date of termination, by giving the Company
written notice of such exercise within 90 days after the date of termination of
employment, but in no event later then the Expiration Date. For purposes of this
Agreement, "Good Reason" has the meaning set forth in the executive severance or
employment agreement, if any, then in effect between the Company and the
Optionee or, in the absence of such agreement shall mean, if the basis for such
Good Reason is not cured within a reasonable period of time (determined in light
of the cure appropriate to the basis of such Good Reason, but in no event less
than 15 days), the failure of the Company to pay any undisputed amount due to
the Optionee in connection with his employment by the Company.
(iv) If the Optionee's employment shall terminate for
any reason other than death, disability or Cause (as hereinafter defined), or if
the Optionee shall terminate his employment with the Company for Good Reason,
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 applicable vesting schedule in Section 3(c)(i), by
giving the Company written notice of such exercise within 24 months after the
date of termination of employment, but in no event later than the Expiration
Date. Notwithstanding the foregoing, the Optionee shall forfeit his right to
exercise any Options that would have vested within the 12 months after
termination, if the Optionee violates the terms regarding non-competition set
forth in the Optionee's executive severance or employment agreement.
(v) 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. For purposes of this Agreement, "Cause" has the
meaning set forth in the executive severance or employment agreement, if any,
then in effect between the Company and the Optionee or, in the absence of such
agreement, shall mean (i) the Optionee's conviction of or plea of guilty or nolo
contendere to a felony, (ii) the Optionee's gross negligence in the performance
of his duties as an employee, officer, director or independent contractor of the
Company, (iii) the Optionee's knowingly dishonest act, or knowing bad faith or
willful misconduct in the performance of his duties as an employee, officer,
director or independent contractor of the Company, or (iv) the Optionee's
material breach of any confidentiality, non-competition, non-solicitation,
agreement to assign work product and inventions or similar covenant or agreement
of the Optionee.
(vi) In the event of termination of employment, if an
Incentive Stock Option is exercised after the expiration of the exercise periods
that apply for purposes of Section 422 of the Code, such stock option shall
thereafter be treated as a nonqualified stock option.
(e) Transferability. Except as otherwise provided in this
Section 2(e), the Option is not transferable other than as designated by the
Optionee in his or her most recently filed Beneficiary designation filed with
the Company, or if there is no such designation or no such
5
designated person survives the Optionee, as designated by the Optionee, by will
or by the laws of descent and distribution, and during the Optionee's life, may
be exercised only by the Optionee. However, an Optionee, with the approval of
the Committee, may transfer the Option for no consideration to or for the
benefit of the Optionee's Immediate Family or to a partnership or limited
liability company for one or more members of the Optionee's Immediate Family,
subject to such limits as the Committee may establish, and the transferee shall
remain subject to all the terms and conditions applicable to Options prior to
such transfer. The foregoing right to transfer the Option shall apply to the
right to consent to amendments to this Agreement and, in the discretion of the
Committee, shall also apply to the right to transfer ancillary rights associated
with the Option. The term "Immediate Family" shall mean the Optionee's spouse,
parents, children, stepchildren, adoptive relationships, sisters, brothers,
nieces, nephews and grandchildren (and, for this purpose, shall also include the
Optionee).
(f) Adjustments. In the event of any change in corporate
capitalization (including, but not limited to, a change in the number of shares
of Common Stock outstanding), such as a stock split or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Section 368
of the Code) or any partial or complete liquidation of the Company, the
Committee or Board may make such substitution or adjustments in the number, kind
and option price of shares subject to the Option and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its sole
discretion; provided, however, that the number of shares subject to the Option
shall always be a whole number. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board shall be authorized to cause the Company to issue or
assume stock options, whether or not in a transaction to which Section 424(a) of
the Code applies, by means of substitution of new stock options for previously
issued stock options or an assumption of previously issued stock options.
(g) 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.
(h) 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);
6
(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.
(i) 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.
(j) 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.
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. Disqualifying Disposition
If the Optionee disposes of Shares acquired upon exercise of this
Option within two year from the date of the grant of such Option or one year
after such Shares were acquired pursuant to exercise of this Option, the
Optionee shall notify the Company in writing of such disposition.
5. 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 American Tire Distributors, Inc.,
12200 Herbert Wayne Court, Suite 150, Huntersville, North Carolina 28078;
Attention: President, 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.
7
6. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to conflicts of laws
principles.
7. No Assignment.
Except as provided in Section 2(e), neither this Agreement nor any of
the rights or obligations of the Optionee hereunder may be transferred or
assigned by the Optionee.
8. 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.
9. 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.
10. Amendments.
No modification, amendment or waiver of any provision of this
Agreement, other than as required under Section 2(f), shall be effective unless
it is in writing and signed by the parties hereto.
11. Counterparts.
This Agreement has been executed in two counterparts each of which
shall constitute one and the same instrument.
12. Stockholders' Agreement.
All Shares purchased pursuant to any exercise of this Option shall be
subject to the terms and conditions of, and constitute "Shares" for all purposes
under, the Stockholders' Agreement, dated as of the date hereof, between the
Company and the Purchaser, as amended from time to time in accordance with its
terms.
8
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.
AMERICAN TIRE DISTRIBUTORS, INC.
By: /s/ Richard P. Johnson
----------------------
Richard P. Johnson
President and Chief Executive Officer
/s/ Phillip E. Marrett
- ----------------------
Phillip E. Marrett
2630 Rolling Ridge Drive
Hickory, NC 28602
EXHIBIT 10.22
AMERICAN TIRE DISTRIBUTORS, INC.
STOCK OPTION AGREEMENT
Number of shares subject to option: 357,140
This Agreement (the "Agreement") made this 12th day of June, 2002,
between American Tire Distributors, Inc., a Delaware corporation (the
"Company"), and Richard P. Johnson (the "Optionee").
W I T N E S S E T H:
1. Grant of Option.
Pursuant to the provisions of American Tire Distributors, Inc. 2002
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 357,140 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 $1.40 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 intended to be eligible to
be an incentive stock option (an "Incentive Stock Option") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code");
provided that to the extent this Option does not qualify as an Incentive Stock
Option, it shall constitute a nonqualified stock option under the Code.
(c) Exercise of Option. (i) Subject to the other terms of this
Agreement regarding the exercisability of this Option, the Options will vest and
be exercisable in accordance with the following schedule, which shall continue
to apply from and after the occurrence of a Change in Control (as defined in
this Agreement or as defined in any employment, executive severance or similar
agreement to which the Optionee is a party):
Options Exercisable with respect to
On or After Cumulative Number of Shares
----------- -----------------------------------
the date of this Agreement 71,428
January 1, 2003 71,428
January 1, 2004 71,428
January 1, 2005 71,428
January 1, 2006 71,428
(ii) (A) Notwithstanding Section 2(c)(i), upon the termination
of Optionee's employment (1) by the Company without Cause (as defined below), by
the Optionee for Good Reason (as defined below) or due to the Optionee's death,
in each case, at any time after a Qualifying Change in Control (as defined
below) or (2) by the Company or the Optionee for any reason other than a
Specified Cause Event (as defined below) or due to the Optionee's death, in each
case, more than six months after a Qualifying Change in Control, the Optionee
shall be entitled to receive an amount (the "Unvested Option Amount"), payable
within five business days after demand by the Optionee or his personal
representative, equal to (x) the excess (if any) of (1) the fair market value of
all cash and freely tradable securities received by the Principal Shareholders
in exchange for each share of Common Stock or security convertible into or
exercisable or exchangeable for shares of Common Stock (giving effect to such
conversion, exercise or exchange for this purpose) sold by the Principal
Shareholders in connection with such Qualifying Change of Control over (2) the
Exercise Price multiplied by (y) the number of Shares not yet vested in
accordance with the above schedule as of the effective time of such Qualifying
Change in Control. For purpose of clause (x)(1) of the immediately preceding
sentence, the "fair market value" of a security on any date of determination
shall be the mean average of the daily closing prices or last sale prices of
such security for each of the 15 preceding days preceding such date during which
the securities exchange or market quotation system on which such security is
listed or quoted was open for business. Prior to the consummation of a
Qualifying Change in Control, the Company shall take all actions reasonably
necessary, in the good faith judgment of the Board, to ensure that (i) a
successor to the Company or transferee of assets of the Company, as appropriate,
(the "Successor Entity") assumes the obligations of the Company under this
Section 2(c)(ii)(A) and (ii) the Successor Entity provides for the issuance of a
letter of credit, establishment of an escrow account containing cash or
investment grade securities, grant of a security interest in specified property,
guaranty or similar security or credit support arrangement (in each case, on
terms reasonably satisfactory to the Optionee) to secure amounts that may become
due in respect of any Unvested Option Amount.
(B) Notwithstanding Section 2(c)(i), all of the Options shall
become fully vested and exercisable immediately upon the termination of
Optionee's employment (1) by the
2
Company without Cause or by the Optionee for Good Reason at any time after a
Change in Control (other than a Qualifying Change in Control); (2) by the
Company or the Optionee for any reason other than a Specified Cause Event (as
defined below) more than six months after a Change in Control (other than a
Qualifying Change in Control); or (3) due to the Optionee's death..
(C) When used in this Agreement:
"Change in Control" means the first to occur of any
of the following: (i) the sale (including by merger, consolidation or
sale of stock of subsidiaries or any other method) of all or
substantially all of the assets of the Company and its consolidated
subsidiaries (taken as a whole) to any person or entity not directly or
indirectly controlled by the holders of at least 50% of the Combined
Voting Power (as defined in the Plan) of the then outstanding shares of
capital stock of the Company (excluding shares owned by employees of
the Company as of the date of determination), (ii) at any time prior to
the consummation of an initial public offering of Common Stock of the
Company or other common stock of the Company having the voting power to
elect directors, a transaction (except pursuant to such initial public
offering) resulting in the Principal Shareholders (as defined in the
Plan) owning, collectively, less than 50% of the Combined Voting Power
of the then outstanding shares of capital stock of the Company
(excluding shares owned by employees of the Company as of the date of
determination), (iii) at any time after the consummation of an initial
public offering of Common Stock of the Company or other common stock of
the Company having the voting power to elect directors, the acquisition
(except pursuant to such initial public offering) by any person or
entity (other than the Principal Shareholders) not directly or
indirectly controlled by the Company's stockholders of more than 30% of
the Combined Voting Power of the then outstanding shares of capital
stock of the Company (excluding shares owned by employees of the
Company as of the date of determination), (iv) individuals serving as
directors of the Company on the Effective Date (as defined in the Plan)
and who were nominated or selected to serve as directors by one or more
Principal Shareholders (together with any new directors whose election
was approved by a vote of (A) such individuals or directors whose
election was previously so approved or (B) Principal Shareholders
holding a majority of the aggregate voting power of the capital stock
of the Company held by all Principal Shareholders) cease for any reason
to constitute a majority of the Board of Directors of the Company (the
"Board"), (v) the adoption of a plan relating to the liquidation or
dissolution of the Company in connection with an equity investment or
sale or a business combination transaction or (vi) any other event or
transaction that the Board deems to be a Change in Control.
"Specified Cause Event" means (1) a proven or
admitted act of fraud, misappropriation or embezzlement by the Optionee
that is detrimental to the Company or (2) the Optionee's conviction of
or plea of guilty or nolo contendere to a felony that is related to the
Company or the performance of the Optionee's services for the Company.
3
"Qualifying Change in Control" means a Change in
Control of the type specified in clause (i) or (ii) of the definition
thereof in which the Principal Shareholders receive cash or freely
tradable securities or both in exchange for shares of Common Stock (or
securities convertible into or exchangeable or exercisable for shares
of Common Stock) of the Company sold by the Principal Shareholders in
connection therewith.
(iii) 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 Section 2(d) of this Agreement, by giving
the Company written notice at any time during the period specified in Section
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.
(iv) 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 only, 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 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, by giving the Company written notice of such
exercise within 36 months 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 Company shall terminate Optionee's
employment with the Company because of disability, the Optionee may exercise the
Option to the extent it was vested on the date of termination, by giving the
Company written notice of such exercise within 36
4
months after the date of termination of employment, but in no event later than
the Expiration Date.
(iii) If the Optionee terminates his employment with
the Company other than for Good Reason, the Optionee may exercise the Option to
the extent it was vested on the date of termination, by giving the Company
written notice of such exercise within 90 days after the date of termination of
employment, but in no event later then the Expiration Date. For purposes of this
Agreement, "Good Reason" has the meaning set forth in the executive severance or
employment agreement, if any, then in effect between the Company and the
Optionee or, in the absence of such agreement shall mean, if the basis for such
Good Reason is not cured within a reasonable period of time (determined in light
of the cure appropriate to the basis of such Good Reason, but in no event less
than 15 days), the failure of the Company to pay any undisputed amount due to
the Optionee in connection with his employment by the Company.
(iv) If the Optionee's employment shall terminate for
any reason other than death, disability or Cause (as hereinafter defined), or if
the Optionee shall terminate his employment with the Company for Good Reason,
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 applicable vesting schedule in Section 3(c)(i), by
giving the Company written notice of such exercise within 36 months after the
date of termination of employment, but in no event later than the Expiration
Date. Notwithstanding the foregoing, the Optionee shall forfeit his right to
exercise any Options that would have vested within the 12 months after
termination, if the Optionee violates the terms regarding non-competition set
forth in the Optionee's executive severance or employment agreement.
(v) 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. For purposes of this Agreement, "Cause" has the
meaning set forth in the executive severance or employment agreement, if any,
then in effect between the Company and the Optionee or, in the absence of such
agreement, shall mean (i) the Optionee's conviction of or plea of guilty or nolo
contendere to a felony, (ii) the Optionee's gross negligence in the performance
of his duties as an employee, officer, director or independent contractor of the
Company, (iii) the Optionee's knowingly dishonest act, or knowing bad faith or
willful misconduct in the performance of his duties as an employee, officer,
director or independent contractor of the Company, or (iv) the Optionee's
material breach of any confidentiality, non-competition, non-solicitation,
agreement to assign work product and inventions or similar covenant or agreement
of the Optionee.
(vi) In the event of termination of employment, if an
Incentive Stock Option is exercised after the expiration of the exercise periods
that apply for purposes of Section 422 of the Code, such stock option shall
thereafter be treated as a nonqualified stock option.
(e) Transferability. Except as otherwise provided in this
Section 2(e), the Option is not transferable other than as designated by the
Optionee in his or her most recently filed Beneficiary designation filed with
the Company, or if there is no such designation or no such designated person
survives the Optionee, as designated by the Optionee, by will or by the laws of
descent and distribution, and during the Optionee's life, may be exercised only
by the Optionee. However, an Optionee, with the approval of the Committee, may
transfer the Option for no consideration to or for the benefit of the Optionee's
Immediate Family or to a partnership or
5
limited liability company for one or more members of the Optionee's Immediate
Family, subject to such limits as the Committee may establish, and the
transferee shall remain subject to all the terms and conditions applicable to
Options prior to such transfer. The foregoing right to transfer the Option shall
apply to the right to consent to amendments to this Agreement and, in the
discretion of the Committee, shall also apply to the right to transfer ancillary
rights associated with the Option. The term "Immediate Family" shall mean the
Optionee's spouse, parents, children, stepchildren, adoptive relationships,
sisters, brothers, nieces, nephews and grandchildren (and, for this purpose,
shall also include the Optionee).
(f) Adjustments. In the event of any change in corporate
capitalization (including, but not limited to, a change in the number of shares
of Common Stock outstanding), such as a stock split or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Section 368
of the Code) or any partial or complete liquidation of the Company, the
Committee or Board may make such substitution or adjustments in the number, kind
and option price of shares subject to the Option and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its sole
discretion; provided, however, that the number of shares subject to the Option
shall always be a whole number. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board shall be authorized to cause the Company to issue or
assume stock options, whether or not in a transaction to which Section 424(a) of
the Code applies, by means of substitution of new stock options for previously
issued stock options or an assumption of previously issued stock options.
(g) 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.
(h) 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
6
(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.
(i) 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.
(j) 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.
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. Disqualifying Disposition
If the Optionee disposes of Shares acquired upon exercise of this
Option within two year from the date of the grant of such Option or one year
after such Shares were acquired pursuant to exercise of this Option, the
Optionee shall notify the Company in writing of such disposition.
5. 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 American Tire Distributors, Inc.,
12200 Herbert Wayne Court, Suite 150, Huntersville, North Carolina 28078;
Attention: President, 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.
6. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to conflicts of laws
principles.
7. No Assignment.
7
Except as provided in Section 2(e), neither this Agreement nor any of
the rights or obligations of the Optionee hereunder may be transferred or
assigned by the Optionee.
8. 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.
9. 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.
10. Amendments.
No modification, amendment or waiver of any provision of this
Agreement, other than as required under Section 2(f), shall be effective unless
it is in writing and signed by the parties hereto.
11. Counterparts.
This Agreement has been executed in two counterparts each of which
shall constitute one and the same instrument.
12. Stockholders' Agreement.
All Shares purchased pursuant to any exercise of this Option shall be
subject to the terms and conditions of, and constitute "Shares" for all purposes
under, the Stockholders' Agreement, dated as of the date hereof, between the
Company and the Purchaser, as amended from time to time in accordance with its
terms.
8
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.
AMERICAN TIRE DISTRIBUTORS, INC.
By: /s/ J. Michael Gaither
----------------------
J. Michael Gaither
Executive Vice President and
General Counsel
/s/ Richard P. Johnson
- ----------------------
Richard P. Johnson
18816 Balmore Pines Lane
Cornelius, NC 28031
EXHIBIT 10.22
AMERICAN TIRE DISTRIBUTORS, INC.
STOCK OPTION AGREEMENT
(NON-QUALIFIED)
Number of shares subject to option: 455,461
This Agreement (the "Agreement") made this 12th day of June, 2002,
between American Tire Distributors, Inc., a Delaware corporation (the
"Company"), and Richard P. Johnson (the "Optionee").
W I T N E S S E T H:
1. Grant of Option.
Pursuant to the provisions of American Tire Distributors, Inc. 2002
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 455,461 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 $1.40 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 not intended to be 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, the Options will vest and
be exercisable in accordance with the following schedule, which shall continue
to apply from and after the occurrence of a Change in Control (as defined in
this Agreement or as defined in any employment, executive severance or similar
agreement to which the Optionee is a party):
Options Exercisable with respect to
On or After Cumulative Number of Shares
----------- -----------------------------------
the date of this Agreement 91,092
January 1, 2003 91,092
January 1, 2004 91,092
January 1, 2005 91,092
January 1, 2006 91,093
(ii) (A) Notwithstanding Section 2(c)(i), upon the termination
of Optionee's employment (1) by the Company without Cause (as defined below), by
the Optionee for Good Reason (as defined below) or due to the Optionee's death,
in each case, at any time after a Qualifying Change in Control (as defined
below) or (2) by the Company or the Optionee for any reason other than a
Specified Cause Event (as defined below) or due to the Optionee's death, in each
case, more than six months after a Qualifying Change in Control, the Optionee
shall be entitled to receive an amount (the "Unvested Option Amount"), payable
within five business days after demand by the Optionee or his personal
representative, equal to (x) the excess (if any) of (1) the fair market value of
all cash and freely tradable securities received by the Principal Shareholders
in exchange for each share of Common Stock or security convertible into or
exercisable or exchangeable for shares of Common Stock (giving effect to such
conversion, exercise or exchange for this purpose) sold by the Principal
Shareholders in connection with such Qualifying Change of Control over (2) the
Exercise Price multiplied by (y) the number of Shares not yet vested in
accordance with the above schedule as of the effective time of such Qualifying
Change in Control. For purpose of clause (x)(1) of the immediately preceding
sentence, the "fair market value" of a security on any date of determination
shall be the mean average of the daily closing prices or last sale prices of
such security for each of the 15 preceding days preceding such date during which
the securities exchange or market quotation system on which such security is
listed or quoted was open for business. Prior to the consummation of a
Qualifying Change in Control, the Company shall take all actions reasonably
necessary, in the good faith judgment of the Board, to ensure that (i) a
successor to the Company or transferee of assets of the Company, as appropriate,
(the "Successor Entity") assumes the obligations of the Company under this
Section 2(c)(ii)(A) and (ii) the Successor Entity provides for the issuance of a
letter of credit, establishment of an escrow account containing cash or
investment grade securities, grant of a security interest in specified property,
guaranty or similar security or credit support arrangement (in each case, on
terms reasonably satisfactory to the Optionee) to secure amounts that may become
due in respect of any Unvested Option Amount.
(B) Notwithstanding Section 2(c)(i), all of the Options shall
become fully vested
2
and exercisable immediately upon the termination of Optionee's employment (1) by
the Company without Cause or by the Optionee for Good Reason at any time after a
Change in Control (other than a Qualifying Change in Control); (2) by the
Company or the Optionee for any reason other than a Specified Cause Event (as
defined below) more than six months after a Change in Control (other than a
Qualifying Change in Control); or (3) due to the Optionee's death.
(C) When used in this Agreement:
"Change in Control" means the first to occur of any
of the following: (i) the sale (including by merger, consolidation or
sale of stock of subsidiaries or any other method) of all or
substantially all of the assets of the Company and its consolidated
subsidiaries (taken as a whole) to any person or entity not directly or
indirectly controlled by the holders of at least 50% of the Combined
Voting Power (as defined in the Plan) of the then outstanding shares of
capital stock of the Company (excluding shares owned by employees of
the Company as of the date of determination), (ii) at any time prior to
the consummation of an initial public offering of Common Stock of the
Company or other common stock of the Company having the voting power to
elect directors, a transaction (except pursuant to such initial public
offering) resulting in the Principal Shareholders (as defined in the
Plan) owning, collectively, less than 50% of the Combined Voting Power
of the then outstanding shares of capital stock of the Company
(excluding shares owned by employees of the Company as of the date of
determination), (iii) at any time after the consummation of an initial
public offering of Common Stock of the Company or other common stock of
the Company having the voting power to elect directors, the acquisition
(except pursuant to such initial public offering) by any person or
entity (other than the Principal Shareholders) not directly or
indirectly controlled by the Company's stockholders of more than 30% of
the Combined Voting Power of the then outstanding shares of capital
stock of the Company (excluding shares owned by employees of the
Company as of the date of determination), (iv) individuals serving as
directors of the Company on the Effective Date (as defined in the Plan)
and who were nominated or selected to serve as directors by one or more
Principal Shareholders (together with any new directors whose election
was approved by a vote of (A) such individuals or directors whose
election was previously so approved or (B) Principal Shareholders
holding a majority of the aggregate voting power of the capital stock
of the Company held by all Principal Shareholders) cease for any reason
to constitute a majority of the Board of Directors of the Company (the
"Board"), (v) the adoption of a plan relating to the liquidation or
dissolution of the Company in connection with an equity investment or
sale or a business combination transaction or (vi) any other event or
transaction that the Board deems to be a Change in Control.
"Specified Cause Event" means (1) a proven or
admitted act of fraud, misappropriation or embezzlement by the Optionee
that is detrimental to the Company or (2) the Optionee's conviction of
or plea of guilty or nolo contendere to a felony that is related to the
Company or the performance of the Optionee's services for the Company.
3
"Qualifying Change in Control" means a Change in
Control of the type specified in clause (i) or (ii) of the definition
thereof in which the Principal Shareholders receive cash or freely
tradable securities or both in exchange for shares of Common Stock (or
securities convertible into or exchangeable or exercisable for shares
of Common Stock) of the Company sold by the Principal Shareholders in
connection therewith.
(iii) 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 Section 2(d) of this Agreement, by giving
the Company written notice at any time during the period specified in Section
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.
(iv) 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 only, 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 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, by giving the Company written notice of such
exercise within 36 months 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 Company shall terminate Optionee's
employment with the Company because of disability, the Optionee may exercise the
Option to the extent it was vested on the date of termination, by giving the
Company written notice of such exercise within 36
4
months after the date of termination of employment, but in no event later than
the Expiration Date.
(iii) If the Optionee terminates his employment with
the Company other than for Good Reason, the Optionee may exercise the Option to
the extent it was vested on the date of termination, by giving the Company
written notice of such exercise within 90 days after the date of termination of
employment, but in no event later then the Expiration Date. For purposes of this
Agreement, "Good Reason" has the meaning set forth in the executive severance or
employment agreement, if any, then in effect between the Company and the
Optionee or, in the absence of such agreement shall mean, if the basis for such
Good Reason is not cured within a reasonable period of time (determined in light
of the cure appropriate to the basis of such Good Reason, but in no event less
than 15 days), the failure of the Company to pay any undisputed amount due to
the Optionee in connection with his employment by the Company.
(iv) If the Optionee's employment shall terminate for
any reason other than death, disability or Cause (as hereinafter defined), or if
the Optionee shall terminate his employment with the Company for Good Reason,
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 applicable vesting schedule in Section 3(c)(i), by
giving the Company written notice of such exercise within 36 months after the
date of termination of employment, but in no event later than the Expiration
Date. Notwithstanding the foregoing, the Optionee shall forfeit his right to
exercise any Options that would have vested within the 12 months after
termination, if the Optionee violates the terms regarding non-competition set
forth in the Optionee's executive severance or employment agreement.
(v) 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. For purposes of this Agreement, "Cause" has the
meaning set forth in the executive severance or employment agreement, if any,
then in effect between the Company and the Optionee or, in the absence of such
agreement, shall mean (i) the Optionee's conviction of or plea of guilty or nolo
contendere to a felony, (ii) the Optionee's gross negligence in the performance
of his duties as an employee, officer, director or independent contractor of the
Company, (iii) the Optionee's knowingly dishonest act, or knowing bad faith or
willful misconduct in the performance of his duties as an employee, officer,
director or independent contractor of the Company, or (iv) the Optionee's
material breach of any confidentiality, non-competition, non-solicitation,
agreement to assign work product and inventions or similar covenant or agreement
of the Optionee.
(e) Transferability. Except as otherwise provided in this
Section 2(e), the Option is not transferable other than as designated by the
Optionee in his or her most recently filed Beneficiary designation filed with
the Company, or if there is no such designation or no such
5
designated person survives the Optionee, as designated by the Optionee, by will
or by the laws of descent and distribution, and during the Optionee's life, may
be exercised only by the Optionee. However, an Optionee, with the approval of
the Committee, may transfer the Option for no consideration to or for the
benefit of the Optionee's Immediate Family or to a partnership or limited
liability company for one or more members of the Optionee's Immediate Family,
subject to such limits as the Committee may establish, and the transferee shall
remain subject to all the terms and conditions applicable to Options prior to
such transfer. The foregoing right to transfer the Option shall apply to the
right to consent to amendments to this Agreement and, in the discretion of the
Committee, shall also apply to the right to transfer ancillary rights associated
with the Option. The term "Immediate Family" shall mean the Optionee's spouse,
parents, children, stepchildren, adoptive relationships, sisters, brothers,
nieces, nephews and grandchildren (and, for this purpose, shall also include the
Optionee).
(f) Adjustments. In the event of any change in corporate
capitalization (including, but not limited to, a change in the number of shares
of Common Stock outstanding), such as a stock split or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Section 368
of the Code) or any partial or complete liquidation of the Company, the
Committee or Board may make such substitution or adjustments in the number, kind
and option price of shares subject to the Option and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its sole
discretion; provided, however, that the number of shares subject to the Option
shall always be a whole number. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board shall be authorized to cause the Company to issue or
assume stock options, whether or not in a transaction to which Section 424(a) of
the Code applies, by means of substitution of new stock options for previously
issued stock options or an assumption of previously issued stock options.
(g) 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.
(h) 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);
6
(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.
(i) 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.
(j) 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.
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. Reserved.
5. 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 American Tire Distributors, Inc.,
12200 Herbert Wayne Court, Suite 150, Huntersville, North Carolina 28078;
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.
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6. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to conflicts of laws
principles.
7. No Assignment.
Except as provided in Section 2(e), neither this Agreement nor any of
the rights or obligations of the Optionee hereunder may be transferred or
assigned by the Optionee.
8. 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.
9. 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.
10. Amendments.
No modification, amendment or waiver of any provision of this
Agreement, other than as required under Section 2(f), shall be effective unless
it is in writing and signed by the parties hereto.
11. Counterparts.
This Agreement has been executed in two counterparts each of which
shall constitute one and the same instrument.
12. Stockholders' Agreement.
All Shares purchased pursuant to any exercise of this Option shall be
subject to the terms and conditions of, and constitute "Shares" for all purposes
under, the Stockholders' Agreement, dated as of the date hereof, between the
Company and the Purchaser, as amended from time to time in accordance with its
terms.
8
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.
AMERICAN TIRE DISTRIBUTORS, INC.
By: /s/ J. Michael Gaither
----------------------
J. Michael Gaither
Executive Vice President and
General Counsel
/s/ Richard P. Johnson
- ----------------------
Richard P. Johnson
18816 Balmore Pines Lane
Cornelius, NC 28031