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Exhibit 99(b)
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EXHIBIT 99(b)
GATES/FA DISTRIBUTING, INC.
1987 STOCK OPTION PLAN
ORIGINALLY ADOPTED OCTOBER 12, 1987
ADOPTED BY THE BOARD OF DIRECTORS, AS AMENDED AND RESTATED,
ON SEPTEMBER 5, 1991 AND REAPPROVED BY THE SHAREHOLDERS AS
AMENDED AND RESTATED ON NOVEMBER 15, 1991
1. PURPOSE
(a) The purpose of the Plan is to provide a means by which selected
employees of Gates/FA Distributing, Inc. (the "Company") and its Affiliates, as
defined in subparagraph 1(b), may be given an opportunity to Purchase stock of
the Company.
This Plan is the continuation of the Gates Distributing, Inc. 1987 Stock
Option Plan and after the adoption of this Plan as amended and restated herein
by the Board of the Company and approved as amended and restated by the
Shareholders, shall be known as the "Gates/FA Distributing, Inc. 1987 Stock
Option Plan."
(b) Plan is designed to strengthen the Company by providing an additional
means of attracting and retaining key personnel and providing an incentive to
key employees of the Company to encourage them to devote their abilities and
industry to the success of the Company's business enterprise. It is intended
that this purpose be achieved by extending to key employees an added long-term
incentive for high levels of performance and unusual efforts designed to improve
the financial performance of the Company through the grant of options to
purchase shares of the Company's Common Stock under this Plan.
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(c) The word "Affiliate" as used in the Plan means any parent corporation
or subsidiary corporation of the Company as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1954, as amended
(the "Code").
(d) The Company intends that the options issued under the Plan not be
incentive stock options as that term is used in Section 422A of the Code.
2. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors (the "Board")
of the Company unless and until the Board delegates administration to a
committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible
under the Plan shall be granted options; when and how the option shall be
granted; the provisions of each option granted (which need not be
identical), including the time or times during the term of each option
within which all or portions of such option may be exercised; and the
number of shares for which an option shall be granted to each such person.
(2) To construe and interpret the Plan and options granted under it,
and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of
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this power, may correct any defect, omission or inconsistency in the Plan or in
any option agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.
(3) To amend the Plan as provided in paragraph 10.
(4) Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the
Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) directors (the "Committee"), all of the
members of which Committee shall be disinterested persons, as defined by the
provisions of subparagraph 2(d). If administration is delegated to a Committee,
the Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by the Board, subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board.
The Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
(d) The term "disinterested person," as used in this Plan, shall mean an
administrator of the Plan who has not at any time within one year prior to his
or her service as administrator of the Plan received, and who will not during
the term of his or her service receive a discretionary grant or award of a stock
option or a stock appreciation right under this Plan or any other plan or
practice of the Company or any of its affiliates. Any such person
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shall otherwise comply with the requirements of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as from time
to time in effect.
3. SHARES SUBJECT TO THE PLAN
(a) Subject to the provisions of paragraph 9 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to options granted under
the Plan shall not exceed in the aggregate One Million Three Hundred Fifty
Thousand (1,350,000) shares of the Company's Common Stock. If any option granted
under either this Plan shall for any reason expire or otherwise terminate
without having been exercised in full, the stock not purchased under such option
shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
(c) There is no maximum limit on the aggregate fair market value of the
stock for which any eligible person may be granted options under this Plan in
any calendar year.
4. ELIGIBILITY
(a) Options may be granted only to key employees (including officers) of
the Company or its Affiliates. A director of the Company shall not be eligible
for the benefits of the Plan unless such director is also a key employee
(including an officer) of the Company or any Affiliate.
(b) A director shall in no event be eligible for the benefits of the Plan
unless and until such director is expressly declared eligible to participate in
the Plan by action of the Board or the
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Committee, and only if, at any time discretion is exercised by the Board in the
selection of a director as a person to whom options may be granted, or in the
determination of the number or maximum number of shares which may be covered by
options granted to a director, a majority of the Board and a majority of the
directors acting in such matter are disinterested persons, as defined in
subparagraph 2(d). The Board shall otherwise comply with the requirements of
Rule 16b-3 promulgated under the Exchange Act, as from time to time in effect.
(c) No person shall be eligible for the grant of an option under the Plan
if, at the time of grant, such person owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates unless the option price is at least one
hundred ten percent (110%) of the fair market value of such stock at the date of
grant and the term of the option does not exceed five (5) years from the date of
grant.
5. OPTION PROVISIONS
Each option shall be in such form and shall contain such terms and
conditions as the Board or the Committee shall deem appropriate. The provisions
of separate options need not be identical, but each option shall include
(through incorporation of provisions hereof by reference in the option or
otherwise) the substance of each of the following provisions:
(a) The term of any option shall not be greater than ten (10) years from
the date it was granted.
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(b) The exercise price of each option shall be not less than
eighty-five percent (85%) of the fair market value of the stock subject to
the option on the date the option is granted.
(c) The purchase price of stock acquired pursuant to an option shall
be paid, to the extent permitted by applicable statutes and regulations,
either (i) in cash at the time the option is exercised, or (ii) at the
discretion of the Board or the Committee, either at the time of grant or
exercise of the option (A) by delivery to the Company of other Common Stock
of the Company, (B) according to a deferred payment or other arrangement
(which may include, without limiting the generality of the foregoing, the
use of other Common Stock of the Company) with the person to whom the
option is granted or to whom the option is transferred pursuant to
subparagraph 5(d), or (C) in any other form of legal consideration that may
be acceptable to the Board or the Committee.
(d) An option shall not be transferable except by will or by the laws
of descent and distribution, and shall be exercisable during the lifetime
of the person to whom the option is granted only by such person.
(e) The total number of shares of stock subject to an option may, but
need not, be allotted in periodic installments (which may, but need not, be
equal). From time to time during each of such installment periods, the
option may be exercised with respect to some or all of the shares allotted
to that period, and/or with respect to some or all of the shares allotted
to any prior period
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as to which the option was not fully exercised. During the remainder of the term
of the option (if its term extends beyond the end of the installment periods),
the option may be exercised from time to time with respect to any shares then
remaining subject to the option. The provisions of this subparagraph 5(e) are
subject to any option provisions governing the minimum number of shares as to
which an option may be exercised.
(f) The Company may require any optionee, or any person to whom an option
is transferred under subparagraph 5(d), as a condition of exercising any such
option: (1) to give written assurances satisfactory to the Company as to the
optionee's knowledge and experience in financial and business matters and/or to
employ a purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters that he or she
is capable of evaluating, alone or together with the purchaser representative,
the merits and risks of exercising the option; and (2) to give written
assurances satisfactory to the Company stating that such person is acquiring the
stock subject to the option for such person's own account and not with any
present intention of selling or otherwise distributing the stock. These
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (i) the issuance of the shares upon the exercise of the option
has been registered under a then currently effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), or (ii), as
to any particular requirement, a determination is made by
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counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws.
(g) An option shall terminate three (3) months after termination of the
optionee's employment with the Company or an Affiliate, unless (i) the
termination of employment of the optionee is due to such person's permanent and
total disability, within the meaning of Section 422(c)(6) of the Code, in which
case the option shall provide that it may be exercised at any time within one
(1) year following such termination of employment; or (ii) the optionee dies
while in the employ of the Company or an Affiliate, or within not more than
three (3) months after termination of such employment, in which case the option
shall provide that it may be exercised at any time within eighteen (18) months
following the death of the optionee by the person or persons to whom the
optionee's rights under such option pass by will or by the laws of descent and
distribution; or (iii) the option by its terms specifies either (a) that it
shall terminate sooner than three (3) months after termination of the optionee's
employment, or (b) that it may be exercised more than three (3) months after
termination of the optionee's employment with the Company or an Affiliate. This
subparagraph 5(g) shall not be construed to extend the term of any option or to
permit anyone to exercise the option after expiration of its term, nor shall it
be construed to increase the number of shares as to which any option is
exercisable from the amount exercisable on the date of termination of the
optionee's employment.
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(h) The option may, but need not, include a provision whereby the optionee
may elect at any time during the term of his or her employment with the Company
or any Affiliate to exercise the option as to any part or all of the shares
subject to the option prior to the stated vesting date of the option or of any
installment or installments specified in the option. Any shares so purchased
from any unvested installment or option may be subject to a repurchase right in
favor of the Company or to any other restriction the Board or the Committee
determines to be appropriate.
6. COVENANTS OF THE COMPANY
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan or any stock issued or issuable pursuant to any such option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of
such options unless and until such authority is
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obtained.
7. USE OF PROCEEDS FROM STOCK
Proceeds from the sale of stock pursuant to options granted under the Plan
shall constitute general funds of the Company.
8. MISCELLANEOUS
(a) The Board or the Committee shall have the power to accelerate the time
during which an option may be exercised of the time during which an option or
any portion thereof will vest pursuant to subparagraph 5(e), notwithstanding the
provisions in the option stating the time during which it may be exercised or
the time during which it will vest.
(b) Neither an optionee nor any person to whom an option is transferred
under subparagraph 5(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(c) Throughout the term of any option granted pursuant to the Plan, the
Company shall make available to the holder of such option, not later than one
hundred twenty (120) days after the close of each of the Company's fiscal years
during the option term, upon request, such financial and other information
regarding the Company as comprises the annual report to the shareholders of the
Company provided for in the bylaws of the Company.
(d) Nothing in the Plan or any instrument executed or option granted
pursuant thereto shall confer upon any eligible person or
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optionee any right to continue in the employ of the Company or any Affiliate or
shall affect the right of the Company or any Affiliate to terminate the
employment of any eligible person or optionee with or without cause.
9. ADJUSTMENTS UPON CHANGES IN STOCK
(a) If Any change is made in the stock subject to the Plan, or subject to
any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
options will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding options.
(b) In the event of (1) a dissolution or liquidation of the Company; (2) a
merger or consolidation in which the Company is not the surviving corporation;
(3) a reverse merger in which the Company is the surviving corporation but the
shares of the Company's common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise; or (4) any other capital reorganization
in which more than fifty percent (50%) of the shares of the Company entitled to
vote are exchanged, then, at the sole discretion of the Board and to the extent
permitted by applicable law (i) any surviving corporation shall assume any
options outstanding under the Plan or shall substitute similar
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options for those outstanding under the Plan, or (ii) the time during which such
options may be exercised shall be accelerated and the options terminated if not
exercised prior to such event, or (iii) such options shall continue in full
force and effect.
10. AMENDMENT OF THE PLAN
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 9 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the vote or written
consent of a majority of the outstanding shares of the Company entitled to vote
within twelve (12) months before or after the adoption of the amendment, where
the amendment will:
(i) Increase the number of shares reserved for options under the Plan;
(ii) Materially modify the requirements as to eligibility for
participation in the Plan; or
(iii) Materially increase the benefits accruing to participants
under the Plan.
(b) Rights and obligations under any option granted before amendment of the
Plan shall not be altered or impaired by any amendment of the Plan, except with
the consent of the person to whom the option was granted.
11. TERMINATION OR SUSPENSION OF THE PLAN
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on October 12, 1997. No options may be
granted under the Plan while the Plan is
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suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
12. EFFECTIVE DATES
(a) The Plan shall become effective as determined by the Board, but no
options granted under the Plan shall be exercised unless and until the Plan has
been approved by the vote or written consent of the holders of a majority of the
outstanding shares of the Company entitled to vote.
(b) The 1991 amendments to the Plan shall become effective as of the date
of shareholder approval and adoption of the Plan, as amended and restated, with
the exception of the amendments contained in subparagraphs 2(c) and (d), which
shall become effective as of September 1, 1992.
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