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Exhibit 7.2
STOCK OPTION
AGREEMENT
This is a Stock Option Agreement, which has been entered into and is
effective as of February 1, 1994, by and between Ronald D. Offutt ("Offutt")
and Paul T. Horn ("Horn"), and acknowledged by RDO Equipment Co. ("RDO").
A. Horn and Offutt have previously entered into an arrangement whereby
Horn provides services to various entities owned or controlled by Offutt, in
exchange for certain compensation, including earning on a deferred payment
basis, for each year of service, .25% of Offutt's net worth, with the
understanding that payment of such deferred compensation would be deferred
until such time as Horn's employment with such Offutt entities was
terminated, voluntarily or involuntarily for any reason.
B. One of the entities owned or controlled by Offutt is RDO, and Horn
and Offutt have determined that the previously existing arrangement should be
modified by removing RDO from the deferred compensation arrangement.
C. Horn and Offutt have agreed that in lieu of any previously existing
deferred compensation arrangement as to Horn owning or earning a percentage
of RDO, Horn will instead be granted by Offutt an option to acquire a stated
number of shares of RDO that are owned by Offutt.
D. The previously existing deferred compensation arrangement shall
continue as it currently exists, other than as to RDO.
Accordingly, Horn and Offutt agree as follows:
1. GRANT OF OPTIONS. Offutt hereby grants to Horn the right,
privilege, and option (the "Option") to purchase eight thousand six
hundred six (8,606) shares (the "Option Shares") of RDO's Common
Stock, according to the terms and condition hereinafter set forth.
2. OPTION EXERCISE PRICE. The per share price to be paid by Horn in
the event of an exercise of the Option will be $135.00.
3. OFFUTT REPRESENTATIONS. Offutt warrants and represents that as of
February 1, 1994, he owned more shares of RDO Common Stock than the
Option Shares, and that he will at all times have available for
delivery to Horn sufficient number of shares of RDO Common Stock to
deliver to Horn in the event of exercise of the Option. Offutt
further represents that he has good and marketable title to the
Option Shares, subject to no liens.
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Offutt further represents that, without being required to obtain
the consent or approval of any person or other entity, he has full
right, power, and authority to enter into this Agreement and to
sell and convey, as provided herein, the entire right, title, and
interest in and to all of the Option Shares. He further represents
that this Agreement has been duly executed delivered by him and is
binding upon and enforceable against him, and upon his death his
estate, in accordance with its terms. He further represents that he
shall continue to own, beneficially, all right, title and interest
in and to the Option Shares, subject to no liens, attachments or
other encumbrances, and also shall continue to have, undiminished,
the full right, power, and authority to sell and convey the Option
Shares as provided herein.
4. TERM AND EXERCISE ABILITY. The Option is immediately exercisable
with respect to all of the Option Shares, and shall be exercisable
until February 1, 2020.
5. MANNER OF OPTION EXERCISE. This Option may be exercised by Horn in
whole or in part from time to time, subject to the conditions
contained in this Agreement, by delivery, in person, by facsimile
or electronic transmission or through the mail, to Offutt at his
principal executive office, of a written Notice of Exercise, with a
copy to RDO at its principal executive office. Such notice will
identify this Option, will specify the number of Option Shares with
respect to which the Option is being exercised, and will be signed
by the person so exercising the Option. Such notice shall be
accompanied by payment in full of the total purchase price of the
Option Shares purchased. In the event that the Option is being
exercised by any person or persons other than Horn, the Notice will
be accompanied by appropriate proof of right of such person or
persons to exercise the Option. As soon as practicable after the
effective exercise of the Option, Offutt will deliver to the person
exercising this Option one or more duly issued stock certificates
evidencing such ownership, together with an assignment separate
from the certificate duly endorsed by him evidencing the transfer
of the Option Shares with respect to which the Option is being
exercised. Upon receipt of the foregoing, RDO will deliver to the
transferee one or more duly issued stock certificates bearing such
transfer restrictions as may then be appropriate based upon advice
of RDO's legal counsel.
6. PAYMENT AT THE TIME OF EXERCISE OF THIS OPTION. Horn will pay the
total purchase price of the Option Shares to be purchased solely in
cash (including a check, bank draft or money order, payable to the
order of Offutt), or as may otherwise be agreed by Horn and Offutt.
7. NO RIGHTS AS A SHAREHOLDER. Horn will have no rights as a
shareholder of RDO with respect to the Option Shares unless and
until all conditions to the effective exercise of this Option have
been satisfied and Horn has become the holder of record of such
shares. No adjustment will be made for dividends or distributions
with respect to this Option as to which there is a record date
preceding the date the Optionee becomes the holder of record of
such shares. Any distributions to shareholders of
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the Company, with respect to the Option Shares, prior to the
exercise of the Option, shall be paid to Offutt and Horn shall
have no right thereto.
8. ADJUSTMENTS. In the event of any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification,
stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a
spin-off), or any other change in the corporate structure or
shares of RDO (including any such change for which any stock
option plan or arrangements of RDO are adjusted), this Option
will be appropriately adjusted in order to prevent the
diminution or enlargement of the rights of Horn as to the
number, kind and exercise price of securities subject to this
Option.
9. WITHHOLDING. Horn understands and acknowledges that the
exercise of this Option may result in taxable income to him,
and may subject RDO to withholding requirements under federal,
state, or local tax laws. Accordingly, as a condition to
the exercise of this Option, Horn agrees that he will, at the
time of Option exercise, reimburse RDO for any amounts that RDO
would be required to withhold from Horn under federal, state,
or local tax laws. Horn specifically authorizes RDO to (i)
withhold and deduct from wages of Horn (or from other amounts
that may be due and owing to Horn from RDO or a subsidiary),
or make other arrangements for the collection of, all legally
required amounts necessary to satisfy any and all federal,
state, or local withholding and employment-related tax
requirements attributable to the Option or the exercise thereof,
or (ii) require Horn promptly to remit the amount of such
withholding to RDO before taking any action, including issuing
any shares of Common Stock, with respect to the Option. RDO may,
in its sole discretion and upon terms and conditions it
specifies, permit or require Horn to satisfy, in whole or in
part, any withholding or employment-related tax obligations by
electing to tender a promissory note (on terms acceptable to
RDO in its sole discretion), or as may otherwise be agreed.
10. MISCELLANEOUS.
10.1. BINDING EFFECT. This Agreement will be binding upon the
heirs, executors, administrators and successors of the
parties to this Agreement.
10.2. GOVERNING LAW. This Agreement and all rights and
obligations in this Agreement will be governed by the
laws of the State of North Dakota, without regard to
the conflict of laws provisions in any other
jurisdictions.
10.3. ENTIRE AGREEMENT. This Agreement sets forth the entire
Agreement understanding of the parties to this Agreement
with respect to the grant and exercise of this Option
and supersedes all prior agreements, arrangements,
plans and understandings relating to the grant and
exercise of this Option.
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10.4 AMENDMENT AND WAIVER. This Agreement may be amended, waived,
modified or canceled only by a written instrument executed by
the parties hereto or, in the case of a waiver, by the party
waiving compliance.
10.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and
all of which together will constitute one in the same
Agreement.
10.6 RESTRICTIONS ON TRANSFER. Except pursuant to testamentary
will or the laws of descent and distribution, no right or
interest of Horn in this Option prior to the exercise may be
assigned or transferred, or subjected to any lien, during the
lifetime of Horn, either voluntarily or involuntarily,
directly or indirectly, by operation of law or otherwise.
Horn will, however, be entitled to designate a beneficiary to
receive this option upon his death, and in the event of his
death, exercise of this Option may be made by his legal
representatives, heirs and legatees, until the Option
expires pursuant to Section 4 hereof.
10.7 CONDITION PRECEDENT TO EFFECTIVENESS. Notwithstanding
anything contained herein to the contrary, this Agreement
and the Option are specifically conditioned upon, on or
before July 31, 1997, the completion and documentation by
Horn to the satisfaction of Offutt of all previous
transactions between Horn and other entities owned or
controlled by Horn, on one hand, and Offutt and other entities
owned by Offutt, on the other hand.
Failure to complete the foregoing on or before July 31, 1997,
shall render this Agreement and the Option null and void and
without further force and effect. Upon completion of the
foregoing, Offutt will provide to Horn and RDO a letter
stating that the conditions set forth in this Section 10.7
have been completed to his satisfaction.
The parties to this Agreement have executed this Agreement effective as
of February 1, 1994.
/s/ Ronald D. Offutt
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Ronald D. Offutt
/s/ Paul T. Horn
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Paul T. Horn
Acknowledged:
RDO Equipment Co.
By: /s/ Allan F. Knoll
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Allan F. Knoll
Its Chief Financial Officer and a Director
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AMENDMENT TO STOCK OPTION AGREEMENT
This is an amendment to the Stock Option Agreement that was entered into
and effective as of February 1, 1994, by and between Ronald D. Offutt
("Offutt") and Paul T. Horn ("Horn"), and acknowledged by RDO Equipment Co.
("RDO").
A. RDO intends to reincorporate in Delaware pursuant to a merger and,
pursuant to such merger and a resulting stock exchange, RDO will have
outstanding shares of Class A Common Stock and Class B Common Stock. The
Option Shares will be split into a greater number of shares, will be for
Class A Common Stock, and the per share exercise price for the Option will
accordingly decrease.
B. The parties desire to reflect and acknowledge such changes in the
number of Option Shares and per share exercise price for the Option.
Accordingly, Horn and Offutt agree as follows:
Effective upon the reincorporation merger and stock split:
1. The number of Option Shares shall increase from Eight Thousand Six
Hundred Six (8,606) to Three Hundred Eighty Three Thousand Five
(383,005) shares.
2. The Option Shares shall be with respect to Class A Common Stock of
RDO, and Horn acknowledges that upon exercise of the Option, any shares
of Class B Common Stock owned by Offutt and used by him to satisfy
the Option will convert automatically to Class A Common Stock.
3. The per share price to be paid by Horn in the event of an exercise
of the Option will be $3.03.
4. All other terms of the Option Agreement shall continue.
The parties have executed this Agreement effective as of January 10,
1997.
/s/ Ronald D. Offutt
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Ronald D. Offutt
/s/ Paul T. Horn
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Paul T. Horn
Acknowledged:
RDO Equipment Co.
By: /s/ Allan F. Knoll
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Allan F. Knoll
Its Chief Financial Officer
