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EXHIBIT 10.7
AMENDED AND RESTATED
STOCK OPTION AGREEMENT
THIS AGREEMENT dated effective as of March 31, 1996, between
SEPCO INDUSTRIES, INC., a Texas corporation (the "Company"), and the Company's
Employee set forth on Exhibit "A" (the "Employee");
W I T N E S S E T H:
WHEREAS, the Company previously granted to Employee an option
to purchase shares of Common Stock of the Company on the date set forth in
Exhibit "A" ("Prior Option Agreement") and the Company and Employee desire to
amend and restate said Prior Option Agreement in accordance with the terms
hereof.
WHEREAS, the Company desires to grant to the Employee, an
option to purchase shares of Common Stock of the Company, and the Employee
desires to acquire such option, all upon the terms and conditions described
below;
NOW, THEREFORE, the parties hereto agree as follows:
1. Stock Option.
(a) Grant of Option. The Company hereby grants to the
Employee an option (the "Option") to purchase the shares of Company's
Common Stock, $.01 par value per share ("Common Stock") set forth on
Exhibit "A", (such shares, as they may be increased or decreased in
accordance with paragraph (d) of this Section 1, are hereinafter
referred to as the "Shares") at the purchase price per share set forth
on Exhibit "A" (such price as it may be adjusted from time to time in
accordance with paragraph (d) of this Section 1, is hereinafter
referred to as the "Purchase Price"), at any time during the period
beginning on the date of this Agreement and ending on the date set
forth on Exhibit "A" or within ninety (90) days after the termination,
for any reason, of Employee's full-time employment with the Company
(the "Option End Date"), whichever event occurs earlier (the "Option
Period"), subject to the terms and conditions hereinafter set forth.
(b) Exercise of Option. The Option may be exercised by
the Employee at any time or from time to time as to all or any
portion of the Shares during the Option Period. The Option shall be
exercised by the delivery to the Company of a written notice stating
that the Employee is exercising the Option to purchase all or a
specified number of the Shares. If the Employee exercises the Option,
the purchase, sale and delivery of the Shares shall take place within
ten (10) days from the date that such written notice from the Employee
is delivered to the Company.
(c) No Rights as Shareholder. Except as may be otherwise
expressly stated herein, the Employee shall have no rights as a
shareholder with respect
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to any of the Shares until the date of issuance of a stock certificate
for any of the Shares purchased pursuant to the Option.
(d) Changes in the Company's Capital Structure. The
existence of the Option shall not affect in any way the right or power
of the Company or its officers, directors and shareholders to (i) make
or authorize any adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business, (ii)
participate in any merger or consolidation of the Company, (iii) issue
any bonds, debentures, or preferred or prior preference stock
affecting the Common Stock or the rights of holders thereof, (iv)
dissolve or liquidate the Company, (v) sell or transfer all or any
part of the assets or business of the Company, or (vi) perform any
other corporate act or proceeding, whether of a similar character or
otherwise. If, while the Option is outstanding, the Company
subdivides or consolidates the shares of Common Stock or effects any
other capital readjustment, pays a stock dividend, or otherwise
increases or reduces the number of shares of Common Stock outstanding,
receiving no or nominal consideration therefor in money, services or
property, then (i) in the event of an increase in the number of shares
of Common Stock outstanding, the number of shares of Common Stock then
subject to the Option shall be proportionately increased, and the
Purchase Price per share shall be proportionately reduced; and (ii) in
the event of a reduction in the number of shares of Common Stock then
outstanding, the number of shares of Common Stock subject to the
Option shall be proportionately reduced, and the Purchase Price per
share shall be proportionately increased.
The issuance by the Company of shares of stock of any
class or securities convertible into shares of stock of any class,
including the Common Stock, for cash, property, labor or services,
either upon direct sale or upon the exercise or rights, options, or
warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common
Stock then subject to the Option.
(e) Merger, Liquidation or Sale of Assets. If the
Company merges into, consolidates with, or sells substantially all its
assets to any other corporation(s) or entity(ies) (the "Merger
Partner"), provided that the Company is not the survivor of such
merger or that an affiliate of the Company is not the surviving or new
corporation or the purchaser of such assets, then the Company shall
(at its election) either (i) prior to such merger, consolidation or
sale of assets (collectively referred to as a "Merger") enter into a
contract with the Merger Partner providing for the Merger Partner to
assume the unexercised portion of the Option, or (ii) permit the
Employee to exercise the Option in full prior to the Merger, as set
forth below ("Accelerate the Option"). If the Company is to be
liquidated, or if in connection with a Merger the Company deems it
advisable to allow the Employee to Accelerate the Option, the Company
shall cause written notice to be mailed to the Employee at least
thirty (30) days prior to the effective date of the liquidation or
merger (the "Merger Notice"). The Employee shall be entitled to
exercise the Option as to all or any part of the Shares not previously
purchased by the Employee for a period of twenty (20) days following
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the delivery of the Merger Notice. To the extent that the Option
remains unexercised as to any of the Shares after such twenty (20) day
period, the Option shall terminate and the Company shall have no
further obligations of any type to the Employee as to any of the
Shares not purchased.
(f) Termination of Employment. If the Employee's
full-time employment with the Company or affiliate of the Company
terminates for any reason prior to the Option End Date, the Employee
(or his estate) shall be entitled to exercise the Option as to all or
any part of the Shares not previously purchased by him for a period of
ninety (90) days following the date of termination. To the extent
that the Option remains unexercised as to any of the Shares after such
ninety (90) day period, the Option shall terminate and the Company
shall have no further obligations of any type to the Employee (or his
estate) as to any of the Shares not purchased.
2. No Assignment. The Employee may not sell, assign or
otherwise dispose of the Option or his rights under this Agreement, except as
set out herein. The Employee's sale or assignment of his Shares shall be
subject to the provisions of Sections 3 through 4 below.
3. Right of First Refusal. If the Employee receives a
bona fide offer for the purchase of all or a portion of his Shares, and he
desires to sell such Shares (for purposes of this Section 3, the "Option
Shares") pursuant to such offer, then the Employee, prior to making any such
sale, shall first offer the Option Shares for sale to the Company, in
accordance with the following provisions of this Section 3.
(a) Option Price; Terms; Offering Notices. The price per
share of Common Stock at which the Employee shall be required to offer
the Option Shares (for purposes of this Section 3, the "Option Price")
and the terms of such offer, shall be the price at which and the terms
upon which any proposed third party purchaser shall have offered to
purchase the Option Shares from the Employee and which the Employee is
prepared to accept. If, however, all or a portion of the Option Price
consists of property or other non-cash consideration, the cash value
of such property or other non-cash consideration shall be reasonably
determined by the Company's Board of Directors (the "Cash Equivalent
Value"). If applicable, such Cash Equivalent Value may be paid to the
Employee by the Company in lieu of the property or non-cash
consideration that comprises all or part of the Option Price. Each
offer required to be made by the Employee pursuant to this Section 3
shall be made by a written notice (for purposes of this Section 3, the
"Offering Notice") which shall state that the offer is being made
pursuant to this Agreement and which shall set forth the number of
Option Shares, the name or names of the proposed purchaser or
purchasers of the Option Shares, the price per share offered by such
proposed purchaser of purchasers for the Option Shares, the method of
payment of the purchase price and the scheduled date of consummation
of such proposed sale. A copy of the written offer from any proposed
third-party purchaser shall be attached to each offering Notice.
(b) Offer to the Company. The Employee shall offer the
Option Shares to the Company by delivering an Offering Notice to the
Company. Within thirty
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(30) days following the Company's receipt of such Offering Notice, the
Company shall deliver to the Employee, a reply notice accepting the
offer of the Employee with respect to all (but not less than all) of
the Option Shares or rejecting such offer. If by such reply notice
the Company accepts the offer made by the Employee, the reply notice
shall constitute an agreement binding on the Employee and the Company
to sell and purchase the Option Shares at a price per share equal to
the Option Price (which may indicate that the Cash Equivalent Value
will be paid in lieu of the property or other non-cash consideration
that comprises all or part of the Option Price). If within such
thirty (30) day period, the Company shall have failed to deliver a
reply notice accepting the offer of the Employee as to all of the
Option Shares, the Company shall be deemed to have rejected such
offer.
(c) Lapse of Option. If after the foregoing offer to
sell Option Shares have been made by the Employee and have not been
accepted by the Company, then the Employee may sell not less than all
of the Option Shares at any time within, but not subsequent to, sixty
(60) days after the lapse of the options granted pursuant to this
Section 3; provided, however, that (i) no sale of the Option Shares
shall be made at any price lower than the Option Price or on terms
different from those specified in the Offering Notice or to any person
or persons other than the persons specified in the Offering Notice,
and (ii) the person or persons to whom the Option Shares are to be
transferred shall enter into an agreement in form and substance
acceptable to the Company pursuant to which such person or persons
agree to be bound by the provisions of Section 4 of this Agreement.
In addition, any such transfer pursuant to this paragraph (c) shall be
subject to any transfer restrictions imposed under any federal or
state securities laws. If after the lapse of such sixty (60) day
period the Option Shares shall not have been sold, all of the
provisions of this Agreement shall apply to any future sale or other
disposition of the Option Shares owned by the Employee.
(d) Consummation of Purchases. Each transaction of
purchase and sale of the Option Shares pursuant to this Section 3
shall be completed by delivery of the stock certificates representing
the Option Shares endorsed in blank, or accompanied by duly executed
stock powers, and by actual registration of the transfer of the Option
Shares on the books of the Company upon payment of the purchase price
by certified or cashier's check to the Employee. Any such transaction
shall be closed at such time and place as shall be agreed upon by the
parties thereto, or, if no such agreement is reached, at the principal
office of the Company on the first business day after the expiration
of thirty (30) days following the date of delivery of the last reply
notice given in connection with such transaction.
4. Option to Purchase. In the event of the death of the
Employee or the termination of his full-time employment with SEPCO Industries,
Inc. or affiliate of SEPCO for any reason, or if the Employee is divorced and
does not succeed to his community property interest, if any, in his Shares, and
at such time the Selling Shareholder (hereafter defined) has, or within the
ninety (90) day period described in Section 1(f) the Selling Shareholder
acquires, any Shares, then in any such event the Company shall have the option
(but not the obligation) to purchase such Shares from
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the Selling Shareholder in accordance with the following provisions of this
Section 4. For purposes hereof, "Selling Shareholder" means, whether one or
more persons, the Employee, the wife of the Employee, or the estate of the
Employee as represented by his executor or other personal representative; and
"Termination Date" means the date of death of the Employee, the date of the
termination of his full-time employment with the Company or affiliate of the
Company or the date the final decree of divorce is entered, as the case may be
or, if later, the date the Company is notified of the applicable event.
(a) Option Price and Terms. The price per share (for
purposes of this Section 4, the "Option Price") at which the Shares
may be purchased shall be the Price Per Share of Common Stock (as
defined below). The aggregate purchase price to be paid to the
Selling Shareholder shall be equal to the product of the Option Price
times the number of Shares being purchased and shall be payable in
cash upon the consummation of such purchase. For purposes of this
Section 4, "Price Per Share of Common Stock" means the value per share
as determined pursuant to Article VI of the Sepco Industries, Inc.
Employee Stock Ownership Plan dated October 15, 1991, as amended.
(b) Exercise of Option by the Company. At any time
during the sixty (60) day period following the Termination Date, the
Company, in order to exercise its option hereunder, shall deliver to
the Selling Shareholder a written exercise notice (the "Exercise
Notice") setting forth a statement of the Company that it intends to
exercise such option to purchase all (but not less than all) of the
Shares at the Option Price or that it intends not to exercise such
option. Delivery of such Exercise Notice in which the Company elects
to exercise its option to purchase the Shares shall constitute an
agreement binding upon the Selling Shareholder and the Company to sell
and purchase the Shares at the Option Price.
(c) Consummation of Purchase. The purchase and sale of
the Shares pursuant to this Section 4 shall be completed by delivery
of the certificates representing such Shares endorsed in blank, or
accompanied by duly executed stock powers, and by actual registration
of the transfer of such Shares on the books of the Company upon
payment of the purchase price to the Selling Shareholder. Any such
transaction shall be closed at such time and place as shall be agreed
upon by the parties thereto, or, if no such agreement is reached, at
the principal office of the Company on the 30th day following the date
the Exercise Notice is delivered, or if such day shall not be a
business day, on the first business day thereafter during normal
business hours.
5. Co-Sale Rights. In the event any person or group of
people or other entities, who are affiliates of the Company (together, the
"SEPCO Shareholders") propose to sell all or substantially all of the shares of
Common Stock held by the SEPCO Shareholders, to a person or group of persons
that is not an affiliate of any of the SEPCO Shareholders (such person or group
being referred to in this Section 5 as a "Purchaser"), the SEPCO Shareholders
shall have the option to purchase or cause the purchase of all (but not less
than all) of the Shares then held by the Employee (or his wife or estate,
hereafter together referred to as the "Selling Shareholder"), all in accordance
with the following provisions of this Section 5. If the SEPCO Shareholders
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propose to make such a sale and intend to exercise such option under this
Section 5 at a time when the Selling Shareholder has not exercised the Option
in Section 1, The SEPCO Shareholders may require that the Selling Shareholder
exercise the Option (so that the Shares may thereupon become subject to this
Section 5), and if the Selling Shareholder refuses to do so, the Option under
Section 1 shall terminate. As used in this Section 5, the term "Sale" means a
sale made or agreed to by the SEPCO Shareholders in the manner described in the
first sentence of this Section 5, and the term "Consummation Date" means the
date fixed for the consummation of a Sale.
Not less than thirty (30) days prior to the Consummation Date,
the SEPCO Shareholders shall give written notice to the Selling Shareholder
setting forth in reasonable detail the name or names of the Purchaser, the
terms and conditions of the Sale and the Consummation Date. If the SEPCO
Shareholders elect to exercise the option to purchase, or cause the purchase
of, all Shares owned by the Selling Shareholder, the notice shall so state. If
the SEPCO Shareholders exercise the option, the Selling Shareholder shall, on
the Consummation Date and conditioned upon and contemporaneously with the Sale,
sell all Shares owned by it to the SEPCO Shareholders, or to the Purchaser if
so designated in the notice of the SEPCO Shareholders, at the same price and
upon terms and conditions the same as those of the Sale. If the SEPCO
Shareholders exercise such option and elect to purchase (rather than cause the
purchase of) the Shares owned by the Selling Shareholders, then the SEPCO
Shareholders must resell to the Purchaser the Shares so purchased from the
Selling Shareholder contemporaneously with the Sale at the same price and upon
terms and conditions the same as those of the Sale. By execution of this
Agreement, the Employee hereby irrevocably designates and appoints the Board of
Directors or anyone of them, as the attorney in fact for the Selling
Shareholder to transfer his Shares on the books of the Company in connection
with any sale made or required to be made by the Selling Shareholder pursuant
to this paragraph, and the Employee hereby agrees to execute and deliver such
instruments of conveyance and transfer and take such other action as the SEPCO
Shareholders or the Purchaser may reasonably require to carry out the terms and
provisions of this paragraph.
6. Notices. All notice, requests, consents and other
communications under this Agreement shall be in writing and shall be deemed to
have been delivered on the date personally delivered or on the date mailed,
postage prepaid, by certified mail, return receipt requested, if addressed to
the respective parties as follows:
If to the Company: SEPCO Industries, Inc.
P. O. Box 1697
Houston, Texas 77251-1697
Attn: Chief Financial Officer
If to the Employee: As set forth on Exhibit "A"
Any party hereto may designate a different address by providing written notice
of such new address to the other parties hereto.
7. Attempted Breaches. Each party hereto acknowledges
that a remedy at law for any breach or attempted breach of any provision of
this Agreement shall be inadequate, agrees that each other party hereto shall
be entitled to specific
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performance and injunctive and other equitable relief in case of any such
breach or attempted breach and further agrees to waive any requirements for the
securing and posting of any bond in connection with the obtaining of any such
injunctive or other equitable relief.
8. Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such provision or invalidity only, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
9. Joinder of Spouse. The spouse of the Employee, by
her execution of this Agreement, acknowledges that she is fully aware of,
understands and agrees to the provisions of this Agreement and its binding
effect upon any interest, community or otherwise, she may at any time own in
the Option and the Shares, and by such execution she agrees that the
termination of her marriage with the Employee for any reason shall not have the
effect of removing the Option and the Shares from the coverage of this
Agreement.
10. Binding Effect. Subject to the provisions of Section
2, this Agreement shall be binding upon and inure to the benefit of the parties
hereto, the Employee's heirs and personal representatives and the successors
and assigns of the Company.
11. Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
matters covered hereby and thereby. The Prior Option Agreement is of no
further force and effect and is replaced in its entirety by this Agreement.
12. Amendment. This Agreement may be amended only by an
instrument in writing executed by the parties hereto.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF TEXAS.
15. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original and all of
which shall constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement in Houston, Texas, effective as of the date and year first above
written.
THE COMPANY:
SEPCO INDUSTRIES, INC.
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By: /s/ GARY A. ALLCORN
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Printed Name: Gary A. Allcorn
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Title: Senior VP/Finance
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THE EMPLOYEE:
/s/ DAVID LITTLE
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DAVID LITTLE
EMPLOYEE'S WIFE:
/s/ SUSAN J. LITTLE
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SUSAN J. LITTLE
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EXHIBIT "A"
TO
STOCK OPTION AGREEMENT
DATED MARCH 31, 1996
EMPLOYEE: David R. Little
DATE OF PRIOR
OPTION AGREEMENT: October 24, 1995
SHARES: 200,000
PURCHASE PRICE: $7.14
OPTION END DATE: October 24, 2005
ADDRESS: 427 Thames
Houston, TX 77024
SPOUSE: Susan J. Little