[Date]
TO EACH HOLDER OF OPTIONS
TO PURCHASE SHARES OF SERIES
A PREFERRED STOCK OF BUILDING
MATERIALS CORPORATION OF AMERICA
Dear Optionee:
Reference is made to the Option Agreement dated September 13, 1996, as
previously amended by amendment dated June 27, 1997 (the "Agreement"), pursuant
to which you were granted an option to purchase shares of Series A Cumulative
Redeemable Convertible Preferred Stock of Building Materials Corporation of
America.
The Agreement is hereby amended as follows:
1. The first sentence of Section 1(b) of the Agreement is hereby amended to
read in its entirety as follows:
"The Option shall vest and become exercisable as to 20% of the
Preferred Shares on December 31 in each of the years 1996 through
2000, in each case to the extent you are employed by the Company or
its subsidiaries on such date; provided that (i) if your employment
with the Company and its subsidiaries should terminate as a direct
result of a divestiture (whether because you are employed by the
business which is sold, your position is eliminated as a result of the
divestiture or otherwise) or (ii) if, after a Change of Control of the
Company, your employment with the Company and its subsidiaries (x)
should be terminated by the Company other than for cause, (y) is
terminated as a result of your death or permanent disability, or (z)
is terminated by you for "good reason", the unvested portion of the
Option shall become vested on the date of your termination. You shall
be deemed to terminate your employment for "good reason" if you do so
as a result of a change or changes in the terms of your employment
that are materially adverse to you, including with respect to your
salary and bonus, level of responsibility or geographic location of
employment."
2. The first sentence of Section 1(c) of the Agreement is hereby amended to
read in its entirety as follows:
"The Option will terminate on the earliest of (i) December 31, 2004,
(ii) 30 days after the termination of your employment with the Company
and its subsidiaries for any reason other than your death or permanent
disability or (iii) one year after the termination of your employment
with the Company and its subsidiaries as a result of your death or
permanent disability."
3. Section 1(d) of the Agreement is hereby amended to read in its entirety
as follows:
"Notwithstanding anything to the contrary contained in this Agreement,
in the event the Company or its parent engages in a public offering of
the common stock of the Company (an "IPO"), (i) you will be entitled
to receive from the Company, on each vesting date set forth in Section
1(b) (or, within five days after consummation of the IPO, in the case
of the unexercised portion, if any, of the Option which is vested as
of the date of consummation of the IPO), an amount in cash equal to
the amount by which Book Value (as defined in Section 3(c)) of the
Common Shares issuable upon conversion of the Preferred Shares subject
to the portion of the Option which vests (or, in the case described in
the immediately preceding parenthetical, is vested) on such date,
determined as of the end of the calendar quarter immediately preceding
the consummation of the IPO, exceeds the aggregate exercise price of
such portion of the Option, and (ii) the Company will endeavor to
grant you options to purchase shares of the Company's Common Stock
which, together with the rights to receive cash described in clause
(i) above, provide equivalent economic value to the Options granted to
you pursuant to this Agreement that are unexercised as of the date of
consummation of the IPO. Such new stock options will vest on the
vesting schedule provided in Section 1(b) of this Agreement and will
be granted under a stock option plan which is appropriate, in the
judgment of the Board of Directors of the Company, for a public
company. Your right to receive cash, and to exercise such new stock
options, will be subject to the conditions to vesting set forth in
Section 1(b), including the proviso to the first sentence thereof.
Following consummation of the IPO, this Agreement (other than Section
3(d) and this Section 1(d)) shall have no further force and effect."
4. The first two sentences of Section 3(c) of the Agreement are hereby
amended to read in its entirety as follows, and a comparable change shall be
made to the first sentence of the definition of Book Value contained in Section
2(f) of the Certificate of Designation:
"For purposes of this Agreement, 'Book Value' shall mean, as of
any date of determination, (x) the sum of (i) the combined
shareholder's equity
2
of the Company and U.S. Intec, Inc. as of December 31, 1995 determined
in accordance with generally accepted accounting principles, (ii) the
cumulative consolidated net income or loss of the Company (treating
U.S. Intec Holdings Inc. as a wholly-owned subsidiary of the Company
for all periods) for the period January 1, 1996 through the date of
determination and (iii) the cumulative operating income (or loss), net
of an amount equal to imputed income taxes on such operating income
calculated at the same tax rate as is accrued as an expense by the
Company in its income statement for the applicable period, of GAF
Fiberglass Corporation ("GAF Fiberglass") for the period January 1,
1997 through the date of determination, and adding back (A) the charge
to shareholder's equity relating to the assumption by the Company of
certain asbestos-related liabilities of GAF Building Materials
Corporation in connection with the Company's formation and (B) the
reduction in shareholder's equity resulting from purchases of the
capital stock of GAF Corporation ("GAF") by persons who participated
in promoting the management buy-out of GAF in March 1989 (the
"Acquisition") (predecessor cost basis adjustment), and excluding, to
the extent occurring after December 31, 1995, (1) nonrecurring
non-operating losses and nonrecurring non-operating gains, including
any further charge relating to asbestos-related liabilities, (2) net
gains or losses in respect of dispositions of assets by the Company
other than in the ordinary course of business, (3) any dividends or
distributions paid to the holders of the Company's capital stock, (4)
any capital contributions made to the Company by its stockholders, (5)
any amounts received by the Company for shares of its capital stock
(including from the exercise of options or warrants to purchase
capital stock or from the conversion into capital stock of convertible
debt or convertible preferred stock) and (6) any charges relating to
amortization of goodwill and other intangibles arising from the
Acquisition divided by (y) 1,000,010. There shall be deducted from
Book Value an amount equal to a 15% per annum charge on the aggregate
capital contributions made to the Company by its stockholders during
the period commencing October 1, 1997 and ending with the date of
determination (the "Period"), amounts received by the Company during
the Period for shares of its capital stock and, to the extent not
actually charged to the Company, on the outstanding principal amount
of loans and other advances made to the Company by affiliates
(excluding subsidiaries of the Company) during the Period. There shall
be added to Book Value a 15% per annum credit on the aggregate
dividends or distributions made by the Company to its stockholders
during the Period and, to the extent not actually charged to the
borrower, on the outstanding principal amount of loans and other
advances made by the Company to affiliates (excluding subsidiaries of
the Company) during the Period. Any adjustments to Book Value
(including the 15% charge and credit referred to in the preceding two
sentences) shall include the tax effects, if any, associated
therewith."
3
5. Section 3(c) of the Agreement is hereby amended to add the following at
the end thereof, and a comparable change shall be made to the definition of Book
Value contained in Section 2(f) of the Certificate of Designations:
"The 'Nashville Facility' shall mean the Nashville, Tennessee
manufacturing facility of GAF Fiberglass."
6. Section 4(b) of the Agreement is hereby amended to read in its entirety
as follows:
"In each calendar year you may, at your option, exercisable by notice
delivered to the Company on or before March 31 of that year, elect to
sell and, upon the giving of the notice, the Company shall be
obligated to purchase and you shall be obligated to sell as many
Common Shares owned by you as you may elect to sell, at their Book
Value determined as of the last day of the preceding calendar year,
provided that you owned the Preferred Shares which were converted into
such Common Shares on or before June 30 of the preceding calendar
year."
7. Section 4(d) of the Agreement is hereby amended to read in its entirety
as follows:
"If you exercise the Option in whole or in part, convert Preferred
Shares received upon exercise into Common Shares and exercise your
right to sell such Common Shares to the Company as provided in Section
4(a) or 4(b), the Company will reimburse you for all interest accrued,
during the period commencing with the date of exercise of your right
under Section 4(a) or 4(b) and ending with the date of purchase by the
Company of your Common Shares, on any loan that financed the purchase
of your Preferred Shares, provided that the terms of the loan and the
lender are reasonably satisfactory to the Company. Such interest will
be paid by the Company when the interest is payable to the lender. The
Company will introduce you to lenders who the Company believes will be
willing to provide financing for exercise of the Options."
8. Section 4(e) of the Agreement is hereby amended to read in its entirety
as follows:
"As used herein, the "Put/Call Period" shall mean the 30-day period
commencing with the later of (i) the date which is six months after
the date on which you exercised the Option to purchase the Preferred
Shares which were converted into the applicable Common Shares or (ii)
the Termination Date."
4
9. Section 2(a) of the Certificate of Designation shall be amended to
replace "$2.00" with "$1.50" in the fourth and eight lines thereof.
In all other respects, the Agreement shall remain in full force and
effect.
Capitalized terms used herein which are not defined shall have the meanings
ascribed to them in the Agreement.
Please sign the enclosed copy of this letter to indicate your agreement to
the foregoing.
Sincerely,
BUILDING MATERIALS
CORPORATION OF AMERICA
By: _________________________
AGREED:
----------------------------
5
[Date]
TO EACH HOLDER OF OPTIONS
TO PURCHASE SHARES OF SERIES
A PREFERRED STOCK OF BUILDING
MATERIALS CORPORATION OF AMERICA
Dear Optionee:
Reference is made to the Option Agreement dated July 1, 1997 (the
"Agreement") pursuant to which you were granted an option to purchase shares of
Series A Cumulative Redeemable Convertible Preferred Stock of Building Materials
Corporation of America.
The Agreement is hereby amended as follows:
1. The first sentence of Section 1(b) of the Agreement is hereby amended to
read in its entirety as follows:
"The Option shall vest and become exercisable as to 20% of the
Preferred Shares on June 30 in each of the years 1998 through 2002, in
each case to the extent you are employed by the Company or its
subsidiaries on such date; provided that (i) if your employment with
the Company and its subsidiaries should terminate as a direct result
of a divestiture (whether because you are employed by the business
which is sold, your position is eliminated as a result of the
divestiture or otherwise) or (ii) if, after a Change of Control of the
Company, your employment with the Company and its subsidiaries (x)
should be terminated by the Company other than for cause, (y) is
terminated as a result of your death or permanent disability, or (z)
is terminated by you for "good reason", the unvested portion of the
Option shall become vested on the date of your termination. You shall
be deemed to terminate your employment for "good reason" if you do so
as a result of a change or changes in the terms of your employment
that are materially adverse to you, including with respect to your
salary and bonus, level of responsibility or geographic location of
employment."
2. The first sentence of Section 1(c) of the Agreement is hereby amended to
read in its entirety as follows:
"The Option will terminate on the earliest of (i) June 30, 2006, (ii)
30 days after the termination of your employment with the Company and
its subsidiaries for any reason other than your death or permanent
disability or (iii) one year after the termination of your employment
with the Company and its subsidiaries as a result of your death or
permanent disability."
3. Section 1(d) of the Agreement is hereby amended to read in its entirety
as follows:
"Notwithstanding anything to the contrary contained in this Agreement,
in the event the Company or its parent engages in a public offering of
the common stock of the Company (an "IPO"), (i) you will be entitled
to receive from the Company, on each vesting date set forth in Section
1(b) (or, within five days after consummation of the IPO, in the case
of the unexercised portion, if any, of the Option which is vested as
of the date of consummation of the IPO), an amount in cash equal to
the amount by which Book Value (as defined in Section 3(c)) of the
Common Shares issuable upon conversion of the Preferred Shares subject
to the portion of the Option which vests (or, in the case described in
the immediately preceding parenthetical, is vested) on such date,
determined as of the end of the calendar quarter immediately preceding
the consummation of the IPO, exceeds the aggregate exercise price of
such portion of the Option, and (ii) the Company will endeavor to
grant you options to purchase shares of the Company's Common Stock
which, together with the rights to receive cash described in clause
(i) above, provide equivalent economic value to the Options granted to
you pursuant to this Agreement that are unexercised as of the date of
consummation of the IPO. Such new stock options will vest on the
vesting schedule provided in Section 1(b) of this Agreement and will
be granted under a stock option plan which is appropriate, in the
judgment of the Board of Directors of the Company, for a public
company. Your right to receive cash, and to exercise such new stock
options, will be subject to the conditions to vesting set forth in
Section 1(b), including the proviso to the first sentence thereof.
Following consummation of the IPO, this Agreement (other than Section
3(d) and this Section 1(d)) shall have no further force and effect."
4. The first two sentences of Section 3(c) of the Agreement are hereby
amended to read in its entirety as follows, and a comparable change shall be
made to the first sentence of the definition of Book Value contained in Section
2(f) of the Certificate of Designation:
"For purposes of this Agreement, 'Book Value' shall mean, as of any
date of determination, (x) the sum of (i) the combined shareholder's
equity
2
of the Company and U.S. Intec, Inc. as of December 31, 1995
determined in accordance with generally accepted accounting
principles, (ii) the cumulative consolidated net income or loss
of the Company (treating U.S. Intec Holdings Inc. as a
wholly-owned subsidiary of the Company for all periods) for the
period January 1, 1996 through the date of determination and
(iii) the cumulative operating income (or loss), net of an amount
equal to imputed income taxes on such operating income calculated
at the same tax rate as is accrued as an expense by the Company
in its income statement for the applicable period, of GAF
Fiberglass Corporation ("GAF Fiberglass") for the period January
1, 1997 through the date of determination, and adding back (A)
the charge to shareholder's equity relating to the assumption by
the Company of certain asbestos-related liabilities of GAF
Building Materials Corporation in connection with the Company's
formation and (B) the reduction in shareholder's equity resulting
from purchases of the capital stock of GAF Corporation ("GAF") by
persons who participated in promoting the management buy-out of
GAF in March 1989 (the "Acquisition") (predecessor cost basis
adjustment), and excluding, to the extent occurring after
December 31, 1995, (1) nonrecurring non-operating losses and
nonrecurring non-operating gains, including any further charge
relating to asbestos-related liabilities, (2) net gains or losses
in respect of dispositions of assets by the Company other than in
the ordinary course of business, (3) any dividends or
distributions paid to the holders of the Company's capital stock,
(4) any capital contributions made to the Company by its
stockholders, (5) any amounts received by the Company for shares
of its capital stock (including from the exercise of options or
warrants to purchase capital stock or from the conversion into
capital stock of convertible debt or convertible preferred stock)
and (6) any charges relating to amortization of goodwill and
other intangibles arising from the Acquisition divided by (y)
1,000,010. There shall be deducted from Book Value an amount
equal to a 15% per annum charge on the aggregate capital
contributions made to the Company by its stockholders during the
period commencing October 1, 1997 and ending with the date of
determination (the "Period"), amounts received by the Company
during the Period for shares of its capital stock and, to the
extent not actually charged to the Company, on the outstanding
principal amount of loans and other advances made to the Company
by affiliates (excluding subsidiaries of the Company) during the
Period. There shall be added to Book Value a 15% per annum credit
on the aggregate dividends or distributions made by the Company
to its stockholders during the Period and, to the extent not
actually charged to the borrower, on the outstanding principal
amount of loans and other advances made by the Company to
affiliates (excluding subsidiaries of the Company) during the
Period. Any adjustments to Book Value (including the 15% charge
and credit referred to in the preceding two sentences) shall
include the tax effects, if any, associated therewith."
3
5. Section 3(c) of the Agreement is hereby amended to add the following at
the end thereof, and a comparable change shall be made to the definition of Book
Value contained in Section 2(f) of the Certificate of Designations:
"The 'Nashville Facility' shall mean the Nashville, Tennessee
manufacturing facility of GAF Fiberglass."
6. Section 4(b) of the Agreement is hereby amended to read in its entirety
as follows:
"In each calendar year you may, at your option, exercisable by
notice delivered to the Company on or before March 31 of that
year, elect to sell and, upon the giving of the notice, the
Company shall be obligated to purchase and you shall be obligated
to sell as many Common Shares owned by you as you may elect to
sell, at their Book Value determined as of the last day of the
preceding calendar year, provided that you owned the Preferred
Shares which were converted into such Common Shares on or before
June 30 of the preceding calendar year."
7. Section 4(d) of the Agreement is hereby amended to read in its entirety
as follows:
"If you exercise the Option in whole or in part, convert
Preferred Shares received upon exercise into Common Shares and
exercise your right to sell such Common Shares to the Company as
provided in Section 4(a) or 4(b), the Company will reimburse you
for all interest accrued, during the period commencing with the
date of exercise of your right under Section 4(a) or 4(b) and
ending with the date of purchase by the Company of your Common
Shares, on any loan that financed the purchase of your Preferred
Shares, provided that the terms of the loan and the lender are
reasonably satisfactory to the Company. Such interest will be
paid by the Company when the interest is payable to the lender.
The Company will introduce you to lenders who the Company
believes will be willing to provide financing for exercise of the
Options."
8. Section 4(e) of the Agreement is hereby amended to read in its entirety
as follows:
"As used herein, the "Put/Call Period" shall mean the 30-day
period commencing with the later of (i) the date which is six
months after the date on which you exercised the Option to
purchase the Preferred Shares which were converted into the
applicable Common Shares or (ii) the Termination Date."
4
9. Section 2(a) of the Certificate of Designation shall be amended to
replace "$2.00" with "$1.50" in the fourth and eight lines thereof.
In all other respects, the Agreement shall remain in full force
and effect.
Capitalized terms used herein which are not defined shall have the meanings
ascribed to them in the Agreement.
Please sign the enclosed copy of this letter to indicate your agreement to
the foregoing.
Sincerely,
BUILDING MATERIALS
CORPORATION OF AMERICA
By: _________________________
AGREED:
----------------------------
5
