Exhibit 10.9
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UNITED INDUSTRIES CORPORATION
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is entered
into as of January 20, 1999, by and between UNITED INDUSTRIES CORPORATION, a
Delaware corporation (the "Company"), and Richard A. Bender ("Optionee")
pursuant to the United Industries Corporation 1999 Stock Option Plan (the
"Plan"). The Company and Optionee are referred to collectively herein as the
"Parties." Capitalized terms used but not defined herein shall have the meaning
set forth in the Plan.
Simultaneously with the execution of this Agreement, the
parties hereto have executed a Management Agreement, dated as of the date hereof
(the "Management Agreement"), to which this Agreement is attached as Annex A.
THE PARTIES AGREE AS FOLLOWS:
1. Grant of Options and Effective Date.
1.1 Grant. The Company hereby grants to Optionee pursuant to the
Plan an option (the "Option") to purchase all or any part of
an aggregate of 300,000 shares (the "Class A Shares") of the
Company's Class A Voting Common Stock, par value $0.01 per
share, and 300,000 shares (the "Class B Shares" and,
together with the Class A Shares (the "Shares")) of the
Company's Class B Non-Voting Common Stock, par value $0.01
per share (collectively, "Common Stock"), on the terms and
conditions set forth herein and in the Plan as in effect on
the Grant Date (as defined below), the terms of which are
incorporated herein by reference.
1.2 Grant Date. The Grant Date of this Option is January 20,
1999 (the "Grant Date").
2. Exercise Price. The exercise price for the Shares of Common Stock
covered by this Option shall be $5.00 per share (the "Exercise
Price").
3. Adjustment and Termination of Options. Subject to the restrictions,
and under the circumstances described, in the Plan and this Agreement,
the Company shall adjust the number and kind of Shares and the
Exercise Price thereof, and this Option shall be terminated in certain
circumstances, in accordance with the provisions of the Plan.
4. Exercise of Options.
4.1 When Exercisable.
(a) Rate of Exercise for 5-Year Options. Optionee's
right to exercise this Option as to 200,000 of the
Shares (100,000 Class A Shares and 100,000 Class B
Shares) subject thereto (the "5 Year Options")
shall vest ratably over
the five (5) year period commencing on the Grant
Date in accordance with the following schedule if
(but only if) Optionee is employed by the Company
or any of its Subsidiaries as of each such date:
Cumulative Shares of
Date 5 Year Option Vested
---- --------------------
1st Anniversary of Grant Date 40,000
2nd Anniversary of Grant Date 80,000
3rd Anniversary of Grant Date 120,000
4th Anniversary of Grant Date 160,000
5th Anniversary of Grant Date 200,000;
provided that if Optionee's employment by the Company terminates by virtue of
the expiration of the "Term" (as defined in the Management Agreement) (i.e.,
Optionee's employment terminates due to the passage of the date referenced in
Section 2(a)(i) thereof (as extended pursuant to the provision in such Section
2(a)) as opposed to any termination by the Company or Optionee or by virtue of
Optionee's death or disability), then Optionee shall be credited with an
additional 21 days of vesting (for example, if Optionee's employment with the
Company terminates as described above on December 31, 2001, the 5 Year Options
will vest through January 20, 2002). Notwithstanding any provision to the
contrary in this Section 4.1(a), but subject to the other restrictions in the
Plan and this Agreement, in the event of a Sale (as defined below) prior to
December 31, 2003, the 5 Year Options shall become vested and immediately
exercisable.
(b) Rate of Exercise on TARSAP Options.
(i) Optionee shall not be vested with the right to
exercise this Option with respect to 400,000 of the Shares
(200,000 Class A Shares and 200,000 Class B Shares) (the
"TARSAP Shares") subject thereto (the "TARSAP Options")
until ten (10) years after the Grant Date, at which time
Optionee shall acquire the vested right to exercise the
TARSAP Options and purchase one hundred percent (100%) of
the TARSAP Shares if (but only if) Optionee is an employee
of the Company or any of its Subsidiaries as of such date.
(ii) Acceleration of TARSAP Options.
Notwithstanding the foregoing, if on and after the
publication of each written determination by the Board of
Directors of the Company (the "Board") or a committee
thereof which is authorized to do so that the Company has
met at least ninety percent (90%) of its objective for
EBITDA (as defined below) (100% of the Company's objective
referred to herein as the "Performance Goals") with respect
to any fiscal year commencing with the fiscal year ending
December 31, 1999 and continuing for each of the four fiscal
years thereafter (which Performance Goals are set forth on
Annex I attached hereto), then (subject to the other
restrictions in the Plan
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and this Agreement), Optionee shall acquire the vested right
to exercise the TARSAP Options to purchase ten percent (10%)
of the TARSAP Shares, and for each additional one percent
(1%) achievement over ninety percent (90%) of the
Performance Goals for any such fiscal year, as so
determined, Optionee shall acquire the vested right to
exercise the TARSAP Options to purchase an additional one
percent (1%) of the TARSAP Shares, but no more than twenty
percent (20%) of the TARSAP Shares in respect of each full
fiscal year. Additionally, on and after publication of a
written determination by the Board or a committee thereof
which is authorized to do so that the Company has met at
least eighty seven and one-half percent (87.5 %) of its
Performance Goals for the fiscal year ending December 31,
2003 and at least ninety percent (90%) of its cumulative
Performance Goals for the five fiscal years ending December
31, 2003 ("Five Year Performance Goals"), then subject to
the other restrictions in the Plan and this Agreement, (i)
Optionee shall acquire the vested right to exercise the
TARSAP Options to purchase fifty percent (50%) of the TARSAP
Shares as to which Optionee had not otherwise acquired the
vested right to exercise, and (ii) for each additional one
percent (1%) achievement over ninety percent (90%) of the
Five Year Performance Goals, as so determined, Optionee
shall acquire the vested right to exercise this TARSAP
Option to purchase an additional five percent (5%) of the
TARSAP Shares as to which Optionee has not otherwise
acquired the vested right to exercise (such additional
exercise rights pursuant to clauses (i) and (ii) above are
referred to herein as the "Additional Exercise Rights").
Such determinations shall be made by the Board or such
committee within ten (10) days after receipt of audited
financial statements for each fiscal year. The Board's or
committee's determination as to whether the Company has met
such objectives shall be final and not subject to dispute.
In addition, the Board or a committee thereof shall have
complete discretion to modify such objectives from time to
time for any year or years to reflect business combinations
or dispositions, fiscal year changes, purchases or sales of
assets or any other circumstances the Board or committee
thereof deems relevant. For purposes hereof, "EBITDA" shall
mean earnings before interest, taxes, depreciation and
amortization, excluding any non-recurring or extraordinary
items, as determined in accordance with generally accepted
accounting principles, consistently applied.
(iii) Acceleration Upon Sale. Notwithstanding any
provision to the contrary in this Section 4.1(b), but
subject to the other restrictions in the Plan and this
Agreement, in the event of a Sale (as defined below) prior
to December 31, 2003, the TARSAP Options shall become vested
and immediately exercisable to the extent set forth below.
On and after publication of a written determination by the
Board or a committee thereof which is authorized to do so
that the Company has met at least eighty seven and one-half
percent (87.5 %) of its Performance Goals for the last
twelve (12) full months and at least ninety percent (90%) of
its cumulative Performance Goals for the completed fiscal
years (if any) and the Interim Period (as defined below)
(based on months elapsed), the Board or such committee shall
treat the percentage of cumulative Performance Goals
achieved through the completed fiscal years (if any) and
Interim Period as the percentage of Five Year Performance
Goals achieved and on that basis shall determine the
Additional Exercise Rights with respect to all 400,000
TARSAP Options as to which Optionee had not otherwise
acquired the vested right to exercise consistent with the
method set forth in the second
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sentence of Section 4.1(b)(ii) above. The percentage of Five
Year Performance Goals for such period shall be computed by
dividing (i) the sum of EBITDA achieved for the completed
fiscal years (if any) and the Interim Period by (ii) the
annual Performance Goals for the completed fiscal years (if
any) and the monthly Performance Goals for the Interim
Period. For purposes hereof, the term "Interim Period" shall
mean the period beginning on the first day of the then
current fiscal year and ending on the last full month of
that uncompleted fiscal year.
For purposes hereof, the term "Sale" shall mean:
(w) the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of voting securities of (a) the Company or (b)
the surviving entity in any reorganization, merger or
consolidation (each an "Acquisition") involving the Company
(any such entity referred to herein as the "Corporation")
where such Acquisition causes such Person to own more than
fifty percent (50%) of the combined voting power of the then
outstanding voting securities of the Corporation entitled to
vote generally in the election of directors, other than
acquisitions by the Thomas H. Lee Company or its affiliates;
(x) approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company;
(y) the acquisition by a third party not
affiliated with the Company of all or substantially all of
the Company's assets; or
(z) individuals who constitute the Board on the
date of the Company's initial public sale of equity
securities registered under the Securities Act (the
"Incumbent Board") cease for any reason to constitute at
least a majority of the Board thereafter. Any person
becoming a director subsequent to such date whose, election,
or nomination for election, is, at any time, approved by a
vote of at least a majority of the directors comprising the
Incumbent Board shall be considered a member of the
Incumbent Board.
The accelerated vesting provided in this Section 4.1(b)(iii) shall
take effect immediately prior to but contingent upon the Sale giving rise to
such accelerated vesting. The phrase "immediately prior to the Sale" shall be
understood to mean sufficiently in advance of a Sale to permit the Optionee to
take all steps reasonably necessary to permit the Optionee to become a
shareholder of the Company as of the consummation of such Sale with respect to
the TARSAP Shares subject to the accelerated vesting provided in this Section
4.1(b)(iii). The Board or committee thereof may in good faith shorten the
Interim Period or make approximations of EBITDA during the Interim Period in
order to comply with the preceding sentence.
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(c) Partial Exercise. Subject to the other
restrictions in the Plan and this Agreement, the
Options may be exercised for all or a part of the
Shares with respect to which each Option is
exercisable under Section 4.1(a) and (b) above.
4.2 Method of Exercise; Stockholders Agreement. Subject to
Section 4.1 and the other restrictions in the Plan and this
Agreement, Options are exercisable from time to time by
Optionee, who shall complete, execute and deliver to the
Company a Form of Exercise and Stock Transfer Power
substantially in the form attached hereto or in such other
form as the Company may require. Except as otherwise
permitted by Section 6(d) of the Plan, such notice shall be
accompanied by payment in full for the Shares to be
purchased. Payment of the Exercise Price may be made: (i) in
cash, (ii) in shares of Common Stock which either (A) were
purchased by Optionee in other than a compensatory
transaction, (B) have been held by Optionee free and clear
for at least six (6) months prior to the use thereof to pay
part or all of the Exercise Price or (C) otherwise are
considered "mature" shares for purposes of generally
accepted accounting principles, as determined by the
Company's outside auditors, or (iii) so long as the Common
Stock is publicly traded, by delivery to the Committee of
irrevocable instructions to a stockbroker to deliver
promptly to the Company an amount of sale or loan proceeds
sufficient to pay a portion of the Exercise Price subject to
this clause (iii), or a combination of the methods specified
in clauses (i), (ii) and (iii), or in the sole discretion of
the Committee, through a cashless exercise procedure.
Optionee shall also execute and deliver to the Company a
copy of the Company's Stockholders Agreement, dated as of
January 20, 1999, in the form in effect at the time of
exercise (as amended and modified from time to time, the
"Stockholders Agreement"), if Optionee has not previously
done so. Upon due exercise of any Option and (if required)
execution and delivery of the Stockholders Agreement,
subject to the terms and conditions in this Agreement, the
Company shall issue in the name of Optionee and deliver to
Optionee a certificate for the Shares in respect of which
such Option shall have been exercised, but no Shares will be
issued until arrangements satisfactory to Company have been
made for appropriate income tax withholding, if any,
pursuant to Section 12 hereof.
4.3 Exercise After Termination of Employment; Termination of
Options.
(a) Definitions. For purposes of this Section 4.3, the
capitalized terms Good Reason, Cause, and
Disability shall have the meanings set forth in
the Management Agreement.
(b) Termination Without Good Reason. Upon any
termination of employment by Optionee without Good
Reason, the Options may, to the extent exercisable
and not terminated pursuant to Section 4.3(e), be
exercised only within thirty (30) days after the
date of such employment termination. This Section
4.3(b) shall not, however, extend the term of the
Options beyond that specified in Section 4.3(e).
For purposes of this Section 4.3(b), the extent to
which the Options are exercisable shall be
determined as of the date of termination of
employment.
(c) Termination by Virtue of Death or Disability or
Without Cause or With Good Reason. Upon any
termination of employment of Optionee by virtue of
Optionee's death or Disability or upon any
termination of employment by Optionee with Good
Reason, or by the
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Company without Cause, the Options may, to the
extent exercisable and not terminated pursuant to
Section 4.3(e), be exercised only within twelve
(12) months after the date of such termination.
This Section 4.3 (c) shall not extend the term of
the Options beyond that specified in Section
4.3(e). For purposes of this Section 4.3(c), the
extent to which the Options are exercisable shall
be determined as of the date of termination of
employment.
(d) Termination for Cause. The Option shall terminate
immediately upon termination of the employment of
Optionee for Cause.
(e) Other Termination. The Options shall not be
exercisable after the earliest of (i) a Sale
(provided that Optionee has at least five (5)
business days prior to the Sale to exercise the
Options or the Options are treated as exercised in
connection with such Sale) or (ii) January 20,
2009.
(f) Company Repurchase; Extension of Exercise Period.
If Optionee properly elects to exercise all or any
portion of the Option following a termination of
Optionee's employment as described in Section
4.3(c) (a "Post-Termination Exercise"), at the
written request of Optionee delivered to the
Company prior to or simultaneously with the
attempted exercise of such Option, the Company
shall either:
(i) offer to purchase from Optionee, within
fifteen (15) days following its receipt of such request, at
a purchase price equal to Fair Market Value, such portion of
the Shares obtained by Optionee through the Post-Termination
Exercise having an aggregate Fair Market Value equal to the
excess of (A) Optionee's aggregate federal, state and local
income tax obligations in respect of the Post-Termination
Exercise over (B) any amounts related to income tax
previously withheld by the Company with respect to such
Post-Termination Exercise; or
(ii) extend the period during which Optionee may
exercise the Options specified in Optionee's notice until
the earlier of (A) such time as the Company elects to comply
with Section 4.3(f)(i), above (disregarding the fifteen (15)
day period referenced therein), and (B) such time as the
Shares to be received by Optionee upon the exercise of the
Options specified in Optionee's notice are registered under
the Securities Act and freely tradable.
5. Non-transferability of Options. The Options shall not be transferable
or assignable except upon Optionee's death by will or the laws of
descent and distribution and shall be exercisable, during Optionee's
lifetime, only by Optionee.
6. Purchase for Investment; Other Representations of Optionee; Legends.
6.1 Investment Intent. As provided in the Plan, in the event
that the offering of Shares with respect to which the
Options are being exercised is not registered under the
Securities Act, but an exemption is available that requires
an investment representation or other
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representation, Optionee, if electing to purchase Shares,
will be required to represent that such Shares are being
acquired for investment and not with a view to distribution
thereof, and to make such other reasonable and customary
representations regarding matters relevant to compliance
with applicable securities laws as are deemed necessary by
counsel to the Company. Stock certificates evidencing such
unregistered Shares that are acquired upon exercise of the
Options shall bear restrictive legends in substantially the
following form and such other restrictive legends as are
required or advisable under the provisions of any applicable
laws or are provided for in the Stockholders Agreement or
any other agreement to which Optionee is a party:
THE SHARES REPRESENTED BY THIS STOCK CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), NOR UNDER ANY STATE SECURITIES LAWS AND SHALL NOT
BE TRANSFERRED AT ANY TIME IN THE ABSENCE OF (I) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS WITH RESPECT TO SUCH SHARES AT SUCH TIME, OR (II) AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL, TO THE
EFFECT THAT SUCH TRANSFER AT SUCH TIME WILL NOT VIOLATE THE SECURITIES
ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
6.2 Other Representations. Optionee hereby represents and
warrants to the Company as follows:
(a) Access to Information. Because of Optionee's
business relationship with the Company and with
the management of the Company, Optionee has had
access to all material and relevant information
concerning the Company, thereby enabling Optionee
to make an informed investment decision with
respect to his investment in the Company, and all
pertinent data and information requested by
Optionee from the Company or its representatives
concerning the business and financial condition of
the Company and the terms and conditions of this
Agreement have been furnished. Optionee
acknowledges that Optionee has had the opportunity
to ask questions of and receive answers from and
to obtain additional information from the Company
and its representatives concerning the present and
proposed business and financial condition of the
Company.
(b) Financial Sophistication. Optionee has such
knowledge and experience in financial and business
matters that Optionee is capable of evaluating the
merits and risks of investing in the Shares.
(c) Understanding the Investment Risks. Optionee
understands that:
(i) An investment in the Shares represents a
highly speculative investment, and there can be no assurance
as to the success of the Company in its business; and
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(ii) There is at present no market for the Shares
and there can be no assurance that a market will develop in
the future.
(d) Understanding of the Nature of the Shares.
Optionee understands and agrees that:
(i) There can be no assurance that the Shares will
be registered under the Securities Act or any state
securities laws and if they are not so registered, they will
only be issued and sold in reliance upon certain exemptions
contained in the Securities Act and applicable state
securities laws, and the representations and warranties of
Optionee contained herein, which will have to be renewed as
to the Shares at the times of exercise of the Options, are
essential to any claim of exemption by the Company under the
Securities Act and such state laws;
(ii) If the Shares are not so registered, the
Shares will be "restricted securities" as that term is
defined in Rule 144 promulgated under the Securities Act;
(iii) The Option cannot be exercised and the
Shares will not be sold to Optionee and Optionee cannot
resell or transfer the Shares without registration under the
Securities Act and applicable state securities laws unless
the Company receives an opinion of counsel acceptable to it
(as to both counsel and the opinion) that such registration
is not necessary, the cost of such opinion to be borne by
the Company;
(iv) Only the Company can register the Shares
under the Securities Act and applicable state securities
laws;
(v) The Company has not made any representations
to Optionee that the Company will register the Shares under
the Securities Act or any applicable state securities laws,
or with respect to compliance with any exemption therefrom;
(vi) Optionee is aware of the conditions for
Optionee's obtaining an exemption for the resale of the
Shares under the Securities Act and any applicable state
securities laws; and
(vii) The Company may, from time to time, make
stop transfer notations in its transfer records to ensure
compliance with the Securities Act and any applicable state
securities laws, and any additional restrictions imposed by
state securities administrators.
(e) Investment Intent. Optionee acknowledges that:
(i) Optionee is acquiring the Option for
Optionee's own account and not on behalf of any other
person;
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(ii) Optionee is acquiring the option for
investment and not with a view to distribution or with the
intent to divide Optionee's participation with others or
resell or otherwise distribute the Options or the Shares;
(iii) Neither Optionee nor anyone acting on
Optionee's behalf has paid or will pay a commission or other
remuneration to any person in connection with the
acquisition of the Options or the Shares; and
(iv) At the time of exercise of any Option,
Optionee will have to make all the representations and
warranties contained in this Section 6 with respect to the
Shares to be issued and other representations concerning
investment intent as a condition of the issuance of the
Shares by the Company.
7. Restriction on Issuance of Shares. The Company shall not be obligated
to sell or issue any Shares pursuant to this Agreement if such
issuance would result in the violation of any laws, including the
Securities Act or any applicable state securities laws. The Company
agrees to use its reasonable best efforts to qualify for available
exemptions under the Securities Act or any applicable state securities
laws which will enable it to issue Shares hereunder in compliance with
applicable law.
8. Rights as a Shareholder. Optionee shall have no rights as a
shareholder with respect to any Shares covered by the Options until
the date of exercise and payment of the Exercise Price in accordance
with the terms of this Agreement. Subject to Section 3 hereof, no
adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
9. No Employment Rights. This Agreement shall not confer upon Optionee
any right with respect to the continuance as an employee of the
Company or any Subsidiary, nor shall it interfere in any way with the
right of the Company or any Subsidiary to terminate such employment at
any time.
10. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be
governed by, and construed in accordance with, the laws of the State
of Delaware, without giving effect to any choice of law or conflict of
law rules or provisions (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
11. Notices. All notices and other communications under this Agreement
shall be in writing, and shall be deemed to have been duly given on
the date of delivery if delivered personally or when received if
mailed to the party to whom notice is to be given, by certified mail,
return receipt requested, postage prepaid, or by reputable overnight
courier service (charges prepaid), or transmitted by facsimile with
answer-back confirmation to the following address, or any other
address specified, by notice duly given:
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To Optionee at: Richard A. Bender
1563 Dietrich Ridge Drive
Manchester, MO 63021
To the Company at: United Industries Corporation
8825 Page Boulevard
St. Louis, MO 63114
Attention: President
Telecopy: (314) 253-5941
12. Withholdings. Except to the extent prohibited by applicable law,
Optionee may satisfy any required withholding obligation upon the
exercise of an Option hereunder by either of the following methods, or
by a combination of such methods: (a) tendering a cash payment or (b)
delivering to the Company previously acquired Shares, or having the
Company withhold Shares otherwise deliverable upon the exercise of an
Option, in either case having an aggregate Fair Market Value,
determined as of the date the withholding obligation arises, less than
or equal to the amount of the total withholding obligation.
13. Pro Rata Exercise. The Shares of Common Stock covered by this Option
shall only be exercised, if at all, ratably among the Class A Shares
and Class B Shares, based on the aggregate number of Class A Shares
and Class B Shares subject to the Options granted hereunder.
14. Registration of Shares. At any time after UIC Holdings, L.L.C.,
together with its affiliates, holds less than 25% of the Common Stock
held by such entities as of the date hereof, Optionee shall have the
right to cause the Company to register all of the Shares on a Form
S-8, along with a Form S-3 reoffer prospectus, under the Securities
Act of 1933, as amended from time to time, or any successor form
thereto, and the Company shall use its reasonable best efforts to
comply with such request in a timely manner.
* * * * *
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
UNITED INDUSTRIES CORPORATION
By
------------------------------
Name:
------------------------
Title:
------------------------
OPTIONEE:
---------------------------------
Richard A. Bender
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ANNEX I
-------
The Performance Goal with respect to each fiscal year from 1999 through 2003 is
as follows:
Fiscal Year Performance Goal
----------- ----------------
1999* $ 85,400,000
2000 111,200,000
2001 123,100,000
2002 133,000,000
2003 143,800,000
------------
Aggregate $596,500,000
*Including any portion of calendar 1999 prior to closing.
These Performance Goals have been calculated without deduction for any
expenses associated with the recapitalization being effectuated by the Company
on the date hereof or any relocation expenses of the Company's new president,
and the measurement of the Company's actual performance shall similarly be
calculated without deduction for such items. These Performance Goals have
already been reduced to reflect (i) the Company's revised aviation budget, (ii)
management fees payable to Thomas H. Lee Company and/or its affiliates, (iii)
consulting and directors fees payable to David Jones and David Pratt and (iv)
the salary and bonus payable to the Company's new president.
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UNITED INDUSTRIES CORPORATION
FORM OF EXERCISE AND STOCK TRANSFER POWER
United Industries Corporation
8825 Page Boulevard
St. Louis, MO 63114
Ladies and Gentlemen:
Reference is made to the Stock Option Agreement between United
Industries Corporation (the "Company") and me (the "Option Agreement"), whereby
on January 20, 1999, I was granted an option to purchase all or any part of an
aggregate of 300,000 shares (the "Class A Shares") of the Company's Class A
Voting Common Stock, par value $0.01 per share and 300,000 shares (the "Class B
Shares" and, together with the Class A Shares (the "Shares")) of the Company's
Class B Non-Voting Common Stock, par value $0.01 per share (collectively,
"Common Stock"), at $5.00 per share. I hereby exercise my right to purchase
Shares (on a pro rata basis among the Class A Shares and the Class B Shares)
(the "Exercised Shares") of Common Stock at said price and deliver to you
herewith the full purchase price of such Exercised Shares, as follows:
[ ] Cash or check in the amount $ ;
-----------------------------
[ ] Previously owned shares of Common Stock having a Fair
Market Value (as defined in the Option Agreement) equal to
$_______ as of the date hereof, and otherwise in accordance
with Section 4.2 of the Option Agreement; and/or
[ ] If the Common Stock is publicly traded, by delivery to the
Company of the attached copy of irrevocable broker
instructions to deliver promptly to the Company $_______ of
loan proceeds, or $_________ of proceeds of the sale of
Exercised Shares of Common Stock deliverable upon exercise
of the option represented by the Option Agreement.
I understand that no Exercised Shares will be issued until
arrangements satisfactory to the Company have been made for appropriate income
tax withholding, if any, and I have executed the Company's Stockholders
Agreement (the "Stockholders Agreement").
The Exercised Shares will be subject to certain rights of
repurchase and other restrictions, as more particularly set forth in the
Management Agreement by and between the Company and me dated as of January 20,
1999 and the Stockholders Agreement.
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In the event that the Exercised Shares have not been
registered under the Securities Act of 1933, as amended from time to time, upon
the date hereof, I hereby represent and warrant to the Company as follows:
1. Because of my business relationship with the Company and with the
management of the Company, I have had access to all material and
relevant information concerning the Company, thereby enabling me to
make an informed investment decision with respect to my investment in
the Company, and all pertinent data and information requested by me
from the Company or its representatives concerning the business and
financial condition of the Company and the terms and conditions of the
Option Agreement have been furnished. I acknowledge that I have had
the opportunity to ask questions of and receive answers from and to
obtain additional information from the Company and its representatives
concerning the present and proposed business and financial condition
of the Company.
2. I have such knowledge and experience in financial and business matters
that I am capable of evaluating the merits and risks of investing in
the Exercised Shares.
3. I understand that:
(a) An investment in the Exercised Shares represents a highly
speculative investment, and there can be no assurance as to
the success of the company in its business; and
(b) There is at present no market for the Exercised Shares and
there can be no assurance that a market will develop in the
future.
4. I understand and agree that:
(a) There can be no assurance that the Exercised Shares will be
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws and if they
are not so registered, they will only be issued and sold in
reliance upon certain exemptions contained in the Securities
Act and applicable state securities laws, and my
representations and warranties contained herein are
essential to any claim of exemption by the Company under the
Securities Act and such state laws;
(b) If the Exercised Shares are not so registered, the Exercised
Shares will be "restricted securities" as that term is
defined in Rule 144 promulgated under the Securities Act;
(c) I cannot resell or transfer the Exercised Shares without
registration under the Securities Act and applicable state
securities laws unless the Company receives an opinion of
counsel acceptable to it (as to both counsel and the
opinion) that such registration is not necessary, the cost
of such opinion to be borne by the Company;
(d) Only the Company can register the Exercised Shares under the
Securities Act and applicable state securities laws;
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(e) The Company has not made any representations to me that the
Company will register the Exercised Shares under the
Securities Act or any applicable state securities laws, or
with respect to compliance with any exemption therefrom;
(f) I am aware of the conditions for obtaining an exemption for
the resale of the Exercised Shares under the Securities Act
and any applicable state securities laws;
(g) The Company may, from time to time, make stop transfer
notations in its transfer records to ensure compliance with
the Securities Act, and any applicable state securities
laws, and any additional restrictions imposed by state
securities administrators; and
(h) I understand that stock certificates evidencing the
Exercised Shares shall bear restrictive legends as more
particularly described in the Option Agreement and the
Stockholders Agreement.
5. I acknowledge that:
(a) I am acquiring the Exercised Shares for my own account and
not on behalf of any other person;
(b) I am acquiring the Exercised Shares for investment and not
with a view to distribution or with the intent to divide my
participation with others or resell or otherwise distribute
the Exercised Shares; and
(c) Neither I nor anyone acting on my behalf has paid or will
pay a commission or other remuneration to any person in
connection with the acquisition of the Exercised Shares.
Signature
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Address:
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Social Security No.:
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