Building Materials Corporation of America
1361 Alps Road
Wayne, New Jersey 07470
[Date]
[Name
Address]
Dear
In consideration of your agreement to the terms and conditions of [the
Non-Competition Agreement], a copy of which is attached hereto, among other good
and valuable consideration, Building Materials Corporation of America (the
"Company") hereby agrees with you as follows:
1. Option to Purchase.
(a) Subject to the terms and conditions of this Agreement, the Company
hereby grants you the option (the "Option") to purchase _____ shares of the
Company's Series A Cumulative Redeemable Convertible Preferred Stock, $.01 par
value (the "Preferred Shares"), for the purchase price of $100 per Preferred
Share. The Preferred Shares shall have the rights and preferences set forth in
the Certificate of Designation attached as Exhibit A hereto, provided that
"_____________" shall be substituted for "December 31, 1995" for purposes of
Section 6(a) of the Certificate of Designation and your Preferred Shares,
notwithstanding the terms of the Certificate of Designation.
(b) The Option shall vest and become exercisable as to 20% of the Preferred
Shares on ______ in each of the years ____ through _____, in each case to the
extent you are employed by the Company or its subsidiaries on such date;
provided that (i) if your employment with the Company and its subsidiaries
should terminate as a direct result of a divestiture (whether because you are
employed by the business which is sold, your position is eliminated as a result
of the divestiture or otherwise) or (ii) if, after a Change of Control of the
Company, your employment with the Company and its subsidiaries (x) should be
terminated by the Company other than for cause, (y) is terminated as a result of
your death or permanent disability, or (z) is terminated by you for "good
reason", the unvested portion of the Option shall become vested on the date of
your termination. You shall be deemed to terminate your employment for "good
reason" if you do so as a result of a change or changes in the terms of your
employment that are materially adverse to you, including with respect to your
salary and bonus, level of responsibility or geographic location of employment.
"Change of Control" shall mean the occurrence of either of the following events:
(i) prior to the time that at least 15% of the then outstanding voting stock of
the Company or any parent of the Company is publicly traded, the Heyman Group
ceases to be the "beneficial owner", directly or indirectly, of majority voting
power of the voting stock of the Company; or (ii) at any other time, any person
or entity, other than the Heyman Group , is or becomes the beneficial owner,
directly or indirectly, of more than 35% of the voting stock of the Company or
any parent of the Company and the Heyman Group beneficially owns, directly or
indirectly, in the aggregate a lesser percentage of the voting stock of the
Company or such parent, as the case may be, than such other person or entity.
The "Heyman Group" shall mean (i) Samuel J. Heyman, his heirs, administrators,
executors and entities of which a majority of the voting stock is owned by
Samuel J. Heyman, his heirs, administrators or executors and (ii) any entity
controlled, directly or indirectly, by Samuel J. Heyman or his heirs,
administrators or executors. "Beneficial ownership" shall be determined in
accordance with Rule 13d under the Securities Exchange Act of 1934, as amended.
(c) The Option will terminate on the earliest of (i) ___________, (ii) 30
days after the termination of your employment with the Company and its
subsidiaries for any reason other than your death or permanent disability or
(iii) one year after the termination of your employment with the Company and its
subsidiaries as a result of your death or permanent disability. You will be
deemed to be permanently disabled if you become physically or mentally
incapacitated or disabled to the extent that you are unable to perform for the
Company or its subsidiaries substantially the same services as you performed
prior to incurring such incapacity or disability (the Company, at its option and
expense, being entitled to retain a physician reasonably acceptable to you to
confirm the existence of the incapacity or disability, and the determination of
that physician being binding upon the Company and you), and your incapacity or
disability continues for a period of six consecutive months; provided, however,
that, if at the time of your permanent disability you are a party to an
employment agreement with the Company or any of its subsidiaries which contains
a definition of disability which is inconsistent with the provisions hereof, the
definition contained in that employment agreement shall govern for purposes of
this Section. In the event of your death or disability, the Option may be
exercised by your executors or personal representatives; provided that such
persons shall be bound by the provisions of this Agreement, including, without
limitation, Sections 3 and 4, as if they were parties to this Agreement.
(d) Notwithstanding anything to the contrary contained in this Agreement,
in the event the Company or its parent engages in a public offering of the
common stock of the Company (an "IPO"), (i) you will be entitled to receive from
the Company, on each vesting date set forth in Section 1(b) (or, within five
days after consummation of the IPO, in the case of the unexercised portion, if
any, of the Option which is vested as of the date of consummation of the IPO),
an amount in cash equal to the amount by which Book Value (as defined in Section
3(c)) of the Common Shares issuable upon conversion of the Preferred Shares
subject to the portion of the Option which vests (or, in the case described in
the immediately preceding parenthetical, is vested) on such date, determined as
of the end of the calendar quarter immediately preceding the consummation of the
IPO, exceeds the aggregate exercise price of such portion of the Option, and
-2-
(ii) the Company will endeavor to grant you options to purchase shares of the
Company's Common Stock which, together with the rights to receive cash described
in clause (i) above, provide equivalent economic value to the Options granted to
you pursuant to this Agreement that are unexercised as of the date of
consummation of the IPO. Such new stock options will vest on the vesting
schedule provided in Section 1(b) of this Agreement and will be granted under a
stock option plan which is appropriate, in the judgment of the Board of
Directors of the Company, for a public company. Your right to receive cash, and
to exercise such new stock options, will be subject to the conditions to vesting
set forth in Section 1(b), including the proviso to the first sentence thereof.
Following consummation of the IPO, this Agreement (other than Section 3(d) and
this Section 1(d)) shall have no further force and effect.
(e) The Option shall not be exercisable after its expiration. Prior
thereto, the vested portion of the Option may be exercised in whole or in part
at any time or from time to time.
(f) Unless otherwise agreed to by the Company and you, the purchase price
for the Preferred Shares shall be paid by you to the Company in full upon
exercise of the Option, in cash or by certified or official bank check or wire
transfer.
(g) The Company hereby represents and warrants to you that, upon the
issuance and purchase of (and payment for) the Preferred Shares, the Preferred
Shares shall be duly authorized, validly issued, fully paid and nonassessable.
2. Legend on Certificates. Each stock certificate of the Company issued to
represent any Preferred Shares, or shares of the Company's Common Stock issued
upon conversion of the Preferred Shares (the shares of Common Stock issued upon
conversion of the Preferred Shares being referred to herein as 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 Option Agreement, dated as of
___________, 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 Preferred Shares or
Common Shares, as the case may be, represented thereby are no longer subject to
the restrictions referred to in such legend. No Preferred Shares shall be
issued, sold or delivered pursuant to the exercise of the Option, and no Common
Shares shall be issued upon conversion of Preferred Shares,
-3-
prior to (a) any registration or other qualification of such shares under any
state or federal law or regulation which the Company shall, in its absolute
discretion upon the advice of counsel, deem necessary or advisable, and (b) the
admission of such shares to listing on any stock exchange on which the shares
may then be listed free of any conditions not acceptable to the Company. For
purposes of this Agreement, the term "Preferred Shares" and "Common Shares"
shall mean any securities or property into which the Preferred Shares or Common
Shares, as the case may be, may be converted or exchanged pursuant to a
recapitalization, stock split, combination, reorganization, merger, exchange or
similar transaction occurring after the date hereof.
3. Transfer of Preferred Shares or Common Shares.
(a) You agree that you will not, prior to __________, directly or
indirectly, sell, pledge, give, bequeath, transfer, assign or in any other way
whatsoever encumber or dispose of (hereinafter collectively called "transfer")
any Preferred Shares or Common Shares or any interest therein, or any stock
certificate representing, or any voting trust certificate issued with respect
to, any Preferred Shares or Common Shares (voluntarily, involuntarily, by
operation of law or otherwise), except as otherwise permitted by this Agreement
or as may be specifically authorized by the Board of Directors of the Company.
(b) If, on or after ____________, you desire to sell any of your Preferred
Shares or Common Shares, you must first offer to sell to the Company such
Preferred Shares for a purchase price equal to $100 per Preferred Share, plus
accrued and unpaid dividends to the purchase date, and/or such Common Shares for
a purchase price equal to their Book Value determined as of the end of the
calendar quarter in which the offer is made. You must notify the Company in
writing of the number of Preferred Shares and/or Common Shares you wish to sell
(the "Sale Notice"). Upon receipt of your Sale Notice, the Company shall have
the option, exercisable for 30 days after the Company receives the Sale Notice
(the "Option Period"), to purchase all (but not less than all) of the Preferred
Shares and/or Common Shares specified in the Sale Notice. The option may be
exercised by giving notice to you within the Option Period. If the Company
elects to purchase the Preferred Shares and/or Common Shares you have offered,
it shall be obligated to purchase, and you will be obligated to sell, those
Preferred Shares and/or Common Shares at the price and on the terms described
above. If the Company does not elect to purchase the Preferred Shares and/or
Common Shares you have offered, and if otherwise permitted under this Section 3,
you may, at any time thereafter within a period of 120 days after the expiration
of the Option Period, transfer those Preferred Shares and/or Common Shares to
any party, provided, however, that, in the event you have not transferred the
Preferred Shares and/or Common Shares within 120 days after expiration of the
Option Period, then any transfer of those Preferred Shares and/or Common Shares
shall thereafter again be subject to all of the restrictions contained in this
Section 3.
(c) For purposes of this Agreement, 'Book Value' shall mean, as of any date
of determination, (x) the sum of (i) the combined shareholder's equity of the
Company and U.S. Intec, Inc. as of December 31, 1995 determined in accordance
with generally accepted accounting principles, (ii) the cumulative consolidated
net income or loss of the Company (treating U.S. Intec Holdings Inc. as a
-4-
wholly-owned subsidiary of the Company for all periods) for the period January
1, 1996 through the date of determination and (iii) 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
the Company in its income statement for the applicable period, of GAF Fiberglass
Corporation ("GAF Fiberglass") for the period January 1, 1997 through the date
of determination, and adding back (A) the charge to shareholder's equity
relating to the assumption by the Company of certain asbestos-related
liabilities of GAF Building Materials Corporation in connection with the
Company's formation and (B) the reduction in shareholder's equity resulting from
purchases of the capital stock of GAF Corporation ("GAF") by persons who
participated in promoting the management buy-out of GAF in March 1989 (the
"Acquisition") (predecessor cost basis adjustment), and excluding, to the extent
occurring after December 31, 1995, (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 the Company other than in the ordinary course of business, (3) any
dividends or distributions paid to the holders of the Company's capital stock,
(4) any capital contributions made to the Company by its stockholders, (5) any
amounts received by the Company 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 Acquisition divided by (y) 1,000,010. There shall
be deducted from Book Value an amount equal to a 15% per annum charge on the
aggregate capital contributions made to the Company by its stockholders during
the period commencing October 1, 1997 and ending with the date of determination
(the "Period"), amounts received by the Company during the Period for shares of
its capital stock and, to the extent not actually charged to the Company, on the
outstanding principal amount of loans and other advances made to the Company by
affiliates (excluding subsidiaries of the Company) during the Period. There
shall be added to Book Value a 15% per annum credit on the aggregate dividends
or distributions made by the Company 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 the Company to affiliates (excluding
subsidiaries of the Company) 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 Preferred
Shares or Common Shares are converted into or exchanged for other securities or
property pursuant to a recapitalization, stock split, combination,
reorganization, merger, exchange or similar transaction, if GAF Fiberglass
becomes a direct or indirect subsidiary of the Company, if the Company directly
or indirectly acquires the Nashville Facility, or if a sale of all or
substantially all of, the Common Stock of the Company shall occur or be pending,
Book Value, the Option and the terms hereof shall be modified by the Board of
Directors of the Company in such manner as is reasonable under the
circumstances. All determinations by the Board of Directors hereunder shall be
made in good faith and shall be binding and conclusive. The Nashville Facility
shall mean the Nashville, Tennessee manufacturing facility of GAF Fiberglass.
(d) You agree that your Preferred Shares and Common Shares may not be sold,
offered for sale, transferred, pledged, hypothecated or otherwise disposed of
except in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws and the
-5-
restrictions of this Agreement on the transfer thereof. You have been advised
that the Company has no obligation to register the Preferred Shares or Common
Shares under the Securities Act or to comply with any exemption under the
Securities Act, including but not limited to that set forth in Rule 144
promulgated under the Securities Act, which would permit them to be sold by you.
You understand that it is not anticipated that there will be any market for
resale of the Preferred Shares or Common Shares and that it may not be possible
for you to liquidate an investment in the Preferred Shares or Common Shares. You
understand the legal consequences of the foregoing to mean that you must bear
the economic risk of your investment therein except as otherwise provided in
this Agreement. You agree that you will not transfer any Preferred Shares or
Common Shares except in compliance with the Securities Act. The Company will not
transfer on its books any certificate representing Preferred Shares or Common
Shares in violation of the provisions of this Agreement.
4. Purchase and Sale of Common Stock.
(a) In the event you leave the employ of the Company and its subsidiaries
for any reason on or after the date hereof (any such date of leaving is called
the "Termination Date"), you may, at your option, exercisable by a notice
delivered to the Company during the Put/Call Period, elect to sell and, upon the
giving of the notice, you shall be obligated to sell, and the Company shall be
obligated to purchase all, but not less than all, the Common Shares owned by you
at the time such notice is given, at their Book Value determined as of the last
day of the calendar quarter during which such notice is given to the Company.
(b) In each calendar year you may, at your option, exercisable by notice
delivered to the Company on or before March 31 of that year, elect to sell and,
upon the giving of the notice, the Company shall be obligated to purchase and
you shall be obligated to sell as many Common Shares owned by you as you may
elect to sell, at their Book Value determined as of the last day of the
preceding calendar year, provided that you owned the Preferred Shares which were
converted into such Common Shares on or before June 30 of the preceding calendar
year.
(c) In the event you leave the employ of the Company and its subsidiaries
for any reason on or after the date hereof, the Company may, at its option,
exercisable by notice delivered to you during the Put/Call Period, elect to
purchase and, upon the giving of the notice, you shall be obligated to sell and
the Company shall be obligated to purchase all, but not less than all, the
Common Shares owned by you at the time such notice is given, at their Book Value
determined as of the last day of the calendar quarter during which such notice
is given to you.
(d) If you exercise the Option in whole or in part, convert Preferred
Shares received upon exercise into Common Shares and exercise your right to sell
such Common Shares to the Company as provided in Section 4(a) or 4(b), the
Company will reimburse you for all interest accrued, during the period
commencing with the date of exercise of your right under Section 4(a) or 4(b)
and ending with the date of purchase by the Company of your Common Shares, on
any loan that financed the purchase of your Preferred Shares, provided that the
terms of the loan and the lender are reasonably satisfactory to
-6-
the Company. Such interest will be paid by the Company when the interest is
payable to the lender. The Company will introduce you to lenders who the Company
believes will be willing to provide financing for exercise of the Options.
(e) As used herein, the "Put/Call Period" shall mean the 30-day period
commencing with the later of (i) the date which is six months after the date on
which you exercised the Option to purchase the Preferred Shares which were
converted into the applicable Common Shares or (ii) the Termination Date.
(f) In the event that a purchase of Common Shares or Preferred Shares by
the Company pursuant to this Section 4 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 to which the
Company or an affiliate of the Company is a party (in each case as the same may
be amended from time to time), or in the opinion of the Board of Directors of
the Company would not be feasible due to the impairment of the financial ability
of the Company that would result from the satisfaction of all notices then and
theretofore given under similar provisions of agreements with other holders of
Common Shares or Preferred Shares, then your obligation to deliver Common Shares
or Preferred Shares and the Company's obligation to pay the purchase price shall
be suspended until such prohibition, default or impairment lapses or is waived
or cured. In such event the price to be paid by the Company for your Common
Shares shall be the greater of (i) the price that would have been paid had the
purchase been completed without deferral, or (ii) the Book Value as of the last
day of the calendar quarter preceding the quarter during which such prohibition,
default or impairment lapses or is cured.
5. Terms of Payment, Etc.
(a) Any sales and purchases pursuant to Section 3 or 4 shall take place at
the principal executive offices of the Company within thirty (30) days after the
later of (i) if applicable, the date on which the Book Value upon which the
purchase price is based is determined by the Company or (ii) the date on which
the notice of sale or purchase is given.
(b) The purchase price payable by the Company under Section 3 or 4 shall be
paid by the Company to you in full, in cash or by certified or official bank
check or wire transfer, at the closing pursuant to such Section.
(c) Any Preferred Shares or Common Shares sold pursuant to Section 3 or
Section 4 shall be delivered by you to the Company at the closing, free and
clear of all liens, charges and encumbrances of any kind. In addition, you shall
take such actions as the Company shall request as may be necessary to vest in
the Company at the closing good and marketable title to the Preferred Shares
and/or Common Shares being sold, free and clear of all liens, charges and
encumbrances.
6. Notices. 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
-7-
mailing by registered or certified mail, return receipt requested, or when
delivered personally, as follows:
(a) if to the Company:
Building Materials Corporation of America
1361 Alps Road
Wayne, New Jersey 07470
Attention: General Counsel
or at such other place as the Company shall have designated by notice as
herein provided to you; and
(b) if to you, at your address as it appears below your name on the first
page of this Agreement, or at such other address as you shall have
designated by notice as herein provided to the Company.
7. Specific Performance. It is acknowledged that the Company 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, the Company 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, enjoining such breach or ordering compliance
with the provisions of this Agreement.
8. Miscellaneous. (a) This Agreement, together with the instruments
referred to herein, constitutes the entire agreement of the parties to this
Agreement with respect to its subject matter, and may not be modified or amended
except by a written agreement signed by the Company (following the specific
approval of such modification or amendment by the Company's Board of Directors)
and you.
(b) 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.
(c) Except as otherwise expressly provided in this Agreement, this
Agreement, as amended (including any waivers or consents pursuant to Section
8(b) hereof), shall be binding upon and inure to the benefit of the Company, its
successors and assigns, and you and your heirs, personal representatives and
assigns; provided that you shall not have the right to assign the Option or 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 Preferred Shares or Common Shares
except in accordance with this Agreement.
-8-
(d) 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.
(e) The section headings contained herein are for convenience only and are
not intended to define or limit the contents of any section.
(f) Nothing in this Agreement shall confer on you any right to continue in
the employ of the Company or any parent, subsidiary or affiliate of the Company
or any successor to any of them, affect the right of the Company or any such
parent, 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 the Company or any such parent, subsidiary, affiliate
or successor.
(g) 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.
(h) Whenever the pronouns "he" or "his" are used in this Agreement, they
shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in the
plural and words in the plural shall be read and construed as though in the
singular in all cases where they would so apply.
(i) This Agreement may be executed in counterparts, all of which taken
together shall be deemed one original.
(j) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE
STATE OF NEW JERSEY 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.
THIS AGREEMENT IS NOT, AND SHALL NOT, BE CONSTRUED TO CREATE A CONTRACT OF
EMPLOYMENT, EXPRESS OR IMPLIED. I REMAIN AN AT-WILL EMPLOYEE. THIS MEANS THAT I
HAVE THE RIGHT TO TERMINATE THAT EMPLOYMENT RELATIONSHIP WITH OR WITHOUT CAUSE
OR REASON AND WITHOUT PRIOR NOTICE OR COMPLIANCE WITH ANY PROCEDURES. LIKEWISE,
THE COMPANY CAN TERMINATE MY EMPLOYMENT WITH OR WITHOUT CAUSE OR REASON, AND
WITHOUT PRIOR NOTICE OR COMPLIANCE WITH ANY PROCEDURES.
-9-
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:___________________________________
AGREED AND ACCEPTED:
- -------------------------------
-10-