Exhibit 10.13
ASSOCIATED MATERIALS HOLDINGS INC.
2002 STOCK OPTION PLAN
1. Purposes. The purposes of the Associated Materials Holdings Inc. 2002
Stock Option Plan are:
(a) To further the growth, development and success of the Company
and its Affiliates by enabling the executive and other employees and directors
of, and consultants to, the Company and its Affiliates to acquire a continuing
equity interest in the Company, thereby increasing their personal interests in
such growth, development and success and motivating such employees, directors
and consultants to exert their best efforts on behalf of the Company and its
Affiliates; and
(b) To maintain the ability of the Company and its Affiliates to
attract and retain employees, directors and consultants of outstanding ability
by offering them an opportunity to acquire a continuing equity interest in the
Company and its Affiliates which will reflect the growth, development and
success of the Company and its Affiliates.
Toward these objectives, the Committee may grant Options to such employees,
directors and consultants, all pursuant to the terms and conditions of the Plan.
2. Definitions. As used in the Plan, the following capitalized terms shall
have the meanings set forth below:
(a) "AFFILIATE" - other than the Company, (i) any corporation or
limited liability company in an unbroken chain of corporations or limited
liability companies ending with the Company if each corporation or limited
liability company owns stock or membership interests (as applicable) possessing
more than fifty percent (50%) of the total combined voting power of all classes
of stock in one of the other corporations or limited liability companies in such
chain; (ii) any corporation, trade or business (including, without limitation, a
partnership or limited liability company) which is more than fifty percent (50%)
controlled (whether by ownership of stock, assets or an equivalent ownership
interest or voting interest) by the Company or one of its Affiliates; or (iii)
any other entity, approved by the Committee as an Affiliate under the Plan, in
which the Company or any of its Affiliates has a material equity interest.
(b) "AGREEMENT" - a written stock option award agreement evidencing
an Option, as described in Section 3(e).
(c) "BOARD" - the Board of Directors of the Company.
(d) "CHANGE IN CONTROL" - an event described in clause (i), (ii) or
(iii) of Section 10(c).
(e) "CODE" - the Internal Revenue Code of 1986, as it may be amended
from time to time, including regulations and rules thereunder and successor
provisions and regulations and rules thereto.
(f) "COMMITTEE" - the Compensation Committee of the Board, or such
other Board committee as may be designated by the Board to administer the Plan.
(g) "COMMON STOCK" - the common stock, $0.01 par value per share, of
the Company.
(h) "COMPANY" - Associated Materials Holdings Inc., a Delaware
corporation, or any successor entity.
(i) "DISABILITY" - the meaning given the term "total disability" in
the Company's long-term disability plan, or, in the absence thereof, an
inability to perform duties and services as an employee, director or consultant,
as the case may be, of the Company or an Affiliate by reason of a medically
determinable physical or mental impairment, supported by medical evidence, which
can be expected to result in death or which has lasted or can be expected to
last for a continuous period of not less than six (6) months, as determined by
the Committee in its good faith discretion; provided, however, that for purposes
of Incentive Stock Options granted under the Plan, "Disability" shall mean
"permanent and total disability" as set forth in Section 22(e)(3) of the Code
which is defined as an inability to perform the duties and services as an
employee of the Company by reason of a medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for at least a continuous twelve (12)-month period.
(j) "FAIR MARKET VALUE" - of a share of Stock as of a given date
shall be: (i) the mean of the highest and lowest reported sale prices for a
share of Stock, on the principal exchange on which the Stock is then listed or
admitted to trading, for such date, or, if no such prices are reported for such
date, the most recent day for which such prices are available shall be used;
(ii) if the Stock is not then listed or admitted to trading on a stock exchange,
the mean of the closing representative bid and asked prices for the Stock on
such date as reported by Nasdaq National Market (or any successor or similar
quotation system regularly reporting the market value of the Stock in the
over-the-counter market), or, if no such prices are reported for such date, the
most recent day for which such prices are available shall be used; or (iii) in
the event neither of the valuation methods provided for in clauses (i) and (ii)
above are practicable, the fair market value determined by such other reasonable
valuation method as the Committee shall, in its discretion, select and apply in
good faith as of the given date; provided, however, that for purposes of
paragraphs (a) and (h) of Section 6, such fair market value shall be determined
subject to Section 422(c)(7) of the Code.
(k) "ISO" or "INCENTIVE STOCK OPTION" - a right to purchase Stock
granted to an Optionee under the Plan in accordance with the terms and
conditions set forth in Section 6 and which conforms to the applicable
provisions of Section 422 of the Code.
(l) "NOTICE" - written notice actually received by the Company at
its executive offices on the day of such receipt, if received on or before 1:30
p.m., on a day when
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the Company's executive offices are open for business, or, if received after
such time, such notice shall be deemed received on the next such day, which
notice may be delivered in person to the Company's Assistant Treasurer, c/o
Harvest Partners, Inc., 280 Park Avenue, 33rd Floor, New York, NY 10017,
attention: Jonathan Angrist, or sent to the Company at the address indicated on
the Agreement.
(m) "OPTION" - a right to purchase Stock granted to an Optionee
under the Plan in accordance with the terms and conditions set forth in Section
6. Options may be either ISOs or stock options other than ISOs.
(n) "OPTIONEE" - an individual who is eligible, pursuant to Section
5, and who has been selected, pursuant to Section 3(c), to participate in the
Plan, and who holds an outstanding Option granted to such individual under the
Plan in accordance with the terms and conditions set forth in Section 6.
(o) "PLAN" - this Associated Materials Holdings Inc. 2002 Stock
Option Plan.
(p) "PREFERRED STOCK" - the 8% cumulative redeemable preferred
stock, $0.01 par value per share, of the Company.
(q) "SECURITIES ACT" - the Securities Act of 1933, as it may be
amended from time to time, including the regulations and rules promulgated
thereunder and successor provisions and regulations and rules thereto.
(r) "STOCK" - the Common Stock or Preferred Stock.
(s) "SUBSIDIARY" - any present or future corporation which is or
would be a "subsidiary corporation" of the Company as the term is defined in
Section 424(f) of the Code.
3. Administration of the Plan. (a) The Committee shall have exclusive
authority to operate, manage and administer the Plan in accordance with its
terms and conditions. Notwithstanding the foregoing, in its absolute discretion,
the Board may at any time and from time to time exercise any and all rights,
duties and responsibilities of the Committee under the Plan, including, but not
limited to, establishing procedures to be followed by the Committee, except with
respect to matters which under any applicable law, regulation or rule, are
required to be determined in the sole discretion of the Committee. If and to the
extent that no Committee exists which has the authority to administer the Plan,
the functions of the Committee shall be exercised by the Board.
(b) The Committee shall be appointed from time to time by the Board,
and the Committee shall consist of not less than two members of the Board.
Appointment of Committee members shall be effective upon their acceptance of
such appointment. Committee members may be removed by the Board at any time
either with or without cause, and such members may resign at any time by
delivering notice thereof to the Board. Any vacancy on the Committee, whether
due to action of the Board or any other reason, shall be filled by the Board.
(c) The Committee shall have full authority to grant, pursuant to
the terms of the Plan, Options to those individuals who are eligible to receive
Options under the Plan. In
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particular, the Committee shall have discretionary authority, in accordance with
the terms of the Plan, to: determine eligibility for participation in the Plan;
select, from time to time, from among those eligible, the employees, directors
and consultants to whom Options shall be granted under the Plan, which selection
may be based upon information furnished to the Committee by the Company's or an
Affiliate's management; determine whether an Option shall take the form of an
ISO or an Option other than an ISO; determine the number of shares of Stock to
be included in any Option, and whether such shares shall be Common Stock,
Preferred Stock or any combination thereof, and the periods for which Options
will be outstanding; establish and administer any terms, conditions, performance
criteria, restrictions, limitations, forfeiture, vesting or exercise schedule,
and other provisions of or relating to any Option; grant waivers of terms,
conditions, restrictions and limitations under the Plan or applicable to any
Option, or accelerate the vesting or exercisability of any Option; amend or
adjust the terms and conditions of any outstanding Option and/or adjust the
number and/or class of shares of Stock subject to any outstanding Option; at any
time and from time to time after the granting of an Option, specify such
additional terms, conditions and restrictions with respect to any such Option as
may be deemed necessary or appropriate to ensure compliance with any and all
applicable laws or rules, including, but not limited to, terms, restrictions and
conditions for compliance with applicable securities laws, regarding an
Optionee's exercise of Options by tendering shares of Stock or under any
"cashless exercise" program established by the Committee, and methods of
withholding or providing for the payment of required taxes; offer to buy out an
Option previously granted, based on such terms and conditions as the Committee
shall establish with and communicate to the Optionee at the time such offer is
made; and, to the extent permitted under the applicable Agreement, permit the
transfer of an Option or the exercise of an Option by one other than the
Optionee who received the grant of such Option (other than any such transfer or
exercise which would cause any ISO to fail to qualify as an "incentive stock
option" under Section 422 of the Code).
(d) The Committee shall have all authority that may be necessary or
helpful to enable it to discharge its responsibilities with respect to the Plan.
Without limiting the generality of the foregoing sentence or Section 3(a), and
in addition to the powers otherwise expressly designated to the Committee in the
Plan, the Committee shall have the exclusive right and discretionary authority
to interpret the Plan and the Agreements; construe any ambiguous provision of
the Plan and/or the Agreements and decide all questions concerning eligibility
for and the amount of Options granted under the Plan. The Committee may
establish, amend, waive and/or rescind rules and regulations and administrative
guidelines for carrying out the Plan and may correct any errors, supply any
omissions or reconcile any inconsistencies in the Plan and/or any Agreement or
any other instrument relating to any Options. The Committee shall have the
authority to adopt such procedures and subplans and grant Options on such terms
and conditions as the Committee determines necessary or appropriate to permit
participation in the Plan by individuals otherwise eligible to so participate
who are foreign nationals or employed outside of the United States, or otherwise
to conform to applicable requirements or practices of jurisdictions outside of
the United States; and take any and all such other actions it deems necessary or
advisable for the proper operation and/or administration of the Plan. The
Committee shall have full discretionary authority in all matters related to the
discharge of its responsibilities and the exercise of its authority under the
Plan. Decisions and actions by the Committee with respect to the Plan and any
Agreement shall be final, conclusive and binding on all persons having or
claiming to have any right or interest in or under the Plan and/or any
Agreement.
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(e) Each Option shall be evidenced by an Agreement, which shall be
executed by the Company and the Optionee to whom such Option has been granted,
unless the Agreement provides otherwise; two or more Options granted to a single
Optionee may, however, be combined in a single Agreement. An Agreement shall not
be a precondition to the granting of an Option; no person shall have any rights
under any Option, however, unless and until the Optionee to whom the Option
shall have been granted (i) shall have executed and delivered to the Company an
Agreement or other instrument evidencing the Option, unless such Agreement
provides otherwise, and (ii) has otherwise complied with the applicable terms
and conditions of the Option. The Committee shall prescribe the form of all
Agreements, and, subject to the terms and conditions of the Plan, shall
determine the content of all Agreements. Any Agreement may be supplemented or
amended in writing from time to time as approved by the Committee; provided that
the terms and conditions of any such Agreement as supplemented or amended are
not inconsistent with the provisions of the Plan.
(f) A majority of the members of the entire Committee shall
constitute a quorum and the actions of a majority of the members of the
Committee in attendance at a meeting at which a quorum is present, or actions by
a written instrument signed by all members of the Committee, shall be the
actions of the Committee.
(g) The Committee may consult with counsel who may be counsel to the
Company. The Committee may, with the approval of the Board, employ such other
attorneys and/or consultants, accountants, appraisers, brokers and other persons
as it deems necessary or appropriate. In accordance with Section 12, the
Committee shall not incur any liability for any action taken in good faith in
reliance upon the advice of such counsel or other persons.
(h) In serving on the Committee, the members thereof shall be
entitled to indemnification as directors of the Company, and to any limitation
of liability and reimbursement as directors with respect to their services as
members of the Committee.
(i) Except to the extent prohibited by applicable law or the
applicable rules of a stock exchange, the Committee may, in its discretion,
allocate all or any portion of its responsibilities and powers under this
Section 3 to any one or more of its members and/or delegate all or any part of
its responsibilities and powers under this Section 3 to any person or persons
selected by it; provided, however, that the Committee may not delegate its
authority to correct errors, omissions or inconsistencies in the Plan. Any such
authority delegated or allocated by the Committee under this paragraph (i) of
Section 3 shall be exercised in accordance with the terms and conditions of the
Plan and any rules, regulations or administrative guidelines that may from time
to time be established by the Committee, and any such allocation or delegation
may be revoked by the Committee at any time.
4. Shares of Stock Subject to the Plan. (a) The shares of stock subject to
Options granted under the Plan shall be shares of Stock. Such shares of Stock
subject to the Plan may be either authorized and unissued shares (which will not
be subject to preemptive rights) or previously issued shares acquired by the
Company or any Subsidiary. The total number of shares of Stock that may be
delivered pursuant to Options granted under the Plan is 566,675 shares,
comprising of 477,519 shares of Common Stock and 89,156 shares of Preferred
Stock.
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(b) Notwithstanding any of the foregoing limitations set forth in
this Section 4, the number of shares of Stock specified in this Section 4 shall
be adjusted as provided in Section 10.
(c) Any shares of Stock subject to an Option which for any reason
expires or is terminated or forfeited without having been fully exercised may
again be granted pursuant to an Option under the Plan, subject to the
limitations of this Section 4.
(d) Any shares of Stock purchased under an Option which are
forfeited or reacquired by the Company at the option exercise price thereof
pursuant to the applicable Agreement, may again be granted pursuant to an Option
under the Plan, subject to the limitations of this Section 4.
(e) Any shares of Stock described in paragraph (c) or (d) of this
Section 4 may, in lieu of being granted pursuant to a new Option, be issued to
the Company's stockholders, other than any employee or director stockholders,
pro-rata to their then-current ownership of the outstanding Stock, if, and in
the manner, determined by the Committee.
(f) Any shares of Stock delivered under the Plan in assumption or
substitution of outstanding stock options, or obligations to grant future stock
options, under plans or arrangements of an entity other than the Company or an
Affiliate in connection with the Company or an Affiliate acquiring such another
entity, or an interest in such an entity, or a transaction otherwise described
in Section 6(j), shall not reduce the maximum number of shares of Stock
available for delivery under the Plan; provided, however, that the maximum
number of shares of Stock that may be delivered pursuant to Incentive Stock
Options granted under the Plan shall be the number of shares set forth in
paragraph (a) of this Section 4, as adjusted pursuant to paragraphs (b) and (c)
of this Section 4.
5. Eligibility. Executive employees and other employees, including
officers, of the Company and the Affiliates, directors (whether or not also
employees), and consultants of the Company and the Affiliates, shall be eligible
to become Optionees and receive Options in accordance with the terms and
conditions of the Plan, subject to the limitations on the granting of ISOs set
forth in Section 6(h).
6. Terms and Conditions of Stock Options. All Options to purchase Stock
granted under the Plan shall be either ISOs or Options other than ISOs. To the
extent that any Option does not qualify as an ISO (whether because of its
provisions or the time or manner of its exercise or otherwise), such Option, or
the portion thereof which does not so qualify, shall constitute a separate
Option other than an ISO. Each Option shall be subject to all the applicable
provisions of the Plan, including the following terms and conditions, and to
such other terms and conditions not inconsistent therewith as the Committee
shall determine and which are set forth in the applicable Agreement. Options
need not be uniform as to all grants and recipients thereof.
(a) The option exercise price per share of shares of Stock subject
to each Option shall be determined by the Committee and stated in the Agreement;
provided, however, that, subject to paragraph (h)(C) and/or (j) of this Section
6, if applicable, such option exercise
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price applicable to any ISO shall not be less than one hundred percent (100%) of
the Fair Market Value of a share of Stock subject to such Option at the time
that the Option is granted.
(b) Each Option shall be exercisable in whole or in such
installments, at such times and under such conditions, as may be determined by
the Committee in its discretion in accordance with the Plan and stated in the
Agreement, and, in any event, over a period of time ending not later than ten
(10) years from the date such Option was granted, subject to paragraph (h)(C) of
this Section 6.
(c) An Option shall not be exercisable with respect to a fractional
share of Stock or the lesser of one hundred (100) shares and the full number of
shares of Stock then subject to the Option. No fractional shares of Stock shall
be issued upon the exercise of an Option.
(d) Each Option may be exercised by giving Notice to the Company
specifying the number and type of shares of Stock to be purchased, which shall
be accompanied by payment in full including applicable taxes, if any, in
accordance with Section 9. Payment shall be in any manner permitted by
applicable law and prescribed by the Committee, in its discretion, and set forth
in the Agreement, including, in the Committee's discretion, and subject to such
terms, conditions and limitations as the Committee may prescribe, payment in
accordance with a "cashless exercise" program (through broker accommodation)
established by the Committee and/or in Stock owned by the Optionee or by the
Optionee and his or her spouse jointly.
(e) No Optionee or other person shall become the beneficial owner of
any shares of Stock subject to an Option, nor have any rights to dividends or
other rights of a shareholder with respect to any such shares until he or she
has exercised his or her Option in accordance with the provisions of the Plan
and the applicable Agreement.
(f) An Option may be exercised only if at all times during the
period beginning with the date of the granting of the Option and ending on the
date of such exercise, the Optionee was an employee, director or consultant of
the Company or an Affiliate, as applicable. Notwithstanding the preceding
sentence, the Committee may determine in its discretion that an Option may be
exercised prior to expiration of such Option following termination of such
continuous employment, directorship or consultancy, whether or not exercisable
at the time of such termination, to the extent provided in the applicable
Agreement.
(g) Subject to the terms and conditions and within the limitations
of the Plan, the Committee may modify, extend or renew outstanding Options
granted under the Plan, or accept the surrender of outstanding Options (up to
the extent not theretofore exercised) and authorize the granting of new Options
in substitution therefor (to the extent not theretofore exercised).
(h) (A) Each Agreement relating to an Option shall state whether
such Option will or will not be treated as an ISO. No ISO shall be granted
unless such Option, when granted, qualifies as an "incentive stock option" under
Section 422 of the Code. No ISO shall be granted to any individual otherwise
eligible to participate in the Plan who is not an employee of the
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Company or a Subsidiary on the date of granting of such Option. Any ISO granted
under the Plan shall contain such terms and conditions, consistent with the
Plan, as the Committee may determine to be necessary to qualify such Option as
an "incentive stock option" under Section 422 of the Code. Any ISO granted under
the Plan may be modified by the Committee to disqualify such Option from
treatment as an "incentive stock option" under Section 422 of the Code.
(B) Notwithstanding any intent to grant ISOs, an Option
granted under the Plan will not be considered an ISO to the extent
that it, together with any other "incentive stock options" (within
the meaning of Section 422 of the Code, but without regard to
subsection (d) of such Section) under the Plan and any other
"incentive stock option" plans of the Company, any Subsidiary and
any "parent corporation" of the Company within the meaning of
Section 424(e) of the Code, are exercisable for the first time by
any Optionee during any calendar year with respect to Stock having
an aggregate Fair Market Value in excess of $100,000 (or such other
limit as may be required by the Code) as of the time the Option with
respect to such Stock is granted. The rule set forth in the
preceding sentence shall be applied by taking Options into account
in the order in which they were granted.
(C) No ISO shall be granted to an individual otherwise
eligible to participate in the Plan who owns (within the meaning of
Section 424(d) of the Code), at the time the Option is granted, more
than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or a Subsidiary or any "parent
corporation" of the Company within the meaning of Section 424(e) of
the Code. This restriction does not apply if at the time such ISO is
granted the option exercise price per share of Stock subject to the
Option is at least 110% of the Fair Market Value of a share of such
Stock on the date such ISO is granted, and the ISO by its terms is
not exercisable after the expiration of five years from such date of
grant.
(i) The Committee may determine and reflect in the Agreement
applicable to any Option the nature and extent of any restrictions to be imposed
on the shares of Stock which may be purchased thereunder, including, but not
limited to, restrictions on the transferability of such shares acquired through
the exercise of such Option for such period as the Committee may determine and,
further, that in the event an Optionee's employment by the Company or an
Affiliate terminates or any conditions prescribed by the Committee and set forth
in such Agreement fail to be satisfied during the period in which such shares
are nontransferable, the Optionee shall be required to sell such shares back to
the Company at such prices as the Committee may specify in such Agreement.
Without limiting the foregoing, an Option and any shares of Stock received upon
the exercise of an Option shall be subject to such other transfer and/or
ownership restrictions and/or legending requirements as the Committee may
establish in its discretion and which are specified in the Agreement and may be
referred to on the certificates evidencing such shares of Stock. The Committee
may require an Optionee to give prompt Notice to the Company concerning any
disposition of shares of Stock received upon the exercise of an ISO within: (i)
two (2) years from the date of granting such ISO to such Optionee or (ii) one
(1) year from the transfer of such shares of Stock to such Optionee or (iii)
such other period as the Committee may from time to time determine. The
Committee may direct that an Optionee
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with respect to an ISO undertake in the applicable Agreement to give such Notice
described in the preceding sentence, at such time and containing such
information as the Committee may prescribe, and/or that the certificates
evidencing shares of Stock acquired by exercise of an ISO refer to such
requirement to give such Notice.
(j) In the event that a transaction described in Section 424(a) of
the Code involving the Company or a Subsidiary is consummated, such as the
acquisition of property or stock from an unrelated corporation, individuals who
become eligible to participate in the Plan in connection with such transaction,
as determined by the Committee, may be granted Options in substitution for
options granted by another corporation that is a party to such transaction. If
such substitute Options are granted, the Committee, in its discretion and
consistent with Section 424(a) of the Code, if applicable, and the terms of the
Plan, though notwithstanding paragraph (a) of this Section 6, shall determine
the option exercise price and other terms and conditions of such substitute
Options.
(k) An Option may include a right entitling the Optionee to receive
credits for additional shares of Preferred Stock based on the amount of cash
dividends that would be paid or accrued on the shares of Preferred Stock
(including shares previously so credited) subject to the Optionee's outstanding
but unexercised Option if such shares were held by such Optionee. Such right
shall be distributed and settled in shares of Preferred Stock upon exercise of
the related Option and shall expire under the same conditions as such Option.
The terms and conditions of any such rights shall be specified by the Committee
and stated in the Agreement.
7. Transfer, Leave of Absence. A transfer of an employee from the Company
to an Affiliate (or, for purposes of any ISO granted under the Plan, a
Subsidiary), or vice versa, or from one Affiliate to another (or in the case of
an ISO, from one Subsidiary to another), and a leave of absence, duly authorized
in writing by the Company or a Subsidiary or Affiliate, shall not be deemed a
termination of employment of the employee for purposes of the Plan or with
respect to any Option (in the case of ISOs, to the extent permitted by the
Code).
8. Rights of Employees and Other Persons. (a) No person shall have any
rights or claims under the Plan except in accordance with the provisions of the
Plan and the applicable Agreement.
(b) Nothing contained in the Plan or in any Agreement shall be
deemed to (i) give any employee or director the right to be retained in the
service of the Company or any Affiliate nor restrict in any way the right of the
Company or any Affiliate to terminate any employee's employment or any
director's directorship at any time with or without cause or (ii) confer on any
consultant any right of continued relationship with the Company or any
Affiliate, or alter any relationship between them, including any right of the
Company or an Affiliate to terminate its relationship with such consultant.
(c) The adoption of the Plan shall not be deemed to give any
employee of the Company or any Affiliate or any other person any right to be
selected to participate in the Plan or to be granted an Option.
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(d) Nothing contained in the Plan or in any Agreement shall be
deemed to give any employee the right to receive any bonus, whether payable in
cash or in Stock, or in any combination thereof, from the Company or any
Affiliate, nor be construed as limiting in any way the right of the Company or
any Affiliate to determine, in its sole discretion, whether or not it shall pay
any employee bonuses, and, if so paid, the amount thereof and the manner of such
payment.
9. Tax Withholding Obligations. (a) The Company and/or any Affiliate are
authorized to take whatever actions are necessary and proper to satisfy all
obligations of Optionees (including, for purposes of this Section 9, any other
person entitled to exercise an Option pursuant to the Plan or an Agreement) for
the payment of all Federal, state, local and foreign taxes in connection with
any Options (including, but not limited to, actions pursuant to the following
paragraph (b) of this Section 9).
(b) Each Optionee shall (and in no event shall Stock be delivered to
such Optionee with respect to an Option until), no later than the date as of
which the value of the Option first becomes includible in the gross income of
the Optionee for income tax purposes, pay to the Company in cash, or make
arrangements satisfactory to the Company, as determined in the Committee's
discretion, regarding payment to the Company of, any taxes of any kind required
by law to be withheld with respect to the Stock or other property subject to
such Option, and the Company and any Affiliate shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind
otherwise due to such Optionee. Notwithstanding the above, the Committee may, in
its discretion and pursuant to procedures approved by the Committee, permit the
Optionee to (i) elect withholding by the Company of Stock otherwise deliverable
to such Optionee pursuant to his or her Option (provided, however, that the
amount of any Stock so withheld shall not exceed the amount necessary to satisfy
the Company's or any Affiliate's required Federal, state, local and foreign
withholding obligations using the minimum statutory withholding rates for
Federal, state and/or local tax purposes, including payroll taxes, that are
applicable to supplemental taxable income) and/or (ii) tender to the Company
Stock owned by such Optionee (or by such Optionee and his or her spouse
jointly), and purchased or held for the requisite period of time as necessary to
avoid a charge to the Company's or any Affiliate's earnings for financial
reporting purposes, in full or partial satisfaction of such tax obligations,
based, in each case, on the Fair Market Value of the Stock on the payment date
as determined by the Committee.
10. Changes in Capital. (a) The existence of the Plan and any Options
granted hereunder shall not affect in any way the right or power of the Board or
the stockholders 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 or an
Affiliate, any issue of debt, preferred or prior preference stock ahead of or
affecting Stock, the authorization or issuance of additional shares of Stock,
the dissolution or liquidation of the Company or its Affiliates, any sale or
transfer of all or part of its assets or business or any other corporate act or
proceeding.
(b) (i) Upon changes in the outstanding Stock by reason of a stock
dividend, stock split, reverse stock split, subdivision, recapitalization,
reclassification, merger, consolidation (whether or not the Company is a
surviving corporation), combination or exchange
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of shares of Stock, separation, or reorganization, or in the event of an
extraordinary dividend, "spin-off," liquidation, other substantial distribution
of assets of the Company or acquisition of property or stock or other change in
capital of the Company, or the issuance by the Company of shares of its capital
stock without receipt of full consideration therefor, or rights or securities
exercisable, convertible or exchangeable for shares of such capital stock, or
any similar change affecting the Company's capital structure, the aggregate
number, class and kind of shares of stock available under the Plan as to which
Options may be granted and the number, class and kind of shares under each
outstanding Option and the exercise price per share applicable to any such
Options shall be appropriately adjusted by the Committee in its discretion to
preserve the benefits or potential benefits intended to be made available under
the Plan or with respect to any outstanding Options or otherwise necessary to
reflect any such change.
(ii) Without limiting the generality of Section 10(b)(i), in its
discretion, and on such terms and conditions as it deems appropriate, the
Committee may provide, either by the terms of the Agreement applicable to
any Option or by resolution adopted prior to the occurrence of a
"spin-off," reorganization, partial liquidation, or other distribution of
assets of the Company or any Subsidiary, that any outstanding Option shall
be accelerated as described in Section 10(c)(1) or adjusted or converted
as described in Section 10(c)(2) or (3) with respect to stock or other
securities of any entity that is a party, direct or indirect, to such
transaction.
(iii) Fractional shares of Stock resulting from any adjustment in
Options pursuant to this Section 10(b) shall be aggregated until, and
eliminated at, the time of exercise of the affected Options. Notice of any
adjustment shall be given by the Committee to each Optionee whose Option
has been adjusted and such adjustment (whether or not such Notice is
given) shall be effective and binding for all purposes of the Plan.
(c) In the event of (i) a stock sale, merger, consolidation,
combination, reorganization or other transaction resulting in less than fifty
percent (50%) of the combined voting power of the surviving or resulting entity
being owned by the shareholders of the Company immediately prior to such
transaction, or (ii) the liquidation or dissolution of the Company or the sale
or other disposition of all or substantially all of the assets or business of
the Company (other than, in the case of either clause (i) or (ii) above, in
connection with any employee benefit plan of the Company or an Affiliate):
(1) In its discretion and on such terms and conditions as it
deems appropriate, the Committee may provide, either by the terms of the
Agreement applicable to any Option or by a resolution adopted prior to the
occurrence of the Change in Control, that any outstanding Option shall be
accelerated and become immediately exercisable as to all or a portion of
the shares of Stock covered thereby, notwithstanding anything to the
contrary in the Plan or the Agreement.
(2) In its discretion, and on such terms and conditions as it
deems appropriate, the Committee may provide, either by the terms of the
Agreement applicable to any Option or by resolution adopted prior to the
occurrence of the Change in Control, that any outstanding Option shall be
adjusted by substituting for each share of Stock
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subject to such Option immediately prior to the transaction resulting in
the Change in Control the consideration (whether stock or other securities
of the surviving corporation or any successor corporation to the Company,
or a parent or subsidiary thereof, or that may be issuable by another
corporation that is a party to the transaction resulting in the Change in
Control, or other property) received in such transaction by holders of
such Stock for each share of such Stock held on the closing or effective
date of such transaction, in which event, the aggregate exercise price of
the Option shall remain the same; provided, however, that if such
consideration received in the transaction is not solely stock of a
successor, surviving or other corporation, the Committee may provide for
the consideration to be received upon exercise of the Option, for each
share of Stock subject to the Option, to be solely stock of the successor,
surviving or other corporation, as applicable, equal in fair market value,
as determined by the Committee, to the per share consideration received by
holders of such Stock in the Change in Control transaction.
(3) In its discretion, and on such terms and conditions as it
deems appropriate, the Committee may provide, either by the terms of the
Agreement applicable to any Option or by resolution adopted prior to the
occurrence of the Change in Control, that any outstanding Option shall be
converted into a right to receive cash on or following the closing date or
expiration date of the transaction resulting in the Change in Control in
an amount equal to the highest value of the consideration to be received
in connection with such transaction for one share of the Stock subject to
such Option, or, if higher, the highest Fair Market Value of such Stock
during the thirty (30) consecutive business days immediately prior to the
closing date or expiration date of such transaction, less the per share
exercise price of such Option, multiplied by the number of shares of Stock
subject to such Option, or a portion thereof.
(4) The Committee may, in its discretion, provide that an
Option cannot be exercised after such a Change in Control, to the extent
that such Option is or becomes fully exercisable on or before such Change
in Control or is subject to any acceleration, adjustment or conversion in
accordance with the foregoing paragraphs (1), (2) or (3) of this
subsection 10(c).
No Optionee shall have any right to prevent the consummation of any of the
foregoing acts affecting the number of shares of Stock available to such
Optionee. Any actions or determinations of the Committee under this subsection
10(c) need not be uniform as to all outstanding Options, nor treat all Optionees
identically. Notwithstanding the foregoing adjustments, in no event may any
Option be exercised after ten (10) years from the date it was originally
granted, and any changes to ISOs pursuant to this Section 10 shall, unless the
Committee determines otherwise, only be effective to the extent such adjustments
or changes do not cause a "modification" (within the meaning of Section
424(h)(3) of the Code) of such ISOs or adversely affect the tax status of such
ISOs.
11. Miscellaneous Provisions. (a) The Plan shall be unfunded. The Company
shall not be required to establish any special or separate fund or to make any
other segregation of assets to assure the issuance of shares of Stock or the
payment of cash upon exercise or payment
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of any Option. Proceeds from the sale of shares of Stock pursuant to Options
granted under the Plan shall constitute general funds of the Company.
(b) Except as otherwise provided in this paragraph (b) of Section 11
or by the Committee, an Option by its terms shall be personal and may not be
sold, transferred, pledged, assigned, encumbered or otherwise alienated or
hypothecated otherwise than by will or by the laws of descent and distribution
and shall be exercisable during the lifetime of an Optionee only by him or her.
An Agreement may permit the exercise or payment of an Optionee's Option (or any
portion thereof) after his or her death by or to the beneficiary most recently
named by such Optionee in a written designation thereof filed with the Company,
or, in lieu of any such surviving beneficiary, as designated by the Optionee by
will or by the laws of descent and distribution. In the event any Option is
exercised by the executors, administrators, heirs or distributees of the estate
of a deceased Optionee, or such an Optionee's beneficiary, or the transferee of
an Option, in any such case pursuant to the terms and conditions of the Plan and
the applicable Agreement and in accordance with such terms and conditions as may
be specified from time to time by the Committee, the Company shall be under no
obligation to issue Stock thereunder unless and until the Committee is satisfied
that the person or persons exercising such Option is the duly appointed legal
representative of the deceased Optionee's estate or the proper legatee or
distributee thereof or the named beneficiary of such Optionee, or the valid
transferee of such Option, as applicable.
(c) (i) If at any time the Committee shall determine, in its
discretion, that the listing, registration and/or qualification of shares of
Stock upon any securities exchange or under any state or Federal law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the sale or purchase of
shares of Stock hereunder, no Option may be granted, exercised or paid in whole
or in part unless and until such listing, registration, qualification, consent
and/or approval shall have been effected or obtained, or otherwise provided for,
free of any conditions not acceptable to the Committee.
(ii) If at any time counsel to the Company shall be of the opinion
that any sale or delivery of shares of Stock pursuant to an Option is or
may be in the circumstances unlawful or result in the imposition of excise
taxes on the Company or any Affiliate under the statutes, rules or
regulations of any applicable jurisdiction, the Company shall have no
obligation to make such sale or delivery, or to make any application or to
effect or to maintain any qualification or registration under the
Securities Act, or otherwise with respect to shares of Stock or Options
and the right to exercise any Option shall be suspended until, in the
opinion of such counsel, such sale or delivery shall be lawful or will not
result in the imposition of excise taxes on the Company or any Affiliate.
(iii) Upon termination of any period of suspension under this
Section 11(c), any Option affected by such suspension which shall not then
have expired or terminated shall be reinstated as to all shares available
before such suspension and as to the shares which would otherwise have
become available during the period of such suspension, but no suspension
shall extend the term of any Option.
(d) The Committee may require each person receiving Stock in
connection with any Option under the Plan to represent and agree with the
Company in writing that such
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person is acquiring the shares of Stock for investment without a view to the
distribution thereof. The Committee, in its absolute discretion, may impose such
restrictions on the ownership and transferability of the shares of Stock
purchasable or otherwise receivable by any person under any Option as it deems
appropriate. Any such restrictions shall be set forth in the applicable
Agreement, and the certificates evidencing such shares may include any legend
that the Committee deems appropriate to reflect any such restrictions.
(e) By accepting any benefit under the Plan, each Optionee and each
person claiming under or through such Optionee shall be conclusively deemed to
have indicated their acceptance and ratification of, and consent to, all of the
terms and conditions of the Plan and any action taken under the Plan by the
Committee, the Company or the Board, in any case in accordance with the terms
and conditions of the Plan.
(f) In the discretion of the Committee, an Optionee may elect
irrevocably (at a time and in a manner determined by the Committee) prior to
exercising an Option that delivery of shares of Stock upon such exercise shall
be deferred until a future date and/or the occurrence of a future event or
events, specified in such election. Upon the exercise of any such Option and
until the delivery of any deferred shares under this paragraph (f) of Section
11, the number of shares otherwise issuable to the Optionee shall be credited to
a memorandum account in the records of the Company or its designee and any
dividends or other distributions payable on such shares shall be deemed
reinvested in additional shares of Stock, in a manner determined by the
Committee, until all shares of Stock credited to such Optionee's memorandum
account shall become issuable pursuant to the Optionee's election.
(g) The Committee may, in its discretion, extend one or more loans
to Optionees who are directors, key employees or consultants of the Company or
an Affiliate in connection with the exercise or receipt of an Option granted to
any such individual. The terms and conditions of any such loan shall be
established by the Committee.
(h) Neither the adoption of the Plan nor anything contained herein
shall affect any other compensation or incentive plans or arrangements of the
Company or any Affiliate, or prevent or limit the right of the Company or any
Affiliate to establish any other forms of incentives or compensation for their
directors, employees or consultants or grant or assume options or other rights
otherwise than under the Plan.
(i) The Plan shall be governed by and construed in accordance with
the laws of the State of New York, without regard to such state's conflict of
law provisions, and, in any event, except as superseded by applicable Federal
law.
(j) The words "Section," "subsection" and "paragraph" herein shall
refer to provisions of the Plan, unless expressly indicated otherwise. Wherever
any words are used in the Plan or any Agreement in the masculine gender they
shall be construed as though they were also used in the feminine gender in all
cases where they would so apply, and wherever any words are used herein in the
singular form they shall be construed as though they were also used in the
plural form in all cases where they would so apply.
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(k) The Company shall bear all costs and expenses incurred in
administering the Plan, including expenses of issuing Stock pursuant to any
Options granted hereunder.
12. Limits of Liability. (a) Any liability of the Company or an Affiliate
to any Optionee with respect to any Option shall be based solely upon
contractual obligations created by the Plan and the Agreement.
(b) None of the Company, any Affiliate, any member of the Committee
or the Board or any other person participating in any determination of any
question under the Plan, or in the interpretation, administration or application
of the Plan, shall have any liability, in the absence of bad faith, to any party
for any action taken or not taken in connection with the Plan, except as may
expressly be provided by statute.
13. Amendments and Termination. The Board may, at any time and with or
without prior notice, amend, alter, suspend or terminate the Plan, retroactively
or otherwise; provided, however, unless otherwise required by law or
specifically provided herein, no such amendment, alteration, suspension or
termination shall be made which would impair the previously accrued rights of
any holder of an Option theretofore granted without his or her written consent,
or which, without first obtaining approval of the stockholders of the Company
(where such approval is necessary to satisfy (i) with regard to ISOs, any
requirements under the Code relating to ISOs or (ii) any applicable law,
regulation or rule), would:
(a) except as is provided in Section 10, increase the maximum number
of shares of Stock which may be sold or awarded under the Plan;
(b) except as is provided in Section 10, decrease the minimum option
exercise price requirements of Section 6(a);
(c) change the class of persons eligible to receive Options under
the Plan; or
(d) extend the duration of the Plan or the period during which
Options may be exercised under Section 6(b).
The Committee may amend the terms of any Option theretofore granted, including
any Agreement, retroactively or prospectively, but no such amendment shall
materially impair the previously accrued rights of any Optionee without his or
her written consent.
14. Duration. The Plan shall become effective as of the date the Plan is
adopted by the Board, provided that the Plan is approved by the holders of a
majority of the Company's outstanding Stock which is present and voted at a
meeting, or by written consent in lieu of a meeting, which approval must occur
within the period ending twelve (12) months after the date the Plan is adopted
by the Board. The Plan shall terminate upon the earliest to occur of:
(a) the effective date of a resolution adopted by the Board
terminating the Plan;
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(b) the date all shares of Stock subject to the Plan are delivered
pursuant to the Plan's provisions; or
(c) ten (10) years from the date the Plan is adopted by the Board.
No Option may be granted under the Plan after the earliest to occur of the
events or dates described in the foregoing paragraphs (a) through (c) of this
Section 14; however, Options theretofore granted may extend beyond such date.
No such termination of the Plan shall materially impair the previously accrued
rights of any Optionee hereunder without his or her consent, and all Options
previously granted hereunder shall continue in force and in operation after the
termination of the Plan, except as they may be otherwise terminated in
accordance with the terms of the Plan or the Agreement.
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