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Exhibit 10.24
SIGNATURE BRANDS USA, INC.
CHIEF EXECUTIVE OFFICER STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
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THIS AGREEMENT is entered into as of the 11th day of August, 1997, by
and between Signature Brands USA, Inc., a Delaware corporation (the "Company"),
and Xxxxx Xxxx (the "Optionee").
WITNESSETH:
WHEREAS, the Board of Directors of the Company has appointed a
Compensation Committee (the "Committee") to serve as the Committee to administer
the Signature Brands USA, Inc. Chief Executive Officer Stock Option Plan (the
"Plan"); and
WHEREAS, the Committee has determined that the Optionee has been
retained as the Chief Executive Officer of the Company with primary
responsibility for the success and future growth of the Company; and
WHEREAS, the Committee has determined that, subject to and in
consideration of the Optionee's agreement to be bound by the provisions of this
Agreement (including without limitation the provisions of Section 8 hereof), the
Optionee should be granted a stock option under the Plan upon the terms and
conditions set forth in this Agreement, and for the number of shares of Common
Stock, $.01 par value, of the Company (the "Common Stock") set forth
hereinbelow.
NOW, THEREFORE, the Company and the Optionee hereby agree as follows:
SECTION 1. DEFINITIONS. The following terms shall have the meanings set
forth below whenever used in this instrument:
(a) "Acquisition Consideration" shall mean the kind and amount of
shares of the surviving or new corporation, cash, securities, evidence of
indebtedness, other property or a combination thereof receivable in respect of
one share of Common Stock upon consummation of the transaction in question.
(b) "Agreement" shall mean this instrument.
(c) "Board of Directors" shall mean the Board of Directors of the
Company.
(d) "Cause" shall mean the occurrence of any of the following, which
occurrence will justify termination of the Optionee's employment by the Company
for "Cause":
(i) the Optionee has been convicted of, or pleads nolo
contendere with respect to, any felony, or of any
lesser crime or offense having as its predicate
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element fraud, dishonesty or misappropriation of the
property of the Company;
(ii) the habitual drug addiction or intoxication of the
Optionee which negatively impacts her job
performance;
(iii) the willful failure or refusal of the Optionee to
perform her duties as set forth herein or the willful
failure or refusal to follow the direction of the
Board; provided such failure or refusal continues
after 10 days of the receipt of notice in writing
from the Board of such failure or refusal; or
(iv) the Optionee breaches any of the terms of this
Agreement or any other agreement between the Optionee
and the Company which breach is not cured within 10
days subsequent to notice from the Company to the
Optionee of such breach.
(e) "Change of Control" shall mean (i) the sale of all or substantially
all of the assets of the Company, (ii) the sale, in a single transaction or
series of related transactions, of all of the shares of Common Stock owned by
the Xxx Group on August 11, 1997 (including any shares issued as a dividend on
or otherwise in respect of such stock), (iii) the consummation of a merger,
consolidation or similar transaction involving the Company in which the holders
of the Company's capital stock immediately prior to the transaction do not
retain at least a majority of the voting power of the corporation surviving the
merger or its parent corporation, (iv) the percentage of the Company's
outstanding Common Stock owned by the Xxx Group at any time becomes less than
50% of the percentage of the Company's outstanding Common Stock owned by the Xxx
Group as of August 11, 1997, or (v) the complete liquidation or dissolution of
the Company.
(f) "Code" shall mean the Internal Revenue Code of 1986, or any law
that supersedes or replaces it, as amended from time to time.
(g) "Committee" shall mean the Compensation Committee of the Board of
Directors, or any other committee of the Board of Directors that the Board of
Directors authorizes to administer this Plan. The Committee will be constituted
in a manner that satisfies the "non-employee director" standard set forth in
Rule 16b-3.
(h) "Common Stock" shall mean shares of Common Stock, $.01 par value,
of Signature Brands USA, Inc., including authorized an unissued shares and
treasury shares.
(i) "Company" shall mean Signature Brands USA, Inc., a Delaware
corporation, and its directors and indirect subsidiaries.
(j) "Director" shall mean a director of Signature Brands USA, Inc.
(k) "Effective Date" shall mean the date as of which this Agreement is
executed.
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(l) "Employee" shall mean any person who is an employee of either the
Company or any Subsidiary.
(m) "Employment Agreement" shall mean that certain employment agreement
between the Optionee and the Company, dated August 11, 1997, as the same may be
amended from time to time.
(n) "Xxx Group" shall mean the Xxxxxx X. Xxx Company and its
affiliates.
(o) "Incentive Stock Option" shall mean any Option which qualifies as
an Incentive Stock Option under terms of Section 422 of the Code.
(p) "Option" shall mean the right and option of the Optionee to
purchase Common Stock pursuant to the terms of this Agreement.
(q) "Option Price" shall mean the price at which Common Stock may be
acquired upon the exercise of any Option.
(r) "Optionee" shall mean the person to whom an Option has been granted
pursuant to this Agreement.
(s) "Personal Representative" shall mean, following the Optionee's
death, the person who shall have acquired, by Will or by the laws of descent and
distribution, the right to exercise any Option.
(t) "Plan" shall mean the Signature Brands USA, Inc. Chief Executive
Officer Stock Option Plan, as adopted and as it may later be amended.
(u) "Subsidiary" shall mean any corporation at least 50% of the common
stock of which is owned directly or indirectly by the Company.
(v) "Third Party" shall mean any person, group or entity other than the
Xxx Group.
SECTION 2. GRANT OF OPTION. Effective as of the date of this Agreement,
and subject to all of the terms and provisions of this Agreement, the Company
grants to the Optionee, upon the terms and conditions set forth hereinafter, the
right and option to purchase all or any lesser number (but not a fractional
share) of an aggregate of five hundred thousand (500,000) shares of Common Stock
at an Option Price per share equal to $3.50 (the closing price for the Company's
Common Stock as reported in The Wall Street Journal under the heading "NASDAQ
National Market" for the effective date of this Agreement). All of such shares
of Common Stock are subject to a nonqualified stock option, and none of such
shares of Common Stock are subject to an Incentive Stock Option.
SECTION 3. TERM OF OPTION. Except as otherwise provided herein, the
term of the Option shall be for a period of ten (10) years from the date hereof,
and the Option shall expire at the close of regular business hours at the
Company's principal office (presently at 0000 Xxxxxxx Xxxx,
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Xxxxxxxxxx, Xxxx 00000) on the last day of the term of the Option (August 10,
2007) or, if earlier, on the applicable expiration date provided for in Section
5, 6 and 7 hereof.
SECTION 4. EXERCISABILITY. The Optionee shall be entitled to exercise
the Option with respect to the number of shares of Common Stock indicated below
on or after the dates indicated opposite such number below:
Cumulative Number of Shares
of Common Stock Date Beginning
As To Which Option On Which Option
May Be Exercised May Be Exercised
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250,000 September 30, 1998
500,000 September 30, 1999
To the extent that the Option has become exercisable with respect to a number of
shares of Common Stock, as provided above, the Option may thereafter be
exercised by the Optionee either as to all or any part of such whole shares of
Common Stock at any time or from time to time prior to the expiration of the
Option pursuant to Section 3 hereof without regard to the provisions of Sections
5, 6 or 7 hereof. Notwithstanding the foregoing provisions of this Section 3, if
there is a Change of Control in accordance with Section 4(e) of the Employment
Agreement, all Options shall vest immediately, even if the Optionee continues
employment with the new entity until the end of the employment contract period.
Also, if the Optionee shall terminate her employment with the Company upon a
Change of Control in accordance with Section 4(e) of the Employment Agreement,
the Option shall remain fully exercisable upon such termination of employment.
SECTION 5. TERMINATION OF OPTIONEE'S EMPLOYMENT. If the Optionee ceases
to be an Employee for any reason other than by virtue of the Optionee's death or
Cause, the Option shall remain in full force and effect and may be exercised by
the Optionee (but only to the extent the Option is, at the time of the cessation
of the Optionee's employment, then exercisable under Section 4 hereof);
provided, however, that the Option shall terminate upon the last day of the term
of the Option.
SECTION 6. OPTIONEE'S DEATH. If, while the Optionee is an Employee, the
Optionee dies, the Option shall continue in full force and effect and may be
exercised by the Optionee's Personal Representative; provided, however, that the
Option shall terminate upon the last day of the term of the Option.
SECTION 7. TERMINATION OF OPTIONEE'S EMPLOYMENT FOR CAUSE; BREACH OF
EMPLOYMENT AGREEMENT. If the Optionee's employment (i) is terminated for Cause,
or (ii) if she breaches the Employment Agreement at any time, all unvested
Options shall immediately terminate effective on the date of termination of the
Optionee's employment, or the date she breaches the Non-Competition Agreement if
such breach is within the duration of the non-competition period. Vested Option
shall terminate upon the last day of the term of the Option.
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SECTION 8. NON-COMPETITION. Without limiting the generality of
Optionee's duty to comply with the terms of the Employment Agreement, the
Optionee shall comply with the Agreement not to Compete set forth in Section 6
of the Employment Agreement.
SECTION 9. ADJUSTMENTS.
(a) If the Company shall at any time change the number of
shares of issued Common Stock without new consideration to the Company (such as
by stock dividends or stock splits), the total number of shares then remaining
subject to purchase hereunder shall be changed in proportion to such change in
issued shares and the option price per share shall be adjusted so that the total
consideration payable to the Company upon purchase of all shares not theretofore
purchased shall not be changed.
(b) In the case of a Change of Control of the Company, the
Company shall have the right, with the explicit written consent of the Optionee,
to either (i) accelerate the exercisability of any unvested Stock Options
subject to this Agreement notwithstanding any limitations set forth in this
Agreement or in the Plan, or (ii) cause the Optionee to have the right
thereafter and during the term of the Stock Option, to receive upon exercise
thereof the Acquisition Consideration receivable upon the consummation of such
transaction by a holder of the number of shares of Common Stock which might have
been obtained upon exercise of all or any portion thereof; or (iii) take such
other action appropriate to preserve the value of the Award to the Optionee with
the agreement of the Optionee.
SECTION 10. EXERCISE OF OPTION. The Option may be exercised by
delivering to the Secretary of the Company at its principal office (presently at
0000 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxx 00000) a completed Notice of Exercise of
Option (obtainable from the Secretary of the Company) setting forth the number
of shares of Common Stock with respect to which the Option is being exercised.
Such Notice shall be accompanied by payment in full for the Common Stock. Such
payment shall be made by certified or cashier's check payable to the order of
the Company and/or certificates of Common Stock equal in value (based upon their
Fair Market Value (as defined in the Plan) on the date of surrender) to such
purchase price; provided, however, that payment of the exercise price by
delivery of Common Stock of the Company then owned by the Optionee may only be
made if such payment does not result in a charge to earnings for financial
accounting purposes as determined by the Company.
SECTION 11. ISSUANCE OF SHARE CERTIFICATES. Subject to the last
sentence of this Section 11, upon receipt by the Company prior to expiration of
the Option of a duly completed Notice of Exercise of Option to exercise the
Option accompanied by full payment for the Common Stock being purchased pursuant
to such Notice (and, with respect to any Option exercised pursuant to Section 12
hereof by someone other than the Optionee, accompanied in addition by proof
satisfactory to the Committee of the right of such person to exercise the
Option), the Company shall cause to be made or otherwise delivered to the
Optionee, within thirty (30) days of such receipt, a certificate for the number
of shares of Common Stock so purchased. The Optionee shall not have any of the
rights of a shareholder with respect to the shares of Common Stock which are
subject to the Option unless and until a certificate representing such Common
Stock is issued to the Optionee.
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The Company shall not be required to issue any certificates for Common Stock
upon the exercise of the Option prior to (i) obtaining any approval from any
governmental agency which the Committee shall, in its sole discretion, determine
to be necessary or advisable, and/or (ii) the admission of such Common Stock to
listing on any national securities exchange or the inclusion of such Common
Stock on any interdealer quotation system on which the Common Stock may be
listed or included, as the case may be, and/or (iii) completion of any
registration or other qualification of the Common Stock under any state or
federal law or ruling or regulations of any governmental body which the
Committee shall, in its sole discretion, determine to be necessary or advisable,
or the determination by the Committee, in its sole discretion, that any
registration or other qualification of the Common Stock is not necessary or
advisable.
SECTION 12. SUCCESSORS IN INTEREST AND NONASSIGNABILITY. This Agreement
shall be binding upon and inure to the benefit of any successor of the Company
and the heirs, estate, and Personal Representative of the Optionee or a
transferee of the Optionee. The Option shall not be transferable other than by
Will or the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined in the Code, or by a written transfer document filed
with the Company and transferring the Option or portion thereof to one or more
members of the Optionee's immediate family. The Option may be exercised during
the lifetime of the Optionee only by the Optionee, or such transferee to the
extent of the transfer. A deceased Optionee's Personal Representative shall act
in the place and stead of the deceased Optionee with respect to exercising an
Option or taking any other action pursuant to this Agreement.
SECTION 13. PROVISIONS OF AGREEMENT CONTROL. To the extent possible,
this Agreement shall be interpreted in a manner consistent with the terms,
conditions, and provisions of the Plan and to such rules, regulations, and
interpretations relating to the Plan as may be adopted by the Committee and as
may be in effect from time to time. A copy of the Plan is attached hereto as
Exhibit "A" and is incorporated herein by reference. In the event and to the
extent that this Agreement conflicts or is inconsistent with the terms,
conditions, and provisions of the Plan, this Agreement shall control, and the
Plan shall be deemed to be modified accordingly.
SECTION 14. NO LIABILITY UPON DISTRIBUTION OF SHARES. The liability of
the Company under this Agreement and any distribution of Common Stock made
hereunder is limited to the obligations set forth herein with respect to such
distribution and no term or provision of this Agreement shall be construed to
impose any liability on the Company or the Committee in favor of any person with
respect to any loss, cost or expense which the person may incur in connection
with or arising out of any transaction in connection with this Agreement.
SECTION 15. WITHHOLDING. The Optionee agrees that the Company may make
appropriate provision for tax withholding with respect to the transactions
contemplated by this Agreement.
SECTION 16. TENURE. The Optionee's right to continue to serve the
Company as an officer, director, employee or otherwise shall not be enlarged or
otherwise affected by the award of these Options.
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SECTION 17. CAPTIONS. The captions and section numbers appearing in
this Agreement are inserted only as a matter of convenience. They do not define,
limit, construe or describe the scope or intent of the provisions of this
Agreement.
SECTION 18. NUMBER. The use of the singular or plural herein shall not
be restrictive as to number and shall be interpreted in all cases as the context
shall require.
SECTION 19. GENDER. The use of the feminine, masculine or neuter
pronoun shall not be restrictive as to gender and shall be interpreted in all
cases as the context may require.
SECTION 20. INVESTMENT REPRESENTATION. Optionee hereby represents and
warrants that any Common Stock which he may acquire by virtue of the exercise of
the Option shall be acquired for investment purposes only and not with a view to
distribution or resale; provided, however, that this restriction shall become
inoperative in the event the Common Stock which are subject to the Option shall
be registered under the Securities Act of 1933, as amended, or in the event
there is presented to the Company evidence satisfactory to the Company to the
effect that the offer or sale of the Common Stock which were acquired upon
exercise of the Option may lawfully be made without registration under the
Federal Securities Act of 1933, as amended.
SECTION 21. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware and any
applicable federal law.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officer, and the Optionee has
hereunto set his hand, all as of the day and year first above written.
SIGNATURE BRANDS USA, INC.
("Company")
By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Chairman of the Board
XXXXX XXXX
("Optionee")
/s/ Xxxxx Xxxx
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Xxxxx Xxxx
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