BUILDING MATERIALS CORPORATION OF AMERICA
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▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
ISP HOLDINGS INC.
c/o ISP Management Company, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
July 8, 1998
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▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇:
1. Termination of ISP Holdings Inc. Agreements
Reference is made to that certain (i) Agreement from ISP Holdings Inc.
("ISPH") to you dated January 1, 1997 (the "ISPH Option Agreement") with respect
to ISPH's grant to you of an option to purchase shares of ISPH's Series A
Cumulative Redeemable Convertible Preferred Stock and (ii) Agreement from ISPH
to you dated January 1, 1997 (the "ISPH SAR Agreement" and together with the
ISPH Option Agreement, the "ISPH Agreements") with respect to ISPH's grant to
you of the right to receive an amount in cash based upon the appreciation in
value in certain shares of common stock of ISPH. In connection with the
consummation of the merger (the "Merger") of International Specialty Products
Inc. ("ISP") with and into ISPH (which will be the surviving corporation of the
Merger and is hereinafter referred to as the "Surviving Corporation") pursuant
to that certain Agreement and Plan of Merger, dated as of March 30, 1998,
between ISP and ISPH, the ISPH Agreements will be terminated as of the effective
date of the Merger (the "Effective Date") and, in consideration therefor, you
will receive the cash payment referred to below in Section 2 on the terms and
conditions specified herein. In consideration for these cash payments, ISPH and
you agree that the ISPH Agreements will be terminated as of the Effective Date
in all respects and neither you nor ISPH shall have any rights or obligations
thereunder.
2. Cash Payments (a) Subject to the consummation of the Merger,
as of the Effective Date, you will be entitled
to receive from ISPH cash payments in an aggregate amount equal to $5,073,212
(the "Cash Payment"), as and when provided on Schedule A hereto; provided,
however, that you shall only be entitled to receive such scheduled payments if
you are employed by Building Materials Corporation of America ("BMCA") or any of
its affiliates at the date of each such scheduled payment. Notwithstanding the
foregoing and subject to Section 2(b) below, if your employment is terminated by
BMCA or any of its affiliates (i) without Cause (as defined below) and you are
not offered employment with an affiliate of BMCA on substantially the same terms
as you were employed prior to such termination or (ii) as a result of your
Disability (as defined below) or death, you (or after your death, your legal
representative) will be entitled to receive from ISPH, in lieu of any other cash
payments, an amount of cash equal to (x) the cumulative amount of cash you would
have received as of the date of such termination had you received cash in
accordance with the vesting schedule on Schedule B minus (y) the cumulative
amount of cash that you had received as of the date of such termination, in
accordance with Schedule A.
(b) If a Change of Control (as defined below) of BMCA shall occur and
at any time following such Change of Control, BMCA (or any successor thereto)
terminates without Cause your employment, your employment is terminated as a
result of your death or Disability (as defined in ISP's 1991 Incentive Plan for
Key Employees and Directors, as amended (the "Plan")) or you terminate your
employment for Good Reason (as defined in the Plan), the Cash Payment (less any
portion thereof previously paid to you pursuant to this Agreement prior to the
acceleration provided in this paragraph (b)) shall become immediately due and
payable to you by BMCA (or its successor). You hereby acknowledge your receipt
of the Plan.
(c) The following terms shall have the meanings assigned below:
(i) "Cause" shall mean (a) the commission of a felony, the
commission of a misdemeanor involving moral turpitude or the commission
of any other act involving dishonesty, disloyalty or fraud with respect
to your employer or any affiliate thereof, (b) substantial and repeated
failure by you to perform your duties, (c) gross negligence or willful
misconduct with respect to your employer or any affiliate thereof or
(d) a material breach of any of the terms or provisions of
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any employment agreement to which you may be a party; provided,
however, that if at the time of termination of your employment you are
a party to an employment agreement with an entity controlled by or
under common control with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ that contains a definition
of "Cause" that is inconsistent with the provisions hereof, the
definition contained in that employment agreement shall govern for
purposes of this Agreement;
(ii) A "Change of Control" shall be deemed to have occurred if
the ▇▇▇▇▇▇ Group ceases to have, in the aggregate, directly or
indirectly, at least 20% of the voting power of BMCA. The "▇▇▇▇▇▇
Group" shall mean (i) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, his heirs, administrators,
executors and entities of which a majority of the voting stock is owned
by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, his heirs, administrators, executors and entities
of which a majority of the voting stock is owned by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
his heirs, administrators or executors and (ii) any entity controlled
directly or indirectly, by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or his heirs,
administrators or executors.
3. Grant of BMCA Common Stock
(a) Subject to the terms and conditions of this Agreement,
BMCA will issue to you on the Effective Date of the Merger (i) 15,000 shares of
Class A Common Stock, par value $.01 per share ("Class A Common Stock"), of BMCA
and (ii) 15,000 shares of Class B Common Stock, par value $.01 per share ("Class
B Common Stock" and together with the Class A Common Stock, the "Common Stock"),
of BMCA. Subject to the terms of this Agreement, all of the Common Stock granted
to you pursuant to this Section 3 shall be immediately vested. The Common Stock
granted to you pursuant to this Agreement will not have the right to participate
in cash dividends paid on such Common Stock and you hereby agree to waive any
such right to receive such dividends.
(b) The Book Value (as defined below) of each share of Common Stock
shall equal the book value as of January 1, 1998 determined in accordance with
generally accepted accounting principles ("GAAP"). All changes in book value of
Common Stock after January 1, 1998 shall be calculated as described in the next
paragraph:
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"Book Value" shall mean (i) Book Value of BMCA determined in accordance
with GAAP as of January 1, 1998, (which you and BMCA agree is $82,999,000 at
such date) plus the sum of (i) the cumulative consolidated net income or loss of
BMCA for the period January 1, 1998 through the date of determination and (ii)
the cumulative operating income (or loss), net of an amount equal to imputed
income taxes on such operating income calculated at the same tax rate as is
accrued as an expense by BMCA in its income statement for the applicable period,
of GAF Fiberglass Corporation ("GAF Fiberglass") for the period January 1, 1998
through the date of determination, and excluding, to the extent occurring after
December 31, 1997, (1) nonrecurring non-operating losses and nonrecurring
non-operating gains, including any further charge relating to asbestos-related
liabilities, (2) net gains or losses in respect of dispositions of assets by
BMCA or any subsidiary other than in the ordinary course of business, (3) any
dividends or distributions paid to the holders of BMCA's capital stock, (4) any
capital contributions made to BMCA by its stockholders, (5) any amounts received
by BMCA for shares of its capital stock (including from the exercise of options
or warrants to purchase capital stock or from the conversion into capital stock
of convertible debt or convertible preferred stock) and (6) any charges relating
to amortization of goodwill and other intangibles arising from the management
buy-out of GAF Corporation in March 1989. The Book Value per share of Common
Stock shall equal the Book Value divided by 1,030,010. There shall be deducted
from Book Value an amount equal to a 15% per annum charge on the aggregate
capital contributions made to BMCA by its stockholders during the period
commencing January 1, 1998 and ending with the date of determination (the
"Period"), amounts received by BMCA during the Period for shares of its capital
stock and, to the extent not actually charged to BMCA, on the outstanding
principal amount of loans and other advances made to BMCA by affiliates
(excluding subsidiaries of BMCA) during the Period. There shall be added to Book
Value a 15% per annum credit on the aggregate dividends or distributions made by
BMCA to its stockholders during the Period and, to the extent not actually
charged to the borrower, on the outstanding principal amount of loans and other
advances made by BMCA to affiliates (excluding subsidiaries of BMCA) during the
Period. Any adjustments to Book Value (including the 15% charge and credit
referred to in the preceding two sentences) shall include the tax effects, if
any, associated therewith. If the shares of Common Stock are converted into or
exchanged for other securities or property pursuant to a
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recapitalization, stock split, combination, reorganization, merger, exchange or
similar transaction, or if GAF Fiberglass becomes a direct or indirect
subsidiary of BMCA, or if BMCA directly or indirectly acquires the Nashville,
Tennessee manufacturing facility of GAF Fiberglass, or if a sale of all or
substantially all of the Common Stock of BMCA shall occur or be pending, Book
Value, and the terms hereof shall be modified by the Board of Directors of BMCA
in such manner as is reasonable under the circumstances. Moreover, in the event
affiliates of BMCA, other than a subsidiary of BMCA, purchase a building
products business, the formula for determining Book Value of BMCA shall be
adjusted, as the Board of Directors determines reasonably appropriate, to ensure
that you are treated the same as if such business were acquired by BMCA. All
determinations by the Board of Directors hereunder shall be made in good faith
and shall be binding and conclusive.
4. Transfer of Securities. (a) You agree that you will not, prior
to July 15, 2005 directly or indirectly, sell, pledge, give, bequeath, transfer,
assign or in any other way whatsoever encumber or dispose of (hereinafter
collectively called "transfer") any Common Stock or any interest in any Common
Stock, or any stock certificate representing or any voting trust certificate
issued with respect to, any Common Stock, except as provided in herein or as may
be specifically authorized by the Board of Directors of BMCA; provided, however,
that, subject to Section 11 herein, the restrictions imposed by this Section 4
shall cease and terminate on any date (the "Public Offering Date") on which BMCA
or its parent first effects a registration of any of its equity securities
(other than pursuant to an employee benefit plan) under the Securities Act of
1933, as amended (the "Act"). The period from the date hereof and ending on the
earlier of July 15, 2005 or the Public Offering Date is sometimes hereinafter
referred to as the "Restricted Period."
(b) If, after July 15, 2005, but prior to the Public Offering
Date you desire to sell any of your Common Stock, you must first offer to sell
to BMCA such Common Stock at Book Value thereof determined as of the end of the
calendar quarter immediately preceding the date on which the offer is made. You
must notify BMCA in writing of the amount and class of Common Stock you wish to
sell (the "Sale Notice"). Upon receipt of the Sale Notice, BMCA shall have the
option, exercisable for 30 days after BMCA receives the Sale Notice (the "Option
Period"), to purchase all (but not
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less than all) of the Common Stock specified in the Sale Notice. The option may
be exercised by giving notice to you within the Option Period. If BMCA elects to
purchase the Common Stock you have offered prior to the end of the Option
Period, it shall be obligated to purchase, and you will be obligated to sell,
such Common Stock at the price and on the terms described above, and the closing
shall be held within 60 days after the expiration of the Option Period (or if
such day is not a business day, on the next succeeding business day) at the
principal executive offices of BMCA. If BMCA does not elect to purchase the
Common Stock you have offered, and if otherwise permitted under this Agreement,
you may, at any time thereafter within a period of 120 days after the expiration
of the Option Period, transfer such Common Stock to any third party; provided,
however, that in the event you have not so transferred the Common Stock within
the 120 day period, then any transfer of such Common Stock shall thereafter
again be subject to all of the restrictions contained in this Section 4.
(c) Notwithstanding anything to the contrary contained herein,
you agree that you will not transfer any Common Stock except in compliance with
the Act.
(d) BMCA agrees that it will not transfer on its books any
certificate for Common Stock in violation of the provisions of this Agreement.
5. Put and Call Rights. (a) In the event you leave the employ of
BMCA or its subsidiaries for any reason, whether as a result of your termination
for Cause, death, Disability or otherwise (any such date of leaving, the
"Termination Date"), you may, at your option, by delivering written notice to
BMCA within 30 days after the Termination Date, elect to sell, and upon the
giving of the notice BMCA shall be obligated to purchase, all, but not less than
all, of the Common Stock owned by you at the time of the Termination Date at the
Book Value determined as of the last day of the calendar quarter in which the
Termination Date occurs.
(b) BMCA may, at its option, exercisable by a written notice
delivered to you within 30 days after the Termination Date, elect to purchase,
and upon the giving of the notice BMCA shall be obligated to purchase, and you
shall be obligated to sell, all, but not less than all, of the Common Stock
owned by you at the time of the Termination
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Date at the Book Value determined as of the last day of the calendar quarter in
which the Termination Date occurs.
(c) For each calendar year commencing in 1999, you may, at
your option, exercisable by delivering to BMCA a written notice prior to March
31 of such year, elect to sell, and upon the giving of the notice BMCA shall be
obligated to purchase, any amount of shares of Common Stock owned by you at the
time of delivering such notice, at the Book Value thereof determined as of the
last day of the immediately preceding calendar year.
(d) In the event your right to receive the Cash Payment
becomes immediately due and payable on the terms set forth in Section 2(b)
above, you may, at your option, by delivering written notice to BMCA within 30
days after the date such payment becomes due and payable, elect to sell, and
upon the giving of the notice BMCA shall be obligated to purchase, all, but not
less than all, of the Common Stock owned by you at the time the Cash Payment
becomes due and payable, at the Book Value determined as of the last day of the
calendar quarter in which the Termination Date occurs.
(e) The closing for all purchases of Common Stock pursuant to
Sections 5(a) through (d) above shall be held at the principal executive offices
of BMCA within one year after the event giving rise to BMCA's obligation or
election to purchase the Common Stock.
(f) In the event a transaction (the "Transaction") is
announced publicly prior to January 1, 2000 that, if consummated, would result
in a Change of Control (as defined in the Plan) of ISPH, you shall have the
right (the "Put Right") for 30 days following such Change of Control,
exercisable by delivering written notice thereof to BMCA or its successor, to
elect to sell all, but not less than all, of the Common Stock owned by you on
such date to BMCA (or its successor), at an amount equal to 546,501 times the
difference between the Market Value (as defined below) of ISPH at the time of
such Change of Control and $16.125 (the "Change of Control Cash Amount"). For
purposes of this clause (f), "Market Value" shall mean, (i) in the event only
cash is paid to the stockholders of ISPH in the Transaction, such per share cash
consideration, (ii) in the event cash and/or publicly traded securities are paid
to the stockholders of ISPH in such Transaction, the sum of the average closing
price of such securities during the first 15 trading days immediately following
the date of the
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Transaction and the per share cash consideration, if any, paid to such
stockholders, (iii) in the event any other property is paid to such stockholders
in such Transaction, the fair market value thereof as determined by the Board of
Directors of BMCA (or its successor) in good faith and (iv) in the event no cash
or other property is paid to such stockholders in such Transaction, the average
closing price of the ISPH common stock during the 15 trading days immediately
following the date of the Transaction.
(g) In the event that you elect to exercise the Put Right, you
will be entitled to receive the Change of Control Cash Amount as and when
provided on Schedule C; provided, however, that you shall only be entitled to
receive such Change of Control Cash amount if you are employed by BMCA or any of
its affiliates at the date of each such scheduled payment. Notwithstanding the
foregoing, if following a Change of Control of ISPH you terminate your
employment with BMCA for Good Reason (as defined in the Plan), or your
employment is terminated by BMCA without Cause, or is terminated as a result of
your death or Disability, the Change of Control Cash Amount (less any portion
thereof previously paid to you pursuant to this Agreement prior to the
acceleration provided in this paragraph (g)) shall become immediately due and
payable to you by ISPH (or its successor).
(h) Notwithstanding the foregoing provisions of this Section
5, the put and call rights described in this Section 5 shall terminate at such
date as BMCA or its parent sells common stock in a public offering pursuant to a
registration statement under the Act (other than a registration statement filed
with respect to employee benefit plans).
6. Closings and Terms of Payment.
(a) The closing (each, a "Closing") for all purchases of
Common Stock hereunder shall be held at the principal executive offices of BMCA.
The purchase price to be paid by BMCA for shares of Common Stock purchased
hereunder shall be paid in full by BMCA in cash or by certified or official bank
check at the Closing.
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(b) You shall cause the Common Stock sold pursuant to this
Agreement to be delivered to BMCA at the Closing free and clear of all liens,
charges and encumbrances of any kind. In addition, you shall take all such
actions as BMCA shall request as necessary to vest in BMCA at the Closing good
and marketable title to the Common Stock, free and clear of all liens, charges
and encumbrances.
(c) In the event a purchase of Common Stock pursuant to this
Agreement shall be prohibited or would cause a default under the terms of any
institutional credit agreement, indenture or other like instrument with respect
to the borrowing of money, in each case as the same may be amended from time to
time, the rights and obligations of you and BMCA pursuant hereto shall be
suspended until the prohibition lapses or is waived and no default would be
caused. Upon the lapse or waiver of the restrictions, the price to be paid by
BMCA for your Common Stock shall be determined as of the last day of the
calendar quarter in which such restrictions are waived or lapsed.
7. Registration Rights. (a) You shall not be entitled to
participate in any manner with respect to the first registration of BMCA's
common stock under the Act if all of the securities to be sold in such
registration are offered solely by BMCA or its parent. If a stockholder of BMCA,
other than its parent, proposes to register under the Act any of such holder's
common stock or if BMCA at any time after its initial registration proposes to
register any shares of its common stock under the Act, in each case other than
in connection with a registration filed with respect to employee benefit plans
(each a "Registration"), you may participate in the Registration as provided in
this Section 7. If the Registration relates to any common stock of BMCA, whether
or not for sale on its own account, on a form and in a manner which would permit
the sale of your Class B Common Stock to the public under the Act, BMCA shall
include any of your Class B Common Stock in the Registration subject to the
provisions described in this Section 7.
(b) BMCA shall give written notice of any proposed
registration of its common stock to you and all subsequent holders of such Class
B Common Stock who acquired them directly or indirectly from you in a
transaction permitted by the terms of this Agreement at least thirty (30) days
prior to the filing of the registration statement in connection with the
Registration. Each such holder of
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the shares of Class B Common Stock (a "Holder") shall have the right to request
that all or any part of such Holder's shares of Class B Common Stock be included
in the registration by giving written notice to BMCA within fifteen (15) days
after the giving of the notice by BMCA (any Holder giving BMCA a notice
requesting that shares of Class B Common Stock owned by such Holder be included
in a proposed registration shall be hereinafter referred to as a "Registering
Holder").
(c) Limitations on Underwritten Offerings. If a Registration
is in connection with an underwritten offering on behalf of BMCA, and the
managing underwriters of such offering determine that the inclusion of some or
all of the shares proposed to be included in the registration statement by
Registering Holders would interfere with the underwritten public offering, the
number of shares of Class B Common Stock (in the case of an underwritten
offering of BMCA's common stock) included shall be reduced in the proportion
requested by the underwriters and BMCA shall include in the registration, first,
the shares that BMCA or its parent proposes to sell and second, any other shares
requested to be included in the registration, including the shares of the
Registering Holders that, in the opinion of the managing underwriters, would not
interfere with the offering. In the event that all shares of participating
Registering Holders will not be included in the offering, the number of shares
of each Registering Holder to be included in the offering shall be pro rata
based on the number of shares owned by such Holder. Shares of Class B Common
Stock proposed to be registered and sold for the account of any Registering
Holder under this Section 7 shall be sold to prospective underwriters selected
or approved by BMCA and on the terms and subject to the conditions of one or
more underwriting agreements negotiated between BMCA and the prospective
underwriters. BMCA may withdraw any registration statement described in this
Section 7 at any time before it becomes effective, or postpone any offering of
securities, without obligation or liability to any Registering Holder.
(d) Registration Procedures. In connection with any
registration of shares of Class B Common Stock under the Act pursuant to this
Agreement, BMCA will furnish each Registering Holder with a copy of the
registration statement and all amendments to it and will supply each Registering
Holder with copies of any prospectus included in the registration statement
(including a preliminary prospectus and all amendments and supplements to it),
in quantities
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that are reasonably necessary for the purposes of the proposed sale or
distribution covered by the registration. BMCA shall not, however, be required
to maintain the registration statement and to supply copies of a prospectus for
a period beyond 90 days after the effective date of the registration statement
and, at the end of that period, BMCA may deregister any shares of Class B Common
Stock covered by the registration statement and not then sold or distributed. In
connection with any registration of shares of Class B Common Stock, BMCA will,
at the request of the managing underwriters with respect to it, use its best
efforts to qualify the registered shares for sale under the securities or "blue
sky" laws of those states in which it is reasonably required to permit the
distribution of the registered shares, provided that BMCA shall not be required
to qualify to do business in any state where it is not then qualified or to take
any action that would subject it to tax or to the general service of process in
any state where it is not then subject.
(e) Limitations on Public Sale. Notwithstanding any other
provision of this Section 7, you agree that you will not (and it shall be a
condition to the rights of each Registering Holder under this Section 7 that the
Registering Holder does not) offer for public sale any securities of BMCA or its
parent during the 14 days prior to, and the 90 days after, the effective date of
any registration statement in connection with an underwritten public offering,
unless such securities are covered by that registration statement or a separate
effective registration statement.
(f) Fees and Expenses. Except as otherwise required by state
securities or "blue sky" laws or the rules and regulations promulgated
thereunder, all expenses, disbursements and fees incurred by BMCA in connection
with carrying out its obligations under this Section 7 shall be borne by BMCA;
provided, however, that each Registering Holder shall pay (i) all costs and
expenses of counsel for such Holder, (ii) all underwriting discounts,
commissions and expenses and all transfer taxes with respect to the shares sold
by such Holder, and (iii) all other expenses incurred by him which are
incidental to the sale and delivery of the shares to be sold by such Holder.
(g) Conditions. It shall be a condition to each Registering
Holder's rights to register Class B Common Stock that:
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(i) the Registering Holder cooperate with BMCA by
supplying information and executing appropriate documents
relating to him or his securities in connection with the
registration;
(ii) the Registering Holder take all actions relating
to the conduct of a proposed offering of Class B Common Stock
which BMCA or the underwriters may reasonably request as being
necessary to insure compliance with federal or state
securities laws or the rules or other requirements of The
National Association of Securities Dealers, Inc., or otherwise
to effectuate the offering; and
(iii) the Registering Holder shall execute and
deliver an agreement to indemnify and hold harmless BMCA, each
of its directors, each of its officers who has signed the
registration statement, any underwriter (as defined in the
Act), and each person, if any, who controls BMCA or such
underwriter, within the meaning of the Act, against those
losses, claims, damages or liabilities (including
reimbursement for legal and other expenses) to which BMCA or
any such director, officer, underwriter or controlling person
may become subject under the Act or otherwise, the
indemnification agreement to be in the form that is customary
for registrations of the type then proposed and, in any event,
equivalent in scope to indemnities given by BMCA in connection
with the registration; provided, however, that the liability
of any Registering Holder pursuant to any indemnification
agreement shall only be with respect to information furnished
by such Registering Holder in connection with the registration
and shall be limited to the offering price of the securities
being offered by the Registering Holder in the registration.
8. Tag-Along Rights. (a) At least ten days prior to the
consummation of any sale or transfer by any member of the ▇▇▇▇▇▇ Group of shares
of Common Stock to any unrelated third party during the Restricted Period, those
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members of the ▇▇▇▇▇▇ Group (the "Selling Member") shall deliver to you a
written notice (a "Tag-Along Notice"), which shall fully disclose the identity
of the prospective transferee and the terms and conditions of the proposed sale.
No member of the ▇▇▇▇▇▇ Group will consummate any such sale until ten days after
the Tag-Along Notice has been mailed to you. You may elect to participate in the
contemplated sale with respect to your Class B Common Stock by delivering
written notice to the Selling Member within seven days of receipt of such
Tag-Along Notice. If you elect to sell in the contemplated sale, you will be
entitled to sell in the contemplated sale, at the same price and on the same
terms applicable to the Selling Member, in amounts bearing the same proportion
to your holdings of Class B Common Stock as the amounts to be so transferred by
the Selling Member bear to the ▇▇▇▇▇▇ Group's aggregate holdings of Common
Stock. This Section shall apply to any sales or transfers of Common Stock,
whether or not made pursuant to an effective registration statement in
accordance with the Act.
(b) The ▇▇▇▇▇▇ Group will not sell any shares of Common Stock
unless the purchaser of such stock agrees to purchase all of your Class B Common
Stock which you have elected, and are permitted, to sell pursuant to clause (a)
above.
9. Preemptive Rights, etc. You shall have the right to
participate in any equity offering made to affiliates of BMCA, based on the pro
rata percentage of Common Stock outstanding represented by your Class B Common
Stock, such participation to be on the same terms and condition as such
affiliates purchase such equity, except that in such offering you shall only be
entitled to purchase Class B Common Stock.
10. Initial Public Offering
If BMCA or its parent sells common stock in a public offering
(the "IPO") pursuant to a registration statement under the Act (other than a
registration statement filed with respect to employee benefit plans), then the
following shall occur:
(a) With respect to the Class A Common Stock held by you at the
time of the IPO, you shall sell to BMCA or such other entity
determined by BMCA, and BMCA or such other entity shall
purchase from you, all
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of these shares for an amount in cash equal to the Book Value
per share (without taking into consideration any gain from the
IPO) of Class A Common Stock as of the last day of the fiscal
quarter immediately preceding the date of the IPO;
(b) With respect to the Class B Common Stock held by
you at the time of the IPO, the terms of the Class
B Common Stock shall be amended, if necessary, to
have the same rights as the holders of the shares
of common stock being sold in the IPO, with the
total number of shares owned by you being adjusted
for any recapitalization, reorganization or
similar transaction occurring in connection with
the IPO;
(c) With respect to the Class B Common Stock held by
you at the time of the IPO, the terms of the Class
B Common Stock shall be further amended, if
necessary, if in connection with an IPO, a
recapitalization reorganization or similar
transaction of BMCA (or its parent's stockholders,
if the parent's shares are sold in the IPO) occurs
such that dividends are paid to BMCA (or its
parent, as per the case may be) stockholders prior
to, and in connection with, the IPO. The
adjustments referred to in the foregoing sentence
shall be those which are necessary, in the
reasonable judgment of the Board of Directors of
BMCA, to ensure that the value of the Class B
Common Stock held by you is not adversely affected
in any material way as a result of such
transaction. Under no circumstances shall BMCA
have any liability to you resulting from the
pricing of the common stock in the IPO or its
performance thereafter;
(d) For a period of 18 months following the consummation of IPO,
you shall not be permitted to sell 50% of the Common Stock
that you own as of the date of such consummation (the
"Restricted Stock"). The Restricted Stock shall not be subject
to forfeiture under any circumstance.
In addition, pursuant to the share incentive plan adopted in
connection with the IPO, you shall receive a grant of an
option to purchase shares of common stock (in the discretion
of the Board of
14
Directors of such entity) in an amount designed, in the
reasonable judgment of the Board of Directors of such entity,
to provide you with a potential appreciation in value equal to
that anticipated to be realized by the Class A Common Stock
held by you prior to the IPO. Such option shall have an
exercise price equal to the price of Common Stock sold to the
public in the IPO and shall vest in accordance with the terms
of such incentive plan.
11. Legend on Certificates. Each stock certificate issued to
represent any shares of the Common Stock (the "Common Shares") shall bear the
following (or a substantially equivalent) legend on its face or reverse side:
"These securities have not been registered under the
Securities Act of 1933, as amended, or under the applicable securities
laws of any other jurisdiction. These securities may not be sold unless
registered under the Securities Act of 1933, as amended, and any other
applicable securities laws, unless an exemption from such registration
is available. In addition, the transfer of these securities is subject
to restrictions set forth in an Agreement, dated as of _______ __,
1998, and any amendments thereto, a copy of which is available for
inspection at the office of the Company."
Any stock certificate issued at any time in exchange or substitution for any
certificate bearing such legend shall also bear the same legend, unless and to
the extent, in the opinion of counsel acceptable to the Company (which counsel
may be an employee of the Company or its affiliates), the Common Shares
represented thereby are no longer subject to the restrictions referred to in
such legend. For purposes of this Agreement, the term "Common Shares" shall mean
any securities or property into which the Common Shares may be converted or
exchanged pursuant to a recapitalization, stock split, combination,
reorganization, merger, exchange or similar transaction occurring after the date
hereof.
12. Miscellaneous.
(a) This Agreement constitutes the entire agreement of the
parties to this Agreement with respect to the subject matter hereof and may not
be modified or amended except by a written agreement signed by BMCA (following
the
15
specific approval of such modification or amendment by
BMCA's Board of Directors) and you.
(b) It is acknowledged that the BMCA will be irreparably
damaged in the event that this Agreement is not specifically enforced. In the
event of a breach or threatened breach of the terms, covenants and/or conditions
of this Agreement by you or any other Holder, BMCA shall, in addition to all
other remedies, be entitled (without any bond or other security being required)
to a temporary and/or permanent injunction, without showing any actual damage or
that monetary damages would not provide an adequate remedy, and/or a decree for
specific performance, in accordance with the provisions of this Agreement.
(c) Each party to this Agreement shall cooperate and shall
take such further action and shall execute and deliver such further documents as
may be reasonably requested by any other party in order to carry out the
provisions and purposes of this Agreement.
(d) No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature.
(e) All notices or other communications under this Agreement
shall be given in writing and shall be deemed duly given and received on the
third full business day following the date of its mailing by registered or
certified mail, return receipt requested, or when delivered personally, as
follows:
if to BMCA:
Building Materials Corporation
of America
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
or at such other place as BMCA shall have
designated by notice as herein provided to
you;
if to you, at your address as it appears on
the first page hereof, or at such other address as you shall
have designated by notice as herein provided to BMCA; and
16
if to any other Holder, the
Holder's last address appearing in stock
transfer records.
(f) No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature.
(g) Except as otherwise expressly provided in this Agreement,
this Agreement, as amended, shall be binding upon and inure to the benefit of
BMCA, its successors and assigns, and you and your heirs, personal
representatives and assigns; provided, however, that you shall not have the
right to assign any of your rights under this Agreement except as expressly
provided herein; and provided, further, that nothing contained in this Agreement
shall be construed as granting you the right to transfer any of your Common
Stock except in accordance with this Agreement.
(h) If any provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
in this Agreement.
(i) All determinations by the Board of Directors of BMCA or
ISPH (or their successors) hereunder shall be binding and conclusive.
(j) The section headings contained herein are for convenience
only and are not intended to define or limit the contents of any section.
(k) Nothing in this Agreement shall confer on you any right to
continue in the employ of the BMCA or any subsidiary or affiliate of BMCA or any
successor to any of the, affect the right of BMCA or any such subsidiary,
affiliate or successor to terminate your employment at any time, or be deemed a
waiver or modification of any provision contained in any agreement between you
and BMCA or any such subsidiary, affiliate or successor.
17
(l) This Agreement may be executed in counterparts, all of
which taken together shall be deemed one original.
(m) This Agreement shall be deemed to be a contract under the
laws of the State of New York and for all purposes shall be construed and
enforced in accordance with the internal laws of that state without regard to
the principles of conflicts of law.
18
(n) NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, THIS AGREEMENT WILL BE OF NO FORCE AND EFFECT IF
THE MERGER IS NOT CONSUMMATED.
If you are in agreement with the foregoing, please sign and return the
extra copy of this Agreement, whereupon this Agreement shall become a binding
agreement between you and the Company.
Very truly yours,
BUILDING MATERIALS CORPORATION
OF AMERICA
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice
President, General
Counsel and Secretary
ISP HOLDINGS INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice
President, General
Counsel and Secretary
AGREED AND ACCEPTED:
/s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------
▇▇▇▇▇ ▇▇▇▇▇
19
SCHEDULE A
CASH VESTING SCHEDULE
CASH
PAYMENTS
PAYMENT AS CUMULATIVE CUMULATIVE
DATES ADJUSTED PAYMENTS VESTING
------- -------- ---------- ----------
SAR Payment 16-July-98 $1,428,158 $1,428,158 28.2%
SAR Payment 10-Apr-99* $598,292 $2,026,450 39.9%
Pref Optn Pmt 11-Jun-99 $0 $2,026,450 39.9%
SAR Payment 12-Feb-2000 $0 $2,026,450 39.9%
Pref Optn Pmt 11-Jun-2000 $0 $2,026,450 39.9%
Pref Optn Pmt 11-Jun-2001 $761,691 $2,788,141 55.0%
Pref Optn Pmt 11-Jun-2002 $761,691 $3,549,832 70.0%
Pref Optn Pmt 11-Jun-2003 $761,691 $4,311,523 85.0%
Pref Optn Pmt 11-Dec-2003 $761,689 $5,073,212 100.0%
TOTAL $5,073,212
* Original date per SAR agreement was Feb 12, 1999
SCHEDULE B
ORIGINAL CASH VESTING SCHEDULE
ORIGINAL
CASH ORIGINAL
PAYMENT PAYMENT CUMULATIVE CUMULATIVE
DATES SCHEDULE PAYMENTS VESTING
------- --------- ---------- ----------
SAR Payment 16-July-98 $1,828,029 $1,823,029 35.9%
SAR Payment 12-Feb-99 $598,292 $2,421,321 47.7%
Pref Optn Pmt 11-Jun-99 $643,861 $3,065,182 60.4%
SAR Payment 12-Feb-2000 $583,503 $3,648,685 71.9%
Pref Optn Pmt 11-Jun-2000 $346,877 $3,995,562 78.8%
Pref Optn Pmt 11-Jun-2001 $311,746 $4,307,308 84.9%
Pref Optn Pmt 11-Jun-2002 $279,584 $4,586,892 90.4%
Pref Optn Pmt 11-Jun-2003 $249,896 $4,836,788 95.3%
Pref Optn Pmt 11-Dec-2003 $236,424 $5,073,212 100.0%
TOTAL $5,073,212
SCHEDULE C
CHANGE OR CONTROL CASH VESTING SCHEDULE
VESTING ON CUMULATIVE
DATES EACH DATE VESTING
16-July-98 35.9% 35.9%
12-Feb-99 11.8% 47.7%
11-Jun-99 12.7% 60.4%
12-Feb-2000 11.5% 71.9%
11-Jun-2000 6.9% 78.8%
11-Jun-2001 6.1% 84.9%
11-Jun-2002 5.5% 90.4%
11-Jun-2003 4.9% 95.3%
11-Dec-2003 4.7% 100%
100.0%