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EXHIBIT 10.18
FORM OF STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement"), dated as of March __,
1997, by and between Intrepid Food Holdings, Inc., a Delaware corporation (the
"Company"), and the individual named as the Holder on the signature page hereof
(the "Holder").
1. Background. On March ____, 1997, the Company reserved certain shares
of Common Stock of the Company, par value $0.001 per share (the "Common Stock"),
for issuance to employees, officers and directors of, and consultants to, the
Company pursuant to the 1997 Stock Option Plan of Intrepid Food Holdings, Inc.
(the "Plan"), which has been adopted and approved by the Board of Directors of
the Company (the "Board"). This Agreement (a) is being entered into as of the
date hereof (the "Date of Grant") and (b) documents the relative rights,
privileges, powers, duties, responsibilities and obligations of the parties
hereto with respect to the stock option which the Company granted to the Holder
pursuant to the Plan as of the Date of Grant (the "Option"). The Option is
issued, and this Agreement is entered into, in accordance with the terms of the
Plan and the provisions of the Plan, including, but not limited to, Sections 13,
14, 15, 16, 17, 18, 19 and 20, are hereby incorporated in this Agreement by
reference.
2. Definitions. In addition to other terms defined herein, when used
herein, the following capitalized terms shall have the following meanings:
"Approved Sale" means the sale of the Company to a third party
in an arm's-length transaction, whether by merger, consolidation, sale of all or
substantially all of its assets or sale of all or substantially all of the
capital stock of the Company.
"Cause" means (a) the Holder's commission of fraud, theft,
embezzlement or similar malfeasance or any felony, (b) the Holder's breach of
Section 6 of this Agreement, and (c) termination of the Holder's employment by
the Board for failure to perform the Holder's duties in a satisfactory manner.
"Common Stock" has the meaning set forth in Section 1 hereof.
"Date of Grant" has the meaning set forth in Section 1 hereof.
"Employment Date" means the date on which the Holder commenced
employment with the Company.
"Exercise Price" has the meaning set forth in Section 3.1
hereof.
"Fundamental Change" means (a) a sale or transfer of all or
substantially all the assets of the Company on a consolidated basis in any
transaction or series of related transactions (other than sales in the ordinary
course of business), or (b) any merger, consolidation or reorganization to which
the Company is a party, except for a merger, consolidation or reorganization in
which, after giving effect to such merger, consolidation or reorganization, the
holders of the Company's outstanding capital stock (on a fully-diluted basis)
immediately prior to the merger, consolidation or reorganization will own
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immediately following the merger, consolidation or reorganization the
outstanding capital stock (on a fully diluted basis) having a majority of the
ordinary voting power (under ordinary circumstances) to elect the board of
directors of the surviving or resulting corporation.
"Option" has the meaning set forth in Section 1 hereof.
"Option Shares" means ________________ shares of Common Stock,
subject to adjustment as set forth in Section 3.7 hereof.
"Parent" means any corporation directly or indirectly owning
shares of capital stock entitling such corporation to elect a majority of the
members of the board of directors of the Company.
"Private Placement" means the closing of the sale of debt or
equity securities of the Company to one or more investors other than pursuant to
a registration statement declared effective under the Securities Act.
"Public Offering" means a registered public offering of the
Company's capital stock pursuant to a registration statement declared effective
by the Securities and Exchange Commission pursuant to the Securities Act.
"Purchased Option Shares" has the meaning set forth in Section
3.2 hereof.
"Representative" means the executor(s) or administrator(s) of
the Holder's estate or, if the Holder is incompetent, the Holder's guardian(s).
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal law then in force.
"Stock Sale" means any sale of outstanding shares of the
capital stock of the Company by the holders thereof if after giving effect to
such sale the Company's stockholders (on a fully diluted basis) prior to such
sale do not own immediately following such sale outstanding capital stock of the
Company (on a fully diluted basis) having the voting power (under ordinary
circumstances) to elect a majority of the Board.
"Subsidiary" means any corporation of which the Company or its
Parent, if any, or another Subsidiary owns stock entitling it (or any
combination of them) to elect a majority of the members of the board of
directors of such corporation.
"Unpurchased Option Shares" means all Option Shares (whether
or not available for purchase by the Holder pursuant to Section 3.3) which have
not yet been purchased pursuant to this Agreement.
3. Terms of Option.
3.1 Grant of the Option. Upon the terms and conditions
hereinafter set forth, the Company hereby grants to the Holder an option to
purchase the Option Shares at a price of per share, subject to
adjustment as set forth in Section 3.7 hereof (the "Exercise Price").
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3.2 Procedures for Exercise. Subject to the Option becoming
vested and exercisable pursuant to Section 3.3, the Holder may exercise the
Option in whole or in part at any time prior to the earlier of (a) 5:00 p.m.
(Chicago time) on ___________, 2004 (the "Expiration Date") and (b) the Option's
earlier termination upon the terms set forth herein. In order to exercise the
Option, the Holder shall give to the Company a written notice specifying the
number of Option Shares to be purchased, accompanied by payment in full of the
entire Exercise Price for such Option Shares in cash or certified check payable
to the order of the Company; provided, however, that the Company may, in its
sole discretion, permit the Holder to pay all or part of the Exercise Price (i)
in one or more future installments pursuant to an interest-bearing promissory
note of the Holder containing such terms as the Board, or an authorized
committee thereof, may approve, (ii) by delivering to the Company for
cancellation shares of Common Stock owned by the Holder at the time of such
exercise having a fair market value, determined by the Board, equal to the
aggregate exercise price of the Options being exercised, and/or (iii) by
cancellation of outstanding options of the Holder exercisable at the time of
such exercise or withholding shares of Common Stock issuable to the Holder upon
exercise of Options exercisable at the time of such exercise, which options or
shares have a fair market value, net of the applicable exercise price,
determined by the Board. Upon exercise of the Option and payment of the entire
Exercise Price for the shares of Common Stock being purchased as provided in the
preceding sentence, the Company will prepare, execute and deliver to the Holder
a stock certificate ("Stock Certificate") issued in the name of the Holder
representing the number of Option Shares purchased hereunder (the "Purchased
Option Shares").
3.3 Vesting Schedule. The Option shall become vested and
exercisable for one-third of the Option Shares on the first anniversary of the
Employment Date. Thereafter, the Option shall become vested and exercisable for
an additional one-third of the Option Shares on each of the next two
anniversaries of the Employment Date (and to the extent the Option has not
become vested and exercisable as to any Option Shares on the third anniversary
of the Employment Date, the Option shall become vested and exercisable as to
such Option Shares on such anniversary). Notwithstanding the foregoing, if a
Fundamental Change or Stock Sale occurs prior to the Option becoming vested and
exercisable for all of the Option Shares, the Option shall become vested and
exercisable for all remaining Option Shares immediately prior to the
consummation of such Fundamental Change or Stock Sale, as the case may be.
3.4 Fractional Shares. Fractional shares will not be issued
upon the exercise of the Option but in any case where the Holder would, except
for the provisions of this Section 3.4, be entitled under the terms of this
Agreement to receive a fractional share upon the complete exercise of the
Option, the Company will, upon the exercise of the Option for the largest number
of whole shares then called for, pay a sum in cash equal to the excess of the
value of such fractional share (determined in such reasonable manner and in good
faith by the Board or an authorized committee thereof) over the proportional
part of the Exercise Price represented by such fractional share.
3.5 Termination Events. (a) If the Holder's employment with
the Company terminates while the Option is outstanding and unexercised, in whole
or in part:
(i) if such termination occurs for any reason on or prior to
the first anniversary of the Employment Date, or if such termination occurs at
any time as a result of the termination by the Company for Cause, the Option
shall terminate and cease to be exercisable upon the date of such termination;
and
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(ii) if such termination occurs after the first anniversary of
the Employment Date other than as a result of termination by the Company for
Cause, the Option shall immediately terminate with respect to any Option Shares
which have not yet become vested and exercisable pursuant to Section 3.3. With
respect to Option Shares which have become vested and exercisable pursuant to
Section 3.3 and which do not otherwise terminate and cease to be exercisable
pursuant to this Section 3.5, the Option shall terminate and cease to be
exercisable for all such Option Shares (A) on the earlier of (1) six months
after the date of such termination of employment and (2) the Expiration Date, if
such termination of employment occurs other than as a result of the voluntary
termination of employment by the Holder, and (B) on the earlier of (1) thirty
(30) days after the date of such termination of employment and (2) the
Expiration Date, if such termination of employment occurs as a result of the
voluntary termination of employment by the Holder.
(b) The Company shall use its reasonable best efforts to give
notice to the Holder not less than fifteen (15) days prior to the consummation
of a Fundamental Change or a Stock Sale. Upon the consummation of a Fundamental
Change or Stock Sale, the Option shall terminate for all Unpurchased Option
Shares.
(c) In the event of the dissolution, liquidation or winding-up
of the Company, whether voluntary or involuntary, the Option shall terminate for
all Unpurchased Option Shares immediately prior to such dissolution, liquidation
or winding-up.
(d) Notwithstanding subparagraphs (a), (b), or (c) above, if
the Holder violates Section 6, the Option shall terminate and cease to be
exercisable as of and after the time of such violation.
3.6 Certain Rules Concerning Employment. For purposes of this
Agreement, (a) employment of the Holder by any Parent or Subsidiary thereof
shall be deemed employment by the Company, (b) a transfer of the Holder's
employment, without any intervening period, from the Company to a Parent or a
Subsidiary thereof or vice versa, from one such Subsidiary to another, or from
such Parent to such a Subsidiary or vice versa, shall not be deemed a
termination of the Holder's employment, and (c) if the Holder is granted a leave
of absence by the Board or an authorized committee thereof, the Holder shall be
deemed to have remained in the employ of the Company during such leave of
absence. Nothing contained in the Plan or this Agreement shall confer upon the
Holder any right with respect to the continuation of the Holder's employment by
or relationship with the Company, a Parent or any Subsidiary or interfere in any
way with the right of the Company, a Parent or any Subsidiary at any time to
terminate such employment or relationship or to increase or decrease
compensation of the Holder.
3.7 Antidilution Provisions. In the event of any stock
dividend, stock split or combination of the Common Stock, the number of shares
that are subject to the Option and the Exercise Price may be proportionately and
appropriately adjusted, without any change in the aggregate Exercise Price to be
paid for all Option Shares upon full exercise of the Option. Any adjustments
under this Section 3.7 will be made by the Board, whose determination as to what
adjustments, if any, will be made and the extent thereof will be final, binding
and conclusive.
4. Representations of the Holder. The Holder represents and warrants to
the Company as follows:
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(a) the Holder will acquire the Option Shares, to the extent
that the Option becomes vested and exercisable pursuant to the terms hereof and
the Holder exercises the Option in whole or in part, solely for investment for
the Holder's own account and not with a view to the resale or distribution of
all or any part thereof;
(b) the Holder understands that (i) the Holder may purchase
the Option Shares only to the extent that the Option becomes vested and
exercisable pursuant to Section 3.3 hereof, (ii) it is possible that the Option
will not become exercisable for any of the Option Shares, (iii) none of the
Company, the Parent or any Subsidiary is obligated to continue the Holder's
employment, and (iv) none of the Option Shares have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and the Holder may
have to hold the Option Shares, to the extent they become Purchased Option
Shares hereunder, for an indefinite period unless the offer and sale thereof is
subsequently registered under the Securities Act (and the Company is under no
obligation to so register any Purchased Option Shares) or an exemption is
available therefrom;
(c) the Holder's permanent residence is at the address
specified on the signature page hereof; and
(d) the issuance of the Option satisfies any obligation that
the Company's Subsidiary, Health Valley Company, may have to issue options or
other rights to the Holder.
5. Representations of the Company. The Company represents and warrants
to the Holder that (a) this Agreement has been duly authorized, executed, and
delivered by the Company, (b) the Company has the requisite power and authority
to issue the Option Shares and to perform its obligations under this Agreement,
and (c) the execution, delivery, and performance of this Agreement by the
Company do not and will not violate or result in a default under the Company's
certificate of incorporation or by-laws or any agreement or instrument to which
the Company is a party or by which it or any of its property is bound.
6. Confidential Information. The Holder shall not, without the prior
written consent of the Company (or the Parent or any Subsidiary thereof), except
as may be required in connection with any judicial or administrative proceeding
or inquiry, disclose to any person or entity, other than an officer or director
of the Company (or the Parent or any Subsidiary thereof) or a person or entity
to whom disclosure is reasonably necessary or appropriate in connection with the
performance by the Holder of the Holder's duties as an employee of the Company
(or the Parent or any Subsidiary thereof), any confidential information obtained
by the Holder while in the employ of, or providing services for, the Company (or
the Parent or any Subsidiary thereof) (or any predecessor of any such entity)
with respect to its business or assets, including, but not limited to,
confidential information relating to the properties, accounts, books, records,
suppliers, trade secrets, and contracts of the Company (or the Parent or any
Subsidiary thereof) (or any predecessor of any such entity); provided, however,
that confidential information shall not include any information known or
available to the public (other than as a result of unauthorized disclosure by
the Holder).
7. Sale of the Company. If the Board of Directors of the Company and a
majority of the shares of Common Stock then outstanding approve an Approved
Sale, the Holder will consent to and raise no objections to the Approved Sale,
and (a) if the Approved Sale is structured as a sale of stock, the Holder will
agree to sell all of his or her Purchased Option Shares on the terms and
conditions approved by the holders of a majority of the shares of Common Stock
then outstanding, (b) if the Approved Sale
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is structured as a merger or consolidation, the Holder will vote in favor
thereof and will not exercise any dissenters' rights of appraisal he or she may
have under applicable law, and (c) if the Approved Sale is structured as a sale
of all or substantially all of the assets of the Company and a subsequent
dissolution and liquidation of the Company, the Holder will vote in favor
thereof and will vote in favor of the subsequent dissolution and liquidation of
the Company. The Holder will take all necessary actions in connection with the
consummation of the Approved Sale as are reasonably requested by the Company.
The provisions of this Section 7 are applicable to the Holder only so long as
the consideration to be paid with respect to each Purchased Option Share in the
Approved Sale is the same for each share of Common Stock of the Company.
8. Stockholders Agreements. Upon exercise of the Option, the Holder
will agree in writing to be bound by that certain Amended and Restated
Stockholders Agreement, dated as of January 28, 1997 (as such agreement may be
amended or amended and restated from time to time hereafter) as a Management
Stockholder and a Holder of Management Securities (as such terms are defined
therein). In connection with any subsequent Private Placements, if one or more
investors in such Private Placement request the stockholders of the Company to
execute a stockholders' agreement as a condition to closing such Private
Placement, the Holder will agree (i) to be bound by the same restrictions
(including restrictions applying after the closing of such Private Placement)
with respect to the Holder's Purchased Option Shares as the other holders of
Management Securities may agree to be bound with respect to shares of Common
Stock owned by such holders and (ii) to execute an agreement containing such
restrictions.
9. Termination of Certain Provisions. The provisions set forth in
Sections 7 and 8 of this Agreement shall terminate upon the earlier of the
consummation of an Approved Sale and the consummation of a Public Offering.
10. Miscellaneous.
10.1 Successors and Assigns; Binding Agreement. Subject to the
provisions of the Plan and Section 10.2 hereof, this Agreement shall inure to
the benefit of, be enforceable by and binding upon, the respective successors
and assigns of the Company and the Holder and his or her personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees ("Representatives") and, with respect to Sections 7 and 8 of this
Agreement, each transferee of all or any of the Purchased Option Shares, whether
so expressed or not.
10.2 Limitation on Alienation. Notwithstanding the terms of
Section 10.1 hereof, the Holder shall not transfer, sell, convey, exchange or
otherwise dispose of (herein referred to as "disposition" or "to dispose of")
the Option and the rights and privileges of the Holder under this Agreement,
except (i) by will or by the applicable laws of descent and distribution to a
person (or persons) who consents in writing to be bound by the terms of this
Agreement to the same extent as the Holder or (ii) by exercise pursuant to the
terms of this Agreement. During the Holder's lifetime, the Option shall be
exercisable only by the Holder. After the Holder's lifetime, references in
Section 3.2 to the "Holder" shall mean such Holder's Representative.
10.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal law of, and not the law of conflicts
of, the State of Illinois applicable to contracts entered into and to be wholly
performed in Illinois.
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10.4 Waivers. The waiver by either party of any right
hereunder or of any failure to perform or breach by the other party shall not be
deemed a waiver of any other right hereunder or of any other failure or breach
by the other party, whether of the same or a similar nature or otherwise. No
waiver shall be deemed to have occurred unless set forth in a writing executed
by or on behalf of the waiving party. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
10.5 Notices. All notices and communications that are required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given when delivered personally or upon mailing by registered or
certified mail, postage prepaid, return receipt requested, as follows:
If to the Company, to:
Intrepid Food Holdings, Inc.
000 X. XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: President
If to the Holder, to the address set forth on the signature page hereto;
or to such other address as may be specified in a notice given by one party to
the other hereunder.
10.6 Severability. If for any reason any term or provision of
this Agreement is held to be invalid or unenforceable, all other valid terms and
provisions hereof shall remain in full force and effect, and all of the terms
and provisions of this Agreement shall be deemed to be severable in nature.
10.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
10.8 Amendment. This Agreement may be amended or canceled by
mutual agreement of the parties in writing without the consent of any other
person or entity, and in the manner set forth in the Plan, and, so long as the
Holder lives, no person or entity, other than the parties, shall have any rights
under or interest in this Agreement or the subject matter hereof.
10.9 Entire Agreement. This Agreement and the Plan constitute
the entire agreement between the parties, and supersedes all prior oral or
written understandings between the parties, relating to the Option Shares. The
Holder acknowledges that he or she has received a copy of the Plan and in the
event that any provision of this Agreement is inconsistent with any provision of
the Plan, the provisions of the Plan shall be controlling.
10.10 No Attachment. Except as required by law, no right to
receive Option Shares under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation or to execution, attachment, levy, or similar process or
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assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void and of no effect.
10.11 No Rights as Stockholder. The Holder will not have any
of the rights of a stockholder with respect to the Option Shares except to the
extent that such Option Shares are actually issued pursuant to exercise of the
Option. The existence of the Option shall not affect in any way the right or
power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, or other changes to the
Company's capital structure or its business, or to effect any sale, merger or
consolidation of the Company, nor create any pre-emptive right on behalf of the
holder of the Option to acquire any Common Stock or securities or indebtedness
convertible into or exchangeable for Common Stock.
10.12 Securities Act Legend. Until (a) the Purchased Option
Shares represented by such certificate are effectively registered under the
Securities Act (and the Company is under no obligation at any time to so
register any of such Purchased Option Shares), or (b) the holder of such
securities delivers to the Company a written opinion of counsel, which counsel
and opinion are reasonably acceptable to the Company, to the effect that such
legend is no longer necessary, the Company shall be entitled to cause each
certificate representing Purchased Option Shares to be stamped or otherwise
imprinted with a legend in substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
thus may not be transferred unless so registered or unless an
exemption from registration is available."
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IN WITNESS WHEREOF, the parties hereto have duly executed this Option
Agreement as of the date first above written.
INTREPID FOOD HOLDINGS, INC.
By:
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Title:
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HOLDER:
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Name:
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Address:
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