EXHIBIT 10(B)
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CROWN LABORATORIES, INC.
STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of July 25, 1997 between CROWN LABORATORIES,
INC., a Delaware company (hereinafter called the "Company"), and EWE TRUST
NUMBER 1, a Florida trust (hereinafter called the "Optionee"). Unless otherwise
defined herein, capitalized terms used herein have the meanings set forth in the
Equipment Lease between the Company and the Optionee, dated as of July 25, 1997
(the "Equipment Lease").
WHEREAS, the Company has determined that it is in its best interests to
acquire the use of the Equipment in accordance with the terms of the Equipment
Lease;
WHEREAS, in order to induce the Optionee, as Lessor, to enter into the
Equipment Lease, the Company and the Optionee desire to enter into an agreement
whereby the Company will grant the Optionee alternative options to purchase
shares of the Company's common stock, par value $0.001 per share (the "Common
Stock") in certain circumstances and under certain conditions,
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Optionee agree
as follows:
THE OPTIONS, AND THE COMMON STOCK ISSUABLE UPON THEIR EXERCISE, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR
SALE, IN WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND COMPLIANCE OTHERWISE WITH OTHER SUCH
LAWS COVERING THE OPTIONS AND/OR THE COMMON STOCK ISSUABLE UPON ITS
EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO CROWN
LABORATORIES, INC. THAT AN EXEMPTION IS AVAILABLE UNDER THE SECURITIES ACT
OR OTHER SUCH LAWS.
1. ORIGINAL OPTION
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(A) OPTION GRANT. Pursuant to and subject to the terms and conditions of
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this Agreement, the Company grants the Optionee the option to purchase an
aggregate of seven hundred thirty-four thousand four hundred (734,400) shares
("Original Option Shares") of the presently authorized and unissued Common Stock
(subject to adjustment as provided herein in Section 1(e) and 1(f) of this
agreement, the "Original Option"). The grant of the Original Option is in
consideration of the transactions described in the Equipment Lease.
(B) TERM. The Original Option shall be exercisable by the optionee at any
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time prior to the end of the 60th month of the Term of the Equipment Lease,
subject to the provisions of Sections 1(e), 1(f) and 1(g) hereof (the "Original
Option Term")
(C) EXERCISE PRICE. The exercise price for the Original Option shall
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initially be $1.25 per share (the "Original Exercise Price"). Subject to
adjustment as provided in Sections 1(e) and Section 1(f) hereof, the Original
Exercise Price shall be payable by (i) the Optionee's delivery to the Company of
(A) the canceled Equipment Lease, and (B) within forty-five (45) days thereof,
free and clear title to the Equipment reasonably satisfactory to the Company or
(ii) in the Company's sole discretion upon the Optionee's written request, the
delivery of the aggregate Original Exercise Price in the form of cash or in
immediately available funds.
(D) METHOD OF EXERCISE. Within ninety (90) days after the date of
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delivery by the Optionee of a written notice to the Company, substantially in
the form of Exhibit A attached hereto, stating its intention to exercise the
Original Option (a "Notice of Intent"), the Optionee may, subject to the
provisions of Section 7 hereof, at its election exercise all of, but not less
than all of, the then outstanding Original Option by the delivery to the Company
of a written notice, substantially in the form of Exhibit B attached hereto (an
"Exercise Notice"), together with payment in full of the Original Exercise Price
as described in Section 1(c) hereof.
(E) ADJUSTMENTS; PARTIAL EXPIRATION OF THE ORIGINAL OPTIONS. If, on any
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date on or prior to the last day of the 18th month of the Equipment Lease Term
(the "Prepayment Expiration Date"), the Financed Amount under the Equipment
Lease is reduced to $600,000 or less by one or more prepayments of principal
outstanding under the Equipment Lease (the "Prepayment") or otherwise, then one
hundred eighty-four thousand (184,400) of the Original Option Shares shall
expire without further action on the date of Prepayment by the Company. All of,
but not less than all of, the remaining five hundred fifty thousand (550,000)
Original Option Shares will thereafter, from the Prepayment Expiration Date
until the end of the Original Option Term, be exercisable at the election of the
Optionee, at an exercise price of $1.09 per share under the terms and conditions
of this Agreement. If the Company does not reduce the Financed Amount under the
Equipment Lease to $600,000 or less on or prior to the
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Prepayment Expiration Date, the number and exercise price of the Original Option
shall be unchanged from the terms of Section 1(c) until the end of the Original
Option Term.
(F) MANDATORY EXERCISE. If, at any time prior to the end of the
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Original Option Term, the average closing price of the Common Stock (as
calculated in the following sentence) is $3.50 or more per share during the
Trade Period, the Optionee shall exercise all of the then outstanding Original
Option at the then applicable Exercise Price on the first business date
following the end of the Trade Period (as defined below) (i.e., either (i)
734,400 Option Shares exercisable at an Exercise Price of $1.25 per share if the
Company has not timely made the Prepayment or (ii) 550,000 Options Shares
exercisable at an Exercise Price of $1.09 per share if the Company has timely
made the Prepayment), and the Company shall sell, and the Optionee shall
purchase, all of the shares of Common Stock underlying such Original Option on
the first business date following the end of the Trade Period (as defined below)
(the "Mandatory Exercise"). For purposes of this provision, the average closing
price of the Common Stock shall be the average of its last sale price as
reported in the principal consolidated transaction reporting system of the
American Stock Exchange, Inc. (or the then principal trading market for the
Common Stock) over a fourteen (14) consecutive trading day period (the "Trade
Period"). The Exercise Price shall be payable in the same manner and form as
Section 1(c) prescribes.
(G) TERMINATION. The Original Option shall terminate and expire at
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5:00 pm (New York time) on the earlier of (i) the last day of the 60th month of
the Term of the Equipment Lease, provided, however, that the Company has made
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all monthly Rent payments as provided in Section 2 of the Equipment Lease, or
(ii) the date on which the Company exercises the option to purchase the
Equipment pursuant to Section 23 of the Equipment Lease (in either case, the
"Expiration Date").
2. NEW OPTION.
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(A) EXCHANGE. If, the Original Option has terminated and expired
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without exercise as provided in Section 1(g) hereof, the Company shall, at the
Expiration Date, cancel all of the then outstanding Original Option and grant
the Optionee an option to purchase five hundred fifty thousand (550,000) shares
of Common Stock (the "New Option").
(B) TERM. The New Option shall be exercisable by the Optionee on or
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prior to the date which is thirty-six (36) months from the Expiration Date (the
"New Option Term").
(C) EXERCISE PRICE. The New Option shall be exercisable by the
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Optionee during the New Option Term at an exercise price (the "New Option
Exercise Price") equal to the last sale price of the Common Stock as reported
in the principal consolidated transaction reporting system of the American Stock
Exchange, Inc. (or other applicable national securities exchange or the NASDAQ)
on the trading day immediately preceding the Expiration Date.
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The New Option Exercise Price shall be payable by the Optionee in cash or in
immediately available funds.
(D) METHOD OF EXERCISE. Within ninety (90) days after the date of
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delivery by the Optionee of a Notice of Intent stating its intention to exercise
the New Option, the Optionee may, subject to the provisions of Section 7 hereof,
at its election exercise the New Option, in whole or in part, by the delivery to
the Company of an Exercise Notice, together with payment in full of the New
Option Exercise Price as described in Section 2(c) hereof.
(E) TERMINATION. The New Option shall terminate and expire on the
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last day of the New Option Term at 5:00 pm (New York time).
3. OPTION REFERENCE. The Original Option and the New Option are
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hereinafter collectively referred to as the "Options." The shares of Common
Stock underlying the Options are hereinafter referred to as the "Option Shares."
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
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represents and warrants to the Optionee as follows:
(A) ORGANIZATION AND STANDING. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware and has all corporate power and authority required to enter into this
Agreement and to carry out its obligations hereunder. The Company is in good
standing in the State of Nevada, in which the Company's principal place of
business is located.
(B) AUTHORITY. The execution and delivery of this Agreement by the
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Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Company and no other corporate proceedings on the part of the Company and
no action of the Company's shareholders are necessary to authorize this
Agreement or any of the transactions contemplated hereby; this Agreement has
been duly and validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery hereof by the Optionee, is enforceable
against the Company in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally, and except that
the availability of equitable remedies, including specific performance, may be
subject to the discretion of any court before which any proceeding therefor may
be brought.
(C) RESERVATION OF SHARES. The Company has taken all necessary
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corporate action to authorize and reserve for issuance and to permit it to
issue, upon exercise of the Options, and at all times from the date hereof
through the expiration of the Options will have reserved, a number of authorized
and unissued shares of the Company's Common Stock not less than 734,400, such
amount being subject to adjustment as provided in Sections 1(e) and 1(f)
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hereof, all of which, upon their issuance and delivery in accordance with the
terms of this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable.
(D) NO LIENS. The Option Shares issued to the Optionee upon the
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exercise of the Options will be, upon delivery thereof to the Optionee, free and
clear of all claims, preemptive rights, liens, charges, encumbrances and
security interests of any nature whatsoever.
(E) NO CONFLICTS. The execution and delivery of this Agreement by the
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Company does not, and, subject to compliance with applicable law, the
consummation by the Company of the transactions contemplated hereby will not,
violate, conflict with, or result in a breach of any provision of, or constitute
a default (with or without notice or lapse of time, or both) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination, cancellation, or acceleration of any obligation or the
loss of a material benefit under, or the creation of a lien, pledge, security
interest or other encumbrance on assets (any such violation, conflict, breach,
default, termination, acceleration, right of termination, cancellation or
acceleration, loss, or creation, a "Violation") by the Company or any of its
subsidiaries of (i) any provision of the Certificate of Incorporation or the
Bylaws of the Company or any of its subsidiaries, each as amended to date, (ii)
any material provision of any material loan or credit agreement, note, mortgage,
indenture, lease, benefit plan or other agreement, obligation, instrument,
permit, concession, franchise or license (a "Material Contract") of the Company
or any of its subsidiaries or to which any of them is a party or by which any of
them or their respective properties or assets are bound, or (iii) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or any of its subsidiaries or any of their respective properties or
assets.
5. REPRESENTATIONS AND WARRANTIES OF OPTIONEE. The Optionee hereby
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represents and warrants to the Company as follows:
(A) INVESTMENT INTENT. Optionee is purchasing or acquiring the Options
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and the Option Shares thereunder for the Optionee's own account for investment
and not with a view to, or for sale in connection with, any distribution thereof
in violation of the Securities Act. Optionee hereby consents to the imposition
of a legend substantially similar to the following on each certificate for
shares of Common Stock and Optionee agrees to abide by the restrictions
contained therein:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR APPLICABLE STATE SECURITIES LAWS AND
MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED
OF OR OFFERED FOR SALE, IN WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND COMPLIANCE OTHERWISE
WITH OTHER SUCH LAWS COVERING THE OPTIONS
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AND/OR THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO CROWN LABORATORIES, INC. THAT AN
EXEMPTION IS AVAILABLE UNDER THE SECURITIES ACT OR OTHER SUCH LAWS.
In addition, such certificates shall bear any other legends as may be required
by law.
(B) AUTHORIZATION. Optionee has the power and authority to enter into
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this Agreement and to perform all of optionee's Obligations hereunder.
(C) RESTRICTED SECURITIES. Optionee understands that the Options and
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Option Shares thereunder have not been registered under the Securities Act by
reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
Optionee's investment intent as expressed herein. Optionee acknowledges that
the Option Shares, when received, must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available ("Restricted Shares"). Optionee has been advised of
or is aware of the provisions of Rule 144 promulgated under the Securities Act,
which rule permits limited resale of securities purchased in a private placement
subject to the satisfaction of certain conditions contained therein.
(D) BROKERAGE. There are no valid claims for brokerage commissions,
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finder's fees or similar compensation in connection with the transactions
contemplated by this agreement based upon any arrangement or agreement made by
or on behalf of Optionee, and Optionee agrees to indemnify and hold harmless the
Company against any liability or expense to it arising out of such a claim to
the extent that such claim arises out of actions or alleged actions of such
Optionee.
(E) EXPERIENCE; EVALUATION OF INVESTMENT; RISK OF LOSS. Optionee has
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carefully reviewed the representations concerning the Company contained in this
Agreement, and has made detailed inquiry concerning the Company, its business
and its personnel. The officers of the Company have made available to Optionee
any and all written information which Optionee has requested and have answered
to Optionee's satisfaction all inquiries made by such Optionee. Optionee
acknowledges that it has had the opportunity to ask questions of and receive
answers from the Company. Optionee understands that an investment in the
Company involves a substantial degree of risk and Optionee represents and
warrants that Optionee has adequate net worth and means of providing for
Optionee's current needs and personal contingencies to sustain a complete loss
of Optionee's investment in the Company. Optionee further represents and
warrants that Optionee's overall commitment to investments which are not readily
marketable is not disproportionate to Optionee's net worth and Optionee's
investment in the Option Shares will not cause such overall commitment to become
excessive.
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(F) OPTIONEE STATUS. Optionee is an accredited investor within the
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definition set forth in Rule 501(a) under the Securities Act. Simultaneously
with the execution of this Agreement, Optionee has executed a Suitability
Questionnaire (attached hereto as Exhibit C) which evidences that status and
contains certain representations and warrants by the Optionee.
6. COMPLIANCE WITH SECURITIES LAWS.
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(A) SECURITIES LAW CONDITIONS. The Company's obligation to issue
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Option Shares upon exercise of the Options is expressly conditioned upon (i) the
completion by the Company of any registration or other qualification of such
shares under any state and/or Federal law or rulings or regulations of any
government regulatory body and (ii) the completion by the Company of any
original or supplemental listing applications of such shares.
(B) GENERAL. No Option Shares shall be issued upon exercise of the
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Options unless and until the Company is satisfied, in its reasonable discretion,
that there has been compliance with all legal requirements applicable to the
issuance of such Option Shares.
7. REGISTRATION RIGHTS.
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(A) GENERAL. Subject to the provisions of Sections 5 and 6 hereof,
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the Company will use commercially reasonable efforts to register the Option
Shares under a "resale" prospectus pursuant to the Securities Act with the
Securities and Exchange Commission within ninety (90) days after the delivery to
the Company by the Optionee of a Notice of Intent stating its intention to
exercise the Options. Such Notice of Intent shall be in the form of Exhibit A
hereto. Any rights to require registration hereunder shall terminate with
respect to any shares of Common Stock that may be sold pursuant to Rule 144
under the Securities Act without any further holding period thereunder.
Notwithstanding the foregoing, the Company shall have the right to postpone the
time of delivery of Option Shares for such period as may be required for it with
reasonable diligence to comply with any applicable listing requirements of any
national securities exchange or any federal, state, or local law, to complete a
previously filed indemnity, or to avoid the premature disclosure of a possible
material transaction.
(B) REGISTRATION COSTS. If, within two (2) years of the Optionee's
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delivery of a Notice of Intent, the Optionee shall not have delivered to the
Company an Exercise Notice, together with payment in full of the applicable
Exercise Price, and if the Company has complied with the provisions of Section
7(a) hereof (including the 90-day requirement), the Optionee shall pay to the
Company, in the form of cash or in immediately available funds, fifty percent
(50%) of the registration costs incurred by the Company pursuant to Section 7(a)
hereof, including any federal or state fees, attorneys' costs, or printing
expense.
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8. RESTRICTION UPON RIGHT OF RESALE.
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(A) NOTICE. The Optionee shall give the Company written notice of its
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intention to sell or dispose of any of the Option Shares not less than seven (7)
days prior to any such sale or disposition.
(B) RESTRICTIONS. The Optionee may resell the Option Shares in an
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amount per month not to exceed 10% of the number of Option Shares originally
purchased by the Optionee; provided however, that in any one, and only one,
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month, the Optionee may sell an amount not to exceed thirty-five (35%) of the
number of Option Shares originally purchased by the Optionee.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
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(A) CERTAIN CHANGES. In the event of any change in the Common Stock
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by reason of any stock dividend, stock split, merger, recapitalization,
combination, exchange of shares or any similar transaction, the type and number
of shares or securities subject to the Options, and the Exercise Price per share
provided herein, shall be adjusted appropriately and proper provision shall be
made in the agreements governing such transaction so that the Optionee shall
receive, upon exercise of the Options, the number and class of securities or
property that the Optionee would have received in respect of the shares of
Common Stock issuable to the Optionee if the Options had been exercised
immediately prior to such event or the record date therefor, as applicable. In
addition, without limiting any restriction on the Company contained in this
Agreement, in the event of any change in the Common Stock by reason of any stock
dividend, stock split, merger, recapitalization, combination, exchange of shares
or similar transaction, equitable adjustment shall be made to the other
provisions hereof to carry out the original intent of this Agreement.
(B) CERTAIN TRANSACTIONS. If the Company shall enter into an agreement
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(i) to consolidate with or merge with and into a person and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person to merge with and into the Company and the Company shall be
the continuing or surviving corporation, but, in connection with such merger,
the then-outstanding shares of Common Stock shall be changed into or exchanged
for stock or other securities of the Company or any other person or cash or any
other property, or (iii) to sell or otherwise transfer all or substantially all
of its assets to any person, then, the agreement governing such transaction
shall make proper provision so that upon the consummation of such transaction
and upon the subsequent exercise of the Options, the Optionee shall be entitled
to receive, for each share of Common Stock underlying the Options, an amount of
consideration in the form of and equal to the per share amount of consideration
that would be received by the holder of one share of Common Stock (and, in the
event of an election or similar arrangement with respect to the type of
consideration to be received by the holders of Common Stock, subject to the
foregoing, proper provision shall be made so that the Optionee would have
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the same election or similar rights as would the holder of the number of shares
of Common Stock for which either of the Options are then exercisable).
10. NO STOCKHOLDER RIGHTS. The Optionee shall have no rights or
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privileges as a stockholder with respect to any shares of Common Stock subject
hereto until the Optionee has purchased, and become the holder of record of,
such shares, and no adjustment shall be made for dividends or distribution of
rights in respect to such shares if the record date therefor is prior to the
date which the Optionee becomes the holder of record.
11. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY BENEFICIARIES.
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This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Except as
expressly provided for in this Agreement, neither this Agreement nor the rights
or obligations of either party hereto are assignable, except by operation of
law, or with the written consent of the other party, and any such attempted
assignment in violation of this Agreement shall be void and of no force or
effect. Nothing contained in this Agreement, express or implied, is intended to
confer upon any person other than the parties hereto and their respective
permitted assigns any rights or remedies of any nature whatsoever.
12. SPECIFIC PERFORMANCE. The parties hereto recognize and agree that if
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for any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party agrees that, in addition to other
remedies, whether at law or in equity, the other party shall be entitled to an
injunction to prevent or restrain any violation or threatened violation of the
provisions of this Agreement, and to enforce specifically the terms and
provisions hereof, in any court of the State of New York or of the United States
of America within the Southern District in the State of New York. In the event
that any action should be brought in equity to enforce the provisions of this
Agreement, neither party will allege, and each party hereby waives the defense,
that there is an adequate remedy at law.
13. MISCELLANEOUS
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(A) ENTIRE AGREEMENT. This Agreement, together with the Equipment
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Lease, and their respective exhibits, constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
or contemporaneous agreements, whether oral or written, of the parties
pertaining to that subject matter. No agent or employee of the Company or the
Optionee is authorized to waive, alter or add any terms or conditions printed
herein.
(B) AMENDMENTS. This Agreement may only be modified or amended by a
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writing signed by both parties.
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(C) NOTICES. All notices and other communications hereunder shall be
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in writing and shall be deemed given if (a) delivered personally, (b) if sent by
overnight courier service (receipt confirmed in writing), (c) if delivered by
facsimile transmission (with receipt confirmed), or (d) five (5) days after
being mailed by registered or certified mail (return receipt requested) to the
parties in each case to the following addresses (or at such other address for a
party as shall be specified by like notice):
if to the Company:
Crown Laboratories, Inc.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Facsimile No. (000) 000-0000
Attention: Xxxxx X. Xxxx, Chief Executive Officer
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Facsimile No. (000) 000-0000/7004
Attention: Xxxxxxx X. Xxxxxxxxxxxx
if to the Optionee:
EWE Trust Number 1
000 Xxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Facsimile No. (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Trustee
with a copy to:
Greenberg, Traurig, Hoffman, Lipoff,
Xxxxx & Xxxxxxx, P.A.
0000 Xxxxxxx Xxxxxx
Xxxxx, XX 00000
Facsimile No. (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
(D) SUCCESSORS AND ASSIGNS. The rights and obligations of the Company
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under this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Company.
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(E) APPLICABLE LAW. This Agreement shall be governed by and construed,
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and any controversy arising out of or otherwise relating to this Agreement shall
be determined, in accordance with the laws of the State of New York applicable
to agreements made and to be performed entirely within such State and without
regard to its choice of law principles. Each party hereto consents and submits
to the exclusive jurisdiction of any court of the State of New York or of the
United States of America within the Southern District in the State of New York
for the adjudication of any action, suit, proceeding, claim or dispute arising
out of or otherwise relating to this Agreement.
(F) PARAGRAPH HEADINGS. The paragraph headings used in this Agreement
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are for convenience or reference, and are not to be construed as part of this
Agreement.
(G) FURTHER ASSURANCES. Each party agrees to execute and deliver all
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such further documents and instruments and take all such further action as may
be necessary in order to consummate the transactions contemplated hereby.
(H) COUNTERPARTS. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under seal effective as of the date written on the first page of this
Agreement.
CROWN LABORATORIES, INC.
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: Chief Executive Officer
EWE TRUST NUMBER 1
BY: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx, Trustee
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EXHIBIT A
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NOTICE OF INTENT
Crown Laboratories, Inc.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: President
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Gentlemen:
Pursuant to our Stock Option Agreement dated as of July 25, 1997, I hereby
intend to exercise the Option as follows:
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Number of Shares Per Share Total
Which I Elect to Purchase x Price = Price
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Executed as of this date of , 199 .
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Very truly yours,
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Name:
Title:
Address:
EXHIBIT B
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EXERCISE NOTICE
Crown Laboratories, Inc.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: President
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Gentlemen:
Pursuant to our Stock Option Agreement dated as of July 25, 1997, I hereby
elect to exercise the Option as follows:
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Number of Shares Per Share Total
Which I Elect to Purchase x Price = Price
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Enclosed with this Notice of Exercise is full payment of the total price of
the shares described above as provided the Stock Option Agreement or in the form
of a check in the amount of $ payable to the order of the Company.
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Kindly issue a certificate or certificates to me representing the shares of
Common Stock which I am acquiring by this exercise, and deliver it to the
address provided below.
Executed as of this date of , 199 .
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Very truly yours,
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Name:
Title:
Address:
EXHIBIT C
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CROWN LABORATORIES, INC.
SUITABILITY QUESTIONNAIRE
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Background
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The offer and sale of up to 734,400 shares of common stock, par value
$0.001 per share ("Common Stock"), of Crown Laboratories, Inc., a Delaware
corporation (the "Company"), pursuant to the terms and conditions of the Stock
Option Agreement between the Company and EWE Trust Number 1, a Florida trust
(the "Investor"), is being made by the Company pursuant to the private placement
exemption from registration in Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act") and Rule 506 promulgated thereunder by the
Securities and Exchange Commission ("SEC"), and pursuant to exemptions under
applicable state securities laws. The following information is requested in
order to determine whether the Investor qualifies as an "accredited investor"
for purposes of utilizing the above-referenced exemptions.
Representations
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The undersigned acknowledges that this questionnaire is designed to enable
the Company to comply with the above-referenced exemptions and that the Company
and its advisers thus will rely upon the information contained herein. In this
connection, the undersigned represents and warrants to the Company that the
information contained herein is true and accurate and may be relied up on by the
Company and its advisers. The undersigned agrees to notify the Company
immediately of any material change in any such information prior to the purchase
of any of the shares of Common Stock which may be obtained by the Investor upon
exercise of the Option (the "Option Shares").
The undersigned understands and further agrees that, although the Company
will use its best efforts to keep the information provided in the answer to this
questionnaire strictly confidential, the Company, on its behalf, may present
this questionnaire and the information provided in it to such parties as the
Company deems advisable if it is called up on to establish the availability
under any federal or state securities laws of an exemption from registration or
if the contents thereof are relevant to any issue in any threatened or pending
action or other proceeding to which the Company or any of its respective
advisers is or may become a party.
The undersigned acknowledges and also agrees that this questionnaire does
not constitute an offer by the Company to sell Common Stock, but is a request
for information.
Instructions
------------
PLEASE PRINT OR TYPE ALL ANSWERS AND RETURN THE EXECUTED SUITABILITY
QUESTIONNAIRE TO:
Xxxxxxx X. Xxxxxxxxxxxx
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
PHONE: (000) 000-0000
TELECOPIER: (000) 000-0000/7004
(1) If the Investor is or represents an entity, Questions 4 through 8 must
be answered.
(2) If the answer to Question 6 is yes, then responses to Questions 11
through 23 must be provided with respect to each beneficial owner of the
----
entity.
(3) If the answer to Question 6 is no, then the information requested in
Questions 11 through 23 should be provided, where applicable, with respect to
the entity.
(4) An entity investor shall furnish a copy of its organizational
documents, or appropriate certificates in lieu thereof, reflecting its authority
to enter into the above-referenced investment.
-2-
Information Required of the Investor
------------------------------------
CAPACITY
--------
1. Name of the Investor:
---------------------------------------------------------------------------
2. Are you acting for your own account?
Yes No
------ ------
3. If you are not acting for your own account, please specify the capacity
in which you are acting (i.e., agent, trustee, partner, corporate officer or
----
joint tenant).
4.a. If you represent an entity, when was the entity formed? (Please
provide the filing date of the entity's articles of incorporation or the
agreement of partnership, where applicable.)
4.b. If you represent an entity, what is the name of the entity?
4.c. Specify whether the entity is a corporation, general partnership,
limited partnership, association, joint stock company, trust or other
incorporated association.
5. In what state, territory, possession or foreign country was the entity
formed?
6. If the Investor is an entity such as a corporation, partnership,
association, joint stock company, trust or other incorporated association, was
such Investor organized for the purpose of acquiring the Option and the Common
Stock?
Yes No
-------- --------
-3-
7. If the answer to Question 6 is yes, or if the Investor is an entity
which is an Accredited Investor (as defined in Rule 501(a) under the Securities
Act) because all the equityholders of the Investor are Accredited Investors,
please list in the space provided below (or on attached sheets) the names,
addresses and telephone numbers of each beneficial owner of the Investor and his
----
percentage equity interest in such Investor and supply the information requested
---
in Questions 11 to 23 below with respect to each beneficial owner of the entity.
----
You may have each such beneficial owner complete and sign a photocopy of this
form.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
8. Taxpayer Identification or Social Security No.:
---------------------------------------------------------------------------
9a. Address to which all correspondence should be sent:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
9b. Home telephone number:
------------------------------------------------
9c. Office telephone number:
-----------------------------------------------
9d. Fax telephone number:
--------------------------------------------------
-4-
FINANCIAL DATA AND INVESTMENT HISTORY
-------------------------------------
10. Is the Investor's present net worth in excess of $5,000,000? Natural
persons may use their joint net worth with their spouse and should use
$1,000,000 as the reference amount. Joint net worth is the sum of individual
net worth of both spouses.
Yes No
------- -------
11. Does the Investor have adequate liquid assets (defined as cash and
cash equivalents and marketable securities) to meet its current needs and
contingencies without considering the assets proposed to be invested in the
Option and the Option Shares?
Yes No
------- -------
12. Have you filed or been involved (within the past two years) in, or
threatened with, or are considering, personal bankruptcy proceedings?
Yes No
------- -------
13. Are there any lawsuits outstanding or threatened against the Investor,
or are there any claims against or contingent liabilities of the Investor which
could materially affect its net worth as reported in this questionnaire so as to
bring it below $5,000,000 (in the case of a natural person, $1,000,000)? If
yes, please provide details in response to question, below.
Yes No
------- -------
14. Please indicate below any additional matter of a financial nature that
is relevant to an analysis of the Investor's financial position:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
-5-
15. Do any significant contingent liabilities exist for which you may be
obligated?
Yes No
------- -------
If yes, please indicate type and amount.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
16. Have you previously invested in securities offered through private
placements (other than Crown Laboratories, Inc.)?
Yes No
------- -------
If so, indicate the approximate amount invested: $
-------------
INVESTMENT IN THE OPTION AND OPTION SHARES
------------------------------------------
17. Are you currently a beneficial and record holder of the Common Stock?
Yes No
------- -------
18. Do you understand the nature of this particular investment in the
Option and Option Shares and the risks associated with such an investment?
Yes No
------- -------
19. Do you understand that there is no guarantee of any financial return
on this investment?
Yes No
------- -------
20. Do you understand that this investment is not liquid, and, therefore,
must be held indefinitely and may not be relied upon for your current needs and
contingencies?
Yes No
------- -------
-6-
21. Are the Option and Option Shares being purchased for investment and
not with the intent to resell them?
Yes No
------- -------
22. Do you understand that the Option Shares have not been registered and,
therefore, cannot be sold unless they are registered under the Securities Act or
unless an exemption from registration is available?
Yes No
------- -------
23. Do you understand that the Option Shares will bear a legend stating
that they have not been registered and are restricted as to transfer?
Yes No
------- -------
-7-
IN WITNESS WHEREOF, I have executed this Suitability Questionnaire as of
the 25th day of July, 1997, and declare that it is true and correct.
FOR INDIVIDUALS ONLY:
(Check One) Signature of Investor
----- Individual ------------------------------------
----- Joint tenants with ------------------------------------
right of survivorship Name:
----- Tenants
in Common FOR OTHER INVESTORS:
----- As custodian, Signature of Investor
trustee or agent
------------------------------------
----- Corporation ------------------------------------
Name:
----- Partnership Title:
CROWN LABORATORIES, INC.
By:
-------------------------------
-------------------------------
Name:
Title:
-8-
