Exhibit 4.12
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of ___________ __, 1999, is made by and
between Spalding Holdings Corporation, a Delaware corporation (the "Company"),
and _____________________, an employee of the Company or a Subsidiary (as
defined below) or Affiliate (as defined below) of the Company ("Optionee").
WHEREAS, the Company wishes to afford the Optionee the opportunity
to purchase shares of its Common Stock, par value $.01 per share (the "Common
Stock");
WHEREAS, the Company wishes to carry out the Plan (as hereinafter
defined), the terms of which are hereby incorporated by reference and made a
part of this Agreement; and
WHEREAS, the Committee (as hereinafter defined), appointed to
administer the Plan, has determined that it would be to the advantage and best
interest of the Company and its stockholders to grant the Options (as
hereinafter defined) provided for herein to the Optionee as an incentive for
increased efforts during his term of office with the Company or its Subsidiaries
or Affiliates, and has advised the Company thereof and instructed the
undersigned officers to issue said Options;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall
have the meaning specified in the Plan or below unless the context clearly
indicates to the contrary.
Section 1.1 - Affiliate
"Affiliate" shall mean, with respect to the Company, any corporation
directly or indirectly controlling, controlled by, or under common control with,
the Company or any other entity designated by the Board of Directors of the
Company in which the Company or an Affiliate has an interest.
Section 1.2 - Cause
"Cause" shall mean (i) the Optionee's willful and continued failure
to perform Optionee's duties with respect to the Company or its subsidiaries
after a written demand for substantial performance is delivered to Optionee by
the Company or (ii) misconduct by Optionee
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involving (x) dishonesty or breach of trust in connection with Optionee's
employment which is reasonably likely to be injurious to the Company or (y)
conduct which would be a reasonable basis for an indictment of Optionee for a
felony or for a misdemeanor involving moral turpitude.
Section 1.3 - Change of Control
A "Change of Control" means (i) a sale of all or substantially all of the
assets of the Company to a Person or Group who is not an Affiliate of Kohlberg
Kravis Xxxxxxx & Co., L.P. ("KKR"), (ii) a sale by KKR or any of its Affiliates
resulting in (A) more than 50% of the voting stock of the Company being held by
a Person or Group that does not include KKR or any of its Affiliates and (B)
more than 50% of the seats on the Board of Directors of the Company being
controlled by or being designees of a party or parties other than KKR or any of
its Affiliates, or (iii) a merger or consolidation of the Company into another
Person which is not an Affiliate of KKR.
Section 1.4 - Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.5 - Committee
"Committee" shall mean the Compensation Committee of the Board of
Directors of the Company.
Section 1.6 - Grant Date
"Grant Date" shall mean the date hereof.
Section 1.7 - Group
"Group" means two or more Persons acting together as a partnership,
limited partnership, syndicate or other group for the purpose of acquiring,
holding or disposing of securities of the Company.
Section 1.8 - Initial Vesting Date
"Initial Vesting Date" shall mean July 1, 1999.
Section 1.9 - Management Stockholder's Agreement
"Management Stockholder's Agreement" shall mean the Management
Stockholder's Agreement dated as of ___________ __, 1999 between the Optionee
and the Company.
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Section 1.10 - Options
"Options" shall mean the non-qualified options to purchase Common
Stock granted under this Agreement.
Section 1.11 - Permanent Disability
The Optionee shall be deemed to have a "Permanent Disability" if the
Optionee is unable to engage in the activities required by the Optionee's job by
reason of any medically determined physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months, or if the majority of the Board of
Directors of the Company shall, in good faith, determine the Optionee is
permanently disabled.
Section 1.12 - Person
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
Section 1.13 - Plan
"Plan" shall mean the Amended and Restated 1996 Stock Purchase and
Option Plan for Key Employees of Spalding Holdings Corporation. and
Subsidiaries.
Section 1.14 - Pronouns
The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.15 - Retirement
"Retirement" shall mean (i) retirement at age 65 or over after
having been employed by the Company or any subsidiary for at least five years
after the Grant Date or (ii) retirement at age 55 or over if such Optionee has
been employed with the Company and/or a Subsidiary for a minimum of 15 years and
after having been employed by the Company and/or any Subsidiary for at least
five years after the Grant Date.
Section 1.16 - Secretary
"Secretary" shall mean the Secretary of the Company.
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Section 1.17 - Subsidiary
"Subsidiary" shall mean any company in an unbroken chain of
companies beginning with the Company if each of the companies, or group of
commonly controlled companies (other than the last company in the unbroken
chain), then owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other companies in such chain.
ARTICLE II
GRANT OF OPTIONS
Section 2.1 - Grant of Options
For good and valuable consideration, on and as of the date hereof
the Company irrevocably grants to the Optionee an Option to purchase any part or
all of an aggregate of the number of shares set forth with respect to each such
Option on the signature page hereof of its Common Stock upon the terms and
conditions set forth in this Agreement.
Section 2.2 - Exercise Price
Subject to Section 2.4, the exercise price of the shares of stock
covered by the Options shall be $2.00 per share without commission or other
charge.
Section 2.3 - Consideration to the Company
In consideration of the granting of these Options by the Company,
the Optionee agrees to render faithful and efficient services to the Company or
a Subsidiary or Affiliate, with such duties and responsibilities as the Company
shall from time to time prescribe. Nothing in this Agreement or in the Plan
shall confer upon the Optionee any right to continue in the employ of the
Company or any Subsidiary or Affiliate or shall interfere with or restrict in
any way the rights of the Company and its Subsidiaries or Affiliates, which are
hereby expressly reserved, to terminate the employment of the Optionee at any
time for any reason whatsoever, with or without cause.
Section 2.4 - Adjustments to Options Pursuant to Merger, Consolidation, etc.
Subject to Section 9 of the Plan, in the event that the outstanding
shares of the stock subject to an Option are, from time to time, changed into or
exchanged for a different number or kind of shares of the Company or other
securities of the Company by reason of a merger, consolidation,
recapitalization, reclassification, stock split, stock dividend, combination of
shares, or otherwise, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares and/or the amount of consideration
as to which or for which, as the case may be, such Option, or portions thereof
then unexercised, shall be exercisable. Any such
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adjustment made by the Committee shall be final and binding upon the Optionee,
the Company and all other interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1 - Commencement of Exercisability
(a) Options shall become exercisable as follows:
Percentage of Option
Date Option Shares Granted As to Which
Becomes Exercisable Option Is Exercisable
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After the first anniversary
of the Initial Vesting Date 20%
After the second anniversary
of the Initial Vesting Date 40%
After the third anniversary
of the Initial Vesting Date 60%
After the fourth anniversary
of the Initial Vesting Date 80%
After the fifth anniversary
of the Initial Vesting Date 100%
Notwithstanding the foregoing, the Option shall become immediately
exercisable as to 100% of the shares of Common Stock subject to such Option
immediately prior to a Change of Control (but only to the extent such Option has
not otherwise terminated or become exercisable).
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(b) Notwithstanding the foregoing, no Option shall become
exercisable as to any additional shares of Common Stock following the
termination of employment of the Optionee for any reason other than a
termination of employment because of death, Permanent Disability or Retirement
of the Optionee and any Option (other than as provided in the next succeeding
sentence) which is not exercisable as of the Optionee's termination of
employment shall be immediately cancelled. In the event of a termination of
employment because of such death, Permanent Disability or Retirement, the
Options shall immediately become exercisable as to all shares of Common Stock
subject thereto.
Section 3.2 - Expiration of Options
Except as otherwise provided in Section 5 or 6 of the Management
Stockholder's Agreement, the Options may not be exercised to any extent by the
Optionee after the first to occur of the following events:
(a) The tenth anniversary of the Grant Date; or
(b) The first anniversary of the date of the Optionee's termination
of employment by reason of death, Permanent Disability or Retirement; or
(c) The first business day which is fifteen calendar days after the
earlier of (i) 75 days after termination of employment of the Optionee for
any reason other than for death, Permanent Disability or Retirement
(except as to the extent described in clause (e) below) or (ii) the
delivery of notice by the Company that it does not intend to exercise its
call right under Section 6 of the Management Stockholder's Agreement;
provided, however, that in any event the Options shall remain exercisable
under this subsection 3.2(c) until at least 45 days after termination of
employment of the Optionee for any reason other than for death, Permanent
Disability or Retirement; or
(d) The date the Option is terminated pursuant to Section 5, 6 or
8(b) of the Management Stockholder's Agreement;
(e) The date of an Optionee's termination of employment by the
Company for Cause; or
(f) If the Committee so determines pursuant to Section 9 of the
Plan, the effective date of either the merger or consolidation of the
Company into another Person, or the exchange or acquisition by another
Person of all or substantially all of the Company's assets or 80% or more
of its then outstanding voting stock, or the recapitalization,
reclassification, liquidation or dissolution of the Company. At least ten
(10) days prior to the effective date of such merger, consolidation,
exchange, acquisition, recapitalization,
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reclassification, liquidation or dissolution, the Committee shall give the
Optionee notice of such event if the Option has then neither been fully
exercised nor become unexercisable under this Section 3.2.
ARTICLE IV
EXERCISE OF OPTION
Section 4.1 - Person Eligible to Exercise
Except as otherwise provided in the Management Stockholder's
Agreement, during the lifetime of the Optionee, only he or she may exercise an
Option or any portion thereof. After the death of the Optionee, any exercisable
portion of an Option may, prior to the time when an Option becomes
unexercisable under Section 3.2, be exercised by his personal representative or
by any person empowered to do so under the Optionee's will or under the then
applicable laws of descent and distribution.
Section 4.2 - Partial Exercise
Any exercisable portion of an Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Section
3.2; provided, however, that any partial exercise shall be for whole shares of
Common Stock only.
Section 4.3 - Manner of Exercise
An Option, or any exercisable portion thereof, may be exercised
solely by delivering to the Secretary or his office all of the following prior
to the time when the Option or such portion becomes unexercisable under Section
3.2:
(a) Notice in writing signed by the Optionee or the other person
then entitled to exercise the Option or portion thereof, stating that the
Option or portion thereof is thereby exercised, such notice complying with
all applicable rules established by the Committee;
(b) Full payment (in cash, by check or by a combination thereof) for
the shares with respect to which such Option or portion thereof is
exercised;
(c) A bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the
shares of stock are being acquired for his or her own account, for
investment and without any present intention of distributing or reselling
said shares or any of them except as may be permitted under the
Securities Act of 1933, as amended (the "Act"), and then applicable rules
and regulations thereunder, and that the Optionee or other person then
entitled to exercise such Option or portion thereof will indemnify the
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Company against and hold it free and harmless from any loss, damage,
expense or liability resulting to the Company if any sale or distribution
of the shares by such person is contrary to the representation and
agreement referred to above; provided, however, that the Committee may, in
its absolute discretion, take whatever additional actions it deems
appropriate to ensure the observance and performance of such
representation and agreement and to effect compliance with the Act and any
other federal or state securities laws or regulations;
(d) Full payment to the Company of all amounts which, under federal,
state or local law, it is required to withhold upon exercise of the
Option; and
(e) In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the
option.
Without limiting the generality of the foregoing, the Committee may require an
opinion of counsel acceptable to it to the effect that any subsequent transfer
of shares acquired on exercise of an Option does not violate the Act, and may
issue stop-transfer orders covering such shares. Share certificates evidencing
stock issued on exercise of this Option shall bear an appropriate legend
referring to the provisions of subsection (c) above and the agreements herein.
The written representation and agreement referred to in subsection (c) above
shall, however, not be required if the shares to be issued pursuant to such
exercise have been registered under the Act, and such registration is then
effective in respect of such shares.
Section 4.4 - Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of an Option, or
any portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of an Option or portion thereof prior to fulfillment of all of the
following conditions:
(a) The obtaining of approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or desirable; and
(b) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish
for reasons of administrative convenience.
Section 4.5 - Rights as Stockholder
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The holder of an Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares purchasable
upon the exercise of the Option or any portion thereof unless and until
certificates representing such shares shall have been issued by the Company to
such holder.
ARTICLE V
MISCELLANEOUS
Section 5.1 - Administration
The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke
any such rules. All actions taken and all interpretations and determinations
made by the Committee shall be final and binding upon the Optionee, the Company
and all other interested persons. No member of the Committee shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or the Options. In its absolute discretion, the Board of
Directors may at any time and from time to time exercise any and all rights and
duties of the Committee under the Plan and this Agreement.
Section 5.2 - Options Not Transferable
Except as provided in the Management Stockholder's Agreement,
neither the Options nor any interest or right therein or part thereof shall be
liable for the debts, contracts or engagements of the Optionee or his successors
in interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that this Section 5.2 shall not
prevent transfers made solely for estate planning purposes or by will or by the
applicable laws of descent and distribution.
Section 5.3 - Shares to Be Reserved
The Company shall at all times during the term of the Options
reserve and keep available such number of shares of stock as will be sufficient
to satisfy the requirements of this Agreement.
Section 5.4 - Notices
Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary, and any
notice to be given to the Optionee shall be addressed to him at the address
given beneath his signature hereto. By a notice given
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pursuant to this Section 5.4, either party may hereafter designate a different
address for notices to be given to him. Any notice which is required to be given
to the Optionee shall, if the Optionee is then deceased, be given to the
Optionee's personal representative if such representative has previously
informed the Company of his status and address by written notice under this
Section 5.4. Any notice shall have been deemed duly given when enclosed in a
properly sealed envelope or wrapper addressed as aforesaid, deposited (with
postage prepaid) in a post office or branch post office regularly maintained by
the United States Postal Service.
Section 5.5 - Titles
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
Section 5.6 - Applicability of Plan and Management Stockholder's Agreement
The Options and the shares of Common Stock issued to the Optionee
upon exercise of the Options shall be subject to all of the terms and provisions
of the Plan and the Management Stockholder's Agreement, to the extent applicable
to the Options and such shares. In the event of any conflict between this
Agreement and the Plan, the terms of the Plan shall control. In the event of any
conflict between this Agreement or the Plan and the Management Stockholder's
Agreement, the terms of the Management Stockholder's Agreement shall control.
Section 5.7 - Amendment
This Agreement may be amended only by a writing executed by the
parties hereto which specifically states that it is amending this Agreement.
Section 5.8 - Governing Law
The laws of the State of Delaware (or if the Company reincorporates
in another state, the laws of that state) shall govern the interpretation,
validity and performance of the terms of this Agreement regardless of the law
that might be applied under principles of conflicts of laws.
Section 5.9 - Jurisdiction
Any suit, action or proceeding against the Optionee with respect to
this Agreement, or any judgment entered by any court in respect of any thereof,
may be brought in any court of competent jurisdiction in the State of Delaware
(or if the Company reincorporates in another state, in that state) or New York,
as the Company may elect in its sole discretion, and the Optionee hereby submits
to the non-exclusive jurisdiction of such courts for the purpose of any such
suit, action, proceeding or judgment. The Optionee hereby irrevocably waives any
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objections which he may now or hereafter have to the laying of the venue of any
suit, action or proceeding arising out of or relating to this Agreement brought
in any court of competent jurisdiction in the State of Delaware (or if the
Company reincorporates in another state, in that state) or New York, and hereby
further irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in any inconvenient forum. No suit,
action or proceeding against the Company with respect to this Agreement may be
brought in any court, domestic or foreign, or before any similar domestic or
foreign authority other than in a court of competent jurisdiction in the State
of Delaware (or if the Company reincorporates in another state, in that state)
or New York, and the Optionee hereby irrevocably waives any right which he may
otherwise have had to bring such an action in any other court, domestic or
foreign, or before any similar domestic or foreign authority. The Company hereby
submits to the jurisdiction of such courts for the purpose of any such suit,
action or proceeding.
Section 5.10 - Counterparts
This Agreement may be signed in two or more counterparts, each of
which will be deemed an original.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto.
SPALDING HOLDINGS CORPORATION
By_______________________________________
Name:
Title:
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Optionee Name (Print)
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Optionee Signature Aggregate number of shares of
Common Stock subject to the Option
granted hereunder (100% of total
number of shares):
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Optionee's Address
Optionee's Taxpayer
Identification Number:
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