EXHIBIT 10.11
AMH HOLDINGS II, INC.
2004 Stock Option Plan
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1. Purposes. The purposes of the AMH Holdings II, Inc. 2004 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), substantially in the form of Exhibit A
hereto.
(c) "Board" - the Board of Directors of the Company.
(d) "Change in Control" shall mean (i) a stock sale, merger,
consolidation, combination, reorganization or other transaction involving the
Company 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 sale
or other disposition of all or substantially all of the consolidated assets or
business of the Company.
(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 Series B (Non-Voting) Common Stock, $0.01
par value per share, of the Company.
(h) "Company" - AMH Holdings II, 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 Common Stock as of a given
date shall be: (i) the mean of the highest and lowest reported sale prices for a
share of Common Stock, on the principal exchange on which the Common 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 Common 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 Common Stock on such date as reported by Nasdaq National
Market (or any successor or similar quotation system regularly reporting the
market value of the Common 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 shall be determined in good faith by the Board of Directors utilizing such
reasonable valuation methods as the Board of Directors 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.
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(k) "ISO" or "Incentive Stock Option" - a right to purchase Common
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 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 at the Company's address indicated on the Agreement, with copies to be
provided as set forth herein.
(m) "Option" - a right to purchase Common 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 AMH Holdings II, Inc. 2004 Stock Option Plan.
(p) "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.
(q) "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 Common
Stock to be included in any Option, 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, in accordance with the last paragraph in Section 13, the terms and
conditions of any outstanding Option and/or adjust the number and/or class of
shares of Common 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 Common 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, and (ii) has otherwise complied with the applicable terms and
conditions of the Option and Agreement. 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 in accordance
with the last paragraph of Section 13; 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 Common Stock Subject to the Plan. (a) The shares of stock
subject to Options granted under the Plan shall be shares of Common Stock. Such
shares of Common 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
Common Stock that may be delivered pursuant to Options granted under the Plan is
469,782 shares of Common Stock; provided, however, that the number of shares of
Common Stock covered by Options granted to an Optionee in any one year pursuant
to the Plan
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shall in no event exceed 234,891 shares. Any or all of such shares of Common
Stock may be delivered pursuant to ISOs.
(b) Notwithstanding any of the foregoing limitations set forth in
this Section 4, the number of shares of Common Stock specified in this Section 4
shall be adjusted as provided in Section 10.
(c) Any shares of Common 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 Common 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
Common Stock available for delivery under the Plan; provided, however, that the
maximum number of shares of Common 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 paragraph (b)
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 Common
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 Common Stock
subject to each Option shall be determined by the Committee and stated in the
Agreement; provided, however, that such option exercise price shall not be less
than one hundred percent (100%) of the Fair Market Value of a share of Common
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.
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(c) An Option shall not be exercisable with respect to a fractional
share of Common Stock or the lesser of one hundred (100) shares and the full
number of shares of Common Stock then subject to the Option. No fractional
shares of Common 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 Common 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 Common 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 Common 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 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
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"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 Common
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 Common 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 Common Stock subject to the Option
is at least 110% of the Fair Market Value of a share of such Common
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 Common 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 Common
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
Common Stock. The Committee may require an Optionee to give prompt Notice to the
Company concerning any disposition of shares of Common 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 Common
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 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
Common 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
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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.
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.
(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 Common 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 Common 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
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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 Common
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 Common Stock otherwise deliverable to such
Optionee pursuant to his or her Option (provided, however, that the amount of
any Common 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
Common 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 Common 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 Common Stock, the authorization or issuance of additional shares of
Common 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 Common 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 of shares of Common 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
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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 Common 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 a Change of Control:
(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 Common 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 Common Stock 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
Common Stock for each share of such Common 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 Common 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 Common 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 value of the consideration to be received in
connection with such transaction for one share of the Common Stock subject
to such Option, less the per share
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exercise price of such Option, multiplied by the number of shares of
Common 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 Common 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 Common Stock or
the payment of cash upon exercise or payment of any Option. Proceeds from the
sale of shares of Common 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 or the applicable Agreement, 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
Common 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
Common 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
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purchase of shares of Common 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 Common 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 Common 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 Common Stock in
connection with any Option under the Plan to represent and agree with the
Company in writing that such person is acquiring the shares of Common 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 Common 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) 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.
(g) 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.
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(h) 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.
(i) The Company shall bear all costs and expenses incurred in
administering the Plan, including expenses of issuing Common 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 Common 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. The foregoing to the contrary notwithstanding, the Board
may amend or alter the Plan and the Committee may amend or alter any Award,
including any Agreement, either retroactively or prospectively, without the
consent of the applicable Optionee, if the Board or the Committee determines in
its discretion that such amendment or alteration is required or advisable for
the Company, the Plan
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or the Award to satisfy, comply with or meet the requirements of any law,
regulation, rule or accounting standard.
14. Duration. The Plan shall become effective as of 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;
(b) the date all shares of Common 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, Common Stock may thereafter be granted after 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.
15. Shareholder Approval. Sections 10(b)(ii) and 10(c) shall not be
effective unless shareholder approval meeting the requirements of Section
280G(b)(5) of the Code, and the regulations promulgated thereunder, is obtained.
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