EXHIBIT 10.20
OPTION NO: D-4
FOUNDERS FOOD & XXXXXXX LTD.
STOCK OPTION AGREEMENT
PURSUANT TO 1997 DIRECTOR STOCK OPTION PLAN
Founders Food & Xxxxxxx Ltd., a Minnesota corporation (the "Company"),
hereby grants to Xxxxx X. Xxxxxxxxxx (the "Optionee"), an option to purchase the
number of shares of the Company's Common Stock, $.01 par value per share (the
"Stock"), set forth herein. The Stock shall be issued at the price determined as
provided herein, and shall be in all respects subject to the terms, definitions
and provisions of the Founders Food & Xxxxxxx Ltd. 1997 Director Stock Option
Plan (the "Plan") adopted by the Company, which is incorporated herein by
reference. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings herein.
W I T N E S S E T H :
1. GRANT OF OPTION. Pursuant to the provisions of the Plan and subject to
the additional conditions set forth herein, the Optionee has been automatically
granted on the date hereof the right and option to purchase from the Company all
or a part of an aggregate of 15,000 shares of Stock, subject to adjustment as
provided in Section 4(d) of the Plan, at the purchase price of $4.00 per share
(the "Option"). The Option does not constitute an incentive stock option within
the meaning of Section 422 of the Code.
2. TERMS AND CONDITIONS. It is understood and agreed that the Option
evidenced hereby is subject to the following terms and conditions and to the
terms and conditions of the Plan:
(a) EXPIRATION DATE. The Option shall expire five (5) years after the
date hereof.
(b) EXERCISE OF OPTION. The Option shall become exercisable in full on the
first anniversary of the grant of the Option, provided that the Optionee shall
have maintained Continuous Service as a Director throughout such 12-month
period. The Option shall be exercisable only while the Optionee serves as an
outside director of the Company, and for a period twelve (12) months after
ceasing to be an outside director pursuant to Section 10 of the Plan. Any
exercise shall be accompanied by a written notice to the Company specifying the
number of shares as to which the Option is being exercised. Notation of any
partial exercise shall be made by the Company on Schedule I attached hereto.
(c) PAYMENT OF PURCHASE PRICE UPON EXERCISE. At the time of any exercise,
the purchase price of the shares as to which the Option is exercised shall be
paid in cash to the Company, unless, in accordance with the provisions of
Section 9(b) of the Plan, the Board shall permit payment of the purchase price
in another manner.
(d) EXERCISE UPON DEATH OR TERMINATION OF STATUS AS A DIRECTOR.
(i) TERMINATION OF STATUS AS A DIRECTOR. If the Optionee ceases to
serve as a director, the Optionee may, but only within twelve (12) months
after the date the Optionee ceases to be an outside director of the
Company, exercise his Option to the extent the Optionee was entitled to
exercise it at the date of such termination. To the extent that the
Optionee was not entitled to exercise the Option at the date of such
termination, or if the Optionee does not exercise such Option within the
time specified herein, the Option shall terminate.
(ii) DEATH OF OPTIONEE. In the event of the death of the Optionee
occurring:
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(A) during the term of the Option, and provided that the Optionee
was at the time of death a director of the Company and had been in
Continuous Service as a director since the date of grant of the
Option, the Option may be exercised, at any time within twelve (12)
months following the date of death, by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that
would have accrued had the Optionee continued living and remained in
Continuous Service a director for twelve (12) months after the date of
death; or
(B) within thirty (30) days after the termination of Continuous
Service as a director, the Option may be exercised, at any time within
six (6) months following the date of death, by the Optionee's estate
or by a person who acquired the right to exercise the Option by
bequest or inheritance, but only to the extent of the right to
exercise that had accrued at the date of termination of Continuous
Service as a director.
(e) NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent and distribution or pursuant to a qualified
domestic relations order and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
(f) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The number of shares of
Common Stock covered by the Option and the per share exercise price of the
Option shall be proportionately adjusted for any increase or decrease in the
number of issued and outstanding shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein or
in the Plan, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, or options or rights
to purchase shares of Common Stock of any class shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to the Option.
(g) NO RIGHTS AS SHAREHOLDER. The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock subject to this Option
prior to the date of issuance to him of a certificate or certificates for such
shares.
(h) NO RIGHT TO CONTINUED STATUS AS A DIRECTOR. The Option shall not confer
upon the Optionee any right with respect to continued status as a director of
the Company, nor shall it interfere in any way with the right of the Company or
its shareholders to terminate his status as a director of the Company at any
time.
(i) COMPLIANCE WITH LAW AND REGULATIONS. This Option and the obligation of
the Company to sell and deliver shares of its Common Stock hereunder shall be
subject to all applicable federal and state laws, rules and regulations and to
such approvals by any government or regulatory agency as may be required. The
Company shall not be required to issue or deliver any certificates for shares of
Common Stock prior to (i) compliance with the regulations of the NASD or any
stock exchange on which the Common Stock may then be listed and (ii) the
completion of any registration or qualification of such shares under any federal
or state law, or any rule or regulation of any government body which the Company
shall, in its sole discretion, determine to be necessary or advisable. Moreover,
this Option may not be exercised if its exercise or the receipt of shares of
Common Stock pursuant hereto would be contrary to applicable law.
3. INVESTMENT REPRESENTATION. As a condition to the exercise of the Option,
the Company may require the person exercising the Option to represent and
warrant (in the form attached hereto as Exhibit A) at the time of exercise that
the shares of Common Stock are being purchased only for investment and without
any present
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intention to sell or distribute such shares, if, in the opinion of counsel for
the Company, such a representation is required by any relevant provisions of
law. The shares of Common Stock issued pursuant to the Option may be issued with
appropriate legends on the stock certificates representing the shares, and the
Company may place stop transfer orders with respect to such shares.
4. OPTIONEE BOUND BY PLAN. The Optionee hereby acknowledges receipt of a
copy of the Plan and agrees to be bound by all the terms and provisions thereof.
5. NOTICES. Any notice hereunder to the Company shall be addressed to it at
its principal executive offices; and any notice hereunder to the Optionee shall
be addressed to him at the address set forth below; subject to the right of
either party to designate at any time hereunder in writing some other address.
6. COUNTERPARTS. This Agreement may be executed in two counterparts each of
which shall constitute one and the same instrument.
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IN WITNESS WHEREOF, Founders Food & Xxxxxxx Ltd., has caused this Agreement
to be executed by its Chief Executive Officer and the Optionee has executed this
Agreement, both as of the day and year first above written.
DATE OF GRANT: November 26, 1999
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FOUNDERS FOOD & XXXXXXX LTD.
By: /s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
Optionee (signature)
/s/ Xxxxx X. Xxxxxxxxxx
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Name and address of Optionee
(type or print):
Xxxxx X. Xxxxxxxxxx
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3709 Xxxxxx Xxxxx
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Xxxxxxxx Xxxx, Xxxxxxxxx 00000
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EXHIBIT A
INVESTMENT REPRESENTATION STATEMENT
PURCHASER : Xxxxx X. Xxxxxxxxxx
ISSUER : Founders Food & Xxxxxxx Ltd.
SECURITY : Common Stock
AMOUNT : ____________ Shares
DATE : __________________
In connection with the purchase of the common stock ("Securities") of
Founders Food & Xxxxxxx Ltd. (the "Company"), the undersigned represents to the
Company the following:
(a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am
purchasing the Securities for my own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Securities
Act").
(b) I understand that the Securities have not been registered under
the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of my
investment intent as expressed herein. In this connection, I understand that, in
the view of the Securities and Exchange Commission (the "SEC"), the statutory
basis for such exemption may be unavailable if my representation was predicated
solely upon a present intention to hold the Securities for the minimum capital
gains period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Securities, or for a period of
one year or any other fixed period in the future.
(c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. Moreover, I understand that the
Company is under no obligation to register the Securities. In addition, I
understand that the certificate evidencing the Securities will be imprinted with
a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel for
the Company.
(d) I am familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act by the SEC, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of issuance of the Securities, such
issuance will be exempt from registration under the Securities Act. In the event
the Company later becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended, ninety (90) days
thereafter the securities exempt under Rule 701 may be resold, subject to the
satisfaction of certain of the conditions specified by Rule 144, including among
other things: (1) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934, as amended); and, in
the case of an affiliate of the Company, (2) the availability of certain public
information about the Company, and the amount of securities being sold during
any three month period not exceeding the limitations specified in paragraph (e)
of Rule 144, if applicable. Notwithstanding this paragraph (d), I acknowledge
and agree to the restrictions set forth in paragraph (e) hereof.
In the event that the Company does not qualify under Rule 701 at the time
of issuance of the Securities, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires
among other things: (1) the availability of certain public information about the
Company, (2) the resale
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occurring not less than one year after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and, in
the case of an affiliate, or of a non-affiliate who has held the securities less
than two years, (3) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934, as amended) and the
amount of securities being sold during any three month period not exceeding the
specified limitations stated therein, if applicable.
(e) I further understand that in the event all of the applicable
requirements of Rule 144 or Rule 701 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule 144 and
Rule 701 are not exclusive, the Staff of the SEC has expressed its opinion that
persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 or Rule 701 will
have a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their own
risk.
Dated: Signature of Purchaser:
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Xxxxx X. Xxxxxxxxxx
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SCHEDULE I - NOTATIONS AS TO PARTIAL EXERCISE
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Number of Balance of Shares Authorized
Date of Exercise Purchased Shares on Option Signature Notation Date
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