EXHIBIT 10.1
ELSON T. KILLAM ASSOCIATES, INC.
1987 INCENTIVE STOCK OPTION PLAN
As Adopted by the Board of Directors
on December 15, 1987
As Ratified by the Shareholders
on July 26, 1988
(December 15, 1987)
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ELSON T. KILLAM ASSOCIATES, INC.
1987 INCENTIVE STOCK OPTION PLAN
1. Purpose
The Elson T. Killam Associates, Inc. 1987 Incentive Stock
Option Plan (the "Plan") is intended to enable Elson T. Killam,
Associates, Inc. (the "Company") and any parent or subsidiary
corporation of the Company to attract and retain capable officers
and key senior management employees and to provide them with
incentives to promote the best interests of the Company and its
parent and subsidiaries by enabling and encouraging them, through
the grant of incentive stock options (the "Options") to acquire
Company stock.
As used in the Plan, the term "incentive stock options"
means options which are intended to qualify as incentive stock
options within the meaning of section 422A of the Internal
Revenue Code of 1986, as amended from time to time (the "Code"),
and which are designated as incentive stock options in the Option
Agreement. The term "subsidiary" means any corporation (whether
or not in existence at the time the Plan is adopted) which, at
the time an Option is granted is a subsidiary of the Company
under the definition of "subsidiary corporation" contained in
section 425(f) of the Code, or any similar provision hereafter
enacted. The term "parent" means any corporation (whether or not
in existence at the time the Plan is adopted) which, at the time
an Option is granted, is a parent of the Company under the
definition of "parent corporation" contained in section 425(e) of
the Code or any similar provision hereafter enacted. The term
"related corporation" means any corporation which is a subsidiary
or parent of the Company.
2. Administration.
Except as otherwise provided below, the Plan shall be
administered by a Management Committee (the "Committee") which
shall be composed of the President of Les Chantiers Modernes and
the President of the Company or their representatives designated
in writing. Subject to the terms of the Plan, the Committee
shall have the authority to determine the persons to whom
incentive stock options shall be granted under the Plan and to
recommend the date of grant and the other terms and conditions
thereof. The Committee shall have full authority to administer
the Plan and all references hereinafter shall be made to the
actions of the Committee except as otherwise provided. The
Committee shall have the authority to establish, from time to
time, such rules and regulations, not inconsistent with the
provisions of the Plan, for the proper administration of the
Plan, and to make such determinations and interpretations under
or in connection with the Plan and the Options granted hereunder,
as it deems necessary or advisable. All such rules, regulations,
determinations and interpretations shall be binding and
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conclusive upon the Company, its stockholders, employees
(including former employees), and any related corporation, and
upon their respective legal representatives, beneficiaries,
successors and assigns and upon all other persons claiming under
or through any of them. No member of the of the Committee shall
be liable for any action or determination made in good faith with
respect to the Plan or any Option granted hereunder.
3. Eligibility.
The persons eligible to participate in the Plan shall be the
officers and key senior management employees of the Company and
related corporations who may be designated by the Committee. The
persons eligible to receive Options under the Plan are
hereinafter referred to as "Eligible Individuals".
4. Stock Subject to the Plan.
Subject to the provisions of Section 7 hereof, 2,130 shares
(the "Shares") of ten dollars ($10.00) par value common stock of
the Company (the "Common Stock"), shall be available for the
grant of Options under the Plan. Shares issuable under the Plan
shall be authorized but unissued Shares or reacquired Shares of
the Company as determined by the Committee.
If any Option granted under the Plan expires or otherwise
terminates, in whole or in part, without having been exercised,
the Shares subject to the unexercised portion of such Option
shall be available for the granting of Options under the Plan as
fully as if such Shares had never been subject to an Option.
5. Grants, Terms and Conditions of Options.
From time to time until the expiration or earlier
termination of the Plan, the Committee may grant Options to
Eligible Individuals (such grantees are hereinafter referred to
as "Optionees"), under the Plan. Options granted pursuant to the
Plan to such Eligible Individuals shall be in such form as the
Committee shall from time to time approve, and shall be subject
to the following terms and conditions to the extent such terms
and conditions are applicable to such Option:
(a) Price. The option price per Share under each Option
granted under the Plan as an incentive stock option
shall be determined and fixed by the Committee, in its
discretion, but shall not be less than the fair market
value of the Shares on the date of grant of such
Option. The fair market value of a Share on any day
shall mean (i) the value assigned to each Share in
accordance with the valuation method attached hereto as
Exhibit A; or (ii) such other method of determining
fair market value as may be required by the Code or the
regulations and rulings thereunder, and adopted by the
Committee from time to time.
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(b) Term. Subject to earlier termination as provided in
Subsections (c) through (g) below and in Section 7
hereof, and except as otherwise provided in Subsection
(j) below, the duration of each Option shall not be
more than ten (10) years from the date of grant.
(c) Exercise and Payment. Options shall be exercisable in
such installments and on such dates as the Committee
may specify provided; however, that no Options may be
exercised until July 1, 1991, except as otherwise
provided in accordance with Section 7 or in the event
of death, disability, involuntary termination without
cause or retirement of an Optionee as provided herein.
Options shall be exercisable in accordance with the
following schedule:
Option
Grant Period Exercisable
------------ -----------
January 1 to 4 years after
December 31,1987 Date of Grant
January 1, 1988 25% exercis-
and thereafter able as of the
anniversary date
of each Date of
Grant beginning in
or after 1991
Except as otherwise provided in Subsections (d) through
(g) below, Options shall only be exercisable by an
Optionee while he remains in the employ of the Company
or a related corporation. Any Option Shares, the right
to the purchase of which has accrued, may be purchased
at any time up to the expiration or termination of the
Option. As a condition to the exercise of any of the
Options, each Optionee shall enter into a Shareholders'
Agreement in substantially the same form as attached
hereto as Exhibit D. Options may be exercised, in whole
or in part, from time to time, by giving written notice
of exercise to the Company at its principal office,
specifying the number of Shares to be purchased, and
accompanied by payment in full of the aggregate
purchase price for such Shares or by a promissory note
executed in the form attached hereto as Exhibit C. Only
full Shares shall be delivered, and any fractional
Share which might otherwise be deliverable upon
exercise of an Option granted hereunder shall be
forfeited.
The purchase price shall be payable in cash or its
equivalent, as determined by the Committee, in its
discretion unless an Optionee requests the Company to
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permit the exercise of any or all Options by delivery
of a promissory note in accordance with Section 8
hereof.
(d) Termination of Optionee's Employment. If an Optionee's
employment with the Company and all related
corporations is terminated for any reason, voluntarily
or with cause, other than by reason of death,
disability, or retirement (as described in Subsections
(e), (f) and (g) below) prior to the expiration of the
original term of his Option ("Expiration Date") such
Option shall terminate immediately upon such
termination of employment and all rights with respect
to any unvested or unexercised Options shall be
forfeited. For purposes of this Subsection, an
Optionee's employment relationship shall not be deemed
terminated while the Optionee is on military leave,
sick leave, or other bona fide leave of absence (such
as temporary employment by the government) if the
period of such leave does not exceed ninety (90) days,
or, if longer, so long as the Optionee's right to
reemployment with the Company or a related corporation
is guaranteed either by statute or contract.
(e) Death of Optionee. If an Optionee's employment is
terminated by reason of his death prior to the
Expiration Date of his Option, or if an Optionee whose
employment is terminated as a result of retirement or
disability (as described in Subsections (f) and (g)
below) shall die following his termination of
employment but prior to the Expiration Date of his
Option or expiration of the period determined under
Subsections (f) or (g) below, if earlier, such Option
may be exercised by the Optionee's estate, personal
representative or beneficiary who acquired the right to
exercise such Option by bequest or inheritance or by
reason of the death of the Optionee, whether or not the
Options were completely exercisable under Section 5 (c)
at the time of death, at any time prior to the earlier
of (i) three (3) months following the date of the
Optionee's death, or (ii) the Expiration Date of such
Option (which, in the case of death following a
termination of employment pursuant to Subsections (f)
or (g) below, shall be deemed to mean the expiration of
the exercise period determined thereunder).
(f) Disability of Optionee. If an Optionee shall become
disabled (within the meaning of section 22(e)(3) of the
Code) during his employment with the Company or a
related corporation, and his employment with the
Company and all related corporations is terminated as a
consequence of such disability prior to the Expiration
Date of his Option, such Option may be exercised in
full by the Optionee, whether or not the Options were
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completely exercisable under Section 5(c) at the time
of such disability, at any time prior to the earlier of
(i) three (3) months following the date of the
Optionee's termination of employment, or (ii) the
Expiration Date of such Option. In the event of the
Optionee's legal disability such Option may be so
exercised by the Optionee's legal representative.
(g) Retirement or Involuntary Termination of Optionee. If
an Optionee retires in accordance with the retirement
policy of the Company or any related corporation, or
otherwise involuntarily has his employment terminated
by the Company without cause prior to the Expiration
Date of his Option, all Options may be exercised in
full by the Optionee, whether or not the Options were
completely exercisable under Section 5(c) at the time
of such retirement or involuntary termination any time
prior to the earlier of (i) three (3) months after the
date of retirement or (ii) the Expiration Date of such
Option.
(h) Transferability. No Option shall be assignable or
transferable by an Optionee otherwise than by will or
by the laws of descent and distribution, and during the
lifetime of the Optionee, the Option shall be
exercisable only by him, or in the event of his legal
disability, by his legal representative.
(i) Rights as a Stockholder. An Optionee shall have no
rights as a stockholder with respect to any Shares
covered by his Option until the issuance of a stock
certificate to him representing such Shares.
(j) Ten Percent Shareholder. Any other provision of the
Plan notwithstanding, if an Eligible Individual owns
more than ten percent (10%) of the total combined
voting power of all shares of stock of the Company or
of a related corporation at the time an incentive stock
Option is granted to such Eligible Individual, the
incentive stock option price shall not be less than one
hundred ten percent (110%) of the fair market value of
the optioned Shares on the date the incentive stock
option is granted, and such incentive stock option by
its terms shall not be exercisable after the expiration
of five (5) years from the date the incentive stock
option is granted. For purposes of this Subsection, an
Eligible Individual shall be considered to own any
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shares of the Company or a related corporation which
are attributable to such Eligible Individual under
section 425(d) of the Code.
(k) Annual Limit on Grant of Incentive Stock Options. The
aggregate fair market value (determined as of the time
an incentive stock option is granted) of the Shares
with respect to which incentive stock options are
exercisable for the first time by an Optionee during
any calendar year (under the Plan and any other
incentive stock option plan of the Company or a related
corporation) shall not exceed one hundred thousand
dollars ($100,000.00).
(l) Option Agreement and Further Conditions. As a
condition to the grant of an Option, each Optionee
shall enter into, and be bound by the terms of, a stock
option agreement (the "Option Agreement") which shall
state the number of Shares to which the Option
pertains. The Option Agreement shall set forth such
terms, conditions and restrictions regarding the Option
not inconsistent with the Plan and the provisions of
section 422A(b) of the Code as the Committee shall
determine. Without limiting the generality of the
foregoing, the Committee, in its discretion, may impose
further conditions upon the exercisability of Options
and restrictions on transferability with respect to
Shares issued upon exercise of Options.
(m) Withholding. The obligation of the Company to deliver
Shares upon the exercise of any Option shall be subject
to any applicable federal, state and local tax
withholding requirements.
6. Listing and Registration of Shares.
Each Option under the Plan shall be subject to the
requirement that, if at any time the Committee shall determine in
its discretion that the listing, registration or qualification of
the Shares covered thereby upon any securities exchange or under
the laws of any jurisdiction, or the consent or approval of any
regulatory body, is necessary or desirable as a condition of, or
in connection with, the granting of such Option, or the
acquisition of Shares thereunder, or that action by the Company
or the Optionee should be taken in order to obtain an exemption
from any such requirement, then no such Option may be exercised
in whole or in part and no certificate representing Shares shall
be issued unless and until such listing, registration,
qualification, consent, approval, or action shall have been
effected, obtained, or taken on conditions acceptable to the
Committee. Each Optionee or his legal representative or
beneficiaries, also may be required to give satisfactory
assurance that Shares acquired upon exercise of an Option are
being acquired for investment and not with a view to
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distribution, and certificates representing such Shares may be
legended accordingly. Such Shares shall be transferable
thereafter only if the proposed transfer is permissible under the
Plan and the Option Agreement and if, in the opinion of counsel
(who shall be satisfactory to the Company), such transfer shall
at such time be in compliance with securities laws. Nothing
contained in this Section 6 shall obligate the Company to list,
register or qualify any of the Shares.
7. Adjustments.
The number of Shares which may be issued under the Plan, as
stated in Section 4 hereof, and the number of Shares issuable
upon exercise of outstanding Options under the Plan (as well as
the exercise price per share under such outstanding Options)
shall be equitably adjusted by the Committee to reflect any stock
dividend, stock split, share combination, or similar change in
the capitalization of the Company.
In the event the Company is liquidated, its shares become
publicly traded, or a corporate transaction described in section
425(a) of the Code and the Treasury Regulations issued thereunder
occurs (as, for example, a merger, consolidation, acquisition of
property or stock, separation, or reorganization), each
outstanding Option shall be immediately exercisable in full
regardless of any exercise schedule otherwise applicable. The
Committee shall give each Optionee to whom an outstanding Option
has been granted, sixty (60) days written notice prior to such
transaction (i.e., by reason of such liquidation, sale, or other
corporate transaction described above), so that any outstanding
Option or portion thereof may be exercised up to, and including
the earlier of: (i) the date immediately preceding such
transaction, or (ii) the Expiration Date of such Option. In such
event, the Committee may, in its sole discretion, allow each such
Optionee to exercise his Option in full or in part (if it has not
otherwise terminated) regardless of the provisions of Section
5(c) hereof or of the terms of any Option Agreement even if under
the Plan or the Incentive Stock Option Agreement the vesting
period has not expired with respect to such Shares. The
Committee, in its discretion, may change the number of Shares
issuable upon exercise of outstanding Options (as well as the
exercise price per share under such outstanding Options) to
equitably reflect any such corporate transaction, provided that
any such change is made in accordance with section 425(a) of the
Code.
8. Loans to Eligible Employees.
Prior to delivery of a written notice of exercise (under
Section 5 (c)), the Optionee may obtain a loan or loans from the
Company for the purchase of Shares by delivering a written
request to the Committee stating the desired amount of the loan.
Loan requests may not be submitted for amounts in excess of
ninety percent (90%) of the exercise price. If such request
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comports with the requirements of this Plan, the Committee shall
notify the Optionee within seven (7) days of receipt of the loan
request that the loan is approved, subject to the conditions set
forth in Section 8 hereof and the other applicable provisions of
this Plan.
(a) The loan will be extended only if, within thirty (30)
days after receipt from the Committee of notice that
the loan request is approved, the Optionee exercises an
Option granted pursuant to this Plan for the purchase
from the Company of a number of Shares which in the
aggregate have an exercise price at least equal to the
amount of the loan requested and approved.
(b) Loans will be extended under this Plan only to persons
who are employees an the date the Option referred to in
Section 8(a) is exercised, and no loans will be
extended in connection with Options exercised in
connection with death, disability or retirement.
(c) The loan shall be evidenced by a promissory note
bearing interest at the minimum rate to avoid the
imputation of interest under the Code in substantially
the same form as attached hereto as Exhibit C.
(d) If an Optionee terminates his employment with the
Company or any subsidiary corporation due to death,
disability, retirement, voluntary or involuntary
termination or otherwise, any loan indebtedness, and
interest thereon, outstanding an the date of such
termination shall be repaid to the Company, in full,
within ninety (90) days of such termination.
(e) As security for the repayment of the loan extended
under this Plan, the Optionee shall pledge to the
Company shares of Stock of the Company having a total
fair market value equal to one hundred percent (100%)
of the loan amount; provided, however, that to the
extend such Shares are subject to the provisions of
Section 12, alternative security may be required within
the discretion of the Committee.
(f) The Company shall be entitled to all the rights and
remedies with respect to the pledged Shares of a
secured creditor under the Uniform Commercial Code as
in effect from time to time in the State of New Jersey.
If an Optionee, or his personal representative or
legatee, as the case may be, fails to pay any
indebtedness when due or within twenty (20) days
thereafter, without making other arrangements
satisfactory to the Committee for discharging his
indebtedness, the Company may sell any pledged stock or
property at public or private sale and apply the
proceeds to the unpaid indebtedness without demand or
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notice to the Optionee.
(g) If the Optionee is entitled to receive any Special
Performance Bonus in accordance with Exhibit B hereto,
such amounts must be applied to repay any loan which
remains outstanding at the time such bonus is paid or
is to be paid.
9. Amendment or Discontinuance of the Plan.
The Board at any time, and from time to time, may suspend or
discontinue the Plan or amend it in any respect whatsoever,
provided, however, that, without the approval of the holders of
at least two-thirds (2/3) of the outstanding Shares, the Plan may
not be amended so as to materially (a) increase the benefits
accruing to participants under the Plan, (b) increase the number
of Shares which may be issued under the Plan (except for
adjustments permitted or required under Section 7 hereof), (c)
modify the requirements as to eligibility for participation in
the Plan, or (d) increase the cost of the Plan to the Company;
and provided further, that no such suspension, discontinuance or
amendment shall materially impair the rights of any holder of an
outstanding Option without the consent of such holder.
10. Absence of Rights.
The recommendation or selection of an Eligible Individual as
a recipient of an Option under the Plan shall not entitle such
person to any Option unless and until the grant actually has been
made by appropriate action of the Committee; and any such grant
is subject to the provisions of the Plan. Further, the granting
of an Option to a person shall not entitle that person to
continued employment by the Company or a related corporation or
affect the terms and conditions of such employment, and the
Company shall have the absolute right, in its discretion, to
retire such person in accordance with its retirement policies or
otherwise to terminate his employment, whether or not such
termination may result in a partial or total termination of his
Option.
11. Application of Funds.
The funds received by the Company upon the exercise of
Options and otherwise under the Plan shall be used for general
corporate purposes as permitted by law.
12. Pledge of Shares.
To the extent required under Section 12 (u) of the Revolving
Credit and Term Loan Agreement dated as of September 16, 1986, to
which the Company is a party, the Company shall not issue Shares
pursuant to the exercise of any Options unless the Optionee shall
have entered into a Pledge Agreement, substantially in the Form
of Exhibit E as attached hereto (except that the rights of the
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Banks and the Agents, as such persons are defined in such Pledge
Agreement, shall have recourse only to the being pledged),
pledging the Shares the Optionee is purchasing to the Agent.
13. Shareholder Approval.
This Plan is subject to the approval of the holders of at
least two-thirds (2/3) of the outstanding Shares, which approval
shall be obtained on or before December 15, 1988, which date is
within twelve (12) months of the date the Plan is adopted by the
Board of Directors of the Company. If the shareholders shall not
approve the Plan as aforesaid, the Plan shall not be effective,
and any and all actions taken prior thereto shall be null and
void or shall, if necessary, be deemed to have been fully
rescinded.
14. No Obligation to Exercise Option.
The granting of an Option shall impose no obligation upon an
Optionee to exercise such Option.
15. Termination of Plan.
No Options or Stock Grants may be granted after December 15,
1997, provided, however, that the Plan and all outstanding
Options shall remain in effect until such Options have expired or
vested, as the case may be, or are terminated in accordance with
the Plan.