AMENDED AND RESTATED STOCK OPTION AGREEMENT
AGREEMENT made on November 15, 1994, by and between FREEDOM CHEMICAL
COMPANY, a Delaware corporation (the "Company") and THE FREEDOM GROUP
PARTNERSHIP, a Pennsylvania limited partnership ("Freedom"), the general and
limited partners of which are Freedom Investment Corp., a corporation controlled
by Xxxxxx X. Xxxxxxxx ("Sorgenti") and RULCO, Inc., a corporation controlled by
Xxxx X. Xxxxx ("Xxxxx"). Sorgenti and Xxxxx are hereinafter referred to as the
"Executives".
WHEREAS, pursuant to an agreement entered into on September 9, 1993
(the "Hilton Davis Option Agreement"), the Company granted to Freedom a
non-qualified stock option to acquire an aggregate of 7,500 shares of the
Company's Common Stock, par value $100.00 per share (the "Common Stock") on the
terms set forth therein;
WHEREAS, the Company has filed a Registration Statement on Form S-1
with the Securities and Exchange Commission relating to a public offering of
3,000,000 shares of the Company's Common Stock (the "Public Offering");
WHEREAS, the Company has entered into an employment agreement with
Sorgenti dated as of November 15, 1994 (such agreement together with any
agreement replacing or amending such agreement being herein referred to as the
"Sorgenti Employment Agreement");
WHEREAS, the Company has entered into an employment agreement with
Xxxxx dated as of November 15, 1994 (such agreement together with any agreement
replacing or amending such agreement being herein referred to as the "Xxxxx
Employment Agreement"; the Xxxxx Employment Agreement and the Sorgenti
Employment Agreement are sometimes collectively referred to as the "Employment
Agreements");
WHEREAS, the Company and Freedom desire to amend and restate the
Hilton Davis Option Agreement in its entirety, such amendment and restatement to
be contingent upon and effective with the consummation of the Public Offering;
NOW, THEREFORE, the parties agree that, subject to the terms
and conditions hereof, the Hilton Davis Option Agreement shall be amended and
restated in its entirety as follows:
1. Definitions. Capitalized terms not other wise defined herein
shall have the meaning set forth in the Employment Agreements.
2. Grant of Option. Freedom is hereby granted a non-qualified stock
option (the "Option") to purchase an aggregate of 7,500 shares (the "Option
Shares") of Common Stock, pursuant to the terms of this Agreement. 4,500 of the
shares subject to the Option are herein referred to as the "Sorgenti Shares" and
3,000 of the shares subject to the Option are herein referred to as the "Xxxxx
Shares". Notwithstanding the foregoing, the parties hereto acknowledge that on
January 18, 1994, Freedom exercised the Option with respect to 4,275 of the
Sorgenti Shares.
3. Option Price. The exercise price of the Option shall be $100.00
per share of Common Stock issuable thereunder.
4. Conditions to Exercisability.
(a) The Option is immediately exercisable with respect to
forty percent (40%) of the Option Shares covered hereby. The Option will become
exercisable with respect to (i) an additional twenty percent (20%) of the
Sorgenti Shares subject hereto on each of May 4, 1995, May 4, 1996, and May 4,
1997; provided that Sorgenti is employed by the Company on such date and (ii) an
additional twenty percent (20%) of the Xxxxx Shares subject hereto on each of
May 4, 1995, May 4, 1996 and May 4, 1997; provided that Xxxxx is employed by the
Company on such date.
(b) Notwithstanding the foregoing, this Option shall become
immediately exercisable with respect to (i) one hundred percent (100%) of the
Sorgenti Shares then unvested in the event the Sorgenti Employment Agreement is
terminated by reason of the death or disability of Sorgenti or by the Company
without Cause or by Sorgenti for Good Reason (in each case pursuant to and as
defined in the Sorgenti Employment Agreement), (ii) one
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hundred percent (100%) of the Xxxxx Shares then unvested in the event the Xxxxx
Employment Agreement is terminated by reason of the death or disability of Xxxxx
or by the Company without Cause or by Xxxxx for Good Reason (in each case
pursuant to and as defined in the Xxxxx Employment Agreement) and (iii) one
hundred percent (100%) of the Option Shares then unvested in the event of a
Change of Control of the Company (as defined in the Employment Agreements).
(c) Notwithstanding the foregoing, in the event JLL offers
Common Stock to the public in an offering registered under the Securities Act of
1933 (the "Securities Act"), prior to May 4, 1997, and JLL participates in such
offering by selling all or part of its holdings of Common Stock, this Option
shall become immediately exercisable on the date of such offering to the extent
and only to the extent necessary to enable Freedom to sell (if permitted by the
underwriters) such number of Option Shares in the aggregate as would equal 25%
of the shares sold by JLL. Freedom acknowledges and agrees that this Section
4(c) does not entitle Freedom to participate in any such public offering.
5. Period of Option. The Option shall expire (i) with respect to one
hundred percent (100%) of the Sorgenti Shares on the date six months following
termination of Sorgenti's employment by the Company for any reason and (ii) with
respect to one hundred percent (100%) of the Xxxxx Shares on the date six months
following termination of Xxxxx'x employment by the Company for any reason; in
each such case this Option may be exercised (to the extent it has become
exercisable pursuant to Section 4 above), in whole or in part (other than with
respect to any fractional share), at any time prior to such expiration;
provided, however, that if (i) Sorgenti's employment with the Company is
terminated by reason of the death or disability of Sorgenti or by the Company
without Cause or by Sorgenti for Good Reason, Freedom shall be entitled, for a
period of one year following such termination, to exercise the Option with
respect to one hundred percent (100%) of the Sorgenti Shares and if (ii) Xxxxx'x
employment with the Company is terminated by reason of the death or disability
of Xxxxx or by the Company without Cause or by Xxxxx for Good Reason, Freedom
shall be entitled, for a period of one year following such termination, to
exercise the Option with
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respect to one hundred percent (100%) of the Xxxxx Shares.
6. Exercise of Option.
(a) The Option shall be exercised in the following manner:
Freedom, or the person or persons having the right to exercise the Option on
behalf of Freedom, shall deliver to the Company written notice specifying the
number of shares of Common Stock which it elects to purchase. Freedom (or such
other person) must include with such notice full payment of the exercise price
for the Common Stock being purchased pursuant to such notice. Payment of the
exercise price must be made in cash or by certified or cashier's check.
(b) The Company may, if in its reasonable judgment determines
it to be required under any applicable law, require that Freedom pay to the
Company, at the time of exercise of any portion of the Option, any such
additional amount as the Company deems necessary to satisfy its liability to
withhold federal, state or local income tax or any other taxes incurred by
reasons of the exercise or the transfer of shares of Common Stock thereupon.
(c) If any law, regulation or interpretation requires the
Company to take any action regarding the Common Stock, before the Company issues
certificates for the Common Stock being purchased, the Company may delay
delivering the certificates for the Common Stock for the period necessary to
take such action. The certificate or certificates representing the Common Stock
acquired pursuant to the Option may bear a legend restricting the transfer of
such Common Stock, and the Company may impose stop transfer instructions to
implement such restrictions, if applicable.
(d) Freedom will not be deemed to be a holder of any shares
pursuant to exercise of the Option until the date of the issuance of a stock
certificate to it for such shares of Common Stock and until the shares of Common
Stock are paid in full.
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7. Representations and Covenants
(a) The Company represents and warrants and covenants that (i)
this Agreement has been authorized by all necessary corporate action of the
Company and is a valid and binding agreement of the Company enforceable against
it in accordance with its terms and (ii) the Company shall at all times during
the term of this Agreement reserve and keep available such number of shares of
Common Stock as will be sufficient to satisfy the obligations of the Company
under this Agreement.
(b) Freedom represents and warrants that it is not a party to
any agreement or instrument which would prevent it from entering into or
performing its duties in any way under this Agreement.
(c) Freedom understands that the Option Shares have not been
registered under the Securities Act and that it cannot offer for sale, sell or
transfer such Option Shares unless such offer, sale or transfer has been
registered under the Securities Act or unless an exemption from such
registration is available.
8. Transferability. Prior to vesting pursuant to Section 4 above,
the Option may not be transferred other than to Sorgenti, Rullo, Freedom
Investment Corp. or pursuant to the laws of descent and distribution; provided,
however, that to the extent the Option has become exercisable pursuant to
Section 4 above, the Option may be transferred to a Permitted Transferee,
provided that such Permitted Transferee agrees to be bound by all the terms and
conditions of any stockholders agreement then in effect among Freedom, the
Company and/or JLL. For purposes of this Agreement, a "Permitted Transferee"
shall be (i) Freedom Investment Corp.; (ii) RULCO, Inc.; (iii) an Executive;
(iv) an Executive's spouse; (v) an Executive's children or step-children or
their lineal descendants; (vi) any trust the beneficiary of which is an
Executive's spouse, children, step-children or their lineal descendants and
which is controlled by such Executive; or (vii) any affiliate of any of the
foregoing. For purposes of clause (vi) above, a trust shall be deemed to be
controlled by an Executive if that Executive has the power to direct the
disposition of the assets transferred to such trust. In addition, Freedom shall
be entitled to transfer to Xxxxxx X. XxXxxxx a beneficial
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interest in not more than 5% of the Option, provided that Xx. XxXxxxx agrees to
be bound by all of the terms and conditions of any stockholders agreement then
in effect among Freedom, the Company and/or JLL.
9. Adjustments. In the event of any increase, reduction, change or
exchange of Option Shares for a different number or kind of shares or other
securities of the Company by reasons of a reclassification, recapitalization,
merger, consolidation, stock dividend or other similar event, the Board of
Directors of the Company shall, in the exercise of its good faith judgment,
conclusively determine the number and class of Option Shares subject hereto and
the exercise price thereof to the extent it determines such adjustment to be
appropriate to prevent any unfair change in Freedom's rights hereunder.
10. Entire Agreement. This Agreement and the Employment Agreements
contain all the understandings between the parties hereto pertaining to the
matters referred to herein and therein, and supersede all undertakings and
agreements, whether oral or in writing, previously entered into by them with
respect thereto. Freedom represents that, in executing this Agreement, it does
not rely and has not relied upon any representation or statement not set forth
herein made by the Company with regard to the subject matter or effect of this
Agreement or otherwise.
11. Amendment or Modification, Waiver. No provision of this
Agreement may be amended or waived unless such amendment or waiver is agreed to
in writing, signed by Freedom and by a duly authorized officer of the Company.
No waiver by any party hereto of any breach by another party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar condition or provision at
the same time, any prior time or any subsequent time.
12. Effectiveness Conditioned Upon Public Offering. The amendments
to the Hilton Davis Option Agreement made by this Agreement are contingent upon
and shall become effective upon the consummation of the Public Offering. In the
event the Public Offering is not consummated by March 31, 1995, this Agreement
shall
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terminate, be null and void and of no further force or effect and the Options
shall be governed by the terms of the Hilton Davis Option Agreement.
13. Notices. Any notice to be given hereunder shall be in writing
and shall be deemed given when delivered personally, sent by courier or telecopy
or registered or certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated below or to such other
address as such party may subsequently give notice of hereunder in writing:
To Freedom at:
The Freedom Group
Mellon Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Partner
Telecopy: (000) 000-0000
To the Company at:
Freedom Chemical Company
Mellon Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: President
Telecopy: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxxxxx & Xxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
Any notice delivered personally or by courier under this Section 12
shall be deemed given on the date delivered and any notice sent by telecopy or
registered or certified mail, postage prepaid, return receipt requested, shall
be deemed given on the date telecopied or mailed.
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14. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision to such person or circumstances other than those to which it
is so determined to be invalid and unenforceable, shall not be affected thereby,
and each provision hereof shall be validated and shall be enforced to the
fullest extent permitted by law.
15. Survivorship. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
16. Governing Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York, without regard to its
conflicts of laws principles.
17. Headings. All descriptive headings of sections and paragraphs in
this Agreement are intended solely for convenience, and no provision of this
Agreement is to be construed by reference to the heading of any section or
paragraph.
18. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
FREEDOM CHEMICAL COMPANY
By: /s/ Xxxx X. Xxxxx
----------------------------
Name: Xxxx X. Xxxxx
Title: President
THE FREEDOM GROUP PARTNERSHIP
By: FREEDOM INVESTMENT CORP.,
a General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
By: RULCO, Inc.,
a General Partner
By: /s/ Xxxx X. Xxxxx
----------------------------
Name: Xxxx X. Xxxxx
Title: President
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