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EXHIBIT 10.24
HEDSTROM HOLDINGS, INC.
1995 STOCK OPTION PLAN
1. Purpose.
HEDSTROM HOLDINGS, INC., a Delaware corporation (herein, together with
its successors, referred to as the "Company"), by means of this 1995 Stock
Option Plan (the "Plan"), desires to afford certain officers, directors and
other key employees of the Company and any parent corporation or subsidiary
corporation thereof now existing or hereafter formed or acquired (such parent
and subsidiary corporations sometimes referred to herein as "Related Entities")
who are responsible for the continued growth of the Company an opportunity to
acquire a proprietary interest in the Company, and thus to create in such
persons an increased interest in and a greater concern for the welfare of the
Company and any Related Entities. As used in the Plan, the terms "parent
corporation" and "subsidiary corporation" shall mean, respectively, a
corporation within the definition of such terms contained in Sections 424(e)
and 424(f), respectively, of the Internal Revenue Code of 1986, as amended (the
"Code").
The stock options described in Sections 6 and 7 (the "Options"), and
the shares of Common Stock (as defined in Section 3) acquired pursuant to the
exercise of such Options are a matter of separate inducement and are not in
lieu of any salary or other compensation for services.
2. Administration.
The Plan shall be administered by the Option Committee, or any
successor thereto, of the Board of Directors of the Company (the "Board of
Directors"), or by any other committee appointed by the Board of Directors to
administer this Plan (the "Committee"); provided, however, that the entire
Board of Directors may act as the Committee if it chooses to do so. The number
of individuals that shall constitute the Committee shall be determined from
time to time by a majority of all the members of the Board of Directors, and,
unless that majority of the Board of Directors determines otherwise, shall be
no less than two individuals. A majority of the Committee shall constitute a
quorum (or if the Committee consists of only two members, then both members
shall constitute a quorum), and subject to the provisions of Section 5, the
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acts of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by all members of the Committee, shall be
the acts of the Committee. Whenever the Company shall have a class of equity
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), each member of the Committee shall be
required to be (i) a "disinterested person" within the meaning of Rule 16b-3,
as amended ("Rule 16b-3"), or other applicable rules under Section 16(b) of the
Exchange Act.
The members of the Committee shall serve at the pleasure of the Board
of Directors, which shall have the power, at any time and from time to time, to
remove members from or add members to the Committee. Removal from the
Committee may be with or without cause. Any individual serving as a member of
the Committee shall have the right to resign from membership in the Committee
by written notice to the Board of Directors. The Board of Directors, and not
the remaining members of the Committee, shall have the power and authority to
fill vacancies on the Committee, however caused. The Board of Directors shall
promptly fill any vacancy that causes the number of members of the Committee to
be below two or, if the Company has a class of equity securities registered
pursuant to Section 12 of the Exchange Act, any other number that Rule 16b-3
may require from time to time.
3. Shares Available.
Subject to the adjustments provided in Section 10, the maximum
aggregate number of shares of common stock, $.01 par value per share, of the
Company ("Common Stock") which may be granted for all purposes under the Plan
shall be 2,446,236 shares. If, for any reason, any shares as to which Options
have been granted cease to be subject to purchase thereunder, including the
expiration of such Option, the termination of such Option prior to exercise, or
the forfeiture of such Option, such shares shall thereafter be available for
grants to any individual or individuals under the Plan as determined by the
Committee. Options granted under the Plan may be fulfilled in accordance with
the terms of the Plan with (i) authorized and unissued shares of the Common
Stock, (ii) issued shares of such Common Stock held in the Company's treasury,
or (iii) issued shares of Common Stock reacquired by the Company in each
situation as the Board of Directors or the Committee may determine from time to
time.
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4. Eligibility and Bases of Participation.
Grants of Incentive Options (as defined in Section 6) and
Non-Qualified Options (as defined in Section 6) may be made under the Plan,
subject to and in accordance with Section 6, to Key Employees. As used herein,
the term "Key Employee" shall mean any employee of the Company or any Related
Entity, including officers and directors of the Company or any Related Entity
who are also employees of the Company or any Related Entity, who are regularly
employed on a salaried basis and who are so employed on the date of such grant,
whom the Committee identifies as having a direct and significant effect on the
performance of the Company or any Related Entity.
Grants of Non-Qualified Options may be made, subject to and in
accordance with Section 7, to any Eligible Non- Employee. As used herein, the
term "Eligible Non-Employee" shall mean any director or officer (who is not
also an employee) of the Company or any Related Entity whom the Board of
Directors or the Committee identifies as having a direct and significant effect
on the performance of the Company or any Related Entity.
The adoption of this Plan shall not be deemed to give any Person a
right to be granted any Options.
5. Authority of Committee.
Subject to and not inconsistent with the express provisions of the
Plan, the Code and, if applicable, Rule 16b- 3, the Committee shall have
plenary authority to:
a. determine the Key Employees and Eligible Non-Employees to whom
Options shall be granted, the time when such Options shall be
granted, the number of Options, the purchase price or exercise
price of each Option, the period(s) during which such Options
shall be exercisable (whether in whole or in part), the
restrictions to be applicable to Options and all other terms
and provisions thereof (which need not be identical);
b. require, as a condition to the granting of any Option, that
the Person receiving such Option agree not to sell or
otherwise dispose of such Option, any Common Stock acquired
pursuant to such Option, or any other "derivative security"
(as defined by Rule 16a-1(c) under the
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Exchange Act) for a period of six months following the later
of (i) the date of the grant of such Option or (ii) the date
when the exercise price of such Option is fixed if such
exercise price is not fixed at the date of grant of such
Option, or for such other period as the Committee may
determine;
c. provide an arrangement through registered broker-dealers
whereby temporary financing may be made available to an
optionee by the broker-dealer, under the rules and regulations
of the Board of Governors of the Federal Reserve, for the
purpose of assisting the optionee in the exercise of an
Option, such authority to include the payment by the Company
of the commissions of the broker-dealer;
d. provide the establishment of procedures for an optionee (i) to
have withheld from the total number of shares of Common Stock
to be acquired upon the exercise of an Option (other than an
Incentive Option) that number of shares having a Fair Market
Value (as defined in Section 18) which, together with such
cash as shall be paid in respect of fractional shares, shall
equal the Option exercise price, and (ii) to exercise a
portion of an Option by delivering that number of shares of
Common Stock already owned by such optionee having an
aggregate Fair Market Value which shall equal the partial
Option exercise price and to deliver the shares thus acquired
by such optionee in payment of shares to be received pursuant
to the exercise of additional portions of such Option, the
effect of which shall be that such optionee can in sequence
utilize such newly acquired shares in payment of the exercise
price of the entire Option, together with such cash as shall
be paid in respect of fractional shares; provided, however,
that in the case of an Incentive Option, no shares shall be
used to pay the exercise price unless such shares were not
acquired through the exercise of an Incentive Option or, if so
acquired, have been held for more than two years since the
grant of such Option and for more than one year since the
exercise of such Option;
e. provide (in accordance with Section 13 or otherwise) the
establishment of a procedure whereby a number of shares of
Common Stock or other securities may be withheld from the
total number of shares of Common Stock or other securities to
be issued upon exercise of an Option (other than an Incentive
Option) to meet the obligation of withholding for
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income, social security and other taxes incurred by an
optionee upon such exercise or required to be withheld by the
Company or a Related Entity in connection with such exercise;
f. prescribe, amend, modify and rescind rules and regulations
relating to the Plan;
g. make all determinations permitted or deemed necessary,
appropriate or advisable for the administration of the Plan,
interpret any Plan or Option provision, perform all other
acts, exercise all other powers, and establish any other
procedures determined by the Committee to be necessary,
appropriate, or advisable in administering the Plan or for the
conduct of the Committee's business. Any act of the
Committee, including interpretations of the provisions of the
Plan or any Option and determinations under the Plan or any
Option shall be final, conclusive and binding on all parties.
The Committee may delegate to one or more of its members, or to one or
more agents, such administrative duties as it may deem advisable, and the
Committee or any Person to whom it has delegated duties as aforesaid may employ
one or more Persons to render advice with respect to any responsibility the
Committee or such Person may have under the Plan; provided, however, that
whenever the Company has a class of equity securities registered under Section
12 of the Exchange Act, the Committee may not delegate any duties to a member
of the Board of Directors who, if elected to serve on the Committee, would not
qualify as a "disinterested person" to administer the Plan as contemplated by
Rule 16b-3, as amended, or other applicable rules under the Exchange Act. The
Committee may employ attorneys, consultants, accountants, or other Persons and
the Committee, the Company, and its officers and directors shall be entitled to
rely upon the advice, opinions, or valuations of any such Persons. No member
or agent of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan and
all members and agents of the Committee shall be fully protected by the Company
in respect of any such action, determination or interpretation.
6. Stock Options for Key Employees.
Subject to the express provisions of this Plan, the Committee shall
have the authority to grant incentive stock options pursuant to Section 422 of
the Code ("Incentive Options"), to grant non-qualified stock options (options
which do not
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qualify under Section 422 of the Code) ("Non-Qualified Options"), and to grant
both types of Options to Key Employees. No Incentive Option shall be granted
pursuant to this Plan after the earlier of ten years from the date of adoption
of the Plan or ten years from the date of approval of the Plan by the
stockholders of the Company. Notwithstanding anything in this Plan to the
contrary, Incentive Options may be granted only to Key Employees. The terms
and conditions of the Options granted under this Section 6 shall be determined
from time to time by the Committee; provided, however, that the Options granted
under this Section 6 shall be subject to all terms and provisions of the Plan
(other than Section 7), including the following:
a. Option Exercise Price. The Committee shall establish the
option exercise price at the time any Option is granted at
such amount as the Committee shall determine; provided, that
such price shall not be not less than the Fair Market Value
per share of Common Stock at the date such Option is granted;
and provided, further, that in the case of an Incentive Option
granted to a person who, at the time such Incentive Option is
granted, owns shares of the Company or any Related Entity
which possess more than 10% of the total combined voting power
of all classes of shares of the Company or of any Related
Entity, the option exercise price shall not be less than 110%
of the Fair Market Value per share of Common Stock at the date
such Option is granted. The option exercise price shall be
subject to adjustment in accordance with the provisions of
Section 10 of the Plan.
b. Payment. The price per share of Common Stock with respect to
each Option exercise shall be payable at the time of such
exercise. Such price shall be payable in cash or by any other
means acceptable to the Committee, including delivery to the
Company of shares of Common Stock owned by the optionee or by
the delivery or withholding of shares pursuant to a procedure
created pursuant to Section 5.d. of the Plan (but, with
respect to Incentive Options, subject to the limitations
described in such Section 5.d.). Shares delivered to or
withheld by the Company in payment of the option exercise
price shall be valued at the Fair Market Value of the Common
Stock on the day preceding the date of the exercise of the
Option.
c. Continuation of Employment. Each Incentive Option shall
require the optionee to remain in the continuous employ of the
Company or any Related Entity from the date of grant of the
Incentive Option until no
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more than three months prior to the date of exercise of the
Incentive Option.
d. Exercisability of Stock Option. Subject to Section 8, each
Option shall be exercisable in one or more installments as the
Committee may determine at the time of the grant. No Option
by its terms shall be exercisable after the expiration of ten
years from the date of grant of the Option, unless, as to any
Non-Qualified Option, otherwise expressly provided in such
Option; provided, however, no Incentive Option shall be
exercisable after the expiration of ten years from the date
such Option is granted; and provided, further, that no
Incentive Option granted to a person who, at the time such
Option is granted, owns stock of the Company, or any Related
Entity, possessing more than 10% of the total combined voting
power of all classes of stock of the Company, or any Related
Entity, shall be exercisable after the expiration of five
years from the date such Option is granted.
e. Death. If any optionee's employment with the Company or a
Related Entity terminates due to the death of such optionee,
the estate of such optionee, or a Person who acquired the
right to exercise such Option by bequest or inheritance or by
reason of the death of the optionee, shall have the right to
exercise such Option in accordance with its terms at any time
and from time to time within one year after the date of death
unless a longer or shorter period is expressly provided in
such Option or established by the Committee pursuant to
Section 8 (but in no event after the expiration date of such
Option).
f. Disability. If the employment of any optionee terminates
because of his Disability (as defined in Section 18), such
optionee or his legal representative shall have the right to
exercise the Option in accordance with its terms at any time
and from time to time within one year after the date of such
termination unless a longer or shorter period is expressly
provided in such Option or established by the Committee
pursuant to Section 8 (but not after the expiration date of
the Option); provided, however, that in the case of an
Incentive Option, the optionee or his legal representative
shall in any event be required to exercise the Incentive
Option within one year after termination of the optionee's
employment due to his Disability.
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g. Other Termination of Employment. If the employment of an
optionee with the Company or a Related Entity terminates for
any reason other than those specified in subsections 6(e) and
(f) above, such optionee shall have the right to exercise his
Option in accordance with its terms, within 60 days after the
date of such termination, unless a longer period is expressly
provided in such Option or established by the Committee
pursuant to Section 8 (but not after the expiration date of
the Option); provided, that no Incentive Option shall be
exercisable more than three months after such termination;
and, provided, further, that, unless the Option expressly
provides otherwise, if such optionee's employment was
terminated by the Company or any Related Entity for Good Cause
(as defined in Section 18), or if the optionee voluntarily
terminates employment without the consent of the Company or
any Related Entity (other than on a basis expressly permitted
by the optionee's employment agreement with the Company or any
Related Entity), such optionee shall immediately forfeit all
rights under his Option except as to the shares of stock
already purchased. The determination that there exists Good
Cause for termination shall be made by the Option Committee
(unless otherwise agreed to in writing by the Company and the
optionee or unless otherwise restricted by the optionee's
employment agreement).
h. Maximum Exercise. The aggregate number of shares of stock
with respect to which Incentive Options may be granted to any
Key Employee shall not exceed one-half of the number of shares
described in Section 3.
7. Stock Option Grants to Eligible Non-Employees.
Subject to the express provisions of this Plan, the Committee shall
have the authority to grant Non-Qualified Options to Eligible Non-Employees;
provided, however, that whenever the Company has any class of equity securities
registered pursuant to Section 12 of the Exchange Act, no Eligible Non-Employee
then serving on the Committee (or such other committee then administering the
Plan) shall be granted Options hereunder if the grant of such Options would
cause such Eligible Non-Employee to no longer be a "disinterested person" as
set forth in Section 2 hereof. The terms and conditions of the Options granted
under this Section 7 shall be determined from time to time by the Committee;
provided, however, that the Options
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granted under this Section 7 shall be subject to all terms and provisions of
the Plan (other than Section 6), including the following:
a. Option Exercise Price. The Committee shall establish the
option exercise price at the time any Non- Qualified Option is
granted at such amount as the Committee shall determine. The
option exercise price shall be subject to adjustment in
accordance with the provisions of Section 10 of the Plan.
b. Payment. The price per share of Common Stock with respect to
each Option exercise shall be payable at the time of such
exercise. Such price shall be payable in cash or by any other
means acceptable to the Committee, including delivery to the
Company of shares of Common Stock owned by the optionee or by
the delivery or withholding of shares pursuant to a procedure
created pursuant to Section 5.d. of the Plan. Shares
delivered to or withheld by the Company in payment of the
option exercise price shall be valued at the Fair Market Value
of the Common Stock on the day preceding the date of the
exercise of the Option.
c. Exercisability of Stock Option. Subject to Section 8, each
Option shall be exercisable in one or more installments as the
Committee may determine at the time of the grant. No Option
shall be exercisable after the expiration of ten years from
the date of grant of the Option, unless otherwise expressly
provided in such Option.
d. Death. If the retention by the Company or any Related Entity
of the services of any Eligible Non- Employee terminates
because of his death, the estate of such optionee, or a Person
who acquired the right to exercise such Option by bequest or
inheritance or by reason of the death of the optionee, shall
have the right to exercise such Option in accordance with its
terms, at any time and from time to time within one year after
the date of death unless a longer or shorter period is
expressly provided in such Option or established by the
Committee pursuant to Section 8 (but in no event after the
expiration date of such Option).
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e. Disability. If the retention by the Company or any Related
Entity of the services of any Eligible Non- Employee
terminates because of his Disability, such optionee or his
legal representative shall have the right to exercise the
Option in accordance with its terms at any time and from time
to time within one year after the date of the optionee's
termination unless a longer or shorter period is expressly
provided in such Option or established by the Committee
pursuant to Section 8 (but not after the expiration of the
Option).
f. Other Termination of Relationship. If the retention by the
Company or any Related Entity of the services of any Eligible
Non-Employee terminates for any reason other than those
specified in subsections 7(d) and (e) above, such optionee
shall have the right to exercise his or its Option in
accordance with its terms within 30 days after the date of
such termination, unless a longer or shorter period is
expressly provided in such Option or established by the
Committee pursuant to Section 8 (but not after the expiration
date of the Option); provided, that, in the case of an
Eligible Non-Employee serving as a director of the Company or
of any Related Entity, unless the Committee provides
otherwise, if the optionee is removed from office for cause by
action of the stockholders in accordance with the by-laws of
the Company or such Related Entity, as applicable, and the
General Corporation Law of the State of Delaware or if such
optionee voluntarily terminates his service without the
consent of the Company or any Related Entity, then such
optionee shall immediately forfeit his rights under his Option
except as to the shares of stock already purchased.
g. Ineligibility for Other Grants. Any Eligible Non-Employee who
receives an Option pursuant to this Section 7 shall be
ineligible to receive any Options under any other Section of
the Plan unless such Person becomes a Key Employee subsequent
thereto.
8. Change of Control.
If a Change of Control (as defined in Section 18) shall occur, or if
the Company shall enter into an agreement providing for a Change of Control,
the Committee may declare any or all Options outstanding under the Plan to be
vested and exercisable in full at such time or times as the Committee shall
determine, notwithstanding the express provisions of such Options. Each Option
accelerated by
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the Committee in connection with a Change of Control pursuant to the preceding
sentence may be terminated, notwithstanding any express provision thereof or
any other provision of the Plan, on such date (not later than the stated
expiration date) as the Committee shall determine.
9. Purchase Option.
a. To the extent and only to the extent expressly provided in any
particular Option, if any optionee's employment (or, in the
case of any Option granted under Section 7, the optionee's
relationship) with the Company or a Related Entity terminates
for any reason at any time, the Company and/or its designee(s)
shall have the option (the "Purchase Option") to purchase, and
if the option is exercised, the optionee (or the optionee's
executor or the administrator of the optionee's estate, in the
event of the optionee's death, or the optionee's legal
representative in the event of the optionee's incapacity
(hereinafter, collectively with such optionee, the "Grantor"))
shall sell to the Company and/or its assignee(s), all or any
portion (at the Company's option) of the shares of Common
Stock and/or Options held by the Grantor (such shares of
Common Stock and Options collectively being referred to as the
"Purchasable Shares").
b. The Company shall give notice in writing to the Grantor of the
exercise of the Purchase Option within 60 days from the date
of the termination of the optionee's employment or engagement.
Such notice shall state the number of Purchasable Shares to be
purchased and the determination of the Board of Directors of
the Fair Market Value per share of such Purchasable Shares.
If no notice is given within the time limit specified above,
the Purchase Option shall terminate.
c. The purchase price to be paid for the Purchasable Shares
purchased pursuant to the Purchase Option shall be, in the
case of any Common Stock, the Fair Market Value per share
times the number of shares being purchased, and in the case of
any Option, the Fair Market Value per share, less the
applicable per share Option exercise price, times the number
of vested shares subject to such Option which are being
purchased. The purchase price shall be paid in cash. The
closing of such purchase shall take place at the Company's
principal executive offices within ten days after the notice
described in Section 9.b has
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been delivered to Grantor. At such closing, the Grantor shall
deliver to the purchaser(s) the certificates or instruments
evidencing the Purchasable Shares being purchased, duly
endorsed (or accompanied by duly executed stock powers) and
otherwise in good form for delivery, against payment of the
purchase price by check of the purchaser(s). In the event
that, notwithstanding the foregoing, the Grantor shall have
failed to obtain the release of any pledge or other
encumbrance on any Purchasable Shares by the scheduled closing
date, at the option of the purchaser(s) the closing shall
nevertheless occur on such scheduled closing date, with the
cash purchase price being reduced to the extent of all unpaid
indebtedness for which such Purchasable Shares are then
pledged or encumbered.
d. To assure the enforceability of the Company's rights under
this Paragraph 9, each certificate or instrument representing
Common Stock or an Option held by him or it shall bear a
conspicuous legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN OPTION
TO REPURCHASE PROVIDED UNDER THE PROVISIONS OF THE HEDSTROM HOLDING
CORP. 1995 STOCK OPTION PLAN AND A STOCK OPTION AGREEMENT ENTERED INTO
PURSUANT THERETO. A COPY OF SUCH OPTION PLAN AND OPTION AGREEMENT ARE
AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICES."
The Company's rights under this Section 9 shall terminate upon the
consummation of an underwritten public offering of the Common Stock, registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant
to which the Company receives aggregate cash sales proceeds, before
underwriting discount, of at least $25 million or such lesser amount as the
Committee shall determine.
10. Adjustment of Shares.
Unless otherwise expressly provided in a particular Option, in the
event that, by reason of any merger, consolidation, combination, liquidation,
reorganization, recapitalization, stock dividend, stock split, split-up, split-
off, spin-off, combination of shares, exchange of shares or other like change
in capital structure of the Company
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(collectively, a "Reorganization"), the Common Stock is substituted, combined,
or changed into any cash, property, or other securities, or the shares of
Common Stock are changed into a greater or lesser number of shares of Common
Stock, the number and/or kind of shares and/or interests subject to an Option
and the per share price or value thereof shall be appropriately adjusted by the
Committee to give appropriate effect to such Reorganization. Any fractional
shares or interests resulting from such adjustment shall be eliminated. The
adjustments set forth in this paragraph shall be applied to each successive
Reorganization, if any. Notwithstanding the foregoing, (i) each such
adjustment with respect to an Incentive Option shall comply with the rules of
Section 424(a) of the Code, and (ii) in no event shall any adjustment be made
which would render any Incentive Option granted hereunder other than an
"incentive stock option" for purposes of Section 422 of the Code.
In the event the Company is not the surviving entity of a
Reorganization and, following such Reorganization, any optionee will hold
Options issued pursuant to this Plan which have not been exercised, cancelled,
or terminated in connection therewith, the Company shall cause such Options to
be assumed (or cancelled and replacement Options issued) by the surviving
entity or a Related Entity.
11. Assignment or Transfer.
Except as otherwise expressly provided in any Non-Qualified Option, no
Option granted under the Plan or any rights or interests therein shall be
assignable or transferable by an optionee except by will or the laws of descent
and distribution, and during the lifetime of an optionee, Options granted to
him or her hereunder shall be exercisable only by the optionee or, in the event
that a legal representative has been appointed in connection with the
Disability of an optionee, such legal representative.
12. Compliance with Securities Laws.
The Company shall not in any event be obligated to file any
registration statement under the Securities Act or any applicable state
securities law to permit exercise of any Option or to issue any Common Stock in
violation of the Securities Act or any applicable state securities law. Each
optionee (or, in the event of his death or, in the event a legal representative
has been appointed in connection with his Disability, the Person exercising the
Option) shall, as a condition to his right to exercise any Option, deliver to
the Company an agreement or certificate containing such representations,
warranties and covenants as the Company may deem necessary or appropriate to
ensure that the issuance of shares of Common Stock pursuant to
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such exercise is not required to be registered under the Securities Act or any
applicable state securities law.
Certificates for shares of Common Stock, when issued, may have
substantially the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED
FOR SALE, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF
UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE
ISSUER (WHICH, IN THE DISCRETION OF THE ISSUER, MAY INCLUDE AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH
OFFER, SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT
VIOLATE APPLICABLE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Common Stock issued
pursuant to an effective registration statement under the Securities Act and in
accordance with applicable state securities laws.
13. Withholding Taxes.
By acceptance of the Option, the optionee will be deemed to (i) agree
to reimburse the Company or Related Entity by which the optionee is employed
for any federal, state, or local taxes required by any government to be
withheld or otherwise deducted by such corporation in respect of the optionee's
exercise of all or a portion of the Option; (ii) authorize the Company or any
Related Entity by which the Grantee is employed to withhold from any cash
compensation paid to the optionee or in the optionee's behalf, an amount
sufficient to discharge any federal, state, and local taxes imposed on the
Company, or the Related Entity by which the optionee is employed, and which
otherwise has not been reimbursed by the optionee, in respect of the optionee's
exercise of all or a portion of the Option; and (iii) agree that the Company
may, in its discretion, hold the stock certificate to which the optionee is
entitled upon exercise of the Option as security for the payment of the
aforementioned withholding
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tax liability, until cash sufficient to pay that liability has been
accumulated, and may, in its discretion, effect such withholding by retaining
shares issuable upon the exercise of the Option which shares shall have a Fair
Market Value on the date of exercise which is equal to the amount to be
withheld.
14. Costs and Expenses.
The costs and expenses of administering the Plan shall be borne by the
Company and shall not be charged against any Option nor to any employee
receiving an Option.
15. Funding of Plan.
The Plan shall be unfunded. The Company shall not be required to make
any segregation of assets to assure the payment of any Option under the Plan.
16. Other Incentive Plans.
The adoption of the Plan does not preclude the adoption by appropriate
means of any other incentive plan for employees.
17. Effect on Employment.
Nothing contained in the Plan or any agreement related hereto or
referred to herein shall affect, or be construed as affecting, the terms of
employment of any Key Employee except to the extent specifically provided
herein or therein. Nothing contained in the Plan or any agreement related
hereto or referred to herein shall impose, or be construed as imposing, an
obligation on (i) the Company or any Related Entity to continue the employment
of any Key Employee, and (ii) any Key Employee to remain in the employ of the
Company or any Related Entity.
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18. Definitions.
In addition to the terms specifically defined elsewhere in the Plan,
as used in the Plan, the following terms shall have the respective meanings
indicated:
a. "Affiliate" shall mean, as to any Person, a Person that
directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control
with, such Person.
b. "Board of Directors" shall have the meaning set forth in
Section 2 hereof.
c. "Change of Control" shall mean the first to occur of the
following events: (i) any sale, lease, exchange, or other
transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the
Company to any Person or group of related Persons for purposes
of Section 13(d) of the Exchange Act (a "Group"); (ii) a
majority of the Board of Directors of the Company shall
consist of Persons who are not Continuing Directors (as
defined below); or (iii) the acquisition by any Person or
Group (other than HMTF) of the power, directly or indirectly,
to vote or direct the voting of securities having more than
50% of the ordinary voting power for the election of directors
of the Company.
d. "Code" shall have the meaning set forth in Section 1 hereof.
e. "Committee" shall have the meaning set forth in Section 2
hereof.
f. "Common Stock" shall have the meaning set forth in Section 3
hereof.
g. "Company" shall have the meaning set forth in Section 1
hereof.
h. "Continuing Director" shall mean, as of the date of
determination, any Person who (i) was a member of the Board of
Directors of the Company on the date of adoption of this Plan
or (ii) was nominated for election or elected to the Board of
Directors of the Company with the affirmative vote of a
majority of the Continuing Directors who were members of such
Board of Directors at the time of such nomination or election.
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i. "Disability" shall mean permanent disability as defined under
the appropriate provisions of the long- term disability plan
maintained for the benefit of employees of the Company or any
Related Entity who are regularly employed on a salaried basis
unless another meaning shall be agreed to in writing by the
Committee and the optionee; provided, however, that in the
case of an Incentive Option "disability" shall have the
meaning specified in Section 22(e)(3) of the Code.
j. "Eligible Non-Employee" shall have the meaning set forth in
Section 4 hereof.
k. "Exchange Act" shall have the meaning set forth in Section 2
hereof.
l. "Fair Market Value" shall, as it relates to the Common Stock,
mean the average of the high and low prices of the Common
Stock as reported on the principal national securities
exchange on which the shares of Common Stock are then listed
on the date specified herein, or if there were no sales on
such date, on the next preceding day on which there were
sales, or if such Common Stock is not listed on a national
securities exchange, the last reported bid price in the
over-the-counter market, or if such shares are not traded in
the over-the-counter market, the per share cash price for
which all of the outstanding Common Stock could be sold to a
willing purchaser in an arms length transaction (without
regard to minority discount, absence of liquidity, or transfer
restrictions imposed by any applicable law or agreement) at
the date which is the end of the Company's fiscal quarter
preceding the event giving rise to a need for a determination.
Except as may be otherwise expressly provided in a particular
Option, Fair Market Value shall be determined in good faith by
the Committee.
m. "Good Cause" shall mean (unless another definition is agreed
to in writing by the Company and the optionee) termination by
action of the Board of Directors because of: (A) the
optionee's conviction of, or plea of nolo contendere to, a
felony or a crime involving moral turpitude; (B) the
optionee's personal dishonesty, incompetence, willful
misconduct, willful violation of any law, rule, or regulation
(other than minor traffic violations or similar offenses) or
breach of fiduciary duty which involves personal profit; (C)
the optionee's commission of material mismanagement in the
conduct of his duties as assigned to him
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by the Board of Directors or the President of the Company; (D)
the optionee's willful failure to execute or comply with the
policies of the Company or his stated duties as established by
the Board of Directors or the President of the Company, or
intentional failure to perform his stated duties; or (E)
substance abuse or addiction on the part of the optionee.
n. "Grantor" has the meaning set forth in Section 9 hereof.
o. "HMTF" shall mean Hicks, Muse, Tate & Furst Equity Fund II,
L.P. and its Affiliates.
p. "Incentive Options" shall have the meaning set forth in
Section 6 hereof.
q. The term "including" when used herein shall mean "including,
but not limited to".
r. "Key Employee" shall have the meaning set forth in Section 4
hereof.
s. "Non-Qualified Options" shall have the meaning set forth in
Section 6 hereof.
t. "Options" shall have the meaning set forth in Section 1
hereof.
u. "Person" shall mean any person or entity of any nature
whatsoever, specifically including an individual, a firm, a
company, a corporation, a partnership, a trust, or other
entity.
v. "Plan" shall have the meaning set forth in Section 1 hereof.
w. "Purchasable Shares" shall have the meaning set forth in
Section 9 hereof.
x. "Purchase Option" shall have the meaning set forth in Section
9 hereof.
y. "Related Entities" shall have the meaning set forth in Section
1 hereof.
z. "Reorganization" shall have the meaning set forth in Section
10 hereof.
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aa. "Rule 16b-3" shall have the meaning set forth in Section 2
hereof.
ab. "Securities Act" shall have the meaning set forth in Section 9
hereof.
19. Amendment of Plan.
The Board of Directors shall have the right to amend, modify, suspend
or terminate the Plan at any time; provided, that no amendment shall be made
which shall increase the total number of shares of the Common Stock which may
be issued and sold pursuant to Options granted under the Plan or decrease the
minimum Option exercise price in the case of an Incentive Option, or modify the
provisions of the Plan relating to eligibility with respect to Incentive
Options unless such amendment is made by or with the approval of the
stockholders. The Board of Directors shall be authorized to amend the Plan and
the Options granted thereunder (i) to qualify as "incentive stock options"
within the meaning of Section 422 of the Code, and (ii) to comply with Rule
16b-3 (or any successor rule) under the Exchange Act. No amendment,
modification, suspension or termination of the Plan shall alter or impair any
Options previously granted under the Plan, without the consent of the holder
thereof, or violate any provision of Rule 16b-3.
20. Effective Date.
The Plan shall become effective on the date on which it is approved by
the Board of Directors of the Company and shall be void retroactively if not
approved by the stockholders of the Company within twelve months of the date of
approval by the Board of Directors.
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