Exhibit 10-iii
MEMC ELECTRONIC MATERIALS, INC.
STOCK OPTION AGREEMENT
September 1, 1996
This STOCK OPTION AGREEMENT (the "Agreement") dated as of
September 1, 1996, is made between MEMC Electronic Materials, Inc., a
corporation organized under the laws of Delaware (the "Company"), and
the other party signatory hereto (the "Participant").
WHEREAS, the Participant is currently an officer or employee of the
Company or one of its Subsidiaries and, pursuant to the Company's
1995 Equity Incentive Plan (the "Plan") and upon the terms and subject to
the conditions hereinafter set forth, the Company desires to provide the
Participant with an incentive to remain in its employ or in the employ of
one of its Subsidiaries and to increase his interest in the success of the
Company by granting to the Participant nonqualified stock options (the
"Stock Options") to purchase shares of Common Stock, par value $.01 per
share, of the Company (the "Common Stock").
NOW, THEREFORE, in consideration of the covenants and agreements
contained in this Agreement, the parties hereto agree as follows:
1. Definitions; Incorporation of Plan Terms. Capitalized terms used
in this Agreement without definition shall have the meanings assigned to
them in the Plan. This Agreement, the Stock Options and the Common Stock
issued pursuant to the exercise of Stock Options shall be subject to the
Plan, the terms of which are hereby incorporated in this Agreement by
reference, and in the event of any conflict or inconsistency between the
Plan and this Agreement, the Plan shall govern. The Stock Options shall be
granted effective as of September 1, 1996 (the "Date of Grant").
2. Certain Restrictions. None of the Stock Options may be sold,
transferred, assigned, pledged, or otherwise encumbered or disposed of,
except by will or the laws of descent and distribution. During the
Participant's lifetime, a Stock Option shall be exercisable only by the
Participant or by the Participant's guardian or legal representative. Each
permitted transferee of a Stock Option shall, as a condition of the
transfer thereof, execute an agreement pursuant to which it shall become a
party to this Agreement.
3. Grant of Stock Options. Subject to the terms and conditions
contained in this Agreement and in the Plan, the Company hereby grants to
the Participant, effective as of the Date of Grant, the number of Stock
Options specified at the foot of the signature page of this Agreement.
Each such Stock Option shall entitle the Participant to purchase, upon
payment of the Exercise Price (as defined below), one share of Common
Stock. The "Exercise Price" shall be the amount specified at the foot of
the signature page of this Agreement, which was the Fair Market Value, as
defined in the Plan, of a share of Common Stock on September 1, 1996.
The Stock Options granted pursuant to this Agreement shall be
non-qualified stock options, which are not qualified under Section 422 of the
Code.
4. Terms and Conditions of Options. The Stock Options evidenced by
this Agreement are subject to the following terms and conditions.
(a) Vesting. The Stock Options shall vest at the rate of 25%
annually on the first four anniversaries of the Date of Grant, such
that 100% vesting shall occur on the fourth anniversary of the Date of
Grant. In the event of a Change in Control and except as the
Committee (as constituted immediately prior to such Change in Control)
may otherwise determine in its sole discretion, any Stock Options then
outstanding (other than any Stock Option granted within six months of
such Change in Control) shall become fully exercisable as of the date
of the Change in Control.
(b) Option Period. The Stock Options shall not be exercisable
following the tenth anniversary of the Date of Grant, and shall be
subject to earlier termination as provided in this Agreement and in
the Plan.
Upon termination of the Participant's employment with the Company
and its Subsidiaries for reasons other than death, Disability or
Retirement the Participant (or the Participant's estate) may exercise
any Stock Option to the extent exercisable on the date of termination
within the sixty day period after such a termination of employment
(but never later than the tenth anniversary of the Date of Grant).
Any Stock Options which have not vested at the time of such a
termination of employment shall terminate and be cancelled, except as
the Committee may otherwise determine in its sole discretion. Any
vested Stock Options that are not exercised within the sixty day
period after such a termination of employment shall terminate and be
cancelled.
Upon termination of the Participant's employment with the Company
and its Subsidiaries on account of death, Disability or Retirement,
all Stock Options shall vest and the Participant (or the Participant's
Beneficiary) may exercise any or all Stock Options within the three
year period after such a termination of employment (but never later
than the tenth anniversary of the Date of Grant). From time to time,
on a form acceptable to the Committee or its delegate, the Participant
may designate any person or persons (concurrently, contingently or
successively) to whom the Stock Option shall be transferred in the
event that the Participant shall die before he or she exercises the
Stock Option. A beneficiary designation form shall be effective only
when the form is signed by the Participant and filed in writing with
the Company while the Participant is alive, and shall cancel all
beneficiary designation forms that were previously signed and filed.
If no Beneficiary is so designated, the Beneficiary of a Participant
shall be the estate of the Participant or the distributees thereof.
For purposes of this paragraph, "Retirement" shall mean the
termination of the Participant's employment with the Company after the
Participant attains sixty-five years of age, or after the Participant
attains fifty-five years of age and the sum of his age and years of
Vesting Service as defined in the MEMC Electronic Materials, Inc.
Pension Plan for Salaried Employees is at least eighty (80).
Notwithstanding anything to the contrary in this Agreement, in
the event of the termination of the Participant's employment with the
Company and its Subsidiaries for Cause (as defined below), all Stock
Options, whether or not vested, shall be cancelled and no longer
exercisable as of the date of such termination.
For purposes of this Section 4(b), termination for "Cause" shall
mean termination of the Participant's employment because of:
(i) any act or omission that constitutes a material breach
of any of the material obligations of any employment agreement
that the Participant may have with the Company or any of its
Subsidiaries (other than by reason of the Participant's death or
Disability);
(ii) the continued failure or refusal of the Participant to
perform the material duties required of him as an employee of the
Company or any of its Subsidiaries (other than by reason of the
Participant's death or Disability);
(iii) any willful material violation by the Participant
of any law or regulation applicable to the business of the
Company or any of its Subsidiaries, or the Participant's
conviction of a felony, or any willful perpetration by the
Participant of a common law fraud; or
(iv) any other willful misconduct by the Participant which
is materially injurious to the financial condition or business
reputation of, or is otherwise materially injurious to, the
Company or any of its Subsidiaries.
(c) Notice of Exercise. Subject to Sections 4(d) and 4(f)
hereof, the Participant may exercise any or all of the vested Stock
Options by giving written notice (as described in Section 10 below) to
the Company. The date of exercise of a Stock Option shall be the
later of (i) the date on which the Company receives such written
notice and (ii) the date on which the conditions provided in
Sections 4(d), 4(f) and 6(b) hereof are satisfied.
(d) Payment. Prior to the issuance of a certificate pursuant to
Section 4(g) hereof evidencing the shares of Common Stock acquired
pursuant to the exercise of Stock Options, the Participant shall have
paid to the Company the aggregate Exercise Price of Common Stock
purchased pursuant to the exercise of such Stock Options, in cash, by
certified or bank check, note or other instrument acceptable to the
Committee. Payment of the Exercise Price may also be made in full or
in part in shares of Common Stock with a Fair Market Value (determined
as of the date of exercise of such Stock Option) at least equal to
such full or partial payment. Common Stock used to pay the Exercise
Price may be shares that are already owned by the Participant, or the
Company may withhold shares of Common Stock that would otherwise have
been received by the Participant upon exercise of the Stock Option. A
Participant may also exercise a Stock Option through a "cashless
exercise" procedure involving a broker or dealer approved by the
Committee, provided that the conditions described in Section 8(f) of
the Plan are satisfied.
(e) Shareholder Rights. The Participant shall have no rights as
a shareholder with respect to any shares of Common Stock issuable upon
the exercise of a Stock Option until a certificate or certificates
evidencing such shares shall have been issued to the Participant, and,
subject to Sections 13(b) and 13(c) of the Plan, no adjustment shall
be made for dividends or distributions or other rights in respect of
any share for which the record date is prior to the date on which the
Participant shall become the holder of record thereof.
(f) Limitation on Exercise. A Stock Option shall not be
exercisable unless and until (i) a registration statement under the
Securities Act of 1933, as amended, has been duly filed and declared
effective pertaining to the Common Stock subject to such Stock Option
and such Common Stock shall have been qualified under applicable state
"blue sky" laws, or (ii) the Committee in its sole discretion
determines that such registration, qualification and status are not
required as a result of the availability of an exemption from such
registration, qualification, and status under such laws.
(g) Issuance of Certificate. As soon as practicable following
the exercise of any Stock Options, subject to the tax withholding
provisions of Section 8(b), a certificate evidencing the number of
shares of Common Stock issued in connection with such exercise shall
be issued in the name of the Participant.
5. Representations and Warranties. The Participant is aware of and
familiar with the restrictions imposed on the transfer of any Stock
Options. The Participant represents that this Agreement has been duly
executed and delivered by the Participant and constitutes a legal, valid
and binding agreement of the Participant, enforceable against the
Participant in accordance with its terms, except as limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar
law affecting creditors' rights generally and by general principles of
equity.
6. Miscellaneous.
(a) No Rights to Grants or Continued Employment. The
Participant shall not have any claim or right to receive grants for any
future awards under the Plan. Nothing in the Plan or in this Agreement
shall confer upon the Participant any right to continued employment with
the Company or any Subsidiary, as the case may be, or interfere in any way
with the right of the Company or a Subsidiary to terminate the employment
of the Participant at any time, with or without Cause.
(b) Tax Withholding. If the Company is required by any
governmental entity to withhold an amount from the wages of the Participant
as a result of any exercise of Stock Options pursuant to this Agreement,
the Company will not be required to deliver a stock certificate to the
Participant until the Participant pays to the Company the amount required
to be withheld from the wages of the Participant with respect to such
event. Payment of such amount may be in the form of cash, withholding from
other compensation, or shares of Common Stock with a Fair Market Value
equal to such payment. Common Stock used to pay the withholding amount may
be shares that are already owned by the Participant, or shares of Common
Stock that would otherwise have been received by the Participant upon
exercise of the Stock Option.
(c) No Restriction on Right of Company to Effect Corporate
Changes. Neither the Plan nor this Agreement shall affect or restrict in
any way the right or power of the Company or its shareholders to make or
authorize any adjustment, recapitalization, reorganization or other change
in the capital structure or business of the Company, or any merger or
consolidation of the Company, or any issue of stock, options, warrants or
rights to purchase stock or bonds, debentures, preferred or prior
preference stocks whose rights are superior to or affect the Common Stock
or the rights thereof or which are convertible into or exchangeable for
Common Stock, or the dissolution or liquidation of the Company, or any
other corporate act or proceeding, whether of a similar character or
otherwise.
7. Survival; Assignment.
(a) All agreements, representations and warranties made in this
Agreement and in any certificates delivered pursuant hereto shall survive
the issuance to the Participant of the Stock Options and the Common Stock
and, notwithstanding any investigation heretofore or hereafter made by the
Participant or the Company or on the Participant's or the Company's behalf,
shall continue in full force and effect. Without the prior written consent
of the Company, the Participant may not assign any of his rights hereunder
except by will or the laws of descent and distribution. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the heirs and permitted successors and assigns of such
party; and all agreements in this Agreement by or on behalf of the Company,
or by or on behalf of the Participant, shall bind and inure to the benefit
of the heirs and permitted successors and assigns of such parties hereto.
The Participant agrees to cause any future spouse of his or hers to deliver
to the Company a consent in the form of the consent set forth at the foot
hereof validly executed by such spouse promptly after any such person
becomes his or her spouse.
(b) The Company shall have the right to assign to any of its
affiliates any of its rights, or to delegate to any of its affiliates any
of its obligations, under this Agreement.
8. Adjustments to Stock Option Grant. In the event of any changes
in the outstanding Common Stock by reason of a stock dividend,
recapitalization, reorganization, merger, consolidation, stock split,
combination or exchanges of shares (a "Change in Capitalization"), such
proportionate adjustments as may be necessary (in the form determined by
the Committee in its sole discretion), to reflect such change shall be made
to prevent dilution or enlargement of the rights of the Participant with
respect to the grant of the Stock Options made pursuant to this Agreement
or the exercise price in respect thereof.
9. Certain Remedies. Without intending to limit the remedies
available to the Company, the Participant agrees that damages at law shall
be an insufficient remedy in the event the Participant violates the terms
of this Agreement. The Participant agrees that the Company may apply for
and have injunctive or other equitable relief in any court of competent
jurisdiction to restrain the breach or threatened breach of, or otherwise
specifically to enforce, any of the provisions hereof.
10. Notices. All notices and other communications provided for in
this Agreement shall be in writing and shall be delivered by hand or sent
by certified or registered mail, return receipt requested, postage prepaid,
addressed, if to the Participant, to his attention at the mailing address
set forth at the foot of this Agreement (or to such other address as the
Participant shall have specified to the Company in writing) and, if to the
Company, to it at 501 Pearl Drive, St. Peters, Missouri 63376 Attention:
Chief Financial Officer. All such notices shall be conclusively deemed to
be received and shall be effective, if sent by hand delivery, upon receipt,
or if sent by mail, on the fifth day after the day on which such notice is
mailed.
11. Waiver. The waiver by either party of compliance of any
provisions of this Agreement by the other party shall not operate or be
construed as a waiver of any other provisions of this Agreement, or of any
subsequent breach by such party of any provision of this Agreement.
12. Entire Agreement; Governing Law. This Agreement and the other
related agreements expressly referred to in this Agreement set forth the
entire agreement and understanding between the parties hereto and supersede
all prior agreements and understandings relating to the subject matter
hereof. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same agreement. The headings of sections
and subsections in this Agreement are included solely for convenience of
reference and shall not affect the meaning of any of the provisions of this
Agreement. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without giving effect to
conflicts of law principles.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Participant has executed
this Agreement, both as of the day and year first above written.
MEMC Electronic Materials, Inc.
By: /s/ ERHARD MEYER-GALOW
-----------------------------
Erhard Meyer-Galow
Title: Chairman
PARTICIPANT
Name: /s/ LUDGER H. VIEFHUES
---------------------------
Ludger H. Viefhues
Address: MEMC Electronic Materials, Inc.
P. O. Box 8
St. Peters, MO 63376
Number of Stock Options: 9,500
Exercise Price of Stock Options: $35.25 per share