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OPTION NO. [ ]
OPTIONEE: Xxxx X. Xxxxx
DATE OF GRANT: December , 1998
OPTION PRICE: $100.00
COVERED SHARES: 6,750
COLORADO PRIME HOLDINGS, INC.
1997 INCENTIVE STOCK OPTION PLAN
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INCENTIVE STOCK OPTION AGREEMENT
1. Definitions. In this Agreement, except where the context otherwise
indicates, the following definitions apply:
1.1. "Affiliate" means parent or subsidiary corporations of the
Company, as defined in Sections 424(e) and (f) of the Code (but substituting
"the Company" for "employer corporation").
1.2. "Agreement" means this Incentive Stock Option Agreement.
1.3. "Board" means the Board of Directors of the Company.
1.4. A "Change of Control" means the occurrence of any of the
following events after the Date of Grant: (i) any person or group of persons
(as defined in Section 13(d) and 14(d) of the Exchange Act) together with its
affiliates, excluding employee benefit plans of the Company, other than Xxxxxx,
becomes, directly or indirectly, the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act) of securities of the Company representing 51% or
more of the combined voting power of the Company's then outstanding securities;
(ii) the stockholders of the Company approve a merger or consolidation of the
Company with any other corporation or entity regardless of which entity is the
survivor, other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or being converted into voting
securities of the surviving entity) at least 50% of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or
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consolidation; (iii) an IPO Event; or (iv) the stockholders of the Company
approve a plan of complete liquidation or winding-up of the Company or an
agreement for the sale or disposition by the Company of all or substantially
all of the Company's assets.
1.5. "Code" means the Internal Revenue Code of 1986, as amended.
1.6. "Committee" means the committee charged, pursuant to the provisions
of the Plan, with the administration of the Plan.
1.7. "Common Stock" means the common stock, par value $0.01 per share, of
the Company.
1.8. "Company" means Colorado Prime Holdings, Inc.
1.9. "Covered Shares" means the number of Shares subject to the Option set
forth as the "Covered Shares" on page 1 of this Agreement.
1.10. "Date of Exercise" means the date on which the Company receives
notice pursuant to Section 4.1 of the exercise, in whole or in part, of the
Option.
1.11. "Date of Expiration" means the date on which the Option shall expire,
which shall be the earliest of the following times:
(a) the date the Optionee's Employment is terminated by the Company
or any Affiliate for Good Cause;
(b) ninety (90) days after the termination of the Optionee's
Employment by reason of resignation, retirement, death or Disability;
(c) ninety (90) days after the date the Optionee's Employment is
terminated by the Company or any Affiliate other than for Good Cause; or
(d) ten (10) years after the Date of Xxxxx.
1.12. "Date of Grant" means the date set forth as the "Date of Grant" on
page 1 of this Agreement.
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1.13. "Disability" means (i) incapacity due to physical or mental illness
or injury where the Optionee shall have been absent from his full time duties at
the Company for four (4) consecutive months.
1.14. "Employment" means the Optionee's employment with the Company and
its Affiliates, including service as a director.
0.2. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
1.16. "Fair Market Value" means the fair market value of a Share as
determined by the Committee pursuant to a reasonable method adopted in
good faith for such purpose.
1.17. "Good Cause" means a termination based on an Optionee's (i) willful
misconduct or gross negligence in the performance or intentional nonperformance
(continuing for ten (10) days after receipt of written notice of need to cure)
of any of the Optionee's material duties and responsibilities for the Company;
(2) willful dishonesty, fraud, alcohol or illegal drug abuse, or misconduct with
respect to the business or affairs of the Company, which materially and
adversely affects the operations, prospects or reputation of the Company; or
(3) conviction of a felony or other crime involving moral turpitude.
0.18. "IPO Event" means the consummation of an underwritten public offering,
pursuant to an effective registration statement under the Securities Act, that
is underwritten by one or more nationally-recognized investment banking firms
and results in the Company receiving not less than $25,000,000 in aggregate cash
proceeds from such offering.
1.19. "Option" means the incentive stock option granted to the Optionee
in Section 2 of this Agreement.
1.20. "Option Price" means the dollar amount per Share set forth as the
"Option Price" on page 1 of this Agreement.
1.21. "Optionee" means the person identified as the "Optionee" on page 1
of this Agreement.
1.22. "Plan" means the Colorado Prime Holdings, Inc. 1997 Incentive Stock
Option Plan.
0.23. "Securities Act" means the Securities Act of 1933, as amended.
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1.24. "Share" means a share of Common Stock.
0.3. "Xxxxxx" means Xxxxxx Equity Investors III, L.P.
2. Grant of Options. Pursuant to the Plan and subject to the terms of this
Agreement, the Company hereby grants to the Optionee the Option to purchase from
the Company that number of Shares equal to the Covered Shares, exercisable at
the Option Price.
3. Terms of the Option.
3.1. Type of Option. The Option is intended to be an incentive stock
option within the meaning of Section 422 of the Code; provided, however, that to
the extent that, during any calendar year, the Option becomes exercisable for
the first time with respect to Shares having an aggregate fair market value in
excess of the limited imposed by Section 422(d) of the Code, (a) the Option
shall be treated as a nonstatutory stock option and not as an incentive stock
option to the extent required by Section 422(d) of the Code, and (b) upon any
exercise of the Option, the Optionee shall be required to designate the extent
to which, if any, the exercise of the Option is with respect that portion of the
Option that is a nonstatutory stock option pursuant to the preceding clause (a).
If, as of the same date, the Optionee exercises the Option with respect to a
portion of the Option that is an incentive stock option and with respect to a
portion of the Option that is a nonstatutory stock option, the Company shall
issue separate certificates to the Optionee representing (i) those Shares that
were acquired pursuant to the exercise of an incentive stock option (which
Shares shall be identified on the Company's stock transfer records as such), and
(ii) those Shares that were acquired pursuant to the exercise of a nonstatutory
stock option.
3.2. Exercise Period. During the period commencing on the Date of
Grant and terminating on the Date of Expiration, the Option may be exercised
with respect to all or a portion of the Covered Shares (in full shares), to the
extent that the Option has vested and has not been previously exercised with
respect to such Covered Shares.
3.3. Vesting Schedule. On each of September 30, 1999 and September 30,
2000, the Option shall vest as to 3,375 Shares, respectively. Notwithstanding
the foregoing, (i) the Option shall vest in full upon a Change of Control; and
(ii) no part of the Option shall vest after the date of termination for any
reason of the Optionee's Employment.
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4. Exercise.
4.1. Notice. The Option shall be exercised, in whole or in part, by
the delivery to the Company of written notice of such exercise, in such form as
the Committee may from time to time prescribe, accompanied by (i) full payment
of the Option Price with respect to that portion of the Option being exercised
and (ii) any amounts required to be withheld pursuant to applicable tax laws in
connection with such exercise. Options may be exercised only with respect to
whole numbers of Shares. Until the Committee notifies the Optionee to the
contrary, the form attached to this Agreement as Exhibit A shall be used to
exercise the Option.
4.2. Payment of the Option Price. Upon exercise of the Option, the
Optionee shall pay the Option Price and any applicable withholding tax amounts
in cash. With the prior written approval of the Committee, which approval shall
be in the Committee's sole discretion, the Optionee may also pay the Option
Price, in whole or in part, by delivering duly endorsed certificates
representing, or duly executed stock transfer instruments in respect of, a
whole number of Shares having an aggregate value on the Date of Exercise
(determined based on the Fair Market Value) not more than the portion of the
Option Price being paid by delivery of such Shares, or in a combination of cash
and Shares. Notwithstanding the preceding sentence, no Shares may be used to
pay any portion of the Option Price unless those Shares were issued to the
Optionee at least six months prior to the Date of Exercise.
5. Restrictions on Transfer.
5.1. Options. Except by will or the laws of descent and distribution,
the Option may not be sold, transferred, assigned, pledged or otherwise
disposed of or encumbered by the Optionee, and any attempt to do so shall be
null and void. The Option may be exercised during the Optionee's lifetime only
by the Optionee or, in the event of the Optionee's legal disability, by the
Optionee's legal representative. The terms of the Option shall be binding upon
any successor or permitted assignee of the Optionee.
5.2. Shareholders Agreement. The Optionee understands and agrees
that, upon his or her exercise of the Option and receipt of Shares, he or she
will become a party to the Shareholders Agreement dated as of May 9, 1997, by
and among the Company, Xxxxxx Equity Investors III, L.P. and certain
shareholders of the Company (the "Shareholders Agreement"). The Optionee hereby
agrees to be bound as a "Shareholder" to all the terms and conditions and to be
subject to the benefits of the Shareholders Agreement as a "Manager," including
the transfer restrictions of the Shareholders Agreement and the rights and
obligations of the Managers with respect to certain events relating to the
disposition of the Shares
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upon the Optionee's termination or resignation of employment with the Company
or its Affiliates. The Optionee acknowledges that a copy of the Shareholders
Agreement has been made available to the Optionee for inspection.
6. Capital Adjustments. In the event of any change in the outstanding
Common Stock by reason of any stock dividend, split-up (or reverse stock
split), reclassification, reincorporation, liquidation or similar change in
corporate structure, the Committee shall, in its discretion, either provide for
a substitution for or adjustment in (i) the number and class of Covered Shares
and (ii) the Option Price.
7. Investment Intent; Legends.
7.1. Representations. The Optionee agrees that, upon the issuance of
any Shares upon the exercise of the Option, the Optionee will, upon the request
of the Company, represent and warrant in writing that the Optionee (i) has
received and reviewed a copy of the Plan; (ii) is capable of evaluating the
merits and risks of exercising the Option and acquiring the Shares and able to
bear the economic risks of such investment; (iii) has made such investigations
as he or she deems necessary and appropriate of the business and financial
prospects of the Company; and (iv) is acquiring the Shares for investment only
and not with a view to resale or other distribution thereof. The Optionee
acknowledges that the Company has made available to the Optionee the
opportunity to obtain information to evaluate the merits and risks associated
with this Agreement and the transactions contemplated hereby. The Optionee
further acknowledges that the investment contemplated by the Option involves a
high degree of risk, including risks associated with the Company's business
operations and prospects, the lack of a public market for the Shares, and the
limitations on the transferability of the Option and the Shares.
7.2. Legends. The Optionee agrees that the certificates evidencing
the Shares issued upon exercise of the Option may include any legend which the
Committee deems appropriate to reflect any transfer or other restrictions
contained in the Plan, this Agreement or the Shareholders Agreement or to
comply with applicable laws.
8. Rights as Stockholder. The Optionee shall have no rights as a
stockholder with respect to any Covered Shares until and unless a certificate
or certificates representing such shares are issued to the Optionee pursuant to
this Agreement. Except as provided in Section 6, no adjustment shall be made
for dividends or other rights for which the record date is prior to the
issuance of such certificate or certificates.
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9. Employment. Neither the granting of the Option evidenced by this
Agreement nor any term or provision of this Agreement shall constitute or be
evidence of any understanding, express or implied, on the part of the Company or
any of its Affiliates to employ the Optionee (or have the Optionee serve as a
director) for any period.
10. Subject to the Plan. The Option evidenced by this Agreement and the
exercise thereof are subject to the terms and conditions of the Plan, which are
incorporated herein by reference and made a part hereof, but the terms of the
Plan shall not be considered an enlargement of any benefits under this
Agreement. In addition, the Option is subject to any rules and regulations
promulgated by the Committee pursuant to the Plan.
11. Notice. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally,
by facsimile or sent by overnight express or by registered or certified mail,
postage prepaid, addressed as follows:
If to the Company to:
Colorado Prime Holdings, Inc.
0 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxxxxx, Vice President
Facsimile: 000-000-0000
If to the Optionee, to the address set forth beneath the Optionee's signature
on the signature page hereof.
All deliveries of notice shall be deemed effective when received by the
person entitled to such receipt or when delivery has been attempted but refused
by such person. Any party may change the person or address to which such
deliveries shall be made with respect to such party by delivering notice
thereof to the other party hereto in accordance with this Section 11.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be signed on
its behalf effective as of the Date of Grant.
ATTEST: COLORADO PRIME HOLDINGS, INC.
By:
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Accepted and agreed to as of the Date of Xxxxx.
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Optionee:
Address:
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EXHIBIT A
EXERCISE OF OPTION
Board of Directors
Colorado Prime Holdings, Inc.
0 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned, the Optionee under the Incentive Stock Option Agreement
identified as Option No. ____ (the "Agreement"), granted pursuant to the
Colorado Prime Holdings, Inc. 1997 Incentive Stock Option Plan (the "Plan"),
hereby irrevocably elects to exercise the option granted in such Agreement (the
"Option") to purchase ____ [whole numbers only] shares of Common Stock, par
value $0.01 per share, (the "Shares") of Colorado Prime Holdings, Inc. (the
"Company"), and herewith makes payment of $______ in cash.
The Optionee hereby represents and warrants as follows:
1. The Optionee has received and reviewed a copy of the Plan;
2. The Optionee is capable of evaluating the merits and risks of
exercising the Option and acquiring the Shares and able to bear the economic
risks of such investment;
3. The Optionee has made such investigations as he or she deems necessary
and appropriate of the business and financial prospects of the Company; and
4. The Optionee is acquiring the Shares for investment only and not with a
view to resale or other distribution thereof.
The Optionee acknowledges that the Company has made available to the
Optionee the opportunity to obtain information to evaluate the merits and risks
associated with the Agreement and the transactions contemplated thereby. The
Optionee further acknowledges that the investment contemplated by the Option
involves a high degree of risk, including risks associated with the Company's
business operations and prospects, the lack of a public market for the Shares,
and the limitations on the transferability of the Option and the Shares.
The Optionee understands and agrees that, upon his or her exercise of the
Option and receipt of Shares, he or she becomes a party to the Shareholders
Agreement dated as of May 9, 1997, by and among the Company, Xxxxxx Equity
Investors III, L.P. and certain shareholders of the Company (the "Shareholders
Agreement"). The Optionee hereby agrees to be bound as a "Shareholder" to all
the terms and conditions, including
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the transfer restrictions, of the Shareholders Agreement, a copy of which has
been made available to the Optionee for inspection.
Dated:
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(Signature of Optionee)
Date Received by
Colorado Prime Holdings, Inc.:
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Received by:
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