EXHIBIT 10.18
AQUAPENN SPRING WATER COMPANY, INC.
1992 STOCK OPTION PLAN
1. Purpose. The purpose of this Stock Incentive Plan (the "Plan") is
to advance the development, growth and financial condition of AquaPenn
Spring Water Company, Inc. (the "Corporation") by providing incentives
through participation in the appreciation of capital stock of the
Corporation so as to secure, retain and motivate personnel who may be
responsible for or involved in the management and operation of the affairs
of the Corporation.
2. Term. The Plan shall become effective as of the date it is adopted
by the Corporation's Board of Directors (the"Board"), so long as the
Corporation's stockholders duly approve the Plan within twelve (12) months
either before or after the date of the Board's adoption of the Plan. Any
and all options and rights awarded under the Plan ("Awards") before it is
so approved by the Corporation's stockholders shall be conditional upon and
may not be exercised before timely obtainment of such approval, and shall
lapse upon the failure thereof. If the Plan is so approved, it shall
continue in effect until all Awards either have lapsed or been exercised or
cancelled according to their terms under the Plan.
3. Stock. The shares of stock that may be issued under the Plan shall
not exceed in the aggregate 500,000 shares of the Corporation's no par
value common stock (the "Stock"), as may be adjusted pursuant to paragraph
17 hereof. Such shares of Stock may
1
be either authorized and unissued shares of Stock, or authorized shares of
Stock issued by the Corporation and subsequently reacquired by it as
treasury stock. Under no circumstances shall any fractional shares of Stock
be issued or sold under the Plan or any Award. Except as may be otherwise
provided in the Plan, any Stock subject to an Award that for any reason
lapses or terminates prior to its exercise as to such Stock shall become
and again be available under the Plan. The Corporation shall reserve and
keep available, and shall duly apply for any requisite governmental
authority to issue or sell the number of shares of Stock needed to satisfy
the requirements of the Plan while in effect. The Corporation's failure to
obtain any such governmental authority deemed necessary by the
Corporation's legal counsel for the lawful issuance and sale of Stock under
the Plan shall relieve the Corporation of any duty, or liability for the
failure to issue or sell such Stock as to which such authority has not been
obtained.
4. Administration. The Plan shall be administered by a committee (the
"Committee") consisting of not fewer than three (3) persons serving for
such terms as determined, selected and appointed by the Board. The Board
shall fill all vacancies occurring in the Committee's membership, and at
any time and for any reason may add additional members to the Committee or
may remove members from the Committee and appoint their successors. The
members of the Committee may, but need not be members of the Board, but no
person shall be a member of the Committee unless he or she is ineligible
while serving on the Committee and has been
2
ineligible for at least one (1) year prior to his or her appointment to the
Committee to receive any Awards, allocations or other options or rights of
or with respect to Stock or any other capital stock of the Corporation or
its affiliates under the Plan or any other plan of the Corporation or its
affiliates. A majority of the Committee's membership shall constitute a
quorum for the transaction of all business of the Committee, and all
decisions and actions taken by the Committee shall be determined by a
majority of the members of the Committee attending a meeting at which a
quorum of the Committee is present.
The Committee shall be responsible for the management and operation of
the Plan and, subject to its provisions, shall have full, absolute and
final power and authority, exercisable in its sole discretion: to interpret
and construe the provisions of the Plan, adopt, revise and rescind rules
and regulations relating to the Plan and its administration, and decide all
questions of fact arising in the application thereof; except as may be
required pursuant to any employment agreement of the Corporation, to
determine what, to whom, when and under what facts and circumstances Awards
shall be made, and the form, number, terms, conditions and duration
thereof, including but not limited to when exercisable, the number of
shares of Stock subject thereto, and Stock option purchase prices; to
adopt, revise and rescind procedural rules for the transaction of the
Committee's business, subject to any directives of the Board not
inconsistent with the provisions or intent of the Plan or applicable
provisions of law;
3
and to make all other determinations and decisions, take all actions and do
all things necessary or appropriate in and for the administration of the
Plan. The Committee's determinations, decisions and actions under the Plan,
including but not limited to those described above, need not be uniform or
consistent, but may be different and selectively made and applied, even in
similar circumstances and among similarly situated persons. Unless contrary
to the provisions of the Plan, all decisions, determinations and actions
made or taken by the Committee shall be final and binding upon the
Corporation and all interested persons, and their heirs, personal and legal
representatives, successors, assigns and beneficiaries. No member of the
Committee or of the Board shall be liable for any decision, determination
or action made or taken in good faith by such person under or with respect
to the Plan or its administration.
5. Awards. Awards may be made under the Plan in the form of (a)
"Qualified Options" to purchase Stock that are intended to qualify for
certain tax treatment as incentive stock options under Sections 421 and 422
of the Internal Revenue Code of 1986, as amended (the "Code"), or (b)
"Non-Qualified Options" to purchase Stock that do not qualify under
Sections 421-424 of the Code. All Awards and the terms and conditions
thereof shall be set forth in written agreements, in such form and content
as approved by the Committee from time to time, and shall be subject to the
provisions of the Plan whether or not contained in such agreements. Every
Award made to a person (a "Recipient") shall be exercisable during
4
his or her lifetime only by the Recipient, and shall not be salable,
transferable or assignable by the Recipient except by his or her Will or
pursuant to applicable laws of descent and distribution.
6. Eligibility. Persons eligible to receive Awards shall be those key
officers and other employees of the Corporation as determined by the
Committee. In no case, however, shall any current member of the Committee
be eligible to receive any Awards. A person's eligibility to receive Awards
shall not confer upon him or her any right to receive any Awards; rather,
the Committee shall have the sole authority, exercisable in its discretion
consistent with the provisions of the Plan, to select when, to whom and
under what facts and circumstances Awards will be made. Except as otherwise
provided, a person's eligibility to receive, or actual receipt of Awards
under the Plan shall not limit or affect his or her benefits under or
eligibility to participate in any other incentive or benefit plan or
program of the Corporation or its affiliates.
7. Grant of Award. On the first business day immediately following the
adoption of the Plan by the Corporation's Board of Directors, an Award for
450,000 shares of the Stock shall be granted under the Plan to Patrick
Cresci, the Vice President of Operations of the Corporation, as set forth
in the Stock Option Agreement that is attached hereto as Exhibit "A".
8. Qualified Options. In addition to other applicable provisions of
the Plan, all Qualified Options and Awards thereof
5
shall be under and subject to the following terms and conditions:
(a) No Qualified Option shall be awarded more than ten (10) years
after the date the Plan is adopted by the Board or the date the Plan
is approved by the Corporation's stockholders, whichever date is
earlier;
(b) The time period during which any Qualified Option is
exercisable, as determined by the Committee, shall not commence before
the expiration of six (6) months or continue beyond the expiration of
ten (10) years after the date such Option is awarded; and
(c) The purchase price of a share of Stock subject to any
Qualified Option, as determined by the Committee, shall not be less
than the Stock's fair market value at the time such Option is awarded.
9. Non-Qualified Options. In addition to other applicable provisions
of the Plan, all Non-Qualified Options and Awards thereof shall be under
and subject to the following terms and conditions:
(a) The time period during which any Non-Qualified Option is
exercisable, as determined by the Committee, shall not commence before
the expiration of six (6) months or continue beyond the expiration of
ten (10) years after the date such Option is awarded;
(b) If a Recipient of a Non-Qualified Option, before its lapse or
full exercise, ceases to be eligible under the Plan, the Committee may
permit the Recipient thereafter to exercise
6
such Option during its remaining term, to the extent that the Option
was then and remains exercisable, for such time period and under such
terms and conditions as may be prescribed by the Committee; and
(c) The purchase price of a share of Stock subject to any
Non-Qualified Option shall be determined by the Committee.
10. Exercise. Except as otherwise provided in the Plan or specified in
an individual award, Awards may be exercised in whole or in part by giving
written notice thereof to the Secretary of the Corporation, or his or her
designee, identifying the Award being exercised, the number of shares of
Stock with respect thereto, and other information pertinent to exercise of
the Award. The purchase price of the shares of Stock with respect to which
an Award is exercised shall be fully payable with the written notice of
exercise, either in cash or in Stock at its then current fair market value,
or in any combination thereof, as the Committee shall determine. Funds
received by the Corporation from the exercise of any Award shall be used
for its general corporate purposes. The number of shares of Stock subject
to an Award shall be reduced by the number of shares of Stock with respect
to which the Recipient has exercised rights under the Award.
The Committee may permit an acceleration of previously established
exercise terms of any Awards as, when, under such facts and circumstances,
and subject to such other or further requirements and conditions as the
Committee may deem necessary or appropriate. In addition: (a) if the
Corporation or its
7
stockholders execute an agreement to dispose of all or substantially all of
the Corporation's assets or capital stock by means of sale, merger,
consolidation, reorganization, liquidation or otherwise, as a result of
which the Corporation's stockholders as of immediately before such
transaction will not own more than forty-nine percent (49%) of the total
combined voting power of all classes of voting capital stock of the
surviving entity (be it the Corporation or otherwise) immediately after the
consummation of such transaction, thereupon any and all Awards immediately
shall become and remain exercisable with respect to the total number of
shares of Stock still subject thereto for the remainder of their respective
terms until the consummation of such transaction, or if not consummated,
until the agreement therefor expires or is terminated, in which case
thereafter all Awards shall be treated as if said agreement never had been
executed; or (b) if there is a change in the ownership of fifty-one percent
(51%) or more of all classes of voting capital stock of the Corporation
through the acquisition of, or an offer to acquire such percentage of the
Corporation's voting capital stock by any person or entity, or persons or
entities acting in concert or as a group, and such acquisition or offer has
not been duly approved by the Board, thereupon any and all Awards
immediately shall become and remain exercisable with respect to the total
number of shares of Stock still subject thereto for the remainder of their
respective terms.
11. Withholding. Whenever the Corporation is about to issue Stock
pursuant to any Award, the Corporation may require the
8
Recipient to remit to the Corporation an amount sufficient to satisfy fully
any federal, state and other jurisdictions' income and other tax
withholding requirements prior to the delivery of any certificates for such
shares of Stock. Whenever payments are to be made in cash to any Recipient
pursuant to his or her exercise of an Award, such payments shall be made
net after deduction of all amounts sufficient to satisfy fully any federal,
state and other jurisdictions' income and other tax withholding
requirements.
12. Value. Where used in the Plan, the "fair market value" of Stock or
any options or rights with respect thereto, including Awards, shall mean
and be determined by (a) the average of the highest and lowest reported
sales prices thereof on the principal established domestic securities
exchange on which listed, and if not listed, then (b) the average of the
dealer "bid" and "ask" prices thereof on the New York over-the-counter
market as reported by the National Association of Securities Dealers, Inc.,
in either case as of the specified or otherwise required or relevant time,
or if not traded as of such specified, required or relevant time, then
based upon such reported sales or "bid" and "ask" prices before and/or
after such time in accordance with pertinent provisions of and principles
under the Code and the regulations promulgated thereunder.
13. Amendment. The Committee may amend or terminate the Plan at any
time, but may not without the approval of the Corporation's stockholders:
(a) increase the maximum number of shares of Stock that may be issued under
the Plan (other than adjustments pursuant
9
to paragraph 17 hereof), (b) extend the time period during which any Award
is exercisable, (c) extend the term of the Plan, or (d) change the minimum
Stock purchase price under any Qualified Option. In no event shall any such
termination or amendment limit or affect any outstanding Award, or the
rights of a Recipient thereunder, without such Recipient's consent.
In addition, the Committee may prescribe other or additional terms,
conditions and provisions with respect to the grant or exercise of any or
all Awards as the Committee may determine necessary or appropriate for such
Awards and the Stock subject thereto to qualify under and comply with all
applicable laws, rules and regulations, and changes therein, including but
not limited to the provisions of Sections 421 and 422 of the Code, Section
16 of the Securities Exchange Act of 1934, as amended, and Rule 16b-3
promulgated by the Securities and Exchange Commission. Without limiting the
generality of the preceding sentence, each Qualified Option, shall be
subject to such other and additional terms, conditions and provisions as
the Committee may deem necessary or appropriate in order to qualify such
Option, or connected Option, as an incentive stock option under Section 422
of the Code, including but not limited to the following provisions:
(i) the aggregate fair market value, at the time such Option is
awarded, of the Stock subject thereto and of any Stock or other
capital stock with respect to which incentive stock options qualifying
under Sections 421 and 422 of the Code are exercisable for the first
time by the Recipient
10
during any calendar year under the Plan and any other plans of the
Corporation or its affiliates, shall not exceed $100,000.00;
(ii) No Qualified Option shall be awarded to any person if at the
time of such Award, such person owns Stock possessing more than ten
percent (10%) of the total combined voting power of all classes of
capital stock of the Corporation or its affiliates, unless at the time
such Option is awarded the Stock purchase price under such Option is
at least one hundred and ten percent (110%) of the fair market value
of the Stock subject to such Option and the Option by its terms is not
exercisable after the expiration of five (5) years from the date it is
awarded; and
(iii) If the Recipient of a Qualified Option ceases to be
employed by the Corporation or any Subsidiary for any reason other
than his or her death, the Committee may permit the Recipient
thereafter to exercise such Option during its remaining term for a
period of not more than three (3) months after such cessation of
employment to the extent that the Option was then and remains
exercisable, unless such employment cessation was due to the
Recipient's disability as defined in Section 22(e)(3) of the Code, in
which case such three (3) month period shall be twelve (12) months; if
the Recipient dies while employed by the Corporation, the Committee
may permit the Recipient's qualified personal representatives, or any
persons who acquire the Qualified
11
Option pursuant to his or her Will or laws of descent and
distribution, thereafter to exercise such Option during its remaining
term for a period of not more than one (1) year after the Recipient's
death to the extent that the Option was then and remains exercisable;
the Committee may impose terms and conditions upon and for said
exercise of such Qualified Option after such cessation of the
Recipient's employment or his or her death.
From time to time, the Committee may rescind, revise and add to any of such
terms, conditions and provisions as may be necessary or appropriate to have
any Awards be or remain qualified and in compliance with all applicable
laws, rules and regulations, and may delete, omit or waive any of such
terms, conditions or provisions that are no longer required by reason of
changes in applicable laws, rules or regulations.
14. Continued Employment. Nothing in the Plan or any Award shall
confer upon any Recipient or other persons any right to continue in the
employment of, or maintain any particular relationship with the Corporation
or its affiliates, or limit or affect any rights, powers or privileges that
the Corporation or its affiliates may have to supervise, discipline and
terminate such Recipient or other persons, and the employment and other
relationships thereof. However, the Committee may require as a condition of
making and/or exercising any Award that its Recipient agree to, and in fact
provide services, either as an employee or in another capacity, to or for
the Corporation for such time period
12
following the date the Award is made and/or exercised as the Committee may
prescribe. The immediately preceding sentence shall not apply to any
Qualified Option to the extent such application would result in
disqualification of said Option as an incentive stock option under Sections
421 and 422 of the Code.
15. General Restrictions. Each Award shall be subject to the
requirement and provision that if at any time the Committee determines it
necessary or desirable as a condition of or in consideration of making such
Award, or the purchase or issuance or Stock thereunder, (a) the listing,
registration or qualification of the Stock subject to the Award, or the
Award itself, upon any securities exchange or under any federal or state
securities or other laws, (b) the approval of any governmental authority,
or (c) an agreement by the Recipient with respect to disposition of any
Stock (including without limitation that at the time of the Recipient's
exercise of the Award, any Stock thereby acquired is being and will be
acquired solely for investment purposes and without any intention to sell
or distribute such Stock), then such Award shall not be consummated in
whole or in part unless such listing, registration, qualification, approval
or agreement shall have been appropriately effected or obtained to the
satisfaction of the Committee and legal counsel for the Corporation.
16. Rights. Except as otherwise provided in the Plan, the Recipient of
any Award shall have no rights as a holder of the Stock subject thereto
unless and until one or more certificates for the shares of such Stock are
issued and delivered to the Recipient.
13
No adjustments shall be made for dividends, either ordinary or
extraordinary, or any other distributions with respect to Stock, whether
made in cash, securities or other property, or any rights with respect
thereto, for which the record date is prior to the date that any
certificates for Stock subject to an Award are issued to the Recipient
pursuant to his or her exercise thereof. No Award, or the grant thereof,
shall limit or affect the right or power of the Corporation or its
affiliates to adjust, reclassify, recapitalize, reorganize or otherwise
change its or their capital or business structure, or to merge,
consolidate, dissolve, liquidate or sell any or all of its or their
business, property or assets.
17. Adjustments. Except as otherwise provided in the Plan, no
Recipient of any Award shall have any rights, powers or privileges or be
entitled to any adjustments of or with respect to his or her Award by
reason of any stock split, dividend, distribution or division,
recapitalization, merger, consolidation, reorganization, liquidation,
dissolution, issuance, sale or exchange of shares of Stock or any other
capital stock or any rights thereto, increase or decrease in the authorized
number of shares of Stock or any other capital stock, sale, transfer or
other disposition of any assets of any kind, or any other similar action or
transaction by, of or with respect to the Corporation or its affiliates.
In the event of a change in the Stock as presently constituted, which
change is limited to a change of all of the authorized shares thereof into
the same number of shares with a
14
different par value, the shares resulting from such change shall be deemed
to be Stock within the meaning and for purposes of the Plan without further
action.
The aggregate number of shares of Stock available for Awards under the
Plan, and the shares of Stock subject to any and all outstanding Awards and
the option purchase price for each share of Stock thereunder all shall be
adjusted proportionately for and on account of any increase or decrease in
the number of issued shares of Stock after the effective date of the Plan
resulting from (a) a split, division or consolidation of, or any other
capital change or adjustment with respect to shares of Stock, (b) the
payment of any Stock dividend with respect to shares of Stock, or (c) any
other increase or decrease in the number of issued shares of Stock effected
without the receipt of consideration by the Corporation.
In the event the Corporation is the surviving corporation of any
merger, consolidation or other reorganization, any and all outstanding
Awards shall apply and relate to the securities to which a holder of Stock
is entitled after such merger, consolidation or other reorganization. Upon
any liquidation or dissolution of the Corporation, or any merger,
consolidation or other reorganization of which the Corporation is not the
surviving corporation, any and all outstanding Awards shall terminate upon
consummation of such merger, consolidation or other reorganization, but
prior to such consummation shall be exercisable to the extent that the same
otherwise are exercisable under the Plan.
15
18. Forfeiture. Notwithstanding anything to the contrary in this Plan,
if the Committee finds after full consideration of the facts presented on
behalf of the Corporation and the involved Recipient, that he or she has
been engaged in fraud, embezzlement, theft, commission of a felony, or
dishonesty in the course of his or her employment by the Corporation that
has damaged it, or that the Recipient has disclosed trade secrets of the
Corporation or its affiliates, the Recipient shall forfeit all rights under
and to unexercised Awards, and all exercised Awards under which the
Corporation yet has not delivered the certificates for shares of Stock, all
of which Awards and rights shall be automatically cancelled. The decision
of the Committee as to the cause of the Recipient's discharge from
employment with the Corporation and the damage thereby suffered shall be
final for purposes of the Plan, but shall not affect the finality of the
Recipient's discharge by the Corporation for any other purposes. The
preceding provisions of this paragraph shall not apply to any Qualified
Option to the extent such application would result in disqualification of
said Option as an incentive stock option under Sections 421 and 422 of the
Code.
19. Indemnification. In and with respect to the administration of the
Plan, the Corporation shall indemnify each present and future member of the
Committee and/or of the Board, who shall be entitled without further action
on his or her part to indemnity from the Corporation for all damages,
losses, judgments, settlement amounts, punitive damages, excise taxes,
fines,
16
penalties, costs and expenses (including without limitation attorneys' fees
and disbursements) incurred by such member in connection with any
threatened, pending or completed action, suit or other proceedings of any
nature, whether civil, administrative, investigative or criminal, whether
formal or informal, and whether by or in the right or name of the
Corporation, any class of its security holders, or otherwise, in which such
member may be or have been involved, as a party or otherwise, by reason of
his or her being or having been a member of the Committee and/or of the
Board, whether or not he or she continues to be such a member. The
provisions, protection and benefits of this paragraph shall apply and exist
to the fullest extent permitted by applicable law to and for the benefit of
all present and future members of the Committee and/or of the Board, and
their respective heirs, personal and legal representatives, successors and
assigns, in addition to all other rights that they may have as a matter of
law, by contract, or otherwise, except (a) as may not be allowed by
applicable law, (b) to the extent there is entitlement to insurance
proceeds under insurance coverage provided by the Corporation on account of
the same matter or proceeding for which indemnification hereunder is
claimed, or (c) to the extent there is entitlement to indemnification from
the Corporation, other than under this paragraph, on account of the same
matter or proceeding for which indemnification hereunder is claimed.
17
20. Miscellaneous. Any reference contained in this Plan to a
particular section or provision of law, rule or regulation, including but
not limited to the Internal Revenue Code of 1986 and the Securities
Exchange Act of 1934, both as amended, shall include any subsequently
enacted or promulgated section or provision of law, rule or regulation, as
the case may be, of similar import. Where used in this Plan: the plural
shall include the singular, and unless the context otherwise clearly
requires, the singular shall include the plural; and, the term "affiliates"
shall mean each and every subsidiary (as defined in Section 425 of the
Code) and any parent of the Corporation. The captions of the numbered
paragraphs contained in this Plan are for convenience only, and shall not
limit or affect the meaning, interpretation or construction of any of the
provisions of the Plan.
-------------
END
-------------
18
AQUAPENN SPRING WATER COMPANY, INC.
1992 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Pursuant to the AquaPenn Spring Water Company, Inc. 1992 Stock Option
Plan (the "Plan"), an option and right to purchase not more than a total of
four hundred and fifty thousand (450,000) shares of no par value common
stock (the "Stock") of AquaPenn Spring Water Company, Inc., a Pennsylvania
business corporation ("AquaPenn"), is hereby granted to Patrick Cresci (the
"Optionee") under and subject to the following terms and conditions:
1. After a twelve (12) month time period after the date of the
adoption by AquaPenn of the 1992 Stock Option Plan, (the "Effective Date"),
the Optionee may purchase up to fifty thousand (50,000) shares of Stock;
however, the Optionee may not exercise such purchase right before the
expiration of six (6) months after the date of this Agreement. In addition,
on each of the succeeding eight (8) anniversaries of the Effective Date, an
additional fifty thousand (50,000) shares of Stock shall become available
for the Optionee's purchase hereunder. The Optionee's right to purchase up
to four hundred fifty thousand (450,000) shares of Stock as above provided
in this paragraph shall be cumulative; for example, if the Optionee
purchases 50,000 shares of the 150,000 shares of Stock available for
purchase as of the fourth anniversary of the Effective Date, the Optionee
would be entitled to purchase up to 100,000 shares of Stock until the
fourth anniversary of the Effective Date, and upon the
EXHIBIT "A"
19
fourth anniversary, the Optionee would be entitled to purchase 200,000
shares of Stock.
2. This Agreement and the option and right to purchase Stock hereunder
shall terminate at 11:59 o'clock p.m. on the tenth year after adoption of
the 1992 Stock Option Plan, or at such earlier time as may be provided in
this Agreement, or if earlier, when the option to purchase Stock hereunder
has lapsed or been exercised or canceled under the provisions of this
Agreement or the provisions of the Plan; upon termination of this
Agreement, any unexercised option or right to purchase Stock hereunder
shall expire and the Optionee shall have no further rights under this
Agreement. Provided however, that a termination of this Agreement or lapse
or cancellation of the option hereunder shall not terminate, limit or
affect AquaPenn's right of repurchase under paragraph 4(b) of this
Agreement, which right of repurchase shall survive as provided in said
paragraph 4(b).
3. If at any time while this Agreement is in effect, the Optionee's
employment with AquaPenn is terminated by AquaPenn without cause under the
provisions of paragraph 2(b) of the Employment Agreement, the Optionee (or
the duly qualified personal representative of his estate, to the extent
permitted by applicable law) then may purchase up to four hundred and fifty
thousand (450,000) shares of Stock, minus the number of shares of Stock
previously purchased by the Optionee under this Agreement. Such option to
purchase shall expire on the third (3rd) anniversary of the effective date
of such termination of the Optionee's employment
20
and if not exercised by that time, such option and this Agreement shall
lapse and terminate.
4. (a) If at any time while this Agreement is in effect, the
Optionee's employment with AquaPenn terminates for any reason other than by
AquaPenn without case (including without limitation a termination of
employment due to the Optionee's death), the Optionee (or the duly
qualified personal representative of his estate, to the extent permitted by
applicable law) then may purchase under this Agreement up to that number of
shares of Stock that is equal to thirty thousand (30,000) shares of Stock
multiplied by the number of twelve (12) month time periods (including any
part of a twelve-month period) beginning with the Effective Date and ending
with the effective date of such termination of the Optionee's employment,
but in no event more than three hundred thousand (300,000) shares of Stock,
minus the number of shares of Stock previously purchased by the Optionee
under this Agreement. Such option to purchase shall expire on the sixtieth
(60th) day after the effective date of such termination of the Optionee's
employment and if not exercised by that time, such option and this
Agreement shall lapse and terminate. For example, if the Optionee
terminates his employment nine weeks after the third anniversary of the
Effective Date, the Optionee then would be entitled to purchase within the
next 60 days 90,000 shares of Stock less what he already had purchased
under this Agreement.
(b) If prior to such a termination of the Optionee's employment with
AquaPenn for any reason other than by AquaPenn
21
without cause (including without limitation a termination of employment due
to the Optionee's death), the Optionee has purchased more shares of Stock
than he would be entitled to purchase under paragraph 4(a) above, AquaPenn
shall have the right to purchase from the Optionee (and his purchasers,
transferees, assignees and any other persons to whom the Optionee may have
disposed of his shares of Stock in any manner, and the Optionee's personal
and legal representatives, estate, heirs and testamentary beneficiaries)
any or all of the shares of Stock purchased by the Optionee under this
Agreement in excess of the number of shares of Stock that the Optionee is
entitled to purchase under paragraph 4(a) above. Such right to repurchase
by AquaPenn shall be at the same per share purchase price as was paid by
the Optionee for each such excess share of Stock, and shall expire on the
sixtieth (60th) day after the effective date of such termination of the
Optionee's employment (and if not exercised by that time, shall be of no
further force or effect).
5. Notwithstanding the preceding provisions hereof, if while this
Agreement is in effect: (a) AquaPenn or its stockholders execute an
agreement to dispose of all or substantially all of AquaPenn's assets or
capital stock by means of sale, merger, consolidation, reorganization,
liquidation or otherwise, as a result of which AquaPenn's stockholders as
of immediately before such transaction will not own more than forty-nine
percent (49%) of the total combined voting power of all classes of voting
capital stock of the surviving entity (be it AquaPenn or otherwise)
22
immediately after the confirmation of such transaction, or (b) there is a
change in the ownership of fifty-one percent (51%) or more of all classes
of voting capital stock of AquaPenn through the acquisition of, or an offer
to acquire such percentage of AquaPenn's voting capital stock by any person
or entity, or persons or entities acting in concert or as a group, and such
acquisition or offer has not been duly approved by the Board, or (c) there
is a public offering of the common stock of AquaPenn, and in any such case
(a, b or c above) the employment of the Optionee with AquaPenn continues
and then is in effect under that certain Employment Agreement between
AquaPenn and the Optionee dated ---------------- (the "Employment
Agreement"), the Optionee's right to purchase Stock under paragraph 1 above
shall be accelerated (without further action) so that the Optionee may
purchase immediately under this Agreement up to four hundred fifty thousand
(450,000) shares of Stock, minus the number of shares of Stock previously
purchased by the Optionee under this Agreement. Provided, that if while
this Agreement is in effect, the Optionee's employment with AquaPenn for
any reason terminates at any time subsequent to any of the events described
in (a, b or c) in the immediately preceding sentence, the Optionee's option
to purchase Stock under this paragraph 5 shall remain in effect only until:
(a) three months after the effective date of such termination of the
Optionee's employment, if such termination of employment is by AquaPenn
without cause under the provisions of paragraph 2(b) of
23
the Employment Agreement, and if not exercised by that time, such option
and this Agreement shall lapse and terminate; or
(b) the sixtieth (60th) day after the effective date of such
termination of the Optionee's employment, if such termination of employment
occurs for any reason other than by AquaPenn without cause (including
without limitation a termination of employment due to the Optionee's
death), and if not exercised by that time, such option and this Agreement
shall lapse and terminate.
Any shares of Stock actually purchased by the Optionee pursuant to his
exercise of the accelerated rights above provided in this paragraph 5 shall
not be subject to AquaPenn's right of repurchase under paragraph 4(b) of
this Agreement.
6. All share certificates for Stock issued pursuant to the exercise of
the option to purchase under paragraph 1 above shall be conspicuously
endorsed with a legend providing notice of AquaPenn's right of repurchase
under paragraph 4(b) above.
7. The option price for each share of Stock purchased under this
Agreement, regardless of when purchased, shall be $1.75 per share, the fair
market value of the Stock as of the date of this Agreement. Any exercise of
the option to purchase Stock under this Agreement and payment of such
option price for the Stock being purchased shall be made in the manner
provided in paragraph 10 of the Plan.
8. The option and right granted to the Optionee under this Agreement
shall be exercisable during the Optionee's lifetime only by the Optionee,
and shall not be salable, transferable or
24
assignable in any manner by the Optionee except by his or her Will or
pursuant to applicable laws of descent and distribution.
9. It is intended that the Optionee's option and right to purchase
Stock under this Agreement shall be an incentive stock option qualified
under Sections 421 and 422 of the Internal Revenue Code of 1986, as
amended, to the fullest extent permitted by said Sections and the rules and
regulations promulgated thereunder.
10. Except as otherwise hereinbefore provided, this Agreement and the
option to purchase Stock hereunder are subject to all of the terms,
conditions and provisions of the Plan, a copy of which has been furnished
to and received by the Optionee. The provisions of this Agreement shall be
construed under and enforced in accordance with the laws of the
Commonwealth of Pennsylvania. Where used in this Agreement, the words
"hereunder", "herein" and other similar compounds of the word "here" shall
mean and refer to this entire Agreement and not to any particular paragraph
or provision of this Agreement.
25
IN WITNESS WHEREOF, pursuant to the Plan, AquaPenn Spring Water
Company, Inc. and Patrick Cresci, each intending to be legally bound
hereby, have duly executed this Agreement as of the ---------- day of
- ----------, 19--.
ATTEST: AQUAPENN SPRING WATER COMPANY, INC.
- -------------------- ------------------------------
Secretary Edward J. Lauth, III
President
WITNESS: OPTIONEE:
- -------------------- ------------------------------
Patrick Cresci
26