K&E DRAFT: 5/14/97
ANVIL HOLDINGS, INC.
AMENDED AND RESTATED
1997 STOCK OPTION PLAN
ANVIL HOLDINGS, INC.
AMENDED AND RESTATED
1997 STOCK OPTION PLAN
ARTICLE I
PURPOSE OF PLAN
The 1997 Amended and Restated Stock Option Plan (the "PLAN") of Anvil
Holdings, Inc., a Delaware corporation (the "COMPANY"), adopted by the Board
of Directors effective May 19, 1997, is intended to advance the best
interests of the Company by providing executives and other key employees of
the Company or any Subsidiary who have substantial responsibility for the
management and growth of the Company or any Subsidiary with additional
incentives by allowing such employees to acquire an ownership interest in the
Company. The Plan is a compensatory benefit plan within the meaning of Rule
701 under the Securities Act of 1933, as amended (the "SECURITIES ACT") and,
unless and until the Class B Common is publicly traded, the issuance of
options and Class B Common pursuant to the Plan is intended to qualify for
the exemption from registration under the Securities Act provided by Rule
701. The Plan amends and restates in its entirety the 1997 Stock Option Plan
of the Company originally adopted on March 14, 1997, in order to clarify
certain provisions.
ARTICLE II
DEFINITIONS
For purposes of the Plan the following terms have the indicated meanings:
"AUTHORIZATION DATE" has the meaning ascribed thereto in Section
5.9(a) hereof.
"BOARD" means the Board of Directors of the Company.
"CLASS A COMMON" means the Class A Common Stock, par value $0.01 per
share, of the Company.
"CLASS B COMMON" means the Class B Common Stock, par value $0.01 per
share, of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"COMMITTEE" means the Compensation Committee or such other committee of
the Board as the Board may designate to administer the Plan or, if for any
reason the Board has not designated such a committee, the Board. The
Committee, if other than the Board, shall be composed of three or more
directors as appointed from time to time by the Board.
"FAIR MARKET VALUE" per share on any given date means the average of the
closing prices of the sales of the Class B Common on all securities exchanges
on which such stock may at the time be listed, or, if there have been no
sales on any such exchange on any day, the average of the highest bid and
lowest asked prices on all such exchanges at the end of such day, or, if on
any day such stock is not so listed, the average of the representative bid
and asked prices quoted on the Nasdaq Stock Market as of 4:00 P.M., New York
time, or, if on any day such stock is not quoted on the Nasdaq Stock Market,
the average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization. If at any time
the Class B Common is not listed or quoted, the Fair Market Value per share
shall be determined by the Committee or the Board, giving effect to the
preferences and priorities set forth in the Company's Certificate of
Incorporation with respect to other series or classes of the Company's
capital stock, and also based on such other factors as the members thereof in
the exercise of their business judgment, consider relevant.
"INITIAL PUBLIC OFFERING" means an underwritten initial public offering
registered under the Securities Act, involving the sale by the Company of
shares of Class B Common.
"MEASUREMENT DATE" means the date on which any taxable income resulting
from the exercise of an Option is determined under applicable federal income
tax law.
"OPTION SHARES" shall mean (i) all shares of Class B Common issued or
issuable upon the exercise of an Option and (ii) all shares of Class B Common
issued with respect to the Class B Common referred to in clause (i) above by
way of stock dividend or stock split or in connection with any conversion,
merger, consolidation or recapitalization or other reorganization affecting
the Class B Common. Unless provided otherwise herein or in the Participant's
Option Agreement, Option Shares will continue to be Option Shares in the
hands of any holder other than the Participant (except for the Company), and
each such transferee thereof will succeed to the rights and obligations of a
holder of Option Shares hereunder.
"OPTIONS" has the meaning set forth in Article IV.
"PARTICIPANT" means any executive or other key employee of the Company
or any Subsidiary who has been selected to participate in the Plan by the
Committee or the Board.
"PERMITTED TRANSFEREE" means those persons to whom the Participant is
authorized pursuant to Section 6.3, to transfer Options.
"QUALIFYING SALE OF THE COMPANY" means a Sale of the Company in which
Bruckmann, Rosser, Sherrill & Co., L.P. and 399 Venture Partners, Inc.
(collectively, the "INVESTORS") receive proceeds which, when aggregated with
all other amounts received by the Investors with respect to their Common
Stock, results in a 35% blended internal rate of return on the Investors'
investment in the Class A Common and the Class B Common.
"QUALIFYING SECONDARY OFFERING" means a sale by the stockholders of the
Company, after an Initial Public Offering, of Class A Common and/or Class B
Common which provides gross proceeds (before deducting underwriting discounts
and expenses), when aggregated with all prior sales of Class A Common and
Class B Common, to the Company's stockholders of at least $32,200,000.
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"SALE NOTICE" has the meaning ascribed thereto in Section 5.9(a)
hereof.
"SALE OF THE COMPANY" means a merger or consolidation effecting a change
in control of the Company, a sale of all or substantially all of the assets
of the Company or a sale of a majority of the outstanding voting securities
of the Company effecting a change in control of the Company.
"SECURITIES ACT" has the meaning ascribed thereto in Article 1 hereof.
"SUBSIDIARY" means any subsidiary corporation (as such term is defined
in Section 424(f) of the Code) of the Company.
"TEN PERCENT SHAREHOLDER" means any person who owns stock representing
more than 10% of the total combined voting power of all classes of stock of
the Company or any Subsidiary.
"TERMINATION DATE" shall mean the date upon which such Participant's
employment with the Company and the Subsidiaries terminated.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Committee. Subject to the
limitations of the Plan, the Committee shall have the sole and complete
authority to: (i) select Participants, (ii) grant Options to Participants in
such forms and amounts as it shall determine, (iii) impose such limitations,
restrictions and conditions upon such Options as it shall deem appropriate,
(iv) interpret the Plan and adopt, amend and rescind administrative
guidelines and other rules and regulations relating to the Plan, (v) correct
any defect or omission or reconcile any inconsistency in the Plan or in any
Options granted under the Plan, and (vi) make all other determinations and
take all other actions necessary or advisable for the implementation and
administration of the Plan. The Committee's determinations on matters within
its authority shall be conclusive and binding upon the Participants, the
Company and all other persons. All expenses associated with the
administration of the Plan shall be borne by the Company. The Committee may,
as approved by the Board and to the extent permissible by law, delegate any
of its authority hereunder to such persons or entities as it deems
appropriate.
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ARTICLE IV
LIMITATION ON AGGREGATE SHARES
The number of shares of Class B Common with respect to which stock
purchase options ("OPTIONS") may be granted under the Plan shall not exceed,
in the aggregate, 188,948 shares, subject to adjustment in accordance with
Section 6.4; PROVIDED, that any Options that do not vest due to the failure
of the Company to meet the certain financial performance standards may, at
the discretion of the Committee, be granted to management employees of the
Company. To the extent any Options expire unexercised or are cancelled,
terminated or forfeited in any manner without the issuance of Class B Common
thereunder, such shares shall again be available under the Plan. The shares
of Class B Common available under the Plan may consist of authorized and
unissued shares, treasury shares or a combination thereof, as the Committee
shall determine.
ARTICLE V
AWARDS
5.1 GRANT OF OPTIONS. The Committee may grant Options to Participants
from time to time in accordance with this Article V. Options granted under
the Plan are intended, to the extent possible, to be "incentive stock
options" within the meaning of Section 422 of the Code; PROVIDED, that the
Committee may, in its discretion, grant Options intended as "nonqualified"
stock options. However, no Option granted hereunder shall be invalid because
of a failure to qualify as an incentive stock option (either because the
limitations of Section 422(d) of the Code are exceeded or otherwise). The
exercise price per share of Class B Common under each Option shall be
determined by the Committee or the Board at the time of grant; PROVIDED,
that, with respect to Options intended as "incentive stock options", such
exercise price shall be equal to or greater than the Fair Market Value of the
Class B Common on the date such Option is issued (110% of such Fair Market
Value in the case of an option issued to a Participant who is a Ten Percent
Shareholder). Subject to Section 5.6, Options shall be exercisable at such
time or times as the Committee shall determine. The Committee shall
determine the term of each Option, which term shall not exceed ten years from
the date of grant of the Option (five years in the case of any Option granted
to a Ten Percent Shareholder).
5.2 EXERCISE PROCEDURE. Options shall be exercisable, to the extent they
are vested, by written notice to the Company (to the attention of the Company's
Chief Administrative Officer) accompanied by payment in full of the applicable
exercise price. Payment of such exercise price may be made (i) in cash
(including check, bank draft, money order or wire transfer of immediately
available funds), (ii) in shares of Class B Common valued at their Fair Market
Value as of the date of exercise as provided in Section 5.3 below (to the extent
permitted by the Company's material agreements for indebtedness for borrowed
money) or (iii) in a combination of the foregoing.
5.3 EXCHANGE OF PREVIOUSLY ACQUIRED STOCK. At the discretion of the
Committee, exercised at the time of grant, the exercise price for the shares
being acquired upon the exercise of an Option may be paid, in full or in
part, by the delivery to the Company of Class B Common (to the extent
permitted by the Company's material agreements for indebtedness for borrowed
money). Any Class B Common so delivered shall be treated as the payment of
cash equal to the aggregate Fair Market Value on the date of delivery of such
Class B Common.
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5.4 WITHHOLDING TAX REQUIREMENTS.
(a) AMOUNT OF WITHHOLDING. It shall be a condition of the
exercise of any Option that the Participant exercising the Option make
appropriate payment or other provision acceptable to the Company with respect
to any withholding tax requirement arising from such exercise. The amount of
withholding tax required, if any, with respect to any Option exercise (the
"WITHHOLDING AMOUNT") shall be determined by a financial or other appropriate
officer of the Company, and the Participant shall furnish such information
and make such representations as such officer requires to make such
determination.
(b) WITHHOLDING PROCEDURE. If the Company determines that
withholding tax is required with respect to any Option exercise, the Company
shall notify the Participant of the Withholding Amount, and the Participant
shall pay to the Company an amount not less than the Withholding Amount. In
lieu of making such payment, the Participant may elect to pay the Withholding
Amount by either (i) delivering to the Company a number of shares of Class B
Common having an aggregate Fair Market Value as of the Measurement Date not
less than the Withholding Amount or (ii) directing the Company to withhold
(and not to deliver or issue to the Participant) a number of shares of Class
B Common, otherwise issuable upon the exercise of an Option, having an
aggregate Fair Market Value as of the Measurement Date not less than the
Withholding Amount. In addition, if the Committee approves, a Participant may
elect pursuant to the prior sentence to deliver or direct the withholding of
shares of Class B Common having an aggregate Fair Market Value in excess of
the minimum Withholding Amount but not in excess of the Participant's
applicable highest marginal combined federal income and state income tax
rate, as estimated in good faith by such Participant. Any fractional share
interests resulting from the delivery or withholding of shares of Class B
Common to meet withholding tax requirements shall be settled in cash. All
amounts paid to or withheld by the Company and the value of all shares of
Class B Common delivered to or withheld by the Company pursuant to this
Section 5.4 shall be deposited in accordance with applicable law by the
Company as withholding tax for the Participant's account. If the Treasurer or
other appropriate officer of the Company determines that no withholding tax
is required with respect to the exercise of any Option, but subsequently it
is determined that the exercise resulted in taxable income as to which
withholding is required (as a result of a disposition of shares or
otherwise), the Participant shall promptly, upon being notified of the
withholding requirement, pay to the Company, by means acceptable to the
Company, the amount required to be withheld.
5.5 NOTIFICATION OF INQUIRIES AND AGREEMENTS. Each Participant and
each Permitted Transferee shall notify the Company in writing within 10 days
after the date such Participant or Permitted Transferee (i) first obtains
knowledge of any Internal Revenue Service inquiry, audit, assertion,
determination, investigation, or question relating in any manner to the value
of Options granted hereunder; (ii) includes or agrees (including, without
limitation, in any settlement, closing or other similar agreement) to include
in gross income with respect to any Option granted under this Plan (A) any
amount in excess of the amount reported on Form 1099 or Form W-2 to such
Participant by the Company, or (B) if no such Form was received, any amount;
and/or (iii) exercises, sells, disposes of, or otherwise transfers an Option
acquired pursuant to this Plan. Upon request, a Participant or Permitted
Transferee shall provide to the Company any information or document relating
to any event described in the preceding sentence which the Company (in its
sole discretion) requires in order to calculate and substantiate any change
in the Company's tax liability as a result of such event.
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5.6 CONDITIONS AND LIMITATIONS ON EXERCISE. At the discretion of the
Committee, exercised at the time of grant, Options may vest, in one or more
installments, upon (i) the fulfilment of certain conditions, (ii) the passage
of a specified period of time, and/or (iii) the achievement by the Company or
any Subsidiary of certain performance goals.
(a) PERFORMANCE VESTING. Unless the Committee specifies otherwise
in the Option grant, the Option shall be subject to performance vesting and
shall vest with respect to 12.5% of the Option Shares that are subject to
such Option as of the end of each of the first four fiscal years of the
Company following the date of grant in the event that the Company achieves
certain financial performance targets which will be specified (or the method
of establishment of which will be specified) in each Option Agreement. In
addition to such performance vesting, the remaining 50% of the Option shall
be subject to milestone vesting in accordance with the provisions of Sections
5.6(b) and 5.6(c).
(b) SALE OF THE COMPANY. In the event of a Qualifying Sale of the
Company, all unvested Options (other than Options which did not vest because
the Company did achieve the requisite performance targets in a prior year as
set forth in Section 5.6(a) ("MISSED OPTIONS")) shall become immediately
vested, and all Missed Options shall immediately be terminated. All Options
(other than Missed Options) shall terminate if not exercised as of the date
of the Qualifying Sale of the Company or any other designated date (the
"DESIGNATED DATE") or all such Options (other than Missed Options) shall
thereafter represent only the right to receive the excess of the
consideration per share of Class B Common offered in such Qualifying Sale of
the Company over the exercise price of such Options. The Company shall give
all Participants notice of an impending Qualifying Sale of the Company at
least 15 days prior to the date of such Sale of the Company or the Designated
Date, whichever is earlier.
(c) Unless the Committee specifies otherwise in the Option grant,
in the event of an Initial Public Offering, 25% of the Options shall become
immediately vested; and in the event of subsequent, secondary public
offerings of Class B Common and/or Class A Common which result in aggregate
proceeds to the sellers thereof of more than $32.2 million (a "QUALIFYING
SECONDARY OFFERING"), an additional 25% of the Options shall become
immediately vested.
5.7 EXPIRATION OF OPTIONS.
(a) NORMAL EXPIRATION. In no event shall any part of any Option be
exercisable after the stated date of expiration thereof.
(b) EARLY EXPIRATION UPON TERMINATION OF EMPLOYMENT. Any part of any
Option that was not vested on a Participant's Termination Date shall expire and
be forfeited on such date, and any part of any Option that was vested on the
Termination Date shall also expire and be forfeited to the extent not
theretofore exercised on the thirtieth (30th) day (one year if termination is
caused by the Participant's death or disability) following the Termination Date,
but in no event after the stated date of expiration thereof.
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5.8 STOCKHOLDERS AGREEMENT. A holder of Option Shares shall become a
party to the Stockholders Agreement, dated as of March 14, 1997, by and among
the Company and certain of its stockholders (the "STOCKHOLDERS AGREEMENT"),
and the Option Shares shall be deemed Stockholder Shares for all purposes of
the Stockholders Agreement; PROVIDED, that if the Stockholders Agreement has
terminated by its terms, the provisions of this Section 5.8 shall no longer
apply.
ARTICLE VI
GENERAL PROVISIONS
6.1 WRITTEN AGREEMENT. Each Option granted hereunder shall be embodied
in a written agreement (the "OPTION AGREEMENT") which shall be signed by the
Participant to whom the Option is granted and shall be subject to the terms
and conditions set forth herein.
6.2 LISTING, REGISTRATION AND LEGAL COMPLIANCE. If at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of the shares subject to Options upon any securities exchange
or under any state or federal securities or other law or regulation, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition to or in connection with the granting of Options or
the purchase or issuance of shares thereunder, no Options may be granted or
exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free
of any conditions not acceptable to the Committee. The holders of such
Options will supply the Company with such certificates, representations and
information as the Company shall request and shall otherwise cooperate with
the Company in obtaining such listing, registration, qualification, consent
or approval. In the case of officers and other persons subject to Section
16(b) of the Securities Exchange Act of 1934, as amended, the Committee may
at any time impose any limitations upon the exercise of Options that, in the
Committee's discretion, are necessary or desirable in order to comply with
such Section 16(b) and the rules and regulations thereunder. If the Company,
as part of an offering of securities or otherwise, finds it desirable because
of federal or state regulatory requirements to reduce the period during which
any Options may be exercised, the Committee may, in its discretion and
without the Participant's consent, so reduce such period on not less than 15
days' written notice to the holders thereof.
6.3 OPTIONS NOT TRANSFERRABLE. Options may not be transferred other
than by will or the laws of descent and distribution and, during the lifetime
of the Participant to whom they were granted, may be exercised only by such
Participant (or, if such Participant is incapacitated, by such Participant's
legal guardian or legal representative). In the event of the death of a
Participant, Options which are not vested on the date of death shall
terminate; exercise of Options granted hereunder to such Participant, which
are vested as of the date of death, may be made only by the executor or
administrator of such Participant's estate or the person or persons to whom
such Participant's rights under the Options will pass by will or the laws of
descent and distribution.
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6.4 ADJUSTMENTS. In the event of a reorganization, recapitalization,
stock dividend or stock split, or combination or other change in the shares of
Class B Common, the Board or the Committee may, in order to prevent the dilution
or enlargement of rights under the Plan or outstanding Options, adjust (1) the
number and type of shares as to which options may be granted under the Plan, (2)
the number and type of shares covered by outstanding Options, (3) the exercise
prices specified therein and (4) other provisions of this Plan which specify a
number of shares, all as such Board or Committee determines to be appropriate
and equitable.
6.5 RIGHTS OF PARTICIPANTS. Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any Subsidiary to terminate any
Participant's employment at any time (with or without cause), or confer upon any
Participant any right to continue in the employ of the Company or any Subsidiary
for any period of time or to continue to receive such Participant's current (or
other) rate of compensation. No employee shall have a right to be selected as a
Participant or, having been so selected, to be selected again as a Participant.
6.6 AMENDMENT, SUSPENSION AND TERMINATION OF PLAN. The Board or the
Committee may suspend or terminate the Plan or any portion thereof at any time
and may amend it from time to time in such respects as the Board or the
Committee may deem advisable; PROVIDED, that no such amendment shall be made
without stockholder approval to the extent such approval is required by law,
agreement or the rules of any exchange upon which the Class B Common is listed,
and no such amendment, suspension or termination shall impair the rights of
Participants under outstanding Options without the consent of the Participants
affected thereby, except as provided below. No Options shall be granted
hereunder after the tenth anniversary of the earlier of the adoption of the Plan
or its approval by the Company's shareholders.
6.7 AMENDMENT OF OUTSTANDING OPTIONS. The Committee may amend or modify
any Option in any manner to the extent that the Committee would have had the
authority under the Plan initially to grant such Option; PROVIDED, that except
as expressly contemplated elsewhere herein or in any agreement evidencing such
Option, no such amendment or modification shall impair the rights of any
Participant under any outstanding Option without the consent of such
Participant.
6.8 INDEMNIFICATION. In addition to such other rights of indemnification
as they may have as members of the Board or the Committee, the members of the
Committee shall be indemnified by the Company against (i) all costs and expenses
reasonably incurred by them in connection with any action, suit or proceeding to
which they or any of them may be party by reason of any action taken or failure
to act under or in connection with the Plan or any Option granted under the
Plan, and (ii) all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the Company) or
paid by them in satisfaction of a judgment in any such action, suit or
proceeding; PROVIDED, that any such Committee member shall be entitled to the
indemnification rights set forth in this Section 6.8 only if such member (1)
acted in good faith and in a manner that such member reasonably believed to be
in, and not opposed to, the best interests of the Company, and (2) with respect
to any criminal action or proceeding, (A) had no reasonable cause to believe
that such conduct was unlawful, and (B) upon the institution of any such action,
suit or proceeding a Committee member shall give the Company written notice
thereof and an opportunity to handle and defend the same before such Committee
member undertakes to handle and defend it on his own behalf.
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6.9 RESTRICTED SECURITIES. All Class B Common issued pursuant to the
terms of this Plan shall constitute "restricted securities," as that term is
defined in Rule 144 promulgated by the Securities and Exchange Commission
pursuant to the Securities Act, and may not be transferred except in compliance
with the registration requirements of the Securities Act or an exemption
therefrom.
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