Exhibit 10.4
PLI INVESTORS INC.
STOCK OPTION PLAN
ARTICLE 1
GENERAL
1.1 PURPOSE. The purpose of this PLI Investors Inc. Stock Option
Plan (the "Plan") is to provide for certain key employees and/or directors of P.
Leiner Nutritional Products Corp., a Delaware corporation and its subsidiaries
and affiliates (collectively, the "Company"), each an indirect wholly-owned
subsidiary of PLI Investors Inc., a Delaware corporation ("PLI"), an incentive
(I) to join and/or remain in the service of the Company and its subsidiaries,
(II) to maintain and enhance the long-term performance and profitability of PLI,
the Company and their subsidiaries and affiliates and (III) to acquire a
proprietary interest in the success of PLI, the Company and their subsidiaries.
1.2 DEFINITION OF CERTAIN TERMS.
(a) "Agreement" means an agreement issued pursuant to Section 2.1.
(b) "Board" means the Board of Directors of PLI.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Committee appointed to administer the Plan
in accordance with Section 13.
(e) "Company" means P. Leiner Nutritional Products Corp., a Delaware
corporation and its subsidiaries and affiliates.
(f) "Common Stock" means the shares of Class A common stock, par value
$.01 per share, of PLI and any other shares into which such common stock shall
thereafter be exchanged by reason of a recapitalization, merger, consolidation,
split-up, combination, exchange of shares or the like.
(g) "Optionee" means an employee of the Company who has been awarded
any Option under this Plan.
(h) "Option" means a "nonqualified" stock option, as described in
Section 1.5, granted under the Plan.
(i) The terms "parent corporation" and "subsidiary corporation" as
used herein shall have the meaning given those terms in Code section 425(e) and
(f), respectively. A corporation shall be deemed a parent or a subsidiary only
for such periods during which the requisite ownership relationship is
maintained.
(j) "Plan" means this PLI Investors Inc. Stock Option Plan.
(k) "Termination With Cause," with respect to any Optionee, means
termination by the Company of such Optionee's employment for: (I)
misappropriation of corporate funds, (II) conviction of a felony or a crime
involving moral turpitude, (III) willful violation of directions of the Chief
Executive Officer or the Board of Directors of the Company, or (IV) gross
negligence and wilful misconduct.
1.3 ADMINISTRATION. (a) (i) Subject to Section 1.3(e), the Plan
shall be administered by a committee of the Board which shall consist of at
least two directors and which shall have the power of the Board to authorize
awards under the Plan. The members
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of the Committee shall be appointed by, and may be changed from time to time in
the discretion of, the Board.
(ii) No person shall serve as a member of the Committee if such person
is then. or was at any time within one year prior thereto, eligible for
selection as a person to whom awards may be granted under the Plan, or under any
other plan of PLI or any of its affiliates entitling the participants therein to
acquire stock, stock options of PLI or any of its affiliates. The term
"affiliate" as used in the preceding sentence means any person or entity which,
at the time of reference, directly, or indirectly through one or more
intermediaries, (I) controls PLI or (II) is controlled by, or is under common
control with, PLI.
(b) The Committee shall have the authority (I) to exercise all of the
powers granted to it under the Plan, (II) to construe, interpret and implement
the Plan and any Agreement executed pursuant to Section 2.1, (III) to prescribe,
amend and rescind rules and regulations relating to the Plan, (IV) to make all
determinations necessary or advisable in administering the Plan, and (V) to
correct any defect, supply any omission and reconcile any inconsistency in the
Plan.
(c) The determination of the Committee on all matters relating to the
Plan or any Agreement shall be conclusive.
(d) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any award
thereunder.
(e) Notwithstanding anything to the contrary contained herein: (I)
until the Board shall appoint the members of the Committee, the Plan shall be
administered by the
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Board; and (II) the Board may, in its sole discretion, at any time and from time
to time, resolve to administer the Plan, with any members of the Board who are
eligible to receive awards hereunder not participating in decisions relating to
the Plan. In either of the foregoing events, the term "Committee" as used
herein shall be deemed to mean the Board.
1.4 PERSONS ELIGIBLE FOR AWARDS. Awards under the Plan may be made
from time to time to such key employees of the Company as the Committee shall in
its sole discretion select.
1.5 TYPES OF AWARDS UNDER THE PLAN. Awards may be made under the Plan
in the form of stock options which shall be "nonqualified" stock options subject
to the provisions of section 83 of the Code, all as more fully set forth in
Article 2.
1.6 SHARES AVAILABLE FOR AWARDS. (a) Subject to Section 3.4 (relating
to adjustments upon changes in capitalization), as of any date the total number
of shares of Common Stock with respect to which Options may be awarded under the
Plan shall be equal to the excess (if any) of (I) 100,000 shares over (II) the
sum of (A) the number of shares subject to outstanding Options granted under the
Plan, and (B) the number of shares previously issued pursuant to the exercise of
Options granted under the Plan. In accordance with (and without limitation
upon) the preceding sentence, shares of Common Stock covered by Options granted
under the Plan which expire or terminate for any reason shall again become
available for award under the Plan.
(b) Shares that are issued upon the exercise of Options awarded under
the Plan shall be authorized and unissued or treasury shares of Common Stock.
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(c) Without limiting the generality of the preceding provisions of
this Section 1.6, the Committee may, but solely with the Optionee's consent,
agree to cancel any award of Options under the Plan and issue new Options in
substitution therefor, provided that the Options as so substituted shall satisfy
all of the requirements of the Plan as of the date such new Options are awarded.
ARTICLE 2
STOCK OPTIONS
2.1 AGREEMENTS EVIDENCING STOCK OPTIONS. (a) Options awarded under
the Plan shall be evidenced by Agreements which shall not be inconsistent with
the terms and provisions of the Plan, and which shall contain such provisions as
the Committee may in its sole discretion deem necessary or desirable. Without
limiting the generality of the foregoing, the Committee may in any Agreement
impose such restrictions or conditions upon the exercise of such Option or upon
the sale or other disposition of the shares of Common Stock issuable upon
exercise of such Option as the Committee may in its sole discretion determine.
By accepting an award pursuant to the Plan each Optionee shall thereby agree
that each such award shall be subject to all of the terms and provisions of the
Plan, including, but not limited to, the provisions of Section 1.3(d).
(b) Each Agreement shall set forth the number of shares of Common
Stock subject to the Option granted thereby.
(c) Each Agreement relating to Options shall set forth the amount
payable by the Optionee to PLI upon exercise of the Option evidenced thereby.
The Option exercise
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price per share of Common Stock of a "nonqualified" stock option shall be not
less than $100 per share, adjusted as determined by the Committee to reflect
changes in capitalization as contemplated by Section 3.4.
2.2 TERM OF OPTIONS. Each Agreement shall set forth the period during
which the Option evidenced thereby shall be exercisable, whether in whole or in
part, such periods to be determined by the Committee in its discretion.
2.3 EXERCISE OF OPTIONS. Subject to the provisions of this Article 2,
each Option granted under the Plan shall be exercisable as follows:
(a) An Option shall become exercisable at such times and subject to
such conditions as the applicable Agreement may provide.
(b) Unless the applicable Agreement otherwise provides, an Option
granted under the Plan may be exercised from time to time as to all or part
of the shares as to which such Option shall then be exercisable.
(c) An Option shall be exercisable by the filing of a written notice
of exercise with PLI, on such form and in such manner as the Committee
shall in its sole discretion prescribe.
(d) Any written notice of exercise of an Option shall be accompanied
by payment of the exercise price for the shares being purchased. Such
payment shall be made by certified or official bank check payable to PLI
(or the equivalent thereof acceptable to the Committee). As soon as
practicable after receipt of such payment,
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PLI shall deliver to the Optionee a certificate or certificates for the
shares of Common Stock so purchased.
2.4 TERMINATION OF OPTIONS. (a) Notwithstanding anything to the
contrary in this Plan, except as the Agreement may otherwise provide and as set
forth in Section 2.4(b) and Section 2.4(d), Options granted to an Optionee (and
already vested but not yet exercised) shall terminate on the earliest to occur
of (I) the date which is 45 days after termination of his employment with the
Company for any reason (other than death or disability in which case the Options
shall terminate on the date which is 180 days after the date of such
termination), (II) a sale or other disposition of 80% or more of the outstanding
capital stock or substantially ail the assets of PLI ("Sale"), and (III) the
merger or consolidation of the Company with or into any other corporation
("Merger") other than (X) a merger or consolidation in which the Company is the
surviving corporation and the shares of its outstanding common stock are not
changed into any other securities or property pursuant to such merger or
consolidation, or (Y) a merger or consolidation with an affiliate of the Company
following which those persons who owned directly or indirectly a majority of the
outstanding shares of common stock of the Company immediately prior to such
merger or consolidation will own a majority of the outstanding shares of common
stock of the surviving corporation.
(b) Notwithstanding anything to the contrary in this Plan, all Options
granted to an Optionee shall immediately expire and cease to be exercisable and
all rights granted to
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an Optionee under this Plan and such Optionee's Agreement shall immediately
expire in the event of a Termination With Cause of the Optionee by the Company
at any time.
(c) Unless the applicable Agreement expressly provides otherwise,
Options awarded to Optionees under the terms of the Plan will be exercisable
only in accordance with the following vesting schedule:
Cumulative
Percentage of
Applicable Date Total Shares
--------------- ------------
On the date of the applicable Agreement 25%
On the first anniversary of the date of the Agreement 50%
On the second anniversary of the date of the Agreement 75%
On the third anniversary of the date of the Agreement 100%
provided, however that in the event of a Sale or Merger any unexercised Options
will be fully vested on the Closing Date of any such Sale or Merger. The
Committee may modify this vesting schedule in any manner that it deems
appropriate in any Agreement, and may provide different vesting schedules in
different Agreements in its sole discretion. Except as otherwise provided
herein, in the event that Optionee's employment with the Company is terminated
for any reason prior to the date on which the Optionee's right to exercise the
Options has fully vested pursuant to this Section 2.4(c), the Options will
immediately cease to be exercisable with respect to any and all shares which
have not vested as of the date of such termination.
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(d) If at the time in question the Common Stock is not publicly traded
on a national securities exchange or over-the-counter market, in the event that
an Optionee's employment with the Company is terminated for any reason, the
Company at its election, on giving ten days' written notice to Optionee, may (I)
repurchase any and all shares of Common, Stock then owned by Optionee which were
previously acquired by Optionee through exercise of Options granted under this
Plan and (II) cancel any Options which have vested under the terms of the Plan
but have not been exercised subject to payment of the purchase price described
below. The purchase price payable by the Company to the Optionee on exercise of
its right to repurchase under (d)(i) above will be the fair market value of the
Common Stock held by the Optionee which is being repurchased, determined as of
the date of the repurchase. The purchase price payable by the Company to
Optionee on exercise of the right to cancel vested but unexercised Options under
(d)(ii) above will be the fair market value of the Options in question
determined as of the date of the cancellations. In either of the above cases,
the fair market value will be determined by the Board in its absolute
discretion.
ARTICLE 3
MISCELLANEOUS
3.1 AMENDMENT OF THE PLAN; MODIFICATION OF AWARDS. (a) The Board may,
without stockholder approval, from time to time suspend or discontinue the Plan
or revise or amend it in any respect whatsoever, except that no such amendment
shall alter or impair any rights or obligations under any award theretofore made
under the Plan without the consent of
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the person to whom such award was made. Furthermore, except as and to the
extent otherwise permitted by Section 3.4, no such amendment shall, without
stockholder approval:
(i) increase, beyond the amounts set forth in Section 1.6, the number
of shares of Common Stock in respect of which awards may be granted;
(ii) change the designation in Section 1.4 of the class of persons
eligible to receive awards under the Plan; or
(iii) extend the term of the Plan beyond the period set forth in
Section 3.12.
(b) With the consent of the Optionee and subject to the terms and
conditions of the Plan (including Section 3.1(a)), the Committee may amend
outstanding Agreements with such Optionee, for example, to (I) accelerate the
time or times at which an Option may be exercised or (II) extend the scheduled
expiration date of the Option.
3.2 NONASSIGNABILITY. No right granted to any Optionee under the Plan
or under any Agreement shall be assignable or transferable other than by will or
by the laws of descent and distribution. During the life of the Optionee, all
rights granted to the Optionee under the Plan or under any Agreement shall be
exercisable only by him.
3.3 WITHHOLDING OF TAXES. PLI or the Company shall be entitled to
withhold an amount sufficient to satisfy any federal, state and other
governmental tax requirements related thereto. Whenever, under the Plan, shares
of Common Stock are to be delivered upon exercise of an Option, PLI shall be
entitled to require as a condition of delivery that the Optionee remit an amount
sufficient to satisfy all federal, state and other governmental tax withholding
requirements related thereto.
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3.4 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. If and to the extent
specified by the Committee, the number of shares of Common Stock which may be
issued pursuant to the exercise of Options granted under the Plan may be
appropriately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from the subdivision or combination of shares
of Common Stock or other capital adjustments, or the payment of a stock dividend
after the effective date of this Plan, or other increase or decrease in the
number of such shares of Common Stock effected without receipt of consideration
by PLI; provided, however, that any Options to purchase fractional shares of
Common Stock resulting from any such adjustment shall be eliminated.
Adjustments under this Section 3.4 shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
3.5 RIGHT OF DISCHARGE RESERVED. Nothing in this Plan or in any
Agreement shall confer upon any employee or other person the right to continue
in the employment or service of the Company or affect any right which the
Company may have to terminate the employment or service of such employee or
other person.
3.6 NO RIGHTS AS A STOCKHOLDER. No Optionee or other person holding
an Option shall have any of the rights of a stockholder of PLI with respect to
shares subject to an Option until the issuance of a stock certificate to him for
such shares. Except as otherwise provided in Section 3.4, no adjustment shall
be made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) for which the
record date is prior to the date such stock certificate is issued.
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3.7 NATURE OF PAYMENTS. (a) Any and all payments of shares of Common
Stock or cash hereunder shall be granted, transferred or paid in consideration
of services performed by the Optionee for the Company.
(b) All such grants, issuances and payments shall constitute a special
incentive payment to the Optionee and shall not, unless otherwise determined by
the Committee, be taken into account in computing the amount of salary or
compensation of the Optionee for the purposes of determining any pension,
retirement, death or other benefits under (I) any pension, retirement, life
insurance or other benefit plan of the Company or (II) any agreement between the
Company and the Optionee.
3.8 NON-UNIFORM DETERMINATIONS. The Committee's determinations under
the Plan need not be uniform and may be made by it selectively among persons who
receive, or are eligible to receive, awards under the Plan (whether or not such
persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, and to enter into non-uniform and
selective Agreements, as to (I) the persons to receive awards under the Plan.
and (II) the terms and provisions of awards under the Plan.
3.9 OTHER PAYMENTS OR AWARDS. Nothing contained in the Plan shall be
deemed in any way to limit or restrict PLI, the Company, any subsidiary or the
Committee from making any award or payment to any person under any other plan,
arrangement or understanding, whether now existing or hereafter in effect.
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3.10 RESTRICTIONS. (a) If the Committee shall at any time determine
that any Consent (as hereinafter defined) is necessary or desirable as a
condition of, or in connection with, the granting of any award under the
Plan, the issuance or purchase of shares or other rights thereunder or the
taking of any other action thereunder (each such action being hereinafter
referred to as a "Plan Action"), then such Plan Action shall not be taken,
in whole or in part, unless and until such Consent shall have been effected
or obtained to the full satisfaction of the Committee. Without limiting
the generality of the foregoing, if (I) the Committee is entitled under the
Plan to make any payment in cash, Common Stock or both, and (II) the
Committee determines that a Consent is necessary or desirable as a
condition of, or in connection with, payment in any one or more of such
forms, the Committee shall be entitled to determine not to make any payment
whatsoever until such Consent shall have been obtained in the manner
aforesaid.
(b) The term "Consent" as used herein with respect to any Plan Action
means (I) any and all listings, registrations or qualifications in respect
thereof upon any securities exchange or under any federal, state or local law,
rule or regulation, (II) any and all written agreements and representations by
the grantee with respect to the disposition of shares, or with respect to any
other matter, which the Committee shall deem necessary or desirable to comply
with the terms of any such listing, registration or qualification or to obtain
an exemption from the requirement that any such listing, qualification or
registration be made
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and (III) any and all consents, clearances and approvals in respect of a Plan
Action by any governmental or other regulatory bodies.
3.11 SECTION HEADINGS. The section headings contained herein are for
the purposes of convenience only and are not intended to define or limit the
contents of said sections.
3.12 EFFECTIVE DATE AND TERM OF PLAN. (a) This Plan shall be deemed
adopted and become effective upon the approval thereof by the Board; provided
that, notwithstanding any other provision of this Plan, no Option awarded under
the Plan shall be exercisable unless the Plan is approved, within 12 months
before or after the date the Plan is adopted, by (I) the express consent of
stockholders holding at least a majority of PLI's voting stock voting in person
or by proxy at a duly held stockholders' meeting, or (II) the written consent of
stockholders holding at least a majority of PLI's voting stock.
(b) The Plan shall terminate 10 years after the earlier of the date on
which it becomes effective or the date on which it is approved by the
stockholders of PLI, and no awards shall thereafter be made under the Plan.
Notwithstanding the foregoing, all awards made under the Plan prior to the date
on which the Plan terminates shall remain in effect until such awards have been
satisfied or terminated in accordance with the terms and provisions of the Plan.
3.13 NOTICES. PLI has agreed to provide reasonable notice, designed
to permit an Optionee the opportunities to exercise his Options, of the
occurrence of (A) a Sale or (B) a Merger.
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