As filed with the Securities and Exchange Commission on March 2, 2000
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
REGISTRATION STATEMENT
ON FORM S-8
UNDER
THE SECURITIES ACT OF 1933
--------------------
EVENFLO COMPANY, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 31-1360477
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
Northwoods Business Center II
707 Crossroads Court
Vandalia, Ohio 45377
(937) 415-3300
(Address, including Zip Code, of Registrant's Principal Executive Offices)
Evenflo Ownership Plan
(Full Title of the Plan)
--------------------------
Richard W. Frank
Evenflo Company, Inc.
Northwoods Business Center II
707 Crossroads Court
Vandalia, Ohio 45377
(937) 415-3300
(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 & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
(212) 455-2000
--------------------
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=======================================================================================================================
Proposed Proposed
Maximum 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>
Class A Common Stock, $1.00 par value per share 1,850,000 shares $5.00 $9,250,000 $2,442.00
=======================================================================================================================
</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.
================================================================================
<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 Evenflo Company, Inc. (the
"Company" or the "Registrant") with the Securities and Exchange Commission (the
"Commission") are hereby incorporated by reference in this Registration
Statement:
(a) Amendment No. 3 to the Company's Registration Statement on Form S-4,
as filed with the Commission on May 10, 1999;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999;
(c) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999; and
(d) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 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
Agreement, filed as part of this Registration Statement as Exhibit 4.8 and by
reference to the provisions of the Company's certificate of incorporation.
The entire authorized capital stock of the Company consists of (i)
20,000,000 shares of Common Stock designated as the "Class A Common Stock," (ii)
5,000,000 shares of non-voting Common Stock designated as the "Class B Common
Stock," and (iii) 10,000,000 shares of Preferred Stock. As of September 30,
1999, there were (i) 10,000,000 shares of Class A Common Stock outstanding, (ii)
no shares of Class B Common Stock outstanding and (iii) 400,000 shares of
Preferred Stock outstanding.
Common Stock
Voting Rights. The holders of the Class A Common Stock are entitled to one
vote per share on all matters submitted for action by the shareholders. The
holders of the Class B Common Stock do not have any voting rights with the
exception of those described below. 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.
II-1
<PAGE>
Under Delaware law, holders of Class B Common Stock are entitled to vote
as a class upon a proposed amendment to the certificate of incorporation,
whether or not entitled to vote thereon by the certificate of incorporation, if
the amendment would increase or decrease the par value of the shares of such
class, increase or decrease the aggregate number of authorized shares of such
class or alter or change the powers, preferences or special rights of the shares
of such class so as to affect them adversely.
Dividend Rights. All shares of Common Stock are entitled to share equally
in such dividends on Common Stock 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 common shareholders
after payment of all prior obligations of the Company.
Other Matters. The holders of the Common Stock have no preemptive rights.
All outstanding shares of Common Stock are, and the Common Stock offered hereby
will be, fully paid and non-assessable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
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. The Registrant's Restated Certificate of Incorporation provides that
the Registrant will indemnify directors and officers to the fullest extent
permitted by Delaware laws for and against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement reasonably incurred in
connection with any threatened, pending or completed action, suit or proceeding
(brought in the right of the Registrant or otherwise by a third party or by such
officer of director (in the latter case, only after authorization from the Board
of Directors of the Registrant). The Restated Certificate of Incorporation also
allows the Registrant to indemnify any person that is an employee or agent to
the fullest extent permitted by Delaware law for and against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement reasonably
incurred in connection with any threatened, pending or completed action, suit or
proceeding (brought in the right of the Registrant or otherwise). 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 Sixth of the
Registrant's Restated Certificate of Incorporation includes such a provision.
II-2
<PAGE>
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 offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective Registration Statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement.
(2) That, for the purposes of determining any liability under the
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) That, for purposes of determining any liability under the Act, each
filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<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 Vandalia, State of Ohio, on this 2nd day of
March 2000.
EVENFLO COMPANY, INC.
BY: /s/ Daryle A. Lovett
--------------------------------------
Chief Financial Officer and
Executive Vice President
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>
/s/ Richard W. Frank Chairman of the Board of Directors
- ------------------------- and Chief Executive Officer
Richard W. Frank (Principal Executive Officer) March 2, 2000
/s/ Daryle A. Lovett Chief Financial Officer and Executive
- ------------------------- Vice (Principal Financial Officer and March 2, 2000
Daryle A. Lovett Principal Accounting Officer)
/s/ Ronald P. Moran Vice President, General Counsel
- ------------------------- and Secretary March 2, 2000
Ronald P. Moran
/s/ Henry R. Kravis Director March 2, 2000
- -------------------------
Henry R. Kravis
/s/ George R. Roberts
- ------------------------- Director March 2, 2000
George R. Roberts
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Michael T. Tokarz
- -------------------------
Michael T. Tokarz Director March 2, 2000
/s/ Marc S. Lipschultz
- -------------------------
Marc S. Lipschultz Director March 2, 2000
/s/ Edwin L. Artzt
- -------------------------
Edwin L. Artzt Director March 2, 2000
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
4.1 Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1
to the Company's Registration Statement on Form S-4 (File No. 333-64893)
and incorporated herein by reference).
4.2 By-laws of the Company (filed as Exhibit 3.2 to the Company's Registration
Statement on Form S-4 (File No. 333-64893) and incorporated herein by
reference).
4.3 Indenture dated as of August 20, 1998, between the Company and HSBC Bank
USA (formerly known as Marine Midland Bank), as Trustee (filed as Exhibit
4.1 to the Company's Registration Statement on Form S-4 (File No.
333-64893) and incorporated herein by reference).
4.4 Form of 11 3/4% Senior Note due 2006 (included in Exhibit 4.3).
4.5 Form of 11 3/4% Series B Senior Note due 2006 (included in Exhibit 4.3).
4.6 Registration Rights Agreement dated as of August 20, 1998, among the
Company, Donaldson, Lufkin & Jenrette Securities Corporation, Merrill
Lynch, Pierce, Fenner & Smith Incorporated and BancAmerica Robertson
Stephens (filed as Exhibit 4.4 to the Company's Registration Statement on
Form S-4 (File No. 333-64893) and incorporated herein by reference).
4.7 Evenflo Ownership Plan.
4.8 Form of Management Stockholder's Agreement (Initial Grant).
4.9 Form of Management Stockholder's Agreement (New Hires/Subsequent Grants).
4.10 Form of Non-Qualified Stock Option Agreement (Initial Grant).
4.11 Form of Non-Qualified Stock Option Agreement (New Hires/Subsequent
Grants).
4.12 Form of Sale Participation Agreement.
4.13 Registration Rights Agreement, dated August 20, 1998, between the Company
and KKR 1996 Fund L.P. (filed as Exhibit 10.4 to the Company's
Registration Statement on Form S-4 (File No. 333-64893) and incorporated
herein by reference).
5 Opinion of Ronald P. Moran, Esq.
15 Letter in lieu of consent of Deloitte & Touche LLP.
23.1 Consent of Deloitte & Touche LLP, independent auditors, with respect to
the Company.
23.2 Consent of Ronald P. Moran, Esq. (included as part of its opinion filed as
Exhibit 5 hereto).
II-6
EVENFLO OWNERSHIP PLAN
1. Purpose of Plan
The Evenflo Ownership Plan (the "Plan") is designed:
(a) to promote the long term financial interests and growth of Evenflo
Company, Inc. (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) "Board of Directors" means the Board of Directors of the Company.
(b) "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.
(c) "Committee" means the Compensation Committee of the Board of
Directors.
(d) "Common Stock" or "Share" means common stock of the Company which may
be authorized but unissued, or issued and reacquired.
(e) "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.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
<PAGE>
2
(g) "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.
(h) "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, Non-Qualified 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.
(i) "Grant Agreement" means an agreement between the Company and a
Participant that sets forth the terms, conditions and limitations applicable to
a Grant.
(j) "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.
(k) "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.
(l) "Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
(m) "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.
(n) "Stock Options" means the collective reference to "Incentive Stock
Options" and "Non-Qualified Stock Options".
(o) "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.
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)
<PAGE>
3
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 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.
5. Grants
From time to time, the Committee will determine the forms and amounts of
Grants for Participants. Such Grants may take the following forms in the
Committee's sole discretion:
(a) Incentive Stock Options - These are stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended ("Code"), to
purchase Common Stock. In addition to other restrictions contained in the Plan,
an option granted under this Paragraph 5(a), (i) may not be exercised more than
10 years after the date it is granted, (ii) may not have an
<PAGE>
4
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 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.
<PAGE>
5
(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.
(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
<PAGE>
6
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
1,850,000 shares of the authorized Common Stock as of the effective date of the
Plan. The number of Shares subject to Grants under this Plan to any one
Participant shall not be more than 1,000,000 shares. Unless restricted by
applicable law, Shares related to Grants that are forfeited, terminated,
cancelled or expire unexercised, shall immediately become available for Grants.
(b) No Grants shall be made under the Plan beyond ten years after the
effective date of the Plan, but the terms of Grants made on or before the
expiration of the Plan may extend beyond such expiration. At the time a Grant is
made or amended or the terms or conditions of a Grant are changed, the Committee
may provide for limitations or conditions on such Grant.
(c) Nothing contained herein shall affect the right of the 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.
(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
<PAGE>
7
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.
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
<PAGE>
8
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.
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
<PAGE>
9
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, 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 Stock-Based 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
Board of Directors and shall terminate ten years later, subject to earlier
termination by the Board of Directors pursuant to Paragraph 10.
INITIAL GRANT
FORM OF MANAGEMENT STOCKHOLDER'S AGREEMENT
This Management Stockholder's Agreement (this "Agreement") is
entered into as of March __, 2000 between EVENFLO COMPANY, INC., 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 Class A Common Stock, par
value $1.00 per share (the "Common Stock"), to key employees of the Company and
certain other investors at a price of $5.00 per share of Common Stock.
This Agreement is one of several other agreements ("Other
Purchasers' Agreements") which have been, or which in the future will be,
entered into between the Company and other individuals who are or will be key
employees of the Company or one of its subsidiaries (collectively, the "Other
Purchasers"). In addition, the Company has also entered into, and may in the
future enter into, agreements with other purchasers pursuant to which such other
purchasers 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 $5.00 per share of
Common Stock pursuant to the terms of the Evenflo Ownership Plan (the "Option
Plan") and the "Non-Qualified Stock Option Agreement" attached hereto as Exhibit
A.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the Parties agree as follows:
1. Purchase of Stock; Issuance of Options.
(a) Subject to the terms and conditions hereinafter set forth, the
Purchaser hereby subscribes for and shall purchase, and the Company shall
sell to the Purchaser and deliver to the Purchaser (or, at the Purchaser's
option, the Purchaser's Trust (as hereinafter defined)), the Purchase
Stock at a purchase price of $5.00 per share on __________ __, 2000 (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.
<PAGE>
2
(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 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
<PAGE>
3
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 MARCH ___, 2000 BETWEEN EVENFLO
COMPANY, INC. (THE "COMPANY") AND THE PURCHASER NAMED ON THE FACE
HEREOF (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY)."
(c) The Purchaser acknowledges that he has been advised that (i) the
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
<PAGE>
4
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.
(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.
<PAGE>
5
If at any time after the fifth anniversary of the Purchase Date, the
Purchaser receives a bona fide offer to purchase any or all of his shares of
Stock (the "Offer") from a third party (the "Offeror") which the Purchaser
wishes to accept, the Purchaser shall cause the Offer to be reduced to writing
and shall notify the Company in writing of his wish to accept the Offer. The
Purchaser's notice shall contain an irrevocable offer to sell such shares of
Stock to the Company (in the manner set forth below) at a purchase price equal
to the price contained in, and on the same terms and conditions of, the Offer,
and shall be accompanied by a true copy of the Offer (which shall identify the
Offeror). At any time within 30 days after the date of the receipt by the
Company of the Purchaser's notice, the Company shall have the right and option
to purchase, or to arrange for a third party to purchase, all of the shares of
Stock covered by the Offer either (i) at the same price and on the same terms
and conditions as the Offer or (ii) if the Offer includes any consideration
other than cash, then at the sole option of the Company, at the equivalent all
cash price, determined in good faith by the Company's Board of Directors, by
delivering a certified bank check or checks in the appropriate amount (and any
such non-cash consideration to be paid) to the Purchaser at the principal office
of the Company against delivery of certificates or other instruments
representing the shares of the Purchase Stock so purchased, appropriately
endorsed by the Purchaser. If at the end of such 30 day period, the Company has
not tendered the purchase price for such shares in the manner set forth above,
the Purchaser may during the succeeding 30 day period sell not less than all of
the shares of Stock covered by the Offer to the Offeror at a price and on terms
no less favorable to the Purchaser than those contained in the Offer. Promptly
after such sale, the Purchaser shall notify the Company of the consummation
thereof and shall furnish such evidence of the completion and time of completion
of such sale and of the terms thereof as may reasonably be requested by the
Company. If, at the end of 30 days following the expiration of the 30 day period
for the Company to purchase the Stock, the Purchaser has not completed the sale
of such shares of the Stock as aforesaid, all the restrictions on sale, transfer
or assignment contained in this Agreement shall again be in effect with respect
to such shares of the Stock.
5. Purchaser's Resale of Stock and Options to the Company Upon The
Purchaser's Death or Disability.
(a) Except as otherwise provided herein, if at any time prior to the
fifth anniversary of the Purchase Date, (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
<PAGE>
6
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 cancelling the Options so terminated
appropriately endorsed or executed by the Purchaser, the Purchaser's Estate or
the Purchaser's Trust, or his or its duly authorized representative. For
purposes of this Agreement, Purchaser shall be deemed to have a "Permanent
Disability" 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 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
<PAGE>
7
determined as if no Event had occurred in which case, solely for purposes of
this proviso, the Repurchase Calculation Date shall be determined as if no Event
had occurred). All Options exercisable as of the date of a Redemption Notice
shall continue to be exercisable until the repurchase pursuant to such
Redemption Notice.
(c) Notwithstanding any other provision of this Section 5 to the
contrary and subject to Section 11, the Purchaser, the Purchaser's Estate or the
Purchaser's Trust, as the case may be, shall have the right to withdraw any
Redemption Notice which has been pending for 60 or more days and which has
remained unsatisfied because of the provisions of Section 5(b).
6. The Company's Option to Repurchase Stock and Options of
Purchaser.
(a) If, on or prior to the fifth anniversary of the Purchase Date,
(i) the Purchaser's active employment with the Company (and/or, if applicable,
its subsidiaries) is voluntarily or involuntarily terminated for any reason
whatsoever, with or without Cause, (ii) the beneficiaries of a Purchaser's Trust
shall include any person or entity other than the Purchaser, his spouse or his
lineal descendants, or (iii) the Purchaser shall effect a transfer of any of the
Stock other than as permitted in this Agreement (alternatively, a "Call Event"),
the Company shall have the right to purchase all, but not less than all, of the
shares of the Stock then held by the Purchaser, the Purchaser's Estate or a
Purchaser's Trust at the Section 6 Repurchase Price determined in accordance
with Section 7 hereof; provided, however, that if the termination of employment
results from (A) the death or permanent disability of the Purchaser or (B) the
Retirement (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
<PAGE>
8
and appropriate documents cancelling the Options so terminated, appropriately
endorsed or executed by the Purchaser, the Purchaser's Trust or his or its
authorized representative.
(c) Notwithstanding any other provision of this Section 6 to the
contrary and subject to Section 11, if there exists and is continuing any Event,
the Company shall delay the repurchase of any of the 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.
(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 $5.00 plus the
amount, if any, by which the Book Value Per Share (as defined in Section 7(d))
as of the Repurchase Calculation Date exceeds $5.00. After a Public Offering,
the Section 5 Repurchase Price shall be a per share Repurchase Price equal to
$5.00 plus the amount, if any, by which the Market Price Per Share as of the
Repurchase Calculation Date exceeds $5.00.
(c) Prior to a Public Offering, the Section 6 Repurchase Price shall
be a per share Repurchase Price equal to the lesser of (i) the Book Value Per
Share (as defined in paragraph (d) below) or (ii) $5.00 plus (x) the Percentage
(as defined below) multiplied by (y) the amount, if any, by which the Book Value
Per Share as of the Repurchase Calculation Date
<PAGE>
9
exceeds $5.00. 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) $5.00 plus (a) the Percentage multiplied by (b) the amount, if any, by
which the Market Price Per Share as of the Repurchase Calculation Date exceeds
$5.00; provided, however, that in the event of Purchaser's termination without
Cause by the Company (and/or, if applicable, its subsidiaries) or with Good
Reason by the Purchaser, the Section 6 Repurchase Price shall be the Book Value
Per Share or Market Price Per Share, as the case may be. For purposes of this
Agreement the following definitions shall apply: "Cause" shall mean (i) the
Purchaser's willful and continued failure to perform Purchaser's duties with
respect to the Company or its subsidiaries which continues beyond ten days after
a written demand for substantial performance is delivered to Purchaser by the
Company or (ii) misconduct by Purchaser involving (x) dishonesty or breach of
trust in connection with Purchaser's employment which is reasonably likely to be
injurious to the Company or (y) conduct which would be a reasonable basis for an
indictment of Purchaser for a felony or for a misdemeanor involving moral
turpitude; and "Good Reason" shall mean (i) a material reduction in Purchaser's
base salary or (ii) a substantial reduction in Purchaser's duties and
responsibilities other than as approved by the Chief Executive Officer or
President of the Company.
The "Percentage" shall be determined as follows:
Repurchase Calculation Date Percentage
- --------------------------- ----------
Eligibility Date through and including the first
anniversary of the Eligibility Date 0%
After the first anniversary of the Eligibility Date
through and including the second anniversary of the
Eligibility Date 20%
After the second anniversary of the Eligibility Date
through and including the third anniversary of the
Eligibility Date 40%
After the third anniversary of the Eligibility Date
through and including the fourth anniversary of the
Eligibility Date 60%
After the fourth anniversary of the Eligibility Date
through and including the fifth anniversary of the
Eligibility Date 80%
After the fifth anniversary of the Eligibility Date 100%
For purposes of the foregoing, Eligibility Date shall mean August
20, 1998.
(d) For purposes of this Agreement, "Book Value Per Share" shall
mean book value per common share on a fully diluted basis determined in
accordance with generally accepted accounting principles, excluding any
extraordinary or unusual items or the effects of purchase accounting adjustments
and amortization thereof, as determined in the discretion of the Compensation
Committee of the Board of Directors of the Company; provided that until the date
<PAGE>
10
that the foregoing calculation results in a Book Value Per Share of $5.00 or a
per share amount in excess thereof, Book Value Per Share shall be deemed to
equal $5.00 (the "Initial Base Value") if EBITDA (defined as earnings before
interest, taxes, depreciation and amortization and before such extraordinary and
unusual items as determined in the discretion of the Board of Directors of the
Company) for the preceding fiscal year exceeds EBITDA of the next preceding
completed fiscal year. In the event that (A) EBITDA for the preceding completed
fiscal year is lower than or equal to EBITDA of the next preceding completed
fiscal year and (B) Book Value Per Share as calculated in accordance with the
preceding sentence without giving effect to the proviso thereto is less than
$5.00 per share, then Book Value Per Share shall equal the Initial Base Value
less the net loss per share for such fiscal year as calculated in accordance
with the preceding sentence (the "Adjusted Base Value"). In any subsequent year
in which clauses (A) and (B) of the preceding sentence are satisfied, the
Adjusted Base Value shall be further reduced by the calculation of net loss per
share for such preceding completed fiscal year. In the event that the Initial
Base Value has been previously adjusted and (A) EBITDA for the preceding
completed fiscal year is greater than EBITDA of the next preceding completed
fiscal year and (B) Book Value Per Share as calculated in accordance with the
first sentence of this definition without giving effect to the proviso thereto
is less than $5.00 per share, then Book Value Per Share shall be equal to the
greater of the Adjusted Base Value and the amount derived by calculating Book
Value Per Share.
(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 Common Stock held by any of the KKR Affiliates (as defined
below); 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 or any other nationally recognized stock exchange at the end
of the Repurchase Calculation Date. If the Common Stock is not so listed or
reported by NASDAQ or any other nationally recognized stock exchange, 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
<PAGE>
11
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 $5.00 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 or by other
acquisition of shares of Common Stock.
(b) All outstanding Options granted to the Purchaser under the
Option Plan or otherwise, whether or not then exercisable, will be automatically
terminated upon the payment by the Company to the Purchaser (if not otherwise
terminated pursuant to Section 3.2 of the Non-Qualified Stock Option Agreement
relating to such Options), pursuant to the provisions of Sections 5 or 6 of this
Agreement, of an amount equal to the Option Excess Price. If the Option Excess
Price is zero or a negative number, all outstanding stock options granted to the
Purchaser under the Option Plan or otherwise, whether or not then exercisable,
shall be automatically terminated upon the repurchase of Stock as provided in
Sections 5 or 6. The Option Excess Price is the excess, if any, of the Section 5
Repurchase Price or the Section 6 Repurchase Price, depending on which
Repurchase Price is being used to repurchase the remainder of the Stock, over
the option 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 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 Purchase Stock, when issued and delivered in accordance with the
terms hereof, will be duly and validly issued, fully paid and nonassessable.
(b) If the Company shall have engaged in a Public Offering, the
Company will file the reports required to be filed by it under the Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder, to the
extent required from time to time to enable the Purchaser to sell shares of
Stock without registration under the Act within the limitations of the
<PAGE>
12
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
August 20, 1998 between the Company and KKR 1996 Fund L.P. (the "Registration
Rights Agreement") and, in the case of a Qualified Public Offering and subject
to the limitations set forth in this Section 10, shall have all of the rights
and privileges of the Registration Rights Agreement, in each case as if the
Purchaser were an original party (other than the Company) thereto; provided,
however, that the Purchaser shall not have any rights to request registration
under Section 3 of the Registration Rights Agreement; and provided further, that
the Purchaser shall not be bound by any amendments to the Registration Rights
Agreement unless Purchaser consents thereto. Notwithstanding anything to the
contrary contained in the Registration Rights Agreement, the Purchaser's rights
and obligations under the Registration Rights Agreement shall be subject to the
limitations and additional obligations set forth in this Section 10. All shares
of Stock purchased by the Purchaser pursuant to this Agreement and held by the
Purchaser, the Purchaser's Trust or the Purchaser's Estate, including shares
purchased upon the exercise of Options, shall be deemed to be Registrable
Securities as defined in the Registration Rights Agreement.
(b) The Company will promptly notify the Purchaser in writing (a
"Notice") of any proposed registration (a "Proposed Registration"). 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
<PAGE>
13
(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).
(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.
<PAGE>
14
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.
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
<PAGE>
15
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 KKR 1996 Fund 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 other investors, but only if such merger, reorganization, business
combination, liquidation or sale of Common Stock results in KKR 1996 Fund 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.
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
<PAGE>
16
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.
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
<PAGE>
17
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.
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.
<PAGE>
18
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.
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
<PAGE>
19
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, member, 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).
(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).
<PAGE>
20
(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.
EVENFLO COMPANY, INC.
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.]
New Hires/Subsequent Grants
FORM OF MANAGEMENT STOCKHOLDER'S AGREEMENT
This Management Stockholder's Agreement (this "Agreement") is
entered into as of March __, 2000 between EVENFLO COMPANY, INC., 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 Class A Common Stock, par
value $1.00 per share (the "Common Stock"), to key employees of the Company and
certain other investors at a price of $5.00 per share of Common Stock.
This Agreement is one of several other agreements ("Other
Purchasers' Agreements") which have been, or which in the future will be,
entered into between the Company and other individuals who are or will be key
employees of the Company or one of its subsidiaries (collectively, the "Other
Purchasers"). In addition, the Company has also entered into, and may in the
future enter into, agreements with other purchasers pursuant to which such other
purchasers 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 $5.00 per share of
Common Stock pursuant to the terms of the Evenflo Ownership Plan (the "Option
Plan") and the "Non-Qualified Stock Option Agreement" attached hereto as Exhibit
A.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the Parties agree as follows:
1. Purchase of Stock; Issuance of Options.
(a) Subject to the terms and conditions hereinafter set forth, the
Purchaser hereby subscribes for and shall purchase, and the Company shall
sell to the Purchaser and deliver to the Purchaser (or, at the Purchaser's
option, the Purchaser's Trust (as hereinafter defined)), the Purchase
Stock at a purchase price of $5.00 per share on __________ __, 2000 (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
<PAGE>
2
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 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
<PAGE>
3
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 MARCH ___, 2000 BETWEEN EVENFLO
COMPANY, INC. (THE "COMPANY") AND THE PURCHASER NAMED ON THE FACE
HEREOF (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY)."
(c) The Purchaser acknowledges that he has been advised that (i) the
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.
<PAGE>
4
(d) If any shares of the Stock are to be disposed of in accordance
with Rule 144 under the Act or otherwise, the Purchaser shall promptly notify
the Company of such intended disposition and shall deliver to the Company at or
prior to the time of such disposition such documentation as the Company may
reasonably request in connection with such sale and, in the case of a
disposition pursuant to Rule 144, shall deliver to the Company an executed copy
of any notice on Form 144 required to be filed with the Securities and Exchange
Commission (the "SEC").
(e) The Purchaser agrees that, if any shares of the capital stock of
the Company are offered to the public pursuant to an effective registration
statement under the Act (other than registration of securities issued under an
employee plan), the Purchaser will not effect any public sale or distribution of
any shares of the Stock not covered by such registration statement within 7 days
prior to, or within 180 days after, the effective date of such registration
statement, unless otherwise agreed to in writing by the Company.
(f) The Purchaser represents and warrants that (i) he has received
and reviewed the documents comprising the Prospectus (the "Prospectus") relating
to the 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.
(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
<PAGE>
5
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, the
Purchaser receives a bona fide offer to purchase any or all of his shares of
Stock (the "Offer") from a third party (the "Offeror") which the Purchaser
wishes to accept, the Purchaser shall cause the Offer to be reduced to writing
and shall notify the Company in writing of his wish to accept the Offer. The
Purchaser's notice shall contain an irrevocable offer to sell such shares of
Stock to the Company (in the manner set forth below) at a purchase price equal
to the price contained in, and on the same terms and conditions of, the Offer,
and shall be accompanied by a true copy of the Offer (which shall identify the
Offeror). At any time within 30 days after the date of the receipt by the
Company of the Purchaser's notice, the Company shall have the right and option
to purchase, or to arrange for a third party to purchase, all of the shares of
Stock covered by the Offer either (i) at the same price and on the same terms
and conditions as the Offer or (ii) if the Offer includes any consideration
other than cash, then at the sole option of the Company, at the equivalent all
cash price, determined in good faith by the Company's Board of Directors, by
delivering a certified bank check or checks in the appropriate amount (and any
such non-cash consideration to be paid) to the Purchaser at the principal office
of the Company against delivery of certificates or other instruments
representing the shares of the Purchase Stock so purchased, appropriately
endorsed by the Purchaser. If at the end of such 30 day period, the Company has
not tendered the purchase price for such shares in the manner set forth above,
the Purchaser may during the succeeding 30 day period sell not less than all of
the shares of Stock covered by the Offer to the Offeror at a price and on terms
no less favorable to the Purchaser than those contained in the Offer. Promptly
after such sale, the Purchaser shall notify the Company of the consummation
thereof and shall furnish such evidence of the completion and time of completion
of such sale and of the terms thereof as may reasonably be requested by the
Company. If, at the end of 30 days following the expiration of the 30 day period
for the Company to purchase the Stock, the Purchaser has not completed the sale
of such shares of the Stock as aforesaid, all the restrictions on sale, transfer
or assignment contained in this Agreement shall again be in effect with respect
to such shares of the Stock.
5. Purchaser's Resale of Stock and Options to the Company Upon The
Purchaser's Death or Disability.
(a) Except as otherwise provided herein, if at any time prior to the
fifth anniversary of the Purchase Date, (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
<PAGE>
6
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 cancelling the Options so terminated
appropriately endorsed or executed by the Purchaser, the Purchaser's Estate or
the Purchaser's Trust, or his or its duly authorized representative. For
purposes of this Agreement, Purchaser shall be deemed to have a "Permanent
Disability" 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 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,
<PAGE>
7
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 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
<PAGE>
8
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 cancelling the Options so terminated, appropriately
endorsed or executed by the Purchaser, the Purchaser's Trust or his or its
authorized representative.
(c) Notwithstanding any other provision of this Section 6 to the
contrary and subject to Section 11, if there exists and is continuing any Event,
the Company shall delay the repurchase of any of the 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.
(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 $5.00 plus the
amount, if any, by which the Book Value Per Share (as defined in Section 7(d))
as of the Repurchase Calculation Date exceeds $5.00. After a Public Offering,
the Section 5 Repurchase Price shall be a per share Repurchase Price equal to
$5.00 plus the amount, if any, by which the Market Price Per Share as of the
Repurchase Calculation Date exceeds $5.00.
<PAGE>
9
(c) Prior to a Public Offering, the Section 6 Repurchase Price shall
be a per share Repurchase Price equal to the lesser of (i) the Book Value Per
Share (as defined in paragraph (d) below) or (ii) $5.00 plus (x) the Percentage
(as defined below) multiplied by (y) the amount, if any, by which the Book Value
Per Share as of the Repurchase Calculation Date exceeds $5.00. After a Public
Offering, the Section 6 Repurchase Price shall be a per share Repurchase Price
equal to the lesser of (i) Market Price Per Share or (ii) $5.00 plus (a) the
Percentage multiplied by (b) the amount, if any, by which the Market Price Per
Share as of the Repurchase Calculation Date exceeds $5.00; provided, however,
that in the event of Purchaser's termination without Cause by the Company
(and/or, if applicable, its subsidiaries) or with Good Reason by the Purchaser,
the Section 6 Repurchase Price shall be the Book Value Per Share or Market Price
Per Share, as the case may be. For purposes of this Agreement the following
definitions shall apply: "Cause" shall mean (i) the Purchaser's willful and
continued failure to perform Purchaser's duties with respect to the Company or
its subsidiaries which continues beyond ten days after a written demand for
substantial performance is delivered to Purchaser by the Company or (ii)
misconduct by Purchaser involving (x) dishonesty or breach of trust in
connection with Purchaser's employment which is reasonably likely to be
injurious to the Company or (y) conduct which would be a reasonable basis for an
indictment of Purchaser for a felony or for a misdemeanor involving moral
turpitude; and "Good Reason" shall mean (i) a material reduction in Purchaser's
base salary or (ii) a substantial reduction in Purchaser's duties and
responsibilities other than as approved by the Chief Executive Officer or
President of the Company.
The "Percentage" shall be determined as follows:
Repurchase Calculation Date Percentage
- --------------------------- ----------
Purchase Date through and including the first
anniversary of the Purchase Date 0%
After the first anniversary of the Purchase Date
through and including the second anniversary of the
Purchase Date 20%
After the second anniversary of the Purchase Date
through and including the third anniversary of the
Purchase Date 40%
After the third anniversary of the Purchase Date
through and including the fourth anniversary of the
Purchase Date 60%
After the fourth anniversary of the Purchase Date
through and including the fifth anniversary of the
Purchase Date 80%
After the fifth anniversary of the Purchase Date 100%
(d) For purposes of this Agreement, "Book Value Per Share" shall
mean book value per common share on a fully diluted basis determined in
accordance with generally accepted accounting principles, excluding any
extraordinary or unusual items or the effects of purchase accounting adjustments
and amortization thereof, as determined in the discretion of the
<PAGE>
10
Compensation Committee of the Board of Directors of the Company; provided that
until the date that the foregoing calculation results in a Book Value Per Share
of $5.00 or a per share amount in excess thereof, Book Value Per Share shall be
deemed to equal $5.00 (the "Initial Base Value") if EBITDA (defined as earnings
before interest, taxes, depreciation and amortization and before such
extraordinary and unusual items as determined in the discretion of the Board of
Directors of the Company) for the preceding fiscal year exceeds EBITDA of the
next preceding completed fiscal year. In the event that (A) EBITDA for the
preceding completed fiscal year is lower than or equal to EBITDA of the next
preceding completed fiscal year and (B) Book Value Per Share as calculated in
accordance with the preceding sentence without giving effect to the proviso
thereto is less than $5.00 per share, then Book Value Per Share shall equal the
Initial Base Value less the net loss per share for such fiscal year as
calculated in accordance with the preceding sentence (the "Adjusted Base
Value"). In any subsequent year in which clauses (A) and (B) of the preceding
sentence are satisfied, the Adjusted Base Value shall be further reduced by the
calculation of net loss per share for such preceding completed fiscal year. In
the event that the Initial Base Value has been previously adjusted and (A)
EBITDA for the preceding completed fiscal year is greater than EBITDA of the
next preceding completed fiscal year and (B) Book Value Per Share as calculated
in accordance with the first sentence of this definition without giving effect
to the proviso thereto is less than $5.00 per share, then Book Value Per Share
shall be equal to the greater of the Adjusted Base Value and the amount derived
by calculating Book Value Per Share.
(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 Common Stock held by any of the KKR Affiliates (as defined
below); 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 or any other nationally recognized stock exchange at the end
of the Repurchase Calculation Date. If the Common Stock is not so listed or
reported by NASDAQ or any other nationally recognized stock exchange, then the
Market Price Per Share shall be the Book Value Per Share.
<PAGE>
11
(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 $5.00 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 or by other
acquisition of shares of Common Stock.
(b) All outstanding Options granted to the Purchaser under the
Option Plan or otherwise, whether or not then exercisable, will be automatically
terminated upon the payment by the Company to the Purchaser (if not otherwise
terminated pursuant to Section 3.2 of the Non-Qualified Stock Option Agreement
relating to such Options), pursuant to the provisions of Sections 5 or 6 of this
Agreement, of an amount equal to the Option Excess Price. If the Option Excess
Price is zero or a negative number, all outstanding stock options granted to the
Purchaser under the Option Plan or otherwise, whether or not then exercisable,
shall be automatically terminated upon the repurchase of Stock as provided in
Sections 5 or 6. The Option Excess Price is the excess, if any, of the Section 5
Repurchase Price or the Section 6 Repurchase Price, depending on which
Repurchase Price is being used to repurchase the remainder of the Stock, over
the option 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 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 Purchase Stock, when issued and delivered in accordance with the
terms hereof, will be duly and validly issued, fully paid and nonassessable.
(b) If the Company shall have engaged in a Public Offering, the
Company will file the reports required to be filed by it under the Act and the
Exchange Act and the rules and
<PAGE>
12
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
August 20, 1998 between the Company and KKR 1996 Fund L.P. (the "Registration
Rights Agreement") and, in the case of a Qualified Public Offering and subject
to the limitations set forth in this Section 10, shall have all of the rights
and privileges of the Registration Rights Agreement, in each case as if the
Purchaser were an original party (other than the Company) thereto; provided,
however, that the Purchaser shall not have any rights to request registration
under Section 3 of the Registration Rights Agreement; and provided further, that
the Purchaser shall not be bound by any amendments to the Registration Rights
Agreement unless Purchaser consents thereto. Notwithstanding anything to the
contrary contained in the Registration Rights Agreement, the Purchaser's rights
and obligations under the Registration Rights Agreement shall be subject to the
limitations and additional obligations set forth in this Section 10. All shares
of Stock purchased by the Purchaser pursuant to this Agreement and held by the
Purchaser, the Purchaser's Trust or the Purchaser's Estate, including shares
purchased upon the exercise of Options, shall be deemed to be Registrable
Securities as defined in the Registration Rights Agreement.
(b) The Company will promptly notify the Purchaser in writing (a
"Notice") of any proposed registration (a "Proposed Registration"). 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
<PAGE>
13
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).
(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.
<PAGE>
14
(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.
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.
<PAGE>
15
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 KKR 1996 Fund 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 other investors, but only if such merger, reorganization, business
combination, liquidation or sale of Common Stock results in KKR 1996 Fund 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.
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.
<PAGE>
16
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.
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.
<PAGE>
17
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.
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.
<PAGE>
18
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.
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
<PAGE>
19
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,
member, 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).
(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
<PAGE>
20
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.
EVENFLO COMPANY, INC.
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.]
INITIAL GRANT
EVENFLO OWNERSHIP PLAN
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of March __, 2000, is made by and between
Evenflo Company, Inc., 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 $1.00 per share (the "Common
Stock");
WHEREAS, the Company wishes to carry out the Plan (as hereinafter
defined), the terms of which are hereby incorporated by reference and made a
part of this Agreement; and
WHEREAS, the Committee (as hereinafter defined), appointed to
administer the Plan, has determined that it would be to the advantage and best
interest of the Company and its stockholders to grant the Options (as
hereinafter defined) provided for herein to the Optionee as an incentive for
increased efforts during his term of office with the Company or its Subsidiaries
or Affiliates, and has advised the Company thereof and instructed the
undersigned officers to issue said Options;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall
have the meaning specified in the Plan or below unless the context clearly
indicates to the contrary.
Section 1.1 - Affiliate
"Affiliate" shall mean, with respect to the Company, any corporation
directly or indirectly controlling, controlled by, or under common control with,
the Company or any other entity designated by the Board of Directors of the
Company in which the Company or an Affiliate has an interest.
<PAGE>
2
Section 1.2 - Cause
"Cause" shall mean (i) the Optionee'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 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 on which the Options provided for
in this Agreement were granted.
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.
<PAGE>
3
Section 1.8 - Management Stockholder's Agreement
"Management Stockholder's Agreement" shall mean the Management
Stockholder's Agreement dated as of the date hereof between the Optionee and the
Company.
Section 1.9 - Options
"Options" shall mean the non-qualified options to purchase Common
Stock granted under this Agreement.
Section 1.10 - 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 1.11 - 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 1.12 - Plan
"Plan" shall mean the Evenflo Ownership Plan.
Section 1.13 - Pronouns
The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.14 - Reorganization Date
"Reorganization Date" shall mean August 20, 1998.
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
<PAGE>
4
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.
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 $5.00 per share without commission or other
charge.
Section 2.3 - Consideration to the Company
In consideration of the granting of these Options by the Company,
the Optionee agrees to render faithful and efficient services to the Company or
a Subsidiary or Affiliate, with such duties and responsibilities as the Company
shall from time to time prescribe. Nothing in this Agreement or in the Plan
shall confer upon the Optionee any right to continue in the employ of the
Company or any Subsidiary or Affiliate or shall interfere with or restrict in
any way the rights of the Company and its Subsidiaries or Affiliates, which are
hereby expressly reserved, to terminate the employment of the Optionee at any
time for any reason whatsoever, with or without cause.
<PAGE>
5
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 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 Reorganization Date 20%
After the second anniversary
of the Reorganization Date 40%
After the third anniversary
of the Reorganization Date 60%
After the fourth anniversary
of the Reorganization Date 80%
After the fifth anniversary
of the Reorganization 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).
<PAGE>
6
(b) Notwithstanding the foregoing, no Option shall become
exercisable as to any additional shares of Common Stock following the
termination of employment of the Optionee for any reason other than a
termination of employment because of death, Permanent Disability or Retirement
of the Optionee and any Option (other than as provided in the next succeeding
sentence) which is 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, reclassification, liquidation or
dissolution, the Committee shall give the Optionee notice of such event if
the Option has then neither been fully exercised nor become unexercisable
under this Section 3.2.
<PAGE>
7
ARTICLE IV
EXERCISE OF OPTION
Section 4.1 - Person Eligible to Exercise
Except as otherwise provided in the Management Stockholder's
Agreement, during the lifetime of the Optionee, only he may exercise an Option
or any portion thereof. After the death of the Optionee, any exercisable portion
of an Option may, prior to the time when an Option becomes unexercisable under
Section 3.2, be exercised by his personal representative or by any person
empowered to do so under the Optionee's will or under the then applicable laws
of descent and distribution.
Section 4.2 - Partial Exercise
Any exercisable portion of an Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Section
3.2; provided, however, that any partial exercise shall be for whole shares of
Common Stock only.
Section 4.3 - Manner of Exercise
An Option, or any exercisable portion thereof, may be exercised
solely by delivering to the Secretary or his office all of the following prior
to the time when the Option or such portion becomes unexercisable under Section
3.2:
(a) Notice in writing signed by the Optionee or the other person
then entitled to exercise the Option or portion thereof, stating that the
Option or portion thereof is thereby exercised, such notice complying with
all applicable rules established by the Committee;
(b) Full payment (in cash, by check or by a combination thereof) for
the shares with respect to which such Option or portion thereof is
exercised;
(c) A bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the
shares of stock are being acquired for his own account, for investment and
without any present intention of distributing or reselling said shares or
any of them except as may be permitted under the Securities Act of 1933,
as amended (the "Act"), and then applicable rules and regulations
thereunder, and that the Optionee or other person then entitled to
exercise such Option or portion thereof will indemnify the Company against
and hold it free and harmless from any loss, damage, expense or liability
resulting to the Company if any sale or distribution of the shares by such
person is contrary to the representation and
<PAGE>
8
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
The holder of an Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares purchasable
upon the exercise of the Option or any portion thereof unless and until
certificates representing such shares shall have been issued by the Company to
such holder.
<PAGE>
9
ARTICLE V
MISCELLANEOUS
Section 5.1 - Administration
The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke
any such rules. All actions taken and all interpretations and determinations
made by the Committee shall be final and binding upon the Optionee, the Company
and all other interested persons. No member of the Committee shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or the Options. In its absolute discretion, the Board of
Directors may at any time and from time to time exercise any and all rights and
duties of the Committee under the Plan and this Agreement.
Section 5.2 - Options Not Transferable
Except as provided in the Management Stockholder's Agreement,
neither the Options nor any interest or right therein or part thereof shall be
liable for the debts, contracts or engagements of the Optionee or his successors
in interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that this Section 5.2 shall not
prevent transfers made solely for estate planning purposes or by will or by the
applicable laws of descent and distribution.
Section 5.3 - Shares to Be Reserved
The Company shall at all times during the term of the Options
reserve and keep available such number of shares of stock as will be sufficient
to satisfy the requirements of this Agreement.
Section 5.4 - Notices
Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary, and any
notice to be given to the Optionee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section
5.4, either party may hereafter designate a different address for notices to be
given to him. Any notice which is required to be given to the Optionee shall, if
the Optionee is then deceased, be given to the Optionee's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section 5.4. Any notice shall
have been deemed duly
<PAGE>
10
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
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
<PAGE>
11
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.
<PAGE>
12
IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto.
EVENFLO COMPANY, INC.
By_______________________________________
Name:
Title:
Aggregate number of shares of Common
Stock subject to the Option granted
__________________________________ hereunder subject to (100% of total
Optionee Name (Print) number of shares):
________________
__________________________________
Optionee Signature
__________________________________
__________________________________
Optionee's Address
Optionee's Taxpayer
Identification Number:
________________________
NEW HIRES/SUBSEQUENT GRANTS
EVENFLO OWNERSHIP PLAN
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of March __, 2000, is made by and between
Evenflo Company, Inc., 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 $1.00 per share (the "Common
Stock");
WHEREAS, the Company wishes to carry out the Plan (as hereinafter
defined), the terms of which are hereby incorporated by reference and made a
part of this Agreement; and
WHEREAS, the Committee (as hereinafter defined), appointed to
administer the Plan, has determined that it would be to the advantage and best
interest of the Company and its stockholders to grant the Options (as
hereinafter defined) provided for herein to the Optionee as an incentive for
increased efforts during his term of office with the Company or its Subsidiaries
or Affiliates, and has advised the Company thereof and instructed the
undersigned officers to issue said Options;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall
have the meaning specified in the Plan or below unless the context clearly
indicates to the contrary.
Section 1.1 - Affiliate
"Affiliate" shall mean, with respect to the Company, any corporation
directly or indirectly controlling, controlled by, or under common control with,
the Company or any other entity designated by the Board of Directors of the
Company in which the Company or an Affiliate has an interest.
<PAGE>
2
Section 1.2 - Cause
"Cause" shall mean (i) the Optionee'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 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 on which the Options provided for
in this Agreement were granted.
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.
<PAGE>
3
Section 1.8 - Management Stockholder's Agreement
"Management Stockholder's Agreement" shall mean the Management
Stockholder's Agreement dated as of the date hereof between the Optionee and the
Company.
Section 1.9 - Options
"Options" shall mean the non-qualified options to purchase Common
Stock granted under this Agreement.
Section 1.10 - 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 1.11 - 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 1.12 - Plan
"Plan" shall mean the Evenflo Ownership Plan.
Section 1.13 - Pronouns
The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.14 - 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.
<PAGE>
4
Section 1.15 - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.16 - 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 $5.00 per share without commission or other
charge.
Section 2.3 - Consideration to the Company
In consideration of the granting of these Options by the Company,
the Optionee agrees to render faithful and efficient services to the Company or
a Subsidiary or Affiliate, with such duties and responsibilities as the Company
shall from time to time prescribe. Nothing in this Agreement or in the Plan
shall confer upon the Optionee any right to continue in the employ of the
Company or any Subsidiary or Affiliate or shall interfere with or restrict in
any way the rights of the Company and its Subsidiaries or Affiliates, which are
hereby expressly reserved, to terminate the employment of the Optionee at any
time for any reason whatsoever, with or without cause.
Section 2.4 - Adjustments 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
<PAGE>
5
merger, consolidation, recapitalization, reclassification, stock split, stock
dividend, combination of shares, or otherwise, the Committee shall make an
appropriate and equitable adjustment in the number and kind of shares and/or the
amount of consideration as to which or for which, as the case may be, such
Option, or portions thereof then unexercised, shall be exercisable. Any such
adjustment made by the Committee shall be final and binding upon the Optionee,
the Company and all other interested persons.
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 Grant Date 20%
After the second anniversary
of the Grant Date 40%
After the third anniversary
of the Grant Date 60%
After the fourth anniversary
of the Grant Date 80%
After the fifth anniversary
of the Grant 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).
<PAGE>
6
(b) Notwithstanding the foregoing, no Option shall become
exercisable as to any additional shares of Common Stock following the
termination of employment of the Optionee for any reason other than a
termination of employment because of death, Permanent Disability or Retirement
of the Optionee and any Option (other than as provided in the next succeeding
sentence) which is 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, reclassification, liquidation or
dissolution, the Committee shall give the Optionee notice of such event if
the Option has then neither been fully exercised nor become unexercisable
under this Section 3.2.
<PAGE>
7
ARTICLE IV
EXERCISE OF OPTION
Section 4.1 - Person Eligible to Exercise
Except as otherwise provided in the Management Stockholder's
Agreement, during the lifetime of the Optionee, only he may exercise an Option
or any portion thereof. After the death of the Optionee, any exercisable portion
of an Option may, prior to the time when an Option becomes unexercisable under
Section 3.2, be exercised by his personal representative or by any person
empowered to do so under the Optionee's will or under the then applicable laws
of descent and distribution.
Section 4.2 - Partial Exercise
Any exercisable portion of an Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Section
3.2; provided, however, that any partial exercise shall be for whole shares of
Common Stock only.
Section 4.3 - Manner of Exercise
An Option, or any exercisable portion thereof, may be exercised
solely by delivering to the Secretary or his office all of the following prior
to the time when the Option or such portion becomes unexercisable under Section
3.2:
(a) Notice in writing signed by the Optionee or the other person
then entitled to exercise the Option or portion thereof, stating that the
Option or portion thereof is thereby exercised, such notice complying with
all applicable rules established by the Committee;
(b) Full payment (in cash, by check or by a combination thereof) for
the shares with respect to which such Option or portion thereof is
exercised;
(c) A bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the
shares of stock are being acquired for his own account, for investment and
without any present intention of distributing or reselling said shares or
any of them except as may be permitted under the Securities Act of 1933,
as amended (the "Act"), and then applicable rules and regulations
thereunder, and that the Optionee or other person then entitled to
exercise such Option or portion thereof will indemnify the Company against
and hold it free and harmless from any loss, damage, expense or liability
resulting to the Company if any sale or distribution of the shares by such
person is contrary to the representation and
<PAGE>
8
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
The holder of an Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares purchasable
upon the exercise of the Option or any portion thereof unless and until
certificates representing such shares shall have been issued by the Company to
such holder.
<PAGE>
9
ARTICLE V
MISCELLANEOUS
Section 5.1 - Administration
The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke
any such rules. All actions taken and all interpretations and determinations
made by the Committee shall be final and binding upon the Optionee, the Company
and all other interested persons. No member of the Committee shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or the Options. In its absolute discretion, the Board of
Directors may at any time and from time to time exercise any and all rights and
duties of the Committee under the Plan and this Agreement.
Section 5.2 - Options Not Transferable
Except as provided in the Management Stockholder's Agreement,
neither the Options nor any interest or right therein or part thereof shall be
liable for the debts, contracts or engagements of the Optionee or his successors
in interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that this Section 5.2 shall not
prevent transfers made solely for estate planning purposes or by will or by the
applicable laws of descent and distribution.
Section 5.3 - Shares to Be Reserved
The Company shall at all times during the term of the Options
reserve and keep available such number of shares of stock as will be sufficient
to satisfy the requirements of this Agreement.
Section 5.4 - Notices
Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary, and any
notice to be given to the Optionee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section
5.4, either party may hereafter designate a different address for notices to be
given to him. Any notice which is required to be given to the Optionee shall, if
the Optionee is then deceased, be given to the Optionee's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section 5.4. Any notice shall
have been deemed duly
<PAGE>
10
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
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
<PAGE>
11
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.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto.
EVENFLO COMPANY, INC.
By_______________________________________
Name:
Title:
Aggregate number of shares of Common
Stock subject to the Option granted
__________________________________ hereunder subject to (100% of total
Optionee Name (Print) number of shares):
________________
__________________________________
Optionee Signature
__________________________________
__________________________________
Optionee's Address
Optionee's Taxpayer
Identification Number:
________________________
FORM OF SALE PARTICIPATION AGREEMENT
March __, 2000
To: The Person whose name
and address are set forth
on the signature page hereof
Dear Sir or Madam:
You have entered into a Management Stockholder's Agreement, dated as
of the date hereof between Evenflo Company, Inc., a Delaware corporation (the
"Company"), and you (the "Stockholder's Agreement") relating to your ownership
and/or purchase of shares of the Class A Common Stock, par value $1.00 per
share, of the Company (the "Common Stock"). All capitalized terms used and not
defined herein shall have the meanings ascribed to them in the Stockholder's
Agreement. The "Investors," which term includes the KKR 1996 Fund, L.P. and its
affiliates, 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 the Investors (each, a "Selling
Party" and collectively, the "Selling Parties"), propose to sell for cash or any
other consideration any shares of Common Stock owned by them, in any transaction
other than a Public Offering (as defined in the Stockholder's Agreement) or a
sale to an affiliate of an Investor or a partner, executive or employee of
Kohlberg Kravis Roberts & Co. L.P. or an affiliate thereof who agrees in writing
to be bound by the provisions hereof (it being understood that if Common Stock
owned by an Investor is pledged to a financial institution as collateral for a
bona fide loan and such Common Stock is transferred to such financial
institution pursuant to the terms of the definitive agreements evidencing such
loan and pledge, such transfer shall not constitute a Proposed Sale hereunder),
the Investors 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
Party 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
pursuant to the Stockholder's Agreement 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
Party), the
<PAGE>
2
Common Stock so held by you will be so included as provided herein; 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 Party will furnish you, your Purchaser's Trust
or your Purchaser's Estate, as the case may be, with a copy of the Sale
Agreement, if any.
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 (i) the product of
(A) 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 (as defined
in the Stockholder's Agreement) 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 by the Investors and (B) the Percentage (as
defined in the Stockholder's Agreement), multiplied by (ii) the quotient
determined by dividing (1) the aggregate number of shares of Common Stock
proposed to be sold in the Proposed Sale by (2) the sum of (x) the aggregate
number of shares of Common Stock owned by all parties who have rights pursuant
to this Agreement and (y) the aggregate number of shares of Common Stock held by
the Investors. 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"), the Investors, 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. The Investors 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 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
<PAGE>
3
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 Party proposes to sell in the Proposed Sale. Such terms and
conditions shall include, without limitation: the sale price; the payment of
fees, commissions and expenses; the provision of, and representation and
warranty as to, information requested by the Selling Party; 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 a pro
rata share of 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.
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 Party,
execute and deliver a custody agreement and power of attorney in form and
substance satisfactory to the Selling
<PAGE>
4
Party 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 Party.
7. The obligations of the Investors 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. The
provisions of this Agreement shall apply, to the full extent set forth herein
with respect to the Common Stock, to any and all shares of capital stock which
may be issued in respect of, in exchange for, or substitution of the Common
Stock, by reason of any stock dividend, split, reverse split, combination,
recapitalization, liquidation, reclassification, merger, consolidation or
otherwise.
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 Stockholder's 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 the Investors 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>
5
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: Arthur Robinson, Esq.
(b) If to you, at the address set forth on the signature page
hereof;
(c) If to your Purchaser's Estate or Purchaser's Trust, at the
address provided to such parties 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, overnight delivery or
telecopy.
10. The laws of the State of New York 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 New York, as the Selling Parties 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. You hereby irrevocably and unconditionally waive trial by jury in any
legal action or proceeding in relation to this Agreement and for any
counterclaim therein.
11. Notwithstanding any other provision of this Agreement, none of
the officers or directors of KKR or any general partner, limited partner or
member of any affiliate or future general or limited partner or member of any
affiliate of KKR, shall have any personal liability for performance of any
obligation of such entity under this Agreement.
12. If KKR 1996 Fund, L.P. or [ ] transfers its interest in the
Company to an affiliate, such affiliate shall assume the obligations hereunder
of KKR 1996 Fund, L.P. or [ ], as the case may be.
It is the understanding of the undersigned that you are aware that
no Proposed Sale presently is contemplated and that such a sale may never occur.
If the foregoing accurately sets forth our agreement, please
acknowledge your acceptance thereof in the space provided below for that
purpose.
Very truly yours,
<PAGE>
6
THE INVESTORS:
KKR 1996 FUND L.P.
By: KKR Associates 1996 L.P., its general
partner
By: KKR 1996 GP LLC, its general partner
By: _____________________________________
Name: Marc Lipschultz
[ ]
By: _____________________________________
Name:
Accepted and agreed to:
By: ___________________________
___________________________
Address
March 2, 2000
Evenflo Company, Inc.
Northwoods Business Center II
707 Crossroads Court
Vandalia, Ohio 45377
Ladies and Gentlemen:
I am Vice President, General Counsel and Secretary of Evenflo Company,
Inc., 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") relating to
the issuance by the Company of 1,850,000 shares or options to acquire such
shares of Class A Common stock, par value $1.00 per share (collectively, the
"Shares"), pursuant to the Evenflo Ownership Plan (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
or 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,
<PAGE>
2
the legal capacity of natural persons, the authenticity of all documents
submitted to me as originals, the conformity to original documents of all
documents submitted to me as certified or photostatic copies, and the
authenticity of the originals of such latter documents.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, I hereby advise you that in my opinion the issuance
of the Shares has been duly authorized and, when issued and sold as contemplated
by the Plan, such Shares will be validly issued, fully paid and non-assessable.
I am a member of the Bars of the States of Ohio and New York and I do not
express any opinion herein concerning any law other than the federal laws of the
United states 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
Registration Statement.
Very truly yours,
/s/ Ronald P. Moran
- ----------------------------
Ronald P. Moran
[Letterhead of Deloitte & Touche]
February 25, 2000
Evenflo Company, Inc.
707 Crossroads Court
Vandalia, Ohio 45377
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 Evenflo Company, Inc. and subsidiaries for the periods ended
March 31, 1999 and 1998, June 30, 1999 and 1998, and September 30, 1999 and
1998, as indicated in our reports dated June 23, 1999, August 11, 1999 and
November 10, 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 quarters ended March 31, 1999, June 30,
1999 and September 30, 1999, are being used in this Registration Statement.
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.
/s/ Deloitte & Touche LLP
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Evenflo Company, Inc. on Form S-8 of our reports dated February 19, 1999 (May 6,
1999, with respect to the Note to the table in Note G) and May 6, l999,
appearing in the Amendment No. 3 to the Registration Statement (No. 333-64893)
of Evenflo Company, Inc. on Form S-4.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Dayton, Ohio
February 25, 2000
