Exhibit 10.28
Execution Version
FORM OF
THL FOOD PRODUCTS HOLDING CO. 2003 STOCK OPTION PLAN
STOCK OPTION AWARD AGREEMENT
THIS STOCK OPTION AWARD AGREEMENT (the "Agreement") is made effective
as of the 20th day of November, 2003, between THL Food Products Holding Co., a
Delaware corporation (hereinafter called the "Company"), and ______________
(hereinafter called the "Participant"):
R E C I T A L S:
- - - - - - - -
WHEREAS, the Company has adopted the THL Food Products Holding Co.
2003 Stock Option Plan (the "Plan"), which Plan is incorporated herein by
reference and made a part of this Agreement. Capitalized terms not otherwise
defined herein shall have the same meaning as in the Plan; and
WHEREAS, the Committee has determined that it would be in the best
interests of the Company and its stockholders to grant the option provided for
herein to the Participant pursuant to the Plan and the terms set forth herein.
NOW THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties agree as follows:
1. Grant of the Option. The Company hereby grants to the Participant the
right and option to purchase, on the terms and conditions hereinafter set forth,
all or any part of an aggregate of _______ Option Shares, subject to adjustment
as set forth in the Plan. The per share purchase price of the Option Shares
subject to the Option (the "Exercise Price") shall be $_______. The Option is
intended to be a non-qualified stock option, and is not intended to be treated
as an option that complies with Section 422 of the Internal Revenue Code of
1986, as amended.
2. Vesting. At any time, the portion of the Option that has become vested
and exercisable as described in this Section 2 is hereinafter referred to as the
"Vested Portion."
(a) Subject to the Participant's continued employment with the Company
and to paragraphs (b) and (c) of this Section 2, the Option shall vest over a
five year period, in five equal installments, with twenty percent (20%) of the
Option vesting on the first anniversary of the date hereof and an additional
twenty percent (20%) of the Option vesting on each successive anniversary of the
date hereof until such time as the Option is fully vested and exercisable.
(b) Termination of Employment. If the Participant's employment with the
Company is terminated for any reason, the Option shall, to the extent not then
vested, be cancelled by the Company without consideration and only the Vested
Portion of the Option shall remain exercisable for the period set forth in
Section 3(a). The Vested Portion of the Option not exercised within the period
set forth in Section 3(a) shall immediately expire.
(c) Sale of the Company. Notwithstanding any other provisions of this
Agreement to the contrary, in the event of a Sale of the Company, the Option
shall, to the extent not previously cancelled, immediately become vested and
exercisable immediately prior to a Sale of the Company.
3. Exercise of Option.
(a) Period of Exercise. Subject to the provisions of the Plan and
this Agreement, the Participant may exercise all or any part of the Vested
Portion of the Option at any time prior to the earliest to occur of:
(i) the tenth anniversary of the date hereof;
(ii) ninety days following the date of the Participant's
termination of employment by the Company without Cause (other than as a
result of death or Disability), or by the Participant for Good Reason or
as a result of death, Disability or Retirement;
(iii) a Sale of the Company; and
(iv) the date of the Participant's termination of employment by
the Company for Cause or by the Participant without Good Reason.
(b) Method of Exercise.
(i) Subject to Section 3(a), the Vested Portion of the Option
may be exercised by delivering to the Company at its principal office
written notice of intent to so exercise. Such notice shall specify the
number of Option Shares for which the Option is being exercised and shall
be accompanied by payment in full of the aggregate Exercise Price. The
payment of the Exercise Price shall be made (x) in cash, (y) in Option
Shares that have been owned by the Participant for at least six months,
such Option Shares to be valued at their Fair Market Value as of the date
of exercise, or (z) after a Public Offering, through simultaneous sales of
underlying Option Shares by brokers.
(ii) Notwithstanding any other provision of the Plan or this
Agreement to the contrary, the Option may not be exercised prior to the
completion of any registration or qualification of the Option or the
Option Shares that is required to comply with applicable state and federal
securities law or any ruling or regulation of any governmental body or
national securities exchange that the Committee shall in its sole
discretion determine in good faith to be necessary or advisable.
(iii) Upon the Company's determination that the Option has been
validly exercised as to any of the Option Shares, the Company shall issue
certificates in the Participant's name for such Option Shares. However,
the Company shall not be liable to the Participant for damages relating to
any delays in issuing the certificates to him, any loss of the
certificates, or any mistakes or errors in the issuance of the
certificates or in the certificates themselves.
2
(iv) The Company shall be entitled, if necessary or desirable, to
withhold from any Participant, from any amounts due and payable by the
Company to such Participant (or secure payment from such Participant in
lieu of withholding), the amount of any withholding or other tax due from
the Company with respect to any securities issuable under the Options, and
the Company may defer the exercise of the Options or the issuance of the
Option Shares thereunder unless indemnified to its satisfaction.
(v) As a condition to any exercise of an Option, a Participant
will permit the Company to deliver to him or her all financial and other
information regarding the Company and its Subsidiaries which it believes
necessary to enable such Participant to make an informed investment
decision.
4. Certain Sales Upon Termination of Employment. If the Participant's
employment is terminated under certain circumstances, the Participant shall have
a limited right to sell to the Company (pursuant to Section 4(a) below), and the
Company shall have certain rights (pursuant to Section 4(b) below) to purchase
from the Participant either (i) the Vested Portion of Participant's Options or
(ii) Option Shares acquired pursuant to the exercise of all or any part of the
Vested Option, as follows:
(a) Put Right.
(i) If the Participant's employment with the Company and
Subsidiaries terminates due to the Disability or death of the Participant
prior to the earlier of (x) a Public Offering or (y) a Sale of the
Company, for (A) the Vested Portion of all Options and (B) all Option
Shares, within 120 days after such termination of employment the
Participant shall have the right, subject to the provisions of Section 5
hereof to sell to the Company and the Company shall be required to
purchase (subject to the provisions of Section 5 hereof), on one occasion
from the Participant and his Permitted Transferees, if applicable, all
(but not less than all) of (1) Participant's Vested Portion of all Options
and (2) the number of Option Shares then held by the Participant and such
other number of Option Shares or Vested Portions of Option Shares, to the
extent transferable, held by the Participant's Permitted Transferees as
the Participant may request at a price per Option or Option Share equal to
(i) in the case of the purchase of Options, the difference between the
Fair Market Value of the Option Share underlying the Option (measured as
of the delivery of the notice referred to in Section 4(a)(ii)) and the
Exercise Price of such Option Shares and (ii) in the case of the purchase
of Option Shares, (x) if such termination occurs prior to the date which
is 18 months from the date of this Agreement, the greater of the Fair
Market Value of such Option Share (measured as of the delivery of the
notice referred to in Section 4(a)(ii)) and the Cost of such Option Share
and (y) if such termination occurs after the date which is 18 months from
the date of this Agreement, the Fair Market Value of such Option Share. If
the Participant's employment with the Company and Subsidiaries terminates
due to Retirement of the Participant prior to (x) a Public Offering or (y)
a Sale of the Company, for all Option Shares issued 181 days or more prior
to the date of termination of employment of the Participant, within 90
days after such date of termination of employment (or in the case of
Option Shares issued 180 days or less
3
prior to such date of termination or at any time after such date of
termination of employment, no earlier than 181 days and no later than 271
days after the date of issuance of such Option Shares), the Participant
shall have the right, subject to the provisions of Section 5 hereof, to
sell to the Company and the Company shall be required to purchase (subject
to the provisions of Section 5 hereof), on one occasion from the
Participant and his Permitted Transferees, if applicable, all (but not
less than all) of the Option Shares then held by the Participant and such
other number of Option Shares held by the Participant's Permitted
Transferees as the Participant may request at a price per Option Share
equal to the Fair Market Value of such Option Share (measured as of the
delivery of the notice referred to in Section 4(a)(ii)).
(ii) If the Participant desires to exercise his or her option to
require the Company to repurchase Options and/or Option Shares pursuant to
Section 4(a), the Participant shall send one written notice to the Company
setting forth the intention of Participant and Permitted Transferees, if
applicable, to collectively sell all Options and/or Option Shares pursuant
to Section 4(a) within the period described above, which notice shall
specify the number of Option Shares, or in the case of a sale of Options,
the number of Option Shares underlying such Options, to be sold and shall
include the signature of the Participant and each Permitted Transferee
desiring to sell Options and Option Shares. Subject to the provisions of
Section 5, the closing of the purchase shall take place at the principal
office of the Company on the 60th day after the giving of such notice.
Subject to the provisions of Section 5, the Participant and each Permitted
Transferee, as applicable, shall deliver to the Company duly executed
instruments transferring any and all rights, title and interest to and in
the Options and Option Shares to the Company, against payment of the
appropriate purchase price by cashier's or certified check payable to the
Participant or by wire transfer of immediately available funds to an
account designated by the Participant.
(b) Call Right.
(i) If the Participant's employment with the Company and/or its
Subsidiaries terminates for any of the reasons set forth in clauses (A),
with the exception of termination due to Participant's Retirement, or (C)
below prior to a Sale of the Company, within 120 days after such date, the
Company shall have the right and option to purchase, and the Participant
and the Participant's Permitted Transferees (hereinafter referred to as
the "Participant Group") shall be required to sell to the Company, any or
all of such Option Shares then held by such member of the Participant
Group, at a price per Option Share equal to the applicable purchase price
determined pursuant to Section 4(b)(iii). If the Participant's employment
with the Company or any of its Subsidiaries terminates for any of the
reasons set forth in clause (B) or due to Participant's Retirement, for
any Option Shares issued 180 days or more prior to the date of
Participant's termination of employment, within 90 days after such date
(or in the case of Option Shares issued 180 days or less prior to such
date or at any time after such date, no earlier than 181 days and no later
than 271 days after the date of issuance of such Option Shares), the
Company shall have the right and option to purchase, and the Participant
and the Participant's Permitted Transferees (hereinafter referred to as
the "Participant Group") shall be required to sell to the Company, any or
4
all of such Option Shares then held by such member of the Participant
Group, at a price per Option Share equal to the applicable purchase price
determined pursuant to Section 4(b)(iii):
(A) if the Participant's active employment with the Company
and/or its Subsidiaries is terminated due to the Disability, death or
Retirement of the Participant;
(B) if the Participant's active employment with the Company,
and/or its Subsidiaries is terminated by the Company, and/or its
Subsidiaries without Cause or by the Participant for Good Reason;
(C) if the Participant's active employment with the Company
and/or its Subsidiaries is terminated (x) by the Company or any of its
Subsidiaries for Cause or (y) by the Participant for any other reason
not set forth in Section 4(b)(i)(A) or Section 4(b)(i)(B);
provided that the Company's rights under this Section 4(b) shall not be
available in the event of the termination of Participant's employment by the
Company or its Subsidiaries without Cause or by Participant for Good Reason, in
either case following a sale by the Company or its subsidiaries of substantially
all of the lines of business in which the Participant primarily performs his
services.
If the Participant engages in "Competitive Activity" (as defined in
Section 6 of this Agreement), the Company shall have the right and option
to purchase within 90 days after such date as the Company receives notice
that the Participant has engaged in Competitive Activity, and the
Participant Group shall be required to sell to the Company, any or all of
such Option Shares then held by such member of the Participant Group, at a
price per Option Share equal to the applicable purchase price determined
pursuant to Section 4(b)(iii)(A); provided that in the case of Option
Shares issued 180 days or less prior to the date that the Company receives
notice of Participant's engagement in Competitive Activity, the
Participant shall be required to sell such Option Shares no earlier than
181 days and no later than 271 days after the date of issuance of such
Option Shares.
(ii) If the Company desires to exercise one of its options to
purchase Option Shares pursuant to this Section 4(b), the Company shall,
not later than the expiration of the applicable period described for such
purchase in Section 4(b)(i), send written notice to each member of the
Participant Group of its intention to purchase Option Shares, specifying
the number of Option Shares to be purchased (the "Call Notice"). Subject
to the provisions of Section 5, the closing of the purchase shall take
place at the principal office of the Company on the 60th day after the
giving of the Call Notice. Subject to the provisions of Section 5, the
Participant shall deliver to the Company duly executed instruments
transferring title to Option Shares to the Company, against payment of the
appropriate purchase price by cashier's or certified
5
check payable to the Participant or by wire transfer of immediately
available funds to an account designated by the Participant.
(iii) In the event of a purchase by the Company pursuant to
Section 4(b)(i), the purchase price shall be (in each case after taking
account of any prior purchases pursuant to Section 4(b)(i)):
(A) if the Participant engages in "Competitive Activity"
(as defined in Section 6 of this Agreement), a price per Option
Share equal to the lesser of (A) Fair Market Value (measured as of
the "Activity Date" (as defined in Section 6 of this Agreement))
and (B) Cost;
(B) in the case of a termination of employment described in
Section 4(b)(i)(A), Section 4(b)(i)(B), (x) if such termination
occurs prior to the date which is 18 months from the date of this
Agreement, the greater of the Fair Market Value of such Option
Shares and Cost and (y) if such termination occurs after the date
which is 18 months from the date of this Agreement, the Fair Market
Value of such Option Shares (measured as of the date of the Call
Notice); and
(C) in the case of a termination of employment described in
Section 4(b)(i)(C), a price per Option Share equal to the lesser of
(A) Fair Market Value (measured as of the date of the Call Notice)
and (B) Cost.
Notwithstanding anything in this Section 4(b) to the contrary,
in the event that the Company purchases Option Shares at Fair Market Value
pursuant to the terms of this Section 4(b) and within six months of the
date of the determination of such Fair Market Value both (A) a Sale of the
Company or a Public Offering occurs and (B) in connection with such
transaction, the per share value of the Option Shares exceeds the per
share purchase price paid by the Company to Participant under this Section
4(b), the Participant shall be entitled to receive from the Company the
benefit of such higher valuation for the Option Shares purchased. The
excess of (x) the net proceeds which the Participant would have received
in such Sale of the Company or Public Offering from the sale in such
transaction of all Option Shares repurchased by the Company under this
Section 4(b), less (y) the amount which the Participant received from the
purchase of such Option Shares by the Company, shall be paid by certified
or cashier's check or wire transfer of funds to the Participant upon
consummation of such transaction.
5. Certain Limitations on the Company's Obligations to Purchase Option
Shares.
(a) Payment of Shares. If at any time the Company elects or is
required to purchase any Option Shares pursuant to Section 4, the Company shall
pay the purchase price for the Option Shares it purchases (i) first, by
offsetting indebtedness, if any, owing from the Participant to Investors or the
Company (which indebtedness shall be applied pro rata against the proceeds
receivable by each member of the Participant Group receiving consideration in
such repurchase) and (ii) then, by the Company's delivery of a check or wire
transfer of
6
immediately available funds for the remainder of the purchase price, if any,
against delivery of the certificates or other instruments representing the
Option Shares so purchased, duly endorsed; provided that if such cash payment
would result (A) in a violation of any law, statute, rule, regulation, policy,
order, writ, injunction, decree or judgment promulgated or entered by any
federal, state, local or foreign court or governmental authority applicable to
the Company or any of its Subsidiaries or any of its or their property or (B)
after giving effect thereto, in a Financing Default, or (C) if the Committee
determines in good faith that immediately prior to such purchase there shall
exist a Financing Default which prohibits such purchase, dividend or
distribution ((A) through (C) collectively the "Cash Deferral Conditions"), the
portion of the cash payment so affected may be made by the Company's delivery of
either (z) subordinated promissory notes of the Company (the "Notes") with a
principal equal to the balance of the purchase price or, at the option of the
Company, (y) preferred shares of the Company (the "Preferred Shares") with a
liquidation preference equal to the balance of the purchase price; which Notes
or Preferred Shares shall bear interest or accrue yield, as appropriate,
annually at the "prime rate" published in The Wall Street Journal on the date of
issuance, which interest or yield, as appropriate, shall be payable at maturity
or upon payment by the Company of dividends on Company capital stock [for the
purpose of clarity, distributions made by the Company pursuant to Section
7.06(f) of that certain Credit Agreement, dated November 20, 2003, by and among
the Company and the other parties named therein, shall not be deemed a payment
by the Company of dividends on Company capital stock as described in this
sentence). Any such Notes or Preferred Shares issued shall be promptly paid (i)
when the Cash Deferral Condition which prompted their issuance no longer exists,
(ii) upon consummation of a Public Offering of the Company or Xxxxxxx Foods,
Inc., a Delaware corporation (or their successors) (to the extent allowed by the
underwriters of such Public Offering), or (iii) upon a Sale of the Company from
net cash proceeds, if any, payable to the Company or its stockholders; to the
extent that sufficient net cash proceeds are not so payable, the Notes or
Preferred Shares, as applicable, shall be cancelled in exchange for such
non-cash consideration received by note-holders or shareholders, as applicable,
in the Sale of the Company having a fair market value equal to the principal of
and accrued interest on the Notes or the accrued yield on the Preferred Shares,
as applicable. If interest or yield is required to be paid on any Notes or
Preferred Shares prior to maturity and any Cash Deferral Conditions exist, such
interest or yield may be cumulated and accrued until and to the extent that such
prohibition no longer exists.
6. Competitive Activity.
(a) Competitive Activity. Participant shall be deemed to have engaged
in "Competitive Activity" if, during the period commencing on the date hereof
and ending on the second anniversary of the date Participant's employment with
Investors, the Company, and/or its Subsidiaries terminates, (i) Participant, for
himself or on behalf of any other person, firm, partnership, corporation, or
other entity, engages, directly or indirectly, as an executive, agent,
representative, consultant, partner, shareholder or holder of any other
financial interest, in any business that engages in the production, distribution
or sales of eggs or egg products, refrigerated potato products or branded cheese
products (as applicable) (a "Competing Business"), it being understood and
agreed that Participant's activities shall not satisfy this clause (i) where
Participant is employed by a person, firm, partnership, corporation, limited
liability company, or other entity engaged in a variety of activities, including
the Competing
7
Business, and Participant is not engaged in or responsible for the Competing
Business of such entity. Participant may also, without satisfying clause (i) be
a passive owner of not more than 2% of the outstanding publicly traded stock of
any class of a Competing Business so long as Participant has no active
participation in the business of such entity, except to the extent permitted
above; or (ii) Participant (A) directly or indirectly through another entity,
induces or attempts to induce any employee of the Company or its Subsidiaries to
leave the employ of the Company or its Subsidiaries, or in any way interfere
with the relationship between the Company or any of its Subsidiaries and any
employee thereof, (B) knowingly hires any person who was an employee of the
Company or any of its Subsidiaries within 180 days prior to the time such
employee was hired by Participant, (C) induces or attempts to induce any
customer, supplier, licensee or other business relation of the Company or any of
its Subsidiaries to cease doing business with the Company or its Subsidiaries or
in any way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company or any Subsidiary or (D) directly
or indirectly acquires or attempts to acquire an interest in any business
relating to the business of the Company or any of its Subsidiaries and with
which the Company or any of its Subsidiaries has entertained discussions or has
requested and received information relating to the acquisition of such business
by the Company or its Subsidiaries in the one-year period immediately preceding
Participant's termination of employment with the Company.
(b) Activity Date. If Participant engages in Competitive Activity, the
"Activity Date" shall be the first date on which Participant engages in such
Competitive Activity.
(c) Repayment of Proceeds. If Participant engages in Competitive
Activity, then Participant shall be required to pay to the Company, within ten
business days following the Activity Date, an amount equal to the excess, if
any, of (A) the aggregate proceeds Participant received upon the sale or other
disposition of Participant's Option Shares, over (B) the aggregate Cost of such
Option Shares, it being understood that in the event that the aggregate proceeds
Participant received upon the sale or other distribution of Participant's Option
Shares consisted of cash (or have since been converted into cash), such
repayment to the Company will be made first in cash up to the amount of such
cash proceeds with the remainder to be paid to the Company by reducing the
outstanding principal amount of any non-cash consideration received by
Participant.
7. Take-Along Rights on Sale of the Company.
(a) If Investors elect to consummate a transaction constituting a
Sale of the Company, Investors shall notify the Company and Participant in
writing of that election, Participant will consent to and raise no objections to
the proposed transaction, and Participant and the Company will take all other
actions reasonably necessary or desirable to cause the consummation of such Sale
of the Company on the terms proposed by Investors. Without limiting the
foregoing, (i) if the proposed Sale of the Company is structured as a sale of
assets or a merger or consolidation, or otherwise requires approval of
Participant, Participant and all of Participant's Permitted Transferees will
vote or cause to be voted all Option Shares, whether granted pursuant to this
Plan or otherwise, that he holds or with respect to which Participant has the
power to direct the voting and which are entitled to vote on such transaction in
favor of such transaction and will waive any appraisal rights which he may have
8
in connection therewith and (ii) if the proposed Sale of the Company is
structured as or involves a sale or redemption of Option Shares, Participant
will agree to sell his Option Shares in such Sale of the Company on the terms
and conditions approved by Investors, and Participant will execute any merger,
asset purchase, security purchase, recapitalization or other sale agreement
approved by Investors in connection with such Sale of the Company.
(b) The obligations of Participant with respect to the Sale of the
Company are subject to the satisfaction of the following conditions: (i) upon
the consummation of the Sale of the Company, all of the holders of Option Shares
shall receive the same form and amount of consideration per share or amount of
Option Shares, or if any holders of Option Shares are given an option as to the
form and amount of consideration to be received, all holders of Option Shares
will be given the same option and (ii) all holders of Options, without regard to
vesting or exercise restrictions, will be given an opportunity to either (A)
exercise such Options, prior to the consummation of the Sale of the Company and
participate in such sale as holders of Option Shares or (B) upon the
consummation of the Sale of the Company, receive, in exchange for such Options,
the same form and amount of consideration per Option Share as received by all
other holders of Option Shares in connection with the Sale of the Company, less
the exercise price per share of such Options which must be exercised to acquire
Option Shares, it being understood that the exercise price shall be paid first
with any cash consideration to be distributed to Participant in connection with
the Sale of the Company.
(c) Participant will bear his pro-rata share (based upon the relative
amount of Option Shares sold) of the reasonable and customary costs of any sale
of Option Shares pursuant to a Sale of the Company to the extent such costs are
incurred for the benefit of Participant and are not otherwise paid by the
Company or the acquiring party. Costs incurred by or on behalf of Participant
for his sole benefit will not be considered costs of the transaction hereunder.
8. Tag-Along Rights.
(a) Prior to making any Transfer of Common Stock (other than a
Transfer described in Section 8(b)), Investors shall give at least 30 days prior
written notice to Participant and the Company, which notice (for purposes of
this Section 8, the "Sale Notice") shall identify the type and amount of Common
Stock to be sold (for purposes of this Section 8, the "Offered Securities"),
describe in reasonable detail the terms and conditions of such proposed Transfer
and identify each prospective Transferee. Participant may, within 15 days of the
receipt of the Sale Notice, give written notice (the "Tag-Along Notice") to
Investors that Participant wishes to participate in such proposed Transfer upon
the terms and conditions set forth in the Sale Notice, which Tag-Along Notice
shall specify the Option Shares such Participant desires to include in such
proposed Transfer; provided, however, that (1) none of Participant's rights to
Option Shares subject to the exercise of Options shall be entitled to be sold
pursuant to this Section 8(a) unless such Options have fully vested and the
Options have been exercised and (2) to exercise its tag-along rights hereunder,
Participant must agree to make to the Transferee the same representations,
warranties, covenants, indemnities and agreements as Investors agree to make in
connection with the Transfer of the Offered Securities (except that in the case
of representations and warranties pertaining specifically to, or covenants made
specifically by, Investors, Participant shall make comparable
9
representations and warranties pertaining specifically to (and, as applicable,
covenants by) himself), and must agree to bear his ratable share (which shall be
proportionate based on the value of Option Shares and Offered Securities that
are Transferred but shall not exceed the amount of proceeds received in
connection with such Transfer) of all liabilities to the Transferees arising out
of representations, warranties and covenants (other than those representations,
warranties and covenants that pertain specifically to a given stockholder, who
shall bear all of the liability related thereto), indemnities or other
agreements made in connection with the Transfer. Each stockholder will bear (x)
its or his own costs of any sale of shares of Common Stock pursuant to this
Section 8(a) and (y) its or his pro-rata share (based upon the relative amount
of shares of Common Stock sold) of any of the other costs of any reasonable and
customary sale of shares of Common Stock pursuant to this Section 8(a) to the
extent such costs are incurred for the benefit of all stockholders and are not
otherwise paid by the Transferee.
If Participant does not give Investors a Tag-Along Notice prior to the
expiration of the 15-day period for giving Tag-Along Notices with respect to the
Transfer proposed in the Sale Notice, then (notwithstanding the first sentence
of this Section 8(a)) Investors may Transfer such Offered Securities on the
terms and conditions set forth, to or among any of the Transferees identified
(or Affiliates of Transferees identified), in the Sale Notice at any time within
180 days after expiration of the 15-day period for giving Tag-Along Notices with
respect to such Transfer. Any such Offered Securities not Transferred by
Investors during such 180-day period will again be subject to the provisions of
this Section 8(a) upon subsequent Transfer. If Participant gives Investors a
timely Tag-Along Notice, then Investors shall use all reasonable efforts to
obtain the agreement of the prospective Transferee(s) to the participation of
Participant in any contemplated Transfer, on the same terms and conditions as
are applicable to the Offered Securities, and Investors shall not transfer any
of its shares to any prospective Transferee if such prospective Transferee(s)
declines to allow the participation of Participant. If the prospective
Transferee(s) is unwilling or unable to acquire all of the Offered Securities
and all of the Option Shares specified in a timely Tag-Along Notice upon such
terms, then Investors may elect either to cancel such proposed Transfer or to
allocate the maximum number of shares of Common Stock that the prospective
Transferees are willing to purchase (the "Allocable Shares") among Investors,
Participant and such other participants giving timely Tag-Along Notices as
follows:
(i) each participating Person (including Investors) shall be
entitled to sell a number of shares of Common Stock (not to exceed, for
Participant, the number of shares of Common Stock identified in such
Participant's Tag-Along Notice) equal to the product of (A) the number of
Allocable Shares of Common Stock and (B) a fraction, the numerator of which
is such stockholder's Ownership Percentage of shares of Common Stock and
the denominator of which is the aggregate Ownership Percentage for all
participating Persons; and
(ii) if after allocating the Allocable Shares of Common Stock to
such stockholders in accordance with clause (i) above, there are any
Allocable Shares that remain unallocated, then they shall be allocated (in
one or more successive allocations on the basis of the allocation method
specified in clause (i) above) among Investors
10
and each Participant that has elected in its Tag-Along Notice to sell a
greater number of shares of Common Stock than previously has been allocated
to it pursuant to clause (i) and this clause (ii) (all of whom (but no
others) shall, for purposes of clause (i) above, be deemed to be the
participating Persons) until all such Allocable Shares have been allocated
in accordance with this clause (ii).
(b) Excluded Transfers. The rights and restrictions contained in
Section 8(a) shall not apply with respect to any of the following Transfers of
shares of Common Stock:
(i) any Transfer of Common Stock by Investors in a Public
Offering;
(ii) any Transfer of Common Stock to and among the members of
Investors and the partners (including limited partners), securityholders,
employees, affiliates or family group of such members; and
(iii) any Transfer of Common Stock incidental to the exercise,
conversion or exchange of such Common Stock in accordance with their terms,
any combination of shares (including any reverse stock split) or any
recapitalization, reorganization or reclassification of, or any merger or
consolidation involving, the Company.
(c) Excluded Shares. No shares of Common Stock that have been
transferred by Investors or Participant in a Transfer pursuant to the provisions
of Section 8(a) ("Excluded Shares") shall be subject again to the restrictions
set forth in Section 8(a), nor shall Participant, if Participant holds Excluded
Shares, be entitled to exercise any rights under Section 8(a) with respect to
such Excluded Shares, and no Excluded Shares held by Investors or Participant
shall be counted in determining the respective participation rights of such
Persons in a Transfer subject to Section 8(a).
(d) Upon the occurrence of any event which gives rise to Participant's
ability or requirement to transfer (including by operation of law) Participant's
interests in the Company or a Subsidiary of the Company to a third party in
exchange for consideration pursuant to this Agreement, at the election of
Participant, the Company shall take, and shall cause its Subsidiaries to take,
all actions necessary to convert Option Shares then held by Participant into the
appropriate type of security to permit Participant to transfer such Shares to
such third party.
(e) The provisions of this Section 8 shall remain in effect following
the first Public Offering.
9. Definitions. For purposes of this Agreement:
(a) "Allocable Shares" shall have the meaning set forth in Section 8 of
this Agreement.
(b) "Cost" shall mean, with respect to Option Shares, the price per
Option Share paid by the Participant (as proportionately adjusted for all
subsequent stock splits, stock dividends and other recapitalizations).
11
(c) "Date of Exercise" shall mean the date the Participant exercises
the Option.
(d) "Disability" shall mean the inability of the Participant to
perform the essential functions of the Participant's job, with or without
reasonable accommodation, by reason of a physical or mental infirmity, for a
continuous period of six months. The period of six months shall be deemed
continuous unless Participant returns to work for at least 30 consecutive
business days during such period and performs during such period at the level
and competence that existed prior to the beginning of the six-month period. The
date of such termination for Disability shall be on the first day of such
six-month period.
(e) "Excluded Shares" shall have the meaning set forth in Section 8 of
this Agreement.
(f) "Fair Market Value" used in connection with the value of Option
Shares shall mean the fair value of the Option Shares determined in good faith
by the Board (without taking into account the effect of any contemporaneous
repurchase of Units at less than Fair Market Value under Section 4).
(g) "Family Group" means, with respect to any individual, such
individual's spouse and descendants (whether natural or adopted) and any trust,
partnership, limited liability company or similar vehicle established and
maintained solely for the benefit of (or the sole members or partners of which
are) such individual, such individual's spouse and/or such individual's
descendants.
(h) "Financing Default" shall mean any event of default under (i) that
certain Senior Secured Credit Facilities, (ii) senior unsecured floating rate
loan facility by and among Xxxxxxx Foods and Bank of America, as administrative
agent and (iii) the Senior Subordinated Notes, or any other similar notes or
instruments that Xxxxxxx Foods or its Subsidiaries may issue from time to time.
(i) "Good Reason" shall have the meaning ascribed to such term in any
management stock purchase and unit subscription agreement, employment or
severance agreement then in effect between Participant and the Company or one of
its Subsidiaries or, if no such agreement containing a definition of "Good
Reason" is then in effect, shall mean either (i) the imposition upon Participant
of substantial additional or different duties which are inconsistent with
Participant's current position and, in the case of such duties which do not
constitute a diminution of duties, without a commensurate increase in
compensation, or (ii) either the reduction of Participant's salary or a material
reduction of other benefits under any employee benefit plan, program or
arrangement of the Company (other than a change that affects all senior
executives of the Company) from the level in effect upon Participant's
commencement of participation in the Plan.
(j) "Investors" shall mean THL-MF Investors, LLC, a Delaware limited
liability company, as well as all affiliates of Investors.
(k) "Offered Securities" shall have the meaning set forth in Section
8.
12
(l) "Ownership Percentage" shall mean, for each stockholder and with
respect to the Common Stock, the percentage obtained by dividing the number of
shares of such Common Stock held by such stockholder by the total number of
shares of Common Stock outstanding.
(m) "Retirement" shall mean, with respect to the Participant, the
Participant's retirement as an employee of the Company or any of its
Subsidiaries on or after reaching age 65 or such earlier age as may be otherwise
determined by the Board after at least three years employment with the Company
or one of its Subsidiaries after the date of this Agreement.
(n) "Sale Notice" shall have the meaning set forth in Section 8 of
this Agreement.
(o) "Senior Secured Credit Facilities" shall mean that certain Credit
Agreement, dated November 20, 2003, by and among the Company and the other
parties named therein, and one or more other debt facilities or commercial paper
facilities, in each case with banks or other institutional lenders providing for
revolving credit loans, term loans, receivables financing (including through the
sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time.
(p) "Senior Subordinated Notes" shall mean those certain 8% Senior
Subordinated Notes due 2013 in an aggregate principal amount of $150,000,000,
issued by THL Food Products Co., a Delaware corporation, on November 20, 2003,
or any other similar notes or instruments that the Company or its Subsidiaries
may issue from time to time.
(q) "Tag-Along Notice" shall have the meaning set forth in Section 8
of this Agreement.
10. No Right to Continued Employment. Nothing contained in the Plan or
this Agreement shall be deemed to obligate the Company or any Subsidiary of the
Company to employ the Participant in any capacity whatsoever or to prohibit or
restrict the Company (or any such subsidiary) from terminating the employment of
the Participant at any time or for any reason whatsoever, with or without Cause.
11. Legend on Certificates. A restrictive legend in the form set forth
below and other legends reasonably requested by the Company shall be placed on
the certificates representing Option Shares issued upon exercise of the Option:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO CERTAIN REPURCHASE OPTIONS AND
OTHER PROVISIONS SET FORTH IN A STOCK OPTION AWARD
AGREEMENT BETWEEN THE ISSUER AND ______________
DATED AS OF NOVEMBER 20, 2003, AS AMENDED FROM
TIME TO TIME, A COPY OF WHICH MAY BE OBTAINED BY
THE HOLDER HEREOF AT THE ISSUER'S PRINCIPAL PLACE
OF BUSINESS WITHOUT
13
CHARGE."
12. Transferability. Except as set forth in this Section 12, Participant
may not transfer his Option or Option Shares. Participant may transfer Option
Shares, subject to the terms and conditions of this Agreement and the Plan, to:
(a) the Participant's Family Group;
(b) a trust solely for the benefit of the Participant and his or her
Family Group; or
(c) a partnership or limited liability company whose only members or
partners are the Participant and members of his or her Family Group;
(each transferee in clauses (i), (ii), and (iii) above, a "Permitted
Transferee"); provided that the Participant, prior to the transfer of Option
Shares to a Permitted Transferee (other than a transfer in connection with or
subsequent to a Sale of the Company), the Participant shall deliver to the
Company a written agreement of the proposed transferee (a) evidencing such
person's undertaking to be bound by the terms of this Agreement and (b)
acknowledging that the Option Shares transferred to such person will continue to
be Option Shares for purposes of this Agreement in the hands of such person. Any
transfer or attempted transfer of Option Shares in violation of any provision of
this Agreement shall be void, and the Company shall not record such transfer on
its books or treat any purported transferee of such Option Shares as the owner
of such Option Shares for any purpose.
13. Confidentiality. Participant recognizes and acknowledges that he may
receive certain confidential and proprietary information and trade secrets of
the Company and its Subsidiaries, including but not limited to confidential
information of the Company and its Subsidiaries regarding their financial
condition (the "Confidential Information"). Participant agrees that he will not,
whether through an Affiliate or otherwise, disclose Confidential Information to
any Person for any reason or purpose whatsoever, except (i) to authorized
representatives and employees of the Company or the Subsidiaries and as
otherwise may be proper in the course of performing Participant's obligations,
or enforcing Participant's rights, under this Agreement, or (ii) as is required
to be disclosed by order of a court of competent jurisdiction, administrative
body or governmental body, or by subpoena, summons or legal process, or by law,
rule or regulation, provided that the Participant shall provide to the Board
prompt notice of such disclosure. For purposes of this Section 13, Confidential
Information shall not include any information (w) that has been published in a
form generally available to the public or becomes generally available to the
public prior to the date Participant discloses such information (such
information shall not be deemed to have been published merely because individual
portions of the information have been separately published, but only if all
material features constituting such information have been published in
combination), (x) of which Participant became aware prior to its affiliation
with the Company, (y) Participant learns from sources other than the Company or
its Subsidiaries (provided that Participant does not know or have reason to
know, at the time of Participant's disclosure of such information, that such
information was acquired by such source through violation of law, breach of
contractual confidentiality obligations or breach of fiduciary duties) or (z)
which is disclosed
14
by the Company in a prospectus or other documents for dissemination to the
public or is otherwise required to be disclosed by law or legal process (subject
to reasonable advance notice to the Company to permit the Company to seek a
protective order or otherwise protect its information).
14. Securities Laws. Upon the acquisition of any Option Shares pursuant to
the exercise of the Option, the Participant will make or enter into such written
representations, warranties and agreements as the Committee may reasonably
request in order to comply with applicable securities laws or with this
Agreement.
15. Notices. Any notice necessary under this Agreement shall be addressed
to the Company in care of its Secretary at the principal executive office of the
Company and to the Participant at the address appearing in the personnel records
of the Company for the Participant or to either party at such other address as
either party hereto may hereafter designate in writing to the other. Any such
notice shall be deemed effective upon receipt thereof by the addressee.
16. Choice of Law. The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of Delaware applicable to
contracts made and to be performed therein.
17. Binding Effect. The provisions of this Agreement shall be binding upon
and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns; provided that Vestar and Marathon
are third party beneficiaries of this Agreement and shall have the right to
enforce the provisions hereof.
18. Amendment; Waiver. This Agreement may be amended only by a written
instrument signed by the parties hereto. No waiver by any party hereto of any of
the provisions hereof shall be effective unless set forth in writing executed by
the party so waiving.
19. Option Subject to Plan. By entering into this Agreement the
Participant agrees and acknowledges that the Participant has received and read a
copy of the Plan. The Option and the Option Shares are subject to the Plan. The
terms and provisions of the Plan as it may be amended from time to time in
accordance with its respective terms are hereby incorporated herein by
reference. In the event of a conflict between any term or provision contained
herein and a term or provision of the Plan, the applicable terms and provisions
of the Plan will govern and prevail.
20. Signature in Counterparts. This Agreement may be signed in
counterparts (including by means of telecopied signature pages), each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
THL FOOD PRODUCTS HOLDING CO.
By:____________________________
Its:
Agreed and acknowledged as
of the date first above written:
____________________________________
Name of Participant
16
