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MATERIAL SCIENCES
CORPORATION
FISCAL YEAR 2009 INCENTIVE
PLAN
NON-QUALIFIED STOCK OPTION
AGREEMENT
UNDER 1992
OMNIBUS
STOCK AWARDS PLAN FOR KEY
EMPLOYEES
THIS NON-QUALIFIED STOCK
OPTION AGREEMENT (this “ Agreement ”) is entered
into between Material Sciences Corporation, a Delaware corporation
(the “ Company ”), and
(“ Employee ”), pursuant to the 1992 Omnibus
Stock Awards Plan for Key Employees (the “ Plan
”), to document an award made as of April __, 2008 (“
Grant Date ” ) under the Company’s Fiscal Year
2009 Incentive Plan. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in
Section 17.
1. Option Grant . Subject to the
terms and conditions set forth in the Plan and this Agreement, the
Company hereby grants to the Employee the right to purchase (the
“ Option ”) from the Company
shares (the “ Option Shares ”) of the
Company’s common stock, $.02 par value (the “ Common
Stock ”), at an exercise price per share (the “
Option Price ”) equal to $8.00 (which is the higher of
(a) the average closing price of the Common Stock on the New
York Stock Exchange (“NYSE”) for the five
(5) consecutive trading days immediately preceding the Grant
Date, rounded up to the next highest full dollar amount and
(b) the closing price of the Common Stock on the NYSE on the
last trading date preceding the Grant Date), to be exercisable at
the times and on the terms and subject to the conditions set forth
herein. The Option shall be null and void unless the Employee
executes this Agreement and returns it to the Secretary of the
Company at its office in Elk Grove Village, Illinois within thirty
(30) days of receipt by the Employee. The Option will expire
on the tenth anniversary of the Grant Date (the “ Final
Expiration Date ”), unless terminated earlier as provided
under Section 3 or 4. The Option is not intended to be
an “incentive stock option” within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended
(the “ Code ”).
2. Vesting and Exercise . The
Option shall be exercisable only to the extent vested in accordance
with this Section 2.
(a) The Option shall become
vested as to fifty percent (50%) of the Option Shares on the
third anniversary of the Grant Date, provided that Employee remains
continuously in Employment by the Company through such date. The
Option shall become vested as to the other fifty percent
(50%) of the Option Shares on the third anniversary of the
Grant Date, provided that (i) Employee remains continuously in
Employment by the Company through such date and (ii) the
Company achieves its provisional strategic plan for the three
(3)-consecutive fiscal year period ending February 28,
2011.
(b) Notwithstanding
Section 2(a) hereof, but subject to the provisions this
Section 2(b), the Option shall become vested in fifty percent
(50%) of the Option Shares on the date of Employee’s death or
Disability. The Option shall become vested in the remaining fifty
percent (50%) of the Option Shares on the date of Executive’s
death or Disability to the extent that the Committee determines
that the Company has satisfied its provisional strategic plan for
the portion of the three (3)-consecutive fiscal year period ending
with such Termination of Employment. Death and Disability are the
only events that accelerate the vesting of the Option granted under
this Agreement. To the extent that the vesting of all or any
portion of the Option otherwise would accelerate under the
provisions of a severance and change in control agreement between
Executive and the Company, or under any other plan, program, or
agreement of or with the Company, no such acceleration of vesting
shall occur with respect to the Option. The grant of the Option
under Section 1 is expressly conditioned on the conditions of the
immediately preceding sentence.
(c) Any portion of the Option
that is not, or shall not have become, vested as of the date of
Employee’s Termination of Employment shall be forfeited to
the Company effective on the date of Employee’s Termination
of Employment. Any portion of the Option that is or shall have
become vested as of the date of Employee’s Termination of
Employment shall be exercisable in accordance with the applicable
terms of the Plan and this Agreement.
(d) Subject to the foregoing,
the Option shall be exercisable, and Employee shall have the right
to purchase the Option Shares, from time to time and in whole or in
part, only if Employee is in Employment by the Company on the
exercise date, except as provided under Section 3 or
Section 4, as applicable.
3. Cessation of
Employment . Subject to this Section 3, the Option shall
expire and permanently terminate upon, and shall not be exercisable
or exercised after, Employee’s Termination of Employment for
any reason other than a cessation of employment due to death or
Disability. Upon a Termination of Employment described in this
Section 3, except as specifically set forth in Section 4,
Employee may exercise the Option until the earlier to occur of
(a) the ninetieth (90 th ) day after the effective date of the Termination of
Employment or (b) the Final Expiration Date; provided, however
that no portion of the Option may be exercised in the event of or
after Executive’s dismissal for Cause.
4. Death, Disability, or
Retirement . If Employee (a) dies while in Employment by
the Company, (b) incurs a Disability while in Employment by
the Company, or (c) terminates his employment as a result of
Retirement, the Option, to the extent vested, may be exercised
until the earlier to occur of (i) the third (3
rd
) anniversary of
Employee’s death, Disability, or Retirement, as applicable,
and (ii) the Final Expiration Date.
5. Method of Exercise and Payment
. Subject to the limitations herein set forth, Employee or
Employee’s beneficiary, if applicable, may exercise the
Option by delivery of written notice to the Secretary of the
Company in Elk Grove Village, Illinois, specifying the number of
Option Shares to be purchased and including payment of the Option
Price, as described below; provided , however , that
no fractional shares may be purchased hereunder at any time.
Payment of the
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Option Price shall be made (a) in
cash or by check, bank draft or money order to the order of
Material Sciences Corporation (collectively, “ cash
”), (b) at the discretion of Employee and with the
consent of the Committee, in shares of Common Stock (valued as of
the date of the notice of exercise) with a total value equal to or
less than the aggregate Option Price, plus cash in the amount, if
any, by which the aggregate Option Price exceeds the value of such
shares of Common Stock or (c) at the discretion of the
Committee, by delivery of a properly executed exercise notice
together with such other documentation as the Committee and a
qualified broker, if applicable, shall require to effect an
exercise of the Option, and delivery to the Company of the proceeds
required to pay the exercise price; provided ,
however , that this method of payment shall not be available
to an “Executive Officer” (as defined in Rule 3b-7 of
the Securities Exchange Act of 1934, as amended from time to time,
and any successor thereto) if it would constitute a loan by the
Company to the Employee.
6. Tax Withholding . As a
condition precedent to the exercise of the Option, Employee shall,
if requested by the Company, pay to the Company, in addition to the
aggregate Option Price, such amount of cash as the Company may be
required, under applicable federal
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