EXHIBIT 10.11
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 and this Agreement), Optionee shall acquire the vested
right to exercise the TARSAP
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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 sentence of SECTION
4.1(b)(II) above. The percentage of Five Year Performance Goals for
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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
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other 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 an
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
------------
------------
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*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 $ ;
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|_| 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.
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;
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(d) Only the Company can register the Exercised Shares under the
Securities Act and applicable state securities laws;
(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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