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Exhibit 10.8
AMENDED AND RESTATED
OPTION AGREEMENT
This AMENDED AND RESTATED OPTION AGREEMENT is dated as of
April 4, 1997 (actually executed on ___________, 1997) (this "Agreement"), among
TEKNI-PLEX, INC., a Delaware corporation (the "Company"), TEKNI-PLEX PARTNERS
L.P., a Delaware limited partnership (the "Partnership"), and F. ▇▇▇▇▇▇▇ ▇▇▇▇▇,
residing at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("▇▇▇▇▇").
WHEREAS, the Partnership presently owns all of the outstanding
shares of the Company's common stock (the "Common Stock") and has no other
material investments;
WHEREAS, the Company has completed a recapitalization,
pursuant to which the Company has:
(a) (i) issued senior subordinated notes in the
aggregate amount of $75 million, and (ii) received a capital
contribution from the Partnership for aggregate consideration of $18.2
million;
(b) used the proceeds therefrom to (i) repay its
existing credit facility, (ii) repay currently outstanding senior
subordinated notes, (iii) repurchase warrants which would otherwise
have entitled the holder, among other things, to acquire fifteen
percent (15%) of the Company's Common Stock, and (iv) add the remainder
to its working capital; and
(c) entered into a new credit facility providing for
initial bank commitments of $75 million (collectively with the
transactions covered in clauses (a) and (b) above, the
"Recapitalization");
WHEREAS, the Company and the Partnership desire to provide
▇▇▇▇▇ with an option to permit him to make a further investment in the
Partnership beyond his prior investment in the Partnership;
WHEREAS, the Partnership and ▇▇▇▇▇ desire that, while the
Partnership holds its investment in the Company, ▇▇▇▇▇ will hold his investment
in the Company, including any investment through exercise of such option,
through the Partnership;
WHEREAS, upon ▇▇▇▇▇'▇ exercise in full of such option, the
parties hereto have agreed that ▇▇▇▇▇ would be put in the same position as if he
were to have invested $1,843,252.90 in the Partnership in exchange for Class A
Partnership interests as of April 4, 1997, the amount of such interests
determined by valuing the Partnership assets at the same fair market value as
was
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agreed for the investments by the other partners made on such date (the "New
▇▇▇▇▇ Class A Interests"); and
WHEREAS, the parties hereto wish to amend that certain
agreement granting a certain option to ▇▇▇▇▇ dated as of April 4, 1997, and to
restate it in its entirety, superseding all provisions thereof;
NOW, THEREFORE, in consideration of the premises and the
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. Grant of Option. The Partnership hereby grants ▇▇▇▇▇ the
right to purchase (the "Option"), in full or in part, at any time during the
term as defined in Section 5 hereof, the New ▇▇▇▇▇ Class A Interests, on the
terms and conditions herein set forth.
2. Purchase Price. The purchase price for the New ▇▇▇▇▇ Class
A Interests, if the Option is exercised in full, shall be One Million Eight
Hundred Forty-Three Thousand Two Hundred Fifty-Two Dollars and Ninety Cents
($1,843,252.90) or, if exercised in part, shall be a pro rata amount thereof. If
the Partnership owns all of the outstanding Common Stock of the Company on a
fully diluted basis (apart from the options granted to ▇▇▇▇▇▇▇ ▇▇▇▇▇), the
Partnership will apply such purchase price as a capital contribution to the
Company without the actual issuance of shares.
3. ▇▇▇▇▇ Rights in Partnership. ▇▇▇▇▇ may exercise the Option
by giving notice thereof to the general partner of the Partnership and the
Company. The exercise of the Option by and at the instruction of ▇▇▇▇▇ shall not
be treated as an exercise of management authority by ▇▇▇▇▇ and shall not affect
his status as a limited partner in the Partnership. Upon such exercise by ▇▇▇▇▇,
▇▇▇▇▇ shall receive from the Partnership, in exchange for the capital
contribution ▇▇▇▇▇ has elected to make (such amount not to exceed, after
including the purchase price paid for any and all prior exercises of the Option,
the full purchase price stated in Section 2 above), Class A Interests (as
defined in the Partnership Agreement). The number of Class A Interests purchased
by ▇▇▇▇▇ and to be issued by the Partnership to ▇▇▇▇▇ shall be determined by
valuing the Partnership assets at the same fair market value as was agreed for
the investments by the other partners made on April 4, 1997 (see Exhibit A
hereto).
4. Exercise of Option. The Option shall be exercisable on the
terms and conditions hereinafter set forth:
(a) The Option shall be immediately exercisable, in whole and
in part, and from time to time, commencing on the date of this Agreement.
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(b) The Option may be exercised by notice and payment to the
Company as provided in Sections 12 and 17 hereof.
5. Term of Option. The term of the Option shall be a period of
five (5) years from April 4, 1997 (for the avoidance of doubt, such term shall
end precisely at 5:00 p.m. NYC time on April 4, 2002) subject to earlier
termination or cancellation as provided in Sections 7 and 8 hereof in certain
circumstances when ▇▇▇▇▇ ceases to be an employee of the Company or of an
Affiliate (as hereinafter defined) of the Company. As used in this Agreement,
the term "Affiliate" refers to and includes each entity which directly or
indirectly, owns or controls, is under common ownership or control with or is
owned or controlled by, the Company, including each "subsidiary corporation"
within the meaning of the term as defined in Section 425(f) of the Internal
Revenue Code of 1986, as amended (the "Code").
6. Non-transferability of Option. Subject to Section 10
hereof, the Option shall not be transferable otherwise than by will or by the
laws of descent and distribution, and the Option may be exercised during ▇▇▇▇▇'▇
lifetime only by him. More particularly, but without limiting the generality of
the foregoing, the Option may not be assigned, transferred or otherwise disposed
of, or pledged or hypothecated in any way (whether by operation of law or
otherwise), and shall not be subject to execution, attachment or other process.
Any assignment, transfer, pledge, hypothecation or other disposition of the
Option attempted contrary to the provisions of this Agreement, or any levy of
execution, attachment or other process attempted upon the Option, will be null
and void and without effect. Any attempt to make any such assignment, transfer,
pledge, hypothecation or other disposition of the Option or any attempt to make
any such levy of execution, attachment or other process will cause the Option to
terminate immediately upon the happening of any such event if the Board of
Directors of the Company, at any time, should in its sole discretion, so elect,
by written notice to ▇▇▇▇▇ or to the person or persons then entitled to exercise
the Option under the provisions of Section 12 hereof.
7. Exercise Upon Cessation of ▇▇▇▇▇'▇ Employment.
(a) If ▇▇▇▇▇ ceases to be employed by the Company or any of
its Affiliates by reason of his discharge for "cause" (as defined in ▇▇▇▇▇'▇
employment agreement with the Company) or by reason of voluntary termination
(e.g. resignation), the Option may be exercised to the same extent ▇▇▇▇▇ would
have been entitled to exercise the Option on the day immediately preceding the
date of such cessation of employment, at any time within one hundred and fifty
(150) days after such cessation of employment, at the end of which period the
Option shall terminate. In any event the Option may not be exercised after the
expiration of the term provided in Section 5 hereof.
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(b) If ▇▇▇▇▇ is granted a temporary leave of absence, such
leave of absence will be deemed a continuation of his employment by the Company
or any Affiliate thereof for the purpose of this Agreement, but only if and so
long as the employing corporation consents thereto.
(c) Any termination of the Option by reason of ▇▇▇▇▇'▇
discharge for "cause" or voluntary termination shall be without prejudice to any
rights or remedies which the Company or any of its Affiliates may have against
▇▇▇▇▇ or which ▇▇▇▇▇ may have against the Company or any of its Affiliates under
this Agreement or otherwise.
8. Exercise Upon ▇▇▇▇▇'▇ Death or Disability.
(a) If ▇▇▇▇▇ dies while he is employed by the Company or any
Affiliate or within one hundred and fifty (150) days after he has ceased to be
an employee by reason of discharge for "cause" or voluntary termination, during
which period ▇▇▇▇▇ would have been entitled to exercise the Option under the
provisions of Section 7 hereof, the Option may be exercised, to the extent ▇▇▇▇▇
would have been entitled under Section 4 hereof to exercise the Option on the
day immediately preceding the date of ▇▇▇▇▇'▇ death, by the estate of ▇▇▇▇▇ or
by the person or persons (including the estate of any such person or persons who
have died) who acquire the right to exercise the Option by bequest or
inheritance at any time within the period ending three hundred (300) days after
the death of ▇▇▇▇▇, at the end of which period the Option shall terminate. In
any event, the Option may not be exercised after the expiration of the term
provided in Section 5 hereof.
(b) The cessation of ▇▇▇▇▇'▇ employment by the Company or any
Affiliate thereof for any reason other than discharge for "cause," voluntary
termination or death will not affect the term of the Option.
9. Use of Proceeds and Adjustments. (a) The Partnership shall
use the proceeds from ▇▇▇▇▇'▇ exercise of the Option to make a capital
contribution to the Company if the factual circumstances set forth in Section 2
requiring such a capital contribution exist in fact. If such factual
circumstances do not exist, then the Partnership shall be entitled, subject to
the adjustments provided in this Section 9, to demand a number of shares to be
issued, and the Company will issue and sell such number of shares, as though the
Partnership made the investment on April 4, 1997 and the fair market value for
the Company's equity agreed for that date were to apply (see Exhibit A hereto).
(b) The Partnership will not have any rights to dividends or
any other rights of a stockholder with respect to any shares of Common Stock it
is entitled to purchase from the Company hereunder until such shares shall have
been actually
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issued (as evidenced by the appropriate entry on the books of a duly authorized
transfer agent of the Company), provided that the date of issuance shall not be
earlier than the Closing Date (as defined herein) with respect to such shares.
(c) The number of shares that the Partnership is entitled to
purchase pursuant to subparagraph (a) above shall be adjusted in the event of a
stock dividend, stock split-up, share combination, share redemption or
retirement, exchange of shares, recapitalization, merger, consolidation,
acquisition or disposition of property or shares, reorganization, liquidation or
other similar changes or transactions of or by the Company after April 4, 1997.
The Board of Directors of the Company shall make (or shall undertake to have the
Board of Directors of any corporation which merges with, or acquires the stock
or assets of, the Company make) such adjustment of (whether by increasing or
decreasing) the number of shares of Common Stock the Partnership is entitled to
purchase as it shall, in its reasonable judgement, deem appropriate to give
proper effect to such event.
10. Termination of Partnership. If the Partnership shall
terminate prior to the end of the term of the Option stated in Section 5 hereof
and the Option upon such termination shall not have been exercised in full, upon
such termination the Partnership itself shall have no further rights under the
Option and it shall be transferred automatically to ▇▇▇▇▇ himself who shall be
entitled to purchase shares of the Company to the same extent and subject to the
provisions hereof as if the Partnership had continued and he had exercised the
Option and the Partnership, accordingly, had used the proceeds of such exercise
to purchase shares of Common Stock pursuant to Section 9(a) hereof. For purposes
hereof, the Partnership shall be deemed to have terminated when it has
terminated pursuant to section 1.5 of the 1997 Amended and Restated Agreement of
Limited Partnership of Tekni-Plex Partners L.P., as the same may be further
amended, supplemented or otherwise modified from time to time.
11. Registration. The shares of Common Stock subject hereto
and issuable upon the exercise hereof, as of the date hereof, have not been
registered under the Securities Act of 1933, as amended (the "Act"), and, if
required upon the request of counsel to the Company, the Partnership or ▇▇▇▇▇,
as the case may be, will give to the Company a representation as to its or his
investment intent with respect to such shares prior to their issuance as set
forth in Section 12 hereof. The Company may register or qualify the shares
covered by the Option for sale pursuant to the Act, at any time prior to or
after the exercise, in whole or in part, of the Option.
12. Method of Exercise of Option.
(a) Subject to the terms and conditions of this Agreement, the
Option shall be exercisable by notice to the
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Partnership and the Company and payment to the Company in accordance with the
procedure prescribed herein. Each such notice shall:
(1) State the amount of the purchase price being
elected for such exercise;
(2) Contain such representations and agreements as to
investment intent with respect to shares to be issued, if any, if
required by counsel to the Company, in form satisfactory to counsel for
the Company; and
(3) Be signed by the person or persons entitled to exercise
the Option and, if the Option is being exercised by any person or
persons other than ▇▇▇▇▇, be accompanied by proof, satisfactory to
counsel for the Company, of the right of such person or persons to
exercise the Option.
(b) Upon receipt of the notice specified in Section 12(a)
above, the Company will specify, by written notice to the person giving the
notice, a date and time (such date and time being herein called the "Closing
Date") and place for payment of the elected purchase price. The Closing Date
will be not more than fifteen (15) days from the date the notice of exercise is
received by the Company unless another date is agreed upon by the Company and
the Option holder or is required upon advice of counsel for the Partnership or
the Company in order to meet the requirements of Section 13 hereof.
(c) Payment of the elected amount of the purchase price in
respect of the Option being exercised will be made by ▇▇▇▇▇ at the place
specified by the Company, on or before the Closing Date by delivering to the
Company a certified or bank cashier's check payable to the order of the Company.
The Option will be deemed to have been exercised if, and only if, the preceding
provisions of this Section 12 and the provisions of Section 13 hereof shall have
been complied with, in which event the Option will be deemed to have been
exercised on the Closing Date. Anything in this Agreement to the contrary
notwithstanding, any notice of exercise given pursuant to the provisions of this
Section 12 will be void and of no effect if all the preceding provisions of this
Section 12 and the provisions of Section 13 shall not have been complied with.
To the extent shares are issuable to ▇▇▇▇▇ directly, certificate or certificates
for shares of Common Stock issued pursuant hereto will be registered in the name
of the ▇▇▇▇▇ or, if ▇▇▇▇▇ so requests, will be registered in the name of ▇▇▇▇▇
and another person jointly, with right of survivorship, or in the name of a
trust (provided ▇▇▇▇▇ controls the trust or is a principal beneficiary thereof)
and will be delivered on the Closing Date to ▇▇▇▇▇ at the place specified for
the closing, but only upon compliance with all of the provisions of this
Agreement.
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13. Approval of Counsel. The exercise of the Option and the
issuance and delivery of shares of Common Stock, if any, pursuant thereto shall
be subject to approval by the Company's counsel of all legal matters in
connection therewith, including compliance with the requirements of the Act, and
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, and the requirements of any stock exchange upon which the Common
Stock may then be listed.
14. Resale of Common Stock.
(a) Upon any sale or transfer of the Common Stock purchased
upon exercise of the Option, the seller or transferor shall deliver to the
Company an opinion of counsel satisfactory to the Company to the effect that
either (i) the Common Stock to be so sold or transferred has been registered
under the Act, and that there is in effect a current prospectus meeting the
requirements of Subsection 10(a) of the Act which is being or will be delivered
to the purchaser or transferee at or prior to the time of delivery of the
certificates evidencing the Common Stock to be sold or transferred, or (ii) such
Common Stock may then be sold without violating Section 5 of said Act.
(b) The Common Stock issued upon exercise of the Option shall
bear the following legend if required by counsel for the Company:
THE SHARES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE FIRST
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNLESS, IN THE OPINION OF COUNSEL FOR THE COMPANY, SUCH REGISTRATION IS
NOT REQUIRED.
15. Reservation of Shares. The Company shall at all times
during the term of the Option reserve and keep available such number of shares
of Common Stock as will be sufficient to satisfy the requirements of this
Agreement.
16. Limitation of Action. The Partnership, ▇▇▇▇▇, and the
Company each acknowledges that every right of action accruing to him or it, as
the case may be, and arising out of or in connection with this Agreement against
the Company or an Affiliate thereof, or against the Partnership or ▇▇▇▇▇, ▇▇▇▇,
irrespective of the place where an action may be brought, cease and be barred by
the expiration of three years from the date of the act or omission in respect of
which such right of action arises.
17. Notices. Each notice relating to this Agreement shall be
in writing and delivered in person or by certified mail to the proper address.
All notices given hereunder shall be addressed as follows:
(a) If to the Company, to:
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Tekni-Plex, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(b) If to the Partnership, to:
Tekni-Plex Partners L.P.
c/o MST Partners
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(c) If to ▇▇▇▇▇, to:
F. ▇▇▇▇▇▇▇ ▇▇▇▇▇
c/o Tekni-Plex, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
The ▇▇▇▇ Firm P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Anyone to whom a notice may be given under this Agreement may designate a new
address by notice to that effect.
18. Benefits of Agreement. This Agreement shall inure to the
benefit of and be binding upon each successor and assign of the Company and,
subject to the terms hereof, ▇▇▇▇▇'▇ heirs and legal representatives. All
obligations imposed (i) upon the Company shall be binding upon the Company's
successors and assigns, (ii) upon the Partnership shall be binding upon the
Partnership's legal representatives, successors and assigns, and (iii) upon
▇▇▇▇▇ shall be binding upon ▇▇▇▇▇'▇ heirs, legal representatives, successors and
assigns.
19. Severability. In the event that any one or more provisions
of this Agreement shall be deemed to be illegal or unenforceable, such
illegality or unenforceability shall not affect the validity and enforceability
of the remaining legal and enforceable provisions hereof, which shall be
construed as if such illegal or unenforceable provision or provisions had not
been inserted.
20. Governing Law. THIS AGREEMENT WILL BE CONSTRUED AND
GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
21. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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22. Integration. This Agreement constitutes the entire
understanding of the parties hereto and shall supersede all prior agreements,
representations and understandings of the parties hereto related to the subject
matter hereof, and without limiting the generality of the foregoing shall
supersede that certain option to ▇▇▇▇▇ dated as of April 4, 1997.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date and year first above written.
TEKNI-PLEX, INC.
By:________________________________
Name:
Title:
-----------------------------------
F. ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Social Security Number
TEKNI-PLEX PARTNERS L.P.
By: MST/TP PARTNERS L.P.,
its Sole General Partner
By: MST PARTNERS, L.P.,
its Co-General Partner
By: MST MANAGEMENT, L.P.,
its Sole General Partner
By:_________________________
Name:
Title: General Partner
By: MST OFFSHORE PARTNERS C.V.,
its Co-General Partner
By: MST MANAGEMENT, L.P.,
its Co-General Partner
By:_________________________
Name:
Title: General Partner
By: MST OFFSHORE MANAGEMENT,
N.V., its Co-General Partner
By:_________________________
Name:
Title: Managing Director
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EXHIBIT A TO OPTION AGREEMENT
(1) Amount paid to purchase the warrants outstanding
immediately prior to April 4, 1997 as referred to on page 17 of the Company's
prospectus: $20,000,000.
(2) The warrants were exercisable for 15% of the shares of the
Company on a fully diluted basis as reflected in such prospectus.
(3) If $20,000,000 is paid for 15% of the equity, then all of
the equity is impliedly worth $20,000,000/.15, which equals $133,333,333.33.
(4) ▇▇. ▇▇▇▇▇'▇ option is for 2.5% of the outstanding shares
of the Company (page 42 of the Company's prospectus), the exercise of which will
leave the Partnership with 97.5% of the outstanding shares (page 41).
(5) On the basis of the foregoing, the agreed value for the
equity of the Company is:
$133,333,333 based on the foregoing (prior to 4/4/97)
20,000,000 paid out for the warrants
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$113,333,333 net left after payout
18,373,268 4/4/97 capital contribution (excluding any
------------
exercise of the option provided herein and
reflects payment of certain capital
contribution by delivery of notes)
$131,706,601
and the agreed value for the partnership holding is:
[($131,706,601-$41,473,268(a))*0.975]+$41,473,268(a)=$129,450,768(b)
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(a) Aggregate capital contribution made on or prior to 4/4/97.
(b) Rounded to nearest dollar.
