EXECUTION COPY
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OPTION AGREEMENT
for
▇▇▇▇ ▇. ▇▇▇▇▇
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THIS OPTION AGREEMENT (this "AGREEMENT") is made as of January 8, 1997
(the "Grant Date"), by and between Remington Products Company, L.L.C., a
Delaware limited liability company (the "Company"), and the individual named on
the signature page hereto (the "Executive").
WHEREAS, on the terms and subject to the conditions hereof, the
Company desires to grant the Executive, and the Executive wishes to acquire,
options to purchase and acquire the number of Common Units of the Company set
forth on SCHEDULE I attached hereto (the "CURRENT OPTIONS"), as hereinafter set
forth; and
WHEREAS, the Company desires to grant to the Executive, and the
Executive wishes to acquire, the options for the number of Common Units listed
on Schedule II based on achievement of the Performance Criteria (the
"PERFORMANCE OPTIONS"); and
WHEREAS, this Agreement is one of several agreements being entered
into by the Company with certain persons who are or will be key employees of the
Company (collectively with the Executive, the "MANAGEMENT OPTION HOLDERS") as
part of a management option plan designed to comply with Rule 701 promulgated
under the Securities Act (as defined below);
NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
1. DEFINITIONS.
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"AGREEMENT" shall have the meaning set forth in the preface.
"APPLICABLE PERCENTAGE" shall mean (i) 25% during the one-year period
commencing on the first anniversary of the Grant Date; (ii) 50% during the
one-year period commencing on the second anniversary of the Grant Date; and
(iii) 100% on and after the third anniversary of the Grant Date. The Applicable
Percentage shall be 100% after an IPO Exit Transaction.
"CAUSE" shall mean a termination of employment of the Executive by the
Company or any subsidiary thereof due to (i) the commission by the Executive of
an act of fraud or embezzlement (including the unauthorized disclosure of
confidential or proprietary information of the Company or any of its
subsidiaries which results in material financial loss to the Company or any of
its subsidiaries); (ii) the commission by Executive of a felony which (A)
materially involves the Company or its business or (B) materially affects the
ability of the Executive to render services for a substantial period in
accordance with his employment agreement; (iii) the willful misconduct
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of the Executive as an employee of the Company or any of its subsidiaries which
is reasonably likely to result in material injury or financial loss to the
Company or any of its subsidiaries; (iv) the willful failure of Executive to
render services to the Company or any of its subsidiaries in accordance with
Executive's employment which failure amounts to a material neglect of
Executive's duties to the Company or any of its subsidiaries or (v) a willful
material breach ofthe covenants in Section 3(a) (but only in the penultimate
sentence thereof), Section 3(b) and Sections 10 or 11 of the Employment
Agreement by Executive, which breach is not cured within thirty (30) days after
written notice of such breach is delivered to Executive. The Executive shall not
be deemed to have been terminated for Cause unless the Company shall have given
or delivered to the Executive (I ) reasonable notice setting forth, in
reasonable detail, the facts and circumstances, if any, claimed to provide a
basis for termination for Cause and (2) a reasonable opportunity for Executive,
together with his counsel, to be heard before the Board.
For purposes of determining whether the Executive was given
"reasonable notice" and "reasonable opportunity to be heard" in connection with
any determination by the Board as to whether Cause exists, 10 business days'
notice of the Board meeting shall be deemed to constitute "reasonable notice"
(without prejudice to the determination of whether some other period would also
constitute "reasonable notice") and the opportunity for the Executive and his
counsel to present arguments to the Board at such meeting as to why the
Executive believes that no Cause exists shall constitute "reasonable opportunity
to be heard" (without prejudice to the determination of whether some other forum
or method would also constitute a "reasonable opportunity to be heard").
"COMMON UNITS" shall mean the common units of the Company, together
with any securities issued in exchange therefor.
"COMPANY" shall have the meaning set forth in the preface.
"COST" shall mean, with respect to each of the Common Units, the
exercise price per unit paid by the Executive (as proportionately adjusted for
all subsequent stock splits, stock dividends and other recapitalization).
"CURRENT OPTIONS" shall mean the Options to acquire the number of
Common Units set forth on Schedule 1.
"DISABILITY" shall mean the inability of the Executive to perform the
essential functions of Executive's job, with or without reasonable
accommodation, by reason of a physical or mental infirmity, for a continuous
period of six months. The period of six months shall be deemed continuous unless
Executive returns to work for at least 30 consecutive business days during such
period and performs during such period services at the level and competence that
were performed prior to the beginning of the six-month period. The date of such
Disability (for purposes of determining the Termination Date in the event of
such Disability) shall be on the first day of such six-month period.
"EMPLOYEE" shall mean any employee (as defined in accordance with the
regulations and revenue rulings then applicable under Section 3401 (c) of the
Internal Revenue Code of 1986,
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as amended) of the Company or any of its subsidiaries, and the term
"EMPLOYMENT" shall include service as a part- or full-time Employee to the
Company or any of its subsidiaries.
"EMPLOYMENT AGREEMENT" shall mean that certain Employment Agreement of
even date herewith between the Company and the Executive.
"EXECUTIVE" shall have the meaning set forth in the preface.
"EXECUTIVE GROUP" shall have the meaning set forth in Section 4.1 (a).
"EXERCISE PRICE" shall have the meaning set forth in Section 2. 1.
"EXPIRATION DATE" shall have the meaning set forth in Section 2.2.
"FAIR MARKET VALUE" shall mean the average of the closing prices of
the sales of the Company's Common Units on all securities exchanges on which the
Common Units may at the time be listed, or, if there have been no sales on any
such exchange on any day, the average of the highest bid and lowest asked prices
on all such exchanges at the end of such day, or, if on any day the Common Units
are not so listed, the average of the representative bid and asked prices quoted
in the NASDAQ System as of 4:00 p.m., New York time, or, if on any day the
Common Units are not quoted in the NASDAQ System, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which the Fair Market Value is being determined and the 20
consecutive business days prior to such day. If at any time the Common Units are
not listed on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the Fair Market Value shall be the fair value of the
Common Units determined in good faith by the Management Committee (without
taking into account the lack of liquidity and minority position of the Common
Units subject to repurchase). In the event that the Executive disagrees with the
valuation, he shall provide written notice to the Management Committee within 15
business days of being informed of the valuation. If the Executive and the
Management Committee cannot resolve the differences within 15 business days of
the date that the Executive provides written notice of his objection, the
dispute shall be submitted for resolution pursuant to Section 6. 17.
"FINANCING DEFAULT" shall mean an event which would constitute (or
with notice or lapse of time or both would constitute) an event of default under
any of the following as they may be amended, supplemented or modified from time
to time: (i) the Credit and Guarantee Agreement and Indenture (collectively, the
"SENIOR FINANCING AGREEMENTS") dated on or about the Grant Date among the
Company and the other financial institutions, agents and trustees party thereto,
and any extensions, renewals, refinancingsor refundings thereof in whole or in
part; (ii) any provision of the Company's Limited Liability Company Agreement or
any of its subsidiary's certificate of incorporation or limited liability
company agreement, as the case may be, as in effect on the Grant Date; and (iii)
any of the securities issued pursuant to or whose terms are governed by the
terms of any of the agreements set forth in clauses (i) and (ii) above, and any
extensions, renewals, refinancings or refundings thereof in whole or in part.
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"GOOD REASON" shall have the same meaning as set forth in the
Employment Agreement of even date herewith between the Company and the
Executive.
"GRANT DATE" shall have the meaning set forth in the preface.
"IPO" means the consummation of an initial public offering of Common
Units or common stock of a corporation that is the successor to the Company or
which owns, directly or indirectly, more than 50% of the Common Units of the
Company or its successor.
"IPO EXIT TRANSACTION" means the first date after an IPO, on which
Vestar and its affiliates (not including employees of the general partner of
Vestar) own less than 10% of the Common Units or of the outstanding common stock
of a corporation that is the successor to the Company or which controls the
Company or its successor.
"LIMITED LIABILITY COMPANV AGREEMENT" shall mean the Amended and
Restated Limited Liability Company Agreement of the Company, dated as of May 16,
1996, by and between RPI Corp. (formerly Remington Products, Inc.), a Delaware
corporation ("RPI"), Vestar ▇▇▇▇▇▇ Corp., a Delaware corporation ("▇▇▇▇▇▇"),
Vestar Razor Corp., a Delaware corporation ("Razor"), and the individuals listed
as management members on Schedule A thereto, as the same may be amended from
time to time.
"MANAGEMENT COMMITTEE" shall mean the Company's Management Committee
or any board of directors or similar governing body of a successor to the
Company.
"MANAGEMENT OPTION HOLDERS" shall have the meaning set forth in the
preface.
"OPTIONS" shall mean the Current Options and the Performance Options.
"PERFORMANCE CRITERIA" shall mean the criteria set forth on Schedule
III attached hereto.
"PERFORMANCE OPTIONS" shall mean the option to acquire the number of
Units set forth on Schedule II hereto.
"PERMITTED TRANSFEREE" means any transferee of Common Units pursuant
to clauses (f) or (g) of the definition of "Exempt Employee Transfer" as defined
in the Securityholders Agreement.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, trust, joint stock company, business trust, unincorporated
association, joint venture, governmental authority or other entity of any nature
whatsoever.
"PUBLIC OFFERING" shall mean a registered public offering of the
Company's Common Units.
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"REORGANIZATION" means the consummation of the transactions
contemplated by the Reorganization Agreement dated as of May 1, 1996, by and
among RPI, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇, Vestar/Remington Corp., a Delaware corporation
("VESTAR CORP.") and Vestar Equity Partners, L.P., a Delaware limited
partnership ("Vestar").
"RETIREMENT" shall mean the Executive's retirement as an employee of
the Company or any of its subsidiaries on or after reaching age 60 or such
earlier age as may be otherwise determined by the Management Committee after at
least four years employment with the Company after the Grant Date.
SALE OF THE COMPANV" shall mean a Company Sale, as that term is
defined in the Limited Liability Company Agreement.
SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
all rules and regulations promulgated thereunder, as the same may be amended
from time to time.
"SECURITYHOLDERS AGREEMENT" shall mean the Securityholders Agreement
dated as of May 23, 1996 among ▇▇▇▇▇▇, Razor, Vestar, RPI, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇
and other equity holders of the Company.
"TERMINATION DATE" means the date upon which Executive's employment
with the Company and its subsidiaries is terminated.
GRANT OF OPTIONS.
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2.1 CONFIRMATION OF GRANT: OPTION PRICE. Pursuant to the terms and
subject to the conditions set forth in this Agreement, the Company hereby
evidences and confirms the grant to the Executive, effective on the Grant Date,
of the Options to purchase from the Company the number of Common Units set forth
in SCHEDULE I (in the case of the Current Options) and SCHEDULE II (in the case
of the Performance Options) attached hereto at an exercise price per unit (the
EXERCISE PRICE") and for an aggregate exercise price set forth in SCHEDULE I (in
the case of the Current Options) and Schedule II (in the case of the Performance
Options) attached hereto. Within six months of the Grant Date, the Company and
the Executive shall establish a three-year strategic plan for the Company for
the three fiscal years commencing with the 1997 fiscal year, which plan will
establish financial goals to be achieved by the Company at the end of the three
year period (the "Performance Criteria"). When agreed to, the Performance
Criteria shall be set forth on Schedule III and attached hereto. If the
Executive exercises the Options, the Executive must exercise the Options for all
of the Common Units subject thereto.
2.2 EXPIRATION DATE. The Options shall terminate on the tenth
anniversary of the Grant Date; PROVIDED, HOWEVER, that if the Executive's
Employment with the Company is terminated for any reason, the Options shall
terminate on the 90th day following the Termination Date unless the Management
Committee otherwise specifies a later date (such tenth anniversary of the Grant
Date or earlier date as specified in the proviso is referred to as the
"Expiration Date"). The Options may be exercised, subject to the terms of this
Agreement, only (a) in connection with a Sale of the
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Company, (b) after the effectiveness of a public offering of the Common Units
pursuant to an underwritten offering registered under the Securities Act and (c)
at any time during the 90-day period preceding the Expiration Date. At 5:00 p.m.
(New York time) on the Expiration Date, unexercised Options shall be canceled
and of no further force and effect. Notwithstanding the foregoing, the
Management Committee may require that the Options be exercised in connection
with any Sale of the Company or, if not so exercised, provide that the Options
terminate.
2.3 EXERCISE AND PAYMENT. The Executive may exercise the Options by
delivering written notice of exercise to the Company, which notice must (x)
contain the representations and warranties set forth in Section 3.2 and (y) be
accompanied by the aggregate Exercise Price for the Common Units subject to the
Option in the form of cashier's check, certified check or wire transfer of
immediately available funds; PROVIDED that the Options may not be exercised by
the Executive unless, to the extent applicable, all of the following conditions
are met:
(a) Legal counsel for the Company must be satisfied at the time
of exercise that the issuance of Common Units upon exercise will be in
compliance with the Securities Act and other applicable United States federal,
state, local and foreign laws; and
(b) the Executive must execute the Limited Liability Company
Agreement and Securityholders Agreement.
The number of Common Units that may be acquired pursuant to the exercise of the
Performance Options shall be limited as set forth on Schedule III based on the
achievement of the Performance Criteria. The Management Committee may impose
such additional procedural requirements to exercise of the Options as it may
deem necessary or advisable in connection therewith.
INVESTMENT REPRESENTATIONS AND COVENANTS OF THE EXECUTIVE.
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3.1 OPTIONS AND COMMON UNITS UNREGISTERED. The Executive acknowledges
and represents that Executive has been advised by the Company that:
(a) the Options and the Common Units have not been registered under
the Securities Act;
(b) any Common Units issued upon exercise of the Option must be held
indefinitely and the Executive must continue to bear the economic risk of such
investment in the Common Units unless the offer and sale of such Common Units is
subsequently registered under the Securities Act and all applicable state
securities laws or an exemption from such registration is available;
(c) there is no established market for the Options and the Common
Units and it is not anticipated that there will be any public market for the
Options or the Common Units in the foreseeable future;
(d) a restrictive legend in the form set forth below shall be placed
on the certificates representing the Options and the Common Units acquired on
exercise thereof:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
REPURCHASE RIGHTS AND OTHER PROVISIONS SET FORTH IN AN OPTION
AGREEMENT BETWEEN THE ISSUER AND ▇▇▇▇ ▇. ▇▇▇▇▇ DATED AS OF JANUARY 8,
1997, AS AMENDED AND MODIFIED FROM TIME TO TIME, A COPY OF WHICH MAY
BE OBTAINED BY THE HOLDER HEREOF AT THE ISSUER'S PRINCIPAL PLACE OF
BUSINESS WITHOUT CHARGE";
(e) a notation shall be made in the appropriate records of the Company
indicating that the Options and the Common Units are subject to restrictions on
transfer and, if the Company should at some time in the future engage the
services of a securities transfer agent, appropriate stop-transfer instructions
will be issued to such transfer agent with respect to the Options and the Common
Units acquired on exercise thereof;
(f) upon exercise of the Options the Executive must, if applicable,
execute and deliver the Limited Liability Company Agreement, Securityholders
Agreement and, if requested by the Management Committee, the Members Pledge
Agreement (all of which the Executive has had access to and understands the
contents of), and become subject to the terms thereof; and
(g) the exercise of the Options, and becoming a member of the Company,
may subject the Executive to taxation in the various jurisdictions where the
Company conducts business.
3.2 ADDITIONAL INVESTMENT REPRESENTATIONS. Upon each exercise of the
Options, the Executive shall represent and warrant that:
(a) the Executive's financial situation is such that Executive can
afford to bear the economic risk of holding the Common Units for an indefinite
period of time, has adequate means for providing for Executive's current needs
and personal contingencies, and can afford to suffer a complete loss of
Executive's investment in the Common Units;
(b) the Executive's knowledge and experience in financial and business
matters are such that Executive is capable of evaluating the merits and risks of
the investment in the Common Units;
(c) the Executive understands that the Common Units are a speculative
investment which involves a high degree of risk of loss of Executive's
investment therein, there are substantial restrictions on the transferability of
the Common Units, and, on the date of Executive's exercise of the Options and
for an indefinite period thereafter, there may be no public market for the
Common Units and, accordingly, it may not be possible for the Executive to
liquidate Executive's investment in case of emergency, if at all;
(d) the terms of this Agreement provide that in the event that the
Executive ceases
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to be an Employee, the Company has the right to repurchase the Common Units
issued upon exercise of the Options at a price which may be less than the Fair
Market Value of such Common Units;
(e) the Executive understands and has taken cognizance of all the risk
factors related to the purchase of the Common Units, and, other than as set
forth in this Agreement, no representations or warranties have been made to the
Executive or Executive's representatives concerning the Common Units or the
Company or their prospects or other matters;
(f) the Executive has been given the opportunity to examine all
documents and to ask questions of, and to receive answers from, the Company and
its representatives concerning the Company and its subsidiaries, the
Reorganization, the Securityholders Agreement, the Company's Amended and
Restated Limited Liability Company Agreement and the terms and conditions of the
purchase of the Common Units and to obtain any additional information which the
Executive deems necessary; and
(g) all information which the Executive has provided to the Company
and Executive's representatives concerning the Executive and Executive's
financial position is complete and correct as of the date of this Agreement.
CERTAIN SALES UPON TERMINATION OF EMPLOYMENT.
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4.1 PUT OPTION.
(a) If the Executive's Employment terminates due to Disability, death
or Retirement (such date of termination, the "Put Date"), in either case prior
to the earlier of a Public Offering or the fifth anniversary of the Grant Date,
each of the Executive and the Executive's Permitted Transferees (hereinafter
sometimes collectively referred to as the "EXECUTIVE GROUP") shall have the
right, subject to the provisions of Section 5 hereof, for 90 days following the
Put Date (or, if the Options are exercised after the Put Date, 90 days following
the date of such exercise), to sell to the Company, and the Company shall be
required to purchase (subject to the provisions of Section 5 hereof), on one
occasion from each member of the Executive Group, all (but not less than all) of
the Common Units then held by the Executive Group at a price per Common Unit
equal to the greater of Fair Market Value (measured as of the Termination Date)
or Cost for the Applicable Percentage (measured as of the Termination Date) of
the Common Units and (y) Cost for the remainder of the Common Units: PROVIDED
that in any case the Management Committee shall have the right, in its sole
discretion, to increase any of the foregoing purchase prices.
(b) If the Executive Group desires to exercise its option to require
the Company to repurchase Common Units obtained upon exercise of the Option
pursuant to Section 4.1 (a), the members of the Executive Group shall send one
written notice to the Company setting forth such members' intention to
collectively sell all of their Common Units within the applicable 90-day period
described above, which notice shall be signed by each member of the Executive
Group. Subject to the provisions of Section 5. 1, the closing of the purchase
shall take place at the
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principal office of the Company on a date specified by the Company no later than
the 60th day after the giving of such notice.
4.2 CALL OPTIONS.
(a) Upon termination of the Executive's Employment, the Company shall
have the right and option to purchase, for a period of 90 days following the
Termination Date (or, if the Options are exercised after the Termination Date,
90 days following the date of such exercise), and each member of the Executive
Group shall be required to sell to the Company, any or all of the Common Units
obtained upon exercise of the Options then held by each member of the Executive
Group at a price per Common Unit as follows:
(i) if the Executive's Employment is terminated at any time due to
Disability, death or Retirement, the purchase price shall be (x) the greater of
Fair Market Value (measured as of the Termination Date) or Cost for the
Applicable Percentage (measured as of the Termination Date) of the Common Units
being purchased and (y) the average of the Fair Market Value (measured as of the
Termination Date) and Cost for the remainder of the Common Units being
purchased;
(ii) if the Executive's Employment is terminated by the Company at any
time without Cause or by the Executive for Good Reason, the purchase price shall
be (x) the greater of Fair Market Value (measured as of the Termination Date) or
Cost for the Applicable Percentage (measured as of the Termination Date) of the
Option Units being purchased and (y) Cost for the remainder of the Common Units
being purchased;
(iii) if after the third anniversary of the Grant Date the Executive's
Employment is terminated for any reason other than (A) Disability, (B) death,
(C) Retirement, (D) termination by the Company with or without Cause or (E)
termination by the Executive for Good Reason, the purchase price shall be the
Fair Market Value (measured as of the Termination Date) of the Common Units
being purchased;
(iv) if the Executive's Employment is terminated prior to the third
anniversary of the Grant Date by the Executive for any reason other than (A)
Disability, (B) death, (C) Retirement, or (D) Good Reason, the purchase price
shall be the Cost of the Common Units; and
(v) if the Executive's Employment is terminated for Cause (A) on or
prior to the third anniversary hereof, the purchase price shall be the Cost of
the Common Units and (B) subsequent to the third anniversary hereof, the
purchase price shall be the Fair Market Value of the Common Units; PROVIDED,
HOWEVER, that if ( I ) the termination is due to the acts described in items (i)
and (ii)(A) of the definition of Cause ("COMPANY CAUSE") or the Executive is
found to have committed acts of Company Cause prior to the third anniversary
hereof, and (2) the termination occurs on or prior to the fifth anniversary
hereof, the purchase price shall be the Cost of the Common Units; and
PROVIDED FURTHER that, in any case, the Management Committee shall have the
right, in its sole
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discretion, to increase any purchase price set forth above and, PROVIDED
FURTHER, that if the Executive elects to contest a Board determination of Fair
Market Value, the date of purchase shall be deferred until such value is
determined pursuant to Section 6.17 hereof
(b) If the Company desires to exercise its option to purchase any
Common Units pursuant to this Section 4.2, the Company shall, not later than end
of the applicable 90 day period referred to above, send written notice to each
member of the Executive Group of its intention to purchase the Common Units,
specifying the number of Common Units to be purchased (the "CALL NOTICE").
Subject to the provisions of Section 5, the closing of the purchase shall take
place at the principal office of the Company on a date specified by the Company
no later than the 60th day after the giving of the Call Notice.
4.3 OBLIGATION TO SELL SEVERAL. In the event there is more than one member
of the Executive Group, the failure of any one member thereof to perform its
obligations hereunder shall not excuse or affect the obligations of any other
member thereof, and the closing of the purchases from such other members by the
Company shall not excuse, or constitute a waiver of its rights against, the
defaulting member.
CERTAIN LIMITATIONS ON THE COMPANV'S OBLIGATIONS TO PURCHASE COMMON UNITS.
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5.1 DEFERRAL OF PURCHASES.
(a) Notwithstanding anything to the contrary contained herein, the
Company shall not be obligated to purchase any Common Units at any time pursuant
to Section 4, regardless of whether it has delivered a notice of its election to
purchase any such Common Units, (i) to the extent that the purchase of such
Common Units (together with any other purchases of Common Units pursuant to
Section 4 of other management Option Agreements or the Management Common Unit
Subscription Agreements) would result (A) in a violation of any law, statute,
rule, regulation, order, writ, injunction, decree or judgment promulgated or
entered by any federal, state, local or foreign court or governmental authority
applicable to the Company or any of its subsidiaries or any of its or their
material property (which violation is material to the Company, its directors or
members or the repurchase of units) or (B) after giving effect thereto, in a
Financing Default, or (ii) if immediately prior to such purchase there exists a
Financing Default which prohibits such purchase. The Company shall within
fifteen days of learning of any such fact so notify the members of the Executive
Group that it is not obligated to purchase units hereunder.
(b) Notwithstanding anything to the contrary contained in Section 4,
any Common Units which a member of the Executive Group has elected to sell to
the Company or which the Company has elected to purchase from members of the
Executive Group, but which in accordance with Section 5.1(a) are not purchased
at the applicable time provided in Section 4, shall to the extent then owned by
the Executive Group be purchased by the Company on or prior to the fifteenth day
after such date or dates that (after taking into account any purchases to be
made at such time pursuant to the agreements with other Management Option
Holders) it is no longer prohibited from purchasing such units under Section 5.1
(a), and the Company shall give
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the members of the Executive Group five days prior notice of any such purchase.
5.2 PAYMENT FOR COMMON UNITS. If at any time the Company elects or is
required to purchase any Common Units pursuant to Section 4, the Company shall
pay the purchase price for the Common Units it purchases (i) first, by the
cancellation of any indebtedness, if any, owing from the Executive to the
Company or any of its subsidiaries (which indebtedness shall be applied pro rata
against the proceeds receivable by each member of the Executive Group receiving
consideration in such repurchase) and (ii) then, by the Company's delivery of a
check or wire transfer of immediately available funds for the remainder of the
purchase price, if any, against delivery of the certificates or other
instruments representing the Common Units so purchased, duly endorsed; PROVIDED
that if any of the conditions set forth in Section 5.1(a) exists which prohibits
such cash payment, the portion of the cash payment so prohibited may be made, to
the extent such payment is not prohibited, by the Company's delivery of an
unsecured subordinated promissory note (which shall be subordinated and subject
in right of payment only to the prior payment of any debt outstanding under the
Senior Financing Agreements and any modifications, renewals, extensions,
replacements and refunding of all such indebtedness) of the Company (a
"Repurchase Note") in a principal amount equal to the balance of the purchase
price, payable in up to five equal annual installments commencing on the first
anniversary of the issuance thereof and bearing interest payable annually at the
publicly announced prime rate of Chase Bank, on the date of issuance and each
June 30 and December 31 thereafter; and, PROVIDED FURTHER, that in the case of a
purchase pursuant to either ( 1 ) Section 4.1(a) or (2) any of Sections
4.2(a)(iv) or 4.2(a)(v), the Company may elect to deliver a Repurchase Note in a
principal amount equal to all or a portion of the cash purchase price (in lieu
of paying such portion of the purchase price in cash), which Repurchase Note
shall mature on the fifth anniversary of its issuance, require principal
payments to be made in five equal, annual installments and bear interest payable
annually at the publicly announced prime rate of Chase Bank on the date of
issuance and each June 30 and December 31 thereafter. The Company shall have the
right set forth in clause (i) of the first sentence of this Section 5.2 whether
or not the member of the Executive Group selling such Option Units is an obliger
of the Company.
6. MISCELLANEOUS.
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6.1 TAX WITHHOLDING. Whenever Common Units are to be issued pursuant
to the exercise of an Option or any cash payment is to be made hereunder or
under the Limited Liability Company Agreement, the Company shall have the power
to withhold, or require the Executive to remit to the Company in cash or offset
against any amounts otherwise payable Executive, an amount sufficient to satisfy
all Federal, state, local and foreign withholding tax requirements relating to
such transaction, and the Company may defer payment of cash or issuance of
Common Units until such requirements are satisfied.
6.2 TRANSFERS TO PERMITTED TRANSFEREES. The Executive may transfer
Options only upon his death pursuant to applicable laws of descent and
distribution and may transfer Common Units only as contemplated by the Limited
Liability Agreement and the Securityholders Agreement. Prior to any transfer of
Common Units, the Executive shall deliver to the Company a written agreement of
the proposed transferee (a) evidencing such Person's
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undertaking to be bound by the terms of this Agreement and (b) acknowledging
that Common Units transferred to such Person will continue to be Common Units
for purposes of this Agreement in the hands of such Person. Any transfer or
attempted transfer of Common Units in violation of any provision of this
Agreement, the Limited Liability Agreement or the Securityholders Agreement
shall be void, and the Company shall not record such transfer on its books or
treat any purported transferee of such Common Units as the owner of such Common
Units for any purpose.
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6.3 RECAPITALIZATIONS. EXCHANGES. ETC.. AFFECTING COMMON UNITS. The
number, class and Exercise Price of any outstanding Options (and the number of
Common Units subject to outstanding Options) shall be adjusted by the Management
Committee if, in its good faith judgment, it shall deem such an adjustment to be
necessary or appropriate to reflect any transaction involving the Common Units
having the same effect as a stock dividend, stock split, stock issuance or
reverse stock split or any combination, recapitalization, reclassification,
merger, consolidation or other reorganization. The provisions of this Agreement
shall apply, to the full extent set forth herein with respect to Options, to
Common Units, to any and all equity interests or options to acquire equity
interests of the Company or 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 in substitution of the Common Units, by reason
of any stock dividend, stock split, stock issuance, reverse stock split,
combination, recapitalization, reclassification, merger, consolidation or
otherwise. Nothing contained in this Agreement shall prohibit or restrict the
Company from reorganizing into a corporation or other entity or otherwise
recapitalizing in connection with a Sale of the Company or Public Offering of
the Company's equity interests. Each member of the Executive Group shall
cooperate with, and take all actions requested by, the Company in effecting such
a reorganization. In the event that the Company is reorganized as a corporation
(or the interests in the Company are transferred to a corporation) (a
"REORGANIZATION"), the Executive shall cooperate with such Reorganization. In
the event of a Reorganization, the Company's successor or its new parent entity
may substitute an option to purchase its stock (with substantially equivalent
economic terms as this Agreement) for this Agreement, and the Executive will
execute such documents as are required to evidence such substitution.
6.4 REQUIREMENTS OF LAW. The issuance of Common Units shall be
subject to all applicable laws, rules and regulations and to such approvals by
any governmental agencies or national securities exchanges or quotation systems
as may be required. The Company will be under no obligation to issue, sell or
transfer any Common Units upon the Executive's election to exercise any Options
granted hereunder if such issuance, sale or transfer would, in the reasonable
opinion of the Company, result in a violation of applicable law, including the
federal securities laws and any commercially reasonable efforts to obtain the
approvals referred to in this Section 6.4 and otherwise to permit any such
issuance, sale or transfer of Common Units to comply with applicable law, it
being expressly understood, however, that the Company shall not have any
obligation to register the Common Units or otherwise take any other action to
make available any exemption from the registration requirements of any federal
or state securities law to permit the issuance, sale or transfer of such Common
Units.
6.5 EXECUTIVE'S EMPLOYMENT BY THE COMPANY. Nothing contained in
this Agreement shall be deemed to obligate the Company or any subsidiary of the
Company to employ the Executive in any capacity whatsoever or to prohibit or
restrict the Company (or any such subsidiary) from terminating the employment of
the Executive at any time or for any reason whatsoever, with or without Cause.
6.6 NO RIGHTS AS EQUITY HOLDER. Except as otherwise required by
law, the Executive shall not have any rights as an equity holder with respect to
any Common Units until
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such time as the Common Units have been so issued.
6.7 ADMINISTRATION BV MANAGEMENT COMMITTEE. This Option Agreement
shall be administered by the Management Committee, which shall have full power
and authority to construe and administer this Agreement as it may deem
advisable.
6.8 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; PROVIDED, HOWEVER, that no
transferee shall derive any rights under this Agreement unless and until such
transferee has executed and delivered to the Company a valid undertaking and
becomes bound by the terms of this Agreement.
6.9 AMENDMENT: WAIVER. This Agreement may be amended only by a
written instrument signed by the parties hereto. No waiver by any party hereto
of any of the provisions hereof shall be effective unless set forth in a writing
executed by the party so waiving.
6.10 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without regard to the conflicts of law principles thereof.
6.11 JURISDICTION. Any suit, action or proceeding with respect to
this Agreement, or any judgment entered by any court in respect of any thereof,
shall be brought in any court of competent jurisdiction in the State of New
York, and each of the Company and the members of the Executive Group hereby
submits to the exclusive jurisdiction of such courts for the purpose of any such
suit, action, proceeding or judgment. Each of the members of the Executive Group
and the Company hereby irrevocably waives any objections which it 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 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.
6.12 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when personally
delivered, telecopied (with confirmation of receipt), two days after deposit
with a reputable overnight delivery service (charges prepaid) and three days
after deposit in the U.S. Mail (postage prepaid and return receipt requested) to
the address set forth below or such other address as the recipient party has
previously delivered notice to the sending party.
(a) If to the Company:
Remington Products Company, L.L.C.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
and
Remington Products Company, L.L.C.
c/o Vestar Equity Partners, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇,▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
(b) If to the Executive, to the address as shown on the equity interest
register of
6.13 INTEGRATION. This Agreement and the documents referred to herein
or delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to the subject matter hereof and
thereof. There are no restrictions, agreements, promises, representations,
warranties, covenants or undertakings with respect to the subject matter hereof
other than those expressly set forth herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
6.14 COUNTERPARTS. This Agreement may be executed in separate
counterparts, and by different parties on separate counterparts each of which
shall be deemed an original, but all of which shall constitute one and the same
instrument.
6.15 INJUNCTIVE RELIEF. The Executive and Executive's Permitted
Transferees each acknowledges and agrees that a violation of any of the terms of
this Agreement will cause the Company irreparable injury for which adequate
remedy at law is not available. Accordingly, it is agreed that the Company shall
be entitled to an injunction, restraining order or other equitable relief to
prevent breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof in any court of competent jurisdiction in the
United States or any state thereof' in addition to any other remedy to which it
may be entitled at law or equity.
6.16 RIGHTS CUMULATIVE: WAIVER. The rights and remedies of the
Executive and the Company under this Agreement shall be cumulative and not
exclusive of any rights or remedies which either would otherwise have hereunder
or at law or in equity or by statute, and no failure or delay by either party in
exercising any right or remedy shall impair any such right or
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remedy shall impair any such right or remedy or operate as a waiver of such
right or remedy, nor shall any single or partial exercise of any power or right
preclude such party's other or further exercise or the exercise of any other
power or right. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any preceding or
succeeding breach and no failure by either party to exercise any right or
privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.
6.17 ARBITRATION. (a) To the extent that the parties are unable
to resolve any disputes arising under this Agreement, other than disputes
relating to the fair market value of Common Units, then either party may submit
the dispute to binding arbitration in New York City in accordance with the rules
for Employee Dispute Resolution of the American Arbitration Association then in
effect (and the Company will pay all filing fees for commencing such
arbitration). The arbitrator's decision shall be made in accordance with such
rules, shall be delivered in writing to the parties and shall be conclusive and
binding upon the parties.
(b) Disputes relating to the Fair Market Value of Common Units shall
be submitted promptly to an investment banker from a nationally prominent
investment banking firm mutually acceptable to the Executive and the Company who
shall decide the Fair Market Value of the Common Units in accordance with the
definition of Fair Market Value herein. The costs of retaining the investment
banker shall be paid by the party whose valuation is furthest away from the
value as determined by the investment banker, provided that if the difference
between the value as so determined and the average of the values advocated by
the two parties is less than 5% of such average value, the costs shall be split
evenly by the Executive and the Company.
IN WITNESS WHEREOF, the parties have executed this Option Agreement as
of the date first above written.
REMINGTON PRODUCTS COMPANY, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇
------------------------------
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
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SCHEDULE II
-----------
Performance Options
AGGREGATE
NUMBER OF OPTIONS EXERCISE PRICE EXERCISE PRICE
----------------- -------------- --------------
Common Units equaling 2% The same price per Common $160,000
of the Common Units on a Unit paid at the original
fully-diluted basis* closing
*The maximum number of Common Units to be acquired under the Performance Options
shall be adjusted at the first anniversary of the Grant Date so that the number
will be 2% of the Common Units on a fully-diluted basis on that date taking into
account (1) any issuances of options or Common Units to executives who become
employed by the Company and (2) repurchases (or cancellations) of options or
Common Units from executives whose employment with the Company is terminated, in
each case prior to the first anniversary of the Grant Date. Any other changes in
ownership of the Common Units shall be ignored for purposes of the adjustment.
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SCHEDULE I
Current Options
AGGREGATE
NUMBER OF OPTIONS EXERCISE PRICE EXERCISE PRICE
----------------- -------------- --------------
Common Units equaling 5% The same price per Common $400,000
of the Common Units on a Unit paid at the original
fully-diluted basis* closing
* The maximum number of Common Units to be acquired under the Current Options
shall be adjusted at the first anniversary of the Grant Date so that the number
will be 5% of the Common Units on a fully-diluted basis on that date taking into
account (1) any issuances of options or Common Units to executives who become
employed by the Company and (2) repurchases (or cancellations) of options or
Common Units from executives whose employment with the Company is terminated, in
each case prior to the first anniversary of the Grant Date. Any other changes in
ownership of the Common Units shall be ignored for purposes of the adjustment.
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SCHEDULE III
Performance Criteria
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