EXHIBIT 10.7
XXXXXX'X TRADING COMPANY, INC.
FORM OF
1999 STOCK OPTION AGREEMENT
THIS 1999 STOCK OPTION AGREEMENT (this "Agreement") is entered into as of
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___________ by and between Xxxxxx'x Trading Company, Inc., an Indiana
corporation (the "Company"), and _____________ ("Optionee") pursuant to the
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Xxxxxx'x Trading Company, Inc. 1999 Executive Stock Option Plan (the "Plan").
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All capitalized terms not otherwise defined herein shall have the meanings set
forth in the Plan.
R E C I T A L S
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A. Optionee is an employee of the Company and the Company considers it
desirable to give Optionee an added incentive to advance the Company's
interests.
B. The Committee has determined to grant Optionee the right to purchase
shares of common stock of the Company pursuant to the terms and conditions of
this Agreement and the Plan.
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, in consideration of the covenants hereinafter set forth,
the parties agree as follows:
1. Options; Number of Shares.
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(a) The Company hereby grants to Optionee the right to purchase (each an
"Option" and collectively, the "Options") up to _________ shares of Class A
common stock, no par value, of the Company (the "Common Stock" or the "Shares")
at the following prices per share (the "Purchase Price"):
(i) Options to purchase _______Shares at a price equal to
__________ dollars per Share; and
(ii) Options to purchase _______ Shares at a price equal to
__________ dollars per Share.
(b) The Options and the right to purchase all or any portion of the
Shares are subject to the terms and conditions stated in this Agreement and in
the Plan. Upon exercise of an Option and payment of the Purchase Price, Optionee
shall become a shareholder
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of the Company, with all rights and privileges of a shareholder of the Company
in respect of any Shares issuable upon such exercise. It is intended that the
Options will not qualify for treatment as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Exercise Criteria; Termination of Options.
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(a) Exercise Criteria. The Options shall become exercisable as set forth
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on Schedule A.
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(b) Termination. The Options and Optionee's right to exercise the
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Options, shall terminate on the expiration of seven (7) years from the date
hereof unless terminated earlier pursuant to Section 3 hereof or pursuant to the
Plan.
3. Effect of Termination of Employment or Death. If the Optionee's
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employment by the Company terminates, the Options and all other rights and
benefits under this Agreement terminate, except that the Optionee may, at any
time within the following periods after the Termination Date (as defined in
Section 8), exercise the Options to the extent the Options were exercisable on
the Termination Date and have not otherwise expired or do not otherwise expire
prior to the end of such periods:
(a) Termination of Optionee's employment or other relationship with the
Company by the Company (other than termination for cause): for a period of 90
days; provided that if Optionee dies within 90 days after his Termination Date,
such period shall be extended to 120 days;
(b) Voluntary resignation (other than in anticipation of or in
connection with a termination for cause): for a period of 90 days; provided that
if Optionee dies within 90 days after his Termination Date, such period shall be
extended to 120 days; or
(c) Optionee's death or disability (within the meaning of Section
22(e)(3) of the Code): for a period of 120 days.
In the case of a termination for cause (as determined in good faith by the Board
of Directors of the Company (the "Board")) or a voluntary resignation in
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anticipation of or in connection with a termination for cause, the Options shall
terminate immediately, in their entirety and shall not be exercisable in whole
or part thereafter.
4. Termination of Employment or Other Relationship. The termination for any
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reason of Optionee's employment or other relationship with the Company shall not
accelerate the vesting of the Options. The Options may only be exercised with
respect to that number of Shares which could have been exercised under the
Options had such Options been exercised by Optionee on the date of such
termination.
5. Death of Optionee: No Assignment. The rights of Optionee under this
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Agreement may not be assigned or transferred except by will, by the laws of
descent or distribution and may be exercised during the lifetime of Optionee
only by such Optionee; provided, however, that in the event of disability
(within the meaning of Section 22(e)(3) of the
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Code) of Optionee, a designee of Optionee (or the Optionee's legal
representative if Optionee has not designated anyone) may exercise the Options
on behalf of Optionee (provided the Options would have been exercisable by
Optionee) until the right to exercise the Options otherwise expires. Any attempt
to sell, pledge, assign, hypothecate, transfer or otherwise dispose of the
Options in contravention of this Agreement or the Plan shall be void. If
Optionee should die while Optionee is engaged in an employment relationship with
the Company or within 90 days after termination of such relationship, and
provided Optionee's rights hereunder shall have vested, in whole or in part,
pursuant to Section 2 hereof, Optionee's designee, legal representative, or
legatee, the successor trustee of Optionee's inter vivos trust or the person who
acquired the right to exercise the Options by reason of the death of Optionee
(individually, a "Successor") shall succeed to Optionee's rights under this
Agreement. After the death of Optionee, only a Successor may exercise the
Options.
6. Exercise of Options. No Option granted under this Agreement shall be
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exercisable until and except to the extent that it has vested. On or after the
vesting of the Options in accordance with Section 2 hereof and until termination
of the Options in accordance with this Agreement and the Plan, the Options may
be exercised by Optionee (or such other person specified in Section 5 hereof) to
the extent exercisable as determined under Section 2 hereof, upon delivery of
the following to the Company at its principal executive offices:
(a) a written notice of exercise which identifies this Agreement, the
type of Option to be exercised, and states the number of Shares to be purchased
(which shall be no less than 100 Shares);
(b) a check, cash or any combination thereof in the amount of the
aggregate Purchase Price (or payment of the aggregate Purchase Price in such
other form of lawful consideration as the Committee may approve from time to
time under the provisions of Section 7 of the Plan);
(c) a check or cash in the amount reasonably requested by the Company to
satisfy the Company's withholding obligations under federal, state or other
applicable tax laws with respect to the taxable income, if any, recognized by
Optionee in connection with the exercise, in whole or in part, of the Options
(unless the Company and Optionee shall have made other arrangements for
deductions or withholding from Optionee's wages, bonus or other income paid to
Optionee by the Company, provided, however, such arrangements must satisfy the
requirements of all applicable tax laws);
(d) a written representation and undertaking, in such form and substance
as the Company may require, that the Shares underlying the Option are being
acquired by Optionee for Optionee's personal account, for investment purposes
only, and not with a view to the distribution, resale or other disposition
thereof;
(e) a written representation and undertaking, in such form and substance
as the Company may require, setting forth the investment intent of Optionee, or
a Successor, as the case may be, and such other agreements, representations and
undertakings as described in the Plan; and
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(f) such further acts as may be necessary to register Optionee as a
shareholder of the Company.
7. Restrictions on Transfer of Shares.
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(a) Compliance with Securities Laws. Notwithstanding anything contained
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in this Agreement, Optionee may not sell, transfer, assign, pledge, hypothecate
or otherwise dispose of (collectively, "Transfer"), or enter into any swap,
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participation or other arrangement that transfers to another person, in whole or
in part, any of the economic consequences of ownership with respect to (a "Swap
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Transaction"), any of the Shares, or any right, title or interest therein,
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except in compliance with the Securities Act, applicable state securities laws
and this Agreement. Any purported Transfer or Transfers (including involuntary
Transfers initiated by operation of legal process) or Swap Transactions with
respect to any of the Shares or any right, title or interest therein, except in
strict compliance with the terms and conditions of this Agreement, shall be null
and void.
(b) Opinion of Counsel. Optionee agrees that it will not Transfer any
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Shares (other than in a Public Market Sale (as hereinafter defined)) prior to
delivery to the Company of an opinion of counsel in form and substance
reasonably satisfactory to the Company with respect to compliance with the
Securities Act.
(c) Transfers by Optionee.
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(i) Optionee may, at any time or times, Transfer any or all of the
Shares: (a) inter vivos to Optionee's spouse or issue, a trust for their
benefit, or pursuant to any will or testamentary trust; or (b) upon
Optionee's death, to any person in accordance with the laws of descent
and/or testamentary distribution (such persons described in clauses (a) and
(b) hereof are collectively referred to herein as "Permitted Transferees").
Notwithstanding the foregoing in this Section 7(c)(i), Shares shall not be
Transferred pursuant to this Section 7(c)(i) until the Permitted Transferee
executes a valid undertaking, in form and substance reasonably satisfactory
to the Company, to the effect that the Permitted Transferee and the Shares
so Transferred shall thereafter remain subject to all of the provisions of
this Agreement, as though the Permitted Transferee were a party to this
Agreement, bound in every respect in the same way as Optionee. Transfers
made in accordance with this Section 7(c)(i) shall not be subject to the
provisions of Section 8 of this Agreement.
(ii) Prior to the date that is five (5) years from the date hereof
(the "Permitted Transfer Date"), Optionee shall not Transfer any of his
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Shares or enter into any Swap Transaction with respect to any of his
Shares, other than a Transfer (i) to the Company, (ii) pursuant to and in
conformity with Section 7(c)(i) hereof, (iii) pursuant to and in conformity
with Section 10 or 11 hereof, or (iv) in a Public Market Sale. The term
"Public Market Sale" means any sale of Common Stock after the Initial
Public Offering which is made pursuant to Rule 144 promulgated under the
Securities Act or which is permitted by Rule 701 promulgated under the
Securities Act or which is made pursuant to a registration
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statement filed with and declared effective by the Securities and Exchange
Commission.
(iii) From and after the Permitted Transfer Date, Optionee may
Transfer all or any portion of his Shares, provided that (x) the transferee
executes a valid undertaking, in form and substance reasonably satisfactory
to the Company, to the effect that such transferee and the Shares so
Transferred shall thereafter remain subject to the provisions of Section 8,
9 and 10 of this Agreement and (y) such Transfer is subject to compliance
with Section 8 hereof.
8. Right of First Refusal.
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(a) Sales; Notice. Prior to any intended Transfer pursuant to Section
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7(c)(iii) hereof, Optionee shall first give at least thirty (30) days' advance
written notice (the "Notice") to the Company specifying (i) Optionee's bona fide
intention to sell such Shares; (ii) the name(s) and address(es) of the proposed
transferee(s); (iii) the number of Shares Optionee proposes to Transfer
(individually, an "Offered Share," and collectively, the "Offered Shares"); (iv)
the price for which Optionee proposes to Transfer each Offered Share (the
"Proposed Purchase Price"); (v) such evidence as the Company may reasonably
request to demonstrate the ability of the proposed transferee(s) to pay the
Proposed Purchase Price; and (vi) all other material terms and conditions of the
proposed transfer.
(b) Election by the Company. Within twenty (20) days after receipt of
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the Notice, the Company may elect to purchase any or all of the Offered Shares
at the price and on the terms and conditions set forth in the Notice by delivery
of written notice of such election to Optionee, specifying a day, which shall
not be more than twenty (20) days after such notice is delivered, on or before
which Optionee shall surrender (if Optionee has not already done so) the
certificate or certificates representing the Offered Shares with stock powers
duly endorsed in blank at the administrative office of the Company. Within
twenty (20) days after delivery of such notice to Optionee, the Company shall
deliver to Optionee a check, payable to Optionee or to such person as Optionee
shall request, in the amount equal to the product of the Proposed Purchase Price
multiplied by the number of Offered Shares (the "First Refusal Price") in
exchange for the Offered Shares. If Optionee fails to so surrender such
certificate or certificates on or before such date, from and after such date the
Offered Shares shall be deemed to be no longer outstanding, and Optionee shall
cease to be a Shareholder with respect to such Shares and shall have no rights
with respect thereto except only the right to receive payment of the First
Refusal Price, without interest, upon surrender of the certificate or
certificates therefor with stock powers duly endorsed in blank. Notwithstanding
the foregoing, if any Outstanding Amount (as defined in that certain Stock
Subscription Agreement between the Company and the Optionee dated October __,
1999) is owed to the Company by Optionee, the First Refusal Price shall be
reduced (to an amount not less than zero) by such Outstanding Amount, which
reduction shall be specified in reasonable detail in the Company's written
notice of election to purchase the Offered Shares. If the Company does not elect
to purchase all of Offered Shares, Optionee shall be entitled to Transfer the
balance of the Offered Shares to the transferee(s) named in the Notice at the
Proposed Purchase Price, or at a higher price, and on the terms and conditions
set forth in the Notice; provided, however, that such Transfer must be
consummated within ninety (90) days
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after the date of the Notice and any proposed Transfer after such ninety (90)
day period may be made only by again complying with the procedures set forth in
this Section.
(c) Termination on Initial Public Offering. This right of first refusal
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shall terminate upon an underwritten public offering of Common Stock by the
Company registered under the Securities Act resulting in gross proceeds to the
Company and selling shareholders, if applicable, in excess of $50 million and
the sale of newly issued Common Stock representing at least fifteen percent
(15%) of the outstanding Common Stock of the Company (an "Initial Public
Offering").
9. Repurchase Option Upon Termination.
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(a) Repurchase Option. Subject to the terms and conditions of this
Section 9, including the six-month holding period in clause (f) hereof, in the
event that Optionee's employment or other relationship with the Company
terminates for any reason (including, without limitation, by reason of
Optionee's death, disability, retirement, voluntary resignation or dismissal by
the Company, with or without cause), the Company shall have the option (the
"Repurchase Option") to purchase from Optionee all or any portion of the Shares
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acquired by Optionee pursuant to this Option Agreement for a period of twelve
(12) months after the effective date of such termination (the effective date of
termination is hereinafter referred to as the "Termination Date") (the
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"Repurchase Period").
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(b) Repurchase Price. The purchase price (the "Repurchase Price") for
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each Share to be purchased pursuant to the Repurchase Option shall equal (a) the
greater of the applicable exercise price of such Share and Book Value (as
defined herein) if the Termination Date occurs within the two (2) year period
commencing on the date hereof and (b) the greater of the applicable exercise
price of such Share and Fair Market Value (as defined herein) thereof
thereafter. The "Book Value" of a Share shall equal $10.00 per Share plus the
net income or minus the net loss per share from September 1, 1999 to the end of
the fiscal quarter immediately preceding the Termination Date, as determined by
the Board, acting in good faith and based upon the books and records of the
Company prepared in accordance with generally accepted accounting principles
consistently applied, which determination shall be final and binding. The "Fair
Market Value" of a Share shall be the fair market value of a Share as of the
Termination Date, as reasonably determined by the Board in good faith.
(c) Adjustments to Repurchase Price. The Repurchase Price for any Shares
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to be purchased pursuant to the Repurchase Option shall be increased or
decreased appropriately to reflect any distribution of stock or other securities
of the Company or any successor or assign of the Company which is made in
respect of, in exchange for or in substitution of the Shares by reason of any
split, reverse split, combination, recapitalization, reclassification, merger,
consolidation or otherwise.
(d) Repurchase Notice. The Repurchase Option shall be exercised by the
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Company by delivery to Optionee of a written notice (the "Repurchase Notice")
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(a) setting forth the Company's intent to exercise the Repurchase Option and
containing the total number of Shares to be sold to the Company pursuant to the
Repurchase Option, (b) mailed, via postage pre-paid registered or certified
United States mail, to the attention of or otherwise actually
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delivered to the Optionee at the Optionee's most recent address reflected in the
Company's payroll records (or to such other representative of the Optionee or
such other address as the Optionee may duly notice in writing to the Company),
and (c) delivered to the Optionee no earlier than six months after the
acquisition of the Shares by the Optionee and no later than the last day of the
Repurchase Period.
(e) Closing. The closing of any repurchase under this Section 9 shall be
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at a date to be specified by the Company, such date to be no later than the
later to occur of (i) 30 days after the date of the Repurchase Notice and (ii)
the last day of the Repurchase Period. The Repurchase Price shall be paid at the
closing in the form of a check payable to the Optionee, in the amount equal to
the Repurchase Price, against surrender by the Optionee of a stock certificate
or certificates evidencing the Shares with stock powers duly endorsed in blank.
If Optionee fails to so surrender such certificate or certificates on or before
such date, from and after such date the Shares which the Company elected to
repurchase shall be deemed to be no longer outstanding, and Optionee shall cease
to be a stockholder with respect to such Shares and shall have no rights with
respect thereto except only the right to receive payment of the Repurchase
Price, without interest, upon surrender of the certificate or certificates
therefor with stock powers duly endorsed in blank. Notwithstanding the foregoing
in this Section 9, if any Outstanding Amount (as defined in the Stock
Subscription Agreement between Company and Optionee dated as of October __,
1999) is owed to the Company by Optionee, the Repurchase Price for the number of
the Shares to be repurchased hereunder shall be reduced by such Outstanding
Amount, which reduction shall be specified in reasonable detail in the Company's
written notice of election to exercise the Repurchase Option. If the Outstanding
Amount exceeds the Repurchase Price for the number of the Shares to be
repurchased, Optionee shall remain obligated and liable to the Company for the
unpaid balance thereof.
(f) Required Holding Period. This Repurchase Option applies only to
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Shares owned by the Optionee for at least six months after the date the Shares
were acquired upon exercise of the Option.
(g) Termination on Initial Public Offering. This Repurchase Option shall
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terminate upon an Initial Public Offering.
10. Obligation to Sell Securities.
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(a) Notice of Sale. If FS Equity Partners IV, L.P., a Delaware limited
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partnership, ("FS Equity") finds a third-party buyer (the "Third Party Buyer")
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for all shares of Common Stock held by it (whether such sale is by way of
purchase, exchange, merger or other form of transaction), upon the request of FS
Equity, Optionee shall sell all of Optionee's Shares for the same per share
consideration (which may be less than the Purchase Price per share paid by
Optionee), and otherwise pursuant to the terms and conditions applicable to FS
Equity for the sale of its shares of Common Stock. FS Equity shall send Optionee
a written notice ("Sale Notice") of the exercise of its rights under this
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Section 10(a).
(b) Closing of Sale. Optionee agrees to timely take such actions as FS
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Equity may reasonably request in connection with the approval of the
consummation of such sale, transfer, reorganization, exchange, merger,
combination or other form of transaction,
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including voting as a stockholder to approve any such sale, transfer,
reorganization, exchange, merger, combination or other form of transaction and
waiving any appraisal rights that Optionee may have in connection therewith.
Without limiting the generality of the foregoing, within 30 days of Optionee's
receipt of the Sale Notice, Optionee shall deliver to FS Equity, certificates
representing Optionee's Shares to be sold pursuant to this Section 10 together
with stock powers duly endorsed in blank. In the event that Optionee fails to
deliver such certificates, Company shall cause the books and records of Company
to show that Optionee's Shares are bound by the provisions of this Section 10
and that such Shares shall be transferred only to the Third Party Buyer upon
surrender for transfer by Optionee. Optionee hereby grants to FS Equity an
irrevocable proxy to vote Optionee's Shares and to exercise all the rights,
powers, privileges and remedies to which a holder of such Shares would be
entitled, which proxy shall be effective, automatically and without the
necessity of any action (including any transfer of any such Shares on the
records books of the Company) by any other person, upon the failure of Optionee
to deliver any of his Shares pursuant to this Section 10 and which proxy shall
terminate only upon consummation of the sale of such Shares or 120 days after
the Sale Notice is given (or such longer period as may be necessary to complete
any applicable regulatory approval process in connection with such sale) if FS
Equity has not completed the sale of such Shares in accordance herewith.
(c) Termination Upon Initial Public Offering. The rights of FS Equity
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under this Section 10 shall terminate upon an Initial Public Offering.
11. Tag Along Rights. If FS Equity finds a third-party buyer (other than a
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buyer that is an investment fund or partnership affiliated with FS Equity or a
general or limited partner of FS Equity (each a "FS Permitted Transferee")), for
all or part of the shares of Common Stock held by FS Equity (whether such sale
is by way of purchase, exchange, merger or other form of transaction), the
Optionee shall have the right (a "Tag Along Right") to sell, on the terms set
forth in a written notice (the "Offering Notice") delivered by FS Equity to the
Optionee describing the terms of the proposed sale (including the minimum sale
price to the shares of Common Stock that FS Equity plans to sell), that amount
of the Shares Optionee then owns which constitutes the same percentage of his
Shares as the percentage of Common Stock sold by FS Equity after giving effect
to the exercise of the Tag Along Right and all other tag along rights. Each such
right shall be exercisable by delivering written notice to FS Equity within 15
days after receipt of the Offering Notice. Failure to exercise such right within
such 15-day period shall be regarded as a waiver of such rights. FS Equity shall
have 180 days from the expiration of such 15-day period to consummate the
proposed Transfer at a price no greater than the price set forth in the Offering
Notice and on terms and conditions no more favorable to FS Equity than those
stated in the Offering Notice. Any Shares that continue to be held by FS Equity
after such 180-day period shall again be subject to the provisions of this
Section 11. The obligations of FS Equity under this Section 11 shall terminate
upon an Initial Public Offering.
12. Board of Directors.
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(a) Composition of Board. Subject to Section 12(d), The Limited, Inc.,
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a Delaware corporation ("The Limited") shall be entitled, but not required, to
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nominate two members (the "Limited Nominees") of the Board. Subject to Section
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12(d), FS Equity shall be entitled, but not required, to nominate four members
(the "FS Nominees") of the Board. The
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seventh member of the Board shall at all times be the then current Chief
Executive Officer of the Company. The eighth member of the Board shall at all
times be the chairman of the Board and the Purchaser agrees that, at Closing,
the chairman of the Board shall be Xxxxxx Xxxxxxxx.
(b) Voting of Shares.
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(i) Purchaser agrees to vote or cause to be voted all of his Shares at
any regular or special meeting of the stockholders of the Company called for the
purpose of filling positions on the Board, or in any written consent executed in
lieu of such a meeting of stockholders, and agrees to take or cause to be taken
all actions otherwise necessary, to ensure the election to the Board of the
Limited Nominees and the FS Nominees and the other directors as required by
Section 12(a).
(ii) Purchaser hereby agrees to use his best efforts to call, or cause
the appropriate officers and directors of the Company to call, a special meeting
of stockholders of the Company, and Purchaser hereby agrees to vote or cause to
be voted all of his Shares for, or to take or cause to be taken, all actions by
written consent in lieu of any such meeting necessary to cause, the removal
(with or without Cause) of (i) any Limited Nominee if The Limited requests such
director's removal for any reason, and (ii) any FS Nominee if FS Equity requests
such director's removal for any reason.
(c) Removal of Nominees. Except as provided in Section 12(b)(ii),
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Purchaser hereby agrees that, he will not vote in favor of the removal of any
Limited Nominee or FS Nominee unless such removal shall be for Cause. For the
purposes of this Section 8(c), "Cause" shall mean the willful and continued
failure by a director substantially to perform his duties as a director of the
Company, the willful engaging by a director in conduct which is demonstrably and
materially injurious to the Company, or the director's conviction of any crime
constituting a felony which involves moral turpitude.
(d) Reduction in Limited Nominees and FS Nominees. Notwithstanding the
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foregoing (i) at such time as The Limited ceases to own Shares representing more
than 50% of the Shares held by it on August 31, 1999, The Limited shall be
entitled to designate no more than 1 member of the Board, (ii) at such time as
FS Equity ceases to own Shares representing more than 75% of the Shares held by
it on August 31, 1999, FS Equity shall be entitled to designate no more than 3
members of the Board, (iii) at such time as FS Equity ceases to own Shares
representing more than 50% of the Shares held by it on August 31, 1999, FS
Equity shall be entitled to designate no more than 2 members of the Board, (iv)
at such time as FS Equity ceases to own Shares representing more than 25% of the
Shares held by it as a group on August 31, 1999, FS Equity shall be entitled to
designate no more than 1 member of the Board and (v) at such time as The Limited
or FS Equity shall own less than 5% of the Shares, such stockholder's right to
designate members of the Board shall terminate.
13. Representations and Warranties of Optionee.
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(a) Optionee is acquiring the Options and, if and when he exercises any
Option, will acquire the Shares solely for investment for Optionee's own account
and not with a view to, or for resale in connection with, the distribution or
other disposition thereof
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except in compliance with this Agreement and as permitted by law, including
without limitation, the Securities Act. Optionee does not have any present
intent to resell or distribute all or any part of his Options in violation of
the Securities Act.
(b) Optionee has been advised that the Company may issue Shares upon the
exercise of the Options without registering such Shares under the Securities Act
on the basis on certain exemptions from such registration requirements and that
accordingly, Optionee's exercise of the Options may be expressly conditioned
upon Optionee's delivery to the Company of such representations and undertakings
as the Company may reasonably require in order to secure the availability of
such exemptions, including a representation as to Optionee's investment intent.
Optionee also acknowledges that such Shares may not be sold or otherwise
disposed of unless registered thereunder or an exemption from registration is
available and that accordingly it may be required to bear the economic risk of
the investment in the Shares for an indefinite period of time. Optionee also
understands that the Company does not have any intention of registering the
Shares under the Securities Act or of supplying the information which may be
necessary to enable Optionee to sell the Shares pursuant to Rule 144 under the
Securities Act.
(c) Optionee (A) has received and reviewed a Disclosure Statement from
the Company relating to his investment in the Options and, if and when he
exercises any Option, his investment in the Shares, (B) by virtue of such
Optionee's employment relationship with the Company is generally knowledgeable
regarding the business of the Company and (C) has been given the opportunity to
obtain any additional information or documents and to ask questions and receive
answers about such documents, the Company and the business and prospects of the
Company as he deems necessary to evaluate the merits and risks related to his
investment and no representations concerning such matters or any other matters
relating to such investment have been made to Optionee except as set forth in
this Agreement. Optionee has consulted his or her own attorney, accountant or
investment advisor with respect to the investment contemplated hereby and its
suitability for Optionee, including the tax and other economic considerations
related to the investment.
(d) This Agreement, when signed by or on behalf of Optionee on the
signature page hereof, shall be validly executed and delivered on behalf of
Optionee and shall be valid, binding and enforceable against Optionee in
accordance with its terms.
14. No Rights as a Stockholder. Neither the Optionee nor any other person
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entitled to exercise any Option shall have any of the rights or privileges of a
stockholder of the Company as to any shares of Common Stock until the issuance
and delivery to him or her of a certificate evidencing the shares registered in
his or her name. No adjustment will be made for dividends or other rights as to
a stockholder for which a record date is prior to such date of delivery.
15. Limitation of Company's Liability for Nonissuance. Inability of the
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Company to obtain, from any regulatory body having jurisdiction, authority
reasonably deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any Shares hereunder and under the Plan shall relieve the
Company of any liability in respect of the
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nonissuance or sale of such Shares as to which such requisite authority shall
not have been obtained.
16. The Plan. The Options and all rights of Optionee thereunder are subject
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to, and the Optionee agrees to be bound by, all of the terms and conditions of
the provisions of the Plan. Unless otherwise expressly provided in these terms
and conditions, provisions of the Plan that confer discretionary authority on
the Committee do not (and shall not be deemed to) create any additional rights
in the Optionee not expressly set forth in the Optionee's Option Agreement or in
a written amendment thereto. If there is any conflict or inconsistency between
the terms and conditions of this Option Agreement and of the Plan, the terms and
conditions of the Plan shall govern. The Optionee acknowledges receipt of a
complete copy of the Plan and agrees to be bound by its terms.
17. Miscellaneous.
--------------
(a) Legends on Certificates. Optionee hereby acknowledges that federal
securities laws and the securities laws of the state in which Optionee resides
or works may require the placement of certain restrictive legends upon the
Shares issued upon exercise of the Options, and the Optionee hereby consents to
the placing of any such legends upon certificates evidencing the Shares as the
Company, or its counsel, may reasonably deem necessary; provided, however, that
any such legend or legends shall be removed when no longer applicable. Any and
all certificates now or hereafter issued evidencing the Shares shall have
endorsed upon them a legend substantially as follows:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
UPON TRANSFER AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT IN ACCORDANCE WITH THE TERMS
AND CONDITIONS OF THAT CERTAIN STOCK SUBSCRIPTION AGREEMENT DATED AS OF
_________, BY AND BETWEEN XXXXXX'X TRADING COMPANY, INC., AN INDIANA
CORPORATION, AND THE ORIGINAL OPTIONEE HEREOF COPIES OF WHICH AGREEMENT ARE
ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF XXXXXX'X TRADING COMPANY,
INC."
Such certificates shall also bear such legends and shall be subject to such
restrictions on transfer as may be necessary to comply with all applicable
federal and state securities laws and regulations.
(b) Further Assurances. Each party hereto agrees to perform any further
-------------------
acts and execute and deliver any documents which may be reasonably necessary to
carry out the intent of this Agreement.
(c) Notices. Except as otherwise provided herein, all notices, requests,
--------
demands and other communications under this Agreement shall be in writing, and
if by telegram or telecopy, shall be
11
deemed to have been validly served, given or delivered when sent, or if by
personal delivery or messenger or courier service, or by registered or certified
mail, shall be deemed to have been validly served, given or delivered upon
actual delivery, at the following addresses, telephone and facsimile numbers (or
such other address(es), telephone and facsimile numbers a party may designate
for itself by like notice):
If to the Company:
Xxxxxx'x Trading Company, Inc.
0000 X. Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Chief Executive Officer
Telecopy: (000) 000-0000
If to Optionee:
c/x Xxxxxx'x Trading Company, Inc.
0000 X. Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
With a copy to:
Ice Xxxxxx Xxxxxxx & Xxxx
Xxx Xxxxxxxx Xxxxxx
Xxx 00000
Xxxxxxxxxxxx, XX 46282
Attn: Xxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
(d) Amendments. This Agreement may be amended only by a written
-----------
agreement executed by both of the parties hereto and by FS Equity.
(e) Governing-Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of New York.
(f) Disputes. In the event of any dispute among the parties arising out
---------
of this Agreement, the prevailing party shall be entitled to recover from the
nonprevailing party the reasonable expenses of the prevailing party including,
without limitation, reasonable attorneys' fees.
(g) Entire Agreement. This Agreement constitutes the entire agreement
-----------------
and understanding among the parties pertaining to the subject matter hereof and
supersedes any and all prior agreements, whether written or oral, relating
hereto.
(h) Recapitalizations or Exchanges Affecting the Company's Capital. The
---------------------------------------------------------------
provisions of this Agreement shall apply to any and all stock or other
securities of the Company or any successor or assign of the Company, which may
be issued in respect of, in exchange for or in substitution of, the Shares by
reason of any split, reverse split, recapitalization, reclassification,
combination, merger, consolidation or otherwise, and such
12
Shares or other securities shall be encompassed within the term "Shares" for
purposes of this Agreement and the Pledge Agreement.
(i) No Rights as an Employee. Nothing in this Agreement shall give
-------------------------
Optionee any rights to continuous employment or affect in any manner whatsoever
the rights of the Company to terminate Optionee's employment for any reason,
with or without cause, subject to the terms and conditions of any employment
agreement to which Optionee may be a party.
(j) Disclosure. The Company shall have no duty or obligation to
-----------
affirmatively disclose to Optionee, and Optionee shall have no right to be
advised of, any material information regarding the Company at any time prior to,
upon or in connection with the Company's repurchase of the Shares under this
Agreement at the cessation or termination of Optionee's employment with the
Company.
(k) Successors and Assigns. The Company may assign with absolute
-----------------------
discretion any or all of its rights and/or obligations and/or delegate any of
its duties under this Agreement to any of its affiliates, successors and/or
assigns and this Agreement shall inure to the benefit of, and be binding upon,
such respective affiliates, successors and/or assigns of the Company in the same
manner and to the same extent as if such affiliates, successors and/or assigns
were original parties hereto. Without limiting the foregoing, the Company may
assign the right of first refusal and/or the Repurchase Option provided for in
Section 8 and Section 9 of this Agreement, respectively, to any of its
affiliates, successors and/or assigns. FS Equity may assign its rights under
Section 10 to any FS Permitted Transferee or to an optionee of shares of Common
Stock then owned by FS equity. Except as expressly provided in Section 7(c)
hereof, Optionee may not assign any or all of his rights and/or obligations
and/or delegate any or all his duties under this Agreement without the prior
written consent of the Company and FS Equity. Upon an assignment of any or all
of Optionee's rights and/or obligations and/or a delegation of any or all of his
duties under this Agreement in accordance with the terms of this Agreement, this
Agreement shall, if and to the extent set forth herein, inure to the benefit of,
and be binding upon, Optionee's respective affiliates, successors and/or assigns
in the same manner and to the same extent as if such affiliates, successors
and/or assigns were original parties hereto.
(l) Headings. Introductory headings at the beginning of each section and
---------
subsection of this Agreement are solely for the convenience of the parties and
shall not be deemed to be a limitation upon or description of the contents of
any such section and subsection of this Agreement.
(m) Counterparts. This Agreement may be executed in two counterparts,
-------------
each of which shall be deemed an original and both of which, when taken
together, shall constitute one and the same agreement.
13
IN WITNESS WHEREOF, the Company and Optionee have executed this
Agreement as of the date first above written.
THE COMPANY:
Xxxxxx'x Trading Company, Inc.
an Indiana corporation
--------------------------------
OPTIONEE:
--------------------------------
14
SCHEDULE A
OPTION VESTING SCHEDULE
-----------------------
Vesting Schedule: % Vesting Dates of Vesting
--------- ----------------
