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EXHIBIT 10.2
ASSOCIATED MATERIALS INCORPORATED
EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the interests of
Associated Materials Incorporated by providing eligible employees with the
opportunity to acquire a proprietary interest in the Company through
participation in a payroll-deduction based employee stock purchase plan designed
to qualify under Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to such terms in
the attached Appendix.
II. ADMINISTRATION OF THE PLAN
A. The Plan Administrator shall administer the Plan and shall have full
authority and discretion to interpret and construe any provision of the Plan and
to adopt such rules and regulations for administering the Plan as it may deem
necessary, and to take any action it may deem necessary in order to comply with
the requirements of Section 423 of the Code. Decisions of the Plan Administrator
and the Board shall be final and binding on all parties having an interest in
the Plan. The Plan Administrator shall have full authority and discretion to
retain and engage such third party firms (including, without limitation,
brokerage and record keeping firms) as it shall from time to time deem advisable
or appropriate.
B. The Board shall have the full authority and discretion to designate
Corporate Affiliates as Participating Companies from time to time and to
terminate any such designation; to decide any questions relating to the
administration of the Plan that are referred to the Board by the Plan
Administrator; and to amend the Plan as provided in Section X.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of authorized but
unissued Common Stock or shares of Common Stock held in the Company's treasury.
The maximum number of shares of Common Stock which may be issued over the term
of the Plan shall not exceed 500,000 shares.
B. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Company's receipt of consideration, appropriate adjustments shall be made to
(i) the maximum number and class of securities issuable under the Plan, (ii) the
maximum number and class of securities purchasable per Participant on any one
Purchase Date and (iii) the number and class of securities and the price
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per share in effect under each outstanding purchase right in order to prevent
the dilution or enlargement of benefits thereunder.
IV. PURCHASE PERIODS
Shares of Common Stock shall be offered for purchase under the Plan through
a series of successive Purchase Periods until such time as (i) the maximum
number of shares of Common Stock available for issuance under the Plan shall
have been purchased or (ii) the Plan shall have been sooner terminated.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the Effective Date shall
be eligible to participate in the Plan on the first day of any Purchase Period
under the Plan, provided such individual remains an Eligible Employee on such
day. Eligibility to participate in the Plan shall be limited to Eligible
Employees employed by the Company or by a Corporate Affiliate that is a U.S.
subsidiary of the Company.
B. Each individual who becomes an Eligible Employee after the Effective
Date shall be eligible to participate in the Plan on the first day of any
Purchase Period commencing thereafter, provided such individual remains an
Eligible Employee on such day.
C. To participate in the Plan for a particular Purchase Period, an Eligible
Employee must complete the enrollment forms prescribed by the Plan Administrator
and file such forms with the Plan Administrator (or its designee) before the
first day of such Purchase Period. An Eligible Employee's enrollment in the Plan
for a Purchase Period will remain in effect for all subsequent Purchase Periods
until modified or terminated by the Eligible Employee or until he or she no
longer qualifies as an Eligible Employee.
VI. PAYROLL DEDUCTIONS; SHORTFALL CONTRIBUTIONS
A. The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock under the Plan may be (i) any whole multiple of
one percent (1%) of the Eligible Compensation paid to the Participant during
each Purchase Period or (ii) any whole dollar amount of the Eligible
Compensation paid to the Participant during each Purchase Period, provided that
the Participant's payroll deduction for any Purchase Period shall not exceed a
maximum of twenty-five percent (25%) of such Eligible Compensation. The
deduction rate so authorized shall continue in effect for the entire Purchase
Period. The Participant may not increase his or her rate of payroll deduction
during a Purchase Period. However, the Participant may, at any time prior to the
tenth (10th) Business Day immediately preceding the Purchase Date for the
Purchase Period, reduce his or her rate of payroll deduction to any whole
percentage or whole dollar amount or to zero, such reduction to become effective
prospectively as soon as administratively feasible after filing the appropriate
form with the Plan Administrator. The Participant may not, however, effect more
than one (1) such reduction per Purchase Period. If a Participant reduces his or
her payroll deductions to zero, the Participant's previous payroll deductions
for the Purchase Period will still be applied to the purchase of shares of
Common
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Stock on the Purchase Date, unless the Participant elects to terminate his or
her purchase rights for the Purchase Period in accordance with Section VII.E.
B. Payroll deductions shall begin on the first pay day of each Purchase
Period and shall (unless sooner terminated) continue through the pay day ending
on or immediately prior to the last day of the Purchase Period. The amounts so
collected shall be credited to the Participant's Account under the Plan. Payroll
deduction amounts need not be held in any segregated account or trust fund and
may be commingled with the general assets of the Company and used for general
corporate purposes.
C. Payroll deductions shall automatically cease upon the termination of the
Participant's purchase right in accordance with the provisions of the Plan.
D. A Participant whose net pay after all deductions therefrom on any given
pay day is not sufficient to fund the payroll deduction authorized by the
Participant for a Purchase Period shall be permitted to fund any such shortfall
by contributing the amount thereof to the Plan in cash, by personal check or in
any other form permitted from time to time by the Plan Administrator ("Shortfall
Contributions"). Shortfall Contributions must be contributed to the Plan before
the tenth (10th) Business Day immediately preceding the Purchase Date for the
Purchase Period. All references in this Plan to payroll deductions also shall be
deemed to refer to and include Shortfall Contributions, except where the context
clearly requires otherwise.
E. No interest shall accrue on the payroll deductions of a Participant in
the Plan.
VII. PURCHASE RIGHTS
A. A Participant shall be granted a separate purchase right on the first
day of each Purchase Period in which he or she participates. The purchase right
shall provide the Participant with the right to purchase shares of Common Stock
on the Purchase Date upon the terms set forth below. Under no circumstances
shall purchase rights be granted under the Plan to any Eligible Employee if such
individual would, immediately after the grant, own (within the meaning of
Section 424(d) of the Code) or hold outstanding options or other rights to
purchase, stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Company or any Corporate
Affiliate.
B. Each purchase right shall be automatically exercised on the Purchase
Date, and shares of Common Stock shall accordingly be purchased on such date on
behalf of each Participant participating in the related Purchase Period (other
than any Participant whose payroll deductions have previously been refunded in
accordance with paragraph E below). The purchase shall be effected by applying
the Participant's Account balance as of the last day of the Purchase Period to
the purchase of shares of Common Stock (subject to the limitation on the maximum
number of shares purchasable per Participant) at the Purchase Price in effect
for that Purchase Period.
C. The number of shares of Common Stock purchasable by a Participant on
each Purchase Date shall be the number of whole and fractional shares obtained
by dividing the Participant's Account balance on the last day of the Purchase
Period by the Purchase Price in effect for that
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Purchase Date. However, the maximum number of shares of Common Stock purchasable
per Participant on any one Purchase Date shall not exceed 3,000 shares.
D. Any portion of the Participant's Account balance that is not applied to
the purchase of Common Stock by reason of the limitation on the maximum number
of shares purchasable by the Participant on the Purchase Date shall be refunded
as soon as administratively feasible.
E. The following provisions shall govern the termination of outstanding
purchase rights:
(i) A Participant may, at any time prior to the tenth (10th)
Business Day immediately preceding the Purchase Date for the Purchase
Period, terminate his or her outstanding purchase right by filing the
appropriate form with the Plan Administrator (or its designee), and no
further payroll deductions shall be collected from or made by the
Participant with respect to such terminated purchase right. The
Participant's entire Account balance as of the effective date of such
termination shall be refunded as soon as administratively feasible.
(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin the Purchase
Period for which the terminated purchase right was granted. In order to
resume participation in any subsequent Purchase Period, such individual
must re-enroll in the Plan (by making a timely filing of the prescribed
enrollment forms) before the first day of the new Purchase Period.
(iii) Should the Participant cease to remain an Eligible
Employee for any reason (including death, disability or change in
employment status) while his or her purchase right remains outstanding,
then that purchase right shall immediately terminate, and the Participant's
entire Account balance shall be refunded as soon as administratively
feasible. However, should the Participant cease to remain in active service
by reason of an approved unpaid leave of absence, then the Participant
shall have the right, exercisable up until the tenth (10th) Business Day
immediately preceding the Purchase Date for the Purchase Period in which
such leave commences, to withdraw his or her entire Account balance. If a
Participant on such an unpaid leave does not exercise this right, such
Participant's Account balance shall be held for the purchase of shares at
the next Purchase Date. In no event, however, shall any further payroll
deductions be collected on the Participant's behalf during any such unpaid
leave. Upon the return to active service of any Participant previously on
unpaid leave, his or her payroll deductions under the Plan shall
automatically resume at the rate in effect at the time the leave began,
unless the Participant elected to withdraw his or her Account balance for
the Purchase Period in which the leave commenced.
(iv) Notwithstanding any other provision of the Plan to the
contrary, a Participant's purchase rights with respect to a Purchase Period
shall terminate, and his or her Account balance shall be refunded as soon
as administratively feasible, if the Participant's employment with the
Participating Companies terminates for any reason on or before the Purchase
Date for such Purchase Period.
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F. Each outstanding purchase right shall automatically be exercised,
immediately prior to the date any Corporate Transaction is consummated, by
applying the Participant's Account balance to the purchase of whole and
fractional shares of Common Stock at a purchase price per share equal to
eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of
Common Stock on the first day of the Purchase Period in which such Corporate
Transaction occurs or (ii) the Fair Market Value per share of Common Stock
immediately prior to the date such Corporate Transaction is consummated.
However, the applicable limitation on the number of shares of Common Stock
purchasable per Participant shall continue to apply to any such purchase. The
Company shall use reasonable efforts to provide prior written notice of the
occurrence of any Corporate Transaction, and Participants shall, following the
receipt of such notice, have the right to terminate their outstanding purchase
rights prior to the effective date of the Corporate Transaction.
G. Should the total number of shares of Common Stock which are to be
purchased pursuant to outstanding purchase rights on any particular date exceed
the number of shares then available for issuance under the Plan, the Plan
Administrator shall make a pro-rata allocation of the available shares on a
uniform and nondiscriminatory basis, and the Account balance of each
Participant, to the extent in excess of the aggregate Purchase Price payable for
the Common Stock pro-rated to such individual, shall be refunded as soon as
administratively feasible.
H. The purchase right shall be exercisable only by the Participant and
shall not be assignable or transferable by the Participant.
I. A Participant shall have no stockholder rights with respect to the
shares subject to his or her outstanding purchase right until the shares are
purchased on the Participant's behalf in accordance with the provisions of the
Plan and the Participant has become the owner of the purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any purchase right outstanding under this Plan if and to the
extent such rights, when aggregated with (i) rights to purchase Common Stock
accrued under any other purchase right granted under this Plan and (ii) similar
rights accrued under other employee stock purchase plans (within the meaning of
Section 423 of the Code) of the Company or any Corporate Affiliate, would
otherwise permit such Participant to purchase more than Twenty-Five Thousand
Dollars ($25,000) worth of stock of the Company and of any Corporate Affiliate
(determined on the basis of the Fair Market Value of such stock on the date or
dates such rights are granted) for each calendar year such rights are at any
time outstanding, subject to the following:
(i) The right to acquire Common Stock under each outstanding
purchase right shall accrue on the Purchase Date in effect for the Purchase
Period for which such right is granted.
(ii) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has already
accrued in the same calendar
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year the right to acquire Common Stock under one (1) or more other purchase
rights at a rate equal to Twenty-Five Thousand Dollars ($25,000) worth of
Common Stock (determined on the basis of the Fair Market Value per share on
the date or dates of grant) for each calendar year such rights were at any
time outstanding.
B. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular Purchase Period, then the
Participant's Account balance with respect to such purchase right shall be
refunded as soon as administratively feasible.
C. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on August 26, 1998 and shall become
effective on the Effective Date, provided no purchase rights granted under the
Plan shall be exercised, and no shares of Common Stock shall be issued
hereunder, until the Company shall have complied with all applicable
requirements of the 1933 Act (including the registration of the shares of Common
Stock issuable under the Plan on a Form S-8 registration statement filed with
the Securities and Exchange Commission), all applicable listing requirements of
any stock exchange on which the Common Stock is listed for trading and all other
applicable requirements established by law or regulation other than approval of
the Plan by the Company's stockholders. In the event stockholder approval of the
Plan by majority vote of the shares represented in person or by proxy at a
meeting of the stockholders of the Company at which a quorum is present is not
obtained, or such compliance is not effected, within twelve (12) months after
the date on which the Plan is adopted by the Board, the Plan shall terminate and
have no further force or effect, and the Participants' Account balances shall be
distributed as soon as administratively feasible.
B. Unless sooner terminated by the Board, the Plan shall terminate upon the
earliest to occur of (i) the last Business Day in December 2008, (ii) the date
on which all shares available for issuance under the Plan shall have been sold
to Participants pursuant to purchase rights exercised under the Plan or (iii)
the date on which all purchase rights are exercised in connection with a
Corporate Transaction. Following such termination, no further purchase rights
shall be granted or exercised, and no further payroll deductions shall be
collected under the Plan.
X. AMENDMENT OF THE PLAN
A. The Plan may be amended from time to time by the Board or any duly
authorized committee thereof, and all purchase rights outstanding at the
effective date of any such amendment will be subject to such amendment. In the
event any law, or any rule or regulation issued or promulgated by the Internal
Revenue Service, the Securities and Exchange Commission, the National
Association of Securities Dealers, Inc., any stock exchange upon which the
Common Stock is listed for trading, or any other governmental or
quasi-governmental agency having jurisdiction over the Company, the Common Stock
or the Plan, requires the Plan to be amended, or in the event any of the rules
under Section 16 of the 1934 Act are amended or
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supplemented (e.g., by addition of alternative rules), in either event to
require or permit the Company to add, remove or lessen any restrictions on or
with respect to purchase rights under the Plan, the Board reserves the right to
amend the Plan to the extent of any such requirement, amendment or supplement,
and all purchase rights then outstanding will be subject to such amendment.
B. The Plan may be terminated at any time by action of the Board; provided,
however, that the termination of the Plan shall not adversely affect the terms
of any outstanding purchase rights.
C. Notwithstanding the foregoing, the Board may not, without the approval
of the Company's stockholders, increase the number of shares of Common Stock
issuable under the Plan, except to the extent permitted under Section III.B.
D. With respect to any Participating Corporation which employs Eligible
Employees who reside outside of the United States, and notwithstanding anything
herein to the contrary, the Board may in its sole discretion amend the terms of
the Plan, or any purchase right granted under the Plan, in order to comply with
the requirements of local law, and may, where appropriate, establish one or more
sub-plans to reflect such amended provisions applicable to such Eligible
Employees.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the Plan shall
be paid by the Company.
B. Nothing in the Plan shall confer upon any Participant any right to
continue in the employ of the Company or any Corporate Affiliate for any period
of specific duration, or interfere with or otherwise restrict in any way the
rights of the Company (or any Corporate Affiliate employing such person) or of
the Participant, which rights are hereby expressly reserved by each, to
terminate such Participant's employment at any time for any reason, with or
without cause.
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APPENDIX
The following definitions shall be in effect under the Plan:
A. ACCOUNT shall mean the account established by the Plan Administrator to
record a Participant's payroll deductions as of any given date.
B. BOARD shall mean the Company's Board of Directors.
C. BUSINESS DAY shall mean a day on which the New York Stock Exchange is
open for trading.
D. CODE shall mean the Internal Revenue Code of 1986, as amended.
E. COMMON STOCK shall mean the Company's common stock, par value $.0025 per
share.
F. COMPANY shall mean Associated Materials Incorporated, a Delaware
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Associated Materials Incorporated which shall by
appropriate action adopt the Plan.
G. CORPORATE AFFILIATE shall mean any parent or subsidiary corporation of
the Company (as determined in accordance with Section 424 of the Code), whether
now existing or subsequently established.
H. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Company is a party:
(i) a merger, consolidation or reorganization of the Company
into or with another corporation or legal person as a result of which
securities possessing less than fifty percent (50%) of the total combined
voting power of the then-outstanding voting securities of such corporation
or person immediately after such transaction are held in the aggregate by
the holders of the voting securities of the Company immediately prior to
such transaction, or
(ii) a sale or other transfer of all or substantially all of
the assets of the Company to another corporation or other legal person as a
result of which securities possessing less than fifty percent (50%) of the
total combined voting power of the then-outstanding voting securities of
such corporation or person immediately after such sale or transfer are held
in the aggregate by the holders of the voting securities of the Company
immediately prior to such sale or transfer.
I. EFFECTIVE DATE shall mean October 1, 1998.
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J. ELIGIBLE COMPENSATION means the following items of remuneration paid to
a Participant by one or more Participating Companies during each Purchase
Period: base salary, overtime pay, commissions and cash incentive compensation,
computed before giving effect to the Participant's salary reduction elections
under Section 125 or Section 401(k) of the Code or the Participant's deferral
elections under any nonqualified deferred compensation plan of the Company or
any Corporate Affiliate.
K. ELIGIBLE EMPLOYEE shall mean an Employee who is employed by a
Participating Company on a basis under which he or she is regularly expected to
render at least twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages. Notwithstanding the
foregoing, a person who is an independent contractor performing services for a
Participating Company shall not be eligible to participate in the Plan.
L. EMPLOYEE shall mean an individual who is a common law employee of the
Company or any Corporate Affiliate.
M. FAIR MARKET VALUE per share of Common Stock on any relevant date shall
be the closing selling price per share of Common Stock on the date in question
on the stock exchange determined by the Plan Administrator to be the primary
market for the Common Stock or the NASDAQ, as such price is officially quoted in
the composite tape of transactions on such exchange or NASDAQ. If there is no
closing selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.
N. 1933 ACT shall mean the Securities Act of 1933, as amended.
O. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
P. PARTICIPANT shall mean any Eligible Employee of a Participating Company
who is actively participating in the Plan.
Q. PARTICIPATING COMPANY shall mean the Company, each Corporate Affiliate
that is a direct or indirect domestic subsidiary of the Company and each other
Corporate Affiliate that is authorized from time to time by the Board to extend
the benefits of the Plan to its Eligible Employees. For purposes of the
foregoing, the term "subsidiary" has the meaning set forth in Section 424(f) of
the Code.
R. PLAN shall mean the Company's Employee Stock Purchase Plan, as set forth
in this document.
S. PLAN ADMINISTRATOR shall mean the person or persons appointed by the
Board from time to time as the plan administrator of the Plan.
T. PURCHASE DATE shall mean the last Business Day of each Purchase Period
or, with respect to a Corporate Transaction, the date specified for the purchase
in Section VII.F.
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U. PURCHASE PERIOD shall mean a period of six (6) months extending from
January 1 to June 30 and from July 1 to December 31 of each year; provided,
however, that the first Purchase Period shall begin on October 1, 1998, and
shall end on December 31, 1998.
V. PURCHASE PRICE shall mean the purchase price per share at which Common
Stock will be purchased on the Participant's behalf on each Purchase Date and
shall be equal to eighty-five percent (85%) of the lower of (i) the Fair Market
Value per share of Common Stock on the first day of the Purchase Period in which
the Purchase Date occurs or (ii) the Fair Market Value per share of Common Stock
on that Purchase Date.
W. SERVICE shall mean the performance of services to the Company or any
Corporate Affiliate by a person in the capacity of an Employee.
X. SHORTFALL CONTRIBUTIONS shall have the meaning ascribed to such term in
Section VI.D. of the Plan.
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