EXHIBIT 10.1

 

 

TEKNI-PLEX, INC.

2008 STOCK OPTION PLAN

(Effective as of October 22, 2008)

 

1.

Purpose

The purpose of the Plan is to provide a means through which the Company and its
Subsidiaries may attract able persons to enter and remain in the employ and
service of the Company and its Subsidiaries and to provide a means whereby
employees, directors and Consultants of the Company and its Subsidiaries can
acquire and maintain Common Stock ownership, thereby strengthening their
commitment to the welfare of the Company and its Subsidiaries and promoting an
identity of interest between stockholders and these employees, directors and
Consultants.

The Plan provides for the grant of Options to purchase Common Stock.

 

2.

Definitions

The following definitions shall be applicable throughout the Plan.

(a)      “Affiliate” with respect to any Person, means any other Person who,
directly or indirectly (including through one or more intermediaries), controls,
is controlled by, or is under common control with, such Person. For purposes of
this definition, “control,” when used with respect to any specified Person,
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities, by contract or otherwise; and the terms “controlling” and
“controlled” shall have correlative meanings.

 

(b)

“Board” means the Board of Directors of the Company.

(c)      “Cause” with respect to any Participant, has the same meaning as
“Cause”, “Just Cause” or any term of like import set forth in any employment,
consulting or similar agreement between such Participant and the Company or any
of its Subsidiaries. Absent such term in any such agreement, and in the case of
other Participants who do not have such an agreement, “Cause” shall mean the
following: (A) the Participant’s conviction of, or pleading guilty or no contest
to, a felony or a crime involving moral turpitude, or other material act or
omission involving dishonesty or fraud, (B) the Participant’s conduct that
brings or is reasonably likely to bring the Company or any of its Affiliates
into public disgrace or disrepute and that affects the Company’s or any
Affiliate’s business in any material way, (C) the Participant’s failure to
perform duties (other than as a result of his incapacity due to physical or
mental illness or injury) as reasonably directed by the Company (which, if
curable, is not cured within 14 days after notice thereof is provided to the
Participant) (D) the Participant’s gross negligence, willful malfeasance,
material act of disloyalty or other conduct materially injurious with respect to
the Company or its Affiliates (which, if curable, is not cured within 14 days
after notice thereof is provided to the Participant) or (E) the Participant’s
willful and repeated failure to follow the

 

 

 

 

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reasonable and lawful instructions of the Board or his or her direct superiors.
Any determination of whether Cause exists shall be made by the Committee in its
sole discretion.

(d)      “Change in Control” shall, unless the applicable Stock Option Agreement
states otherwise or contains a different definition of “Change in Control,” mean
(i) any change in the ownership of the capital stock of the Company (whether by
merger, recapitalization, issuance of equity securities or otherwise) if,
immediately after giving effect thereto, any Person (as such term is defined in
Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act) (or group of Persons acting in concert) other than
OCM Tekni-Plex Holdings, L.P. (“Oaktree”) and its respective Affiliates will
have the direct or indirect power to (A) elect a majority of the members of the
Board or (B) direct or cause the direction of the management and policies of the
Company or its subsidiaries or (ii) any sale or other disposition of all or
substantially all of the assets of the Company (including without limitation by
way of a merger or consolidation or through the sale of all or substantially all
of the equity interests of its subsidiaries or sale of all or substantially all
of the assets of the Company and its subsidiaries, taken as a whole) to another
Person (the “Change of Control Transferee”) if, immediately after giving effect
thereto, any Person (or group of Persons acting in concert) other than Oaktree
and its respective Affiliates will have the power to (A) elect a majority of the
members of the board of directors (or other similar governing body) of the
Change of Control Transferee or (B) direct or cause the direction of the
management and policies of the Company or its subsidiaries; or (iii) the Company
adopts any plan of liquidation providing for the distribution of all of
substantially all of its assets; or (iv) following the consummation of an
Initial Public Offering, a change in the composition of the Board over a period
of thirty-six (36) months or less such that a majority of the Board members
(rounded up to the next whole number) ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who are
continuing directors.

Notwithstanding the foregoing, in no event shall an Initial Public Offering or
any corporate transactions effected in connection with the reorganization of the
Company and its Affiliates (and their predecessors) constitute a Change in
Control.

(e)      “Code” means the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code shall be deemed to include any amendments
or successor provisions to such section and any regulations under such section.

(f)      “Committee” means a committee of at least two people as the Board may
appoint to administer the Plan or, if no such committee has been appointed by
the Board, the Board.

(g)      “Common Stock” means the common stock, par value $0.01 per share, of
the Company.

(h)      “Company” means Tekni-Plex, Inc., a Delaware corporation.

 

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(i)      “Consultant” means any consultant or advisor to the Company or any of
its Subsidiaries who may be offered securities registrable on Form S-8 under the
Securities Act or pursuant to an offer that is exempt from registration
requirements under Section 5 of the Securities Act under Rule 701 promulgated
under the Securities Act.

(j)      “Date of Grant” means the date on which the granting of an Option is
authorized by the Committee or such other subsequent date as may be specified in
such authorization.

(k)      “Disability” with respect to any Participant, has the same meaning as
“Disability” or any term of like import set forth in any employment, consulting
or similar agreement between such Participant and the Company or any of its
Subsidiaries. Absent such term in any such agreement, and in the case of other
Participants who do not have such an agreement, “Disability” shall mean the
following with respect to any Participant: any event of disability under the
disability insurance plan of the Company or any of its Affiliates covering such
Participant, or, ifthere shall be no such disability plan, then as set forth in
any agreement between such Participant and the Company or any of its Affiliates,
or, if there shall be no such agreement, then the inability of the Participant
to perform his or her duties to the Company or any of its Subsidiaries as
determined by the Committee in its sole discretion.

 

(l)

“Effective Date” means October 22, 2008.

(m)    “Eligible Person” means any (i) individual regularly employed by the
Company or any of its Subsidiaries who satisfies all of the requirements of
Section 6 of the Plan; (ii) director of the Company or any of its Subsidiaries;
or (iii) Consultant to the Company or any of its Subsidiaries.

(n)      “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(o)      “Exercise Price” means the exercise price for an Option as described in
Section 7(a) of the Plan.

(p)      “Fair Market Value” on a given date means, except as otherwise
determined by the Committee: (i) if the Common Stock is listed on a national
securities exchange, the closing sale price reported as having occurred on the
primary exchange with which the Common Stock is listed and traded on such date,
or, if there is no such sale on that date, then on the last preceding date on
which such a sale was reported; (ii) if the Common Stock is not listed on any
national securities exchange but is quoted in an inter-dealer quotation system
on a last sale basis, the average between the closing bid price and ask price
reported on such date, or, if there is no such sale on that date, then on the
last preceding date on which a sale was reported; (iii) if Fair Market Value
cannot be determined under clause (i) or (ii) above, or if the Committee
determines in its sole discretion that the shares of Common Stock are too thinly
traded for Fair Market Value to be determined pursuant to clause (i) or (ii),
the fair market value as determined in good faith by the Committee in its sole
discretion; or (iv) if the Common Stock is not listed on a national securities
exchange or quoted in an inter-dealer quotation system on a last sale basis, the
amount determined in good faith by the Committee, in

 

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its sole discretion, to be the fair market value. Fair Market Value is intended
to be not less than fair market value as determined for purposes of Section 409A
of the Code.

(q)      “Fiscal Year” shall mean the fiscal year of the Company, which on the
date hereof is the period beginning on or about July 1 and ending on or about
June 30.

(r)      “Initial Public Offering” means the consummation of an initial
underwritten public offering by the Company (or any corporate successor of the
Company) of its Common Stock (or a successor security) pursuant to a
registration statement (other than a registration statement relating solely to
an employee benefit plan) that has been filed under the Securities Act and
declared effective by the Securities and Exchange Commission.

(s)      “Option” means an award granted under Section 7 of the Plan.

(t)      “Option Period” means the term of the Option described in Section 7(c)
of the Plan.

(u)      “Participant” means an Eligible Person who has been selected by the
Committee to participate in the Plan and to receive an Option pursuant to
Section 7 of the Plan.

(v)      “Permitted Transferee” has the meaning set forth in the Stockholders’
Agreement.

(w)     “Person” means an individual or a corporation, association, partnership,
limited liability company, joint venture, organization, business, trust or any
other entity or organization, including a government or any subdivision or
agency thereof.

 

(x)

“Plan” means this Tekni-Plex, Inc. 2008 Stock Option Plan.

(y)      “Repurchase Payment” has the meaning set forth in Section 7(f).

(z)      “Repurchase Right” shall have the meaning set forth in Section 7(f).

(aa)    “Securities Act” means the Securities Act of 1933, as amended.

(bb)    “Securities Laws” means the Exchange Act, the Securities Act and state
securities and “blue sky” laws, all as now enacted or as the same may from time
to time be amended, and the applicable rules and regulations promulgated
thereunder.

 

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(cc)

“Spread” shall have the meaning set forth in Section 7(f).

(dd)    “Stock Option Agreement” means the agreement between the Company and a
Participant who has been granted an Option pursuant to Section 7 of the Plan,
which defines the rights and obligations of the parties as required in Section
7(d) of the Plan.

(ee)    “Stockholders’ Agreement” means the Stockholders’ Agreement, dated as of
May 30, 2008, by and among the Company, Oaktree and the other investors and
individuals executing the Stockholders’ Agreement from time to time, as such
agreement is amended, supplemented or otherwise modified from time to time.

(ff)     “Subsidiaries” has the meaning set forth in the Stockholders’
Agreement.

(gg)    “transfer” has the meaning set forth in the Stockholders’ Agreement.

(hh)    “12h-1(f) Exemption” means the exemption from registration under Section
12(g) of the Exchange Act by operation of Rule 12h-1(f) of the Exchange Act.

 

3.

Effective Date, Duration and Expiration Date

The Plan is effective as of the Effective Date. The expiration date of the Plan,
on and after which no Options may be granted hereunder, shall be the tenth
anniversary of the Effective Date; provided, however, that the administration of
the Plan shall continue in effect until all matters relating to obligations in
respect of Options previously granted have been settled.

 

4.

Administration

(a)      The Committee shall administer the Plan. The majority of the members of
the Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present or acts approved in writing
by a majority of the Committee shall be deemed the acts of the Committee.

(b)      Subject to the provisions of the Plan and applicable law, the Committee
shall have the power, in addition to other express powers and authorizations
conferred on the Committee by the Plan, to: (i) designate Participants; (ii)
determine the number of shares of Common Stock to be covered by, or with respect
to which payments, rights or other matters are to be calculated in connection
with Options, including the treatment of any fractional shares; (iii) determine
the terms and conditions of any Options; (iv) determine whether, to what extent,
under what circumstances and in what amounts Options may be settled or exercised
in cash, shares of Common Stock, other securities, other Options or other
property, or canceled, forfeited or suspended and the method or methods by which
Options may be settled, exercised, canceled, forfeited or suspended; (v)
interpret, administer, reconcile any inconsistency, correct any defect and/or
supply any

 

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omission in the Plan and any instrument or agreement relating to, or Option
granted under, the Plan; (vi) accelerate the vesting or exercisability of
Options; (vii) establish, amend, suspend or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (viii) make any other determination and take any other action
specified under the Plan or that the Committee deems necessary or desirable for
the administration of the Plan.

(c)      Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Option or any documents evidencing any and all Options granted
pursuant to the Plan shall be within the sole discretion of the Committee, may
be made at any time and shall be final, conclusive and binding upon all parties,
including, without limitation, the Company, any Affiliate of the Company, any
Participant, any holder of any Option and any stockholder.

 

5.

Grant of Options; Shares Subject to the Plan

The Committee may, from time to time, grant Options to one or more Eligible
Persons; provided, however, that:

(a)      Subject to Section 9 of the Plan, the aggregate number of shares of
Common Stock in respect of which Options may be granted under the Plan is
350,000 shares;

(b)      Such shares shall be deemed to have been issued in payment of Options
whether or not they are actually delivered. In the event any Option shall be
surrendered, terminate, expire or be forfeited, the number of shares of Common
Stock no longer subject thereto shall thereupon be released and shall thereafter
be available for new grants under the Plan;

(c)      Common Stock delivered by the Company in settlement of Options granted
under the Plan may be authorized and unissued Common Stock or Common Stock held
in the treasury of the Company or may be purchased on the open market or by
private purchase;

(d)      As a condition precedent to the Company’s grant of an Option under the
Plan, the Participant must enter into a Stock Option Agreement;

(e)      As a condition precedent to the Participant’s exercise of an Option
under the Plan, the Participant must enter into the Stockholders’ Agreement; and

(f)      No Option granted under the Plan shall be an incentive stock option
under Section 422 of the Code.

 

6.

Eligibility

Participation shall be limited to Eligible Persons who have been selected by the
Committee to participate in the Plan and entered into a Stock Option Agreement
and the Stockholders’ Agreement.

 

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7.

Terms of Options

The Committee is authorized to grant one or more Options to any Eligible Person.
Each Option so granted shall be subject to the following conditions, or to such
other conditions as may be reflected in the applicable Stock Option Agreement.
In all events, the provisions in the applicable Stock Option Agreement shall
control the terms of the Option issued pursuant thereto. If there shall be a
conflict between the provisions of the Plan and such Stock Option Agreement, the
provisions of the Plan shall control.

(a)      Exercise Price. The Exercise Price per share of Common Stock for each
Option shall be set by the Committee at the time of grant but shall not be less
than the Fair Market Value of one share of Common Stock on the Date of Grant.

(b)      Manner of Exercise and Form of Payment. No shares of Common Stock shall
be delivered pursuant to any exercise of an Option until payment in full of the
aggregate exercise price therefor is received by the Company. Options which have
become exercisable may be exercised by delivery of written notice of exercise to
the Committee accompanied by payment of the Exercise Price. Unless otherwise
specifically provided in the applicable Stock Option Agreement, the Exercise
Price shall be payable in cash (by certified check or wire transfer), shares of
Common Stock previously owned by the Participant having a Fair Market Value on
the date of exercise equal to the Exercise Price of the Option, or by such other
method as the Committee may allow, including without limitation: (A) if there is
a public market for the shares of Common Stock at such time, by means of a
broker-assisted “cashless exercise” pursuant to which the Company is delivered a
copy of irrevocable instructions to a stockbroker to sell the shares of Common
Stock otherwise deliverable upon the exercise of the Option and to deliver
promptly to the Company an amount equal to the exercise price of the Option or
(B) by means of a “net exercise” procedure approved by the Committee.

(c)      Vesting, Option Period and Expiration. Options shall vest and become
exercisable in such manner and on such date or dates determined by the Committee
and shall expire after such period, not to exceed ten years, as may be
determined by the Committee (the “Option Period”), all as set forth in the
applicable Stock Option Agreement; provided, however, that notwithstanding any
vesting dates set by the Committee, the Committee may in its sole discretion
accelerate the exercisability of any Option, which acceleration shall not affect
the terms and conditions of any such Option other than with respect to
exercisability. If an Option is exercisable in installments, such installments
or portions thereof which become exercisable shall remain exercisable until the
Option expires. Notwithstanding the foregoing, unless otherwise provided in any
Stock Option Agreement, (i) upon the consummation of a Change in Control,
subject to the Participant’s continued employment or service with the Company or
any of its Subsidiaries on the date of such event, all unvested Options then
held by such Participant will accelerate in full and be immediately exercisable,
(ii) upon termination of the Participant’s employment or service, all unvested
Options then held by such Participant shall be forfeited, (iii) if the
Participant’s employment or service with the Company or any Subsidiary
terminates due to a termination by the Company or any of its Subsidiaries for
Cause, all Options then held by such Participant (whether or not vested) shall
be forfeited and canceled in their entirety upon such

 

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termination of employment, (iv) if the Participant’s employment or service with
the Company or any Subsidiary terminates due to a termination by the Company or
any of its Subsidiaries for any reason other than for Cause, death or
Disability, such Participant’s Options shall expire on the earlier of the date
that is three months after the date of such termination and the last day of the
applicable Option Period, and (v) if the Participant’s employment or service
with the Company or any Subsidiary terminates due to death or Disability, such
Participant’s Options shall expire on the earlier of the date that is twelve
months after the date of such termination and the last day of the applicable
Option Period, and, in the case of the events to which clauses (iv) and (v)
above apply, each of such Participant’s Options shall remain exercisable by the
Participant until its expiration only to the extent such Option was vested and
exercisable at the time of such termination.

(d)      Stock Option Agreement - Other Terms and Conditions. Each Option
granted under the Plan shall be evidenced by a Stock Option Agreement, which
shall contain such provisions as may be determined by the Committee and, except
as may be specifically stated otherwise in such Stock Option Agreement, which
shall be subject to the following terms and conditions:

(i)        Each Option or portion thereof that is exercisable shall be
exercisable for the full amount or for any part thereof.

(ii)       Each share of Common Stock purchased through the exercise of an
Option shall be paid for in full at the time of the exercise. Each Option shall
cease to be exercisable as to any share of Common Stock when the Participant
purchases the share or when the Option expires.

(iii)      Subject to Section 8(l) of the Plan, Options shall not be
transferable by the Participant except by will or the laws of descent and
distribution and shall be exercisable during the Participant’s lifetime only by
the Participant.

(iv)      Each Stock Option Agreement may contain a provision that, upon demand
by the Committee, the Participant shall deliver to the Committee at the time of
any exercise of an Option a written representation and warranty that the shares
to be acquired upon such exercise are to be acquired for investment and not for
resale or with a view to the distribution thereof, and any other representations
and warranties deemed necessary by the Committee to ensure compliance with all
applicable Securities Laws. Upon such demand, delivery of such representations
and warranties 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 such
other person to purchase any shares. In the event certificates for Common Stock
are delivered under the Plan with respect to which such representations and
warranties has been obtained, the Committee may cause a legend or legends to be
placed on such certificates to make appropriate reference to such
representations and warranties and to restrict transfer in the absence of
compliance with applicable Securities Laws.

 

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(e)      Voluntary Surrender. The Committee may permit the voluntary surrender
of all or any portion of any Option, if any, granted under the Plan to be
conditioned upon the granting to the Participant of a new Option for the same or
a different number of shares as the Option surrendered or require such voluntary
surrender as a condition precedent to a grant of a new Option to such
Participant. Such new Option shall be exercisable at an Exercise Price, during
an Option Period and in accordance with any other terms or conditions specified
by the Committee at the time the new Option is granted, all determined in
accordance with the provisions of the Plan without regard to the Exercise Price,
Option Period or any other terms and conditions of the Option surrendered.

(f)      Company Repurchase Right. The Company shall have the right (but not the
obligation) (a “Repurchase Right”) within 180 days following a Participant’s
termination of employment with the Company and its Affiliates prior to an
Initial Public Offering to provide that all or any part of the vested portion of
a Participant’s Option shall be automatically exercised on a cash-settled “stock
appreciation right” basis, such that the Participant shall receive a payment (a
“Repurchase Payment”) in an amount equal to the excess, if any, of the Fair
Market Value of the shares of Common Stock underlying the portion of the vested
Option with respect to which the Company is exercising its Repurchase Right
minus the aggregate Exercise Price for such portion of the vested Option (the
“Spread”). The Participant shall receive any such Repurchase Payment within 30
days of the date the Company exercises the Repurchase Right. Fair Market Value
shall be determined on the date the Company exercises the Repurchase Right and,
unless otherwise specifically provided in the applicable Stock Option Agreement,
shall be determined in good faith by the Board.

 

8.

General

(a)      Additional Provisions of an Option. Options granted to a Participant
under the Plan also may be subject to such other provisions (whether or not
applicable to Options granted to any other Participant) as the Committee
determines appropriate including, without limitation, provisions to assist the
Participant in financing the purchase of Common Stock upon the exercise of
Options (provided, that the Committee determines that providing such financing
does not violate the Sarbanes-Oxley Act of 2002), provisions for the forfeiture
of or restrictions on resale or other disposition of shares of Common Stock
acquired under any Option, provisions giving the Company the right to repurchase
shares of Common Stock acquired under any Option in the event the Participant
elects to dispose of such shares or terminate employment, provisions allowing
the Participant to elect to defer the receipt of payment in respect of Options
for a specified period or until a specified event and provisions to comply with
Securities Laws and federal, state, provincial, territorial, local or foreign
tax withholding requirements. Any such provisions shall be reflected in the
applicable Stock Option Agreement.

(b)      Privileges of Common Stock Ownership. Except as otherwise specifically
provided in the Plan, no Person shall be entitled to the privileges of ownership
in respect of shares of Common Stock which are subject to Options hereunder
until such shares have been issued to that person.

 

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(c)      Government and Other Regulations. The obligation of the Company to make
payment of Options in Common Stock or otherwise shall be subject to all
applicable laws, rules and regulations, and to such approvals by governmental
agencies as may be required. Notwithstanding any terms or conditions of any
Option to the contrary, the Company shall be under no obligation to offer to
sell or to sell and shall be prohibited from offering to sell or selling any
shares of Common Stock pursuant to an Option unless such shares have been
properly registered for sale pursuant to the Securities Laws or unless the
Company has received an opinion of counsel, satisfactory to the Company, that
such shares may be offered or sold without such registration pursuant to an
available exemption therefrom and the terms and conditions of such exemption
have been fully complied with. The Company may, but shall be under no obligation
to, register for sale under the Securities Laws any of the shares of Common
Stock to be offered or sold under the Plan. If the shares of Common Stock
offered for sale or sold under the Plan are offered or sold pursuant to an
exemption from registration under the Securities Laws, the Company may restrict
the transfer of such shares and may legend the Common Stock certificates
representing such shares in such manner as it deems advisable to ensure the
availability of any such exemption.

 

(d)

Tax Withholding.

(i)        A Participant may be required to pay to the Company or any
Subsidiary, and the Company or any Subsidiary shall have the right and is hereby
authorized to withhold from any shares of Common Stock or other property
deliverable under any Option or from any compensation or other amounts owing to
a Participant, the amount (in cash, Common Stock or other property) of any
required tax withholding and payroll taxes in respect of an Option, its exercise
or any payment or transfer under an Option or under the Plan and to take such
other action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes.

(ii)       Without limiting the generality of clause (i) above, unless otherwise
provided in a Stock Option Agreement, the Committee shall have the authority to
require that a Participant satisfy the withholding liability by payment in cash
or by certified check and may also allow a Participant to satisfy, in whole or
in part, the foregoing withholding liability (but no more than the minimum
required withholding liability) by delivery of shares of Common Stock owned by
the Participant with a Fair Market Value equal to such withholding liability
(provided that such shares are not subject to any pledge or other security
interest and have either been held by the Participant for six months, previously
acquired by the Participant on the open market or meet such other requirements
as the Committee may determine necessary in order to avoid an accounting
earnings charge), or by having the Company withhold from the number of shares of
Common Stock otherwise issuable pursuant to the exercise or settlement of the
Option a number of shares of Common Stock with a Fair Market Value equal to such
withholding liability.

(e)      Claim to Options and Employment Rights. No employee of the Company or
any of its Subsidiaries, or other Person, shall have any claim or right to be
granted an Option under the Plan

 

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or, having been selected for the grant of an Option, to be selected for a grant
of any other Option. There is no obligation for uniformity of treatment of
Participants regarding the number of Options granted, the manner in which grants
are made or the terms or conditions of any Options. Neither the Plan nor any
action taken hereunder shall be construed as giving any Participant any right to
be retained in the employ or service of the Company or any of its Subsidiaries.

(f)      No Liability of Committee Members. No member of the Committee shall be
personally liable by reason of any contract or other instrument executed by such
member or on his behalf in his capacity as a member of the Committee nor for any
mistake of judgment made in good faith, and the Company shall indemnify and hold
harmless each member of the Committee and each other employee, officer or
director of the Company 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) arising out of any act or omission to act in connection
with the Plan unless arising out of such person’s own fraud or willful bad
faith; provided, however, that approval of the Board shall be required for the
payment of any amount in settlement of a claim against any such person. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company’s
Amended and Restated Certificate of Incorporation or Amended and Restated
By-Laws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.

(g)      Funding. No provision of the Plan shall require the Company, for the
purpose of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity or otherwise to segregate any
assets, nor shall the Company maintain separate bank accounts, books, records or
other evidence of the existence of a segregated or separately maintained or
administered fund for such purposes. Participants shall have no rights under the
Plan other than as unsecured general creditors of the Company, except that
insofar as they may have become entitled to payment of additional compensation
by performance of services, they shall have the same rights as other employees
under general law.

(h)      No Trust or Fund Created Neither the Plan nor any grant made under the
Plan shall create or be construed to create a trust or a fiduciary relationship
between the Company or any of its Subsidiaries and a Participant or any other
Person.

(i)      Reliance on Reports. Each member of the Committee and each member of
the Board shall be fully justified in relying, acting or failing to act, and
shall not be liable for having so relied, acted or failed to act in good faith,
upon any report made by the independent public accountant of the Company or any
of its Affiliates and upon any other information furnished in connection with
the Plan by any person or persons other than himself.

(j)      Expenses. The expenses of administering the Plan shall be borne by the
Company and its Affiliates.

 

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(k)      Termination of Employment. For all purposes herein, a person who
transfers from employment or service with the Company to employment or service
with a Subsidiary or vice versa shall not be deemed to have terminated
employment or service with the Company or a Subsidiary.

 

(l)

Transferability.

(i)        Each Option shall be exercisable only by the Participant during the
Participant’s lifetime, or, if permissible under applicable law, by the
Participant’s legal guardian or representative. No Option may be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered by a
Participant otherwise than by will or by the laws of descent and distribution
(provided that any such transferee shall be bound by and hold the Option
pursuant to the terms and conditions of the Stockholders’ Agreement, the Plan,
and any applicable Stock Option Agreement), and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or an Affiliate; provided that the designation
of a beneficiary shall not constitute an assignment, alienation, pledge,
attachment, sale, transfer or encumbrance.

(ii)       Notwithstanding subparagraph (i), the Committee may in the Stock
Option Agreement or at any time after the Date of Grant in an amendment to a
Stock Option Agreement provide that an Option may be transferred by a
Participant without consideration, subject to such rules as the Committee may
adopt consistent with any applicable Stock Option Agreement to preserve the
purposes of the Plan, to a Permitted Transferee; provided that the Participant
gives the Committee advance written notice describing the terms and conditions
of the proposed transfer and the Committee notifies the Participant in writing
that such a transfer would comply with the requirements of the Plan and any
applicable Stock Option Agreement.

(iii)      The terms of any Option transferred in accordance with the
immediately preceding subparagraph shall apply to the Permitted Transferee and
any reference in the Plan or in a Stock Option Agreement to a Participant shall
be deemed to refer to the Permitted Transferee, except that (w) Permitted
Transferees shall not be entitled to transfer any Option, other than by will or
the laws of descent and distribution; (x) Permitted Transferees shall not be
entitled to exercise any transferred Option unless there shall be in effect a
registration statement on an appropriate form covering the shares of Common
Stock to be acquired pursuant to the exercise of such Option if the Committee
determines, consistent with any applicable Stock Option Agreement, that such a
registration statement is necessary or appropriate; (y) neither the Committee
nor the Company shall be required to provide any notice to a Permitted
Transferee, whether or not such notice is or would otherwise have been required
to be given to the Participant under the Plan or otherwise but shall continue to
provide the Participant with all notices hereunder; and (z) the consequences of
the termination of the Participant’s employment by, or services to, the Company
or an Affiliate under the terms of the Plan and the applicable Stock Option
Agreement shall continue to be applied with respect to the Participant,

 

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including, without limitation, that an Option shall be exercisable by the
Permitted Transferee only to the extent, and for the periods, specified in the
Plan and the applicable Stock Option Agreement.

(iv)      Notwithstanding anything to the contrary in the Plan, the
Stockholders’ Agreement, any Stock Option Agreement or any charter, by-laws or
other instrument or document governing or applicable to the Options or shares of
Common Stock, if and to the extent the Committee determines that it is necessary
to rely on the 12h-1(f) Exemption with respect to the Options outstanding under
the Plan, each Option, including any Option granted prior to, on or after the
date of any such determination by the Committee, shall be subject to the
following conditions: (A) the Options and, prior to exercise, the shares of
Common Stock to be issued upon exercise of the Options shall be restricted as to
transfer by the Participant other than to persons who are Permitted Transferees,
or to an executor or guardian of the Participant upon the death or Disability of
the Participant until the Company becomes subject to the reporting requirements
of Section 13 or Section 15(d) of the Exchange Act or is no longer relying on
the 12h-1(f) Exemption; provided that the Participant may transfer the Options
to the Company, or in connection with a Change in Control or other acquisition
transaction involving the Company, if, after such transaction, the Options no
longer will be outstanding, and the Company no longer will be relying on the
12h-1(f) Exemption; and (B) the Options, and the shares of Common Stock issuable
upon exercise of such Options, will be restricted as to any pledge,
hypothecation or other transfer, including any short position, any “put
equivalent position” (as defined in Rule 16a-1(h) of the Exchange Act), or any
“call equivalent position” (as defined in Rule 16a-1(b) of the Exchange Act) by
the Participant prior to exercise of an Option, except in the circumstances
permitted in paragraph (iv) above, until the Company becomes subject to the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act or is
no longer relying on the 12h-1(f) Exemption.

(m)    No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Subsidiary from adopting or continuing in
effect other compensation arrangements, which may, but need not, provide for the
grant of Options, securities and other types of awards, and such arrangements
may be either generally applicable or applicable only in specific cases.

(n)      Special Incentive Compensation. By acceptance of a grant hereunder,
each Participant shall be deemed to have agreed that such award is special
incentive compensation that will not be taken into account, in any manner, as
salary, compensation or bonus in determining the amount of any payment under any
pension, retirement, life insurance, disability, severance or other employee
benefit plan of the Company or any Affiliate of the Company. In addition, each
beneficiary of a deceased Participant shall be deemed to have agreed that such
grant will not affect the amount of any life insurance coverage, if any,
provided by any Person on the life of the Participant which is payable to such
beneficiary under any life insurance plan covering employees.

 

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(o)      Governing Law. The Plan shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to its choice
of law provisions that would cause the law of another jurisdiction to apply.

(p)      Severability. If any provision of the Plan or any award made hereunder
is, becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or as to any Person or award, or would disqualify the Plan or any
award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the award, such provision shall be
stricken as to such jurisdiction, Person or award and the remainder of the Plan
and any such award shall remain in full force and effect.

(q)      Headings. Headings are used herein solely as a convenience to
facilitate reference and shall not be deemed in any way material or relevant to
the construction or interpretation of the Plan or any provision thereof.

(r)      Interpretation. The terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.

(s)      Gender. Except where otherwise indicated by the context, any masculine
term used herein shall also include the feminine.

(t)      Amendment to Stockholders’ Agreement. Neither the adoption of this Plan
nor any award made hereunder shall restrict in any way the adoption of any
amendment, supplement or other modification of the Stockholders’ Agreement in
accordance with the terms of such agreement.

(u)      Conflict Between the Plan and the Stockholders’ Agreement. The Plan and
any award made hereunder are subject to the Stockholders’ Agreement, the terms
and provisions of which are hereby incorporated herein by reference. In the
event of a conflict between any term or provision contained herein and a term or
provision of the Stockholders’ Agreement, the Committee shall resolve any such
conflict in its sole discretion.

(v)      Financial Information. If the Company is relying on the 12h-1(f)
Exemption, until the Company becomes subject to the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act or is no longer relying on the
12h-1(f) Exemption, the Company will, subject to the last sentence of this
Section 8(v), provide to each Participant the information described in Rule
701(e)(3), (4) and (5) under the Securities Act (described below), every six
months with the financial statements required to be provided thereunder being
not more than 180 days old and with such information provided either by physical
or electronic delivery to each Participant or by written notice to each
Participant of the availability of the information on an Internet site that may
be password-protected and of any password needed to access the information. The
information described in Rule 701(e)(3), (4), and (5) consists of (A)
information about the risks associated with investment in Options and the shares
of Common Stock purchased upon exercise of an Option, and (B) the Company’s
financial statements required to be furnished by Part F/S of Form 1-A under

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Regulation A of the Securities Act. The Company may request that the Participant
agree to keep the information to be provided pursuant to this Section 8(v)
confidential and shall not be required to provide such information if a
Participant does not agree to keep the information confidential.

 

9.

Changes in Capital Structure

(a)      In order to prevent substantial enlargement or dilution of a
Participant’s rights in a manner inconsistent with the purposes of the Plan, the
Committee may make such equitable adjustments or substitutions as it deems
necessary or appropriate to any Option, including without limitation, as to the
number and kind of shares subject to the Option, the Exercise Price per share or
other consideration subject to the Option, (i) in the event of changes affecting
the outstanding shares of Common Stock, the capital structure of the Company or
the Company’s business by reason of stock or extraordinary cash dividends, stock
splits, reverse stock splits, recapitalization, reorganizations, mergers,
consolidations, combinations, exchanges, or other relevant changes in
capitalization, or sale of Company assets occurring after the Date of Grant of
any such Options, or (ii) in the event of any change in applicable laws or any
change in circumstances which results in or would result in any substantial
dilution or enlargement of the rights granted to, or available for,
Participants, or which otherwise warrants equitable adjustment because it
interferes with the intended operation of the Plan.

(b)      The manner and extent of any adjustments and substitutions contemplated
by Section 9(a) shall be determined by the Committee in its sole discretion
acting reasonably and in good faith. The determination of the Committee
regarding any adjustment or substitution will be final and conclusive.

(c)      Without limiting any other provision of this Section 9, in the event of
any of the following:

(i)        a merger or consolidation involving the Company;

(ii)       a sale of all or substantially all of the assets of the Company and
its Subsidiaries on a consolidated basis;

(iii)      a sale of all or substantially all of the outstanding shares of
Common Stock of the Company and its Subsidiaries on a consolidated basis;

(iv)      the reorganization, capital restructuring, liquidation, dissolution or
winding up of the Company;

 

(v)

a Change in Control; or

(vi)      the Company (or applicable Person) enters into a written agreement to
undergo an event described in clauses (i), (ii), (iii), (iv) or (v) above,

 

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then the Committee may, in its sole discretion, provide for a substitution or
assumption of the Options, accelerate the exercisability of, or termination of,
the Options, provide for a period of time for exercise prior to the occurrence
of such event or cancel all or any portion of any outstanding Options and, if
applicable, cause the holders thereof to be paid, in cash or Common Stock or
other equity interests, securities or property, or any combination thereof, the
intrinsic value, if any, of such Options based upon the price per share of
Common Stock received or to be received by other stockholders of the Company in
the event. Such intrinsic value shall be limited to the excess, if any, of the
Fair Market Value (as of a date specified by the Committee) of the shares of
Common Stock underlying the Options over the aggregate Exercise Price (it being
understood that, in such event, any Option having an Exercise Price equal to, or
in excess of, the Fair Market Value of one share of Common Stock subject thereto
may be canceled and terminated without payment or consideration therefor).
Payments to be made in connection with the cancellation of an Option may be
subject to further vesting to the extent the Option was not previously vested.
The terms of this Section 9 may be varied by the Committee in any particular
Stock Option Agreement.

 

10.

Nonexclusivity of the Plan

The adoption of this Plan by the Board shall not be construed as creating any
limitations on the power of the Board to adopt such other incentive arrangements
as it may deem desirable, including, without limitation, the granting of stock
options otherwise than under this Plan, and such arrangements may be either
applicable generally or only in specific cases.

 

11.

Amendments and Termination

(a)      Amendment and Termination of the Plan. The Board may amend, alter,
suspend, discontinue or terminate the Plan or any portion thereof at any time;
provided that no such amendment, alteration, suspension, discontinuation or
termination shall be made without stockholder approval if such approval is
necessary to comply with any tax or regulatory requirement applicable to the
Plan; and provided further that any such amendment, alteration, suspension,
discontinuance or termination that would impair the rights of any Participant or
any holder of any Option theretofore granted shall not to that extent be
effective without the consent of the affected Participant or holder.

(b)      Amendment of Stock Option Agreements. The Committee may, to the extent
consistent with the terms of any Stock Option Agreement, waive any conditions or
rights under, amend any terms of, or alter, suspend, discontinue, cancel or
terminate, any Option theretofore granted, prospectively or retroactively;
provided that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would impair the rights of any
Participant in respect of any Option theretofore granted shall not to that
extent be effective without the consent of the affected Participant.

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12.

Effect of Change in Control

A Participant’s Stock Option Agreement may include specific provisions relating
to the effect of a Change in Control including, without limitation, provisions
that accelerate the exercisability of an Option in connection with a Change in
Control.

 

13.

Misconduct of Grantee

Notwithstanding anything to the contrary in the Plan, the Committee, in its sole
discretion, may establish procedures, at or before the time that an Option is
granted (or, with the consent of the Participant, after such time), in the
applicable Stock Option Agreement or in a separate agreement, providing for the
forfeiture or cancellation of such Option (whether vested or unvested), or the
disgorgement of gains from the exercise, vesting or settlement of the Option, in
each case to be applied if the Participant engages in conduct detrimental to the
Company. For purposes of this Plan, conduct detrimental to the Company shall
include Participant’s breaches of any restrictive covenants on competition,
solicitation of employees or clients, or confidential information, and may
include conduct that the Committee in its sole discretion determines (x) to be
injurious or prejudicial to any interest of the Company or any of its
Affiliates, or (y) to otherwise violate a policy, procedure or rule applicable
to the Participant with respect to the Company or any of its Affiliates, or if
the Participant’s employment with the Company and its Affiliates is terminated
for Cause. Notwithstanding any of the foregoing to the contrary, the Company
shall retain the right to bring an action at equity or law to enjoin
Participant’s misconduct and recover damages resulting from such misconduct.

 

14.

Code Section 409A

(a)      Without limiting the generality of the foregoing, to the extent
applicable, notwithstanding anything herein to the contrary, this Plan and
Options issued hereunder are intended to be exempt from the requirements of
Section 409A of the Code and Department of Treasury regulations and other
interpretative guidance issued thereunder, including, without limitation, any
such regulations or other guidance that may be issued after the Effective Date
(“Section 409A”). To the extent applicable, the Plan and the Options granted
under the Plan shall be interpreted in accordance with this intent.
Notwithstanding any provision of the Plan to the contrary, in the event that the
Committee determines that any shares of Common Stock issued or amounts payable
hereunder will be subject to additional tax under Section 409A, prior to
delivery to such Participant of such shares or payment to such Participant of
such amount, the Company shall (a) adopt such amendments to the Plan and Options
and appropriate policies and procedures, including amendments and policies with
retroactive effect, that the Committee determines necessary or appropriate to
preserve the intended tax treatment of the benefits provided by the Plan and
Options hereunder and/or (b) take such other actions as the Committee determines
necessary or appropriate to avoid or limit the imposition of such additional tax
under Section 409A; provided, however, that the Company shall not be obligated
to adopt such amendments, policies or procedures or take any other actions that
would impose additional costs on the Company.

(b)      In the event that it is reasonably determined by the Committee that, as
a result of Section 409A, payments in respect of any Option under the Plan may
not be made at the time contemplated by the terms of the Plan or the relevant
Stock Option Agreement, as the case may be, without causing the

 

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Participant holding such Option to be subject to taxation under Section 409A,
the Company will make such payment on the first day that would not result in the
Participant incurring any tax liability under Section 409A.

* * *

As adopted by the Board of Directors of

Tekni-Plex, Inc. as of October 22, 2008

 

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