CELESTIAL SEASONINGS, INC.
STOCK OPTION AGREEMENT
Agreement made as of the 16th day of June, 1997, between Celestial
Seasonings, Inc., a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxx
("Grantee").
x. Xxxxx of Option. The Company hereby grants to Grantee,
as of the date of grant specified above, a nonqualified option
to purchase 165,000 shares of common stock, par value $0.01
per share (the "Common Stock"), of the Company (which number
of shares may be adjusted pursuant to Paragraph 5 below) at
$21.50 per share, subject to the terms and conditions set
forth herein.
ii. Exercise of Option. Subject to the earlier termination
of the option as provided herein, the option may be exercised,
by written notice to the Company in the form attached as
Exhibit A hereto, at any time and from time to time after the
date of grant; provided however, unless a Change in Control
(as defined in Section 5) occurs, such option shall not be
exercisable for more than the sum of ( i) 20% of the aggregate
number of shares covered by this option multiplied by the
number of full years from the date of grant thereof to the
date of such exercise, in accordance with the following
schedule, plus (ii) the product of 1 % multiplied by the
number of full months from the most recent one-year
anniversary of the date of grant until the date of exercise
(the "Monthly Vesting Percentage") multiplied by the total
number of shares covered by this option. For example, if the
date of grant is July 19, 1993 and the date of exercise is
between January 19, 1995 and February 18, 1995, the option may
be exercised for 30% of the total number of shares covered
hereby.
Cumulative Percentage
Completed Years of Shares That May
From Date of Grant Be Exercisable
1 but less than 2 years 20% plus Monthly Vesting Percentage
2 but less than 3 years 40% plus Monthly Vesting Percentage
3 but less than 4 years 60% plus Monthly Vesting Percentage
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4 but less than 5 years 80% plus Monthly Vesting Percentage
5 or more years 100%
An option shall not be exercisable in any event after the expiration of ten
years from the date of grant. An option may not be exercised for a fraction of
a share of Common Stock
iii. Conditions to Exercise. The option may not be exercised
by Grantee unless all of the following conditions are met:
(i) Legal counsel for the Company must be
satisfied at the time of exercise that the
issuance of shares of Common Stock upon
exercise will be in compliance with the
Securities Act of 1933, as amended (the
"Act") and applicable United States federal,
state, local and foreign laws;
(ii) Grantee must pay at the time of
exercise the full purchase price for the
shares of Common Stock being acquired
hereunder, by (i) paying in United States
dollars by cash, (ii) tendering shares of
Common Stock owned by Grantee which have a
fair market value equal to the full purchase
price for the shares of Common Stock being
acquired, such fair market value to be
determined in such reasonable manner as may
be provided from time to time by the Company
or as may be required in order to comply
with or conform to the requirements of any
applicable or relevant laws or regulations,
(iii) paying in such other form as the
Company may determine in its sole
discretion, or (iv) tendering a combination
of the forms of payment provided for in
Subparagraphs 3(b)(i) through 3(b)(iii)
above; and
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(iii) Grantee must, at all times during the
period beginning with the grant date of the
option and ending on the date of such
exercise, have been employed by the Company,
except (i) if Grantee ceases to be an
employee by reason of Grantee's disability
or early, normal or deferred retirement or
resignation, Grantee may, at any time within
one year of the date of the onset of such
disability or retirement (but in no event
after the expiration of ten years from the
grant date) exercise the option with respect
to the number of shares, determined under
Paragraph 2 above, as to which Grantee could
have exercised the option on the date of the
onset of such disability or retirement or
with respect to such greater number of
shares as determined by the Company in its
sole discretion, and any remaining portion
of the option shall be cancelled by the
Company, (ii) if Grantee ceases to be an
employee by reason of death, the provisions
of Paragraph 4 shall apply, (iii) if
Grantee's employment is terminated for any
other reason (including termination by the
Company for reasons other than death as
described in Paragraph 4 or disability,
retirement or resignation as described
above), Grantee may, at any time within
ninety days of the date of such termination
(but in no event after the expiration of ten
years from the grant date) exercise the
option with respect to the number of shares,
determined under Paragraph 2 above, as to
which Grantee could have exercised the
option on the date of such termination or
with respect to such greater number of
shares as determined by the Company in its
sole discretion, and any remaining portion
of the option shall be cancelled by the
Company.
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iv. Transferability. The option may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of by
Grantee, except by will or the laws of descent and
distribution and is exercisable during Grantee's lifetime only
by Grantee. If Grantee or anyone claiming under or through
Grantee attempts to violate this Paragraph 4, such attempt
shall be null and void and without effect, and the Company's
obligation to make any further payments (stock or cash)
hereunder shall terminate. If at the time of Grantee's death
the option has not been fully exercised, Grantee's estate or
any person who acquires the right to exercise the option by
bequest or inheritance or by reason of Grantee's death may, at
any time within fifteen months after the date of Grantee's
death (but in no event after the expiration of ten years from
the grant date), exercise the option with respect to the
number of shares, determined under Paragraph 2 above, as to
which Grantee could have exercised the option at the time of
Grantee's death, or with respect to such greater number of
shares as determined by the Company in its sole discretion.
The applicable requirements of Paragraph 3 above must be
satisfied at the time of such exercise.
v. Adjustments. In the event of any change in the number
of shares of Common Stock outstanding by reason of any stock
split, stock dividend, split-up, split-off, spin-off,
recapitalization, merger, consolidation, rights offering,
reorganization, combination or exchange of shares, sale by the
Company of all or part of its assets, distribution to
shareholders other than a normal cash dividend, or other
extraordinary or unusual event occurring after the grant date
specified above and prior to its exercise in full, the number
and kind of shares of Common Stock or other property for which
the option may then be exercised and the option price per
share may or may not be adjusted so as to reflect such change,
all as determined by the Company in its sole discretion. In
the event of the proposed dissolution or liquidation of the
Company, the option shall terminate immediately prior to the
consummation of such proposed action, unless otherwise
provided by the Company. In the event of a Change in Control,
all restrictions on the option shall lapse and Grantee shall
be entitled to the full benefit of the option immediately
prior to the closing of such Change in Control, and the option
shall terminate upon consummation of the Change in Control,
unless otherwise provided by the Company. For purposes of
this Agreement, a Change in Control shall mean a sale of all
or substantially all of the assets of the Company, or the
merger of the Company into another corporation.
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vi. Withholding of Tax. It shall be a condition to the
obligation of the Company to furnish shares of Common Stock
upon exercise of an option (i) that Grantee (or any person
acting under Paragraph 4 above) pay to the Company or its
designee, upon its demand, such amount as may be demanded for
the purpose of satisfying the Company's obligation to withhold
federal, state, local or foreign income, employment or other
taxes incurred by reason of the exercise of the option or the
transfer of shares thereupon, and (ii) that Grantee (or any
person acting under Paragraph 4 above) provide the Company
with any forms, documents or other information reasonably
required by the Company in connection with the grant. If the
amount requested for the purpose of satisfying the withholding
obligation is not paid, the Company may refuse to furnish
shares of Common Stock upon exercise of the option.
vii. Amendment or Substitution of Awards. The terms of this
Agreement may be amended from time to time by the Company in
its sole discretion in any manner that it deems appropriate
(including, but not limited to, acceleration of the vesting
provisions of the option in Paragraph 2); provided, however,
that no such amendment shall adversely affect in a material
manner any right of Grantee under this Agreement without
Grantee's written consent, unless the Company determines in
its sole discretion that there have occurred or are about to
occur significant changes in Grantee's position, duties or
responsibilities or significant changes in economic,
legislative, regulatory, tax, accounting or cost/benefit
conditions which are determined by the Company in its sole
discretion to have or to be expected to have a substantial
effect on the performance of the Company, or any subsidiary,
affiliates, division, or department thereof. The Company
may, in its sole discretion, permit Grantee to surrender this
grant in order to exercise or realize the rights under other
awards, or in exchange for the grant of new awards, or require
Grantee to surrender this grant as a condition precedent to
the grant of new awards.
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viii. Administration. Any action taken or decision made by
the Company's board of directors or the compensation committee
of the board or their delegates arising out of or in
connection with the construction, administration,
interpretation or effect of the Agreement shall lie within its
sole and absolute discretion, as the case may be, and shall be
final, conclusive and binding on Grantee and all persons
claiming under or through Grantee.
ix. No Rights as Stockholder. Unless and until a
certificate or certificates representing such shares of Common
Stock shall have been issued to Grantee (or any person acting
under Paragraph 4 above), Grantee shall not be or have any of
the rights or privileges of a stockholder of the Company with
respect to shares of Common Stock acquirable upon exercise of
the option. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the
record date is prior to the date such stock certificate is
issued to Grantee.
x. Investment Representation. Grantee hereby acknowledges
that the shares of Common Stock which Grantee may acquire by
exercising the option shall be acquired for investment without
a view to distribution, within the meaning of the Act, and
shall not be sold, transferred, assigned, pledged or
hypothecated in the absence of an effective registration
statement for the shares under the Act and applicable state
securities laws or an applicable exemption from the
registration requirements of the Act and any applicable state
securities laws. Grantee also agrees that the shares of
Common Stock which Grantee may acquire by exercising the
option will not be sold or otherwise disposed of in any manner
which would constitute a violation of any applicable
securities laws, whether federal or state.
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xi. Registration of Common Stock. The Company, in its
discretion, may postpone the issuance and/or delivery of
shares of Common Stock upon any exercise of the option until
completion of such registration or other qualification of such
shares under any state and/or federal law, rule or regulation
as the Company may consider appropriate.
xii. Rights of Participants. Neither this Agreement nor the
grant of options creates any employment rights in Grantee and
the Company shall have no liability for terminating Grantee's
employment. Grantee shall have no rights under this Agreement
other than as an unsecured general creditor of the Company
except that insofar as Grantee may have become entitled to
payment of additional compensation by performance of services,
Grantee shall have the same rights as other employees under
general law.
xiii. Notices. Any notice hereunder to the Company shall be
addressed to: Celestial Seasonings, Inc., 0000 Xxxxxxxxxx
Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Secretary, and any
notice hereunder to Grantee shall be addressed to Grantee at
Grantee's last address on the records of the Company, subject
to the right of either party to designate at any time
hereafter in writing some other address. Any notice shall be
deemed to have been duly given when delivered personally, by
facsimile (receipt verified) or enclosed in a properly sealed
envelope, addressed as set forth above, and deposited (with
first class postage prepaid) in the United States mail.
xiv. Counterparts. This Agreement may be executed in one or
several counterparts, each of which shall constitute one and
the same instrument.
xv. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of any successors to the Company and
all persons lawfully claiming under Grantee.
xvi. Governing Law. The validity, construction,
interpretation, administration and effect of this Agreement,
shall be governed by the substantive laws, but not the choice
of law rules, of the State of Colorado.
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IN WITNESS WHEREOF, the Company and Grantee have executed this
Agreement as of the date first above written.
CELESTIAL SEASONINGS, INC.
By: ___________________________
GRANTEE
______________________________
Xxxxxxx X. Xxxxxx
______________________________
Social Security Number
24461
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EXHIBIT A
Form of Letter to be Used on
Exercise of Stock Option
_______________
Date
Celestial Seasonings, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Secretary
Dear Sir:
I wish to exercise the stock option granted on June __, 1997 and
evidenced by my Option Agreement dated as of June __, 1997 to the extent of
________ shares of the Common Stock of Celestial Seasonings, Inc., at the option
price of $___ per share. My check in the amount of $________ in payment of the
entire purchase price for these shares accompanies this letter.
Please issue a certificate for these shares in the following name:
___________________________________
Name
___________________________________
Street Address
___________________________________
City/State/Zip
Very truly yours,
___________________________________
Xxxxxxx X. Xxxxxx
___________________________________
Social Security Number
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