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EXHIBIT 10.6
STOCK OPTION AGREEMENT
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This Agreement is made this ____ day of ________, 199__,
between Skyline Chili, Inc. (hereinafter referred to as the "Company"), an Ohio
corporation, and ______________, an employee of the Company (hereinafter
referred to as the "Optionee").
WHEREAS, the Company has adopted and maintains the Skyline
Chili, Inc. 1986 Stock Option Plan (hereinafter referred to as the "Plan") for
the benefit of its employees and officers;
WHEREAS, the Plan provides that the Stock Option Committee
(hereinafter referred to as the "Committee") of the Company's Board of
Directors (hereinafter referred to as the "Board"), may grant options to
purchase shares of the Company's common stock to certain of its key employees
and officers; and
WHEREAS, the Committee has determined that the Optionee should
be given the opportunity to acquire a stock ownership interest in the Company
pursuant to the Plan, in order to provide the Optionee with additional
incentive and motivation to contribute to the Company's future growth and
continued success, and to encourage the Optionee to continue to provide
services to the Company.
NOW, THEREFORE, the Company and the Optionee agree as follows:
1. Grant of Option.
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Pursuant to the provisions of the Plan, the Company
hereby grants to the Optionee the right and option to purchase
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from the Company, on the terms and conditions hereinafter provided, up to a
maximum number of ______ shares of the Company's no par value common stock
(hereinafter referred to as the "Option Shares").
2. Exercise Price.
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The exercise or purchase price to be paid by the
Optionee for the Option Shares shall be $________ per share.
3. Schedule of Exercise.
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(a) Except as provided below in Paragraph 3(b),
the Optionee shall have the right to exercise the option granted under this
Agreement in accordance with the following schedule:
Years After Date Percentage of Option
of Grant of Option Shares Eligible for Purchase
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Less than one year. 0%
At least one but less than
two years. 25%
At least two but less than
three years. 50%
At least three but less than
four years. 75%
After four years. 100%
For purposes of the preceding schedule, the date of the grant of this option
shall be the day and year stated in the first paragraph of this Agreement.
(b) If there is a "change in control" of the
Company, all options granted under this Agreement shall become exercisable
immediately by the Optionee, in such a manner as shall allow the Optionee upon
exercise to participate in the "change in control"
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transaction or the proceeds thereof as a shareholder. For purposes of this
Paragraph 3(b), a "change in control" shall mean: (i) the sale by the Company
of all or substantially all of the Company's assets to a single purchaser or to
a group of associated purchasers; (ii) the sale, exchange, or other
disposition, in one transaction or related series of transactions, of fifty
percent (50%) or more of the outstanding shares of the Company; (iii) a bona
fide decision by the Company to terminate its business and liquidate its
assets; or (iv) the merger or consolidation of the Company in a transaction in
which the shareholders of the Company receive or hold less than fifty percent
(50%) of the outstanding voting shares of the continuing or new corporation.
4. Method of Exercise.
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Subject to the schedule provided in Paragraph (3) of
this Agreement, the option granted under this Agreement may be exercised by the
Optionee in whole or in part, and from time to time, by written notice signed
by the Optionee or by such other person as may be entitled to exercise the
option and delivered to the Stock Option Committee or the Company's president
at the Company's principal executive offices. The written notice shall state
the number of shares with respect to which the option is being exercised, and
shall be accompanied by the payment of the total exercise or purchase price for
that number of shares. The exercise or purchase price for the Option Shares
may be paid in cash (including certified check or bank cashier's check), or in
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shares of the Company's common stock, or in any combination thereof. Any
shares of the Company's common stock that are delivered in payment of the
exercise or purchase price shall be valued at their fair market value, as
determined by the Committee, as of the date of delivery of the shares to the
Company. Upon payment of the full exercise or purchase price, the Option
Shares shall be fully paid and nonassessable, outstanding shares of the
Company's common stock. No partial exercise of the option may be made for less
than 100 shares, and the Company shall not be required to issue any fractional
shares.
5. Termination of Option.
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(a) Subject to the provisions of subparagraph (5)(b)
hereof, the option and all rights granted under this Agreement, to the extent
that those rights have not been exercised, shall terminate on the earlier of:
(i) the date that the Optionee is discharged or terminates his employment with
the Company for any reason, other than by reason of the Optionee's death or
permanent disability (as defined in Section 105(d)(4) of the Internal Revenue
Code of 1986, as amended); or (ii) the date which is ten years from the date
of the grant of this Option.
(b) If the Optionee dies or becomes permanently
disabled while serving as an employee of the Company, and prior to the ten year
anniversary date described above, the Optionee or in the event of the
Optionee's death, his estate, personal representative or heirs, shall have the
right to exercise the option granted under this Agreement, for the shares then
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available under the schedule provided in paragraph (3), for a period of twelve
(12) months following the Optionee's date of death or in the event of permanent
disability the last date on which the Optionee provided services to the Company
as an employee or officer.
6. Transferability.
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The option and all rights granted under this
Agreement shall be exercisable only by the Optionee, and shall not be
transferred, assigned, pledged or hypothecated in any manner (whether by
operation of law or otherwise) except, in the event of the Optionee's
death, by will or by the applicable laws of descent or distribution. Upon any
attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of this
option contrary to the provisions of this Agreement, or upon the levy of any
attachment or similar process upon this option, such option shall immediately
become null and void.
7. Adjustment to Option Shares.
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(a) In the event that at any time prior to the
termination date of this option and prior to the exercise thereof, the Company
issues common stock by way of stock dividend or other distribution, or
subdivides or combines its outstanding shares of common stock, the number of
shares subject to this option and the exercise price shall be adjusted to be
consistent with such change or changes. In the event that at any time prior to
the termination date of this option and prior to the exercise thereof, there is
any reclassification, capital reorganization or
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other change of outstanding shares of the Company's common stock, or in case of
any consolidation or merger of the Company with or into another corporation, or
in case of any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety, the Company shall cause
effective provision to be made so that the Optionee shall have the right
thereafter, by exercising this option, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, capital reorganization or other change, consolidation,
merger, sale or conveyance. The determination of the Board or Committee as to
any adjustments or provisions to be made under this paragraph shall be final,
binding and conclusive.
(b) Except as provided above, the grant of the
option herein shall not affect in any manner the right or power of the Company
or its shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or to
issue bonds, debentures, preferred or prior preference stock ahead of or
affecting the common stock of the Company or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of all or
any part of the Company's assets or business.
8. Effect of Agreement on Status of Optionee.
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(a) The fact that the Committee has granted an
option to the Optionee pursuant to the Plan, shall not confer on the
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Optionee any right to employment with the Company or to a position as an
officer or director of the Company, nor shall it limit the right of the Company
to terminate or remove the Optionee from any position held by him at any time.
(b) The Optionee shall not be or have any of the
rights or privileges of a shareholder of the Company with respect to the shares
underlying this option, unless and until the option has been exercised, the
exercise or purchase price fully paid, certificates representing such shares
endorsed, transferred and delivered to the Optionee, and the Optionee's name
entered as a shareholder of record on the books of the Company.
9. Securities Laws.
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Notwithstanding anything to the contrary contained in
this Agreement, this option shall not be exercisable by the Optionee except for
shares of the Company's common stock which at the time of such exercise are
registered, exempt, or the subject matter of an exempt transaction, under both
federal and applicable state securities laws. By accepting and executing this
Option Agreement, the Optionee acknowledges and represents to the Company that
any and all shares of the Company's common stock purchased under this Agreement
(unless registered prior to exercise) will be acquired by the Optionee as an
investment, and not with a view towards subsequent distribution.
10. Binding Effect.
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This Agreement shall be binding upon and shall inure
to the benefit of any successors or assigns of the Company, and
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shall be binding upon and inure to the benefit of the Optionee's executors,
administrators, heirs and personal representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first above written.
SKYLINE CHILI, INC.
By:_______________________________
Its:______________________________
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(Optionee)
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