<PAGE>
Post-effective Amendment No. 1 to Registration No. 333-20463
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 2, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
REGISTRATION STATEMENT
ON FORM S-8
UNDER
THE SECURITIES ACT OF 1933
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SPALDING HOLDINGS CORPORATION
(FORMERLY EVENFLO & SPALDING HOLDINGS CORPORATION)
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 59-2439656
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
425 MEADOW STREET
CHICOPEE, MASSACHUSETTS 01013
(Address, including Zip Code, of Registrant's Principal Executive Offices)
AMENDED AND RESTATED 1996 STOCK
PURCHASE AND OPTION PLAN FOR KEY EMPLOYEES OF
SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES
(Full Title of the Plan)
--------------
JAMES R. CRAIGIE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
425 MEADOW STREET
CHICOPEE, MASSACHUSETTS 01013
(413) 536-1200
(Name, Address, including Zip Code, and Telephone Number, including
Area Code, of Registrant's Agent for Service)
WITH COPIES TO:
ARTHUR D. ROBINSON, ESQ.
SIMPSON THACHER & BARLETT
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
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TITLE OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE(a) OFFERING PRICE(a) FEE(a)
<S> <C> <C> <C> <C>
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Common Stock, $.01 par value per share 4,500,000 $2.00 $9,000,000 $2,502
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</TABLE>
(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.
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Pursuant to Rule 429 of the Rules and Regulations of the Securities and
Exchange Commission under the Securities Act of 1933, as amended, this
Registration Statement also relates to Registration Statement No. 333-20463.
<PAGE>
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.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, previously filed by Spalding Holdings
Corporation (the "Company" or the "Registrant") with the Securities and
Exchange Commission (the "Commission") are hereby incorporated by reference
in this Registration Statement:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998;
(b) The Company's Annual Report on Form 10-K for the transition period
from October 1, 1998 to December 31, 1998;
(c) The Company's Quarterly Report on Form 10-Q for the quarter ended
April 3, 1999;
(d) The Company's Quarterly Report on Form 10-Q for the quarter ended
July 3, 1999.
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 of the Management
Stockholder's Agreements, filed as part of this Registration Statement as
Exhibits 4.11 and 4.12.
The authorized capital stock of the Company consists of 150,000,000
shares of Common Stock, par value $.01 per share, of which 97,483,963 shares
were outstanding as of April 30, 1999 and 50,000,000 shares of preferred
stock, of which 100,000 shares were outstanding as of December 31, 1998.
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.
II-2
<PAGE>
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 Peter Arturi.
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
"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.
Section 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
See "Index to Exhibits."
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
II-3
<PAGE>
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, office 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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 Chicopee, State of Massachusetts,
on this 2nd day of Sepember, 1999.
SPALDING HOLDINGS CORPORATION
(Registrant)
By
-------------------------------------
James R. Craigie
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Chairman of Board of Directors September 2, 1999
- - - - - - - - - - ---------------------
Edwin L. Artzt
/s/ James R. Craigie President and Chief Executive Officer September 2, 1999
- - - - - - - - - - ---------------------
James R. Craigie
/s/ Scott H. Creelman President Spalding International September 2, 1999
- - - - - - - - - - ---------------------
Scott H. Creelman
/s/ G. Wade Lewis Chief Financial Officer September 2, 1999
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G. Wade Lewis
/s/ Peter A. Arturi Senior Counsel September 2, 1999
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Peter A. Arturi
/s/ Henry R. Kravis Director September 2, 1999
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Henry R. Kravis
/s/ George Roberts Director September 2, 1999
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George Roberts
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Michael T. Tokarz Director September 2, 1999
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Michael T. Tokarz
/s/ Marc S. Lipschultz Director September 2, 1999
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Marc S. Lipschultz
Director September 2, 1999
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Gustavo A. Cisneros
Director September 2, 1999
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David W. Checketts
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
4.1 Restated Certificate of Incorporation of the Company (filed as Exhibit
3.1 to the Registration Statement on Form S-4 (File No. 333-14569) and
incorporated herein by reference).
4.2 Amendment to the Restated Certificate of Incorporation of the Company
(filed as Exhibit 3.1 to the Company's Current Report on Form 8-K dated
August 13, 1999 and incorporated herein by reference).
4.3 By-laws of the Company (filed as Exhibit 3.2 to the Registration
Statement on Form S-4 (File No. 333-14569) and incorporated herein by
reference).
4.4 Indenture between E&S Holdings Corporation and Marine Midland Bank, as
Trustee (incorporated by reference from Exhibit 4.1 to Registration
Statement on Form S-4 (File No. 333-14569) filed by the Company on
January 9, 1997).
4.5 Form of 10 3/8% Series B Senior Subordinated Notes due 2006
(incorporated by reference from Exhibit 4.3 to Registration Statement
on Form S-4 (File No. 333-14569) filed by the Company on January 9,
1997).
4.6 Stock Purchase Warrants, dated August 20, 1998, by and among Evenflo &
Spalding Holdings Corporation and KKR 1996 Fund L.P., relating to the
purchase of 44,100,000 shares of Common Stock of the Company granted
to KKR 1996 Fund L.P. (filed as Exhibit 4.4 to the Company's Annual
Report on Form 10-K dated March 29, 1999 and incorporated herein by
reference).
4.7 Stockholders' Agreement dated August 20, 1998, by and among Evenflo
Company, Inc. KKR 1996 Fund L.P. and Lisco, Inc. (filed as Exhibit 4.5
to the Company's Annual Report on Form 10-K dated March 29, 1999 and
incorporated herein by reference).
4.8 Certificate of Designations of Variable Rate Cumulative Preferred
Stock of Evenflo & Spalding Holdings Corporation, dated August 19,
1998, (filed as Exhibit 4.6 to the Company's Annual Report on Form 10-K
dated March 29, 1999 and incorporated herein by reference).
4.9 Form of Amended and Restated 1996 Stock Purchase and Option Plan for
Key Employees of Spalding Holdings Corporation and Subsidiaries.
4.10 Form of Management Stockholder's Agreement (Stock and Options).
4.11 Form of Management Stockholder's Agreement (Options).
4.12 Form of Non-Qualified Stock Option Agreement.
4.13 Form of Sale Participation Agreement.
II-7
<PAGE>
4.14 Registration Rights Agreement, dated as of September 30, 1996, among
Evenflo & Spalding Holdings Corporation, Strata Associates, L.P. and
KKR Partners II, L.P. (incorporated by reference from Exhibit 10.4 to
Registration Statement on Form S-4 (File No. 333-14569) filed by the
Company on January 9, 1997).
5 Opinion of Peter Arturi, Esq.
15 Letter in lieu of consent of Deloitte & Touche LLP.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Peter Arturi, Esq. (included in Exhibit 5.1 of this
Registration Statement).
II-8
<PAGE>
Exhibit 4.9
PLAN DOCUMENT
AMENDED AND RESTATED 1996 STOCK PURCHASE AND OPTION PLAN
FOR KEY EMPLOYEES OF
SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES
1. Purpose of Plan
The Amended and Restated 1996 Stock Purchase and Option Plan for Key
Employees of Spalding Holdings Corporation and Subsidiaries (the "Plan") is
designed:
(a) to promote the long term financial interests and growth of Spalding
Holdings Corporation (the "Company") 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 Company'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 Company through opportunities for increased stock, or
stock-based, ownership in the Company.
2. Definitions
As used in the Plan, the following words shall have the following
meanings:
(a) "Affiliate" shall mean any corporation directly or indirectly
controlling, controlled by, or under common control with, the Company, KKR or
any other entity designated by the Board of Directors of the Company in which
the Company or an Affiliate has an interest.
(b) "Board of Directors" means the Board of Directors of the Company.
(c) "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.
(d) "Committee" means the Compensation Committee of the Board of
Directors.
<PAGE>
2
(e) "Common Stock" or "Share" means common stock of the Company which may
be authorized but unissued, or issued and reacquired.
(f) "Employee" means a person, including an officer, in the regular
full-time employment of the Company 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
Company.
(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) "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, NonQualified 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.
(j) "Grant Agreement" means an agreement between the Company and a
Participant that sets forth the terms, conditions and limitations applicable to
a Grant.
(k) "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.
(l) "Participant" means an Employee, or other person having a relationship
with the Company 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.
(m) "Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
(n) "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.
(o) "Stock Options" means the collective reference to "Incentive Stock
Options" and "Non-Qualified Stock Options".
(p) "Subsidiary" shall mean any company in an unbroken chain of companies
beginning with the Company if each of the companies, or group of commonly
controlled
<PAGE>
3
companies, other than the last company 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 companies 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 Company 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 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.
(b) The Committee may delegate to the Chief Executive Officer and to other
senior officers of the Company 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 Company, and the
officers and directors of the Company 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 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 Grants, and all members of the Committee shall be fully protected by the
Company 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 relationship with the Company or any of its
Subsidiaries, and in such form and having such terms, conditions and limitations
as the Committee may determine. 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 the Company.
<PAGE>
4
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, which may only be granted to an Employee (who is actually
employed by the Company). 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 the 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 Company 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 with the terms of the Plan, the Grant Agreement, and of any
applicable guidelines of the Committee in effect at the time.
(b) Non-Qualified 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 the par value of the 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, 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
<PAGE>
5
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 par 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 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, Non-Qualified Stock Options; provided, however,
that the price of such Purchase Shares may not be less than the par 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 Company 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 Fair Market 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 Company's
performance will be measured. These factors must include a minimum performance
standard for the Company 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 Company's performance will be measured shall be not less than six
months.
<PAGE>
6
(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 Company'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 Company's performance will be
measured. The factors will be based on the Company's performance and must
include a minimum performance standard for the Company 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 Company's performance will be measured
shall be not less than six months. Performance Shares will be granted for no
consideration.
(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 Company 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 Company may not be less than the par value of the
Common Stock or such other equity securities on the date 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
12,000,000 shares of the authorized Common Stock as of the effective date of the
Plan. 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 Company 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.
<PAGE>
7
(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 Company 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 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 Company in respect of any Shares purchasable
in connection with any Grant unless and until certificates representing any such
Shares have been issued by the Company 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 Company 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 Company or any of its
Subsidiaries, nor shall any assets of the Company or any of its Subsidiaries be
designated as attributable or allocated to the satisfaction of the Company'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 Company 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 Company
during such leave of absence.
<PAGE>
8
8. Adjustments
(a) 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.
(b) In the event that the Participant's right to require the Company to
purchase his or her Shares or Options or the Company's right to require the
Participant to sell his or her Shares or Options, as provided in Sections 5 and
6, respectively, of the Form of Management Stockholder's Agreement attached
hereto as Exhibit A, or the Company's Right of First Refusal as provided in
Section 4 of the Form of Management Stockholder's Agreement, gives rise to
adverse accounting consequences to the Company in respect of the treatment of
Options granted pursuant to the Plan, the Committee may, in its sole discretion,
adjust the timing of the exercisability of such outstanding Options to avoid
such adverse accounting consequences.
9. Merger, Consolidation, Exchange, Acquisition, Liquidation or Dissolution
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
Company into another company, the exchange of all or substantially all of the
assets of the Company for the securities of another company, the acquisition by
another company of 80% or more of the Company's then outstanding shares of
voting stock or the recapitalization, reclassification, liquidation or
dissolution of the Company, 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.
<PAGE>
9
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
The Company 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 Company 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 StockBased Grant that the Participant pay to the Company such amount as
may be requested by the Company 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 Company and shall terminate ten years later, subject to
earlier termination by the Board of Directors pursuant to Paragraph 10.
<PAGE>
Exhibit 4.10
STOCK AND OPTIONS
FORM OF MANAGEMENT STOCKHOLDER'S AGREEMENT
This Management Stockholder's Agreement (this "Agreement") is
entered into as of __________ __, 1999 between 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 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 $2.00 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 _________
shares of Common Stock ("Options") at an exercise price of $2.00 per share of
Common Stock pursuant to the terms of the Amended and Restated 1996 Stock
Purchase and Option Plan for Key Employees of Spalding Holdings Corporation and
Subsidiaries (the "Option Plan") and the "Non-Qualified Stock Option Agreement"
attached hereto as Exhibit A.
This Agreement and the Exhibits hereto constitute the full and
entire understanding and agreement between the Parties with regard to the
subjects hereof and to the extent that any Purchaser had previously executed an
agreement with regard to the subjects hereof, this Agreement shall supersede any
such previous agreement.
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 $2.00 per share as of the date hereof (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, and, together with any other shares of
Common Stock beneficially owned by the Purchaser as of the date hereof or
hereafter acquired, 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, and the
rules and regulations in effect thereunder (the "Act"), and in compliance with
applicable provisions of state securities laws or (ii) (A) 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
<PAGE>
3
to the Company, that no such registration is required because of the
availability of an exemption from registration under the Act and such transfer
is in compliance with the applicable provisions of state securities laws and (B)
if the Purchaser is a citizen or resident of any country other than the United
States, or the Purchaser desires to effect any transfer in any such country,
counsel for the Purchaser (which counsel shall be acceptable to the Company)
shall have furnished the Company with an opinion or other advice satisfactory in
form and substance to the Company to the effect that such transfer will comply
with the securities laws of such jurisdiction. 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 July 1, 1999 BETWEEN
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).
<PAGE>
4
(c) The Purchaser acknowledges that he has been advised that (i) the
Purchase 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 or the rules and regulations promulgated under the Act, 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.
(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 Purchase Stock and the documents referred to therein, certain of which
documents set forth the rights, preferences and restrictions relating to the
Purchase 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.
<PAGE>
5
(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 Purchase 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 Purchase 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 (as described herein but excluding
the Form S-8 filed in connection with this agreement) or pursuant to the Sale
Participation Agreement (as defined below), the Purchaser agrees that he will
not transfer, sell, assign, pledge, hypothecate or otherwise dispose of any
shares of the Stock at any time prior to the fifth 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
<PAGE>
6
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 ("Retirement") and
(ii) the Purchaser either dies or becomes Permanently Disabled, then the
Purchaser, the Purchaser's 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 or the
Purchaser's Trust, 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 canceling
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" if the Purchaser is unable to engage in the
activities required by the Purchaser'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
<PAGE>
7
period of not less than 12 months, or if the majority of the Board of Directors
of the Company shall, in good faith, determine the Purchaser is permanently
disabled.
(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 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 Stock subject to repurchase under this Section 5(b)
shall be that number of shares of 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 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, the Purchaser's Estate or a
Purchaser's Trust at the Section 6 Repurchase Price
<PAGE>
8
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 (as defined in Section 5(a)) of the
Purchaser from the Company or any of its subsidiaries, the Company shall have
the right to purchase all, but not less than all, of the shares of Stock then
held by the Purchaser or a Purchaser's Trust but the Repurchase Price shall be
the Section 5 Repurchase Price. In the event of Purchaser's active employment
with the Company is terminated by the Company for Cause, all Options (whether or
not then exercisable and whether such Options are held by Purchaser, Purchaser's
Trust or Purchaser's Estate) shall terminate without any payment. 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"). Except as set forth above, in the event that the Company exercises its
right to repurchase shares of 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
representing the Purchase Stock so purchased and appropriate documents canceling
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 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 Stock subject to repurchase under this
Section 6(c) shall be that number of shares of 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.
<PAGE>
9
(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 audited financial
statements, if available, or 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 $____ 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 $_____. After a Public Offering,
the Section 5 Repurchase Price shall be a per share Repurchase Price equal to
$_____ plus the amount, if any, by which the Market Price Per Share as of the
Repurchase Calculation Date exceeds $____.
(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) $_____ 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 $____. After a Public
Offering, the Section 6 Repurchase Price shall be a per share Repurchase Price
equal to the lesser of (i) Market Price Per Share or (ii) $____ 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 $____; 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 or
President of the Company.
<PAGE>
10
The "Percentage" shall be determined as follows:
Repurchase Calculation Date Percentage
- - - - - - - - - - --------------------------- ----------
Purchase Date through and including the first anniversary of the 0%
Purchase Date
After the first anniversary of the Purchase Date through and 20%
including the second anniversary of the Purchase Date
After the second anniversary of the Purchase Date through and 40%
including the third anniversary of the Purchase Date
After the third anniversary of the Purchase Date through and 60%
including the fourth anniversary of the Purchase Date
After the fourth anniversary of the Purchase Date through and 80%
including the fifth anniversary of the Purchase Date
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 September 30, 1996 (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 (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-4 or 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 Common Stock held by Strata Associates, L.P., a Delaware
limited partnership and
<PAGE>
11
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 or the Board of
Directors 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.
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 $2.00 per share or at a different option exercise price. The
term "Purchase Stock" or "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 NonQualified 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 exercise price (as provided in the stock option agreement) 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
<PAGE>
12
Price, could be purchased by the Purchaser upon exercise of his outstanding
options. Notwithstanding the foregoing, in the event of the occurrence of a Call
Event, all outstanding Options (whether or not then exercisable) will be
automatically terminated without payment therefor.
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 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 Rules
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
9(b), the Company may deregister under Section 12 or 15 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.
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.
<PAGE>
13
(b) The Company will promptly notify the Purchaser in writing (a
"Notice") of any proposed registration (a "Proposed Registration"). 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, 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, (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 or (iv) the product of (A) the number of shares of
stock then held by the Purchaser and (B) the quotient determined by dividing (1)
the total number of shares of Stock requested by KKR Affiliates (as defined
below) to be registered by the Company by (2) the aggregate number of shares of
Stock owned by the KKR Affiliates.
(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 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).
<PAGE>
14
(e) Upon delivering a Request the Purchaser, the Purchaser's Estate
or Purchaser's Trust (or his or their authorized representative) 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, the Purchaser's Estate or
Purchaser's Trust (or his or their authorized representative) 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, Purchaser's Estate or Purchaser's Trust'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 the 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, 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 the 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.
<PAGE>
15
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 such Sections, shall terminate and be of no
further force or effect upon (A) 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 (collectively, the "KKR Affiliates"), 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 or (B) a sale of
all or substantially all of the assets of the company (other than in connection
with financing transactions, sale and leaseback transactions and similar
transactions) to a person who is not a KKR Affiliate.
<PAGE>
16
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 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.
<PAGE>
17
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 the State of 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
the State of 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 (or if the Company
reincorporates in another state, in that state) or the State of 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. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING IN RELATION TO THIS AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.
<PAGE>
18
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: Marc Lipschultz
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3909
Attn: Arthur D. Robinson, Esq.
(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.
<PAGE>
19
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 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).
<PAGE>
20
(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>
21
IN WITNESS WHEREOF, the Parties have executed this Agreement as of
the date first above written.
SPALDING HOLDINGS CORPORATION
By________________________________
Name:
Title:
----------------------------------
Purchaser (print)
----------------------------------
Purchaser Signature
----------------------------------
----------------------------------
Address of Purchaser
<PAGE>
EXHIBIT A
Form of Non-Qualified Stock Option Agreement
[See Exhibit B to the Prospectus.]
<PAGE>
Exhibit 4.11
OPTIONS
FORM OF MANAGEMENT STOCKHOLDER'S AGREEMENT
This Management Stockholder's Agreement (this "Agreement") is
entered into as of __________ __, 1999 between SPALDING HOLDINGS CORPORATION, a
Delaware corporation (the "Company"), and __________________ (the "Optionee")
(the Company and the Optionee being hereinafter collectively referred to as the
"Parties").
RECITALS
The Company proposes to grant to key employees of the Company and
certain other investors, options to purchase common stock par value $.01 per
share ("Common Stock) at an exercise price of $2.00 per share of Common Stock.
This Agreement is one of several other agreements ("Other
Purchasers' Agreements"), which Other Purchasers' Agreements shall include
Management Stockholder's Agreements that have been, or that 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 grant to the Optionee an option or
options to purchase shares of Common Stock ("Options") at an exercise price
of $2.00 per share of Common Stock pursuant to the terms of the Amended and
Restated 1996 Stock Purchase and Option Plan for Key Employees of Spalding
Holdings Corporation and Subsidiaries (the "Option Plan") and the
"Non-Qualified Stock Option Agreement" attached hereto as Exhibit A.
This Agreement and the Exhibits hereto, and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the Parties with regard to the subjects
hereof and to the extent that any Optionee had previously executed an agreement
with regard to the subjects hereof, this Agreement shall supersede any such
previous agreement.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the Parties agree as follows:
1. Issuance of Options.
Subject to the terms and conditions hereinafter set forth, the
Company shall grant to the Optionee the Options as of the date hereof (the
"Grant Date") and the Parties shall execute and deliver to each other copies
of the Non-Qualified Stock Option Agreement concurrently with
<PAGE>
2
the grant of the Options. The Company shall have no obligation to grant any
Options to any person who (i) is a resident or citizen of a state or other
jurisdiction in which the granting of the Options 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.
2. Optionee's Representations, Warranties and Agreements.
(a) The Optionee 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") at the time
of exercise, the Common Stock issuable upon exercise of the Options (together
with any other shares of Common Stock beneficially owned by the Optionee as of
the date hereof or hereafter acquired, the "Stock") unless such transfer
complies with Section 3 of this Agreement. Furthermore, if the Optionee 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 Optionee 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,
and the rules and regulations in effect thereunder (the "Act"), and in
compliance with applicable provisions of state securities laws or (ii) (A)
counsel for the Optionee (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 registration under the Act and such transfer
is in compliance with the applicable provisions of state securities laws and (B)
if the Optionee is a citizen or resident of any country other than the United
States, or the Optionee desires to effect any transfer in any such country,
counsel for the Optionee (which counsel shall be acceptable to the Company)
shall have furnished the Company with an opinion or other advice satisfactory in
form and substance to the Company to the effect that such transfer will comply
with the securities laws of such jurisdiction. 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 Optionee to his
executors, administrators, testamentary trustees, legatees or beneficiaries (the
"Optionee'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 Grant Date in
compliance with the federal securities laws to a trust or custodianship the
beneficiaries of which may include only the Optionee, his spouse or his lineal
descendants (a "Optionee's Trust") or a transfer made after the third
anniversary of the Grant Date to such a trust by a person, other than the
Optionee, 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.
<PAGE>
3
(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 __________ ___, 1999 BETWEEN
SPALDING HOLDINGS CORPORATION ("THE COMPANY") AND THE OPTIONEE NAMED
ON THE FACE HEREOF (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY).
(c) The Optionee acknowledges that he has been advised that (i) the
Stock relating to the Options 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 relating to the
Options 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 Optionee is an Affiliate, the Optionee also acknowledges that (i)
the Stock must be held indefinitely and the Optionee 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 or the rules and
regulations promulgated under the Act, 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.
(d) If any shares of the Stock are to be disposed of in accordance
with Rule 144 under the Act or otherwise, the Optionee 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 Optionee 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 Optionee 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.
<PAGE>
4
(f) The Optionee 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 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 Optionee 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 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 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 (as described herein but excluding
the Form S-8 filed in connection with this agreement) or pursuant to the Sale
Participation Agreement (as defined below), the Optionee agrees that he will not
transfer, sell, assign, pledge, hypothecate or otherwise dispose of any shares
of the Stock at any time prior to the fifth anniversary of the Grant 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 Grant Date and
prior to a Public Offering (as defined below), the Optionee 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 Optionee wishes to accept, the Optionee shall
cause the Offer to be reduced to writing and shall notify the Company in writing
of his wish to accept the Offer. The Optionee'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 Optionee'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
<PAGE>
5
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 Optionee at the principal office of the Company against
delivery of certificates or other instruments representing the shares of the
Stock so purchased, appropriately endorsed by the Optionee. 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 Optionee 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 Optionee than those
contained in the Offer. Promptly after such sale, the Optionee 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
Optionee 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. Optionee's Resale of Stock and Options to the Company Upon The
Optionee's Death or Disability.
(a) Except as otherwise provided herein, if at any time prior to a
Public Offering, (i) the Optionee 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 Grant Date or (B) 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 ("Retirement") and (ii)
the Optionee either dies or becomes Permanently Disabled, then the Optionee, the
Optionee's Estate or an Optionee'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 Optionee, the Optionee's
Trust and/or the Optionee'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 Optionee or the Optionee's Estate or the Optionee's
Trust, 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 Optionee. The
Optionee, the Optionee's Estate and/or the Optionee'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 Optionee, the Optionee's Estate or the Optionee'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
<PAGE>
6
of the Optionee, the Optionee's Estate or the Optionee's Trust, as the case may
be, against delivery of certificates or other instruments representing the Stock
so purchased and appropriate documents canceling the Options so terminated
appropriately endorsed or executed by the Optionee, the Optionee's Estate or the
Optionee's Trust, or his or its duly authorized representative. For purposes of
this Agreement, 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, or if the majority of the Board of
Directors of the Company shall, in good faith, determine the Optionee is
permanently disabled.
(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 Stock or the Options from the Optionee, the
Optionee's Estate or the Optionee'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 Stock subject to repurchase under this Section 5(b)
shall be that number of shares of 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 Optionee, the Optionee's Estate or a Optionee'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 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 Optionee, the Optionee's Estate or the
Optionee'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).
<PAGE>
7
6. The Company's Option to Repurchase Stock and Options of Optionee.
(a) If, on or prior to the fifth anniversary of the Grant Date, (i)
the Optionee'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 Optionee's Trust
shall include any person or entity other than the Optionee, his spouse or his
lineal descendants, or (iii) the Optionee 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 Optionee, the Optionee's Estate or a
Optionee'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 Optionee or (B) the
Retirement (as defined in Section 5(a)) of the Optionee from the Company or any
of its subsidiaries, the Company shall have the right to purchase all, but not
less than all, of the shares of Stock then held by the Optionee or a Optionee's
Trust but the Repurchase Price shall be the Section 5 Repurchase Price. In the
event of Optionee's active employment with the Company is terminated by the
Company for Cause, all Options (whether or not then exercisable and whether such
Options are held by Optionee, Optionee's Trust or Optionee's Estate) shall
terminate without any payment. 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 Optionee of
the exercise of such election ("Call Notice"). Except as set forth above, in the
event that the Company exercises its right to repurchase shares of Stock
pursuant to this Section 6, the Company shall also pay the Optionee 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 Optionee.
(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 Optionee 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 Optionee against delivery of certificates or other instruments
representing the Stock so purchased and appropriate documents canceling the
Options so terminated, appropriately endorsed or executed by the Optionee, the
Optionee'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 Stock or the Options
(pursuant to a Call Notice given on a timely basis in accordance with Section
6(a) hereof) from the Optionee, the Optionee's Estate, or the Optionee's Trust,
as the case may be, until the Repurchase Eligibility Date; provided, however,
that (i) the number of shares of Stock subject to repurchase under this Section
6(c) shall be that number of shares of Stock and (ii) the number of Exercisable
Option Shares for purposes of
<PAGE>
8
calculating the Option Excess Price payable under this Section 6(c) shall be the
number of Exercisable Option Shares held by the Optionee, the Optionee's Estate
or a Optionee'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 audited financial
statements, if available, or 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 Optionee, 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 $____ 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 $_____. After a Public Offering,
the Section 5 Repurchase Price shall be a per share Repurchase Price equal to
$_____ plus the amount, if any, by which the Market Price Per Share as of the
Repurchase Calculation Date exceeds $____.
(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) $_____ 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 $____. After a Public
Offering, the Section 6 Repurchase Price shall be a per share Repurchase Price
equal to the lesser of (i) Market Price Per Share or (ii) $____ 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 $____; provided, however,
that in the event of Optionee's termination without Cause by the Company
(and/or, if applicable, its subsidiaries) or with Good Reason by the Optionee,
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 Optionee's willful and
continued failure to perform Optionee'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 Optionee by the Company or (ii)
misconduct by Optionee involving (x) dishonesty or breach of trust in
<PAGE>
9
connection with Optionee'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 Optionee for a felony or for a misdemeanor involving moral
turpitude; and "Good Reason" shall mean (i) a material reduction in Optionee's
base salary or (ii) a substantial reduction in Optionee's duties and
responsibilities other than as approved by the Chief Executive Officer or
President of the Company.
The "Percentage" shall be determined as follows:
Repurchase Calculation Date Percentage
- - - - - - - - - - --------------------------- ----------
Grant Date through and including the first anniversary of the 0%
Grant Date
After the first anniversary of the Grant Date through and 20%
including the second anniversary of the Grant Date
After the second anniversary of the Grant Date through and 40%
including the third anniversary of the Grant Date
After the third anniversary of the Grant Date through and 60%
including the fourth anniversary of the Grant Date
After the fourth anniversary of the Grant Date through and 80%
including the fifth anniversary of the Grant Date
After the fifth anniversary of the Grant 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 September 30, 1996 (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 (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.
<PAGE>
10
(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-4 or 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 Common 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 or the Board of
Directors 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.
8. Stock Issued to Optionee Upon Exercise of Stock Options;
Termination of Options.
(a) The Company may from time to time grant to the Optionee, in
addition to the Options, additional options under the Option Plan to purchase
shares of Common Stock at $____ per share or at a different option exercise
price. The term "Stock" as used in this Agreement shall include all shares of
Common Stock of the Company issued to the Optionee by the Company upon exercise
of the Options and of any other stock options held by the Optionee or otherwise
beneficially owned by the Optionee.
(b) All outstanding Options granted to the Optionee under the Option
Plan or otherwise, whether or not then exercisable, will be automatically
terminated upon the payment by the Company to the Optionee (if not otherwise
terminated pursuant to Section 3.2 of the NonQualified 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
Optionee
<PAGE>
11
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 exercise
price (as provided in the stock option agreement) 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 Optionee upon exercise of his
outstanding options. Notwithstanding the foregoing, in the event of the
occurrence of a Call Event, all outstanding Options (whether or not then
exercisable) will be automatically terminated without payment therefor.
9. The Company's Representations and Warranties.
(a) The Company represents and warrants to the Optionee that (i)
this Agreement has been duly authorized, executed and delivered by the Company
and (ii) the 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 Optionee 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 Rules 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 9(b), the
Company may deregister under Section 12 or 15 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.
10. "Piggyback" Registration Rights.
(a) Effective upon the grant of Options 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 Grant Date,
the Optionee 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 Optionee were an original party (other than the Company) thereto;
provided, however, that the Optionee shall not have any rights to request
registration under Section 3 of the Registration Rights Agreement; and provided
further, that the Optionee shall not be bound by any amendments to the
Registration Rights Agreement unless Optionee consents thereto. Notwithstanding
anything to the contrary contained in the
<PAGE>
12
Registration Rights Agreement, the Optionee'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
Optionee upon the exercise of Options, and held by the Optionee, the Optionee's
Trust or the Optionee's Estate, shall be deemed to be Registrable Securities as
defined in the Registration Rights Agreement.
(b) The Company will promptly notify the Optionee in writing (a
"Notice") of any proposed registration (a "Proposed Registration"). If within 15
days of the receipt by the Optionee of such Notice, the Company receives from
the Optionee, the Optionee's Trust or the Optionee's Estate a written request (a
"Request") to register shares of Stock held by the Optionee, the Optionee's
Estate or the Optionee's Trust (which Request will be irrevocable unless
otherwise mutually agreed to in writing by the Optionee 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 Optionee, the Optionee's Trust or the Optionee's Estate, as
the case may be, may be submitted for all Registrable Securities held by the
Optionee, the Optionee's Estate and the Optionee'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 Optionee (which for purposes of this subparagraph (c) shall
include shares held by the Optionee, Optionee's Estate or a Optionee's Trust),
including all shares of Stock which the Optionee 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, (iii) the maximum number
of shares which the Optionee (pro rata based upon the aggregate number of shares
of Common Stock the Optionee and all Other Purchasers have requested
be registered) and all Other Purchasers are permitted to register
under the Registration Rights Agreement or (iv) the product of (A) the number of
shares of stock then held by the Optionee and (B) the quotient determined by
dividing (1) the total number of shares of Stock requested by KKR Affiliates (as
defined below) to be registered by the Company by (2) the aggregate number of
shares of Stock owned by the KKR Affiliates.
(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 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
<PAGE>
13
Agreement), including, without limitation, the Optionee 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 Optionee, the Optionee's Estate or
Optionee's Trust (or his or their authorized representative) 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 Optionee, the Optionee's Estate or Optionee's Trust
(or his or their authorized representative) 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
Optionee's, Optionee's Estate or Optionee's Trust's agent and attorney-in-fact
with full power and authority to act under the Custody Agreement and Power of
Attorney on the Optionee's behalf with respect to the matters specified therein.
(f) The Optionee 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 Optionee and the Other Purchasers pro rata (on the
basis of the proportion of the number of shares of Stock and the number of
Options each such Optionee 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, the Optionee 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 the Other Purchasers' Agreements.
<PAGE>
14
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 Optionee, 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 Optionee the right to sell, shares of Stock or the Company has the right
to pay, or the Optionee 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 Optionee
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 upon each exercise of the Optionee's
Options; and Optionee further covenants and agrees that he will furnish the
Company with copies of the forms of election the Optionee files within 30 days
after each exercise of Optionee'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 Optionee's Trust,
the Optionee shall provide the Company with a copy of the instruments creating
the Optionee's Trust and with the identity of the beneficiaries of the
Optionee's Trust. The Optionee shall notify the Company immediately prior to any
change in the identity of any beneficiary of the Optionee'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 Optionee (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 Optionee 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 such Sections, shall terminate and be of no
further force or effect upon (A) 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. (through its ownership of Spalding Holdings Corporation) or any affiliate
thereof (collectively, the "KKR Affiliates"), no longer having the power (i) to
elect a majority of the Board of Directors of the
<PAGE>
15
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 or (B) a sale of
all or substantially all of the assets of the company (other than in connection
with financing transactions, sale and leaseback transactions and similar
transactions) to a person who is not a KKR Affiliate.
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. Optionee's Employment by the Company.
Nothing contained in this Agreement or in any other agreement
entered into by the Company and the Optionee contemporaneously with the
execution of this Agreement (i) obligates the Company or any subsidiary of the
Company to employ the Optionee in any capacity whatsoever or (ii) prohibits or
restricts the Company (or any such subsidiary) from terminating the employment,
if any, of the Optionee at any time or for any reason whatsoever, with or
without Cause, and the Optionee hereby acknowledges and agrees that neither the
Company nor any other person has made any representations or promises whatsoever
to the Optionee concerning the Optionee'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 issuance of
the Options to the Optionee.
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 Optionee
hereunder; provided, however, that no transferee (including without limitation,
transferees referred to in Section 2(a) hereof) shall derive any rights under
this Agreement unless
<PAGE>
16
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 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 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 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 the State of 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. By the execution and delivery of this Agreement, the Optionee
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 Optionee 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 Optionee, in such other jurisdictions and in
such manner, as may be permitted by applicable law. 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
the State of 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 (or if the Company
reincorporates in another state, in that state) or the State of New York, and
the
<PAGE>
17
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. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING IN RELATION TO THIS AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.
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: Marc Lipschultz
<PAGE>
18
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3909
Attn: Arthur D. Robinson, Esq.
(b) If to the Optionee, 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 Optionee, the Optionee hereby agrees effective as of the Grant Date,
for so long as the Optionee is employed by the Company or one of its
subsidiaries and for a period of one year thereafter (the "Noncompete Period"),
the Optionee 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 Optionee'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 Optionee's
employment, the Company gives the Optionee notice of such extension and (ii)
beginning with the first anniversary of such termination, the Company pays the
Optionee an amount equal to the Optionee'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 Optionee will not disclose or use at any time any
Confidential Information (as defined below) of which the Optionee 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
Optionee's performance of duties, if any, assigned to the Optionee 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
<PAGE>
19
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 Optionee proposes to disclose or use such information. The Optionee
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 subsidiaries (including its predecessors) and conceived, developed or
made by the Optionee while employed by the Company or its subsidiaries belong to
the Company. The Optionee 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 Optionee's
services are unique and because the Optionee 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 Optionee 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.
SPALDING HOLDINGS CORPORATION
By________________________________
Name:
Title:
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Optionee (print)
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Optionee Signature
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Address of Optionee
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EXHIBIT A
Form of Non-Qualified Stock Option Agreement
[See Exhibit B to the Prospectus.]
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Exhibit 4.12
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of ___________ __, 1999, is made by and
between Spalding Holdings Corporation, a Delaware corporation (the "Company"),
and _____________________, an employee of the Company or a Subsidiary (as
defined below) or Affiliate (as defined below) of the Company ("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.
Section 1.2 - Cause
"Cause" shall mean (i) the Optionee's willful and continued failure
to perform Optionee's duties with respect to the Company or its subsidiaries
after a written demand for substantial performance is delivered to Optionee by
the Company or (ii) misconduct by Optionee
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involving (x) dishonesty or breach of trust in connection with Optionee'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 Optionee for a
felony or for a misdemeanor involving moral turpitude.
Section 1.3 - Change of Control
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.
Section 1.4 - Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.5 - Committee
"Committee" shall mean the Compensation Committee of the Board of
Directors of the Company.
Section 1.6 - Grant Date
"Grant Date" shall mean the date hereof.
Section 1.7 - Group
"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.
Section 1.8 - Initial Vesting Date
"Initial Vesting Date" shall mean July 1, 1999.
Section 1.9 - Management Stockholder's Agreement
"Management Stockholder's Agreement" shall mean the Management
Stockholder's Agreement dated as of ___________ __, 1999 between the Optionee
and the Company.
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Section 1.10 - Options
"Options" shall mean the non-qualified options to purchase Common
Stock granted under this Agreement.
Section 1.11 - 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, or if the majority of the Board of
Directors of the Company shall, in good faith, determine the Optionee is
permanently disabled.
Section 1.12 - Person
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
Section 1.13 - Plan
"Plan" shall mean the Amended and Restated 1996 Stock Purchase and
Option Plan for Key Employees of Spalding Holdings Corporation. and
Subsidiaries.
Section 1.14 - Pronouns
The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.15 - 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 and/or a Subsidiary for a minimum of 15 years and
after having been employed by the Company and/or any Subsidiary for at least
five years after the Grant Date.
Section 1.16 - Secretary
"Secretary" shall mean the Secretary of the Company.
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Section 1.17 - Subsidiary
"Subsidiary" shall mean any company in an unbroken chain of
companies beginning with the Company if each of the companies, or group of
commonly controlled companies (other than the last company 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 companies in such chain.
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 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 $2.00 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 to 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
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adjustment made by the Committee shall be final and binding upon the Optionee,
the Company and all other interested persons.
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 Initial Vesting Date 20%
After the second anniversary
of the Initial Vesting Date 40%
After the third anniversary
of the Initial Vesting Date 60%
After the fourth anniversary
of the Initial Vesting Date 80%
After the fifth anniversary
of the Initial Vesting 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).
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(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 not 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,
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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.
ARTICLE IV
EXERCISE OF OPTION
Section 4.1 - Person Eligible to Exercise
Except as otherwise provided in the Management Stockholder's
Agreement, during the lifetime of the Optionee, only he or she 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 or her 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
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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 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 desirable; 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
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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.
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
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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, 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 of 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
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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 (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.
Section 5.10 - Counterparts
This Agreement may be signed in two or more counterparts, each of
which will be deemed an original.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto.
SPALDING HOLDINGS CORPORATION
By_______________________________________
Name:
Title:
- - - - - - - - - - ------------------------------
Optionee Name (Print)
- - - - - - - - - - ------------------------------
Optionee Signature Aggregate number of shares of
Common Stock subject to the Option
granted hereunder (100% of total
number of shares):
- - - - - - - - - - ------------------------------ -----------------------------------------
- - - - - - - - - - ------------------------------
Optionee's Address
Optionee's Taxpayer
Identification Number:
- - - - - - - - - - ------------------------------
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Exhibit 4.13
FORM OF SALE PARTICIPATION AGREEMENT
_________________________________
_________________________________
c/o Spalding Holdings Corporation
425 Meadow Street
Chicopee, MA 01013
Dear Management Stockholder
You have entered into a Management Stockholder's Agreement, dated as
of ________ _, 1999 (the "Stockholder's Agreement"), between Spalding Holdings
Corporation, a Delaware corporation (the "Company"), and you relating to the
purchase and/or the option purchase from the Company of shares of the common
stock, par value $.01 per share, of the Company ("Common Stock"). The
undersigned "Investors," which include 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;
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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. If the Investors receive an offer from a person to purchase in a
Proposed Sale (a) at least a majority of the shares of Common Stock then
outstanding or (b) all or substantially all of the shares of Common Stock owned
by the Investors, and such offer is accepted by the Investors, then each of you,
your Purchaser's Estate and your Purchaser's
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Trust hereby agrees that, if requested by the Investors (a "KKR Request"), you,
your Purchaser's Estate and your Purchaser's Trust will sell in such Proposed
Sale on the same terms and conditions (including, without limitation, time of
payment and form of consideration) as to be paid and given to the Investors, the
number of shares of Common Stock equal to the number of shares of Common Stock
owned by you, your Purchaser's Estate and your Purchaser's Trust multiplied by
(x) in the case of a Proposed Sale described in clause (a) above, the percentage
of the then outstanding shares of Common Stock to which the Proposed Sale is
applicable or (y) in the case of a Proposed Sale described in clause (b) above,
the percentage of the shares of Common Stock owned by the Investors to which the
Proposed Sale is applicable.
4. (a) 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 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.
(b) In the event of a transaction (such as a merger or
consolidation) involving the Company which results in a change of control
transaction but is not a Proposed Sale (a "Proposed Transaction"), you agree on
behalf of yourself, your Purchaser's Estate and your Purchaser's Trust to bear
your pro rata share of any fees, commissions, adjustments to purchase price,
expenses or indemnities borne by the Investors.
(c) Your pro rata share of any amount pursuant to Paragraphs 4(a)
and (b) shall be based upon the number of shares of Common Stock owned by you,
your Purchaser's Estate and your Purchaser's Trust plus the number of shares of
Common Stock you would have the right to acquire under unexercised options which
are then vested or would become vested as a result of the Proposed Sale or
Proposed Transaction.
(d) The Investors shall be entitled to estimate the amount of fees,
commissions, adjustments to purchase price, expenses or indemnities in
connection with any Proposed Sale or Proposed Transaction and to withhold such
amounts from payments to be made to you, your Purchaser's Estate and your
Purchaser's Trust at the time of closing of such Proposed Sale or Proposed
Transaction; provided that, (i) such estimate shall not preclude the Investors
from recovering additional amounts from you, your Purchaser's Estate and your
Purchaser's Trust in respect of such fees, commissions, adjustments to purchase
price, expenses or indemnities and (ii) the Investors shall reimburse you, your
Purchaser's Estate and your Purchaser's Trust to the extent actual amounts are
ultimately less than the estimated amounts.
<PAGE>
4
5. 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.
6. 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.
7. 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.
8. 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).
9. 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:
(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:
<PAGE>
5
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.
10. 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.
11.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.
This Agreement constitutes the full and entire understanding and
agreement between the undersigned and you with regards to the subjects hereof
and to the extent that you have previously executed an agreement with regard to
the subjects hereof, this Agreement shall supersede any such previous agreement.
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.
This Agreement may be signed in counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.
<PAGE>
6
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
Spalding Holdings Corporation
425 Meadow Street, P.O. Box 901
Chicopee, MA 01021-0901
September 2, 1999
Spalding Holdings Corporation
425 Meadow Street, P.O. Box 901
Chicopee, MA 01021-0901
Ladies and Gentlemen:
I am Senior Counsel for Spalding Holdings Corporation, a Delaware 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, of a Registration Statement on Form S-8 (the
"Registration Statement"), which Registration Statement constitutes
Post-Effective Amendment No. 1 to the Registration Statement on Form S-8 (File
No. 333-20463), relating to the issuance by the Company of an additional
4,500,000 shares or options to acquire such shares of the Company's Common
Stock, par value $.01 per share (collectively, the "Shares"), pursuant to the
Amended and Restated 1996 Stock Purchase and Option Plan for Key Employees of
Spalding Holdings Corporation and Subsidiaries (the "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 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
<PAGE>
Spalding Holdings Corporation
September 2, 1999
Page Two
been duly authorized and, when issued and sold as contemplated by the Plan, such
Shares will be validly issued, fully paid and non-assessable.
I am a member of the Bar of the State of Connecticut 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 Connecticut 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.
Very truly yours,
/s/ Peter A. Arturi
Peter A. Arturi
Senior Counsel
PAA/njb
<PAGE>
EXHIBIT 15
August 31, 1999
The Board of Directors
Spalding Holdings Corporation
Chicopee, Massachusetts
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Spalding Holdings Corporation and subsidiaries for the fiscal
quarters ended April 3, 1999 and July 3, 1999, as indicated in our reports dated
May 6, 1999 and August 6, 1999, respectively; because we did not perform an
audit, we expressed no opinion on that information.
We are aware that our reports referred to above, which were included in your
Quarterly Reports on Form 10-Q for the fiscal quarters ended April 3, 1999 and
July 3, 1999, are being used in this Registration Statement on Form S-8.
We also are aware that the aforementioned reports, pursuant to Rule 436(c)
under the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Hartford, Connecticut
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Spalding Holdings Corporation on Form S-8 of our reports dated November 12, 1998
and March 19, 1999, appearing in the Annual Report on Form 10-K of Spalding
Holdings Corporation for the fiscal year ended September 30, 1998 and the
transition period October 1, 1998 through December 31, 1998, respectively.
DELOITTE & TOUCHE LLP
Hartford, Connecticut
August 31, 1999
