<PAGE>
As filed with the Securities and Exchange Commission on January 27, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
EVENFLO & SPALDING HOLDINGS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 59-2439656
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
601 SOUTH HARBOUR ISLAND BOULEVARD, SUITE 200
TAMPA, FLORIDA 33602-3141
(Address of Principal Executive Office)
1996 STOCK PURCHASE AND OPTION PLAN
FOR KEY EMPLOYEES OF
EVENFLO & SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES
(Full Title of the Plan)
---------------------------------
PAUL L. WHITING
CHAIRMAN OF THE BOARD OF DIRECTORS,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
EVENFLO & SPALDING HOLDINGS CORPORATION
601 SOUTH HARBOUR ISLAND BOULEVARD, SUITE 200
TAMPA, FLORIDA 33602-3141
(813) 204-5200
(Name, Address and Telephone Number, Including Area Code, of Agent for Service)
----------------------------------
WITH COPIES TO:
ARTHUR D. ROBINSON, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017-3954
(212) 455-2000
---------------------------------
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT TO MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE (A) OFFERING PRICE (A) FEE (A)
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Common Stock, $.01
par value per share 7,484,556 $5.00 $37,422,780 $11,340.24(b)
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(a) Pursuant to Rule 457(h) under the Securities Act of 1933, the proposed
maximum offering price per share, the proposed maximum aggregate offering
price and the amount of registration fee have been computed on the basis of
the price at which common stock under the Plan will be sold, and the price
at which options under the Plan may be exercised.
(b) $8,359.46 of the registration fee was paid October 21, 1996.
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ITEM 1. PLAN INFORMATION
Not required to be filed with this Registration Statement.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
Not required to be filed with this Registration Statement.
2
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), after the date of this Registration Statement and prior to the filing of
a post-effective amendment to this Registration Statement indicating that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference into this
Registration Statement and to be part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES
The following description of the terms of the Common Stock is qualified in
its entirety by reference to the provisions in the Management Stockholder's
Agreement, filed as part of this Registration Statement as Exhibit 4.4.
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, par value $.01 per share, of which 50,000,000 shares were
outstanding as of September 30, 1996 and 50,000,000 shares of preferred stock,
of which 1,500,000 shares were outstanding as of September 30, 1996.
VOTING RIGHTS. The holders of the Common Stock are entitled to one vote
per share on all matters submitted for action by the shareholders. There is
no provision for cumulative voting with respect to the election of directors.
Accordingly, the holders of more than 50% of the shares of Common Stock can,
if they choose to do so, elect all of the directors. In such event, absent
contractual provisions to the contrary, the holders of the remaining shares
will not be able to elect any directors.
DIVIDEND RIGHTS. All shares of Common Stock are entitled to share equally
in such dividends as the Board of Directors may declare from sources legally
available therefor.
LIQUIDATION RIGHTS. Upon liquidation or dissolution of the Company, whether
voluntary or involuntary, all shares of Common Stock are entitled to share
equally in the assets available for distribution to shareholders after payment
of all prior obligations of the Company.
OTHER MATTERS. The holders of the Common Stock have no preemptive rights.
All outstanding shares of Common Stock are, and the Common Stock offered hereby
will be, fully paid and non-assessable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Certain legal matters in connection with the Common Stock offered
hereby are being passed upon for the Company by Robert K. Adikes, Esq.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides that a corporation may indemnify directors and officers as well as
other employees and individuals against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative, or
investigative (other than action by or in the right of the corporation a
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<PAGE>
"derivative action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceedings, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with the
defense or settlement of such actions, and the statute requires court approval
before there can be any indemnification where the person seeking indemnification
has been found liable to the corporation. The statute provides that it is not
exclusive of other indemnification that may be granted by a corporation's
charter, by-laws, disinterested director vote, stockholder vote, agreement or
otherwise. Article IV of the Registrant's By-laws requires indemnification to
the fullest extent permitted by Delaware law. The Registrant has also obtained
officers' and directors' liability insurance which insures against liabilities
that officers and directors of the Registrant, in such capacities, may incur.
Such 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duties as a director, except for liability (i) for any
transaction from which the director derives an improper personal benefit, (ii)
for acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law, (iii) for improper payment of dividends or
redemptions of shares, or (iv) for any breach of a director's duty of loyalty to
the company or its stockholders. Article Seven of the Registrant's Restated
Certificate of Incorporation includes such a provision.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable
ITEM 8. EXHIBITS
The following exhibits are filed as part of this Registration Statement:
4.1 Restated Certificate of Incorporation of the Company (filed as
Exhibit 3.1 to the Form S-4 Registration Statement and
incorporated herein by reference).
4.2 Amendment to the Restated Certificate of Incorporation of the
Company.
4.3 By-laws of the Company (filed as Exhibit 3.2 to the Form S-4
Registration Statement and incorporated herein by reference).
4.4 1996 Stock Purchase and Option Plan for Key Employees of Evenflo
& Spalding Holdings Corporation and Subsidiaries
4.5 Form of Management Stockholder's Agreement
4.6 Form of Non-Qualified Stock Option Agreement
4.7 Form of Sale Participation Agreement
4.8 Registration Rights Agreement, dated as of September 30, 1996,
among Evenflo & Spalding Holdings Corporation, Strata Associates,
L.P. and KKR Partners II, L.P. (filed as Exhibit 10.4 to the Form
S-4 Registration Statement and incorporated herein by reference).
5 Opinion of Robert K. Adikes, Esq.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Robert K. Adikes, Esq. (included in Exhibit 5.1 of
this Registration Statement)
24 Power of Attorney (included in Part II of this Registration
Statement)
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<PAGE>
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) to include any prospectus required by Section 10(a)(3) of
the Act;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement.
(2) That, for the purposes of determining any liability under the
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the Act, each
filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Tampa, State of Florida, on the 27th day of January
1997.
Evenflo & Spalding Holdings Corporation
By /S/ Paul L. Whiting
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Chairman of the Board of Directors,
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Evenflo & Spalding Holdings
Corporation, do hereby constitute and appoint Paul L. Whiting and W. Michael
Kipphut, or either of them, our true and lawful attorneys and agents, to do any
and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys and agents, or
either of them, may deem necessary or advisable to enable said Corporation to
comply with the Securities Act of 1933 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without limitation, power
and authority to sign for us or any of us in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto and we do hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on the 27th day of January 1997 by the
following persons in the capacities indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Paul L. Whiting Chairman of the Board of Directors, January 27, 1997
- ---------------------- President and Chief Executive Officer
Paul L. Whiting (Principal Executive Officer)
/s/ W. Michael Kipphut Vice President and Treasurer January 27, 1997
- ------------------------ (Principal Financial Officer)
W. Michael Kipphut
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/s/ Stephen J. Dryer Vice President and Controller January 27, 1997
- ---------------------------- (Principal Accounting Officer)
Stephen J. Dryer
/s/ Robert K. Adikes Vice President, Secretary and January 27, 1997
- ---------------------------- General Counsel
Robert K. Adikes
/s/ Henry R. Kravis Director January 27, 1997
- ----------------------------
Henry R. Kravis
/s/ George R. Roberts Director January 27, 1997
- ----------------------------
George R. Roberts
/s/ Michael T. Tokarz Director January 27, 1997
- ----------------------------
Michael T. Tokarz
/s/ Marc S. Lipschultz Director January 27, 1997
- ----------------------------
Marc S. Lipschultz
/s/ Gustavo A. Cisneros Director January 27, 1997
- ----------------------------
Gustavo A. Cisneros
II-5
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
4.1 Restated Certificate of Incorporation of the Company (filed as Exhibit
3.1 to the Form S-4 Registration Statement and incorporated herein by
reference).
4.2 Amendment to the Restated Certificate of Incorporation of the Company.
4.3 By-laws of the Company (filed as Exhibit 3.2 to the Form S-4
Registration Statement and incorporated herein by reference).
4.4 1996 Stock Purchase and Option Plan for Key Employees of Evenflo &
Spalding Holdings Corporation and Subsidiaries
4.5 Form of Management Stockholder's Agreement
4.6 Form of Non-Qualified Stock Option Agreement
4.7 Form of Sale Participation Agreement
4.8 Registration Rights Agreement, dated as of September 30, 1996, among
Evenflo & Spalding Holdings Corporation, Strata Associates, L.P. and
KKR Partners II, L.P. (filed as Exhibit 10.4 to the Form S-4
Registration Statement and incorporated herein by reference).
5 Opinion of Robert K. Adikes, Esq.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Robert K. Adikes, Esq. (included in Exhibit 5 of this
Registration Statement)
24 Power of Attorney (included in Part II of this Registration Statement)
[cad 179]
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
E&S HOLDINGS CORPORATION
Pursuant to Section 242 of the General Corporation Law of the State of
Delaware, E&S HOLDINGS CORPORATION, a corporation organized and existing under
the laws of the State of Delaware (the "Company"), does hereby certify:
1. The provisions of Article 1 of the Company's Certificate of Incorporation
shall be amended to read as follows:
"1. The name of the Company is EVENFLO & SPALDING HOLDINGS CORPORATION."
IN WITNESS WHEREOF, the Company has caused this Certificate to be signed by
Paul L. Whiting, its Chief Executive Officer, and attested by Robert K. Adikes,
its Secretary, this 15th day of January, 1997.
E&S HOLDINGS CORPORATION
By /s/ Paul L. Whiting________________
Chief Executive Officer
(SEAL)
Attest:
_________/s/ Robert K. Adikes_________
Secretary
<PAGE>
Exhibit 4.4
PLAN DOCUMENT
1996 STOCK PURCHASE AND OPTION PLAN
FOR KEY EMPLOYEES OF
EVENFLO & SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES
1. PURPOSE OF PLAN
The 1996 Stock Purchase and Option Plan for Key Employees of Evenflo &
Spalding Holdings Corporation and Subsidiaries (the "Plan") is designed:
(a) to promote the long term financial interests and growth of Evenflo &
Spalding Holdings Corporation (the "Corporation") and its subsidiaries by
attracting and retaining management personnel with the training, experience and
ability to enable them to make a substantial contribution to the success of the
Corporation's business;
(b) to motivate management personnel by means of growth-related incentives
to achieve long range goals; and
(c) to further the alignment of interests of participants with those of the
stockholders of the Corporation through opportunities for increased stock, or
stock-based, ownership in the Corporation.
2. DEFINITIONS
As used in the Plan, the following words shall have the following meanings:
(a) "Grant" means an award made to a Participant pursuant to the Plan and
described in Paragraph 5, including, without limitation, an award of an
Incentive Stock Option, Stock Option, Stock Appreciation Right, Dividend
Equivalent Right, Restricted Stock, Purchase Stock, Performance Units,
Performance Shares or Other Stock Based Grant or any combination of the
foregoing.
(b) "Grant Agreement" means an agreement between the Corporation and a
Participant that sets forth the terms, conditions and limitations applicable to
a Grant.
(c) "Board of Directors" means the Board of Directors of the Corporation.
(d) "Committee" means the Compensation Committee of the Board of
Directors.
(e) "Common Stock" or "Share" means common stock of the Corporation which
may be authorized but unissued, or issued and reacquired.
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2
(f) "Employee" means a person, including an officer, in the regular
full-time employment of the Corporation or one of its Subsidiaries who, in the
opinion of the Committee, is, or is expected to be, primarily responsible for
the management, growth or protection of some part or all of the business of the
Corporation.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(h) "Fair Market Value" means such value of a Share as reported for stock
exchange transactions and/or determined in accordance with any applicable
resolutions or regulations of the Committee in effect at the relevant time.
(i) "Participant" means an Employee, or other person having a unique
relationship with the Corporation or one of its Subsidiaries, to whom one or
more Grants have been made and such Grants have not all been forfeited or
terminated under the Plan; provided, however, a non-employee director of the
Corporation or one of its Subsidiaries may not be a Participant.
(j) "Stock-Based Grants" means the collective reference to the grant of
Stock Appreciation Rights, Dividend Equivalent Rights, Restricted Stock,
Performance Units, Performance Shares and Other Stock Based Grants.
(k) "Stock Options" means the collective reference to "Incentive Stock
Options" and "Other Stock Options".
(l) "Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Corporation if each of the corporations, or
group of commonly controlled corporations, other than the last corporation in
the unbroken chain then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
3. ADMINISTRATION OF PLAN
(a) The Plan shall be administered by the Committee. None of the members
of the Committee shall be eligible to be selected for Grants under the Plan, or
have been so eligible for selection within one year prior thereto; provided,
however, that the members of the Committee shall qualify to administer the Plan
for purposes of Rule 16b-3 (and any other applicable rule) promulgated under
Section 16(b) of the Exchange Act to the extent that the Corporation is subject
to such rule. The Committee may adopt its own rules of procedure, and action of
a majority of the members of the Committee taken at a meeting, or action taken
without a meeting by unanimous written consent, shall constitute action by the
Committee. The Committee shall have the power and authority to administer,
construe and interpret the Plan, to make rules for carrying it out and to make
changes in such rules. Any such interpretations, rules, and administration
shall be consistent with the basic purposes of the Plan.
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3
(b) The Committee may delegate to the Chief Executive Officer and to other
senior officers of the Corporation its duties under the Plan subject to such
conditions and limitations as the Committee shall prescribe except that only the
Committee may designate and make Grants to Participants who are subject to
Section 16 of the Exchange Act.
(c) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Corporation, and the
officers and directors of the Corporation shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon all Participants, the Corporation and all other
interested persons. No member of the Committee shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan or the Grants, and all members of the Committee shall be fully
protected by the Corporation with respect to any such action, determination or
interpretation.
4. ELIGIBILITY
The Committee may from time to time make Grants under the Plan to such
Employees, or other persons having a unique relationship with Corporation or any
of its Subsidiaries, and in such form and having such terms, conditions and
limitations as the Committee may determine. No Grants may be made under this
Plan to non-employee directors of Corporation or any of its Subsidiaries.
Grants may be granted singly, in combination or in tandem. The terms,
conditions and limitations of each Grant under the Plan shall be set forth in a
Grant Agreement, in a form approved by the Committee, consistent, however, with
the terms of the Plan; provided, however, such Grant Agreement shall contain
provisions dealing with the treatment of Grants in the event of the termination,
death or disability of a Participant, and may also include provisions concerning
the treatment of Grants in the event of a change of control of Corporation.
5. GRANTS
From time to time, the Committee will determine the forms and amounts of
Grants for Participants. Such Grants may take the following forms in the
Committee's sole discretion:
(a) INCENTIVE STOCK OPTIONS - These are stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended ("Code"), to
purchase Common Stock. In addition to other restrictions contained in the Plan,
an option granted under this Paragraph 5(a), (i) may not be exercised more than
10 years after the date it is granted, (ii) may not have an option price less
than the Fair Market Value of Common Stock on the date the option is granted,
(iii) must otherwise comply with Code Section 422, and (iv) must be designated
as an "Incentive Stock Option" by the Committee. The maximum aggregate Fair
Market Value of Common Stock (determined at the time of each Grant) with respect
to which Incentive Stock Options are first exercisable with respect to any
participant under this Plan and any Incentive Stock Options granted to the
Participant for such year under any plans of the Corporation or any Subsidiary
in any calendar year is $100,000. Payment of the option price shall be made in
cash or in shares of Common Stock, or a combination thereof, in accordance
<PAGE>
4
with the terms of the Plan, the Grant Agreement, and of any applicable
guidelines of the Committee in effect at the time.
(b) OTHER STOCK OPTIONS - These are options to purchase Common Stock which
are not designated by the Committee as "Incentive Stock Options". At the time
of the Grant the Committee shall determine, and shall include in the Grant
Agreement or other Plan rules, the option exercise period, the option price, and
such other conditions or restrictions on the grant or exercise of the option as
the Committee deems appropriate, which may include the requirement that the
grant of options is predicated on the acquisition of Purchase Shares under
Paragraph 5(e) by the Optionee. In addition to other restrictions contained in
the Plan, an option granted under this Paragraph 5(b), (i) may not be exercised
more than 10 years after the date it is granted and (ii) may not have an option
exercise price less than 50% of the Fair Market Value of Common Stock on the
date the option is granted. Payment of the option price shall be made in cash
or in shares of Common Stock, or a combination thereof, in accordance with the
terms of the Plan, the Grant Agreement and of any applicable guidelines of the
Committee in effect at the time.
(c) STOCK APPRECIATION RIGHTS - These are rights that on exercise entitle
the holder to receive the excess of (i) the Fair Market Value of a share of
Common Stock on the date of exercise over (ii) the Fair Market Value on the date
of Grant (the "base value") multiplied by (iii) the number of rights exercised
as determined by the Committee. Stock Appreciation Rights granted under the
Plan may, but need not be, granted in conjunction with an Option under Paragraph
5(a) or 5(b). The Committee, in the Grant Agreement or by other Plan rules, may
impose such conditions or restrictions on the exercise of Stock Appreciation
Rights as it deems appropriate, and may terminate, amend, or suspend such Stock
Appreciation Rights at any time. No Stock Appreciation Right granted under this
Plan may be exercised less than 6 months or more than 10 years after the date it
is granted except in the event of death or disability of a Participant. To the
extent that any Stock Appreciation Right that shall have become exercisable, but
shall not have been exercised or cancelled or, by reason of any termination of
employment, shall have become non-exercisable, it shall be deemed to have been
exercised automatically, without any notice of exercise, on the last day on
which it is exercisable, provided that any conditions or limitations on its
exercise are satisfied (other than (i) notice of exercise and (ii) exercise or
election to exercise during the period prescribed) and the Stock Appreciation
Right shall then have value. Such exercise shall be deemed to specify that the
holder elects to receive cash and that such exercise of a Stock Appreciation
Right shall be effective as of the time of automatic exercise.
(d) RESTRICTED STOCK - Restricted Stock is Common Stock delivered to a
Participant with or without payment of consideration with restrictions or
conditions on the Participant's right to transfer or sell such stock; provided
that the price of any Restricted Stock delivered for consideration and not as
bonus stock may not be less than 50% of the Fair Market Value of Common Stock on
the date such Restricted Stock is granted or the price of such Restricted Stock
may be the par value. If a Participant irrevocably elects in writing in the
calendar year preceding a Grant of Restricted Stock, dividends paid on the
Restricted Stock granted may be paid in shares of Restricted Stock equal to the
cash dividend paid on Common Stock. The number of shares of Restricted Stock
and the restrictions or conditions on such shares shall be
<PAGE>
5
as the Committee determines, in the Grant Agreement or by other Plan rules, and
the certificate for the Restricted Stock shall bear evidence of the restrictions
or conditions. No Restricted Stock may have a restriction period of less than 6
months, other than in the case of death or disability.
(e) PURCHASE STOCK - Purchase Stock refers to shares of Common Stock
offered to a Participant at such price as determined by the Committee, the
acquisition of which will make him eligible to receive under the Plan,
including, but not limited to, Other Stock Options; provided, however, that the
price of such Purchase Shares may not be less than 50% of the Fair Market Value
of the Common Stock on the date such shares of Purchase Stock are offered.
(f) DIVIDEND EQUIVALENT RIGHTS - These are rights to receive cash payments
from the Corporation at the same time and in the same amount as any cash
dividends paid on an equal number of shares of Common Stock to shareholders of
record during the period such rights are effective. The Committee, in the Grant
Agreement or by other Plan rules, may impose such restrictions and conditions on
the Dividend Equivalent Rights, including the date such rights will terminate,
as it deems appropriate, and may terminate, amend, or suspend such Dividend
Equivalent Rights at any time.
(g) PERFORMANCE UNITS - These are rights to receive at a specified future
date payment in cash of an amount equal to all or a portion of the value of a
unit granted by the Committee. At the time of the Grant, in the Grant Agreement
or by other Plan rules, the Committee must determine the base value of the unit,
the performance factors applicable to the determination of the ultimate payment
value of the unit and the period over which the Corporation's performance will
be measured. These factors must include a minimum performance standard for the
Corporation below which no payment will be made and a maximum performance level
above which no increased payment will be made. The term over which the
Corporation's performance will be measured shall be not less than six months.
(h) PERFORMANCE SHARES - These are rights to receive at a specified future
date payment in cash or Common Stock, as determined by the Committee, of an
amount equal to all or a portion of the average Fair Market Value for all days
that the Common Stock is traded during the last forty-five (45) days of the
specified period of performance of a specified number of shares of Common Stock
at the end of a specified period based on the Corporation's performance during
the period. At the time of the Grant, the Committee, in the Grant Agreement or
by Plan rules, will determine the factors which will govern the portion of the
rights so payable and the period over which the Corporation's performance will
be measured. The factors will be based on the Corporation's performance and
must include a minimum performance standard for the Corporation below which no
payment will be made and a maximum performance level above which no increased
payment will be made. The term over which the Corporation's performance will be
measured shall be not less than six months. Performance Shares will be granted
for no consideration.
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6
(i) OTHER STOCK-BASED GRANTS - The Committee may make other Grants under
the Plan pursuant to which shares of Common Stock (which may, but need not, be
shares of Restricted Stock pursuant to Paragraph 5(d)) or other equity
securities of the Corporation are or may in the future be acquired, or Grants
denominated in stock units, including ones valued using measures other than
market value. Other Stock-Based Grants may be granted with or without
consideration; provided, however, that the price of any such Grant made for
consideration that provides for the acquisition of shares of Common Stock or
other equity securities of the Corporation may not be less than 50% of the Fair
Market Value of the Common Stock or such other equity securities on the date of
grant of such Grant. Such Other Stock-Based Grants may be made alone, in
addition to or in tandem with any Grant of any type made under the Plan and must
be consistent with the purposes of the Plan.
6. LIMITATIONS AND CONDITIONS
(a) The number of Shares available for Grants under this Plan shall be
7,484,556 shares of the authorized Common Stock as of the effective date of the
Plan. The number of Shares subject to Grants under this Plan to any one
Participant shall not be more than 2,250,000 shares. Unless restricted by
applicable law, Shares related to Grants that are forfeited, terminated,
cancelled or expire unexercised, shall immediately become available for Grants.
(b) No Grants shall be made under the Plan beyond ten years after the
effective date of the Plan, but the terms of Grants made on or before the
expiration of the Plan may extend beyond such expiration. At the time a Grant
is made or amended or the terms or conditions of a Grant are changed, the
Committee may provide for limitations or conditions on such Grant.
(c) Nothing contained herein shall affect the right of the Corporation to
terminate any Participant's employment at any time or for any reason.
(d) Deferrals of Grant payouts may be provided for, at the sole discretion
of the Committee, in the Grant Agreements.
(e) Except as otherwise prescribed by the Committee, the amounts of the
Grants for any employee of a Subsidiary, along with interest, dividend, and
other expenses accrued on deferred Grants, shall be charged to the Participant's
employer during the period for which the Grant is made. If the Participant is
employed by more than one Subsidiary or by both the Corporation and a Subsidiary
during the period for which the Grant is made, the Participant's Grant and
related expenses will be allocated between the companies employing the
Participant in a manner prescribed by the Committee.
(f) Other than as specifically provided in the Form of Management
Stockholder's Agreement attached hereto as Exhibit A, with regard to the death
of a Participant, no benefit under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, and any attempt to do so shall be void. No such
<PAGE>
7
benefit shall, prior to receipt thereof by the Participant, be in any manner
liable for or subject to the debts, contracts, liabilities, engagements, or
torts of the Participant.
(g) Participants shall not be, and shall not have any of the rights or
privileges of, stockholders of the Corporation in respect of any Shares
purchasable in connection with any Grant unless and until certificates
representing any such Shares have been issued by the Corporation to such
Participants.
(h) No election as to benefits or exercise of Stock Options, Stock
Appreciation Rights, or other rights may be made during a Participant's lifetime
by anyone other than the Participant except by a legal representative appointed
for or by the Participant.
(i) Absent express provisions to the contrary, any grant under this Plan
shall not be deemed compensation for purposes of computing benefits or
contributions under any retirement plan of the Corporation or its Subsidiaries
and shall not affect any benefits under any other benefit plan of any kind now
or subsequently in effect under which the availability or amount of benefits is
related to level of compensation. This Plan is not a "Retirement Plan" or
"Welfare Plan" under the Employee Retirement Income Security Act of 1974, as
amended.
(j) Unless the Committee determines otherwise, no benefit or promise under
the Plan shall be secured by any specific assets of the Corporation or any of
its Subsidiaries, nor shall any assets of the Corporation or any of its
Subsidiaries be designated as attributable or allocated to the satisfaction of
the Corporation's obligations under the Plan.
7. TRANSFERS AND LEAVES OF ABSENCE
For purposes of the Plan, unless the Committee determines otherwise: (a) a
transfer of a Participant's employment without an intervening period of
separation among the Corporation and any Subsidiary shall not be deemed a
termination of employment, and (b) a Participant who is granted in writing a
leave of absence shall be deemed to have remained in the employ of the
Corporation during such leave of absence.
8. ADJUSTMENTS
In the event of any change in the outstanding Common Stock by reason of a
stock split, spin-off, stock dividend, stock combination or reclassification,
recapitalization or merger, change of control, or similar event, the Committee
may adjust appropriately the number of Shares subject to the Plan and available
for or covered by Grants and Share prices related to outstanding Grants and make
such other revisions to outstanding Grants as it deems are equitably required.
9. MERGER, CONSOLIDATION, EXCHANGE,
ACQUISITION, LIQUIDATION OR DISSOLUTION
<PAGE>
8
In its absolute discretion, and on such terms and conditions as it deems
appropriate, coincident with or after the grant of any Stock Option or any
Stock-Based Grant, the Committee may provide that such Stock Option or
Stock-Based Grant cannot be exercised after the merger or consolidation of the
Corporation into another corporation, the exchange of all or substantially all
of the assets of the Corporation for the securities of another corporation, the
acquisition by another corporation of 80% or more of the Corporation's then
outstanding shares of voting stock or the recapitalization, reclassification,
liquidation or dissolution of the Corporation, and if the Committee so provides,
it may, in its absolute discretion and on such terms and conditions as it deems
appropriate, also provide, either by the terms of such Stock Option or
Stock-Based Grant or by a resolution adopted prior to the occurrence of such
merger, consolidation, exchange, acquisition, recapitalization,
reclassification, liquidation or dissolution, that, for some period of time
prior to such event, such Stock Option or Stock-Based Grant shall be exercisable
as to all shares subject thereto, notwithstanding anything to the contrary
herein (but subject to the provisions of Paragraph 6(b)) and that, upon the
occurrence of such event, such Stock Option or Stock-Based Grant shall terminate
and be of no further force or effect; provided, however, that the Committee may
also provide, in its absolute discretion, that even if the Stock Option or
Stock-Based Grant shall remain exercisable after any such event, from and after
such event, any such Stock Option or Stock-Based Grant shall be exercisable only
for the kind and amount of securities and/or other property, or the cash
equivalent thereof, receivable as a result of such event by the holder of a
number of shares of stock for which such Stock Option or Stock-Based Grant could
have been exercised immediately prior to such event.
10. AMENDMENT AND TERMINATION
The Committee shall have the authority to make such amendments to any terms
and conditions applicable to outstanding Grants as are consistent with this Plan
provided that, except for adjustments under Paragraph 8 or 9 hereof, no such
action shall modify such Grant in a manner adverse to the Participant without
the Participant's consent except as such modification is provided for or
contemplated in the terms of the Grant.
The Board of Directors may amend, suspend or terminate the Plan except that
no such action, other than an action under Paragraph 8 or 9 hereof, may be taken
which would, without shareholder approval, increase the aggregate number of
Shares available for Grants under the Plan, decrease the price of outstanding
Options or Stock Appreciation Rights, change the requirements relating to the
Committee or extend the term of the Plan.
11. FOREIGN OPTIONS AND RIGHTS
The Committee may make Grants to Employees who are subject to the laws
of nations other than the United States, which Grants may have terms and
conditions that differ from the terms thereof as provided elsewhere in the Plan
for the purpose of complying with foreign laws.
12. WITHHOLDING TAXES
<PAGE>
9
The Corporation shall have the right to deduct from any cash payment made
under the Plan any federal, state or local income or other taxes required by law
to be withheld with respect to such payment. It shall be a condition to the
obligation of the Corporation to deliver shares upon the exercise of an Option
or Stock Appreciation Right, upon payment of Performance units or shares, upon
delivery of Restricted Stock or upon exercise, settlement or payment of any
Other Stock-Based Grant that the Participant pay to the Corporation such amount
as may be requested by the Corporation for the purpose of satisfying any
liability for such withholding taxes. Any Grant Agreement may provide that the
Participant may elect, in accordance with any conditions set forth in such Grant
Agreement, to pay a portion or all of such withholding taxes in shares of Common
Stock.
13. EFFECTIVE DATE AND TERMINATION DATES
The Plan shall be effective on and as of the date of its approval by the
stockholders of the Corporation and shall terminate ten years later, subject to
earlier termination by the Board of Directors pursuant to Paragraph 10.
<PAGE>
EXHIBIT 4.5
FORM OF MANAGEMENT STOCKHOLDER'S AGREEMENT
This Management Stockholder's Agreement (this "Agreement") is entered
into as of February __, 1997 between EVENFLO & SPALDING HOLDINGS CORPORATION, a
Delaware corporation (the "Company"), and __________________ (the "Purchaser")
(the Company and the Purchaser being hereinafter collectively referred to as the
"Parties").
RECITALS
The Company entered into a Recapitalization and Stock Purchase
Agreement (the "Recapitalization Agreement"), dated as of August 15, 1996, by
and among the Company, Strata Holdings L.P. and Abarco N.V., pursuant to which
the Company was recapitalized (the "Recapitalization") on September 30, 1996.
In connection with the Recapitalization, the Company has sold and proposes to
sell shares of its Common Stock, par value $.01 per share (the "Common Stock"),
to key employees of the Company and certain other investors at a price of $5.00
per share of Common Stock.
This Agreement is one of several other agreements ("Other Purchasers'
Agreements") which have been, or which in the future will be, entered into
between the Company and other individuals who are or will be key employees of
the Company or one of its subsidiaries (collectively, the "Other Purchasers").
In addition, the Company has also entered into, and may in the future enter
into, agreements (the "Investors' Agreements") with other purchasers
(collectively, the "Investors") pursuant to which the Investors purchased or
will purchase shares of Common Stock.
The Company has agreed to sell _______________ shares of Common Stock
to Purchaser so that Purchaser shall receive, in the aggregate, _______________
shares of Common Stock (the "Purchase Stock"). In addition, the Company will
grant to Purchaser an option or options to purchase Common Stock ("Options") at
an exercise price of $5.00 per share of Common Stock pursuant to the terms of
the 1996 Stock Purchase and Option Plan for Key Employees of Evenflo & Spalding
Holdings Corporation and Subsidiaries (the "Option Plan") and the "Non-Qualified
Stock Option Agreement" attached hereto as Exhibit A.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the Parties agree as follows:
<PAGE>
2
1. PURCHASE OF STOCK; ISSUANCE OF OPTIONS.
(a) Subject to the terms and conditions hereinafter set forth, the
Purchaser hereby subscribes for and shall purchase, and the Company shall
sell to the Purchaser and deliver to the Purchaser (or, at the Purchaser's
option, the Purchaser's Trust (as hereinafter defined)), the Purchase Stock
at a purchase price of $5.00 per share on February ___, 1997 (the "Purchase
Date"). The Company shall have no obligation to sell any Purchase Stock to
any person who (i) is a resident or citizen of a state or other jurisdiction
in which the sale of the Purchase Stock to him or her would constitute a
violation of the securities or "blue sky" laws of such jurisdiction or (ii)
is not an employee of the Company or any of its subsidiaries on the date
hereof.
(b) The aggregate price for the Purchase Stock shall be $__________
(such amount hereinafter sometimes referred to as the "Purchase Price").
The Purchase Price shall be paid in the following manner: (i) the Purchaser
shall deliver to the Company at least three business days prior to the
Purchase Date cash or a certified bank check or checks payable to the order
of the Company in the aggregate amount of the Purchase Price or (ii) on the
Purchase Date the Purchaser shall pay to the Company by wire transfer of
immediately available funds the aggregate amount of the Purchase Price. On
the Purchase Date, in consideration of receipt of the Purchase Price, the
Company will deliver to the Purchaser a certificate, registered in the
Purchaser's name, for the Purchase Stock, which shall be subject to the
terms and conditions hereinafter set forth.
(c) Subject to the terms and conditions hereinafter set forth and
upon and as of the Purchase Date, the Company shall issue to the Purchaser
the Options and the Parties shall execute and deliver to each other copies
of the Non-Qualified Stock Option Agreement concurrently with the issuance
of the Options.
2. PURCHASER'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) The Purchaser agrees and acknowledges that he will not, directly
or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of (any such act being herein referred to as a "transfer") any shares of
the Purchase Stock and, at the time of exercise, the Common Stock issuable upon
exercise of the Options (collectively, the "Stock") unless such transfer
complies with Section 3 of this Agreement. Furthermore, if the Purchaser is an
"affiliate" (as defined under Rule 405 of the rules and regulations promulgated
under the Act and as interpreted by the Board of Directors of the Company) of
the Company (an "Affiliate"), the Purchaser agrees and acknowledges that he will
not transfer any shares of the Stock unless (i) the transfer is pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
or the rules and regulations in effect thereunder (the "Act"), and in compliance
with applicable provisions of state securities laws or (ii) counsel for the
Purchaser (which shall be such counsel acceptable to the Company) shall have
furnished the Company with an opinion, satisfactory in form and substance to the
Company, that no such registration is required because of the availability of an
exemption from
<PAGE>
3
registration under the Act. Notwithstanding the foregoing, the Company
acknowledges and agrees that any of the following transfers are deemed to be in
compliance with the Act and this Agreement and no opinion of counsel is required
in connection therewith: (x) a transfer made pursuant to Section 4, 5 or 6
hereof, (y) a transfer upon the death of the Purchaser to his executors,
administrators, testamentary trustees, legatees or beneficiaries (the
"Purchaser's Estate") or a transfer to the executors, administrators,
testamentary trustees, legatees or beneficiaries of a person who has become a
holder of Stock in accordance with the terms of this Agreement, provided that it
is expressly understood that any such transferee shall be bound by the
provisions of this Agreement and (z) a transfer made after the Purchase Date in
compliance with the federal securities laws to a trust or custodianship the
beneficiaries of which may include only the Purchaser, his spouse or his lineal
descendants (a "Purchaser's Trust") or a transfer made after the third
anniversary of the Purchase Date to such a trust by a person, other than the
Purchaser, who has become a holder of Stock in accordance with the terms of this
Agreement, provided that such transfer is made expressly subject to this
Agreement and that the transferee agrees in writing to be bound by the terms and
conditions hereof.
(b) During the term of this Agreement, the certificate (or
certificates) representing the Stock shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF THE MANAGEMENT
STOCKHOLDER'S AGREEMENT DATED AS OF FEBRUARY ___, 1997 BETWEEN EVENFLO
& SPALDING HOLDINGS CORPORATION ("THE COMPANY") AND THE PURCHASER
NAMED ON THE FACE HEREOF (A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY).
(c) The Purchaser acknowledges that he has been advised that (i) the
Stock has been registered on form S-8 under the Act, (ii) a restrictive legend
in the form heretofore set forth shall be placed on the certificates
representing the Stock and (iii) a notation shall be made in the appropriate
records of the Company indicating that the Stock is subject to restrictions on
transfer and appropriate transfer restrictions will be issued to the Company's
transfer agent with respect to the Stock. If the Purchaser is an Affiliate, the
Purchaser also acknowledges that (i) the Stock must be held indefinitely and the
Purchaser must continue to bear the economic risk of the investment in the Stock
unless it is subsequently registered under the Act or an exemption from such
registration is available, (ii) it is not anticipated that there will be any
market on an exchange or a quotation service for the Stock, (iii) when and if
shares of the Stock may be disposed of without registration in reliance on Rule
144, such disposition can be made only in limited amounts in accordance with the
terms and conditions of such Rule, and (iv) if the Rule 144 exemption is not
available, public sale without registration will require compliance with
Regulation A or some other exemption under the Act.
<PAGE>
4
(d) If any shares of the Stock are to be disposed of in accordance
with Rule 144 under the Act or otherwise, the Purchaser shall promptly notify
the Company of such intended disposition and shall deliver to the Company at or
prior to the time of such disposition such documentation as the Company may
reasonably request in connection with such sale and, in the case of a
disposition pursuant to Rule 144, shall deliver to the Company an executed copy
of any notice on Form 144 required to be filed with the Securities and Exchange
Commission (the "SEC").
(e) The Purchaser agrees that, if any shares of the capital stock of
the Company are offered to the public pursuant to an effective registration
statement under the Act (other than registration of securities issued under an
employee plan), the Purchaser will not effect any public sale or distribution of
any shares of the Stock not covered by such registration statement within 7 days
prior to, or within 180 days after, the effective date of such registration
statement, unless otherwise agreed to in writing by the Company.
(f) The Purchaser represents and warrants that (i) he has received
and reviewed the documents comprising the Prospectus (the "Prospectus") relating
to the Stock and the documents referred to therein, certain of which documents
set forth the rights, preferences and restrictions relating to the Stock and
(ii) he has been given the opportunity to obtain any additional information or
documents and to ask questions and receive answers about such documents, the
Company and the business and prospects of the Company which he deems necessary
to evaluate the merits and risks related to his investment in the Purchase Stock
and to verify the information contained in the Prospectus and the information
received as indicated in this Section 2(f)(ii), and he has relied solely on such
information.
(g) The Purchaser further represents and warrants that (i) his
financial condition is such that he can afford to bear the economic risk of
holding the Stock for an indefinite period of time and has adequate means for
providing for his current needs and personal contingencies, (ii) he can afford
to suffer a complete loss of his investment in the Purchase Stock, (iii) he
understands and has taken cognizance of all risk factors related to the purchase
of the Stock, including those set forth in the Prospectus referred to above, and
(iv) his knowledge and experience in financial and business matters are such
that he is capable of evaluating the merits and risks of his purchase of the
Purchase Stock as contemplated by this Agreement.
3. RESTRICTION ON TRANSFER.
Except for transfers permitted by clauses (x), (y) and (z) of Section
2(a) or a sale of shares of Stock pursuant to an effective registration
statement under the Act filed by the Company or pursuant to the Sale
Participation Agreement (as defined below), the Purchaser agrees that he will
not transfer any shares of the Stock at any time prior to the fifth
<PAGE>
5
anniversary of the Purchase Date. No transfer of any such shares in violation
hereof shall be made or recorded on the books of the Company and any such
transfer shall be void and of no effect.
4. RIGHT OF FIRST REFUSAL.
If at any time after the fifth anniversary of the Purchase Date and
prior to a Public Offering (as defined below), the Purchaser receives a bona
fide offer to purchase any or all of his shares of Stock (the "Offer") from a
third party (the "Offeror") which the Purchaser wishes to accept, the Purchaser
shall cause the Offer to be reduced to writing and shall notify the Company in
writing of his wish to accept the Offer. The Purchaser's notice shall contain
an irrevocable offer to sell such shares of Stock to the Company (in the manner
set forth below) at a purchase price equal to the price contained in, and on the
same terms and conditions of, the Offer, and shall be accompanied by a true copy
of the Offer (which shall identify the Offeror). At any time within 30 days
after the date of the receipt by the Company of the Purchaser's notice, the
Company shall have the right and option to purchase, or to arrange for a third
party to purchase, all of the shares of Stock covered by the Offer either (i) at
the same price and on the same terms and conditions as the Offer or (ii) if the
Offer includes any consideration other than cash, then at the sole option of the
Company, at the equivalent all cash price, determined in good faith by the
Company's Board of Directors, by delivering a certified bank check or checks in
the appropriate amount (and any such non-cash consideration to be paid) to the
Purchaser at the principal office of the Company against delivery of
certificates or other instruments representing the shares of the Purchase Stock
so purchased, appropriately endorsed by the Purchaser. If at the end of such 30
day period, the Company has not tendered the purchase price for such shares in
the manner set forth above, the Purchaser may during the succeeding 30 day
period sell not less than all of the shares of Stock covered by the Offer to the
Offeror at a price and on terms no less favorable to the Purchaser than those
contained in the Offer. Promptly after such sale, the Purchaser shall notify
the Company of the consummation thereof and shall furnish such evidence of the
completion and time of completion of such sale and of the terms thereof as may
reasonably be requested by the Company. If, at the end of 30 days following the
expiration of the 30 day period for the Company to purchase the Stock, the
Purchaser has not completed the sale of such shares of the Stock as aforesaid,
all the restrictions on sale, transfer or assignment contained in this Agreement
shall again be in effect with respect to such shares of the Stock.
5. PURCHASER'S RESALE OF STOCK AND OPTIONS TO THE
COMPANY UPON THE PURCHASER'S DEATH OR DISABILITY.
(a) Except as otherwise provided herein, if at any time prior to a
Public Offering (i) the Purchaser is still in the employ of the Company or any
subsidiary of the Company, or had retired from the Company and its subsidiaries
(A) at age 65 or over after having been employed by the Company or any
subsidiary for at least five years after the Purchase Date or (B) at age 55 or
over if such Purchaser has been employed with the Company or a Subsidiary for a
minimum of 15 years and after having been employed by the Company or any
subsidiary for at least five years after the Purchase Date, and (ii) the
Purchaser either dies or becomes permanently disabled, then the Purchaser, the
Purchaser's
<PAGE>
6
Estate or a Purchaser's Trust, as the case may be, shall have the right, for six
months (or such longer time as determined by the Board of Directors) following
the date of death or permanent disability, to (I) sell to the Company, and the
Company shall be required to purchase, on one occasion, all or any portion of
the shares of Stock then held by the Purchaser, the Purchaser's Trust and/or the
Purchaser's Estate, as the case may be, at the Section 5 Repurchase Price, as
determined in accordance with Section 7, and (II) require the Company to pay to
the Purchaser or the Purchaser's Estate, as the case may be, an additional
amount equal to the Option Excess Price determined on the basis of a Section 5
Repurchase Price as provided in Section 8 with respect to the termination of
outstanding Options held by the Purchaser. The Purchaser, the Purchaser's
Estate and/or the Purchaser's Trust, as the case may be, shall send written
notice to the Company of its intention to sell shares of Stock and to terminate
such Options in exchange for the payment referred to in the preceding sentence
(the "Redemption Notice"). The completion of the purchase shall take place at
the principal office of the Company on the tenth business day after the giving
of the Redemption Notice. The Section 5 Repurchase Price and any payment with
respect to the Options as described above shall be paid by delivery to the
Purchaser, the Purchaser's Estate or the Purchaser's Trust, as the case may be,
of a wire transfer of immediately available funds or a certified bank check or
checks in the appropriate amount payable to the order of the Purchaser, the
Purchaser's Estate or the Purchaser's Trust, as the case may be, against
delivery of certificates or other instruments representing the Purchase Stock so
purchased and appropriate documents cancelling the Options so terminated
appropriately endorsed or executed by the Purchaser, the Purchaser's Estate or
the Purchaser's Trust, or his or its duly authorized representative. For
purposes of this Agreement, Purchaser shall be deemed to have a "permanent
disability" when the majority of the Board of Directors of the Company shall, in
good faith, so determine.
(b) Notwithstanding anything in Section 5(a) to the contrary and
subject to Section 11, if there exists and is continuing a default or an event
of default on the part of the Company or any subsidiary of the Company under any
loan, guarantee or other agreement under which the Company or any subsidiary of
the Company has borrowed money or if the repurchase referred to in Section 5(a)
would result in a default or an event of default on the part of the Company or
any subsidiary of the Company under any such agreement or if a repurchase would
not be permitted under Delaware General Corporation Law (the "DGCL") (or if the
Company reincorporates in another state, the business corporation law of such
state) (each such occurrence being an "Event"), the Company shall not be
obligated to repurchase any of the Purchase Stock or the Options from the
Purchaser, the Purchaser's Estate or the Purchaser's Trust, as the case may be,
until the first business day which is 10 calendar days after all of the
foregoing Events have ceased to exist (the "Repurchase Eligibility Date");
PROVIDED, HOWEVER, that (i) the number of shares of Purchase Stock subject to
repurchase under this Section 5(b) shall be that number of shares of Purchase
Stock, and (ii) the number of Exercisable Option Shares (as defined in Section
8) for purposes of calculating the Option Excess Price payable under this
Section 5(b) shall be the number of Exercisable Option Shares, held by the
Purchaser, the Purchaser's Estate or a Purchaser's Trust, as the case may be, at
the time of delivery of a Redemption Notice in accordance with Section 5(a)
hereof; PROVIDED, FURTHER, that the Repurchase Calculation Date (as defined
herein) shall be determined in accordance with Section 7 as of the Repurchase
Eligibility Date (unless the Section 5 Repurchase Price would be greater if the
Repurchase Calculation Date had been
<PAGE>
7
determined as if no Event had occurred in which case, solely for purposes of
this PROVISO, the Repurchase Calculation Date shall be determined as if no Event
had occurred). All Options exercisable as of the date of a Redemption Notice
shall continue to be exercisable until the repurchase pursuant to such
Redemption Notice.
(c) Notwithstanding any other provision of this Section 5 to the
contrary and subject to Section 11, the Purchaser, the Purchaser's Estate or the
Purchaser's Trust, as the case may be, shall have the right to withdraw any
Redemption Notice which has been pending for 60 or more days and which has
remained unsatisfied because of the provisions of Section 5(b).
6. THE COMPANY'S OPTION TO REPURCHASE STOCK
AND OPTIONS OF PURCHASER.
(a) If, on or prior to the fifth anniversary of the Purchase Date,
(i) the Purchaser's active employment with the Company (and/or, if
applicable, its subsidiaries) is voluntarily or involuntarily terminated for
any reason whatsoever, with or without Cause, (ii) the beneficiaries of a
Purchaser's Trust shall include any person or entity other than the
Purchaser, his spouse or his lineal descendants, or (iii) the Purchaser shall
effect a transfer of any of the Stock other than as permitted in this
Agreement (alternatively, a "Call Event"), the Company shall have the right
to purchase all, but not less than all, of the shares of the Stock then held
by the Purchaser or a Purchaser's Trust at the Section 6 Repurchase Price
determined in accordance with Section 7 hereof; PROVIDED, HOWEVER, that if
the termination of employment results from (A) the death or permanent
disability of the Purchaser or (B) the retirement of the Purchaser from the
Company or any of its subsidiaries (A) at age 65 or over after having been
employed by the Company or any subsidiary for at least fifteen years and has
been employed with the Company or any Subsidiary for at least five years
after the Purchase Date or (B) at age 55 or over if such Purchaser has been
employed with the Company or any subsidiary for at least five years after the
Purchase Date, the Company shall have the right to purchase all, but not less
than all, of the shares of the Purchase Stock then held by the Purchaser or a
Purchaser's Trust but the Repurchase Price shall be the Section 5 Repurchase
Price. The Company shall have a period of 75 days from the date of a Call
Event in which to give notice in writing to the Purchaser of the exercise of
such election ("Call Notice"). In the event that the Company exercises its
right to repurchase shares of the Purchase Stock pursuant to this Section 6,
the Company shall also pay the Purchaser an amount equal to the Option Excess
Price determined on the basis of the Section 6 Repurchase Price or the
Section 5 Repurchase Price, as the case may be, as provided in Section 7,
with respect to the termination of outstanding Options held by the Purchaser.
(b) The completion of the purchases pursuant to the foregoing shall
take place at the principal office of the Company on the tenth business day
after the giving of notice of the exercise of the option to purchase. The
Section 5 Repurchase Price or the Section 6 Repurchase Price, as the case may
be, and any payment with respect to the Options as described above shall be paid
by delivery to the Purchaser of a wire transfer of immediately available funds
or a certified bank check or checks in the appropriate amount payable to the
order of the Purchaser against delivery of certificates or other instruments
<PAGE>
8
representing the Purchase Stock so purchased and appropriate documents
cancelling the Options so terminated, appropriately endorsed or executed by the
Purchaser, the Purchaser's Trust or his or its authorized representative.
(c) Notwithstanding any other provision of this Section 6 to the
contrary and subject to Section 11, if there exists and is continuing any Event,
the Company shall delay the repurchase of any of the Purchase Stock or the
Options (pursuant to a Call Notice given on a timely basis in accordance with
Section 6(a) hereof) from the Purchaser, the Purchaser's Estate, or the
Purchaser's Trust, as the case may be, until the Repurchase Eligibility Date;
PROVIDED, HOWEVER, that (i) the number of shares of Purchase Stock subject to
repurchase under this Section 6(c) shall be that number of shares of Purchase
Stock and (ii) the number of Exercisable Option Shares for purposes of
calculating the Option Excess Price payable under this Section 6(c) shall be the
number of Exercisable Option Shares held by the Purchaser, the Purchaser's
Estate or a Purchaser's Trust, as the case may be, at the time of delivery of a
Call Notice in accordance with Section 6(a) hereof; PROVIDED, FURTHER, that the
Repurchase Calculation Date shall be determined in accordance with Section 7
based on the Repurchase Eligibility Date (unless the applicable Repurchase Price
would be greater if the Repurchase Calculation Date had been determined as if no
Event had occurred, in which case, solely for purposes of this PROVISO, the
Repurchase Calculation Date shall be determined as if no Event had occurred).
All Options exercisable as of the date of a Call Notice shall continue to be
exercisable until the repurchase pursuant to such Call Notice.
7. DETERMINATION OF REPURCHASE PRICE.
(a) The Section 5 Repurchase Price and the Section 6 Repurchase Price
are hereinafter collectively referred to as the "Repurchase Price." The
Repurchase Price shall be calculated on the basis of the unaudited financial
statements of the Company or the Market Price Per Share (as defined in Section
7(f)) as of the last day of the fiscal quarter preceding the later of (i) the
fiscal quarter in which the event giving rise to the repurchase occurs and (ii)
the fiscal quarter in which the Repurchase Eligibility Date occurs (hereinafter
called the "Repurchase Calculation Date"). The event giving rise to the
repurchase shall be the death, permanent disability, retirement or termination
of employment, as the case may be, of the Purchaser, not the giving of any
notice required pursuant to Section 5 or 6.
(b) Prior to a Public Offering (as hereinafter defined) the Section 5
Repurchase Price shall be a per share Repurchase Price equal to $5.00 plus the
amount, if any, by which the Book Value Per Share (as defined in Section 7(d))
as of the Repurchase Calculation Date exceeds $5.00. After a Public Offering,
the Section 5 Repurchase Price shall be a per share Repurchase Price equal to
$5.00 plus the amount, if any, by which the Market Price Per Share as of the
Repurchase Calculation Date exceeds $5.00.
(c) Prior to a Public Offering, the Section 6 Repurchase Price shall
be a per share Repurchase Price equal to the lesser of (i) the Book Value Per
Share (as defined in paragraph (d) below) or (ii) $5.00 plus (x) the Percentage
(as defined below) multiplied by (y) the amount, if any, by which the Book Value
Per Share as of the Repurchase Calculation Date exceeds $5.00. After a Public
Offering, the Section 6 Repurchase Price shall be a per
<PAGE>
9
share Repurchase Price equal to the lesser of (i) Market Price Per Share or
(ii) $5.00 plus (a) the Percentage multiplied by (b) the amount, if any, by
which the Market Price Per Share as of the Repurchase Calculation Date
exceeds $5.00; PROVIDED, HOWEVER, that in the event of Purchaser's
termination without Cause by the Company (and/or, if applicable, its
subsidiaries) or with Good Reason by the Purchaser, the Section 6 Repurchase
Price shall be the Book Value Per Share or Market Price Per Share, as the
case may be. For purposes of this Agreement the following definitions shall
apply: "Cause" shall mean (i) the Purchaser's willful and continued failure
to perform Purchaser's duties with respect to the Company or its subsidiaries
which continues beyond ten days after a written demand for substantial
performance is delivered to Purchaser by the Company or (ii) misconduct by
Purchaser involving (x) dishonesty or breach of trust in connection with
Purchaser's employment which is reasonably likely to be injurious to the
Company or (y) conduct which would be a reasonable basis for an indictment of
Purchaser for a felony or for a misdemeanor involving moral turpitude; and
"Good Reason" shall mean (i) a material reduction in Purchaser's base salary
or (ii) a substantial reduction in Purchaser's duties and responsibilities
other than as approved by the Chief Executive Officer of the Company.
Notwithstanding the immediately preceding sentence, the definitions in any
employment agreement in effect on the date hereof between the Company and
Purchaser of "Cause" and "Good Reason" shall supersede and replace the
definitions of "Cause" and "Good Reason" in the immediately preceding
sentence and shall be deemed incorporated by reference in this Agreement in
their entirety.
The "Percentage" shall be determined as follows:
REPURCHASE CALCULATION DATE PERCENTAGE
- --------------------------- ----------
Purchase Date through and including the first anniversary of
the Purchase Date 0%
After the first anniversary of the Purchase Date through and
including the second anniversary of the Purchase Date 20%
After the second anniversary of the Purchase Date through and
including the third anniversary of the Purchase Date 40%
After the third anniversary of the Purchase Date through and
including the fourth anniversary of the Purchase Date 60%
After the fourth anniversary of the Purchase Date through and
including the fifth anniversary of the Purchase Date 80%
After the fifth anniversary of the Purchase Date 100%
(d) For purposes of this Agreement, "Book Value Per Share" shall
be the quotient of (a) (i) $250 million PLUS (ii) the aggregate net income of
the Company from and after the date of the Recapitalization (as decreased by
any net losses from and after the date of the Recapitalization) PLUS (iii)
the aggregate dollar amount contributed to (or credited to Common
Stockholders' equity of) the Company after the date of the Recapitalization
as equity of the Company (including consideration to be received upon
exercise of the Options and other stock equivalents) PLUS
<PAGE>
10
(iv) to the extent reflected as deductions to Book Value Per Share in clause
(ii) above, or minus, to the extent reflected as additions to Book Value Per
Share in clause (ii) above, unusual or other items recognized by the Company,
if and to the extent determined in the sole discretion of the Compensation
Committee of the Board of Directors of the Company, minus, (v) the aggregate
dollar amount of any dividends paid by the Company after the date of the
Recapitalization divided by (b) the sum of the number of shares of Common
Stock then outstanding and the number of shares of Common Stock issuable upon
the exercise of all outstanding stock options and other rights to acquire
Common Stock and the conversion of all securities convertible into shares of
Common Stock. The calculations set forth in clauses (a)(ii), (a)(iii),
(a)(iv) and (a)(v) of the immediately preceding sentence shall be determined
in accordance with generally accepted accounting principles applied on a
basis consistent with any prior periods as reflected in the consolidated
financial statements of the Company.
(e) As used herein the term "Public Offering" shall mean the sale of
shares of Common Stock to the public subsequent to the date hereof pursuant to a
registration statement under the Act which has been declared effective by the
SEC (other than a registration statement on Form S-8 or any other similar form)
which results in an active trading market in the Common Stock if such a market
does not already exist. A "Qualified Public Offering" shall mean a Public
Offering pursuant to an effective registration statement relating to the sale of
shares of the Company Stock held by Strata Associates, L.P., a Delaware limited
partnership and its affiliates; PROVIDED, HOWEVER, that a "Qualified Public
Offering" shall be deemed to have occurred if there has been a Public Offering
and there exists an active trading market in 40% or more of the Common Stock.
(f) As used herein the term "Market Price Per Share" shall mean the
price per share equal to the average of the last sale price of the Common Stock
on the Repurchase Calculation Date on each exchange on which the Common Stock
may at the time be listed or, if there shall have been no sales on any of such
exchanges on the Repurchase Calculation Date, the average of the closing bid and
asked prices on each such exchange at the end of the Repurchase Calculation Date
or if there is no such bid and asked price on the Repurchase Calculation Date on
the next preceding date when such bid and asked price occurred or, if the Common
Stock shall not be so listed, the average of the closing sales prices as
reported by NASDAQ at the end of the Repurchase Calculation Date. If the Common
Stock is not so listed or reported by NASDAQ, then the Market Price Per Share
shall be the Book Value Per Share.
(g) In determining the Repurchase Price, appropriate and equitable
adjustments shall be made by the Compensation Committee for any future issuances
of rights to acquire and securities convertible into Common Stock and any stock
dividends, splits, combinations, recapitalizations or any other adjustment in
the number of outstanding shares of Common Stock.
<PAGE>
11
8. STOCK ISSUED TO PURCHASER UPON EXERCISE OF STOCK OPTIONS;
TERMINATION OF OPTIONS.
(a) The Company may from time to time grant to the Purchaser, in
addition to the Options, options under the Option Plan to purchase shares of
Common Stock at $5.00 per share or at a different option exercise price. The
term "Purchase Stock" as used in this Agreement shall include all shares of
Common Stock of the Company purchased by the Purchaser pursuant to this
Agreement and issued to the Purchaser by the Company upon exercise of the
Options and of any other stock options held by the Purchaser.
(b) All outstanding Options granted to the Purchaser under the Option
Plan or otherwise, whether or not then exercisable, will be automatically
terminated upon the payment by the Company to the Purchaser (if not otherwise
terminated pursuant to Section 3.2 of the Non-Qualified Stock Option Agreement
relating to such Options), pursuant to the provisions of Sections 5 or 6 of this
Agreement, of an amount equal to the Option Excess Price. If the Option Excess
Price is zero or a negative number, all outstanding stock options granted to the
Purchaser under the Option Plan or otherwise, whether or not then exercisable,
shall be automatically terminated upon the repurchase of Stock as provided in
Sections 5 or 6. The Option Excess Price is the excess, if any, of the Section
5 Repurchase Price or the Section 6 Repurchase Price, depending on which
Repurchase Price is being used to repurchase the remainder of the Stock, over
the Option Price (as defined in the Option Plan) multiplied by the number of
Exercisable Option Shares. For purposes hereof, "Exercisable Option Shares"
shall mean the shares of Common Stock which, at the time of determination of the
Option Excess Price, could be purchased by the Purchaser upon exercise of his
outstanding options.
9. THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to the Purchaser that (i)
this Agreement has been duly authorized, executed and delivered by the Company
and (ii) the Purchase Stock, when issued and delivered in accordance with the
terms hereof, will be duly and validly issued, fully paid and nonassessable.
(b) If the Company shall have engaged in a Public Offering, the
Company will file the reports required to be filed by it under the Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder, to the
extent required from time to time to enable the Purchaser to sell shares of
Stock without registration under the Act within the limitations of the
exemptions provided by (A) Rule 144 or Rule 144A under the Act, as such Rule may
be amended from time to time, or (B) any similar rule or regulation hereafter
adopted by the SEC. Notwithstanding anything contained in this Section 10(b),
the Company may deregister under Section 12 of the Exchange Act if it is then
permitted to do so pursuant to the Exchange Act and the rules and regulations
thereunder. Nothing in this Section 9(b) shall be deemed to limit in any manner
the restrictions on sales of Stock contained in this Agreement.
<PAGE>
12
10. "PIGGYBACK" REGISTRATION RIGHTS.
(a) Effective upon the purchase of Common Stock pursuant to this
Agreement, until the later of (i) the first occurrence of a Qualified Public
Offering (as defined in Section 7(e) above) or (ii) the fifth anniversary of the
Purchase Date, the Purchaser hereby agrees to be bound by all of the terms,
conditions and obligations of the Registration Rights Agreement dated as of
September 30, 1996, among the Company, Strata Associates, L.P. and KKR Partners
II, L.P. (the "Registration Rights Agreement") and, in the case of a Qualified
Public Offering and subject to the limitations set forth in this Section 10,
shall have all of the rights and privileges of the Registration Rights
Agreement, in each case as if the Purchaser were an original party (other than
the Company) thereto; PROVIDED, HOWEVER, that the Purchaser shall not have any
rights to request registration under Section 3 of the Registration Rights
Agreement; and provided further, that the Purchaser shall not be bound by any
amendments to the Registration Rights Agreement unless Purchaser consents
thereto. Notwithstanding anything to the contrary contained in the Registration
Rights Agreement, the Purchaser's rights and obligations under the Registration
Rights Agreement shall be subject to the limitations and additional obligations
set forth in this Section 10. All shares of Stock purchased by the Purchaser
pursuant to this Agreement and held by the Purchaser, the Purchaser's Trust or
the Purchaser's Estate, including shares purchased upon the exercise of Options,
shall be deemed to be Registrable Securities as defined in the Registration
Rights Agreement.
(b) The Company will promptly notify the Purchaser in writing (a
"Notice") of any proposed registration (a "Proposed Registration") in connection
with a Qualified Public Offering. If within 15 days of the receipt by the
Purchaser of such Notice, the Company receives from the Purchaser, the
Purchaser's Trust or the Purchaser's Estate a written request (a "Request") to
register shares of Stock held by the Purchaser, the Purchaser's Estate or the
Purchaser's Trust (which Request will be irrevocable unless otherwise mutually
agreed to in writing by the Purchaser and the Company), shares of Stock will be
so registered as provided in this Section 10; PROVIDED, HOWEVER, that for each
such registration statement only one Request, which shall be executed by the
Purchaser, the Purchaser's Trust or the Purchaser's Estate, as the case may be,
may be submitted for all Registrable Securities held by the Purchaser, the
Purchaser's Estate and the Purchaser's Trust.
(c) The maximum number of shares of Stock which will be registered
pursuant to a Request will be the lowest of (i) the number of shares of Stock
then held by the Purchaser (which for purposes of this subparagraph (c) shall
include shares held by the Purchaser's Estate or a Purchaser's Trust), including
all shares of Stock which the Purchaser is then entitled to acquire under an
unexercised Option to the extent then exercisable or (ii) the maximum number of
shares of Stock which the Company can register in the Proposed Registration
without adverse effect on the offering in the view of the managing underwriters
(reduced pro rata with all Other Purchasers) as more fully described in
subsection (d) of this Section 10 or (iii) the maximum number of shares which
the Purchaser (pro rata based upon the aggregate number of shares of Common
Stock the Purchaser and all Other Purchasers have requested be registered) and
all Other Purchasers are permitted to register under the Registration Rights
Agreement.
<PAGE>
13
(d) If a Proposed Registration involves an underwritten offering and
the managing underwriter advises the Company in writing that, in its opinion,
the number of shares of Stock requested to be included in the Proposed
Registration exceeds the number which can be sold in such offering, so as to be
likely to have an adverse effect on the price, timing or distribution of the
shares of Stock offered in such Qualified Public Offering as contemplated by the
Company, then the Company will include in the Proposed Registration (i) first,
100% of the shares of Stock the Company proposes to sell and (ii) second, to the
extent of the number of shares of Stock requested to be included in such
registration which, in the opinion of such managing underwriter, can be sold
without having the adverse effect referred to above, the number of shares of
Stock which the "Holders" (as defined in the Registration Rights Agreement),
including, without limitation, the Purchaser and Other Purchasers have requested
to be included in the Proposed Registration, such amount to be allocated pro
rata among all requesting Holders on the basis of the relative number of shares
of Stock then held by each such Holder (provided that any shares thereby
allocated to any such Holder that exceed such Holder's request will be
reallocated among the remaining requesting Holders in like manner).
(e) Upon delivering a Request the Purchaser will, if requested by the
Company, execute and deliver a custody agreement and power of attorney in form
and substance satisfactory to the Company with respect to the shares of Stock to
be registered pursuant to this Section 10 (a "Custody Agreement and Power of
Attorney"). The Custody Agreement and Power of Attorney will provide, among
other things, that the Purchaser will deliver to and deposit in custody with the
custodian and attorney-in-fact named therein a certificate or certificates
representing such shares of Stock (duly endorsed in blank by the registered
owner or owners thereof or accompanied by duly executed stock powers in blank)
and irrevocably appoint said custodian and attorney-in-fact as the Purchaser's
agent and attorney-in-fact with full power and authority to act under the
Custody Agreement and Power of Attorney on the Purchaser's behalf with respect
to the matters specified therein.
(f) The Purchaser agrees that he will execute such other agreements
as the Company may reasonably request to further evidence the provisions of this
Section 10.
11. PRO RATA REPURCHASES.
Notwithstanding anything to the contrary contained in Sections 5, 6 or
7, if at any time consummation of all purchases and payments to be made by the
Company pursuant to this Agreement and the Other Purchasers' Agreements would
result in an Event, then the Company shall make purchases from, and payments to,
the Purchaser and Other Purchasers pro rata (on the basis of the proportion of
the number of shares of Stock and the number of Options each such Purchaser and
all Other Purchasers have elected or are required to sell to the Company) for
the maximum number of shares of Stock and shall pay the Option Excess Price for
the maximum number of Options permitted without resulting in an Event (the
"Maximum Repurchase Amount"). The provisions of Section 5(b) and 6(c) shall
apply in their entirety to payments and repurchases with respect to Options and
shares of Stock which may not be made due to the limits imposed by the Maximum
Repurchase Amount under this Section 11. Until all of such Stock and Options
are purchased and paid for by the Company,
<PAGE>
14
the Purchaser and the Other Purchasers whose Stock and Options are not purchased
in accordance with this Section 11 shall have priority, on a pro rata basis,
over other purchases of Common Stock and Options by the Company pursuant to this
Agreement and Other Purchasers' Agreements.
12. RIGHTS TO NEGOTIATE REPURCHASE PRICE.
Nothing in this Agreement shall be deemed to restrict or prohibit the
Company from purchasing shares of Stock or Options from the Purchaser, at any
time, upon such terms and conditions, and for such price, as may be mutually
agreed upon between the Parties, whether or not at the time of such purchase
circumstances exist which specifically grant the Company the right to purchase,
or the Purchaser the right to sell, shares of Stock or the Company has the right
to pay, or the Purchaser has the right to receive, the Option Excess Price under
the terms of this Agreement.
13. COVENANT REGARDING 83(b) ELECTION.
Except as the Company may otherwise agree in writing, the Purchaser
hereby covenants and agrees that he will make an election provided pursuant to
Treasury Regulation 1.83-2 with respect to the Stock, including without
limitation, the Stock to be acquired pursuant to Section 1 and the Stock to be
acquired upon each exercise of the Purchaser's Options; and Purchaser further
covenants and agrees that he will furnish the Company with copies of the forms
of election the Purchaser files within 30 days after the date hereof, and within
30 days after each exercise of Purchaser's Non-Qualified Options and with
evidence that each such election has been filed in a timely manner.
14. NOTICE OF CHANGE OF BENEFICIARY.
Immediately prior to any transfer of Stock to a Purchaser's Trust, the
Purchaser shall provide the Company with a copy of the instruments creating the
Purchaser's Trust and with the identity of the beneficiaries of the Purchaser's
Trust. The Purchaser shall notify the Company immediately prior to any change
in the identity of any beneficiary of the Purchaser's Trust.
15. EXPIRATION OF CERTAIN PROVISIONS.
The provisions contained in Sections 4, 5 and 6 of this Agreement and
the portion of any other provision of this Agreement which incorporates the
provisions of Sections 4, 5 and 6, shall terminate and be of no further force or
effect with respect to any shares of Stock sold by the Purchaser (i) pursuant to
an effective registration statement filed by the Company pursuant to Section 10
hereof or (ii) pursuant to the terms of the Sale Participation Agreement of even
date herewith, among the Purchaser and Strata Associates, L.P.
The provisions contained in Sections 2(e), 3, 4, 5, 6 and 13 of this
Agreement, and the portion of any other provisions of this Agreement which
incorporate the provisions of
<PAGE>
15
such Sections, shall terminate and be of no further force or effect upon the
consummation of a merger, reorganization, business combination or liquidation of
the Company, or a sale of Common Stock owned by the Investors, but only if such
merger, reorganization, business combination, liquidation or sale of Common
Stock results in Strata Associates, L.P. or any affiliate thereof, no longer
having the power (i) to elect a majority of the Board of Directors of the
Company or such other corporation which succeeds to the Company's rights and
obligations pursuant to such merger, reorganization, business combination,
liquidation or stock sale, or (ii) if the resulting entity of such merger,
reorganization, business combination, liquidation or stock sale is not a
corporation, to select the general partner(s) or other persons or entities
controlling the operations and business of the resulting entity.
16. RECAPITALIZATIONS, ETC.
The provisions of this Agreement shall apply, to the full extent set
forth herein with respect to the Stock or the Options, to any and all shares of
capital stock of the Company or any capital stock, partnership units or any
other security evidencing ownership interests in any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in exchange for, or substitution of the Stock or
the Options, by reason of any stock dividend, split, reverse split, combination,
recapitalization, liquidation, reclassification, merger, consolidation or
otherwise.
17. PURCHASER'S EMPLOYMENT BY THE COMPANY.
Nothing contained in this Agreement or in any other agreement entered
into by the Company and the Purchaser contemporaneously with the execution of
this Agreement (i) obligates the Company or any subsidiary of the Company to
employ the Purchaser in any capacity whatsoever or (ii) prohibits or restricts
the Company (or any such subsidiary) from terminating the employment, if any, of
the Purchaser at any time or for any reason whatsoever, with or without Cause,
and the Purchaser hereby acknowledges and agrees that neither the Company nor
any other person has made any representations or promises whatsoever to the
Purchaser concerning the Purchaser's employment or continued employment by the
Company or any subsidiary of the Company.
18. STATE SECURITIES LAWS.
The Company hereby agrees to use its best efforts to comply with all
state securities or "blue sky" laws which might be applicable to the sale of the
Stock and the issuance of the Options to the Purchaser.
19. BINDING EFFECT.
The provisions of this Agreement shall be binding upon and accrue to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. In the case of a transferee permitted
under Section 2(a) hereof, such transferee shall be deemed the Purchaser
hereunder; provided, however, that no transferee (including without limitation,
transferees referred to in Section 2(a) hereof) shall derive any rights under
this
<PAGE>
16
Agreement unless and until such transferee has delivered to the Company a valid
undertaking and becomes bound by the terms of this Agreement.
20. AMENDMENT.
This Agreement may be amended only by a written instrument signed by
the Parties hereto.
21. CLOSING.
Except as otherwise provided herein, the closing of each purchase and
sale of shares of Stock and the payment of the Option Excess Price, if any,
pursuant to this Agreement shall take place at the principal office of the
Company on the tenth business day following delivery of the notice by either
Party to the other of its exercise of the right to purchase or sell such Stock
hereunder or to cause the payment of the Option Excess Price, if any.
22. APPLICABLE LAW.
The laws of the state of Delaware (or if the Company reincorporates in
another state, of that state) shall govern the interpretation, validity and
performance of the terms of this Agreement, regardless of the law that might be
applied under principles of conflicts of law. Any suit, action or proceeding
against the Purchaser, with respect to this Agreement, or any judgment entered
by any court in respect of any thereof, may be brought in any court of competent
jurisdiction in the State of Delaware (or if the Company reincorporates in
another state, in that state) or New York, as the Company may elect in its sole
discretion, and the Purchaser hereby submits to the non-exclusive jurisdiction
of such courts for the purpose of any such suit, action, proceeding or judgment.
By the execution and delivery of this Agreement, the Purchaser appoints The
Corporation Trust Company, at its office in New York, New York or Wilmington,
Delaware (or if the Company reincorporates in another state, an office in that
state), as the case may be, as his agent upon which process may be served in any
such suit, action or proceeding. Service of process upon such agent, together
with notice of such service given to the Purchaser in the manner provided in
Section 25 hereof, shall be deemed in every respect effective service of process
upon him in any suit, action or proceeding. Nothing herein shall in any way be
deemed to limit the ability of the Company to serve any such writs, process or
summonses in any other manner permitted by applicable law or to obtain
jurisdiction over the Purchaser, in such other jurisdictions and in such manner,
as may be permitted by applicable law. The Purchaser hereby irrevocably waives
any objections which he may now or hereafter have to the laying of the venue of
any suit, action or proceeding arising out of or relating to this Agreement
brought in any court of competent jurisdiction in the State of Delaware (or if
the Company reincorporates in another state, in that state) or New York, and
hereby further irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in any inconvenient forum.
No suit, action or proceeding against the Company with respect to this Agreement
may be brought in any court, domestic or foreign, or before any similar domestic
or foreign authority other than in a court of competent jurisdiction in the
State of Delaware
<PAGE>
17
(or if the Company reincorporates in another state, in that state) or New York,
and the Purchaser hereby irrevocably waives any right which he may otherwise
have had to bring such an action in any other court, domestic or foreign, or
before any similar domestic or foreign authority. The Company hereby submits to
the jurisdiction of such courts for the purpose of any such suit, action or
proceeding.
23. ASSIGNABILITY OF CERTAIN RIGHTS BY THE COMPANY.
The Company shall have the right to assign any or all of its rights or
obligations to purchase shares of Stock pursuant to Sections 4, 5 and 6 hereof;
provided, however, that the Company shall remain obligated to perform its
obligations notwithstanding such assignment in the event that such assignee
fails to perform the obligations so assigned to it.
24. MISCELLANEOUS.
In this Agreement (i) all references to "dollars" or "$" are to United
States dollars and (ii) the word "or" is not exclusive. If any provision of
this Agreement shall be declared illegal, void or unenforceable by any court of
competent jurisdiction, the other provisions shall not be affected, but shall
remain in full force and effect.
25. NOTICES.
All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered by hand
(whether by overnight courier or otherwise) or sent by registered or certified
mail, return receipt requested, postage prepaid, to the Party to whom it is
directed:
(a) If to the Company, to it at the following address:
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
Suite 4200
New York, New York 10019
Attn: Michael T. Tokarz
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3909
Attn: Arthur D. Robinson, Esq.
<PAGE>
18
(b) If to the Purchaser, to him at the address set forth below under
his signature;
or at such other address as either party shall have specified by
notice in writing to the other.
26. COVENANT NOT TO COMPETE; CONFIDENTIAL INFORMATION.
(a) In consideration of the Company entering into this Agreement with
the Purchaser, the Purchaser hereby agrees effective as of the Purchase Date,
for so long as the Purchaser is employed by the Company or one of its
subsidiaries and for a period of one year thereafter (the "Noncompete Period"),
the Purchaser shall not, directly or indirectly, engage in the production, sale
or distribution of any product produced, sold or distributed by the Company or
its subsidiaries on the date hereof or during the Noncompete Period anywhere in
the world in which the Company or its subsidiaries is doing business other than
through the Purchaser's employment with the Company or any of its subsidiaries.
At the Company's option, the Noncompete Period may be extended for an additional
one year period if (i) within nine months of the termination of the Purchaser's
employment, the Company gives the Purchaser notice of such extension and (ii)
beginning with the first anniversary of such termination, the Company pays the
Purchaser an amount equal to the Purchaser's base salary on the date of the
termination of his employment. Such amount shall be paid in installments in a
manner consistent with the then current salary payment policies of the Company.
For purposes of this Agreement, the phrase "directly or indirectly engage in"
shall include any direct or indirect ownership or profit participation interest
in such enterprise, whether as an owner, stockholder, partner, joint venturer of
otherwise, and shall include any direct or indirect participation in such
enterprise as a consultant, licensor of technology or otherwise.
(b) The Purchaser will not disclose or use at any time any
Confidential Information (as defined below) of which the Purchaser is or becomes
aware, whether or not such information is developed by him, except to the extent
that such disclosure or use is directly related to and required by the
Purchaser's performance of duties, if any, assigned to the Purchaser by the
Company. As used in this Agreement, the term "Confidential Information" means
information that is not generally known to the public and that is used,
developed or obtained by the Company or its subsidiaries in connection with its
business, including but not limited to (i) products or services, (ii) fees,
costs and pricing structures, (iii) designs, (iv) computer software, including
operating systems, applications and program listings, (v) flow charts, manuals
and documentation, (vi) data bases, (vii) accounting and business methods,
(viii) inventions, devices, new developments, methods and processes, whether
patentable or unpatentable and whether or not reduced to practice, (ix)
customers and clients and customer or client lists, (x) other copyrightable
works, (xi) all technology and trade secrets, and (xii) all similar and related
information in whatever form. Confidential Information will not include any
information that has been published in a form generally available to the public
prior to the date the Purchaser proposes to disclose or use such information.
The Purchaser acknowledges and agrees that all copyrights, works, inventions,
innovations, improvements, developments, patents, trademarks and all similar or
related information which relate to the actual or anticipated business of the
Company and its
<PAGE>
19
subsidiaries (including its predecessors) and conceived, developed or made by
the Purchaser while employed by the Company or its subsidiaries belong to the
Company. The Purchaser will perform all actions reasonably requested by the
Company (whether during or after the Noncompete Period) to establish and confirm
such ownership at the Company's expense (including without limitation
assignments, consents, powers of attorney and other instruments).
(c) Notwithstanding clauses (a) and (b) above, if at any time a court
holds that the restrictions stated in such clauses (a) and (b) are unreasonable
or otherwise unenforceable under circumstances then existing, the parties hereto
agree that the maximum period, scope or geographic area determined to be
reasonable under such circumstances by such court will be substituted for the
stated period, scope or area. Because the Purchaser's services are unique and
because the Purchaser has had access to Confidential Information, the parties
hereto agree that money damages will be an inadequate remedy for any breach of
this Agreement. In the event a breach or threatened breach of this Agreement,
the Company or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive relief in order to enforce, or
prevent any violations of, the provisions hereof (without the posting of a bond
or other security).
(d) Notwithstanding the foregoing paragraphs (a), (b) and (c), the
provisions of any employment agreement in effect on the date hereof between the
Company and Purchaser which contains covenants relating to confidentiality and
competition shall supersede and replace the provisions of paragraphs (a), (b)
and (c) and shall be deemed incorporated by reference in this Agreement in their
entirety.
<PAGE>
20
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
EVENFLO & SPALDING HOLDINGS CORPORATION
By
--------------------------------------
Name:
Title:
----------------------------------------
----------------------------------------
Purchaser
----------------------------------------
----------------------------------------
Address of Purchaser
<PAGE>
EXHIBIT A
Form of Non-Qualified Stock Option Agreement
<PAGE>
EXHIBIT 4.6
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of February __, 1997, is made by and between
Evenflo & Spalding Holdings Corporation, a Delaware corporation hereinafter
referred to as the "Company", and _____________________, an employee of the
Company or a Subsidiary (as defined below) or Affiliate (as defined below) of
the Company, hereinafter referred to as "Optionee".
WHEREAS, the Company wishes to afford the Optionee the opportunity to
purchase shares of its Common Stock, par value $.01 per share (the "Common
Stock");
WHEREAS, the Company wishes to carry out the Plan (as hereinafter
defined), the terms of which are hereby incorporated by reference and made a
part of this Agreement; and
WHEREAS, the Committee (as hereinafter defined), appointed to
administer the Plan, has determined that it would be to the advantage and best
interest of the Company and its stockholders to grant the Options (as
hereinafter defined) provided for herein to the Optionee as an incentive for
increased efforts during his term of office with the Company or its Subsidiaries
or Affiliates, and has advised the Company thereof and instructed the
undersigned officers to issue said Options;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall
have the meaning specified in the Plan or below unless the context clearly
indicates to the contrary.
SECTION 1.1 - AFFILIATE
"Affiliate" shall mean, with respect to the Company, any corporation
directly or indirectly controlling, controlled by, or under common control with,
the Company or any other entity designated by the Board of Directors of the
Company in which the Company or an Affiliate has an interest.
<PAGE>
2
SECTION 1.2 - CAUSE
"Cause" shall mean (i) the Optionee willful and continued failure to
perform Optionee duties with respect to the Company or its subsidiaries which
continues beyond ten days after a written demand for substantial performance
is delivered to Optionee by the Company or (ii) misconduct by Optionee
involving (x) dishonesty or breach of trust in connection with Optionee
employment which is reasonably likely to be injurious to the Company or (y)
conduct which would be a reasonable basis for an indictment of Optionee for a
felony or for a misdemeanor involving moral turpitude.
SECTION 1.3 - CODE
"Code" shall mean the Internal Revenue Code of 1986, as amended.
SECTION 1.4 - COMMITTEE
"Committee" shall mean the Compensation Committee of the Company.
SECTION 1.5 - GRANT DATE
"Grant Date" shall mean the date on which the Options provided for in
this Agreement were granted.
SECTION 1.6 - MANAGEMENT STOCKHOLDER'S AGREEMENT
"Management Stockholder's Agreement" shall mean that certain
Management Stockholder's Agreement dated as of February __, 1997 between the
Optionee and the Company.
SECTION 1.7 - OPTIONS
"Options" shall mean the non-qualified options to purchase Common
Stock granted under this Agreement.
SECTION 1.8 - PERMANENT DISABILITY
The Optionee shall be deemed to have a "Permanent Disability" if the
Optionee is unable to engage in the activities required by the Optionee's job by
reason of any medically determined physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.
<PAGE>
3
SECTION 1.9 - PLAN
"Plan" shall mean the 1996 Stock Purchase and Option Plan for Key
Employees of Evenflo & Spalding Holdings Corporation and Subsidiaries.
SECTION 1.10 - PRONOUNS
The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
SECTION 1.11 - RETIREMENT
"Retirement" shall mean (i) retirement at age 65 or over after having
been employed by the Company or any subsidiary for at least five years after the
Grant Date or (ii) retirement at age 55 or over if such Optionee has been
employed with the Company or a Subsidiary for a minimum of 15 years and after
having been employed by the Company or any subsidiary for at least five years
after the Grant Date.
SECTION 1.12 - SECRETARY
"Secretary" shall mean the Secretary of the Company.
SECTION 1.13 - SUBSIDIARY
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations, or group of
commonly controlled corporations (other than the last corporation in the
unbroken chain), then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
SECTION 1.14 - TRIGGER DATE
"Trigger Date" shall mean September 30, 1996.
<PAGE>
4
ARTICLE II
GRANT OF OPTIONS
SECTION 2.1 - GRANT OF OPTIONS
For good and valuable consideration, on and as of the date hereof the
Company irrevocably grants to the Optionee an Option to purchase any part or all
of an aggregate of the number of shares set forth with respect to each such
Option on the signature page hereof of its $.01 par value Common Stock upon the
terms and conditions set forth in this Agreement.
SECTION 2.2 - EXERCISE PRICE
Subject to Section 2.4, the exercise price of the shares of stock
covered by the Options shall be $5.00 per share without commission or other
charge.
SECTION 2.3 - CONSIDERATION TO THE COMPANY
In consideration of the granting of these Options by the Company, the
Optionee agrees to render faithful and efficient services to the Company or a
Subsidiary or Affiliate, with such duties and responsibilities as the Company
shall from time to time prescribe. Nothing in this Agreement or in the Plan
shall confer upon the Optionee any right to continue in the employ of the
Company or any Subsidiary or Affiliate or shall interfere with or restrict in
any way the rights of the Company and its Subsidiaries or Affiliates, which are
hereby expressly reserved, to terminate the employment of the Optionee at any
time for any reason whatsoever, with or without cause.
SECTION 2.4 - ADJUSTMENTS IN OPTIONS PURSUANT TO MERGER, CONSOLIDATION, ETC.
Subject to Section 9 of the Plan, in the event that the outstanding
shares of the stock subject to an Option are, from time to time, changed into or
exchanged for a different number or kind of shares of the Company or other
securities of the Company by reason of a merger, consolidation,
recapitalization, reclassification, stock split, stock dividend, combination of
shares, or otherwise, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares and/or the amount of consideration
as to which or for which, as the case may be, such Option, or portions thereof
then unexercised, shall be exercisable. Any such adjustment made by the
Committee shall be final and binding upon the Optionee, the Company and all
other interested persons.
<PAGE>
5
ARTICLE III
PERIOD OF EXERCISABILITY
SECTION 3.1 - COMMENCEMENT OF EXERCISABILITY
(a) Options shall become exercisable as follows:
Percentage of Option
Date Option Shares Granted As to Which
Becomes Exercisable Option Is Exercisable
- ------------------- ---------------------
After the first anniversary
of the Trigger Date 20%
After the second anniversary
of the Trigger Date 40%
After the third anniversary
of the Trigger Date 60%
After the fourth anniversary
of the Trigger Date 80%
After the fifth anniversary
of the Trigger Date 100%
Notwithstanding the foregoing, the Option shall become immediately
exercisable as to 100% of the shares of Common Stock subject to such Option
immediately prior to a Change of Control (but only to the extent such Option has
not otherwise terminated or become exercisable). A "Change of Control" means
(i) a sale of all or substantially all of the assets of the Company to a Person
or Group who is not an Affiliate of Kohlberg Kravis Roberts & Co., L.P. ("KKR"),
(ii) a sale by KKR or any of its Affiliates resulting in (A) more than 50% of
the voting stock of the Company being held by a Person or Group that does not
include KKR or any of its Affiliates and (B) more than 50% of the seats on the
Board of Directors of the Company being controlled by or being designees of a
party or parties other than KKR or any of its Affiliates, or (iii) a merger or
consolidation of the Company into another Person which is not an Affiliate of
KKR. "Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature. "Group" means two or
more Persons acting together as a partnership, limited partnership, syndicate or
other group for the purpose of acquiring, holding or disposing of securities of
the Company.
<PAGE>
6
(b) Notwithstanding the foregoing, no Option shall become exercisable
as to any additional shares of Common Stock following the termination of
employment of the Optionee for any reason other than a termination of employment
because of death, Permanent Disability or Retirement of the Optionee and any
Option (other than as provided in the next succeeding sentence) which is
non-exercisable as of the Optionee's termination of employment shall be
immediately cancelled. In the event of a termination of employment because of
such death, Permanent Disability or Retirement, the Options shall immediately
become exercisable as to all shares of Common Stock subject thereto.
SECTION 3.2 - EXPIRATION OF OPTIONS
Except as otherwise provided in Section 5 or 6 of the Management
Stockholder's Agreement, the Options may not be exercised to any extent by the
Optionee after the first to occur of the following events:
(a) The tenth anniversary of the Grant Date; or
(b) The first anniversary of the date of the Optionee's termination
of employment by reason of death, Permanent Disability or Retirement; or
(c) The first business day which is fifteen calendar days after the
earlier of (i) 75 days after termination of employment of the Optionee for
any reason other than for death, Permanent Disability or Retirement (except
as to the extent described in clause (e) below) or (ii) the delivery of
notice by the Company that it does not intend to exercise its call right
under Section 6 of the Management Stockholder's Agreement; PROVIDED,
HOWEVER, that in any event the Options shall remain exercisable under this
subsection 3.2(c) until at least 45 days after termination of employment of
the Optionee for any reason other than for death, Permanent Disability or
Retirement; or
(d) The date the Option is terminated pursuant to Section 5, 6 or
8(b) of the Management Stockholder's Agreement;
(e) The date of an Optionee's termination of employment by the
Company for Cause; or
(f)If the Committee so determines pursuant to Section 9 of the Plan,
the effective date of either the merger or consolidation of the Company
into another Person, or the exchange or acquisition by another Person of
all or substantially all of the Company's assets or 80% or more of its then
outstanding voting stock, or the recapitalization, reclassification,
liquidation or dissolution of the Company. At least ten (10) days prior to
the effective date of such merger, consolidation, exchange, acquisition,
recapitalization, reclassification, liquidation or dissolution, the
Committee shall give the Optionee notice of such event if the Option has
then neither been fully exercised nor become unexercisable under this
Section 3.2.
<PAGE>
7
ARTICLE IV
EXERCISE OF OPTION
SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE
During the lifetime of the Optionee, only he may exercise an Option or
any portion thereof. After the death of the Optionee, any exercisable portion
of an Option may, prior to the time when an Option becomes unexercisable under
Section 3.2, be exercised by his personal representative or by any person
empowered to do so under the Optionee's will or under the then applicable laws
of descent and distribution.
SECTION 4.2 - PARTIAL EXERCISE
Any exercisable portion of an Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Section
3.2; provided, however, that any partial exercise shall be for whole shares of
Common Stock only.
SECTION 4.3 - MANNER OF EXERCISE
An Option, or any exercisable portion thereof, may be exercised solely
by delivering to the Secretary or his office all of the following prior to the
time when the Option or such portion becomes unexercisable under Section 3.2:
(a) Notice in writing signed by the Optionee or the other person then
entitled to exercise the Option or portion thereof, stating that the Option
or portion thereof is thereby exercised, such notice complying with all
applicable rules established by the Committee;
(b) Full payment (in cash, by check or by a combination thereof) for
the shares with respect to which such Option or portion thereof is
exercised;
(c) A bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the
shares of stock are being acquired for his own account, for investment and
without any present intention of distributing or reselling said shares or
any of them except as may be permitted under the Securities Act of 1933, as
amended (the "Act"), and then applicable rules and regulations thereunder,
and that the Optionee or other person then entitled to exercise such Option
or portion thereof will indemnify the Company against and hold it free and
harmless from any loss, damage, expense or liability resulting to the
Company if any sale or distribution of the shares by such person is
contrary to the representation and agreement referred to above; provided,
however, that the Committee may, in its absolute discretion, take whatever
additional actions it deems appropriate to ensure the
<PAGE>
8
observance and performance of such representation and agreement and to
effect compliance with the Act and any other federal or state securities
laws or regulations;
(d) Full payment to the Company of all amounts which, under federal,
state or local law, it is required to withhold upon exercise of the Option;
and
(e) In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the
option.
Without limiting the generality of the foregoing, the Committee may require an
opinion of counsel acceptable to it to the effect that any subsequent transfer
of shares acquired on exercise of an Option does not violate the Act, and may
issue stop-transfer orders covering such shares. Share certificates evidencing
stock issued on exercise of this Option shall bear an appropriate legend
referring to the provisions of subsection (c) above and the agreements herein.
The written representation and agreement referred to in subsection (c) above
shall, however, not be required if the shares to be issued pursuant to such
exercise have been registered under the Act, and such registration is then
effective in respect of such shares.
SECTION 4.4 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES
The shares of stock deliverable upon the exercise of an Option, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of an Option or portion thereof prior to fulfillment of all of the
following conditions:
(a) The obtaining of approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(b) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish for
reasons of administrative convenience.
SECTION 4.5 - RIGHTS AS STOCKHOLDER
The holder of an Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares purchasable
upon the exercise of the Option or any portion thereof unless and until
certificates representing such shares shall have been issued by the Company to
such holder.
<PAGE>
9
ARTICLE V
MISCELLANEOUS
SECTION 5.1 - ADMINISTRATION
The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke
any such rules. All actions taken and all interpretations and determinations
made by the Committee shall be final and binding upon the Optionee, the Company
and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Options. In its absolute discretion, the
Board of Directors may at any time and from time to time exercise any and all
rights and duties of the Committee under the Plan and this Agreement.
SECTION 5.2 - OPTIONS NOT TRANSFERABLE
Except as provided in the Management Stockholder's Agreement, neither
the Options nor any interest or right therein or part thereof shall be liable
for the debts, contracts or engagements of the Optionee or his successors in
interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that this Section 5.2 shall not
prevent transfers made solely for estate planning purposes or by will or by the
applicable laws of descent and distribution.
SECTION 5.3 - SHARES TO BE RESERVED
The Company shall at all times during the term of the Options reserve
and keep available such number of shares of stock as will be sufficient to
satisfy the requirements of this Agreement.
SECTION 5.4 - NOTICES
Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary, and any
notice to be given to the Optionee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section
5.4, either party may hereafter designate a different address for notices to be
given to him. Any notice which is required to be given to the Optionee shall,
if the Optionee is then deceased, be given to the Optionee's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section 5.4. Any notice shall
have been deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid,
<PAGE>
10
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
SECTION 5.5 - TITLES
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
SECTION 5.6 - APPLICABILITY OFF PLAN AND MANAGEMENT STOCKHOLDER'S AGREEMENT
The Options and the shares of Common Stock issued to the Optionee upon
exercise of the Options shall be subject to all of the terms and provisions of
the Plan and the Management Stockholder's Agreement, to the extent applicable to
the Options and such shares. In the event of any conflict between this
Agreement and the Plan, the terms of the Plan shall control. In the event of
any conflict between this Agreement or the Plan and the Management Stockholder's
Agreement, the terms of the Management Stockholder's Agreement shall control.
SECTION 5.7 - AMENDMENT
This Agreement may be amended only by a writing executed by the
parties hereto which specifically states that it is amending this Agreement.
SECTION 5.8 - GOVERNING LAW
The laws of the State of Delaware (or if the Company reincorporates in
another state, the laws of that state) shall govern the interpretation, validity
and performance of the terms of this Agreement regardless of the law that might
be applied under principles of conflicts of laws.
SECTION 5.9 - JURISDICTION
Any suit, action or proceeding against the Optionee with respect to
this Agreement, or any judgment entered by any court in respect of any
thereof, may be brought in any court of competent jurisdiction in the State
of Delaware (or if the Company reincorporates in another state, in that
state) or New York, as the Company may elect in its sole discretion, and the
Optionee hereby submits to the non-exclusive jurisdiction of such courts for
the purpose of any such suit, action, proceeding or judgment. The Optionee
hereby irrevocably waives any objections which he may now or hereafter have
to the laying of the venue of any suit, action or proceeding arising out of
or relating to this Agreement brought in any court of competent jurisdiction
in the State of Delaware (or if the Company reincorporates in another state,
in that state) or New York, and hereby further irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in any inconvenient forum. No suit, action or proceeding against the
Company with respect to this Agreement may be brought in any court, domestic
or foreign, or before any similar domestic or foreign authority other than in
a court of competent jurisdiction in the
<PAGE>
11
State of Delaware (or if the Company reincorporates in another state, in that
state) or New York, and the Optionee hereby irrevocably waives any right
which he may otherwise have had to bring such an action in any other court,
domestic or foreign, or before any similar domestic or foreign authority.
The Company hereby submits to the jurisdiction of such courts for the purpose
of any such suit, action or proceeding.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.
EVENFLO & SPALDING HOLDINGS
CORPORATION
By
-----------------------------
Name:
Title:
Aggregate number of shares of
- ------------------------- Common Stock for which the Option
- ------------------------- granted hereunder is exercisable
Optionee (100% of total number of shares):
---------------------
- -------------------------
- -------------------------
Address
Optionee's Taxpayer
Identification Number:
- ----------------------
<PAGE>
EXHIBIT 4.7
FORM OF SALE PARTICIPATION AGREEMENT
________________________
________________________
c/o Evenflo & Spalding Holdings Corporation
601 South Harbour Island Boulevard
Tampa, Florida 33602
Dear Management Stockholder:
You have entered into a Management Stockholder's Agreement, dated as
of _____________ ____, 1996 (the "Stockholder's Agreement"), between Evenflo &
Spalding Holdings Corporation, a Delaware corporation ("the Company"), and you
relating to the purchase from the Company of shares of the common stock, par
value $.01 per share, of the Company ("Common Stock"). The undersigned, KKR
Partners II, L.P., a Delaware limited partnership ("KKR Partners"), and Strata
Associates, L.P., a Delaware limited partnership ("Strata Associates"), also
have purchased shares of Common Stock and hereby agree with you as follows,
effective upon such purchase of Common Stock by you:
1. In the event that at any time KKR Partners or Strata Associates,
as the case may be, (each a "Selling Partnership") and collectively, the
"Selling Partnerships"), proposes to sell for cash or any other consideration
any shares of Common Stock owned by it, in any transaction other than a Public
Offering (as defined in the Stockholder's Agreement) or a sale to an affiliate
of KKR Partners or Strata Associates, as the case may be, the Selling
Partnership will notify you or your Purchaser's Estate or Purchaser's Trust (as
such terms are defined in Section 2 of the Stockholder's Agreement), as the case
may be, in writing (a "Notice") of such proposed sale (a "Proposed Sale") and
the material terms of the Proposed Sale as of the date of the Notice (the
"Material Terms") promptly, and in any event not less than 15 days prior to the
consummation of the Proposed Sale and not more than 5 days after the execution
of the definitive agreement relating to the Proposed Sale, if any (the "Sale
Agreement"). If within 10 days of your or your Purchaser's Estate's or
Purchaser's Trust's, as the case may be, receipt of such Notice the Selling
Partnership receives from you or your Purchaser's Estate or Purchaser's Trust,
as the case may be, a written request (a "Request") to include Common Stock held
by you or your Purchaser's Estate or Purchaser's Trust, as the case may be, in
the Proposed Sale (which Request shall be irrevocable unless (a) there shall be
a material adverse change in the Material Terms or (b) if otherwise mutually
agreed to in writing by you or your Purchaser's Estate or Purchaser's Trust, as
the case may be, and the Selling Partnership), the Common Stock held by you will
be so included as provided herein;
<PAGE>
2
provided that only one Request, which shall be executed by you or your
Purchaser's Estate or Purchaser's Trust, as the case may be, may be delivered
with respect to any Proposed Sale for all Common Stock held by you or your
Purchaser's Estate or Purchaser's Trust. Promptly after the consummation of the
transactions contemplated thereby, the Selling Partnership will furnish you,
your Purchaser's Trust or your Purchaser's Estate with a copy of the Sale
Agreement, if any. In the event that both KKR Partners and Strata Associates
propose to sell shares of Common Stock in the Proposed Sale, the term "Selling
Partnership" shall refer only to Strata Associates and not to KKR Partners.
2. The number of shares of Common Stock which you or your
Purchaser's Estate or Purchaser's Trust, as the case may be, will be permitted
to include in a Proposed Sale pursuant to a Request will be the lesser of (a)
the sum of the number of shares of Common Stock then owned by you or your
Purchaser's Estate or Purchaser's Trust, as the case may be, plus all shares of
Common Stock which you are then entitled to acquire under an unexercised option
to purchase shares of Common Stock, to the extent such option is then vested or
would become vested as a result of the consummation of the Proposed Sale and (b)
the sum of the shares of Common Stock then owned by you or your Purchaser's
Estate or Purchaser's Trust, as the case may be, plus all shares of Common Stock
which you are entitled to acquire under an unexercised option to purchase shares
of Common Stock, whether or not fully vested, multiplied by a percentage
calculated by dividing the aggregate number of shares of Common Stock which KKR
Partners and Strata Associates propose to sell in the Proposed Sale by the total
number of shares of Common Stock owned by the Selling Partnership or, in the
case both KKR Partners and Strata Associates propose to sell in the Proposed
Sale, KKR Partners and Strata Associates. If one or more holders of shares of
Common Stock who have been granted the same rights granted to you or your
Purchaser's Estate or Purchaser's Trust, as the case may be, hereunder elect not
to include the maximum number of shares of Common Stock which such holders would
have been permitted to include in a Proposed Sale (the "Eligible Shares"), KKR
Partners or Strata Associates, or such remaining holders of shares of Common
Stock, or any of them, may sell in the Proposed Sale a number of additional
shares of Common Stock owned by any of them equal to their pro rata portion of
the number of Eligible Shares not included in the Proposed Sale, based on the
relative number of shares of Common Stock then held by each such holder, and
such additional shares of Common Stock which any such holder or holders propose
to sell shall not be included in any calculation made pursuant to the first
sentence of this Paragraph 2 for the purpose of determining the number of shares
of Common Stock which you or your Purchaser's Estate or Purchaser's Trust, as
the case may be, will be permitted to include in a Proposed Sale. KKR Partners
and Strata Associates, or any of them, may sell in the Proposed Sale additional
shares of Common Stock owned by any of them equal to any remaining Eligible
Shares which will not be included in the Proposed Sale pursuant to the
foregoing.
3. Except as may otherwise be provided herein, shares of Common
Stock subject to a Request will be included in a Proposed Sale pursuant hereto
and in any agreements with purchasers relating thereto on the same terms and
subject to the same conditions applicable to the shares of Common Stock which
the Selling Partnership proposes to sell in the Proposed Sale. Such terms and
conditions shall include, without limitation: the sales price; the payment of
fees, commissions and expenses; the provision of,and
<PAGE>
3
representation and warranty as to, information requested by Strata Associates;
and the provision of requisite indemnifications; PROVIDED that any
indemnification provided by you, your Purchaser's Estate or your Purchaser's
Trust shall be pro rata in proportion with the number of shares of Common Stock
to be sold.
4. Upon delivering a Request, you or your Purchaser's Estate or
Purchaser's Trust, as the case may be, will, if requested by the Selling
Partnership, execute and deliver a custody agreement and power of attorney in
form and substance satisfactory to the Selling Partnership with respect to the
shares of Common Stock which are to be sold by you or your Purchaser's Estate or
Purchaser's Trust, as the case may be, pursuant hereto (a "Custody Agreement and
Power of Attorney"). The Custody Agreement and Power of Attorney will provide,
among other things, that you or your Purchaser's Estate or Purchaser's Trust, as
the case may be, will deliver to and deposit in custody with the custodian and
attorney-in-fact named therein a certificate or certificates representing such
shares of Common Stock (duly endorsed in blank by the registered owner or owners
thereof) and irrevocably appoint said custodian and attorney-in-fact as your or
your Purchaser's Estate's or Purchaser's Trust's, as the case may be, agent and
attorney-in-fact with full power and authority to act under the Custody
Agreement and Power of Attorney on your or your Purchaser's Estate's or
Purchaser's Trust's, as the case may be, behalf with respect to the matters
specified therein.
5. Your or your Purchaser's Estate's or Purchaser's Trust's, as the
case may be, right pursuant hereto to participate in a Proposed Sale shall be
contingent on your or your Purchaser's Estate's or Purchaser's Trust's, as the
case may be, strict compliance with each of the provisions hereof and your or
your Purchaser's Estate's or Purchaser's Trust's, as the case may be,
willingness to execute such documents in connection therewith as may be
reasonably requested by the Selling Partnership.
6. The obligations of KKR Partners and Strata Associates hereunder
shall extend only to you or your Purchaser's Estate or Purchaser's Trust, as the
case may be, and no other of your or your Purchaser's Estate's or Purchaser's
Trust's, as the case may be, successors or assigns shall have any rights
pursuant hereto.
7. This Agreement shall terminate and be of no further force and
effect on the fifth anniversary of the first occurrence of a Public Offering (as
defined in the Purchase Agreement).
8. All notices and other communications provided for herein shall be
in writing and shall be deemed to have been duly given when delivered to the
party to whom it is directed:
<PAGE>
4
(a) If to KKR Partners or Strata Associates, to it at the following
address:
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, New York 10019
Attn: Michael T. Tokarz
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: Arthur D. Robinson, Esq.
(b) If to you, to you at the address first set forth above herein;
(c) If to your Purchaser's Estate or Purchaser's Trust, at the
address provided to such partnerships by such entity;
or at such other address as any of the above shall have specified by notice in
writing delivered to the others by certified mail.
9. The laws of the State of Delaware (or if the Company
reincorporates in another state, of that state) shall govern the interpretation,
validity and performance of the terms of this Agreement. No suit, action or
proceeding with respect to this Agreement may be brought in any court or before
any similar authority other than in a court of competent jurisdiction in the
State of Delaware (or if the Company reincorporates in another state, of that
state) or New York, as the Selling Partnerships may elect in their sole
discretion, and you hereby submit to the non-exclusive jurisdiction of such
courts for the purpose of such suit, proceeding or judgment. You hereby
irrevocably waive any right which you may have had to bring such an action in
any other court, domestic or foreign, or before any similar domestic or foreign
authority.
10. If KKR Partners or Strata Associates transfers its interest in
the Company to an affiliate of KKR Partners or Strata Associates, as the case
may be, such affiliate shall assume the obligations hereunder of KKR Partners or
Strata Associates, as the case may be.
It is the understanding of the undersigned that you are aware that no
Proposed Sale presently is contemplated and that such a sale may never occur.
<PAGE>
5
If the foregoing accurately sets forth our agreement, please
acknowledge your acceptance thereof in the space provided below for that
purpose.
Very truly yours,
STRATA ASSOCIATES, L.P.
By: KKR ASSOCIATES (STRATA), L.P.
By: STRATA L.L.C.,
as General Partner
By:
-------------------------------
KKR PARTNERS II, L.P.
By: KKR ASSOCIATES (STRATA), L.P.
By: STRATA L.L.C.,
as General Partner
By:
-------------------------------
Accepted and agreed to:
By:
-----------------------------------------
-----------------------------------------
<PAGE>
EXHIBIT 5
[LETTERHEAD]
January 27, 1997
Evenflo & Spalding Holdings Corporation
601 South Island Harbour Boulevard, Suite 200
Tampa Florida 33602-3141
Ladies and Gentlemen:
I am General Counsel for Evenflo & Spalding Holdings Corporation, a
Delware corporation (the "Company"), and have advised the Company in connection
with the preparation and filing by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
of a Registration Statement on Form S-8 (the "Registration Statement") relating
to the issuance by the Company of 7,484,556 shares of the Company's Common
Stock, par value $.01 per share (the "Shares"), pursuant to the 1996 Stock
Purchase and Option Plan for Key Employees of Evenflo & Spalding Holdings
Corporation and Subsidiaries (the "1996 Plan").
I have reviewed the corporate action of the Company in connection with
the issuance and sale of the Shares and have examined, and have relied as to
matters of fact, upon originals or copies, certified or otherwise identified to
my satisfaction, of such corporate records, agreements, documents and other
instruments and such certificates or
<PAGE>
-2-
Evenflo & Spalding January 27, 1997
Holdings Corporation
comparable documents or oral statements of public officials and of officers and
representatives of the Company, and have made such other and further
investigations as I have deemed relevant and necessary as a basis for the
opinions hereinafter set forth. In such examination, I have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to me as originals, the conformity to
original documents of all documents submitted to me as certified or photostatic
copies, and the authenticity of the originals of such latter documents.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, I hereby advise you that in my opinion the issuance
of the Shares has been duly authorized and, when issued and sold as
contem-plated by the 1996 Plan, such Shares will be validly issued, fully paid
and non-assessable.
I am a member of the Bar of the State of New York and I do not express
any opinion herein concerning any law other than the federal laws of the United
States, the internal law of the law of the State of New York and the General
Corporation Law of the State of Delaware
This opinion is rendered to you in connection with the above described
transactions. This opinion may not be relied upon by you for any other purpose,
or relied upon by, or furnished to, any other person, firm or corporation
without my prior written consent.
I hereby consent to the filing of this opinion of counsel as Exhibit 5
to the Registration Statement.
<PAGE>
-3-
Evenflo & Spalding January 27, 1997
Holdings Corporation
Very truly yours,
/s/ Robert K. Adikes
Robert K. Adikes
General Counsel
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Evenflo & Spalding Holdings Corporation
We consent to the incorporation by reference in this Registration Statement of
Evenflo & Spalding Holdings Corporation on Form S-8 of our report dated October
28, 1996, appearing in the Prospectus included in Amendment No. 3 to Form S-4
Registration Statement (No. 333-14569) of E&S Holdings Corporation.
DELOITTE & TOUCHE LLP
Tampa, Florida
January 27, 1997
