ISP Holdings Inc.
c/o ISP Management Company, Inc.
0000 Xxxx Xxxx
Xxxxx, Xxx Xxxxxx 00000
January 1, 1997
[NAME]
[ADDRESS]
Dear Optionee:
ISP Holdings Inc. (the "Company") hereby agrees with you as follows:
1. Option to Purchase.
(a) Subject to the terms and conditions of this Agreement, the Company
hereby grants you the option (the "Option") to purchase ______ shares of the
Company's Series A Cumulative Redeemable Convertible Preferred Stock ("Preferred
Stock"), $.01 par value (the "Preferred Shares"), for a purchase price per
Preferred Share equal to the product of (i) $100 multiplied by (ii) a fraction
(1) the numerator of which is the Book Value (as hereinafter defined)
immediately after giving effect to the Spin-Off Transactions (as hereinafter
defined) and (2) the denominator of which is the GAF Book Value (as hereinafter
defined) (such product being referred to herein as the "Exercise Price"). The
Preferred Shares shall have the rights and preferences set forth in the
Certificate of Designation, the form of which is attached as Exhibit A hereto
(the "Certificate of Designation"). The Company agrees to file the Certificate
of Designation with the Secretary of State of the State of Delaware on or prior
to March 31, 1997. For purposes of Section 6 of the Certificate of Designation,
(i) the "Applicable Date" with respect to any Preferred Shares purchased by you
upon exercise of the Option shall be [date of initial grant of GAF option or GAF
SAR in connection with which ISP Holdings option is being granted], (ii) the
"Applicable Rate" shall mean six percent (6%) per annum and (iii) the "Base Book
Value" shall mean the ISPHI Book Value as defined in that certain agreement (the
"GAF SAR Agreement"), dated as of the date hereof, pursuant to which GAF (as
hereinafter defined) granted to you a stock appreciation right (the "GAF SAR")
based upon the appreciation in value of _____ shares of GAF Common Stock (as
hereinafter defined).
(b) For purposes of this Agreement, the following terms have the meanings
specified in this Section 1(b):
(i) "Book Value" means, as of any date of determination, the book
value per share of the common stock ("Common Stock"), par value $.001 per share,
of the Company as of that date, as determined in accordance with generally
accepted accounting principles after charges such as declaration of dividends on
any capital stock of the Company or payments with respect to repurchases by the
Company of any capital stock from holders thereof but excluding (1) any amounts
reflecting the liquidation preferences of any outstanding preferred stock of the
Company, (2) any reductions resulting from purchases of GAF's capital stock by
persons who participated in promoting the "Acquisition" referred to in the
Prospectus dated March 24, 1989 relative to the GAF Common Stock and certain
other securities of GAF (predecessor cost basis adjustment), (3) any charges
relating to amortization of goodwill and other intangibles arising from the
Acquisition and related transactions, (4) that portion of depreciation charges
attributable to the write-up of assets as a result of the application of
purchase accounting in connection with the Acquisition and (5) any charges
relating to amortization of deferred financing costs and expenses incurred in
connection with the Acquisition; provided, however, that (i) any adjustments to
the Book Value shall include the tax effects, if any, associated therewith, (ii)
any charges specified in subclauses (3), (4) or (5) above, relating to a
business or assets of the Company or any of its subsidiaries, which charges
shall have been incurred on or after the date of the Acquisition but which,
because of the operation of said subclauses (3), (4) and/or (5), shall not
theretofore have been included in the calculation of the Book Value, shall be so
included following a transaction involving such business or assets that, in
accordance with the next sentence, is deemed a sale or disposition thereof, and
(iii) for purposes of clause (ii), an asset, liability or charge not exclusively
attributable to the specific business or assets deemed to have been sold or
otherwise disposed of shall, if attributable to such business or assets and to
other businesses or assets, be deemed to relate to the business or assets sold
or otherwise disposed of and to such other businesses or assets pro rata based
on relative business and assets values immediately following consummation of the
Acquisition; and provided further, that, in calculating the Book Value, if any
stock appreciation rights issued by the Company based upon appreciation in value
of
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shares of Common Stock are outstanding at the time of calculation, the shares of
Common Stock upon which such appreciation in value is based ("SAR Shares") shall
be deemed outstanding. The Board of Directors of the Company shall determine (i)
whether a transaction involving a business or assets of the Company or any of
its subsidiaries is a sale or disposition for purposes of the definition and
calculation of the Book Value and (ii) if such transaction is a sale or
disposition, the amount of the gain or loss thereon. The gain or loss on any
sale or disposition shall be the actual economic benefit to GAF from such
transaction, as determined by the Board of Directors of the Company.
(ii) "GAF" means GAF Corporation, a Delaware corporation.
(iii) "GAF Book Value" means the book value per share of GAF Common
Stock immediately prior to the consummation of the Spin-Off Transactions, as
determined in accordance with the GAF SAR Agreement.
(iv) "GAF Common Stock" means common stock, par value $.001 per
share, of GAF.
(v) "Market Price" as of any date means the average of the daily
market prices per share of Common Stock for the fifteen (15) consecutive
business days immediately preceding such date. The daily market price for each
such business day shall be (1) the last sale price on such day on the principal
stock exchange on which the Common Stock is then listed or admitted to trading,
(2) if no sale takes place on such day on any such exchange, the average of the
last reported closing bid and asked prices on such day as officially quoted on
any such exchange, (3) if the Common Stock is not then listed or admitted to
trading on any stock exchange, the average of the last reported closing bid and
asked prices furnished by the National Association of Securities Dealers
Automated Quotation System or the National Quotation Bureau, Inc., (iv) if
neither such corporation at the time is engaged in the business of reporting
such prices, as furnished by any similar firm then engaged in such business or
(v) if there is no such firm, as furnished by any member of the National
Association of Securities Dealers, Inc. selected by the Company.
(vi) "Spin-Off Transactions" means the series of transactions that
shall result in, among other things, each holder of a share of GAF Common Stock
receiving one share of Common Stock for each share of GAF Common Stock held by
such holder.
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(c) The Option shall vest and become exercisable commencing on the
following dates: as to 25% of the Preferred Shares on [two and one-half years
from date of grant](1) , as to an additional 15% of the Preferred Shares on
_____ in each of [three and one-half years after date of grant] through [six and
one-half years after date of grant] and as to the remainder of the Preferred
Shares on [seven years after date of grant], in each case to the extent that you
are employed by the Company or its affiliates on such date.
(d) The Option will terminate on the earlier of (i) 30 days after the
termination of your employment with the Company and its affiliates for any
reason other than your death or permanent disability or (ii) one year after the
termination of your employment with the Company and its affiliates as a result
of your death or permanent disability. You will be deemed to be permanently
disabled if you become physically or mentally incapacitated or disabled to the
extent that you are unable to perform for the Company or its affiliates
substantially the same services as you performed prior to incurring such
incapacity or disability (the Company, at its option and expense, being entitled
to retain a physician reasonably acceptable to you to confirm the existence of
the incapacity or disability, and the determination of that physician being
binding upon the Company and you), and your incapacity or disability continues
for a period of six consecutive months; provided, however, that if at the time
of your permanent disability you are a party to an employment agreement with the
Company or any of its affiliates that contains a definition of disability that
is inconsistent with the provisions hereof, the definition contained in that
employment agreement shall govern for purposes of this Section 1(d). In the
event of your death or disability, the Option may be exercised by your executors
or personal representatives; provided, however, that such persons shall be bound
by the provisions of this Agreement, including, without limitation, Sections 3
and 4, as if they were parties to this Agreement.
(e) If a Sale Transaction (as hereinafter defined) occurs with respect to
International Specialty Products Inc. ("ISP") or its direct or indirect parent
or Building Materials Corporation of America or its direct or indirect parent
and you are employed by the entity with respect to which such Sale Transaction
shall have occurred or any subsidiary thereof and you are not offered
---------------
(1) For all purposes, the date of grant is deemed to be the date of initial
grant of the GAF SAR or option in connection with which ISP Holdings option is
being granted.
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employment by an entity controlled by Xxxxxx X. Xxxxxx, a member of Xx. Xxxxxx'x
immediate family, a partnership, limited liability company, trust or other
entity established for the benefit of a member or members of Xx. Xxxxxx'x
immediate family or their respective affiliates (a "Xxxxxx Entity") on terms
substantially similar to those pursuant to which you were employed prior to such
Sale Transaction then, irrespective of any other provision of this Agreement,
the Option shall vest and become fully exercisable upon consummation of such
Sale Transaction. If you are offered employment with a Xxxxxx Entity following
such Sale Transaction on the terms specified in the immediately preceding
sentence, you accept such employment, such employment is terminated by the
Xxxxxx Entity (other than for Cause (as hereinafter defined)) [and such
termination occurs (i)]2 within twelve (12) months following the consummation of
such Sale Transaction, then, irrespective of any other provision of this
Agreement, the Option shall vest and become fully exercisable upon such
termination of your employment [or (ii) more than twelve (12) months following
the consummation of such Sale Transaction, but prior to [two and one half years
after date of grant], then, irrespective of any other provision of this
Agreement, the Option shall vest and become exercisable as to 25% of the
Preferred Shares]2. Any of the events specified in the two immediately preceding
sentences shall be referred to herein as an "Acceleration Event".
Notwithstanding any provision contained in the Certificate of Designation, if an
Acceleration Event shall have occurred and you shall convert any Preferred
Shares into Common Shares (as defined in Section 2) on a date on which, absent
the occurrence of such Acceleration Event, the Option would not have been fully
vested [(or, in the case of clause (ii) of the immediately preceding sentence,
vested as to 25% of the Preferred Shares)]2, the date of such conversion shall
be deemed to be, for purposes of determining the Interest Amount pursuant to
Section 6 of the Certificate of Designation, the date on which the Option would
have been fully vested [(or, in the case of clause (ii) of the immediately
preceding sentence, vested as to 25% of the Preferred Shares)](2) absent the
occurrence of such Acceleration Event. "Sale Transaction" shall mean, with
respect to any entity, the sale by such entity (by stock sale, asset sale
(including, without limitation, by sale of stock or assets of a subsidiary of
such entity), merger or consolidation or otherwise) of all or substantially all
of such entity's assets. "Cause"
----------
(2) Provided in certain agreements
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shall mean (i) the commission of a felony, the commission of a misdemeanor
involving moral turpitude or the commission of any other act involving
dishonesty, disloyalty or fraud with respect to your employer or any affiliate
thereof, (ii) substantial and repeated failure by you to perform your duties,
(iii) gross negligence or willful misconduct with respect to your employer or
any affiliate thereof or (iv) a material breach of any of the terms or
provisions of any employment agreement to which you may be party; provided,
however, that if at the time of termination of the Grantee's employment the
Grantee is a party to an employment agreement with the Xxxxxx Entity that
contains a definition of Cause that is inconsistent with the provisions hereof,
the definition contained in that employment agreement shall govern for purposes
of this Agreement.
(f) The Option shall not be exercisable after its expiration. Prior
thereto, the vested portion of the Option may be exercised in whole or in part
at any time or from time to time.
(g) Unless otherwise agreed to by the Company and you, the purchase price
for the Preferred Shares shall be paid by you to the Company in full upon
exercise of the Option, in cash or by certified or official bank check or wire
transfer.
(h) The Company hereby represents and warrants to you that, upon the
issuance and purchase of (and payment for) the Preferred Shares, the Preferred
Shares shall be duly authorized, validly issued, fully paid and nonassessable.
2. Legend on Certificates. Each stock certificate of the Company issued to
represent any Preferred Shares, or shares of the Common Stock issued upon
conversion of the Preferred Shares (the shares of Common Stock issued upon
conversion of the Preferred Shares being referred to herein as the "Common
Shares"), shall bear the following (or a substantially equivalent) legend on its
face or reverse side:
"These securities have not been registered under the Securities Act of
1933, as amended, or under the applicable securities laws of any other
jurisdiction. These securities may not be sold unless registered under the
Securities Act of 1933, as amended, and any other applicable securities
laws, unless an exemption from such registration is available. In addition,
the transfer of these securities is subject to restrictions set forth in an
Option Agreement, dated as of January 1, 1997, and any amendments thereto,
a copy of which is available for inspection at the office of the Company."
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Any stock certificate issued at any time in exchange or substitution for
any certificate bearing such legend shall also bear the same legend, unless and
to the extent, in the opinion of counsel acceptable to the Company (which
counsel may be an employee of the Company or its affiliates), the Preferred
Shares or Common Shares, as the case may be, represented thereby are no longer
subject to the restrictions referred to in such legend. For purposes of this
Agreement, the term "Preferred Shares" and "Common Shares" shall mean any
securities or property into which the Preferred Shares or Common Shares, as the
case may be, may be converted or exchanged pursuant to a recapitalization, stock
split, combination, reorganization, merger, exchange or similar transaction
occurring after the date hereof.
3. Transfer of Preferred Shares.
(a) You agree that you will not, prior to [seventh anniversary after date
of grant], directly or indirectly, sell, pledge, give, bequeath, transfer,
assign or in any other way whatsoever encumber or dispose of (hereinafter
collectively called "transfer") any Preferred Shares or Common Shares or any
interest therein, or any stock certificate representing, or any voting trust
certificate issued with respect to, any Preferred Shares or Common Shares
(voluntarily, involuntarily, by operation of law or otherwise), except as
otherwise permitted by this Agreement or as may be specifically authorized by
the Board of Directors of the Company.
(b) If, after [seventh anniversary after date of grant], you desire to sell
any of your Preferred Shares or Common Shares, you must first offer to sell to
the Company such Preferred Shares at the Exercise Price, plus accrued and unpaid
dividends to the purchase date, and such Common Shares at their Book Value or,
if securities of the same class of the Common Shares are then registered under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Market
Price, in either case determined as of the end of the calendar quarter in which
the offer is made. You must notify the Company in writing of the number of
Preferred Shares and/or Common Shares you wish to sell (the "Sale Notice"). Upon
receipt of your Sale Notice, the Company shall have the option, exercisable for
30 days after the Company receives the Sale Notice (the "Option Period"), to
purchase all (but not less than all) of the Preferred Shares and Common Shares
specified in the Sale Notice. The option may be exercised by giving notice to
you within the Option Period. If the Company elects to purchase the Preferred
Shares and Common Shares you have offered, it
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shall be obligated to purchase, and you will be obligated to sell, those
Preferred Shares and Common Shares at the price and on the terms described
above. If the Company does not elect to purchase the Preferred Shares and Common
Shares you have offered, and if otherwise permitted under this Section 3, you
may, at any time thereafter within a period of 120 days after the expiration of
the Option Period, transfer those Preferred Shares and Common Shares to any
party; provided, however, that, in the event that you have not transferred the
Preferred Shares and Common Shares within 120 days after expiration of the
Option Period, then any transfer of those Preferred Shares and Common Shares
shall thereafter again be subject to all of the restrictions contained in this
Section 3.
(c) You understand that neither the Preferred Shares nor the Common Shares
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of certain states, in reliance upon
specific exemptions from registration thereunder, and you agree that your
Preferred Shares and Common Shares may not be sold, offered for sale,
transferred, pledged, hypothecated or otherwise disposed of except in compliance
with the Securities Act and applicable state securities laws and the
restrictions of this Agreement on the transfer thereof. You have been advised
that the Company has no obligation and does not intend to cause the Preferred
Shares or Common Shares to be registered under the Securities Act or to comply
with any exemption under the Securities Act, including but not limited to that
set forth in Rule 144 promulgated under the Securities Act, that would permit
them to be sold by you. You understand that it is not anticipated that there
will be any market for resale of the Preferred Shares or Common Shares and that
it may not be possible for you to liquidate an investment in the Preferred
Shares or Common Shares. You understand the legal consequences of the foregoing
to mean that you must bear the economic risk of your investment therein except
as otherwise provided in this Agreement. You agree that you will not transfer
any Preferred Shares or Common Shares except in compliance with the Securities
Act. The Company will not transfer on its books any certificate representing
Preferred Shares or Common Shares in violation of the provisions of this
Agreement.
4. Purchase and Sale of Common Stock.
(a) In the event that you are not employed by the Company and its
affiliates for any reason on or after the date hereof (any such date of leaving
is called the "Termination Date"), you may, at your
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option, exercisable by a notice delivered to the Company during the Put/Call
Period, elect to sell and, upon the giving of the notice, you shall be obligated
to sell, and the Company shall be obligated to purchase all, but not less than
all, the Common Shares owned by you at the time such notice is given, at their
Book Value or, if securities of the same class as the Common Shares are then
registered under the Exchange Act, the Market Price, in either case determined
as of the last day of the calendar quarter during which such notice is given to
the Company.
(b) In each calendar year you may, at your option, exercisable by notice
delivered to the Company on or before March 31 of that year, elect to sell and,
upon the giving of the notice, the Company shall be obligated to purchase and
you shall be obligated to sell, as many Common Shares owned by you as you may
elect to sell, at their Book Value or, if securities of the same class of the
Common Shares are then registered under the Exchange Act, the Market Price, in
either case determined as of the last day of the preceding year, provided that
you have owned such Common Shares for at least six months prior to the date on
which you make such election.
(c) In the event that you are not employed by the Company and its
affiliates for any reason on or after the date hereof, the Company may, at its
option, exercisable by notice delivered to you during the Put/Call Period, elect
to purchase and, upon the giving of the notice, you shall be obligated to sell
and the Company shall be obligated to purchase all, but not less than all, the
Common Shares owned by you at the time such notice is given, at their Book Value
or, if securities of the same class of the Common Shares are then registered
under the Exchange Act, the Market Price, in either case determined as of the
last day of the calendar quarter during which such notice is given to you. This
Section 4(c) shall not apply to Common Shares that are freely tradeable under
the Securities Act.
(d) As used herein, the "Put/Call Period" shall mean the 30-day period
commencing with the later of (i) the date which is six months after the date on
which the Common Shares are issued to you upon conversion of Preferred Shares
owned by you or (ii) the Termination Date.
(e) Notwithstanding the foregoing, you shall not be entitled to require the
Company to purchase the Common Shares or any portion thereof under Section 4(a)
or 4(b), and the Company shall not be entitled to purchase Common Shares
pursuant to Section 4(c), unless
you exercise the comparable right to require GAF to purchase a like portion of,
or GAF exercises the comparable right to purchase, as applicable, the GAF SAR.
Any negative value of either the Common Shares or the GAF SAR shall be offset
against the purchase price of the other security; provided, however, that (i)
any negative value of the GAF SAR shall not be offset against the value of the
Common Shares if a Sale Transaction with respect to the Company shall have
occurred and (ii) if such offset is effected and the aggregate net value of such
securities is less than zero, then the aggregate value of both securities shall
be deemed to be zero.
(f) In the event that a purchase of Common Shares by the Company pursuant
to this Section 4 shall be prohibited or would cause a default under the terms
of any institutional credit agreement, indenture or other like instrument with
respect to the borrowing of money (in each case as the same may be amended from
time to time), or in the opinion of the Board of Directors of the Company would
not be feasible due to the impairment of the financial ability of the Company
that would result from the satisfaction of all notices then and theretofore
given under similar provisions of agreements with other holders of Preferred
Shares or similar provisions of agreements between the Company and holders of
Common Stock and holders of stock appreciation rights based on shares of Common
Stock, then your obligation to deliver Common Shares and the Company's
obligation to pay the purchase price shall be suspended until such prohibition,
default or impairment lapses or is waived or cured. In such event the price to
be paid by the Company for your Common Shares shall be the greater of (i) the
price that would have been paid had the purchase been completed without deferral
or (ii) the Book Value as of the last day of the calendar quarter preceding the
quarter during which such prohibition, default or impairment lapses or is cured.
5. Terms of Payment, Etc.
(a) Any sales and purchases pursuant to Section 3 or 4 shall take place at
the principal executive offices of the Company within thirty (30) days after the
later of (i) if applicable, the date on which the Book Value or Market Price, as
the case may be, on which the purchase price is based is determined or (ii) the
date on which the right to sell or purchase is exercised.
(b) The purchase price payable by the Company under Section 3 or 4 shall be
paid by the Company to you in full, in cash or by
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certified or official bank check or wire transfer, at the closing pursuant to
such Section.
(c) Any Preferred Shares or Common Shares sold pursuant to Section 3 or
Section 4 shall be delivered by you to the Company at the closing, free and
clear of all liens, charges and encumbrances of any kind. In addition, you shall
take such actions as the Company shall request as may be necessary to vest in
the Company at the closing good and marketable title to the Preferred Shares
and/or Common Shares being sold, free and clear of all liens, charges and
encumbrances.
6. Deposit of Amount in Trust.
If a Sale Transaction shall have occurred with respect to ISP or its
direct or indirect parent and the Option is not fully vested or does not become
fully vested at the time of the consummation of such Sale Transaction, then the
Company shall place in trust, for your benefit, an amount (the "Trust Amount")
equal to the amount, if any, by which the product of (i) the number of Common
Shares into which the Preferred Shares issuable upon exercise of such unvested
portion of the Option are convertible, multiplied by (ii) the Sale Value (as
hereinafter defined), exceeds the Exercise Price of such unvested portion of the
Option. "Sale Value" shall mean (i) if the Company is the entity with respect to
which the Sale Transaction shall have occurred and such Sale Transaction is the
sale of the stock of, or a merger or consolidation with respect to, the Company,
the aggregate consideration received by the holders of Common Stock, divided by
the number of shares of Common Stock outstanding (treating as outstanding any
SAR Shares) on the date of the consummation of such Sale Transaction or (ii) in
the case of any other Sale Transaction, the Book Value immediately after giving
effect to the consummation of such Sale Transaction or, if securities of the
same class as the Common Shares are then registered under the Exchange Act, the
Market Price for the period ending with the date of the consummation of such
Sale Transaction. Upon the repurchase by the Company of any Common Shares into
which the Preferred Shares issuable upon exercise of such unvested portion of
the Option have been converted, you shall be entitled to receive the purchase
price therefor shall be the Trust Amount as the sole consideration for the
repurchase thereof. The terms of the trust shall provide that if the Option or
any portion thereof, any stock appreciation rights relating to the Common Stock
or any other stock options relating to the Preferred Stock shall expire
unexercised,
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the Trust Amount and any other amounts deposited for the benefit of persons who
as of such date hold any such stock appreciation rights or stock options shall
be allocated pro rata among such persons and holders of shares of Common Stock
as of the date the Sale Transaction is consummated, subject to the vesting of
such stock appreciation rights and stock options.
7. Tag-Along Rights.
(a) At least ten (10) days prior to the consummation, prior to [seven years
after date of grant] and after the Option is exercisable (or if the Option would
be exercisable as a result of an Acceleration Event arising from the
contemplated sale), of any sale or transfer by any member of the Xxxxxx Group of
shares of the Company's Common Stock to any unrelated third party, the Company
shall cause those members of the Xxxxxx Group (the "Selling Members") to deliver
to you a written notice (a "Sale Notice"), which shall fully disclose the
identity of the prospective transferee and the terms and conditions of the
proposed sale. The Company shall cause the Selling Members not to consummate any
such sale until ten (10) days after the Sale Notice has been mailed to you. You
may elect to sell Common Shares owned by you in the contemplated sale by
delivering written notice to the Selling Members within seven (7) days of
receipt of such Sale Notice. If you elect to sell Common Shares owned by you in
the contemplated sale, you will be entitled to sell in the contemplated sale, at
the same price and on the same terms applicable to the Selling Members, in
amounts bearing the same proportion to your holdings of Common Shares (including
shares issuable upon exercise of vested Options, including vesting arising in
connection with a related Acceleration Event) as the amounts to be so
transferred by the Selling Members bear to the Xxxxxx Group's aggregate holdings
of shares of the Company's Common Stock. This Section 7(a) shall apply to any
sales or transfers of the Company's Common Stock, excluding sales pursuant to a
registration statement in accordance with the Securities Act or in brokerage
transactions on a national securities exchange or in the over-the-counter
market. The "Xxxxxx Group" shall mean Xxxxxx X. Xxxxxx, Xxxxxx Holdings
Associates Limited Partnership (a Connecticut limited partnership the general
partner of which is Xx. Xxxxxx and the limited partners of which are
partnerships and trusts as to which the children or further issue of Xx. Xxxxxx
have the beneficial interests), or any other person or entity controlled by or
under common control with Xx. Xxxxxx.
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(b) The Company will cause the Xxxxxx Group not to sell any shares of
Common Stock unless the purchaser of such stock agrees to purchase all of the
Common Shares that you have elected, and are permitted, to sell pursuant to
Section 7(a).
8. Notices. All notices or other communications under this Agreement shall be
given in writing and shall be deemed duly given and received on the third full
business day following the date of its mailing by registered or certified mail,
return receipt requested, or when delivered personally, as follows:
(a) if to the Company:
ISP Holdings Inc.
c/o ISP Management Company, Inc.
0000 Xxxx Xxxx
Xxxxx, Xxx Xxxxxx 00000
Attention: Chief Executive Officer
or at such other place as the Company shall have designated by notice as
herein provided to you; and
(b) if to you, at your address as it appears below your name on the first
page of this Agreement, or at such other address as you shall have designated by
notice as herein provided to the Company.
9. Delivery of Notice of Base Book Value. On or prior to March 31, 1997, the
Company shall deliver to you a written notice setting forth the Base Book Value.
10. Specific Performance. It is acknowledged that the Company will be
irreparably damaged in the event that this Agreement is not specifically
enforced. In the event of a breach or threatened breach of the terms, covenants
and/or conditions of this Agreement by you, the Company shall, in addition to
all other remedies, be entitled (without any bond or other security being
required) to a temporary and/or permanent injunction, without showing any actual
damage or that monetary damages would not provide an adequate remedy, and/or a
decree for specific performance, enjoining such breach or ordering compliance
with the provisions of this Agreement.
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11. Miscellaneous.
(a) This Agreement, together with the instruments referred to herein,
constitutes the entire agreement of the parties to this Agreement with respect
to the subject matter hereof and may not be modified or amended except by a
written agreement signed by the Company (following the specific approval of such
modification or amendment by the Company's Board of Directors) and you.
(b) No waiver of any breach or default hereunder shall be considered valid
unless in writing, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or similar nature.
(c) Except as otherwise expressly provided in this Agreement, this
Agreement, as amended (including any waivers or consents pursuant to Section
10(b) hereof), shall be binding upon and inure to the benefit of the Company,
its successors and assigns, and you and your heirs, personal representatives and
assigns; provided, however, that you shall not have the right to assign the
Option or any of your rights under this Agreement except as expressly provided
herein; and provided further, that nothing contained in this Agreement shall be
construed as granting you the right to transfer any of your Preferred Shares or
Common Shares except in accordance with this Agreement.
(d) If any provision of this Agreement shall be invalid or unenforceable,
such invalidity or unenforceability shall attach only to such provision and
shall not in any manner affect or render invalid or unenforceable any other
severable provision of this Agreement, and this Agreement shall be carried out
as if any such invalid or unenforceable provision were not contained in this
Agreement.
(e) The section headings contained herein are for convenience only and are
not intended to define or limit the contents of any section.
(f) Nothing in this Agreement shall confer on you any right to continue in
the employ of the Company or any subsidiary or affiliate of the Company or any
successor to any of them, affect the right of the Company or any such
subsidiary, affiliate or successor to terminate your employment at any time, or
be deemed a waiver or modification of any provision contained in any agreement
14
between you and the Company or any such subsidiary, affiliate or successor.
(g) Each party to this Agreement shall cooperate and shall take such
further action and shall execute and deliver such further documents as may be
reasonably requested by any other party in order to carry out the provisions and
purposes of this Agreement.
(h) Whenever the pronouns "he" or "his" are used in this Agreement,
they shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in the
plural and words in the plural shall be read and construed as though in the
singular in all cases where they would so apply.
(i) This Agreement may be executed in counterparts, all of which taken
together shall be deemed one original.
(j) This Agreement shall be deemed to be a contract under the laws of the
State of New York and for all purposes shall be construed and enforced in
accordance with the internal laws of that state without regard to the principles
of conflicts of law.
[Remainder of page intentionally left blank]
15
If you are in agreement with the foregoing, please sign and return the
extra copy of this Agreement, whereupon this Agreement shall become a binding
agreement between you and the Company.
Very truly yours,
ISP HOLDINGS INC.
By:____________________
Name:__________________
Title:_________________
AGREED AND ACCEPTED:
------------------------
16
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS
OF ISP HOLDINGS INC.
-----------------
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
-----------------
We, the undersigned, Senior Vice President and Secretary,
respectively, of ISP Holdings Inc. (the "Corporation"), a corporation organized
and existing under the General Corporation Law of the State of Delaware (the
"General Corporation Law"), in accordance with the provisions of Section 151
thereof, do hereby certify that the Board of Directors of the Corporation duly
adopted the following resolutions by unanimous consent dated as of
_____________, 1996:
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of the
Certificate of Incorporation of the Corporation, this Board of Directors hereby
creates and authorizes the issuance of a series of Series A Cumulative
Redeemable Convertible Preferred Stock, par value $.01 per share, and hereby
fixes the designation, dividend rate, redemption provisions, voting powers,
rights on liquidation, dissolution or winding up, and other preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations, or restrictions thereof, as follows:
3. Designation. The Preferred Stock created and authorized hereby shall be
designated as the "Series A Cumulative Redeemable Convertible Preferred Stock"
(the "Series A Preferred Stock"). The number of shares of Series A Preferred
Stock shall be ________. The liquidation preference of the Series A Preferred
Stock shall be $_____(1) per share (the "Liquidation Preference").
--------------------
(1) $100 multiplied by ISP Holdings Adjustment Factor.
4. Dividends.
(a) Each holder of a share of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of the funds of
the Corporation legally available therefor pursuant to the General Corporation
Law (the "Legally Available Funds"), cumulative cash dividend payments of
$______(2) per share for each full Quarterly Dividend Period (as defined in
Section 2(f) hereof) that such share of Series A Preferred Stock is outstanding;
provided, however, that if a share of Series A Preferred Stock is not
outstanding for a full Quarterly Dividend Period, the dividend payment per share
in respect of such partial Quarterly Dividend Period shall be equal to
$______(3) multiplied by a fraction, the numerator of which is the number of
days such share was outstanding (but not more than thirty (30) days for any
calendar month fully occurring in such portion), and the denominator of which is
90. Such dividends, if and to the extend declared, shall be payable quarterly in
arrears on January 1, April 1, July 1 and October 1 of each year (each, a
"Dividend Payment Date"); provided, however, that if any such date is not a
Business Day (as defined in Section 2(f) hereof), then the applicable dividend
shall be payable, if and to the extent declared, on the next succeeding Business
Day. Such dividends shall be fully cumulative.
(b) Dividends shall accrue (whether or not declared or paid) on each share
of Series A Preferred Stock from the date on which such share is issued.
(c) Quarterly dividends, if and to the extent declared, shall be paid to
the holders of record of shares of Series A Preferred Stock as they appear on
the stock register of the Corporation on the record date therefor, which record
date shall be the December 15, March 15, June 15 and September 15 immediately
preceding the Dividend Payment Date relating thereto.
(d) If dividends are not paid in full, or not declared in full and sums set
apart for the payment thereof, on the Series A Preferred Stock and any Capital
Stock (as defined in Section 2(f) hereof) of the Corporation ranking on a parity
with the Series A Preferred Stock as to the payment of dividends, all dividends
---------------------
(2) [1.5]% of Liquidation Preference.
(3) [1.5]% of Liquidation Preference.
2
declared upon shares of Series A Preferred Stock and shares of such other stock
shall be declared pro rata so that in all cases the amount of dividends declared
per share on the Series A Preferred Stock and such other stock share bear to
each other the same ratio that accumulated, unpaid dividends per share on the
Series A Preferred Stock and such other stock shall bear to each other. Except
as provided in the preceding sentence, unless full cumulative dividends on the
Series A Preferred Stock have been paid or declared in full and sums set aside
for the payment thereof, no dividends shall be declared or paid or set aside for
payment, or other distribution made, on any Capital Stock of the Corporation
ranking on a parity with or junior to the Series A Preferred Stock as to the
payment of dividends, nor shall any such stock be purchased, redeemed or
otherwise acquired, except as provided in Section 2(e) hereof, for any
consideration (or any payment made to or available for a sinking fund for the
redemption of any such stock).
(e) Except as provided in Section 2(d) hereof, the Corporation may not pay
cash dividends or make cash distributions on, or repurchase, redeem or otherwise
acquire (except in exchange for shares of Capital Stock ranking junior to the
Series A Preferred Stock as to the payment of dividends and as to the
distribution of assets upon liquidation, dissolution or winding up of the
Corporation or options, rights or warrants to acquire such shares) any of its
Capital Stock other than Capital Stock ranking senior to the Series A Preferred
Stock as to the payment of dividends, if, at such date, there are accumulated,
unpaid dividends on the Series A Preferred Stock; provided, however, that the
Corporation may purchase outstanding shares of Common Stock from the holders
thereof in accordance with the terms and conditions of the Employee Stockholder
Agreements (as defined in Section 2(f) hereof).
(f) The following terms shall have the meanings set forth below:
"Applicable Date," "Applicable Rate" and "Base Book Value" shall have the
respective meanings specified in each Stock Option Agreement entered into
between the Corporation and the optionee party thereto.
3
"Business Day" means any day other than a Saturday, a Sunday or any
other day on which commercial banking institutions in the City of New York are
authorized by law to be closed.
"Capital Stock" of any person means any and all shares, interests,
participations or other equivalents (however designated) of equity interests in
such person.
"Common Stock" means the Corporation's common stock, par value $.001
per share, and any securities or property into which the Corporation's Common
Stock may be converted or exchanged pursuant to a recapitalization, stock split,
combination, reorganization, merger, exchange or similar transaction.
"Corporation" means the party named as such in the preamble to this
Certificate.
"Employee Stockholder Agreements" means the agreements among the
Company and holders of Common Stock, other than Xxxxxx X. Xxxxxx and his
affiliates, and the option agreements relating to the Series A Preferred Stock.
"person" means any individual, partnership, limited liability
company, joint venture, firm, corporation, association, trust or other
enterprise or any government or political subdivision or agency, department or
instrumentality thereof.
"Quarterly Dividend Period" means the applicable period from January
1 through the next March 31, from April 1 through the next June 30, from July 1
through the next September 30 or from October 1 through the next December 31.
5. Redemption.
(a) The Series A Preferred Stock shall be redeemable, at any time in whole
or from time to time in part, out of Legally Available Funds, at the option of
the Corporation, upon giving notice as provided in Section 3(b) hereof, at the
Liquidation Preference thereof plus accumulated but unpaid dividends to the date
of redemption.
(b) At least thirty (30) days but not more than sixty (60) days prior to
the date fixed for the redemption of shares of the Series A Preferred Stock
pursuant to Section 3(a) hereof (each a
4
"Redemption Date"), written notice of such redemption shall be mailed to each
holder of record of shares of Series A Preferred Stock to be redeemed in a
postage prepaid envelope addressed to such holder at his mailing address as
shown on the records of the Corporation; provided, however, that no failure of
any holder of Series A Preferred Stock to receive such notice nor any defect
therein shall affect the validity of the proceeding for the redemption of the
shares of Series A Preferred Stock to be redeemed. Each such notice shall state:
(i) the Redemption Date; (ii) the number of shares of Series A Preferred Stock
to be redeemed and, if fewer than all of the shares held by such holder are to
be redeemed from such holder, the number of shares to be redeemed from such
holder; (iii) the cash redemption price being paid; (iv) the place or places
where certificates for such shares are to be surrendered for payment of the
redemption price; and (v) that dividends on the shares to be redeemed shall
cease to accrue on the Redemption Date. On or after the Redemption Date, each
holder of shares of Series A Preferred Stock to be redeemed shall present and
surrender his certificate or certificates for such shares to the Corporation at
the place designated in such notice and thereupon the redemption price of such
shares shall be paid to the person whose name appears on such certificate or
certificates as the owner thereof and each surrendered certificate shall be
cancelled. In case fewer than all of the shares represented by such certificate
are redeemed, a new certificate shall be issued representing the unredeemed
shares. From and after the Redemption Date (unless default shall be made by the
Corporation in payment of the redemption price) all dividends on the shares of
Series A Preferred Stock designated for redemption in such notice shall cease to
accrue and all rights of the holders thereof as stockholders of the Corporation,
except the right to receive the redemption price thereof, without interest, upon
the surrender of certificates representing the same, shall cease and terminate
and such shares shall not thereafter be transferred (except with the written
consent of the Corporation) on the books of the Corporation and such shares
shall not be deemed to be outstanding for any purpose whatsoever.
(c) If fewer than all of the shares of Series A Preferred Stock are to be
redeemed, the Board of Directors of the Corporation shall select the shares to
be redeemed on such basis as the Board of Directors shall determine in its sole
discretion. The Board of Directors shall not be required to redeem shares of
Series A Preferred Stock on a pro rata basis. The Board of
5
Directors may elect to redeem shares of Series A Preferred Stock held by one
holder or group of holders and elect not to redeem shares of Series A Preferred
Stock held by other holders. Regardless of the method used, the calculation of
the number of shares to be redeemed shall be based upon whole shares, such that
the Corporation shall in no event be required to issue fractional shares of
Series A Preferred Stock or cash in lieu thereof. In the event a method
requiring proration is used, the number of shares to be redeemed from a holder
shall be rounded downward to the nearest whole number of shares. The holders of
Series A Preferred Stock shall have no right to request the Corporation to
redeem such shares at any time, and the Corporation shall have no obligation to
honor any such request if made.
6. Voting Rights. The holders of Series A Preferred Stock shall be entitled to
one vote for each share held on all matters to be voted on by the stockholders
of the Corporation and shall vote together as a single class with the holders of
Common Stock and the holders of any other class of stock entitled to vote in
such manner. The holders of Series A Preferred Stock shall not, except as
required by law, be entitled to vote as a separate class. Without limiting the
generality of the preceding sentence, a class vote or the consent of the holders
of the outstanding shares of Series A Preferred Stock as a separate class shall
not be required in connection with: (i) the creation of any class or series of
Capital Stock of the Corporation; (ii) any merger, consolidation or transfer of
all or substantially all the assets of the Corporation or other transaction
involving the Corporation and a third party in which the Corporation is the
survivor or in which the Corporation is not the survivor and in which the Series
A Preferred Stock shall (a) remain outstanding as an equivalent security of the
survivor with no adverse change to the powers, preferences or special rights
provided for in this Certificate or (B) be redeemed for an amount per share
equal to the Liquidation Preference plus accrued and unpaid dividends; or (iii)
any increase in the total number of authorized or issued shares of Capital Stock
of any class, including without limitation Series A Preferred Stock.
7. Priority of Series A Preferred Stock in Event of Liquidation, Dissolution or
Winding Up. In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, after payment or
provision for payment of the debts and other liabilities of the Corporation, the
holders of the
6
Series A Preferred Stock shall be entitled to receive, out of the remaining net
assets of the Corporation, an amount per share in cash equal to the Liquidation
Preference plus all dividends accrued and unpaid on each such share up to the
date fixed for distribution before any distribution shall be made to the holders
of any Capital Stock of the Corporation ranking junior to the Series A Preferred
Stock as to the distribution of assets upon the liquidation, dissolution or
winding up of the Corporation. If, upon any liquidation, dissolution or winding
up of the Corporation, the assets distributable among the holders of Series A
Preferred Stock and any Capital Stock of the Corporation ranking on a parity
with the Series A Preferred Stock as to the distribution of assets upon the
liquidation, dissolution or winding up of the Corporation shall be insufficient
to permit the payment in full to the holders of the Series A Preferred Stock and
such other stock of all preferential amounts payable to all such holders, then
the assets thus distributable shall be distributed ratably among the holders of
the Series A Preferred Stock and any Capital Stock of the Corporation ranking on
a parity with the Series A Preferred Stock as to the distribution of assets upon
liquidation, dissolution or winding up of the Corporation in proportion to the
respective amounts that would be payable per share if such assets were
sufficient to permit payment in full. Except as otherwise provided in this
Section 5, holders of Series A Preferred Stock shall not be entitled to any
distribution in the event of liquidation, dissolution or winding up of the
affairs of the Corporation. For the purposes of this Section 5, neither the
voluntary sale, lease, conveyance, exchange or transfer (for cash, securities or
other consideration) of all or substantially all the property or assets of the
Corporation, nor the consolidation or merger of the Corporation with one or more
other corporations, shall be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary.
8. Conversion.
(a) The holders of shares of Series A Preferred Stock shall have the right,
at any time or from time to time, at their option, to convert all or any portion
of such shares into shares of Common Stock on the following basis: Each share of
Series A Preferred Stock shall be convertible into the number of shares of
Common Stock equal to ______(4) divided by the sum of (i) an amount equal
----------------
(4) Liquidation Preference.
7
to the Base Book Value and (ii) the Interest Amount (as hereinafter defined).
"Interest Amount" means interest on such Base Book Value at the Applicable Rate
per annum from the Applicable Date to the date of conversion. The Corporation
may, at its option, pay to any holder cash in lieu of any fractional share of
Common Stock issuable upon conversion of shares of Series A Preferred Stock.
(b) In the case of a redemption pursuant to Section 3 hereof of any shares
of Series A Preferred Stock, the right of conversion under this Section 6 shall
cease and terminate, as to the shares to be redeemed, at the close of business
on the second day preceding the date fixed for such redemption, unless default
shall be made in the payment of the Redemption Price for the shares to be so
redeemed.
(c) In order to convert shares of Series A Preferred Stock into shares of
Common Stock pursuant to the right of conversion set forth in Section 6(a), the
holder thereof shall surrender the certificate or certificates representing
Series A Preferred Stock, duly endorsed to the Corporation or in blank, at the
principal office of the Corporation and shall give written notice to the
Corporation that such holder elects to convert the same. Within five (5)
business days, the Corporation shall deliver at said office to such holder of
Series A Preferred Stock a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled as aforesaid. Shares of
Series A Preferred Stock shall be deemed to have been converted as of the date
of the surrender of such shares for conversion as provided above, and the person
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder of such shares of Common
Stock on such date. Upon conversion of only a portion of the number of shares
covered by a certificate representing shares of Series A Preferred Stock
surrendered for conversion, the Corporation shall issue and deliver to the
holder of the certificate so surrendered for conversion, at the expense of the
Corporation, a new certificate covering the number of shares of Series A
Preferred Stock representing the unconverted portion of the certificate so
surrendered, which new certificate shall entitle the holder thereof to the
rights of the shares of Series A Preferred Stock represented thereby to the same
extent as if the certificate theretofore covering such unconverted shares had
not been surrendered for conversion.
8
(d) The issuance of certificates for shares of Common Stock upon the
conversion of shares of Series A Preferred Stock shall be made without charge to
the converting stockholder for any original issue or transfer tax in respect of
the issuance of such certificates and any such tax shall be paid by the
Corporation.
(e) The Corporation shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of Series A Preferred
Stock, the full number of shares of Common Stock then deliverable upon the
conversion of all shares of Series A Preferred Stock at the time outstanding.
The Corporation shall take at all times such corporate action as shall be
necessary in order that the Corporation may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the conversion of Series A
Preferred Stock in accordance with the provisions hereof, free from all taxes,
liens, charges and security interests with respect to the issue thereof. The
Corporation will, at its expense, use its best efforts to cause such shares to
be listed (subject to issuance or notice of issuance) on all stock exchanges, if
any, on which the Common Stock may become listed.
9. Cancellation of Reacquired Series A Preferred Stock. Shares of Series A
Preferred Stock that have been issued and reacquired in any manner, including
shares purchased or redeemed, shall (upon compliance with any applicable
provisions of the laws of the State of Delaware) have the status of authorized
and unissued shares of
9
preferred stock undesignated as to series and may be redesignated and reissued
as part of any series of preferred stock.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to
be duly executed on its behalf, this ___ day of _____________, 1997.
ISP HOLDINGS INC.
By:________________________
Senior Vice President
ATTEST:
---------------------------
Secretary
(Corporate Seal)
