Stock Appreciation Right
ISP Holdings Inc., a Delaware corporation ("ISPHI"), hereby grants
____________(the "Grantee") the right to receive ("SAR") an amount in cash based
upon the appreciation in value of ______ shares (the "Shares") of common stock
("Common Stock"), par value $.001 per share, of ISPHI. The SAR shall be on the
following terms:
1. Capitalized terms used herein that are not defined elsewhere herein shall
have the following meanings:
(a) "Appreciation Value" means an amount equal to the Base Book
Value, multiplied by the number of Shares, plus interest on
such product from [date of grant](1) at the rate of ____% per
annum.
(b) "Base Book Value" means the product of (1) [initial base book
value of GAF SAR] multiplied by (2) a fraction (i) the
numerator of which is the Book Value immediately after giving
effect to the Spin-Off Transactions and (ii) the denominator
of which is the GAF Book Value immediately prior to the
Spin-Off Transactions.
(c) "Book Value" means, as of any date of determination, the book
value per share of Common Stock as of that date, as determined
in accordance with generally accepted accounting principles
after charges such as declaration of dividends on any capital
stock of ISPHI or payments with respect to repurchases by
ISPHI of any capital stock from holders thereof but excluding
(1) any amounts reflecting the liquidation preferences of any
outstanding preferred stock of ISPHI, (2) any reductions
resulting from purchases of GAF's capital stock by persons who
participated in promoting the "Acquisition" referred to in the
Prospectus dated March 24, 1989 relative to the GAF Common
Stock and certain other securities of GAF (predecessor cost
basis adjustment), (3) any charges relating to amortization
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(1) For all purposes, the date of grant is deemed to be the date of initial
grant of the GAF SAR or option in connection with which the ISP Holdings SAR is
being granted.
of goodwill and other intangibles arising from the Acquisition
and related transactions, (4) that portion of depreciation
charges attributable to the write-up of assets as a result of
the application of purchase accounting in connection with the
Acquisition and (5) any charges relating to amortization of
deferred financing costs and expenses incurred in connection
with the Acquisition; provided, however, that (i) any
adjustments to the Book Value shall include the tax effects,
if any, associated therewith, (ii) any charges specified in
subclauses (3), (4) or (5) above, relating to a business or
assets of ISPHI or any of its subsidiaries, which charges
shall have been incurred on or after the date of the
Acquisition but which, because of the operation of said
subclauses (3), (4) and/or (5), shall not theretofore have
been included in the calculation of the Book Value, shall be
so included following a transaction involving such business or
assets that, in accordance with the next sentence, is deemed a
sale or disposition thereof, and (iii) for purposes of clause
(ii), an asset, liability or charge not exclusively
attributable to the specific business or assets deemed to have
been sold or otherwise disposed of shall, if attributable to
such business or assets and to other businesses or assets, be
deemed to relate to the business or assets sold or otherwise
disposed of and to such other businesses or assets pro rata
based on relative business and assets values immediately
following consummation of the Acquisition; and provided
further, that, in calculating the Book Value, if any stock
appreciation rights issued by ISPHI based upon appreciation in
value of shares of Common Stock are outstanding at the time of
calculation, the shares of Common Stock upon which such
appreciation in value is based ("SAR Shares") shall be deemed
outstanding. The Board of Directors of ISPHI shall determine
(i) whether a transaction involving a business or assets of
ISPHI or any of its subsidiaries is a sale or disposition for
purposes of the definition and calculation of the Book Value
and (ii) if such transaction is a sale or disposition, the
amount of the gain or loss thereon. The gain or loss on any
sale or disposition shall be the actual economic benefit to
ISPHI from such transaction, as determined by the Board of
Directors of ISPHI.
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(d) "Current Value" means an amount equal to the Book Value as of
the date of determination multiplied by the number of Shares
increased by an amount equal to any cash dividends or
distributions that would have been paid on the Shares from the
date hereof through the date of determination if they had been
outstanding; provided, however, that, if securities of the
same class as the Shares are then registered under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), Market Price shall be substituted for Book Value in
calculating Current Value.
(e) "Exercise Value" means (i) zero if the grantee's employment
with ISPHI and its affiliates is terminated prior to [two and
one half years after date of grant], (ii) 40% of the Spread if
the grantee's employment with ISPHI and its affiliates is
terminated on or after [two and one half years after date of
grant] but prior to [three years after date of grant], (iii)
60% of the Spread if the Grantee's employment with ISPHI and
its affiliates is terminated on or after [three years after
date of grant] but prior to [four years after date of grant];
(iv) 80% of the Spread if the Grantee's employment is
terminated on or after [four years after date of grant] but
prior to [five years after date of grant]; and (v) 100% of the
Spread if the Grantee's employment is terminated on or after
[five years after date of grant].
(f) "GAF" means GAF Corporation, a Delaware corporation.
(g) "GAF Book Value" means the book value per share of GAF Common
Stock as determined in accordance with that certain agreement,
dated as of the date hereof, pursuant to which GAF granted to
the Grantee a stock appreciation right based upon the
appreciation in value of ____ shares of GAF Common Stock.
(h) "GAF Common Stock" means common stock, par value $.001 per
share, of GAF.
(i) "Market Price" as of any date means the average of the daily
market prices per Share for the fifteen (15) consecutive
business days immediately preceding such
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date. The daily market price for each such business day shall
be (i) the last sale price on such day on the principal stock
exchange on which the Shares are then listed or admitted to
trading, (ii) if no sale takes place on such day on any such
exchange, the average of the last reported closing bid and
asked prices on such day as officially quoted on any such
exchange, (iii) if the Shares are not then listed or admitted
to trading on any stock exchange, the average of the last
reported closing bid and asked prices furnished by the
National Association of Securities Dealers Automated Quotation
System or the National Quotation Bureau, Inc., (iv) if neither
such corporation at the time is engaged in the business of
reporting such prices, as furnished by any similar firm then
engaged in such business or (v) if there is no such firm, as
furnished by any member of the National Association of
Securities Dealers, Inc. selected by ISPHI.
(j) The "Restricted Period" means the period commencing on [date
of grant] and ending [seven years after date of grant].
(k) "Spin-Off Transactions" means the series of transactions that
shall result in, among other things, each holder of a share of
GAF Common Stock receiving one share of Common Stock for each
share of GAF Common Stock held by such holder.
(l) The "Spread" as of any date of determination means the excess,
if any, of the Current Value over the Appreciation Value.
2. In the event that the Grantee is not employed by ISPHI and its affiliates for
any reason on or after the date hereof, ISPHI shall have the right, but not the
obligation, exercisable by notice to the Grantee within thirty (30) days after
termination of employment, to repurchase the SAR for an amount in cash equal to
the Exercise Value, with the Current Value determined as of the last day of the
calendar quarter next preceding the calendar quarter in which termination of
employment occurs.
3. In the event that the Grantee is not employed by ISPHI and its affiliates for
any reason on or after the date hereof, the Grantee shall have the right,
exercisable by notice to ISPHI
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within thirty (30) days after termination of employment, to require ISPHI to
repurchase the SAR for an amount in cash equal to the Exercise Value, with the
Current Value based upon the lowest amount thereof determined as of the last day
of the following calendar quarters: the calendar quarter (the "Quarter")
immediately preceding the calendar quarter in which the termination of
employment occurred and the first, second and third calendar quarter immediately
succeeding the Quarter.
4. In each calendar year the Grantee may, at the Grantee's option, exercisable
by notice delivered to ISPHI on or before March 31 of that year, elect to cause
ISPHI to repurchase the SAR (or any portion thereof) for an amount in cash equal
to the Exercise Value determined as of the last day of the preceding year.
5. (a) Notwithstanding the foregoing, ISPHI shall not be entitled to
repurchase the SAR under paragraph 2, and the Grantee shall not be
entitled to cause ISPHI to repurchase the SAR or any portion thereof
under paragraph 3 or 4, unless GAF exercises the comparable right to
repurchase, or the Grantee exercises the comparable right to cause GAF
to repurchase a like portion of, as applicable, the stock appreciation
right ("GAF SAR") with respect to ____ shares of GAF Common Stock
granted by GAF to the Grantee on the date hereof. Any negative value of
either the SAR or the GAF SAR shall be offset against the purchase
price of the other security; provided, however, that (i) any negative
value of the GAF SAR shall not be offset against the value of the SAR
if a Sale Transaction (as hereinafter defined) with respect to ISPHI
shall have occurred and (ii) if such offset is effected and the
aggregate net value of such securities is less than zero, then the
value of both securities shall be deemed to be zero.
(b) The closing of any repurchase by ISPHI of the SAR or a portion
thereof shall be held at the principal offices of ISPHI within thirty
(30) days after the later of (i) if applicable, the date on which the
Book Value or Market Price, as the case may be, on which the Current
Value is based is determined or (ii) the date on which the right to
sell or repurchase is exercised. The purchase price shall be paid by
delivery to the Grantee of a certified or official bank check or wire
transfer.
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(c) In the event a repurchase of the SAR or a portion thereof pursuant
to paragraph 2, 3 or 4 hereof shall be prohibited, or would cause a
default, under the terms of any institutional credit agreement,
indenture or other like instrument with respect to borrowed money to
which ISPHI or any of its affiliates may be a party or be bound, in
each case as the same may be amended from time to time, or shall be
prohibited by law, the rights and obligations of the Grantee and ISPHI
pursuant to paragraph 2, 3 or 4 hereof, as the case may be, shall be
suspended until the prohibition lapses or is waived and no default
would be caused. If the Board of Directors of ISPHI shall determine in
good faith that, in light of the financial condition or financial
resources of ISPHI, it would be imprudent for ISPHI to repurchase the
SAR or a portion thereof pursuant to paragraph 3 or 4, the rights and
obligations of the Grantee and ISPHI pursuant to paragraph 3 or 4 shall
be suspended until the Board of Directors determines that such
repurchase would be prudent in such light. Upon the lapse or waiver of
the restrictions or upon such determination that the purchase would be
prudent, as the case may be, the purchase price to be paid by ISPHI for
the SAR or such portion thereof shall be determined as of the last day
of the calendar quarter in which such restrictions are waived or lapse
or such determination occurs, and the purchase price shall be paid with
interest thereon at the rate of ___% per annum from the first
anniversary of the event giving rise to the repurchase obligation to
the date of payment.
6. At least ten (10) days prior to the consummation during the Restricted Period
of any sale or transfer by any member of the Xxxxxx Group (as hereinafter
defined) to any unrelated third party of securities of the same class as Shares,
ISPHI shall cause those members of the Xxxxxx Group (the "Selling Members") to
deliver to the Grantee a written notice (a "Sale Notice"), which shall fully
disclose the identity of the prospective transferee and the terms and conditions
of the proposed sale. The Grantee may elect to participate in the contemplated
sale by delivering written notice to the Selling Members within seven (7) days
of receipt of such Sale Notice. If the Grantee elects to participate in the
contemplated sale, he will be entitled to sell in the contemplated sale or, if
ISPHI elects, to ISPHI or to ISPHI's designee, for an amount per Share equal to
the sales price per Share received by the Selling Members minus the Appreciation
Value per Share and, to the extent applicable, on
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the same terms applicable to the Selling Members, that portion of the SAR
bearing the same relationship to the number of Shares represented hereby of the
class being transferred as the amounts to be so transferred by the Selling
Members bear to the Xxxxxx Group's aggregate holdings of securities of such
class. This paragraph 6 shall apply to any sales or transfers of Shares, whether
or not made pursuant to an effective registration statement in accordance with
the Securities Act of 1933, as amended, and shall not apply to any sale of
securities of the same class as Shares in brokerage transactions on a national
securities exchange or in the over-the-counter market. The term "Xxxxxx Group"
shall mean Xxxxxx X. Xxxxxx, Xxxxxx Holdings Associates Limited Partnership or
any other person or entity controlled by or under common control with Xx.
Xxxxxx.
7. If a Sale Transaction (as hereinafter defined) occurs with respect to
International Specialty Products Inc. ("ISP") or its direct or indirect parent
or Building Materials Corporation of America or its direct or indirect parent
and the Grantee is employed by the entity with respect to which such Sale
Transaction shall have occurred or any subsidiary thereof and the Grantee is not
offered employment by an entity controlled by Xxxxxx X. Xxxxxx, a member of Xx.
Xxxxxx'x immediate family, a partnership, limited liability company, trust or
other entity established for the benefit of a member or members of Xx. Xxxxxx'x
immediate family or their respective affiliates (a "Xxxxxx Entity") on terms
substantially similar to those pursuant to which he was employed prior to such
Sale Transaction then, irrespective of any other provision of this Agreement,
the Exercise Value shall be deemed to be 100% of the Spread following such Sale
Transaction. If the Grantee is offered employment with a Xxxxxx Entity following
such Sale Transaction on the terms specified in the immediately preceding
sentence, the Grantee accepts such employment and such employment is terminated
by the Xxxxxx Entity (other than for Cause (as hereinafter defined)) within
twelve (12) months following the consummation of such Sale Transaction, then,
irrespective of any other provision of this Agreement, the Exercise Value shall
be deemed to be 100% of the Spread. Either of the events specified in the two
immediately preceding sentences shall be referred to herein as an "Acceleration
Event". If an Acceleration Event shall have occurred and ISPHI shall repurchase
the SAR on a date on which, absent the occurrence of such Acceleration Event,
the Exercise Value of the SAR would have been less than 100% of the Spread, the
date of such repurchase shall be deemed to be, for purposes
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of determining the interest accrual in calculation of the Appreciation Value as
of such date, the date on which the Exercise Value of the SAR would have been
100% of the Spread absent the occurrence of such Acceleration Event. "Sale
Transaction" shall mean, with respect to any entity, the sale by such entity (by
stock sale, asset sale (including, without limitation, by sale of stock or
assets of a subsidiary of such entity), merger or consolidation or otherwise) of
all or substantially all of such entity's assets. "Cause" shall mean (i) 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 the Grantee's employer or any affiliate thereof, (ii)
substantial and repeated failure by the Grantee to perform his duties, (iii)
gross negligence or willful misconduct with respect to the Grantee's employer or
any affiliate thereof or (iv) a material breach of any of the terms or
provisions of any employment agreement to which the Grantee may be party;
provided, however, that if at the time of termination of the Grantee's
employment the Grantee is a party to an employment agreement with the Xxxxxx
Entity 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.
8. If a Sale Transaction shall have occurred with respect to ISP or its direct
or indirect parent and the Exercise Value of the SAR is not 100% of the Spread
at the time of the consummation of such Sale Transaction, then ISPHI shall place
in trust, for the benefit of the Grantee, an amount (the "Trust Amount") equal
to 100% less the percentage of the Spread on which the Exercise Value would have
been based if the Exercise Value were calculated on the date on which such Sale
Transaction is consummated, multiplied by the Sale Value (as hereinafter
defined). "Sale Value" shall mean (i) if ISPHI is the entity with respect to
which the Sale Transaction shall have occurred and such Sale Transaction is the
sale of the stock of, or a merger or consolidation with respect to, ISPHI, the
product of (x) the aggregate consideration received by the holders of Common
Stock divided by the number of shares of Common Stock outstanding (treating as
outstanding any SAR Shares) on the date of the consummation of such Sale
Transaction multiplied by (y) the number of Shares or (ii) in the case of any
other Sale Transaction, the Current Value, with the Book Value calculated
immediately after giving effect to the consummation of such Sale Transaction or,
if securities of the same class as the Shares are
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then registered under the Exchange Act, Market Value calculated for the period
ending with the date of the consummation of such Sale Transaction. Upon the
repurchase of the SAR, the Grantee shall be entitled to receive from such trust
the Trust Amount as the sole consideration for the repurchase thereof. The terms
of the trust shall provide that if the SAR or any portion thereof, any other
stock appreciation rights relating to the Common Stock or any stock options
relating to the Series A Cumulative Redeemable Convertible Preferred Stock, par
value $.01 per share, of ISPHI shall expire unexercised, the Trust Amount and
any other amounts deposited for the benefit of persons who as of such date hold
any such stock appreciation rights or stock options shall be allocated pro rata
among such persons and holders of shares of Common Stock as of the date the Sale
Transaction was consummated, subject to the vesting of such stock appreciation
rights and stock options.
9. The Shares shall include any securities that would have been received by the
Grantee, if the Shares had been outstanding, in any split-up, recapitalization,
combination, dividend, distribution, merger or exchange of or relating to the
Common Stock, including any securities of a subsidiary of ISPHI distributed to
stockholders of ISPHI, and if any such event shall occur the Board of Directors
of ISPHI shall make such adjustments in Book Value, Appreciation Value and
Current Value as they determine in good faith are appropriate.
10. The Grantee may not sell, pledge, give, transfer, assign, encumber or
dispose of the SAR (or any interest herein or therein) except by will or
intestacy.
11. All determinations by the Board of Directors of ISPHI hereunder shall be
made in good faith and shall be binding and conclusive.
12. (a) All notices or other communications hereunder shall be given in
writing and shall be deemed duly given and received on the third full
business day following the date of mailing by registered or certified
mail, return receipt requested, or when delivered personally, as
follows:
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(i) if to ISPHI:
ISP Holdings Inc.
c/o ISP Management Company, Inc.
0000 Xxxx Xxxx
Xxxxx, Xxx Xxxxxx 00000
Attention: Chief Executive Officer
or at such other place as ISPHI shall have designated by
notice as herein provided to the Grantee;
(ii) if to the Grantee, at his last address appearing in
ISPHI's records or at such other place as the Grantee
shall have designated by notice as herein provided to
ISPHI.
(b) On or prior to March 31, 1997, ISPHI shall deliver to the
Grantee a written notice setting forth the Base Book Value.
(c) This writing constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof, supersedes
all agreements between the parties with respect to the subject
matter hereof and may not be modified or amended except by a
written agreement signed by ISPHI (following the specific
approval of such modification or amendment by ISPHI's Board of
Directors) and the Grantee. This Agreement shall be binding
upon and inure to the benefit of ISPHI its successors and
assigns and the Grantee and his heirs and personal
representatives.
(d) Nothing in this Agreement shall confer on you any right to
continue in the employ of ISPHI or any subsidiary or affiliate
of ISPHI or any successor to any of them, affect the right of
ISPHI 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 ISPHI or any such subsidiary, affiliate or
successor.
(e) 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
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invalid or unenforceable provision were not contained in this
Agreement.
(f) 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 principles of conflicts of law.
IT WITNESS WHEREOF, the undersigned has executed this instrument as of
the 1st day of January, 1997.
ISP HOLDINGS INC.
By:______________________
Name:____________________
Title:___________________
AGREED AND ACCEPTED:
________________________
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