UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-13828
MEMC ELECTRONIC MATERIALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 56-1505767
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
501 Pearl Drive St. Peters, Missouri 63376
(Address of principal executive offices) (Zip Code)
(314) 279-5500
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. [x] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock outstanding at September 30, 1996: 41,438,326 shares
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited; Dollars in thousands, except share data)
Three-Months Ended Nine-Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
Net sales $303,525 $251,210 $917,667 $624,478
Cost of goods sold 237,034 188,483 681,021 470,813
------- ------- ------- -------
Gross margin 66,491 62,727 236,646 153,665
Marketing, administration and
technology expenses 32,469 23,256 92,576 62,047
------- ------- ------- -------
Operating profit 34,022 39,471 144,070 91,618
Nonoperating (income) expense:
Interest expense - 2,571 494 9,721
Interest income (659) (2,900) (4,394) (4,334)
Royalty income (1,394) (1,591) (4,731) (3,946)
Other, net 3,704 2,083 6,209 2,645
------- ------- ------- -------
1,651 163 (2,422) 4,086
------- ------- ------- -------
Earnings before income taxes,
equity in income of joint
ventures and minority
interests 32,371 39,308 146,492 87,532
Income taxes 12,948 15,570 58,597 36,614
------- ------- ------- -------
Earnings before equity in
income of joint ventures
and minority interests 19,423 23,738 87,895 50,918
Equity in income of joint ventures 1,460 4,207 21,505 6,071
Minority interests in income (loss)
of joint ventures (270) 568 2,135 568
------ ------ ------- ------
Net earnings $21,153 $27,377 $107,265 $56,421
====== ====== ======= ======
Net earnings per share $0.51 $0.71 $2.59 N/A
==== ==== ====
Pro forma net earnings per share N/A N/A N/A $ 2.01
====
Weighted average shares used in
computing earnings per share/
pro forma earnings per share
(in thousands) 41,397 38,745 41,406 28,046
====== ====== ====== ======
See accompanying notes to consolidated financial statements.
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(Unaudited)
September 30, December 31,
1996 1995
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 31,205 $ 77,192
Deposit with affiliate - 55,000
Accounts receivable, less allowance for
doubtful accounts of $2,306 and $2,040 in
1996 and 1995, respectively 176,951 165,994
Notes receivable from affiliates 993 3,149
Inventories 98,594 89,574
Prepaid and other current assets 39,493 38,264
--------- ---------
Total current assets 347,236 429,173
Property, plant and equipment, net of
accumulated depreciation of $355,048 and
$295,228 in 1996 and 1995, respectively 872,660 528,374
Investment in joint ventures 104,703 66,001
Excess of cost over net assets acquired, net
of accumulated amortization of $2,034 and
$1,001 in 1996 and 1995, respectively 51,490 52,523
Other assets 50,565 25,792
--------- ---------
Total assets $1,426,654 $1,101,863
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current portion of
long-term debt $ 23,188 $ 15,407
Accounts payable 154,961 141,459
Accrued liabilities 40,606 29,242
Accrued wages and salaries 30,937 24,142
Income taxes payable 31,401 19,665
--------- --------
Total current liabilities 281,093 229,915
Long-term debt 29,133 40,418
Long-term debt with affiliates 146,400 49,280
Pension and similar liabilities 66,226 59,009
Customer deposits 55,837 -
Other liabilities 35,359 27,936
--------- --------
Total liabilities 614,048 406,558
--------- --------
Minority interests 59,009 52,914
Stockholders' equity:
Preferred stock, $.01 par value, 50,000,000
shares authorized, none issued or
outstanding in 1996 or 1995 - -
Common stock, $.01 par value, 200,000,000
shares authorized, 41,474,531 and
41,399,998 issued and outstanding in 1996
and 1995, respectively 415 414
Additional paid-in capital 574,430 569,959
Retained earnings 176,852 69,587
Cumulative translation adjustment 5,333 4,447
Unearned restricted stock awards (2,105) (2,016)
Treasury stock, at cost: 36,205 shares in 1996 (1,328) -
--------- ---------
Total stockholders' equity 753,597 642,391
--------- ---------
Total liabilities and stockholders'
equity $1,426,654 $1,101,863
========= =========
See accompanying notes to consolidated financial statements.
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; Dollars in thousands)
Nine-Months Ended
September 30,
1996 1995
---- ----
Cash flows from operating activities:
Net earnings $ 107,265 $ 56,421
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 64,626 44,116
Minority interests 2,135 568
Equity in income of joint ventures (21,505) (5,093)
Working capital and other 75,038 (15,227)
--------- ---------
Net cash provided by operating
activities 227,559 80,785
--------- ---------
Cash flows from investing activities:
Additions to property, plant, and equipment (414,453) (103,697)
Investment in joint ventures (17,197) (29,905)
Deposit with affiliate, net 55,000 (115,000)
Notes receivable from affiliates, net 2,246 17,028
Other 49 272
--------- ---------
Net cash used in investing activities (374,355) (231,302)
--------- --------
Cash flows from financing activities:
Proceeds from initial public offering - 441,348
Incentive plan transactions 872 -
Net short-term borrowings 8,237 (998)
Net short-term borrowings from affiliates (10,000) (6,750)
Proceeds from issuance of long-term debt 807 150,440
Proceeds from issuance of long-term debt
with affiliates 100,000 10,000
Principal payments on long-term debt (482) (159,218)
Principal payments on long-term debt with
affiliates - (135,000)
Contribution from minority interests 2,476 -
Dividend paid - (100,000)
Repurchase of common stock (1,328) -
--------- ---------
Net cash provided by financing activities 100,582 199,822
--------- ---------
Effect of exchange rate changes on cash 227 (64)
--------- ---------
Net (decrease) increase in cash and cash
equivalents (45,987) 49,241
Cash and cash equivalents at beginning of period 77,192 5,112
--------- ---------
Cash and cash equivalents at end of period $ 31,205 $ 54,353
========= =========
See accompanying notes to consolidated financial statements.
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements of MEMC
Electronic Materials, Inc. and Subsidiaries (the Company), in the opinion of
management, include all adjustments (consisting of normal, recurring items)
necessary to present fairly the Company's financial position and results of
operations and cash flows for the periods presented. The consolidated
financial statements are presented in accordance with the requirements of
Regulation S-X and consequently do not include all disclosures required by
generally accepted accounting principles. Operating results for the three and
nine months ended September 30, 1996 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1996.
(2) Inventories
Inventories consist of the following:
September 30, December 31,
1996 1995
---- ----
Raw materials and supplies $ 48,157 $ 39,726
Goods in process 26,263 26,669
Finished goods 24,174 23,179
------ ------
$ 98,594 $ 89,574
====== ======
(3) Earnings per Share (EPS)
Net EPS for the three and nine month periods ended September 30, 1996, and for
the three month period ended September 30, 1995 were calculated based on the
weighted average shares outstanding during each respective period.
Pro forma net EPS for the nine months ended September 30, 1995 was calculated
based on the actual number of shares outstanding for the nine months ended
September 30, 1995 plus, for the three months ended March 31, 1995, the number
of shares that would have been required to be sold at the initial public
offering price of $24 per share to fund the excess of a $100,000 dividend paid
to Huls Corporation on April 28, 1995 over the Company's net earnings for the
prior twelve-month period.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Net Sales. Consolidated net sales for the third quarter ended September 30,
1996 increased 20.8% to $303.5 million from net sales of $251.2 million in the
third quarter of 1995. The increase in net sales for the third quarter is
attributable to price increases and a continued mix shift to more advanced
large diameter and epitaxial wafers. For the first nine months of 1996,
consolidated net sales increased 46.9% to $917.7 million compared to net sales
of $624.5 million for the corresponding period of 1995. In addition to the
price and mix improvements discussed above, sales increased due to the
inclusion of MEMC Southwest for all of 1996 and the addition of capacity
during the current year. The net sales achieved for the first nine months of
1996 exceeded the total sales for all of 1995.
The third quarter of 1996 marked the first time in more than three years the
Company was not operating at installed capacity. The tight silicon wafer
supply conditions that had existed in the industry for the past several years
have been replaced by an environment in which wafer supplies are more certain.
Some of the Company's customers have reduced their wafer starts in response
to conditions in the semiconductor industry, creating a softer order backlog
going into the fourth quarter. The Company also believes some customers have
begun an effort to lower their inventories before the end of the fiscal year.
Including the impact of the Company's unconsolidated joint ventures, every
market region has seen sales volume declines in comparison to the prior
quarter, with the Asia Pacific market experiencing the largest decrease.
Smaller diameter wafers have received the greatest portion of this decline,
but all diameters and product types have been affected to some extent.
The Company believes that sales for the fourth quarter of 1996 will be
sequentially lower, in the range of $200 million with a resulting decrease in
operating profit. Net earnings could reflect a slight loss for the fourth
quarter.
Gross Margin. For the three months ended September 30, 1996, gross margin
decreased to 21.9% from 25.0% compared with the prior year period. The
decrease in gross margin resulted from a lower rate of capacity utilization
and start-up costs, partially offset by sales mix improvements. Advanced
large diameter and epitaxial products represented 40.5% of product volume for
the third quarter of 1996 compared to 28.5% for the prior year period.
In response to the lower level of capacity utilization the Company has taken
a number of actions, including reductions in overtime pay, elimination of the
majority of temporary and contract workers, reductions in hiring and
implementation of spending restrictions on non-essential activities. These
actions have not compensated fully for the negative impact of unscheduled
production overcapacity. In order to reduce costs further, the Company has
scheduled several short plant shutdown periods during the fourth quarter.
However, start-up costs are anticipated to increase in the fourth quarter as
compared to the third quarter of 1996 due to the completion of MEMC Southwest
and St. Peters plant expansions.
For the nine months ended September 30, 1995, gross margin improved to 25.8%
from 24.6% for the year ago period. The enhancement in gross margin resulted
from price and sales mix improvements during the first nine months of 1996 but
was offset by the lower capacity utilization for the third quarter of 1996,
as discussed above.
Marketing, Administration and Technology Expenses. Marketing, administration
and technology expenses increased to 10.7% and 10.1% of net sales for the
three and nine month periods ended September 30, 1996, respectively compared
to 9.3% and 9.9% for the comparable 1995 periods. These increases are due to
higher expenditures for research and development and administration costs.
Interest Expense. There was no interest expense for the three months ended
September 30, 1996 versus $2.6 million for the three months ended September
30, 1995. This decline resulted from the capitalization of interest related
to capacity expansions in 1996. For the nine months ended September 30, 1996,
interest expense decreased to $0.5 million from $9.7 million for the
comparable period due to the repayment of debt in 1995 with proceeds from the
initial public offering in addition to capitalized interest discussed above.
Average debt outstanding for the third quarter of 1996 was approximately $176
million, which was 8.8% lower than the average debt for the 1995 quarter of
approximately $193 million.
Joint Ventures. Equity in income of joint ventures declined to $1.5 million
for the third quarter of 1996, compared to $4.2 million in the prior year
period. This decrease was attributable to a loss from Taisil, the Taiwanese
joint venture, during its start-up phase. PHC continued to produce positive
earnings during the third quarter of 1996 but has been impacted by reduced
sales volume.
Liquidity and Capital Resources. At September 30, 1996 the Company had cash,
cash equivalents, deposits and notes with affiliates of $32.2 million. The
Company also has $199 million of outstanding borrowings under available credit
facilities totaling $430 million. The $231 million of unused facilities,
including $150 million with affiliates, have expiration dates ranging from
1996 to 2001.
A comparison of components of the Company's financial condition follows
(dollars in millions):
September 30, December 31,
1996 1995
---- ----
Working Capital $66.1 $199.3
Current Ratio 1.24 to 1 1.87 to 1
Stockholders' Equity $753.6 $642.4
Total Debt to Total Capitalization 19.6% 13.1%
Cash flow provided by operating activities was $227.6 million for the nine
months ended September 30, 1996 compared to $80.8 million for the comparable
1995 period. This increase is principally attributable to higher net earnings
and depreciation and amortization, customer deposits and higher payables and
accrued liabilities, offset by increased equity in income of joint ventures.
Capital expenditures for the first nine months of 1996 totaled $414.5 million.
At September 30, 1996 the Company had $214.3 million of committed capital
expenditures. The Company has taken actions where appropriate to delay
installation of selected production equipment at certain locations to better
match production requirements with current demand. However, the Company has
not taken any actions to reduce its plan for strategic investments.
Other. In order to accommodate customer requests for an incremental supply
of silicon wafers beyond that anticipated to be provided by the Company, a
program was initiated in the fourth quarter of 1995 for these customers to pay
in advance for future orders. As of September 30, 1996, the Company has
received approximately $56 million related to this program.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995 -- except for the historical information contained herein, the matters
discussed in this document regarding levels of customer inventories, sales,
operating performance, plant shutdown periods and start-up costs in the fourth
quarter of 1996, and production equipment installations are forward-looking
statements. Such statements involve certain risks and uncertainties that
could cause actual results to differ materially from those in the forward
looking statements. Potential risks and uncertainties include such factors
as demand for the Company's silicon wafers, utilization of manufacturing
capacity, demand for semiconductors generally, limited number of principal
customers, competitors' actions and other risks described in the Company's
filings with the Securities and Exchange Commission, including the reports on
Form 8-K dated September 10, 1996 and 10-K for the year ended December 31,
1995.
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See the Exhibit Index at page 9 of this report.
(b) Reports on Form 8-K
During the third quarter of 1996, the Company filed one current report
on Form 8-K, dated September 10, 1996. The Form 8-K was filed to report,
under Item 5, a news release issued by the Company discussing its outlook
for the third and fourth quarters of 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MEMC Electronic Materials, Inc.
November 12, 1996 /s/ JAMES M. STOLZE
--------------------------------------------
James M. Stolze
Executive Vice President and Chief Financial
Officer
(on behalf of the registrant and as principal
financial and accounting officer)
EXHIBIT INDEX
The exhibits below are numbered in accordance with the Exhibit Table
of Item 601 of Regulation S-X.
Exhibit
Number Exhibit
------ -------
2 Omitted -- Inapplicable
3-a Omitted -- Inapplicable
3-b By-Laws, as amended as of August 30, 1996
4 Omitted -- Inapplicable
10-hhh Employment Agreement between the Company and Ludger H.
Viefhues
10-iii Stock Option Agreement between the Company and Ludger H.
Viefhues
11 Omitted -- Inapplicable
15 Omitted -- Inapplicable
18 Omitted -- Inapplicable
19 Omitted -- Inapplicable
22 Omitted -- Inapplicable
23 Omitted -- Inapplicable
24 Omitted -- Inapplicable
27 Financial Data Schedule (filed electronically with the
SEC only)
99 Omitted -- Inapplicable
Exhibit 3-b
MEMC Electronic Materials, Inc.
Restated By-Laws (as of August 30, 1996)
ARTICLE I
Offices
Section 1. Offices. The registered office of MEMC Electronic
Materials, Inc. (hereinafter called the Corporation) shall be in the State
of Delaware. The Corporation may have offices and places of business at
such places within and without the State of Delaware as shall be determined
by the Board of Directors. The books of the Corporation may be kept
outside of the State of Delaware at such place or places as the Board of
Directors may from time to time determine.
ARTICLE II
Stockholders
Section 1. Place of Meetings. All meetings of the stockholders shall
be held at such place within or without the State of Delaware as is
designated by the Board of Directors.
Section 2. Annual Meeting. The Board of Directors shall fix the time
and place of the annual meeting of the stockholders for the purpose of
electing the directors and for the transaction of such other business as
may properly be brought before the meeting.
Section 3. Special Meeting. Special meetings of the stockholders may
be called by a majority of the holders of the common stock of the
Corporation or by a majority of the Board of Directors or by the Chairman
of the Board.
Section 4. Notice of Meetings. Except as is otherwise provided by
law, notice of each meeting of stockholders, whether annual or special,
shall be given to each stockholder not less than 10 nor more than 60 days
prior to the meeting. The notice shall state the date, time and place and,
in the case of special meetings, the purpose or purposes of such meeting,
and at whose direction the notice is given.
Section 5. Quorum. At all meetings of stockholders, except as
otherwise required by statute, the holders of a majority of the shares
entitled to vote thereat, present in person or by proxy, shall constitute a
quorum for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat may adjourn such meeting from time to
time in accordance with Section 7 of this Article II of these By-Laws until
the number of votes requisite to constitute a quorum shall be present.
Section 6. Voting. When a quorum is present or represented by proxy
at any meeting of stockholders, the vote of the holders of a majority of
the outstanding shares of stock entitled to vote thereat present in person
or by proxy shall decide any question brought before such meeting, unless
the question is one upon which an express provision of the General
Corporation Law of the State of Delaware or of the Restated Certificate of
Incorporation requires a greater vote, in which case such provision shall
control.
Each stockholder entitled to vote at any meeting may vote in person or
by proxy and shall, unless the Restated Certificate of Incorporation
provides otherwise, have one vote for each share of stock registered in his
name, but no proxy shall be valid after three years from its date, unless
the proxy provides for a longer period.
Section 7. Adjourned Meetings. Any meeting of stockholders may be
adjourned to a designated time and place by a vote of a majority in
interest of the stockholders present in person or by proxy, even though
less than a quorum is so present. No notice of such an adjourned meeting
needs to be given, other than by announcement at the meeting, and any
business may be transacted which might have been transacted at the meeting
as originally called; provided, however, that if the adjournment is for
more than 30 days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given
to each stockholder of record entitled to vote at the adjourned meeting.
Section 8. Action Without Meeting. Any action required or permitted
to be taken at any annual or special meeting of stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken, shall be signed by
the holders of all the outstanding stock entitled to vote thereon. The
effective date of the authorization of such action shall be deemed to be
the date of the filing of the last such written consent in the minute books
of the Corporation, which date shall be noted therein by the Secretary.
Section 9. Advance Notice of Business to Be Transacted at Annual
Meetings. To be properly brought before the annual meeting of
stockholders, business must be either (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the
Board of Directors (or any duly authorized committee thereof), (b)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors (or any duly authorized committee thereof) or (c)
otherwise properly brought before the meeting by any stockholder of the
Corporation (i) who is a stockholder of record on the date of the giving of
the notice provided for in this Section 9 and on the record date for the
determination of stockholders entitled to vote at such meeting and (ii) who
complies with the notice procedures set forth in this Section 9. In
addition to any other applicable requirements, including but not limited to
the requirements of Rule 14a-8 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), for business to be properly brought before an annual
meeting by a stockholder, such stockholder must have given timely notice
thereof in proper written form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of
the Corporation, not less than 60 days nor more than 90 days prior to the
anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual meeting
is called for a date that is not within 30 days before or after such
anniversary date, in order to be timely, notice by the stockholder must be
so received not later than the close of business on the tenth day following
the day on which notice of the date of the annual meeting is mailed to
stockholders or public disclosure of the date of the annual meeting is
made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary
must set forth as to each matter such stockholder proposes to bring before
the annual meeting (a) a brief description of the business desired to be
brought before the meeting and the reasons for conducting such business at
the meeting, (b) the name and record address of such stockholder, (c) the
class or series and number of shares of capital stock of the Corporation
which are owned beneficially or of record by such stockholder, together
with evidence reasonably satisfactory to the Secretary of such beneficial
ownership, (d) a description of all arrangements or understandings between
such stockholder and any other person or persons (including their names) in
connection with the proposal of such business by such stockholder and any
material interest of such stockholder in such business and (e) a
representation that such stockholder intends to appear in person or by
proxy at the annual meeting to bring such business before the meeting.
Notwithstanding anything in these By-Laws to the contrary, no business
shall be conducted at the annual meeting of stockholders except business
brought before such meeting in accordance with the procedures set forth in
this Section 9; provided, however, that, once business has been properly
brought before such meeting in accordance with such procedures, nothing in
this Section 9 shall be deemed to preclude discussion by any stockholder of
any such business. If the chairman of such meeting determines that
business was not properly brought before the meeting in accordance with the
foregoing procedures, the chairman shall declare to the meeting that the
business was not properly brought before the meeting and such business
shall not be transacted.
ARTICLE III
Directors
Section 1. Management of the Corporation. The business and affairs
of the Corporation shall be managed by or under the direction of the Board
of Directors. The officers of the Corporation shall keep the Board of
Directors fully informed about the affairs of the Corporation, and the
officers and employees of the Corporation shall provide the Board of
Directors with such written or oral reports and information as the Board of
Directors may deem advisable.
Section 2. Number and Term of Office. Subject to the rights, if any,
of holders of preferred stock of the Corporation, the number of directors
shall be determined from time to time by resolution passed by a majority of
the Board of Directors of the Corporation, but in no event shall the Board
of Directors consist of less than five or more than 15 directors. The
number of directors so determined is referred to in these By-Laws as the
"total number of directors". The Board of Directors shall, by resolution
passed by a majority of the Board of Directors, designate the directors to
serve as initial Class I, Class II and Class III directors upon filing of
the Restated Certificate of Incorporation of the Corporation with the
Secretary of State of the State of Delaware. Except as provided in Section
5 of this Article III, directors shall be elected by a plurality of the
votes cast at annual meetings of stockholders, and each director so elected
shall hold office as provided by Article Fifth of the Restated Certificate
of Incorporation of the Corporation. Directors need not be stockholders of
the Corporation.
Section 3. Nomination of Directors and Advance Notice Thereof. Only
persons who are nominated in accordance with the Restated Certificate of
Incorporation of the Corporation shall be eligible for election as
directors of the Corporation.
Section 4. Resignation. Any director may resign at any time. Such
resignation shall be made in writing and shall take effect at the time
specified therein or, if no time be specified, at the time of its receipt
by the Chief Executive Officer (the "CEO"), the President or the Secretary
of the Corporation. The acceptance of a resignation shall not be necessary
to make it effective.
Section 5. Vacancies. Subject to the rights, if any, of the holders
of any series of preferred stock then outstanding, any vacancy on the Board
of Directors arising from death, resignation, removal, an increase in the
number of directors or any other cause, may be filled either by a majority
vote of the remaining directors, although less than a quorum, or by the
sole remaining director; provided, however, that if any director then in
office determines that any such vacancy on the Board of Directors shall be
filled by the stockholders, such vacancy shall be filled by the
stockholders in accordance with the Restated Certificate of Incorporation.
Any director elected to fill a vacancy shall hold office for a term that
shall coincide with the term of the class to which such director shall have
been elected.
Section 6. Regular Meetings. The Board of Directors shall hold at
least two regular meetings during each calendar year on such dates as may
be determined by the Board of Directors. Such regular meetings may be held
at such places, either within or without the State of Delaware, as shall
from time to time be determined by the Board of Directors.
Section 7. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the CEO or the
President, and shall be called by the CEO, the President or the Secretary,
upon the written request of at least two members of the Board of Directors.
Each director shall be given 10 days' notice of each such meeting.
Section 8. Fees. Each member of the Board of Directors who is not an
officer of the Corporation shall receive from the Corporation an annual fee
for serving on the Board of Directors and an annual fee for serving on each
committee of the Board of Directors on which such director serves, plus a
fee for each meeting of the Board of Directors he attends, plus a fee for
each meeting of a committee of the Board of Directors he attends. The
amount of such fees shall be determined from time to time by a majority of
the total number of directors. Each director, including those who are also
officers, shall receive from the Corporation reimbursement of travel
expenses for each meeting of the Board of Directors or any committee
thereof he attends.
Section 9. Quorum. A quorum of directors for the transaction of
business shall consist of at least a majority of the total number of
directors.
Section 10. Waiver of Notice. Notice of a meeting need not be given
to any director who submits a written waiver of such notice, signed by him,
whether before or after such meeting. Neither the business to be
transacted at, nor the purpose of, any meeting of the directors need be
specified in any written waiver of notice with respect to such meeting.
Attendance of a director at a meeting shall constitute a waiver of notice
of such meeting, except when the director attends such meeting for the
express purpose of objecting, at the beginning of such meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 11. Voting. The act of a majority of the total number of
directors shall be the act of the Board of Directors.
Section 12. Meetings via Conference Call. Any one or more members of
the Board of Directors or any committee thereof may participate in a
meeting of the Board of Directors or such committee by means of a
conference telephone call or similar communications equipment hook-up
allowing all persons participating in the meeting to hear each other at the
same time. Participation by such means shall constitute presence in person
at a meeting.
Section 13. Action Without Meeting. Notwithstanding any other
provisions of these By-Laws, any action required or permitted to be taken
at any meeting of the Board of Directors or any committee thereof may be
taken without a meeting, if a written consent or consents to the adoption
of a resolution authorizing the action is signed by the whole Board of the
Corporation or all the members of such committee, as the case may be. The
resolution and the written consents thereto shall be filed with the minutes
of the proceedings of the Board of Directors.
Section 14. Committees. (a) Audit Committee; Compensation
Committee; Other Committees. The Board of Directors shall designate an
Audit Committee and a Compensation Committee, each consisting of at least
two directors and to have such duties and functions as shall be specified
in the resolution or resolutions appointing such committees. The Board of
Directors, by resolution passed by a majority of the total number of
directors, may designate other committees of the Board of Directors, each
such committee to consist of two or more directors and to have such duties
and functions as shall be provided in such resolution.
(b) Rules of Committees. A majority of all of the members of any
committee of the Board of Directors may determine its rules of procedure,
determine its action and fix the time and place, whether within or without
the State of Delaware, of its meetings and specify what notice thereof, if
any, shall be given, unless the Board of Directors shall otherwise by
resolution provide. Each committee shall record minutes of its proceedings
and shall submit the same to the Board of Directors. The Board of
Directors shall have power to change the members of any such committee and
fill vacancies therein and to discharge any such committee, either with or
without cause, at any time.
Section 15. The Chairman of the Board and Vice Chairman of the Board.
The Chairman of the Board and, if the Board of Directors determines that
the Board should have a Vice Chairman, the Vice Chairman of the Board shall
be elected annually by the Board of Directors. The Chairman of the Board
shall preside at all meetings of the Board of Directors, act as chairman at
all meetings of stockholders and shall sign the minutes of the proceedings
recorded at such meetings by the Secretary. He shall make reports to the
Board of Directors as well as to the stockholders and shall perform all
duties incident to his office or properly required of him by the Board of
Directors. The Chairman of the Board and the Vice Chairman of the Board
shall each perform such further duties and exercise such further powers as
may be assigned to him from time to time by the Board of Directors. In the
absence of the Chairman of the Board, the Vice Chairman of the Board shall
carry out his duties and authorities.
ARTICLE IV
Officers
Section 1. Officers. The officers of the Corporation shall include
the Chief Executive Officer, the President, a Treasurer and a Secretary.
Each officer of the Corporation shall hold office until his successor shall
have been duly chosen and qualified, or until his death, disqualification,
resignation or removal. Except for the offices of President and Secretary,
any two or more offices may be held by one person. Any vacancy occurring
in any office shall be filled by the Board of Directors.
Section 2. Other Officers. The Board of Directors may appoint one or
more Vice Presidents, Assistant Treasurers, Assistant Secretaries and such
other officers and agents with such powers and duties as it shall deem
necessary.
Section 3. The Chief Executive Officer (the "CEO"). The Chief
Executive Officer, subject to the direction of the Board of Directors,
shall have general management and control of the business and affairs of
the Corporation.
Section 4. The President. The President shall be the Chief Operating
Officer of the Corporation and, subject to the direction of the CEO and the
Board of Directors, shall be responsible for the day-to-day management of
the Corporation.
Section 5. The Treasurer. The Treasurer shall have custody of all
funds, securities and evidences of indebtedness of the Corporation, shall
receive and give receipts and acquittances for monies paid in on account of
the Corporation, shall pay out of the funds on hand all bills, payrolls,
and other just debts of the Corporation, of whatever nature upon maturity,
shall enter regularly in books to be kept by him for that purpose, full and
accurate accounts of all monies received and paid out by him on account of
the Corporation, and shall perform all other duties incident to the Office
of Treasurer and as may be prescribed by the Board of Directors.
Section 6. The Secretary. The Secretary, if he shall be present,
shall keep the minutes of all proceedings of directors and stockholders,
and shall attend to the giving and serving of all notices to stockholders
and directors or other notices required by law or by these By-Laws, shall
affix the seal of the Corporation to deeds, contracts and other instruments
in writing requiring a seal when duly signed or when so ordered by the
Board of Directors, shall have charge of the minute books, certificate
books and stock books and such other books and papers as the Board of
Directors may direct, and shall perform all other duties incident to the
office of Secretary.
Section 7. Removal of Officers. Any officer of the Corporation may
be removed from office at any time, with or without cause, by a vote of the
majority of the total number of directors.
ARTICLE V
Capital Stock
Section 1. Form and Execution of Certificates. The shares of the
Corporation shall be represented by certificates in such form as is
required by the General Corporation Law of the State of Delaware and as
shall be adopted by the Board of Directors. Certificates shall be numbered
and registered in the order issued, shall be signed by the President or a
Vice President and by the Secretary or the Treasurer and sealed with the
corporate seal or a facsimile thereof.
Section 2. Transfer. Transfer of shares shall be made only upon the
books of the Corporation by the registered holder thereof or by attorney,
duly authorized, and upon
surrender of the certificate or certificates for such shares properly
assigned for transfer.
Section 3. Lost or Destroyed Certificates. The holder of any
certificate representing shares of stock of the Corporation may notify the
Corporation of any loss, theft, or destruction thereof, and the Board of
Directors may thereupon, in its discretion (subject to applicable law),
cause a new certificate for the same number of shares to be issued to such
holder upon satisfactory proof of such loss, theft or destruction, and, if
required by the Board of Directors, the deposit of indemnity by way of bond
or otherwise, in such form and amount and with such surety or sureties as
the Board of Directors may require, to indemnify the Corporation against
loss or liability by reason of the issuance of such new certificates.
Section 4. Record Date. The Board of Directors may fix, in advance,
a date, not exceeding 60 days nor less than 10 days, as the record date for
the determination of stockholders entitled to receive notice of, or to vote
at, any meeting of stockholders, or to consent to any proposal without a
meeting, or for the purpose of determining stockholders entitled to receive
payment of any dividends, or allotment of any rights, or for the purpose of
any other action.
ARTICLE VI
Miscellaneous
Section 1. Dividends and Reserves. The Board of Directors may
declare dividends and may set apart out of any of the funds of the
Corporation available for dividends a reserve or reserves for any proper
purpose and may reduce or eliminate any such reserve. Dividends may be
paid in cash, in property, or in shares of stock.
Section 2. Regulations. The Board of Directors may make such rules
and regulations as it may deem expedient concerning the transfer and
registration of certificates for shares of the Corporation.
Section 3. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation and the words "CORPORATE SEAL", and the
state of its incorporation.
Section 4. Notice and Waiver of Notice. Whenever under the
provisions of these By-Laws any notice is required to be given, such
notice, unless otherwise required by law or by these By-Laws, shall be
communicated to the person entitled thereto be courier mail or first-class
mail, postage prepaid, or by telegraph, telex, cable, facsimile or other
recorded form of transmission, and such notice shall be deemed to have been
given on the third day after the time of dispatch by courier mail or
mailing thereof or at the time of dispatch in the case of notice by any
other form of transmission. Any notice required to be given under these
By-Laws may be waived in writing by the person entitled thereto, whether
before or after the time stated therein.
Section 5. Fiscal Year. The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
ARTICLE VII
Amendments
Section 1. Amendments. The Board of Directors shall have the power,
without assent or vote of the stockholders, to make, alter, amend, change,
add to or repeal these By-Laws, or any of them, upon a vote of a majority
of the total number of directors.
Exhibit 10-hhh
September 3, 1996
Mr. Ludger H. Viefhues
16856 Kehrsbrooke
Clarkson Valley, Missouri 63005
Dear Mr. Viefhues,
I am pleased to confirm the terms of your employment with MEMC
Electronic Materials, Inc. ("MEMC") as Chief Executive Officer.
1. Employment Term. The term of your employment commenced
effective August 1, 1996 and will terminate on July 31, 2002.
2. Reporting Responsibility. You will report directly to the
Board of Directors of MEMC. During the employment period, you will devote
your full business time to the duties as Chief Executive Officer of MEMC.
3. Base Salary. Your base salary will be $500,000.00 per annum,
which may be increased, but not decreased, at the discretion of the
Compensation Committee of the Board of Directors of MEMC (the "Compensation
Committee") based upon your performance and upon the Compensation
Committee's review of the appropriate base salary for the titles and
responsibilities assigned to you from time to time. The Compensation
Committee will review your base salary annually. Compensation of the
Chief Executive Officer is primarily a function of company performance and
individual performance and could, in any given year, be higher or lower
than that of other CEO's in comparable positions. But it is the intent
that MEMC's compensation opportunity be structured to afford comparable pay
given comparable performance.
4. Annual Bonus. You will be eligible to receive an annual
bonus each year with a target at 50% of your annual base salary as of
December 31 (pro rata for 1996 from August 1). The target bonus will be
payable to you only upon achievement of performance objectives set by the
Compensation Committee, and the payment of any bonus above target will be
at the Compensation Committee's sole discretion. The bonus will be paid
under the Annual Incentive Plan under the same performance objectives and
terms applicable to other executive employees.
5. Stock Options. In accordance with the MEMC Equity Incentive
Plan, you will be awarded stock options annually. On September 1, 1996 you
will receive 9,500 stock options, which options will have terms set forth
in the agreement between you and MEMC dated September 1, 1996. Beginning
in January 1997, each year's grant will be comprised of options to purchase
a number of shares with a face value equal to 200% of your salary (as of
December 31 of the year prior to the grant), which options will have an
exercise price per share equal to 100% of market value on the date of the
grant. The options will vest at the rate of 25% per year starting one year
after the grant such that 100% vesting will occur on the fourth anniversary
of the grant; provided, however, that all options will vest upon your
retirement on or following July 31, 2002, or earlier, if with the consent
of the Compensation Committee. The options shall in all other respects be
subject to the same terms applicable to options granted to other senior
executives.
6. Benefits. You will participate in all welfare and fringe
benefit plans maintained by MEMC for its senior executives, assuming
insurability, with all eligibility waiting periods waived, with credit
given for your prior MEMC service solely for the purpose of eligibility for
benefits.
7. Pension. You will participate (commencing as of August 1,
1996) in the MEMC Electronic Materials, Inc. Pension Plan for Salaried
Employees as well as the MEMC Electronic Materials Inc. Supplemental
Executive Pension Plan.
8. Termination of Employment. Either party may terminate your
employment under this Letter upon six months' prior notice, delivered in
writing. In the event of such a termination of employment, (a) you will
receive all salary accrued through the date of termination, (b) MEMC will
pay you a pro rata bonus for the year of termination (to be paid at the
same time and to the same extent (i.e., based on MEMC's performance for the
full year) bonuses are paid generally to executives with respect to such
year, (c) you will be reimbursed for all reasonable relocation expense
incurred by you in returning to Germany with your family and (d) all stock
options granted to you will vest and remain outstanding and exercisable for
three years following your termination date. Notwithstanding the
foregoing, no advance notice will be required and items (b) through (d)
above shall not apply in the event that you are terminated for cause by
MEMC or if you resign.
9. Miscellaneous. This Letter shall be construed in accordance
with and governed by the laws of the State of Missouri applicable to
contracts executed and to be performed within such State. It also
represents the entire agreement of the parties regarding its subject matter
and supersedes any prior or contemporaneous agreements or understandings,
whether written or oral.
Please indicate your acceptance of the terms and conditions of
employment as stated above by signing the additional copy of this letter
and returning it to me.
Sincerely,
/s/ ERHARD MEYER-GALOW
---------------------------------
Dr. Erhard Meyer-Galow
Chairman of the Board of Directors
MEMC Electronics Materials, Inc.
Accepted and Agreed:
/s/ LUDGER H. VIEFHUES
---------------------------------
Ludger H. Viefhues
Exhibit 10-iii
MEMC ELECTRONIC MATERIALS, INC.
STOCK OPTION AGREEMENT
September 1, 1996
This STOCK OPTION AGREEMENT (the "Agreement") dated as of
September 1, 1996, is made between MEMC Electronic Materials, Inc., a
corporation organized under the laws of Delaware (the "Company"), and
the other party signatory hereto (the "Participant").
WHEREAS, the Participant is currently an officer or employee of the
Company or one of its Subsidiaries and, pursuant to the Company's
1995 Equity Incentive Plan (the "Plan") and upon the terms and subject to
the conditions hereinafter set forth, the Company desires to provide the
Participant with an incentive to remain in its employ or in the employ of
one of its Subsidiaries and to increase his interest in the success of the
Company by granting to the Participant nonqualified stock options (the
"Stock Options") to purchase shares of Common Stock, par value $.01 per
share, of the Company (the "Common Stock").
NOW, THEREFORE, in consideration of the covenants and agreements
contained in this Agreement, the parties hereto agree as follows:
1. Definitions; Incorporation of Plan Terms. Capitalized terms used
in this Agreement without definition shall have the meanings assigned to
them in the Plan. This Agreement, the Stock Options and the Common Stock
issued pursuant to the exercise of Stock Options shall be subject to the
Plan, the terms of which are hereby incorporated in this Agreement by
reference, and in the event of any conflict or inconsistency between the
Plan and this Agreement, the Plan shall govern. The Stock Options shall be
granted effective as of September 1, 1996 (the "Date of Grant").
2. Certain Restrictions. None of the Stock Options may be sold,
transferred, assigned, pledged, or otherwise encumbered or disposed of,
except by will or the laws of descent and distribution. During the
Participant's lifetime, a Stock Option shall be exercisable only by the
Participant or by the Participant's guardian or legal representative. Each
permitted transferee of a Stock Option shall, as a condition of the
transfer thereof, execute an agreement pursuant to which it shall become a
party to this Agreement.
3. Grant of Stock Options. Subject to the terms and conditions
contained in this Agreement and in the Plan, the Company hereby grants to
the Participant, effective as of the Date of Grant, the number of Stock
Options specified at the foot of the signature page of this Agreement.
Each such Stock Option shall entitle the Participant to purchase, upon
payment of the Exercise Price (as defined below), one share of Common
Stock. The "Exercise Price" shall be the amount specified at the foot of
the signature page of this Agreement, which was the Fair Market Value, as
defined in the Plan, of a share of Common Stock on September 1, 1996.
The Stock Options granted pursuant to this Agreement shall be
non-qualified stock options, which are not qualified under Section 422 of the
Code.
4. Terms and Conditions of Options. The Stock Options evidenced by
this Agreement are subject to the following terms and conditions.
(a) Vesting. The Stock Options shall vest at the rate of 25%
annually on the first four anniversaries of the Date of Grant, such
that 100% vesting shall occur on the fourth anniversary of the Date of
Grant. In the event of a Change in Control and except as the
Committee (as constituted immediately prior to such Change in Control)
may otherwise determine in its sole discretion, any Stock Options then
outstanding (other than any Stock Option granted within six months of
such Change in Control) shall become fully exercisable as of the date
of the Change in Control.
(b) Option Period. The Stock Options shall not be exercisable
following the tenth anniversary of the Date of Grant, and shall be
subject to earlier termination as provided in this Agreement and in
the Plan.
Upon termination of the Participant's employment with the Company
and its Subsidiaries for reasons other than death, Disability or
Retirement the Participant (or the Participant's estate) may exercise
any Stock Option to the extent exercisable on the date of termination
within the sixty day period after such a termination of employment
(but never later than the tenth anniversary of the Date of Grant).
Any Stock Options which have not vested at the time of such a
termination of employment shall terminate and be cancelled, except as
the Committee may otherwise determine in its sole discretion. Any
vested Stock Options that are not exercised within the sixty day
period after such a termination of employment shall terminate and be
cancelled.
Upon termination of the Participant's employment with the Company
and its Subsidiaries on account of death, Disability or Retirement,
all Stock Options shall vest and the Participant (or the Participant's
Beneficiary) may exercise any or all Stock Options within the three
year period after such a termination of employment (but never later
than the tenth anniversary of the Date of Grant). From time to time,
on a form acceptable to the Committee or its delegate, the Participant
may designate any person or persons (concurrently, contingently or
successively) to whom the Stock Option shall be transferred in the
event that the Participant shall die before he or she exercises the
Stock Option. A beneficiary designation form shall be effective only
when the form is signed by the Participant and filed in writing with
the Company while the Participant is alive, and shall cancel all
beneficiary designation forms that were previously signed and filed.
If no Beneficiary is so designated, the Beneficiary of a Participant
shall be the estate of the Participant or the distributees thereof.
For purposes of this paragraph, "Retirement" shall mean the
termination of the Participant's employment with the Company after the
Participant attains sixty-five years of age, or after the Participant
attains fifty-five years of age and the sum of his age and years of
Vesting Service as defined in the MEMC Electronic Materials, Inc.
Pension Plan for Salaried Employees is at least eighty (80).
Notwithstanding anything to the contrary in this Agreement, in
the event of the termination of the Participant's employment with the
Company and its Subsidiaries for Cause (as defined below), all Stock
Options, whether or not vested, shall be cancelled and no longer
exercisable as of the date of such termination.
For purposes of this Section 4(b), termination for "Cause" shall
mean termination of the Participant's employment because of:
(i) any act or omission that constitutes a material breach
of any of the material obligations of any employment agreement
that the Participant may have with the Company or any of its
Subsidiaries (other than by reason of the Participant's death or
Disability);
(ii) the continued failure or refusal of the Participant to
perform the material duties required of him as an employee of the
Company or any of its Subsidiaries (other than by reason of the
Participant's death or Disability);
(iii) any willful material violation by the Participant
of any law or regulation applicable to the business of the
Company or any of its Subsidiaries, or the Participant's
conviction of a felony, or any willful perpetration by the
Participant of a common law fraud; or
(iv) any other willful misconduct by the Participant which
is materially injurious to the financial condition or business
reputation of, or is otherwise materially injurious to, the
Company or any of its Subsidiaries.
(c) Notice of Exercise. Subject to Sections 4(d) and 4(f)
hereof, the Participant may exercise any or all of the vested Stock
Options by giving written notice (as described in Section 10 below) to
the Company. The date of exercise of a Stock Option shall be the
later of (i) the date on which the Company receives such written
notice and (ii) the date on which the conditions provided in
Sections 4(d), 4(f) and 6(b) hereof are satisfied.
(d) Payment. Prior to the issuance of a certificate pursuant to
Section 4(g) hereof evidencing the shares of Common Stock acquired
pursuant to the exercise of Stock Options, the Participant shall have
paid to the Company the aggregate Exercise Price of Common Stock
purchased pursuant to the exercise of such Stock Options, in cash, by
certified or bank check, note or other instrument acceptable to the
Committee. Payment of the Exercise Price may also be made in full or
in part in shares of Common Stock with a Fair Market Value (determined
as of the date of exercise of such Stock Option) at least equal to
such full or partial payment. Common Stock used to pay the Exercise
Price may be shares that are already owned by the Participant, or the
Company may withhold shares of Common Stock that would otherwise have
been received by the Participant upon exercise of the Stock Option. A
Participant may also exercise a Stock Option through a "cashless
exercise" procedure involving a broker or dealer approved by the
Committee, provided that the conditions described in Section 8(f) of
the Plan are satisfied.
(e) Shareholder Rights. The Participant shall have no rights as
a shareholder with respect to any shares of Common Stock issuable upon
the exercise of a Stock Option until a certificate or certificates
evidencing such shares shall have been issued to the Participant, and,
subject to Sections 13(b) and 13(c) of the Plan, no adjustment shall
be made for dividends or distributions or other rights in respect of
any share for which the record date is prior to the date on which the
Participant shall become the holder of record thereof.
(f) Limitation on Exercise. A Stock Option shall not be
exercisable unless and until (i) a registration statement under the
Securities Act of 1933, as amended, has been duly filed and declared
effective pertaining to the Common Stock subject to such Stock Option
and such Common Stock shall have been qualified under applicable state
"blue sky" laws, or (ii) the Committee in its sole discretion
determines that such registration, qualification and status are not
required as a result of the availability of an exemption from such
registration, qualification, and status under such laws.
(g) Issuance of Certificate. As soon as practicable following
the exercise of any Stock Options, subject to the tax withholding
provisions of Section 8(b), a certificate evidencing the number of
shares of Common Stock issued in connection with such exercise shall
be issued in the name of the Participant.
5. Representations and Warranties. The Participant is aware of and
familiar with the restrictions imposed on the transfer of any Stock
Options. The Participant represents that this Agreement has been duly
executed and delivered by the Participant and constitutes a legal, valid
and binding agreement of the Participant, enforceable against the
Participant in accordance with its terms, except as limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar
law affecting creditors' rights generally and by general principles of
equity.
6. Miscellaneous.
(a) No Rights to Grants or Continued Employment. The
Participant shall not have any claim or right to receive grants for any
future awards under the Plan. Nothing in the Plan or in this Agreement
shall confer upon the Participant any right to continued employment with
the Company or any Subsidiary, as the case may be, or interfere in any way
with the right of the Company or a Subsidiary to terminate the employment
of the Participant at any time, with or without Cause.
(b) Tax Withholding. If the Company is required by any
governmental entity to withhold an amount from the wages of the Participant
as a result of any exercise of Stock Options pursuant to this Agreement,
the Company will not be required to deliver a stock certificate to the
Participant until the Participant pays to the Company the amount required
to be withheld from the wages of the Participant with respect to such
event. Payment of such amount may be in the form of cash, withholding from
other compensation, or shares of Common Stock with a Fair Market Value
equal to such payment. Common Stock used to pay the withholding amount may
be shares that are already owned by the Participant, or shares of Common
Stock that would otherwise have been received by the Participant upon
exercise of the Stock Option.
(c) No Restriction on Right of Company to Effect Corporate
Changes. Neither the Plan nor this Agreement shall affect or restrict in
any way the right or power of the Company or its shareholders to make or
authorize any adjustment, recapitalization, reorganization or other change
in the capital structure or business of the Company, or any merger or
consolidation of the Company, or any issue of stock, options, warrants or
rights to purchase stock or bonds, debentures, preferred or prior
preference stocks whose rights are superior to or affect the Common Stock
or the rights thereof or which are convertible into or exchangeable for
Common Stock, or the dissolution or liquidation of the Company, or any
other corporate act or proceeding, whether of a similar character or
otherwise.
7. Survival; Assignment.
(a) All agreements, representations and warranties made in this
Agreement and in any certificates delivered pursuant hereto shall survive
the issuance to the Participant of the Stock Options and the Common Stock
and, notwithstanding any investigation heretofore or hereafter made by the
Participant or the Company or on the Participant's or the Company's behalf,
shall continue in full force and effect. Without the prior written consent
of the Company, the Participant may not assign any of his rights hereunder
except by will or the laws of descent and distribution. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the heirs and permitted successors and assigns of such
party; and all agreements in this Agreement by or on behalf of the Company,
or by or on behalf of the Participant, shall bind and inure to the benefit
of the heirs and permitted successors and assigns of such parties hereto.
The Participant agrees to cause any future spouse of his or hers to deliver
to the Company a consent in the form of the consent set forth at the foot
hereof validly executed by such spouse promptly after any such person
becomes his or her spouse.
(b) The Company shall have the right to assign to any of its
affiliates any of its rights, or to delegate to any of its affiliates any
of its obligations, under this Agreement.
8. Adjustments to Stock Option Grant. In the event of any changes
in the outstanding Common Stock by reason of a stock dividend,
recapitalization, reorganization, merger, consolidation, stock split,
combination or exchanges of shares (a "Change in Capitalization"), such
proportionate adjustments as may be necessary (in the form determined by
the Committee in its sole discretion), to reflect such change shall be made
to prevent dilution or enlargement of the rights of the Participant with
respect to the grant of the Stock Options made pursuant to this Agreement
or the exercise price in respect thereof.
9. Certain Remedies. Without intending to limit the remedies
available to the Company, the Participant agrees that damages at law shall
be an insufficient remedy in the event the Participant violates the terms
of this Agreement. The Participant agrees that the Company may apply for
and have injunctive or other equitable relief in any court of competent
jurisdiction to restrain the breach or threatened breach of, or otherwise
specifically to enforce, any of the provisions hereof.
10. Notices. All notices and other communications provided for in
this Agreement shall be in writing and shall be delivered by hand or sent
by certified or registered mail, return receipt requested, postage prepaid,
addressed, if to the Participant, to his attention at the mailing address
set forth at the foot of this Agreement (or to such other address as the
Participant shall have specified to the Company in writing) and, if to the
Company, to it at 501 Pearl Drive, St. Peters, Missouri 63376 Attention:
Chief Financial Officer. All such notices shall be conclusively deemed to
be received and shall be effective, if sent by hand delivery, upon receipt,
or if sent by mail, on the fifth day after the day on which such notice is
mailed.
11. Waiver. The waiver by either party of compliance of any
provisions of this Agreement by the other party shall not operate or be
construed as a waiver of any other provisions of this Agreement, or of any
subsequent breach by such party of any provision of this Agreement.
12. Entire Agreement; Governing Law. This Agreement and the other
related agreements expressly referred to in this Agreement set forth the
entire agreement and understanding between the parties hereto and supersede
all prior agreements and understandings relating to the subject matter
hereof. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same agreement. The headings of sections
and subsections in this Agreement are included solely for convenience of
reference and shall not affect the meaning of any of the provisions of this
Agreement. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without giving effect to
conflicts of law principles.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Participant has executed
this Agreement, both as of the day and year first above written.
MEMC Electronic Materials, Inc.
By: /s/ ERHARD MEYER-GALOW
-----------------------------
Erhard Meyer-Galow
Title: Chairman
PARTICIPANT
Name: /s/ LUDGER H. VIEFHUES
---------------------------
Ludger H. Viefhues
Address: MEMC Electronic Materials, Inc.
P. O. Box 8
St. Peters, MO 63376
Number of Stock Options: 9,500
Exercise Price of Stock Options: $35.25 per share
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER>1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 31,205
<SECURITIES> 0
<RECEIVABLES> 176,722
<ALLOWANCES> 2,306
<INVENTORY> 98,594
<CURRENT-ASSETS> 347,236
<PP&E> 1,227,708
<DEPRECIATION> 355,048
<TOTAL-ASSETS> 1,426,654
<CURRENT-LIABILITIES> 281,093
<BONDS> 175,533
0
0
<COMMON> 415
<OTHER-SE> 753,182
<TOTAL-LIABILITY-AND-EQUITY> 1,426,654
<SALES> 917,667
<TOTAL-REVENUES> 917,667
<CGS> 681,021
<TOTAL-COSTS> 681,021
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 494
<INCOME-PRETAX> 146,492
<INCOME-TAX> 58,597
<INCOME-CONTINUING> 107,265
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 107,265
<EPS-PRIMARY> 2.59
<EPS-DILUTED> 2.59
</TABLE>
