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EXHIBIT 10.6
THE SHARES ISSUABLE PURSUANT TO THIS AGREEMENT ARE SUBJECT TO AN OPTION TO
REPURCHASE AND A RIGHT OF FIRST REFUSAL PROVIDED UNDER THE PROVISIONS OF THE
COMPANY'S 1996 STOCK OPTION PLAN AND THIS AGREEMENT ENTERED INTO PURSUANT
THERETO. A COPY OF SUCH PLAN IS AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY
AT ITS PRINCIPAL EXECUTIVE OFFICES.
INTERNATIONAL HOME FOODS, INC.
1996 STOCK OPTION PLAN
FORM OF
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR ELIGIBLE NON-EMPLOYEES
November 12, 1996
X. X. Xxxxxxxxx
0000 Xxxx Xxxx
Xxxxxx, Xxxxxxx 00000
Re: Grant of Stock Option
Dear Xx. Xxxxxxxxx:
The Board of Directors of International Home Foods, Inc. (the "Company")
has adopted the Company's 1996 Stock Option Plan (the "Plan") for certain
individuals, directors and key employees of the Company and its Related
Entities. A copy of the Plan is being furnished to you concurrently with the
execution of this Option Agreement and shall be deemed a part of this Option
Agreement as if fully set forth herein. Unless the context otherwise requires,
all terms defined in the Plan shall have the same meaning when used herein.
1. The Grant.
Subject to the conditions set forth below, the Company hereby grants to
you, effective as of November 12, 1996 (the "Grant Date"), as a matter of
separate inducement and not in lieu of any compensation for your services, the
right and option to purchase (the "Option"), in accordance with the terms and
conditions set forth herein and in the Plan, an aggregate of 100,000 shares of
Common Stock of the Company (the "Option Shares"), at the Exercise Price (as
hereinafter defined). As used herein, the term "Exercise Price" shall mean a
price equal to $1.00 per share, subject to the adjustments and limitations set
forth herein and in the Plan. The Option granted hereunder is intended to
constitute a Non-Qualified Option within the meaning of the Plan; however, you
should consult with your tax advisor concerning the proper reporting of any
federal or state tax liability that may arise as a result of the grant or
exercise of the Option.
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2. Exercise.
(a) For purposes of this Option Agreement, all of the Option
Shares shall be deemed "Vested Shares."
(b) Subject to the relevant provisions and limitations
contained herein and in the Plan, you may exercise the Option to purchase all
or a portion of the applicable number of Vested Shares at any time prior to the
termination of the Option pursuant to this Option Agreement. In no event shall
you be entitled to exercise the Option for a fraction of a Vested Share.
(c) The unexercised portion of the Option, if any, will
automatically, and without notice, terminate and become null and void upon the
expiration of ten (10) years from the Grant Date.
(d) Any exercise by you of the Option shall be in writing
addressed to the Secretary of the Company at its principal place of business (a
copy of the form of exercise to be used will be available upon written request
to the Secretary), and shall be accompanied by a certified or bank check
payable to the order of the Company in the full amount of the Exercise Price of
the shares so purchased, or in such other manner as described in the Plan and
approved by the Committee.
3. Termination of Relationship.
Upon the termination of your relationship with the Company or any
Related Entity, you may, until the earlier of (x) 30 days from the date of such
termination or (y) the expiration of the Option in accordance with its terms,
exercise the Option with respect to all or any part of the Vested Shares which
you were entitled to purchase immediately prior to such termination and,
thereafter, the Option shall, to the extent not previously exercised,
automatically terminate and become null and void, provided that:
(a) in the case of termination of your relationship with the
Company or any Related Entity due to death, your estate
(or any Person who acquired the right to exercise such
Option by bequest or inheritance or otherwise by reason of
your death) may, until the earlier of (x) 181st day after
the date of death or (y) the expiration of the Option in
accordance with its terms, exercise the Option with
respect to all or any part of the Vested Shares which you
were entitled to purchase immediately prior to the time of
your death;
(b) in the case of termination of your relationship with the
Company or any Related Entity due to Disability, you or
your legal representative may, until the earlier of (x)
the 181st day after the date your relationship was
terminated or (y) the expiration of the Option in
accordance with its terms, exercise the Option with
respect to all or any part of the Vested Shares which you
were entitled to purchase immediately prior to the time of
such termination; and
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(c) in the case of termination of your relationship with the
Company or any Related Entity (i) for Good Cause (as
determined by the Committee in its sole judgment in
accordance with the Plan and this Agreement), (ii) as a
result of your removal from office as a director of the
Company or of any Related Entity for cause by action of
the stockholders of the Company or such Related Entity in
accordance with the by-laws of the Company or such Related
Entity, as applicable, and the corporate law of the
jurisdiction of incorporation of the Company or such
Related Entity, or (iii) as a result of the voluntarily
termination by you of your service without the consent of
the Company or any Related Entity, then you shall
immediately forfeit your rights under the Option except as
to those Option Shares already purchased.
4. Transferability.
Except as provided in Section 6 hereof, the Option and any rights
or interests therein are not assignable or transferable by you except by will
or the laws of descent and distribution, and during your lifetime, the Option
shall be exercisable only by you or, in the event that a legal representative
has been appointed in connection with your Disability, such legal
representative. Any Option Shares received upon exercise of this Option are
subject to the Company's Right of First Refusal (as defined in the Plan).
To assure the enforceability of the Company's rights under this Section
4 in regard to the Right of First Refusal, each certificate or instrument
representing Common Stock or an Option held by you shall bear a conspicuous
legend in substantially the following form:
THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE PURSUANT TO THIS
AGREEMENT] ARE SUBJECT TO AN OPTION TO REPURCHASE PROVIDED UNDER THE
PROVISIONS OF THE COMPANY'S ROLLOVER STOCK OPTION PLAN AND A STOCK
OPTION AGREEMENT ENTERED INTO PURSUANT THERETO. A COPY OF SUCH OPTION
PLAN AND OPTION AGREEMENT ARE AVAILABLE UPON WRITTEN REQUEST TO THE
COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.
5. Registration.
The Company shall not in any event be obligated to file any registration
statement under the Securities Act or any applicable state securities laws to
permit exercise of the Option or to issue any Common Stock in violation of the
Securities Act or any applicable state securities laws. You (or in the event
of your death or, in the event a legal representative has been appointed in
connection with your Disability, the Person exercising the Option) shall, as a
condition to your right to exercise the Option, deliver to the Company an
agreement or certificate containing such representations, warranties and
covenants as the Company may deem necessary or appropriate to ensure that the
issuance of the Option Shares pursuant to such exercise is not required to be
registered under the Securities Act or any applicable state securities laws.
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Certificates for Option Shares, when issued, shall have substantially
the following legend, or statements of other applicable restrictions, endorsed
thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE,
SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL THE
HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE ISSUER
(WHICH, IN THE DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION
OF COUNSEL SATISFACTORY TO THE ISSUER') THAT SUCH OFFER, SALE,
PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT VIOLATE APPLICABLE
FEDERAL OR STATE LAWS.
The foregoing legend may not be required for Option Shares issued
pursuant to an effective registration statement under the Securities Act and in
accordance with applicable state securities laws.
6. Purchase Option.
(a) If (i) your relationship with the Company or a Related
Entity terminates for any reason at any time or (ii) a Change of Control
occurs, the Company and/or its designees) shall have the option (the "Purchase
Option") to purchase, and if the option is exercised, you (or your executor or
the administrator of your estate or the Person who acquired the right to
exercise the Option by bequest or inheritance in the event. of your death, or
your legal representative in the event of your incapacity (hereinafter,
collectively with such optionee, the "Grantor")) shall sell to the Company
and/or its assignee(s), all or any portion (at the Company's option) of the
Option Shares and/or the Option held by the Grantor (such Option Shares and
Option collectively being referred to as the "Purchasable Shares").
(b) The Company shall give notice in writing to the Grantor of
the exercise of the Purchase Option within one (1) year from the date of the
termination of your relationship or such Change of Control. Such notice shall
state the number of Purchasable Shares to be purchased and the determination of
the Board of Directors of the Fair Market Value per share of such Purchasable
Shares. If no notice is given within the time limit specified above, the
Purchase Option shall terminate.
(c) The purchase price to be paid for the Purchasable Shares
purchased pursuant to the Purchase Option shall be, in the case of any Option
Shares, the Fair Market Value per share times the number of shares being
purchased, and in the case of the Option, the Fair Market Value per share times
the number of Vested Shares subject to such Option which are being purchased,
less the applicable per share Option Exercise Price. The purchase price shall
be paid in cash. The closing of such purchase shall take place at the
Company's principal executive offices within ten (10) days after the purchase
price has been determined. At such closing, the Grantor shall deliver to the
purchasers) the certificates or instruments evidencing the Purchasable Shares
being purchased,
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duly endorsed (or accompanied by duly executed stock powers) and otherwise in
good form for delivery, against payment of the purchase price by check of the
purchaser(s). In the event that, notwithstanding the foregoing, the Grantor
shall have failed to obtain the release of any pledge or other encumbrance on
any Purchasable Shares by the scheduled closing date, at the option of the
purchasers) the closing shall nevertheless occur on such scheduled closing
date, with the cash purchase price being reduced to the extent of all unpaid
indebtedness for which such Purchasable Shares are then pledged or encumbered.
(d) To assure the enforceability of the Company's rights under
this Section 6, each certificate or instrument representing Option Shares
subject to this Option Agreement shall bear a conspicuous legend in
substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
OPTION TO REPURCHASE PROVIDED UNDER THE PROVISIONS OF THE
COMPANY'S 1996 STOCK OPTION PLAN AND A STOCK OPTION AGREEMENT
ENTERED INTO PURSUANT THERETO. A COPY OF SUCH OPTION PLAN AND
OPTION AGREEMENT ARE AVAILABLE UPON WRITTEN REQUEST TO THE
COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES."
(e) The Company's rights under this Section 6 shall terminate
upon the consummation of a Qualifying Public Offering (as defined in the Plan).
7. Withholding Taxes.
By acceptance hereof, you hereby (i) agree to reimburse the
Company or any Related Entity by which you are employed for any federal, state
or local taxes required by any government to be withheld or otherwise deducted
by such corporation in respect of your exercise of all or a portion of the
Option; (ii) authorize the Company or any Related Entity by which you are
employed to withhold from any cash compensation paid to you or on your behalf,
an amount sufficient to discharge any federal, state and local taxes imposed on
the Company, or the Related Entity by which you are employed, and which
otherwise has not been reimbursed by you, in respect of your exercise of all or
a portion of the Option; and (iii) agree that the Company may, in its
discretion, hold the stock certificate to which you are entitled upon exercise
of the Option as security for the payment of the aforementioned withholding tax
liability, until cash sufficient to pay that liability has been accumulated,
and may, in its discretion, effect such withholding by retaining shares
issuable upon the exercise of the Option having a Fair Market Value on the date
of exercise which is equal to the amount to be withheld.
8. Consent to Approved Sale.
If the Board and the holders of a majority of the Common Stock
then outstanding approve the Sale of the Company to an independent third party
(the "Approved Sale"), you shall consent to and raise no objections against the
Approved Sale, and if the Approved Sale is structured as a sale of capital
stock, you shall agree to sell all of your Option Shares and rights to acquire
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Option Shares on the terms and conditions approved by the Board of Directors
and the holders of a majority of the Common Stock then outstanding. You shall
take all necessary and desirable actions in connection with the consummation of
the Approved Sale. For purposes of this Section 10, an "independent third
party" is any person who does not own in excess of 5% of the Common Stock on a
fully-diluted basis, who is not controlling, controlled by or under common
control with any such 5% owner of the Common Stock and who is not the spouse,
ancestor, descendant (by birth or adoption) or descendent of a grandparent of
any such 5% owner of the Common Stock. If the Company or the holders of the
Company's securities enter into any negotiation or transaction for which Rule
506 (or any similar rule then in effect) promulgated pursuant to the Securities
Act may be available with respect to such negotiation or transaction (including
a merger, consolidation or other reorganization), you shall, at the request of
the Company, appoint a purchaser representative (as such term is defined in
Rule 501 promulgated pursuant to the Securities Act) reasonably acceptable to
the Company. If you appoint the purchaser representative designated by the
Company, the Company will pay the fees of such purchaser representative, but if
you decline to appoint the purchaser representative designated by the Company
you shall appoint another purchaser representative (reasonably acceptable to
the Company), and you shall be responsible for the fees of the purchaser
representative so appointed.
9. Adjustments. In the event that, by reason of any merger,
consolidation, combination, liquidation, reorganization, recapitalization,
stock dividend, stock split, split-up, split-off, combination of shares,
exchange of shares or other like change in capital structure of the Company
(collectively, a "Reorganization"), the Common Stock is substituted, combined,
or changed into any cash, property, or other securities, or the shares of
Common Stock are changed into a greater or lesser number of shares of Common
Stock, the number and/or kind of shares and/or interests subject to an Option
and the per share price or value thereof shall be appropriately adjusted by the
Committee to give appropriate effect to such Reorganization, such that the
Option shall thereafter be exercisable for such securities, cash, and/or other
property as would have been received in respect of the Option Shares subject to
the Option had the Option been exercised in full immediately prior to such
event. Any fractional shares or interests resulting from such adjustment shall
be eliminated.
10. Miscellaneous.
(a) This Option Agreement is subject to all the terms,
conditions, limitations and restrictions contained in the Plan. In the event
of any conflict or inconsistency between the terms hereof and the terms of the
Plan, the terms of the Plan shall be controlling.
(b) This Option Agreement is not a contract of employment and
the terms of your employment shall not be affected by, or construed to be
affected by, this Option Agreement, except to the extent specifically provided
herein. Nothing herein shall impose, or be construed as imposing, any
obligation (i) on the part of the Company or any Related Entity to continue
your employment, or (ii) on your part to remain in the employ of the Company or
any Related Entity.
(c) This Option Agreement may be amended as provided in
Section 19 of the Plan.
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Please indicate your acceptance of all the terms and conditions of the
Option and the Plan by signing and returning a copy of this Option Agreement.
Very truly yours,
INTERNATIONAL HOME FOODS, INC.
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Vice President
ACCEPTED:
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Signature of Optionee
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Name of Optionee (Please Print)
Date:
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