STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made as of June 20, 1997 by
and between Xxxxxx Natural Corporation, a Delaware corporation (the "Company"),
and Xxxxxx X. Xxxxx, Xx. ("Holder").
Preliminary Recitals
A. Holder, the Company and Xxxxxx Beverage Company ("HBC"), a
wholly-owned subsidiary of the Company, are parties to that certain Severance
and Consulting Agreement of even date herewith (the "Consulting Agreement"),
providing for the termination of Holder's employment with HBC and HBC's
engagement of Holder as a consultant.
B. Pursuant to the Xxxxxx Natural Corporation Stock Option
Plan, and that certain Stock Option Agreement dated as of June 30, 1995 between
the Company and Holder (the "1995 Option Agreement"), the Company granted Holder
a stock option (the "1995 Option") to purchase up to 180,000 shares of the
Company's common stock, par value $.005 per share (the "Common Stock"), at a
purchase price of $1.38 per share (the "1995 Exercise Price").
C. Pursuant to the Consulting Agreement the Company has agreed
to grant to Holder a stock option to purchase shares of Common Stock at an
exercise price equal to the 1995 Exercise Price, subject to the terms and
conditions set forth below, in consideration of, among other matters, the
termination of the 1995 Option Agreement and the cancellation of the 1995
Option.
NOW, THEREFORE, the Company and Holder agree as follows:
1. Grant of Stock Option. The Company hereby grants to Holder,
subject to the terms and conditions set forth herein, the stock option
("Option") to purchase up to 100,000 shares of Common Stock, at the purchase
price of $1.38 per share, such Option to be exercisable and exercised as
hereinafter provided.
2. Exercise Period. The period during which the Option may be
exercised shall commence on July 1, 1997 and shall expire on June 30, 1999
unless the Consulting Agreement is terminated by HBC for Cause (as defined in
the Consulting Agreement) or unless the Consulting Agreement is terminated by
reason of the death of Holder. If the Consulting Agreement is terminated by HBC
for Cause, the Option shall expire as of the date the Consulting Agreement
terminates. If the Consulting Agreement terminates due to Holder's death, then
the Option may be exercised by the person or persons to which Holder's rights
under this Agreement pass by will, or if no such person has such right, by his
executors or administrators, within six months after the date of death, but no
later than June 30, 1999.
3. Exercise of Option
(a) The Option may be exercised, to the extent
exercisable by its terms, from time to time in whole or in
part at any time prior to the expiration thereof. Any
exercise shall be accompanied by a written notice to the
Company specifying the number of shares as to which this
Option is being exercised (the "Option Shares").
(b) Holder hereby agrees to notify the Company in
writing in the event shares acquired pursuant to the
exercise of this Option are transferred, other than by will
or by the laws of the descent and distribution, within two
years after the date indicated above or within one year
after the issuance of such shares pursuant to such exercise.
1
4. Payment of Purchase Price Upon Exercise. At the time of any
exercise of the Option the purchase price of the Option shall be paid in full to
the Company in either of the following ways or in any combination of the
following ways:
(a) By check or other immediately available funds.
(b) With property consisting of shares of Common
Stock(The shares of Common Stock to be used as payment shall
be valued as of the date of exercise of the Option at the
Closing Price as defined below. For example, if Holder
exercises the option for 4,000 shares at a total exercise
price of $8,000, assuming exercise price of $2.00 per share,
and the Closing Price is $5.00, he may pay for the 4,000
Option Shares by transferring 1,600 shares of Common Stock
to the Company.)
(c) For purposes of this Agreement, the term "Closing
Price" means, with respect to the Company's Common Stock,
the last sale price regular-way or, in case no such sale
takes place on such date, the average of the closing bid and
asked prices regular-way on the principal national
securities exchange on which the securities are listed or
admitted to trading; or, if they are not listed or admitted
to trading on any national securities exchange, the last
sale price of the securities on the consolidated transaction
reporting system of the National Association of Securities
Dealers ("NASD"), if such last sale information is reported
on such system or, if not so reported, the average of the
closing bid and asked prices of the securities on the
National Association of Securities Dealers Automatic
Quotation System ("NASDAQ") or any comparable system, if the
securities are not listed on NASDAQ or a comparable system,
the average of the closing bid and asked prices as furnished
by two members of the NASD selected from time to time by the
Company for that purpose.
5. Purchase for Investment; Resale Restrictions. Unless at the
time of exercise of the Option there shall be a valid and effective registration
statement under the Securities Act of 1933 ("`33 Act") and appropriate
qualification and registration under applicable state securities laws relating
to the Option Shares being acquired, Holder shall upon exercise of the Option
give a representation that he is acquiring such shares for his own account for
investment and not with a view to, or for sale in connection with, the resale or
distribution of any such shares. In the absence of such registration statement,
Holder shall execute a written affirmation, in a form reasonably satisfactory to
the Company, of such investment intent. Holder further agrees that he will not
sell or transfer any Option Shares until he requests and receives an opinion of
the Company's counsel or other counsel reasonably satisfactory to the Company to
the effect that such proposed sale or transfer will not result in a violation of
the `33 Act, or a registration statement covering the sale or transfer of the
shares has been declared effective by the Securities and Exchange Commission, or
he obtains a no-action letter from the Securities and Exchange Commission with
respect to the proposed transfer.
6. Nontransferability. The Option shall not be transferable
other than by will or by the laws of descent and distribution. During the
lifetime of Holder, the Option shall be exercisable only by Holder.
7. Adjustments. In the event of any change in the outstanding
Common Stock of the Company by reason of any stock recapitalization, merger,
consolidation, combination or exchange of shares, the kind of shares subject to
the Option and the purchase price per share (but not the number of shares) shall
be appropriately adjusted consistent with such change in such manner as the
Board of Directors of the Company may deem equitable. In the event of a stock
dividend or stock split the kind of shares, the purchase price per share and the
number of shares shall be appropriately adjusted, consistent with such change in
such manner as the Board of Directors may deem equitable. Any adjustment so made
shall be final and binding on Holder. No adjustments shall be made that would
have the effect of modifying an Option under Internal Revenue Code " 422 and
424.
2
8. No Rights as Stockholder. Holder shall have no rights as a
stockholder with respect to any shares of Common Stock subject to the Option
prior to the date of issuance to him of a certificate or certificates for such
shares.
9. Compliance with Law and Regulation. This Agreement and the
obligation of the Company to sell and deliver shares of Common Stock 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.
If at any time the Board of Directors of the Company shall determine that (i)
the listing, registration or qualification of the shares of Common Stock subject
or related thereto upon any securities exchange or under any state or federal
law, or (ii) the consent or approval of any government regulatory body, is
necessary or desirable as a condition of or in connection with the issue or
purchase of shares of Common Stock hereunder, the Option may not be exercised in
whole or in part unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Board of Directors. Moreover, the Option may
not be exercised if its exercise or the receipt of shares of Common Stock
pursuant thereto would be contrary to applicable law.
10. Tax Withholding Requirements. The Company shall have the
right to require Holder to remit to the Company an amount sufficient to satisfy
any federal, state or local withholding tax requirements prior to the delivery
of any certificate or certificates for Common Stock.
11. Fractional Shares. Notwithstanding any other provision of
this Agreement, no fractional shares of stock shall be issued upon the exercise
of the Option and the Company shall not be under any obligation to compensate
Holder in any way for such fractional shares.
12. Notices. Any notice hereunder to the Company shall be
addressed to it at its offices at 0000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxx with a copy to Xxxxxxxx X. Xxxx,
Esq., Xxxxxxx Breed Xxxxxx & Xxxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
and any notice hereunder to Holder shall be addressed to him at 0000 Xxxxxxxx
Xxxxxx, Xx Xxxxx, Xxxxxxxxxx 00000, subject to the right of either party to
designate at any time hereafter in writing some other address.
13. Amendment. No modification, amendment or waiver of any of
the provisions of this Agreement shall be effective unless in writing
specifically referring hereto, and signed by both parties.
14. Governing Law. This Agreement shall be construed according
to the laws of the State of Delaware and all provisions hereof shall be
administered according to and its validity shall be determined under, the laws
of such State, except where preempted by federal laws.
15. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, Xxxxxx Natural Corporation has caused this
Agreement to be executed by a duly authorized officer and Holder has executed
this Agreement both as of the day and year first above written.
XXXXXX NATURAL CORPORATION
By:__________________________
Title:
-------------------------------
Holder
3
