AMENDED AND RESTATED
COMMEMORATIVE BRANDS, INC.
1997 STOCK OPTION PLAN
1. PURPOSE. The Commemorative Brands, Inc., 1997 Stock Option
Plan (the "Plan") was adopted for the purpose of motivating and retaining key
employees responsible for the attainment of the primary long-term performance
goals of Commemorative Brands, Inc. (the "Corporation"). The Plan has been
amended and restated, as set forth herein, to include directors of the
Corporation among those eligible to participate in the Plan. The Plan is
designed to increase the ability of the Corporation to attract and retain
individuals of exceptional ability and to give them a proprietary interest in
the success of the Corporation. This Plan is subject to approval by the
Corporation's stockholders.
2. DEFINITIONS. When used herein, the following terms shall have
the following meanings:
"Administrator" means the Compensation Committee of the Board,
which shall be comprised of two or more non-employee directors, within the
meaning of Securities and Exchange Commission Rule 16b-3.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by, or under direct or
indirect common control with, such Person. A person shall be deemed to
control a corporation if such Person possesses, directly or indirectly, the
power to (i) vote ten percent (10%) or more of the securities having ordinary
voting power for the election of directors of such corporation, or (ii)
direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract
or otherwise.
"Board" means the Board of Directors of the Corporation.
"Cause" means, with respect to a Participant, (i) a finding by the
Administrator based upon reasonable evidence presented in writing to the
Participant that the Participant engaged in a criminal act involving moral
turpitude, or any criminal act or willful misconduct, which in either case is
inconsistent with his or her employment responsibilities or contractual
relationship with the Corporation or any subsidiary thereof, (ii) the
Participant's willful and continued failure to substantially perform his or
her duties, other than due to the Disability of such Participant, that
results in or is reasonably likely to result in material harm or damage to
the Corporation or any of its assets, properties, businesses, operations or
prospects, (iii) repeated acts of insubordination by the Participant that
result in or are reasonably likely to result in material harm to the
Corporation or any of its assets, properties, businesses, operations or
prospects, or willful failure to execute the Corporation's plans and/or
strategies, or (iv) acts of dishonesty by the Participant resulting or
intending to result in personal gain or enrichment at the expense of the
Corporation. With respect to clauses (ii) and (iii) above, the Participant
shall not be terminated
for Cause unless the Corporation shall notify the Participant in writing of
such failures and/or acts of subordination prior to termination and the
Participant shall have thirty (30) days after receipt of such notice to cure
such deficiency; PROVIDED, HOWEVER, in the event the Participant shall
continue to engage in the behavior described in clause (ii) or (iii), as the
case may be, after such cure period, the Participant shall not have a cure
period for any subsequent misconduct.
"Change in Control" shall be deemed to have occurred if, at any
time following the effective date of the Plan specified in Section 18: (a)
any Person who is not a stockholder of the Corporation as of the effective
date of the Plan becomes the beneficial owner, directly or indirectly, of
more of the combined voting power of the then outstanding securities of the
Corporation than Castle Harlan Partners II, L.P. and all its Affiliates
(including Castle Harlan Offshore Partners, L.P.; Dresdner Bank AG, Grand
Cayman Branch and all of the Investor Stockholders (as defined in the
Subscription Agreement dated as of December 16, 1996, as amended as of
December 17, 1996, between the Corporation and its stockholders)), except
pursuant to an Initial Public Offering of securities of the Corporation, (b)
there shall occur the sale or other transfer or disposition of all or
substantially all of the assets of the Corporation to one or more Persons who
are not stockholders of the Corporation or a subsidiary of the Corporation as
of the effective date of the Plan, or (c) there occurs a merger,
consolidation or other reorganization or business combination of the
Corporation with a Person who is not a stockholder of the Corporation or a
subsidiary of the Corporation as of the effective date of the Plan and in
which the Corporation or such subsidiary is not the surviving entity or, if
the Corporation is the surviving entity, its shareholders immediately prior
to such merger, consolidation, reorganization or business combination do not,
following such event own or control 50% or more of the voting securities of
the new entity.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Common Stock" means the Common Stock, par value $.01 per share, of
the Corporation.
"Corporation" means Commemorative Brands, Inc., a Delaware
corporation.
"Designated Beneficiary" shall have the meaning set forth in
Section 7(h) hereof.
"Disability" means, with respect to a Participant, a determination
by the Administrator that such Participant was unable to perform his or her
job, including after reasonable accommodation by the Corporation, for three
consecutive months or for any 120 days in a 360-day period.
"EBITDA" means, for any period, the amount equal to: (a) the net
income (or net loss) of the Corporation and its subsidiaries during such
period after deduction of all expenses, taxes and other charges, determined
in accordance with generally accepted accounting principles, after
eliminating therefrom all extraordinary items of income and expense
(including elimination of any management fee paid to Castle Harlan, Inc.
pursuant to the Management Agreement between it and the Corporation, dated as
of December 16, 1996); PLUS (b) to the extent deducted from net
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income, dividends on the Corporation's preferred stock; PLUS (c) any
provision for (or less any benefit from) income or franchise taxes included
in the determination of (a) above; PLUS (d) depreciation, depletion and
amortization; PLUS (e) the expenses of the Corporation and its subsidiaries
charged to income for interest on indebtedness (including the current portion
thereof), determined in accordance with generally accepted accounting
principles.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Fair Market Value" means, on any day, with respect to Common Stock
which is (a) listed on a United States securities exchange, the last sales
price of such stock on such day on the largest United States securities
exchange on which such stock shall have traded on such day, or if such day is
not a day on which a United States securities exchange is open for trading,
on the immediately preceding day on which such securities exchange was open,
(b) not listed on a United States securities exchange but is included in The
NASDAQ Stock Market System (including The NASDAQ National Market), the last
sales price on such system of such stock on such day, or if such day is not a
trading day, on the immediately preceding trading day, or (c) neither listed
on a United States securities exchange nor included in The NASDAQ Stock
Market System, the fair market value of such stock as determined from time to
time by the Administrator in good faith in its sole discretion.
"Fully-Diluted Basis" means, without duplication, (a) all shares of
Common Stock outstanding at the time of determination, (b) all shares of
Common Stock issuable upon the exercise of any option, warrant or similar
right outstanding at the time of determination, whether or not currently
exercisable, and (c) all shares of Common Stock issuable upon the exercise of
any conversion or exchange right contained in any security convertible into
or exchangeable for shares of Common Stock.
"Incentive Stock Option" means an Option that is designated by the
Administrator as an incentive stock option and qualifies as such within the
meaning of Section 422 of the Code and is granted by the Administrator to a
Participant.
"Initial Public Offering" means a public offering of Common Stock
pursuant to a registration statement filed with, and declared effective by,
the Securities and Exchange Commission other than on Forms S-4 or S-8 (or
successors thereto), upon the consummation of which the shares so registered
are listed on a United States securities exchange or included in The NASDAQ
Stock Market System.
"Key Employee" means an employee who owns more than 10% of the
total combined voting power of all classes of stock of the Corporation,
determined at the time an Option is proposed to be granted.
"Multiplier" means the number, determined in accordance with the
provisions of Section 11 hereof, which is multiplied by EBITDA for the
applicable Plan Year in order to calculate Purchase Price for purposes of
Section 11 hereof.
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"Nonqualified Stock Option" means an Option, which is not an
Incentive Stock Option, granted by the Administrator to a Participant.
"Option" means a right granted under the Plan to a Participant to
purchase a stated number of shares of Common Stock as an Incentive Stock
Option or Nonqualified Stock Option.
"Option Period" means the period within which an Option may be
exercised pursuant to the Plan.
"Participant" means any employee or any director (whether or not
also an employee) of the Corporation or any subsidiary thereof who is
selected to participate in the Plan in accordance with Section 4.
"Person" means any individual, partnership, firm, trust,
corporation or other similar entity. When two or more Persons act as a
partnership, limited partnership, syndicate or other group for the purpose of
acquiring, holding or disposing of securities of the Corporation, such
partnership, limited partnership, syndicate or group shall be deemed a
"Person."
"Plan" means the Commemorative Brands, Inc. 1997 Stock Option Plan.
"Plan Year" means the year ended on the last Saturday in August in
each year.
"Purchase Price" means an amount equal to EBITDA for the
immediately preceding Plan Year, times the applicable Multiplier, minus the
sum of (i) the amount of the Corporation's debt (determined in accordance
with generally accepted accounting principles as set forth on the
Corporation's most recent quarterly balance sheet, including current and long
term portions) and accrued interest, (ii) liability for gold on consignment
to the extent not included in debt calculated in accordance with (i), and
(iii) the liquidation preference plus accrued and unpaid dividends on its
preferred stock, divided by the number of shares of Common Stock outstanding
on a Fully-Diluted Basis.
3. ADMINISTRATION. The Plan shall be administered by the
Administrator. Subject to the provisions of the Plan, the Administrator
shall have the authority to:
(a) select the Participants;
(b) determine the number of shares of Common Stock covered by
any Option granted to a Participant; PROVIDED, HOWEVER, that
no single Participant may be granted Options relating to
more than 9,000 shares of Common Stock in any Plan Year
(subject to adjustment as provided in Section 7(i)); and
provided, further, that no Option shall be granted after the
expiration of the period of ten (10) years from the
effective date of this Plan, as specified in Section 18
hereof;
(c) determine whether each Option shall be an Incentive Stock
Option or a Nonqualified Stock Option; and
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(d) establish from time to time regulations for the
administration of the Plan, interpret the Plan, delegate in
writing administrative matters to committees of the Board or
to other persons, and make such other determinations and
take such other action, as it deems necessary or advisable
for the administration of the Plan.
All decisions, actions and interpretations of the Administrator
shall be final, conclusive and binding upon all parties.
4. PARTICIPATION. Participants in the Plan shall be limited to
those employees and directors of the Corporation or any subsidiary thereof
who have been notified in writing by the Administrator that they have been
selected to participate in the Plan.
5. SHARES SUBJECT TO THE PLAN. Options may be granted by the
Administrator to Participants from time to time to purchase not more than in
the aggregate of 69,954 shares of Common Stock (subject to adjustment as
provided in Section 7(j), all of which shares shall be reserved for issuance
upon exercise of Options granted under the Plan. The shares issued upon the
exercise of Options granted under the Plan may be authorized and unissued
shares, shares held in the treasury of the Corporation, or, if applicable,
shares purchased on the open market by the Corporation (at such time or times
and in such manner as it may determine). The Corporation shall be under no
obligation to acquire Common Stock for distribution to optionholders before
payment in shares of Common Stock is due. If any Option granted under the
Plan shall be canceled or shall expire without the shares covered by such
Option being purchased by the applicable optionholder thereunder, new Options
may thereafter be granted covering such shares.
6. GRANTING OPTIONS. The Administrator, at any time and from
time to time, may grant Options under the Plan to any Participant,
exercisable for such number of shares of Common Stock as the Administrator
shall designate, subject to the provisions of Section 7.
7. TERMS AND CONDITIONS OF OPTIONS. Each Option granted under
the Plan shall be evidenced by a written agreement, in form approved by the
Administrator and executed by the President, Chief Financial Officer or
Secretary of the Corporation, which shall be subject to the following express
terms and conditions and to such other terms and conditions as the
Administrator may deem appropriate:
(a) OPTION PERIOD. Each Option agreement shall specify that the
Option thereunder is granted for a period of ten (10) years,
or such shorter period as the Administrator may determine,
from the date of grant and shall provide that the Option
shall expire on such ten (10) year anniversary, or shorter
period, as the case may be (unless earlier exercised or
terminated pursuant to its terms); PROVIDED, HOWEVER, that
any Incentive Stock Option granted to a Key Employee shall
specify that the Incentive Stock Option is granted for a
period of five (5) years from the date of grant and shall
expire on such five (5) year anniversary.
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(b) OPTION PRICE. The Option price per share shall be the Fair
Market Value at the time the Option is granted or, with
respect to a Nonqualified Stock Option, such other price as
the Administrator shall determine; PROVIDED, HOWEVER, that
the Option price per share for any Incentive Stock Option
granted to a Key Employee shall equal 110% of the Fair
Market Value at the time the Incentive Stock Option is
granted.
(c) EXERCISE OF OPTION; VOTING ARRANGEMENT. Subject to Sections
7(g) and 8, Options shall become exercisable such that on
the second anniversary of the date of grant the amount
exercisable shall be 25% and on each of the third, fourth
and fifth anniversaries of the date of grant the amount
exercisable shall cumulatively increase by 25%, as set forth
in the following schedule:
Years from Amount
Date of Grant Exercisable
------------- -----------
One ............................ 0%
Two ............................ 25%
Three .......................... 50%
Four ........................... 75%
Five ........................... 100%
Notwithstanding the foregoing schedule, the
Administrator may grant Options that become exercisable
in accordance with such other vesting schedule, subject
to the Administrator's authority to amend or accelerate
such vesting schedule and upon such terms and conditions
as the Administrator shall determine, PROVIDED, HOWEVER,
that no Options may be granted with a vesting schedule
of less than six (6) months. A Participant or his or
her Designated Beneficiary who acquires Common Stock
pursuant to the exercise of an Option shall execute and
become a party to the Corporation's Voting Trust
Agreement, dated as of December 17, 1996, as the same
may be amended, restated or otherwise revised, and shall
deposit such shares of Common Stock in the voting trust
described therein, which execution and deposit shall be
a condition precedent to the right of the Participant or
his or her Designated Beneficiary to purchase any shares.
(d) LIMITATION ON AMOUNT OF INCENTIVE STOCK OPTIONS GRANTED.
Options shall be treated as Incentive Stock Options only to
the extent that the aggregate Fair Market Value of stock
with respect to which Incentive Stock Options are
exercisable for the first time by any optionholder during
any calendar year (whether under the terms of the Plan or
any other stock option plan of the Corporation or of its
parent or any subsidiary corporation) is $100,000 or less.
To the extent that such aggregate Fair Market Value exceeds
$100,000, the Options shall be treated as Nonqualified Stock
Options. Fair
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Market Value shall be determined as of the time the Option
with respect to such stock is granted.
(e) LIMITATIONS ON GRANTING OF OPTIONS. The Administrator shall
have the authority and discretion to grant to an eligible
employee either Incentive Stock Options or Nonqualified
Stock Options or both, but shall clearly designate the
nature of each Option at the time of grant in the stock
option agreement. Participants who are non-employee
directors on the date an Option is granted may only receive
Nonqualified Stock Options.
(f) PAYMENT OF OPTION PRICE UPON EXERCISE. The option price of
the shares of Common Stock as to which an Option shall be
exercised shall be paid to the Corporation at the time of
exercise at the option of the optionholder either (i) in
cash, (ii) by check, (iii) bank draft, (iv) money order
payment to the Corporation, (v) by delivering Common Stock
of the Corporation already owned by the optionholder and
having a total Fair Market Value on the date of such
delivery equal to the option price, (vi) to the extent
authorized by the Administrator, through the written
election of the optionholder to have shares of Common Stock
withheld by the Corporation from the shares otherwise to be
received, with such withheld shares having an aggregate Fair
Market Value on the date of exercise equal to the option
price, (vii) by wire transfer to an account designated by
the Corporation or (viii) any combination of the above
methods of payment.
(g) EXERCISE OF OPTIONS UPON TERMINATION. If a Participant's
relationship with the Corporation terminates for any reason
other than death or Disability, the Options granted to such
Participant that are exercisable as of the date of
termination of such relationship may be so exercised within
three (3) months after termination of such relationship, or
such longer period as the Administrator may determine, and
shall then terminate; PROVIDED, HOWEVER, that any Incentive
Stock Options shall no longer be treated as Incentive Stock
Options unless exercised within three (3) months following
the termination of such Participant's relationship with the
Corporation; PROVIDED, FURTHER, that in no event may such
Options be exercised after the expiration date of such
Options as established in accordance with Section 7(a). All
Options that have been granted to a Participant which are
not exercisable as of the date of the termination of a
Participant's relationship with the Corporation shall
terminate as of such date. If the relationship of a
Participant to the Corporation terminates on account of
death or Disability, the Options granted to such Participant
that are exercisable as of the date of such termination may
be so exercised within one (1) year after such termination,
or such longer period as the Administrator may determine,
and shall then terminate; PROVIDED, HOWEVER, that any
Incentive Stock Options shall no longer be treated as
Incentive Stock Options unless exercised within one (1) year
of the termination of a Participant's relationship with the
Corporation on account of Disability.
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(h) TRANSFERABILITY OF OPTIONS. No Option granted under the
Plan and no right arising under such Option shall be
transferable other than by will or by the laws of descent
and distribution. During the lifetime of the Participant an
Option shall be exercisable only by such Participant. Any
Option exercisable at the date of the Participant's death
and transferred by will or by the laws of descent and
distribution shall be exercisable in accordance with the
terms of such Option by the executor or administrator, as
the case may be, of the Participant's estate or by the
Person or Persons to whom such Option is transferred by will
or the laws of descent or distribution (each, a "Designated
Beneficiary") for a period of one (1) year after the date of
the Participant's death, or such longer period as the
Administrator may determine, and shall then terminate;
PROVIDED, HOWEVER, that in no event may such Options be
exercised after the expiration date of such Options as
established in accordance with Section 7(a). All Options
not exercisable at the date of the Participant's death shall
terminate as of such date.
(i) INVESTMENT REPRESENTATION. Each Option agreement may
contain an undertaking that, upon demand by the
Administrator for such a representation, the Participant or
his Designated Beneficiary, as the case may be, shall
deliver to the Administrator at the time of any exercise of
an Option a written representation that the shares of Common
Stock to be acquired upon such exercise are to be acquired
for such Participant's or Designated Beneficiary's own
account and not with a view to, or for resale in connection
with, any distribution. Upon such demand, delivery of such
representation prior to the delivery of any shares issued
upon exercise of an Option shall be a condition precedent to
the right of the Participant or his Designated Beneficiary
to purchase any shares.
(j) ADJUSTMENTS IN EVENT OF CHANGE IN COMMON STOCK. In the
event of any change in the Common Stock by reason of any
stock dividend, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares,
or of any similar change affecting the Common Stock, the
number and kind of shares which thereafter may be optioned
and sold under the Plan and the number and kind of shares
subject to Option in outstanding Option agreements and the
purchase price per share thereof shall be appropriately
adjusted consistent with such change in such manner as the
Board may deem equitable to prevent substantial dilution or
enlargement of the rights granted to, or available for,
Participants in the Plan. Without limiting the generality
of the foregoing, if the Common Stock is recapitalized into
multiple classes of common stock, the kind of shares subject
to Option shall be those common shares intended for broad
general ownership rather than any class of special super-
voting or other control stock.
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(k) OPTIONHOLDERS TO HAVE NO RIGHTS AS STOCKHOLDERS. No
optionholder shall have any rights as a stockholder with
respect to any shares subject to such optionholder's Option
prior to the date on which such optionholder is recorded as
the holder of such shares on the records of the Corporation.
(l) PLAN AND OPTION NOT TO CONFER RIGHTS WITH RESPECT TO
CONTINUANCE OF EMPLOYMENT. Neither the Plan nor any action
taken thereunder shall be construed as giving any
Participant any right to continue such Participant's
relationship with the Corporation or a subsidiary thereof,
nor shall it give any employee the right to be retained in
the employ of the Corporation, or interfere in any way with
the right of the Corporation to terminate any Participant's
employment or relationship, as the case may be, at any time
with or without Cause.
(m) OTHER OPTION PROVISIONS. The form of option agreement
authorized by the Plan may contain such other provisions,
consistent with this Plan, as the Administrator may, from
time to time, determine.
(n) NOTIFICATION OF SALES OF COMMON STOCK. Subject to the
provisions of Section 11 hereof, any optionholder who
disposes of shares of Common Stock acquired upon the
exercise of an Incentive Stock Option either (a) within two
(2) years from the date of the grant of the Incentive Stock
Option under which the Common Stock was acquired or (b)
within one (1) year after the transfer of such shares of
Common Stock to the optionholder, shall notify the
Corporation of such disposition and of the amount realized
upon such disposition.
8. EFFECT OF CHANGE IN CONTROL OR INITIAL PUBLIC OFFERING.
Notwithstanding the provisions of Section 7, if there should be a Change in
Control of the Corporation, or if the Corporation shall effectuate an Initial
Public Offering, the Corporation shall give each optionholder written notice of
such Change in Control or Initial Public Offering as promptly as practicable
prior to the effective date thereof and all of the Options held by an
optionholder not currently exercisable shall become immediately exercisable
immediately prior to the effective date of such Change in Control or Initial
Public Offering; PROVIDED, HOWEVER, that all or a portion of such Options shall
not be exercisable to the extent that the exercise would cause the optionholder
to be subject to taxes under Section 4999 of the Code.
9. NO CLAIM OR RIGHT UNDER THE PLAN. No employee or director shall
at any time have the right to be selected as a Participant in the Plan nor,
having been selected as a Participant and granted an Option, to be granted any
additional Options.
10. LISTING AND QUALIFICATION OF SHARES. The Plan, the grant and
exercise of Options thereunder, and the obligation of the Corporation to sell
and deliver shares under such Options, shall be subject to all applicable
Federal and state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required. The Corporation, in its
discretion, may postpone the issuance or delivery of shares upon any exercise of
an Option until
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completion of any stock exchange listing, or other qualification of such
shares under any state or Federal law, rule or regulation as the Corporation
may consider appropriate, and may require any optionholder to make such
representations and furnish such information as it may consider appropriate
in connection with the issuance or delivery of the shares in compliance with
applicable laws, rules and regulations. Certificates representing shares of
Common Stock acquired by the exercise of an Option may bear such legend as
the Corporation may consider appropriate under the circumstances.
11. DISPOSITION OF SHARES. At any time prior to the consummation of
an Initial Public Offering, each share of Common Stock acquired by an exercise
of an Option granted under the Plan may be transferred, other than by will or
the laws of descent and distribution, only to the Corporation and only in
accordance with the following provisions of this Section 11 and Section 12
hereof. Each certificate representing shares of Common Stock acquired by the
exercise of an Option shall bear a legend to such effect.
(a) CALL BY CORPORATION. The Corporation shall have the right
to purchase from a Participant or Designated Beneficiary, as
the case may be, within six (6) months following the death,
Disability or termination of such employee Participant's
employment by the Corporation without Cause, or termination
of such non-employee Participant's relationship with the
Corporation without Cause, the Common Stock acquired by the
exercise of Options by such Participant or Designated
Beneficiary for an amount equal to the Purchase Price where
the Multiplier is 6.0. The Corporation shall have the right
to purchase from a Participant or Designated Beneficiary, as
the case may be, within six (6) months following the
termination of such employee Participant's employment by the
Corporation for Cause or the termination of such non-employee
Participant's relationship with the Corporation for Cause, or
the resignation by the Participant, the Common Stock acquired
by such Participant or Designated Beneficiary, for an amount
equal to the Purchase Price where the Multiplier is 5.0.
(b) PUT BY PARTICIPANT. Each Participant or Designated Beneficiary,
as the case may be, shall have the right (the "Put Right") to
sell to the Corporation, within six (6) months following the
death or Disability of such Participant, or within three (3)
months following termination of such employee Participant's
employment by the Corporation without Cause, or termination of
such non-employee Participant's relationship with the Corporation
without Cause, the Common Stock acquired by the exercise of
Options by such Participant or Designated Beneficiary, for an
amount equal to the Purchase Price where the Multiplier is 5.0;
PROVIDED, that a Participant shall not have the right to exercise
such Put Right (i) if the Corporation is prohibited from
satisfying such Put Right by law, (ii) if the Corporation's
performance of its obligations would cause an event of default
under any financial covenants under any loan documents to which
it is a party (other than loan documents with respect to
indebtedness incurred after the effective date of the Plan the
proceeds of which are used to fund payments
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to the Corporation's securityholders), or (iii) if there is
then pending or under active negotiation an agreement for sale
of all or substantially all of the Corporation's stock or assets
or for a merger. In any such event, the optionholder's rights
under this Section 11(b) shall remain in effect until such time
as the Corporation is able to perform its obligations hereunder
or the proposed sale or merger transaction has been abandoned as
the case may be. The Administrator shall notify the
optionholders in writing that the Corporation is able to perform
such obligation or the proposed sale or merger transaction has
been abandoned as the case may be.
The purchase of Common Stock by the Corporation pursuant to the foregoing
provisions of this Section 11 may, at the discretion of the Administrator, be
paid for either (i) in cash or (ii) up to forty percent (40%) in cash with the
balance payable under a note issued by the Corporation with principal payments
made in four (4) equal annual installments and bearing interest, payable
annually, at the rate of the greater of (i) seven percent (7%) per annum and
(ii) the lowest interest rate required to avoid imputed interest.
12. SALE OF COMMON STOCK. Notwithstanding anything herein to the
contrary, if Castle Harlan Partners II, L.P. ("CHP II") proposes to sell all of
its Common Stock to any third party, in one or a series of transactions (any
such sale being referred to as a "Go-Along Sale"), then CHP II, at its option,
may require a Participant or Designated Beneficiary to sell all of the Common
Stock owned by such Participant or Designated Beneficiary at the same time as
the completion of CHP II's sale for the same consideration as received by CHP II
as provided herein. If CHP II determines to exercise such rights, it shall
provide such Participant or Designated Beneficiary with written notice (a "Go-
Along Notice") at least twenty (20) days prior to the proposed closing of the
Go-Along Sale. Such Go-Along Notice shall set forth: (i) the name and address
of the proposed purchaser in the Go-Along Sale and the proposed closing date for
such Go-Along Sale; and (ii) the proposed amount and form of consideration to be
paid for the Common Stock and the terms and conditions of payment. The closing
of a Go-Along Sale shall take place on such date and at such time as CHP II
specifies to such Participant or Designated Beneficiary by not less than three
(3) days' prior notice. At the closing of a Go-Along Sale, such Participant or
Designated Beneficiary shall cause the stock certificates evidencing all of such
Participant's or Designated Beneficiary's shares of Common Stock (with stock
powers duly executed) to be delivered to the purchaser free and clear of all
liens, charges, encumbrances and rights of third parties of any kind and shall
take all actions necessary to vest in the purchaser at such closing good and
marketable title to all of such Participant's or Designated Beneficiary's Common
Stock, free and clear of all liens, charges, encumbrances and rights of third
parties. In addition, such Participant or Designated Beneficiary shall deliver
to the purchaser at each such closing any opinions of counsel and certificates
that the purchaser may reasonably request. Notwithstanding the provisions of
Sections 7 and 8 hereof, all of the Options granted to such Participant or
Designated Beneficiary not currently exercisable shall become immediately
exercisable as of the effective date of the Go-Along Sale. If such Participant
or Designated Beneficiary elects not to exercise all of the Options on such date
and sell each share of Common Stock acquired by such exercise in the Go-Along
Sale, all of the Options not so exercised shall terminate as of the effective
date of the Go-Along Sale.
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13. TAXES. The Administrator may make such provisions and take such
steps as it may deem necessary or appropriate for the withholding of all
federal, state, local and other taxes required by law to be withheld by the
Corporation with respect to Options under the Plan including, but not limited to
(a) reducing the number of shares of Common Stock otherwise deliverable, based
upon their Fair Market Value on the date of exercise, to permit deduction of the
amount of any such withholding taxes from the amount otherwise payable under the
Plan, (b) deducting the amount of any such withholding taxes from any other
amount then or thereafter payable to a Participant or Designated Beneficiary, as
the case may be, or (c) requiring a Participant or Designated Beneficiary to pay
to the Corporation the amount required to be withheld or to execute such
documents as the Administrator deems necessary or desirable to enable the
Corporation to satisfy its withholding obligations as a condition of releasing
the Common Stock.
14. NO LIABILITY OF BOARD MEMBERS. No member of the Board shall be
personally liable by reason of any contract or other instrument executed by such
member or on such member's behalf in such member's capacity as a member of the
Board or the Administrator nor for any mistake of judgment made in good faith,
and the Corporation shall indemnify and hold harmless each employee, officer or
director of the Corporation to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or delegated,
against any cost or expense (including counsel fees) or liability (including any
sum paid in settlement of a claim with the approval of the Board) arising out of
any act or omission to act in connection with the Plan unless arising out of
such person's own fraud or bad faith.
15. AMENDMENT OR TERMINATION. The Administrator may, with
prospective or retroactive effect, amend, suspend, or terminate the Plan or any
portion thereof at any time; PROVIDED, HOWEVER, that no amendment, suspension or
termination of the Plan shall deprive any optionholder of any right with respect
to any Option granted under the Plan without such optionholder's written
consent; and PROVIDED, FURTHER, that unless duly approved by the holders of
stock entitled to vote thereon at a meeting (which may be the annual meeting)
duly called and held for such purpose, except as provided in Section 7(j), no
amendment or change shall be made to the Plan, (i) increasing the total number
of shares which may be issued or transferred under the Plan, (ii) changing the
exercise price specified for the shares subject to the Options, (iii) changing
the maximum periods during which Options may be exercised, (iv) extending the
period during which Options may be granted under the Plan, (v) materially
changing the designation of persons eligible to receive Options under the Plan,
or (vi) materially increasing in any other way the benefits accruing to
Participants under the Plan.
16. CAPTIONS. The captions preceding the sections of the Plan have
been inserted solely as a matter of convenience and shall not in any manner
define or limit the scope or intent of any provisions of the Plan.
17. GOVERNING LAW. The Plan and all rights thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed entirely within such State.
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18. EFFECTIVE DATE. The Plan, as amended and restated, shall become
effective as of July 29, 1997.
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