Document:

Exhibit 4.3

 

EXECUTION COPY

 

NSP
HOLDINGS L.L.C.

and

NSP
HOLDINGS CAPITAL CORP.

 

As Issuers

 

 

11 3⁄4%
Senior Pay in Kind Notes due 2012

 

 

FIRST SUPPLEMENTAL INDENTURE

 

Dated as
of July 19, 2005

 

 

Supplementing the Indenture dated
as of January 7, 2005, among

NSP Holdings L.L.C. and NSP Holdings Capital Corp., as Issuers, and

Wilmington Trust Company, as
trustee

 

 

WILMINGTON
TRUST COMPANY

As Trustee

 

 

FIRST
SUPPLEMENTAL INDENTURE dated as of July 19, 2005 (this “First Supplemental
Indenture”), is by and among NSP Holdings L.L.C., a Delaware limited
liability company (the “Company”), NSP Holdings Capital Corp., a
Delaware corporation (“Capital” and, together with the Company, the “Issuers”)
and Wilmington Trust Company, a Delaware banking corporation, as trustee under
the Indenture referred to below (the “Trustee”).

 

W I T N E S S E T H

 

WHEREAS, the
Issuers and the Trustee are parties to an indenture dated as of January 7,
2005 (the “Indenture”; capitalized terms used herein but not otherwise
defined shall have the meanings assigned to such terms in the Indenture),
providing for the issuance of the Issuers’ 11 3⁄4% Senior Pay in Kind Notes due
2012 (the “Notes”);

 

WHEREAS, Safety
Products Holdings, Inc. (“Safety Products”) has agreed to purchase
from the Company all of the equity interests of Norcross Safety Products L.L.C.
and Capital (the “Acquisition”);

 

WHEREAS,
Safety Products, the Issuers and the Trustee will enter into a supplemental
indenture dated as of July 19, 2005, whereby Safety Products will assume
all of the Company’s obligations under the Indenture;

 

WHEREAS, on January 7,
2005, the Issuers issued $100,000,000 in aggregate principal amount of Notes
under the Indenture (the “Initial Notes”);

 

WHEREAS,
pursuant to the Consent Solicitation Statement dated as of June 13, 2005
(the “Consent Solicitation”), the Issuers solicited consents from
Holders of the Notes to (i) amend certain provisions of the Indenture, as
set forth herein, and (ii) waive the Company’s obligations under (x) the
change in control covenant of the Indenture and (y) clause (c) of the
limitation on consolidation, merger and sale of assets covenant of the
Indenture, each in connection with the Acquisition (the “Waivers”);

 

WHEREAS,
Section 8.02 of the Indenture provides that the Issuers and the Trustee
may amend the Indenture with the consent of the Holders of at least a majority
in aggregate principal amount of the Notes then outstanding (the “Requisite
Consents”);

 

WHEREAS,
the Requisite Consents to the amendments effected by this First Supplemental
Indenture and the Waivers have been received; and

 

WHEREAS, all
things necessary to make this First Supplemental Indenture a valid agreement of
the Issuers and the Trustee, in accordance with its terms, and a valid
amendment of, and supplement to, the Indenture, have been done;

 

NOW
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Issuers and the
Trustee

 

 

mutually covenant and
agree for the equal and ratable benefit of the Holders of the Notes as follows:

 

1.             Amendments
to Certain Definitions.  Section 1.01
of the Indenture (Definitions) is hereby amended as follows:

 

(a)           The
definition of “Change of Control” is hereby amended by (i) replacing the
period (“.”) following clause (7) thereof with a semicolon (“;”) and (ii) adding
the following at the beginning of the next line:

 

“provided, that, notwithstanding
anything to the contrary in this definition, the 2005 Sale Transaction shall
not constitute a “Change of Control.”

 

(b)           The
definition of “CIBC” is hereby deleted in its entirety.

 

(c)           The
definition of “CIBC/Argosy Group” is hereby deleted in its entirety.

 

(d)           The
definition of “Consolidated Interest Expense” is hereby amended by replacing
clause (6) thereof with the following:

 

“amortization
of discount or premium (other than original issue discount deemed to apply to
the Notes issued on the Issue Date as a result of the 2005 Sale Transaction and
related transactions), if any; and”

 

(e)           The
definition of “Consolidated Net Income” is hereby amended by

 

(i)            deleting the word “and” immediately
preceding subclause (iii) of clause (4) thereof and replacing it with
a comma (“,”);

 

(ii)           adding
the following to the end of clause (4):

 

“and (iv) any extraordinary, unusual or
non-recurring costs and expenses incurred in connection with the 2005 Sale
Transaction)”;

 

(iii)          deleting
the period (“.”) at the end of clause (10) and replacing it with “; and”
and

 

(iv)          adding the following clause (11) immediately
thereafter:

 

“(11) any net after-tax income or loss (less all fees
and expenses or charges relating thereto) attributable to the early
extinguishment of indebtedness in connection with the 2005 Sale Transaction
shall be excluded.”

 

(f)            The
following definition is hereby added immediately following the definition of “GAAP”:

 

“GEPT”
means General Electric Pension Trust and its Affiliates.

 

 

(g)           The
definition of “John Hancock” is hereby deleted in its entirety.

 

(h)           The
following definition is hereby added immediately following the definition of “Notes”:

 

“Odyssey” means Odyssey Investment Partners
Fund III, LP and its Affiliates.

 

(i)            The
definition of “Permitted Holders” is hereby amended by (a) deleting the
words “the CIBC/Argosy Group, CIVC and John Hancock” and (b) replacing
them with “Odyssey and GEPT”.

 

(j)            The
definition of “Permitted Indebtedness” is hereby amended by replacing the word “100.0
million” in clause (2) thereof with “125.0 million”.

 

(k)           The
definition of “Registration Rights Agreement” is hereby amended by adding the
following to the end of that definition:

 

“along
with any similar agreement entered into with respect to issuances of Additional
Notes”.

 

The
following definition is hereby added immediately following the definition of “Trustee”:

 

“2005
Sale Transaction” means the transaction pursuant to which  Safety Products Holdings, Inc. will (1) acquire
all of the issued and outstanding membership units of Norcross and all of the
issued and outstanding common stock of Capital and (2) assume all of the
outstanding indebtedness and obligations of the Company and Capital pursuant to
the Indenture, the Notes, the Registration Rights Agreements and the CIVC
Registration Rights Agreement, and (3) effect the debt and equity
financing transactions related thereto.

 

2.             Additional Amendments.

 

(a)           Section 4.11 is hereby amended
by

 

(i)            replacing clause (3) thereof
with the following:

 

“immediately
after giving effect to such Restricted Payment, the aggregate of all Restricted
Payments declared or made after the Issue Date (excluding payments made
pursuant to clauses (2), (3), (4), (5), (6), (7), (8) and (13) of
paragraph (B) below and 50% of the payments made pursuant to clause (9) of
paragraph (B) below) does not exceed the sum of”;

 

(ii)           deleting the word “and” at the end of
clause (12) thereof;

 

(iii)          adding as clause (13) thereof, the
following:

 

 

“(13) distribution of proceeds of
up to $25 million of new indebtedness of the Company and up to $30 million in
cash to members of NSP Holdings L.L.C. and up to $3.0 million in aggregate
value of stock of North Safety Products, Inc. to members of Company
management, all in connection with the 2005 Sale Transaction; and”; and

 

(iv) adding “(14)” before
the prior clause (13) so that clause (14) shall read as follows:

 

“(14) so long as no
Default shall have occurred and be continuing or would be caused thereby, other
Restricted Payments in an aggregate amount not to exceed $5.0 million since the
date of this Indenture.”

 

(b)           Section 4.18
is hereby replaced in its entirety with the following:

 

“The Company and its Restricted Subsidiaries
shall not engage in any businesses which are not the same, similar, ancillary,
related to or constitute a reasonable extension of the businesses in which the
Company and its Restricted Subsidiaries are engaged in on the Issue Date. The
Company shall at all times directly or indirectly own 100% of the Capital Stock
of Norcross.

 

Capital will not engage in any business or
activities other than as necessary to (1) maintain its corporate existence
and (2) perform its obligations under the Notes, the Exchange Notes, this
Indenture, the Registration Rights Agreements and the CIVC Registration Rights Agreement.”

 

(c)           Section 5.01
is hereby amended by adding the following to the beginning of clause (c) thereof:

 

“with
respect to any transaction other than the 2005 Sale Transaction,”

 

3.             Amendments to the Notes

 

(a)           The
Notes, a form of which is attached hereto as Exhibit A, are hereby
amended by replacing Section 5 thereof with the following:

 

“(a)         Optional Redemption with Make Whole
Payment.  At any time prior to July 1,
2006, the notes may be redeemed in whole or in part at the option of the
Company, upon not less than 30 or more than 60 days’ prior notice, at a
redemption price equal to 100% of the principal amount thereof, plus the Make
Whole Premium and any accrued and unpaid interest thereon to the applicable
redemption date.

 

(b)           Optional Redemption.  The Issuers may redeem the Notes, at their
option, in whole at any time or in part from time to time, on and after July 1,
2006 at the following Redemption Prices (expressed as percentages of the
principal amount thereof) if redeemed during the periods set forth below, plus,
in each case, accrued and unpaid interest thereon, if any, to the date of redemption.

 

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  July 1,
  2006 - June 30, 2007

  	
   

  	
  112.5

  	
  %

  
	
  July 1,
  2007 - June 30, 2008

  	
   

  	
  105

  	
  %

  
	
  July 1,
  2008 - June 30, 2009

  	
   

  	
  103

  	
  %

  
	
  Thereafter

  	
   

  	
  100

  	
  %

  

 

(c)           Optional Redemption upon Equity
Offerings.  Notwithstanding the
foregoing, the Issuers may redeem in the aggregate up to 35% of the principal
amount of Notes at any time and from time to time prior to July 1, 2006 at
a Redemption Price equal to 111.75% of the aggregate principal amount so
redeemed, plus accrued and unpaid interest in cash, if any, to the Redemption
Date out of the Net Proceeds of one or more Equity Offerings; provided that

 

(1)           at least 65% of the principal amount
of Notes originally issued remains outstanding immediately after the occurrence
of any such redemption and

 

(2)           any such redemption occurs within 90
days following the closing of such Equity Offering.

 

(d)           Mandatory Partial
Redemption.  On July 1, 2010, if
any notes are outstanding, the Company will be required to redeem, at a redemption
price of 100% of the principal amount of the notes so redeemed, a principal
amount of notes (the “Mandatory Principal Redemption Amount”) sufficient (but not in excess of the amount sufficient) to ensure that the notes are not
treated under the Code as “Applicable High Yield Discount Obligations” for the
ongoing deductibility of interest by the Company. The Mandatory Principal
Redemption Amount will be calculated as (i) the excess of (A) the aggregate principal
amount of all notes outstanding on July 1, 2010, over (B) the issue price (determined pursuant
to Treasury Regulation Section 1.1273-2(a)(i)) of all notes issued or
deemed issued (as a result of the deemed exchange for U.S. federal income tax
purposes of notes outstanding immediately prior to the date of closing of the
2005 Sale Transaction (the “Effective Date”) for new notes on the Effective
Date, and assuming for this purpose that all holders consented to the
amendments and waivers to the Indenture proposed in connection with the 2005
Sale Transaction (“Proposed Amendments and Waivers”)), less (ii) an
amount equal to one year’s simple uncompounded interest (determined using the stated interest rate on the notes) on the aggregate
issue price (determined pursuant to Treasury Regulation Section 1.1273-2(a)(i),
and assuming for this purpose that all holders consent to the Proposed Amendments
and Waivers) of all notes, other than PIK Notes issued subsequent to the Effective Date. The
Mandatory Principal Redemption Amount will be applied as a partial redemption
of each note outstanding.”

 

4.             Transaction Approval.

 

The
Consent Solicitation provided specific consent to the “Sale” and the “2005 Sale
Transaction” as described in the Consent Solicitation.  This First Supplemental Indenture shall be
construed as a waiver of any incidental or technical defaults under the
Indenture in connection with the “Sale” and the “2005 Sale Transaction” as
described in the Consent Solicitation.

 

 

5.             Counterparts.

 

This First
Supplemental Indenture may be executed in any number of counterparts, and all
such counterparts taken together shall be deemed to constitute one and the same
instrument.  Signature pages may be
detached from counterpart documents and reassembled to form duplicate executed
originals.

 

6.             Governing Law.

 

This First
Supplemental Indenture shall be governed by and construed in accordance with
the laws of the State of New York, as applied to contracts made and performed
within the state of New York, without regard to principles of conflicts of
law.  Each of the parties hereto agrees
to submit to the jurisdiction of the courts of the state of New York in any
action or proceeding arising out of or relating to this First Supplemental
Indenture.

 

7.             Execution as Supplemental
Indenture.

 

This First Supplemental
Indenture is executed and shall be construed as an indenture supplemental to
the Indenture and, as provided in the Indenture, this First Supplemental Indenture
forms a part thereof.  Except as herein
expressly otherwise defined, the use of the terms and expressions herein is in
accordance with the definitions, uses and constructions contained in the Indenture.

 

8.             Responsibility for Recitals,
Etc.

 

The
recitals herein and in the Additional Notes (except in the Trustee’s
certificate of authentication) shall be taken as the statements of the Issuers,
and the Trustee assumes no responsibility for the correctness thereof.  The Trustee makes no representations as to
the validity or sufficiency of this First Supplemental Indenture or of the Additional
Notes.  The Trustee shall not be accountable
for the use or application by the Issuers of the Additional Notes or of the
proceeds thereof.

 

9.             Provisions Binding on Issuers’
Successors.

 

All
the covenants, stipulations, promises and agreements contained in this First Supplemental
Indenture by the Issuers shall bind their successors and assigns whether so
expressed or not.

 

 

10.           Separability.

 

Each provision of this First Supplemental Indenture
shall be considered separable and if for any reason any provision which is not
essential to the effectuation of the basic purpose of this First Supplemental
Indenture or the Indenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

 

11.           Effective
Time.

 

This First Supplemental Indenture shall
be deemed to be effective immediately prior to the consummation of the
Acquisition and shall cease to be effective if the Acquisition is not
consummated.

 

 

IN
WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed and delivered as of the date first written above.

 

	
   

  	
  NSP HOLDINGS L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David F. Myers, Jr.

  	
   

  
	
   

  	
   

  	
   Name:

  
	
   

  	
   

  	
   Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NSP HOLDINGS CAPITAL CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David F. Myers, Jr.

  	
   

  
	
   

  	
   

  	
   Name:

  
	
   

  	
   

  	
   Title:

  

 

 

	
   

  	
  WILMINGTON TRUST COMPANY,

  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ James J. McGinley

  	
   

  
	
   

  	
   

  	
    Name:  James J. McGinley

  
	
   

  	
   

  	
    Title:  Authorized Signer

  

 

 

Exhibit A - Form of NoteExhibit 10.18

 

2005
OPTION PLAN

OF

SAFETY PRODUCTS HOLDINGS, INC.

 

Safety
Products Holdings, Inc., a Delaware corporation (the “Company”),
hereby adopts this 2005 Option Plan of Safety Products Holdings, Inc. The
purposes of this Plan are as follows:

 

(1)           To
further the growth, development and financial success of the Company and its
Subsidiaries (as defined herein), by providing additional incentives to
Employees, Consultants and Independent Directors (as such terms are defined
below) of the Company and its Subsidiaries who have been or will be given
responsibility for the management or administration of the Company’s (or one of
its Subsidiaries’) business affairs, by assisting them to become owners of
Common Stock (as defined herein), thereby benefiting directly from the growth,
development and financial success of the Company and its Subsidiaries.

 

(2)           To
enable the Company (and its Subsidiaries) to obtain and retain the services of
the type of professional, technical and managerial Employees, Consultants and
Independent Directors considered essential to the long-range success of the
Company (and its Subsidiaries) by providing and offering them an opportunity to
become owners of Common Stock under non-qualified Options (as defined herein).

 

ARTICLE I.

DEFINITIONS

 

Whenever the
following terms are used in this Plan, they shall have the meaning specified
below unless the context clearly indicates to the contrary.  The singular pronoun shall include the plural
where the context so indicates.

 

Section 1.1        “Affiliate” shall mean, with respect to any
Person, any other Person directly or indirectly controlling, controlled by, or
under common control with, such Person where “control” shall have the meaning
given such term under Rule 405 of the Securities Act.

 

Section 1.2        “Board” shall mean the Board of Directors of
the Company.

 

Section 1.3        “Code” shall mean the Internal Revenue Code of
1986, as amended.

 

Section 1.4        “Committee” shall mean the Committee appointed
as provided in Section 6.1.

 

Section 1.5        “Common Stock” shall mean the common stock, par
value $0.01 per share, of the Company.

 

Section 1.6        “Company” shall mean Safety Products Holdings, Inc.,
a Delaware corporation.

 

Section 1.7        “Consultant” shall mean any consultant or
adviser if:  (a) the consultant or
adviser renders bona  fide services to the Company or a
Subsidiary; (b) the services rendered by the consultant or adviser are not
in connection with the offer or sale of securities in a capital-

 

 

raising transaction and do not directly or
indirectly promote or maintain a market for the Company’s securities; and (c) the
consultant or adviser is a natural person who has contracted directly with the
Company or a Subsidiary to render such services.

 

Section 1.8        “Corporate Event” shall mean, as determined by
the Committee (or by the Board, in the case of Options granted to Independent
Directors) in its sole discretion, any transaction or event described in Section 7.1(a) or
any unusual or nonrecurring transaction or event affecting the Company, any
Affiliate of the Company, or the financial statements of the Company or any
Affiliate of the Company, or any change in applicable laws, regulations, or
accounting principles.

 

Section 1.9        “Director” shall mean a member of the Board.

 

Section 1.10      “Eligible Representative” for an Optionee shall
mean such Optionee’s personal representative or such other person as is
empowered as the disabled Optionee’s personal representative or under the
deceased Optionee’s will or the then applicable laws of descent and
distribution to represent the Optionee hereunder.

 

Section 1.11      “Employee” shall mean, with respect to any
entity, any employee of such entity (as defined in accordance with the
regulations and revenue rulings then applicable under Section 3401(c) of
the Code).

 

Section 1.12      “Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended.

 

Section 1.13      “Fair Market Value” of a share of Common Stock
as of a given date shall be:

 

(a)       If the Common Stock is listed on one or more National
Securities Exchanges (within the meaning of the Exchange Act), each share of
Common Stock to be repurchased shall be valued at the closing price of a share
of Common Stock on the principal exchange on which the shares are then trading
on the most recent trading day preceding such date of determination;

 

(b)      If the Common Stock is not traded on a National
Securities Exchange but is quoted on Nasdaq or a successor quotation system and
the Common Stock is listed as a National Market Issue under the NASD National
Market System, each share of Common Stock to be repurchased shall be valued at
the mean between the closing representative bid and asked prices for a share of
Common Stock on the most recent trading day preceding such date of
determination as reported by Nasdaq or such successor quotation system; or

 

(c)       If the Common Stock is not publicly
traded on a National Securities Exchange and is not quoted on Nasdaq or a
successor quotation system, the Fair Market Value of the Common Stock to be
repurchased shall be determined in good faith by the Board, without regard to
minority discounts, and with reference to the most recent valuation of the
Common Stock and performed annually by an independent valuation consultant or
appraiser of nationally recognized standing (which may be the Company’s
independent accounting firm) (the “Company Appraiser”) to be initially selected
by the mutual agreement of the Board and

 

2

 

Majority Holders and
ratified annually by the Board (provided, that if such independent valuation
consultant or appraiser is not ratified by the Board, the appointment of a new
independent valuation consultant or appraiser shall be selected by the mutual
agreement of the Board and Majority Holders) and with such adjustment to the appraisal
by said Company Appraiser to the date of the exercise of the Call Right, Put
Right or Involuntary Transfer Repurchase Right, as applicable as the Board,
acting in good faith, deems appropriate. 
Such determination shall be binding on the Management Stockholder unless
such Management Stockholder (A) holds at the time of exercise of the Call
Right, Put Right or Involuntary Repurchase Right, as applicable, Shares with an
aggregate Fair Market Value reasonably likely to be in excess of $500,000 and (B) delivers
a written notice to the Company within ten (10) business days after
delivery of a determination of Fair Market Value by the Company Appraiser that
he or she objects to such valuation (an “Objection Notice”) along with the name
of an independent valuation consultant or appraiser of nationally recognized
standing (the “Management Appraiser”) that shall conduct an independent
appraisal of such Management Stockholder’s Shares.  The determination of Fair Market Value by
such Management Appraiser shall be made within thirty (30) days after delivery
of the Objection Notice.  In the event
that the difference between the Fair Market Value determined by each of the
Company Appraiser and the Management Appraiser is greater than five percent
(5%), a disinterested appraiser (which shall be an independent valuation
consultant or appraiser of nationally recognized standing) mutually selected by
the Company Appraiser and the Management Appraiser (the “Mutual Appraiser”)
shall determine the Fair Market Value, the fees and expenses of which appraisal
shall be paid as follows: (x) in the event that the determination of Fair
Market Value by the Mutual Appraiser results in a Fair Market Value more than
105% of the Fair Market Value initially determined by the Company Appraiser,
all fees and expenses of the Mutual Appraiser and the Management Appraiser
shall be borne by the Company and (y) in the event that the determination of
Fair Market Value by the Mutual Appraiser results in a Fair Market Value less
than or equal to 105% of the Fair Market Value initially determined by the
Company Appraiser, all fees and expenses of the Mutual Appraiser and the
Management Appraiser shall be borne by the Management Stockholder.  Any selection of a Mutual Appraiser shall be
made in good faith within ten (10) business days after the determination
of Fair Market Value by the Management Appraiser and any determination of Fair
Market Value by the Mutual Appraiser shall be made within thirty (30) days of
the date of selection.  In furtherance of
the foregoing, the Company agrees to provide each of the Management Appraiser
and the Mutual Appraiser with reasonable access during normal business hours
and upon reasonable notice to the books and records of the Company that are
reasonably necessary to the conduct of such appraiser’s valuation.

 

Section 1.14      “Incentive Stock Option” shall mean an Option granted
to an Employee of the Company that conforms to the applicable provisions of Section 422
of the Code and that is designated as an Incentive Stock Option by the
Committee.

 

Section 1.15      “Independent Director” shall mean a member of
the Board who is not an Employee of the Company or any of its Subsidiaries.

 

Section 1.16      “Initial Public Offering” shall mean the first
issuance by the Company of any class of common equity securities that is
required to be registered (other than on a Form S-8) under the Securities
Act.

 

3

 

Section 1.17      “Management Stockholders Agreement” shall mean
the agreement by and between the Optionee, the Company, Odyssey Investment
Partners Fund III, LP, a Delaware limited partnership and certain other
stockholders which contains certain restrictions and limitations applicable to
the shares of Common Stock acquired upon Option exercise (and/or to other
shares of Common Stock, if any, held by the Optionee during the term of such
agreement).

 

Section 1.18      “Non-Qualified Option” shall mean an Option
which is not an Incentive Stock Option.

 

Section 1.19      “Officer” shall mean an officer of the Company,
as defined in Rule 16a-l(f) under the Exchange Act, as such rule may
be amended from time to time.

 

Section 1.20      “Option” shall mean an option granted under the
Plan to purchase Common Stock.  Subject
to Section 3.2, an Option shall, as determined by the Committee, be either
an Incentive Stock Option or a Non-Qualified Option.

 

Section 1.21      “Option Agreement” shall have the meaning set
forth in Section 4.1.

 

Section 1.22      “Optionee” shall mean an Employee, Consultant
or Independent Director to whom an Option is granted under the Plan.

 

Section 1.23      “Person” shall mean an individual, partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, governmental authority or other
entity of whatever nature.

 

Section 1.24      “Plan” shall mean the 2005 Option Plan of Safety
Products Holdings, Inc.,  as amended
from time to time.

 

Section 1.25      “Rule 16b-3” shall mean that certain Rule 16b-3
promulgated under the Exchange Act, as such Rule may be amended from time
to time.

 

Section 1.26      “Securities Act” shall mean the Securities Act
of 1933, as amended.

 

Section 1.27      “Subsidiary” of any entity shall mean any
corporation in an unbroken chain of corporations beginning with such entity if
each of the corporations other than the last corporation in the unbroken chain
then owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

 

Section 1.28      “Termination of Consultancy” shall mean the
time when the engagement of an Optionee as a Consultant to the Company or a
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, by resignation, discharge, death or retirement, but
excluding a termination where there is a simultaneous commencement of
employment with the Company or any Subsidiary. 
The Committee, in the good faith exercise of its sole discretion, and
subject to any consulting agreement in effect between Optionee and the Company
(or one of its Subsidiaries) shall determine the effect under this Plan of of
all matters and questions relating to Termination of Consultancy, including,
but not by way of limitation, the question of whether a Termination of
Consultancy resulted from a discharge for Cause as defined in Optionee’s Option
Agreement.

 

4

 

Section 1.29      “Termination of Directorship” shall mean the
time when an Optionee who is an Independent Director ceases to be a Director
for any reason, including but not by way of limitation, a termination by
resignation, failure to be elected or appointed, death or retirement.  The Board, in the good faith exercise of its
sole discretion, shall determine the effect of all matters and questions
relating to Termination of Directorship.

 

Section 1.30      “Termination of Employment” shall mean the time
when the employee-employer relationship between an Optionee and the Company or
one of its subsidiaries is terminated for any reason, with or without Cause,
including, but not by way of limitation, a termination by resignation,
discharge, disability, death or retirement, but excluding a termination where
there is a simultaneous reemployment by the Company or one of its
subsidiaries.  The Committee or the Board
shall determine, in the first instance (with it being understood and agreed
that such Optionee may challenge such determination), the effect of all matters
and questions relating to Termination of Employment, including, but not by way
of limitation, all questions of whether a particular leave of absence
constitutes a Termination of Employment; provided,
however, that, with respect to Incentive Stock Options, a leave of
absence shall constitute a Termination of Employment if, and to the extent
that, such leave of absence interrupts employment for the purposes of Section 422(a)(2) of
the Code and the then applicable regulations and revenue rulings under Section 422(a)(2) of
the Code.

 

ARTICLE II.

SHARES SUBJECT TO PLAN

 

Section 2.1        Shares Subject to Plan. 
The shares of stock subject to Options shall be shares of Common Stock.
Subject to Section 7.1, the aggregate number of such shares which may be
issued upon exercise of Options or otherwise under the Plan shall not exceed the
207,000 shares reserved for issuance to certain management stockholders pursuant
to the Management Subscription Agreement (as that term is defined in the
Recitals to the Management Stockholders Agreement) plus 1,286,631 shares (equal to 10.5% of the total number of fully diluted
outstanding shares of Common Stock of the
Company) which shall be reserved for issuance upon exercise of Options granted
to Employees and Consultants performing the functions of an Employee.

 

Section 2.2        Unexercised Options. 
If any Option (or portion thereof) expires or is canceled without having
been fully exercised, the number of shares of Common Stock subject to such unexercised
Option (or the unexercised  portion
thereof) may again be optioned hereunder, subject to the limitations of Section 2.1.

 

ARTICLE III.

GRANTING OF OPTIONS

 

Section 3.1        Eligibility.  Subject to Section 3.2,
any (a) Employee of the Company or one of its Subsidiaries; (b) Consultant;
or (c) Independent Director shall be eligible to be granted Options.

 

5

 

Section 3.2        Qualification of Incentive Stock Options. 
Notwithstanding Section 3.1, no Incentive Stock Option shall be
granted to any person who is not an Employee of the Company or one of its
Subsidiaries.

 

Section 3.3        Granting of Options to Employees and Consultants

 

(a)       The Committee shall from time to time:

 

(i)            Select from among the Employees and Consultants of the
Company and any of its Subsidiaries (including those to whom Options have been
previously granted under the Plan) such of them as in its opinion should be
granted Options;

 

(ii)           Determine the number of shares of Common Stock to be
subject to such Options granted to such Employees and Consultants and, subject
to Section 3.2, determine whether such Options are to be Incentive Stock
Options or Non-Qualified Options; and

 

(iii)          Determine the terms and conditions of such Options,
consistent with the Plan.

 

(b)      Upon the selection of an Employee or Consultant of the
Company or any of its Subsidiaries to be granted an Option pursuant to Section 3.3(a),
the Committee shall instruct the corporate secretary or another authorized
Officer of the Company to issue such Option and may impose such conditions on
the grant of such Option as it deems appropriate.  Without limiting the generality of the
preceding sentence, the Committee may require as a condition to the grant of an
Option to such an Employee or Consultant that such Employee or Consultant
surrender for cancellation some or all of the unexercised Options which have
been previously granted to him or her. 
An Option the grant of which is conditioned upon such surrender may have
an Option price lower (or higher) than the Option price of the surrendered
Option, may cover the same (or a lesser or greater) number of shares as the
surrendered Option, may contain such other terms as the Committee deems
appropriate and shall be exercisable in accordance with its terms, without
regard to the number of shares, price, period of exercisability or any other
term or condition of the surrendered Option.

 

Section 3.4        Granting of Option to Independent Directors

 

(a)  
    The Board shall from time to time:

 

(i)            Select from among the Independent Directors (including
those to whom Options have previously been granted under the Plan) such of them
as in its opinion should be granted Options;

 

(ii)           Determine the number of shares of Common Stock to be
subject to such Options granted to such selected Independent Directors; and

 

(iii)          Determine the terms and conditions of such Options,
consistent with the Plan; provided, however,
that all Options granted to Independent Directors shall be Non-Qualified Options.

 

6

 

(b)  
   Upon the selection of an Independent
Director to be granted an Option pursuant to Section 3.4(a), the Board
shall instruct the corporate secretary or another authorized Officer of the
Company to issue such Option and may impose such conditions on the grant of
such Option as it deems appropriate. 
Without limiting the generality of the preceding sentence, the Board may
require as a condition to the grant of an Option to an Independent Director
that the Independent Director surrender for cancellation some or all of the
unexercised Options which have been previously granted to him or her.  An Option the grant of which is conditioned
upon such surrender may have an Option price lower (or higher) than the Option
price of the surrendered Option, may cover the same (or a lesser or greater)
number of shares as the surrendered Option, may contain such other terms as the
Board deems appropriate and shall be exercisable in accordance with its terms,
without regard to the number of shares, price, period of exercisability or any
other term or condition of the surrendered Option.

 

ARTICLE IV.

TERMS OF OPTIONS

 

Section 4.1        Option Agreement.  Each Option
shall be evidenced by a written Option Agreement, which shall be executed by
the Optionee and an authorized Officer of the Company and which shall contain
such terms and conditions as the Committee (or the Board, in the case of
Options granted to Independent Directors) shall determine, consistent with the
Plan.  Option Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be
necessary to qualify such Options as “incentive stock options” within the
meaning of Section 422 of the Code.

 

Section 4.2        Exercisability of Options

 

(a)  
    Each Option shall become exercisable
according to the terms of the applicable Option Agreement; provided, however, that by a resolution
adopted after an Option is granted the Committee (or the Board, in the case of
Options granted to Independent Directors) may, on such terms and conditions as
it may determine to be appropriate, accelerate the time at which such Option or
any portion thereof may be exercised.

 

(b)  
   Except as otherwise provided in the
applicable Option Agreement, no portion of an Option which is unexercisable at
Termination of Employment, Termination of Consultancy or Termination of
Directorship, as applicable, shall thereafter become exercisable.

 

(c)  
    To the extent that the aggregate
Fair Market Value of stock with respect to which “incentive stock options”
(within the meaning of Section 422 of the Code, but without regard to Section 422(d) of
the Code) are exercisable for the first time by an Optionee during any calendar
year (under the Plan and all other incentive stock option plans of the Company
or any Subsidiary thereof) exceeds $100,000, such options shall be treated and
taxable as Non-Qualified Options.  The rule set
forth in the preceding sentence shall be applied by taking options into account
in the order in which they were granted, and the stock issued upon exercise of
options shall designate whether such stock was acquired upon exercise of an
Incentive Stock Option.  For purposes of
these rules, the Fair Market Value of stock shall be determined as of the date
of grant of the Option granted with respect to such stock.

 

7

 

Section 4.3        Option Price  The price of
the shares subject to each Option shall be set by the Committee (or the Board,
in the case of Options granted to Independent Directors); provided, however, that in the case of an
Incentive Stock Option, the price per share shall be not less than 100% of the
Fair Market Value of such shares on the date such Option is granted; and provided, further, that in the case of an
individual then owning (within the meaning of Section 424(d) of the
Code) more than 10% of the total combined voting power of all classes of stock
of the Company, the price per share shall not be less than 110% of the Fair
Market Value of such shares on the date such Incentive Stock Option is granted.

 

Section 4.4        Expiration of Options. 
No Option may be exercised to any extent by anyone after the first to occur
of the following events:

 

(a)  
    The expiration of ten years from the
date the Option was granted; or

 

(b)  
   With respect to an Incentive Stock
Option in the case of an Optionee owning (within the meaning of Section 424(d) of
the Code), at the time the Incentive Stock Option was granted, more than 10% of
the total combined voting power of all classes of stock of the Company or any
Subsidiary, the expiration of five years from the date the Incentive Stock
Option was granted.

 

Section 4.5        At-Will Employment.  Nothing in
the Plan or in any Option Agreement hereunder shall confer upon any Optionee
any right to continue in the employ of, or as a Consultant for, the Company or
any Subsidiary, or shall interfere with or restrict in any way the rights of
the Company and any Subsidiary, which are hereby expressly reserved, to
discharge any Optionee at any time for any reason whatsoever, with or without
cause, except to the extent expressly provided otherwise in a written agreement
between the Optionee and the Company or any Subsidiary.

 

ARTICLE V.

EXERCISE OF OPTIONS

 

Section 5.1        Person Eligible to Exercise. 
During the lifetime of the Optionee, only he or she may exercise an
Option (or any portion thereof); provided,
however, that the Optionee’s Eligible Representative may exercise
such Optionee’s Option during the period of his or her disability (as defined
in Section 22(e)(3) of the Code) notwithstanding that an Option so
exercised may not qualify as an Incentive Stock Option, despite having been
granted as an Incentive Stock Option. 
After the death of the Optionee, any exercisable portion of an Option
may, prior to the time when such portion becomes unexercisable under the Plan
or the applicable Option Agreement, be exercised by his or her Eligible
Representative.

 

Section 5.2        Partial Exercise.  At any time
and from time to time prior to the time when the Option becomes unexercisable
under the Plan or the applicable Option Agreement, the exercisable portion of
an Option may be exercised in whole or in part; provided, however, that the Company shall not be required to
issue fractional shares and the Committee (or the Board, in the case of Options
granted to Independent Directors) may, by the terms of the Option, require any
partial exercise to exceed a specified minimum number of shares.

 

8

 

Section 5.3        Manner of Exercise.  An
exercisable Option, or any exercisable portion thereof, may be exercised solely
by delivery to the corporate secretary of all of the following prior to the
time when such Option or such portion becomes unexercisable under the Plan or
the applicable Option Agreement:

 

(a)  
    Notice in writing signed by the
Optionee or his or her Eligible Representative, stating that such Option or
portion is exercised, and specifically stating the number of shares with
respect to which the Option is being exercised;

 

(b)  
   A copy of the Management Stockholders
Agreement signed by the Optionee or Eligible Representative, as applicable;

 

(c)  
    Full payment for the shares with
respect to which such Option or portion is thereby exercised:

 

(i)            In cash or by personal, certified, or bank cashier
check; or

 

(ii)           With the consent of the Committee (or the Board, in
the case of Options to Independent Directors) which consent shall not be
unreasonably withheld, (A) shares of Common Stock which have been owned by
the Optionee for at least six months duly endorsed for transfer to the Company
with a Fair Market Value on the date of delivery equal to the aggregate
exercise price of the Option or exercised portion thereof; (B) except with
respect to Incentive Stock Options, shares of the Common Stock issuable to the
Optionee upon exercise of the Option, with a Fair Market Value on the date of
Option exercise equal to the aggregate Option price of the shares with respect
to which such Option or portion is thereby exercised; (C) following an
Initial Public Offering, delivery of a notice that the Optionee has placed a
market sell order with a broker with respect to shares of Common Stock then
issuable upon exercise of the Option, and that the broker has been directed to
pay a sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price; or (D) any combination of the
consideration listed in this subsection (c);

 

(d)  
   The payment to the Company (in cash
or by personal, certified or bank cashier check or by any other means of
payment approved by the Committee) of all amounts necessary to satisfy any and
all federal, state and local tax withholding requirements arising in connection
with the exercise of the Option;

 

(e)  
    Such customary representations and
documents as the Committee (or the Board, in the case of Options granted to
Independent Directors) deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act, Exchange Act and any other
federal or state securities laws or regulations.  The Committee (or the Board, in the case of
Options granted to Independent Directors) may, in the good faith exercise of its
sole discretion, also take whatever additional actions it determines to be
necessary or appropriate to effect such compliance including, without
limitation, placing legends on share certificates and issuing stop-transfer
orders to transfer agents and registrars; and

 

(f)  
    In the event that the Option or
portion thereof shall be exercised pursuant to Section 5.1 by any person
or persons other than the Optionee, appropriate proof of the right of such
person or persons to exercise the Option or portion thereof.

 

9

 

(g)  
   Conditions to Issuance of Stock
Certificates.  The shares of Common Stock issuable and
deliverable upon the exercise of an Option, or any portion thereof, may be
either previously authorized but unissued shares or issued shares which have
then been reacquired by the Company.  A
certificate of shares will be delivered to the Optionee at the Company’s
principal place of business within thirty days of receipt by the Company of the
written notice and payment, and satisfaction of the conditions of this Section 5.3
unless an earlier date is agreed upon.

 

Section 5.4        Rights as Stockholders. 
The holder of an Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares
purchasable upon the exercise of any part of an Option unless and until such
holder has satisfied the conditions specified in Section 5.3.

 

Section 5.5        Transfer Restrictions. 
Shares acquired upon exercise of an Option shall be subject to the terms
and conditions of the Management Stockholders Agreement.  In addition, the Committee (or the Board, in
the case of Options granted to Independent Directors), in the good faith
exercise of its sole discretion, may impose further restrictions on the
transferability of the shares purchasable upon the exercise of an Option as it determines
to be necessary or appropriate.  Any such
restriction shall be set forth in the respective Option Agreement and may be
referred to on the certificates evidencing such shares.  The Committee may require an Employee to give
the Company prompt notice of any disposition of shares of stock, acquired by
exercise of an Incentive Stock Option, within two years from the date of
granting such Option or one year after the transfer of such shares to such
Employee.  The Committee may direct that
the certificates evidencing shares acquired by exercise of an Incentive Stock
Option refer to such requirement.

 

ARTICLE VI.

ADMINISTRATION

 

Section 6.1        Committee.  Prior to an
Initial Public Offering, unless and until the Board delegates administration of
the Plan to the Compensation Committee of the Board, the Plan shall be
administered by the full Board, and for such purposes the term “Committee” as
used in this Plan shall be deemed to refer to the Board.  Following an Initial Public Offering, if any,
the full Board shall administer the Plan unless and until there is appointed a
Compensation Committee (or another committee or a subcommittee of the Board
assuming the functions of the Committee under the Plan) that shall consist
solely of two or more Independent Directors appointed by and holding office at
the pleasure of the Board, each of whom is both a “non-employee director” as
defined by Rule 16b-3 and an “outside director” for purposes of Section 162(m)
of the Code.  Appointment of Committee
members shall be effective upon acceptance of appointment.  Committee members may resign at any time by
delivering written notice to the Board. 
Vacancies in the Committee may be filled by the Board in its sole
discretion.  Prior to an Initial Public
Offering, any action required or permitted to be taken by the Committee
hereunder or under any Option Agreement may be taken by the Board.

 

Section 6.2        Delegation of Authority. 
The Committee may, but need not, from time to time delegate some or all
of its authority to grant Options under the Plan to a committee or subcommittee
consisting of one or more members of the Committee or of one or more Officers

 

10

 

of the Company; provided,
however, that the Committee may not delegate its authority to grant
Options to individuals (a) who are subject on the date of the grant to the
reporting rules under Section 16(a) of the Exchange Act, (b) whose
compensation the Committee determines is, or may become, subject to the
deduction limitations set forth in Section 162(m) of the Code or (c) who
are Officers of the Company who are delegated authority by the Committee
hereunder. Any delegation hereunder shall be subject to the restrictions and
limits that the Committee specifies at the time of such delegation, and the
Committee may at any time rescind the authority so delegated or appoint a new
delegatee. At all times, the delegatee appointed under this Section 6.2
shall serve in such capacity at the pleasure of the Committee.

 

Section 6.3        Duties and Powers of the Committee. 
It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions.  The Committee shall have the power to
interpret the Plan and the Options and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules.  Notwithstanding the foregoing, the full
Board, acting by a majority of its members in office, shall conduct the general
administration of the Plan with respect to Options granted to Independent
Directors.  Any such interpretations and rules in
regard to Incentive Stock Options shall be consistent with the terms and
conditions applicable to “incentive stock options” within the meaning of Section 422
of the Code.  All determinations and
decisions made by the Committee in the good faith exercise of its sole
discretion under any provision of the Plan or of any Option granted thereunder
shall be final, conclusive and binding on all persons.  In any instance under this Plan is which the
interpretation or construction of the Management Stockholders Agreement is
requried, such interpretation or construction shall be performed by the Board
in the good faith exercise of its discretion.

 

Section 6.4        Compensation, Professional Assistance, Good Faith
Actions.  The members of the Committee shall receive
such compensation, if any, for their services hereunder as may be determined by
the Board.  All expenses and liabilities
incurred by the members of the Committee or the Board in connection with the
administration of the Plan shall be borne by the Company.  The Committee or the Board may employ attorneys,
consultants, accountants, appraisers, brokers or other persons.  The Committee, the Company and its Officers
and Directors shall be entitled to rely upon the advice, opinions or valuations
of any such persons.  All actions taken
and all interpretations and determinations made by the Committee and the Board
in good faith shall be final and binding upon all Optionees, the Company and
all other interested persons.  No member
of the Board shall be personally liable for any action, determination or interpretation
made in good faith with respect to the Plan or the Options, and all members of
the Board shall be fully protected by the Company in respect to any such
action, determination or interpretation.

 

ARTICLE VII.

OTHER PROVISIONS

 

Section 7.1        Changes in Common Stock; Disposition of Assets and
Corporate Events

 

(a)  
    Subject to Section 7.1(d), in
the event that the Committee (or the Board, in the case of Options granted to
Independent Directors) determines that any dividend or other distribution (whether
in the form of cash, Common Stock, other securities, or other property),

 

11

 

recapitalization, reclassification, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer,
exchange or other disposition of all or substantially all of the assets of the
Company, or exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other similar corporate transaction or event, in
the Committee’s sole discretion (or in the case of Options granted to
Independent Directors, the Board’s sole discretion), affects the Common Stock
such that an adjustment is determined by the Committee (or the Board, in the
case of Options granted to Independent Directors) to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan or with respect to an Option, then the
Committee (or the Board, in the case of Options granted to Independent
Directors) shall, in such manner as it may in the good faith exercise of its
sole discretion determine to be equitable, adjust any or all of:

 

(i)            The number and kind of shares of Common Stock (or
other securities or property) with respect to which Options may be granted
under the Plan (including, but not limited to, adjustments of the limitations
in Section 2.1 on the maximum number and kind of shares which may be
issued);

 

(ii)           The number and kind of shares of Common Stock (or
other securities or property) subject to outstanding Options;

 

(iii)          The exercise price with respect to any outstanding Option;
and

 

(iv)          The financial or other “targets” specified in each Option
Agreement for determining the exercisability of Options.

 

(b)  
   Subject to Section 7.1(d) and
the terms of outstanding Option Agreements and the applicable terms, if any, of
(i) any written employment agreement between an Optionee and the Company
or any of its Subsidiaries and (ii) the Management Stockholders Agreement,
upon the occurrence of a Corporate Event, the Committee (or the Board, in the
case of options granted to Independent Directors), in the good faith exercise
of its sole discretion, is hereby authorized to take any one or more of the
following actions whenever the Committee (or the Board, in the case of Options
granted to Independent Directors) determines that such action is necessary or appropriate
to prevent dilution or unintended enlargement of the benefits or potential
benefits intended to be made available under the Plan or with respect to any
Option under this Plan, to facilitate such Corporate Event or to give effect to
such changes in laws, regulations or principles, provided that, in the
good faith exercise of its discretion, the Committee or the Board, as
applicable, shall apply the authority granted below in such fashion as cannot
reasonably be construed to deprive any Optionee of any vested benefit
hereunder, nor to deprive any Optionee of the reasonable opportunity to earn
any unvested benefit provided hereunder without substituting therefor a benefit
or benefit opportunity, as applicable, that is reasonably expected to provide
comparable benefits and benefit opportunities to the Optionees affected:

 

(i)            The Committee (or the Board, in the case of Options
granted to Independent Directors) may provide, either by the terms of the
applicable Option Agreement or

 

12

 

by action taken prior to the occurrence of
such Corporate Event and either automatically or upon the Optionee’s request,
for either the purchase of any such Option for an amount of cash, securities,
or other property equal to the amount that could have been attained upon the
exercise of the vested portion of such Option (and such additional portion of
the Option as the Board or Committee may determine) immediately prior to the
occurrence of such transaction or event, or the replacement of such vested (and
other) portion of such Option with other rights or property selected by the
Committee (or the Board, in the case of Options granted to Independent
Directors) in the good faith exercise of its sole discretion;

 

(ii)           The Committee (or the Board, in the case of Options
granted to Independent Directors) may provide, either by the terms of the
applicable Option Agreement or by action taken prior to the occurrence of such
Corporate Event, that the Option (or any portion thereof) cannot be exercised
after such event;

 

(iii)          The Committee (or the Board, in the case of Options
granted to Independent Directors) may provide, either by the terms of the
applicable Option Agreement or by action taken prior to the occurrence of such
Corporate Event, that for a specified period of time prior to such Corporate
Event, such Option shall be exercisable as to all shares covered thereby or a
specified portion of such shares, notwithstanding anything to the contrary in
this Plan or the applicable Option Agreement;

 

(iv)          The Committee (or the Board, in the case of Options
granted to Independent Directors) may provide, either by the terms of the
applicable Option Agreement or by action taken prior to the occurrence of such
Corporate Event, that upon such event, such Option (or any portion thereof) be
assumed by the successor or survivor corporation, or a parent or subsidiary
thereof (including without limitation any common parent of the Company and any
other company or companies), or shall be substituted for by similar options,
rights or awards covering the stock of the successor or survivor corporation,
or a parent or subsidiary thereof (including without limitation any common
parent of the Company and any other company or companies), with appropriate
adjustments as to the number and kind of shares and prices; and

 

(v)           The Committee (or the Board, in the case of Options
granted to Independent Directors) may make adjustments in the number and type
of shares of Common Stock (or other securities or property) subject to
outstanding Options (or any portion thereof) and/or in the terms and conditions
of (including the exercise price), and the criteria included in, outstanding
Options and Options which may be granted in the future.

 

(c)  
    Subject to Section 7.1(d), the Committee
(or the Board, in the case of Options granted to Independent Directors) may, in
its sole discretion, include such further provisions and limitations in any Option
Agreement as it may deem equitable and in the best interests of the Company and
its Affiliates.

 

(d)  
   With respect to Incentive Stock
Options, no adjustment or action described in this Section 7.1 or in any
other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause the Plan to violate Section 422(b)(1) of
the Code or any successor provisions thereto, unless the Committee determines
that the Plan and/or the Options are not to comply with Section 422(b)(1) of
the Code. The number of shares of

 

13

 

Common Stock subject to any Option shall
always be rounded up to the next higher whole number.

 

Section 7.2        Options Not Transferable. 
No Option or interest or right therein or part thereof shall be liable
for the debts, contracts or engagements of the Optionee or his or her
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law, by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided,
however, that nothing in this Section 7.2 shall prevent
transfers by will or by the applicable laws of descent and distribution or the
exercise of such Option by the Optionee’s personal representative upon the
Optionee’s disability.

 

Section 7.3        Amendment, Suspension or Termination of the Plan. 
The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Board or the
Committee.  However, without stockholder
approval within 12 months before or after such action no action of the Board or
the Committee may, except as provided in Section 7.1, increase any limit
imposed in Section 2.1 on the maximum number of shares which may be issued
on exercise of Options, reduce the minimum Option price requirements of Section 4.3(a),
or extend the limit imposed in this Section 7.3 on the period during which
options may be granted.  Except as
provided by Section 7.1, neither the amendment, suspension nor termination
of the Plan or any outstanding Option shall, without the consent of the holder
of the Option, adversely affect the rights of an Optionee with respect to an
Option previously granted.  Notwithstanding
the foregoing, the Committee may amend the Plan or any outstanding Option
without the consent of the Optionee to the extent it deems appropriate;
provided however, that in the case of amendments adverse to the Optionee, the
Committee must obtain the Optionee’s consent to any such amendment, provided
however, that such consent shall not be required if, as determined by the
Committee in the good faith exercise of its sole discretion, such amendment is
required to either: (a) comply with applicable laws; (b) prevent the
Optionee from being subject to any excise tax or penalty under Section 409A.  No Option may be granted during any period of
suspension nor after termination of the Plan, and in no event may any Option be
granted under this Plan after the expiration of ten years from the date the
Plan is adopted by the Board.

 

Section 7.4        Effect of Plan Upon Other Option and Compensation
Plans.  The adoption of this Plan shall not affect
any other compensation or incentive plans in effect for the Company or any
Affiliate.  Nothing in this Plan shall be
construed to limit the right of the Company or any Affiliate (a) to
establish any other forms of incentives or compensation for directors or
employees of the Company (or any Affiliate); or (b) to grant or assume
options otherwise than under this Plan in connection with any proper corporate
purpose, including, but not by way of limitation, the grant or assumption of
options in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.

 

Section 7.5        Approval of Plan by Stockholders. 
This Plan will be submitted for the approval of the Company’s stockholders
within 12 months after the date of the Board’s initial adoption of this
Plan.  No Option may be exercised to any
extent by anyone unless and until the

 

14

 

Plan is so approved by the stockholders, and
if such approval has not been obtained by the end of said 12-month period, the
Plan and all Options theretofore granted shall thereupon be canceled and become
null and void.

 

Section 7.6        Titles.  Titles are
provided herein for convenience only and are not to serve as a basis for
interpretation or construction of the Plan.

 

Section 7.7        Conformity to Securities Laws. 
The Plan is intended to conform to the extent necessary with all
provisions of (a) the Securities Act and the Exchange Act and any and all
regulations and rules promulgated by the Securities and Exchange
Commission thereunder; and (b) any applicable state and local securities
laws and any and all regulations and rules promulgated by any applicable
state or local regulatory authority thereunder, in each case to the extent the
Company or any Optionee is subject to the provisions thereof.  Notwithstanding anything herein to the
contrary, the Plan shall be administered, and Options shall be granted and may
be exercised, only in such a manner as to conform to such laws, rules and
regulations.  To the extent permitted by
applicable law, the Plan and Options granted hereunder shall be deemed amended
to the extent necessary to conform to such laws, rules and regulations.

 

Section 7.8        Governing Law.  To the extent
not preempted by federal law, the Plan shall be construed in accordance with
and governed by the internal laws of the State of Delaware,
without regard to the principles of conflicts of law thereof, or principles of
conflicts of law of any other jurisdiction which could cause the application of
the laws of any jurisdiction other than the State of Delaware.

 

Section 7.9        Severability.  In the event
any portion of the Plan or any action taken pursuant thereto shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provisions had not been included, and the
illegal or invalid action shall be null and void.

 

15

 

*  * 
*  *  *

 

I hereby
certify that the foregoing Plan was duly adopted by the Board of Directors of Safety
Products Holdings, Inc. as of July 18, 2005.

 

Executed as of
                     ,
2005.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Officer

  

 

16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00095-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00095-of-00352.parquet"}]]