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EXHIBIT 10.28
STOCK OPTION AGREEMENT WITH XXXX X. XXXX DATED FEBRUARY 4, 1998
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STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is made and entered into as of the
4th day of February, 1998, by and between Saratoga Beverage Group, Inc. (the
"Company"), a Delaware corporation, and Xxxx X. Xxxx (the "Optionee"), residing
at 000 Xxxxxx Xxxx, Xxxxx Xxxxxx, Xxx Xxxxxx 00000.
The Board of Directors (the "Board") of the Company adopted on February 4, 1998
(the "Grant Date") a resolution granting the Optionee a stock option (the
"Option") to purchase 200,000 shares (the "Shares") of the Company's Class A
common stock, par value $.01 per share (the "Common Stock"), for the price, on
the terms and subject to the conditions set forth in this Agreement. The Option
was not granted under the Company's 1993 Stock Option Plan. In connection with
the grant of the Option, the Optionee waived his rights to receive stock options
under the Company's 1993 Stock Option Plan.
The Option is not intended to satisfy the requirements for an incentive stock
option (an "ISO") under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). The Company makes no representations or warranties as to
the income, estate or other tax consequences to the Optionee of the grant or
exercise of the Option or the sale or other disposition of the Shares acquired
pursuant to the exercise thereof.
1. (a) The price at which the Optionee shall have the right to purchase
the Shares under this Agreement is $2.875 per Share, subject to
adjustment as provided in Paragraph 4 below.
(b) Unless the Option is previously terminated or accelerated pursuant
to this Agreement, the Option shall be exercisable in installments of
100,000 Shares on each of February 4, 1998 and February 4, 1999;
provided, however, that the February 4, 1999 installment shall not be
exercisable if the Optionee is not serving as Chairman of the Board or
co-Chairman of the Board on such date. In no event shall any Shares be
purchasable under this Agreement after February 3, 2008 (the
"Expiration Date"). The Option shall cease to be exercisable three (3)
months (or such longer period which may at such time be provided for
directors under the Company's 1993 Stock Option Plan) after the date
the Optionee no longer serves as a director of the Company.
2. Nothing contained herein shall be construed to confer on the Optionee
any right to continue as a director of the Company or to derogate from
any right of the Board or stockholders of the Company, free from
liability, to remove the Optionee as a director at any time, with or
without cause.
3. (a) Subject to Section 422 of the Code, neither the Option nor any
right under the Option shall be assignable, alienable, saleable or
transferable by the Optionee otherwise than by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations
order as defined in the Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder; provided, however, that,
if so determined by the Board or a committee thereof, the Optionee may,
in the manner established by the Board or a committee thereof in its
sole discretion, designate a beneficiary or beneficiaries to exercise
the rights of the Optionee, and to receive any property distributable,
with respect to any Option upon the death of the Optionee.
(b) The Option shall not be pledged, alienated, attached, or otherwise
encumbered or transferred in any manner except to the extent that the
Option may be exercised by an executor or administrator or beneficiary
as provided in subparagraph 3(a) above, and any purported pledge,
alienation, attachment, encumbrance, or transfer thereof shall be void
and unenforceable against the Company. The Option may be exercised,
during the lifetime of the Optionee, only by the Optionee or his duly
appointed guardian or legal representative.
4. (a) In the event that the Board or a committee thereof shall determine
that the outstanding shares of Common Stock are affected by any (i)
subdivision or consolidation of shares, (ii)
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dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property) or (iii) recapitalization or other
capital adjustment of the Company, such that an adjustment is
determined to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available hereunder, then the Board or a committee thereof shall, in
such manner as it may deem necessary to prevent dilution or enlargement
of the benefits or potential benefits intended to be made hereunder,
adjust any or all of (x) the number and type of Shares which may be
subject to the Option, (y) the number and type of Shares subject to the
unexercised portion of the Option, and (z) the exercise price per Share
with respect to the Option; provided, however, that the exercise price
per Share shall not be adjusted below the par value per Share of the
Common Stock. In computing any adjustment under this paragraph, any
fractional share shall be eliminated.
(b) In the event of the dissolution or liquidation of the Company, or
in the event of a Change in Control (as defined in the Company's 1983
Stock Option Plan), the Optionee shall have the right, immediately
prior to the record date for the determination of stockholders entitled
to participate in such dissolution, liquidation or Change in Control,
to exercise the Option, in whole or in part, without regard to any
installment provisions contained in subparagraph 1(b). In such event,
the Company will mail or cause to be mailed to the Optionee a notice
specifying the date of such dissolution, liquidation or Change in
Control. Such notice shall be mailed at least ten (10) days prior to
the date therein specified to the address of the Optionee specified on
page 1 of this Agreement or to such other address as the Optionee
delivers or transmits by registered or certified mail to the Secretary
of the Company at its principal office.
5. The Option shall be exercised when written notice of such exercise,
signed by the person entitled to exercise the Option, has been
delivered or transmitted by registered or certified mail, to the
Secretary of the Company at its principal office. Said written notice
shall specify the number of Shares purchasable under the Option which
such person then wishes to purchase and shall be accompanied by such
documentation, if any, as may be required by the Company as provided in
Paragraph 7 below and be accompanied by payment of the aggregate Option
price. Such payment of the aggregate Option price shall be, without
limitation, in the form of (i) cash, Shares, outstanding Options or
other consideration, or any combination thereof, having a Fair Market
Value on the exercise date equal to the exercise price of the Option or
portion thereof being exercised or (ii) a broker- assisted cashless
exercise program established by the Board or a committee thereof.
Delivery of said notice and such documentation shall constitute an
irrevocable election to purchase the Shares specified in said notice
and the date on which the Company receives said notice and
documentation shall, subject to the provisions of Paragraph 7, be the
date as of which the Shares so purchased shall be deemed to have been
issued. The person entitled to exercise the Option shall not have the
right or status as a holder of the Shares to which such exercise
relates prior to receipt by the Company of such payment, notice and
documentation. For purposes of this Agreement, "Fair Market Value"
shall mean, with respect to Shares or other securities, (i) the closing
price per Share of the Shares on the principal exchange on which the
Shares are then trading, if any, on such date, or, if the Shares were
not traded on such date, then on the next preceding trading day during
which a sale occurred; or (ii) if the Shares are not traded on an
exchange but are quoted on Nasdaq or a successor quotation system, (1)
the last sales price (if the Shares are then listed on the Nasdaq
National Market) or (2) the mean between the closing representative bid
and asked prices (in all other cases) for the Shares on such date as
reported by Nasdaq or such successor quotation system; or (iii) if the
Shares are not publicly traded on an exchange and not quoted on Nasdaq
or a successor quotation system, the mean between the closing bid and
asked prices for the Shares on such date as determined in good faith by
the Committee; or (iv) if the Shares are not publicly traded, the fair
market value established by the Committee acting in good faith.
6. (a) In combination with or in substitution for cash withholding or any
other legal method of satisfying federal and state withholding tax
liability, the Optionee may elect to have Shares withheld by the
Company in order to satisfy federal and state withholding tax liability
(a "share withholding election"); provided, however, that (i) the Board
or a committee thereof shall not
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have revoked its advance approval of the Optionee's share withholding
election; and (ii) the share withholding election is made on or prior
to the date on which the amount of withholding tax liability is
determined (the "Tax Date"). If the Optionee elects within thirty (30)
days of the date of exercise to be subject to withholding tax on the
exercise date pursuant to the provisions of Section 83(b) of the Code,
then the share withholding election may be made during such thirty (30)
day period. Notwithstanding the foregoing, the Optionee may make a
share withholding election only if the following additional conditions
are met: (i) the share withholding election is made no sooner than six
(6) months after the date of grant of the Option; and (ii) the share
withholding election is made (x) at least six (6) months prior to the
Tax Date, or (y) during the period beginning on the third business day
following the date of release of the Company's quarterly or annual
financial results and ending on the twelfth business day following such
date.
(b) A share withholding election shall be deemed made when written
notice of such election, signed by the Optionee, has been delivered or
transmitted by registered or certified mail to the Secretary of the
Company at its principal office. Delivery of such notice shall
constitute an irrevocable election to have Shares withheld.
(c) If the Optionee has made a share withholding election pursuant to
this Section 6; and (i) within thirty (30) days of the date of exercise
of the Option, the Optionee elects pursuant to the provisions of
Section 83(b) of the Code to be subject to withholding tax on the date
of exercise of the Option, then the Optionee will be unconditionally
obligated to immediately tender back to the Company the number of
Shares having an aggregate Fair Market Value equal to the amount of tax
required to be withheld plus cash for any fractional amount, together
with written notice to the Company informing the Company of the
Optionee's election pursuant to Section 83(b) of the Code; or (ii) if
the Optionee has not made an election pursuant to the provisions of
Section 83(b) of the Code, then on the Tax Date, such Optionee will be
unconditionally obligated to tender back to the Company the number of
Shares having an aggregate Fair Market Value equal to the amount of tax
required to be withheld plus cash for any fractional amount.
7. The Board or a committee thereof may require as a condition to the
right to exercise the Option hereunder that the Company receive from
the person exercising the Option, representations, warranties and
agreements, at the time of any such exercise, to the effect that the
Shares are being purchased for investment only and without any present
intention to sell or otherwise distribute such Shares and that the
Shares will not be disposed of in transactions which, in the opinion of
counsel to the Company, would violate the registration provisions of
the Securities Act of 1933, as then amended (the "Securities Act"), and
the rules and regulations thereunder. The certificate issued to
evidence such Shares shall bear appropriate legends summarizing such
restrictions on the disposition thereof.
8. (a) If, at any time, the Company proposes to file a registration
statement on Form S-8 under the Securities Act with respect to an
offering for its own account or for the account of others of any class
of equity security, then the Company shall give written notice of such
proposed filing to the Optionee at least twenty-five (25) days before
the anticipated filing date, and such notice shall offer the Optionee
the opportunity to register such Shares (whether or not vested under
the installment provisions of subparagraph 1(b) at such time) as such
Optionee may request in writing to the Company within fifteen (15) days
after the date such Optionee first received notice of such registration
(a "Piggyback Registration"); provided, however, that the Company shall
have no obligation to register any Shares of the Optionee pursuant to
this Section 8(a) unless the Optionee shall request that 50% or more
(or all outstanding Shares, if less than 50% of the initial aggregate
number of Shares) of the initial aggregate number of Shares be
registered.
(b) The Optionee may not participate in any registration initiated as a
Piggyback Registration which is underwritten for the benefit of the
Company unless the Optionee (i) agrees to sell his Shares on the basis
provided in any underwriting agreements approved by the Company; (ii)
completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting agreements and which are
customary with industry practice; and (iii) agrees that if an
underwriter advises the Company in writing that the number of shares
proposed to be sold by
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the Company and/or the Optionee is greater than the number of shares of
Common Stock which the underwriter believes is feasible to sell at that
time, at the price and in the terms approved by the Company, then the
underwriter may exclude some or all of the Shares from such Piggyback
Registration. The Company shall advise the Optionee of the limitation,
and that the number of shares of Shares to be offered by the Optionee
will be reduced to the number recommended by the underwriter.
(c) In any registration initiated as a Piggyback Registration, whether
or not the registration statement becomes effective, the Company will
pay or cause to be paid all costs, fees and expenses in connection
therewith, including, without limitation, the Company's legal and
accounting fees, printing expenses and "blue sky" fees and expenses,
except that the Company shall not pay for (i) underwriting discounts
and commissions, (ii) state transfer taxes, (iii) brokerage
commissions, (iv) fees and expenses of counsel and accountants for the
Optionee and (v) blue sky fees and expenses in jurisdictions where the
Company is not currently registered or qualified.
(d) To the extent not inconsistent with applicable law, the Optionee
agrees not to effect any public sale or distribution of Common Stock,
including a sale pursuant to Rule 144 or in reliance on any other
exemption from registration under the Securities Act, during the
fourteen (14) days prior to, and during the ninety (90) days beginning
on, the effective date of a registration statement that includes Shares
(except as part of such registration), but only if and to the extent
requested in writing (with reasonable prior written notice) by the
underwriter(s) in the case of an underwritten public offering by the
Company of securities similar to the Shares.
(e) The Company and the Optionee agree to indemnify and hold harmless
each other (and, in the case of the Company, its directors and officers
and each person who controls the Company (within the meaning of the
Securities Act)) against all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) (collectively,
"Losses") arising out of or based upon any untrue or alleged untrue
statement of material fact contained in any registration statement with
respect to a Piggyback Registration, any amendment or supplement
thereto, any prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided, however, that the Optionee shall not be indemnified for
Losses insofar as such Losses arise out of or are based upon any such
untrue statement or omission based upon information furnished in
writing to the Company by or on behalf of the Optionee (in his
individual capacity) expressly for use therein; provided further,
however, that in the event the prospectus shall have been amended or
supplemented and copies thereof, as so amended or supplemented, shall
have been furnished to the Optionee prior to the confirmation of any
sales of Registrable Securities, such indemnity with respect to the
prospectus shall not inure to the benefit of the Optionee if the person
asserting such Loss did not, at or prior to the confirmation of the
sale of the Registrable Securities to such person, receive a copy of
the prospectus, as so amended or supplemented, and the untrue statement
or omission of a material fact contained in the prospectus was
corrected in the prospectus, as so amended or supplemented.
9. The Option shall be exercisable in accordance with the terms hereof
even if (i) any ISO to purchase Common Stock in the Company, in any
parent or subsidiary of the Company or in any predecessor corporation
of such corporations, was granted to the Optionee and (ii) such
previously granted ISO remains outstanding. For purposes of this
Paragraph, an ISO shall be treated as outstanding until such option is
exercised in full or expires by reason of lapse of time.
10. All certificates for Shares delivered pursuant to any Option or the
exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Board or a committee thereof may deem
advisable under the rules, regulations, and other restrictions of the
Securities and Exchange Commission, any stock exchange upon which such
Shares or other securities are then listed, and any applicable federal
or state securities laws, and the Board or a committee thereof
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may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
11. This Agreement shall be construed and enforced in accordance with the
laws of the State of Delaware and applicable federal law. Subject to
subparagraph 3(a) hereof, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors or assigns, as the case may
be.
IN WITNESS WHEREOF, the parties have witnessed this Agreement to be
duly executed and delivered as of the date first above written.
SARATOGA BEVERAGE GROUP, INC.
By: /s/ Xxxx X. Xxxx By: /s/ Xxxxx Xxxxxx
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Xxxx X. Xxxx Xxxxx Xxxxxx
President and Chief
Executive Officer
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