EXHIBIT 10.13
STOCK OPTION AGREEMENT
AGREEMENT, made as of the 21st day of August, 1998, between BIG CITY
BAGELS, INC., a New York corporation ("Employer"), and XXXX XXXXXXX
("Executive").
WHEREAS, Executive and Employer have entered into an Amended and Restated
Employment Agreement dated as of the date hereof ("Employment Agreement"); and
WHEREAS, on August 13, 1998, the Board of Directors authorized the grant to
Executive, pursuant to Employer's 1998 Performance Equity Plan ("Plan"), of an
option (the "Option") to purchase an aggregate of 100,000 of the authorized but
unissued or treasury shares of the common stock of Employer, $.001 par value
("Common Stock"), on the terms and conditions set forth in this Agreement and
subject to the provisions of the Plan; and
WHEREAS, Executive desires to acquire said Option on the terms and
conditions set forth in this Agreement:
IT IS AGREED:
1. Grant of Stock Option. Employer hereby grants Executive the Option to
purchase all or any part of an aggregate of 100,000 shares of Common Stock (the
"Option Shares") on the terms and conditions set forth herein and subject to the
provisions of the Plan.
2. Non-Qualified Stock Option. The Option represented hereby is not
intended to be an Option which qualifies as an "Incentive Stock Option" under
Section 422 of the Internal Revenue Code of 1986, as amended.
3. Exercise Price. The exercise price of the Option shall be $1.00 per
share, subject to adjustment as hereinafter provided ("Exercise Price").
4. Exercisability. This Option is exercisable, subject to the terms and
conditions of the Plan and this Agreement, at any time from and after the date
hereof, and it shall remain exercisable until the close of business on August
20, 2008 (the "Exercise Period").
5. Effect of Termination of Employment. Notwithstanding any provision set
forth in the Plan:
5.1 Termination Due to Death. If Executive's employment by Employer
terminates by reason of death, the Option shall remain exercisable and may
thereafter be exercised by the legal representative of the estate or by the
legatee of Executive under the will of Executive until the expiration of the
Exercise Period.
5.2 Termination Due to Disability. If Executive's employment by
Employer terminates by reason of "Disability" as defined in Section 7(c) of the
Employment Agreement, the Option shall remain exercisable and may thereafter be
exercised by Executive or legal representative until the expiration of the
Exercise Period.
5.3 Termination by Executive for Good Reason. If Executive terminates
his employment for "Good Reason" as such term is defined in Section 7(e) the
Employment Agreement, then the Option may be exercised until the expiration of
the Exercise Period.
5.4 Termination by Employer For Cause. If Executive's employment is
terminated by Employer for "Cause" as defined in Section 7(b) of the Employment
Agreement, then the Option shall expire on the date of termination of
employment.
5.5 Other Termination. If Executive's employment is terminated for any
reason other than as set forth in Sections 5.1, 5.2, 5.3 or 5.4, then the Option
may be exercised until the expiration of the Exercise Period.
6. Withholding Tax. Not later than the date as of which an amount first
must be included in the gross income of Executive for federal income tax
purposes with respect to the Option, Executive may be required to pay to
Employer, or make arrangements satisfactory to Employer regarding the payment
of, any federal, state and local taxes of any kind required by law to be
withheld or paid with respect to such amount. The obligations of Employer under
the Plan and pursuant to this Agreement shall be conditional upon such payments
or arrangements with Employer, if such payments or arrangements are required,
and Employer shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to Executive from
Employer.
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7. Adjustments.
7.1 In the event of a stock split, stock dividend, combination of
shares, or any other similar change in the Common Stock of Employer as a whole,
the Board of Directors of Employer shall make equitable, proportionate
adjustments in the number and kind of shares covered by the Option and in the
Exercise Price hereunder.
7.2 In the event of any reclassification or reorganization of the
outstanding shares of Common Stock other than a change covered by Section 7.1
hereof or which solely affects the par value of such shares of Common Stock, or
in the case of any merger or consolidation of Employer with or into another
corporation (other than a consolidation or merger in which Employer is the
continuing corporation and which does not result in any reclassification or
reorganization of the outstanding shares of Common Stock), Executive shall have
the right thereafter (until the expiration of the right of exercise of this
Option) to receive upon the exercise hereof after such event, for the same
aggregate Exercise Price payable hereunder immediately prior to such event, the
kind and amount of shares of stock or other securities or property (including
cash) receivable upon such reclassification, reorganization, merger or
consolidation by a holder of the number of shares of Common Stock of Employer
obtainable upon exercise of this Option immediately prior to such event. The
provisions of this Section 7.2 shall similarly apply to successive
reclassifications, reorganizations, mergers or consolidations, sales or other
transfers.
8. Method of Exercise.
8.1 Notice to Employer. The Option shall be exercised in whole or in
part by written notice in the form attached hereto as Exhibit A directed to
Employer at its principal place of business accompanied by full payment as
hereinafter provided of the Exercise Price for the number of Option Shares
specified in the notice.
8.2 Delivery of Option Shares. Employer shall deliver a certificate
for the Option Shares to Executive as soon as practicable after payment
therefor, but in any event not more than ten business days thereafter.
8.3 Payment of Purchase Price.
8.3.1 Cash Payment. Executive shall make cash payments by wire
transfer, certified or bank check or personal check, in each case payable to the
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order of Employer, Employer shall not be required to deliver certificates for
Option Shares until Employer has confirmed the receipt of good and available
funds in payment of the purchase price thereof.
8.3.2 Stock Payment. At Executive's election, Executive shall be
permitted to use Common Stock of Employer owned by him to pay the purchase price
for the Option Shares (and any required withholding taxes) by delivery of stock
certificates in negotiable form which are effective to transfer good and valid
title thereto to Employer, free of any liens or encumbrances. Shares of Common
Stock used for this purpose shall be valued at the Fair Market Value, as defined
below, on the second trading day immediately preceding the date notice is
delivered by Executive pursuant to Section 8.1.
8.3.3 Fair Market Value. "Fair Market Value", unless otherwise
required by any applicable provision of the Internal Revenue Code of 1986, as
amended, or any regulations issued thereunder, means, as of any given date: (i)
if the Common Stock is listed on a national securities exchange or quoted on the
Nasdaq National Market or Nasdaq SmallCap Market, the last sale price of the
Common Stock in the principal trading market for the Common Stock on the last
trading day preceding the date of exercise in accordance with Section 8.3.2,
above, as reported by the exchange or Nasdaq, as the case may be; (ii) if the
Common Stock is not listed on a national securities exchange or quoted on the
Nasdaq National Market or Nasdaq SmallCap Market, but is traded in the
over-the-counter market, the closing bid price for the Common Stock on the last
trading day preceding the date of exercise in accordance with Section 8.3.2,
above, as reported by the OTC Bulletin Board or the National Quotation Bureau,
Incorporated or similar publisher of such quotations; and (iii) if the fair
market value of the Common Stock cannot be determined pursuant to clause (i) or
(ii) above, such price as Employer shall determine, in good faith.
8.3.4 Cashless Exercise. At Executive's election, Executive shall
be permitted to convert this Option, in whole or part, into Common Stock
("Conversion Right") as follows: Upon exercise of the Conversion Right, Employer
shall deliver to Executive (without payment by Executive of any of the Exercise
Price) that number of shares of Common Stock equal to the quotient obtained by
dividing (i) the "Value" (as defined below) of the portion of the Option being
converted on the second trading day immediately preceding the date notice is
delivered by Executive pursuant to Section 8.1 ("Valuation Date") by (ii) the
"Market Price" (as defined above) on the Valuation Date. The "Value" of the
portion of the Option being converted shall equal the remainder derived from
subtracting (a) the Exercise Price multiplied by the number of shares of Common
Stock underlying the portion of the Option being converted from (b) the Market
Price of the Common Stock multiplied by the number of shares of Common Stock
underlying the portion of the Option being converted.
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9. Nonassignability. The Option shall not be assignable or transferable,
without the consent of Employer, except by will or by the laws of descent and
distribution in the event of the death of Executive. No transfer of the Option
by Executive by will or by the laws of descent and distribution shall be
effective to bind Employer unless Employer shall have been furnished with
written notice thereof and a copy of the will and/or such other evidence as
Employer may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions of the
Option.
10. Form S-8 Registration. If upon termination of Executive's employment
for any reason other than for "Cause" as defined in Section 6(b) of the
Employment Agreement, (i) the Option Shares have been registered under the
Securities Act of 1933, as amended ("Act") pursuant to a registration statement
on Form S-8 (or other available Form) and Employer has made available to
Executive a current prospectus relating thereto, then Employer shall take such
action as is necessary to maintain the effectiveness of such registration
statement and a current prospectus relating thereto as long as any portion of
the Option remains exercisable, or (ii) the Option Shares have not been so
registered or a current prospectus relating thereto not maintained, then, upon
written demand of Executive or his legal representative delivered at any time
while any portion of the Option remains exercisable, Employer, within forty-five
days after such demand has been given, shall register the Option Shares under
the Act on Form S-8 and make available to Executive a current prospectus
relating thereto, and Employer shall maintain the effectiveness of such
registration statement and a current prospectus relating thereto as long as any
portion of the Option remains exercisable.
11. Employer Representations. Employer hereby represents and warrants to
Executive that:
(i) Employer, by appropriate and all required action, is duly
authorized to enter into this Agreement and consummate all of the
transactions contemplated hereunder; and
(ii) the Option Shares, when issued and delivered by Employer to
Executive in accordance with the terms and conditions hereof, will be duly
and validly issued and fully paid and non-assessable.
12. Executive Representations. Executive hereby represents and warrants to
Employer that:
(i) he is acquiring the Option and, unless the Option Shares have been
registered under the Act, he shall acquire the Option Shares, for his own
account and not with a view towards the distribution thereof;
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(ii) he has received a copy of the Plan as in effect as of the date of
this Agreement;
(iii) he has received a copy of all reports and documents required to
be filed by Employer with the Commission pursuant to the Exchange Act
within the last 12 months and all reports issued by Employer to its
shareholders;
(iv) he understands that he must bear the economic risk of the
investment in the Option Shares, which cannot be sold by him unless they
are registered under the Act or an exemption therefrom is available
thereunder;
(v) in his position with Employer, he has had both the opportunity to
ask questions and receive answers from the officers and directors of
Employer and all persons acting on its behalf concerning the terms and
conditions of the offer made hereunder and to obtain any additional
information to the extent Employer possesses or may possess such
information or can acquire it without unreasonable effort or expense
necessary to verify the accuracy of the information obtained pursuant to
clause (iii) above; and
(vi) he is aware that, in the absence of registration under the Act or
his ability to sell the Option Shares pursuant to Rule 144(k) promulgated
under the Act, Employer shall place stop transfer orders with its transfer
agent against the transfer of the Option Shares and the certificates
evidencing the Option Shares shall bear the following legend:
"The shares represented by this certificate have been acquired
for investment and have not been registered under the Securities
Act of 1933. The shares may not be sold or transferred in the
absence of such registration or an exemption therefrom under said
Act."
13. Restriction on Transfer of Option Shares. Anything in this Agreement to
the contrary notwithstanding, Executive hereby agrees that he shall not sell,
transfer by any means or otherwise dispose of the Option Shares acquired by him
unless (i) they have been registered under the Act or (ii) an exemption from the
registration requirements of the Act is available thereunder and Executive has
furnished Employer with notice of such proposed transfer and an opinion of legal
counsel that such proposed transfer is so exempt.
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14. Miscellaneous.
14.1 Notices. All notices, requests, deliveries, payments, demands and
other communications which are required or permitted to be given under this
Agreement shall be in writing and shall be either delivered personally or sent
by registered or certified mail, or by private courier to the parties at their
respective addresses set forth herein, or to such other address as either shall
have specified by notice in writing to the other. Notice shall be deemed duly
given hereunder when delivered or mailed as provided herein.
14.2 Conflicts with Plan. In the event of a conflict between the
provisions of the Plan and the provisions of this Agreement, the provisions of
this Agreement shall in all respects be controlling.
14.3 Executive and Shareholder Rights. Executive shall not have any of
the rights of a shareholder with respect to the Option Shares until such shares
have been issued after the due exercise of the Option. Nothing contained in this
Agreement shall be deemed to confer upon Executive any right to continued
employment with Employer or any subsidiary thereof, nor shall it interfere in
any way with the right of Employer to terminate such employment in accordance
with the provisions regarding such termination set forth in Executive's written
employment agreement with Employer, or if there exists no such agreement, to
terminate Executive at will.
14.4 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
14.5 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof. This Agreement
may not be amended except by writing executed by Executive and Employer.
14.6 Binding Effect; Successors. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
14.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York (without regard to choice
of law provisions).
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14.8 Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
day and year first above written.
BIG CITY BAGELS, INC. Address: 00 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
/s/ Xxxxxx X. Xxxx
By:__________________________
Name: Xxxxxx X. Xxxx
Title: Chief Financial Officer and
Assistant Secretary
EXECUTIVE Address: 000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
/s/ Xxxx Xxxxxxx
______________________________
XXXX XXXXXXX
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EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
____________________
DATE
Big City Bagels, Inc.
00 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: The Board of Directors
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of August ___, 1998
with Big City Bagels, Inc. ("Employer"), I hereby irrevocably elect to exercise
the right to purchase _________ shares of Employer's common stock, par value
$.001 per share ("Common Stock").
As payment for my shares, enclosed is (check and complete applicable
box[es]):
|_| a [personal check] [certified check] [bank check] payable to the order
of "Big City Bagels, Inc." in the sum of $_________;
|_| confirmation of wire transfer in the amount of $_____________; and/or
|_| a certificate for ___________ shares of Employer's Common Stock, free
and clear of any encumbrances, duly endorsed, having a Fair Market
Value (as such term is defined in Section 8.3.3 of the Stock Option
Agreement) of $_________; and/or
|_| in lieu of payment of the purchase price, I elect to convert my Option
into shares of Common Stock pursuant to Section 8.3.4 of the
above-mentioned agreement.
I hereby represent and warrant to, and agree with, Employer that:
(i) I have received a copy of the Plan and all reports and documents
required to be filed by Employer with the Commission pursuant to the Exchange
Act within the last 12 months and all reports issued by Employer to its
shareholders;
(ii) I understand that I must bear the economic risk of the investment
in the Option Shares, which cannot be sold by me unless they are registered
under the Securities Act of 1933 (the "Act") or an exemption therefrom is
available thereunder;
(iii) in my position with Employer, I have had both the opportunity to
ask questions and receive answers from the officers and directors of Employer
and all persons acting on its behalf concerning the terms and conditions of the
offer made hereunder and to obtain any additional information to the extent
Employer possesses or may possess such information or can acquire it without
unreasonable effort or expense necessary to verify the accuracy of the
information obtained pursuant to clause (i) above; and
(iv) if the Option Shares have not been registered under the Act, (a)
I am acquiring the Option and shall acquire the Option Shares for my own
account, for investment, and not with a view towards the distribution thereof,
(b) I am aware that Employer shall place stop transfer orders with its transfer
agent against the transfer of the Option Shares unless they may be transferred
pursuant to Rule 144(k) and (c) the certificates evidencing the Option Shares
shall bear the following legend:
"The shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of
1933. The shares may not be sold or transferred in the absence of such
registration or an exemption therefrom under said Act."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
_______________________________ _________________________________
(Signature) (Address)
_______________________________ _________________________________
(Print Name)
__________________________________
(Social Security Number)
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