EXHIBIT NO. 10(g)
Employment Agreement effective February 27, 1991,
between the Company and G. ▇▇▇▇▇▇ ▇▇▇▇▇
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made and entered into the 22nd day of April, 1991,
effective February 27, 1991 (the "Effective Date"), by and between Material
Sciences Corporation, a Delaware corporation (the "Company"), and G. ▇▇▇▇▇▇
▇▇▇▇▇ of ▇▇▇▇▇, Illinois (the "Executive").
WHEREAS, the Company wishes to employ the Executive as Chairman of the
Board, President and Chief Executive officer of the Company, under the terms and
conditions hereinbelow set forth; and
WHEREAS, the Executive wishes to accept such employment under those terms
and conditions;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the Company and
the Executive (the "Parties") agree as follows:
1. Term of Employment.
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The term (the "Term") of the Executive's employment hereunder
commenced on the Effective Date, and shall continue through February 28, 1994
(the "Termination Date"); provided that (i) the Term shall automatically renew
for one year on the Termination Date and each anniversary thereof, unless either
Party shall deliver written notice to the other Party, at least one year in
advance, of such Party's election not to have the term renewed, (ii) the Term
shall terminate upon the Executive's death, Disability (as defined below) or
resignation and (iii) the Term may be terminated by the Company at any time for
Cause (as defined below) or without Cause.
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2. Position, Duties, Responsibilities.
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(a) During the Term, the Executive will serve as President and Chief
Executive Officer of the Company, with duties and responsibilities including
general supervision, direction and control of the business and affairs of the
Company, subject to the control of the Board of Directors of the Company (the
"Board"), and such additional duties, consistent with his position, as may be
assigned from time to time by the Board. The Executive will devote his full
business time, attention and energies to the operations and activities of the
Company, except for reasonable vacations and for reasonable periods of illness
or incapacity. It is understood that the Executive may need to devote small
amounts of time during the first weeks of his employment to concluding certain
transactions on behalf of his prior business. It is also understood that the
Executive may, with the prior consent of the Board (which consent shall not be
unreasonably withheld), serve on the board of directors of one or more other
corporations not in competition with the Company and its subsidiaries.
(b) The Board has appointed Executive to fill a newly created vacancy
on the Board and nominated Executive for election as a director at the annual
meeting of the Company's stockholders scheduled for June 19, 1991. With respect
to all regular elections of directors during the Term, subject to the fiduciary
duties of the Board, the Company shall nominate, and use its best efforts to
elect, Executive to serve as a member of the Board. Upon the termination of the
Term for any reason, Executive shall resign as a direct subsidiaries, as the
case may be. During the Term, so long as the Executive shall be a director,
Executive shall serve as Chairman of the Board.
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3. Salary.
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The Company will pay the Executive a base salary ("Base Salary") at an
annual rate of $250,000, payable in accordance with the Company's payroll
practices. The Board or the Compensation Committee thereof (the "Compensation
Committee") shall review the Base Salary annually for increase, in the sole
discretion of the Board or the Compensation Committee, as the case may be.
4. Initial Payment.
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In connection with the execution of this Agreement, the Executive has
received a payment of $60,000. Such payment is separate from, and in addition
to, any compensation otherwise received hereunder.
5. Annual Bonus.
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The Executive shall participate in the Company's annual bonus program
(the "Bonus Program"). His target bonus for the Company's 1992 Fiscal Year,
stated as a percentage of salary, will be the target currently provided under
the Bonus Program for the chief executive officer. The Compensation Committee
will work with the Executive to establish personal performance targets for the
Company's 1992 Fiscal Year.
6. Equity Opportunity.
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(a) Restricted Stock.
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(i) The Company hereby grants to the Executive, on the terms,
conditions and restrictions set forth in this Section 6(a), 20,000 shares (the
"Restricted Shares") of the Company's common stock, $.02 par value ("Stock").
The Executive shall have all the rights of a stockholder with respect to the
Restricted Shares (including the right to vote the Restricted Shares
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and the right to receive dividends with respect to the Restricted Shares),
except as provided in subsection (ii) below.
(ii) Except as provided in subsection (iii) below, the Executive
may not sell, transfer, assign, pledge or otherwise encumber any of the
Restricted Shares (any such disposition or encumbrance being referred to herein
as a "transfer"). Any transfer or purported transfer by the Executive of any
Restricted Shares shall be null and void and the Company shall not recognize or
give effect to such transfer on its books and records or recognize the person to
whom such purported transfer has been made as the legal or beneficial holder of
such shares. The Restricted Shares shall not be subject to execution,
attachment or other process and no person shall be entitled to exercise any
rights of the Executive as the holder of such Restricted Shares by virtue of any
attempted execution, attachment or other process until the restrictions imposed
herein on the transfer of the Restricted Shares lapse as provided in subsection
(iii) below. All certificates representing Restricted Shares shall have
endorsed thereon the following legend:
"The shares represented by this certificate are subject to
restrictions on transfer set forth in an Employment Agreement made
April 22, 1991, between the Company and the registered holder, a copy
of which is on file at the principal office of the Company. Any
transfer or purported transfer of the shares represented by this
certificate in violation of such Employment Agreement shall be null
and void."
The Executive may request the removal of such legend from certificates
representing any Restricted Shares as to which the restrictions imposed herein
on the transfer of such Restricted Shares have lapsed as provided in subsection
(iii) below.
(iii) If the Executive's employment with the Company has not been
terminated by the Company or the Executive prior to February 27, 1993, the
restrictions on transfer
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imposed by subsection (ii) above shall lapse as of February 27, 1993 with
respect to all of the Restricted Shares. In the event that, prior to February
27, 1993, (a) the Company terminates the employment of the Executive without
Cause or (b) following a Change in Control (as defined below), the Executive's
employment with the Company is terminated by the Executive for Good Reason (as
defined below) or by the Company without Cause, the restrictions on transfer
imposed by subsection (ii) above shall lapse as of the date of such termination
with respect to all of the Restricted Shares. In the event that, prior to
February 27, 1993, the Executive's employment with the Company is terminated due
to the Executive's Disability, (y) the restrictions on transfer imposed by
subsection (ii) above shall lapse as of the date of such termination with
respect to 10,000 of the Restricted Shares and (z) the Executive shall forfeit
to the Company, on the date of such termination, the other 10,000 of the
Restricted Shares. In the event that, prior to February 27, 1993, the
Executive's employment with the Company is terminated (including in the event of
the death of the Executive) other than as specified in one of the two
immediately preceding sentences, the Executive shall forfeit to the Company, on
the date on which his employment is terminated, all of the Restricted Shares.
(iv) In the event of any change in capitalization of the Company
which affects the Restricted Shares (such as a stock dividend, a stock
distribution, a stock split, a subdivision or combination of shares, or a merger
or consolidation to which the Company is a party), the Compensation Committee
shall make or cause to be made any proportionate adjustments necessary to
reflect such change with respect to the Restricted Shares, notwithstanding that
the Restricted Shares are subject to the restrictions on transfer imposed by
subsection (ii) above. The
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decision of the Compensation Committee as to the amount and timing of any such
adjustment shall be conclusive.
(v) Such rights are not subject to execution, attachment or other
process and no person shall be entitled to exercise any rights hereunder by
virtue of any attempted execution, attachment or other process.
(vi) The Restricted Shares are being acquired for investment and
not with a view to the distribution thereof within the meaning of the Securities
Act of 1933, as amended.
(b) Stock Options.
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The Executive was awarded, on February 27, 1991, options (the
"Options") under the Company's 1985 Stock Option Plan for Key Employees (the
"1985 Plan") for 80,000 shares of Stock at an exercise price of $11.88 per share
subject, in the case of 10,000 of such shares, to the approval of an amendment
to Section 2 of the 1985 Plan by the Company's stockholders. To confirm such
grant, the Company and the Executive shall execute a Non-Qualified Stock Option
Agreement with respect to 36,400 of such shares in the form of Exhibit A
attached hereto, a Non Qualified Stock Option Agreement with respect to 10,000
of such shares in the form of Exhibit B attached hereto and an incentive Stock
Option Agreement with respect to 33,600 of such shares in the form of Exhibit C
attached hereto (collectively, the "option Agreements"). If such amendment to
the 1985 Plan is not approved by the Company's stockholders, the Company and the
Executive will agree on a mutually satisfactory arrangement to secure the
economic benefits of such grant for the Executive.
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7. Supplemental Pension.
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In lieu of participation in the Company's Supplemental Pension Plan
applicable to other members of senior management, the Executive shall be
entitled to a supplemental pension (the "Special Pension"), which, when stated
as a single life annuity commencing at age 65, will provide an annual benefit
calculated as: (A) (i) the Executive's average Base Salary over the last 12
consecutive months of his employment with the Company times (ii) six percent
(6%) times the number of years the Executive is employed by the Company, up to a
maximum of five (5) years, reduced by (B) (x) the primary old age benefit
payable to the Executive under the Social Security Act, and (y) any benefit
payable to the Executive pursuant to any other pension or retirement plan or
program of the Company, other than any amounts payable under the Company's
Savings and Investment Plan on account of contributions thereunder made by the
Executive (but not matching contributions made by the Company or any of its
subsidiaries). A partial accrual of 1-1/2 percent (1-1/2%) per fiscal quarter
will be credited for purposes of clause (A) (ii) above for any partial year of
employment after the third anniversary of the Effective Date. It is understood
that the percentage calculated pursuant to clause (A)(ii) above shall never
exceed 30%.
The Executive shall be entitled to receive the Special Pension in any
form available under the Company's tax-qualified defined benefit pension plan
for salaried employees (the "Company Plan"), adjusted using such actuarial
assumptions and interest rates as are in effect under the Company Plan from time
to time (the "Plan Methods"). Amounts described in clause (B) above shall also
be determined using the Plan Methods.
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8. Other Benefits.
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The Company will provide or make available to the Executive such other
benefits and perquisites as are provided to other members of senior management
from time to time. These shall include, without limitation, membership dues at
a country club, and an automobile to be made available pursuant to the Company's
automobile program. The Executive will be reimbursed for all reasonably
incurred business expenses properly accounted for.
9. Termination of Employment.
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9.1 Death.
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In the event the Term is terminated due to the death of the
Executive:
A. Base Salary accrued to the date of the Executive's death will be
paid to the Executive's estate.
B. Other benefits shall be as set forth herein and as determined
under the terms and conditions of any other applicable plans, programs or
other coverages maintained by the Company, including, without limitation,
Section 6(a) hereof with respect to the Restricted Shares and the option
Agreements with respect to the Options.
9.2 Disability.
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In the event the Term is terminated due to the Executive's Disability
(as defined in the Company's long-term disability plan as in effect from time to
time):
A. Base Salary, at the rate in effect on the date of the Executive's
termination of employment, will continue to be paid until the Executive
begins receiving benefits under the Company's long-term disability plan.
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B. Other benefits will be as set forth herein and as determined under
the terms and conditions of any other applicable plans, programs or other
coverages maintained by the Company, including, without limitation, Section
6(a) hereof with respect to the Restricted Shares and the Option Agreements
with respect to the Options.
9.3 Termination by the Company without Cause.
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The Company may terminate the Executive's employment at any time
without Cause, in which case, except as otherwise provided in section 9.6:
A. The Executive shall continue to be paid his Base Salary as in
effect on the date of termination of employment as follows:
(i) if termination occurs on or prior to the second anniversary of the
Effective Date, during the 12 months from and after the end of the month in
which such termination occurs, and
(ii) if termination occurs thereafter, during the 24 months from
and after the end of the month in which such termination occurs.
B. Medical, hospitalization and any other health benefits shall
continue to be provided to the Executive by the Company for: (i) twelve
months, if termination occurs on or prior to the second anniversary of the
Effective Date, or (ii) twenty-four months, if termination occurs
thereafter; provided that the Company shall have no obligation to provide
such benefits from and after the date on which the Executive is eligible
for comparable coverage under any plan maintained by a successor employer.
C. Other benefits will be as set forth herein and as determined under
the terms and conditions of any other applicable plans, programs or other
coverages maintained by the
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Company, including, without limitation, Section 6(a) hereof with respect to
the Restricted Shares and the Option Agreements with respect to the
Options.
9.4 Termination by the Company for Cause.
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If the Company terminates the Executive's employment for Cause,
the Executive shall be entitled only to such Base Salary as is accrued to the
date of termination. Other benefits will be as set forth herein and as
determined under the terms and conditions of any other applicable plans,
programs or other coverages maintained by the Company, including, without
limitation, Section 6(a) hereof with respect to the Restricted Shares and the
Option Agreements with respect to the Options. For purposes of this Agreement,
Cause shall mean:
A. the Executive's conviction of, or plea of nolo contendere to, a
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felony or a crime involving moral turpitude;
B. the commission by the Executive of an act involving fraud with
respect to the Company or any of its subsidiaries;
C. the Executive's continued willful neglect of duties, after
written notice and an opportunity to correct; or
D. the Executive's gross misconduct in the performance of duties,
injurious to the reputation, business or operation of the Company or any of
its subsidiaries.
The Executive must be notified in writing of any termination of
his employment for Cause. The Executive will then have the right, within ten
days of receipt of such notice, to file a written request for review. In such
case, the Executive will be given the opportunity to be heard, personally or by
counsel, by the members of the Board who are not then employees of the Company
(the "Independent Directors") and a majority of the Independent Directors must
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thereafter confirm that such termination is for Cause. If the Independent
Directors do not provide such confirmation, the termination shall be treated as
a termination by the Company without Cause.
9.5 Termination by the Executive.
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The Executive may terminate the Term at any time, in which case
the Executive shall be entitled only to such Base Salary, except as otherwise
provided in Section 9.6, as is accrued to the date of termination. Other
benefits will be as set forth herein and as determined under the terms and
conditions of any other applicable plans, programs or other coverages maintained
by the Company, including, without limitation, Section 6(a) hereof with respect
to the Restricted Shares and the Option Agreements with respect to the Options.
9.6 Certain Terminations of Employment Following a Change in Control.
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Following a Change in Control (as defined below), in the event
the Term is terminated by the Executive for Good Reason (as defined below) or by
the Company without Cause, in lieu of the provisions of Section 9.3 or 9.5:
A. Executive shall, within ten (10) days, receive a lump sum payment
equal to 200% of his Base Salary at the rate in effect on the date of
termination of employment.
B. Medical, hospitalization and any other health benefits shall
continue to be provided to the Executive by the Company for twenty-four
months; provided that the Company shall have no obligation to provide such
benefits from and after the date on which the Executive is eligible for
comparable coverage under any plan maintained by a successor employer.
C. Other benefits will be as set forth herein and as determined
under the terms and conditions of any other applicable plans, programs or
other coverages maintained by the
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Company, including, without limitation, Section 8 hereof with respect to
the Restricted Shares and the Option Agreements with respect to the
options.
Notwithstanding anything herein to the contrary, if any portion of
the payments or benefits provided to the Executive under this Agreement and any
other plan or program of the Company constitutes a "parachute payment," as such
term is defined in Section 28OG(b)(2) of the Internal Revenue Code of 1986, as
amended (the "Code"), such payments and benefits shall be reduced to the extent
necessary so that no portion thereof shall be subject to the excise tax imposed
by Section 4999 of the Code. The determinations to be made with respect to this
paragraph shall be made by the Company. If within 30 days after the Company
gives the Executive notice that there will be a reduction pursuant to this
paragraph, the Executive gives the Company notice that he reasonably objects to
such determination, the Parties shall use reasonable efforts to resolve the
matter. If the Parties are unable to so resolve such matter within 30 days after
the Executive gives such notice, the matter shall be submitted to an accounting
firm (the "Auditor") jointly selected by the Company and the Executive. The
Auditor shall be a nationally recognized United States public accounting firm
that has not during the two years preceding the date of its selection acted, in
any way, on behalf of the Company, or any of its subsidiaries. If the Executive
and the Company cannot agree on the firm to serve as the Auditor, then the
Auditor shall be selected by lot from the "Big Five" nationally recognized
United States public accounting firms after eliminating one firm designated as
objectionable by each of the Company and the Executive. The fees and expenses of
the Auditor shall be paid 50% by the Company and 50% by the Executive. The
determination of the Auditor shall be final and binding upon the Parties. If the
notice described above is not given by the Executive within such 30 day period,
the Company's determination shall be final and binding upon
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the Parties. If a final and binding determination is made that a reduction in
the aggregate of all payments due to the Executive upon a Change in control is
required by this paragraph, the Executive shall have the right to specify the
portion of such reduction, if any, that will be made under this Agreement and
each plan or program of the Company. If the Executive does not so specify within
60 days following the date of such determination, the Company shall determine,
in its sole discretion, the portion of such reduction, if any, to be made under
this Agreement and each plan or program of the Company.
For purposes of this Section 9.6, Good Reason shall mean (i) the
loss of the Executive's position as either President or Chief Executive officer,
or any significant loss of responsibility in connection with such position, or
the assignment of duties inconsistent with his position as Chief Executive
Officer, (ii) an attempted reduction in the Executive's compensation or
benefits, other than a reduction in benefits applicable to all employees of the
Company receiving such benefit or to all senior executives of the Company
receiving such benefit, or (iii) a relocation of the CompanyFs headquarters,
without the Executive's consent, beyond a fifty (50) mile radius of Chicago,
Illinois.
For purposes of this Agreement, Change in Control shall mean (i) any
individual, partnership, joint venture, association, trust, company or other
entity (including a "group" as defined in section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) becomes the owner of more than thirty-five
percent (35%) of the outstanding shares of Stock, (ii) the Incumbent Directors,
as defined below, cease to constitute a majority of the Board, or (iii) the
Company combines with another company, and the shareholders of the Company,
determined as of the date immediately before such combination, hold less than
fifty percent (50%) of. the total of all voting shares of the
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entity resulting from such combination outstanding or to be outstanding as a
result of the combination; provided, however, that a Change in Control shall not
include any such ownership, change in directors or combination if the Executive
(i) receives payments in connection therewith from the Acquiring Person (as
defined below), other than payments pursuant to his employment arrangements with
the Company as in effect prior to such ownership, change in directors or
combination and payments with respect to shares of Stock and Options owned by
the Executive on the same terms as payments are made to other stockholders and
optionholders of the company, or (ii) owns (not including ownership prior to the
commencement of the transactions resulting in the Change in Control of less than
one percent of the outstanding stock of any class of an Acquiring Person which
is publicly traded) or acquires in connection with such ownership, change in
directors or combination (on terms different from those available to other
stockholders and optionholders of the Company) equity securities of the
Acquiring Person. For purposes of the foregoing, Acquiring Person means the
Person or Persons owning such shares, sponsoring such change in directors or
combining with the Company, and affiliates of such Person or Persons. "Incumbent
Directors" shall mean the directors of the Company on February 26, 1991 who were
not then employed by the Company, and any new director whose appointment or
election is not opposed in writing by a majority of the then Incumbent
Directors.
Following a Change in Control, the Company's obligation to make the
payments described in this Section 9.6 shall be absolute and unconditional and
shall not be subject to setoff, counterclaim, recoupment or other defenses or
rights the Company may have against the Executive. All amounts payable by the
Company under this Section 9.6 shall be paid without notice or demand. Each and
every payment made under this Section 9.6 by the Company shall be final and the
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Company will not seek to recover all or any part of any such payment from the
Executive or other person entitled thereto for any reason whatsoever.
If there is a termination of the Term after a Change in Control and a
good faith dispute arises with respect to the enforcement of the Executive's
rights under this Agreement with respect thereto, the Executive shall recover
from the Company any reasonable attorney's fees and necessary costs and
disbursements incurred as a result of such dispute, regardless of the outcome,
together with prejudgment interest on any money judgment or arbitration award
obtained by the Executive with respect to such dispute, calculated at the Base
Rate of interest announced by Continental Bank, N.A., from time to time, from
the date that payments to him should have been made under this Agreement.
10. Confidential Information. The Executive acknowledges that the trade
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secrets and other confidential information and data obtained by him while
employed by the Company concerning the business or affairs of the Company and
its subsidiaries ("Confidential Information") are the property of the Company or
such subsidiary. Therefore, Executive agrees that he shall not disclose to any
unauthorized person or use for his own account any Confidential Information
without the prior written consent of the Board, unless and to the extent that
such matters become generally known to and available for use by the public other
than as a result of Executive's acts or omissions to act or as may be required,
upon the advice of counsel, to comply with any lawful request made by a court or
other governmental agency. Executive shall deliver to the Company at the
termination of the Term, or at any other time the Company may request, all
memoranda, notes, plans, records, reports, computer tapes and software and other
documents and data (and copies thereof) relating to
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the Confidential Information or the business of the Company or any subsidiary
which he may then possess or have under his control.
11. Non-Compete: Non-Solicitation.
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(a) Executive acknowledges that in the course of his employment with
the Company he will become familiar with the Company's trade secrets and with
other confidential information concerning the Company and its Subsidiaries and
that his services will be of special, unique and extraordinary value to the
Company. Therefore, Executive agrees that, during the Term and for two years
thereafter (one year if the Executive's employment is terminated without Cause
on or prior to the second anniversary of the Effective Date) (the "Noncompete
Period"), he shall not, directly or indirectly, own, manage, control,
participate in, consult with, render services for, or in any manner engage in
any business competing with the businesses of the Company or its subsidiaries as
such businesses exist or are in process on the date of the termination of the
Term, within any geographical area in which the Company or its subsidiaries
engage or plan to engage in such businesses. Nothing herein shall prohibit
Executive from (i) being a passive owner of not more than 2% of the outstanding
stock of any class of a corporation which is publicly traded, so long as
Executive has no active participation in the business of such corporation, or
(ii) with the prior consent of the Board (which consent shall not be
unreasonably withheld), serving as a member of the board of directors of any
corporation (it being understood that in determining whether or not to grant
such consent the Board shall consider, among other factors, the extent to which
the members of any such board generally participate in the management of any
such corporation).
(b) During the Noncompete Period, Executive shall not, directly or
indirectly through another entity, (i) induce or attempt to induce any employee
(other than his secretary) of the
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Company or any subsidiary of the Company to leave the employ of the Company or
such subsidiary, or in any way interfere with the relationship between the
Company or any subsidiary of the Company and any employee thereof, or (ii)
induce or attempt to induce any customer, supplier, licensee, partner or other
business relation of the Company or any subsidiary of the Company to cease doing
business with the Company or such subsidiary, or in any way interfere with the
relationship between any such customer, supplier, licensee, partner or business
relation and the Company or any subsidiary of the Company.
12. Payment Limitations.
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Notwithstanding anything contained in this Agreement to the contrary,
the Company shall not be obligated to make any payment under this Agreement
after the date on which the Executive is in breach of Section 10 or 11 hereof.
13. Enforcement.
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If, at the time of enforcement of Section 10 or 11 of this Agreement,
a court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area. Because the Executive's
services are unique and because the Executive has access to Confidential
information, the Parties agree that money damages would be an inadequate remedy
for any breach of this Agreement. Therefore, in the event a breach or threatened
breach of this Agreement, the Company or its successors or assigns may, in
addition to other rights and remedies existing in their favor, apply to any
court of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce, or prevent any violation of, the provisions
hereof (without posting a bond or other security).
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14. Arbitration.
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The Parties agree that any controversy or claim arising out of or
relating to this Agreement, or the breach of any provision hereof, or the terms
or conditions of employment, including whether such controversy or claim is
arbitrable, will be settled by arbitration in Chicago, Illinois, in accordance
with the rules for commercial arbitration of the American Arbitration
Association as in effect at the time a demand for arbitration under the rules is
made, and judgment upon the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. The decision of the arbitrators,
including determination of the amount of any damages suffered, will be
conclusive, final and binding on the Parties, their heirs, executors,
administrators, successors and assigns. Subject to Section 9.6 above, the cost
of arbitration incurred by either Party will be borne by that Party unless
otherwise determined by the arbitrators.
15. Withholding; Other Tax Matters.
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Anything to the contrary notwithstanding, all payments required to
be made by the Company hereunder to the Executive, his spouse, his estate or
beneficiaries, will be subject to withholding of such amounts relating to taxes
as the Company may reasonably determine it should withhold pursuant to any
applicable law or regulation. In lieu of withholding such amounts in whole or in
part, the Company may, in its sole discretion, accept other provisions for
payment of taxes as required by law, provided it is satisfied that all
requirements of law affecting its responsibilities to withhold such taxes have
been satisfied. As a condition precedent to his receipt of the Restricted Shares
hereunder, the Executive agrees to pay to the Company at such times as the
Committee shall determine such amounts as the Committee shall deem necessary to
satisfy any withholding taxes due on income that the Executive recognizes as a
result of the lapse of the restrictions described in
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subsection of Section 6(a) hereof. The Executive has elected, in his sole
discretion, not to make an election with the Internal Revenue Service under
Section 83(b) of the Code. Notwithstanding the foregoing, the Parties
acknowledge and agree that the Executive is responsible for all federal, state
and local income and other taxes payable as a result of any transaction
contemplated by this Agreement or any other plan, program or coverage maintained
by the Company.
16. Assignability; Binding Nature.
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This Agreement is binding upon, and will inure to the benefit of, the
Parties and their respective successors, heirs, administrators, executors and
assigns. No rights or obligations of the Executive under this Agreement may be
assigned or transferred by the Executive except that (a) his rights to
compensation and benefits hereunder, which rights will remain subject to the
limitations of this Agreement, may be transferred by will or operation of law,
and (b) his rights under employee benefit plans or programs as described in
Section 8 above, may be assigned or transferred in accordance with such plans,
programs or regular practices thereunder. No rights or obligations of the
Company under this Agreement may be assigned or transferred except that such
rights or obligations may be assigned or transferred by operation of law in the
event of a merger or consolidation in which the Company is not the continuing
entity, or the sale or liquidation of all or substantially all of the assets of
the Company, provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in
this Agreement, either contractually or as a matter of law.
17. Entire Agreement.
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This Agreement (including the documents referred to herein) contains
the entire agreement between the Parties concerning the subject matter hereof
and supersedes all prior agreements, understandings, discussions, negotiations,
and undertakings, whether written or oral, between the Parties with respect
thereto.
18. Amendments and Waivers.
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This Agreement may not be modified or amended except by a writing
signed by both Parties. A Party may waive compliance by the other Party with any
term or provision of this Agreement, or any part thereof, provided that the term
or provision, or part thereof, is for the benefit of the waiving Party. Any
waiver will be limited to the facts or circumstances giving rise to the
noncompliance and will not be deemed either a general waiver or modification
with respect to the term or provision, or part thereof, being waived, or as to
any other term or provision of this Agreement, nor will it be deemed a waiver of
compliance with respect to any other facts or circumstances then or thereafter
occurring.
19. Notices.
-------
Any notice given hereunder will be in writing and will be deemed given
when delivered personally or by courier, or five days after being mailed,
certified or registered mail, duly addressed to the Party concerned at the
address indicated below or at such other address as such Party may subsequently
provide, in accordance with the notice and delivery provisions of this Section
19, such notice and delivery:
-21-
To the Company:
Material Sciences Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Secretary
With a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
To the Executive:
G. ▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
20. Severability.
------------
In the event that any provision or portion of this Agreement will be
determined to be invalid or unenforceable for any reason, the remaining
provisions or portions of this Agreement will be unaffected thereby and will
remain in full force and effect to the fullest extent permitted by law.
21. Survivorship.
------------
The respective rights and obligations of the Parties hereunder will
survive any termination of the Term.
-22-
22. References.
----------
In the event of the Executive's death or a judicial determination of
his incompetence, reference in this Agreement to the Executive will be deemed,
where appropriate, to refer to his legal representative or, where appropriate,
to his beneficiary or beneficiaries.
23. Governing Law.
-------------
This Agreement will be governed by and construed and interpreted in
accordance with the laws of the State of Illinois without reference to the
principles of conflicts of law.
24. Headings.
--------
The headings of Sections contained in this Agreement are for
convenience only and will not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first written above.
Material Sciences Corporation
By:__________________________________
Its:_________________________________
_____________________________________
G. ▇▇▇▇▇▇ ▇▇▇▇▇
-23-
EXHIBIT A
MATERIAL SCIENCES CORPORATION
-----------------------------
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
(1985 STOCK OPTION PLAN FOR KEY EMPLOYEES)
------------------------------------------
Material Sciences Corporation, a Delaware corporation (the "Company"),
hereby grants to G. ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Employee"), pursuant to the Material
Science Corporation 1985 Stock Option Plan for Key Employees (the "Plan"), an
option to purchase from the Company 36,400 shares of its common stock, $.02 par
value (the "Common Stock"), at a price of $11.88 per share (the "Option Price"),
to be exercisable on the terms and conditions set forth herein. This option
shall expire on February 27, 2001 (the "Expiration Date"), subject to earlier
expiration in connection with the termination of your employment or your death
as provided in paragraphs 1, 2, 8 and 10 below. This option is not intended to
qualify as an incentive stock option under Section 422 of the Internal Revenue
Code of 2986, as amended (the "Code"), and will be treated accordingly by the
Company and the Employee.
1. The option to purchase shares hereunder may be exercised only to the
extent that it has vested and, except as provided in paragraphs 8 and 10 below,
only if on the date of exercise the Employee has been continuously employed by
the Company since February 27, 1991. The option shall vest and become
exercisable as follows:
(a) 9,100 shares of Common Stock shall vest on the earlier of (i)
February 27, 1993 or (ii) the date on which the price of a share of Common Stock
on any domestic securities exchange on which shares Common Stock are listed (the
"Trade Price") equals or exceeds $25.00;
-1-
(b) an additional 9,200 shares of Common Stock shall vest on the
earlier of (i) February 27, 1994 or (ii) the date on which the Trade Price
equals or exceeds $30.00;
(c) an additional 9,100 shares of Common Stock shall vest on the
earlier of (i) February 27, 1995 or (ii) the date on which the Trade Price
equals or exceeds $40.00; and
(d) an additional 9,100 shares of Common Stock shall vest on the
earlier of (i) February 27, 1996 or (ii) the date on which the Trade Price
equals or exceeds $50.00.
Except as provided in paragraph 2 below, upon the Employee ceasing to
be employed by the Company for any reason (including death or disability), any
portion of this option that was not exercisable and not vested on the date of
such employment termination shall expire and be forfeited as of such date.
Leaves of absence for periods and purposes conforming to the personnel policies
of the Company and approved by the Compensation Committee (the "Committee") of
the Board of Directors of the Company (the "Board") shall not be deemed
termination of employment or interruptions of continuous service.
2. Notwithstanding paragraph 1 above, if, following a Change in Control
(as defined below), the employment of the Employee with the Company is
terminated by the Employee for Good Reason (as defined below) or by the Company
without Cause (as defined below), this option shall vest and become exercisable
with respect to a number of shares of Common Stock equal to 50% of the number of
shares of Common Stock subject to this option that were not vested on the date
of such employment termination. The option with respect to the shares of Common
Stock that remain unvested shall expire and be forfeited as of the date of such
employment termination. For purposes of this paragraph, Change in Control, Good
Reason and Cause shall have the respective
-2-
meanings assigned to such terms in the Employment Agreement made April __, 1991
by and between the Company and the Employee.
3. Subject to the limitations herein set forth, exercise of this option
shall be by delivery of written notice to the Secretary of the Company in Elk
Grove Village, Illinois, specifying the number of shares to be purchased,
provided, however, that no fractional shares may be purchased hereunder at any
time, and the Company shall not be obligated to make any payment in lieu of
fractional shares. Payment shall be made either (i) in cash or by check, bank
draft or money order to the order of Material Sciences Corporation
(collectively, "cash"), or (ii) with the consent of the Board, in shares of
Common Stock (valued as of the date of the notice of exercise) with a value
equal to or less than the total option price, plus cash in the amount, if any,
by which the total option price exceeds the value of such shares of Common
Stock. Payment for shares with respect to options exercised for cash shall be
delivered with the notice specifying the number of shares being purchased.
Payment for shares with respect to options exercised for Common Stock and cash,
if any, shall be delivered to the Treasurer of the Company not later than the
end of the third business day after the exercise date. In the case of payment in
stock, such payment shall be made by delivery of the necessary share
certificates, with executed stock powers attached, to the Treasurer of the
Company or, if such certificates have not yet been delivered to the optionee, by
written notice to the Treasurer of the Company requesting that the shares
represented by such certificates be applied toward payment as hereinabove
provided.
4. The Employee hereby represents that any shares which are not
registered under the Securities Act of 1933, as amended (the "Securities Act"),
purchased upon exercise of this option will be purchased for investment and not
with a view to the distribution thereof within the meaning
-3-
of the Securities Act; and if requested by the Company, the Employee shall
submit a written statement, in form satisfactory to counsel for the Company, to
the effect that such representation is true and correct as of the date of
purchase of any shares hereunder. As a further condition precedent to the
exercise of this option, the Employee shall comply with all regulations and
requirements of any regulatory authority having control of or supervision over
the issuance of the Common Stock and, in connection therewith, shall execute any
documents which the Committee shall, in its sole discretion, deem necessary or
advisable.
5. As a condition precedent to the exercise of this option, the Employee
shall, if requested by the Company, pay or deliver to the Company (or, in the
case of shares of Common Stock, have the Company hold back), in addition to the
option price, such amount of cash and/or shares of Common Stock (valued as of
the date of exercise) as the Company may be required, under applicable federal,
state or local law or regulations, to withhold and pay over as income or other
withholding taxes.
6. Upon the exercise of this option in whole or in part, the Company
shall deliver a certificate or certificates representing the number of shares
purchased against full payment therefore in the manner set forth in paragraph 3
hereof and the Company shall pay all original issue or transfer taxes and all
other fees and expenses incident to such delivery, except as otherwise provided
in paragraph 5 hereof.
7. The Employee shall not be entitled to any privileges of ownership with
respect to the shares subject to this option unless and until purchased and
delivered upon the exercise of this option, in whole or in part.
-4-
8. Subject to paragraph 15 below, if the Employee shall cease to be
employed by the Company for any reason other than death, this option may be
exercised by the Employee within three months after he ceases to be employed by
the Company (12 months if he ceases to be so employed due to total and permanent
disability), but in no event after the Expiration Date.
9. Neither this option nor any rights hereunder may be transferred other
than by will or the laws of descent and distribution, and during his lifetime
this option shall be exercisable only by the Employee. Any other transfer or any
attempted assignment, pledge or hypothecation, whether or not by operation of
law, shall be void. This option shall not be subject to execution, attachment or
other process, and no person shall be entitled to exercise any rights of the
Employee hereunder or possess any rights hereunder by virtue of any attempted
execution, attachment or other process.
10. Subject to paragraph 15 below, if the Employee shall die while
employed by the Company, within twelve months after ceasing to be employed by
the Company due to total and permanent disability or within three months after
ceasing to be employed by the Company for any other reason, this option may be
exercised at such time and to such extent that the Employee, had he lived, would
have been entitled to exercise such option (but in no event after the Expiration
Date or the expiration of one year from the date of the Employee's death) either
by the person designated in the Employee's will for such purpose or, if no such
person is so designated or if the Employee dies intestate, the Employee's
personal representative.
11. The Company shall at all times prior to the Expiration Date reserve
and keep available, either in its treasury or out of its authorized but unissued
shares of Common Stock, the full number of shares subject hereto from time to
time.
-5-
12. The Company hereby waives any rights it may have under Section 9 of
the Plan to repurchase shares of Common Stock purchased upon the exercise of
this option.
13. Upon the occurrence of any of the following events prior to the
Expiration Date, this option shall be adjusted as follows:
(a) in case the number of outstanding shares of Common Stock shall be
increased by stock split, stock dividend, recapitalization or other similar
relevant change in the capitalization of the Company after the date hereof
(which shall not include the sale by the Company of shares of Common Stock or
securities convertible into such shares), the number of shares which may
thereafter be purchased hereunder shall be proportionately increased and the
option price per share shall be proportionately decreased;
(b) in case the number of outstanding shares of Common Stock shall be
decreased by reverse stock split, combination of shares, recapitalization or
other similar relevant change in the capitalization of the Company (which shall
not include the purchase or retirement by the Company of shares of Common Stock
or securities convertible into such shares), the number of shares which may
thereafter be purchased hereunder shall be proportionately decreased and the
option price per share shall be proportionately increased; and
(c) in case the Company shall be a party to a merger, consolidation
or any other reorganization not described in clauses (a) and (b) above, or shall
sell all or substantially all of its assets, and pursuant to such transaction
the outstanding shares of Common Stock shall be exchanged for other shares or
securities of the Company or of another corporation, the Employee shall have the
right to purchase, at the aggregate option price provided for in this option and
on the same terms and conditions (including with respect to vesting), the kind
and number of shares or other securities of the Company or of such other
corporation which would have been issuable to him in respect of the number of
shares of Common Stock subject to this option immediately prior to the effective
date of such transaction if such shares had been then owned by him. The Company
agrees to use its best efforts to provide for the preservation of the Employee's
rights as described in the second sentence of Section 13 of the Plan.
Any adjustment pursuant to this paragraph 13 shall be effected in a manner such
that the difference between the aggregate fair market value of the shares or
other securities subject to this option immediately after giving effect to such
adjustment and the aggregate option price of such shares or other securities
shall be substantially equal to (but shall not be greater than) the difference
between the aggregate fair market value of the shares of Common Stock subject to
this option immediately
-6-
prior to such adjustment and the aggregate option price of such shares. The
decision of the Board as to the exact manner, amount and tinting of any such
adjustment shall be conclusive.
14. As used in this option, employment by the Company shall include
employment by a corporation which is a "parent corporation" or a "subsidiary
corporation" of the Company, as such terms are defined in subsections (e) and
(f) of Section 424 of the Code, and employment by any corporation, or a "parent
corporation" or "subsidiary corporation" of such corporation, assuming this
option, or issuing a stock option in lieu thereof, in a transaction to which
Section 424 (a) of the Code shall apply.
15. This option is subject to the condition that if at any time the
Committee shall reasonably determine, in its discretion, that the listing of the
shares subject hereto on any securities exchange, or the registration or
qualification of such shares under any federal or state law, or the consent or
approval of any regulatory body, shall be necessary or desirable as a condition
of , or in connection with, the granting of this option or the purchase or
delivery of shares hereunder, this option may not be exercised, in whole or in
part, and the shares hereunder may not be delivered, as the case may be, unless
and until such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not reasonably acceptable
to the Committee; provided, however, that to the extent this option is to expire
prior to the Expiration Date at a time when this option may not be exercised due
to the provisions of this paragraph 15, this option shall continue to be
exercisable until the earlier of (i) one month after the date the exercise of
this option is not so restricted by this paragraph 15 and (ii) the Expiration
Date. The Company agrees to make every reasonable effort to effect or obtain any
such listing, registration, qualification, consent or approval.
-7-
16. In no event shall the granting of this option or its acceptance by the
Employee give or be deemed to give the Employee any right to continue in the
employment of the Company or any of its subsidiaries.
17. The Committee shall have the right to resolve all questions which may
arise in connection with this option or its exercise.
18. This option shall be binding upon and inure to the benefit of any
successor or successors of the Company and any person or persons who shall, upon
the death of the Employee, acquire any rights under paragraph 10 hereof.
19. The parties agree to execute such further instruments and to take such
further actions as may reasonably be required to carry out the intent of this
Agreement.
20. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post office, by certified mail with postage and fees prepaid,
return receipt requested, addressed to the other party hereto at his address
hereinafter shown below his signature or at such other address as such party may
designate by ten (10) days' advance written notice to the other party.
21. This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof.
22. This Agreement shall be governed by and construed under the laws of
the State of Illinois.
-8-
23. This option shall be null and void unless the Employee shall accept
the same below.
Dated this _____ day of ____________, 199__.
MATERIAL SCIENCES CORPORATION
By:__________________________________
Its:_________________________________
Accepted this ___ day
---------------------
of _________, 1991.
____________________
G. ▇▇▇▇▇▇ ▇▇▇▇▇
Address: _________________
__________________________
__________________________
-9-
EXHIBIT B
---------
MATERIAL SCIENCES CORPORATION
-----------------------------
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
(1985 STOCK OPTION PLAN FOR KEY EMPLOYEES)
------------------------------------------
Material Sciences Corporation, a Delaware corporation (the "Company"),
hereby grants to G. ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Employee"), pursuant to the Material
Science Corporation 1985 Stock Option Plan for Key Employees (the "Plan"), an
option to purchase from the Company 10,000 shares of its common stock, $.02 par
value (the "Common Stock"), at a price of $11.88 per share (the "Option Price"),
to be exercisable on the terms and conditions set forth herein. This option
shall expire on February 27, 2001 (the "Expiration Date"), subject to earlier
expiration in connection with the termination of your employment or your death
as provided in paragraphs 1, 2, 8 and 10 below. This option is not intended to
qualify as an incentive stock option under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), and will be treated accordingly by the
Company and the Employee. Notwithstanding anything to the contrary herein, this
option shall become null and void if the Company's stockholders do not approve
an amendment to the Plan deleting the second paragraph of Section 2 thereof
prior to April 10, 1992.
1. The option to purchase shares hereunder may be exercised only to the
extent that it has vested and, except as provided in paragraphs 8 and 10 below,
only if on the date of exercise the Employee has been continuously employed by
the Company since February 27, 1991. The option shall vest and become
exercisable as follows:
-1-
(a) 2,500 shares of Common Stock shall vest on the earlier of (i)
February 27, 1993 or (ii) the date on which the price of a share of Common Stock
on any domestic securities exchange on which shares of Common Stock are listed
(the "Trade Price") equals or exceeds $25.00;
(b) an additional 2,500 shares of Common Stock shall vest on the
earlier of (i) February 27, 1994 or (ii) the date on which the Trade Price
equals or exceeds $30.00;
(c) an additional 2,500 shares of Common Stock shall vest on the
earlier of (i) February 27, 1995 or (ii) the date on which the Trade Price
equals or exceeds $40.00; and
(d) an additional 2,500 shares of Common Stock shall vest on the
earlier of (i) February 27, 1996 or (ii) the date on which the Trade Price
equals or exceeds $50.00.
Except as provided in paragraph 2 below, upon the Employee ceasing to
be employed by the Company for any reason (including death or disability), any
portion of this option that was not exercisable and not vested on the date of
such employment termination shall expire and be forfeited as of such date.
Leaves of absence for periods and purposes conforming to the personnel policies
of the Company and approved by the Compensation Committee (the "Committee") of
the Board of Directors of the Company (the "Board") shall not be deemed
termination of employment or interruptions of continuous service.
2. Notwithstanding paragraph 1 above, if, following a Change in Control
(as defined below), the employment of the Employee with the Company is
terminated by the Employee for Good Reason (as defined below) or by the Company
without Cause (as defined below), this option shall vest and become exercisable
with respect to a number of shares of Common Stock equal to 50% of the number of
shares of Common Stock subject to this option that were not vested on the date
of such employment termination. The option with respect to the shares of Common
Stock that
-2-
remain unvested shall expire and be forfeited as of the date of such employment
termination. For purposes of this paragraph, Change in Control, Good Reason and
Cause shall have the respective meanings assigned to such terms in the
Employment Agreement made April ___, 1991 by and between the Company and the
Employee (the "Employment Agreement").
3. Subject to the limitations herein set forth, exercise of this option
shall be by delivery or written notice to the Secretary of the Company in Elk
Grove Village, Illinois, specifying the number of shares to be purchased,
provided, however, that no fractional shares may be purchased hereunder at any
time, and the Company shall not be obligated to make any payment in lieu of
fractional shares. Payment shall be made either (i) in cash or by check, bank
draft or money order to the order of Material Sciences Corporation
(collectively, "cash"), or (ii) with the consent of the Board, in shares of
Common Stock (valued as of the date of the notice of exercise) with a value
equal to or less than the total option price, plus cash in the amount, if any,
by which the total option price exceeds the value of such shares of Common
Stock. Payment for shares with respect to options exercised for cash shall be
delivered with the notice specifying the number of shares being purchased.
Payment for shares with respect to options exercised for Common Stock and cash,
if any, shall be delivered to the Treasurer of the company not later than the
end of the third business day after the exercise date. In the case of payment in
stock, such payment shall be made by delivery of the necessary share
certificates, with executed stock powers attached, to the Treasurer of the
Company or, if such certificates have not yet been delivered to the optionee, by
written notice to the Treasurer of the Company requesting that the shares
represented by such certificates be applied toward payment as hereinabove
provided.
-3-
4. The Employee hereby represents that any shares which are not
registered under the Securities Act of 1933, as amended (the "Securities Act"),
purchased upon exercise of this option will be purchased for investment and not
with a view to the distribution thereof within the meaning of the Securities
Act; and if requested by the Company, the Employee shall submit a written
statement, in form satisfactory to counsel for the Company, to the effect that
such representation is true and correct as of the date of purchase of any shares
hereunder. As a further condition precedent to the exercise of this option, the
Employee shall comply with all regulations and requirements of any regulatory
authority having control of or supervision over the issuance of the Common Stock
and, in connection therewith, shall execute any documents which the Committee
shall, in its sole discretion, deem necessary or advisable.
5. As a condition precedent to the exercise of this option, the Employee
shall, if requested by the Company, pay or deliver to the Company (or, in the
case of shares of Common Stock, have the Company hold back), in addition to the
option price, such amount of cash and/or shares of Common Stock (valued as of
the date of exercise) as the Company may be required, under applicable federal,
state or local law or regulations, to withhold and pay over as income or other
withholding taxes.
6. Upon the exercise of this option in whole or in part, the Company
shall deliver a certificate or certificates representing the number of shares
purchased against full payment therefore in the manner set forth in paragraph 3
hereof and the Company shall pay all original issue or transfer taxes and all
other fees and expenses incident to such delivery, except as otherwise provided
in paragraph 5 hereof.
-4-
7. The Employee shall not be entitled to any privileges of ownership with
respect to the shares subject to this option unless and until purchased and
delivered upon the exercise of this option, in whole or in part.
8. Subject to paragraph 15 below, if the Employee shall cease to be
employed by the Company for any reason other than death, this option may be
exercised by the Employee within three months after he ceases to be employed by
the Company (12 months if he ceases to be so employed due to total and permanent
disability), but in no event after the Expiration Date.
9. Neither this option nor any rights hereunder may be transferred other
than by will or the laws of descent and distribution, and during his lifetime
this option shall be exercisable only by the Employee. Any other transfer or any
attempted assignment, pledge or hypothecation, whether or not by operation of
law, shall be void. This option shall not be subject to execution, attachment or
other process, and no person shall be entitled to exercise any rights of the
Employee hereunder or possess any rights hereunder by virtue of any attempted
execution, attachment or other process.
10. Subject to paragraph 15 below, if the Employee shall die while
employed by the Company, within twelve months after ceasing to be employed by
the Company due to total and permanent disability or within three months after
ceasing to be employed by the Company for any other reason, this option may be
exercised at such time and to such extent that the Employee, had he lived, would
have been entitled to exercise such option (but in no event after the Expiration
Date or the expiration of one year from the date of the Employee's death) either
by the person designated in the Employee's will for such purpose or, if no such
person is so designated or if the Employee dies intestate, the Employee's
personal representative.
-5-
11. The Company shall at all times prior to the Expiration Date reserve
and keep available, either in its treasury or out of its authorized but unissued
shares of Common Stock, the full number of shares subject hereto from time to
time.
12. The Company hereby waives any rights it may have under Section 9 of
the Plan to repurchase shares of Common Stock purchased upon the exercise of
this option.
13. Upon the occurrence of any of the following events prior to the
Expiration Date, this option shall be adjusted as follows:
(a) in case the number of outstanding shares of Common Stock shall be
increased by stock split, stock dividend, recapitalization or other similar
relevant change in the capitalization of the Company after the date hereof
(which shall not include the sale by the Company of shares of Common Stock or
securities convertible into such shares), the number of shares which may
thereafter be purchased hereunder shall be proportionately increased and the
option price per share shall be proportionately decreased;
(b) in case the number of outstanding shares of Common Stock shall be
decreased by reverse stock split, combination of shares, recapitalization or
other similar relevant change in the capitalization of the Company (which shall
not include the purchase or retirement by the Company of shares of Common Stock
or securities convertible into such shares), the number of shares which may
thereafter be purchased hereunder shall be proportionately decreased and the
option price per share shall be proportionately increased; and
(c) in case the company shall be a party to a merger, consolidation
or any other reorganization not described in clauses (a) and (b) above, or shall
sell all or substantially all of its assets, and pursuant to such transaction
the outstanding shares of Common Stock shall be exchanged for other shares or
securities of the Company or of another corporation, the Employee shall have the
right to purchase, at the aggregate option price provided for in this option and
on the same terms and conditions (including with respect to vesting), the kind
and number of shares or other securities of the Company or of such other
corporation which would have been issuable to him in respect of the number of
shares of Common Stock subject to this option immediately prior to the effective
date of such transaction if such shares had been then owned by him. The Company
agrees to use its best efforts to provide for the preservation of the Employee's
rights as described in the second sentence of Section 13 of the Plan.
-6-
Any adjustment pursuant to this paragraph 13 shall be effected in a manner such
that the difference between the aggregate fair market value of the shares or
other securities subject to this option immediately after giving effect to such
adjustment and the aggregate option price of such shares or other securities
shall be substantially equal to (but shall not be greater than) the difference
between the aggregate fair market value of the shares of Common Stock subject to
this option immediately prior to such adjustment and the aggregate option price
of such shares. The decision of the Board as to the exact manner, amount and
timing of any such adjustment shall be conclusive.
14. As used in this option, employment by the Company shall include
employment by a corporation which is a "parent corporation" or a "subsidiary
corporation" of the Company, as such terms are defined in subsections (e) and
(f) of Section 424 of the Code, and employment by any corporation, or a "parent
corporation" or "subsidiary corporation" of such corporation, assuming this
option, or issuing a stock option in lieu thereof, in a transaction to which
Section 424(a) of the Code shall apply.
15. This option is subject to the condition that if at any time the
Committee shall reasonably determine, in its discretion, that the listing of the
shares subject hereto on any securities exchange, or the registration or
qualification of such shares under any federal or state law, or the consent or
approval of any regulatory body, shall be necessary or desirable as a condition
of, or in connection with, the granting of this option or the purchase or
delivery of shares hereunder, this option may not be exercised, in whole or in
part, and the shares hereunder may not be delivered, as the case may be, unless
and until such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not reasonably acceptable
to the Committee; provided, however, that to the extent this option is to expire
prior to the Expiration Date at a time
-7-
when this option may not be exercised due to the provisions of this paragraph
15, this option shall continue to be exercisable until the earlier of (i) one
month after the date the exercise of this option is not so restricted by this
paragraph 15 and (ii) the Expiration Date. The Company agrees to make every
reasonable effort to effect or obtain any such listing, registration,
qualification, consent or approval.
16. In no event shall the granting of this option or its acceptance by the
Employee give or be deemed to give the Employee any right to continue in the
employment of the Company or any of its subsidiaries.
17. The Committee shall have the right to resolve all questions which may
arise in connection with this option or its exercise.
18. This option shall be binding upon and inure to the benefit of any
successor or successors of the Company and any person or persons who shall, upon
the death of the Employee, acquire any rights under paragraph 10 hereof.
19. The parties agree to execute such further instruments and to take such
further actions as may reasonably be required to carry out the intent of this
Agreement.
20. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by certified mail with postage and fees prepaid,
return receipt requested, addressed to the other party hereto at his address
hereinafter shown below his signature or at such other address as such party may
designate by ten (10) days' advance written notice to the other party.
21. This Agreement, together with the Employment Agreement, constitutes
the entire agreement of the parties with respect to the subject matter hereof.
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22. This Agreement shall be governed by and construed under the laws of
the State of Illinois.
23. This option shall be null and void unless the Employee shall accept
the same below.
Dated this _____ day of ____________, 199__.
MATERIAL SCIENCES CORPORATION
By:__________________________________
Its:_________________________________
Accepted this ___ day
of _________, 1991.
__________________________
G. ▇▇▇▇▇▇ ▇▇▇▇▇
Address: _________________
__________________________
__________________________
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EXHIBIT C
MATERIAL SCIENCES CORPORATION
-----------------------------
INCENTIVE STOCK OPTION AGREEMENT
--------------------------------
(1985 STOCK OPTION PLAN FOR KEY EMPLOYEES)
------------------------------------------
Material Sciences Corporation, a Delaware corporation (the "Company"),
hereby grants to G. ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Employee"), pursuant to the Material
Science corporation 1985 Stock Option Plan for Key Employees (the "Plan"), an
option to purchase from the Company 33,600 shares of its common stock, $.02 par
value (the "Common Stock"), at a price of $11.88 per share (the "Option Price"),
to be exercisable on the terms and conditions set forth herein. This option
shall expire on February 26, 2001 (the "Expiration Date"), subject to earlier
expiration in connection with the termination of your employment or your death
as provided in paragraphs 1, 2, 8 and 10 below. This option is intended to
qualify as an incentive stock option under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), and will be treated accordingly by the
Company and the Employee.
1. The option to purchase shares hereunder may be exercised only to the
extent that it has vested and, except as provided in paragraphs 8 and 10 below,
only if on the date of exercise the Employee has been continuously employed by
the Company since February 27, 1991. The option shall vast and become
exercisable as follows:
(a) 8,400 shares of Common Stock shall vast on the earlier of (i)
February 27, 1993 or (ii) the date on which the price of a share of Common Stock
on any domestic securities exchange on which shares of Common Stock are listed
(the "Trade Price") equals or exceeds $25.00;
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(b) an additional 8,400 shares of Common Stock shall vest on the
earlier of (i) February 27, 1994 or (ii) the date on which the Trade Price
equals or exceeds $30.00;
(c) an additional 8,400 shares of Common Stock shall vest on the
earlier of (i) February 27, 1995 or (ii) the date on which the Trade Price
equals or exceeds $40.00; and
(d) an additional 8,400 shares of Common Stock shall vest on the
earlier of (i) February 27, 1996 or (ii) the date on which the Trade Price
equals or exceeds $50.00.
Except as provided in paragraph 2 below, upon the Employee ceasing to
be employed by the Company for any reason (including death or disability), any
portion of this option that was not exercisable and not vested on the date of
such employment termination shall expire and be forfeited as of such date.
Leaves of absence for periods and purposes conforming to the personnel policies
of the Company and approved by the Compensation Committee (the "Committee") of
the Board of Directors of the Company (the "Board") shall not be deemed
termination of employment or interruptions of continuous service.
2. Notwithstanding paragraph 1 above, if, following a Change in Control
(as defined below), the employment of the Employee with the Company is
terminated by the Employee for Good Reason (as defined below) or by the Company
without Cause (as defined below), this option shall vest and become exercisable
with respect to a number of shares of Common Stock equal to 50% of the number of
shares of Common Stock subject to this option that were not vested on the date
of such employment termination. The option with respect to the shares of Common
Stock that remain unvested shall expire and be forfeited as of the date of such
employment termination. For purposes of this paragraph, Change in Control, Good
Reason and Cause shall have the respective
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meanings assigned to such terms in the Employment Agreement made April ___, 1991
by and between the Company and the Employee.
3. Subject to the limitations herein set forth, exercise of this option
shall be by delivery of written notice to the Secretary of the Company in Elk
Grove Village, Illinois, specifying the number of shares to be purchased,
provided, however, that no fractional shares may be purchased hereunder at any
time, and the Company shall not be obligated to make any payment in lieu of
fractional shares. Payment shall be made either (i) in cash or by check, bank
draft or money order to the order of Material Sciences Corporation
(collectively, "cash"), or (ii) with the consent of the Board, in shares of
Common Stock (valued as of the date of the notice of exercise) with a value
equal to or less than the total option price, plus cash in the amount, if any,
by which the total option price exceeds the value of such shares of Common
Stock. Payment for shares with respect to options exercised for cash shall be
delivered with the notice specifying the number of shares being purchased.
Payment for shares with respect to options exercised for Common Stock and cash,
if any, shall be delivered to the Treasurer of the Company not later than the
end of the third business day after the exercise date. In the case of payment in
stock, such payment shall be made by delivery of the necessary share
certificates, with executed stock powers attached, to the Treasurer of the
Company or, if such certificates have not yet been delivered to the optionee, by
written notice to the Treasurer of the Company requesting that the shares
represented by such certificates be applied toward payment as hereinabove
provided.
4. The Employee hereby represents that any shares -which -are not
registered under the Securities Act of 1933, as amended (the "Securities Act"),
purchased upon exercise of this option will be purchased for investment and not
with a view to the distribution thereof within the meaning
-3-
of the Securities Act; and if requested by the Company, the Employee shall
submit a written statement, in form satisfactory to counsel for the Company, to
the effect that such representation is true and correct as of the date of
purchase of any shares hereunder. As a further condition precedent to the
exercise of this option, the Employee shall comply with all regulations and
requirements of any regulatory authority having control of or supervision over
the issuance of the Common Stock and, in connection therewith, shall execute any
documents which the Committee shall, in its sole discretion, deem necessary or
advisable.
5. As a condition precedent to the exercise of this option, the Employee
shall, if requested by the Company, pay or deliver to the Company (or, in the
case of shares of Common Stock, have the Company hold back), in addition to the
option price, such amount of cash and/or shares of Common Stock (valued as of
the date of exercise) as the Company may be required, under applicable federal,
state or local law or regulations, to withhold and pay over as income or other
withholding taxes.
6. Upon the exercise of this option in whole or in part, the Company
shall deliver a certificate or certificates representing the number of shares
purchased against full payment therefore in the manner set forth in paragraph 3
hereof and the Company shall pay all original issue or transfer taxes and all
other fees and expenses incident to such delivery, except as otherwise provided
in paragraph 5 hereof.
7. The Employee shall not be entitled to any privileges of ownership with
respect to the shares subject to this option unless and until purchased and
delivered upon the exercise of this option, in whole or in part.
-4-
8. Subject to paragraph 15 below, if the Employee shall cease to be
employed by the Company for any reason other than death, this option may be
exercised by the Employee within three months after he ceases to be employed by
the Company (12 months if he ceases to be so employed due to total and permanent
disability), but in no event after the Expiration Date.
9. Neither this option nor any rights hereunder may be transferred other
than by will or the laws of descent and distribution, and during his lifetime
this option shall be exercisable only by the Employee. Any other transfer or any
attempted assignment, pledge or hypothecation, whether or not by operation of
law, shall be void. This option shall not be subject to execution, attachment or
other process, and no person shall be entitled to exercise any rights of the
Employee hereunder or possess any rights hereunder by virtue of any attempted
execution, attachment or other process.
10. Subject to paragraph 15 below, if the Employee shall die while
employed by the Company, within twelve months after ceasing to be employed by
the Company due to total and permanent disability or within three months after
ceasing to be employed by the Company for any other reason, this option may be
exercised at such time and to such extent that the Employee, had he lived, would
have been entitled to exercise such option (but in no event after the Expiration
Date or the expiration of one year from the date of the Employee's death) either
by the person designated in the Employee's will for such purpose or, if no such
person is so designated or if the Employee dies intestate, the Employee's
personal representative.
11. The company shall at all times prior to the Expiration Date reserve
and keep available, either in its treasury or out of its authorized but unissued
shares of Common Stock, the full number of shares subject hereto from time to
time.
-5-
12. The Company hereby waives any rights it may have under Section 9 of
the Plan to repurchase shares of Common Stock purchased upon the exercise of
this option.
13. Upon the occurrence of any of the following events prior to the
Expiration Date, this option shall be adjusted as follows:
(a) in case the number of outstanding shares of Common Stock shall be
increased by stock split, stock dividend, recapitalization or other similar
relevant change in the capitalization of the Company after the date hereof
(which shall not include the sale by the Company of shares of Common Stock or
securities convertible into such shares), the number of shares which may
thereafter be purchased hereunder shall be proportionately increased and the
option price per share shall be proportionately decreased;
(b) in case the number of outstanding shares of Common Stock shall be
decreased by reverse stock split, combination of shares, recapitalization or
other similar relevant change in the capitalization of the Company (which shall
not include the purchase or retirement by the Company of shares of Common Stock
or securities convertible into such shares), the number of shares which may
thereafter be purchased hereunder shall be proportionately decreased and the
option price per share shall be proportionately increased; and
(c) in case the Company shall be a party to a merger, consolidation
or any other reorganization not described in clauses (a) and (b) above, or shall
sell all or substantially all of its assets, and pursuant to such transaction
the outstanding shares of Common Stock shall be exchanged for other shares or
securities of the Company or of another corporation, the Employee shall have the
right to purchase, at the aggregate option price provided for in this option and
on the same terms and conditions (including with respect to vesting), the kind
and number of shares or other securities of the Company or of such other
corporation which would have been issuable to him in respect of the number of
shares of Common Stock subject to this option immediately prior to the effective
date of such transaction if such shares had been then owned by him. The Company
agrees to use its best efforts to provide for the preservation of the Employee's
rights as described in the second sentence of Section 13 of the Plan.
Any adjustment pursuant to this paragraph 13 shall be effected in a manner such
that the difference between the aggregate fair market value of the shares or
other securities subject to this option immediately after giving effect to such
adjustment and the aggregate option price of such shares or other securities
shall be substantially equal to (but shall not be greater than) the difference
between the aggregate fair market value of the shares of Common Stock subject to
this option immediately
-6-
prior to such adjustment and the aggregate option price of such shares. The
decision of the Board as to the exact manner, amount and timing of any such
adjustment shall be conclusive.
14. As used in this option, employment by the Company shall include
employment by a corporation which is a "parent corporation" or a "subsidiary
corporation" of the Company, as such terms are defined in subsections (e) and
(f) of Section 424 of the Code, and employment by any corporation, or a "parent
corporation" or "subsidiary corporation" of such corporation, assuming this
option, or issuing a stock option in lieu thereof, in a transaction to which
Section 424(a) of the Code shall apply.
15. This option is subject to the condition that if at any time the
Committee shall reasonably determine, in its discretion, that the listing of the
shares subject hereto on any securities exchange, or the registration or
qualification of such shares under any federal or state law, or the consent or
approval of any regulatory body, shall be necessary or desirable as a condition
of, or in connection with, the granting of this option or the purchase or
delivery of shares hereunder, this option may not be exercised, in whole or in
part, and the shares hereunder may not be delivered, as the case may be, unless
and until such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not reasonably acceptable
to the Committee; provided, however, that to the extent this option is to expire
prior to the Expiration Date at a time when this option may not be exercised due
to the provisions of this paragraph 15, this option shall continue to be
exercisable until the earlier of (i) one month after the date the exercise of
this option is not so restricted by this paragraph 15 and (ii) the Expiration
Date. The Company agrees to make every reasonable effort to effect or obtain any
such listing, registration, qualification, consent or approval.
-7-
16. In no event shall the granting of this option or its acceptance by the
Employee give or be deemed to give the Employee any right to continue in the
employment of the Company or any of its subsidiaries.
17. The Committee shall have the right to resolve all questions which may
arise in connection with this option or its exercise.
18. This option shall be binding upon and inure to the benefit of any
successor or successors of the Company and any person or persons who shall, upon
the death of the Employee, acquire any rights under paragraph 10 hereof.
19. The parties agree to execute such further instruments and to take such
further actions as may reasonably be required to carry out the intent of this
Agreement.
20. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post office, by certified mail with postage and fees prepaid,
return receipt requested, addressed to the other party hereto at his address
hereinafter shown below his signature or at such other address as such party may
designate by ten (10) days advance written notice to the other party.
21. This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof.
22. This Agreement shall be governed by and construed under the laws of
the State of Illinois.
23. This option shall be null and void unless the Employee shall accept
the same below.
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Dated this ____ day of _____________, 1991.
MATERIAL SCIENCES CORPORATION
By:__________________________________
Its:_________________________________
Accepted this ___ day
of _________, 1991
___________________________
G. ▇▇▇▇▇▇ ▇▇▇▇▇
Address:____________________
____________________________
____________________________
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