Building Materials Corporation of America
0000 Xxxx Xxxx
Xxxxx, Xxx Xxxxxx 00000
August 15, 1996
[Name
Address]
Dear
Building Materials Corporation of America (the "Company") hereby agrees
with you as follows:
1. Option to Purchase.
(a) Subject to the terms and conditions of this Agreement, the Company
hereby grants you the option (the "Option") to purchase _____ shares of the
Company's Series A Cumulative Redeemable Convertible Preferred Stock, $.01 par
value (the "Preferred Shares"), for the purchase price of $100 per Preferred
Share. The Preferred Shares have the rights and preferences set forth in the
Certificate of Designation attached as Exhibit A hereto. Concurrently with the
grant of the Option, you are being granted an option (the "USI Option") to
acquire shares of Redeemable Convertible Preferred Stock of U.S. Intec, Inc.
("USI") pursuant to an Option Agreement ("USI Option Agreement") dated the date
hereof between you and USI.
(b) The Option shall vest and become exercisable commencing on the
following dates: as to 25% of the Preferred Shares on June 30, 1998, as to an
additional 15% of the Preferred Shares on June 30 in each of the years 1999
through 2002, and as to the remainder of the Preferred Shares on December 31,
2002, in each case to the extent you are employed by the Company or its
subsidiaries on such date; provided that, if your employment with the Company
and its subsidiaries should terminate as a direct result of a divestiture
(whether because you are employed by the business which is sold, your position
is eliminated as a result of the divestiture or otherwise), or your employment
with the Company and its subsidiaries should be terminated by the Company other
than for cause within six months after a Change of Control of the Company, the
unvested portion of the Option shall become vested on the date of your
termination. "Change of Control"
1
shall mean the occurrence of either of the following events: (i) prior to the
time that at least 15% of the then outstanding voting stock of the Company or
any parent of the Company is publicly traded, the Xxxxxx Group ceases to be the
"beneficial owner", directly or indirectly, of majority voting power of the
voting stock of the Company; or (ii) at any other time, any person or entity,
other than the Xxxxxx Group , is or becomes the beneficial owner, directly or
indirectly, of more than 35% of the voting stock of the Company or any parent of
the Company and the Xxxxxx Group beneficially owns, directly or indirectly, in
the aggregate a lesser percentage of the voting stock of the Company or such
parent, as the case may be, than such other person or entity. The "Xxxxxx Group"
shall mean (i) Xxxxxx X. Xxxxxx, his heirs, administrators, executors and
entities of which a majority of the voting stock is owned by Xxxxxx X. Xxxxxx,
his heirs, administrators or executors and (ii) any entity controlled, directly
or indirectly, by Xxxxxx X. Xxxxxx or his heirs, administrators or executors.
"Beneficial ownership" shall be determined in accordance with Rule 13d under the
Securities Exchange Act of 1934, as amended.
(c) The Option will terminate on the earlier of (i) 30 days after the
termination of your employment with the Company and its subsidiaries for any
reason other than your death or permanent disability or (ii) one year after the
termination of your employment with the Company and its subsidiaries as a result
of your death or permanent disability. You will be deemed to be permanently
disabled if you become physically or mentally incapacitated or disabled to the
extent that you are unable to perform for the Company or its subsidiaries
substantially the same services as you performed prior to incurring such
incapacity or disability (the Company, at its option and expense, being entitled
to retain a physician reasonably acceptable to you to confirm the existence of
the incapacity or disability, and the determination of that physician being
binding upon the Company and you), and your incapacity or disability continues
for a period of six consecutive months; provided, however, that, if at the time
of your permanent disability you are a party to an employment agreement with the
Company or any of its subsidiaries which contains a definition of disability
which is inconsistent with the provisions hereof, the definition contained in
that employment agreement shall govern for purposes of this Section. In the
event of your death or disability, the Option may be exercised by your executors
or personal representatives; provided that such persons shall be bound by the
provisions of this Agreement, including, without limitation, Sections 3 and 4,
as if they were parties to this Agreement.
(d) Notwithstanding anything to the contrary contained in this
Agreement, in the event the Company or its parent engages in a public offering
of the Common Stock of the Company, the portion of the Option which is vested on
the date such public offering is consummated shall terminate 30 days after the
consummation of such public offering and the unvested portion of the Option
shall be replaced by options granted under a stock option plan of the Company,
which is appropriate, in the judgment of the Board of Directors of the Company,
for a public company.
(e) The Option shall not be exercisable after its expiration. Prior
thereto, the vested portion of the Option may be exercised in whole or in part
at any time or from time to time. The Option and the USI Option must be
exercised at the same time and in the same proportions.
2
(f) Unless otherwise agreed to by the Company and you, the purchase
price for the Preferred Shares shall be paid by you to the Company in full upon
exercise of the Option, in cash or by certified or official bank check or wire
transfer.
(g) The Company hereby represents and warrants to you that, upon the
issuance and purchase of (and payment for) the Preferred Shares, the Preferred
Shares shall be duly authorized, validly issued, fully paid and nonassessable.
(h) So long as USI is an affiliate of the Company and you are employed
by USI or its subsidiaries, you shall be deemed employed by the Company for
purposes of this Agreement.
2. Legend on Certificates. Each stock certificate of the Company issued
to represent any Preferred Shares, or shares of the Company's Common Stock
issued upon conversion of the Preferred Shares (the shares of Common Stock
issued upon conversion of the Preferred Shares being referred to herein as the
"Common Shares"), shall bear the following (or a substantially equivalent)
legend on its face or reverse side:
"These securities have not been registered under the
Securities Act of 1933, as amended, or under the applicable securities
laws of any other jurisdiction. These securities may not be sold unless
registered under the Securities Act of 1933, as amended, and any other
applicable securities laws, unless an exemption from such registration
is available. In addition, the transfer of these securities is subject
to restrictions set forth in an Option Agreement, dated as of August
15, 1996, and any amendments thereto, a copy of which is available for
inspection at the office of the Company."
Any stock certificate issued at any time in exchange or substitution for any
certificate bearing such legend shall also bear the same legend, unless and to
the extent, in the opinion of counsel acceptable to the Company (which counsel
may be an employee of the Company or its affiliates), the Preferred Shares or
Common Shares, as the case may be, represented thereby are no longer subject to
the restrictions referred to in such legend. No Preferred Shares shall be
issued, sold or delivered pursuant to the exercise of the Option, and no Common
Shares shall be issued upon conversion of Preferred Shares, prior to (a) any
registration or other qualification of such shares under any state or federal
law or regulation which the Company shall, in its absolute discretion upon the
advice of counsel, deem necessary or advisable, and (b) the admission of such
shares to listing on any stock exchange on which the shares may then be listed
free of any conditions not acceptable to the Company. For purposes of this
Agreement, the term "Preferred Shares" and "Common Shares" shall mean any
securities or property into which the Preferred Shares or Common Shares, as the
case may be, may be converted or exchanged pursuant to a recapitalization, stock
split, combination, reorganization, merger, exchange or similar transaction
occurring after the date hereof.
3. Transfer of Preferred Shares.
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(a) You agree that you will not, prior to December 31, 2003, directly
or indirectly, sell, pledge, give, bequeath, transfer, assign or in any other
way whatsoever encumber or dispose of (hereinafter collectively called
"transfer") any Preferred Shares or Common Shares or any interest therein, or
any stock certificate representing, or any voting trust certificate issued with
respect to, any Preferred Shares or Common Shares (voluntarily, involuntarily,
by operation of law or otherwise), except as otherwise permitted by this
Agreement or as may be specifically authorized by the Board of Directors of the
Company.
(b) If, after December 31, 2003, you desire to sell any of your
Preferred Shares or Common Shares, you must first offer to sell to the Company
such Preferred Shares for a purchase price equal to $100 per Preferred Share,
plus accrued and unpaid dividends to the purchase date, and such Common Shares
for a purchase price equal to their Book Value determined as of the end of the
calendar quarter in which the offer is made. You must notify the Company in
writing of the number of Preferred Shares and/or Common Shares you wish to sell
(the "Sale Notice"). Upon receipt of your Sale Notice, the Company shall have
the option, exercisable for 30 days after the Company receives the Sale Notice
(the "Option Period"), to purchase all (but not less than all) of the Preferred
Shares and Common Shares specified in the Sale Notice. The option may be
exercised by giving notice to you within the Option Period. If the Company
elects to purchase the Preferred Shares and Common Shares you have offered, it
shall be obligated to purchase, and you will be obligated to sell, those
Preferred Shares and Common Shares at the price and on the terms described
above. If the Company does not elect to purchase the Preferred Shares and Common
Shares you have offered, and if otherwise permitted under this Section 3, you
may, at any time thereafter within a period of 120 days after the expiration of
the Option Period, transfer those Preferred Shares and Common Shares to any
party, provided, however, that, in the event you have not transferred the
Preferred Shares and Common Shares within 120 days after expiration of the
Option Period, then any transfer of those Preferred Shares and Common Shares
shall thereafter again be subject to all of the restrictions contained in this
Section 3.
(c) For purposes of this Agreement, "Book Value" shall mean, as of any
date of determination, (x) shareholder's equity of the Company as of that date
determined in accordance with generally accepted accounting principles, but
adding back (A) the charge to shareholder's equity relating to the assumption by
the Company of certain asbestos-related liabilities of GAF Building Materials
Corporation in connection with the Company's formation, (B) the reduction in
shareholder's equity resulting from purchases of the capital stock of GAF
Corporation ("GAF") by persons who participated in promoting the management
buy-out of GAF in March 1989 (the "Acquisition") (predecessor cost basis
adjustment) and (C) any amounts reflecting the liquidation preferences of any
outstanding preferred stock of the Company and excluding, to the extent
occurring after December 31, 1995, (1) nonrecurring non-operating losses and
charges to stockholder's equity and nonrecurring non-operating gains and
increases in stockholder's equity, including any further charge relating to
asbestos-related liabilities and any increase in stockholder's equity
attributable to a public offering of capital stock of the Company, (2) net gains
or losses in respect of dispositions of assets by the Company other than in the
ordinary course of business, and (3) any charges relating to amortization of
goodwill and other
4
intangibles arising from the Acquisition divided by (y) the number of shares of
Common Stock of the Company outstanding on the date of determination. Any
adjustments to Book Value shall include the tax effects, if any, associated
therewith. If the Preferred Shares or Common Shares are converted into or
exchanged for other securities or property pursuant to a recapitalization, stock
split, combination, reorganization, merger, exchange or similar transaction, or
if a sale of all or substantially all of, the Common Stock of the Company shall
occur or be pending, Book Value, the Option and the terms hereof shall be
modified by the Board of Directors of the Company in such manner as is
reasonable under the circumstances. All determinations by the Board of Directors
hereunder shall be made in good faith and shall be binding and conclusive.
(d) You agree that your Preferred Shares and Common Shares may not be
sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed
of except in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws and the restrictions of
this Agreement on the transfer thereof. You have been advised that the Company
has no obligation to register the Preferred Shares or Common Shares under the
Securities Act or to comply with any exemption under the Securities Act,
including but not limited to that set forth in Rule 144 promulgated under the
Securities Act, which would permit them to be sold by you. You understand that
it is not anticipated that there will be any market for resale of the Preferred
Shares or Common Shares and that it may not be possible for you to liquidate an
investment in the Preferred Shares or Common Shares. You understand the legal
consequences of the foregoing to mean that you must bear the economic risk of
your investment therein except as otherwise provided in this Agreement. You
agree that you will not transfer any Preferred Shares or Common Shares except in
compliance with the Securities Act. The Company will not transfer on its books
any certificate representing Preferred Shares or Common Shares in violation of
the provisions of this Agreement.
4. Purchase and Sale of Common Stock.
(a) In the event you leave the employ of the Company and its
subsidiaries for any reason on or after the date hereof (any such date of
leaving is called the "Termination Date"), you may, at your option, exercisable
by a notice delivered to the Company during the Put/Call Period, elect to sell
and, upon the giving of the notice, you shall be obligated to sell, and the
Company shall be obligated to purchase all, but not less than all, the Common
Shares owned by you at the time such notice is given, at their Book Value
determined as of the last day of the calendar quarter during which such notice
is given to the Company.
(b) In each calendar year you may, at your option, exercisable by
notice delivered to the Company on or before March 31 of that year, elect to
sell and, upon the giving of the notice, the Company shall be obligated to
purchase and you shall be obligated to sell as many Common Shares owned by you
as you may elect to sell, at their Book Value determined as of the last day of
the preceding calendar year, provided that you owned such Common Shares on June
30 of the preceding calendar year.
5
(c) In the event you leave the employ of the Company and its
subsidiaries for any reason on or after the date hereof, the Company may, at its
option, exercisable by notice delivered to you during the Put/Call Period, elect
to purchase and, upon the giving of the notice, you shall be obligated to sell
and the Company shall be obligated to purchase all, but not less than all, the
Common Shares owned by you at the time such notice is given, at their Book Value
determined as of the last day of the calendar quarter during which such notice
is given to you.
(d) In the event the Company (or its parent) proposes to engage, or
engages, in a public offering of the Common Stock of the Company, the Company
may at its option, exercisable by notice delivered to you at any time during the
IPO Period, elect to purchase from you all, but not less than all, the Common
Shares owned by you at their Book Value determined as of the last day of the
calendar quarter during which the election to purchase occurs.
(e) As used herein, the "Put/Call Period" shall mean the 30-day period
commencing with the later of (i) the date which is six months after the date on
which the Common Shares are issued to you upon conversion of Preferred Shares
owned by you or (ii) the Termination Date, and the "IPO Period" shall mean the
period commencing 30 days before the anticipated date of commencement of, and
ending seven months after the consummation of, the first public offering of
shares of Common Stock of the Company.
(f) In the event that a purchase of Common Shares or Preferred Shares
by the Company pursuant to this Section 4 shall be prohibited or would cause a
default under the terms of any institutional credit agreement, indenture or
other like instrument with respect to the borrowing of money to which the
Company or an affiliate of the Company is a party (in each case as the same may
be amended from time to time), or in the opinion of the Board of Directors of
the Company would not be feasible due to the impairment of the financial ability
of the Company that would result from the satisfaction of all notices then and
theretofore given under similar provisions of agreements with other holders of
Common Shares or Preferred Shares, then your obligation to deliver Common Shares
or Preferred Shares and the Company's obligation to pay the purchase price shall
be suspended until such prohibition, default or impairment lapses or is waived
or cured. In such event the price to be paid by the Company for your Common
Shares shall be the greater of (i) the price that would have been paid had the
purchase been completed without deferral, or (ii) the Book Value as of the last
day of the calendar quarter preceding the quarter during which such prohibition,
default or impairment lapses or is cured.
5. Terms of Payment, Etc.
(a) Any sales and purchases pursuant to Section 3 or 4 shall take place
at the principal executive offices of the Company within thirty (30) days after
the later of (i) if applicable, the date on which the Book Value upon which the
purchase price is based is determined by the Company or (ii) the date on which
the notice of sale or purchase is given.
6
(b) The purchase price payable by the Company under Section 3 or 4
shall be paid by the Company to you in full, in cash or by certified or official
bank check or wire transfer, at the closing pursuant to such Section.
(c) Any Preferred Shares or Common Shares sold pursuant to Section 3 or
Section 4 shall be delivered by you to the Company at the closing, free and
clear of all liens, charges and encumbrances of any kind. In addition, you shall
take such actions as the Company shall request as may be necessary to vest in
the Company at the closing good and marketable title to the Preferred Shares
and/or Common Shares being sold, free and clear of all liens, charges and
encumbrances.
(d) At the same time as you transfer Common Shares or Preferred Shares
to the Company pursuant to Section 3(b), 4(a), 4(b), 4(c) or 4(d), you shall
transfer to USI, in accordance with the corresponding provisions of the USI
Option Agreement, the same proportion of the shares of Common Stock or Preferred
Stock of USI owned by you (or issuable upon exercise of conversion rights
relating to the USI Preferred Stock).
6. Notices. All notices or other communications under this Agreement
shall be given in writing and shall be deemed duly given and received on the
third full business day following the date of its mailing by registered or
certified mail, return receipt requested, or when delivered personally, as
follows:
(a) if to the Company:
Building Materials Corporation of America
0000 Xxxx Xxxx
Xxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
or at such other place as the Company shall have designated by notice
as herein provided to you; and
(b) if to you, at your address as it appears below your name on the
first page of this Agreement, or at such other address as you shall
have designated by notice as herein provided to the Company.
7. Specific Performance. It is acknowledged that the Company will be
irreparably damaged in the event that this Agreement is not specifically
enforced. In the event of a breach or threatened breach of the terms, covenants
and/or conditions of this Agreement by you, the Company shall, in addition to
all other remedies, be entitled (without any bond or other security being
required) to a temporary and/or permanent injunction, without showing any actual
damage or that monetary damages would not provide an adequate remedy, and/or a
decree for specific performance, enjoining such breach or ordering compliance
with the provisions of this Agreement.
7
8. Miscellaneous. (a) This Agreement, together with the instruments
referred to herein, constitutes the entire agreement of the parties to this
Agreement with respect to purchase, retention and transfer of equity securities
of the Company, including without limitation Preferred Shares, Common Shares or
any interest therein, and may not be modified or amended except by a written
agreement signed by the Company (following the specific approval of such
modification or amendment by the Company's Board of Directors) and you.
(b) No waiver of any breach or default hereunder shall be considered
valid unless in writing, and no such waiver shall be deemed a waiver of any
subsequent breach or default of the same or similar nature.
(c) Except as otherwise expressly provided in this Agreement, this
Agreement, as amended (including any waivers or consents pursuant to Section
8(b) hereof), shall be binding upon and inure to the benefit of the Company, its
successors and assigns, and you and your heirs, personal representatives and
assigns; provided that you shall not have the right to assign the Option or any
of your rights under this Agreement except as expressly provided herein; and
provided further that nothing contained in this Agreement shall be construed as
granting you the right to transfer any of your Preferred Shares or Common Shares
except in accordance with this Agreement.
(d) If any provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
in this Agreement.
(e) The section headings contained herein are for convenience only and
are not intended to define or limit the contents of any section.
(f) Nothing in this Agreement shall confer on you any right to continue
in the employ of the Company or any parent, subsidiary or affiliate of the
Company or any successor to any of them, affect the right of the Company or any
such parent, subsidiary, affiliate or successor to terminate your employment at
any time, or be deemed a waiver or modification of any provision contained in
any agreement between you and the Company or any such parent, subsidiary,
affiliate or successor.
(g) Each party to this Agreement shall cooperate and shall take such
further action and shall execute and deliver such further documents as may be
reasonably requested by any other party in order to carry out the provisions and
purposes of this Agreement.
(h) Whenever the pronouns "he" or "his" are used in this Agreement,
they shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in the
plural and words in the plural shall be read and construed as though in the
singular in all cases where they would so apply.
8
(i) This Agreement may be executed in counterparts, all of which taken
together shall be deemed one original.
(j) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF
THE STATE OF NEW JERSEY AND FOR ALL PURPOSES SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THAT STATE WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAW.
If you are in agreement with the foregoing, please sign and return the
extra copy of this Agreement, whereupon this Agreement shall become a binding
agreement between you and the Company.
Very truly yours,
BUILDING MATERIALS CORPORATION
OF AMERICA
By:____________________________
AGREED AND ACCEPTED:
-------------------------------
9
EXHIBIT A
CERTIFICATE OF DESIGNATIONS
OF BUILDING MATERIALS CORPORATION OF AMERICA
-----------------
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
-----------------
We, the undersigned, Senior Vice President and Secretary, respectively,
of Building Materials Corporation of America (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware (the "General Corporation Law"), in accordance with the provisions of
Section 151 thereof, do hereby certify that the Board of Directors of the
Corporation duly adopted the following resolutions by unanimous consent dated as
of August 15, 1996:
RESOLVED, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of the
Certificate of Incorporation of the Corporation, this Board of Directors hereby
creates and authorizes the issuance of a series of Series A Cumulative
Redeemable Convertible Preferred Stock, par value $.01 per share, and hereby
fixes the designation, dividend rate, redemption provisions, voting powers,
rights on liquidation, dissolution or winding up, and other preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations, or restrictions thereof, as follows:
1. Designation. The Preferred Stock created and authorized hereby shall
be designated as the "Series A Cumulative Redeemable Convertible Preferred
Stock" (the "Series A Preferred Stock"). The number of shares of Series A
Preferred Stock shall be 50,000. The liquidation preference of the Series A
Preferred Stock shall be $100 per share (the "Liquidation Preference").
2. Dividends.
(a) Each holder of a share of Series A Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of Directors, out
of the funds of the Corporation legally available therefor pursuant to the
General Corporation Law (the "Legally Available Funds"), cumulative cash
dividend payments of $2.00 per share for each full Quarterly Dividend Period (as
defined in Section 2(f) hereof) that such share of Series A Preferred Stock is
outstanding; provided, if a share of Series A Preferred Stock is not outstanding
for a full Quarterly Dividend Period, the dividend payment per share in respect
of such partial Quarterly Dividend Period shall be equal to $2.00 multiplied by
a fraction, the numerator of which is the number of days such share was
10
outstanding (but not more than 30 days for any calendar month fully occurring in
such portion), and the denominator of which is 90. Such dividends, if and to the
extend declared, shall be payable quarterly in arrears on January 1, April 1,
July 1 and October 1 of each year (each, a "Dividend Payment Date"); provided
that if any such date is not a Business Day (as defined in Section 2(f) hereof),
then the applicable dividend shall be payable, if and to the extent declared, on
the next succeeding Business Day. Such dividends shall be fully cumulative.
(b) Dividends shall accrue (whether or not declared or paid)
on each share of Series A Preferred Stock from the date on which such share is
issued.
(c) Quarterly dividends, if and to the extent declared, shall
be paid to the holders of record of shares of Series A Preferred Stock as they
appear on the stock register of the Corporation on the record date therefor,
which record date shall be the December 15, March 15, June 15 and September 15
immediately preceding the Dividend Payment Date relating thereto.
(d) If dividends are not paid in full, or not declared in full
and sums set apart for the payment thereof, on the Series A Preferred Stock and
any Capital Stock (as defined in Section 2(f) hereof) of the Corporation ranking
on a parity with the Series A Preferred Stock as to the payment of dividends,
all dividends declared upon shares of Series A Preferred Stock and shares of
such other stock shall be declared pro rata so that in all cases the amount of
dividends declared per share on the Series A Preferred Stock and such other
stock shall bear to each other the same ratio that accumulated, unpaid dividends
per share on the Series A Preferred Stock and such other stock shall bear to
each other. Except as provided in the preceding sentence, unless full cumulative
dividends on the Series A Preferred Stock have been paid or declared in full and
sums set aside for the payment thereof, no dividends shall be declared or paid
or set aside for payment, or other distribution made, on any Capital Stock of
the Corporation ranking on a parity with or junior to the Series A Preferred
Stock as to the payment of dividends, nor shall any such stock be purchased,
redeemed or otherwise acquired, except as provided in Section 2(e) hereof, for
any consideration (or any payment made to or available for a sinking fund for
the redemption of any such stock).
(e) Except as provided in Section 2(d) hereof, the Corporation
may not pay cash dividends or make cash distributions on, or repurchase, redeem
or otherwise acquire (except in exchange for shares of Capital Stock ranking
junior to the Series A Preferred Stock as to the payment of dividends and as to
the distribution of assets upon liquidation, dissolution or winding up of the
Corporation or options, rights or warrants to acquire such shares) any of its
Capital Stock other than Capital Stock ranking senior to the Series A Preferred
Stock as to the payment of dividends, if, at such date, there are accumulated,
unpaid dividends on the Series A Preferred Stock; provided that the Corporation
may purchase outstanding shares of Common Stock and Series A Preferred Stock
from the holders thereof in accordance with the terms and conditions of the
Option Agreements (as defined in Section 2(f)).
11
(f) The following terms shall have the meanings set forth below:
"Book Value" shall mean, as of any date of determination, (x)
shareholder's equity of the Corporation as of that date determined in accordance
with generally accepted accounting principles, but adding back (A) the charge to
shareholder's equity relating to the assumption by the Corporation of certain
asbestos-related liabilities of GAF Building Materials Corporation in connection
with the Corporation's formation, (B) the reduction in shareholder's equity
resulting from purchases of the capital stock of GAF Corporation ("GAF") by
persons who participated in promoting the management buy-out of GAF in March
1989 (the "Acquisition") (predecessor cost basis adjustment) and (C) any amounts
reflecting the liquidation preferences of any outstanding preferred stock of the
Corporation and excluding, to the extent occurring after December 31, 1995, (1)
nonrecurring non-operating losses and charges to stockholder's equity and
nonrecurring non-operating gains and increases in stockholder's equity,
including any further charge relating to asbestos-related liabilities and any
increase in stockholder's equity attributable to a public offering of capital
stock of the Corporation, (2) net gains or losses in respect of dispositions of
assets by the Corporation other than in the ordinary course of business, and (3)
any charges relating to amortization of goodwill and other intangibles arising
from the Acquisition divided by (y) 1,000,000. Any adjustments to Book Value
shall include the tax effects, if any, associated therewith. If the Series A
Preferred Stock or Common Stock are converted or exchanged for other securities
or property pursuant to a recapitalization, stock split, combination,
reorganization, merger, exchange or similar transaction, or if a sale of all or
substantially all of the Common Stock of the Corporation shall occur or be
pending, Book Value shall be modified by the Board of Directors in such manner
as is reasonable under the circumstances. All determinations by the Board of
Directors hereunder shall be made in good faith and shall be binding and
conclusive.
"Business Day" means any day other than a Saturday, a Sunday
or any other day on which commercial banking institutions in the City of New
York are authorized by law to be closed.
"Capital Stock" of any person means any and all shares,
interests, participations or other equivalents (however designated) of equity
interests in such person.
"Common Stock" means the Corporation's common stock, par value
$.001 per share, and any securities or property into which the Corporation's
Common Stock may be converted or exchanged pursuant to a recapitalization, stock
split, combination, reorganization, merger, exchange or similar transaction.
"Corporation" means the party named as such in the preamble to
this Certificate.
"Option Agreements" means option agreements between the
Corporation and employees of the Corporation or U.S. Intec, Inc. relating to the
Series A Preferred Stock.
12
"person" means any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or agency, department or instrumentality thereof.
"Quarterly Dividend Period" means the applicable period from
January 1 through the next March 31, from April 1 through the next June 30, from
July 1 through the next September 30 or from October 1 through the next December
31.
3. Redemption.
(a) The Series A Preferred Stock shall be redeemable, at any
time in whole or from time to time in part, out of Legally Available Funds, at
the option of the Corporation, upon giving notice as provided in Section 3(b)
hereof, at the Liquidation Preference thereof plus accumulated but unpaid
dividends to the date of redemption.
(b) At least 30 days but not more than 60 days prior to the
date fixed for the redemption of shares of the Series A Preferred Stock pursuant
to Section 3(a) hereof (each a "Redemption Date"), written notice of such
redemption shall be mailed to each holder of record of shares of Series A
Preferred Stock to be redeemed in a postage prepaid envelope addressed to such
holder at his mailing address as shown on the records of the Corporation;
provided, however, that no failure of any holder of Series A Preferred Stock to
receive such notice nor any defect therein shall affect the validity of the
proceeding for the redemption of the shares of Series A Preferred Stock to be
redeemed. Each such notice shall state (i) the Redemption Date; (ii) the number
of shares of Series A Preferred Stock to be redeemed and, if fewer than all of
the shares held by such holder are to be redeemed from such holder, the number
of shares to be redeemed from such holder; (iii) the cash redemption price being
paid; (iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that dividends on the
shares to be redeemed shall cease to accrue on the Redemption Date. On or after
the Redemption Date, each holder of shares of Series A Preferred Stock to be
redeemed shall present and surrender his certificate or certificates for such
shares to the Corporation at the place designated in such notice and thereupon
the redemption price of such shares shall be paid to the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be cancelled. In case fewer than all of the shares
represented by such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares. From and after the Redemption Date (unless
default shall be made by the Corporation in payment of the redemption price) all
dividends on the shares of Series A Preferred Stock designated for redemption in
such notice shall cease to accrue and all rights of the holders thereof as
stockholders of the Corporation, except the right to receive the redemption
price thereof, without interest, upon the surrender of certificates representing
the same, shall cease and terminate and such shares shall not thereafter be
transferred (except with the written consent of the Corporation) on the books of
the Corporation and such shares shall not be deemed to be outstanding for any
purpose whatsoever.
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(c) If fewer than all of the shares of Series A Preferred
Stock are to be redeemed, the Board of Directors of the Corporation shall select
the shares to be redeemed on such basis as the Board of Directors shall
determine in its sole discretion. The Board of Directors shall not be required
to redeem shares of Series A Preferred Stock on a pro rata basis. The Board of
Directors may elect to redeem shares of Series A Preferred Stock held by one
holder or group of holders and elect not to redeem shares of Series A Preferred
Stock held by other holders. Regardless of the method used, the calculation of
the number of shares to be redeemed shall be based upon whole shares, such that
the Corporation shall in no event be required to issue fractional shares of
Series A Preferred Stock or cash in lieu thereof. In the event a method
requiring proration is used, the number of shares to be redeemed from a holder
shall be rounded downward to the nearest whole number of shares. The holders of
Series A Preferred Stock shall have no right to request the Corporation to
redeem such shares at any time, and the Corporation shall have no obligation to
honor any such request if made.
4. Voting Rights. The holders of Series A Preferred Stock shall be
entitled to one vote for each share held on all matters to be voted on by the
stockholders of the Corporation and shall vote together with the holders of
Common Stock and the holders of any other class of stock entitled to vote in
such manner. The holders of Series A Preferred Stock shall not, except as
required by law, be entitled to vote as a separate class. Without limiting the
generality of the preceding sentence, a class vote or the consent of the holders
of the outstanding shares of Series A Preferred Stock as a separate class shall
not be required in connection with: (i) the creation of any class or series of
Capital Stock of the Corporation; (ii) any merger, consolidation or transfer of
all or substantially all the assets of the Corporation or other transaction
involving the Corporation and a third party in which the Corporation is the
survivor or in which the Corporation is not the survivor and in which the Series
A Preferred Stock shall (a) remain outstanding as an equivalent security of the
survivor with no adverse change to the powers, preferences or special rights
provided for in this Certificate or (B) be redeemed for an amount per share
equal to the Liquidation Preference plus accrued and unpaid dividends; or (iii)
any increase in the total number of authorized or issued shares of Capital Stock
of any class, including without limitation Series A Preferred Stock.
5. Priority of Series A Preferred Stock in Event of Liquidation,
Dissolution or Winding Up. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, after
payment or provision for payment of the debts and other liabilities of the
Corporation, the holders of the Series A Preferred Stock shall be entitled to
receive, out of the remaining net assets of the Corporation, an amount per share
in cash equal to the Liquidation Preference plus all dividends accrued and
unpaid on each such share up to the date fixed for distribution before any
distribution shall be made to the holders of any Capital Stock of the
Corporation ranking junior to the Series A Preferred Stock as to the
distribution of assets upon the liquidation, dissolution or winding up of the
Corporation. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets distributable among the holders of Series A Preferred
Stock and any Capital Stock of the Corporation ranking on a parity with the
Series A Preferred Stock as to the distribution of assets upon the liquidation,
dissolution or winding up of the
14
Corporation shall be insufficient to permit the payment in full to the holders
of the Series A Preferred Stock and such other stock of all preferential amounts
payable to all such holders, then the assets thus distributable shall be
distributed ratably among the holders of the Series A Preferred Stock and any
Capital Stock of the Corporation ranking on a parity with the Series A Preferred
Stock as to the distribution of assets upon liquidation, dissolution or winding
up of the Corporation in proportion to the respective amounts that would be
payable per share if such assets were sufficient to permit payment in full.
Except as otherwise provided in this Section 5, holders of Series A Preferred
Stock shall not be entitled to any distribution in the event of liquidation,
dissolution or winding up of the affairs of the Corporation. For the purposes of
this Section 5, neither the voluntary sale, lease, conveyance, exchange or
transfer (for cash, securities or other consideration) of all or substantially
all the property or assets of the Corporation, nor the consolidation or merger
of the Corporation with one or more other corporations, shall be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary.
6. Conversion.
(a) The holders of shares of Series A Preferred Stock shall
have the right, at any time or from time to time, at their option, to convert
all or any portion of such shares into shares of Common Stock on the following
basis: Each share of Series A Preferred Stock shall be convertible into the
number of shares of Common Stock equal to 100 divided by 115% of Book Value as
of December 31, 1995. The Corporation may, at its option, pay to any holder cash
in lieu of any fractional share of Common Stock issuable upon conversion of
shares of Series A Preferred Stock.
(b) In the case of a redemption pursuant to Section 3 hereof
of any shares of Series A Preferred Stock, the right of conversion under this
Section 6 shall cease and terminate, as to the shares to be redeemed, at the
close of business on the second day preceding the date fixed for such
redemption, unless default shall be made in the payment of the Redemption Price
for the shares to be so redeemed.
(c) In order to convert shares of Series A Preferred Stock
into shares of Common Stock pursuant to the right of conversion set forth in
Section 6(a), the holder thereof shall surrender the certificate or certificates
representing Series A Preferred Stock, duly endorsed to the Corporation or in
blank, at the principal office of the Corporation and shall give written notice
to the Corporation that such holder elects to convert the same. Within five
business days, the Corporation shall deliver at said office to such holder of
Series A Preferred Stock a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled as aforesaid. Shares of
Series A Preferred Stock shall be deemed to have been converted as of the date
of the surrender of such shares for conversion as provided above, and the person
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder of such shares of Common
Stock on such date. Upon conversion of only a portion of the number of shares
covered by a certificate representing shares of Series A Preferred Stock
surrendered for conversion, the Corporation shall issue and deliver to the
holder of the certificate so
15
surrendered for conversion, at the expense of the Corporation, a new certificate
covering the number of shares of Series A Preferred Stock representing the
unconverted portion of the certificate so surrendered, which new certificate
shall entitle the holder thereof to the rights of the shares of Series A
Preferred Stock represented thereby to the same extent as if the certificate
theretofore covering such unconverted shares had not been surrendered for
conversion.
(d) The issuance of certificates for shares of Common Stock
upon the conversion of shares of Series A Preferred Stock shall be made without
charge to the converting stockholder for any original issue or transfer tax in
respect of the issuance of such certificates and any such tax shall be paid by
the Corporation.
(e) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
Series A Preferred Stock, the full number of shares of Common Stock then
deliverable upon the conversion of all shares of Series A Preferred Stock at the
time outstanding. The Corporation shall take at all times such corporate action
as shall be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the conversion of
Series A Preferred Stock in accordance with the provisions hereof, free from all
taxes, liens, charges and security interests with respect to the issue thereof.
The Corporation will, at its expense, use its best efforts to cause such shares
to be listed (subject to issuance or notice of issuance) on all stock exchanges,
if any, on which the Corporation's Common Stock may become listed.
7. Cancellation of Reacquired Series A Preferred Stock. Shares of
Series A Preferred Stock which have been issued and reacquired in any manner,
including shares purchased or redeemed, shall (upon compliance with any
applicable provisions of the laws of the State of Delaware) have the status of
authorized and unissued shares of preferred stock undesignated as to series and
may be redesignated and reissued as part of any series of preferred stock.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
duly executed on its behalf, this ___ day of ____________, 1996.
Building Materials Corporation of
America
ATTEST: By: _____________________________
Senior Vice President
----------------------------
Secretary
(Corporate Seal)
16
March ___, 1997
TO THE HOLDERS OF OPTIONS
TO PURCHASE SHARE OF SERIES A
PREFERRED STOCK OF BUILDING
MATERIALS CORPORATION OF
AMERICA AND U.S. INTEC, INC.
Dear Optionee:
Reference is made to each of (i) the Option Agreement (the "BMCA Option
Agreement") pursuant to which you were granted an option (the "BMCA Option") to
purchase shares of Series A Cumulative Redeemable Convertible Preferred Stock
(the "BMCA Preferred Stock"), par value $.01 per share, of Building Materials
Corporation of America ("BMCA") and (ii) the Option Agreement (the "Intec Option
Agreement") pursuant to which you were granted an option (the "Intec Option") to
purchase shares of Series A Cumulative Redeemable Convertible Preferred Stock
(the "Intec Preferred Stock"), par value $.01 per share, of U.S. Intec, Inc.
("Intec"). Effective as of January 1, 1997, Intec became an indirect subsidiary
of BMCA. Section 3(c) of the Intec Option Agreement provides that, upon the
occurrence of such an event, Book Value (as defined in the Intec Option
Agreement), the Intec Option and the terms of the Intec Option Agreement shall
be modified by the Board of Directors of Intec in such manner as is reasonable
under the circumstances. Accordingly, the Boards of Directors of Intec and BMCA
have taken the following actions, each of which are effective as of January 1,
1997:
1. Termination of Intec Option Agreement. The Intec Option Agreement has
been terminated and is no longer of any force or effect.
2. Increase in Number of Shares Issuable upon Exercise of BMCA Option. The
number of shares of BMCA Preferred Stock issuable to each holder of an
option to purchase shares of BMCA Preferred Stock upon exercise of such
option has been increased by a number of shares of BMCA Preferred Stock
equal to the number of shares of Intec Preferred Stock that were
issuable upon exercise of the option to purchase Intec Preferred Stock
held by such
1
holder immediately prior to the termination of the Option Agreement
with respect thereto. Accordingly, the number of shares of BMCA
Preferred Stock issuable upon exercise of the BMCA Option has been
increased by a number of shares of BMCA Preferred Stock equal to the
number of shares of Intec Preferred Stock that were issuable upon
exercise of the Intec Option immediately prior to the termination of
the Intec Option Agreement.
3. Amendment of BMCA Option Agreement.
(a) Amendment of Section 1(a). Section 1(a) of the BMCA Option
Agreement has been amended by deleting the final sentence
thereof.
(b) Amendment of Section 1(e). Section 1(e) of the BMCA Option
Agreement has been amended by deleting the final sentence
thereof.
(c) Amendment of Section 1(h). Section 1(h) of the BMCA Option
Agreement has been amended by deleting such section in its
entirety.
(d) Amendment of Section 3(c). Section 3(c) of the BMCA Option
Agreement has been amended by:
(i) deleting the first sentence thereof and replacing it
with the following new sentence:
"(c) For purposes of this Agreement, `Book Value'
shall mean, as of any date of determination, (x) the
sum of (i) shareholder's equity of the Company (or,
in the case of Book Value as of December 31, 1995,
the combined shareholder's equity of the Company and
USI) as of that date determined in accordance with
generally accepted accounting principles and treating
U.S. Intec Holdings Inc. as a wholly-owned subsidiary
of the Company after December 31, 1995 and (ii) the
cumulative operating profit (or loss) of the
Nashville, Tennessee fiberglass manufacturing
facility (the "Nashville Facility") of GAF Fiberglass
Corporation ("GAF Fiberglass") during the period
commencing January 1, 1997 through the date of
determination, and adding back (A) the charge to
shareholder's equity relating to the assumption by
the Company of certain asbestos-related liabilities
2
of GAF Building Materials Corporation in connection
with the Company's formation, (B) the reduction in
shareholder's equity resulting from purchases of the
capital stock of GAF Corporation ("GAF") by persons
who participated in promoting the management buy-out
of GAF in March 1989 (the "Acquisition") (predecessor
cost basis adjustment) and (C) any amounts reflecting
the liquidation preferences of any outstanding
preferred stock of the Company and excluding, to the
extent occurring after December 31, 1995, (1)
nonrecurring non-operating losses and nonrecurring
non-operating gains, including any further charge
relating to asbestos-related liabilities, (2) net
gains or losses in respect of dispositions of assets
by the Company other than in the ordinary course of
business, and (3) any charges relating to
amortization of goodwill and other intangibles
arising from the Acquisition divided by (y) in the
case of Book Value as of December 31, 1995, 1,000,000
and, in the case of all other calculations of Book
Value, the number of shares of Common Stock of the
Company outstanding on the date of determination.";
and
(ii) adding the following phrase after the phrase
"exchange or similar transaction," in the penultimate
sentence thereof:
"if GAF Xxxxxxxxxx becomes a direct or indirect
subsidiary of the Company, if the Company directly or
indirectly acquires the Nashville Facility".
(e) Amendment of Section 5(d). Section 5(d) of the BMCA Option
Agreement has been amended by deleting such section in its
entirety.
4. Amendment of Certificate of Designations. The defined term "Book Value"
contained in Section 2(f) of the Certification of Designations of the
BMCA Preferred Stock (the "Certificate of Designations") has been
amended by:
(i) deleting the first sentence thereof and replacing it
with the following new sentence:
"`Book Value' shall mean, as of any date of
determination, (x) the sum of (i) shareholder's
3
equity of the Corporation (or, in the case of Book
Value as of December 31, 1995, the combined
shareholder's equity of the Corporation and U.S.
Intec, Inc.) as of that date determined in accordance
with generally accepted accounting principles and
treating U.S. Intec Holdings Inc. as a wholly-owned
subsidiary of the Corporation after December 31, 1995
and (ii) the cumulative operating profit (or loss) of
the Nashville, Tennessee fiberglass manufacturing
facility (the "Nashville Facility") of GAF Fiberglass
Corporation ("GAF Fiberglass") during the period
commencing January 1, 1997 through the date of
determination, and adding back (A) the charge to
shareholder's equity relating to the assumption by
the Corporation of certain asbestos-related
liabilities of GAF Building Materials Corporation in
connection with the Corporation's formation, (B) the
reduction in shareholder's equity resulting from
purchases of the capital stock of GAF Corporation
("GAF") by persons who participated in promoting the
management buy-out of GAF in March 1989 (the
"Acquisition") (predecessor cost basis adjustment)
and (C) any amounts reflecting the liquidation
preferences of any outstanding preferred stock of the
Corporation and excluding, to the extent occurring
after December 31, 1995, (1) nonrecurring
non-operating losses and nonrecurring non-operating
gains, including any further charge relating to
asbestos-related liabilities, (2) net gains or losses
in respect of dispositions of assets by the
Corporation other than in the ordinary course of
business, and (3) any charges relating to
amortization of goodwill and other intangibles
arising from the Acquisition divided by (y) in the
case of Book Value as of December 31, 1995, 1,000,000
and, in the case of all other calculations of Book
Value, the number of shares of Common Stock of the
Corporation outstanding on the date of
determination."; and
(ii) by adding the following phrase after the phrase
"exchange or similar transaction," in the penultimate
sentence thereof: "if GAF Xxxxxxxxxx becomes a direct
or indirect subsidiary of the Corporation, if the
Corporation directly or indirectly acquires the
Nashville Facility".
4
5. Effect on BMCA Option Agreement and Certificate of Designations. Except
as specified herein, the BMCA Option Agreement and the Certificate of
Designations shall remain unmodified and in full force and effect.
Very truly yours,
BUILDING MATERIALS CORPORATION
OF AMERICA
By:_______________________
Name:_____________________
Title:____________________
U.S. INTEC, INC.
By:_______________________
Name:_____________________
Title:____________________
ACCEPTED AND AGREED TO:
-----------------------
(Signature)
Name:__________________
Date:__________________
5
