Exhibit 4.5
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
-------------------------------------------------
THIS AGREEMENT, dated as of the Agreement Date indicated on the signature
page hereof (this "Agreement") is made by and between ▇▇▇▇▇▇ CHEMICAL, INC., a
---------
New Jersey corporation (the "Company"), and the undersigned, an employee of the
-------
Company or a Subsidiary (as defined below) of the Company (hereinafter referred
to as "Optionee").
--------
WHEREAS, the Company wishes to afford the Optionee the opportunity to
purchase shares of common stock, par value $.01 per share ("Common Stock"), of
------------
the Company;
WHEREAS, the Company wishes to carry out the Plan (as hereinafter defined),
the terms of which are hereby incorporated by reference and made a part of this
Agreement; and
WHEREAS, the Committee (as hereinafter defined), appointed to administer
the Plan, has determined that it would be to the advantage and best interest of
the Company and its stockholders to grant the Non-Qualified Options provided for
herein to the Optionee as an incentive for increased efforts during his term of
office with the Company or its Subsidiaries , and has advised the Company
thereof and instructed the undersigned officers to issue said Options;
NOW THEREOF, in consideration of the mutual covenants herein contained and
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties do hereby agree as follows:
ARTICLE I
DEFINITIONS
----------------
Whenever the following terms are used in this Agreement, they shall have
the meaning specified in the Plan or below unless the context clearly indicates
to the contrary. Capitalized terms used but not defined herein shall be used as
defined in the Plan.
Section 1.1 "Affiliate" shall mean, with respect to the Company,
---------
any corporation directly or indirectly controlling, controlled by, or under
common control with, the Company or any other entity designated by the
Board of Directors of the Company in which the Company or an Affiliate
has an interest.
Section 1.2 "Cause" shall mean (i) the Optionee's willful and continued
------
failure to perform the Optionee's duties with respect to the Company
and its Subsidiaries which continues beyond ten days after a written demand
for substantial performance improvement is delivered to the Optionee by
the Company or (ii) misconduct by the Optionee involving (x) dishonesty or
breach of trust in connection with the Optionee's employment or (y) conduct
which would be a reasonable basis for an indictment of the Optionee for a felony
or for a misdemeanor involving moral turpitude.
Section 1.3 "Change of Control" shall mean (i) a sale of all or
------------------
substantially all of the assets of the Company to a Person who is not an
Affiliate of Kohlberg Kravis ▇▇▇▇▇▇▇ & Co., L.P. ("KKR"), (ii) a sale by KKR or
any of its Affiliates resulting in more than 50% of the voting stock of the
Company being held by a Person or Group that does not include KKR or any of its
Affiliates or (iii) a merger or consolidation of the Company into another Person
which is not an Affiliate of KKR, if and only if any such event in clause (i),
(ii) or (iii) above results in the inability of KKR or its Affiliate to elect a
majority of the Board of Directors of the Company (or the resulting entity).
Section 1.4 "Code" shall mean the Internal Revenue Code of 1986, as
----
amended.
Section 1.5 "Committee" shall mean the Compensation Committee of the
---------
Company, or any other committee duly authorized by the Board of Directors
of the Company to administer the Plan and this Agreement.
Section 1.6 "Exercisable Option Shares" shall mean the shares of
----------------------------
Common Stock which, at the time of determination of the Option Excess Price (as
defined below), could be purchased by the Optionee upon exercise of this
outstanding Option or other options.
Section 1.7 "Good Reason" shall mean (i) a reduction in the Optionee's
-----------
base salary, other than a reduction which is part of a general salary reduction
program affecting senior executives of the Company, or (ii) a material reduction
by the Company of any provision of the Optionee's employment agreement with the
Company, if any, including any material reduction in the Optionee's duties and
responsibilities.
Section 1.8 "Group" shall mean two or more Persons acting together
-----
as a partnership, limited partnership, syndicate or other group
for the purpose of acquiring, holding or disposing of securities of the Company.
Section 1.9 "Management Stockholder's Agreement" shall mean a
------------------------------------
management stockholder's agreement in form and substance satisfactory to the
Company, which agreement shall be substantially similar to the management
stockholder's agreements to which the Company is a party as of the date hereof
with certain stockholders of the Company, unless the Company shall in its sole
discretion otherwise determine.
Section 1.10 "Option Excess Price" shall mean the excess, if any, of the
-------------------
Special Treatment Termination Price or the Ordinary Termination Price, as the
case may be, over the exercise price of the Option, multiplied by the number of
Exercisable Option Shares.
Section 1.11 "Optionee's Estate" shall mean, after the death
-----------------
of the Optionee, the Optionee's executors, administrators, testamentary
trustees, legatees or beneficiaries.
Section 1.12 "Options" shall mean the non-qualified options
-------
to purchase Common Stock granted under this Agreement.
Section 1.13 "Other Optionees" shall mean other individuals who are
----------------
or will be employees of the Company or one of its Subsidiaries and who own
options pursuant to the Plan.
Section 1.14 "Permanent Disability" The Optionee shall be deemed to have
--------------------
a "Permanent Disability" if the Optionee is unable to engage in the activities
--------------------
required by the Optionee's job by reason of any medically determined physical
or mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than
12 months, or if the majority of the Board of Directors of the Company shall,
in good faith, determine the Optionee is permanently disabled. "Permanently
-----------
Disabled" shall have a correlative meaning.
--------
Section 1.15 "Person" shall mean an individual, partnership, corporation,
------
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other entity of whatever nature.
Section 1.16 "Plan" shall mean the 1996 Stock Purchase and Option
----
Plan for Key Employees of the Company and its Subsidiaries, as amended.
Section 1.17 "Pronouns" The masculine pronoun shall include the feminine
--------
and neuter, and the singular the plural, where the context so indicates.
Section 1.18 "Retirement" shall mean retirement at age 65 or over (or
-----------
such other age as may be approved by the Board of Directors of the Company or
the Committee) after having been employed by the Company or a Subsidiary for at
least three years after the Vesting Reference Date.
Section 1.19 "Sale Participation Agreement" shall mean that certain
--------------------------------
sale participation agreement in form and substance satisfactory to the Company,
which agreement shall be substantially similar to the sale participation
agreements to which the Company is a party as of the date hereof with certain
stockholders of the Company, unless the Company shall in its sole discretion
otherwise determine.
Section 1.20 "Secretary" shall mean the Secretary of the Company.
---------
Section 1.21 "Subsidiary" shall mean any corporation in an unbroken chain
----------
of corporations beginning with the Company if each of the corporations, or group
of commonly controlled corporations, other than the last corporation in the
unbroken chain then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
Section 1.22 "Vesting Reference Date" shall mean the date set forth
------------------------
on the signature page hereof as the Vesting Reference Date.
ARTICLE II
GRANT OF OPTIONS
----------------
Section 2.1 Grant of Options
--------------------
For good and valuable consideration, on and as of the date hereof the Company
irrevocably grants to the Optionee an Option to purchase any part or all of an
aggregate of the number of shares of Common Stock set forth with respect to each
such Option on the signature page hereof upon the terms and conditions set forth
in this Agreement.
Section 2.2 Exercise Price
---------------
The exercise price of the shares of stock covered by the Option shall be the
price per share set forth on the signature page hereof.
Section 2.3 Consideration to the Company
-----------------------------
In consideration of the granting of this Option by the Company, the Optionee
agrees to render faithful and efficient services to the Company or a Subsidiary
or Affiliate, with such duties and responsibilities as the Company shall from
time to time prescribe. Nothing in this Agreement or in the Plan shall confer
upon the Optionee any right to continue in the employ of the Company or any
Subsidiary or Affiliate or shall interfere with or restrict in any way the
rights of the Company and its Subsidiaries or Affiliates, which are hereby
expressly reserved, to terminate the employment of the Optionee at any time for
any reason whatsoever, with or without Cause.
Section 2.4 Adjustments in Options
-------------------------
Subject to Section 9 of the Plan, in the event that the outstanding shares of
the stock subject to an Option are, from time to time, changed into or exchanged
for a different number or kind of shares of the Company or other securities of
the Company by reason of a merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, combination of shares, or
otherwise, the Committee shall make an appropriate and equitable adjustment in
the number and kind of shares or other considerations as to which such Option,
or portions thereof then unexercised, shall be exercisable. Any such adjustment
made by the Committee shall be final and binding upon the Optionee, the Company
and all other interested persons.
Section 2.5 Termination of Options Upon a Special Treatment Event.
-----------------------------------------------------------
(a) Except as otherwise provided herein, if, , (i)(A) the Optionee is
still in the employ of the Company or any Subsidiary of the Company and (B) the
Optionee either dies or becomes Permanently Disabled or (ii) the Optionee elects
Retirement (any event referred to in clause (i) or clause (ii) being referred to
herein as a "Special Treatment Event"), then the Optionee or the Optionee's
-------------------------
Estate, as the case may be, shall have the right, for twelve months following
the date of the occurrence of such Special Treatment Event, to require the
Company to pay to the Optionee or the Optionee's Estate, as the case may be, an
amount equal to the Option Excess Price, determined on the basis of the Special
Treatment Termination Price as provided in Section 2.7, with respect to the
termination of outstanding Options held by the Optionee. No fewer than 10
business days prior to the last day of the twelve month period following the
occurrence of a Special Treatment Event, the Optionee or the Optionee's Estate,
as the case may be, shall send written notice to the Company's Secretary of its
intention to terminate such Options in exchange for the payment referred to in
the preceding sentence (the "Optionee Termination Notice").
-----------------------------
(b) The payment provided for in Section 2.5(a) shall take place at the
principal office of the Company on the tenth business day after the giving of
the Optionee Termination Notice. The Option Excess Price shall be paid by
delivery to the Optionee or the Optionee's Estate, as the case may be, of a
check or checks in the appropriate amount payable to the order of the Optionee
or the Optionee's Estate, as the case may be, against delivery of appropriate
documents canceling the Options so terminated appropriately endorsed or executed
by the Optionee or the Optionee's Estate, or his or its duly authorized
representative.
(c) Notwithstanding anything in Section 2.5(a) or 2.5(b) to the
contrary and subject to Section 2.8, (i) if there exists and is continuing a
default or an event of default on the part of the Company or any Subsidiary of
the Company under any loan, guarantee or other agreement under which the Company
or any Subsidiary of the Company has borrowed money or such termination would
result in a default or an event of default on the part of the Company or any
Subsidiary of the Company under any such agreement or (ii) if a termination
would not be permitted under Section 14A:7-14.1 of the Business Corporation Act
of the State of New Jersey or would otherwise violate the Business Corporation
Act of the State of New Jersey (each such occurrence referred to in clause (i)
or (ii) above being an "Event"), then the Company shall not be obligated to make
-----
payments to the Optionee or the Optionee's Estate, as the case may be, with
respect to the termination of the Options until the first business day which is
10 calendar days after all of the foregoing Events have ceased to exist (the
"Option Termination Eligibility Date"); provided, however, that the number of
--------------------------------------- -------- -------
Exercisable Option Shares for purposes of calculating the Option Excess Price
payable under this Section 2.5(c) shall be that number of Exercisable Option
Shares, held by the Optionee or the Optionee's Estate, as the case may be, at
the time of delivery of an Optionee Termination Notice in accordance with
Section 2.5(a) hereof; provided, further, that the Option Termination
-------- -------
Calculation Date (as defined in Section 2.7) shall be determined in accordance
with Section 2.6 as of the Option Termination Eligibility Date (unless the
Special Treatment Termination Price would be greater if the Option Termination
Calculation Date has been determined as if no Event had occurred, in which case,
solely for purposes of this proviso, the Option Termination Calculation Date
shall be determined as if no Event had occurred). All Options exercisable as of
the date of a Redemption Notice shall continue to be exercisable until the
termination pursuant to such Optionee Termination Notice.
(d) Notwithstanding any other provision of this Section 2.5 to the
contrary and subject to Section 2.8, the Optionee or the Optionee's Estate, as
the case may be, shall have the right to withdraw any Optionee Termination
Notice which has been pending for 60 or more days and which has remained
unsatisfied because of the provisions of Section 2.5(c).
Section 2.6 The Company's Right to Terminate Options of Optionee Section
------------------------------------------------------------
(a) If, on or prior to the fifth anniversary of the Vesting Reference
Date, the Optionee's active employment with the Company (and/or, if applicable,
its Subsidiaries) is terminated for any reason other than a termination by the
Company for Cause or by the Optionee without Good Reason , (a "Company
-------------
Termination Event") then the Company shall have the right
-------------------
(the "Company Termination Right"), in the Company's sole discretion, to
---------------------------
terminate the Options and pay the Optionee an amount equal to the Option Excess
Price determined on the basis of the Ordinary Termination Price (as defined in
Section 2.7) or the Special Treatment Termination Price, in the event that the
termination of employment results from a Special Treatment Event, as provided in
Section 2.5, with respect to the termination of outstanding Options held by the
Optionee. The Company shall have a period of 75 days from the date of a Company
Termination Event in which to give notice in writing to the Optionee
of the exercise of such election ("Company Termination Notice").
-------------------------------
(b) The termination and payment pursuant to Section 2.6(a) shall take
place at the principal office of the Company on the tenth business day after the
giving of the Company Termination Notice. Payment shall be made by delivery to
the Optionee of a check or checks in the appropriate amount payable to the order
of the Optionee against delivery of certificates or other instruments
representing the Stock so purchased and appropriate documents canceling the
Options so terminated, appropriately endorsed or executed by the Purchaser or
the Purchaser's Trust, or his or its authorized representative. From and after
the time of such payment, the Options shall immediately be terminated and shall
no longer be outstanding or exercisable.
(c) Notwithstanding any other provision of this Section 2.6 to the
contrary and subject to Section 2.8, if there exists and is continuing any
Event, then the Company may delay the termination of any of the Options until
the Option Termination Eligibility Date; provided, however, that the number of
-------- -------
Exercisable Option Shares for purposes of calculating the Option Excess Price
payable under this Section 2.6(c) shall be that number of Exercisable Option
Shares, held by the Optionee or the Optionee's Estate, as the case may be, at
the time of delivery of a Company Termination Notice in accordance with Section
2.6(a) hereof; provided, further, that the Option Termination Calculation Date
-------- -------
shall be determined in accordance with Section 2.7 based on the Option
Termination Eligibility Date (unless the applicable Termination Price would be
greater if the Option Termination Calculation Date had been determined as if no
Event had occurred, in which case, solely for purposes of this proviso, the
Option Termination Calculation Date shall be determined as if no Event had
occurred), and provided, further, that if the Repurchase Eligibility Date has
-------- -------
not occurred within 10 months of the date of the Call Notice, then the Call
Notice shall expire. All Options exercisable as of the date of a Company
Termination Notice shall continue to be exercisable until the termination
pursuant to such Company Termination Notice.
Section 2.7 Determination of Termination Price.
----------------------------------
(a) The Special Treatment Termination Price and the Ordinary
Termination Price are hereinafter collectively referred to as the "Termination
-----------
Price". The Termination Price shall be calculated on the basis of the unaudited
----
financial statements of the Company or the Market Price Per Share (as defined in
Section 2.7(f) as of the last day of the month preceding the later of (i) the
month in which the event giving rise to the termination occurs and(ii) the month
in which the Option Termination Eligibility Date occurs (hereinafter called the
"Option Termination Calculation Date"). The event giving rise to the termination
-----------------------------------
shall be the death, permanent disability, retirement or termination of
employment, as the case may be, of the Optionee, and not the giving of any
notice required pursuant to Section 2.5 or 2.6.
(b) The "Special Treatment Termination Price" shall be:
--------------------------------------
(i) Prior to a Public Offering (as defined in Section
2.7(e)), a per share Termination Price equal to $2.00
(the "Base Price")
--------------
plus the amount, if any, by which the Modified Book Value
---
Per Share
(as defined in Section 2.7(d)) as of the Option Termination
Calculation Date exceeds the Base Price.
(ii) After Public Offering, a per share Termination Price
equal to the Base Price plus the amount, if any, by which
----
the Market Price Per Share as of the Option Termination
Calculation Date exceeds the Base Price.
(c) The "Ordinary Termination Price" shall be:
----------------------------
(i) Prior to a Public Offering, a per share Termination
Price equal to the lesser of:
(A) the Modified Book Value Per Share; and
(B) the Base Price plus (x) the Percentage (as
----
defined below) multiplied by
(y) the amount, if any, by which the Modified Book
Value Per Share as of the Option Termination
Calculation Date exceeds the Base Price
(ii) After a Public Offering, a per share Termination
Price equal to the lesser of:
(A) the Market Price Per Share; and
(B) the Base Price plus (x) the Percentage (as
----
defined below) multiplied by
(y) the amount, if any, by which the Market Price
Per Share as of the Option Termination
Calculation Date exceeds the Base Price.
(iii) The "Percentage" shall be determined as follows:
----------
Option Termination Calculation Date Percentage
-------------------------------------- ----------
After the first anniversary of the Vesting Reference Date 20%
through and including the second anniversary of the
Vesting Reference Date
After the second anniversary of the Vesting Reference Date 40%
through and including the third anniversary of the
Vesting Reference Date
After the third anniversary of the Vesting Reference Date 60%
through and including the fourth anniversary of the
Vesting Reference Date
After the fourth anniversary of the Vesting Reference Date 80%
through and including the fifth anniversary of the
Vesting Reference Date
After the fifth anniversary of the Vesting Reference Date 100%
(d) For purposes hereof, "Modified Book Value Per Share" shall be the
-----------------------------
quotient of:
(i) an amount equal to (A) $ _____ million plus (B) the
----
aggregate net income of the Company attributable to
the Common Stock from and after the Vesting Reference
Date (as decreased by any net losses from and after
the Vesting Reference Date) plus (C) the aggregate dollar
----
amount contributed to the Company after the Vesting
Reference Date as common equity by the shareholders of
the Company in exchange for shares of Common Stock of
the Company, minus (D) the aggregate dollar amount of
-----
any stock repurchases made by the Company on the Common
Stock after the Vesting Reference Date, divided by
(ii) the sum of the number of shares of Common Stock
then outstanding; provided that, if any outstanding
--------
stock options, other rights to acquire Common Stock,
or securities convertible into shares of Common Stock
have a per share exercise price less than such
quotient (collectively, the "In-the-Money Options"),
-----------------
then, sequentially beginning with the In-the-Money
Options with the lowest per share exercise price
and until either (x) all In-the-Money Options have been
included in such adjustment of such quotient or
(y) there are no In-the-Money Options with a per
share exercise price less than the quotient as adjusted
that have not been included in such adjustment of such
quotient, the numerator of such quotient shall be
increased by the aggregate exercise prices of such
In-the-Money Options and the denominator of such
quotient shall be increased by the number of shares
of Common Stock issuable upon the exercise of such
In-the-Money Options.
The calculations set forth in clauses (i)(B), (i)(C) and (i)(D) of the
immediately preceding sentence shall be determined in accordance with generally
accepted accounting principles applied on a basis consistent with any prior
periods as reflected in the consolidated financial statements of the Company,
without giving effect to any adjustments required or permitted by Accounting
Principles Board Opinion Nos. 16 and 17 with respect to assets acquired or
liabilities assumed in the acquisition of the Company (except that the
determination of gains or losses on sales of assets and on foreign currency
translations shall be computed in accordance with Accounting Principles Board
Opinion Nos. 16 and 17).
(e) For purposes of this Grant, "Public Offering" shall mean the sale
---------------
of shares of Common Stock to the public subsequent to the date hereof pursuant
to a registration statement under the Act which has been declared effective by
the Securities and Exchange Commission (other than a registration statement on
Form S-8 or any other similar form) which results in an active trading market in
the Common Stock.
(f) For purposes of this Grant, "Market Price Per Share" shall mean the
----------------------
price per share equal to the average of the last sale price of the Common Stock
on the Option Termination Calculation Date on each exchange on which the Common
Stock may at the time be listed or, if there shall have been no sales on any of
such exchanges on the Option Termination Calculation Date, the average of the
closing bid and asked prices on each such exchange at the end of the Option
Termination Calculation Date or if there is no such bid and asked price on the
Option Termination Calculation Date on the next preceding date when such bid and
asked price occurred or, if the Common Stock shall not be so listed, the average
of the closing sales prices as reported by Nasdaq at the end of the Option
Termination Calculation Date in the over-the-counter market. If the Common
Stock is not so listed or reported by Nasdaq, then the Market Price Per Share
shall be the Modified Book Value Per Share.
(g) In determining the Termination Price, appropriate adjustments shall
be made for any future issuances of rights to acquire and securities convertible
into Common Stock and any stock dividends, splits, combinations,
recapitalizations or any other adjustment in the number of outstanding shares
of Common Stock.
Section 2.8 Pro Rata Terminations.
------------------------
Notwithstanding anything to the contrary contained in Sections 2.5, 2.6 or
2.7, if at any time consummation of all payments and terminations to be made by
the Company pursuant hereto and pursuant to the terms of Other Optionees'
options to purchase shares of Common Stock would result in an Event, then the
Company shall make payments to the Optionee and Other Optionees pro rata (on the
basis of the proportion of the number of options each such Optionee and all
Other Optionees have elected or are required to sell to the Company) for the
Option Excess Price for the maximum number of options permitted without
resulting in an Event (the "Maximum Termination Amount"). The provisions of
--------------------------
Sections 2.5(c) and 2.6(c) shall apply in their entirety to payments and
terminations with respect to Options which may not be made due to the limits
imposed by the Maximum Termination Amount under this Section 2.8. Until all of
such options are terminated and paid for by the Company, the Optionee and the
Other Optionees whose options are terminated and paid for the Company, the
Optionee and the Other Optionees whose options are not terminated in accordance
with this Section 2.8 shall have priority, on a pro rata basis, over other
terminations of options by the Company pursuant to this Grant and Other
Optionees' Grants.
Section 2.9 Rights to Negotiate Termination Price.
-------------------------------------------
Nothing in this Grant shall be deemed to restrict or prohibit the Company
from terminating Options at any time, upon such terms and conditions, and for
such payment, as may be mutually agreed upon between the Company and the
Optionee, whether or not at the time of such termination circumstances exist
which specifically grant the Company the right to terminate, or the Optionee has
the right to receive, the Option Excess Price under the terms of this Grant.
Section 2.10 Expiration of Certain Provisions.
-----------------------------------
The provisions contained in Sections 2.5 and 2.6 hereof, and the portion of
any other provisions hereof which incorporated the provisions of such Sections,
shall terminate and be of no further force or effect upon the consummation of a
merger, reorganization, business combination or liquidation of the Company, or
a sale of Common Stock owned by ▇▇▇▇▇▇ Holdings, Inc., a Delaware corporation
(the "Parent"), but only if such merger, reorganization, business combination,
------
liquidation or sale of Common Stock results in KKR Associates, a New York
limited partnership, Parent or any affiliate of either of them, no longer having
the power (i) to elect a majority of the Board of Directors of the Company or
such other corporation which succeeds to the Company's rights and obligations
pursuant to such merger, reorganization, business combination, liquidation or
stock sale, or (ii) if the resulting entity of such merger, reorganization,
business combination, liquidation or stock sale is not a corporation, to select
the general partner(s) or other persons or entities controlling the operations
and business of the resulting entity.
ARTICLE III
PERIOD OF EXERCISABILITY
-----------------------------
Section 3.1 Commencement of Exercisability.
--------------------------------
(a) Subject to the Optionee's continued employment with the Company,
the Options shall become exercisable as follows:
Percentage of Option
Date Option Shares Granted As to Which
Becomes Exercisable Option Is Exercisable
-------------------- -----------------------
After the first anniversary
of the Vesting Reference Date 20%
After the second anniversary
of the Vesting Reference Date 40%
After the third anniversary
of the Vesting Reference Date 60%
After the fourth anniversary
of the Vesting Reference Date 80%
After the fifth anniversary
of the Vesting Reference Date 100%
(b) Notwithstanding the foregoing, each Option shall become immediately
exercisable as to 100% of the shares of Common Stock subject to such Option
immediately prior to a Change of Control (but only to the extent such Option has
not otherwise terminated or become exercisable).
(c) Notwithstanding the foregoing, no Option shall become exercisable
as to any additional shares of Common Stock following the termination of
employment of the Optionee for any reason other than a termination of employment
because of death, Permanent Disability or Retirement of the Optionee and any
Option (other than as provided in the succeeding sentence) which is
non-exercisable as of the Optionee's termination of employment shall immediately
be canceled. In the event of a termination of employment because of death,
Permanent Disability or Retirement of the Optionee, the Options shall
immediately become exercisable as to all shares of Common Stock subject thereto.
Section 3.2 Expiration of Options.
------------------------
Except as otherwise provided in Section 2.5 or 2.6 of this Agreement, the
Options may not be exercised to any extent by the Optionee after the first to
occur of the following events:
(a) The tenth anniversary of the Vesting Reference Date; or
(b) The first anniversary of the date of the Optionee's
termination of employment by reason of death, Permanent
Disability or Retirement; or
(c) The first business day which is fifteen calendar days after
the earlier of (i) 75 days after termination of employment
of the Optionee for any reason other than for Cause or without
Good Reason or (ii) the delivery of notice by the Company that
it does not intend to exercise its Company Termination Right under
Section 2.6; provided, however, that in any event the Options shall
-------- -------
remain exercisable under this subsection 3.2(c) until at
least 45 days after termination of employment of the
Optionee for any reason other than for death, Permanent Disability
or Retirement (except as described in clause (e) below); or
(d) The date the Option is terminated pursuant to Sections 2.6, 2.7
or 2.8 of this Agreement; or
(e) The date of an Optionee's termination of employment by the
Company for Cause or by the Optionee without Good Reason; or
(f) If the Committee so determines pursuant to Section 9 of the
Plan, the effective date of either the merger or consolidation of
the Company into another Person, or the exchange or acquisition by
another Person of all or substantially all of the Company's assets
or 80% or more of its then outstanding voting stock, or the
recapitalization, reclassification, liquidation or dissolution of
the Company. At least ten (10) days prior to the effective
date of such merger, consolidation, exchange, acquisition,
recapitalization, reclassification, liquidation or dissolution,
the Committee shall give the Optionee notice of such event
if the Option has then neither been fully exercised
nor become unexercisable under this Section 3.2.
ARTICLE IV
EXERCISE OF OPTION
-------------------
Section 4.1 Person Eligible to Exercise.
---------------------------
Except as otherwise provided in Section 5.2 of this Agreement, during the
lifetime of the Optionee, only the Optionee may exercise an Option or any
portion thereof. After the death of the Optionee, any exercisable portion of an
Option may, prior to the time when an Option becomes unexercisable under Section
3.2, be exercised by his personal representative or by any person empowered to
do so under the Optionee's will or under the then applicable laws of descent and
distribution.
Section 4.2 Partial Exercise .
------------------
Any exercisable portion of an Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under Section 3.2;
provided, however, that any partial exercise shall be for whole shares of Common
------- -------
Stock only.
Section 4.3 Manner of Exercise.
----------------------
An Option, or any exercisable portion thereof, may be exercised solely by
delivering to the Secretary or her office all of the following prior to the time
when the Option or such portion becomes unexercisable under Section 3.2:
(a) Notice in writing signed by the Optionee or the other person then
entitled to exercise the Option or portion thereof, stating that the Option or
portion thereof is thereby exercised, such notice complying with all applicable
rules established by the Committee;
(b) Full payment (in cash, by check or by a combination thereof) for
the shares with respect to which such Option or portion thereof is exercised;
(c) A bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the shares of
stock are being acquired for the Optionee's own account, for investment and
without any present intention of distributing or reselling said shares or any of
them except as may be permitted under the Securities Act of 1933, as amended
(the "Act"), and then applicable rules and regulations thereunder, and that the
---
Optionee or other person then entitled to exercise such Option or portion
thereof will indemnify the Company against and hold it free and harmless from
any loss, damage, expense or liability resulting to the Company if any sale or
distribution of the shares by such person is contrary to the representation and
agreement referred to above; provided, however, that the Committee may, in its
-------- -------
absolute discretion, take whatever additional actions it deems appropriate to
ensure the observance and performance of such representation and agreement and
to effect compliance with the Act and any other federal or state securities laws
or regulations;
(d) Full payment to the Company of all amounts which, under federal,
state or local law, it is required to withhold upon exercise of the Option;
(e) An executed Management Stockholder's Agreement along with any other
documents that the Company may require, including a Sale Participation
Agreement, or appropriate proof such agreements have been previously executed
by the Optionee; and
(f) In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the option.
Without limiting the generality of the foregoing, the Committee may require
an opinion of counsel acceptable to it to the effect that any subsequent
transfer of shares acquired on exercise of an Option does not violate the Act,
and may issue stop-transfer orders covering such shares. Share certificates
evidencing stock issued on exercise of this Option shall bear an appropriate
legend referring to the provisions of subsection (c) above and the agreements
herein. The written representation and agreement referred to in subsection (c)
above shall, however, not be required if the shares to be issued pursuant to
such exercise have been registered under the Act, and such registration is then
effective in respect of such shares.
Section 4.4 Conditions to Issuance of Stock Certificates
-------------------------------------------------
The shares of stock deliverable upon the exercise of an Option, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The certificate or certificates for such
shares shall bear such legend or legends as the Committee shall, in its absolute
discretion, determine in accordance with the Plan, including any legend required
to limit or restrict transferability of the shares represented by such
certificate. The Company shall not be required to issue or deliver any
certificate or certificates for shares of stock purchased upon the exercise of
an Option or portion thereof prior to fulfillment of all of the following
conditions:
(a) The obtaining of approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(b) The lapse of such reasonable period of time following the exercise
of the Option as the Committee may from to time establish for reasons of
administrative convenience; and
(c) Except as the Company may otherwise agree in writing, the Optionee
shall have made an election pursuant to Treasury Regulation 1.83-2 with respect
to the Common Stock to be acquired upon such exercise of the Options, and shall
have delivered to the Company copies of the forms of election the Optionee has
filed with the Internal Revenue Service within 30 days after the exercise of the
Options, with evidence that each such election has been filed in a timely
manner.
Section 4.5 Rights as Stockholder
-------------------------
The holder of an Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares purchasable
upon the exercise of the Option or any portion thereof unless and until
certificates representing such shares shall have been issued by the Company to
such holder.
ARTICLE V
MISCELLANEOUS
-----------------
Section 5.1 Administration.
-----------------
The Committee shall have the power to interpret the Plan and this Agreement
and to adopt such rules for the administration, interpretation and application
of the Plan as are consistent therewith and to interpret or revoke any such
rules. All actions taken and all interpretations and determinations made by the
Committee shall be final and binding upon the Optionee, the Company and all
other interested persons. No member of the Committee shall be personally liable
for any action, determination or interpretation made in good faith with respect
to the Plan or the Options. In its absolute discretion, the Board of Directors
may at any time and from time to time exercise any and all rights and duties of
the Committee under the Plan and this Agreement.
Section 5.2 Options Not Transferable.
---------------------------
Except as provided in this Agreement, neither the Options nor any interest
or right therein or part thereof shall be liable for the debts, contracts or
engagements of the Optionee or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect.
Notwithstanding the foregoing, the following transfers are permitted: (x)
transfers upon death by will or by the applicable laws of descent and
distribution; and (y) a transfer made after the Vesting Reference Date in
compliance with the federal and state securities laws to a trust, custodianship
or partnership, the beneficiaries of which may include only the Optionee, the
Optionee's spouse and/or his lineal descendants, provided that any such transfer
is made expressly subject to this Agreement and that the transferee agrees in
writing to be bound by the terms and conditions hereof.
Section 5.3 Optionee's Employment by Company.
--------------------------------
Nothing in this Grant or in the Plan shall confer upon the Optionee any
right to continue in the employ of the Company or any Subsidiary or Affiliate or
shall interfere with or restrict in any way the rights of the Company and its
Subsidiaries or Affiliates, which are hereby expressly reserved, to terminate
the employment of the Optionee at any time for any reason whatsoever, with or
without Cause.
Section 5.4 Shares to Be Reserved.
-------------------------
The Company shall at all times during the term of the Options reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of this Agreement.
Section 5.5 Notices.
--------
Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary, and any notice to be
given to the Optionee shall be addressed to him at the address indicated on the
signature page hereto. By a notice given pursuant to this Section 5.5, either
party may hereafter designate a different address for notices to be given to
him. Any notice which is required to be given to the Optionee shall, if the
Optionee is then deceased, be given to the Optionee's personal representative if
such representative has previously informed the Company of his status and
address by written notice under this Section 5.5. Any notice shall have been
deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, and delivered personally or by private courier or mailed
by registered or certified mail, postage prepaid, return receipt requested.
Section 5.6 Titles.
--------
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
Section 5.7 Applicability of Plan and Management Stockholder's
-------------------------------------------------------
Agreement.
-----------
The Options and the shares of Common Stock issued to the Optionee upon
exercise of the Options shall be subject to all of the terms and provisions of
the Plan and the Management Stockholder's Agreement, to the extent applicable to
the Options and such shares. In the event of any conflict between this
Agreement and the Plan, the terms of the Plan shall control. In the event of
any conflict between this Agreement or the Plan and the Management Stockholder's
Agreement, the terms of the Management Stockholder's Agreement shall control.
Section 5.8 Termination of ▇▇▇▇▇▇, Inc. Stock Options
--------------------------------------------
By accepting this grant, Optionee consents to the termination and cancellation
of all stock options, stock appreciation rights, equity appreciation rights, and
other stock based grants or similar equity based compensation received by the
Optionee from ▇▇▇▇▇▇, Inc. prior to March 14, 1995.
Section 5.9 Amendment.
---------
This Agreement may be amended only by a writing executed by the parties
hereto which specifically states that it is amending this Agreement.
Section 5.10 Governing Law.
----------------
The laws of the State of New Jersey shall govern the interpretation,
validity and performance of the terms of this Agreement regardless of the law
that might be applied under principles of conflicts of laws.
Section 5.11 Consent to Jurisdiction; Waivers.
----------------------------------
Any suit, action or proceeding against the Optionee with respect to this
Agreement, or any judgment entered by any court in respect of any thereof, may
be brought in any court of competent jurisdiction in the State of New Jersey,
Ohio or New York, as the Company may elect in its sole discretion, and the
Optionee hereby submits to the non-exclusive jurisdiction of such courts for the
purpose of any such suit, action, proceeding or judgment. The Optionee hereby
irrevocably waives any objections which he 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 Jersey, Ohio or 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. No suit, action or proceeding against the
Company with respect to this Agreement may be brought in any court, domestic or
foreign, or before any similar domestic or foreign authority other than in a
court of competent jurisdiction in the State of New Jersey, Ohio or New York,
and the Optionee hereby irrevocably waives any right which he may otherwise have
had to bring such an action in any other court, domestic or foreign, or before
any similar domestic or foreign authority. The Company hereby submits to the
jurisdiction of such courts for the purpose of any such suit, action or
proceeding.
EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING IN RELATION TO THIS AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.
Section 5.12 Counterparts
-------------
This Agreement may be signed in two or more counterparts, each of
which will be deemed an original.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
▇▇▇▇▇▇ CHEMICAL , INC.
-------------------------
By----------------------
Title:
NAME OF OPTIONEE:
-------------------
SIGNATURE OF OPTIONEE:
------------------------
ADDRESS OF OPTIONEE:
----------------------------
OPTIONEE'S TAXPAYER IDENTIFICATION
(SOCIAL SECURITY) NUMBER:
------------------------------------
AGREEMENT DATE: October 1, 2003
---------------- -----------------
AGGREGATE NUMBER OF SHARES OF
COMMON STOCK FOR WHICH THE OPTION
GRANTED HEREUNDER IS EXERCISABLE:
------------------------------------
VESTING REFERENCE DATE: October 1, 2003
------------------------- -----------------
EXERCISE PRICE: $2.00 per share of Common Stock
---------------- ------------------------------------