CONSULTING AGREEMENT
AS ADVISOR TO
CHIEF EXECUTIVE OFFICER
This Consulting Agreement ("Agreement") is made as dated below, by and
between Xx. Xxxxxx X. Xxxxxxxx ("Xx. Xxxxxxxx") and MEMC Electronic Materials,
Inc. ("MEMC"). Xx. Xxxxxxxx and MEMC have mutually agreed to end Xx. Xxxxxxxx'x
employment with MEMC, so that Xx. Xxxxxxxx may pursue other interests and become
a consulting advisor to MEMC's CEO. Xx. Xxxxxxxx has been employed as President
and Chief Operating Officer of MEMC. Xx. Xxxxxxxx also serves as a Director on
the MEMC Board of Directors. In order to resolve any and all matters arising out
of the employment relationship and its termination, and in order to insure a
smooth transition of Xx. Xxxxxxxx'x job duties and to continue to take advantage
of Xx. Xxxxxxxx'x skills and experience, the parties have entered into this
Agreement. The parties agree as follows:
1. Xx. Xxxxxxxx will voluntarily retire and resign his employment with MEMC
effective December 1, 1997 ("Termination Date"). Xx. Xxxxxxxx will receive all
regular compensation due for services rendered as an MEMC employee through
November 30, 1997 on the next regular pay date. In addition, Xx. Xxxxxxxx will
receive payment for all accrued but unused vacation time in the amount of
$47,525.60, payable on December 15, 1997. Xx. Xxxxxxxx (or his designated
beneficiary, if he should die before the scheduled payment date) also shall
receive compensation due him pursuant to the Employment Agreement dated May 1,
1995 between Xx. Xxxxxxxx and MEMC (the "Employment Agreement") in the aggregate
amount of $561,666.67, payable as follows: $28,083.33 payable on December 15,
1997; $337,000.00 payable on January 2, 1998; and $196,583.34 payable on January
4, 1999. The Employment Agreement, which is attached as Exhibit A and
incorporated by reference herein, shall be deemed to be amended by all
provisions of this Agreement that are inconsistent therewith. Capitalized terms
used herein but not defined herein shall have the meanings assigned in the
Employment Agreement. "Agreement" shall mean this Consulting Agreement unless
the context otherwise requires.
2. For a one-year period beginning with the day after Xx. Xxxxxxxx'x
Termination Date ("Consulting Period"), Xx. Xxxxxxxx agrees to make himself
reasonably available for consultation with MEMC either by phone or in person as
reasonably requested by MEMC on such matters as MEMC may reasonably request.
During the Consulting Period Xx. Xxxxxxxx shall be considered a consulting
advisor to MEMC's CEO. Xx. Xxxxxxxx shall be free to perform services for others
when not performing under this Agreement; provided, that nothing in this
Agreement will eliminate or modify in any way the confidentiality and
non-competition restrictions placed upon Xx. Xxxxxxxx by Paragraphs 5.1 and 5.2
of the Employment Agreement, which paragraphs are incorporated by reference
herein and shall be effective as of the Termination Date, except that (a) such
paragraphs shall be interpreted solely with reference to the definition of
"Competitive Work" set forth in the Confidentiality Agreement dated as of March
31, 1989 (the "Confidentiality Agreement"), which is incorporated by reference
in the Employment Agreement; and (b) the written consent of MEMC described in
the first paragraph of the section of the Confidentiality Agreement entitled
"Competitive Activity" shall not be unreasonably withheld and shall be deemed to
have been given if Xx. Xxxxxxxx has received no response from MEMC as of the
14th day after Xx. Xxxxxxxx has furnished the written evidence required
thereunder to MEMC.
3. The parties agree that during the Consulting Period, the parties'
relationship will be that of a client and an independent contractor. During this
period Xx. Xxxxxxxx will not be considered an agent or employee of MEMC and
therefore will not necessarily be entitled to any of the benefits MEMC provides
its employees, including but not limited to health, worker's compensation and
pension or profit sharing plans; except that nothing contained herein shall
deprive Xx. Xxxxxxxx of any benefits to which he is entitled under Section 3.1.1
of the Employment Agreement, under any plan providing benefits during retirement
if and when Xx. Xxxxxxxx elects to begin receiving retirement income, and any
other benefits that may be specifically provided under this Consulting
Agreement. Nothing in this Agreement shall adversely affect Xx. Xxxxxxxx'x
rights with respect to any vested profit sharing or pension monies, if any; Xx.
Xxxxxxxx'x right to begin receiving retirement income, if he is eligible under
the terms of any plan, at any time before, during, or after the Consulting
Period; or Xx. Xxxxxxxx'x rights under any other plan for which he may be
eligible or any law, including without limitation the Consolidated Omnibus
Reconciliation Act of 1986 ("COBRA").
4. In consideration of Xx. Xxxxxxxx'x consulting services and other
promises herein, on January 2, 1998, MEMC will pay to Xx. Xxxxxxxx (or his
designated beneficiary, if he should die before January 2, 1998) a lump sum in
the amount of $539,751.00. In addition, Xx. Xxxxxxxx will be paid an hourly rate
of $250 for each hour and fraction thereof which he spends providing consulting
services, with a minimum of two hours for each telephone consultation and four
hours for each requested consultation in person. In addition, Xx. Xxxxxxxx will
be reimbursed for all reasonable expenses incurred as a result of his performing
consulting services. To the extent that Xx. Xxxxxxxx requires administrative
support to perform his consulting duties, these will be provided by MEMC;
provided that, it is expressly understood that MEMC will not be responsible for
providing Xx. Xxxxxxxx with office facilities at any MEMC location. Xx. Xxxxxxxx
expressly acknowledges that the monies paid hereunder are over and above
anything which MEMC may owe him for his services prior to the termination of his
employment and represents additional pay and benefits to which Xx. Xxxxxxxx
would not normally be entitled at the end of his employment.
If Xx. Xxxxxxxx is required to travel in order to provide consulting
services to MEMC, MEMC shall provide travel insurance in an amount not less than
that for which Xx. Xxxxxxxx was eligible during the month prior to the
Termination Date.
5. The parties also agree as follows:
(a) MEMC shall take or cause to be taken all actions necessary such that:
(1) all stock options previously awarded to Xx. Xxxxxxxx under any
plan of MEMC ("Options") that have not vested shall vest as of
the Termination Date;
(2) if at any time in the future MEMC issues Options to replace
Options granted as of the same date as any Options that then
remain outstanding, the effect of which is to lower the exercise
price under the Options being replaced, MEMC shall issue Options
to replace outstanding Options on the same terms as such other
Options, subject to Subsection 5(a)(3) and subject to the
execution of such documents as MEMC reasonably requires to assure
compliance with the securities laws.
(3) Xx. Xxxxxxxx shall have all rights under the Equity Incentive
Plan or Long Term Incentive Plan, as the case may be, to pay any
Option exercise price in shares of stock or through a cashless
exercise procedure, as well as the right to elect to pay in
shares of stock all or a part of any amount required to be
withheld to satisfy income tax liability in connection with the
exercise of any Option (unless such election would subject him to
liability under Section 16(b) of the Securities Exchange Act of
1934, as amended);
(4) Xx. Xxxxxxxx shall be allowed to exercise all Options (including
any replacement options) until the tenth anniversary of the date
on which each Option was granted; and
(5) all shares of restricted stock previously awarded to Xx. Xxxxxxxx
under any plan of MEMC ("Restricted Stock") that have not vested
shall vest as of the Termination Date, and all remaining
restrictions on such Restricted Stock shall lapse as of the
Termination Date.
(b) The six (6) month prior irrevocable election requirement of the
Supplemental Executive Pension Plan shall be waived. As payment in
full for all amounts due him from the Supplemental Executive Pension
Plan, Xx. Xxxxxxxx (or his designated beneficiary, if he should die
before the scheduled payment date) shall receive 120 monthly
installment payments as follows:
(1) $10,588.11 each month in 1998;
(2) $10,764.58 each month in 1999;
(3) $10,946.24 each month in 2000;
(4) $11,133.88 each month in 2001;
(5) $11,328.73 each month in 2002;
(6) $11,532.64 each month in 2003;
(7) $11,748.88 each month in 2004;
(8) $11,983.86 each month in 2005;
(9) $12,253.50 each month in 2006; and
(10) $12,621.10 each month in 2007.
(c) Xx. Xxxxxxxx (or his designated beneficiary, if he should die before
the scheduled payment date) also shall receive as retirement income in
addition to amounts due him from the Supplemental Executive Pension
Plan, 120 monthly installment payments as follows
(1) $11,644.68 each month in 1998;
(2) $11,838.76 each month in 1999;
(3) $12,038.54 each month in 2000;
(4) $12,244.91 each month in 2001;
(5) $12,459.20 each month in 2002;
(6) $12,683.47 each month in 2003;
(7) $12,921.28 each month in 2004;
(8) $13,179.71 each month in 2005;
(9) $13,476.25 each month in 2006; and
(10) $13,880.54 each month in 2007.
(d) MEMC shall advance to Xx. Xxxxxxxx as an interest free loan an amount
equal to 47.05% of the gross income realized by Xx. Xxxxxxxx for
federal income tax purposes resulting from the vesting of MEMC
Restricted Stock on December 1, 1997, which loan shall be advanced in
sufficient time to fund the required tax withholding on such income.
Such loan shall be repaid in full no later than January 2, 2003. In
addition, on April 15 after each year during the period December 1,
1997 through December 31, 2002, MEMC shall pay Xx. Xxxxxxxx an amount
equal to 47.05% of the amount of imputed interest reported by MEMC to
Xx. Xxxxxxxx for federal income tax purposes for the immediately
preceding year.
(e) MEMC shall deposit $2,661,282.29 in the MEMC Electronic Materials,
Inc. Supplemental Executive Pension Plan Trust in January, 1998 to
provide a source of payment of the amounts due Xx. Xxxxxxxx under
Subsections 5(b) and 5(c) above.
6. Xx. Xxxxxxxx agrees to release MEMC and its past and present
shareholders, officers, directors, agents, employees, representatives,
attorneys, successors and assigns, and affiliated or related companies (Released
Parties), from any and all claims made, to be made, or which might have been
made as a consequence of Xx. Xxxxxxxx'x employment with MEMC or arising out of
the termination of said employment relationship other than the breach of any
provision of this Agreement by MEMC. This release specifically applies to, but
is not limited to, any and all claims for back pay, front pay, sick pay,
bonuses, or any other form of compensation or benefits not expressly preserved
herein, claims of wrongful or retaliatory discharge, and any and all other
claims arising under federal, state, or local law, known or unknown, which exist
as of the date of the execution of this Agreement, whether such claims arise
under either common law (whether sounding in tort or contract) or under
constitution, statute or ordinance, including by way of illustration Title VII
of the Civil Rights Act of 1954, as amended, 42 U.S.C. Section 2000(e), et seq.;
the Missouri Human Rights Act, as amended, and the Americans With Disabilities
Act, 42 U.S.C. Section 12101, et seq., the Age Discrimination in Employment Act
of 1967, 29 U.S.C. Section 621, et seq.
7. Xx. Xxxxxxxx agrees never to institute, directly or indirectly, any
action or proceeding of any kind against any Released Party, on account of any
matters over which he has waived his rights in this Agreement.
8. MEMC hereby releases Xx. Xxxxxxxx and his heirs, personal
representatives, successors, and assigns from any and all claims of every nature
and description, whether known or unknown, prior to the date hereof. This does
not release Xx. Xxxxxxxx from any claim which may be made as a consequence of
the future breach by Xx. Xxxxxxxx of any provision of this Agreement.
9. MEMC agrees never to institute, directly or indirectly, any action or
proceeding of any kind against Xx. Xxxxxxxx, on account of any matters over
which MEMC has waived its rights in this Agreement.
10. Within seven (7) days following Xx. Xxxxxxxx'x Termination Date, he
shall return to MEMC any and all property of MEMC which he may have in his
possession or control, if any, including, but not limited to any financial
records or reports, memoranda, and all other documents, recordings, tapes,
disks, etc., whether written or electronic, and without retaining any copies
thereof, except that he may retain copies of those documents that may be helpful
to him in preparing an updated resume. Upon completion of the Consulting Period,
he shall also return all MEMC property with which he may be provided, without
retaining copies.
11. The provisions of this Agreement governed by state law will be governed
by Missouri law, exclusive of any rules that would apply to another state's
substantive rules of law or equity, or which would in any way impair the
enforceability of the arbitration provision described in paragraph 18 below.
12. This Agreement shall be binding upon, and shall inure to the benefit of
MEMC and Xx. Xxxxxxxx and their respective heirs, executors, administrators,
legal representatives, successors and assigns; and MEMC affirmatively will
require any successor to all or any portion of the business and/or assets of
MEMC that includes the obligations to which MEMC is bound under this Agreement,
whether succession is direct or indirect and without regard to the manner by
which it is effected, including without limitation purchase, merger, and
consolidation, expressly to assume and perform this Agreement in the same manner
and to the same extent that MEMC would be required to perform it if no such
succession had taken place. As used in this Agreement, "MEMC" shall include any
such successor.
13. Xx. Xxxxxxxx agrees not to reapply for employment with MEMC at any
time.
14. The parties agree that in the event either party breaches any of the
provisions of this Agreement, either party shall be entitled to any and all
equitable remedies provided by law. Moreover, if a party prevails in any
litigation or arbitration related to a breach of this Agreement, the prevailing
party shall be entitled to the reimbursement of reasonable attorney's fees,
expenses and court costs incurred in such litigation or arbitration.
15. The parties mutually agree that the terms of this Agreement are
strictly confidential. They will not be discussed or otherwise disclosed to
third parties. However, the parties expressly understand that nothing herein
prohibits the divulging or reporting of anything related to this Agreement as
required by law, regulation, governmental authority or similar body, or as
required in the written opinion of counsel to comply with applicable laws,
including securities laws and regulations or stock exchange requirements, it
being expressly acknowledged and agreed that this Agreement and all amendments,
attachments and exhibits thereto shall be filed with the Securities and Exchange
Commission ("the SEC") and furnished to parties requesting copies of exhibits to
filings with the SEC. The parties further acknowledge that employees of MEMC may
learn of the terms of this Agreement in the ordinary course of business and that
Xx. Xxxxxxxx'x spouse, attorneys, accountants and advisors may also learn of its
terms. However, the parties will undertake to advise such persons as discussed
in the foregoing sentence that they are not to disclose or otherwise divulge the
terms of this Agreement.
16. Xx. Xxxxxxxx expressly acknowledges that he has been advised to consult
with an attorney of his choice regarding his execution of this document, that he
has been told that he has twenty-one (21) days from his date of receipt of the
final version of this Agreement to either accept or reject its terms, and that
if he executes this Agreement, he shall have the right to revoke his acceptance
by notifying MEMC, in writing, within seven (7) days of his execution, of his
revocation.
17. Xx. Xxxxxxxx shall remain a member of the Board as a non-employee
Director of MEMC, until such time as he is removed or is reappointed, provided
that he shall resign from the Board forty-five (45) days prior to the 1998
annual meeting unless requested in writing not to do so. Xx. Xxxxxxxx shall
receive fees and other compensation, if any, as a non-employee Director of MEMC
at the same level as determined for MEMC's other non-employee Directors, payable
during such time as Xx. Xxxxxxxx continues to serve as a member of the Board.
18. Any disputes between the parties to this Agreement shall be settled by
arbitration in St. Louis, Missouri, before a single arbitrator in accordance
with the Commercial Arbitration Rules under the American Arbitration
Association, provided that discovery shall be permitted in accordance with the
Federal Rules of Civil Procedure. The decision of such arbitration shall be
final and conclusive on the parties, and judgment upon such decision may be
entered in any court having jurisdiction thereof.
19. If a court of competent jurisdiction determines that any provision
contained in this Agreement, or any part thereof, cannot for any reason be
enforced, the parties agree that such determination shall not affect or
invalidate the remainder of this Agreement.
20. MEMC makes no representations and is not responsible with respect to
the income tax and securities law consequences to Xx. Xxxxxxxx resulting from
this Agreement and the compensation and benefits payable pursuant thereto. All
amounts payable pursuant to this Agreement are subject to federal and state tax
withholding as required by applicable law from time to time.
21. Xx. Xxxxxxxx may designate a beneficiary or beneficiaries
(contingently, consecutively, or successively) of a death benefit, if any,
payable under this Agreement and, from time to time, may change his designated
beneficiary. A beneficiary may be a trust. A beneficiary designation shall be
made in writing and delivered to MEMC while Xx. Xxxxxxxx is alive. If there is
no designated beneficiary surviving at the death of Xx. Xxxxxxxx, payment of any
death benefit shall be made to his surviving spouse, and if he has no surviving
spouse, to his estate.
22. Xxxxxxxx hereby agrees now and at any time in the future to refrain
from making any comments or statements to the press, the employees of MEMC or
any individual or entity with whom MEMC has a business relationship or others,
(i) which would be likely to adversely affect the conduct of the business of
MEMC or any of its affiliates, or any of their plans or prospects, or their
business reputations, or the business reputations of any of their
representatives or members of their respective boards of directors, or (ii)
which would disparage in any way or cast in a negative light MEMC or any of its
affiliates, or any of their respective directors, officers, agents or employees.
MEMC hereby agrees now and at any time in the future to refrain from making any
comments or statements to the press or any individual or entity with whom
Xxxxxxxx has a business relationship or others, (i) which would be likely to
adversely affect the business reputation of Xxxxxxxx, or (ii) which would
disparage in any way or cast in a negative light Xxxxxxxx.
23. The parties acknowledge that each has read this Agreement consisting of
9 pages, 23 sections, and the attached exhibits and fully understand same. Xx.
Xxxxxxxx also acknowledges that he agrees to all of the terms and conditions of
this Agreement and that he does so of his own free will and without coercion and
that he has had an opportunity to review this document with an attorney of his
choice. MEMC represents that it has the corporate authority to enter this
Agreement and has taken or will take all steps necessary to carry out its terms
and conditions. The parties agree that no representation or promise inconsistent
with or additional to the terms of this Agreement have been made, that this
Agreement includes all referenced Exhibits and is the full and complete
agreement of the parties, and that this Agreement may not be modified, changed,
or added to except in writing signed by all parties.
THE PARTIES ACKNOWLEDGE THAT THE INSTANT AGREEMENT CONTAINS A BINDING AND
ENFORCEABLE ARBITRATION PROVISION.
SO AGREED: MEMC ELECTRONIC MATERIALS, INC.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Viefhues
------------------------- ------------------------
Xxxxxx X. Xxxxxxxx, Ph.D. Title: CEO
Date: December 1, 1997 Date: December 1, 1997
------------------ -----------------------
Exhibit A
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of May 1, 1995 (the "Agreement"), between
MEMC ELECTRONIC MATERIALS, INC. of St. Xxxxxx, Missouri, a Delaware corporation
("MEMC"), and Xx. Xxxxxx X. Xxxxxxxx (the "Executive").
WHEREAS, MEMC desires to employ the Executive and to assure itself of the
continued services of the Executive and the availability of his advise, counsel
and leadership for the term of employment provided for in this Agreement; and
WHEREAS, the Executive desires to accept such employment and enter into
this Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. Term.
Subject to Sections 3, 4 and 5 below, the term of the Executive's
employment under this Agreement shall commence on the effective date of the
Registration Statement on Form S-1 in connection with the initial public
offering (the "IPO") "hereinafter, the "IPO date") of securities of MEMC and
shall terminate on the first day of the month following the fourth anniversary
of the IPO Date (the "Term"). During the Term, the Executive will devote his
full business time to his duties as President and Chief Operating Officer
("COO") of MEMC. In such capacity, the Executive agrees to serve MEMC faithfully
and to the best of his ability under the direction of the Board of Directors of
MEMC (the "Board"). The Executive also agrees to serve, if elected or appointed,
at no compensation in addition to that provided for in this Agreement, in the
position of officer or director of any affiliate of MEMC.
2. Compensation and Benefits.
2.1. Compensation. In consideration of the Executive's agreement to be
employed by MEMC under the terms and provision of this Agreement, MEMC shall
provide the Executive with the compensation arrangements listed on the attached
Schedule 1; provided, however, that the grants of options and restricted stock
described therein shall be subject to the consummation by MEMC of the IPO. The
Executive's compensation as described in Schedule 1 shall be reviewed by the
Board, based upon the Executive's performance and then current titles and
responsibilities, not less often than annually. The Executive's base salary may
be increased, but not decreased, based on his performance and upon the Board's
view of the appropriate base salary for the titles and responsibilities assigned
to the Executive from time to time. Compensation of the Executive is primarily a
function of company performance and individual performance and could, in any
given year, be higher or lower than that of other COOs in comparable positions.
But it is the intent that MEMC's compensation opportunity be structured to
afford comparable pay given comparable performance by the Executive and MEMC. In
addition to any increases effected as a result of such review, the Board at any
time may in its sole discretion increase the Executive's base salary.
Compensation will include but not be limited to: (a) base salary; (b) annual
incentives; (c) grants of options, restricted stock or other awards under an
omnibus equity incentive plan (the "Equity Incentive Plan") to be adopted by
MEMC prior to consummation of the IPO; and (d) participation in any long term
incentive plan established by MEMC.
2.2. Pension Benefits. The Executive shall continue to be entitled to
participate in the MEMC Pension Plan for Salaried Employees (the "MEMC Pension
Plan").
2.3. Other Employee Benefits. The Executive shall be entitled to continue
to participate as a vested employee in any welfare plans of MEMC, including, but
not limited to, medical, dental, life insurance, and disability income, and
perquisites to which an employee of comparable or lesser grade level in MEMC is
entitled.
3. Termination Payments.
3.1. Termination Without Cause.
3.1.1. General. Subject to Section 5 below, if MEMC terminates the
Executive's employment without Cause (as defined below) prior to the expiration
of the Term, (i) MEMC shall be obligated to pay the Executive his then current
base salary for the balance of the Term (the "Severance Period") in accordance
with MEMC's payroll practices, (ii) all unvested options granted under the
Equity Incentive Plan shall vest and all restrictions on awards granted under
the Equity Incentive Plan shall lapse and (iii) the Executive shall be allowed
to exercise all stock options granted under the Equity Incentive Plan until the
earlier of (A) the later of (x) one year following the date of termination and
(y) the first day of the month following the fourth anniversary of the IPO Date
and (B) the expiration of the term of the stock option; provided, however, that
the Executive may exercise any incentive stock options until three months
following the date of termination (or, if earlier, until expiration of the term
of such incentive stock options). In addition, in the event of termination
without Cause, the then current year annual incentive will be paid at such level
and at such time as payment is made to MEMC's other executives under the
applicable bonus plan. The Executive shall have no further right to receive any
other compensation or benefits after such termination or resignation of
employment, except as determined in accordance with the terms of the employee
benefit plans or programs of MEMC or as provided in Section 2.2 above.
3.1.2. Conditions Applicable to the Severance Period. If, during the
Severance Period, the Executive breaches his obligations under Section 5 of this
Agreement, MEMC may, upon written notice to the Executive, terminate the
Severance Period and cease to make any further payments or provide any benefits
described in Section 3.1.1. except as determined in accordance with the terms of
the employee benefit plans or programs of MEMC as provided for in Section 2.2
above.
3.1.3. Death During Severance Period. In the event of the Executive's death
during the Severance Period, payments of the severance amounts under this
Section 3 shall continue to be made during the remainder of the Severance Period
to the beneficiary designated in writing for this purpose by the Executive or,
if no such beneficiary is specifically designated, to the Executive's estate.
3.1.4. Date of Termination. The date of termination of employment without
Cause shall be the date specified in a written notice of termination to the
Executive (which date shall be coincident with or subsequent to the date of such
notice).
3.2. Termination for Cause: Resignation by the Executive.
3.2.1. General. If, prior to the expiration of the Term, the Executive's
employment is terminated by MEMC for Cause, or the Executive resigns from his
employment hereunder, the Executive shall be entitled to payment of his base
salary as then in effect through and including the date of termination or
resignation. The Executive shall have no further right to receive any other
compensation or benefits after such termination or resignation of employment,
except as determined in accordance with the terms of the employee benefit plans
or programs of MEMC or as provided in Section 2.2 above.
3.2.2. Date of Termination. Subject to the proviso to Section 3.3, the date
of termination for Cause shall be the date specified in a written notice of
termination to the Executive. The date of resignation shall be the date
specified in the written notice of resignation from the Executive to MEMC (which
date shall be coincident with or subsequent to the date of such notice) or, if
no date is specified therein, 10 business days after receipt by MEMC of written
notice of resignation from the Executive.
3.3. Cause. Termination for "Cause" shall mean termination of the
Executive's employment because of:
(i) any act or omission that constitutes a material breach by the
Executive of any of his material obligations under this Agreement (other
than by reason of his death or Permanent Disability (as defined below));
(ii) the continued failure or refusal of the Executive to perform the
material duties required of him as an employee of MEMC (other than by
reason of his death or Permanent Disability);
(iii) any willful material violation by the Executive of any law or
regulation applicable to the business of MEMC or any of its subsidiaries,
or the Executive's conviction of a felony, or any willful perpetration by
the Executive of a common law fraud; or
(iv) any other willful misconduct by the Executive which is materially
injurious to the financial condition or business reputation of, or is
otherwise materially injurious to, MEMC or any of its subsidiaries or
affiliates;
provided, however, that if any such Cause relates to the Executive's obligations
under this Agreement and (x) is susceptible to cure and (y) does not constitute
a repetition of such Cause, MEMC shall not terminate the Executive's employment
hereunder unless MEMC first gives the Executive notice of its intention to
terminate and of the grounds for such termination, and the Executive has not,
within 10 business days following receipt of the notice, cured such Cause, or in
the event such Cause is not susceptible to cure within such 10 business day
period, the Executive has not taken all reasonable steps within such 10 business
day period to cure such Cause as promptly as practicable thereafter.
4. Death or Disability.
In the event of termination of the Executive's employment by reason of
death or Permanent Disability (as hereinafter defined), the Executive (or his
estate, as applicable) shall be entitled to base salary and benefits determined
under Section 2 hereof through the date of death or, in the case of Permanent
Disability, through the later of the date of termination or the date (not later
than one year following the date of termination) on which the Executive
commences to receive disability benefits (including a pro rata annual incentive
for the year of death or disability at the maximum opportunity level). For 50%
of the restricted stock held by the Executive on the date of the termination of
his employment, all restrictions will immediately lapse. The remaining
restricted stock and options outstanding will continue to vest in accordance
with Schedule 1 as if his employment has not terminated. Other benefits shall be
determined in accordance with the benefit plans maintained by MEMC, including,
without limitation, the Equity Incentive Plan and any Long Term Incentive Plan,
and MEMC shall have no further obligation hereunder. For purposes of this
Agreement, "Permanent Disability" means a physical or mental disability or
infirmity of the Executive that prevents the normal performance of substantially
all his duties as an employee of MEMC, which disability or infirmity shall
exist, or in the opinion of an independent physician is reasonably likely to
exist, for any continuous period of 180 days.
5. Restrictive Covenants.
5.1 Non-Compete: Confidentiality. For the period extending through the
later of (i) April 1, 2000 and (ii) two years following the date of termination
of the Executive's employment with MEMC or its affiliates, the Executive will
not accept employment nor engage in business, directly or indirectly, as a sole
proprietor, member of a partnership, stockholder or investor (other than a
stockholder or investor owning not more than a 5% interest), officer or director
of a corporation, or as an employee, associate, consultant or agent for any
person, partnership, corporation or other business organization or entity other
than MEMC or any of its subsidiaries which competes with MEMC without the
express written consent of MEMC. In addition, the terms of the confidentiality
agreement dated March, 1989 between MEMC and the Executive are incorporated
herein by reference. Notwithstanding anything contained in this Section 5 to the
contrary, the period of applicability of this Section 5 shall be extended an
additional day for each day on which the Executive is in breach of this Section
5.
5.2 Injunctive Relief. Without intending to limit the remedies available to
the parties hereto, the parties acknowledge that a breach of any of the
covenants contained in this Section 5 may result in material and irreparable
injury to MEMC for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, MEMC shall be entitled to seek a temporary
restraining order and/or a preliminary or permanent injunction restraining the
Executive from engaging in activities prohibited by this Section 5 or such other
relief as may be required specifically to enforce any of the covenants in this
Section 5. If, for any reason, it is held that the restrictions under this
Section 5 are not reasonable or that consideration therefor is inadequate, such
restrictions shall be interpreted or modified to include as much of the duration
and scope identified in this Section 5 as will render such restrictions valid
and enforceable.
6. Successors. MEMC will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of MEMC to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that MEMC would be required
to perform it if no such succession had taken place. As used in this Agreement,
"MEMC" shall mean MEMC as defined above and any successor to its business and/or
assets which by reason hereof assumes and agrees to perform this Agreement by
operation of law, or otherwise.
7. Miscellaneous.
7.1 Severability. Each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
7.2 Disputes. Any disputes between the parties to this Agreement shall be
settled by arbitration in St. Louis, Missouri under the auspices of, and in
accordance with the rules of, the American Arbitration Association. The decision
in such arbitration shall be final and conclusive on the parties and judgment
upon such decision may be entered in any court having jurisdiction thereof.
7.3 Entire Agreement: Amendment.
(i) Except as expressly set forth herein, this Agreement represents
the entire agreement of the parties concerning the subject matter hereof
and shall supersede any and all previous contracts, arrangements or
understandings between MEMC and the Executive.
(ii) This Agreement may be amended at any time by mutual written
agreement of the parties hereto.
7.4 Withholding. The payment of any amount pursuant to this Agreement shall
be subject to applicable withholding and payroll taxes, and such other
deductions as may be required under MEMC's employee benefit plans, if any.
7.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri.
The parties have executed this Agreement as of the day and year first above
written.
MEMC Electronic Materials, Inc.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Viefhues
-------------------------------- -----------------------------------
Xxxxxx X. Xxxxxxxx Chairman of the Board
[ ]
Schedule 1
Current Compensation Program
o Annual Base Salary - USD $310,000 per annum
o 1995 Incentive Program Target Incentive Opportunity as a percent of base
salary - Annual Incentive Target/Maximum Opportunity; 30%/66%
o Grants of Stock Options and Performance Contingent Vesting Restricted Stock
in connection with the IPO
o Participation in any Long Term Incentive Plan (expected to be established
by MEMC on or after January 1, 1996)
STOCK OPTIONS RESTRICTED STOCK
----------------------- ------------------------------
72,364 Options at IPO price which 24,000 shares of Restricted
vest at the rate of 25% per year, Stock which vest 100% (i.e.,
such that 100% vesting will occur on all forfeiture restrictions
the fourth anniversary of the IPO lapse) on the fourth anniver-
Date. (1) ("Ratable Vesting Options") sary of the IPO Date.
("Performance Vesting
Restricted Stock"). However,
if, at any time during the
first 3 years, the common
stock share appreciation is
greater than 55% from the
IPO price, 50% of the
Performance Vesting
Restricted Stock will become
fully vested. If such share
72,364 Options at IPO price which appreciation is greater than
vest 100% on the fourth anniversary 100%, then all Performance
of the IPO Date. ("Cliff Vesting Vesting Restricted Stock will
Options") become fully vested.
24,000 shares of Restricted
Stock which vest 100% on fourth
anniversary of the IPO Date.
("Cliff Vesting Restricted
Stock")
---------------
(1) The number of shares representing .171% of outstanding stock on a fully
diluted basis is assumed to be 72,364 shares. If the IPO results in a
different number of shares equaling .171% of outstanding stock on a fully
diluted basis, the Executive shall receive, for each of the Ratable Vesting
and Cliff Vesting Option grants, the greater of 72,364 shares or .171% of
outstanding stock on a fully diluted basis. The number of both Ratable
Vesting and Cliff Vesting Restricted Stock shares referenced granted to the
Executive will also be determined in this manner.
Performance Vesting Restricted Stock, Cliff Vesting Options, and Cliff Vesting
Restricted Stock will be forfeited and cancelled, if the employment of the
Executive is terminated for Cause or due to his option to retire prior to the
fourth anniversary of the IPO Date.
