NONQUALIFIED STOCK OPTION AWARD AGREEMENT Issued Pursuant to the Purple Beverage Company, Inc. 2007 Incentive Plan
Issued
Pursuant to the
Purple
Beverage Company, Inc. 2007 Incentive Plan
THIS
OPTION AWARD AGREEMENT (“Agreement”), effective ______,
(the
“Date of Grant”) represents the grant of an incentive stock option (“Option”) by
Purple Beverage Company, Inc. (the “Company”), to ___________________ (the
“Participant”) pursuant to the provisions of the Purple Beverage Company, Inc.
2007 Incentive Plan adopted ______ __, 2007 and approved by shareholders ____
__, 2007 (the “Plan”), as may be amended from time to time. The Option granted
hereby is not intended to be an “ISO”, as such term is defined in the Plan,
within the meaning of Section 422 of the Code.
The
Plan
provides a complete description of the terms and conditions governing this
Option. If there is any inconsistency between the terms of this Agreement and
the terms of the Plan, the Plan’s terms shall completely supersede and replace
the conflicting terms of this Agreement. All capitalized terms shall have the
meanings ascribed to them in the Plan, unless specifically set forth otherwise
herein, and the receipt of a copy of which the Participant hereby acknowledges
by his or her signature below. The parties hereto agree as follows:
1. General
Option Grant Information.
The
individual named above has been selected to be a Participant in the Plan and
receive an incentive option grant, as of the Date of Grant, as specified
below:
(a) Number
of Shares Covered by this Option:
____________
(b) Option
Price per share:
$0.50
(c) Date
of Expiration:
______,
2012
2. Grant
of Option.
The
Company hereby grants to the Participant an Option to purchase the number of
Shares set forth above, at the stated Option Price per share, which is 100%
of
the Fair Market Value of a Share on the Date of Grant, in the manner and subject
to the terms and conditions of the Plan and this Agreement. The Committee has
determined that the Fair Market Value of a Share on the date of grant is equal
to $0.50.
3. Option
Term.
The term
of this Option begins as of the Date of Grant as detailed above and continues
through the Date of Expiration as detailed above, unless sooner terminated
in
accordance with the terms of this Agreement.
4. Vesting
Period:
If the
Participant has been continuously employed by the Company or its Subsidiaries
or
Affiliates, with respect to each incremental vesting period, this Option shall
vest and be exercisable, as to one-third of the total Shares covered by the
Option, each year over a three year period, with the first one-third of the
total Option vesting on the first anniversary of the Date of Grant, the second
one-third of the total Option vesting on the second anniversary of the Date
of
Grant, and the third one-third of the total Option vesting on the third
anniversary of the Date of Grant.
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Notwithstanding
anything to the contrary set forth herein, in the event of the occurrence of
a
change in control of the Company (a “Change in Control”), the Option shall
immediately vest. For purposes of this Agreement, a “Change in Control” shall be
deemed to occur if: (i) there shall have occurred a change in control of the
Company of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended, as in effect on the date hereof, whether or not the
Company is then subject to such reporting requirement, provided,
however,
that
the foregoing event shall not be deemed to be a Change in Control if immediately
prior to such transaction the Participant or an entity of which the Participant
is an executive officer, director or more than five percent equity holder is,
directly or indirectly, one of the new controlling parties; or (ii) the Company
has merged or consolidated with, or sold substantially all of its assets to,
another company, provided,
however,
that
the foregoing event shall not be deemed to be a Change in Control if immediately
prior to such transaction the Participant is an executive officer, director
or
more than five percent equity holder of the other party to the transaction
or of
any entity directly or indirectly controlling that party to the transaction.
Provided, further, that if in the event of a Change in Control, the successor
company assumes or substitutes options for its shares for this Option then
the
vesting of this Option shall not be accelerated.
Notwithstanding
the foregoing, in the event of a termination of the Participant’s employment or
directorship in such successor company within twenty-four (24) months following
such Change in Control, the Option granted hereunder or the substitute option
held by such Participant at the time of the Change in Control shall vest as
of
the day preceding the date of termination.
Notwithstanding
anything to the contrary set forth herein, in the event of the termination
of
the Participant’s employment for Cause, the Option and all rights granted
hereunder shall be forfeited and deemed canceled and no longer exercisable
on
the day of such termination of employment. For the purposes of their Agreement,
“Cause” shall be defined as: (a) a material breach by Participant of any term of
this Agreement; (b) an intentional refusal or failure to follow the lawful
and
reasonable instructions of the Board of Directors or an individual to whom
the
Board of Directors instructed the Participant to report (as appropriate); (c)
a
willful or habitual neglect of duties; (d) misconduct on the part of Participant
that is materially injurious to the Company, including, without limitation,
misappropriation of trade secrets, fraud or embezzlement; or (e) Participant’s
conviction for fraud, theft or a felony involving moral turpitude. In the case
of clauses (a) through (c), Participant fails to cure such breach within thirty
(30) days of Participant’s receipt of written notice from the Company;
provided,
however,
that
such cure period shall not be applicable if, in the case of clause (a), the
Board of Directors, in its sole discretion, has determined that such breach
is
not capable of being fully cured; provided,
further,
that,
upon the second occurrence of a breach of under clauses (a) through (c), no
such
cure period need be extended to Participant. A determination of Cause shall
be
made by the Board of Directors of the Company.
5. Exercise:
This
Option shall not be transferable by the Participant other than by will or the
laws of descent and distribution. The Participant, or the Participant’s
representative upon the Participant’s death or disability, may exercise this
Option at any time prior to the termination of the Option, subject to and as
provided in Sections 3 and 8.
6. How
to Exercise:
Once
vested, the Options hereby granted shall be exercised by written notice to
the
Company, specifying the number of Shares subject to this Option Participant
desires to exercise. The Option Price of the Options shall be payable to the
Company in full either: (a) in cash or its equivalent; or (b) any other
method approved or accepted by the Committee in its sole discretion, including,
without limitation, if the Committee so determines, a cashless (broker-assisted)
exercise. In no event may the Option be exercised for a fraction of a
share.
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Unless
otherwise determined by the Committee, all cash payments under all of the
methods indicated above shall be paid in United States dollars.
7. Nontransferability.
This
Option may not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent and distribution,
and may be exercised or surrendered during Participant’s lifetime only by the
Participant or his or her guardian or legal representative. No assignment or
transfer of the Option in violation of this Section 7, whether voluntary or
involuntary, by operation of law or otherwise, except by will or the laws of
descent and distribution or as otherwise required by applicable law, shall
vest
in the assignee or transferee any interest whatsoever. Notwithstanding the
foregoing, upon the request of the Participant, the Committee may, in its sole
discretion, permit the Participant to transfer this Option under such terms
and
conditions as the Committee may determine. In the event of any such transfer,
the Option shall still be subject to the provisions of Section 7 hereof and
Section 6.8 of the Plan concerning the exercisability during the Participant’s
employment.
8. Termination
of Option:
(a)
In
General.
If the
Participant ceases to perform services of any kind for the Company or any of
its
Subsidiaries or Affiliates for any reason other than death or disability, the
vested portion of this Option shall remain exercisable; provided,
however,
that,
in the event of termination for Cause, this Option shall terminate and be of
no
force or effect; provided,
further,
that in
no instance may the term of the Option, as so extended, exceed the date of
expiration set forth in Section 1(d), above.
(b)
Death.
In the
event the Participant dies while employed by the Company or any of its
Subsidiaries or Affiliates, the Option to the extent not previously expired
or
exercised shall, to the extent vested and exercisable on the date of death,
be
exercisable by the estate of such Participant or by any person who acquired
such
Option by bequest or inheritance at any time, unless earlier terminated pursuant
to its terms, provided,
however,
that in
no instance may the term of the Option, as so extended, exceed the date of
expiration set forth in Section 1(d) above.
(c)
Disability.
In the
event the Participant ceases to perform services of any kind for the Company
or
any of its Subsidiaries or Affiliates due to permanent and total disability,
the
Participant, or his guardian or legal representative, shall have the unqualified
right to exercise the vested portion of the Option, to the extent not previously
exercised or expired, as of the first date of permanent and total disability
(as
determined in the sole discretion of the Committee), at any time within one
year
after the first date of permanent and total disability, unless earlier
terminated pursuant to its terms, provided,
however,
that in
no instance may the term of the Option, as so extended, exceed the date of
expiration set forth in Section 1(d), above. For purposes of this Agreement,
the
term “permanent and total disability” means the Participant is unable to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than
12 months, and the permanence and degree of which shall be supported by medical
evidence satisfactory to the Committee. Notwithstanding anything to the contrary
set forth herein, the Committee shall determine, in its sole and absolute
discretion, (1) whether a Participant has ceased to perform services of any
kind
due to a permanent and total disability and, if so, (2) the first date of such
permanent and total disability.
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9. Sale
Restriction.
(a) The
Shares covered by the Option shall be subject to the restrictions contained
in
this Section 9 that shall commence on the date hereof and terminate two years
hereafter (the “Restriction Period”).
(b) The
following legend shall be contained on the Participant’s certificate
representing the Shares:
THE
SHARES OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS PURSUANT TO A NONQUALIFIED STOCK OPTION AGREEMENT THAT MAY BE
EXAMINED AT THE PRINCIPAL PLACE OF BUSINESS OF THE COMPANY OR MAY BE FURNISHED
WITHOUT CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON RECEIPT BY THE COMPANY
AT
ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM
THE STOCKHOLDER.
(c) The
Participant hereby agrees that during the Restriction Period and without the
prior written consent of the Company, which may be withheld, delayed, or denied
for any reason or for no reason, the Participant will not sell, transfer or
otherwise dispose of any shares of common stock or any options, warrants or
other rights to purchase shares of common stock or any other security of the
Company that the Participant owns or has a right to acquire as of the date
hereof or during the Restriction Period, other than in connection with an offer
made to all stockholders of the Company in connection with merger, consolidation
or similar transaction involving the Company. The Participant further agrees
that the Company is authorized to and the Company agrees to place “stop orders”
on its books to prevent any transfer of shares of common stock or other
securities of the Company held by the Participant in violation of this
Agreement. In connection with the agreement of the Participant, the Company
hereby agrees to use commercially reasonable efforts not to allow any
transaction inconsistent with this Section 9; provided,
however,
that
upon the prior written consent of the Company, which may be withheld, delayed,
or denied for any reason or for no reason, during each calendar month of the
last year of the Restriction Period, the Participant may sell,
pledge,
hypothecate, or otherwise derive economic value from an amount of Shares
equivalent to not more than five percent of the number of Shares subject to
the
restrictions set forth in this Section 9. In the event the Participant does
not
sell five percent of the Shares in any of such months (assuming permission
has
been so granted), such unsold Shares may be sold in any future month without
reducing such future month’s five percent allowance (assuming permission has
been so granted). Upon the expiration of the Restriction Period, the Participant
will no longer be subject to any potential contractual restrictions in favor
on
the disposition of any of the Shares.
(d) The
Participant and the Company agree that any subsequent issuance to and/or
acquisition by the Participant of common stock of the Company, or its corporate
successor (the “Convertible Securities”) during the Restriction Period will be
subject to the provisions of this Section 9.
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(e) Notwithstanding
the foregoing potential restrictions set forth in this Section 9, the
Participant may, at any time and from time to time during the Restriction
Period, transfer all or a portion of the shares of common stock or Convertible
Securities (i) as bona fide gifts or transfers by will or intestacy and
(ii) to any trust for the direct or indirect benefit of the Participant or
the immediate family of the Participant, provided,
however,
that
any such transfer shall not involve a disposition for value; provided,
further,
that,
in the case of any gift or transfer described in clauses (i) and (ii), each
donee or transferee agrees in writing to be bound by the terms and conditions
contained herein in the same manner as such terms and conditions apply to the
Participant.
10. Administration.
This
Agreement and the rights of the Participant hereunder are subject to all the
terms and conditions of the Plan, as the same may be amended from time to time,
as well as to such rules and regulations as the Committee may adopt for
administration of the Plan. It is expressly understood that the Committee is
authorized to administer, construe, and make all determinations necessary or
appropriate to the administration of the Plan and this Agreement, all of which
shall be binding upon the Participant. Any inconsistency between the Agreement
and the Plan shall be resolved in favor of the Plan.
11. Reservation
of Shares.
The
Company hereby agrees that at all times there shall be reserved for issuance
and/or delivery upon exercise of the Option such number of Shares as shall
be
required for issuance or delivery upon exercise hereof.
12. Adjustments.
The
number of Shares subject to this Option, and the exercise price, shall be
subject to adjustment in accordance with Section 4.4 of the Plan.
13. Exclusion
from Pension Computations.
By
acceptance of the grant of this Option, the Participant hereby agrees that
any
income or gain realized upon the receipt or exercise hereof, or upon the
disposition of the Shares received upon its exercise, is special incentive
compensation and shall not be taken into account, to the extent permissible
under applicable law, as “wages”, “salary” or “compensation” in determining the
amount of any payment under any pension, retirement, incentive, profit sharing,
bonus or deferred compensation plan of the Company or any of its Subsidiaries
or
Affiliates.
14. Amendment.
The
Committee may, with the consent of the Participant, at any time or from time
to
time amend the terms and conditions of the Option, and may at any time or from
time to time amend the terms of this Option in accordance with the Plan.
15. Notices.
Any
notice which either party hereto may be required or permitted to give to the
other shall be in writing, and may be delivered personally or by mail, postage
prepaid, or overnight courier, addressed as follows: if to the Company, at
its
office at ▇▇▇ ▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, or at such other address as the Company by
notice to the Participant may designate in writing from time to time; and if
to
the Participant, at the address shown below his or her signature on this
Agreement, or at such other address as the Participant by notice to the Company
may designate in writing from time to time. Notices shall be effective upon
receipt.
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16. Withholding
Taxes.
(a)
The
Company shall have the right to withhold from a Participant, or otherwise
require such Participant or assignee to pay, any Withholding Taxes arising
as a
result of (i) exercise of the Option, or any other taxable event occurring
pursuant to the Plan or this Agreement, or (ii) a Disqualifying Disposition
(as
defined below) of Shares. If the Participant shall fail to make such tax
payments as are required, the Company (or its Affiliates or Subsidiaries) shall,
to the extent permitted by law, have the right to deduct any such Withholding
Taxes from any payment of any kind otherwise due to such Participant or to
take
such other action as may be necessary to satisfy such Withholding Taxes. In
satisfaction of the requirement to pay Withholding Taxes, the Participant may
make a written election which may be accepted or rejected in the discretion
of
the Committee (i) to have withheld a portion of any Shares or other payments
then issuable to the Participant pursuant to any Award, or (ii) to tender other
Shares to the Company (either by actual delivery or attestation, in the sole
discretion of the Committee, provided that,
except
as otherwise determined by the Committee, the Shares that are tendered must
have
been held by the Participant for at least six (6) months prior to their tender
to satisfy the Option Price or have been purchased on the open market), in
either case having an aggregate Fair Market Value equal to the Withholding
Taxes.
17. Registration;
Legend.
The
Company may postpone the issuance and delivery of Shares upon any exercise
of
this Option until (a) the admission of such Shares to listing on any stock
exchange or exchanges on which Shares of the Company of the same class are
then
listed and (b) the completion of such registration or other qualification of
such Shares under any state or federal law, rule or regulation as the Company
shall determine to be necessary or advisable. The Participant shall make such
representations and furnish such information as may, in the opinion of counsel
for the Company, be appropriate to permit the Company, in light of the then
existence or non-existence with respect to such Shares of an effective
Registration Statement under the Securities Act of 1933, as amended, to issue
the Shares in compliance with the provisions of that or any comparable
act.
The
Company may cause the following or a similar legend to be set forth on each
certificate representing Shares or any other security issued or issuable upon
exercise of this Option unless counsel for the Company is of the opinion as
to
any such certificate that such legend is unnecessary:
NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE ACCEPTABLE TO THE COMPANY.
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18. Miscellaneous.
(a) This
Agreement shall not confer upon the Participant any right to continuation of
employment by the Company or any of its Subsidiaries or Affiliates, nor shall
this Agreement interfere in any way with the Company’s or any of its
Subsidiaries’ or Affiliates’ right to terminate, retire or request the
termination of the Participant at any time.
(b) The
Participant shall have no rights as a stockholder of the Company with respect
to
the Shares subject to this Option Agreement until such time as the purchase
price has been paid, and the Shares have been issued and delivered to the
Participant.
(c) With
the
approval of the Board, and if necessary, the shareholders, the Committee may
terminate, amend, or modify the Plan; provided, however, that no such
termination, amendment, or modification of the Plan may in any way adversely
affect the Participant’s rights under this Agreement.
(d) This
Agreement shall be subject to all applicable laws, rules, and regulations,
and
to such approvals by any governmental agencies or national securities exchanges
as may be required.
(e) To
the
extent not preempted by federal law, this Agreement shall be governed by, and
construed in accordance with the laws of the State of New York, without regard
to the principles of conflicts of law which might otherwise apply.
(f) All
obligations of the Company under the Plan and this Agreement, with respect
to
the Option, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
(g) The
provisions of this Agreement are severable and if any one or more provisions
are
determined to be illegal or otherwise unenforceable, in whole or in part, the
remaining provisions shall nevertheless be binding and enforceable.
(h) By
accepting this Award or other benefit under the Plan, the Participant and each
person claiming under or through the Participant shall be conclusively deemed
to
have indicated their acceptance and ratification of, and consent to, any action
taken under the Plan by the Company, the Board or the Committee.
(i) The
Participant, every person claiming under or through the Participant, and the
Company hereby waives to the fullest extent permitted by applicable law any
right to a trial by jury with respect to any litigation directly or indirectly
arising out of, under, or in connection with the Plan or this Award Agreement
issued pursuant to the Plan.
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19. Exculpation.
This
Option and all documents, agreements, understandings and arrangements relating
hereto have been executed by the undersigned in his/her capacity as an officer
of the Company, and not individually, and neither the Directors, officers or
shareholders of the Company nor of any Subsidiary or Affiliate of the Company
shall be bound or have any personal liability hereunder. Each party hereto
shall
look solely to the assets of the Company for satisfaction of any liability
of
the Company in respect of the Option and all documents, agreements,
understanding and arrangements relating hereto and will not seek recourse or
commence any action against any of the Directors, officers or shareholders
of
the Company or of any Subsidiary or Affiliate of the Company, or any of their
personal assets for the performance or payment of any obligation hereunder
or
thereunder. The foregoing shall also apply to any future documents, agreements,
understandings, arrangements and transactions between the parties
hereto.
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COMPANY:
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PURPLE
BEVERAGE COMPANY, INC.
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▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, President
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PARTICIPANT:
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BY:
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____________,
its ________________
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Address:
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