EXHIBIT 10.19
CRUNCH HOLDING CORP.
2004 STOCK PURCHASE PLAN
1. Purpose.
Crunch Holding Corp., a Delaware corporation (the "Company"), by means of
this 2004 Stock Purchase Plan (the "Plan"), desires to afford certain
individuals and key employees of the Company and any parent corporation or
subsidiary corporation thereof now existing or hereafter formed or acquired
(such parent and subsidiary corporations sometimes referred to herein as
"Related Entities") who are responsible for the continued growth of the Company
an opportunity to acquire a proprietary interest in the Company, and thus to
create in such persons an increased interest in and a greater concern for the
welfare of the Company and any Related Entities. As used in the Plan, the terms
"parent corporation" and "subsidiary corporation" shall mean, respectively, a
corporation within definition of such terms contained in Sections 424(e) and
424(f), respectively, of the Internal Revenue Code of 1986, as amended (the
"Code"). All defined terms not otherwise defined in Sections 2 through 16 of the
Plan shall have the meanings set forth in Section 17 of the Plan.
2. Administration.
(a) Committee. The Board of Directors of the Company (the "Board of
Directors") shall administer the Plan with respect to all Eligible Holders (as
hereinafter defined) or may delegate all or part of its duties under this Plan
to any committee or sub-committee specially appointed by the Board of Directors
(the "Committee") or to any officer or committee of officers of the Company,
subject in each case to such conditions and limitations, as the Board of
Directors may establish. The number of persons that shall constitute the
Committee shall be determined from time to time by a majority of all the members
of the Board of Directors. Except for references in Sections 2(a), 2(b), and
2(c) hereof and unless the context otherwise requires, references herein to the
"Committee" shall also refer to the Board of Directors as administrator of the
Plan or to the appropriate delegate of the Committee or the Board of Directors.
(b) Duration, Removal, Etc. The members of the Committee shall serve at
the pleasure of the Board of Directors, which shall have the power, at any time
and from time to time, to remove members from or add members to the Committee or
to disband the Committee. Removal from the Committee may be with or without
cause. Any individual serving as a member of the Committee shall have the right
to resign from membership in the Committee by written notice to the Board of
Directors. The Board of Directors, and not the remaining members of the
Committee, shall have the power and authority to fill vacancies on the
Committee, however caused.
(c) Meetings and Actions of Committee. The Board of Directors shall
designate which of the Committee members shall be the chairman of the Committee.
If the Board of Directors fails to designate a Committee chairman, the members
of the Committee shall elect one of the Committee members as chairman, who shall
act as chairman until he ceases to be a member of the Committee or until a new
chairman is elected. The Committee shall hold its meetings at those times and
places as the chairman of the Committee may determine. At all
meetings of the Committee, a quorum for the transaction of business shall be
required, and a quorum shall be deemed present if at least a majority of the
members of the Committee are present. At any meeting of the Committee, each
member shall have one vote. All decisions and determinations of the Committee
shall be made by the majority vote or majority decision of all of its members
present at a meeting at which a quorum is present; provided, however, that any
decision or determination reduced to writing and signed by all of the members of
the Committee shall be as fully effective as if it had been made at a meeting
that was duly called and held. The Committee may make any rules and regulations
as it may deem advisable for the conduct of its business that are not
inconsistent with the provisions of the Plan, the certificate of incorporation
of the Company, the by-laws of the Company, Rule 16b-3 so long as it is
applicable, and Section 162(m) so long as it is applicable.
(d) Authority of Committee. Subject to the authority of the Board of
Directors to set conditions and limitations, the Committee shall interpret and
construe the Plan and all rights to purchase Securities ("Rights to Purchase")
granted under the Plan, shall make, such rules as it deems necessary for the
proper administration of the Plan, shall make all other determinations necessary
or advisable for the administration of the Plan, including the determination of
eligibility to participate in the Plan and limitations on the number of shares
subject to a participant's Rights to Purchase under the Plan, and shall correct
any defect or supply any omission or reconcile any inconsistency in the Plan or
in any Rights to Purchase granted under the Plan in the manner and to the extent
that the Committee deems desirable to carry the Plan or any Rights to Purchase
into effect. The Committee shall, in its sole discretion exercised in good
faith, make such decisions or determinations and take such actions as it deems
appropriate and all such decisions, determinations and actions taken or made by
the Committee pursuant to this and the other paragraphs of the Plan shall be
conclusive on all parties.
(e) Reliance on Experts. In making any determination or in taking or not
taking any action under this Plan, the Committee or the Board of Directors, as
the case may be, may obtain, rely upon the advice of, and pay all reasonable
expenses related to obtaining, experts, including employees of and professional
advisors to the Company or any Related Entity.
(f) Delegation. The Committee or the Board of Directors, as the case may
be, may delegate ministerial, non-discretionary functions to individuals who are
officers or employees of the Company or a Related Entity. Additionally, the
Board of Directors or a committee comprised solely of directors may also
delegate, to the extent permitted by Section 157(c) of the Delaware General
Corporation Law and any other applicable law, to one or more officers of the
Corporation, its powers under this Plan (a) to designate the officers and
employees of the Corporation and its Subsidiaries who will receive Rights to
Purchase and (b) to determine the number of shares subject to the Rights to
Purchase to be received by them, pursuant to a resolution that specifies the
total number of shares that may be granted under the delegation, provided that
no officer may be delegated the power to designate himself or herself as a
recipient of such Rights to Purchase.
(g) Exculpation. No director, manager, member, officer, stockholder or
agent of the Company or a Related Entity will be liable for any action, omission
or decision under the Plan taken, made or omitted in good faith.
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3. Shares Available; Purchase Price.
(a) The maximum aggregate number of shares of common stock, $0.01 par
value, of the Company ("Common Stock") which may be sold pursuant to Rights to
Purchase granted under Plan shall be 14,500,000 shares (subject to equitable
adjustment in the event of any reclassification, recapitalization, combination,
stock split, reverse stock split or other similar event). Shares of Common Stock
purchased under the Plan (the "Securities") may be (i) authorized and unissued
shares of Common Stock, (ii) issued shares of Common Stock held in the Company's
treasury, or (iii) issued shares of Common Stock reacquired by the Company, in
each situation as the Board of Directors or the Committee may determine from
time to time. Any shares which are not subject to outstanding Rights to Purchase
upon the termination of the Plan shall cease to be subject to the Plan.
(b) The purchase price for each Security (the "Purchase Price") will be
the fair market value (as determined in good faith by the Committee or the Board
of Directors) per share on the date of determination.
4. Eligibility and Bases of Participation.
Rights to Purchase may be granted from time to time to any Eligible Holder
in accordance with the Plan. The adoption of the Plan shall not be deemed to
give any Person a right to be granted any such Rights to Purchase.
5. Offer of Rights to Purchase. The Company shall offer such Rights to Purchase
in such number and manner as may be determined by the Committee, under the Plan
to the Eligible Holders by means of a written offer (the "Offer"). Each Offer
shall specify (a) the number of Securities that may purchased thereunder, (b)
the purchase price per share thereunder, (c) the time frame by which such Offer
must be accepted, (d) the manner in which such Offer may be accepted, including
the form of all required subscription agreements and other documents, (e) the
manner and terms by which the underlying purchase price may be paid, (f) the
terms and conditions of any required suitability requirements that must be
fulfilled by the Eligible Holders in order for the Offer to be accepted, (g) any
waiver by the Company of any one or more of the restrictions and limitations set
forth in Sections 6, 7 or 8 of the Plan to the Securities that may be purchased
under such Offer and (h) such other provisions as the Committee may determine.
Notwithstanding the foregoing, all Rights to Purchase granted to an Eligible
Holder shall terminate automatically and no Securities shall be purchasable with
respect to such Rights to Purchase upon such Eligible Holder's termination of
employment or if a Sale of the Company is proposed to be effected, unless
otherwise provided by the Committee.
6. Purchase Option and Call Option. Unless the Committee so determines and the
terms of an Offer for the underlying Right to Purchase expressly provide
otherwise, all Securities purchased by an Eligible Holder pursuant to a Right to
Purchase shall be subject to the following:
(a) Termination of Employment or Services.
(i) Purchase Option. If any Eligible Holder's employment, services
agreement (whether written or oral) or directorship with the
Company or a
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Related Entity terminates for any reason at any time, the
Company (and/or its designees) shall have the right (but not
the obligation) to purchase in one or more transactions (the
"Purchase Option"), and the Grantor shall be obligated to sell
to the Company (and/or its designees), all or any portion (at
the Company's option) of the Securities previously purchased
by such Eligible Holder under this Plan (such Securities being
referred to herein as the "Purchasable Shares").
Notwithstanding the foregoing, repurchases of Purchasable
Shares pursuant to the Purchase Option may only be consummated
with respect to Purchasable Shares owned by an Eligible Holder
for at least six months after the date such Purchasable Shares
were purchased by such Eligible Holder under this Plan. For
purposes of this Plan, if a Related Entity ceases to be a
Subsidiary, a termination of employment or service will be
deemed to have occurred with respect to each Eligible Holder
in respect of such Subsidiary who does not continue as an
Eligible Holder in respect of another entity within the
Company or Related Entity.
(ii) Purchase Option Notice. The Company (or, if applicable, its
designee) shall give notice in writing to the Grantor of the
exercise of the Purchase Option within 120 days from the date
of the termination of the Eligible Holder's employment or
service (the "Purchase Option Notice"). The Purchase Option
Notice shall state the number of Purchasable Shares to be
purchased and the purchase price to be paid for the
Purchasable Shares as determined in accordance with Section
6(a)(iii) below. If no Purchase Option Notice is provided by
the Company (or, if applicable, its designee) within the
120-day period specified above, the Purchase Option shall
terminate.
(iii) Purchase Option Price. The purchase price to be paid for the
Purchasable Shares purchased pursuant to the Purchase Option
shall be either (A) in the case of (i) a termination due to
the Eligible Holder's voluntary resignation for any reason
following the fifteenth (15th) anniversary of the date such
Purchasable Shares were purchased or (ii) a termination at any
time due to the Eligible Holder's death or Disability or
without Cause, an amount equal to (x) the Fair Market Value
per share of the Common Stock as of the date of the Purchase
Option Notice multiplied by (y) the number of Purchasable
Shares being purchased, or (B) in the case of a termination
of, (I) by the Company or a Related Entity for Cause at any
time or (II) due to the Eligible Holder's voluntary
resignation on or prior to the fifteenth (15th) anniversary of
the date such Purchasable Shares were purchased, an amount
equal to original purchase price paid by such Eligible Holder
for the Purchasable Shares being purchased.
(iv) Payment of the Purchase Option Price; Closing. The purchase
price shall be paid by the Company (or, if applicable, its
designee) in cash (by wire transfer of immediately available
funds or by check). The closing of such purchase shall be on a
date to be specified by the Company, such date to
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be no later than 30 days after the date of the Purchase Option
Notice. At such closing, the Grantor shall deliver to the
Company, free and clear of all Liens, the certificates or
instruments evidencing the Purchasable Shares being purchased,
duly endorsed (or accompanied by duly executed stock powers)
and otherwise in good form for delivery, against payment of
the purchase price by the Company (or, if applicable, its
designee). The Company and the Grantor will promptly perform,
whether before or after any such closing, such additional acts
(including, without limitation, executing and delivering
additional documents) as are reasonably required by either
such party to effect more fully the transactions contemplated
by this Section 6(a). No adjustments shall be made to the
purchase price for fluctuations in the Fair Market Value of
the Purchasable Shares after the date of the Purchase Option
Notice.
(v) Assignment. Notwithstanding anything to the contrary, upon
determination by the Board of Directors, the Company may
assign any or all of its rights under this Section 6(a) to one
or more stockholders of the Company.
(b) Sale of the Company.
(i) Call Option. If a Sale of the Company is proposed to be
effected, the Company (and/or its designees) shall have the
right (but not the obligation) to purchase (the "Call
Option"), and the Grantor shall be obligated to sell to the
Company (and/or its designees), all or any portion of the
Securities previously purchased by such Grantor; provided,
however, that repurchases of Securities pursuant to the Call
Option may only be consummated with respect to Securities
owned by an Eligible Holder for at least six months after the
date such Securities were purchased by such Eligible Holder
under this Plan.
(ii) Call Option Notice. The Company (or, if applicable, its
designee) shall give notice in writing to the Grantor of the
exercise of the Call Option at least 10 days prior to the
proposed date of consummation of the Sale of the Company (the
"Call Option Notice"). The Call Option Notice shall state the
number of Securities to be purchased and the estimated Call
Option Price.
(iii) Call Option Price. The purchase price to be paid for the
Securities purchased pursuant to the exercise of the Call
Option (the "Call Option Price") shall be an amount of
consideration equal to the product of (x) the fair market
value per share as determined by the Board of Directors based
on the consideration received in the Sale of the Company (with
consideration given to the structure and terms and conditions
of the transaction, including any escrows and/or indemnities),
and (y) the number of Securities which are being purchased.
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(iv) Payment of the Call Option Price; Closing. At least five (5)
business days prior to the scheduled closing date for the Sale
of the Company, the Grantor shall deliver to the Company, free
and clear of all Liens, the certificates or instruments
evidencing the Securities being purchased, duly endorsed (or
accompanied by duly executed stock powers) and otherwise in
good form for delivery. Within five (5) business days after
the consummation of the Sale of the Company, the Call Option
Price (net of the Holdback Amount, if any, and any portion of
the original purchase price for such Securities that has not
been paid to the Company) shall be paid by the Company (or, if
applicable, its designee) to the Grantor for the Securities;
provided, that with respect to such Securities, the Holdback
Amount, if any, shall be paid to the Grantor in accordance
with the terms and conditions of the Transaction Documents.
The Company and the Grantor will promptly perform, whether
before or after any such closing, such additional acts
(including, without limitation, executing and delivering
additional documents) as are reasonably required by either
such party to effect more fully the transactions contemplated
by this Section 6(b).
(v) Termination of Call Right. The Company's Call Option shall
terminate to the extent that it is not exercised prior to the
date of any public offering of the Company's shares of Common
Stock.
7. Limitations on Transfer. Unless the terms of an Offer for the underlying
Right to Purchase expressly provide otherwise, all Securities purchased by an
Eligible Holder pursuant to Rights to Purchase shall be subject to the
following:
(a) Compliance with Securities Laws. No Eligible Holder shall sell, pledge
or otherwise transfer Securities or any interest in such Securities except in
accordance with the express terms of this Plan. Any attempted transfer in
violation of this Section 7 shall be void and of no effect. Without in any way
limiting the provisions set forth above, no Eligible Holder shall make any
disposition of all or any portion of Securities acquired or to be acquired
pursuant to Rights to Purchase, except in compliance with all applicable federal
and state securities laws and unless and until:
(i) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration
statement; or
(ii) such disposition is made in accordance with Rule 144 under the
Securities Act; or
(iii) such Eligible Holder notifies the Company of the proposed
disposition and furnishes the Company with a statement of the
circumstances surrounding the proposed disposition, and, if
requested by the Company, furnishes to the Company an opinion
of counsel acceptable to the Company's counsel,
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that such disposition will not require registration under the
Securities Act and will be in compliance with all applicable
state securities laws.
Notwithstanding anything else herein to the contrary, the Company or
a Related Entity has no obligation to register the Securities or
file any registration statement under either federal or state
securities laws, nor does the Company or a Related Entity make any
representation concerning the likelihood of a public offering of the
Securities or any other securities of the Company.
(b) Restrictions on Transfer. Other than in connection with a Permitted
Transfer, the Securities shall not be Transferred or otherwise conveyed,
assigned or hypothecated. All Permitted Transfers require satisfaction of the
conditions specified in clauses (a) through (d) of this Section 7. Any purported
Transfer in violation of this Section 7 shall be void ab initio and of no force
or effect.
(c) Restrictive Legends.
(i) Securities Act Legend. Except as otherwise provided in Section
7(f) hereof, each Security held by an Eligible Holder, and
each Security issued to any subsequent transferee of such
Security, shall be stamped or otherwise imprinted with a
legend in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), NOR HAVE THEY BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. NO TRANSFER OF SUCH SECURITIES
WILL BE PERMITTED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS
TO SUCH TRANSFER, THE TRANSFER IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE
ACT, OR IN THE OPINION OF COUNSEL TO THE CORPORATION, REGISTRATION UNDER THE ACT
IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND WITH
APPLICABLE STATE SECURITIES LAWS.
(ii) Section 6 Legends. To assure the enforceability of the
Company's rights under Section 6, each certificate or
instrument representing Securities shall bear a conspicuous
legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL RIGHT TO
REPURCHASE PROVIDED UNDER THE PROVISIONS OF THE COMPANY'S 2004 STOCK PURCHASE
PLAN. A COPY OF SUCH PLAN IS AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT
ITS PRINCIPAL EXECUTIVE OFFICES.
(iii) Other Legends. Except as otherwise permitted by the last
sentence of Section 7(b), each Security issued to each
Eligible Holder or to a subsequent transferee shall include a
legend in substantially the following form:
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THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER AND OTHER TERMS AND
CONDITIONS SET FORTH IN THE COMPANY'S 2004 STOCK PURCHASE PLAN. A COPY OF SUCH
PLAN IS AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE
OFFICES.
(d) Notice of Proposed Transfers. Prior to any Permitted Transfer of any
Security, the Eligible Holder of such Security shall (i) except in the case of
death, give at least 30 days' prior written notice (a "Transfer Notice") to the
Company of such Eligible Holder's intention to effect such Permitted Transfer,
describing the manner and circumstances of the proposed Permitted Transfer, and
(ii) if required by the Company, provide to the Company an opinion reasonably
satisfactory to the Company from counsel who shall be reasonably satisfactory to
the Company (or supply such other evidence reasonably satisfactory to the
Company) that the proposed Permitted Transfer of such Security may be effected
without registration under the Securities Act. After receipt of the Transfer
Notice and opinion or other material (if required), the Company shall, within
ten (10) days thereof, so notify the Eligible Holder of such Security and,
subject Section 8 hereof, such Eligible Holder shall thereupon be entitled to
Transfer such Security in accordance with the terms of the Transfer Notice. Each
Security issued upon such Permitted Transfer shall bear the restrictive legend
set forth in Section 7(c)(i), unless in the reasonable judgment of counsel for
the Company such legend is not required in order to ensure compliance with the
Securities Act. The Eligible Holder of the Security giving the Transfer Notice
shall not be entitled to Transfer such Security until receipt of the notice from
the Company under this Section 7(d).
(e) Termination of Certain Restrictions. Notwithstanding the foregoing
provisions of this Section 7, the restrictions imposed by Section 7(c)(i) upon
the transferability of the Securities and the legend requirements of Section
7(c)(i) shall terminate as to any Security (i) when and so long as such Security
shall have been effectively registered under the Securities Act and disposed of
pursuant thereto or disposed of pursuant to the provisions of Rule 144 thereof
or (ii) when the Company shall have received an opinion of counsel (or such
other evidence) reasonably satisfactory to it that such Security may be
transferred without registration thereof under the Securities Act and that such
legend may be removed.
(f) Lock-Up Agreement. Neither the Eligible Holder (nor any permitted
transferee) may Transfer any of its Securities during the period commencing as
of fourteen (14) days prior to and ending one (1) year, or such lesser period of
time as the relevant underwriters and the Board of Directors may agree (it being
intended that the length of such period reflect market practice at the time the
length of such period is determined), after the effective date of a registration
statement covering any public offering of the Company's securities of which the
Eligible Holder has notice. The Eligible Holder shall agree and consent to the
entry of stop transfer instructions with the Company's transfer agent against
the Transfer of the Securities beneficially owned by the Eligible Holder and
shall conform the limitations hereunder with and for the benefit of the relevant
underwriters by a lock-up agreement or other agreement in customary form.
Notwithstanding anything else herein to the contrary, this Section 7(f) shall
not be construed so as to prohibit the Eligible Holder from participating in a
registration or a public offering of the Common Stock with respect to any Shares
which he or she may hold at that time; provided, however, that such
participation shall be at the sole discretion of the Board of Directors.
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8. Drag-Along Rights.
(a) Applicability. In connection with any Transfer to any non-Affiliate by
CEH (the "Selling Stockholder") of the Shares representing more than 50% of the
Fully-Diluted Common Stock then held by CEH (a "Significant Sale"), the Selling
Stockholder shall provide written notice to each Eligible Holder (each, a
"Co-Seller") in accordance with Section 8(c). Each Co-Seller shall consent to
(if such consent is required) and raise no objections against the Significant
Sale, and if the Significant Sale is structured as (i) a merger or consolidation
of the Company, or a sale of all or substantially all of the Company's assets,
each Co-Seller shall agree to, and hereby agrees to, waive any dissenters'
rights, appraisal rights or similar rights in connection with such merger,
consolidation or asset sale, or (ii) a sale of Securities, each Co-Seller shall
agree to, and hereby agrees to, sell a pro rata percentage (equal to the
percentage of Securities proposed to be sold by the Selling Stockholder relative
to the aggregate number of Securities held by such holders) their Securities on
the terms and conditions approved by the Selling Stockholder and in each such
instance shall agree to, and hereby agrees to, waive any claims any Co-Seller
may have against the Board of Directors and the constituents of the Selling
Stockholder in connection with the Significant Sale. The Co-Sellers shall take
all necessary and desirable actions in connection with the consummation of the
Significant Sale, including obtaining the consent of the Board of Directors, if
necessary, to the Significant Sale and the execution of such agreements and such
instruments and other actions reasonably necessary to provide customary
representations, warranties, indemnities, and escrow arrangements relating to
such Significant Sale.
(b) The obligations of the Co-Sellers pursuant to this Section 8(a) are
also subject to the satisfaction of the following conditions:
(i) if any holders of a class are given an option as to the form
and amount of consideration to be received, all holders of
such class shall be given the same option;
(ii) neither the Selling Stockholder nor the Co-Sellers shall be
obligated to (A) make any out-of-pocket expenditure prior to
the consummation of the Significant Sale (excluding modest
expenditures for postage, copies, etc.) and (B) pay any
portion (or shall be entitled to be reimbursed by the Company
for that portion paid) that is more than its pro rata share
(based upon the amount of consideration received) of
reasonable expenses incurred in connection with a consummated
Significant Sale, to the extent such costs are incurred for
the benefit of all holders of Securities and are not otherwise
paid by the Company or the acquiring party (costs incurred by
or on behalf of a holder of Securities for its sole benefit
will not be considered costs of the transaction hereunder),
provided, that a Co-Seller's liability for such expenses shall
not exceed the total consideration received by such Co-Seller
for its Securities; and
(iii) neither the Selling Stockholder nor the Co-Sellers shall be
required to provide any representations, warranties or
indemnities in connection with the Significant Sale, other
than those contemplated by Section 8(a) and
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those representations, warranties and indemnities concerning
each seller's valid ownership of Shares, free and clear of all
liens, claims and other encumbrances (other than those arising
under applicable securities laws and those attributable to
actions by the purchasers thereof), and each seller's
authority, power, and right to enter into and consummate such
purchase, merger, exchange or other agreement without
violating any other agreement. Any indemnity required to be
provided by the Selling Stockholder and each Co-Seller shall
be several and not joint.
(c) Notice of Significant Sale. The Selling Stockholder shall give each
Co-Seller at least 10 days' prior written notice of any Significant Sale as to
which the Selling Stockholder intends to exercise its rights under this Section
8. If the Selling Stockholder elects to exercise its rights under this Section
8, the Co-Sellers shall take such actions as may be reasonably required and
otherwise cooperate in good faith with the Selling Stockholder in connection
with consummating the Significant Sale (including, without limitation, the
voting of any Securities to approve such Significant Sale). At the closing of
such Significant Sale, each Co-Seller shall deliver certificates for all
Securities to be sold by such Co-Seller, duly endorsed for transfer to the
purchaser against payment of the appropriate purchase price.
9. Co-Sale Rights. If CEH receives an offer (the "Offer") to Transfer more than
50% of the Fully Diluted Common Stock then held by CEH to any Person other than
an Affiliate (the "Co-Sale Offeror") and CEH does not exercise its rights
pursuant to Section 8 hereof, the parties hereto shall comply with the following
procedures:
(a) CEH shall, at least ten (10) Business Days before such Transfer,
deliver a written notice (the "Co-Sale Notice") to each Eligible Holder that
sets forth (A) the number of shares of Common Stock to which the Offer relates,
(B) the name of the proposed Co-Sale Offeror, (C) the proposed amount and type
of consideration (including if the consideration consists in whole or in part of
non-cash consideration such information available to CEH as may be reasonably
necessary for the Eligible Holder to properly analyze the economic value and
investment risk of such non-cash consideration) and, (D) the terms and
conditions of payment that the Co-Sale Offeror intends to accept.
(b) CEH shall not Transfer any Common Stock to the Co-Sale Offeror unless
each of the Eligible Holders is offered the opportunity to Transfer
simultaneously a number of shares of Common Stock equal to its Pro Rata Amount
to which the offer to CEH relates and on the same terms and conditions
(including price).
(c) Within ten (10) days after delivery of the Co-Sale Notice each
Eligible Holder may elect to participate in the proposed Transfer by delivering
to CEH a notice (the "Tag-Along Notice") specifying the type and number of
shares of Common Stock (up to his or her Pro Rata Amount, as determined in
accordance with Section 9(b) above with respect to which such Eligible Holder
shall exercise his, her or its rights under Section 9 and the number of shares
of Common Stock to be Transferred to the Co-Sale Offeror by CEH shall be reduced
accordingly.
(d) Any shares of Common Stock requested to be included in any Tag-Along
Notice shall be Transferred at the same time and on the same terms and
conditions (including price). If
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such Transfer is not made within 60 days from delivery of the Co-Sale Notice,
the provisions of this Section 9 shall again become effective with respect to
the proposed Transfer.
10. Other Incentive Plans.
The adoption of the Plan does not preclude the adoption by appropriate
means of any other incentive plan for employees.
11. Effect on Employment.
Nothing contained in the Plan or any agreement related hereto or referred
to herein shall affect, or be construed as affecting, the terms of employment of
any Eligible Holder except to the extent specifically provided herein or
therein. Nothing contained in the Plan or any agreement related hereto or
referred to herein shall impose, or be construed as imposing, an obligation on
(a) the Company or any Related Entity to continue the employment of any Eligible
Holder that is an employee of the Company or any Related Entity, and (b) any
Eligible Holder that is an employee of the Company or any Related Entity to
remain in the employ of the Company or any Related Entity.
12. Amendment or Termination of the Plan.
The Board of Directors in its discretion may terminate the Plan at any
time. The Board of Directors and the Committee shall have the right to alter or
amend the Plan or any part thereof from time to time without the approval of the
stockholders of the Company or the holders of Rights to Purchase or Securities;
provided, that the Board of Directors and the Committee may not change the class
of individuals eligible to receive Rights to Purchase under the Plan.
13. Effective Date.
The Plan is effective as of March 19, 2004.
14. Confidential Information.
Any information relating to the Company obtained by Eligible Holders in
connection with or as a result of this Plan or their Securities shall be treated
as confidential.
15. Notices.
Any notices or other communications required or permitted hereunder shall
be in writing, and shall be sufficiently given if made by hand delivery, by
telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows (or at such other address as may be
substituted by notice given as herein provided):
If to the Company:
Crunch Holding Corp.
c/o Pinnacle Foods Group Inc.
One Old Bloomfield Road
11
Mountain Lakes, New Jersey 07046
Attention: General Counsel
with a copy to:
O'Melveny & Myers LLP
7 Times Square
New York, New York 10036
Attention: Gregory A. Gilbert, Esq.
If to an Eligible Holder:
to the last address maintained by the Company in its books and
records for such Eligible Holder.
Any notice or communication hereunder shall be deemed to have been given
or made as of the date so delivered if personally delivered; when answered back,
if telexed, when receipt is acknowledged, if telecopied; and five (5) calendar
days after mailing if sent by registered or certified mail (except that a notice
of change of address shall not be deemed to have been given until actually
received by the addressee).
16. Charter Documents.
The certificate of incorporation and by-laws of the Company, as either of
them may lawfully be amended from time to time, may provide for additional
restrictions and limitations with respect to the Shares (including additional
restrictions and limitations on the voting or transfer of Shares) or priorities,
rights and preferences as to securities and interests prior in rights to the
Shares. To the extent that these restrictions and limitations are greater than
those set forth in this Plan or the applicable subscription agreement, such
restrictions and limitations shall apply to any Shares acquired pursuant to this
Plan and are incorporated herein by this reference.
17. Definitions.
In addition to the terms specifically defined elsewhere in the Plan, as
used in the Plan, the following terms shall have the respective meanings
indicated:
(a) "Accredited Investor" means an "Accredited Investor," as defined in
Regulation D of the Securities Act, or any successor rule then in effect.
(b) "Affiliate" means, with respect to any Person, any Person who,
directly or indirectly, controls, is controlled by or is under common control
with the Person. For purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
(c) "Board of Directors" has the meaning set forth in Section 2 hereof.
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(d) "Call Option" has the meaning set forth in Section 6(b)(i).
(e) "Call Option Notice" has the meaning set forth in Section 6(b)(ii).
(f) "Call Option Price" has the meaning set forth in Section 6(b)(iii).
(g) "Cause", with respect to any employee of the Company, means (unless
another definition is provided for in an employment agreement between a Related
Entity and the Eligible Holder) termination by action of the Board of Directors
because of: (A) the Eligible Holder's conviction of, or plea of nolo contendere
to, a felony or a crime involving financial misconduct or moral turpitude; (B)
the Eligible Holder's personal dishonesty, incompetence, willful misconduct,
willful violation of any law, rule, or regulation (other than minor traffic
violations or similar offenses) or breach of fiduciary duty which involves
personal profit, in each case which adversely impacts or reflects badly on the
Company or Related Entity, as determined by the Board of Directors; (C) the
Eligible Holder's commission of material mismanagement or misconduct in the
performance of his duties as assigned to him by the Board of Directors or the
Eligible Holder's supervising officer or officers of the Company or any Related
Entity; (D) the Eligible Holder's willful failure to execute or comply with the
material policies of the Company or any Related Entity or his stated duties as
established by the Board of Directors or the Eligible Holder's supervising
officer or officers of the Company or any Related Entity, or the Eligible
Holder's intentional failure to perform the Eligible Holder's stated duties; or
(E) with respect to a person who qualifies under subsection (b) of the
definition of Eligible Person, the person's willfully making any material
misrepresentation or willfully omitting to disclose any material fact to the
Board of Directors or the board of a Related Entity with respect to the business
of the Company or Related Entity.
A termination for Cause shall be deemed to occur (subject to reinstatement
upon a contrary final determination by the Committee) on the date on which the
Company or Subsidiary first delivers written notice to the Eligible Holder of a
finding of termination for Cause.
(h) "CEH" means Crunch Equity Holding, LLC, a Delaware limited liability
company.
(i) "Code" has the meaning set forth in Section 1 hereof.
(j) "Committee" has the meaning set forth in Section 2 hereof.
(k) "Common Stock" has the meaning set forth in Section 3 hereof.
(l) "Common Stock Equivalents" means the Common Stock and any rights,
warrants, options, convertible securities or indebtedness, exchangeable
securities or indebtedness, or other rights, exercisable for or convertible or
exchangeable into, directly or indirectly, Common Stock, whether such securities
are convertible or exchangeable at the time of issuance or upon the passage of
time or the occurrence of some future event and whether or not such securities
are "in the money" at the time of determination.
(m) "Company" has the meaning set forth in Section 1 hereof.
13
(n) "Co-Seller" has the meaning set forth in Section 8(a).
(o) "Disability" means a "permanent and total disability" within the
meaning of Section 22(e)(3) of the Code and, such other disabilities,
infirmities, afflictions, or conditions as the Committee may include
(p) "Eligible Holder" means (a) any employee of the Company or any Related
Entity, including officers and directors of the Company or any Related Entity
who are also employees of the Company or any Related Entity, who is regularly
employed on a salaried basis and who is so employed on the date of such grant,
whom the Committee identifies as having a direct and significant effect on the
performance of the Company or any Related Entity and (b) any director of the
Company or any Related Entity who is not regularly employed on a salaried basis
with the Company or any Related Entity, in each case as selected by the
Committee.
(q) "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
(r) "Fair Market Value" means, as it relates to Securities, the average of
the high and low prices of the closing price of such Securities as reported on
the principal national securities exchange on which the shares of Securities are
then listed or the Nasdaq National Market System, as applicable, on the date
specified herein for such a determination, or if there were no sales on such
date, on the next succeeding day or immediately preceding day on which there
were sales, or if such Securities is not listed on a national securities
exchange or the Nasdaq National Market System, the last reported bid price in
the over-the-counter market, or if such shares are not traded in the
over-the-counter market, the per share cash price for which all of the
outstanding Securities could be sold to a willing purchaser in an arms length
transaction (without regard to minority discount, absence of liquidity, or
transfer restrictions imposed by an applicable law or agreement) at the date of
the event giving rise to the need for a determination. Except as may be
otherwise expressly provided in a particular Offer, Fair Market Value shall be
determined in good faith by the Board of Directors or the Committee and such
determination shall be binding on the Company and each Eligible Holder receiving
Rights to Purchase hereunder.
(s) "Fully-Diluted Common Stock" means, at any time, all then outstanding
Common Stock Equivalents.
(t) "Grantor" means, collectively, (i) the Eligible Holder, (ii) the
Eligible Holder's executor or the administrator of the Eligible Holder's estate
or the Person who acquired the Securities by bequest or inheritance, in the
event of the Eligible Holder's death, or the Eligible Holder's legal
representative in the event of the Eligible Holder's incapacity, or (iii) the
Person who acquired the Eligible Holder's Securities pursuant to a Permitted
Transfer.
(u) "Holdback Amount" means the portion of the consideration received by
the Company and/or the stockholders in connection with a Sale of the Company
that is required to be retained by the terms of the Transaction Documents,
including, without limitation, amounts retained for purchase price adjustments
and indemnification obligations.
14
(v) "Immediate Family" means the spouse of an individual and the
grandparents, parents, siblings and children (and children and spouses of any of
the foregoing) of the individual or his or her spouse. An adopted child will be
treated as a child of his or her adoptive parent or parents (but only if) he or
she was adopted before he or she reached 21 years of age.
(w) The terms "include," "included" or "including" when used herein shall
mean "including, but not limited to".
(x) "Lien" means any of the following mortgage; lien (statutory or other);
other security agreement, arrangement or interest; hypothecation, pledge or
other deposit arrangement; assignment; charge; levy; executory seizure;
attachment; garnishment; encumbrance (including any easement, exception,
reservation or limitation) right of way, and the like); conditional sale, title
retention, voting agreement or other similar agreement, arrangement, device or
restriction, preemptive or similar right; the filing of any financial statement
under the Uniform Commercial Code or comparable law of any jurisdiction;
restriction on sale, transfer, assignment, disposition or other alienation; or
any option, equity, claim or right of or obligation to, any other Person, of
whatever kind and character.
(y) "Offer" has the meaning set forth in Section 5 hereof.
(z) "Permitted Transfer" means any Transfer (a) with respect to an
Eligible Holder who is an individual, by gift to a member of the Immediate
Family of the Eligible Holder or a trust (or estate planning entity) whose sole
beneficiaries (or owners, as the case may be) are the Eligible Holder and/or
members of the Immediate Family of the Eligible Holder; (b) with respect to an
Eligible Holder that is a trust, to any beneficiary of the trust or any member
of the Immediate Family of a beneficiary of the trust; (c) pursuant to a pledge
to secure indebtedness provided that the pledgee agrees in writing that the
Securities subject to such Transfer shall be subject to the terms hereof; (d)
upon the death of an Eligible Holder to such Eligible Holder's executors,
administrators, testamentary trustees, legatees or beneficiaries; (e) by an
Eligible Holder pursuant to the provisions of Sections 6, 8 or 9; (f) pursuant
to a merger, consolidation, share exchange, scheme of arrangement or other
similar transaction by the Company or pursuant to an agreement to which the
Company is a party; and (g) by an Eligible Holder pursuant to a public offering
registered under the Securities Act or pursuant to Rule 144 promulgated under
the Securities Act; provided, that, in each case of (a) through (d), the
proposed transferee (x) shall execute and deliver to the Company a written
agreement pursuant to which such transferee agrees to be bound by the terms of
the Plan and (y) except in the case of clause (a), (b) or (d) above, certifies
to the reasonable satisfaction of the Company that such transferee is an
Accredited Investor.
(aa) "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
(bb) "Plan" has the meaning set forth in Section 1 hereof.
(cc) "Pro Rata Amount" means, with respect to any Eligible Holder, the
quotient obtained by dividing (i) the number of shares of Common Stock held by
such Eligible Holder by
15
(ii) the aggregate number of shares of Common Stock held by all stockholders of
the Corporation, assuming in each of the preceding clauses (i) and (ii), the
conversion or exchange of all securities of the Corporation by their terms
convertible into or exchangeable for Common Stock and the exercise of all vested
and "in the money" options to purchase or rights to subscribe for Common Stock
(including warrants) or such convertible or exchangeable securities.
(dd) "Purchasable Shares" has the meaning set forth in Section 6(a)(i)
hereof.
(ee) "Purchase Option" has the meaning set forth in Section 6(a)(i)
hereof.
(ff) "Purchase Option Notice" has the meaning set forth in Section
6(a)(ii) hereof.
(gg) "Related Entities" has the meaning set forth in Section 1 hereof.
(hh) "Rights to Purchase" has the meaning set forth in Section 2(d)
hereof.
(ii) "Rule 16b-3" means Rule 16b-3, as amended, or other applicable rules
under Section 16(b) of the Exchange Act.
(jj) "Sale of the Company" means (i) the sale or transfer (in one
transaction or a series of related transactions) of all or substantially all of
the Company's or a Sale Entity' assets (on a consolidated basis), to a Person or
a group of Persons acting in concert, (ii) the sale or transfer (in one or a
series of related transactions) of a significant division or product line of the
Company or any of the Sale Entity (whether by asset sale, merger, spin-off or
other means), to a Person or a group of Persons acting in concert, (iii) the
sale or transfer (in one transaction or a series of related transactions) of a
majority of the outstanding equity interests in the Company or any of the Sale
Entity, to a Person or a group of Persons acting in concert, or (iv) the merger
or consolidation of the Company or any of the Sale Entities with or into another
Person that is not an Affiliate of the Company or any of the Sale Entities, in
each case in clauses (i), (ii), (iii) and (iv) above, under circumstances in
which the holders of a majority in voting power of the outstanding equity
interests of the Company or any of the Sale Entities, as applicable, immediately
prior to such transaction, own less than a majority in voting power of the
outstanding equity interests of the Company or any of the Sale Entities, as
applicable, or the surviving or resulting corporation, entity or acquirer, as
the case may be, immediately following such transaction.
(kk) "Sale Entities" means (i) the Company, CEH, Pinnacle Foods Group Inc.
or Pinnacle Foods Corporation, or (ii) any successor in interest thereof.
(ll) "Section 162(m)" means Section 162(m) of the Code and the rules and
regulations adopted from time to time thereunder, or any successor law or rule
as it may be amended from time to time.
(mm) "Securities" has the meaning set forth in Section 3 hereof.
(nn) "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
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(oo) "Selling Stockholder" has the meaning set forth in Section 8(a).
(pp) "Shares" means shares of Common Stock and Common Stock Equivalents.
(qq) "Significant Sale" has the meaning set forth in Section 8(a).
(rr) "Subsidiary", of any Person, means (i) a corporation a majority of
whose outstanding shares of capital stock or other equity interest with voting
power, under ordinary circumstances, to elect directors, is at the time,
directly or indirectly, owned by such Person, by one or more subsidiaries of
such Person or by such Person and one or more subsidiaries of such Person, and
(ii) any other Person (other than a corporation) in which such Person, a
subsidiary of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has (x) at
least a majority ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
(ss) "Transaction Documents" means the definitive documentation entered
into in connection with a Sale of the Company.
(tt) "Transfer" means any direct or indirect sale, transfer, pledge,
hypothecation, assignment, gift, conveyance or other disposition of any security
or any interest therein.
(uu) "Transfer Notice" has the meaning set forth in Section 7(c) hereof.
17