Exhibit 10.15
UNITED INDUSTRIES CORPORATION
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "AGREEMENT") is entered into
as of July __, 1999, by and between UNITED INDUSTRIES CORPORATION, a Delaware
corporation (the "COMPANY"), and Xxxxx Xxxxx ("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.
Optionee and the Company are parties to that certain Stock
Option Agreement dated as of January 20, 1999, and the options granted to
Optionee hereunder are in addition to, and not in replacement of, the options
granted thereunder. Simultaneously with the execution of this Agreement, the
parties hereto have executed a Chairman's Agreement pursuant to which the
Company engaged Optionee as a member of the Board and its Chairman.
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
150,000 shares (the "CLASS A SHARES") of the Company's Class A Voting Common
Stock, par value $0.01 per share and 150,000 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 Vesting Date (as defined below), the terms of which are
incorporated herein by reference.
1.2 GRANT DATE. The grant date of this Option is the date hereof,
and the reference date of this Option for vesting purposes is January 20, 1999
(the "VESTING 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 100,000 of the Shares (50,000 Class A Shares and
50,000 Class B Shares) subject thereto (the "5 YEAR OPTIONS") shall vest
ratably over the five (5) year period commencing on the
Vesting Date in accordance with the following schedule if (but only if) Optionee
is a director or employee of the Company or any of its Subsidiaries as of each
such date:
Cumulative Shares of
Date 5 Year Option Vested
---- --------------------
1st Anniversary of Vesting Date 20,000
2nd Anniversary of Vesting Date 40,000
3rd Anniversary of Vesting Date 60,000
4th Anniversary of Vesting Date 80,000
5th Anniversary of Vesting Date 100,000
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 200,000 of the Shares (100,000 Class A Shares and
100,000 Class B Shares) (the "TARSAP SHARES") subject thereto (the "TARSAP
OPTIONS") until ten (10) years after the Vesting 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 a
director or 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 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
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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 200,000 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 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:
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(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
Xxxxxx X. Xxx 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.
(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
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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; TERMINATION OF OPTIONS.
(a) TERMINATION OF VESTING. Upon the termination of Optionee
as a director and employee of the Company or any of its Subsidiaries for any
reason, the Options may, to the extent exercisable as of the date of
termination and not terminated pursuant to SECTION 4.3(B), be exercised by
Optionee until termination pursuant to SECTION 4.3(B).
(b) TERMINATION OF OPTIONS. 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.
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; PROVIDED that Optionee shall be permitted to transfer the
Options to members of his Family Group (as defined in the Stockholders
Agreement) for estate planning purposes upon the agreement in writing by the
transferee to be bound by the terms and conditions hereof, and any Options so
transferred shall be exercisable by the transferee thereof in accordance with
the terms and conditions of this Agreement .
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 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
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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
(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:
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(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;
(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
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(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 CONTINUATION RIGHTS. This Agreement shall not confer upon
Optionee any right with respect to the continuance as a director or 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 directorship or 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:
To Optionee at: Xxxxx Xxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Telecopy (000) 000-0000
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To the Company at: United Industries Corporation
0000 Xxxx Xxxxxxxxx
Xx. Xxxxx, XX 00000
Attention: President
Telecopy: (000) 000-0000
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:
---------------------------------
Xxxxx Xxxxx
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ANNEX I
The Performance Goal with respect to each fiscal year from 1999 through 2003 is
as follows, unless adjusted downwards by the Board (or a committee thereof) in
its reasonable discretion:
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 effectuated by the Company
on January 20, 1999 or any relocation expenses of the Company's former
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 Xxxxxx X. Xxx Company and/or its
affiliates, (iii) consulting and directors fees payable to Executive (under the
Consulting Agreement) and Xxxxx Xxxxx and (iv) the salary and bonus payable to
the Company's former president.
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UNITED INDUSTRIES CORPORATION
FORM OF EXERCISE AND STOCK TRANSFER POWER
United Industries Corporation
0000 Xxxx Xxxxxxxxx
Xx. Xxxxx, XX 00000
Ladies and Gentlemen:
Reference is made to the Stock Option Agreement between United
Industries Corporation (the "COMPANY") and me (the "OPTION AGREEMENT"), whereby
on July __, 1999, I was granted an option to purchase all or any part of an
aggregate of 150,000 shares (the "CLASS A SHARES") of the Company's Class A
Voting Common Stock, par value $0.01 per share and 150,000 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 United Industries Corporation 1999
Stock Option Plan) 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 Option
Agreement 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;
(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;
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(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___________________________________
Address:____________________________________
____________________________________
____________________________________
Social Security No.: _______________________
-3-
