INITIAL GRANT
FORM OF MANAGEMENT STOCKHOLDER'S AGREEMENT
This Management Stockholder's Agreement (this "Agreement") is
entered into as of March __, 2000 between EVENFLO COMPANY, INC., a Delaware
corporation (the "Company"), and __________________ (the "Purchaser") (the
Company and the Purchaser being hereinafter collectively referred to as the
"Parties").
RECITALS
The Company proposes to sell shares of its Class A Common Stock, par
value $1.00 per share (the "Common Stock"), to key employees of the Company and
certain other investors at a price of $5.00 per share of Common Stock.
This Agreement is one of several other agreements ("Other
Purchasers' Agreements") which have been, or which in the future will be,
entered into between the Company and other individuals who are or will be key
employees of the Company or one of its subsidiaries (collectively, the "Other
Purchasers"). In addition, the Company has also entered into, and may in the
future enter into, agreements with other purchasers pursuant to which such other
purchasers purchased or will purchase shares of Common Stock.
The Company has agreed to sell _______________ shares of Common
Stock to Purchaser so that Purchaser shall receive, in the aggregate,
_______________ shares of Common Stock (the "Purchase Stock"). In addition, the
Company will grant to Purchaser an option or options to purchase _________
shares of Common Stock ("Options") at an exercise price of $5.00 per share of
Common Stock pursuant to the terms of the Evenflo Ownership Plan (the "Option
Plan") and the "Non-Qualified Stock Option Agreement" attached hereto as Exhibit
A.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the Parties agree as follows:
1. Purchase of Stock; Issuance of Options.
(a) Subject to the terms and conditions hereinafter set forth, the
Purchaser hereby subscribes for and shall purchase, and the Company shall
sell to the Purchaser and deliver to the Purchaser (or, at the Purchaser's
option, the Purchaser's Trust (as hereinafter defined)), the Purchase
Stock at a purchase price of $5.00 per share on __________ __, 2000 (the
"Purchase Date"). The Company shall have no obligation to sell any
Purchase Stock to any person who (i) is a resident or citizen of a state
or other jurisdiction in which the sale of the Purchase Stock to him or
her would constitute a violation of the securities or "blue sky" laws of
such jurisdiction or (ii) is not an employee of the Company or any of its
subsidiaries on the date hereof.
2
(b) The aggregate price for the Purchase Stock shall be $__________
(such amount hereinafter sometimes referred to as the "Purchase Price").
The Purchase Price shall be paid in the following manner: (i) the
Purchaser shall deliver to the Company at least three business days prior
to the Purchase Date cash or a certified bank check or checks payable to
the order of the Company in the aggregate amount of the Purchase Price or
(ii) on the Purchase Date the Purchaser shall pay to the Company by wire
transfer of immediately available funds the aggregate amount of the
Purchase Price. On the Purchase Date, in consideration of receipt of the
Purchase Price, the Company will deliver to the Purchaser a certificate,
registered in the Purchaser's name, for the Purchase Stock, which shall be
subject to the terms and conditions hereinafter set forth.
(c) Subject to the terms and conditions hereinafter set forth and
upon and as of the Purchase Date, the Company shall issue to the Purchaser
the Options and the Parties shall execute and deliver to each other copies
of the Non-Qualified Stock Option Agreement concurrently with the issuance
of the Options.
2. Purchaser's Representations, Warranties and Agreements.
(a) The Purchaser agrees and acknowledges that he will not, directly
or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of (any such act being herein referred to as a "transfer") any shares of
the Purchase Stock and, at the time of exercise, the Common Stock issuable upon
exercise of the Options (collectively, and, together with any other shares of
Common Stock beneficially owned by the Purchaser as of the date hereof or
hereafter acquired, the "Stock") unless such transfer complies with Section 3 of
this Agreement. Furthermore, if the Purchaser is an "affiliate" (as defined
under Rule 405 of the rules and regulations promulgated under the Act and as
interpreted by the Board of Directors of the Company) of the Company (an
"Affiliate"), the Purchaser agrees and acknowledges that he will not transfer
any shares of the Stock unless (i) the transfer is pursuant to an effective
registration statement under the Securities Act of 1933, as amended, and the
rules and regulations in effect thereunder (the "Act"), and in compliance with
applicable provisions of state securities laws or (ii) (A) counsel for the
Purchaser (which shall be such counsel acceptable to the Company) shall have
furnished the Company with an opinion, satisfactory in form and substance to the
Company, that no such registration is required because of the availability of an
exemption from registration under the Act and such transfer is in compliance
with the applicable provisions of state securities laws and (B) if the Purchaser
is a citizen or resident of any country other than the United States, or the
Purchaser desires to effect any transfer in any such country, counsel for the
Purchaser (which counsel shall be acceptable to the Company) shall have
furnished the Company with an opinion or other advice satisfactory in form and
substance to the Company to the effect that such transfer will comply with the
securities laws of such jurisdiction. Notwithstanding the foregoing, the Company
acknowledges and agrees that any of the following transfers are deemed to be in
compliance with the Act and this Agreement and no opinion of counsel is required
in connection therewith: (x) a transfer made pursuant to Section 4, 5 or 6
hereof, (y) a transfer upon the death of the Purchaser to his executors,
administrators, testamentary trustees, legatees or beneficiaries (the
"Purchaser's Estate") or a transfer to the
3
executors, administrators, testamentary trustees, legatees or beneficiaries of a
person who has become a holder of Stock in accordance with the terms of this
Agreement, provided that it is expressly understood that any such transferee
shall be bound by the provisions of this Agreement and (z) a transfer made after
the Purchase Date in compliance with the federal securities laws to a trust or
custodianship the beneficiaries of which may include only the Purchaser, his
spouse or his lineal descendants (a "Purchaser's Trust") or a transfer made
after the third anniversary of the Purchase Date to such a trust by a person,
other than the Purchaser, who has become a holder of Stock in accordance with
the terms of this Agreement, provided that such transfer is made expressly
subject to this Agreement and that the transferee agrees in writing to be bound
by the terms and conditions hereof.
(b) During the term of this Agreement, the certificate (or
certificates) representing the Stock shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE MANAGEMENT
STOCKHOLDER'S AGREEMENT DATED AS OF MARCH ___, 2000 BETWEEN EVENFLO
COMPANY, INC. (THE "COMPANY") AND THE PURCHASER NAMED ON THE FACE
HEREOF (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY)."
(c) The Purchaser acknowledges that he has been advised that (i) the
Purchase Stock has been registered on Form S-8 under the Act, (ii) a restrictive
legend in the form heretofore set forth shall be placed on the certificates
representing the Stock and (iii) a notation shall be made in the appropriate
records of the Company indicating that the Stock is subject to restrictions on
transfer and appropriate transfer restrictions will be issued to the Company's
transfer agent with respect to the Stock. If the Purchaser is an Affiliate, the
Purchaser also acknowledges that (i) the Stock must be held indefinitely and the
Purchaser must continue to bear the economic risk of the investment in the Stock
unless it is subsequently registered under the Act or an exemption from such
registration is available, (ii) it is not anticipated that there will be any
market on an exchange or a quotation service for the Stock, (iii) when and if
shares of the Stock may be disposed of without registration in reliance on Rule
144 or the rules and regulations promulgated under the Act, such disposition can
be made only in limited amounts in accordance with the terms and conditions of
such Rule, and (iv) if the Rule 144 exemption is not available, public sale
without registration will require compliance with Regulation A or some other
exemption under the Act.
(d) If any shares of the Stock are to be disposed of in accordance
with Rule 144 under the Act or otherwise, the Purchaser shall promptly notify
the Company of such intended disposition and shall deliver to the Company at or
prior to the time of such disposition such documentation as the Company may
reasonably request in connection with such sale and, in
4
the case of a disposition pursuant to Rule 144, shall deliver to the Company an
executed copy of any notice on Form 144 required to be filed with the Securities
and Exchange Commission (the "SEC").
(e) The Purchaser agrees that, if any shares of the capital stock of
the Company are offered to the public pursuant to an effective registration
statement under the Act (other than registration of securities issued under an
employee plan), the Purchaser will not effect any public sale or distribution of
any shares of the Stock not covered by such registration statement within 7 days
prior to, or within 180 days after, the effective date of such registration
statement, unless otherwise agreed to in writing by the Company.
(f) The Purchaser represents and warrants that (i) he has received
and reviewed the documents comprising the Prospectus (the "Prospectus") relating
to the Purchase Stock and the documents referred to therein, certain of which
documents set forth the rights, preferences and restrictions relating to the
Purchase Stock and (ii) he has been given the opportunity to obtain any
additional information or documents and to ask questions and receive answers
about such documents, the Company and the business and prospects of the Company
which he deems necessary to evaluate the merits and risks related to his
investment in the Purchase Stock and to verify the information contained in the
Prospectus and the information received as indicated in this Section 2(f)(ii),
and he has relied solely on such information.
(g) The Purchaser further represents and warrants that (i) his
financial condition is such that he can afford to bear the economic risk of
holding the Purchase Stock for an indefinite period of time and has adequate
means for providing for his current needs and personal contingencies, (ii) he
can afford to suffer a complete loss of his investment in the Purchase Stock,
(iii) he understands and has taken cognizance of all risk factors related to the
purchase of the Purchase Stock, including those set forth in the Prospectus
referred to above, and (iv) his knowledge and experience in financial and
business matters are such that he is capable of evaluating the merits and risks
of his purchase of the Purchase Stock as contemplated by this Agreement.
3. Restriction on Transfer.
Except for transfers permitted by clauses (x), (y) and (z) of
Section 2(a) or a sale of shares of Stock pursuant to an effective registration
statement under the Act filed by the Company (as described herein but excluding
the Form S-8 filed in connection with this agreement) or pursuant to the Sale
Participation Agreement (as defined below), the Purchaser agrees that he will
not transfer, sell, assign, pledge, hypothecate or otherwise dispose of any
shares of the Stock at any time prior to the fifth anniversary of the Purchase
Date. No transfer of any such shares in violation hereof shall be made or
recorded on the books of the Company and any such transfer shall be void and of
no effect.
4. Right of First Refusal.
5
If at any time after the fifth anniversary of the Purchase Date, the
Purchaser receives a bona fide offer to purchase any or all of his shares of
Stock (the "Offer") from a third party (the "Offeror") which the Purchaser
wishes to accept, the Purchaser shall cause the Offer to be reduced to writing
and shall notify the Company in writing of his wish to accept the Offer. The
Purchaser's notice shall contain an irrevocable offer to sell such shares of
Stock to the Company (in the manner set forth below) at a purchase price equal
to the price contained in, and on the same terms and conditions of, the Offer,
and shall be accompanied by a true copy of the Offer (which shall identify the
Offeror). At any time within 30 days after the date of the receipt by the
Company of the Purchaser's notice, the Company shall have the right and option
to purchase, or to arrange for a third party to purchase, all of the shares of
Stock covered by the Offer either (i) at the same price and on the same terms
and conditions as the Offer or (ii) if the Offer includes any consideration
other than cash, then at the sole option of the Company, at the equivalent all
cash price, determined in good faith by the Company's Board of Directors, by
delivering a certified bank check or checks in the appropriate amount (and any
such non-cash consideration to be paid) to the Purchaser at the principal office
of the Company against delivery of certificates or other instruments
representing the shares of the Purchase Stock so purchased, appropriately
endorsed by the Purchaser. If at the end of such 30 day period, the Company has
not tendered the purchase price for such shares in the manner set forth above,
the Purchaser may during the succeeding 30 day period sell not less than all of
the shares of Stock covered by the Offer to the Offeror at a price and on terms
no less favorable to the Purchaser than those contained in the Offer. Promptly
after such sale, the Purchaser shall notify the Company of the consummation
thereof and shall furnish such evidence of the completion and time of completion
of such sale and of the terms thereof as may reasonably be requested by the
Company. If, at the end of 30 days following the expiration of the 30 day period
for the Company to purchase the Stock, the Purchaser has not completed the sale
of such shares of the Stock as aforesaid, all the restrictions on sale, transfer
or assignment contained in this Agreement shall again be in effect with respect
to such shares of the Stock.
5. Purchaser's Resale of Stock and Options to the Company Upon The
Purchaser's Death or Disability.
(a) Except as otherwise provided herein, if at any time prior to the
fifth anniversary of the Purchase Date, (i) the Purchaser is still in the employ
of the Company or any subsidiary of the Company, or had retired from the Company
and its subsidiaries (A) at age 65 or over after having been employed by the
Company or any subsidiary for at least five years after the Purchase Date or (B)
at age 55 or over if such Purchaser has been employed with the Company or a
Subsidiary for a minimum of 15 years and after having been employed by the
Company or any subsidiary for at least five years after the Purchase Date
("Retirement") and (ii) the Purchaser either dies or becomes Permanently
Disabled, then the Purchaser, the Purchaser's Estate or a Purchaser's Trust, as
the case may be, shall have the right, for six months (or such longer time as
determined by the Board of Directors) following the date of death or Permanent
Disability, to (I) sell to the Company, and the Company shall be required to
purchase, on one occasion, all or any portion of the shares of Stock then held
by the Purchaser, the Purchaser's Trust and/or the Purchaser's Estate, as the
case may be, at the Section 5 Repurchase Price, as
6
determined in accordance with Section 7, and (II) require the Company to pay to
the Purchaser or the Purchaser's Estate or the Purchaser's Trust, as the case
may be, an additional amount equal to the Option Excess Price determined on the
basis of a Section 5 Repurchase Price as provided in Section 8 with respect to
the termination of outstanding Options held by the Purchaser. The Purchaser, the
Purchaser's Estate and/or the Purchaser's Trust, as the case may be, shall send
written notice to the Company of its intention to sell shares of Stock and to
terminate such Options in exchange for the payment referred to in the preceding
sentence (the "Redemption Notice"). The completion of the purchase shall take
place at the principal office of the Company on the tenth business day after the
giving of the Redemption Notice. The Section 5 Repurchase Price and any payment
with respect to the Options as described above shall be paid by delivery to the
Purchaser, the Purchaser's Estate or the Purchaser's Trust, as the case may be,
of a wire transfer of immediately available funds or a certified bank check or
checks in the appropriate amount payable to the order of the Purchaser, the
Purchaser's Estate or the Purchaser's Trust, as the case may be, against
delivery of certificates or other instruments representing the Purchase Stock so
purchased and appropriate documents cancelling the Options so terminated
appropriately endorsed or executed by the Purchaser, the Purchaser's Estate or
the Purchaser's Trust, or his or its duly authorized representative. For
purposes of this Agreement, Purchaser shall be deemed to have a "Permanent
Disability" if the Purchaser is unable to engage in the activities required by
the Purchaser's job by reason of any medically determined physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12 months, or if
the majority of the Board of Directors of the Company shall, in good faith,
determine the Purchaser is permanently disabled.
(b) Notwithstanding anything in Section 5(a) to the contrary and
subject to Section 11, if there exists and is continuing a default or an event
of default on the part of the Company or any subsidiary of the Company under any
loan, guarantee or other agreement under which the Company or any subsidiary of
the Company has borrowed money or if the repurchase referred to in Section 5(a)
would result in a default or an event of default on the part of the Company or
any subsidiary of the Company under any such agreement or if a repurchase would
not be permitted under Delaware General Corporation Law (the "DGCL") (or if the
Company reincorporates in another state, the business corporation law of such
state) (each such occurrence being an "Event"), the Company shall not be
obligated to repurchase any of the Stock or the Options from the Purchaser, the
Purchaser's Estate or the Purchaser's Trust, as the case may be, until the first
business day which is 10 calendar days after all of the foregoing Events have
ceased to exist (the "Repurchase Eligibility Date"); provided, however, that (i)
the number of shares of Stock subject to repurchase under this Section 5(b)
shall be that number of shares of Stock, and (ii) the number of Exercisable
Option Shares (as defined in Section 8) for purposes of calculating the Option
Excess Price payable under this Section 5(b) shall be the number of Exercisable
Option Shares, held by the Purchaser, the Purchaser's Estate or a Purchaser's
Trust, as the case may be, at the time of delivery of a Redemption Notice in
accordance with Section 5(a) hereof; provided, further, that the Repurchase
Calculation Date (as defined herein) shall be determined in accordance with
Section 7 as of the Repurchase Eligibility Date (unless the Section 5 Repurchase
Price would be greater if the Repurchase Calculation Date had been
7
determined as if no Event had occurred in which case, solely for purposes of
this proviso, the Repurchase Calculation Date shall be determined as if no Event
had occurred). All Options exercisable as of the date of a Redemption Notice
shall continue to be exercisable until the repurchase pursuant to such
Redemption Notice.
(c) Notwithstanding any other provision of this Section 5 to the
contrary and subject to Section 11, the Purchaser, the Purchaser's Estate or the
Purchaser's Trust, as the case may be, shall have the right to withdraw any
Redemption Notice which has been pending for 60 or more days and which has
remained unsatisfied because of the provisions of Section 5(b).
6. The Company's Option to Repurchase Stock and Options of
Purchaser.
(a) If, on or prior to the fifth anniversary of the Purchase Date,
(i) the Purchaser's active employment with the Company (and/or, if applicable,
its subsidiaries) is voluntarily or involuntarily terminated for any reason
whatsoever, with or without Cause, (ii) the beneficiaries of a Purchaser's Trust
shall include any person or entity other than the Purchaser, his spouse or his
lineal descendants, or (iii) the Purchaser shall effect a transfer of any of the
Stock other than as permitted in this Agreement (alternatively, a "Call Event"),
the Company shall have the right to purchase all, but not less than all, of the
shares of the Stock then held by the Purchaser, the Purchaser's Estate or a
Purchaser's Trust at the Section 6 Repurchase Price determined in accordance
with Section 7 hereof; provided, however, that if the termination of employment
results from (A) the death or permanent disability of the Purchaser or (B) the
Retirement (as defined in Section 5(a)) of the Purchaser from the Company or any
of its subsidiaries, the Company shall have the right to purchase all, but not
less than all, of the shares of Stock then held by the Purchaser or a
Purchaser's Trust but the Repurchase Price shall be the Section 5 Repurchase
Price. In the event of Purchaser's active employment with the Company is
terminated by the Company for Cause, all Options (whether or not then
exercisable and whether such Options are held by Purchaser, Purchaser's Trust or
Purchaser's Estate) shall terminate without any payment. The Company shall have
a period of 75 days from the date of a Call Event in which to give notice in
writing to the Purchaser of the exercise of such election ("Call Notice").
Except as set forth above, in the event that the Company exercises its right to
repurchase shares of Stock pursuant to this Section 6, the Company shall also
pay the Purchaser an amount equal to the Option Excess Price determined on the
basis of the Section 6 Repurchase Price or the Section 5 Repurchase Price, as
the case may be, as provided in Section 7, with respect to the termination of
outstanding Options held by the Purchaser.
(b) The completion of the purchases pursuant to the foregoing shall
take place at the principal office of the Company on the tenth business day
after the giving of notice of the exercise of the option to purchase. The
Section 5 Repurchase Price or the Section 6 Repurchase Price, as the case may
be, and any payment with respect to the Options as described above shall be paid
by delivery to the Purchaser of a wire transfer of immediately available funds
or a certified bank check or checks in the appropriate amount payable to the
order of the Purchaser against delivery of certificates or other instruments
representing the Purchase Stock so purchased
8
and appropriate documents cancelling the Options so terminated, appropriately
endorsed or executed by the Purchaser, the Purchaser's Trust or his or its
authorized representative.
(c) Notwithstanding any other provision of this Section 6 to the
contrary and subject to Section 11, if there exists and is continuing any Event,
the Company shall delay the repurchase of any of the Stock or the Options
(pursuant to a Call Notice given on a timely basis in accordance with Section
6(a) hereof) from the Purchaser, the Purchaser's Estate, or the Purchaser's
Trust, as the case may be, until the Repurchase Eligibility Date; provided,
however, that (i) the number of shares of Stock subject to repurchase under this
Section 6(c) shall be that number of shares of Stock and (ii) the number of
Exercisable Option Shares for purposes of calculating the Option Excess Price
payable under this Section 6(c) shall be the number of Exercisable Option Shares
held by the Purchaser, the Purchaser's Estate or a Purchaser's Trust, as the
case may be, at the time of delivery of a Call Notice in accordance with Section
6(a) hereof; provided, further, that the Repurchase Calculation Date shall be
determined in accordance with Section 7 based on the Repurchase Eligibility Date
(unless the applicable Repurchase Price would be greater if the Repurchase
Calculation Date had been determined as if no Event had occurred, in which case,
solely for purposes of this proviso, the Repurchase Calculation Date shall be
determined as if no Event had occurred). All Options exercisable as of the date
of a Call Notice shall continue to be exercisable until the repurchase pursuant
to such Call Notice.
7. Determination of Repurchase Price.
(a) The Section 5 Repurchase Price and the Section 6 Repurchase
Price are hereinafter collectively referred to as the "Repurchase Price." The
Repurchase Price shall be calculated on the basis of the audited financial
statements, if available, or the unaudited financial statements of the Company
or the Market Price Per Share (as defined in Section 7(f)) as of the last day of
the fiscal quarter preceding the later of (i) the fiscal quarter in which the
event giving rise to the repurchase occurs and (ii) the fiscal quarter in which
the Repurchase Eligibility Date occurs (hereinafter called the "Repurchase
Calculation Date"). The event giving rise to the repurchase shall be the death,
permanent disability, retirement or termination of employment, as the case may
be, of the Purchaser, not the giving of any notice required pursuant to Section
5 or 6.
(b) Prior to a Public Offering (as hereinafter defined) the Section
5 Repurchase Price shall be a per share Repurchase Price equal to $5.00 plus the
amount, if any, by which the Book Value Per Share (as defined in Section 7(d))
as of the Repurchase Calculation Date exceeds $5.00. After a Public Offering,
the Section 5 Repurchase Price shall be a per share Repurchase Price equal to
$5.00 plus the amount, if any, by which the Market Price Per Share as of the
Repurchase Calculation Date exceeds $5.00.
(c) Prior to a Public Offering, the Section 6 Repurchase Price shall
be a per share Repurchase Price equal to the lesser of (i) the Book Value Per
Share (as defined in paragraph (d) below) or (ii) $5.00 plus (x) the Percentage
(as defined below) multiplied by (y) the amount, if any, by which the Book Value
Per Share as of the Repurchase Calculation Date
9
exceeds $5.00. After a Public Offering, the Section 6 Repurchase Price shall be
a per share Repurchase Price equal to the lesser of (i) Market Price Per Share
or (ii) $5.00 plus (a) the Percentage multiplied by (b) the amount, if any, by
which the Market Price Per Share as of the Repurchase Calculation Date exceeds
$5.00; provided, however, that in the event of Purchaser's termination without
Cause by the Company (and/or, if applicable, its subsidiaries) or with Good
Reason by the Purchaser, the Section 6 Repurchase Price shall be the Book Value
Per Share or Market Price Per Share, as the case may be. For purposes of this
Agreement the following definitions shall apply: "Cause" shall mean (i) the
Purchaser's willful and continued failure to perform Purchaser's duties with
respect to the Company or its subsidiaries which continues beyond ten days after
a written demand for substantial performance is delivered to Purchaser by the
Company or (ii) misconduct by Purchaser involving (x) dishonesty or breach of
trust in connection with Purchaser's employment which is reasonably likely to be
injurious to the Company or (y) conduct which would be a reasonable basis for an
indictment of Purchaser for a felony or for a misdemeanor involving moral
turpitude; and "Good Reason" shall mean (i) a material reduction in Purchaser's
base salary or (ii) a substantial reduction in Purchaser's duties and
responsibilities other than as approved by the Chief Executive Officer or
President of the Company.
The "Percentage" shall be determined as follows:
Repurchase Calculation Date Percentage
--------------------------- ----------
Eligibility Date through and including the first
anniversary of the Eligibility Date 0%
After the first anniversary of the Eligibility Date
through and including the second anniversary of the
Eligibility Date 20%
After the second anniversary of the Eligibility Date
through and including the third anniversary of the
Eligibility Date 40%
After the third anniversary of the Eligibility Date
through and including the fourth anniversary of the
Eligibility Date 60%
After the fourth anniversary of the Eligibility Date
through and including the fifth anniversary of the
Eligibility Date 80%
After the fifth anniversary of the Eligibility Date 100%
For purposes of the foregoing, Eligibility Date shall mean August
20, 1998.
(d) For purposes of this Agreement, "Book Value Per Share" shall
mean book value per common share on a fully diluted basis determined in
accordance with generally accepted accounting principles, excluding any
extraordinary or unusual items or the effects of purchase accounting adjustments
and amortization thereof, as determined in the discretion of the Compensation
Committee of the Board of Directors of the Company; provided that until the date
10
that the foregoing calculation results in a Book Value Per Share of $5.00 or a
per share amount in excess thereof, Book Value Per Share shall be deemed to
equal $5.00 (the "Initial Base Value") if EBITDA (defined as earnings before
interest, taxes, depreciation and amortization and before such extraordinary and
unusual items as determined in the discretion of the Board of Directors of the
Company) for the preceding fiscal year exceeds EBITDA of the next preceding
completed fiscal year. In the event that (A) EBITDA for the preceding completed
fiscal year is lower than or equal to EBITDA of the next preceding completed
fiscal year and (B) Book Value Per Share as calculated in accordance with the
preceding sentence without giving effect to the proviso thereto is less than
$5.00 per share, then Book Value Per Share shall equal the Initial Base Value
less the net loss per share for such fiscal year as calculated in accordance
with the preceding sentence (the "Adjusted Base Value"). In any subsequent year
in which clauses (A) and (B) of the preceding sentence are satisfied, the
Adjusted Base Value shall be further reduced by the calculation of net loss per
share for such preceding completed fiscal year. In the event that the Initial
Base Value has been previously adjusted and (A) EBITDA for the preceding
completed fiscal year is greater than EBITDA of the next preceding completed
fiscal year and (B) Book Value Per Share as calculated in accordance with the
first sentence of this definition without giving effect to the proviso thereto
is less than $5.00 per share, then Book Value Per Share shall be equal to the
greater of the Adjusted Base Value and the amount derived by calculating Book
Value Per Share.
(e) As used herein the term "Public Offering" shall mean the sale of
shares of Common Stock to the public subsequent to the date hereof pursuant to a
registration statement under the Act which has been declared effective by the
SEC (other than a registration statement on Form S-4 or Form S-8 or any other
similar form) which results in an active trading market in the Common Stock if
such a market does not already exist. A "Qualified Public Offering" shall mean a
Public Offering pursuant to an effective registration statement relating to the
sale of shares of Common Stock held by any of the KKR Affiliates (as defined
below); provided, however, that a "Qualified Public Offering" shall be deemed to
have occurred if there has been a Public Offering and there exists an active
trading market in 40% or more of the Common Stock.
(f) As used herein the term "Market Price Per Share" shall mean the
price per share equal to the average of the last sale price of the Common Stock
on the Repurchase Calculation Date on each exchange on which the Common Stock
may at the time be listed or, if there shall have been no sales on any of such
exchanges on the Repurchase Calculation Date, the average of the closing bid and
asked prices on each such exchange at the end of the Repurchase Calculation Date
or if there is no such bid and asked price on the Repurchase Calculation Date on
the next preceding date when such bid and asked price occurred or, if the Common
Stock shall not be so listed, the average of the closing sales prices as
reported by NASDAQ or any other nationally recognized stock exchange at the end
of the Repurchase Calculation Date. If the Common Stock is not so listed or
reported by NASDAQ or any other nationally recognized stock exchange, then the
Market Price Per Share shall be the Book Value Per Share.
(g) In determining the Repurchase Price, appropriate and equitable
adjustments shall be made by the Compensation Committee or the Board of
Directors for any
11
future issuances of rights to acquire and securities convertible into Common
Stock and any stock dividends, splits, combinations, recapitalizations or any
other adjustment in the number of outstanding shares of Common Stock.
8. Stock Issued to Purchaser Upon Exercise of Stock Options;
Termination of Options.
(a) The Company may from time to time grant to the Purchaser, in
addition to the Options, options under the Option Plan to purchase shares of
Common Stock at $5.00 per share or at a different option exercise price. The
term "Purchase Stock" or "Stock" as used in this Agreement shall include all
shares of Common Stock of the Company purchased by the Purchaser pursuant to
this Agreement and issued to the Purchaser by the Company upon exercise of the
Options and of any other stock options held by the Purchaser or by other
acquisition of shares of Common Stock.
(b) All outstanding Options granted to the Purchaser under the
Option Plan or otherwise, whether or not then exercisable, will be automatically
terminated upon the payment by the Company to the Purchaser (if not otherwise
terminated pursuant to Section 3.2 of the Non-Qualified Stock Option Agreement
relating to such Options), pursuant to the provisions of Sections 5 or 6 of this
Agreement, of an amount equal to the Option Excess Price. If the Option Excess
Price is zero or a negative number, all outstanding stock options granted to the
Purchaser under the Option Plan or otherwise, whether or not then exercisable,
shall be automatically terminated upon the repurchase of Stock as provided in
Sections 5 or 6. The Option Excess Price is the excess, if any, of the Section 5
Repurchase Price or the Section 6 Repurchase Price, depending on which
Repurchase Price is being used to repurchase the remainder of the Stock, over
the option exercise price (as provided in the stock option agreement) multiplied
by the number of Exercisable Option Shares. For purposes hereof, "Exercisable
Option Shares" shall mean the shares of Common Stock which, at the time of
determination of the Option Excess Price, could be purchased by the Purchaser
upon exercise of his outstanding options. Notwithstanding the foregoing, in the
event of the occurrence of a Call Event, all outstanding Options (whether or not
then exercisable) will be automatically terminated without payment therefor.
9. The Company's Representations and Warranties.
(a) The Company represents and warrants to the Purchaser that (i)
this Agreement has been duly authorized, executed and delivered by the Company
and (ii) the Purchase Stock, when issued and delivered in accordance with the
terms hereof, will be duly and validly issued, fully paid and nonassessable.
(b) If the Company shall have engaged in a Public Offering, the
Company will file the reports required to be filed by it under the Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder, to the
extent required from time to time to enable the Purchaser to sell shares of
Stock without registration under the Act within the limitations of the
12
exemptions provided by (A) Rule 144 or Rule 144A under the Act, as such Rules
may be amended from time to time, or (B) any similar rule or regulation
hereafter adopted by the SEC. Notwithstanding anything contained in this Section
9(b), the Company may deregister under Section 12 or 15 of the Exchange Act if
it is then permitted to do so pursuant to the Exchange Act and the rules and
regulations thereunder. Nothing in this Section 9(b) shall be deemed to limit in
any manner the restrictions on sales of Stock contained in this Agreement.
10. "Piggyback" Registration Rights.
(a) Effective upon the purchase of Common Stock pursuant to this
Agreement, until the later of (i) the first occurrence of a Qualified Public
Offering (as defined in Section 7(e) above) or (ii) the fifth anniversary of the
Purchase Date, the Purchaser hereby agrees to be bound by all of the terms,
conditions and obligations of the Registration Rights Agreement dated as of
August 20, 1998 between the Company and KKR 1996 Fund L.P. (the "Registration
Rights Agreement") and, in the case of a Qualified Public Offering and subject
to the limitations set forth in this Section 10, shall have all of the rights
and privileges of the Registration Rights Agreement, in each case as if the
Purchaser were an original party (other than the Company) thereto; provided,
however, that the Purchaser shall not have any rights to request registration
under Section 3 of the Registration Rights Agreement; and provided further, that
the Purchaser shall not be bound by any amendments to the Registration Rights
Agreement unless Purchaser consents thereto. Notwithstanding anything to the
contrary contained in the Registration Rights Agreement, the Purchaser's rights
and obligations under the Registration Rights Agreement shall be subject to the
limitations and additional obligations set forth in this Section 10. All shares
of Stock purchased by the Purchaser pursuant to this Agreement and held by the
Purchaser, the Purchaser's Trust or the Purchaser's Estate, including shares
purchased upon the exercise of Options, shall be deemed to be Registrable
Securities as defined in the Registration Rights Agreement.
(b) The Company will promptly notify the Purchaser in writing (a
"Notice") of any proposed registration (a "Proposed Registration"). If within 15
days of the receipt by the Purchaser of such Notice, the Company receives from
the Purchaser, the Purchaser's Trust or the Purchaser's Estate a written request
(a "Request") to register shares of Stock held by the Purchaser, the Purchaser's
Estate or the Purchaser's Trust (which Request will be irrevocable unless
otherwise mutually agreed to in writing by the Purchaser and the Company),
shares of Stock will be so registered as provided in this Section 10; provided,
however, that for each such registration statement only one Request, which shall
be executed by the Purchaser, the Purchaser's Trust or the Purchaser's Estate,
as the case may be, may be submitted for all Registrable Securities held by the
Purchaser, the Purchaser's Estate and the Purchaser's Trust.
(c) The maximum number of shares of Stock which will be registered
pursuant to a Request will be the lowest of (i) the number of shares of Stock
then held by the Purchaser (which for purposes of this subparagraph (c) shall
include shares held by the Purchaser, Purchaser's Estate or a Purchaser's
Trust), including all shares of Stock which the Purchaser is then entitled to
acquire under an unexercised Option to the extent then exercisable or
13
(ii) the maximum number of shares of Stock which the Company can register in the
Proposed Registration without adverse effect on the offering in the view of the
managing underwriters (reduced pro rata with all Other Purchasers) as more fully
described in subsection (d) of this Section 10, (iii) the maximum number of
shares which the Purchaser (pro rata based upon the aggregate number of shares
of Common Stock the Purchaser and all Other Purchasers have requested be
registered) and all Other Purchasers are permitted to register under the
Registration Rights Agreement or (iv) the product of (A) the number of shares of
stock then held by the Purchaser and (B) the quotient determined by dividing (1)
the total number of shares of Stock requested by KKR Affiliates (as defined
below) to be registered by the Company by (2) the aggregate number of shares of
Stock owned by the KKR Affiliates.
(d) If a Proposed Registration involves an underwritten offering and
the managing underwriter advises the Company in writing that, in its opinion,
the number of shares of Stock requested to be included in the Proposed
Registration exceeds the number which can be sold in such offering, so as to be
likely to have an adverse effect on the price, timing or distribution of the
shares of Stock offered in such Public Offering as contemplated by the Company,
then the Company will include in the Proposed Registration (i) first, 100% of
the shares of Stock the Company proposes to sell and (ii) second, to the extent
of the number of shares of Stock requested to be included in such registration
which, in the opinion of such managing underwriter, can be sold without having
the adverse effect referred to above, the number of shares of Stock which the
"Holders" (as defined in the Registration Rights Agreement), including, without
limitation, the Purchaser and Other Purchasers have requested to be included in
the Proposed Registration, such amount to be allocated pro rata among all
requesting Holders on the basis of the relative number of shares of Stock then
held by each such Holder (provided that any shares thereby allocated to any such
Holder that exceed such Holder's request will be reallocated among the remaining
requesting Holders in like manner).
(e) Upon delivering a Request the Purchaser, the Purchaser's Estate
or Purchaser's Trust (or his or their authorized representative) will, if
requested by the Company, execute and deliver a custody agreement and power of
attorney in form and substance satisfactory to the Company with respect to the
shares of Stock to be registered pursuant to this Section 10 (a "Custody
Agreement and Power of Attorney"). The Custody Agreement and Power of Attorney
will provide, among other things, that the Purchaser, the Purchaser's Estate or
Purchaser's Trust (or his or their authorized representative) will deliver to
and deposit in custody with the custodian and attorney-in-fact named therein a
certificate or certificates representing such shares of Stock (duly endorsed in
blank by the registered owner or owners thereof or accompanied by duly executed
stock powers in blank) and irrevocably appoint said custodian and
attorney-in-fact as the Purchaser's, Purchaser's Estate or Purchaser's Trust's
agent and attorney-in-fact with full power and authority to act under the
Custody Agreement and Power of Attorney on the Purchaser's behalf with respect
to the matters specified therein.
(f) The Purchaser agrees that he will execute such other agreements
as the Company may reasonably request to further evidence the provisions of this
Section 10.
14
11. Pro Rata Repurchases.
Notwithstanding anything to the contrary contained in Sections 5, 6
or 7, if at any time consummation of all purchases and payments to be made by
the Company pursuant to this Agreement and the Other Purchasers' Agreements
would result in an Event, then the Company shall make purchases from, and
payments to, the Purchaser and the Other Purchasers pro rata (on the basis of
the proportion of the number of shares of Stock and the number of Options each
such Purchaser and all Other Purchasers have elected or are required to sell to
the Company) for the maximum number of shares of Stock and shall pay the Option
Excess Price for the maximum number of Options permitted without resulting in an
Event (the "Maximum Repurchase Amount"). The provisions of Section 5(b) and 6(c)
shall apply in their entirety to payments and repurchases with respect to
Options and shares of Stock which may not be made due to the limits imposed by
the Maximum Repurchase Amount under this Section 11. Until all of such Stock and
Options are purchased and paid for by the Company, the Purchaser and the Other
Purchasers whose Stock and Options are not purchased in accordance with this
Section 11 shall have priority, on a pro rata basis, over other purchases of
Common Stock and Options by the Company pursuant to this Agreement and the Other
Purchasers' Agreements.
12. Rights to Negotiate Repurchase Price.
Nothing in this Agreement shall be deemed to restrict or prohibit
the Company from purchasing shares of Stock or Options from the Purchaser, at
any time, upon such terms and conditions, and for such price, as may be mutually
agreed upon between the Parties, whether or not at the time of such purchase
circumstances exist which specifically grant the Company the right to purchase,
or the Purchaser the right to sell, shares of Stock or the Company has the right
to pay, or the Purchaser has the right to receive, the Option Excess Price under
the terms of this Agreement.
13. Covenant Regarding 83(b) Election.
Except as the Company may otherwise agree in writing, the Purchaser
hereby covenants and agrees that he will make an election provided pursuant to
Treasury Regulation 1.83-2 with respect to the Stock, including without
limitation, the Stock to be acquired pursuant to Section 1 and the Stock to be
acquired upon each exercise of the Purchaser's Options; and Purchaser further
covenants and agrees that he will furnish the Company with copies of the forms
of election the Purchaser files within 30 days after the date hereof, and within
30 days after each exercise of Purchaser's Non-Qualified Options and with
evidence that each such election has been filed in a timely manner.
14. Notice of Change of Beneficiary.
Immediately prior to any transfer of Stock to a Purchaser's Trust,
the Purchaser shall provide the Company with a copy of the instruments creating
the Purchaser's Trust and with
15
the identity of the beneficiaries of the Purchaser's Trust. The Purchaser shall
notify the Company immediately prior to any change in the identity of any
beneficiary of the Purchaser's Trust.
15. Expiration of Certain Provisions.
The provisions contained in Sections 4, 5 and 6 of this Agreement
and the portion of any other provision of this Agreement which incorporates the
provisions of Sections 4, 5 and 6, shall terminate and be of no further force or
effect with respect to any shares of Stock sold by the Purchaser (i) pursuant to
an effective registration statement filed by the Company pursuant to Section 10
hereof or (ii) pursuant to the terms of the Sale Participation Agreement of even
date herewith, among the Purchaser and KKR 1996 Fund L.P.
The provisions contained in Sections 2(e), 3, 4, 5, 6 and 13 of this
Agreement, and the portion of any other provisions of this Agreement which
incorporate the provisions of such Sections, shall terminate and be of no
further force or effect upon (A) the consummation of a merger, reorganization,
business combination or liquidation of the Company, or a sale of Common Stock
owned by other investors, but only if such merger, reorganization, business
combination, liquidation or sale of Common Stock results in KKR 1996 Fund L.P.,
or any affiliate thereof (collectively, the "KKR Affiliates"), no longer having
the power (i) to elect a majority of the Board of Directors of the Company or
such other corporation which succeeds to the Company's rights and obligations
pursuant to such merger, reorganization, business combination, liquidation or
stock sale, or (ii) if the resulting entity of such merger, reorganization,
business combination, liquidation or stock sale is not a corporation, to select
the general partner(s) or other persons or entities controlling the operations
and business of the resulting entity or (B) a sale of all or substantially all
of the assets of the Company (other than in connection with financing
transactions, sale and leaseback transactions and similar transactions) to a
person who is not a KKR Affiliate.
16. Recapitalizations, etc.
The provisions of this Agreement shall apply, to the full extent set
forth herein with respect to the Stock or the Options, to any and all shares of
capital stock of the Company or any capital stock, partnership units or any
other security evidencing ownership interests in any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in exchange for, or substitution of the Stock or
the Options, by reason of any stock dividend, split, reverse split, combination,
recapitalization, liquidation, reclassification, merger, consolidation or
otherwise.
17. Purchaser's Employment by the Company.
Nothing contained in this Agreement or in any other agreement
entered into by the Company and the Purchaser contemporaneously with the
execution of this Agreement (i) obligates the Company or any subsidiary of the
Company to employ the Purchaser in any capacity whatsoever or (ii) prohibits or
restricts the Company (or any such subsidiary) from
16
terminating the employment, if any, of the Purchaser at any time or for any
reason whatsoever, with or without Cause, and the Purchaser hereby acknowledges
and agrees that neither the Company nor any other person has made any
representations or promises whatsoever to the Purchaser concerning the
Purchaser's employment or continued employment by the Company or any subsidiary
of the Company.
18. State Securities Laws.
The Company hereby agrees to use its best efforts to comply with all
state securities or "blue sky" laws which might be applicable to the sale of the
Stock and the issuance of the Options to the Purchaser.
19. Binding Effect.
The provisions of this Agreement shall be binding upon and accrue to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. In the case of a transferee permitted
under Section 2(a) hereof, such transferee shall be deemed the Purchaser
hereunder; provided, however, that no transferee (including without limitation,
transferees referred to in Section 2(a) hereof) shall derive any rights under
this Agreement unless and until such transferee has delivered to the Company a
valid undertaking and becomes bound by the terms of this Agreement.
20. Amendment.
This Agreement may be amended only by a written instrument signed by
the Parties hereto.
21. Closing.
Except as otherwise provided herein, the closing of each purchase
and sale of shares of Stock and the payment of the Option Excess Price, if any,
pursuant to this Agreement shall take place at the principal office of the
Company on the tenth business day following delivery of the notice by either
Party to the other of its exercise of the right to purchase or sell such Stock
hereunder or to cause the payment of the Option Excess Price, if any.
22. Applicable Law.
The laws of the State of Delaware (or if the Company reincorporates
in another state, of that state) shall govern the interpretation, validity and
performance of the terms of this Agreement, regardless of the law that might be
applied under principles of conflicts of law. Any suit, action or proceeding
against the Purchaser, with respect to this Agreement, or any judgment entered
by any court in respect of any thereof, may be brought in any court of competent
jurisdiction in the State of Delaware (or if the Company reincorporates in
another state, in that state) or the State of New York, as the Company may elect
in its sole discretion, and the
17
Purchaser hereby submits to the non-exclusive jurisdiction of such courts for
the purpose of any such suit, action, proceeding or judgment. By the execution
and delivery of this Agreement, the Purchaser appoints The Corporation Trust
Company, at its office in New York, New York or Wilmington, Delaware (or if the
Company reincorporates in another state, an office in that state), as the case
may be, as his agent upon which process may be served in any such suit, action
or proceeding. Service of process upon such agent, together with notice of such
service given to the Purchaser in the manner provided in Section 25 hereof,
shall be deemed in every respect effective service of process upon him in any
suit, action or proceeding. Nothing herein shall in any way be deemed to limit
the ability of the Company to serve any such writs, process or summonses in any
other manner permitted by applicable law or to obtain jurisdiction over the
Purchaser, in such other jurisdictions and in such manner, as may be permitted
by applicable law. The Purchaser hereby irrevocably waives any objections which
he may now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Delaware (or if the Company
reincorporates in another state, in that state) or the State of New York, and
hereby further irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in any inconvenient forum.
No suit, action or proceeding against the Company with respect to this Agreement
may be brought in any court, domestic or foreign, or before any similar domestic
or foreign authority other than in a court of competent jurisdiction in the
State of Delaware (or if the Company reincorporates in another state, in that
state) or the State of New York, and the Purchaser hereby irrevocably waives any
right which he may otherwise have had to bring such an action in any other
court, domestic or foreign, or before any similar domestic or foreign authority.
The Company hereby submits to the jurisdiction of such courts for the purpose of
any such suit, action or proceeding. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING IN RELATION TO THIS
AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
23. Assignability of Certain Rights by the Company.
The Company shall have the right to assign any or all of its rights
or obligations to purchase shares of Stock pursuant to Sections 4, 5 and 6
hereof; provided, however, that the Company shall remain obligated to perform
its obligations notwithstanding such assignment in the event that such assignee
fails to perform the obligations so assigned to it.
24. Miscellaneous.
In this Agreement (i) all references to "dollars" or "$" are to
United States dollars and (ii) the word "or" is not exclusive. If any provision
of this Agreement shall be declared illegal, void or unenforceable by any court
of competent jurisdiction, the other provisions shall not be affected, but shall
remain in full force and effect.
18
25. Notices.
All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered by hand
(whether by overnight courier or otherwise) or sent by registered or certified
mail, return receipt requested, postage prepaid, to the Party to whom it is
directed:
(a) If to the Company, to it at the following address:
x/x Xxxxxxxx Xxxxxx Xxxxxxx & Co.
0 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
(b) If to the Purchaser, to him at the address set forth below
under his signature;
or at such other address as either party shall have specified
by notice in writing to the other.
26. Covenant Not to Compete; Confidential Information.
(a) In consideration of the Company entering into this Agreement
with the Purchaser, the Purchaser hereby agrees effective as of the Purchase
Date, for so long as the Purchaser is employed by the Company or one of its
subsidiaries and for a period of one year thereafter (the "Noncompete Period"),
the Purchaser shall not, directly or indirectly, engage in the production, sale
or distribution of any product produced, sold or distributed by the Company or
its subsidiaries on the date hereof or during the Noncompete Period anywhere in
the world in which the Company or its subsidiaries is doing business other than
through the Purchaser's employment with the Company or any of its subsidiaries.
At the Company's option, the Noncompete Period may be extended for an additional
one year period if (i) within nine months of the termination of the Purchaser's
employment, the Company gives the Purchaser notice of such extension and (ii)
beginning with the first anniversary of such termination, the Company pays the
Purchaser an amount equal to the Purchaser's base salary on the date of the
termination
19
of his employment. Such amount shall be paid in installments in a manner
consistent with the then current salary payment policies of the Company. For
purposes of this Agreement, the phrase "directly or indirectly engage in" shall
include any direct or indirect ownership or profit participation interest in
such enterprise, whether as an owner, stockholder, partner, member, joint
venturer of otherwise, and shall include any direct or indirect participation in
such enterprise as a consultant, licensor of technology or otherwise.
(b) The Purchaser will not disclose or use at any time any
Confidential Information (as defined below) of which the Purchaser is or becomes
aware, whether or not such information is developed by him, except to the extent
that such disclosure or use is directly related to and required by the
Purchaser's performance of duties, if any, assigned to the Purchaser by the
Company. As used in this Agreement, the term "Confidential Information" means
information that is not generally known to the public and that is used,
developed or obtained by the Company or its subsidiaries in connection with its
business, including but not limited to (i) products or services, (ii) fees,
costs and pricing structures, (iii) designs, (iv) computer software, including
operating systems, applications and program listings, (v) flow charts, manuals
and documentation, (vi) data bases, (vii) accounting and business methods,
(viii) inventions, devices, new developments, methods and processes, whether
patentable or unpatentable and whether or not reduced to practice, (ix)
customers and clients and customer or client lists, (x) other copyrightable
works, (xi) all technology and trade secrets, and (xii) all similar and related
information in whatever form. Confidential Information will not include any
information that has been published in a form generally available to the public
prior to the date the Purchaser proposes to disclose or use such information.
The Purchaser acknowledges and agrees that all copyrights, works, inventions,
innovations, improvements, developments, patents, trademarks and all similar or
related information which relate to the actual or anticipated business of the
Company and its subsidiaries (including its predecessors) and conceived,
developed or made by the Purchaser while employed by the Company or its
subsidiaries belong to the Company. The Purchaser will perform all actions
reasonably requested by the Company (whether during or after the Noncompete
Period) to establish and confirm such ownership at the Company's expense
(including without limitation assignments, consents, powers of attorney and
other instruments).
(c) Notwithstanding clauses (a) and (b) above, if at any time a
court holds that the restrictions stated in such clauses (a) and (b) are
unreasonable or otherwise unenforceable under circumstances then existing, the
parties hereto agree that the maximum period, scope or geographic area
determined to be reasonable under such circumstances by such court will be
substituted for the stated period, scope or area. Because the Purchaser's
services are unique and because the Purchaser has had access to Confidential
Information, the parties hereto agree that money damages will be an inadequate
remedy for any breach of this Agreement. In the event a breach or threatened
breach of this Agreement, the Company or its successors or assigns may, in
addition to other rights and remedies existing in their favor, apply to any
court of competent jurisdiction for specific performance and/or injunctive
relief in order to enforce, or prevent any violations of, the provisions hereof
(without the posting of a bond or other security).
20
(d) Notwithstanding the foregoing paragraphs (a), (b) and (c), the
provisions of any employment agreement in effect on the date hereof between the
Company and Purchaser which contains covenants relating to confidentiality and
competition shall supersede and replace the provisions of paragraphs (a), (b)
and (c) and shall be deemed incorporated by reference in this Agreement in their
entirety.
21
IN WITNESS WHEREOF, the Parties have executed this Agreement as of
the date first above written.
EVENFLO COMPANY, INC.
By_________________________________
Name:
Title:
_________________________________________
Purchaser (print)
_________________________________________
Purchaser Signature
_________________________________________
_________________________________________
Address of Purchaser
EXHIBIT A
Form of Non-Qualified Stock Option Agreement
[See Exhibit B to the Prospectus.]
