GOLDEN STATE ACQUISITION CORP.
TERMINATION OF STOCK APPRECIATION RIGHTS
AND
NONQUALIFIED STOCK OPTION AGREEMENT
THIS TERMINATION OF STOCK APPRECIATION RIGHTS AND NONQUALIFIED STOCK OPTION
AGREEMENT (this "Agreement") is entered into as of January 1, 1998 by and
between Golden State Acquisition Corp., a Delaware corporation (the "Company"),
and Xxxxx X. Xxxxxxxx ("Xxxxxxxx" or "Optionee").
R E C I T A L S:
A. The Company granted and issued to Xxxxxxxx stock appreciation rights
("SARs") pursuant to a Stock Appreciation Rights Agreement (the "Stock
Appreciation Rights Agreement") dated as of November 23, 1995 and which
represents Xxxxxxxx'x rights regarding an aggregate of 50,000 SARs.
X. Xxxxxxxx and the Company wish to (i) terminate the Stock Appreciation
Rights Agreement, (ii) agree to the payment to Xxxxxxxx of certain amounts due
thereto, pursuant to the Stock Appreciation Rights Agreement, and (iii) grant
and issue to Xxxxxxxx the right to purchase shares of the Company's Class K
Common Stock, par value $.01 per share (the "Class K Common Stock"), pursuant to
the terms and conditions of this Agreement.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the mutual premises set forth in this
Agreement, and such other consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. TERMINATION OF STOCK APPRECIATION RIGHTS AGREEMENT. Xxxxxxxx and the
Company hereby agree as follows:
(a) In consideration of and exchange for (i) the payment of
$1.375 million in cash (the "Payment"), as made pursuant to Section 1(b), and
(ii) the issuance of
1.
the Option, as defined below, Xxxxxxxx and the Company hereby terminate the
Stock Appreciation Rights Agreement, which shall have no further force or
effect.
(b) The Payment may be in any combination of cash and a promissory
note as may be agreed to by Xxxxxxxx, with such promissory note to be on terms
and conditions mutually agreeable to Xxxxxxxx and the Company.
2. OPTION; NUMBER OF SHARES; VESTING. The Company hereby grants to
Optionee the right (the "Option") to purchase up to a maximum of 50,000 shares
(the "Shares") of Class K Common Stock at a price of $35.00 per share (the
"Option Price"), to be paid in accordance with Section 6 hereof. The Option
shall be fully vested as of the date first set forth above.
3. TERM OF AGREEMENT. This Option, and Optionee's right to exercise this
Option, shall terminate when the first of the following occurs: (a) the
expiration of ten (10) years from the date hereof; or (b) 90 days after the date
of termination of Optionee's employment or other relationship with the Company
and any direct or indirect subsidiary of the Company (individually, a
"Subsidiary" and collectively, the "Subsidiaries"), unless such termination
results from Optionee's death or disability (within the meaning of
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code"))
or Optionee dies within 90 days after the date of termination of Optionee's
employment or consulting relationship with the Company and the Subsidiaries, in
which case this Agreement and the Option shall terminate 180 days after the date
of termination of Optionee's employment or other relationship with the Company
and the Subsidiaries.
4. TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP. The termination for
any reason of Optionee's employment or other relationship with the Company and
the Subsidiaries shall not affect the number of Shares with respect to which the
Option may be exercised, and this Option may only be exercised with respect to
that number of Shares which could have been purchased under the Option had the
Option been exercised by Optionee on the date of such termination.
5. DEATH OF OPTIONEE; NO ASSIGNMENT. The rights of Optionee under this
Agreement may not be assigned or transferred except by will, by the laws of
descent or distribution and may be exercised during the lifetime of Optionee
only by such Optionee, provided that in the event of disability (within the
meaning of Section 22(e)(3) of the Code) of Optionee, a designee of Optionee (or
the Optionee's legal representative if Optionee has not designated anyone) may
exercise the Option on behalf of Optionee (provided the Option would have been
exercisable by Optionee) until the right to exercise the Option expires pursuant
to Section 3 hereof. Any attempt to sell, pledge, assign, hypothecate, transfer
or otherwise dispose of the Option in contravention of this Agreement shall be
void and shall have no effect. If
2.
Optionee should die while engaged in an employment or other relationship with
the Company and/or any Subsidiary, Optionee's designee, legal representative, or
legatee, the successor trustee of Optionee's inter vivos trust or the person who
acquired the right to exercise the Option by reason of the death of Optionee
(individually, a "Successor") shall succeed to Optionee's rights under this
Agreement. After the death of Optionee, only a Successor may exercise the
Option, provided that any Shares received by such Successor following such
exercise shall be subject to Section 13.
6. EXERCISE OF OPTION. Until termination of the Option in accordance
with Section 3 hereof, the Option may be exercised by Optionee (or such other
person specified in Section 5 hereof) to the extent exercisable as determined
under Section 2 hereof, upon delivery of the following to the Company at its
principal executive offices:
(a) a written notice of exercise which identifies this Agreement and
states the number of Shares (which may not be less than 10,000) or all of the
Shares (if less than 10,000 Shares then remain covered by the Option) then being
purchased;
(b) a check, cash or any combination thereof in the amount of the
aggregate Option Price (or payment of the aggregate Option Price in such other
form of lawful consideration as the Company may approve from time to time);
(c) a check or cash in the amount reasonably requested by the Company
to satisfy the Company's withholding obligations under federal, state or other
applicable tax laws with respect to the taxable income, if any, recognized by
Optionee in connection with the exercise, in whole or in part, of the Option
(unless the Company and Optionee shall have made other arrangements for
deductions or withholding from Optionee's wages, bonus or other income paid to
Optionee by the Company or any Subsidiary, provided such arrangements satisfy
the requirements of applicable tax laws); and
(d) a written representation and undertaking, if requested by the
Company pursuant to Section 8(b) hereof, in such form and substance as the
Company may require, setting forth the investment intent of Optionee, or a
Successor, as the case may be, and such other agreements, representations and
undertakings as the Company may require.
7. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.
(a) Optionee represents and warrants that the Option is being
acquired by Optionee for Optionee's personal account, for investment purposes
only, and not with a view to the distribution, resale or other disposition
thereof.
3.
(b) Optionee acknowledges that the Company may issue the Shares upon
the exercise of the Option without registering such securities under the Act on
the basis of certain exemptions from such registration requirement.
Accordingly, Optionee agrees that Optionee's exercise of the Option may be
expressly conditioned upon Optionee's delivery to the Company of such
representations and undertakings as the Company may reasonably require in order
to secure the availability of such exemptions, including a representation that
Optionee is acquiring the Shares for investment and not with a present intention
of selling or otherwise disposing of such Shares.
(c) Optionee acknowledges receipt of this Agreement granting the
Option and understands that all rights and liabilities connected with the Option
are set forth herein.
8. NO RIGHTS AS A STOCKHOLDER. Optionee shall have no rights as a
stockholder of any shares of Common Stock covered by the Option until the date
(the "Exercise Date") an entry evidencing such ownership is made in the stock
transfer books of the Company. Except as may be provided under Section 11
hereof, the Company will make no adjustment for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the Exercise Date.
9. LIMITATION OF COMPANY'S LIABILITY FOR NONISSUANCE. The inability of
the Company to obtain, from any regulatory body having jurisdiction, authority
reasonably deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any of the Shares hereunder shall relieve the Company of
any liability in respect of the nonissuance or sale of such shares as to which
such requisite authority shall not have been obtained.
10. CONFIDENTIALITY. Optionee agrees to hold in the strictest of
confidence all material information, including without limitation all financial
information, provided to Optionee by the Company, and further agrees not to use
such information for any purpose adverse to the Company, not to duplicate such
information or to deliver such information to any other person.
11. RECAPITALIZATION, REORGANIZATION; MERGER OR CONSOLIDATION.
(a) Subject to Section 11(b) hereof, if the outstanding shares of
Class K Common Stock of the Company are exchanged for different securities of
the Company through a reorganization, recapitalization or reclassification or if
the number of outstanding shares is changed through a stock split or stock
dividend, an appropriate adjustment shall be made (i) in the number or kind of
shares which may be purchased pursuant to the exercise of the Option and (ii) in
the number, exercise price, or kind of securities subject to the Option. Any
such adjustment in the Option, however, shall be made without change in the
total price applicable to the unexercised portion of the Option but with a
corresponding adjustment in the
4.
price for each share covered by the Option. In making such adjustments, or in
determining that no such adjustments are necessary, the Company may rely upon
the advice of counsel and accountants, and the good faith determination of the
Company shall be final, conclusive and binding. No fractional shares of stock
shall be issued or issuable under the Option on account of any such adjustment.
(b) Upon (i) the dissolution, liquidation or sale of all or
substantially all of the business, properties and assets of the Company, (ii)
any reorganization, merger, consolidation or exchange of securities in which the
Company does not survive, (iii) any reorganization, merger, consolidation or
exchange of securities in which the Company does survive and any of the
Company's stockholders have the opportunity to receive cash, securities and/or
other property in exchange for their shares of the capital stock of the Company
or (iv) any acquisition by any person or group (as defined in Section 13(d) of
the Exchange Act) of beneficial ownership of more than 50% of the Company's then
outstanding shares of the capital stock of the Company (each of the events
described in clauses (i), (ii), (iii) or (iv) is referred to herein as an
"Extraordinary Event"), the Option shall terminate. In such event, if the
Optionee is not tendered an option by the surviving entity in accordance with
all of the terms of the immediately succeeding sentence, or does not accept any
such substituted option which is so tendered, the Optionee shall have the right
until 10 days before the effective date of such Extraordinary Event to exercise,
in whole or in part, any portion of the unexpired Option issued to the Optionee,
to the extent that said Option is then exercisable pursuant to the provisions of
said Option. The Company shall use its reasonable best efforts to cause the
surviving entity in any Extraordinary Event to tender to the Optionee an option
or options to purchase other securities of the surviving entity on the same
basis as the Optionee may purchase shares of Class K Common Stock hereunder
(including satisfaction of similar vesting provisions). The Company shall use
its reasonable best efforts to cause such new option or options to contain such
terms and provisions as shall substantially preserve the rights and benefits of
the Option with any reasonable changes to take into account the circumstances of
the surviving entity.
(c) The grant of this Option shall not affect in any way the right or
power of the Company to make adjustments, reclassifications or changes in its
capital or business structures or to merge, consolidate, dissolve or liquidate
or to sell or transfer all or any part of its business or assets.
12. RESTRICTIVE LEGENDS. Optionee hereby acknowledges that federal
securities laws and the securities laws of the state in which Optionee resides
may require the placement of certain restrictive legends upon the Shares issued
upon exercise of the Option, and Optionee hereby consents to the placing of any
such legends upon certificates evidencing the Shares as the Company, or its
counsel, may reasonably deem necessary, provided that any such legend or legends
shall be removed when no longer applicable.
5.
13. REPURCHASE BY THE COMPANY.
(a) REPURCHASE OPTION. If Optionee's employment or other
relationship with the Company or any Subsidiary terminates for any reason
(including, without limitation, on the death, disability, retirement, voluntary
resignation or dismissal by the Company, with or without cause), the Company or
one or more designated assignees (each, an "Assignee") shall have the option
(the "Repurchase Option") to purchase from Optionee all or any portion of the
Shares then held by Optionee for a period of 180 days after the date of such
termination (the "Termination Date"). The purchase price for any such Shares to
be purchased pursuant to the Repurchase Option shall equal the greater of
(i) the Option Price or (ii) the fair market value of the Shares, as determined
in good faith by the Company's Board of Directors.
(b) ADJUSTMENTS OF OPTION PRICE UNDER REPURCHASE OPTION. The
purchase price for any Shares to be purchased pursuant to the Repurchase Option
shall be increased or decreased, as may be appropriate, to reflect any
subdivision or combination of the Shares or any dividend or distribution with
respect to the Shares which has been paid in additional shares of the capital
stock of the Company.
(c) EXERCISE OF REPURCHASE OPTION. The Repurchase Option shall be
exercised by the Company or any Assignee by delivery to Optionee, within the
180-day period specified in SECTION 13(b) above, of (i) a written notice
specifying the number of Shares to be purchased and (ii) a check in the amount
of the purchase price, calculated as provided in this SECTION 13, for all Shares
to be purchased.
(d) TERMINATION OF REPURCHASE OPTION. The Repurchase Option shall
terminate and have no further force or effect on and after the effectiveness of
the Company's first registration of shares of its equity securities pursuant to
the Securities Act of 1933, as amended.
14. NOTICES. All notices, requests and other communications hereunder
shall be in writing and, if given by telecopy, shall be deemed to have been
validly delivered 12 hours after confirmation of transmission to the fax numbers
set forth below, if sent during usual business hours; if given by personal
delivery, shall be deemed to have been validly served, given or delivered upon
actual delivery; and, if mailed, shall be deemed to have been validly served,
given or delivered three business days after deposit in the United States mails,
as registered or certified mail, with proper postage prepaid and addressed to
the party or parties to be notified, at the following addresses (or such other
address(es) as a party may designate for itself by like notice):
6.
If to the Company:
Golden State Acquisition Corp.
000 Xxxxx'x Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
If to Optionee:
Xxxxx X. Xxxxxxxx
00 Xxxx Xxxx
Xxxxxx Xxxxx Xxxxxx, XX 00000
Fax No.: (000) 000-0000
15. NOT AN EMPLOYMENT OR OTHER AGREEMENT. Nothing contained in this
Agreement shall confer, intend to confer or imply any rights to an employment or
other relationship or rights to a continued employment or other relationship
with the Company and/or any Subsidiary in favor of Optionee or limit the ability
of the Company and/or any Subsidiary to terminate, with or without cause, in its
sole and absolute discretion, the employment or other relationship with
Optionee, subject to the terms of any written employment or other agreement to
which Optionee is a party.
16. GOVERNING LAW. This Agreement shall be construed under and governed
by the laws of the State of Delaware without regard to the conflict of law
provisions thereof.
17. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original and both of which together shall be deemed one
Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
7.
IN WITNESS WHEREOF, the Company and Optionee have executed this Agreement
as of the date first above written.
THE COMPANY:
GOLDEN STATE ACQUISITION CORP.
a Delaware corporation
By:
---------------------------
Xxxxxxx X. Xxxxx
Chairman of the Board
OPTIONEE:
---------------------------
Xxxxx X. Xxxxxxxx
TERMINATION OF STOCK APPRECIATION RIGHTS AND NONQUALIFIED STOCK OPTION AGREEMENT
8.
