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 March 31, 1997
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 (I. R. S. Employer
of incorporation or organization) Identification No.)
501 Pearl Drive (City of O'Fallon) 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 March 31, 1997: 41,436,066 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
March 31,
1997 1996
---- ----
Net sales $ 222,284 $ 289,811
Cost of goods sold 194,215 210,489
------- -------
Gross margin 28,069 79,322
Marketing, administration and technology
expenses 31,388 26,912
------- -------
Operating profit (3,319) 52,410
Nonoperating (income) expense:
Interest expense - 396
Interest income (593) (2,018)
Royalty income (2,087) (1,797)
Other, net 1,707 2,109
------- -------
Total nonoperating income (973) (1,310)
------- -------
Earnings (loss) before income taxes,
equity in income (loss)of joint
ventures and minority interests (2,346) 53,720
Income taxes (1,009) 21,490
------- -------
Earnings (loss) before equity in income
(loss) of joint ventures and minority
interests (1,337) 32,230
Equity in income (loss) of joint ventures (1,773) 8,911
Minority interests 333 (1,515)
------- -------
Net earnings (loss) $ (2,777) $ 39,626
======= =======
Net earnings (loss) per share $ (0.07) $ 0.96
======= =======
Weighted average shares used in
computing earnings (loss) per share 41,436,066 41,416,165
========== ==========
See accompanying notes to consolidated financial statements.
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(Unaudited)
March 31, December 31,
1997 1996
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 23,127 $ 35,096
Accounts receivable, less allowance for
doubtful accounts of $2,234 and $2,299 in
1997 and 1996, respectively 149,799 129,325
Inventories 108,179 100,505
Prepaid and other current assets 36,985 49,329
--------- ---------
Total current assets 318,090 314,255
Property, plant and equipment, net of
accumulated depreciation of $380,484 and
$372,680 in 1997 and 1996, respectively 1,067,324 1,015,145
Investment in joint ventures 88,068 101,103
Excess of cost over net assets acquired, net of
accumulated amortization of $2,720 and $2,376
in 1997 and 1996, respectively 50,804 51,148
Other assets 29,903 27,324
--------- ---------
Total assets $ 1,554,189 $ 1,508,975
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current portion of
long-term debt $ 43,109 $ 47,130
Accounts payable 125,256 156,841
Accrued liabilities 51,441 45,386
Accrued wages and salaries 26,346 25,975
Income taxes payable (6,897) (3,882)
--------- ---------
Total current liabilities 239,255 271,450
Long-term debt, less current portion 367,861 284,701
Pension and similar liabilities 67,681 70,232
Customer deposits 60,559 48,174
Other liabilities 30,964 28,923
--------- ---------
Total liabilities 766,320 703,480
--------- ---------
Minority interests 63,396 63,527
Stockholders' equity:
Preferred stock, $.01 par value, 50,000,000
shares authorized, none issued or
outstanding in 1997 or 1996 - -
Common stock, $.01 par value, 200,000,000
shares authorized, 41,472,271 and
41,470,971 issued and outstanding in 1997
and 1996, respectively 415 415
Additional paid-in capital 573,380 573,351
Retained earnings 168,366 171,143
Cumulative translation adjustment (15,222) (396)
Unearned restricted stock awards (1,138) (1,217)
Treasury stock, at cost: 36,205 shares in
1997 and 1996 (1,328) (1,328)
--------- ---------
Total stockholders' equity 724,473 741,968
--------- ---------
Total liabilities and stockholders'
equity $ 1,554,189 $ 1,508,975
========= =========
See accompanying notes to consolidated financial statements.
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; Dollars in thousands)
Three-Months Ended
March 31,
1997 1996
---- ----
Cash flows from operating activities:
Net earnings (loss) $ (2,777) $ 39,626
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 26,422 21,156
Minority interests (333) 1,515
Equity in (income) loss of joint
ventures 1,773 (8,911)
Working capital and other (35,331) 5,085
-------- --------
Net cash provided by (used in)
operating activities (10,246) 58,471
-------- --------
Cash flows from investing activities:
Additions to property, plant, and equipment (98,221) (74,509)
Investment in joint ventures - (8,212)
Deposit with affiliate, net - 3,000
Notes receivable from affiliates, net (1,029) (1,805)
Dividend received from unconsolidated
joint venture 11,262 -
-------- --------
Net cash used in investing activities (87,988) (81,526)
-------- --------
Cash flows from financing activities:
Net short-term borrowings (599) (3,729)
Proceeds from issuance of long-term debt 87,930 40,882
Principal payments on long-term debt (531) -
Repurchase of common stock - (664)
-------- --------
Net cash provided by financing
activities 86,800 36,489
-------- --------
Effect of exchange rate changes on cash (535) 60
-------- --------
Net increase (decrease) in cash and
cash equivalents (11,969) 13,494
Cash and cash equivalents at beginning of period 35,096 77,192
-------- --------
Cash and cash equivalents at end of period $ 23,127 $ 90,686
======== ========
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 months ended March 31, 1997 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1997.
(2)Inventories
Inventories consist of the following:
March 31, December 31,
1997 1996
---- ----
Raw materials and supplies $ 51,658 $ 47,209
Goods in process 30,988 27,411
Finished goods 25,533 25,885
------- -------
$ 108,179 $ 100,505
======= =======
(3)Earnings per Share (EPS)
Net EPS for the three month periods ended March 31, 1997 and 1996 were
calculated based on the weighted average shares outstanding during each
respective period.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Net Sales. Consolidated net sales decreased 23.3% to $222.3 million for the
three months ended March 31, 1997 from $289.8 million for the three months
ended March 31, 1996. Net sales decreased for all geographic regions and
wafer diameters. The decline in sales was primarily attributable to lower
sales volumes, as lower prices during the first quarter were offset by
improved product mix. However, on a sequential basis net sales increased
10.2% from $201.8 million for the three months ended December 31, 1996. The
sequential increase in net sales was attributable to higher volumes and
improved product mix, offset by lower prices. Sales improved around the
world, led by the North America and Asia Pacific regions. Net sales in the
subsequent quarters of 1997 are expected to show sequential improvement,
reflecting the gradual recovery underway in the semiconductor industry.
Gross Margin. For the three months ended March 31, 1997, gross margin
decreased to 12.6% from 27.4% for the corresponding quarter in 1996. The
decrease in gross margin from 1996 is a function of a lower rate of capacity
utilization. Gross margin improved in the first quarter of 1997 as compared
to 6.7% for the fourth quarter of 1996. This increase resulted from operating
at a higher rate of capacity utilization, and the Company's continued efforts
to remove costs from the manufacturing process. Gross margin rose despite a
rise in start-up costs associated with the Company's MEMC St. Peters and
Southwest expansions.
Advanced large diameter and epitaxial products accounted for 35.2% of sales
volume compared to 32.6% for the first quarter of 1996.
Marketing, Administration and Technology Expenses. Marketing, administration
and technology expenses increased to $31.4 million compared to $26.9 million
in the first quarter of 1996. Substantially all of the increase is due to
increased technology expenditures for development of 300mm (12 inch) wafers
and crystal and wafering processes in the United States, Italy and Japan.
Interest Expense. Interest expense was $0.4 million for the three months
ended March 31, 1996. Interest expense was not recorded for the three months
ended March 31, 1997 due to its capitalization associated with the Company's
capacity expansions. Beginning with the second quarter of 1997, the Company
expects to recognize interest expense as capital projects are completed and
interest costs can no longer be capitalized.
Income Taxes. The effective tax rate for the 1997 first quarter was 43.0%,
as compared to 40.0% for the first quarter of 1996. The Company will continue
to monitor the composition of its worldwide pretax income, as well as
revisions to the Italian tax regulations which have yet to be finalized for
fiscal year 1997. Changes in these items may lead to a higher effective tax
rate as fiscal 1997 progresses.
Joint Ventures. Equity in income (loss) of joint ventures declined to a loss
of $1.8 million for the three months ended March 31, 1997, compared to income
of $8.9 million for the three months ended March 31, 1996. In the 1997
quarter the Company's share of income of $1.8 million at PHC, the Company's
Korean joint venture, was more than offset by the Company's share of losses
of $3.6 million at Taisil, the Company's Taiwanese joint venture, due to
higher expenses associated with its continued qualification process. For the
first quarter of 1996, the Company's share of income from PHC and Taisil was
$8.3 million and $0.6 million, respectively. PHC's decrease in contribution
to MEMC's operating results is attributable to a decrease in sales volumes,
predominantly to customers competing in the DRAM market.
Minority Interests. Minority interest in net losses of consolidated
subsidiaries was $0.3 million for the first quarter of 1997, compared to
interest in income of $1.5 million for the corresponding 1996 quarter. This
decrease is due to start-up costs at the MEMC-CSMC, MEMC Kulim and MEMC
Southwest consolidated joint ventures.
Liquidity and Capital Resources. At March 31, 1997, the Company had cash and
cash equivalents of $23.1 million. The Company also had $411 million of
outstanding borrowings under available credit facilities totaling $579
million. Substantially all of the available credit facilities are short-term.
The Company anticipates entering into additional long-term credit facilities
with an affiliate.
A comparison of components of the Company's financial condition follows
(dollars in millions):
March 31, December 31,
1997 1996
---- ----
Working Capital $78.8 $42.8
Current Ratio 1.33 to 1 1.16 to 1
Stockholders' Equity $724.5 $742.0
Total Debt to Total Capitalization 34.3% 29.2%
Cash flow used in operating activities was $10.2 million for the three months
ended March 31, 1997 compared to $58.5 million provided by operating
activities for the comparable 1996 period. This decrease is principally
attributable to the decrease in net earnings, higher accounts receivable,
lower accounts payable, offset by amounts received under the customer
participation program and higher depreciation and amortization.
Capital expenditures for the first three months of 1997 totaled $98.2 million,
which related to the equipping of MEMC Southwest and the St. Peters wafer
manufacturing facilities, expansion of the MEMC Pasadena polysilicon facility
and implementation of cost reduction programs. At March 31, 1997 the Company
had $135.9 million of committed capital expenditures.
The Company received an $11.3 million dividend from PHC during the first
quarter of 1997. The Company also had proceeds from borrowings with
affiliates of $85 million for the three months ended March 31, 1997.
Other. The Company has opted to delay the commencement of construction of the
MEMC Kulim wafer facility, in order to time its completion to market
requirements. However, the engineering design phase of the project is
essentially complete and training of engineering teams is progressing at other
Company sites to facilitate its rapid progression once construction begins.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share." SFAS
No. 128 establishes standards for the computation and presentation of earnings
per share for entities with publicly held common stock or potential common
stock. This Statement is effective for financial statements issued for
periods ending after December 15, 1997 and requires retroactive restatement
of all prior period earnings per share data presented. The pro forma effect
of SFAS No. 128 on the financial periods presented is as follows:
Three-Months ended
March 31, March 31,
1997 1996
---- ----
Earnings per share, as reported $ (0.07) $ 0.96
====== ====
Basic earnings per share $ (0.07) $ 0.96
====== ====
Diluted earnings per share $ (0.07) $ 0.95
====== ====
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 sales and financing 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, industry competitiveness,
reductions in price and other risks described in the Company's filings with
the Securities and Exchange Commission, including the report on Form 10-K for
the year ended December 31, 1996.
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
None.
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.
May 13, 1997 /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 Omitted -- Inapplicable
4 Omitted -- Inapplicable
10-s 1997 Restatement of the MEMC Electronic Materials, Inc.
Supplemental Executive Pension Plan
10-t MEMC Electronic Materials, Inc. 1995 Equity Incentive
Plan as Amended and Restated on March 18, 1997
*10-ggg HSC/MEMC Agreement dated December 27, 1994 between the
Company and Hemlock Semiconductor Corporation
("Hemlock")
*10-ggg(1) Letter Amendment dated as of June 20, 1995 to the HSC/MEMC
Agreement between the Company and Hemlock
*10-ggg(2) Letter Amendment dated as of November 8, 1996 to the
HSC/MEMC Agreement between the Company and Hemlock
10-nnn Form of Stock Option and Performance Restricted Stock
Agreement
10-ooo Form of Stock Option Agreement
10-ppp Form of Stock Option Agreement (Nonemployee Directors)
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
________
* Portions of these Exhibits have been deleted pursuant to a
request for Confidential Treatment filed separately with the
Secretary of the Securities and Exchange Commission.
MEMC
SUPPLEMENTAL EXECUTIVE PENSION PLAN
1997 RESTATEMENT
ARTICLE I
HISTORY AND PURPOSE
1.1 History. Effective as of January 1, 1990, MEMC Electronic Materials,
Inc. ("MEMC") adopted the MEMC Electronic Materials, Inc. Supplemental Executive
Pension Plan (the "Executive Pension Plan"). The Executive Pension Plan was
amended effective June 14, 1991 to provide for lump sum distributions of amounts
less than $25,000 at the discretion of the Administrator, and was further
amended effective January 1, 1994 to provide that benefit accruals occur as of
the end of each Plan Year, or on the date of the Participant's retirement or
termination of employment if earlier. A Third Amendment, effective December 17,
1993, provided for establishment of a Rabbi Trust for the Executive Pension Plan
to fund distributions under certain conditions. The Executive Pension Plan was
amended and completely restated in 1994. MEMC now wishes to further amend and
restate the Executive Pension Plan to amend, among other things, the eligibility
provisions of the Plan, and to change the name of the Plan to the MEMC
Supplemental Executive Pension Plan.
1.2 Purpose. The Executive Pension Plan is intended to provide certain
benefits to participants who are entitled to benefits under the MEMC Pension
Plan (the "Pension Plan")[prior to January 1, 1997, the MEMC Electronic
Materials, Inc. Pension Plan for Salaried Employees and the MEMC Southwest Inc.
Pension Plan]. The benefits provided by the Executive Pension Plan to Pension
Participants and their Beneficiaries shall be limited to that portion of the
benefit under the Pension Plan which would have been payable but for certain
limitations placed on such benefit in accordance with the terms of the Pension
Plan.
The Executive Pension Plan is structured as two plans. The portion of the
Executive Pension Plan that provides benefits based on limitations imposed by
Section 415 of the Code is intended to be an "excess benefit plan" as defined by
Sections 3(36) and 4(b)(5) of the Employee Retirement Income Security Act of
1974 ("ERISA"). The portion of the Executive Pension Plan that provides benefits
based on limitations imposed by Section 401(a)(17) of the Code is intended to be
a plan as defined by Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA providing
benefits to a select group of management or highly compensated employees.
1.3 Eligible Participants. This Executive Pension Plan shall provide a
benefit only to an individual who is an "Employee," as defined in the Pension
Plan, and (i) whose annual "Earnings" as defined in Section 2.7 of the Pension
Plan, exceed the compensation limit set forth in Section 401(a)(17)(A) of the
Code, as adjusted in accordance with Section 401(a)(17)(B), for any period
utilized in determining the individual's Accrued Benefit under the Pension Plan;
or (ii) whose Pension Plan benefit is reduced because of the limitations imposed
on such benefit by Section 415 of the Code.
ARTICLE II
DEFINITIONS
2.1 (a) Unless otherwise expressly qualified by the context of this
Executive Pension Plan, the terms used in this Executive Pension Plan shall have
the same meaning as those terms in the Pension Plan.
(b) "Eligible Participant" shall mean a Pension Participant described in
Section 1.3 for whom benefits under this Executive Pension Plan will be accrued.
(c) "Pension Participant" shall mean a Participant in the Pension Plan.
(d) "Pension Plan" shall mean the MEMC Pension Plan.
(e) "Plan Formula" shall mean the formula for computing the monthly amount
of the benefit payable under the Pension Plan, as amended from time to time,
that is applicable to the Eligible Participant whose benefit under this
Executive Pension Plan is being computed.
(f) "Rabbi Trust" shall mean the trust established pursuant to the Trust
Agreement for MEMC Electronic Materials, Inc. Supplemental Executive Pension
Plan between MEMC Electronic Materials, Inc. and the trustee.
ARTICLE III
RETIREMENT BENEFITS
3.1 Limitations. The Executive Pension Plan provides benefits that would be
payable to a Pension Participant under the Pension Plan except for the
application of any one or more of the following two limitations:
(a) Benefits not payable under the Pension Plan because of the limitations
imposed on the maximum amount of compensation which may be considered in
determining the annual benefit of the Pension Participant under Section
401(a)(17) of the Code ("Compensation Limitation"); and
(b) Benefits not payable under the Pension Plan because of the limitations
imposed on the annual benefit of the Pension Participant by Section 415 of the
Code ("Section 415 Limitation").
3.2 Retirement Benefits. Each Eligible Participant shall be entitled to an
annual retirement benefit under this Executive Pension Plan, payable in the form
as provided for in Article IV, equal to the excess of:
(a) the annual retirement benefit which would have been payable to a
Pension Participant under the Pension Plan without regard to the Compensation
Limitation and the Section 415 Limitation; over
(b) the amount of the annual retirement benefit that is in fact payable to
such Pension Participant under the Pension Plan.
To the extent they are not inconsistent with this Executive Pension Plan,
the provisions of the Pension Plan are incorporated by this reference and made a
part hereof.
Notwithstanding the above, in the event any portion of the accrued benefit
of an Eligible Participant is awarded to an Alternate Payee pursuant to a
Qualified Domestic Relations Order, the participant's annual retirement benefit
shall be adjusted, as the Plan Administrator shall determine, so that the
combined benefit payable to the Eligible Participant and the Alternate Payee
from this Plan and the Pension Plan is the amount determined pursuant to
subsection 3.2(a) above.
3.3 Offset. Notwithstanding anything to the contrary, the benefit
determined in accordance with Section 3.2 of this Executive Pension Plan shall
be reduced by that portion of the benefit payable from any nonqualified
retirement plan maintained by Monsanto Company or International Business
Machines, Inc. computed as if the Eligible Participant had received his
retirement benefit under such plan or plans in the form of a Single Life Annuity
commencing at his Annuity Starting Date, to the extent that such benefits
duplicate the benefit determined in accordance with Section 3.2 of this
Executive Pension Plan.
3.4 Executive Pension Amount. The total amount of the benefit determined to
be payable to any Eligible Participant in accordance with the terms of this
Article III of the Executive Pension Plan shall be known as the "Executive
Pension Amount."
ARTICLE IV
PAYMENT OF EXECUTIVE PENSION AMOUNTS
4.1 Form of Payment. The normal form of the Executive Pension Amount
payable to an Eligible Participant under this Executive Pension Plan shall be
the form of payment used to compute an Eligible Participant's accrued pension in
accordance with the terms of the Pension Plan.
The Executive Pension Amount which an Eligible Participant or his
Beneficiary is entitled to receive under this Executive Pension Plan shall be
paid in the same form and, subject to the provisions below applicable to lump
sum distributions, adjusted by the same factors used to compute the form of
benefit in which he elects to receive his retirement income payable under the
Pension Plan; provided, however, that a lump sum payment must be elected as
described below. If, however, the lump sum actuarial equivalent value of the
Executive Pension Amount payable under the Executive Pension Plan is less than
$25,000, or alternately, if the monthly amount of the Executive Pension Amount
payable under the Executive Pension Plan is less than $250, the Plan
Administrator may, in its sole discretion, pay such amount in a single lump sum
cash payment. Payment of the lump sum so determined shall be in full and
complete satisfaction of all benefits due the Eligible Participant or his
Beneficiary in accordance with the terms of this Executive Pension Plan. An
Eligible Participant who receives a lump sum distribution from the Pension Plan
and who is not entitled to a lump sum distribution under this Executive Pension
Plan shall receive the Executive Pension Amount in the normal form, as described
in the Pension Plan.
Notwithstanding anything to the contrary in this Section, an Eligible
Participant may elect to receive the actuarial equivalent of the Executive
Pension Amount that he or his Beneficiary is entitled to receive under this
Executive Pension Plan:
(a) As a lump sum payment; or
(b) In annual installments over a period not in excess of 15 years.
Such an election shall be made in writing in a form prescribed by the Plan
Administrator no later than six (6) months before the payment is to commence in
accordance with Section 4.3 of this Executive Pension Plan. A new distribution
election shall revoke all prior elections; provided, however, no distribution
election shall be valid if such election is filed within six months of the date
any amount shall become payable under this Executive Pension Plan. A
distribution election shall be void automatically if the Participant does not
retire by the end of the eighth month following the month in which the election
is made. Payment of a lump sum pursuant to an election hereunder shall be in
full and complete satisfaction of all benefits due an Eligible Participant or
his Beneficiary in accordance with the terms of this Executive Pension Plan.
The amount of a lump sum payment shall be the actuarial equivalent value of
the normal form of benefit payable to the Participant in accordance with the
first paragraph of this Section 4.1, using the actuarial assumptions described
in the definitions of Actuarial Equivalent in the Pension Plan as of the month
in which such an election is made.
In the event the Eligible Participant elects an installment or an annuity
form of distribution, the Employer shall pay the lump sum present value,
calculated as described above, of the Executive Pension Amount into the Rabbi
Trust not later than the Eligible Participant's retirement date.
4.2 Death Benefits. Each Eligible Participant entitled to an Executive
Pension Amount under this Executive Pension Plan who dies before his Annuity
Starting Date shall be entitled to a death benefit equal in amount to the
additional death benefit to which the Eligible Participant would have been
entitled under the Pension Plan if the Executive Pension Amount as determined
under Article III was payable under the Pension Plan instead of this Executive
Pension Plan.
Payment of any death benefit under the Executive Pension Plan shall be made
to the persons and in the proportions to which any death benefit under the
Pension Plan is or would be payable (disregarding any Qualified Domestic
Relations Order). Payment of any death benefit shall be a single payment of the
lump sum present value of the death benefit. If an Eligible Participant elects
to receive installment payments, as provided in Section 4.1, and dies after his
Annuity Starting Date but before all installment payments have been made, or
elects a lump sum benefit and dies after his Annuity Starting Date but before
payment has been made, the remaining payment(s) shall be made to the Beneficiary
or Beneficiaries designated by the Eligible Participant on a form provided by
the Administrator and filed with the Administrator prior to the Eligible
Participant's death. In the event no designation is made or if no Beneficiary
survived the Eligible Participant, payment shall be made to the Eligible
Participant's surviving spouse, and if the Eligible Participant leaves no spouse
surviving, to the estate of the Participant.
4.3 Time of Payment. Payment of the Executive Pension Amount to an Eligible
Participant under this Executive Pension Plan shall commence and terminate on
the same date or dates on which the retirement income payable to such individual
under the Pension Plan commences and terminates, unless such individual has
received a lump sum payment or has elected annual installment payments from this
Executive Pension Plan in accordance with Section 4.1 and such form of benefit
is not available to the Eligible Participant under the Pension Plan. Lump sum
payments shall be made as soon as administratively feasible following the
Eligible Participant's retirement, or such later date as the Eligible
Participant shall specify pursuant to Section 4.4. Annual installment payments
shall commence as soon as administratively feasible following the Eligible
Participant's retirement, or such later date as the Eligible Participant shall
specify on the election form described in Section 4.1, and thereafter shall be
made on the anniversaries of such date until the number of installment payments
elected have been made.
Payment of any lump sum death benefit of an Eligible Participant shall be
made as soon as administratively feasible, but in no event later than six (6)
months after the date of the Eligible Participant's death.
Notwithstanding any other provision of this Plan to the contrary, no
Executive Pension Amount shall be paid to any Eligible Participant prior to the
earliest date on which MEMC's federal income tax deduction for such payment is
not precluded by Section 162(m) of the Internal Revenue Code. In the event any
payment is delayed solely as a result of the preceding restriction, such payment
shall be made as soon as administratively feasible following the first date as
of which Section 162(m) of the Internal Revenue Code no longer precludes the
deduction by MEMC of such payment. Amounts deferred because of the Section
162(m) deduction limitation shall be increased by simple interest for the period
of delay at the annual rate of six percent (6%).
4.4 Deferral of Lump Sum Payment. Notwithstanding anything in Section 4.3
to the contrary, an Eligible Participant who validly elects to receive a lump
sum payment in accordance with Section 4.1 may elect to defer receipt to a
designated future year following retirement. Such an election shall be made in
writing in a form prescribed by the Plan Administrator no later than six (6)
months before the Eligible Participant's retirement date. Such an election, once
made, shall be irrevocable. A lump sum payment deferred in accordance with the
provisions of this Section 4.4 shall be increased by simple interest for the
period of deferral at the annual rate of three percent (3%).
ARTICLE V
SOURCES OF PAYMENTS
Benefits payable under this Executive Pension Plan shall be paid by the
Employer of each Eligible Participant out of its general assets (except as
provided below with respect to a Rabbi Trust). Obligations to pay benefits due
Eligible Participants under the Executive Pension Plan shall primarily be the
obligation of the Employer. An Eligible Participant shall not have any rights
with respect to benefits from the Employer under the Executive Pension Plan
other than the unsecured right to receive payments from the Employer. Except for
the obligation to fund a Rabbi Trust as set forth in Section 4.1, or by the
terms of the Rabbi Trust, an Employer shall not be obligated to set aside,
earmark or escrow any funds or other assets to satisfy its obligation under this
Executive Pension Plan. Any benefit payable in accordance with the terms of this
Executive Pension Plan shall not be represented by a note or any evidence of
indebtedness other than the promises contained in this Executive Pension Plan.
If any Eligible Participant is entitled to receive a benefit from this
Executive Pension Plan, based on his employment with more than one of the
Employers (that is, more than one of the business entities that adopt the
Pension Plan) then each such Employer shall pay that portion of the Executive
Pension Amount that bears the same ratio to the total Executive Pension Amount,
as the benefits accrued by such Eligible Participant under the Pension Plan
while in the employment of each such Employer bears to the total benefits
accrued under the Pension Plan; provided, however, that the portion of an
Eligible Participant's benefit payable under this Executive Pension Plan
attributable to service with an Employer (or Employers) that is no longer a
member of the Controlled Group which includes MEMC Electronic Materials, Inc.,
as defined in Sections 414(b), (c) and (m) of the Internal Revenue Code of 1986,
as amended, at the time such individual terminates employment with all members
of such group shall be paid by MEMC Electronic Materials, Inc. The Sponsor may
make a single payment to the Eligible Participant and receive reimbursement from
the Employers.
MEMC Electronic Materials, Inc. and any other Employer may establish a
Rabbi Trust to accumulate assets to fund the obligations of the Employer
pursuant to this Executive Pension Plan. Payment from the Rabbi Trust of amounts
due under the terms of this Executive Pension Plan shall satisfy the obligation
of the respective Employer(s) to make such payment out of its general assets. In
no event shall any Eligible Participant be entitled to receive payment of an
amount from the general assets of an Employer that the Eligible Participant
received from the Rabbi Trust. No Employer shall be obligated to contribute to
the Rabbi Trust except as specifically provided in Section 4.1.
ARTICLE VI
PLAN ADMINISTRATOR
6.1 Plan Administrator. The Executive Pension Plan shall be administered by
the same Committee appointed by MEMC Electronic Materials, Inc. to be Plan
Administrator of the MEMC Pension Plan. The Plan Administrator so appointed
shall have all of the authority, rights and duties to administer the Executive
Pension Plan as is assigned to the Committee to administer the Pension Plan;
provided, however, that such Committee may adopt such rules as it may deem
necessary, desirable and appropriate to administer the Executive Pension Plan.
Except as provided in the Rabbi Trust, the decisions of the Committee, including
but not limited to interpretations and determinations of amounts due under this
Executive Pension Plan, shall be final and binding on all parties.
6.2 Standard of Conduct. The Committee shall perform its duties as the
Committee in its sole discretion shall determine is appropriate in light of the
reason and purpose for which the Executive Pension Plan is established and
maintained. Except as provided in the Rabbi Trust, the interpretation of all
plan provisions and the determination of whether a Participant or Beneficiary is
entitled to any benefit pursuant to the terms of the Executive Pension Plan,
shall be exercised by the Committee in its sole discretion.
Any Employer that adopts and maintains this Executive Pension Plan hereby
consents to actions of the Committee made in its sole discretion.
ARTICLE VII
NONALIENATION OF BENEFITS
Except as may be required by the federal income tax withholding provisions
of the Code or by the tax laws of any State, the interests of Eligible
Participants and their beneficiaries under this Executive Pension Plan are not
subject to the claims of their creditors and may not be voluntarily or
involuntarily sold, transferred, alienated, assigned, pledged, anticipated, or
encumbered. Any attempt by an Eligible Participant, his Beneficiary, or any
other person to sell, transfer, alienate, assign, pledge, anticipate, encumber,
charge or otherwise dispose of any right to benefits payable hereunder shall be
void. An Employer may cancel and refuse to pay any portion of a benefit which is
sold, transferred, alienated, assigned, pledged, anticipated or encumbered.
ARTICLE VIII
AMENDMENT AND TERMINATION
MEMC Electronic Materials, Inc. reserves the right to amend, alter or
discontinue this Executive Pension Plan at any time; provided, however, that no
such amendment, alteration of discontinuance shall decrease the Accrued Benefit
of any Eligible Participant accrued to the date of such amendment, alteration or
discontinuance or the right of an Eligible Participant to payment of such amount
and that assets of any Rabbi Trust established pursuant to Article IV shall not
revert to MEMC Electronic Materials, Inc. until all benefit obligations funded
by such assets determined separately with respect to each Eligible Participant
and his Beneficiary, shall have been fulfilled. Such action to amend, alter or
discontinue this Executive Pension Plan may be taken by the MEMC Electronic
Materials, Inc. Employee Benefit Committee or such other entity as may be duly
authorized by the Board of Directors of the Sponsor.
ARTICLE IX
GENERAL PROVISIONS
9.1 Plan Not a Contract of Employment. This Executive Pension Plan does not
constitute a contract of employment, and participation in the Executive Pension
Plan will not give any Eligible Participant the right to be retained in the
employment of any of the Employers.
9.2 Construction of Terms. Words of gender shall include persons and
entities of any gender, the plural shall include the singular, and the singular
shall include the plural. Section headings exist for reference purposes only,
and shall not be construed as part of the Executive Pension Plan.
9.3 Successors. The provisions of this Executive Pension Plan shall be
binding upon the Employers and their successors and assigns and upon every
Eligible Participant and his heirs, beneficiaries, estates and legal
representatives.
9.4 Official Actions. Any action required to be taken by the Board of
Directors of MEMC Electronic Materials, Inc. pursuant to the Executive Pension
Plan may be performed by any person or persons, including a committee, to which
the Board of Directors of the MEMC Electronic Materials, Inc. delegates the
authority to take actions of that kind. Whenever under the terms of this
Executive Pension Plan an entity corporation is permitted or required to take
some action such action may be taken by an officer of the corporation who has
been duly authorized by the Board of Directors of such corporation to take
actions of that kind.
9.5 Controlling State Law. To the extent not superseded by the laws of the
United States, the laws of the State of Missouri shall be controlling in all
matters relating to this Executive Pension Plan.
9.6 Severability. In case any provision of this Executive Pension Plan
shall be held illegal or invalid for any reason, such illegality or invalidity
shall not affect the remaining provisions of the Executive Pension Plan, and the
Executive Pension Plan shall be construed and enforced as if such illegal and
invalid provisions had never been set forth.
9.7 Withholding. The Employer shall withhold from amounts due under this
Executive Pension Plan the amount necessary to enable the Employer to remit to
the appropriate government entity or entities on behalf of the Eligible
Participant as may be required by the federal income tax withholding provisions
of the Code, by an applicable state's income tax, or by an applicable city,
county or municipality's earnings or income tax act. The Employer may withhold
from the compensation of, or collect from, the Eligible Participant any amounts
due from an Eligible Participant, the amount necessary to remit on behalf of the
Eligible Participant any FICA taxes which may be required with respect to
amounts accrued by an Eligible Participant hereunder as determined by the
Employer.
The undersigned hereby certifies that the foregoing Plan restatement was
duly adopted by MEMC Electronic Materials, Inc. by its Employee Benefit
Committee in accordance with the authority delegated to such Committee by the
Board of Directors.
MEMC ELECTRONIC MATERIALS, INC.
By: /s/ Margaret B. Stonum
---------------------------------
Director, Benefits
Title: ------------------------------
April 30, 1997
Date: -------------------------------
MEMC Electronic Materials, Inc.
1995 EQUITY INCENTIVE PLAN
as Amended and Restated on March 18, 1997
1. Purpose. The purpose of the MEMC Electronic Materials, Inc. 1995 Equity
Incentive Plan as amended and restated herein (the "Plan") is to provide an
additional incentive to officers, other eligible key employees and directors of
MEMC Electronic Materials, Inc., a Delaware corporation (the "Company"), and its
Subsidiaries (as hereinafter defined) upon whom responsibilities for the
successful operation, administration and management of the Company rest and
whose present or potential contributions are important to the continued success
of the Company, and to enable the Company to attract and retain in its employ
and as directors highly qualified persons for the successful conduct of its
business. It is intended that this purpose will be effected through the granting
of incentive and nonqualified Stock Options, Restricted Stock Awards, or
Performance Share Awards, as provided herein (as each term is hereinafter
defined and collectively defined as the "Awards").
2. Definitions. For purposes of the Plan, the following terms shall be
defined as follows:
"Affiliate" and "Associate" have the respective meanings ascribed
to such terms in Rule 12b-2 promulgated under the Exchange Act.
"Award" means an award to an Eligible Employee (as hereinafter
defined) in the form of Stock Options, Restricted Stock Awards, or
Performance Share Awards.
"Award Agreement" means an agreement granting an Award and
containing such terms and conditions as the Committee deems
appropriate and that are not inconsistent with the terms of the Plan.
"Beneficial Owner" has the meaning ascribed to such term in Rule
13d-3 promulgated under the Exchange Act.
"Board" means the Board of Directors of the Company.
A "Change in Control" of the Company shall be deemed to have
occurred when (A) any Person (other than (x) the Company, any
Subsidiary of the Company, or any Parent of the Company including VEBA
AG, Huls Corporation and any of their Affiliates or (y) any employee
benefit plan of the Company or of any Subsidiary of the Company, or
any Person or entity organized, appointed or established by the
Company or any Subsidiary of the Company for or pursuant to the terms
of any such plan, alone or together with its Affiliates and
Associates) shall become the Beneficial Owner of twenty percent (20%)
or more of the then outstanding shares of Common Stock or the Combined
Voting Power of the Company's then outstanding voting securities
(except pursuant to an offer for all outstanding shares of Common
Stock at a price and upon such terms and conditions as a majority of
the Continuing Directors determine to be in the best interests of the
Company and its shareholders (other than the Person on whose behalf
the offer is being made) (an "Acquiring Person")), or (B) during any
period of two (2) consecutive years, individuals who at the beginning
of such period constitute the Board, and any new director (other than
a director who is a representative or nominee of an Acquiring Person)
whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least a majority
of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved (collectively, the "Continuing Directors"),
cease for any reason to constitute a majority of the Board.
Notwithstanding the foregoing, no Change in Control shall be deemed to
have occurred if VEBA AG and any of its Affiliates are the Beneficial
Owners of fifty percent (50%) or more of the Combined Voting Power of
the Company's then outstanding voting securities and designees of VEBA
AG and its Affiliates constitute a majority of the Board.
"Code" means the Internal Revenue Code of 1986, as amended.
"Combined Voting Power" means the combined voting power of the
Company's then outstanding voting securities.
"Committee" means the Compensation Committee appointed by the
Board pursuant to Section 3(a) hereof to administer the Plan.
"Common Stock" means the Voting Common Stock, par value $.01 per
share, of the Company.
"Disability" means, with respect to any Participant, that, as a
result of incapacity due to physical or mental illness, such
Participant is, or is reasonably likely to become, unable to perform
his or her duties for more than six (6) consecutive months or six (6)
months in the aggregate during any twelve (12) month period.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" means, on any given date, the closing price
of the shares of Common Stock, as reported on the New York Stock
Exchange for such date or such national securities exchange as may be
designated by the Board or, if Common Stock was not traded on such
date, on the next preceding day on which Common Stock was traded.
"Incentive Stock Option" means a Stock Option which is an
"incentive stock option" within the meaning of Section 422 of the Code
and designated by the Committee as an Incentive Stock Option in an
Award Agreement.
"Nonqualified Stock Option" means a Stock Option which is not an
Incentive Stock Option.
"Parent" means any corporation which is a "parent corporation"
within the meaning of Section 424(e) of the Code with respect to the
Company.
"Participant" means an Eligible Employee to whom an Award has
been granted under the Plan.
"Performance Share Award" means a conditional Award of shares of
Common Stock granted to an Eligible Employee pursuant to Section 9
hereof.
"Person" means any person, entity or "group" within the meaning
of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act.
"Restricted Stock Award" means an Award of shares of Common Stock
granted to an Eligible Employee pursuant to Section 8 hereof.
"Retirement" means retirement from active employment with the
Company and its Subsidiaries on or after the attainment of age 55, or
such other retirement date as may be approved by the Committee for
purposes of the Plan and specified in the applicable Award Agreement,
but shall not include the termination of the directorship of a
nonemployee director.
"Stock Option" means an Award to purchase shares of Common Stock
granted to an Eligible Employee pursuant to Section 7 hereof.
"Subsidiary" means any corporation which is a "subsidiary
corporation" within the meaning of Section 424(f) of the Code with
respect to the Company.
"Ten Percent Shareholder" means an Eligible Employee who, at the
time an Incentive Stock Option is to be granted to him or her, owns
(within the meaning of Section 422(b)(6) of the Code,) stock
possessing more than ten percent (10%) of the total Combined Voting
Power of all classes of stock of the Company, or of a Parent or a
Subsidiary.
"Window Period" means the ten (10) business day period in each
fiscal quarter of the Company commencing on the third (3rd) business
day following the release for publication of the Company's quarterly
or annual sales and earnings for the next preceding fiscal quarter or
year, as the case may be, and ending on the twelfth (12th) business
day following such date of release.
3. Administration of the Plan.
(a) The Plan shall be administered by the Committee, which shall be
comprised of no fewer than two members of the Board who shall be appointed
from time to time by the Board. Members of the Committee shall serve at the
pleasure of the Board and the Board may from time to time remove members
from, or add members to, the Committee. All determinations of the Committee
at a meeting shall be made by a majority of the members in attendance. Any
decision or determination reduced to writing and signed by all the members
shall be fully as effective as if it had been made by a majority vote at a
meeting duly called and held. No member of the Committee shall be
personally liable for any action, determination or interpretation made in
good faith with respect to the Plan, and all members of the Committee shall
be indemnified by the Company to the fullest extent permitted by the
certificate of incorporation or by-laws of the Company or applicable
Delaware law with respect to any such action, determination or
interpretation.
(b) Within the limitations described herein, the Committee shall
administer the Plan, select the Eligible Employees to whom Awards will be
granted, determine the number and type of Awards to be granted to each such
Eligible Employee, determine the terms and conditions applicable to each
Award (which need not be identical), make any amendment or modification to
any Award Agreement consistent with the terms of the Plan, and interpret,
construe and implement the provisions of the Plan. The Committee shall have
the authority to adopt rules and regulations for administering the Plan
which shall not be inconsistent with the terms of the Plan. Decisions of
the Committee shall be binding on the Company, on all Eligible Employees
and Participants and all other persons having any interest in the Plan. The
Company shall effect the granting of Awards under the Plan in accordance
with the determinations made by the Committee, which shall be evidenced by
an Award Agreement.
(c) The Committee shall have the authority to adopt such rules and
regulations and to add such terms, conditions and sub-schemes to the Plan
as it deems necessary or desirable to permit or facilitate the granting of
Awards under the Plan to, or obtain favorable tax treatment for, Eligible
Employees resident for tax purposes in jurisdictions outside the United
States; provided, however, that any such rule, regulation, term, condition
or sub-scheme shall not be inconsistent with the terms of the Plan.
(d) Any act that the Committee is authorized to perform hereunder may
instead be performed by the Board at its discretion, and to the extent the
Board so acts, references in the Plan to the Committee shall refer to the
Board as applicable.
4. Duration of Plan. The Plan shall remain in effect until terminated by
the Board of Directors and thereafter until all Awards granted under the Plan
are satisfied by the issuance of shares of Common Stock or the payment of cash
or are terminated under the terms of the Plan or under the Award Agreement
entered into in connection with the grant thereof. Notwithstanding the
foregoing, no Awards may be granted under the Plan after the tenth anniversary
of the Effective Date (as hereinafter defined).
5. Shares of Stock Subject to the Plan. Subject to adjustment as provided
in Section 13(b) hereof, the number of shares of Common Stock that may be issued
under the Plan pursuant to Awards shall not exceed, in the aggregate, 3,597,045,
less the number of shares that may be reserved for issuance under the Company's
Retirement Savings Plan or under any broad-based employee stock purchase plan.
Notwithstanding the foregoing, no more than 1,692,727 shares may be made subject
to Awards hereunder without the approval of the Board. Such shares may consist
in whole or in part, as the Board shall from time to time determine, of
authorized but unissued shares or treasury shares. To the fullest extent
permitted under Section 422 of the Code, any shares subject to an Award which
lapses, expires or is otherwise terminated without the issuance of such shares,
may again be available for purposes of the Plan.
6. Maximum Number of Shares per Eligible Employee. To satisfy the
requirements under Section 162(m) of the Code, no Eligible Employee whose
Performance Award the Committee reasonably believes will be subject to Section
162(m) of the Code shall receive a grant of Awards with respect to more than
325,000 shares of Common Stock in any Plan year.
7. Eligible Employees. Awards may be granted by the Committee to
individuals ("Eligible Employees") who are either directors or salaried
employees of the Company or a Subsidiary with potential to contribute to the
future success of the Company or its Subsidiaries. Awards shall not be affected
by any change of duties or positions so long as the holder continues to be an
employee or director of the Company or of a Subsidiary.
8. Stock Options. Stock Options granted under the Plan may be in the form
of Incentive Stock Options or Nonqualified Stock Options. Stock Options granted
under the Plan shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem appropriate:
(a) Award Agreement. Stock Options shall be evidenced by an Award
Agreement in such form and containing such terms and conditions as the
Committee deems appropriate and which are not inconsistent with the terms
of the Plan.
(b) Terms of Stock Options Generally. Subject to the terms of the Plan
and the applicable Award Agreement, each Stock Option shall entitle the
Participant to whom such Stock Option was granted to purchase, upon payment
of the relevant exercise price, the number of shares of Common Stock
specified in the Award Agreement.
(c) Exercise Price. The exercise price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee at
the time of grant and set forth in the Award Agreement; provided, however,
that the exercise price shall not be less than one hundred percent (100%)
of the Fair Market Value of a share of Common Stock on the date of grant
(110% in the case of an Incentive Stock Option granted to a Ten Percent
Shareholder). The exercise price for any Stock Options granted concurrently
with the initial public offering will be equal to the initial public
offering price.
(d) Option Term. The term of each Stock Option shall be fixed by the
Committee and set forth in the Award Agreement; provided, however, that a
Stock Option shall not be exercisable after the expiration of ten (10)
years after the date the Stock Option is granted (five (5) years in the
case of an Incentive Stock Option granted to a Ten Percent Shareholder).
(e) Exercisability. A Stock Option shall be exercisable at such time
or times and subject to such terms and conditions as shall be determined by
the Committee. The Committee may provide that Stock Options shall be
exercisable in whole or in part based upon length of service or attainment
of specified performance criteria. The Committee, in its sole discretion,
may provide for the acceleration of vesting of a Stock Option, in whole or
in part, based on such factors or criteria (including specified performance
criteria) as the Committee may determine.
(f) Method of Exercise. A Stock Option may be exercised, in whole or
in part, by giving written notice of exercise to the Company specifying the
number of shares to be purchased. Such notice shall be accompanied by
payment in full of the exercise price either by cash, certified or bank
check, note or other instrument acceptable to the Committee. Except as set
forth in Section 8(i) hereof, as determined by the Committee in its sole
discretion, 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 and, where such shares are
withheld (as described below), net of the applicable exercise price) 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. In its
discretion, the Committee may also permit any Participant to exercise an
Option through a "cashless exercise" procedure involving a broker or dealer
approved by the Committee, provided that the Participant has delivered an
irrevocable notice of exercise (the "Notice") to the broker or dealer and
such broker or dealer agrees: (A) to sell immediately the number of shares
of Common Stock specified in the Notice to be acquired upon exercise of the
Option in the ordinary course of its business, (B) to pay promptly to the
Company the aggregate exercise price (plus the amount necessary to satisfy
any applicable tax liability) and (C) to pay to the Participant the balance
of the proceeds of the sale of such shares over the amount determined under
clause (B) of this sentence, less applicable commissions and fees;
provided, however, that the Committee may modify the provisions of this
sentence to the extent necessary to conform the exercise of the Option to
Regulation T under the Exchange Act. The manner in which the exercise price
may be paid may be subject to certain conditions specified by the
Committee. If requested by the Committee, the Participant shall deliver the
Award Agreement evidencing an exercised Stock Option to the Secretary of
the Company, who shall endorse thereon a notation of such exercise and
return such Award Agreement to the Participant exercising the Option. No
fractional shares (or cash in lieu thereof) shall be issued upon exercise
of a Stock Option and the number of shares that may be purchased upon
exercise shall be rounded to the nearest number of whole shares.
(g) Rights as Shareholder. A Participant shall have no rights as a
shareholder with respect to any shares of Common Stock issuable upon
exercise of a Stock Option until a certificate or certificates evidencing
the shares of Common Stock shall have been issued to the Participant and,
subject to Sections 13(b) and 13(c), 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.
(h) Special Rule for Incentive Stock Options. With respect to
Incentive Stock Options granted under the Plan, if the aggregate Fair
Market Value (determined as of the date the Incentive Stock Option is
granted) of the number of shares with respect to which Incentive Stock
Options are exercisable for the first time by a Participant during any
calendar year under all plans of the Company or a Parent or Subsidiary
exceeds One Hundred Thousand Dollars ($100,000) or such other limit as may
be required by the Code, such Incentive Stock Options shall be treated, to
the extent of such excess, as Nonqualified Stock Options. No Incentive
Stock Option shall be granted to any person who is not an employee at the
time of grant.
(i) Payment Alternatives for Section 16 Persons. Persons subject to
Section 16 of the Exchange Act shall have the unfettered right (but not the
obligation) to pay the exercise price 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 and, where such shares are withheld (as
described below), net of the applicable exercise price) 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 who is subject to
Section 16 of the Exchange Act, or such Participant shall have the right
but not the obligation to direct the Company to withhold shares of Common
Stock that would otherwise have been received by such Participant upon
exercise of the Stock Option. It is the intent of this provision that the
transactions described in this subsection qualify for the exemption from
short-swing profit liability under Section 16 of the Exchange Act pursuant
to the "disposition to the issuer" exemption set forth at Rule 16b-3(e)
promulgated under Section 16 of the Exchange Act.
9. Restricted Stock Awards. Restricted Stock Awards granted under the Plan
shall be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the Plan, as the
Committee shall deem appropriate:
(a) Award Agreement. Restricted Stock Awards shall be evidenced by an
Award Agreement in such form and containing such restrictions, terms and
conditions as the Committee deems appropriate and which are not
inconsistent with the terms of the Plan, including, without limitation,
restrictions on the sale, assignment, transfer or other disposition of such
shares and provisions requiring that a Participant forfeit such shares upon
a termination of employment or directorship for specified reasons within a
specified period of time.
(b) Terms of Restricted Stock Awards Generally. Restricted Stock
Awards may be granted under the Plan in such form as the Committee may from
time to time approve. Restricted Stock Awards may be granted for no
consideration or such consideration as the Committee deems appropriate.
Restricted Stock Awards may be granted alone or in addition to other Awards
under the Plan. Subject to the terms of the Plan, the Committee shall
determine the number of shares of Common Stock subject to each Restricted
Stock Award granted to a Participant, and the Committee may impose
different terms and conditions on any particular Restricted Stock Award
granted to any Participant. Each Participant receiving a Restricted Stock
Award shall be issued a certificate or certificates in respect of such
shares of Common Stock at the time of grant. Such certificate shall be
registered in the name of such Participant, and shall bear an appropriate
legend referring to the terms, conditions and restrictions applicable to
such Award. The Committee may require that the certificate or certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
Restricted Stock Award, the Participant shall have delivered a stock power,
endorsed in blank, relating to the Common Stock covered by such Award.
(c) Restriction Period. Restricted Stock Awards shall provide that, in
order for a Participant to vest in such Awards, such Participant must
remain in the employment or directorship of the Company or its
Subsidiaries, subject to such exceptions as the Committee may determine in
its sole discretion for specified reasons for a period commencing on the
date of the Award and ending on such later date or dates as the Committee
may designate at the time of the Award and set forth in the Award Agreement
(the "Restriction Period"). During the Restriction Period, a Participant
may not sell, assign, transfer, pledge, encumber or otherwise dispose of
shares of Common Stock received under a Restricted Stock Award. The
Committee, in its sole discretion, may provide for the lapse of
restrictions in installments during the Restriction Period and may waive or
accelerate such restrictions in whole or in part, based on such factors or
criteria, including specified performance criteria, as the Committee may
determine. Upon expiration of the applicable Restriction Period (or lapse
of restrictions during the Restriction Period), the Participant shall be
vested in the Restricted Stock Award, or applicable portion thereof.
(d) Rights as Shareholder. Except as otherwise provided by the
Committee in its sole discretion, a Participant shall have, with respect to
the shares of Common Stock received under a Restricted Stock Award, all of
the rights of a shareholder of the Company, including the right to vote the
shares and the right to receive any cash dividends. Stock dividends issued
with respect to shares covered by a Restricted Stock Award shall be treated
as additional shares under the Restricted Stock Award and shall be subject
to the same restrictions and other terms and conditions that apply to the
shares with respect to which such dividends are issued.
10. Performance Share Awards. Performance Share Awards granted under the
Plan shall be subject to the following terms and conditions and shall contain
such additional terms and conditions, not inconsistent with the Plan, as the
Committee shall deem appropriate:
(a) Award Agreement. Performance Share Awards shall be evidenced by an
Award Agreement in such form and containing such terms and conditions as
the Committee deems appropriate and which are not inconsistent with the
terms of the Plan. Each Award Agreement shall set forth the number of
shares of Common Stock to be received by a Participant upon satisfaction of
certain specified performance criteria and subject to such other terms and
conditions as the Committee deems appropriate.
(b) Terms of Performance Share Awards Generally. Performance Share
Awards may be granted under the Plan in such form as the Committee may from
time to time approve. Performance Share Awards may be granted for no
consideration or such consideration as the Committee deems appropriate.
Performance Share Awards may be granted alone or in addition to other
Awards under the Plan. Subject to the terms of the Plan, the Committee
shall determine the number of shares of Common Stock subject to each
Performance Share Award granted to a Participant.
(c) Performance Goals. Performance Share Awards shall provide that, in
order for a Participant to be entitled to receive shares of Common Stock
under such Award, the Company and/or the Participant must achieve certain
specified performance goals ("Performance Goals") over a designated
performance period ("Performance Period"). The Performance Goals and
Performance Period shall be established by the Committee in its sole
discretion. The Committee shall establish the Performance Goals for each
Performance Period before, or as soon as practicable after, the
commencement of the Performance Period. In setting Performance Goals, the
Committee may use such measures as net earnings, operating earnings or
income, absolute and/or relative return on equity or assets, earnings per
share, cash flow, pretax profits, earnings growth, revenue growth,
comparison to peer companies, any combination of the foregoing, or such
other measure or measures of performance, including individual measures of
performance, in such manner as it deems appropriate. Prior to the end of a
Performance Period, with respect to any Participant the deductibility of
whose Performance Award will not, in the reasonable belief of the
Committee, be subject to Section 162(m) of the Code, the Committee may, in
its discretion, adjust the performance objectives to reflect a Change in
Capitalization (as hereinafter defined) or any other event which may
materially affect the performance of the Company, a Subsidiary or a
division, including, but not limited to, market conditions or a significant
acquisition or disposition of assets or other property by the Company, a
Subsidiary or a division. With respect to any Participant, the
deductibility of whose Performance Award may, in the reasonable belief of
the Committee, be subject to Section 162(m) of the Code, the Committee
shall not be entitled to exercise the discretion conferred upon it in the
preceding sentence to the extent the existence or exercise of such
discretion would result in a loss of tax deductibility under such Section
162(m) of the Code. The extent to which a Participant is entitled to
payment of a Performance Share Award at the end of the Performance Period
shall be determined by the Committee, in its sole discretion, based on the
Committee's determination of whether the Performance Goals established by
the Committee in the granting of such Performance Share Award have been
met.
(d) Payment of Awards. Payment in settlement of a Performance Share
Award shall be made as soon as practicable following the conclusion of the
respective Performance Period, or at such other time as the Committee shall
determine, in shares of Common Stock.
(e) Rights as Shareholder. Except as otherwise provided by the
Committee in the applicable Award Agreement, a Participant shall have no
rights as a shareholder with respect to a Performance Share Award until a
certificate or certificates evidencing the shares of Common Stock shall
have been issued to the Participant following the conclusion of the
Performance Period, and, subject to Sections 13(b) and 13(c), 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.
11. Termination of Employment.
(a) Disability or Retirement. Except as may otherwise be provided by
the Committee in its sole discretion at the time of grant or subsequent
thereto, if a Participant's employment with the Company and its
Subsidiaries terminates by reason of Retirement or if a Participant's
employment (or, with respect to a nonemployee director, his directorship)
terminates by reason of Disability, (i) any Stock Option held by the
Participant may thereafter be exercised, to the extent it was exercisable
on the date of termination, for a period (the "Exercise Period") of one (1)
year from the date of such Disability or Retirement or until the expiration
of the stated term of the Stock Option, whichever period is shorter, and to
the extent not exercisable on the date of termination, such Stock Option
shall be forfeited; provided, however, that if a Participant terminates
employment by reason of Retirement and such Participant holds an Incentive
Stock Option, the Exercise Period shall not exceed the shorter of three (3)
months from the date of Retirement and the remainder of the stated term of
such Incentive Stock Option; provided further, however, that if the
Participant dies during the Exercise Period, any unexercised Stock Option
held by such Participant may thereafter be exercised to the extent it was
exercisable on the date of Disability or Retirement, by the legal
representative or beneficiary of the Participant, for a period of one (1)
year from the date of such death or until the expiration of the stated term
of such Stock Option, whichever period is shorter (or, in the case of an
Incentive Stock Option, for a period equal to the remainder of the Exercise
Period), and (ii) if such termination is prior to the end of the applicable
Restriction Period (with respect to a Restricted Stock Award) or
Performance Period (with respect to a Performance Share Award), the number
of shares of Common Stock subject to such Award which have not been earned
as of the date of Disability or Retirement shall be forfeited. In
determining whether to exercise its discretion under the first sentence of
this Section 11(a) with respect to an Incentive Stock Option the Committee
may consider the provisions of Section 422 of the Code.
(b) Death. Except as may otherwise be provided by the Committee in its
sole discretion at the time of grant or subsequent thereto, if a
Participant's employment or directorship with the Company and its
Subsidiaries terminates by reason of death, (i) any Stock Option held by
the Participant may thereafter be exercised, to the extent it was
exercisable on the date of death, by the legal representative or
beneficiary of the Participant, for a period of one (1) year from the date
of the Participant's death or until the expiration of the stated term of
such Stock Option, whichever period is shorter, and to the extent not
exercisable on the date of death, such Stock Option shall be forfeited and
(ii) if such termination is prior to the end of the applicable Restriction
Period (with respect to a Restricted Stock Award) or Performance Period
(with respect to a Performance Share Award), the number of shares of Common
Stock subject to such Award which have not been earned as of the date of
death shall be forfeited.
(c) Other Terminations. Unless the Committee determines otherwise in
its sole discretion at the time of grant or subsequent thereto, if a
Participant's employment or directorship with the Company and its
Subsidiaries terminates for any reason other than death, Disability or
Retirement, (i) any Stock Option held by the Participant may thereafter be
exercised, to the extent it was exercisable on the date of termination, for
a period of sixty (60) days from the date of such termination or until the
expiration of the stated term of such Stock Option, whichever period is
shorter, and to the extent not exercisable on the date of termination, such
Stock Option shall be forfeited, and (ii) if such termination is prior to
the end of the applicable Restriction Period (with respect to a Restricted
Stock Award) or Performance Period (with respect to a Performance Share
Award), the number of shares of Common Stock subject to such Award which
have not been earned as of the date of such termination shall be forfeited.
In determining whether to exercise its discretion under the first sentence
of this Section 10(c) with respect to an Incentive Stock Option, the
Committee may consider the provisions of Section 422 of the Code.
12. Non-transferability of Awards. No Awards under the Plan or any rights
or interests therein may be sold, transferred, assigned, pledged or otherwise
encumbered or disposed of except by will or the laws of descent and
distribution; provided, however, that with respect to any Award that is not an
Incentive Stock Option, the foregoing restrictions shall not apply to the extent
determined by the Committee in its sole discretion at the time of grant and set
forth in the applicable Award Agreement; provided further, however, that if so
determined by the Committee, a Participant may, in the manner established by the
Committee, designate a beneficiary to exercise the rights of the Participant
with respect to any Award upon the death of the Participant. During the lifetime
of a Participant, Stock Options shall be exercisable only by, and payments in
settlement of Awards shall be payable only to, the Participant.
13. Recapitalization or Reorganization.
(a) The existence of the Plan, the Award Agreements and the Awards
granted hereunder shall not affect or restrict in any way the right or
power of the Company or the shareholders of the Company to make or
authorize any adjustment, recapitalization, reorganization or other change
in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of stock or of options, warrants or
rights to purchase stock or of 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 sale
or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
(b) Notwithstanding any provision of the Plan or any Award Agreement,
in the event of any change in the outstanding Common Stock by reason of a
stock dividend, recapitalization, reorganization, merger, consolidation,
stock split, combination or exchange of shares (a "Change in
Capitalization"), (i) 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 Participants under the Plan with respect to (a) the aggregate number of
shares of Common Stock for which Awards in respect thereof may be granted
under the Plan, (b) the aggregate number of shares of Common Stock which
are subject to Awards hereunder without the approval of the Board pursuant
to Section 5 hereof, (c) the number of shares of Common Stock covered by
each outstanding Award, and (d) the exercise or Award prices in respect
thereof and (ii) the Committee may make such other adjustments, consistent
with the foregoing, as it deems appropriate in its sole discretion.
(c) Upon the occurrence of a merger of, or consolidation involving,
the Company in which the Common Stock is converted into securities of
another corporation or into cash, or any other transaction that results in
the Common Stock no longer being publicly traded, at the sole discretion of
the Committee, and on such terms and conditions as it deems appropriate,
the Committee may provide either by the terms of an Award granted under the
Plan or by a resolution adopted prior to the occurrence of such event that
upon such event, such Award shall be assumed by the successor corporation,
or a Parent or Subsidiary thereof, or shall be substituted for by a similar
Award, covering the stock of the successor corporation, or a Parent or
Subsidiary thereof, with appropriate adjustments as to the number and kind
of shares and exercise or Award prices.
14. Change in Control. 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, (i) all Stock Options then
outstanding shall become fully exercisable as of the date of the Change in
Control, whether or not then exercisable, (ii) all restrictions and conditions
of all Restricted Stock Awards then outstanding shall lapse as of the date of
the Change in Control and (iii) all Performance Share Awards shall be deemed to
have been fully earned as of the date of the Change in Control.
15. Amendment of the Plan. The Board may at any time and from time to time
terminate, modify, or amend the Plan in any respect, except that no termination,
modification or amendment shall be effective without shareholder approval if
such approval is required to comply with any law, regulation or stock exchange
rule. No termination or amendment of the Plan shall, without the consent of a
Participant to whom any Awards shall previously have been granted, adversely
affect his or her rights under such Awards.
16. Miscellaneous.
(a) Tax Withholding. (i) The Company and its Subsidiaries shall have
the right to deduct from any cash payment made under the Plan any federal,
state or local taxes of any kind required to be withheld with respect to
such payment. It shall be a condition to the obligation of the Company to
deliver shares of Common Stock pursuant to any Award under the Plan that
the recipient of such Award pay to the Company such amount as may be
required by the Company for the purpose of satisfying any liability for any
such withholding taxes. Any Award granted under the Plan may require the
Company, or permit the recipient of such Award to elect, in accordance with
any applicable rules established by the Committee, to withhold or to pay
all or a part of the amount of such withholding taxes in shares of Common
Stock, provided, however, that regardless of whether set forth in the Award
Agreement, any person subject to Section 16 of the Exchange Act shall have
the unfettered right but not the obligation to direct and compel the
Company to withhold, or to accept from such person, such number of shares
of Common Stock valued at the Fair Market Value on the date of such payment
as is necessary to pay, in whole or in part, such person's withholding tax
obligation. Except for elections made by persons subject to Section 16 of
the Exchange Act, elections by all other Participants may be denied by the
Committee in its sole discretion, or may be made subject to certain
conditions specified by the Committee. Neither the Board of Directors nor
the Committee shall have any discretion with respect to the elections by
persons subject to Section 16 of the Exchange Act in order that such
transactions shall qualify for the exemption from short-swing profit
liability pursuant to the "disposition to the issuer" exemption set forth
at Rule 16b-3(e) promulgated under Section 16 of the Exchange Act.
(ii) The applicable Award Agreement for an Incentive Stock Option
shall provide that if a Participant makes a disposition, within the
meaning of Section 424(c) of the Code and the regulations promulgated
thereunder, of any share of Common Stock issued to such Participant
pursuant to the exercise of an Incentive Stock Option within the two
(2)-year period commencing on the day after the date of the grant or
within the one (1)-year period commencing on the day after the date of
transfer of such share of Common Stock to the Participant pursuant to
such exercise, the Participant shall, within ten (10) days of such
disposition, notify the Company thereof, by delivery of written notice
to the Company at its principal executive office.
(b) Loans. On such terms and conditions as shall be approved by the
Committee, the Company may directly or indirectly lend money to a
Participant to accomplish the purposes of the Plan, including to assist
such Participant to acquire or carry shares of Common Stock acquired upon
the exercise of Stock Options granted hereunder, and the Committee may also
separately lend money to any Participant to pay taxes with respect to any
of the transactions contemplated by the Plan.
(c) No Right to Grants or Employment. No Eligible Employee or
Participant shall have any claim or right to receive grants of Awards under
the Plan. Nothing in the Plan or in any Award or Award Agreement shall
confer upon any employee of the Company or any Subsidiary 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 any of its employees at any time, with or
without cause.
(d) Unfunded Plan. The Plan shall be unfunded and the Company shall
not be required to segregate any assets that may at any time be represented
by Awards under the Plan. Any liability of the Company to any person with
respect to any Award under the Plan shall be based solely upon any
contractual obligations that may be effected pursuant to the Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of,
or other encumbrance on, any property of the Company.
(e) Other Employee Benefit Plans. Payments received by a Participant
under any Award made pursuant to the provisions of the Plan shall not be
included in, nor have any effect on, the determination of benefits under
any other employee benefit plan or similar arrangement provided by the
Company.
(f) Securities Law Restrictions. The Committee may require each
Eligible Employee purchasing or acquiring shares of Common Stock pursuant
to a Stock Option or other Award under the Plan to represent to and agree
with the Company in writing that such Eligible Employee is acquiring the
shares for investment and not with a view to the distribution thereof. All
certificates for shares of Common Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, the New York Stock
Exchange or any other stock exchange upon which the Common Stock is then
listed, and any applicable federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions. No shares of Common
Stock shall be issued hereunder unless the Company shall have determined
that such issuance is in compliance with, or pursuant to an exemption from,
all applicable federal and state securities laws.
(g) Compliance with Rule 16b-3. Notwithstanding anything contained in
the Plan or any Award Agreement to the contrary, if the consummation of any
Award under the Plan would result in the possible imposition of liability
on a Participant pursuant to Section 16(b) of the Exchange Act, the
Committee shall have the right, in its sole discretion, but shall not be
obligated, to defer such transaction to the extent necessary to avoid such
liability, but in no event for a period in excess of 180 days.
(h) Deductibility Under Code Section 162(m). Awards granted under the
Plan to Eligible Employees which the Committee reasonably believes may be
subject to Section 162(m) of the Code shall not be exercisable, and payment
under the Plan in connection with such an Award shall not be made, unless
and until the Committee has determined in its sole discretion that such
exercise or payment would no longer be subject to Section 162(m) of the
Code.
(i) Award Agreement. Each Eligible Employee receiving an Award under
the Plan shall enter into an Award Agreement in a form specified by the
Committee agreeing to the terms and conditions of the Award and such other
matters as the Committee shall, in its sole discretion, determine. In the
event of any conflict or inconsistency between the Plan and any such Award
Agreement, the Plan shall govern, and the Award Agreement shall be
interpreted to minimize or eliminate any such conflict or inconsistency.
(j) Costs of Plan. The costs and expenses of administering the Plan
shall be borne by the Company.
(k) Governing Law. Except as to matters of federal law, the Plan and
all actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
conflicts of law principles.
(l) Effective Date. The Plan as amended and restated herein shall be
effective on March 18, 1997 (the "Effective Date").
CONFIDENTIAL TREATMENT REQUESTED
HSC/MEMC AGREEMENT
This Agreement is made this 27th day of December, 1994, by and between Hemlock
Semiconductor Corporation, having its principal place of business at 12334
Geddes Road, Hemlock, Michigan 48626 ("HSC" or "Supplier") and MEMC Electronic
Materials, Inc. having its principal place of business at 501 Pearl Drive (City
of O'Fallon), P.O. Box 8, St. Peters, Missouri, 63376 ("MEMC" or "Customer").
Whereas, HSC and MEMC desire to enter into this Agreement to govern the terms of
the sale by HSC to MEMC of Polycrystalline Silicon;
Now, therefore, in consideration of the mutual obligations stated herein, it is
hereby agreed as follows:
1. DEFINITIONS:
1.1 Actual Purchases means the number of tons of Material shipped by
Supplier to MEMC and MEMC Affiliates during a specified period, and
includes any Stockpile quantities shipped during that period.
1.2 Base Purchase Quantity for the calendar years 1995 - 1999 of this
Agreement is as follows:
Year Base Purchase Quantity
---- ----------------------
1995 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH THE SEC]
1996 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH THE SEC]
1997 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH THE SEC]
1998 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH THE SEC]
1999 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH THE SEC]
1.3 The Base Unit Price for the Base Purchase Quantity for the calendar
years 1995 - 1999 of this Agreement is as follows:
Year Base Unit Price Ceiling Price*
---- --------------- -------------
1995 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH THE SEC]
1996 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH THE SEC]
1997 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH THE SEC]
1998 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH THE SEC]
1999 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH THE SEC]
*Provided the implicit price deflactor of GDP as calculated in section 6.4
does not exceed [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED
SEPARATELY WITH THE SEC]. The Adjusted Base unit price shall not exceed the
ceiling price for the year indicated.
1.4 Contract Purchase Quantity is defined in paragraph 5.1.
1.5 Specified period means the period from January 1, 1995 through and
including December 31, 1999.
1.6 Material means the Polycrystalline Silicon identified in Appendix I.
1.7 MEMC Affiliate means (i) any business entity that, directly or
indirectly, through one or more intermediaries, owns or control at
least forty percent (40%) of the voting stock of MEMC; or (ii) any
business entity in which MEMC directly or indirectly, through one or
more intermediaries, owns, controls or has a partnership interest in
at least forty percent (40%) of the assets or voting stock of that
entity; or (iii) any business entity that is a successor (whether by
change of name, dissolution, merger, consolidation, reorganization or
otherwise) to any such entity or its business and assets.
1.8 Minimum Purchase Quantity for the calendar years 1995 - 1999 of this
Agreement is as follows:
Year Minimum Purchase Quantity
---- -------------------------
1995 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH THE SEC]
1996 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH THE SEC]
1997 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH THE SEC]
1998 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH THE SEC]
1999 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH THE SEC]
1.9 Stockpile is defined in Section 9.
2. SCOPE:
2.1 Customer agrees to purchase from Supplier, and Supplier agrees to sell
to Customer, the Polycrystalline Silicon identified in Appendix I
("Material"). MEMC Affiliates may, at their option, purchase from
Supplier pursuant to this Agreement but shall not be required to do
so. Purchases by, or on behalf of, MEMC Affiliates shall be credited
against the Minimum Purchase Quantity. Every year MEMC will provide
Supplier with the Contract Purchase Quantity for the following
calendar year, pursuant to the provisions of paragraph 5.1. Each year
MEMC and any MEMC Affiliate electing to purchase during that year will
issue a Purchase Order incorporating by reference the terms and
conditions of this Agreement; Release Orders will be issued quarterly
pursuant to the provisions of Section 8.
2.2 In consideration of the foregoing commitment, Supplier agrees to
participate in the MEMC SUPPLIER IMPROVEMENT PROCESS, as set forth in
the document dated March 20, 1989 (which may be revised by MEMC from
time to time), and understands that its continuing participation in
this program is a condition to Customer's obligation to purchase
hereunder.
3. TERM: This Agreement is effective commencing January 1, 1995 and shall
continue until December 31, 1999. On or before December 31, 1996, the parties
shall begin to negotiate in good faith the prices and other terms and conditions
which shall apply after December 31, 1999. If the parties are unable to agree to
revised prices and terms and conditions on or before December 31, 1997, then
this Agreement shall terminate effective December 31, 1999. This Agreement
supercedes the former supply agreement dated November 18, 1991.
4. SPECIFICATIONS: The current specifications for the Materials are set forth in
Appendix I ("Specifications"). Supplier understands that Customer manufactures
its products to the specifications of its customers and that such specifications
are subject to change. It is expected that new or more stringent specifications
for Supplier's Materials will, in good faith, be necessary during the term of
this Agreement so that Customer will able to respond to its customers'
requirements and be able to improve the quality of its products. Supplier has
committed technical resources to reducing the impurities in the Materials to the
levels shown on Appendix II. Supplier will promptly review any changes made by
Customer to the Specifications along with Customer's requested schedule to
implement the revised Specifications, and, within sixty (60) days, will either
(i) accept, indicating the time required to implement the revised
Specifications, or (ii) reject those changes in writing. Customer will consider
the changes accepted if no written objections are received within the sixty (60)
day review period. Supplier's consent shall not be unreasonably withheld. In the
event that Supplier does not accept said revised Specifications, or in the event
that the revised Specifications are not implemented within the time period
requested by Customer; and further provided that another supplier can met the
revised Specifications, then Customer may purchase less than the Minimum
Purchase Quantity.
5. QUANTITY:
5.1 The Contract Purchase Quantity for the calendar year 1995 shall be
[CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH
SEC]. Prior to October 1 of each successive year MEMC will provide
Supplier with notification of the Contract Purchase Quantity for the
following year, specifying an amount no less than the current year's
Actual Purchases and no greater than the lesser of [CONFIDENTIAL
MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC] times the
current year's Actual Purchases or the Base Purchase Quantity for the
following year. Although, if the parties agree, the Actual Purchases
may exceed [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED
SEPARATELY WITH SEC] of the Contract Purchase Quantity for a given
year, for the purposes of this calculation Actual Purchases will be
deemed not to exceed [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED
SEPARATELY WITH SEC] of the Contract Purchase Quantity.
5.2 Supplier shall offer for sale to Customer [CONFIDENTIAL MATERIAL HAS
BEEN DELETED AND FILED SEPARATELY WITH SEC] of the Contract Purchase
Quantity and Customer shall be obligated to purchase the Minimum
Purchase Quantity for the year. Furthermore, in each calendar quarter,
Customer must purchase at least [CONFIDENTIAL MATERIAL HAS BEEN
DELETED AND FILED SEPARATELY WITH SEC] of the Contract Purchase
Quantity and no more than [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND
FILED SEPARATELY WITH SEC] of the Contract Purchase Quantity. In any
given year, upon Supplier's request, Customer will release Supplier
from its obligation to offer to sell the Material to the extent that
Customer does not intend to purchase; and upon Customer's request,
Supplier will release Customer from its obligation to purchase to the
extent that there are other purchasers for the Material.
6. PRICING:
6.1 In the event that the Actual Purchases for a given year are less than
the Base Purchase Quantity for that year, then the Base Unit Price
will be increased for all Material purchased in that year as follows:
More than or equal to
[CONFIDENTIAL MATERIAL
HAS BEEN DELETED AND FILED [CONFIDENTIAL MATERIAL HAS BEEN
SEPARATELY WITH SEC] of the DELETED AND FILED SEPARATELY
Base Purchase Quantity WITH SEC]
Less than [CONFIDENTIAL
MATERIAL HAS BEEN DELETED
AND FILED SEPARATELY WITH
SEC] and more than
or equal to [CONFIDENTIAL
MATERIAL HAS BEEN DELETED [CONFIDENTIAL MATERIAL HAS BEEN
AND FILED SEPARATELY WITH DELETED AND FILED SEPARATELY
SEC] of the Base Purchase WITH SEC] additional for
Quantity each Kg. purchased
Less than [CONFIDENTIAL
MATERIAL HAS BEEN DELETED
AND FILED SEPARATELY WITH
SEC] and more than or equal
to [CONFIDENTIAL MATERIAL [CONFIDENTIAL MATERIAL HAS BEEN
HAS BEEN DELETED AND FILED DELETED AND FILED SEPARATELY
SEPARATELY WITH SEC] of the WITH SEC] additional for
Base Purchase Quantity each Kg. purchased
Less than [CONFIDENTIAL
MATERIAL HAS BEEN DELETED [CONFIDENTIAL MATERIAL HAS BEEN
AND FILED SEPARATELY WITH SEC] DELETED AND FILED SEPARATELY
of the Base Purchase WITH SEC] additional for each
Quantity Kg. purchased
6.2 The invoice unit price will be set for the first calendar quarter of
the year according to the Contract Purchase Quantity for the year. In
each quarterly Release Order (referenced in Paragraph 8.1 below),
Customer will forecast its purchases for the entire calendar year;
these forecasts will be used for the sole purpose of determining the
invoice unit price for the following quarter. At the end of the year,
if the invoice unit price differs from the unit price calculated using
the Actual Purchases for the year, then the appropriate credit or
debit will be issued by Supplier to Customer's account on or before
December 31 of the relevant year.
6.3 Unless changed pursuant to the provisions of this Section 6, the price
shall not be increased during the Initial Term of this Agreement.
6.4 If the Implicit Price Deflator of the GDP increased more than
[CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
in the prior year, then the Base Unit Price will be increased to
partially offset inflationary increases. The calculation will be made
in the following manner: every year the first revision, first quarter
value (May announcement) will be compared with the corresponding value
for the prior year. The Base Unit Price will be increased
[CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
for each whole percent that the Implicit Price Deflator increase
exceeds [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH SEC], effective from and after January 1 of the year following
the year in which the increase of more than [CONFIDENTIAL MATERIAL HAS
BEEN DELETED AND FILED SEPARATELY WITH SEC] occurred. Beginning
[CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH
SEC], the whole amount of the implicit price deflator of the GNP for
the prior year shall be used for calculating the base unit price
adjustment. Beginning [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND
FILED SEPARATELY WITH SEC], the Base Unit Price will be increased
[CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
for each [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH SEC] that the Implicit Price Deflator increases.
6.5 Customer shall be liable for or shall reimburse Supplier for federal,
state and local sales, excise and use taxes or their equivalent, as
applicable. Taxes payable by Customer shall be billed as a separate
line item on the invoice.
6.6 Supplier represents that prices for the Materials furnished to
Customer under this Agreement are no less favorable than the prices
Supplier charges to other customers for the same or comparable
grade/quality Polycrystalline Silicon, in the same or less quantities.
If during the Term of this Agreement, Supplier sells Polycrystalline
Silicon of comparable grade/quality to another customer at a lower
price or on more favorable provisions, then Supplier will offer the
same terms to Customer. This Section shall be implemented as follows:
(a) On or before January 30 Supplier shall notify Customer of more
favorable terms given to other customers in the preceding
calendar year.
(b) If Supplier gives more favorable terms to more than one other
customer, Customer must select the terms given to one of the
customers which it deems most favorable.
(c) The more favorable terms, if accepted by Customer, shall be
applied against future purchases by Customer.
This Section shall not apply to spot quantity sales of less than 25 tons, to
sales made to Supplier's Joint Venture partners, sales made under the provisions
of agreement which also include technology purchases or sales made to the U.S.
Government.
No more than once per calendar year, Customer may engage an independent
certified auditor to audit the records of Supplier solely to ascertain
compliance with this provision. Auditor will comply with reasonable
confidentiality agreements and will report to Customer only whether Supplier has
or has not complied with this Section. If the auditor reports that Supplier has
not complied with this Section, all costs of the audit will be borne by the
Supplier. Supplier will cooperate as necessary for the conduct of this audit.
7. INVOICES: Invoices shall be rendered to the billing address set forth on the
Release Order and shall include the number of tons of Material sold and
delivered to Customer. Any credits due may be applied by Customer against
Supplier's invoice with appropriate information attached. Any credits due
Customer that are not so applied for any reason shall be refunded by Supplier
within thirty (30) days after the date the credit arose. Customer shall pay
Supplier any undisputed amounts due within thirty (30) days of the later of the
receipt of Supplier's invoice or the receipt of the Material.
8. RELEASE ORDERS:
8.1 At least sixty (60) days prior to each calendar quarter, MEMC will
issue a Release Order to Supplier. Each Release Order shall be deemed
to incorporate this Agreement and specify the Materials to be
delivered during the next three months along with the delivery
schedule and any special delivery instructions. MEMC may specify that
Materials be delivered to any facility of an MEMC Affiliate.
8.2 Supplier shall promptly acknowledge each Release Order in writing.
Supplier may reject a Release Order only if (i) Customer fails to
provide the ordering information required by this Agreement, (ii)
Customer does not correctly state pertinent prices or other amounts,
or (iii) the Release Order contains non-preprinted terms and
conditions that impose commercially unreasonable obligations on
Supplier. If Supplier rejects a Release Order, it shall inform
Customer in writing of the specific grounds for such rejection.
8.3 The Release Order shall be deemed accepted unless Supplier has
rightfully rejected the Release Order within ten (10) days after the
date on which the Release Order was issued. No changes by Supplier to
a Release Order, including adjustment of price or the shipment dates,
shall be effective unless agreed upon in writing by Customer. If
Customer does not agree to the changes proposed by Supplier, and if
Supplier does not have any of the grounds permitted by this Agreement
for rejection of a Release Order, the Release Order shall be accepted
by Supplier as submitted by Customer.
8.4 Customer may cancel a Release Order in whole or in part without
liability if a cancellation notice is sent to Supplier no less than
twenty (20) days before the scheduled shipment. Supplier will do all
that is reasonable under the circumstances to accommodate any request
for a schedule change.
9. INVENTORY: Supplier will maintain [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND
FILED SEPARATELY WITH SEC] tons of Material for delivery to Customer in addition
to the Contract Purchase Quantity for that year and in addition to the
quantities specified in the Release Order ("Stockpile"). No more frequently than
every [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC] and
upon receipt of a Purchase Order, Seller will ship this Stockpile to Buyer. Upon
agreement of the parties the Stockpile level maintained by Supplier for Customer
may be changed.
10. SHIPMENT:
10.1 Shipments will be made F.O.B. Hemlock, Michigan, freight collect.
Title and risk of loss or delay shall pass to Customer upon Supplier's
delivery to the carrier at the shipping point.
10.2 Supplier shall insure that the Materials are properly packed and
marked and shipped in suitable containers. Unless otherwise agreed by
the parties, all shipments will be in truck loads.
10.3 The scheduled shipment date will be specified in the Release Order. In
the event that Supplier fails to ship ordered Materials within three
(3) working days of the scheduled shipment date, and if in the opinion
of Customer, the respective plant is in risk of needing said Material
to continue uninterrupted production, Supplier will expedite the
shipment. In such an event, Supplier will issue a credit to Customer
for the difference between the shipment costs for the method of
transportation originally specified by Customer in the Release Order
and costs required to expedite the shipment. Customer may refuse to
accept Material shipped more than seven (7) days prior to the
scheduled shipment date.
10.4 Customer shall furnish written shipping instructions to Supplier no
later than ten (10) days prior to the scheduled shipment date. In the
absence of such instructions, Supplier may chose a carrier and ship to
the address specified on the face of this document, at Supplier's
expense.
11. TECHNICAL COOPERATION:
11.1 Customer and Supplier shall each name a technical coordinator. The
technical coordinators shall provide the principal interface between
Customer and Supplier on technical matters and they may clarify,
explain and provide further details as required for the performance of
this Agreement, but they shall have no authority to make any
agreements between them which change any of the terms and conditions
of this, or any other agreement between the parties. Supplier agrees
that work related to this Agreement shall be the primary assignment
for its technical coordinator, which shall take priority over any
other assignment. The parties may mutually agree to increase or
decrease these commitments.
11.2 Every quarter, or as requested by either party, the parties will meet
to discuss common problems and concerns, the progress made and to set
the priorities for the next period.
11.4 The parties will work on improving packaging, handling, and shipping
processes to eliminate surface contamination and to alleviate
environmental concerns. If the parties agree, there may be an
additional handling charge for any resulting new process.
11.5 Supplier shall provide Customer with at least ninety (90) days written
notice of any significant proposed change in raw materials or methods
of manufacture employed in producing any Material sold hereunder; the
reasons for the proposed change; and the effect which Supplier
estimates such change will have upon the Specifications for the
Materials. If Customer objects to the proposed change and Supplier
elects to make such change despite Customer's objection or if Supplier
makes such a change without prior notification to Customer, then
Customer will be excused from any obligation to purchase from Supplier
under this Agreement. Supplier understands that any significant change
in processing will require re-qualification of Supplier's materials.
Customer's obligations hereunder shall abate during such
re-qualification period. Improvements in quality resulting from
efforts to continuously control existing processes are not considered
to be changes in process.
12. CONFIDENTIALITY:
12.1 During the performance of this Agreement, each party may disclose
information to the other party which the disclosing party considers
confidential and proprietary ("Confidential Information"). Each party
agrees that: (i) it shall not disclose any Confidential Information
which it receives from the disclosing party to any third party or to
any personnel of either party except those who require access to such
Confidential Information to accomplish the purpose of this Agreement;
and (ii) it shall not use the Confidential Information disclosed by
the other party for any purpose other than the purposes for which that
Confidential Information was disclosed to it.
12.2 Confidential Information shall not include, and neither party shall
have any obligation with respect to information which: (i) is known to
the receiving party at the time of receipt from the disclosing party
as shown by documentary evidence; or (ii) is rightfully obtained by
the receiving party from a third party having no obligation to the
disclosing party; or (iii) is either published or otherwise available
to the public at the time of its receipt by the receiving party from
the disclosing party or later becomes published or available to the
public other than by a breach of this Agreement; or (iv) was
discovered, developed or invented by the receiving party independently
of the information received hereunder from the disclosing party.
12.3 The obligations in this Section 12 shall extend for ten (10) years
beyond the termination of this Agreement.
13. WARRANTY:
13.1 Supplier warrants that the Materials delivered under this Agreement
will conform to the applicable Specifications, will be free from
defects in material and workmanship, and when used by Customer will
produce silicon wafers that consistently conform to customers'
requirements.
13.2 Upon notice by Customer to Supplier of a breach of the foregoing
warranty, Supplier shall promptly instruct Customer to either dispose
of said Materials or return said Materials to Supplier, freight
collect. At Customer's option, Supplier will either issue a credit for
the defective Materials or replace said Materials at Supplier's
expense, including all shipping and handling costs. [CONFIDENTIAL
MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]. In the event
that said Materials are, at Customer's discretion, required to ensure
continued uninterrupted production, then Supplier will take all
necessary steps to expedite delivery of the replacement Materials. The
breach of the warranty of any portion of a lot shall be sufficient
grounds to reject the entire lot.
13.3 Supplier agrees to hold Customer harmless and indemnify Customer from
and against any and all liability, loss, cost, claim, suit, judgement
or expense including reasonable attorney's fees arising out of or in
any way related to an infringement of any patent or copyright or a
violation of any trade secret or other proprietary right of any third
party in any of the items provided to Customer pursuant to this
Agreement.
14. FORCE MAJEURE: Neither party shall be liable for delay in performance or
non-performance caused by circumstances beyond the reasonable control of the
party affected including, but not limited to, acts of God; fire; flood; war;
government regulations, direction, or request; or inability to obtain packaging
or raw material or equipment. The party so affected shall provide the other
party with written notice thereof within a reasonable time of the occurrence.
The party receiving notice may elect to (i) terminate, without further
liability, the applicable Release Orders as to Materials not already delivered,
or (ii) suspend the time for performance. In the absence of a written notice,
the second option will be deemed to have been elected. Notwithstanding the
foregoing, Customer, by written notice to Supplier, may reduce the Contract
Purchase Quantity by an amount no greater than the quantity which was either not
shipped or suspended pursuant to the provisions of this paragraph.
15. CLAIMS: It is the intent of the parties that any disputes relating to this
Agreement be resolved in an amicable manner, fair and equitable to both parties
under the circumstances. If a dispute should arise between the parties relating
to this Agreement which cannot be resolved by the personnel directly involved,
either party may invoke the provisions of this section by sending a written
notice stating the dispute in clear and concise language and designating its
executive officer who shall have appropriate authority to be its representative
in negotiations. The party receiving the notice shall, within five (5) business
days, serve its notice upon the invoking party, designating its executive
officer with similar authority to be its representative, and stating its
counter-statement of the dispute. After the exchanges of notices, the designated
executive representatives will establish a mutually convenient date for
conciliation. Prior to the executive representatives' meeting, either side may
make reasonable requests for information pertaining to the defined dispute
provided such requests are not burdensome to comply with and can be accomplished
within two business days. At such conciliation, the parties will in good faith
endeavor to settle the dispute. Unless the other party objects, a party may
enlist one additional person to attend the conciliation to assist. Unless
otherwise agreed by the parties, if the parties are unable to resolve the matter
between them within seven (7) business days following the first meeting of the
designated executive representatives, either party may initiate litigation.
Nothing said during the conciliation sessions shall be admissible in a court of
law, since all such sessions were undertaken as settlement efforts. Once
invoked, this procedure is mandatory.
16. HARDSHIP: If during the term of this Agreement, either Party believes that
(a) the price of the Products supplied under this Agreement with due
consideration to the Annual Purchase Commitment is grossly out of line based on
conditions then existing in the marketplace, (b) the volume commitments are not
consistent with market conditions, or (c) the quality of any products supplied
under this agreement deviates from the level attained by the state of the art
available to suppliers of comparable products, the parties shall meet at the
request of either to negotiate in good faith to resolve such issues with
appropriate remedial action. It is understood that neither Party shall be
obligated to change any term of this Agreement, unless both Parties are in
agreement.
17. GENERAL:
17.1 Notice. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be sufficiently given if
delivered in person, via telex, fax, or if sent by overnight courier,
by Air Mail, registered or certified, addressed to the appropriate
party at the following respective addresses (or at such addresses as
the parties may later specify):
If to Supplier addressed to: Hemlock Semiconductor Corporation
12334 Geddes Road
Hemlock, Michigan 48626
Attn: Duane O. Townley
Vice President Marketing & Sales & Quality
If to Customer addressed to: MEMC Electronic Materials, Inc.
P.O. Box 8
501 Pearl Drive
St. Peters, Missouri 63376
Attn: John Robb
Corporate VP Quality & Facilities
cc: MEMC Electronic Materials, Inc.
P.O. Box 8
501 Pearl Drive
St. Peters, Missouri 63376
Attn: Vice President & General Counsel
17.2 Assignment. Either party may assign or transfer its rights and
delegate its obligations hereunder to the purchaser of, or successor
to, all or substantially all of its assets. Except as set forth in the
preceding sentence, neither party may, whether by operation of law or
otherwise, assign or otherwise transfer any of its rights nor delegate
any of its obligations under this Agreement without the other party's
prior written consent. Any attempted assignment, transfer, or
delegation without such consent shall be void and of no benefit, and
will not be binding upon the parties hereto and their respective
successors and assigns.
17.3 Order of Precedence. In the event of an conflict the handwritten or
hand-typed provisions on the face of Customer's Purchase Order or
Release Order shall govern; but such terms shall be in effect for that
Purchase Order or Release Order only. Any preprinted terms and
conditions on a Purchase Order or on Supplier's quotation,
acknowledgment, or invoice shall be deemed superseded and deleted.
17.4 Modifications. This Agreement shall not be varied by any oral
agreement or representation or by other than an instrument in writing
of subsequent date, executed by both parties by their duly authorized
representatives.
17.5 Waiver. The failure of either party to exercise any of its rights or
to enforce any of the provisions of this Agreement on any occasion
shall not be a waiver of such right or provision, nor affect the right
of such party thereafter to enforce each and every provision of this
Agreement.
17.6 Severability. If any provision of this Agreement is invalid or
unenforceable under applicable law, such provision shall be modified
to the extent necessary to cure its invalidity and this Agreement as
so modified shall continue in full force and effect.
17.7 Headings. The headings are inserted for convenience only and shall not
limit or affect any of the terms hereof.
17.8 Entire Agreement. This Agreement constitutes the entire agreement
between the parties, and supersedes all previous agreements between
the parties with respect to the subject matter hereof.
17.9 Relationship. Except as expressly provided, this Agreement does not
create any relationship of agency, partnership or employment between
the parties.
17.10Governing Law. The validity of this Agreement and any Purchase Order,
the construction and enforcement of their terms and the interpretation
of the rights and duties of the parties shall not be governed by the
provisions of the 1980 U.N. Convention on Contracts for the
International Sale of Goods, but instead shall be governed by the
internal law of the State of Missouri. Any action relating to this
Agreement or any Purchase Order or Release Order issued under it shall
be brought in an appropriate court in the United States.
MEMC Electronic Materials, Inc. Hemlock Semiconductor Corporation
BY /s/ Robert M. Sandfort BY /s/ James R. McCormick
TITLE President & COO TITLE President & CEO
DATE 1/26/95 DATE 4/20/95
CONFIDENTIAL TREATMENT REQUESTED
June 20, 1995
Dr. James R. McCormick
President & CEO
Hemlock Semiconductor Corporation
12334 Geddes Road
Hemlock, Michigan 48626
RE: Agreement between Hemlock Semiconductor Corporation ("HSC") and MEMC
Electronic Materials, Inc. ("MEMC") for the sale of Polycrystalline
Silicon by HSC to MEMC dated December 27, 1994 (the "Agreement")
Dear Dr. McCormick:
This letter confirms our understanding to amend the Agreement as follows:
1. Paragraph 1.2 is amended in its entirety to read as follows:
1.2 Base Purchase Quantity for the calendar years 1995-2000 of this
Agreement is as follows:
Year Base Purchase Quantity
---- ----------------------
1995 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1996 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1997 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1998 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1999 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
2000 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
2. Paragraph 1.3 is amended in its entirety to read as follows:
1.3 The Base Unit Price for the Base Purchase Quantity for the calendar
years 1995-2000 of this Agreement is as follows:
Year Base Unit Price Ceiling Price*
---- --------------- --------------
1995 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1996 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1997 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1998 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1999 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
2000 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
*Provided the implicit price deflator of the GDP as calculated in section 6.4
does not exceed [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILE SEPARATELY WITH
SEC]. The Adjusted Base unit price shall not exceed the ceiling price for the
year indicated.
3. Paragraph 1.5 is amended in its entirety to read as follows:
1.5 "Specified Period" means the period from January 1, 1995 through and
including December 31, 2000.
4. Paragraph 1.8 is amended in its entirety as follows:
1.8 Minimum Purchase Quantity for the calendar years 1995-2000 of this
Agreement is as follows:
Year Base Purchase Quantity
---- ----------------------
1995 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1996 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1997 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1998 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1999 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
2000 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
5. Paragraph 3 is amended in its entirety to read as follows:
3. TERM: This Agreement is effective commencing January 1, 1995 and shall
continue until December 31, 2000. On or before December 31, 1997, the parties
shall begin to negotiate in good faith the prices and other terms and conditions
which shall apply after December 31, 2000. If the parties are unable to agree to
revised prices and terms and conditions on or before December 31, 1998, then
this Agreement shall terminate effective December 31, 2000. This Agreement
supersedes the former supply agreement dated November 18, 1991.
6. Paragraph 5.2 is amended in its entirety to read as follows:
5.2 Supplier shall offer for sale to Customer [CONFIDENTIAL MATERIAL HAS
BEEN DELETED AND FILED SEPARATELY WITH SEC] of the Contract Purchase Quantity if
available but not less than [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED
SEPARATELY WITH SEC] of the Contract Purchase Quantity and Customer shall be
obligated to purchase the Minimum Purchase Quantity for the year. Furthermore,
in each calendar quarter, Customer must purchase at least [CONFIDENTIAL MATERIAL
HAS BEEN DELETED AND FILED SEPARATELY WITH SEC] of the Contract Purchase
Quantity and no more than [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED
SEPARATELY WITH SEC] of the Contract Purchase Quantity. In any given year, upon
Supplier's request, Customer will release Supplier from its obligation to offer
to sell the material to the extent that Customer does not intend to purchase;
and upon Customer's request, Supplier will release Customer from its obligation
to purchase to the extent that there are other purchasers for the Material.
Other than as expressly set forth above, the Agreement shall remain in full
force and effect.
If the foregoing is acceptable to you, please indicate your agreement on behalf
of HSC by signing in the space provided below and returning one fully executed
copy to me.
Sincerely yours,
MEMC Electronic Materials, Inc.
By: /s/ Robert M. Sandfort
Title: President and Chief
Operating Officer
AGREED AND ACCEPTED TO:
Hemlock Semiconductor Corporation
By: /s/ James R. McCormick
Title: President
CONFIDENTIAL TREATMENT REQUESTED
November 8, 1996
Dr. James R. McCormick
President & CEO
Hemlock Semiconductor Corporation
12334 Geddes Road
Hemlock, MI 48626
RE: Agreement between Hemlock Semiconductor Corporation ("HSC") and
MEMC Electronic Materials, Inc. ("MEMC") for the sale of Polycrystalline
Silicon by HSC to MEMC dated December 27, 1994, as amended by Letter
Agreement dated June 20, 1995 (the "Agreement")
Dear Dr. McCormick:
This letter confirms our understanding to further amend the Agreement as
follows:
1. Paragraph 1.2 is amended in its entirety to read as follows:
1.2 Base Purchase Quantity for the calendar years 1996-2000 of this
Agreement is as follows:
Year Base Purchase Quantity
---- ----------------------
1996 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1997 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1998 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1999 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
2000 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
2. Paragraph 1.8 is amended in its entirety to read as follows:
1.8 Minimum Purchase Quantity for the calendar years 1996-2000 of this
Agreement is as follows:
Year Minimum Purchase Quantity
---- -------------------------
1996 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1997 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1998 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1999 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
2000 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
Other than as expressly set forth above, the Agreement shall remain in full
force and effect.
If the foregoing is acceptable to you, please indicate your agreement on behalf
of HSC by signing in the space provided below and returning one fully executed
copy to me.
Sincerely yours,
MEMC Electronic Materials, Inc.
By: /s/ Robert M. Sandfort
Title: President and Chief Operating Officer
AGREED AND ACCEPTED TO:
Hemlock Semiconductor Corporation
By: /s/ James R. McCormick
Title: President & CEO
MEMC ELECTRONIC MATERIALS, INC.
STOCK OPTION AND PERFORMANCE RESTRICTED STOCK AGREEMENT
(Date)
(Name)
(Address)
(Address)
This STOCK OPTION AND PERFORMANCE RESTRICTED STOCK AGREEMENT (the
"Agreement") dated as of __________, 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") and by
granting to the Participant restricted shares of the Company's Common Stock (the
"Performance Restricted Stock") (the award of Stock Options and Performance
Restricted Stock are referred to collectively as the "Awards");
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, the Performance Restricted Stock 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 Awards shall be
granted effective as of _____________ (the "Date of Grant").
2. Certain Restrictions. None of the Awards 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
_________________.
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); provided, however, that in the event of
Disability or Retirement, no Option may be exercised until at least six
months after its 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 12 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 8(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.
If Participant is subject to Section 16 of the Exchange Act,
Participant shall have the unfettered right (but not the obligation) to pay
the exercise price in full or in part in shares of Common Stock in
accordance with Section 8(i) of the Plan.
(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. Grant of Performance Restricted Stock. Subject to the terms and
conditions contained in this Agreement and in the Plan, the Company hereby
grants to the Participant on the Date of Grant the number of shares of
Performance Restricted Stock specified at the foot of the signature page hereof.
6. Terms and Conditions of Performance Restricted Stock. The Performance
Restricted Stock shares evidenced hereby are subject to the following terms and
conditions:
(a) Lapsing of Forfeiture Restrictions (Vesting). The forfeiture
restrictions on Performance Restricted Stock shares granted to the
Participant pursuant to this Agreement shall lapse (i.e., the Performance
Restricted Stock shall vest) in accordance with the following schedule:
(i) Twenty-five percent (25%) of such shares (the "First Block")
shall vest on January 1, 1998, provided that the cumulative earnings
per share of Common Stock, as reported to shareholders of the Company
in the Company's audited financial statements, ("CEPS") for the two
fiscal years of the Company beginning January 1, 1996 and ending
December 31, 1997, are at least $4.75 per share (the "Interim
Target");
(ii) The following portion of such shares, including shares of
the First Block whether or not already vested, shall be vested on
January 1, 2000, provided that the CEPS for the four fiscal years of
the Company beginning January 1, 1996 and ending December 31, 1999,
are at least the following percentage of $12.42 per share (the
"Aggregate Target"):
CEPS as % of Aggregate Target % of Shares Vested
----------------------------- ------------------
100% or more 100%
95% 80%
90% 60%
below 90% 0%
and
(iii) Notwithstanding the above, all Performance Restricted Stock
granted pursuant to this Agreement shall become 100% vested at the end
of a calendar quarter as of which the cumulative earnings per share of
Common Stock, as reported to shareholders of the Company, for any
period beginning January 1, 1996 and ending before December 31, 1999,
are at least $12.42 per share.
Shares in the First Block that vest on account of reaching the CEPS
Interim Target shall not be forfeited merely because the four year CEPS
target level is not reached.
All Performance Restricted Stock granted pursuant to this Agreement
that is not vested as of January 1, 2000 shall be forfeited and returned to
the Company.
The period between the Date of Grant and the lapse of the forfeiture
restrictions shall hereinafter be referred to as the "Restricted Period".
(b) Termination of Employment. Upon termination of the Participant's
employment with the Company and its Subsidiaries for reasons other than
death, Disability or Retirement before January 1, 2000, all Performance
Restricted Stock granted pursuant to this Agreement shall be forfeited and
returned to the Company.
Upon termination of the Participant's employment with the Company and
its Subsidiaries on account of death, Disability or Retirement, the
"unvested portion" of the Performance Restricted Stock granted pursuant to
this Agreement shall be forfeited and returned to the Company. The
remaining portion will continue to be held by the Participant, subject to
the earnings forfeiture condition of Section 6(a) as if such remaining
portion were the total number of shares of Performance Restricted Stock
granted to the Participant pursuant to this Agreement. For purposes of this
paragraph, the "unvested portion" of the Performance Restricted Stock
granted pursuant to this Agreement means the number of shares of
Performance Restricted Stock granted pursuant to this Agreement, multiplied
by a fraction the numerator of which is the number of days from the date of
such a termination of employment through December 31, 1999, and the
denominator of which is 1,460 (365 X 4), rounded down to the nearest whole
share.
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
or any of its Subsidiaries for Cause (as defined in Section 4(b) of this
Agreement) before January 1, 2006, all Performance Restricted Stock granted
pursuant to this Agreement shall be forfeited and returned to the Company.
(c) Shareholder Rights. The Participant shall have, with respect to
the shares of Common Stock received under a Performance Restricted Stock
Award, all of the rights of a shareholder of the Company, including the
right to vote the shares and the right to receive any dividends. Stock
dividends issued with respect to shares covered by a Performance Restricted
Stock Award shall be treated as additional shares under the Performance
Restricted Stock Award and shall be subject to the same restrictions and
other terms and conditions that apply to the shares with respect to which
such dividends are issued.
(d) Issuance of Certificate. As soon as practicable following the
lapse of all forfeiture restrictions with respect to any shares of
Performance Restricted Stock, subject to the tax withholding provisions of
Section 8(b), an unlegended certificate evidencing such shares of Common
Stock held by the Participant shall be issued in the name of the
Participant.
7. Representations and Warranties. The Participant is aware of and familiar
with the restrictions imposed on the transfer of any future Awards. 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.
8. 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 award or exercise of Stock Options or the award or vesting of
Performance Restricted Stock 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 in cash, withholding from other compensation, or in 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 or vesting of
the Performance Restricted Stock.
If Participant is subject to Section 16 of the Exchange Act,
Participant shall have the unfettered right but not the obligation to
direct and compel the Company to withhold, or to accept from Participant,
such a number of shares of Common Stock as is necessary to pay in whole or
in part the Participant's withholding tax obligation, in accordance with
Secion 16(a)(i) of the Plan.
(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 or of options, warrants or rights to
purchase stock or of 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.
9. 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, Performance
Restricted Stock 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.
10. Adjustments to Award. 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 Awards made pursuant to this Agreement or
the exercise or Award prices in respect thereof.
11. 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.
12. 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.
13. 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.
14. 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: -----------------------------------
Huston E. Sherrill
Title: Corporate Vice President, Human Resources
PARTICIPANT: (Name)
(Address)
(Address)
Number of Stock Options:
Exercise Price of Stock Options:
Number of Shares of Performance Restricted Stock:
-----------------------------
Signature
-----------------------------
Date
MEMC ELECTRONIC MATERIALS, INC.
STOCK OPTION AGREEMENT
(Date)
(Name)
(Address)
(Address)
This letter describes the terms of the grant by MEMC Electronic Materials,
Inc. (the "Company") to you of nonqualified stock options (the "Options") to
purchase shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), under the Company's 1995 Equity Incentive Plan (the "Plan").
The Company is granting these Options to you in recognition of your valuable
services to the Company and to facilitate your participation in the Company's
success.
Capitalized terms used in this letter without definition shall have the
meanings assigned to them in the Plan. This letter, the Options and the Common
Stock issued upon the exercise of the Options shall be controlled by the terms
of the Plan, the terms of which are incorporated by reference into this letter.
In the event of any conflict or inconsistency between the Plan and this letter,
the Plan will govern.
Before we describe how the Options work, it is important that you know that
none of the Options may be sold, transferred, assigned, pledged, or otherwise
encumbered or disposed of, except by will or the laws of descent and
distribution. Therefore, during your lifetime, an Option shall be exercisable
only by you or by your guardian or legal representative. Each permitted
transferee of an Option shall, as a condition of the transfer thereof, execute
an agreement pursuant to which it shall agree to comply with the terms of this
letter.
1. Grant of Options. You are hereby granted the number of Options shown on
Exhibit A, attached to this letter. Although you are first receiving this letter
today, these Options became effective as of __________, the "Date of Grant."
Each such Option will entitle you to purchase upon payment of the Exercise
Price, one share of Common Stock. The decision to use an Option to purchase a
share of Common Stock will be referred to in this letter as "exercising an
option." The "Exercise Price" shall be the amount shown on Exhibit A, which was
the Fair Market Value, as defined in the Plan, of a share of Common Stock on
__________.
The Options granted pursuant to this letter shall be non-qualified stock
options, which are not qualified under Section 422 of the Code.
2. Terms and Conditions of Options. The Options granted under this letter
have the following terms and conditions:
(a) Vesting. Of the total number of Options granted to you by this
letter, you will have the right to exercise 25% of them (i.e. 25% will
vest) on the first anniversary of the Date of Grant and an additional 25%
on each anniversary of the Date of Grant thereafter, such that by the
fourth anniversary of the Date of Grant, you will have the right to
exercise all (100%) of them (i.e. 100% will be vested). If a Change in
Control occurs (except as the Compensation Committee of the Board of
Directors of the Company (the "Committee"), as constituted immediately
prior to such Change in Control, may otherwise determine in its sole
discretion) any Options then outstanding (other than any Option granted
within six months of such Change in Control) will become fully exercisable
as of the date of the Change in Control.
(b) Option Period. The Options will not be exercisable after the tenth
anniversary of the Date of Grant, and may be subject to earlier termination
as described below and in the Plan.
Upon termination of your employment with the Company and its
Subsidiaries for reasons other than your death, Disability or Retirement
you (or your estate) may exercise any 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 Options which have not yet vested at the time of
termination of your employment shall terminate and be cancelled (except as
the Committee may otherwise determine in its sole discretion). Also, any
Options not exercised within sixty days after such a termination of
employment shall terminate and be cancelled.
Upon termination of your employment with the Company and its
Subsidiaries on account of your death, Disability or Retirement, all
Options shall vest and you (or your Beneficiary) may exercise any or all
Options within the three year period after such a termination of employment
(but never later than the tenth anniversary of the Date of Grant);
provided, however, that in the event of Disability or Retirement, no Option
may be exercised until at least six months after its Date of Grant. From
time to time, on a form acceptable to the Committee or its delegate, you
may designate any person or persons (concurrently, contingently or
successively) to whom the Options shall be transferred in the event that
you die before you exercise the Options. A beneficiary designation form
shall be effective only when the form is signed by you and filed in writing
with the Company while you are alive, and shall cancel all beneficiary
designation forms that you previously signed and filed. If no Beneficiary
is so designated, your Beneficiary shall be your estate or the distributees
thereof.
For purposes of this paragraph, "Retirement" shall mean the
termination of your employment with the Company after you attain sixty-five
years of age, or after you attain fifty-five years of age and the sum of
your 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 letter, in the event
of your termination of employment with the Company and its Subsidiaries for
Cause (as defined below), all Options, whether or not vested, shall be
cancelled and no longer exercisable as of the date of such termination.
Termination for "Cause" shall mean termination of your employment
because of:
(i) any act or omission that constitutes a material breach
of any of the material obligations of any employment agreement
that you may have with the Company or any of its Subsidiaries
(other than by reason of your death or Disability;
(ii) the continued failure or refusal of you to perform the
material duties required of you as an employee of the Company or
any of its Subsidiaries (other than by reason of your death or
Disability);
(iii) any willful material violation by you of any law or
regulation applicable to the business of the Company or any of
its Subsidiaries, or your conviction of a felony, or any willful
perpetration by you of a common law fraud; or
(iv) any other willful misconduct by you 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) Exercising Options. You may exercise any or all vested Options by
notifying the Company in writing that you wish to exercise your Options and
accompanying the written notice (as described in paragraph 4 below) with
the payment for the Common Stock you are purchasing with such Options.
Payment must be equal to the total number of Options that you wish to
exercise, multiplied by the Exercise Price.
Payment may be made in cash, certified or bank check, note or other
instrument acceptable to the Committee. Payment 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 you already own, or the Company may withhold shares of Common
Stock that you would otherwise have received upon exercise of the Stock
Option. You also may 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.
If you are subject to Section 16 of the Exchange Act, you shall have
the unfettered right (but not the obligation) to pay the exercise price in
full or in part in shares of Common Stock in accordance with Section 8(i)
of the Plan.
The date of exercise will be the date that all of the requirements
above, as well as the requirements in 2(e) below, are met. No certificate
showing the Common Stock purchased under such Option will be issued to you
under 2(f) below until all of these requirements are met.
(d) Shareholder Rights. You will have no rights as a shareholder with
respect to any shares of Common Stock purchased upon the exercise of an
Option until a certificate or certificates for such shares is issued to you
making you the "holder of record" of such shares. Other than under Sections
13(b) and 13(c) of the Plan, no adjustment will be made for dividends or
distributions or other rights related to any share for which the date of
such dividend or distribution is prior to the date on which you will become
the holder of record of the shares.
(e) Limitation on Exercise. Notwithstanding the other provisions of
this letter, an 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 Option and such Common Stock will have been qualified under
applicable state "blue sky" laws, or (ii) the Committee in its sole
discretion determines that such registration, qualification and status is
not required as a result of the availability of an exemption from such
registration, qualification, and status under such laws.
(f) Issuance of Certificate. As soon as practicable following the
exercise of any Options, subject to the tax withholding provisions of
Section 3(b), a certificate showing the number of shares of Common Stock
issued in connection with such exercise will be issued in your name.
3. Miscellaneous.
(a) No Rights to Grants or Continued Employment. You will not have any
claim or right to receive future grants under the Plan. Nothing in the Plan
or in this letter will give you 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 your employment at
any time, with or without cause.
(b) Tax Withholding. If the Company is required by any government
entity to withhold an amount from your wages as a result of any grant or
exercise of Options pursuant to this letter, the Company will not be
required to deliver a stock certificate to you until you pay to the Company
the amount required to be withheld from your wages with respect to such
event. Payment of such amount may be in cash, withholding from other
compensation or in 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 you already own, or shares of Common Stock that you would otherwise
have received upon the exercise of the Option.
If you are subject to Section 16 of the Exchange Act, you shall have
the unfettered right but not the obligation to direct and compel the
Company to withhold, or to accept from you, such number of shares of Common
Stock as is necessary to pay in whole or in part your withholding tax
obligation, in accordance with Section 16(a)(i) of the Plan.
(c) No Restriction on Right of Company to Effect Corporate Changes.
Neither the Plan nor this letter will affect or restrict in any way the
right or power of the Company or its shareholders to make or authorize any
corporate changes described in Section 13 of the Plan.
4. Notices. All notices and other communications discussed in this letter
will be in writing and will be delivered by hand or sent by mail addressed, if
to you, to your attention at the mailing address that you will 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
will be conclusively deemed to be received and will be effective, if sent by
hand delivery, upon receipt, or if sent by registered or certified mail, on the
fifth day after the day on which such notice is mailed.
5. Entire Letter; Governing Law. This letter and the Plan represent the
entire understanding between you and the Company and supersede all prior
understandings relating to the subject matter of this letter. This letter will
be governed by, and construed in accordance with, the laws of the State of
Delaware without giving effect to conflicts of law principles.
MEMC Electronic Materials, Inc.
By: ___________________________________________
Huston E. Sherrill
Title: Corporate Vice President, Human Resources
Exhibit A
MEMC Electronic Materials, Inc. 1995 Equity Incentive Plan
Stock Option Award Letter Agreement
(Date)
Participant Name:
Number of Options:
Exercise Price:
MEMC ELECTRONIC MATERIALS, INC.
STOCK OPTION AGREEMENT
(Nonemployee Directors)
(Name & Address)
This letter describes the terms of the grant by MEMC Electronic Materials,
Inc. (the "Company") to you of nonqualified stock options (the "Options") to
purchase shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), under the Company's 1995 Equity Incentive Plan (the "Plan").
The Company is granting these Options to you in recognition of your valuable
services to the Company as a nonemployee director and to facilitate your
participation in the Company's success.
Capitalized terms used in this letter without definition shall have the
meanings assigned to them in the Plan. This letter, the Options and the Common
Stock issued upon the exercise of the Options shall be controlled by the terms
of the Plan, the terms of which are incorporated by reference into this letter.
In the event of any conflict or inconsistency between the Plan and this letter,
the Plan will govern.
Before we describe how the Options work, it is important that you know that
none of the Options may be sold, transferred, assigned, pledged, or otherwise
encumbered or disposed of, except by will or the laws of descent and
distribution. Therefore, during your lifetime, an Option shall be exercisable
only by you or by your guardian or legal representative. Each permitted
transferee of an Option shall, as a condition of the transfer thereof, execute
an agreement pursuant to which it shall agree to comply with the terms of this
letter.
1. Grant of Options. You are hereby granted the number of Options shown on
Exhibit A, attached to this letter. Although you are first receiving this letter
today, these Options became effective as of ____________, the "Date of Grant."
Each such Option will entitle you to purchase upon payment of the Exercise
Price, one share of Common Stock. The decision to use an Option to purchase a
share of Common Stock will be referred to in this letter as "exercising an
option." The "Exercise Price" shall be the amount shown on Exhibit A, which was
the Fair Market Value, as defined in the Plan, of a share of Common Stock on
____________.
The Options granted pursuant to this letter shall be non-qualified stock
options, which are not qualified under Section 422 of the Code.
2. Terms and Conditions of Options. The Options granted under this letter
have the following terms and conditions:
(a) Vesting. Of the total number of Options granted to you by this letter,
you will have the right to exercise 33-1/3% of them (i.e. 33-1/3% will vest) on
the first anniversary of the Date of Grant and an additional 33-1/3% on each
anniversary of the Date of Grant thereafter, such that by the third anniversary
of the Date of Grant, you will have the right to exercise all (100%) of them
(i.e. 100% will be vested). If a Change in Control occurs (except as the
Compensation Committee of the Board of Directors of the Company (the
"Committee"), as constituted immediately prior to such Change in Control, may
otherwise determine in its sole discretion) any Options then outstanding (other
than any Option granted within six months of such Change in Control) will become
fully exercisable as of the date of the Change in Control.
(b) Option Period. The Options will not be exercisable after the tenth
anniversary of the Date of Grant, and may be subject to earlier termination as
described below and in the Plan.
Upon termination of your position as a director of the Company and any of
its Subsidiaries ("Directorship Termination") for reasons other than your death
or Disability, you (or your estate) may exercise any Option to the extent
exercisable on the date of such Directorship Termination within the sixty day
period after the effective date of the Directorship Termination (but never later
than the tenth anniversary of the Date of Grant). Any Options which have not yet
vested at the time of your Directorship Termination shall terminate and be
cancelled (except as the Committee may otherwise determine in its sole
discretion). Also, any Options not exercised within sixty days after such a
Directorship Termination shall terminate and be cancelled.
Upon your Directorship Termination on account of your death or Disability,
all Options shall vest and you (or your Beneficiary) may exercise any or all
Options within the three year period after your Directorship Termination (but
never later than the tenth anniversary of the Date of Grant); provided, however,
that in the event of Disability, no Option may be exercised until at least six
months after its Date of Grant. From time to time, on a form acceptable to the
Committee or its delegate, you may designate any person or persons
(concurrently, contingently or successively) to whom the Options shall be
transferred in the event that you die before you exercise the Options. A
beneficiary designation form shall be effective only when the form is signed by
you and filed in writing with the Company while you are alive, and shall cancel
all beneficiary designation forms that you previously signed and filed. If no
Beneficiary is so designated, your Beneficiary shall be your estate or the
distributees thereof.
(c) Exercising Options. You may exercise any or all vested Options by
notifying the Company in writing that you wish to exercise your Options and
accompanying the written notice (as described in paragraph 4 below) with the
payment for the Common Stock you are purchasing with such Options. Payment must
be equal to the total number of Options that you wish to exercise, multiplied by
the Exercise Price.
Payment may be made in cash, certified or bank check, note or other
instrument acceptable to the Committee. Payment 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 you
already own, or you may direct the Company to withhold shares of Common Stock
that you would otherwise have received upon exercise of the Stock Option. You
also may 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.
If you are subject to Section 16 of the Exchange Act, you shall have the
unfettered right (but not the obligation) to pay the exercise price in full or
in part in shares of Common Stock in accordance with the Section 8(i) of the
Plan.
The date of exercise will be the date that all of the requirements above,
as well as the requirements in 2(e) below, are met. No certificate showing the
Common Stock purchased under such Option will be issued to you under 2(f) below
until all of these requirements are met.
(d) Shareholder Rights. You will have no rights as a shareholder with
respect to any shares of Common Stock purchased upon the exercise of an Option
until a certificate or certificates for such shares is issued to you making you
the "holder of record" of such shares. Other than under Sections 13(b) and 13(c)
of the Plan, no adjustment will be made for dividends or distributions or other
rights related to any share for which the date of such dividend or distribution
is prior to the date on which you will become the holder of record of the
shares.
(e) Limitation on Exercise. Notwithstanding the other provisions of this
letter, an 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 Option and
such Common Stock will have been qualified under applicable state "blue sky"
laws, or (ii) the Committee in its sole discretion determines that such
registration, qualification and status is not required as a result of the
availability of an exemption from such registration, qualification, and status
under such laws.
(f) Issuance of Certificate. As soon as practicable following the exercise
of any Options, subject to the tax withholding provisions of Section 3(b), a
certificate showing the number of shares of Common Stock issued in connection
with such exercise will be issued in your name.
3. Miscellaneous.
(a) No Rights to Grants or to Continue as a Director. You will not have any
claim or right to receive future grants under the Plan. Nothing in the Plan or
in this letter will give you any right to continued service as a director of the
Company or any Subsidiary, as the case may be, or interfere in any way with the
right of the Company's shareholders to remove you from office pursuant to law or
the Company's Restated Certificate of Designation, with or without cause.
(b) Tax Withholding. If the Company is required by any government entity to
withhold an amount as a result of any grant or exercise of Options pursuant to
this letter, the Company will not be required to deliver a stock certificate to
you until you pay to the Company the amount required to be withheld with respect
to such event. Payment of such amount may be in cash or in 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 you already own, or shares of Common
Stock that you would otherwise have received upon the exercise of the Option.
If you are subject to Section 16 of the Exchange Act, you shall have the
unfettered right but not the obligation to direct and compel the Company to
withhold, or to accept from you, such number of shares of Common Stock as is
necessary to pay in whole or in part your withholding tax obligation, in
accordance with Section 16(a)(i) of the Plan.
(c) No Restriction on Right of Company to Effect Corporate Changes. Neither
the Plan nor this letter will affect or restrict in any way the right or power
of the Company or its shareholders to make or authorize any corporate changes
described in Section 13 of the Plan.
4. Notices. All notices and other communications discussed in this letter
will be in writing and will be delivered by hand or sent by mail addressed, if
to you, to your attention at the mailing address that you will 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
will be conclusively deemed to be received and will be effective, if sent by
hand delivery, upon receipt, or if sent by registered or certified mail, on the
fifth day after the day on which such notice is mailed.
5. Entire Letter, Governing Law. This letter and the Plan represent the
entire understanding between you and the Company and supersede all prior
understandings relating to the subject matter of this letter. This letter will
be governed by, and construed in accordance with, the laws of the State of
Delaware without giving effect to conflicts of law principles.
6. Date of Option Grant. This letter is dated ____________, but the Options
shall be deemed to have been granted effective as of ____________.
MEMC Electronic Materials, Inc.
By:_____________________________________
Huston E. Sherrill
Title: Corporate Vice President, Human Resources
Exhibit A
MEMC Electronic Materials, Inc. 1995 Equity Incentive Plan
Stock Option Award Letter Agreement
____________
Participant Name:
Number of Options:
Exercise Price:
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