Exhibit 10.10


 


Panolam Holdings Co.


 


2005
Equity Incentive Plan


 


EXECUTIVE
NON STATUTORY STOCK OPTION AGREEMENT


REFERENCE
NUMBER: 2005-1


 


SECTION 1.         GRANT OF OPTION.


 


(a)           Option. On the terms and conditions set forth in this
Agreement and each Notice of Stock Option Grant referencing this Agreement (the
“Notice”), the Company grants to the Optionee on the Date of Grant an option to
purchase at the Exercise Price a number of Shares, all as set forth in the
Notice. Each such Notice, together with this referenced Agreement, shall be a
separate option governed by the terms of this Agreement. This option is
intended to be a Nonstatutory Option, as provided in the Notice.


 


(b)           Equity Incentive Plan and Defined Terms. This option is
granted under and subject to the terms of the Plan, which is incorporated
herein by this reference. Capitalized terms are defined in Section 13 of this
Agreement.


 


SECTION 2.         RIGHT TO
EXERCISE.


 


Subject to the conditions set forth in this Agreement,
all or part of this option may be exercised prior to its expiration at the time
or times set forth in the Notice.


 


SECTION 3.         NO TRANSFER OR
ASSIGNMENT OF OPTION.


 


Except as otherwise
provided in this Agreement, this option and the rights and privileges conferred
hereby shall not be sold, pledged or otherwise transferred (whether by
operation of law or otherwise) and shall not be subject to sale under
execution, attachment, levy or similar process.


 


SECTION 4.         EXERCISE
PROCEDURES.


 


(a)           Notice of Exercise. The Optionee or the Optionee’s representative
may exercise this option by giving written notice to the Company specifying the
election to exercise this option, the number of Shares for which it is being
exercised and the form of payment. Exhibit A is an example of a “Notice
of Exercise”. The Notice of Exercise shall be signed by the person exercising
this option. In the event that this option is being exercised by the Optionee’s
representative, the notice shall be accompanied by proof (satisfactory to the
Company) of the representative’s right to exercise this option. The Optionee or
the Optionee’s representative shall deliver to the Company, at the time of
giving the notice, payment in a form permissible under Section 5 for the full
amount of the Purchase Price.


 

















 


(b)           Issuance of Shares. After receiving a proper notice of
exercise, the Company shall cause to be issued a certificate or certificates
for the Shares as to which this option has been exercised, registered in the
name of the person exercising this option (or in the names of such person and
his or her spouse as community property or as joint tenants with right of
survivorship). The Company shall either cause such certificate or certificates
to be deposited in escrow or delivered to or upon the order of the person
exercising this option.


 


(c)           Withholding Requirements. The Company may withhold any tax
(or other governmental obligation) as a result of the exercise of this option
as a condition to the exercise of this option, and the Optionee shall make
arrangements satisfactory to the Company to enable it to satisfy all such
withholding requirements. The Optionee shall also make arrangements
satisfactory to the Company to enable it to satisfy any withholding
requirements that may arise in connection with the vesting or disposition of
Shares purchased by exercising this option.


 


SECTION 5.         PAYMENT FOR
SHARES.


 


(a)           Cash or Check. All or part of the Purchase Price may be paid
in cash or by check.


 


(b)           Other Methods of Payment for Shares. At the sole discretion
of the Board of Directors, all or any part of the Purchase Price and any
applicable withholding requirements may be paid by any other method permissible
under the terms of the Plan. The Company shall notify the Optionee if and when
it shall make such other payment method available to the Optionee.


 


SECTION 6.         TERM AND
EXPIRATION.


 


(a)           Basic Term. Subject to earlier termination in accordance
with subsection (b) below, this option shall expire on the expiration date set
forth in the Notice.


 


(b)           Termination of Service. If the Optionee’s Service terminates
for any reason, then this option shall expire on the earliest of the following
occasions:


 


(i)            The
expiration date determined pursuant to Subsection (a) above;


 


(ii)           The
date two (2) years after the termination of the Optionee’s Service by reason of
death, Disability (or such later date as the Board of Directors may determine)
or any other reason other than as set forth in clause (iii) below; or


 


(iii)          The
date thirty (30) days after the termination of the Optionee’s Service if such
termination is voluntary or for Cause or if Cause exists on such date.


 


The Optionee (or
in the case of the Optionee’s death or Disability, the Optionee’s
representative) may exercise all or part of this option at any time before its
expiration under the preceding sentence, but only to the extent that this
option had become exercisable for vested Shares on or before the date the
Optionee’s Service terminates (subject to any continued vesting set forth in
the Notice). When the Optionee’s Service terminates, this option shall expire
immediately with respect to the number of Shares for which this option is not
yet vested (except as otherwise set forth in the Notice). The Company shall
also have the right not to deliver Shares upon the 


 


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exercise of this
option if, after the exercise of this option, the Optionee’s Service is
terminated for Cause or it is determined that Cause existed on such date.


 


(c)           Leaves of Absence. For any purpose under this Agreement,
Service shall be deemed to continue while the Optionee is on a bona fide leave
of absence, if such leave was approved by the Company in writing or if
continued crediting of Service for such purpose is expressly required by the
terms of such leave or by applicable law (as determined by the Company).


 


SECTION 7.         RIGHT OF FIRST
OFFER.


 


[intentionally
omitted]


 


SECTION 8.         LEGALITY OF
INITIAL ISSUANCE.


 


No Shares shall be issued
upon the exercise of this option unless and until the Company has determined
that:


 


(a)                                  The
Company and the Optionee have taken any actions required to register the Shares
under the Securities Act or to perfect an exemption from the registration
requirements thereof;


 


(b)                                 Any
applicable listing requirement of any stock exchange or other securities market
on which Stock is listed has been satisfied; and


 


(c)           Any other applicable provision of
state or federal law has been satisfied.


 


SECTION 9.         REGISTRATION
RIGHTS.


 


The Company may, but
shall not be obligated to, register or qualify the sale of Shares under the
Securities Act or any other applicable law. The Company shall not be obligated
to take any affirmative action in order to cause the sale of Shares under this
Agreement to comply with any law.


 


SECTION 10.       RESTRICTIONS ON
TRANSFER.


 


(a)           Securities Law Restrictions. Regardless of whether the
offering and sale of Shares under the Plan have been registered under the
Securities Act or have been registered or qualified under the securities laws
of any state, the Company at its discretion may impose restrictions upon the
sale, pledge or other transfer of such Shares (including the placement of
appropriate legends on stock certificates or the imposition of stop-transfer
instructions) if, in the judgment of the Company, such restrictions are
necessary or desirable in order to achieve compliance with the Securities Act
or the securities laws of any state or any other law.


 


(b)           Optionee Undertaking. The Optionee agrees to take whatever
additional action and execute whatever additional documents the Company may deem
necessary or advisable to carry out or effect one or more of the obligations or
restrictions imposed on either the Optionee or upon the Restricted Shares
pursuant to the provisions of this Agreement.


 


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(c)           Investment Intent. The Optionee represents and agrees that
as of the Date of Grant, the Shares to be acquired upon exercising this option
will be acquired for investment, and not with a view to the sale or
distribution thereof. If the sale of Shares under the Plan is not registered
under the Securities Act but an exemption is available which requires an
investment representation or other representation, the Optionee shall represent
and agree at the time of exercise that the Shares being acquired upon exercising
this option are being acquired for investment, and not with a view to the sale
or distribution thereof, and shall make such other representations as are
deemed necessary or appropriate by the Company and its counsel.


 


(d)           Legends. All certificates evidencing Shares purchased under
this Agreement shall bear the following legends:


 


“The shares represented hereby may not be sold,
assigned, transferred, encumbered or in any manner disposed of, except in
compliance with the terms of a written agreement between the Company and the
registered holder of the shares (or the predecessor in interest to the shares).
The Secretary of the Company will upon written request furnish a copy of such
agreement to the holder hereof without charge.”


 


“The shares represented hereby have not been
registered under the Securities Act of 1933, as amended, and may not be sold,
pledged, or otherwise transferred without an effective registration thereof
under such act or an opinion of counsel, satisfactory to the Company and its counsel,
that such registration is not required.”


 


(e)           Removal of Legends. If, in the opinion of the Company, any
legend placed on a stock certificate representing Shares sold under this
Agreement is no longer required, the holder of such certificate shall be
entitled to exchange such certificate for a certificate representing the same
number of Shares but without such legend.


 


(f)            Administration. Any determination by the Company in
connection with any of the matters set forth in this Section 10 shall be conclusive
and binding on the Optionee and all other persons.


 


SECTION 11.       ADJUSTMENT OF
SHARES.


 


In the event of a subdivision of the outstanding
Shares, a declaration of a dividend payable in Shares, a declaration of an
extraordinary dividend payable in a form other than Shares in an amount that
has a material effect on the Fair Market Value of the Shares, a combination or
consolidation of the outstanding Shares into a lesser number of Shares, a
recapitalization, a spin-off, a reclassification or a similar occurrence, the
terms of this option (including, without limitation, the number and kind of
Shares subject to this option and the Exercise Price) shall be adjusted as set
forth in Section 13(a) of the Plan. In the event that the Company is a
party to a merger or consolidation, this option shall be subject to the
agreement of merger or consolidation, as provided in Section 13(b) of the
Plan.


 


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SECTION 12.       MISCELLANEOUS
PROVISIONS.


 


(a)           Rights as a Stockholder. Neither the Optionee nor the
Optionee’s representative shall have any rights as a stockholder with respect
to any Shares subject to this option until the Optionee or the Optionee’s
representative becomes entitled to receive such Shares by (i) filing a notice
of exercise, and (ii) paying the Purchase Price as provided in this Agreement.


 


(b)           No Retention Rights. Nothing in this option or in the Plan
shall confer upon the Optionee any right to continue in Service for any period
of specific duration or interfere with or otherwise restrict in any way the
rights of the Company (or any Parent or Subsidiary employing or retaining the
Optionee) or of the Optionee, which rights are hereby expressly reserved by
each, to terminate his or her Service at any time and for any reason, with or
without cause.


 


(c)           Notification. Any notification required by the terms of this
Agreement shall be given in writing and shall be deemed effective upon personal
delivery or upon deposit with the United States Postal Service, by registered
or certified mail, with postage and fees prepaid. A notice shall be addressed
to the Company at its principal executive office and to the Optionee at the
address that he or she most recently provided to the Company.


 


(d)           Entire Agreement. The Notice, this Agreement and the Plan
constitute the entire contract between the parties hereto with regard to the
subject matter hereof. They supersede any other agreements, representations or
understandings (whether oral or written and whether express or implied) which
relate to the subject matter hereof.


 


(e)           Waiver. No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition whether of like or different nature.


 


(f)            Successors and Assigns. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Company and its
successors and assigns and upon the Optionee, the Optionee’s assigns and the
legal representatives, heirs and legatees of the Optionee’s estate, whether or
not any such person shall have become a party to this Agreement and have agreed
in writing to be join herein and be bound by the terms hereof.


 


(g)           Choice of Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, as such laws
are applied to contracts entered into and performed in such State.


 


SECTION 13.       DEFINITIONS.


 


(a)           “Agreement” shall mean this Stock Option Agreement.


 


(b)           “Board of Directors” shall mean the Board of Directors of the
Company, as constituted from time to time or, if a Committee has been
appointed, such Committee.


 


(c)           “Cause” shall mean with respect to the Optionee, “Cause” as
defined in the Employment Agreement.


 


(d)           “Change in Control” shall have the same meaning as in the Plan.


 


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(e)           “Code” shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated thereunder.


 


(f)            “Committee” shall mean a committee of the Board of Directors,
as described in Section 2 of the Plan.


 


(g)           “Company” shall mean Panolam Holdings Co., a Delaware corporation,
and any successor thereto.


 


(h)           “Consultant” shall mean a person who performs bona fide
services for the Company, a Parent or a Subsidiary as a consultant or advisor,
excluding Employees and Directors.


 


(i)            “Date of Grant” shall mean the date specified in the Notice,
which date shall be the later of (i) the date on which the Board of Directors
resolved to grant this option or (ii) the first day of the Optionee’s
Service.


 


(j)            “Director” shall mean a member of the Board of Directors who
is not an Employee.


 


(k)           “Disability” shall mean that the Optionee is unable to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment as determined by the Board of Directors in its
sole discretion.


 


(l)            “Employee” shall mean any individual who is a common-law
employee of the Company, a Parent or a Subsidiary.


 


(m)          “Employment Agreement” shall mean the Second Amended and
Restated Employment Agreement, dated September 6, 2005, by and among Optionee,
the Company and Panolam Industries Holdings, Inc.


 


(n)           “Exercise Price” shall mean the amount for which one Share
may be purchased upon exercise of this option, as specified in the Notice.


 


(o)           “Fair Market Value” shall have the same meaning as set forth
in Section 17 of the Plan.


 


(p)           “Nonstatutory Option” shall mean a stock option not described
in Sections 422(b) or 423(b) of the Code.


 


(q)           “Notice” shall have the meaning described in Section 1(a) of
this Agreement.


 


(r)            “Optionee” shall mean Robert J. Muller, Jr.


 


(s)           “Parent” shall mean any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain. A corporation that attains the status of
a Parent on a date after the execution of this Agreement shall be considered a
Parent commencing as of such date.


 


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(t)            “Plan” shall mean the Panolam Holdings Co. 2005 Equity
Incentive Plan.


 


(u)           “Purchase Price” shall mean the Exercise Price multiplied by
the number of Shares with respect to which this option is being exercised.


 


(v)           “Securities Act” shall mean the Securities Act of 1933, as
amended.


 


(w)          “Service” shall mean service as an Employee, Director or
Consultant.


 


(x)            “Share” shall mean one share of common stock of the Company,
with a par value of $.001, as adjusted in accordance with Section 13 of
the Plan (if applicable).


 


(y)           “Subsidiary” shall mean any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, if
each of the corporations other than the last corporation in the unbroken chain
owns stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Subsidiary on a date after the
execution of this Agreement shall be considered a Subsidiary commencing as of
such date.


 


(z)            “Transferee” shall mean any person to whom the Optionee has
directly or indirectly transferred any Share acquired under this Agreement.


 


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EXHIBIT A


 


SAMPLE
NOTICE OF EXERCISE


 


Panolam Holdings
Co.


[Address]


 


Attn:  Corporate Secretary


 


To the Corporate
Secretary:


 


I hereby exercise
my stock option granted under the Panolam Holdings Co. 2005 Equity Plan (the “Plan”)
and notify you of my desire to purchase the shares that have been offered
pursuant to the Plan and related Option Agreement as described below.


 


I shall pay for
the shares by delivery of a check payable to Panolam Holdings Co. (the “Company”)
in the amount described below in full payment for such shares plus all amounts
required to be withheld by the Company under state federal or local law as a
result of such exercise or shall provide such documentation as is satisfactory
to the Company demonstrating that I am exempt from any withholding requirement.


 


This notice of
exercise is delivered this          
day of                    
(month)           (year).


 


	
  No. Shares to be Acquired

  	
   

  	
  Type of Option

  	
   

  	
  Exercise Price

  	
   

  	
  Total

  
	
   

  	
   

  	
  Nonstatutory

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Incentive

  	
   

  	
   

  	
   

  	
   

  
	
  Estimated
  Withholding

  	
   

  	
  Nonstatutory
  only

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Amount
  Paid

  	
   

  	
   

  



 


 


	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature of
  Optionee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee’s Name
  and Mailing Address

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee’s
  Social Security Number