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ARA Stock Options
Prospectus 1994B
THE ARA GROUP, INC.
ARA OWNERSHIP PROGRAM
Stock Options
14,644,387 Shares
Common Stock, Class B, $.01 Par Value
This Prospectus relates to up to 14,644,387 shares of the
Common Stock, Class B, $.01 par value ("Common Stock" or "Class B
Common Stock"), of The ARA Group, Inc. ("ARA" or the "Company")
being offered upon exercise of Options to purchase shares of
Common Stock heretofore or hereafter granted by the Company to
eligible employees of the Company and its subsidiaries under the
ARA Ownership Program (the "Program"). The Program consists of
the 1984 Stock Option Plan (the "1984 Option Plan") the 1987
Stock Option Plan (the "1987 Option Plan") and the 1991 Stock
Ownership Plan (the "1991 Ownership Plan").
There is no established public trading market for the Company's
Common Stock and each new management investor is required to be
bound by the terms of an Amended and Restated Stockholders'
Agreement (the "Stockholders' Agreement") which also binds all
other management investors. Management investors may transfer
their shares only in limited instances, and then only in
accordance with the terms of the Stockholders' Agreement.
______________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
________________________
Neither the delivery of this Prospectus nor any sale made
through its use shall, under any circumstances create any
implication that there has been no change in the affairs of the
Company since the date hereof. This Prospectus does not
constitute an offer or solicitation in any jurisdiction in which
such offer or solicitation is not authorized or in any
jurisdiction in which the Company is not qualified to make such
an offer or solicitation or to anyone to whom it is unlawful to
make such offer or solicitation.
________________________
The date of this Prospectus is July 20, 1994.
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TABLE OF CONTENTS
Page
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Available Information...................................... 2
Prospectus Summary......................................... 3
Questions and Answers...................................... 5
The ARA Ownership Program.................................. 15
The Deferred Payment Program............................... 16
Income Tax Considerations.................................. 17
Description of Equity Securities........................... 18
Experts.................................................... 20
Incorporation of Certain Documents by Reference............ 20
Annex A -- Amended and Restated Stockholders' Agreement.. A-1
Annex B -- Stock Option Exercise Form.................... B-1
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in
accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission" or the "SEC").
Reports, proxy statements and other information filed by the
Company may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W.
Washington, D.C., and at the Commission's Regional Offices at 75
Park Place, New York, New York; and 500 West Madison Street,
Chicago, Illinois. Copies of such material also may be obtained
from the public reference section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. at prescribed rates. In addition,
reports, proxy statements and other information concerning the
Company may be inspected at the offices of the Philadelphia Stock
Exchange, 1900 Market Street, Philadelphia, Pennsylvania.
The Company has filed with the Commission registration statements
relating to the shares of Common Stock offered hereby (herein,
together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which have been omitted in
accordance with the rules and regulations of the Commission. For
further information, the reader is referred to the Registration
Statement.
The Company will provide without charge to each person holding a
stock option granted under the Program, upon the request of such
person, a copy of any or all of the documents which are
incorporated by reference herein, other than exhibits to such
documents. Written or telephone requests should be directed to
William B. Bourne, The ARA Group, Inc., The ARA Tower, 1101 Market
Street, Philadelphia, Pennsylvania 19107 (telephone: 215-238-3213).
The ARA Group, Inc. is a Delaware corporation with its principal
offices located at The ARA Tower, 1101 Market Street, Philadelphia,
Pennsylvania 19107 (telephone 215-238-3000). As used herein,
references to the "Company" include The ARA Group, Inc. and its
subsidiaries unless the context otherwise requires.
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PROSPECTUS SUMMARY
The following is a summary of this Prospectus and is qualified in
its entirety by the more detailed information appearing elsewhere
in, or incorporated into, this Prospectus.
The Company
The Company, through ARA Services, Inc. ("ARA Services") and its
other subsidiaries, is engaged in providing or managing services,
including food, leisure and support services, uniform services,
health and education services and distributive services.
As a result of a management buyout transaction that was completed
in 1984 by a group of investors led by ARA senior management, ARA
Holding Company became the parent of ARA Services. Since then, the
number of management investors has increased through stock
offerings made from time to time to selected management employees
pursuant to the ARA Ownership Program. In 1988, as part of the
Company's Shareholder Enhancement Plan, management investors
increased their direct ownership interest in the Company, and the
Company changed its name to The ARA Group, Inc.
Currently, approximately 900 management investors directly own
approximately 55% of the equity of the Company.
In November 1993, the Board of Directors declared and the Company
paid a four-for-one split of the Common Stock effected in the form
of a stock dividend. As a result of the stock split, each share of
Class B Common Stock (a "Class B Share") covered by an outstanding
stock option was automatically converted into the right to receive
a total of four Class B Shares upon exercise of a stock option.
Consequently, while the total purchase price for a stock option
(assuming exercise in full) will remain virtually the same, the per
share exercise price under an outstanding stock option will now be
equal to the pre-split exercise price divided by four.
The Option Plans
The ARA Ownership Program (the "Program") provides selected
management employees of the Company and its subsidiaries with an
opportunity to purchase shares of ARA's Common Stock.
Under the Program, selected management employees are granted
options to purchase shares of Common Stock. The exercise price of
each stock option is the current fair market value at the time the
stock option is granted, based upon the most recent available
independent appraisal.
Generally, each stock option is granted for ten years, but may
not be exercised at the time it is granted. Half of the option
becomes exercisable after five years, and the portion exercisable
increases each year thereafter until the option is fully
exercisable after nine years.
Options that become exercisable may be exercised at any time,
until their expiration date, as long as the option holder remains
an employee of the Company or its subsidiaries (or any entity
designated by the Board of Directors in which ARA owns an equity
interest).
The specific terms of your stock option are set by the terms of
the Plans and your stock option certificate.
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How to Purchase Shares
To exercise all or a portion of your stock option and thereby
purchase shares, you must deliver to the Company (at the address
set forth on the exercise form) (1) a completed exercise form
(included in this Prospectus as Annex B), and (2) payment of the
aggregate purchase price plus the aggregate amount of applicable
income taxes required to be withheld or collected (as computed on
the exercise form). For the exercise of non-qualified stock
options, you may elect to defer payment of up to 1/2 of the total
purchase price (including required withholding taxes) under ARA's
Deferred Payment Program.
Stockholders' Agreement
At the time of the ARA management buyout in 1984, all of the
management investors and other investors (except the ARA employee
benefit plans, which were prohibited by law from doing so)
entered into a Stockholders' Agreement. The Stockholders'
Agreement was entered into to assure that the Company would have
consistent and uniform management as a private company, and that
ownership of the Company would be strictly controlled. At the
time of the adoption of the Shareholder Enhancement Plan in 1988,
the Stockholders' Agreement was amended and restated. By
exercising your stock option, you will be agreeing to be bound by
the terms of the Stockholders' Agreement.
Under the terms of the Stockholders' Agreement, your investment
in the Common Stock can be sold only in limited instances. In
addition, upon your termination of employment, the Company may,
but is not generally obligated to, repurchase your shares.
The Stockholders' Agreement also provides that each year you
must vote your shares in favor of the election of directors
nominated by the Board of Directors.
The terms of the Stockholders' Agreement are summarized in this
Prospectus, and a copy of the Stockholders' Agreement is included
as Annex A.
Other Factors
You have received a copy of ARA's most recent annual report on
Form 10-K. The annual report contains financial and other
information about ARA's operations. Available information for
subsequent periods can be obtained as described under "Available
Information" on page 2. You should read carefully the annual
report as well as this Prospectus, and consider the following (as
well as the other information presented) before electing to
invest.
Additional Information
If you did not receive a copy of ARA's most recent annual
report on Form 10-K, or if you have any questions about the
Program or would like to obtain further information, you should
call one of the following persons in the ARA Corporate Human
Resources Department:
William Bourne at (215) 238-3213
Mari Fulginiti at (215) 238-3217
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QUESTIONS AND ANSWERS
To assist you in better understanding the offering, this
Prospectus briefly describes certain significant provisions of
the Program, the Common Stock and the Stockholders' Agreement in
a question and answer format. For more complete answers to the
questions, you are referred to the text of the Stockholders'
Agreement. References to the appropriate sections of the
Stockholders' Agreement appear below at the end of the answers to
specific questions where applicable. Those sections are
incorporated by such reference into the answer, and the answer is
qualified in its entirety by such reference. The text of the
Stockholders' Agreement is set forth as Annex A to this
Prospectus.
1. Q: What is The ARA Group, Inc.?
A: The ARA Group, Inc. was formed by a group of investors led
by ARA senior management and acquired ARA Services in a
management buyout transaction in 1984. As a result of the
adoption of the Shareholder Enhancement Plan in 1988,
management investors directly own approximately 50% of the
equity of the Company.
2. Q: Are the shares of Common Stock being offered the same as
the shares owned by current management investors?
A: Yes, with the same rights and obligations to which current
management investors are subject under the Stockholders'
Agreement.
3. Q: Am I required to purchase shares?
A: No. Any exercise of all or any portion of your stock
option by you is strictly voluntary.
4. Q: What is the purchase price per share?
A: The price per share for your stock option is set at the
time your stock option is granted. The price appears on
your certificate and represents the fair market value
based on the most recent available independent appraisal
as of the date of grant. This price remains fixed subject
to adjustments for stock dividends, stock splits,
reorganizations, mergers or the like as described in
Question 5 below.
5. Q: Is my stock option adjusted in the event of a Common Stock
dividend, split, reorganization, merger or the like?
A: In such cases your stock option will be equitably
adjusted, if appropriate, as determined by the Human
Resources, Compensation and Public Affairs Committee of
the Board of Directors. For example, as a result of such
adjustments previously made, a stock option originally
granted in February 1985 for 10 shares at an exercise
price of $350.00 per share is now an option for 4,280
shares at an exercise price of $.81 per share.
6. Q: When can I exercise my stock option and purchase shares?
A: You can exercise your stock option (and thereby purchase
shares) only after the conditions set forth in your stock
option certificate are satisfied. Generally, stock
options have two conditions:
(1) You must have held your stock option for at least the
minimum time specified in your certificate.
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(2) A registration statement must have become effective
with respect to the exercise of your option. This second
condition has been satisfied for all stock options under
the Program.
7. Q: What is the required holding period for stock options?
A: The required holding period is specified in your stock
option certificate. Generally, half of your option
becomes exercisable after five years, and the portion
exercisable increases each year thereafter until the
option is fully exercisable after nine years.
8. Q: Do the stock options have an expiration date?
A: Yes. The expiration date is specified in your stock
option certificate. Generally, stock options expire ten
years after they are granted.
9. Q. What if my employment is terminated?
A: Your stock option is canceled if your employment with the
Company and its subsidiaries (or any entity designated by
the board of directors in which ARA continues to own an
equity interest) is terminated for any reason. Unless you
are terminated for cause, however, you may exercise your
option at any time during the three months following your
termination (but not after the expiration date of your
option) to buy those shares which were exercisable at the
time of your termination.
If you die or become permanently disabled while employed
by the Company and its subsidiaries, (or any entity
designated by the board of directors in which ARA
continues to own an equity interest) you (or your legal
representative) may exercise your options at any time
during the 12 months after your disability or death (but
in any case not after the expiration date) to buy those
shares which were exercisable at the time of your
disability or death.
See Questions 44 and 45 for information relating to the
Company's ability to call any shares obtained upon
exercise of stock options and the price paid for such
shares upon exercise of a Call.
10. Q: If I exercise only a portion of my stock option, what
happens to the unexercised portion of my stock option?
A: The unexercised portion of your stock option is not
affected.
11. Q: How do I purchase shares of Common Stock?
A: To exercise all or a portion of your stock option and
thereby purchase shares, you must deliver to the Company,
at the address which appears on the exercise form included
in this Prospectus as Annex B, (1) your completed exercise
form and (2) payment of the aggregate purchase price plus
the estimated aggregate amount of applicable income taxes
required to be withheld or collected. Instructions for
computing your estimated income taxes are included on the
exercise form. For the exercise of non-qualified stock
options, you may elect to defer payment of up to 1/2 of
the total purchase price (including required withholding
taxes) under ARA's Deferred Payment Program (see Questions
19 through 30).
12. Q: Do I have to pay taxes when I exercise my stock option?
A: The answer depends on whether your option is an incentive
stock option or a non-qualified stock option. Certain
stock options issued in 1985 are incentive stock options
("ISOs"), and income subject to regular taxation generally
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is not recognized upon their exercise. Your stock option
certificate will state whether your stock option is
intended to be an ISO. However, stock options held by
employees of former subsidiaries of ARA (regardless of any
statement in the stock option certificate) are non-
qualified stock options. All other stock options are
non-qualified stock options, and taxes are payable upon
their exercise. The tax consequence of exercising an ISO
involves the Alternative Minimum Tax ("AMT") and can be
very complex. You are urged to discuss any planned
exercise of ISOs with your tax adviser. See "Federal
Income Tax Considerations".
13. Q: Why do I have to pay taxes when I exercise a non-qualified
stock option?
A: When you exercise a non-qualified stock option, the
difference (if any) between the exercise price and any
higher fair market value of the Common Stock at the time
of the exercise is considered under the tax law to be
ordinary taxable income. The Company is required to
withhold taxes at the time of the exercise. These include
federal income taxes, social security taxes (if
appropriate), applicable state income taxes, and state
unemployment taxes (depending on the state in which you
are employed). This is not necessarily the entire amount
of tax that you will owe as a result of this exercise.
Additional tax, including estimated tax payments, may be
required to meet your full tax liability due to this
exercise. You should discuss your particular situation
with your tax advisor.
14. Q: Will the Company report to the IRS the taxable income (if
any) that I realize upon the exercise of my non-qualified
stock option?
A: Yes. The taxable income (if any) and the taxes withheld
will be reported on your W-2 form for the year in which
the purchase occurs. The purchase occurs at the time your
completed exercise form and your check are received by
the Company.
15. Q: How will I know what the fair market value of the Common
Stock is when I exercise a non-qualified stock option?
A: The Company's current practice is to have the Common Stock
appraised periodically by an independent appraiser. The
appraised fair market value at December 1, 1993 was
$11.20, which includes the effect of the November 1993
stock split.
16. Q: Can I compute the amount of withholding tax I must deposit
with the Company prior to exercising a non-qualified stock
option?
A: Yes. The exercise form (included in this Prospectus as
Annex B) includes a worksheet which allows you to compute
the amount of applicable taxes required to be withheld or
collected.
17. Q: Can I borrow money to purchase the shares covered by my
stock option?
A: Yes. Generally, you must make your own financing
arrangements. However, for the exercise of non-qualified
stock options, you may elect to defer payment of up to 1/2
of the total purchase price (including required
withholding taxes) under ARA's Deferred Payment Program
(see Questions 19 through 30).
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18. Q. May I pledge my shares of ARA Common Stock?
A. Yes, you may pledge your shares to a commercial bank,
savings and loan institution or any other lending or
financial institution as security for your indebtedness.
However, you may do so only if the lender agrees that,
upon realization of its security, the shares shall remain
subject to all of the terms of the Stockholders' Agreement
and that the lender will dispose of the shares only in
compliance with the terms of the Stockholders' Agreement.
(Section 3.02(e)) If you are eligible to participate in
ARA's Deferred Payment Program, you will be required to
pledge shares to ARA (see Questions 19 through 30).
19. Q: What is the Deferred Payment Program?
A: The Deferred Payment Program is a Company program that
allows you to purchase shares of Common Stock pursuant to
your exercise of a non-qualified stock option and defer
paying a portion of the total purchase price.
20. Q: Will the Deferred Payment Program be offered for future
non-qualified stock option exercises?
A: The Company anticipates the Deferred Payment Program will
continue to be offered. However, the Deferred Payment
Program is subject to cancellation or modification at the
discretion of the Board of Directors at any time without
notice.
21. Q: Do I have to participate in the Deferred Payment Program?
A: No. Any participation by you is strictly voluntary.
22. Q: How much of the purchase price payment may I defer under
the Deferred Payment Program?
A: You may defer payment of up to 1/2 of the total purchase
price (including required withholding taxes) for the
shares you are purchasing. The maximum amount that can be
deferred is equal to 1/2 of the Total Amount Due, as
computed on line 11 of the Stock Option Exercise Form.
23. Q: How do I elect to participate in the Deferred Payment
Program?
A: In order to participate in the Deferred Payment Program
when exercising your non-qualified stock option, you
should indicate the amount to be deferred on the Stock
Option Exercise Form and also complete the Deferred
Payment Obligation form, which is on the reverse side.
24. Q: What are the terms of the Deferred Payment Program?
A: The deferred payment is due, plus interest, on the
February 15, next following the third anniversary of the
date the option is exercised. For example, for an option
exercise in June 1994, the deferred payment is due on
February 15, 1998. Interest accrues at an interest rate
to be established at the time the option is exercised, and
is payable at the same time the deferred payment is due.
(The interest rate is based on the current prime rate.)
All of the shares purchased pursuant to the option
exercise are pledged to secure the deferred payment
obligation, and the Company holds the share certificates.
If you sell or otherwise transfer the pledged shares, the
deferred payment becomes due at the time of the sale.
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25. Q: Will I be able to sell pledged shares in the internal
market or under the Emergency Buyback Program?
A: Yes. However, your deferred payment obligation will
become due at the time of such sale.
26. Q: Will I be able to sell shares to pay my deferred payment
obligation at the time it becomes due?
A: The Company intends to allow you to sell shares at that
time. However, all repurchases of shares by the Company
must be approved by the Board of Directors and are subject
to the ability of the Company to do so under its financing
agreements.
27. Q: Can I prepay my deferred payment obligation?
A: Yes. You may prepay your deferred payment obligation at
any time.
28. Q: Will the pledged shares be subject to the Stockholders'
Agreement?
A: Yes.
29. Q: What are the anticipated federal income tax consequences
to me for participation in the Deferred Payment Program?
A: The tax consequences of exercising your stock option will
not change. Generally, under current federal law, the
interest paid at the time of making the deferred payment
would be treated for federal income tax purposes as
"investment interest." Accordingly, it may be deductible,
but only to the extent of investment income received
during the year the interest is paid. The 1993 tax law
changes have limited the types of income that can be
included in "investment income" and now exclude from that
category any income taxed at the favorable capital gains
rate. As a result, you may not be able, or wish, to
deduct deferred payment interest when you pay it.
However, investment interest expense, including deferred
payment interest, that is not deducted for federal income
tax purposes may be carried forward indefinitely until it
is used. You are urged to discuss this matter with your
tax advisor.
30. Q: Will my obligation to pay the deferred payment be treated
as debt for my personal credit purposes?
A: Any decision regarding your personal credit, whether for a
home mortgage or otherwise, would be made by a lender.
The Company understands that generally the deferred
payment obligation would be treated as debt for personal
credit purposes by lenders.
31. Q: Will I receive a stock certificate for the shares of
Common Stock that I purchase?
A: Yes, unless you are eligible and have elected to
participate in ARA's Deferred Payment Program (see
Questions 19 through 30).
32. Q: Can I have the shares registered jointly in my name and my
spouse's name?
A: Yes, you can register shares in the names of you and your
spouse, as joint tenants, provided both you and your
spouse sign the exercise form. (Introduction to the
Stockholders' Agreement)
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33. Q: Will I receive dividends on the Common Stock?
A: If the Board of Directors declares a dividend, holders of
Common Stock on the dividend record date will be entitled
to receive that dividend.
34. Q: Will I be entitled to vote on any matters submitted to a
vote of The ARA Group, Inc. stockholders?
A: Yes, however you will be bound by the terms of the
Stockholders' Agreement. You will generally be free to
vote your shares in any manner you choose on any matters
properly presented to the stockholders. However, you will
be required to vote your shares in favor of the election
of directors nominated by the Board of Directors. This
has the effect of granting to the existing directors the
right to select their successors. (Section 2.01)
35. Q: May I transfer my shares of Common Stock?
A: Generally, you may not sell or otherwise transfer your
shares of Common Stock (other than in certain limited
instances). (Section 3.02(a))
36. Q: May I transfer my shares of Common Stock for estate or tax
planning purposes?
A: Yes. You may transfer your shares for estate or tax
planning purposes as gifts to your spouse, child,
grandchild or parent or a trust for the benefit of any of
them or to a qualifying charitable organization. You may
also make other transfers to your family members, their
trusts or other entities if the transfer is approved by
the Company's Board of Directors. (Section 3.02)(d))
37. Q: Are these permitted transfers subject to any conditions?
A: Yes. The transferee must sign a document confirming that
he or she is acquiring the shares subject to all the terms
and conditions of the Stockholders' Agreement, and such
document must be delivered to and approved by the Company
at least five business days before the transfer. (Section
3.01)
38. Q: Will I be able to sell shares back to the Company?
A: Yes. Primarily you will be able to sell your Class B and
Series C Shares to the Company in the internal market.
Secondly, the Company provides an Emergency Buyback
Program to accommodate certain limited instances when
unanticipated emergencies arise. The Company anticipates
that the combination of the internal market and the
emergency buyback program should provide adequate
liquidity to all management investors on an orderly and
equitable basis. The Company also provides an offer to
sell procedure for the Class B Shares that could be
utilized. These three methods for realizing liquidity are
described more fully below (see Questions 39, 40 and 41).
Of course, the ability of the Company to repurchase shares
is subject to the Company's continued strong operating and
financial performance. (Section 7).
39. Q: What is the internal market?
A: The internal market is a process whereby the Company, on a
periodic basis, offers to purchase some of your Class B
and Series C Shares. At the time of the offer, each
management owner will then be able to decide whether to
accept or reject the offer. The internal market provides
a way for management owners to sell some of their stock
holdings.
In this regard, a management owner can pursue a sale of
stock in the internal market in excess of the guideline
stated below by contacting one of the persons listed on
page 4 of this Prospectus.
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The initial Internal Market Policy approved for 1994
consists of two semi-annual repurchase periods, and
subject to further review and approval by the Board of
Directors prior to each subsequent annual offering, is as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Class B Shares Series C Shares
-------------- ---------------
Offering Periods: December 15, 1993 to January Same as for Class B
15, 1994 and July 15, 1994 to Shares, except that
August 16, 1994 initial offering
period does not begin
until January 1, 1994
Offerees: All management owners All management owners
Purchase Price: The most recent available $1,000 per share plus
appraised value, as of accrued and unpaid dividends
December 1, 1993, and as
of June 1, 1994 respectively
Payment Terms: Cash Cash
Individual Guideline for Generally, up to $50,000 or, Unlimited
each Offering Period: if greater, 10% of shares owned
(up to a maximum of $150,000);
requests for larger sales can
be made by contacting one of the
persons listed on page 4 of
this Prospectus
Required Holding Shares owned for less than six None
Period: months are not eligible for
resale in the internal market
</TABLE>
40. Q: What is the Emergency Buyback Program?
A: From time to time there may be compelling circumstances when
an unanticipated emergency arises which may cause a
management owner to request the Company to repurchase Class
B or Series C Shares. Each request will be reviewed
individually, taking into account all relevant
circumstances.
41. Q: Will I be able to sell my Class B shares in any other way?
A: The anticipated normal procedure for selling Class B Shares
is through the internal market. However, you could also
offer a portion of your Class B Shares to the Company at the
current appraised Fair Market Value of the Common Stock.
Annually you could offer to sell up to the lesser of 10% of
your Class B Shares or $100,000 in share value. These
rights are cumulative beginning in 1990. In other words, if
you did not choose to sell in one year, the following year
you could offer to sell up to the lesser of 20% of your
Class B Shares or $200,000 in share value, etc. In the
event your Class B Shares were not purchased by ARA you
could offer to sell your Class B Shares within the next 90
days to a third party who agreed to abide by all the terms
of the Stockholders' Agreement, on the same terms offered to
ARA. (Section 4)
Upon termination for any reason, subject to the Company's
right to Call your Class B Shares (see Question 44), you
could offer to sell your Class B Shares as described above.
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Additionally, if the reason for termination were death,
Complete Disability or Normal Retirement, then the annual
10%/$100,000 limitation would no longer be applicable.
(Sections 1.04, 1.06 and 3.02(a))
42. Q: Will I be able to require the Company to repurchase shares?
A: Generally no. However, upon your death, Complete Disability
or Normal Retirement, you or your estate as appropriate,
subject to the Company's financing agreements, can require
the Company to purchase up to 30% of your shares. This
right to require the Company to purchase shares is described
as a "Put". The Company will be required to purchase these
shares for cash at the current appraised Fair Market Value
of the Common Stock. The Company intends to purchase
("Call") your remaining shares (see Question 44). However,
in the event the Company does not Call your shares, then you
could offer to sell the remaining shares (see Question 41).
(Section 5)
43. Q: Will the Company inform me prior to the time that I purchase
from the Company (through the exercise of an option or
otherwise) or sell to the Company (in the internal market or
otherwise) any of my shares of stock of any pending or
potential transaction that could increase or decrease the
value of the stock?
A: No. The Company has no obligation to disclose any pending
or potential transaction in connection with your decision to
purchase from or sell to the Company any shares of Company
stock owned by you. The Company does not disclose publicly
its projections or the status of any transaction that may be
under consideration. This information is generally
confidential, and the Company could be adversely affected if
such information should become publicly known. (Section 8)
44. Q: If my employment with the Company and its subsidiaries is
terminated for any reason, does the Company have the right
to require me to sell my shares to the Company?
A: Yes. This right of the Company to require you to sell your
Class B Shares is described as a "Call". At any time
during the 10 years following the termination of your
employment, the Company has the right to Call any or all of
your Class B Shares and any or all of the Class B shares of
all of your permitted transferees. The Company's intention
is to promptly exercise this right if you are terminated for
any reason for all Class B Shares except those acquired by
exercising stock options shortly before or after
termination. The Company intends to call those Class B
Shares approximately six months after they were acquired.
(Section 6)
45. Q: How will I be paid for my Class B Shares when they are
Called?
A: The Company will purchase your Class B Shares at the lesser
of the appraised Fair Market Value of the Common Stock at
the time of the exercise of the Call or the appraised Fair
Market Value at the time of termination plus 8% simple
interest to the date of the exercise of the Call. Under the
terms of the Stockholders' Agreement, payment will be in
cash up to the least of 10% of shares called, $100,000 or
your highest base salary, with the remainder paid in
installment notes. (Section 6.02)
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<PAGE> 13
46. Q: What are the terms of the installment notes?
A: The Stockholders' Agreement provides for the following terms
for the installment notes. Annual cash payments will equal
the least of 10% of the principal, $100,000 or your highest
base salary. At the end of the 10th year following
termination, any remaining balance on the notes will be paid
in cash. Interest will be paid semi-annually and the rate
will be fixed at the Applicable Federal Rate which currently
varies from approximately 4.3% to 7.2% depending upon the
term of the note (Section 1.08).
47. Q: If the Company purchases my Class B Shares using, in part,
an installment note, will I have to pay tax on the entire
gain in the first year?
A: Generally, no. The purchase using a note usually will
qualify for installment treatment under the federal income
tax laws. You should be able to recognize taxable gain in
proportion to the cash payments of principal you will
receive over the years. You should consult with your tax
advisor to determine if installment sale treatment is
advantageous to you and how you should report it on your tax
returns.
48. Q: What is the Stock Repurchase Policy?
A: The Company's Stock Repurchase Policy provides for payment
terms that are generally more favorable to you than the
payment terms provided for in the Stockholders' Agreement.
This Policy, which is described below (see Questions 49
through 53), may be amended, discontinued or varied for all
repurchase transactions generally or for any specific
repurchase transaction at any time by the Company without
notice. The Policy does not affect the total repurchase
price which you will be paid for your shares.
49. Q: If I terminate before age 55 and my Class B Shares are
Called, what does the Stock Repurchase Policy currently
provide?
A: The initial cash payment will be a minimum of $50,000 and
each annual principal installment on the promissory note
will be a minimum of $25,000.
50. Q: If I terminate at or after age 55 but before Normal
Retirement and my Class B Shares are Called, what does the
Stock Repurchase Policy currently provide?
A: The total repurchase price will be paid in an initial cash
payment and subsequent annual principal installments on the
promissory note in equal amounts, so that the entire
repurchase price will have been paid before you reach age
66. Each such payment is subject to a minimum of $50,000
and a maximum of $300,000, with any remaining balance paid
in the final installment.
51. Q: If I terminate through Normal Retirement and my Class B
Shares are Called (or if I exercise my Put and the remainder
of my Class B Shares are Called), what does the Stock
Repurchase Policy currently provide?
A: Generally, Normal Retirement means you are at least age 60
and you retire from active employment. The initial cash
payment will be 30% of the total repurchase price. The
remainder of the total repurchase price will be paid in
equal annual principal installments on the promissory note
so that the entire repurchase price will have been paid
before you reach 66 (or if you are 63 or over, in 3 equal
annual principal installments). Each such payment is
subject to a minimum of $50,000 and a maximum of $300,000,
with any remaining balance paid in the final installment.
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<PAGE> 14
52. Q: If I die or become Completely Disabled and my Class B Shares
are Called (or if my estate exercises its Put and the
remainder of my shares are Called), what does the Stock
Repurchase Policy currently provide?
A: The initial cash payment will be 30% of the total repurchase
price. The remainder of the total repurchase price will be
paid in three equal annual principal installments on the
promissory note. Each such payment is subject to a minimum
of $50,000 and a maximum of $300,000, with any remaining
balance paid in the final installment.
53. Q: Does the Stock Repurchase Policy provide for an alternative
interest rate on the promissory note?
A: Yes. In lieu of a fixed interest rate (equal to the
Applicable Federal Rate at the time of the repurchase) for
the entire life of the promissory note, you may make a one-
time irrevocable election at the time of repurchase for the
rate to reset annually on the date of each principal payment
to the Applicable Federal Rate then in effect.
54. Q: Do the Call rights apply to a termination of my employment
with ARA and its subsidiaries which is beyond my control?
A: Yes. The Call rights apply to all terminations of
employment with ARA and its subsidiaries without regard to
cause, including death, permanent and complete disability,
voluntary or involuntary termination of employment and
retirement. For example, if ARA were to sell the division
or subsidiary in which you work, then the Call rights would
apply even though you were continuing to work in the same
organization. (Section 6)
55. Q: What if ARA cannot repurchase my Class B Shares pursuant to
the exercise of a Put or a Call because it would cause a
default under one of ARA's loan agreements or would violate
applicable law?
A: Your Class B Shares would be repurchased on the earliest
practicable date when such repurchase could be effected in
compliance with such loan agreement and applicable law.
The price to be paid could be affected because of such
delay. (Section 12)
56. Q: If I voluntarily terminate my employment, the Company has
the right to Call my Class B Shares. Will the Company
inform me prior to the time I terminate my employment of any
pending or potential transaction that could increase the
value of the Common Stock?
A: No. The Company has no obligation to disclose any pending or
potential transaction in connection with your decision to
terminate your employment (or in connection with your
decision to exercise a Put or in any other circumstance).
The Company does not disclose publicly its projections or
the status of any transaction that may be under
consideration. This information is generally confidential,
and the Company could be adversely affected if such
information should become publicly known. (Section 8)
57. Q: When will I be able to transfer my Class B Shares freely
without having to comply with the restrictions on transfer
contained in the Stockholders' Agreement?
A: Generally, the Stockholders' Agreement will continue in
force unless the stockholders who are parties to the
Agreement and the Company vote to terminate or change it.
(Section 15)
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<PAGE> 15
THE ARA OWNERSHIP PROGRAM
The ARA Ownership Program (the "Program") is designed to provide
an opportunity for selected management employees of the Company and
its subsidiaries to acquire an ownership interest in the Company
and thereby give them a more direct and continuing interest in the
future success of the Company's business.
Under the Program, the direct ownership in the Company has
increased from 62 original management investors in 1984 to
approximately 900 management investors today owning approximately
55% of the equity. In addition, at February 1, 1994, management
employees held installment stock purchase opportunities for
8,281,160 shares and stock options for an additional 1,567,856
shares.
The Company's senior management believes that management
ownership has significantly contributed to the Company's success,
and intends to continue to use the Program to expand both the
number of management investors and their percentage ownership.
The Program uses the 1984 Stock Option Plan, the 1987 Stock
Option Plan and the 1991 Stock Ownership Plan. These Plans allow
the Company to offer, and under the Program the Company has
offered, stock purchase opportunities to selected employees in
three different ways: the direct sale of shares, the grant of
installment stock purchase opportunities, and the grant of stock
options. In choosing the form of stock ownership opportunity to be
offered, the Company considers, among other factors, the number of
offerees and their ability generally to finance an investment.
This Prospectus relates to the grant and exercise of stock
options.
The 1984 Option Plan was adopted by the Board of Directors and
approved by the stockholders in December 1984 in connection with
the management buyout. Amendments to the Plan were approved by the
stockholders in February 1987. The Plan provides for the issuance
of up to 14,643,192 shares of Common Stock through the granting of
incentive stock options and/or nonqualified options. Under the
terms of the Plan, a specified number of the options are reserved
for issue in connection with promotions or to new hires. On
February 1, 1994, 1,883,448 options were outstanding under the Plan
and 1,501,506 shares were available for the grant of future options
under the Plan.
The 1987 Option Plan was adopted by the Board of Directors in May
1987 and was approved by stockholders in February 1988. The Plan
provides for the issuance of up to 8,357,956 shares of Common Stock
through the granting of incentive stock options and/or nonqualified
options. On February 1, 1994, 1,750,228 options were outstanding
under the Plan and 2,396,188 shares were available for the grant of
future options.
The 1991 Ownership Plan was adopted by the Board of Directors in
November 1991. The Plan provides for the issuance of up to
8,513,372 shares of Common Stock through the granting of
nonqualified options. On February 1, 1994, 6,215,340 options were
outstanding under the Plan and 897,677 shares were available for
the grant of future options.
In accordance with the terms of the Plans, the purchase price for
shares subject to stock options granted under the Plans will not be
less than the fair market value of the shares (based upon the most
recent available independent appraisal) on the date of the grant.
Shares issued pursuant to the Plans are subject to the
Stockholders' Agreement. The Plans provide that the terms of
options and purchase opportunities outstanding under the Plans and
the number of shares authorized under the Plans will be
appropriately adjusted upon the declaration of stock dividends and
upon the occurrence of certain other events.
The Plans grant certain authority to the Human Resources,
Compensation and Public Affairs Committee (the "Committee") which
consists of six members of the Board.
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<PAGE> 16
The Committee is authorized to grant stock options and to
determine the number of shares to be offered thereby to each
selected key employee. The term "key employee" is not defined in
the Plans, and subject to the express provisions of the Plans, the
Committee has complete authority to determine the employees who
receive stock options thereunder. As a result, the number of
employees eligible to participate in the Plans is not determinable.
Stock options are not transferrable. No stock option can be
subject to attachment, execution or levy of any kind. Each stock
option shall be exercisable only by the employee to whom it is
granted and only while an employee of ARA or a subsidiary (or any
entity in which ARA continues to own an equity interest and which
the board of directors designates).
ARA will use the net proceeds from the sale of shares pursuant to
exercises of stock options for general corporate purposes.
The Plans are not subject to any provisions of the Employee
Retirement Income Security Act of 1974 and are not "qualified"
within the meaning of Section 401(a) of the Internal Revenue Code.
The Board of ARA or the Committee may establish such procedures
as it deems appropriate for the administration of the Plans. It
may also include at the time a stock option is granted such
additional terms and conditions as it deems desirable to the extent
such are not inconsistent with the Plans. The opinion of the
Committee, or the Board for certain matters described in the Plans,
shall be final and binding upon all persons in interest, including
employees, ARA and its stockholders.
The Board may amend the Plans from time to time as it deems
desirable, except that certain amendments to the 1984 Option Plan
or the 1987 Option Plan require stockholder approval.
Neither the Plans nor any stock option granted under the Plans
gives any employee the right to continue in the employ of ARA or
its subsidiaries or limits in any respect the right of ARA or any
subsidiary to terminate such employee.
The appraised fair market value of the Common Stock as of
December 1, 1993 was $11.20. The appraisal of the fair market
value of the shares of Common Stock was provided by Willamette
Management Associates, Inc. ("Willamette"), a professional
independent appraiser. Such appraisal was based on the financial
condition and results of operations of ARA, a comparison of ARA
with other companies with similar characteristics, and other
factors prevailing at the time such determination was made.
In connection with the services rendered by Willamette with
respect to the preparation of the appraisal referred to above and
other appraisals of Company securities within the 12 months prior
to the date of this Prospectus, Willamette has received fees from
the Company of approximately $100,000 plus reimbursement of certain
expenses. In addition, the Company has agreed to indemnify
Willamette against certain liabilities which it might incur in
connection with the preparation of the appraisal referred to above
or otherwise as a result of the services rendered by such firm.
THE DEFERRED PAYMENT PROGRAM
The Deferred Payment Program was adopted in 1992 and is designed
to enable employees to take better advantage of stock options
granted to them, by giving them the alternative to defer payment of
a portion of the purchase price.
The Company anticipates that the Deferred Payment Program will
continue to be offered. However, the Program is subject to
cancellation or modification at the discretion of the Board of
Directors at any time without notice.
The Deferred Payment Program currently in effect will permit the
holder of a non-qualified stock option to defer payment of up to
one-half of the total purchase price (including required
withholding taxes) for the shares being purchased. Accordingly,
<PAGE>
<PAGE> 17
payment may be deferred for up to 47 months in some cases. (In
order to comply more clearly with certain laws which may be
applicable, ARA has the right to require the payment on demand.
However, ARA has no intention of exercising such right.) Interest
will accrue on any deferred payment at a fixed annual rate (to be
established at the time the option is exercised) and payable at the
time the deferred payment is due. ARA may from time to time select
a different interest rate for use in future deferred payment
obligations. However, the interest rate at the time a deferred
payment obligation is entered into is fixed for the entire term of
the obligation. The Company will hold as collateral all shares
purchased in which any portion of the purchase price is financed
under the Deferred Payment Program until the deferred payment is
received by the Company. Deferred payment obligations may be
prepaid at any time at the election of the employee and will become
due immediately in the event any shares securing the deferred
payment obligation are sold or otherwise transferred by the
stockholder (whether pursuant to a call of such shares by ARA upon
termination of employment or otherwise). Holders of stock options
are not required to use the Deferred Payment Program. If you have
any questions about the Deferred Payment Program, you should call
Liza Cartmell at the ARA Corporate Treasury Department (telephone:
215-238-3187).
INCOME TAX CONSIDERATIONS
The following discussion is not intended to be a complete
statement of the federal income tax consequences of the granting
and exercise of stock options pursuant to the Plans or the
disposition of shares acquired upon exercise of such stock options.
Because of the complexities of the federal income tax law, option
holders are urged to consult their own tax advisers.
Stock options granted pursuant to the Plans are intended to be
either incentive stock options or non-qualified stock options for
federal income tax purposes. Incentive stock options are
identified as such on your stock option certificate. However,
stock options held by employees of former subsidiaries of ARA
(regardless of any statement in the stock option certificate) are
non-qualified stock options. All other stock options are
non-qualified stock options.
Incentive Stock Options
With respect to incentive stock options, ARA understands that
under current federal income tax laws, if shares purchased pursuant
to the exercise of an incentive stock option are not disposed of by
the employee within one year after the exercise of the option, then
(i) no income subject to regular taxation will be recognized to the
employee either at the time of grant or at the time of exercise of
the option; (ii) any gain or loss (calculated with reference to the
option exercise price) will be recognized to the employee only upon
the ultimate disposition of the shares and, assuming the shares
constitute capital assets in the employee's hands, will be treated
as long-term capital gain or loss; and (iii) the difference
between the option exercise price and the fair market value of the
shares at the time of exercise will be treated as an "item of tax
preference", subject to AMT.
ARA further understands that if the employee disposes of the
shares acquired by exercise of an incentive stock option before the
expiration of the required holding period, the employee must treat
as ordinary income in the year of such disposition an amount equal
to the difference between the option exercise price and the lesser
of the fair market value at the time of exercise or the selling
price. The balance of the employee's gain on such disposition, if
any, may be taxed as capital gain. None of the gain on such a
disposition would be an item of tax preference subject to AMT.
<PAGE>
<PAGE> 18
Non-Qualified Stock Options
With respect to the non-qualified stock options, ARA understands
that, under current federal income tax laws, (i) no income will be
recognized to the employee at the time of grant; (ii) upon exercise
of a stock option, the employee must treat as ordinary income the
difference, if any, between the exercise price and any higher fair
market value of the Common Stock on the date of exercise, and (iii)
assuming the shares received upon exercise of such stock options
constitute capital assets in the employee's hands, any gain or loss
upon disposition of shares (measured by reference to the fair
market value of the shares on the date of exercise) may be treated
as capital gain or loss. None of the income from exercise of non-
qualified options or gain from the sale of stock acquired through
exercise of such options would be an item of tax preference subject
to AMT.
ARA further understands that income recognized upon the exercise
of a non-qualified stock option is subject to tax withholding and
that it is obligated to withhold or collect an amount equal to a
portion of the tax applicable to such income. Consequently, ARA
requires the exercising employee to deposit with ARA the amount of
the taxes required to be withheld or collected. The Company is
required to report to the IRS the amount of ordinary income
generated by the exercise of a purchase opportunity by including
that amount as compensation in the employee's form W-2, and the
employee is required to report that amount in his/her tax return.
If payment of a portion of the exercise price is deferred under
the Deferred Payment Program, the interest paid at the time of
making the deferred payment would be treated as "investment
interest". Accordingly, it may be deductible, but only to the
extent of investment income received during the year the interest
is paid. The 1993 tax law changes have limited the types of income
that can be included in "investment income" and now exclude from
that category any income taxed at the favorable capital gains rate.
As a result, you may not be able, or wish, to deduct deferred
payment interest when you pay it. However, investment interest
that is not deducted can be carried forward and be deductible in
future years to the extent of the holder's investment income in
such years. You are urged to discuss this matter with your tax
advisor. Similarly, to the extent that stock options are exercised
using other borrowed funds, the interest incurred on such borrowing
may also be treated as "investment interest". You are urged to
discuss this matter as well with your tax advisor.
DESCRIPTION OF EQUITY SECURITIES
General
The authorized capital of the Company consists of 185,000,000
shares, which includes 150,000,000 shares of Common Stock, Class B,
par value $.01 per share ("Common Stock" or "Class B Common Stock")
25,000,000 shares of Common Stock, Class A, par value $.01 per
share ("Class A Common Stock"); and 10,000,000 shares of Series
Preferred Stock, par value $1.00 per share ("Series Preferred
Stock"). As of February 1, 1994, 26,139,143 shares of Class B
Common Stock were issued and outstanding (not including 9,967,555
shares subject to options, installment stock purchase opportunities
and deferred stock units granted and outstanding under the
Company's Plans), 2,100,761 shares of Class A Common Stock were
issued and outstanding, and 19,873 shares of Series Preferred Stock
were outstanding.
Management investors (approximately 900 persons at the date of
this Prospectus) hold all of the shares of outstanding Class B
Common Stock of the Company. There is no established public
trading market for the Class A or Class B Common Stock or the
Series C Preferred Stock of the Company.
The following is a summary of certain provisions of the Restated
Certificate of Incorporation of the Company (the "Certificate of
Incorporation") and the By-Laws of the Company, as amended. The
summary is qualified in its entirety by reference to such documents
filed as exhibits to the Registration Statement of which this
Prospectus is a part.
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<PAGE> 19
The Class A Common Stock and the Class B Common Stock
Voting. Each share of Class A Common Stock and each share of
Class B Common Stock entitles the holder thereof to one vote on all
matters submitted to the stockholders.
All actions submitted to a vote of stockholders are voted upon by
holders of Class A Common Stock and Class B Common Stock voting
together except that the holders of Class A Common Stock and Class
B Common Stock vote separately as classes with respect to
amendments to the Company's Certificate of Incorporation that may
alter or change the powers, preferences or special rights, of their
respective classes of stock so as to affect them adversely, and
such other matters as may require class votes under the Delaware
General Corporation Law.
There is no provision in the Certificate of Incorporation
permitting cumulative voting.
Dividends and Other Distributions (including Distributions upon
Liquidation of the Company). Dividends on the Class A Common Stock
and the Class B Common Stock are paid when, as and if declared by
the Board of Directors and permitted under the Company's loan
agreements. In respect of rights to dividends and other
distributions in cash, stock or property of the Company (including
distributions upon liquidation of the Company, after provision for
creditors of the Company and any shares of the Company's capital
stock having a preference on liquidation, dissolution or winding up
of the Company) each share of Class A Common Stock is entitled to
ten times the dividends and other distributions payable on each
share of Class B Common Stock when, as and if such dividends or
distributions may be declared and/or paid provided, however, that
in the case of dividends or other distributions payable on the
Class A Common Stock and the Class B Common Stock in capital stock
of the Company other than Preferred Stock, including distributions
pursuant to split-ups or divisions of the Class A Common Stock or
the Class B Common Stock, only Class A Common Stock is distributed
with respect to Class A Common Stock and only Class B Common Stock
is distributed with respect to Class B Common Stock. In no event
may either Class A Common Stock or Class B Common Stock be split,
divided or combined unless the other is split, divided or combined
equally.
Convertibility. The Class A Common Stock is not convertible.
Subject to the prior approval of the Board of Directors, the Class
B Common Stock is convertible at all times, in whole or in part,
and without cost to the stockholder, into Class A Common Stock on
the basis of ten shares of Class B Common Stock for each share of
Class A Common Stock. Only full-time employees and directors of
the Company (and their Permitted Transferees while the transferor
is a full-time employee or director) may hold Class B Common Stock.
Upon any holder of Class B Common Stock ceasing to be a full-time
employee or director of the Company, such holder's Class B Common
Stock automatically converts into Class A Common Stock, on the
basis of ten shares of Class B Common Stock for each share of Class
A Common Stock. The Board of Directors, by a majority of the Board
plus one additional director, may at any time order the conversion
of all the Class B Common Stock into Class A Common Stock on a
ten-for-one basis. No fractions of shares of Class A Common Stock
would be issued on such conversion, but rather such amounts would
be paid in cash based on the market value (or, if the Company is
not publicly traded, the last appraised value) of the Class B
Common Stock.
Other. The Class A Common Stock and Class B Common Stock do not
carry any preemptive rights enabling a holder to subscribe for or
receive shares of stock of the Company of any class or any other
securities convertible into shares of stock of the Company.
<PAGE>
<PAGE> 20
EXPERTS
The audited consolidated financial statements and related notes
and schedules included in the Company's Annual Report on Form 10-K
for the year ended October 1, 1993 incorporated by reference herein
have been audited by Arthur Andersen & Co., independent public
accountants, as set forth in their report also incorporated herein
by reference. In their report, that firm states that with respect
to amounts included for Versa Services Ltd., the Company's Canadian
subsidiary, its opinion is based on the report of other auditors,
namely Ernst & Young, Chartered Accountants, whose report is also
incorporated herein by reference. The financial statements
referred to above have been incorporated by reference herein in
reliance upon the reports of said firms and upon the authority of
said firms as experts in accounting and auditing. Subsequent
audited financial statements of the Company and the reports thereon
of the Company's independent public accountants, to the extent
incorporated herein by reference, have been so incorporated in
reliance upon the reports of those accountants and upon the
authority of those accountants as experts in accounting and
auditing to the extent such accountants have audited those
financial statements and consented to the use in this Prospectus of
their reports thereon.
The appraisal of Willamette Management Associates, Inc.,
independent securities appraisers, and references thereto included
in this Prospectus have been included herein in reliance upon the
authority of said firm as an expert in securities valuations.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, if filed by the Company with the
Commission prior to the termination of the offering of the shares,
are incorporated herein by reference:
1. The Company's latest annual report on Form 10-K filed pursuant
to Section 13(a) or 15(d) of the Exchange Act.
2. All other reports filed by the Company pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the fiscal
year of the annual report referred to in Item 1 above.
3. All documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act.
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 Prospectus 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
or in a supplement hereto 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
Prospectus.
<PAGE>
<PAGE> 21
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
OF
THE ARA GROUP, INC.
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT dated as of the
7th day of April, 1988, which amends and restates the Stockholders'
Agreement dated as of December 14, 1984, and amended as of December
1, 1986 (the "Agreement"), by and among The ARA Group, Inc.
(formerly ARA Holding Company), a Delaware corporation ("ARA"), the
parties listed in Schedule I hereto (hereinafter referred to as the
"Management Investors" or their "Permitted Transferees", as
identified on such Schedule), the parties listed in Schedule II
hereto (hereinafter referred to as the "Individual Investors") and
the parties listed in Schedule III hereto (hereinafter referred to
as the "Institutional Investors").
The parties hereto (other than ARA) and any other person who
hereafter acquires equity securities of ARA pursuant to the
provisions of, and subject to the restrictions and rights set forth
in, this Agreement are sometimes hereinafter referred to
collectively, as the "Stockholders" or, individually, as a
"Stockholder." The Management Investors and the Individual
Investors are sometimes hereinafter referred to collectively as the
"Investor Group." Unless otherwise explicitly set forth herein, the
term "Management Investors" shall mean only those individuals so
specified in Schedule I hereto, exclusive of such individuals'
respective heirs, Permitted Transferees (as identified on such
Schedule or defined in Section 3.02(d) hereof) or other Transferees
(as defined in Section 3.01 hereof); provided that the Board of
Directors of ARA may, from time to time and in its sole discretion,
designate any Stockholder then employed full-time by ARA or its
Subsidiaries a "Management Investor." Stockholders who are
Permitted Transferees are identified as such in the foregoing
Schedule, along with the identity of their respective transferors.
Where full-time employees or directors have acquired or acquire
equity securities of ARA in joint tenancy with their spouses or in
any other manner other than sole direct ownership, such employee or
director is deemed to be a Management Investor and such record
owner is deemed to be his or her Permitted Transferee.
RECITALS
Pursuant to a proposed reclassification (the
"Reclassification") of the stock of ARA, at the effective time (the
"Effective Time") of the Reclassification, Management Investors
will receive shares of ARA's Class B Common Stock, par value $.01
per share ("Class B Common Stock") and, unless they were qualified
to and had previously elected to receive (various combinations of)
Class A Common Stock, par value $.01 per share ("Class A Common
Stock"), cash and/or installment notes in the Reclassification, all
other stockholders will receive solely cash. Stockholders who do
not receive in the Reclassification either Class A Common Stock or
Class B Common Stock shall cease to be parties to this Agreement.
The Class A Common Stock and the Class B Common Stock are
collectively referred to herein as the "Common Stock," and when so
referred to shall be treated as one class to which all the
provisions of this Agreement apply.
Pursuant to ARA's Restated Certificate of Incorporation (the
"Certificate of Incorporation"), upon the termination of employment
of a Management Investor, the shares of Class B Common Stock held
by such Management Investor and his Permitted Transferees shall be
converted into shares of Class A Common Stock; and upon any
transfer of shares of Class B Common Stock in accordance with the
terms of this Agreement other than to a Management Investor or
Permitted Transferees of a Management Investor, such shares shall
be converted into shares of Class A Common Stock.
For purposes of this Agreement only, the employment of a
Management Investor shall be deemed terminated if he shall cease to
be a director or an active, full-time employee of ARA or its
Subsidiaries.
<PAGE>
<PAGE> 22
The parties hereto also desire to restrict the sale,
assignment, transfer, encumbrance or other disposition of the
Common Stock, including issued and outstanding shares of Common
Stock as well as shares of Common Stock which may be issued
hereafter, or which may become issuable pursuant to the exercise of
options, and to provide for certain rights and obligations with
respect thereto as hereinafter provided.
In consideration of the premises and of the terms and
conditions herein contained, the parties hereto mutually agree as
follows:
1. Certain Definitions.
1.01 "Affiliate" shall mean a Person that directly, or
indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with another Person.
1.02 "Appraiser" shall mean a firm headquartered in the United
States of nationally recognized standing in the business of
appraisal or valuation of securities which does not own any stock
of ARA which has been selected by the Board of Directors to act as
an independent appraiser. The Board of Directors shall review its
selection of an Appraiser annually.
1.03 "Call" or "Called" shall mean ARA's option to purchase
Common Stock from the holder thereof referred to in Sections 6 and
9 hereof.
1.04 "Completely Disabled" and "Complete Disability" shall mean
a "permanent and total disability" as now defined in Section 105(d)
(9) of the Internal Revenue Code of 1986.
1.05 "Fair Market Value" of shares of Common Stock shall mean
the fair market value of such shares, as determined by an Appraiser
according to the most recent existing appraisal of shares of Common
Stock, which appraisal shall be as of a date not more than six
months prior to the use thereof; provided, however, that, after
such time as any shares of Common Stock are traded on a national
securities exchange or quoted on NASDAQ, "Fair Market Value" of
shares of Common Stock shall be based upon the "Average Market
Price" (as such term is defined in Article Sixth of the Company's
Certificate of Incorporation) of such publicly traded stock.
1.06 "Normal Retirement" shall mean voluntary termination of
employment after attaining the age of 60, on at least ninety days
prior written notice of such termination, where the retiree does
not intend to, at the time of termination, and in fact does not,
engage in full-time employment following such termination other
than employment that is with a governmental or a charitable, non-
profit organization and that is not competitive with ARA.
1.07 "Person" shall mean a corporation, an association, a
partnership, an organization, a business, an individual, a
government or political subdivision thereof or a governmental
agency.
1.08 "Promissory Note" shall mean a subordinated installment
note of ARA substantially in the form of Exhibit A to this
Agreement, with a stated annual rate of interest equal to the
Applicable Federal Rate (as such term is defined in the Internal
Revenue Code of 1986, as amended (the "Code")) as of the issue date
of the Promissory Note, as determined by ARA; with equal annual
installments of principal equal in amount to the least of (1) 10%
of the original principal amount of the Promissory Note, (2) the
Management Investor's highest annual base salary as an employee of
ARA, or (3) $100,000; and with the final installment of principal
equal to the outstanding balance and due at the final maturity; and
with the first installment of principal due on the April 15 or
October 15 occurring closest to the first anniversary of the issue
date of the Promissory Note; and with the final maturity no later
than the tenth anniversary of the Management Investor's termination
of employment; and with such other insertions as ARA shall
reasonably make.
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1.09 "Put" shall mean the option of the holder to cause ARA to
purchase Common Stock referred to in Section 5 hereof.
1.10 "Subsidiary" shall mean any corporation or other entity of
which ARA shall, directly or indirectly, own 50% or more of the
equity, as determined for purposes of this Agreement by the ARA
Board of Directors and any other corporation or other entity in
which ARA shall directly or indirectly have an equity investment
and which the ARA Board of Directors shall in its sole discretion
designate.
1.11 "Supermajority" shall have the meaning as defined in ARA's
Certificate of Incorporation, as it may be restated or amended from
time to time.
SECTION 2 IN ITS ENTIRETY SHALL NOT APPLY TO ANY HOLDER OF
SECURITIES OF ARA HOLDING COMPANY WHICH IS EITHER (A) A "BANK", A
"BANK HOLDING COMPANY" OR ANY "AFFILIATE" THEREOF (AS SUCH TERMS
ARE DEFINED UNDER THE BANK HOLDING COMPANY ACT OF 1956) OR (B) A
TRANSFEREE OF A HOLDER SPECIFIED IN CLAUSE (A) AND ANY SUCH HOLDER
IS NOT A PART OF THIS SECTION 2. SECTION 2 MAY BE AMENDED, WAIVED
OR TERMINATED WITHOUT THE CONSENT OF ANY OF THE HOLDERS SPECIFIED
IN THE PRECEDING SENTENCE.
____________________________
2. Corporate Governance.
2.01 Board of Directors-ARA
(a) Number of Directors. ARA shall be governed by a Board of
Directors consisting of not less than nine but not more than
nineteen members, as set forth in the Certificate of
Incorporation and in the By-Laws of ARA.
(b) Management Directors. The number of the members of the
Board of Directors who are Management Investors and active,
full-time employees of ARA or its Subsidiaries (such persons
and their successors as provided in this Section 2 are,
collectively, referred to herein as the "Management
Directors") shall not exceed (A) the number of directors as
last fixed by resolution of the Board of Directors and
otherwise increased in accordance with paragraph 7(b) of
Part 4A of ARA's Certificate of Incorporation, plus (B) one,
minus (C) a Supermajority (such maximum number of Management
Directors is referred to herein as the "Maximum Number of
Management Directors").
(c) Nominations. The entire Board of Directors, acting by a
Supermajority vote, shall nominate and recommend to holders
of Common Stock entitled to vote the proposed members of the
Board of Directors for the succeeding year; provided,
however, that up to the Maximum Number of Management
Directors shall be as designated by the majority vote of the
Management Directors then in office. If the incumbent
Management Directors shall fail to select any of their
nominees by majority vote, then the nominees shall be
selected by the Chief Executive Officer of ARA. At such time
as a Management Director shall cease for any reason to be a
stockholder of ARA, such Management Director shall
immediately tender his resignation from the Board of
Directors (or, if he does not resign, shall be removed by
the vote of a majority of the votes of the outstanding
shares of Common Stock of ARA entitled to vote in the
election of directors). If none of the Management Directors
any longer serves on the Board, then, the Chief Executive
Officer of ARA shall be elected by the vote of a
Supermajority of the then members of the Board to fill the
place of one of the Management Directors and he shall
nominate the other Management Directors. Under all other
circumstances, the Chief Executive Officer shall be selected
by the vote of a Supermajority of the members of the Board.
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<PAGE> 24
(d) Covenant to Vote. Each of the Management Investors and
their Permitted Transferees shall vote the shares of Common
Stock owned by him at any annual or special meeting of
stockholders of ARA called for the purpose of voting on the
election of directors or by consensual action of
stockholders with respect to the election of directors, in
favor of the election of the directors nominated in
accordance with this Section 2.01. In addition, each
Stockholder agrees to vote the shares of Common Stock owned
by him upon any matter submitted to a vote of the
stockholders in a manner so as to be consistent and not in
conflict with, and to implement, the terms of this
Agreement.
(e) Filling Vacancies. As provided for in Part 5C of ARA's
Certificate of Incorporation, if at any time a vacancy is
created on the Board of Directors by the death, removal or
resignation of any one of the directors, no action shall be
taken by the Board of Directors except by a Supermajority
vote of the directors, until the Board of Directors is
reconstituted with the appropriate number of directors in
accordance with this Section 2.01, other than actions to so
reconstitute the Board of Directors. In the event of any
such death, removal or resignation, the remaining directors
shall meet within ten days for the purpose of approving and
appointing a director nominated to fill such vacancy.
(i) If a vacancy is created by the death, removal or
resignation of a Management Director, the incumbent
Management Directors shall have the right to select a
nominee to fill such vacancy within ten business days of
the occurrence thereof. If the incumbent Management
Directors shall fail to select a nominee by majority
vote, such nominee shall be selected by the Chief
Executive Officer of ARA within the three following
business days. If the Management Directors or the Chief
Executive Officer shall not have nominated a person to
fill such vacancy within such ten days, or three day
period, as the case may be, the Board of Directors shall
meet on the 14th day following the creation of such
vacancy or as soon thereafter as is practicable and a new
director or directors shall be appointed by action of a
majority of the remaining directors, which action shall
be the first action to be taken at such meeting. In the
event the Board shall fail to act to fill such vacancy as
provided herein at two consecutive meetings of the Board
following the creation of such vacancy, such vacancy may
be filled by the vote of a majority of the votes of the
outstanding shares of Common Stock entitled to vote in
the election of directors.
(ii) If a vacancy is created by the death, removal or
resignation of any of the directors who is not a
Management Director, the remaining directors, acting by a
Supermajority vote, shall select a nominee to fill such
vacancy until the next annual meeting of Stockholders. In
the event the Board shall fail to act to fill such
vacancy as provided herein at two consecutive meetings of
the Board to be held within thirty days following the
creation of such vacancy, such vacancy may be filled by
the vote of a majority of the votes of the outstanding
shares of Common Stock entitled to vote in the election
of directors.
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<PAGE> 25
3. Transfer of Common Stock-General.
3.01 Shares of Common Stock Subject to this Agreement. Unless
otherwise explicitly provided herein, and except in connection with
a sale of shares included in a registered public offering under the
Securities Act of 1933, as amended (the "Securities Act"), no
Stockholder shall sell, assign, pledge, encumber or otherwise
transfer any shares of Common Stock to any person (regardless of
the manner in which such Stockholder initially acquired such shares
of Common Stock) nor shall ARA issue, sell or otherwise transfer
any shares of ARA Common Stock to any person (all such persons,
regardless of the method of transfer, shall be referred to
collectively as "Transferees" and individually as a "Transferee")
unless (a) such shares bear legends as provided in Section 14 to
the effect that such shares are not registered under the Securities
Act and to the effect that such shares are subject to the terms of
this Agreement, (b) such Transferee shall have executed, as a
condition to its acquisition of shares (or, in the case of a
Transferee by will or the laws of descent, record ownership on the
books of ARA) of Common Stock, an appropriate document confirming
that such Transferee takes such shares subject to all the terms and
conditions of this Agreement and (c) (other than Transferees by
will or the laws of descent) such document shall have been
delivered to and approved by ARA prior to such Transferee's
acquisition of shares (or, in the case of a Transferee by will or
the laws of descent, record ownership on the books of ARA) of
Common Stock. ARA shall not unreasonably withhold or delay its
approval of any such document. ARA shall not transfer upon its
books any shares of Common Stock held or owned by any of the
Stockholders to any person except in accordance with this
Agreement. A Transferee who is not already a party to this
Agreement, by executing the document referred to in clause (b)
above, shall thereby become entitled to the benefits of this
Agreement and shall be deemed to be an "Institutional Investor,"
except if such Transferee is an employee of the Company, in which
case he shall be deemed to be a "Management Investor," or except if
such Transferee is an Individual Investor or a Permitted Transferee
of an Individual Investor, in which case he shall be deemed to be
an "Individual Investor," or except if such Transferee is a
Permitted Transferee of a Management Investor, in which case he
shall be deemed to be such "Permitted Transferee".
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<PAGE> 26
3.02 Certain Restrictions.
(a) Notwithstanding anything to the contrary set forth
herein, except as provided in Section 3.02(d) (certain
permitted transfers), Sections 5 and 6 (transfers by
Management Investors in the event of death or termination of
employment), Section 7 (transfers approved by the Board of
Directors) and Section 9 (options to purchase involuntarily
transferred shares) (i) no Stockholder shall transfer any
shares of Common Stock at any time, unless any such sale,
assignment, pledge or encumbrance or other transfer shall
have been effected in accordance with the terms of this
Agreement; and (ii) no Management Investor or any of such
Management Investor's Permitted Transferees shall directly
or indirectly sell, assign, pledge or encumber or otherwise
transfer (except, in accordance with Section 3.02(e) hereof
pledges or encumbrances for the benefit of ARA, a commercial
bank, a savings and loan association or other lending
institution) any shares of Common Stock, other than Limited
Transfers, as defined in the following sentence.
"Limited Transfers" shall mean transfers made after January
31, 1990 (or after any earlier termination of employment of
such Management Investor) (A) that are effected in
accordance with this Agreement including, without
limitation, the provisions of Section 4 hereof (rights of
first offer and reoffer) and (B) that are limited for any
Management Investor and his Permitted Transferees in any one
fiscal year of ARA to the lesser of (I) the number of shares
with a fair market value at the time of such transfers (as
determined by the Board of Directors) of $100,000 or (II)
10% of the greatest number of shares previously held at any
time by such Management Investor and his Permitted
Transferees; provided, however, that the limitation in
clause (B) shall not apply to transfers made after December
19, 1999 (or if earlier after the death, Complete Disability
or Normal Retirement of such Management Investor). For
purposes of clause (B) of the definition of "Limited
Transfers", the ability to transfer shares which could have
been, but were not, so transferred in any fiscal year, may
be "carried over" in any subsequent fiscal year.
(b) No Stockholder shall sell, assign, pledge, encumber or
otherwise transfer any shares of Common Stock at any time if
such action would constitute a violation of any federal or
state securities or blue sky laws or a breach of the
conditions to any exemption from registration of the Common
Stock under any such laws or a breach of any undertaking or
agreement of such Stockholder entered into pursuant to such
laws or in connection with obtaining an exemption
thereunder. Each Stockholder agrees that any shares of
Common Stock to be purchased by such Stockholder shall bear
appropriate legends to be determined by the Company, in
addition to the legend provided for in Section 14 hereof
with respect to the Securities Act, restricting the sale or
other transfer of such stock in accordance with applicable
state securities or blue sky laws. Any Stockholder who
proposes to sell, assign, pledge, encumber or transfer any
shares of Common Stock may deliver to ARA an opinion of
counsel that such action would not result in any such
violation or breach. The delivery of such opinion shall be
deemed to establish compliance with the provisions of this
Section 3.02(b) unless, within ten days after the receipt by
ARA of such opinion, counsel for ARA shall deliver an
opinion that such action would result in any such violation
or breach (such opinion to state the basis of the legal
conclusions reached therein).
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<PAGE> 27
(c) No Stockholder shall grant any proxy or enter into or
agree to be bound by any voting trust with respect to Common
Stock nor shall any Stockholder enter into any stockholder
agreement or arrangement of any kind with any person with
respect to Common Stock inconsistent with the provisions of
this Agreement (whether or not such agreement and
arrangement is with other Stockholders or holders of Common
Stock that are not parties to this Agreement), including but
not limited to, any agreement or arrangement with respect to
the acquisition, disposition or voting of shares of Common
Stock, or act, for any reason, as a member of a group or in
concert with any other persons in connection with the
acquisition, disposition or voting of shares of Common Stock
in any manner which is inconsistent with the provisions of
this Agreement.
(d) Other than the restrictions set forth in Section 3.02(b)
and Section 4.06, none of the restrictions contained in this
Agreement with respect to transfers of shares of Common
Stock shall apply to the following transfers: (A) if made
for nominal consideration or as gifts: (i) any transfer or
assignment to any one or more of the following relatives of
the Stockholder - spouse, child, grandchild, parent - or to
a trust of which there are and continue to be, during the
term of this Agreement no principal beneficiaries other than
one or more of such relatives; (ii) any transfer to any
charitable organization which qualifies as such under
Section 5.01 (c) (3) or any successor provision of the Code;
(iii) any transfer to a legal representative in the event
any Stockholder becomes mentally incompetent; (iv) any
transfer of record title to any nominee or custodian,
provided that the Stockholder so transferring such shares
remains the beneficial owner thereof; (B) any transfer among
members of a family, their trusts or other entities, if
approved by the Board of Directors; (C) any transfer among
Institutional Investors which became Stockholders in
December 1984; and (D) with respect to a corporate or
partnership Stockholder, transfers between an Affiliate and
such corporate or partnership Stockholder (it being
understood with respect to such Affiliate that the later
sale of such Affiliate as part of a sale or series of sales
of substantial assets other than Common Stock would not
constitute an indirect sale of Common Stock by such
corporate or partnership Stockholder, and need not be made
within the terms of this Agreement, provided that an officer
of such institution certifies that such sale is not being
undertaken to evade the transfer restrictions herein);
provided, however, that in each of cases (A) through (D),
each transferee, donee or distributee (the "Permitted
Transferees") agrees to take subject to and to comply with
the provisions of this Agreement. "Permitted Transferees"
include the persons identified as such on the Schedules
hereto.
(e) A Stockholder shall be entitled to pledge his shares of
Common Stock to ARA, a commercial bank, savings and loan
institution or any other lending or financial institution as
security for any indebtedness of such Stockholder to such
lender; provided that such lender shall first agree not to
dispose of such shares except in compliance with the
provisions of this Agreement; and further provided that the
lender shall agree upon the realization of its security the
same shall be subject to all of the terms and conditions of
this Agreement (except those prohibiting transfers by
Management Investors under Section 3.02(a)).
4. Rights of First Offer and Reoffer.
4.01 Transfers by Management Investors.
(a) Except as provided in Sections 3.02(d) and (e), if any
Management Investor or Permitted Transferee of a Management
Investor at any time desires to sell or otherwise transfer
any shares of Common Stock, the selling Management Investor
shall first give written notice (a "Management Investor's
Notice") to ARA stating such selling Management Investor's
<PAGE>
<PAGE> 28
desire to make such transfer, the number of shares of Common
Stock to be transferred (the "Offered Management Shares"),
and the price which the selling Management Investor proposes
to be paid for the Offered Management Shares, which proposed
price shall not be greater than the Fair Market Value of (an
equivalent number of) shares of Class B Common Stock (the
"First Offer Price").
(b) Upon receipt of the Management Investor's Notice, ARA
shall have the irrevocable and exclusive option to buy up to
all of the Offered Management Shares at the First Offer
Price; provided, however, that ARA shall not have the right
to purchase any of the Offered Management Shares unless
either (i) ARA purchases all such Offered Management Shares,
or (ii) such selling Management Investor consents to the
purchase of less than all of the Offered Management Shares.
ARA's option under this Section 4.01(b) shall be exercisable
by a written notice to such Selling Management Investor,
given within forty-five days from the date of the Management
Investor's Notice.
4.02 Transfers by Outside Investors.
(a) Except as provided in Sections 3.02(d) and (e), if any
Individual Investor or Institutional Investor (collectively,
an "Outside Investor") at any time desires to sell or
otherwise transfer any shares of Common Stock, including
pursuant to the registration rights under Section 2.1 of
ARA's Amended and Restated Registration Rights Agreement
amended and restated as of April 7, 1988 (the "Registration
Rights Agreement"), the selling Outside Investor shall first
give written notice (a "Seller's Notice") to ARA stating
such selling Outside Investor's desire to make such
transfer, the number of shares of Common Stock to be
transferred (the "Offered Investors' Shares"), and the price
which the selling Outside Investor proposes to be paid for
the Offered Investors' Shares (the "First Offer Investors'
Price").
(b) Upon receipt of the Seller's Notice, ARA shall have the
irrevocable and exclusive option to buy up to all of the
Offered Investors' Shares at the First Offer Investors'
Price; provided, however, that ARA shall not have the right
to purchase any of the Offered Investors' Shares unless
either (i) ARA purchases all such Offered Investors' Shares,
or (ii) such selling Outside Investor consents to the
purchase of less than all of the Offered Investors' Shares.
ARA's option under this Section 4.02(b) shall be exercisable
by a written notice to such selling Outside Investor, given
within forty-five days from the date of the Seller's Notice.
4.03 Transfer of Offered Shares to Third Parties. If the
Management Investor's Notice or the Seller's Notice (collectively,
the "Notice") required to be given pursuant to Section 4.01 or
4.02, as the case may be, has been duly given, and ARA determines
not to exercise its option to purchase the Offered Management
Shares or the Offered Investors' Shares (collectively, the "Offered
Shares") or determines (with the consent of the Stockholder who has
made the First Offer) to exercise its option to purchase less than
all the Offered Shares, then the Stockholder who has made such
First Offer shall be free, for a period of ninety days from the
earlier of (i) the expiration of the option period with respect to
such First Offer pursuant to Section 4.01 or 4.02, as the case may
be, or (ii) the date such Stockholder shall have received written
notice from ARA stating that ARA intends not to exercise in whole
or in part the option granted under Section 4.01 or 4.02, as the
case may be, to sell to any third-party Transferees the remaining
Offered Shares, at a price equal to or greater than the First Offer
Price, in the case of Management Investors or their Permitted
Transferees, and the First Offer Investors' Price, in the case of
Outside Investors; provided, however, that the Transferee complies
with the provisions of Section 3.01 and provided further that, in
the case where such selling Stockholder is a Management Investor or
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<PAGE> 29
a Management Investor's Permitted Transferee, (i) such Transferee
shall have been approved by ARA as a suitable investor in a
privately-owned services management company and (ii) if any of such
Offered Shares shall be shares of Class B Common Stock, then, upon
any such transfer, such shares of Class B Common Stock shall, in
accordance with the terms of the Certificate of Incorporation,
convert into and become shares of Class A Common Stock and shall
continue to be subject to the terms and provisions of this
Agreement. ARA shall not unreasonably withhold or delay such
approval. Anything herein to the contrary notwithstanding, the
90-day period described in this Section 4.03 shall be extended until
the completion of all sales pursuant to a registration statement, a
request for which was made substantially concurrently with the
Notice.
4.04 Reoffers. In the event the proposed purchase price of a
third-party Transferee for the Offered Shares is less than the
First Offer Price or the First Offer Investors' Price, as the case
may be, the Stockholder desiring to sell at such lesser price shall
not sell or otherwise transfer any of the Offered Shares unless
such selling Stockholder shall first reoffer the Offered Shares at
such lesser price to ARA by giving written notice (the "Reoffer
Notice") to ARA of such selling Stockholder's intention to make
such transfer at such lower price (the "Reoffer Price"). ARA shall
then have an irrevocable and exclusive option to purchase all or
part of the Offered Shares at the Reoffer Price, exercisable in the
same manner as provided in Section 4.01 or 4.02, as the case may
be. In the event ARA does not then elect to purchase all the
remaining Offered Shares, or ARA elects (with the consent of the
Stockholder desiring to sell) to purchase less than all the
remaining Offered Shares, the remaining Offered Shares may be sold
by such selling Stockholder within thirty days following the
earlier of (i) the expiration of the option period with respect to
such Reoffer pursuant to Section 4.01 or 4.02, as the case may be,
or (ii) the last date on which such selling Stockholder shall have
received written notice from ARA stating that ARA intends not to
exercise in whole or in part the option granted in this Section
4.04, at a price equal to or greater than the Reoffer Price;
provided, however, that the Transferee complies with the provisions
of Section 3.01; and provided further that, in the case where such
selling Stockholder is a Management Investor or a Management
Investor's Permitted Transferee, such Transferee shall have been
approved by ARA as a suitable investor in a privately-owned
services management company. ARA shall not unreasonably withhold or
delay such approval.
4.05 Waiting Period With Respect to Subsequent Transfers. In
the event that ARA does not exercise its option to purchase any or
all of the Offered Shares at the First Offer Price or the First
Offer Investors' Price, as the case may be, or at the Reoffer
Price, and the Stockholder desiring to sell shall not have sold the
remaining Offered Shares to any Transferee for any reason before
the expiration of the thirty-day period described in Section 4.04
in the event of a Reoffer, or, if no Reoffer Notice is given, the
ninety-day period described in Section 4.03, then such selling
Stockholder shall not sell any shares of Common Stock to any
Transferee or other Stockholder (other than Permitted Transferees)
at any price for a period of three months from the last day of such
thirty- or ninety-day period, as the case may be.
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<PAGE> 30
4.06 No Sales of Control.
(a) Subject to Section 4.06(b) and except as provided in
Section 7 (transfers approved by the Board of Directors), no
Person or group of Persons, as defined in Section 13 (d) (3)
of the Securities Exchange Act of 1934 (the "Exchange Act"),
including for the purposes of this paragraph as part of such
Person's group, Transferees pursuant to Sections 3.02(d) and
(e), shall become (whether through the purchase of shares
pursuant to this Agreement or otherwise or through any other
action) the holder, directly or indirectly, of 10% or more
of either the outstanding shares of Class A Common Stock or
the outstanding shares of Class B Common Stock. Any
transaction resulting in a violation of this Section 4.06(a)
shall be void, and of no effect against ARA, and ARA shall
not record any such purported transfer in its stock transfer
books. Two or more Stockholders owning in the aggregate 10%
or more of such outstanding shares shall not be deemed to be
a group of Persons for the purposes of this Section 4.06
solely because such Stockholders are parties to this
Agreement or because such Stockholders are related by blood
or marriage and/or because such Stockholders are officers or
directors of ARA.
(b) The provisions of Section 4.06(a) shall not apply to the
acquisition by ARA, directly or indirectly, of shares of
Common Stock, notwithstanding that as a result of such
acquisition any Person or group of Persons acting in concert
would own 10% or more of such outstanding shares subsequent
to such an acquisition, but shall apply to any subsequent
acquisition or other action by such Person or group of
Persons.
(c) Except as provided in Section 7 (transfers approved by
the Board of Directors), to the extent an Institutional or
Individual Investor (together in each case with any
Transferees), shall, at any time prior to April 30, 1988,
hold more shares of Class A Common Stock than one-half the
aggregate number of shares of Special Participating Stock,
Class B or Class C, that he held on February 26, 1988 (which
date was prior to the effective time of the
Reclassification), subject to adjustment for stock
dividends, stock splits, reclassification or the like
occurring subsequent to the Effective Time, ARA shall have
the right to Call such shares. The purchase price for such
shares purchased hereunder shall be $2,650 per share,
payable in cash at the Closing Date.
4.07 Form of Consideration for Shares. No offer to purchase or
to sell shares of Common Stock shall be deemed to be a valid offer
under this Section 4 unless the purchase price of such offer is
payable in cash or securities that can be readily valued by
reference to quoted trading prices. The purchase price of shares
upon exercise of an option under this Section 4 in respect of a
Notice which specifies only cash as the form of consideration shall
be payable only in cash.
4.08 Merger Transaction. Subject to any applicable provisions of
the Certificate of Incorporation or any loan agreement or
instruments to which ARA is a party, ARA may enter into any
agreement of merger to merge with or into any other corporation;
and, in such event, Sections 4.01 through 4.07 of this Agreement
shall not be applicable to such merger and all shares may be
transferred for such consideration as approved by the Board of
Directors and the Stockholders in accordance with applicable law.
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<PAGE> 31
4.09 Transfers in a Public Offering. In the event a request is
made under Section 2.1 of the Registration Rights Agreement for a
demand registration, then the procedures set forth in Sections 4.02
through 4.05 shall be modified in the following respects:
(a) Such request shall also provide the information required
to be stated in a Seller's Notice, and shall also constitute
a Seller's Notice.
(b) Prior to the expiration of the twenty-one day period
under the Registration Rights Agreement within which the
Company is to file a registration statement covering the
shares the holder of which requested a demand registration,
ARA shall have the irrevocable and exclusive option to buy
all (and only all) of the Offered Investors' Shares at the
First Offer Investors' Price, which shall be the proposed
public offering price after reduction for commissions,
discounts and the like.
(c) In the event the public offering price (after reduction
for commissions, discounts and the like) is more than 10%
lower than the First Offer Investors' Price, or the number
of shares included in the offering is reduced to less than
75% of the shares as to which the Seller's Notice was
delivered (otherwise than by reason of a cut down by the
Underwriter) then Section 4.04 shall apply, but such section
shall not otherwise apply to any sale pursuant to a
registration statement.
(d) In the event all of the Offered Investors' Shares are
elected to be purchased, the demand registration shall be
held in abeyance pending the closing of such purchase in
accordance with this Agreement.
5. Put of Shares upon Death, Complete Disability or Normal
Retirement.
5.01 Put in Event of Death, Complete Disability or Normal
Retirement. Subject to any financing agreements in connection with
the Reclassification or any other instruments or agreements of ARA
from time to time in effect restricting or otherwise governing the
repurchase or retirement of shares of ARA's capital stock (the
"Loan Agreements") and to applicable law, unless a Call pursuant to
Section 6.01 shall have been exercised by ARA, upon the death,
Complete Disability or Normal Retirement of any Investor Group
member, at the option of such Investor Group member, such Investor
Group member's estate, heirs or personal representative, and such
Investor Group member's Permitted Transferees (other than Permitted
Transferees specified in Section 3.02(d) (ii)) (collectively, the
"Holders" of such Investor Group member's shares) and within thirty
days of receipt by ARA of a Seller's Notice from such Holders,
which notice must be given within thirty days from the date of the
appointment of a personal representative of such Investor Group
member, the date he became Completely Disabled, or the date of his
Normal Retirement, ARA shall purchase from such Holders' the shares
of Common Stock held by such Holders specified in such Seller's
Notice up to 30% of such shares so held at a purchase price
determined in accordance with Section 5.02. ARA shall be under no
obligation to purchase such shares unless it shall have received a
Seller's Notice from such Holders in accordance with this Section
5.01.
5.02 Purchase Price of Put Shares. The purchase price for the
shares of Common Stock purchased pursuant to Section 5.01 shall be
the Fair Market Value of (an equivalent number of) shares of Class
B Common Stock, for the shares of a Holder of a Management
Investor's shares, and shall be the Fair Market Value of shares of
Class A Common Stock for the shares of a Holder of an Individual
Investor's shares. ARA shall satisfy its obligation to purchase
shares upon the exercise of any Put granted under Section 5.01 with
cash.
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<PAGE> 32
6. Call upon Termination of Employment.
6.01 Call in Event of Termination. Unless the shares of Common
Stock held by the Holders of any Management Investor's shares have
been earlier sold pursuant to Section 4 (rights of first offer and
reoffer), including the transfer on the books of the Company
pursuant to Section 3.01, ARA shall have an exclusive and
irrevocable option, at any time and from time to time during the
period of ten years following the termination of employment of such
Management Investor for any reason whatsoever (including without
limitation death, Complete Disability or Normal Retirement) to make
a purchase or purchases of up to all of the shares of Common Stock
owned by such Management Investor and his Permitted Transferees, at
a purchase price, with respect to any such exercise, determined in
accordance with Section 6.02.
6.02 Purchase Price. The purchase price per share for any shares
of Common Stock purchased pursuant to Section 6.01 shall be the
lesser of (i) the Fair Market Value of (an equivalent number of)
shares of Class B Common Stock at the time the option is exercised
and (ii) the Fair Market Value of (an equivalent number of) shares
of Class B Common Stock at the date of termination of employment,
plus 8% simple interest on such amount from the date of termination
of employment through the date the option is exercised and the
shares of Common Stock thereunder are purchased. ARA shall satisfy
its obligations to purchase shares upon the exercise of such Calls
with cash up to the least of $100,000, or the Management Investor's
highest annual base salary as an employee of ARA, or 10% of the
aggregate purchase price for such Called shares and, at the
Company's option, with cash and/or Promissory Notes valued at their
principal amount for the remainder.
6.03 Sale of ARA Following Call. In the event that any entity,
person, or any group of persons acting in concert (excluding the
Management Investors as a group), acquires in any manner shares of
Common Stock with 50% of the ordinary voting rights of the
outstanding shares of Common Stock or in the event of the
redemption or repurchase of all the shares of Common Stock in
connection with a sale of all or substantially all the assets of
ARA, or the winding up, dissolution or liquidation of ARA, within
ninety days from the date of a sale pursuant to Section 6.01 then,
subject to the Loan Agreements, ARA and/or the purchaser of such
shares of Common Stock with 50% of the ordinary voting rights of
the outstanding shares of Common Stock shall pay to the Holders
whose shares have been so purchased the excess, if any, of the
amount per share realized by ARA's stockholders upon such
acquisition, redemption, repurchase, winding up, dissolution or
liquidation over the purchase price per share paid to such Holders
pursuant to Section 6 less the interest paid on any Promissory
Notes paid as consideration for such stock and less a financing
cost for carrying such stock for any cash received, based on an
interest rate equal to the rate paid by ARA under the Loan
Agreements at the date of payment hereunder, for the period from
the date of payment to such Holders pursuant to Section 6 to the
date of such acquisition, redemption, repurchase, winding up,
dissolution or liquidation, for each share purchased by ARA.
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<PAGE> 34
7. Authority of Board of Directors to Approve Transfers;
Actions by Board of Directors. Notwithstanding any other provision
of this Agreement, the Board of Directors shall have the authority
to approve any transfer, or class, category or type of transfer, of
Common Stock, and any such transfer that shall have been so
specifically approved by the Board of Directors shall not be
prohibited by this Agreement. Such authority of the Board of
Directors shall extend to, among other things, (i) the authority to
create an internal market for shares of the Company's stock
pursuant to which Management Investors would be offered the
opportunity to sell a portion of their shares at the times and on
the terms set by the Board of Directors, and (ii) the authority to
waive entirely the restrictions (including, without limitation,
restrictions relating to rights of first offer and reoffer, calls
upon termination of employment and sales, transfers and other
dispositions of shares) set forth in this Agreement which relate to
Management Investors and which do not relate to Outside Investors.
Any such approval may be revoked by the Board at any time without
notice and such revocation shall be effective with respect to any
action, including any or all transfers or proposed transfers,
unless, prior to such revocation, the shares have been presented to
the transfer agent for the purpose of registering such transfer, in
proper form and satisfying the requirements of Section 8-401 of the
Uniform Commercial Code or such other applicable law relating to
the duty of an issuer to register securities transfers.
The Board of Directors may delegate any and all authority it
has under this Agreement to any committee thereof and/or to any
authorized officer or agent.
8. No Access to Information. Each of the parties to this
Agreement acknowledges that, at the time of a sale by a Stockholder
of shares of Common Stock pursuant to this Agreement, there may
have occurred or be proposed or pending an event or a transaction
that could affect the fair market value of the Common Stock, and
that the fair market value of the Common Stock as of a prior date
in all likelihood will vary substantially from the fair market
value as of the current date, and further acknowledges that ARA may
have valid business reasons not to, and in any case shall not be
required to, disclose any event or transaction that may have
occurred or be proposed or pending at the time of any such sale.
9. Involuntary Transfer of Shares.
9.01 Certain Involuntary Transfers; Seller's Notice. Except for
involuntary transfers (by foreclosure or otherwise) to ARA of
shares of Common Stock pledged to ARA by any Management Investor or
other Stockholder employed by ARA or by such Management Investor's
or other employed Stockholder's personal representative, estate or
heirs or Permitted Transferees, in the event a Stockholder shall
involuntarily transfer directly or indirectly any or all of his
shares, for any reason other than as a result of those events
specified in Section 5 or 6, such Stockholder shall give written
notice within thirty days of such involuntary transfer (the
"Stockholder Notice") to ARA, with a copy to the Transferee,
stating the fact that the involuntary transfer occurred, the reason
therefor, the date of the transfer, the name and address of the
Transferee and the number of shares acquired by the Transferee (the
"Acquired Shares"). For purposes of this Section 9 an involuntary
transfer shall include, without limitation, a court-ordered
transfer, constructive trust or other device designed to transfer
economic benefit of share ownership.
9.02 Right to Repurchase. For a period of sixty days from the
date of receipt of the Stockholder Notice or, failing receipt of
such notice, sixty days from the date ARA sends written notice to
the Transferee that the transfer is deemed to be an involuntary
transfer subject to repurchase under this Agreement, ARA shall have
an irrevocable and exclusive option to buy all of the Acquired
Shares, exercisable in the same manner as provided in Section 4.01,
and the provisions of such applicable Section shall be followed in
their entirety except that the purchase price shall be as provided
in Section 9.03.
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<PAGE> 34
9.03 Purchase Price. The purchase price for shares purchased
pursuant to Section 9.02 shall be payable in cash and shall be
equal to the Fair Market Value of (an equivalent number of) shares
of Class B Common Stock.
10. No Right to Continued Employment. Neither this Agreement
nor the ownership of Common Stock by a Management Investor shall
confer upon any Management Investor any right to continue in the
employ of ARA or any of its Subsidiaries or limit in any respect
the right of ARA or its Subsidiaries to terminate his employment at
any time.
11. Avoidance of SEC Registration. Notwithstanding any other
provision of this Agreement that may be to the contrary, unless
ARA's Board of Directors shall have given its prior approval, no
transfer of shares of Common Stock subject to this Agreement shall
be permitted if (i) at the time of such proposed transfer ARA does
not have a class of equity securities registered, or required to be
registered, under Section 12 of the Exchange Act, and (ii) such
transfer, in the determination of the Board of Directors, shall
create a significant risk that such registration would be required
in the future. In making such determination, the Board shall
consider, among other things, the possible requirements of ARA to
issue shares in the future. For purposes of this Section 11, any
increase in the number of holders of record of a class of ARA's
equity securities at a time when the number of record holders
exceeds 450 shall be deemed to create a significant risk that
registration of such class of equity securities under Section 12 of
the Exchange Act would be required in the future. Any transaction
resulting in the violation of this Section 11 shall be void and of
no effect against ARA, and ARA shall not record any such proported
transfer on its stock record books.
12. Closing; Purchase Price. Any selling Stockholder and ARA,
as purchaser, of shares of Common Stock pursuant to Section 4, 5, 6
or 9 shall mutually determine a closing date (the "Closing Date")
which, unless this Agreement otherwise explicitly provides, shall
be not more than five business days, subject to any applicable
regulatory waiting periods, after the expiration of the option
period described in the Section pursuant to which such shares may
be sold in accordance with this Agreement, or if any such day is
not a business day, then the first business day thereafter.
Notwithstanding anything in this Agreement to the contrary, the
Closing Date may be delayed in any case in which ARA cannot, in
compliance with the Loan Agreements or applicable law, purchase any
shares of Common Stock that it is otherwise obligated to purchase
until the earliest practicable date when such closing may be
effected in compliance with such Loan Agreements or applicable law.
The closing shall be held at 11:00 a.m., local time, at the offices
of ARA or at such other time or place as the parties may agree.
The most recent existing appraisal of fair market value as
determined by an Appraiser shall be determined, for purposes of
Sections 5, 6 and 9, at the time the written notice exercising the
Put is received by ARA or the written notice exercising the Call is
received by the Stockholder, as the case may be. The determination
date of the fair market value shall be appropriately changed if the
Closing Date is delayed in accordance with the foregoing paragraph.
13. Deliveries at Closing; Method of Payment of Purchase Price.
On the Closing Date, any selling Stockholder shall deliver
certificates with appropriate transfer tax stamps affixed and with
stock powers endorsed in blank, representing the shares of Common
Stock to be purchased, and ARA, as purchaser shall deliver to such
Stockholder the purchase price which is payable in cash (or by wire
transfer or certified check payable in New York or Philadelphia
Clearing House funds) and the other consideration, if any, to be
given in exchange for such shares. In addition, if the person
selling shares is the personal representative of a deceased
Stockholder, the personal representative shall also deliver to the
purchaser or purchasers (i) copies of letters testamentary or
letters of administration evidencing his appointment and
qualification, (ii) a certificate issued by the Internal Revenue
Service pursuant to Section 6325 of the Code discharging the shares
being sold from liens imposed by the Code and (iii) an estate tax
waiver issued by the state of the decedent's domicile.
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<PAGE> 35
14. Endorsement of Stock Certificates. A copy of this Agreement
shall be filed with the Secretary of ARA and kept with the records
of ARA. Each of the Stockholders hereby agrees that each
outstanding certificate representing shares of Common Stock shall
bear endorsements reading substantially as follows:
(a) The securities represented by this certificate have not
been registered under the Securities Act of 1933, as
amended, and may not be transferred, sold or otherwise
disposed of except while such a registration is in effect or
pursuant to an exemption from registration under said Act.
(b) The securities represented by this certificate are
subject to the right of the Corporation and the Stockholders
of the Corporation to repurchase such securities and the
right of the registered holder to sell such securities to
the Corporation on the terms and conditions set forth in a
Stockholders' Agreement dated as of December 14, 1984, as
the same may be amended from time to time, a copy of which
may be obtained from the Corporation or from the holder of
this instrument. No transfer of such securities will be made
on the books of the Corporation unless accompanied by
evidence of compliance with the terms of such Agreement.
Such certificate shall bear any additional endorsement which
may be required for compliance with state securities or blue
sky laws.
15. Term. The terms and provisions of this Agreement which
relate to Management Investors shall terminate on the 20th
anniversary of the Effective Time. The terms and provisions of this
Agreement which relate to Outside Investors shall terminate on the
20th anniversary of the Effective Time or, if earlier, on the
closing date of the first to occur of (i) any merger or other
business combination of ARA with or into any other corporations,
except a merger with or into ARA Services, Inc. or a merger or
other business combination in which the stockholders of ARA
immediately prior thereto constitute more than a majority of the
stockholders (by value of equity securities held) following such
merger, and (ii) the sale of shares of Class A Common Stock to the
public pursuant to a registered public offering under the 1933 Act,
as a result of which offering the public (including for this
purpose all purchasers in the underwriting irrespective of any
relationship with the Company) owns 10% or more of the outstanding
shares of Class A Common Stock, provided such shares have a fair
market value equal to at least $25,000,000 at the time of the
offering.
Notwithstanding the foregoing, the restrictive terms and
provisions set forth herein with respect to the rights and
obligations of Management Investors shall terminate, effective upon
or after the occurrence of a public offering pursuant to clause
(ii) above, to the extent the existence of such terms and
provisions would impair the ability of ARA to list its Common Stock
on the New York Stock Exchange or, in the written opinion of the
lead underwriter, significantly impair the value of the Common
Stock proposed to be sold in a public offering.
16. Registration of Common Stock. In the event of any
registration under the Securities Act and public offering of Common
Stock, each Stockholder shall, at a meeting convened for the
purpose of amending the Certificate of Incorporation, vote to
increase the authorized number of shares of Common Stock and, if
necessary, to subdivide the outstanding shares of Common Stock of
ARA, in both instances as recommended by a majority of the members
of the Board in order to effectuate such public offering.
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<PAGE> 36
17. Injunctive Relief. It is acknowledged that it will be
impossible to measure in money the damages that would be suffered
if the parties fail to comply with any of the obligations herein
imposed on them and that in the event of any such failure, an
aggrieved person will be irreparably damaged and will not have an
adequate remedy at law. Any such person shall, therefore, be
entitled to injunctive relief, including specific performance, to
enforce such obligations, and if any action should be brought in
equity to enforce any of the provisions of this Agreement, none of
the parties hereto shall raise the defense that there is an
adequate remedy at law.
18. Notices. All notices, statements, instructions or other
documents required to be given hereunder, shall be in writing and
shall be given either personally, or by mailing the same in a
sealed envelope, first-class mail, postage prepaid and either
certified or registered, return receipt requested, addressed to ARA
at its principal offices and to the other parties at their
addresses reflected in the stock records of ARA, or sent by
telegram, telex, telecopy or similar form of telecommunication.
Each Stockholder, by written notice given to ARA in accordance with
this Section 18 may change the address to which notices,
statements, instructions or other documents are to be sent to such
Stockholder. All notices, statements, instructions and other
documents hereunder that are mailed shall be deemed to have been
given on the date of mailing.
19. Cooperation. ARA agrees that it will use all reasonable
efforts under the circumstances to help any Stockholder desiring to
dispose of its Common Stock pursuant to the provisions of this
Agreement to do so.
20. Miscellaneous.
20.01 Successor and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties, and their
respective successors and assigns. The provisions of this Agreement
are for the sole benefit of the parties hereto and their heirs,
executors, administrators, legal representatives, successors and
assigns, and they shall not be construed as conferring any rights
on any other persons. If any Transferee of any Stockholder shall
acquire any shares of Common Stock, in any manner, whether by
operation of law or otherwise, such shares shall be held subject to
all of the terms of this Agreement, and by taking and holding such
shares such person shall be conclusively deemed to have agreed to
be bound by and to perform all of the terms and provisions of this
Agreement.
ARA may assign to any other Person its rights with respect to
any specific transaction pursuant to Section 4, 5, 6 or 9, provided
that Person complies with the provisions of Section 3.01.
20.02 Governing Law. Regardless of the place of execution,
this Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to agreements
made and to be wholly performed in such State.
20.03 Headings. Paragraph headings are inserted herein for
convenience only and do not form a part of this Agreement.
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<PAGE> 37
20.04 Entire Agreement; Amendment. This Agreement contains the
entire agreement among the parties hereto with respect to the
transactions contemplated herein, supersedes all prior written
agreements and negotiations and oral understandings, if any, and
may not be amended, supplemented or discharged except by
performance or by an instrument in writing signed by the holders of
at least three-fourths of the Common Stock held by the
Institutional and Individual Investors (taken as a whole), and by
Management Investors who hold (in combination with their Permitted
Transferees) at least a majority of the Common Stock held by
Management Investors and their Permitted Transferees, and by ARA.
In the event of the amendment or modification of this Agreement in
accordance with its terms, the Stockholders shall cause the Board
of Directors of ARA to meet within thirty days following such
amendment or modification or as soon thereafter as is practicable
for the purpose of amending the Certificate of Incorporation and
By-Laws of ARA, as may be required as a result of such amendment or
modification, and proposing such amendments to the stockholders of
ARA entitled to vote thereon, and such action shall be the first
action to be taken at such meeting.
20.05 Inspection. So long as this Agreement shall be in effect,
this Agreement shall be made available for inspection by any
stockholder of ARA at the principal offices of ARA.
20.06 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
[Signature Pages and Schedules Omitted]
<PAGE>
<PAGE> 38
EXHIBIT A
(to Amended and Restated
Stockholders' Agreement)
THIS NOTE IS NOT TRANSFERABLE UNLESS AS A CONDITION
PRECEDENT TO THE EFFECTIVENESS OF ANY TRANSFER THE
PAYEE HAS OBTAINED THE WRITTEN CONSENT OF THE
COMPANY AS TO THE PROPOSED TRANSFER.
$__________ Philadelphia, Pennsylvania
___________________, 19___
SUBORDINATED INSTALLMENT NOTE
1. For value received, THE ARA GROUP, INC. (formerly ARA Holding
Company), a Delaware corporation (the "Company"), hereby promises
to pay to (the "Payee") the sum of $ in
equal, annual installments of $ and one final installment
of $ on each (April/October) 15 commencing on (April/October)
15, 19 , and to pay simple interest at the rate of % per annum on
the unpaid balance thereof, semi-annually in arrears on each April
15 and October 15.
2. The Payee may not sell, assign or otherwise transfer or
encumber any portion of this Note or interest herein without first
procuring the written consent of the Company, which consent the
Company is under no obligation to provide. No transfer of this
Note shall be effective unless such transfer is in compliance with
the foregoing, including the requirements set forth in the legend
provided for above.
3. Both the principal of this Note and interest thereon are
payable in lawful money of the United States of America at 1101
Market Street, Philadelphia, PA 19107, or such address of any
subsequent principal executive office of the Company within the
United States of America as the Company shall designate in writing
to the Payee, or at the option of the Company, by check mailed to
the Payee at such address for the Payee as is indicated on the
books of the Company.
4. This Note may be prepaid in full, or in part, any time,
without premium or penalty. All prepayments shall be applied first
to accrued interest and then to installments of principal in the
order of their maturities.
5. The indebtedness evidenced by this Note and the payment of
the principal of and interest on this Note are hereby expressly
subordinated, to the extent and in the manner hereinafter set
forth, to the prior payment in full of all Senior Indebtedness.
5.1 "Senior Indebtedness" means the principal of, premium, if
any, interest and any other amounts due on (1) all Indebtedness
incurred, assumed or guaranteed by the Company, either before or
after the date hereof, (excluding any debt which by the terms of
the instrument creating or evidencing the same is not superior in
right of payment to this Note), including, without limitation, (a)
any amount payable with respect to any lease, conditional sale or
installment sale agreement or other financing instrument or
agreement which in accordance with generally accepted accounting
principles is, at the date hereof or at the time the lease,
conditional sale or installment sale agreement or other financing
instrument or agreement is entered into, or assumed or guaranteed
by, directly or indirectly, the Company, required to be reflected
as a liability on the face of the balance sheet of the Company, (b)
any amounts payable in respect to any interest rate exchange
agreement, currency exchange agreement or similar agreement and (c)
any subordinated indebtedness of a corporation merged with or into
or acquired by the Company; and (2) any renewals or extensions or
refunding of any such Senior Indebtedness or evidences of
indebtedness issued in exchange for such Senior Indebtedness.
5.2 "Indebtedness" means (a) all items, except items of capital
stock or of surplus or of general contingency reserves or of
reserves for deferred income taxes, which in accordance with
<PAGE>
<PAGE> 39
generally accepted accounting principles in effect on the date
hereof should be included in determining total liabilities as shown
on the liability side of a balance sheet of the Company as at the
date of which Indebtedness is to be determined, (b) all
indebtedness secured by any mortgage, pledge, lien or conditional
sale or other title retention agreement existing on any property or
asset owned or held by the Company, whether or not such
indebtedness shall have been assumed, and (c) all indebtedness of
others which the Company has directly or indirectly guaranteed,
endorsed, discounted or agreed (contingently or otherwise) to
purchase or repurchase or otherwise acquire, or in respect of which
the Company has agreed to supply or advance funds or otherwise to
become liable directly or indirectly with respect thereto,
including, without limitation, indebtedness arising out of the sale
or transfer of accounts or notes receivable or any moneys due or to
become due.
6. In the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether voluntary or involuntary and
whether in bankruptcy, insolvency or receivership proceedings, or
upon an assignment for the benefit of creditors or any readjustment
of debt, arrangement or composition among creditors or any other
marshalling of the assets and liabilities of the Company or
otherwise), then holders of Senior Indebtedness shall first be paid
in full, or provision made for such payment, before any payment or
distribution, directly or indirectly (including by way of set off)
is made upon the principal of or interest on this Note, and to that
end the holders of Senior Indebtedness shall be entitled to receive
in payment thereof any payment or distribution of assets of the
Company, whether in cash or property or securities, which may be
payable or deliverable in any such proceeding in respect of this
Note. The Payee irrevocably authorizes, empowers and directs all
receivers, custodians, trustee, liquidators, conservators and
others having authority in the premises to effect all such payments
and deliveries. Notwithstanding any statute, including without
limitation the Federal Bankruptcy Code, any rule of law or
bankruptcy procedures to the contrary, the right of the holders of
the Senior Indebtedness to have all of the Senior Indebtedness paid
and satisfied in full prior to the payment of any amounts due the
payee under this Note shall include, without limitation, the right
of the holders of the Senior Indebtedness to be paid in full all
interest accruing on the Senior Indebtedness due them after the
filing of any petition by or against the Company in connection with
any bankruptcy or similar proceeding or any other proceeding
referred to in paragraph 6 hereof, prior to the payment of any
amounts in respect of the Note, including, without limitation, any
interest due to the Payee accruing after such date.
7. No payment, directly or indirectly (including by way of set
off), shall be made by the Company with respect to the principal of
or interest on this Note if (i) an event of default has happened
with respect to any Senior Indebtedness, as defined therein or in
the instrument under which the same is outstanding which if
occurring prior to the stated maturity of such Senior Indebtedness,
permits holders thereof upon the giving of notice or passage of
time, or both, to accelerate the maturity thereof ("Senior
Indebtedness Default") and has not been cured, (ii) a payment by
the Company to or for the benefit of Payee would, immediately after
giving effect thereto, result in a Senior Indebtedness Default, or
(iii) full payment of all amounts then due for principal of (or
premium, if any), interest or any other amounts due on Senior
Indebtedness shall not then have been made or duly provided for.
Upon the occurrence of any events described in (i), (ii) or (iii)
described above, notwithstanding any event of default under this
Note by the Company, the Payee may not accelerate the maturity of
all or any portion of this Note, or take any action towards
collection of all or any portion of this Note or enforcement of any
rights, powers or remedies under this Note, or applicable law until
the earlier of the date on which a Senior Indebtedness Default (or
in the case of (iii) required payments shall have been duly
provided for) have been cured or such Senior Indebtedness has been
paid in full.
<PAGE>
<PAGE> 40
8. In the event that, notwithstanding the foregoing, the Company
shall make any payment prohibited by Section 6 or 7, then, except
as hereinafter in this Section otherwise provided, unless and until
any such Senior Indebtedness Default shall have been cured or
waived or shall cease to exist, such payment shall be held in trust
for the benefit of and shall be paid over to the holders of Senior
Indebtedness or their representative or representatives or to the
trustee or trustees under any indenture under which any instrument
evidencing the Senior Indebtedness may have been issued, as their
respective interests may appear, to the extent necessary to pay in
full all Senior Indebtedness then due, after giving effect to any
concurrent payment to the holders of such Senior Indebtedness.
9. Subject to the payment in full of all Senior Indebtedness at
the time outstanding, the Payee shall be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior
Indebtedness until this Note shall be paid in full, and no payments
or distributions to the holders of Senior Indebtedness by or on
behalf of the Company from the proceeds that would otherwise be
payable to the Payee, or by or on behalf of the Payee, shall as
between the Company and the Payee, be deemed to be a payment by the
Company to or for the account of holders of Senior Indebtedness.
10. No holder of Senior Indebtedness shall be prejudiced in his
right to enforce subordination of this Note by any act on the part
of the Company. The above provisions in regard to subordination
are intended solely for the purpose of defining the relative rights
of the Payee on the one hand, and the holders of Senior
Indebtedness, on the other hand, and nothing contained in this Note
is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Indebtedness and the
Payee, the obligation of the Company, which is absolute and
unconditional, to pay to the Payee, subject to the rights of the
holders of Senior Indebtedness, the principal of and interest on
this Note as and when the same shall become due and payable in
accordance with its terms, subject to the rights, if any, under the
above subordination provisions, of holders of Senior Indebtedness
to receive cash, property or securities of the Company payable in
respect thereof.
11. The principal of this Note and accrued unpaid interest
thereon shall (if not already due and payable) upon written demand
by the Payee become due and payable forthwith, if there shall have
been a default in the payment of any interest on, or principal of,
this Note when it becomes due and payable (but only if such payment
is not prohibited by the provisions of this Note), and such default
shall have continued for a period of 30 days after written notice
of such default shall have been given to the Company and shall be
continuing at the time of such written demand.
12. No course of dealing between the Company and the Payee or any
delay on the part of the Payee in exercising any rights under this
Note shall operate as a waiver of any rights of the Payee.
13. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given when delivered, or
deposited in the mails, first-class, postage prepaid, or delivered
to a telegraph office for transmission, if to the Payee, at such
address for the Payee as is indicated on the books of the Company
or if to the Company, at the address of the principal executive
offices of the Company as provided above.
14. This Note shall be governed by the laws of the State of
Delaware.
THE ARA GROUP, INC.
By:______________________________
Treasurer
<PAGE>
<PAGE> 41
INCENTIVE STOCK OPTION
Instructions to Incentive Stock Option Exercise Form
READ THE PROSPECTUS CAREFULLY BEFORE COMPLETING
THE INCENTIVE STOCK OPTION EXERCISE FORM
Date Stock Option was Granted. Insert the effective date of your
Stock Option that you are exercising. The effective date is
printed on back of your Stock Option Certificate, near the bottom.
Name(s). The shares must be registered initially either in your
name or in the names of you and your spouse, as joint tenants. If
you wish the shares to be registered in the name of both you and
your spouse, as joint tenants, you must print both names in this
space.
1. Purchase Price Per Share. Insert the exercise price per share
specified in your stock option certificate.
2. Number of Shares Being Purchased. Insert the number of shares
being purchased.
3. Amount of Check Enclosed. Multiply the Purchase Price Per Share
(1) by the Number of Shares Being Purchased (2). Payment of
this amount should be made by check payable to "The ARA Group,
Inc."
Signature(s). Sign the form exactly as you printed your name
above. If the shares are to be registered in the names of both you
and your spouse, then you both must sign the form. By signing the
form, your spouse joins in the representations, warranties and
agreement you are making, including your agreement to be bound by
the Amended and Restated Stockholders' Agreement as a Management
Investor.
Delivery of Form. The method of delivery of the Stock Option
Exercise Form and check for the Amount of Check Enclosed is your
decision and at your risk.
<PAGE>
<PAGE> 42
INCENTIVE STOCK OPTION
Please Review Instructions Before You Fill Out This Form
THE ARA GROUP, INC.
Incentive Stock Option Exercise Form
I hereby exercise a Stock Option granted to me on
______________________________________, 19___________.
I hereby represent, warrant and agree as follows:
1. I have received and read copies of (a) the Prospectus dated July
20, 1994, including the Amended and Restated Stockholders'
Agreement by and among The ARA Group, Inc. ("ARA") certain of
its stockholders, and (b) ARA's annual report on Form 10-K.
2. I have full power and authority to enter into the Amended and
Restated Stockholders' Agreement.
3. By signing below, I hereby execute and deliver and agree to be
bound by the Amended and Restated Stockholders' Agreement as a
Management Investor.
4. I will, upon request, execute any additional documents necessary
or desirable for me to become a party to the Amended and
Restated Stockholders' Agreement.
Name(s):___________________________________________________________
Home Address:______________________________________________________
Home Telephone:____ -_____ -____ Business Telephone:____-____-____
ARA Company:____________________ Component Number: _______________
Social Security No:_____________
1. Purchase Price Per Share...................$________
2. Number of Shares Being Purchased...........X________
3. Amount of Check Enclosed (Line 1 x Line 2). $__________
___________________________________________ _______________________
Signature Date
___________________________________________ _______________________
Signature Date
Please complete and return with your check for the amount listed in
Line 3 to:
The ARA Group, Inc.
1101 Market Street
Philadelphia, Pennsylvania 19107
Attention: Annette Nedd
For Transfer agent use only:
Check Number______________________ Check Amount $____________________
HID# _____________________________
<PAGE>
<PAGE> 43
[This Page Intentionally Left Blank]
<PAGE>
<PAGE> 44
INCENTIVE STOCK OPTION
Please Review Instructions Before You Fill Out This Form
THE ARA GROUP, INC.
Incentive Stock Option Exercise Form
I hereby exercise a Stock Option granted to me on
______________________________________, 19___________.
I hereby represent, warrant and agree as follows:
1. I have received and read copies of (a) the Prospectus dated July
20, 1994, including the Amended and Restated Stockholders'
Agreement by and among The ARA Group, Inc. ("ARA") certain of
its stockholders, and (b) ARA's annual report on Form 10-K.
2. I have full power and authority to enter into the Amended and
Restated Stockholders' Agreement.
3. By signing below, I hereby execute and deliver and agree to be
bound by the Amended and Restated Stockholders' Agreement as a
Management Investor.
4. I will, upon request, execute any additional documents necessary
or desirable for me to become a party to the Amended and
Restated Stockholders' Agreement.
Name(s):______________________________________________________________
Home Address:_________________________________________________________
Home Telephone:_____-_____-_____ Business Telephone:_____-_____-_____
ARA Company:____________________ Component Number:___________________
Social Security No:_____________
1. Purchase Price Per Share.......................$_________
2. Number of Shares Being Purchased...............X_________
3. Amount of Check Enclosed (Line 1 x Line 2)..... $________
__________________________________________ _______________________
Signature Date
__________________________________________ _______________________
Signature Date
Please complete and return with your check for the amount listed in
Line 3 to:
The ARA Group, Inc.
1101 Market Street
Philadelphia, Pennsylvania 19107
Attention: Annette Nedd
For Transfer agent use only:
Check Number_________________________ Check Amount $__________________
HID# ________________________________
<PAGE>
<PAGE> 45
(This Page Intentionally Left Blank)
<PAGE>
<PAGE> 46
(This Page Intentionally Left Blank)
<PAGE>
<PAGE> 47
NON-QUALIFIED STOCK OPTION
Instructions to Non-Qualified Stock Option Exercise Form
READ THE PROSPECTUS CAREFULLY BEFORE COMPLETING
THE NON-QUALIFIED STOCK OPTION EXERCISE FORM
Date Stock Option was Granted. Insert the effective date of your
Stock Option that you are exercising. The effective date is
printed on back of your Stock Option Certificate, near the bottom.
Name(s). The shares must be registered initially either in your
name or in the names of you and your spouse, as joint tenants. If
you wish the shares to be registered in the name of both you and
your spouse, as joint tenants, you must print both names in this
space.
1. Purchase Price Per Share. Insert the exercise price per share
specified in your stock option certificate.
2. Number of Shares Being Purchased. Insert the number of shares
being purchased.
3. Total Purchase Price. Multiply the Purchase Price Per Share (1)
by the Number of Shares Being Purchased (2).
4. Current Price Per Share. Insert the most recent appraised
value. If you do not know the appraised value, you can obtain
it by calling one of the persons listed on page 4 of the
Prospectus.
5. Purchase Price Per Share. Insert the same Purchase Price Per
Share you entered on Line 1.
6. Appreciation Per Share. Subtract the Purchase Price Per Share
(5) from the Current Price Per Share (4).
7. Number of Shares Being Purchased. Insert the same Number of
Shares Being Purchased you entered on Line 2.
8. Total Appreciation Subject to Taxes. Multiply the Appreciation
Per Share (6) by the Number of Shares Being Purchased (7).
9. Estimated Withholding Tax Rate. This 38% rate is an estimate of
the federal income tax withholding rate, the social security tax
(FICA) withholding rate and state income tax or state
unemployment tax which may be required to be withheld by certain
states.
10. Total Estimated Withholding Tax Due. Multiply the Total
Appreciation Subject to Taxes (8) by the Estimated Withholding
Tax Rate (9).
11. Total Amount Due. Add the Total Purchase Price (3) plus the
Total Estimated Withholding Tax Due (10).
12. Maximum Amount Eligible to be Deferred. Insert 50% of Total
Amount Due (11).
13. Amount of Payment to be Deferred. You may elect to defer any
amount up to the Maximum Amount Eligible to be Deferred (12).
IF YOU ELECT TO DEFER ANY PART OF THE PAYMENT, YOU MUST COMPLETE
AND SIGN THE REVERSE SIDE OF THE EXERCISE FORM.
<PAGE>
<PAGE> 48
14. Amount of Check Enclosed. Subtract Amount of Payment to be
Deferred (13) from Total Amount Due (11). Payment of this
amount should be made by check payable to "The ARA Group, Inc."
Signature(s). Sign the form exactly as you printed your name
above. If the shares are to be registered in the names of both you
and your spouse, then you both must sign the form. By signing the
form, your spouse joins in the representations, warranties and
agreement you are making, including your agreement to be bound by
the Amended and Restated Stockholders' Agreement as a Management
Investor.
Delivery of Form. The method of delivery of the Stock Option
Exercise Form and check for the Amount of Check Enclosed is your
decision and at your risk.
<PAGE>
<PAGE> 49
NON-QUALIFIED STOCK OPTION
Please Review Instructions Before You Fill Out This Form
THE ARA GROUP, INC.
Non-Qualified Stock Option Exercise Form
I hereby exercise a Stock Option granted to me on____________________________,
19_______.
I hereby represent, warrant and agree as follows:
1. I have received and read copies of (a) the Prospectus dated July 20, 1994
including the Amended and Restated Stockholders' Agreement by and among The
ARA Group, Inc. ("ARA") certain of its stockholders, and (b) ARA's annual
report on Form 10-K.
2. I have full power and authority to enter into the Amended and Restated
Stockholders' Agreement.
3. By signing below, I hereby execute and deliver and agree to be bound by the
Amended and Restated Stockholders' Agreement as a Management Investor.
4. I will, upon request, execute any additional documents necessary or
desirable for me to become a party to the Amended and Restated
Stockholders' Agreement.
Name(s):_____________________________________________________________________
Home Address:________________________________________________________________
Home Telephone:_____ -______ -________ Business Telephone:____-_____-________
ARA Company:__________________________ Component Number:_____________________
Social Security No:___________________
1. Purchase Price Per Share.................................. $______
2. Number of Shares Being Purchased.......................... X______
3. Total Purchase Price (Line 1 x Line 2).................... $______
4. Current Price Per Share................................... $______
5. Purchase Price Per Share.................................. -______
6. Appreciation Per Share (Line 4 - Line 5).................. $______
7. Number of Shares Being Purchased.......................... X______
8. Total Appreciation Subject to Taxes (Line 6 x Line 7)..... $______
9. Withholding Tax Rate (38%)................................ X__.38_
10. Total Withholding Tax Due (Line 8 x Line 9)............... $______
11. Total Amount Due (Line 3 + Line 10)....................... $______
12. Maximum Amount Eligible to be Deferred (50% of Line 11)... $______
13. Amount of Payment to be Deferred (May not exceed Line 12). $______
14. Amount of Check Enclosed (Line 11 - Line 13).............. $______
_______________________________________ _______________________________
Signature Date
_______________________________________ _______________________________
Signature Date
______________________________________________________________________________
IF THE AMOUNT ON LINE 13 IS NOT ZERO, YOU MUST ALSO
COMPLETE AND SIGN THE REVERSE SIDE OF THIS EXERCISE FORM.*
--------
______________________________________________________________________________
Please complete and return with your check for the amount listed in Line 14 to:
The ARA Group, Inc.
1101 Market Street
Philadelphia, Pennsylvania 19107
Attention: Annette Nedd
For Transfer agent use only:
Check Number_________________________________ Check Amount $______________
HID# ________________________________________ Deferred Amount $______________
____________________________
*PLEASE TURN OVER.
____________________________
<PAGE>
<PAGE> 50
DEFERRED PAYMENT OBLIGATION
For value received, I/we promise to pay to the order of The
ARA Group, Inc. (referred to as the "Company") $_____________,
and to pay interest at the rate of _____% per year. Payment of
both the deferred obligation and interest shall be due on
February 15, 1997 or on such earlier date as the Company may make
demand. The obligation and appropriate interest may be prepaid
at any time.
I/We grant to the Company a security interest in ______________
shares of The ARA Group, Inc. common stock, Class B (the
"Pledged Shares") and agree that the Pledged Shares shall be held
as collateral by the Company until the amount is paid in full.
In the event the amount is not paid when due, the Company shall
be entitled to exercise the legal remedies available under
applicable law. If any of the Pledged Shares shall be sold or
otherwise transferred, then the amount shall become due
immediately.
This Agreement may be assigned by the Company at any time
and shall be governed by the laws of the Commonwealth of
Pennsylvania.
Print Name(s):______________________________________________________
______________________________________________________
_______________________________ _______________________________
Signature Date
_______________________________ _______________________________
Signature Date
INSTRUCTIONS
1. Insert the Amount of Payment to be Deferred (Line 13 on the
Exercise Form) in the first paragraph.
2. Please contact one of the individuals on Page 4 for the
interest rate to be inserted.
3. Insert the Number of Shares Being Purchased (Line 2 on the
Exercise Form) in the second paragraph.
4. Print and sign your name exactly as on the Exercise Form (on
the reverse side). If your spouse signed the Exercise Form,
he/she must also sign the Deferred Payment Obligation form.
By signing the form, your spouse joins in the agreement you
are making to pay the amount of the deferred payment
obligation.
<PAGE>
<PAGE> 51
NON-QUALIFIED STOCK OPTION
Please Review Instructions Before You Fill Out This Form
THE ARA GROUP, INC.
Non-Qualified Stock Option Exercise Form
I hereby exercise a Stock Option granted to me on____________________________,
19_______.
I hereby represent, warrant and agree as follows:
1. I have received and read copies of (a) the Prospectus dated July 20, 1994
including the Amended and Restated Stockholders' Agreement by and among The
ARA Group, Inc. ("ARA") certain of its stockholders, and (b) ARA's annual
report on Form 10-K.
2. I have full power and authority to enter into the Amended and Restated
Stockholders' Agreement.
3. By signing below, I hereby execute and deliver and agree to be bound by the
Amended and Restated Stockholders' Agreement as a Management Investor.
4. I will, upon request, execute any additional documents necessary or
desirable for me to become a party to the Amended and Restated
Stockholders' Agreement.
Name(s):_____________________________________________________________________
Home Address:________________________________________________________________
Home Telephone:_____ -______ -________ Business Telephone:____-_____-________
ARA Company:__________________________ Component Number:_____________________
Social Security No:___________________
1. Purchase Price Per Share.................................. $______
2. Number of Shares Being Purchased.......................... X______
3. Total Purchase Price (Line 1 x Line 2).................... $______
4. Current Price Per Share................................... $______
5. Purchase Price Per Share.................................. -______
6. Appreciation Per Share (Line 4 - Line 5).................. $______
7. Number of Shares Being Purchased.......................... X______
8. Total Appreciation Subject to Taxes (Line 6 x Line 7)..... $______
9. Withholding Tax Rate (38%)................................ X__.38_
10. Total Withholding Tax Due (Line 8 x Line 9)............... $______
11. Total Amount Due (Line 3 + Line 10)....................... $______
12. Maximum Amount Eligible to be Deferred (50% of Line 11)... $______
13. Amount of Payment to be Deferred (May not exceed Line 12). $______
14. Amount of Check Enclosed (Line 11 - Line 13).............. $______
_______________________________________ _______________________________
Signature Date
_______________________________________ _______________________________
Signature Date
______________________________________________________________________________
IF THE AMOUNT ON LINE 13 IS NOT ZERO, YOU MUST ALSO
COMPLETE AND SIGN THE REVERSE SIDE OF THIS EXERCISE FORM.*
--------
______________________________________________________________________________
Please complete and return with your check for the amount listed in Line 14 to:
The ARA Group, Inc.
1101 Market Street
Philadelphia, Pennsylvania 19107
Attention: Annette Nedd
For Transfer agent use only:
Check Number_________________________________ Check Amount $______________
HID# ________________________________________ Deferred Amount $______________
____________________________
*PLEASE TURN OVER.
____________________________
<PAGE>
<PAGE> 52
DEFERRED PAYMENT OBLIGATION
For value received, I/we promise to pay to the order of The
ARA Group, Inc. (referred to as the "Company") $_____________,
and to pay interest at the rate of _____% per year. Payment of
both the deferred obligation and interest shall be due on
February 15, 1997 or on such earlier date as the Company may make
demand. The obligation and appropriate interest may be prepaid
at any time.
I/We grant to the Company a security interest in ______________
shares of The ARA Group, Inc. common stock, Class B (the
"Pledged Shares") and agree that the Pledged Shares shall be held
as collateral by the Company until the amount is paid in full.
In the event the amount is not paid when due, the Company shall
be entitled to exercise the legal remedies available under
applicable law. If any of the Pledged Shares shall be sold or
otherwise transferred, then the amount shall become due
immediately.
This Agreement may be assigned by the Company at any time
and shall be governed by the laws of the Commonwealth of
Pennsylvania.
Print Name(s):______________________________________________________
______________________________________________________
__________________________________ _____________________________
Signature Date
__________________________________ _____________________________
Signature Date
INSTRUCTIONS
1. Insert the Amount of Payment to be Deferred (Line 13 on the
Exercise Form) in the first paragraph.
2. Please contact one of the individuals on Page 4 for the
interest rate to be inserted.
3. Insert the Number of Shares Being Purchased (Line 2 on the
Exercise Form) in the second paragraph.
4. Print and sign your name exactly as on the Exercise Form (on
the reverse side). If your spouse signed the Exercise Form,
he/she must also sign the Deferred Payment Obligation form.
By signing the form, your spouse joins in the agreement you
are making to pay the amount of the deferred payment
obligation.
<PAGE>
