EXHIBIT 10.1
**PIERRE HOLDING CORP.**
**2004 STOCK OPTION PLAN**
ARTICLE I
Purpose of Plan
     The 2004 Stock Option Plan (the “Plan”) of Pierre Holding Corp. (the “Company”), adopted bythe Board of Directors and shareholders of the Company on June 30, 2004, for Directors, Employeesand Consultants of the Company and its Subsidiaries, is intended to advance the best interests ofthe Company and its Subsidiaries by providing those persons who have a substantial responsibilityfor its management and growth with additional incentives by allowing them to acquire an ownershipinterest in the Company and thereby encouraging them to contribute to the success of the Companyand its Subsidiaries and to remain in its service. The availability and offering of stock optionsunder the Plan also increases the Company’s and its Subsidiaries’ ability to attract and retainindividuals of exceptional managerial talent upon whom, in large measure, the sustained progress,growth and profitability of the Company and its Subsidiaries depends. This Plan is intended to bea “compensatory benefit plan” within the meaning of such term under Rule 701 of the Securities Actof 1933, as amended.
ARTICLE II
Definitions
     For purposes of the Plan, except where the context clearly indicates otherwise, the followingterms shall have the meanings set forth below:
     “Board” shall mean the Board of Directors of the Company.
     “Cause” shall mean “Cause” as defined in any Service Agreement in effect between theapplicable Participant and the Company or any Subsidiary, or if such Participant is not a party toa Service Agreement in which Cause is defined then, “Cause” shall mean with respect to aParticipant one or more of the following: (i) the commission of a felony or other crime involvingmoral turpitude or the commission of any other act or omission involving dishonesty, disloyalty orfraud with respect to the Company, its Subsidiaries or any of their customers or suppliers, (ii)reporting to work under the influence of alcohol or illegal drugs, the use of illegal drugs(whether or not at the workplace) or other repeated conduct causing the Company or its Subsidiariessubstantial public disgrace or disrepute or substantial economic harm, (iii) substantial andrepeated failure to perform duties as reasonably directed by the Board or the Company’s president,(iv) any act or omission aiding or abetting a competitor, supplier or customer of the Company orits Subsidiaries to the material disadvantage or detriment of the Company or its Subsidiaries, (v)breach of fiduciary duty, gross negligence or willful misconduct with respect to the Company or anyof its Subsidiaries or (vi) any other material breach of a
 

 

Service Agreement in effect between the Participant and the Company or any of its Subsidiarieswhich is not cured to the Board’s reasonable satisfaction within 15 days after written noticethereof to Participant.
     “Code” shall mean the Internal Revenue Code of 1986, as amended, and any successorstatute.
     “Committee” shall mean the committee of the Board which may be designated by the Boardto administer the Plan. The Committee shall be composed of two or more Directors as appointed fromtime to time to serve by the Board. The membership of the Committee shall be constituted so as tocomply at all times with the applicable requirements of Rule 16b-3 or any successor rule (“Rule16b-3”) under the Securities Exchange Act of 1934, as amended. No member of the Committeeshall have within one year prior to his or her appointment received awards under the Plan if suchreceipt would cause such member to cease to be a “disinterested person” under Rule 16b-3.If the Common Stock is Publicly Traded, the committee shall consist of not less than two Directorsappointed to the Committee by the Board and each of whom shall be members of the Board and each ofwhom shall qualify as (i) “non-employee directors (within the meaning of Item 404 of Regulation S-Kof the Securities Act of 1933, as amended) and (ii) “outside directors” within the meaning ofTreas. Reg. §1.162-27(e)(3) as may be appointed by the Board of the Company, all of whom aremembers of the Board.
     “Common Stock” shall mean the Company’s Common Stock, par value $0.01 per share, or ifthe outstanding Common Stock is hereafter changed into or exchanged for different stock orsecurities of the Company, such other stock or securities.
     “Company” shall mean Pierre Holding Corp., a Delaware corporation.
     “Consultant” shall mean a consultant or advisor who is a natural person and whoprovides bona fide services to the Company or its Subsidiaries; provided such services are not inconnection with the offer on sale of securities in a capital raising transaction and do notdirectly or indirectly promote or maintain a market for the Company’s securities.
     “Director” shall mean a member of the Board.
     “Disability” shall mean “Disability” as defined in any Service Agreement in effectbetween the applicable Participant and the Company or any Subsidiary, or if such Participant is nota party to a Service Agreement in which Disability is defined then, “Disability” shall meanParticipant’s inability to perform the essential duties, responsibilities and functions of hisposition with the Company or any Subsidiary as a result of any mental or physical disability orincapacity, even with reasonable accommodations of such disability or incapacity provided by theCompany, or if providing such accommodations would be unreasonable, all as determined by the Boardin its reasonable good faith judgment. Participant shall cooperate in all respects with theCompany or any of its Subsidiaries if a question arises as to whether he has become disabled(including, without limitation, submitting to an examination by a medical doctor or other healthcare specialists selected by the Company or any of its Subsidiaries and authorizing such medical
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doctor or such other health care specialist to discuss Participant’s condition with theCompany or any of its Subsidiaries).
     “Employee” shall mean an officer or other employee of the Company or any of itsSubsidiaries.
     “Independent Third Party” shall mean any Person who, immediately prior to thecontemplated transaction, does not own in excess of 5% of the Common Stock on a fully-diluted basis(a “5% Owner”), who is not controlling, controlled by or under common control with any such5% Owner and who is not the spouse or descendant (by birth or adoption) of any such 5% Owner or atrust for the benefit of such 5% Owner and/or such other Persons.
     “Options” shall have the meaning set forth in Article IV.
     “Participant” shall mean any Employee, Director or Consultant who has been selected toparticipate in the Plan by the Committee or the Board.
     “Person” shall mean an individual, a partnership, a corporation, a limited liabilitycompany, an association, a joint stock company, a trust, a joint venture, an unincorporatedorganization and a governmental entity or any department, agency or political subdivision thereof.
     “Publicly Traded” shall mean corporate stock that is listed or admitted to unlistedtrading privileges on a national securities exchange or designated as a national market systemsecurity on an interdealer quotation system by the NASD or if sales or bid and offer quotations arereported for that class of stock on the NASDAQ National Market.
     “Sale of the Company” shall mean the sale of the Company to an Independent Third partyor group of Independent Third Parties pursuant to which such party or parties acquire (i) capitalstock of the Company possessing the voting power under normal circumstances (without regard to theoccurrence of any contingency) to elect a majority of the Company’s Board (whether by merger,consolidation or sale or transfer of the Company’s capital stock) or (ii) all or substantially allof the Company’s assets determined on a consolidated basis.
     “Service Agreement” shall mean a written agreement between the applicable Participantand the Company or any of its Subsidiaries pursuant to which such Participant provides services tothe Company or any of its Subsidiaries as an Employee , Director or Consultant.
     “Subsidiary” means, with respect to any Person, any corporation, limited liabilitycompany, partnership, association or other business entity of which (i) if a corporation, amajority of the total voting power of shares of stock entitled (without regard to the occurrence ofany contingency) to vote in the election of directors, managers or trustees thereof is at the timeowned or controlled, directly or indirectly, by that Person, one or more Subsidiaries of thatPerson or a combination thereof, or (ii) if a limited liability company, partnership, associationor other business entity, a majority of the partnership or other similar ownership interest thereofis at the time owned or controlled, directly or indirectly, by any Person, one or more Subsidiariesof that
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person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed tohave a majority ownership interest in a limited liability company, partnership, association orother business entity if such Person or Persons shall be allocated a majority of limited liabilitycompany, partnership, association or other business entity gains or losses or shall be or shallcontrol the managing general partner of such limited liability company, partnership, association orother business entity.
ARTICLE III
Administration
     The Plan shall be administered by the Committee; provided that if for any reason the Committeeshall not have been appointed by the Board, all authority and duties of the Committee under thePlan shall be vested in and exercised by the Board. Subject to the limitations of the Plan, theCommittee shall have the sole and complete authority to: (i) select Participants, (ii) grantOptions (as defined in Article IV below) to Participants in such forms and amounts as it shalldetermine, (iii) impose such limitations, restrictions and conditions upon such Options as it shalldeem appropriate, (iv) interpret the Plan and adopt, amend and rescind administrative guidelinesand other rules and regulations relating to the Plan, (v) correct any defect or omission orreconcile any inconsistency in the Plan or in any Option granted hereunder and (vi) make all otherdeterminations and take all other actions necessary or advisable for the implementation andadministration of the Plan. The Committee’s determinations on matters within its authority shallbe conclusive and binding upon the Participants, the Company, its Subsidiaries and all otherPersons. All expenses associated with the administration of the Plan shall be borne by theCompany. The Committee may, as approved by the Board and to the extent permissible by law,delegate any of its authority hereunder to such persons as it deems appropriate. The Plan shallbecome effective only if, within 12 months from the date the Plan is adopted by the Board, the Planis approved by the affirmative vote of a majority of the holders of the Common Stock, or by writtenconsent of such holders, in accordance with the applicable provisions of the Certificate ofIncorporation and Bylaws of the Company and applicable state law.
ARTICLE IV
Limitation on Aggregate Shares
     The number of shares of Common Stock with respect to which options may be granted under thePlan (the “Options”) and which may be issued upon the exercise thereof shall not exceed, in theaggregate, 163,778 shares; provided that the type and the aggregate number of shares which may besubject to Options shall be subject to adjustment in accordance with the provisions of paragraph6.8 below, and further provided that to the extent any Options expire unexercised or are canceled,terminated or forfeited in any manner without the issuance of Common Stock thereunder, or if anyOptions are exercised and the shares of Common Stock issued thereunder are repurchased by theCompany, such shares shall again be available under the Plan. The 163,778 shares of Common Stockavailable under the Plan may be either authorized and unissued shares, treasury shares or acombination thereof, as the Committee shall determine.
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ARTICLE V
Awards
     5.1 Options. The Committee may grant Options to Participants in accordance with thisArticle V.
     5.2 Form of Option. Options granted under this Plan shall be nonqualified stockoptions and are not intended to be “incentive stock options” within the meaning of Section 422 ofthe Code or any successor provision.
     5.3 Exercise Price. The option exercise price per share of Common Stock shall befixed by the Committee in its discretion.
     5.4 Exercisability. Options shall be exercisable at such time or times as theCommittee shall determine at or subsequent to grant.
     5.5 Payment of Exercise Price. Options shall be exercised in whole or in part bywritten notice to the Company (to the attention of the Company’s Secretary) accompanied by paymentin full of the option exercise price. Payment of the option exercise price shall be made, in thediscretion of the Committee, in cash (including check, bank draft or money order), or by deliveryof a promissory note (if in accordance with policies approved by the Board), or by surrender to theCompany of a number of shares of Common Stock having an aggregate fair market value at the time ofexercise equal to the option exercise price (in a manner determined by the Committee).
     5.6 Terms of Options. The Committee shall determine the term of each Option, whichterm shall in no event exceed ten years from the date such Option is granted.
ARTICLE VI
General Provisions
     6.1 Conditions and Limitations on Exercise. Options may be made exercisable in one ormore installments, upon the happening of certain events, upon the passage of a specified period oftime, upon the fulfillment of certain conditions or upon the achievement by the Company and/or itsSubsidiaries of certain performance goals, as the Committee shall decide in each case when theOptions are granted.
     6.2 Sale of the Company. In the event of a Sale of the Company, the Committee or theBoard may provide, in its discretion, that the Options shall become immediately exercisable by anyParticipants who are Employees, Directors or Consultants of the Company and its Subsidiaries at thetime of the Sale of the Company and/or that all Options shall terminate if not exercised as of thedate of the Sale of the Company or other prescribed period of time.
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     6.3 Written Agreement. Each Option granted hereunder to a Participant shall beembodied in a written agreement (an “Option Agreement”) which shall be signed by theParticipant and by the Chairman or the President of the Company for and in the name and on behalfof the Company and shall be subject to the terms and conditions of the Plan prescribed in theAgreement (including, but not limited to, (i) the right of the Company and such other Persons asthe Committee shall designate (“Designees”) to repurchase from each Participant, and suchParticipant’s transferees, all shares of Common Stock issued or issuable to such Participant on theexercise of an Option in the event of such Participant’s termination of employment or service withthe Company and its Subsidiaries, (ii) rights of first refusal granted to the Company andDesignees, (iii) holdback and other registration right restrictions in the event of a publicregistration of any equity securities of the Company and (iv) any other terms and conditions whichthe Committee shall deem necessary and desirable).
     6.4 Listing, Registration and Compliance with Laws and Regulations. Options shall besubject to the requirement that if at any time the Committee shall determine, in its discretion,that the listing, registration or qualification of the shares subject to the Options upon anysecurities exchange or under any state or federal securities or other law or regulation, or theconsent or approval of any governmental regulatory body, is necessary or desirable as a conditionto or in connection with the granting of the Options or the issuance or purchase of sharesthereunder, no Options may be granted or exercised, in whole or in part, unless such listing,registration, qualification, consent or approval shall have been effected or obtained free of anyconditions not acceptable to the Committee. The holders of such Options shall supply the Companywith such certificates, representations and information as the Company shall request and shallotherwise cooperate with the Company in obtaining such listing, registration, qualification,consent or approval. In the case of officers and other Persons subject to Section 16(b) of theSecurities Exchange Act of 1934, as amended, the Committee may at any time impose any limitationsupon the exercise of an Option that, in the Committee’s discretion, are necessary or desirable inorder to comply with such Section 16(b) and the rules and regulations thereunder. If the Company,as part of an offering of securities or otherwise, finds it desirable because of federal or stateregulatory requirements to reduce the period during which any Options may be exercised, theCommittee, may, in its discretion and without the Participant’s consent, so reduce such period onnot less than 15 days written notice to the holders thereof.
     6.5 Nontransferability. Options may not be transferred other than by will or the lawsof descent and distribution and, during the lifetime of the Participant, may be exercised only bysuch Participant (or his legal guardian or legal representative). In the event of the death of aParticipant, exercise of Options granted hereunder shall be made only:
       (i) by the executor or administrator of the estate of the deceased Participant or thePerson or Persons to whom the deceased Participant’s rights under the Option shall pass bywill or the laws of descent and distribution; and        (ii) to the extent that the deceased Participant was entitled thereto at the date ofhis death, unless otherwise provided by the Committee in such Participant’s OptionAgreement.
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     6.6 Expiration of Options.
     (a) Normal Expiration. In no event shall any part of any Option be exercisable afterthe date of expiration thereof (the “Expiration Date”), as determined by the Committeepursuant to paragraph 5.6 above.
     (b) Early Expiration Upon Termination of Employment. Except as otherwise provided bythe Committee in the Option Agreement, any portion of a Participant’s Option that was not vestedand exercisable on the date of the termination of such Participant’s employment or service with theCompany or any of its Subsidiaries shall expire and be forfeited as of such date and any portion ofa Participant’s Option that was vested and exercisable but not exercised as of the date of thetermination of such Participant’s employment or service with the Company or any of its Subsidiariesshall expire and be forfeited as of such date, except that if any Participant’s employment isterminated (i) due to Participant’s death or Disability, then such Participant’s Option shallexpire 180 days after the date of his death or Disability, but in no event after the ExpirationDate or (ii) by the Company without Cause, due to Participant’s retirement (with approval of theBoard or Committee) or by Participant’s resignation, then such Participant’s Option shall expire 60days after the date of his termination, retirement or resignation, but in no event after theExpiration Date.
     6.7 Withholding of Taxes. The Company shall be entitled, if necessary or desirable,to withhold from any Participant from any amounts due and payable by the Company or any of itsSubsidiaries to such Participant (or secure payment from such Participant in lieu of withholding)the amount of any withholding or other tax due from the Company or any of its Subsidiaries withrespect to any shares issuable under the Options, and the Company may defer such issuance unlessindemnified to its satisfaction.
     6.8 Adjustments. In the event of a reorganization, recapitalization, stock dividendor stock split, or combination or other change in the shares of Common Stock or any merger,consolidation or exchange of shares, the Board or the Committee may, in order to prevent thedilution or enlargement of rights under outstanding Options, make such adjustments in the numberand type of shares authorized by the Plan, the number and type of shares covered by outstandingOptions and the exercise prices specified therein as may be determined to be appropriate andequitable. The issuance by the Company of shares of stock of any class, or options or securitiesexercisable or convertible into shares of stock of any class, for cash or property, or for labor orservices either upon direct sale, or upon the exercise of rights or warrants to subscribe therefor,or upon exercise or conversion of other securities, shall not affect, and no adjustment by reasonthereof shall be made with respect to, the number or price of shares of Common Stock then subjectto any Options.
     6.9 Rights of Participants. Nothing in this Plan or in any Option Agreement shallinterfere with or limit in any way the right of the Company or any of its Subsidiaries to terminateany Participant’s employment or service at any time (with or without Cause), nor confer upon anyParticipant any right to continue in the employment or service of the Company or any of itsSubsidiaries for any period of time or to continue his present (or any other) rate of compensation,and except as otherwise provided under this Plan or by the Committee in the
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Option Agreement, in the event of any Participant’s termination of employment or service(including, but not limited to, the termination by the Company or any of its Subsidiary withoutCause), any portion of such Participant’s Option that was not previously vested and exercisableshall expire and be forfeited as of the date of such termination. No Employee shall have a rightto be selected as a Participant or, having been so selected, to be selected again as a Participant.
     6.10 Amendment, Suspension and Termination of Plan. The Board or the Committee maysuspend or terminate the Plan or any portion thereof at any time and may amend it from time to timein such respects as the Board or the Committee may deem advisable; provided that no such amendmentshall be made without stockholder approval to the extent such approval is required by law,agreement or the rules of any exchange upon which the Common Stock is listed, and no suchamendment, suspension or termination shall materially impair the rights of Participants underoutstanding Options without the consent of the Participants affected thereby. No Options shall begranted hereunder after the tenth anniversary of the adoption of the Plan by the Board and theCompany’s shareholders.
     6.11 Amendment, Modification and Cancellation of Outstanding Options. The Committeemay amend or modify any Option in any manner to the extent that the Committee would have had theauthority under the Plan initially to grant such Option; provided that no such amendment ormodification shall materially impair the rights of any Participant under any Option without theconsent of such Participant. With the Participant’s consent, the Committee may cancel any Optionand issue a new Option to such Participant.
     6.12 Indemnification. In addition to such other rights of indemnification as they mayhave as members of the Board or the Committee, the members of the Committee shall be indemnified bythe Company against all costs and expenses reasonably incurred by them in connection with anyaction, suit or proceeding to which they or any of them may be party by reason of any action takenor failure to act under or in connection with the Plan or any Option granted thereunder, andagainst all amounts paid by them in settlement thereof (provided such settlement is approved byindependent legal counsel selected by the Company) or paid by them in satisfaction of a judgment inany such action, suit or proceeding; provided that any such Committee member shall be entitled tothe indemnification rights set forth in this paragraph 6.12 only if such member has acted in goodfaith and in a manner that such member reasonably believed to be in or not opposed to the bestinterests of the Company or any of its Subsidiaries and, with respect to any criminal action orproceeding, had no reasonable cause to believe that such conduct was unlawful, and further providedthat upon the institution of any such action, suit or proceeding a Committee member shall give theCompany written notice thereof and an opportunity, at its own expense, to handle and defend thesame before such Committee member undertakes to handle and defend it on his own behalf.
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