Document:

Exhibit 10.2

Incentive
Stock Option Agreement

under the WII Components, Inc.

2003 Stock Option and Grant Plan

	
  Name of Optionee:

  	
   

  	
  John Fitzpatrick (the “Optionee”)

  
	
  No. of Option Shares:

  	
   

  	
  160,000 Shares of
  Common Stock

  
	
  Grant Date:

  	
   

  	
  May 31, 2006 (the
  “Grant Date”)

  
	
  Expiration Date:

  	
   

  	
  May 31, 2016 (the
  “Expiration Date”)

  
	
  Option Exercise Price/Share:

  	
   

  	
  $5.54 (subject to
  adjustment as provided in Section 14, the “Option Exercise Price”)

  

 

Pursuant to the WII Components, Inc. 2003 Stock Option
and Grant Plan (the “Plan”), WII Components, Inc., a Delaware corporation
(together with all successors thereto, the “Company”), hereby grants to the
Optionee, who is an employee of the Company or any of its Subsidiaries, an
option (the “Stock Option”) to purchase on or prior to the Expiration Date, or
such earlier date as is specified herein, all or any part of the number of
shares of Voting Common Stock, par value $0.01 per share (“Common Stock”), of
the Company indicated above (the “Option Shares,” and such shares once issued
shall be referred to as the “Issued Shares”), at the Option Exercise Price per
share, subject to the terms and conditions set forth in this Incentive Stock
Option Agreement (this “Agreement”) and in the Plan.  This Stock Option is intended to qualify as
an “incentive stock option” as defined in Section 422(b) of the Internal
Revenue Code of 1986, as amended from time to time (the “Code”).  To the extent that any portion of the Stock
Option does not so qualify, it shall be deemed a non-qualified stock
option.

1.             Definitions.  For the purposes of this Agreement, the
following terms shall have the following respective meanings.  All capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Plan.

An “Affiliate” of
any Person means a Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with the
first mentioned Person.  A Person shall
be deemed to control another Person if such first Person possesses directly or
indirectly the power to direct, or cause the direction of, the management and
policies of the second Person, whether through the ownership of voting
securities, by contract or otherwise.

“Bankruptcy” shall
mean (i) the filing of a voluntary petition under any bankruptcy or insolvency
law, or a petition for the appointment of a receiver or the making of an
assignment for the benefit of creditors, with respect to the Optionee or any
Permitted Transferee, or (ii) the Optionee or any Permitted Transferee being
subjected involuntarily to such a petition or assignment or to an attachment or
other legal or equitable interest with respect to the Optionee’s or such
Permitted Transferee’s assets, which involuntary petition or assignment or
attachment is not discharged within 60 days after its date, and (iii) the
Optionee or any Permitted 

 

Transferee being subject to a transfer of the Stock
Option or the Issued Shares by operation of law (including by divorce, even if
not insolvent), except by reason of death.

“Cause” shall mean
a vote of the Board resolving that the Optionee should be dismissed as a result
of (i) the commission of any act by the Optionee constituting financial
dishonesty against the Company (which act would be chargeable as a crime under
applicable law); (ii) the Optionee’s engaging in any other act of dishonesty,
fraud, intentional misrepresentation, moral turpitude, illegality or harassment
which, as determined in good faith by the Board, would:  (A) materially adversely affect the business
or the reputation of the Company with its current or prospective customers,
suppliers, lenders and/or other third parties with whom it does or might do
business; or (B) expose the Company to a risk of civil or criminal legal
damages, liabilities or penalties; (iii) the repeated failure by the Optionee
to follow the directives of the Company’s chief executive officer or Board or
(iv) any material misconduct, violation of the Company’s policies, or willful
and deliberate non-performance of duty by the Optionee in connection with the
business affairs of the Company; provided, however, the Company
acknowledges and hereby agrees that, in the event Optionee is appointed to the
position of Chairman, Optionee’s responsibilities and obligations will be
reduced and that such reduction shall not in any way be deemed to constitute “Cause”
under this Agreement.

“Good Reason”
shall mean the occurrence of any of the following events: (i) a substantial
adverse change in the nature or scope of the Optionee’s responsibilities,
authorities, powers, functions or duties; (ii) a reduction in the Optionee’s
annual base salary except for across-the-board salary reductions similarly
affecting all or substantially all management employees; or (iii) the
relocation of the offices at which the Optionee is principally employed to a
location more than 50 miles from such offices; provided, however,
that the Board may appoint Optionee to the position of Chairman without
reduction in Optionee’s annual cash compensation and such appointment shall not
be deemed to constitute Good Reason.

“Permitted Transferees”
shall mean any of the following to whom the Optionee may transfer Issued Shares
hereunder (as set forth in Section 8): 
the Optionee’s spouse, children (natural or adopted), stepchildren or a
trust for their sole benefit of which the Optionee is the settlor; provided,
however, that any such trust does not require or permit distribution of
any Issued Shares during the term of this Agreement unless subject to its
terms.  Upon the death of the Optionee
(or a Permitted Transferee to whom shares have been transferred hereunder), the
term Permitted Transferees shall also include such deceased Optionee’s (or such
deceased Permitted Transferee’s) estate, executions, administrations, personal
representations, heirs, legatees and distributees, as the case may be.

“Person” shall
mean any individual, corporation, partnership (limited or general), limited
liability company, limited liability partnership, association, trust, joint
venture, unincorporated organization or any similar entity.

“Sale Event” shall
mean, regardless of form thereof, consummation of (i) the dissolution or
liquidation of the Company, (ii) the sale of all or substantially all of the
assets of the Company on a consolidated basis to an unrelated person or entity,
(iii) a merger, reorganization or consolidation in which the outstanding shares
of Stock are converted into or exchanged for securities of the successor entity
and the holders of the Company’s outstanding 

 2
 

 

voting power immediately prior to such transaction do
not own a majority of the outstanding voting power of the successor entity
immediately upon completion of such transaction, (iv) the sale of all or a
majority of the outstanding capital stock of the Company to an unrelated person
or entity or (v) any other transaction in which the owners of the Company’s
outstanding voting power immediately prior to such transaction do not own at
least a majority of the outstanding voting power of the successor entity
immediately upon completion of the transaction; provided, however,
that no such event shall constitute a Sale Event unless, if requested by the
Board, Optionee agrees in writing to continue his Service Relationship with the
Company or its successor in substantially the same capacity as Optionee served
immediately prior to the Sale Event for a term of two (2) years.

“Service Relationship”  shall mean any relationship as an employee or
part-time employee with the Company or one of its Subsidiaries (or their
successors) such that, for example, a Service Relationship shall be deemed to
continue without interruption in the event that the Optionee’s status changes
from employee to part-time employee.

“Subsidiary” shall
mean any corporation (other than the Company) in any unbroken chain of
corporations or other entities beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
or other interests possessing 50 percent or more of the total combined voting
power of all classes of stock or in one of the other corporations in the chain.

2.             Vesting, Exercisability and
Termination.

(a)           No portion of this
Stock Option may be exercised until such portion shall have vested.

(b)           This Stock Option
shall be deemed vested and exercisable in full upon the earliest to occur of
the following:

(i)            A Sale Event; or

(ii)           June 30, 2009; provided, however, in
the event the Optionee’s Service Relationship terminates prior to June 30,
2009, and such termination is either (a) by the Company without Cause, or (b)
by the Optionee for Good Reason, a portion of this Stock Option may vest
according to the provisions set forth in Section 2(c) of this Agreement.

No portion of this Stock Option shall vest or
become exercisable unless and until any of the events described in
subparagraphs (i) and (ii) above occur.

(c)           Termination.  Except as may otherwise be provided by the
Committee, if the Optionee’s Service Relationship is terminated, the period
within which to exercise this Stock Option may be subject to earlier
termination as set forth below:

(i)            Termination By Company Without
Cause.  In the event Optionee’s
Service Relationship is terminated by the Company without Cause, or by the
Optionee for 

 3
 

 

 

Good Reason prior to June 30, 2009, and a
Sale Event occurs thereafter, this Stock Option will vest as indicated below:

	
  Determination Date:

  	
   

  	
   

  	
   

  	
  % of Option Vesting:

  	
   

  
	
  0-365 days after
  termination date

  	
   

  	
  100

  	
  %

  
	
  366-546 days after termination date

  	
   

  	
  50

  	
  %

  
	
  547-730 days after termination date

  	
   

  	
  25

  	
  %

  
	
  thereafter

  	
   

  	
  0

  	
  %

  

 

The date that a letter of
intent regarding a bona fide acquisition of the Company (an “LOI”) has been
approved by the Board and executed by the Company and the relevant third party
shall be the Determination Date used in the table above.  By way of illustration only, if Optionee’s
Service Relationship is terminated by the Company without Cause on February 9,
2007 and the Company executes an LOI on February 14, 2008, then, upon
consummation of the Sale Event described in the LOI, 50% of the Option shall vest
and be exercisable.

(ii)           Termination By Optionee Without
Good Reason or for Cause.  In the
event Optionee terminates the Service Relationship without Good Reason, or the
Company terminates Optionee’s Service Relationship for Cause prior to June 30,
2009, no portion of this Stock Option shall vest.

(iii)          Termination Due to Death or
Disability.  If the Optionee’s
Service Relationship terminates by reason of such Optionee’s death or
disability (as defined in Section 422(c) of the Code), this Stock Option
may be exercised, to the extent exercisable on the date of such termination, by
the Optionee, the Optionee’s legal representative or legatee for a period of 12
months from the date of death or disability or until the Expiration Date, if
earlier, subject in any event to Section 6.

(iv)          Other Termination.  If the Optionee’s Service Relationship
terminates for any reason other than death or disability, and unless otherwise
determined by the Committee, this Stock Option may be exercised, to the extent
exercisable on the date of termination, for a period of 90 days from the date
of termination or until the Expiration Date, if earlier; provided  however,
if the Optionee’s Service Relationship is terminated for Cause, this Stock
Option shall terminate immediately upon the date of such termination.

For purposes hereof, the Committee’s determination of
the reason for termination of the Optionee’s Service Relationship shall be
conclusive and binding on the Optionee and his or her representatives or
legatees or Permitted Transferees.  Any
portion of this Stock Option that is not 

 4
 

 

exercisable on the date of termination of the Service
Relationship shall terminate immediately and be null and void.

It is understood and intended that this Stock Option
is intended to qualify as an “incentive stock option” as defined in
Section 422 of the Code to the extent permitted under applicable law.  Accordingly, the Optionee understands that in
order to obtain the benefits of an incentive stock option under
Section 422 of the Code, no sale or other disposition may be made of
Issued Shares for which incentive stock option treatment is desired within the
one-year period beginning on the day after the day of the transfer of
such Issued Shares to him or her, nor within the two-year period
beginning on the day after the grant of this Stock Option and further that this
Stock Option must be exercised within three (3) months after termination of
employment as an employee (or 12 months in the case of death or disability) to
qualify as an incentive stock option.  If
the Optionee disposes (whether by sale, gift, transfer or otherwise) of any
such Issued Shares within either of these periods, he or she will notify the
Company within 30 days after such disposition. 
The Optionee also agrees to provide the Company with any information
concerning any such dispositions required by the Company for tax purposes.  Further, to the extent Option Shares and any
other incentive stock options of the Optionee having an aggregate Fair Market
Value in excess of $100,000 (determined as of the Grant Date) vest in any year,
such options will not qualify as incentive stock options.

3.             Exercise of Stock Option.

(a)           The Optionee may
exercise this Stock Option only in the following manner:  Prior to the Expiration Date (subject to
Section 6), the Optionee may deliver a Stock Option exercise notice (an “Exercise
Notice”) in the form of Appendix A hereto indicating his or her
election to purchase some or all of the Option Shares with respect to which
this Stock Option is exercisable at the time of such notice.  Such notice shall specify the number of
Option Shares to be purchased.  Payment
of the purchase price may be made by one or more of the methods described
below.  Payment instruments will be
received subject to collection.

(i)            in cash, by certified or bank check,
or other instrument acceptable to the Committee in U.S. funds payable to the
order of the Company in an amount equal to the purchase price of such Option
Shares; or

(ii)           if the Company’s Initial Public
Offering has occurred, then (A) through the delivery (or attestation to
ownership) of shares of Common Stock that have been purchased by the Optionee
on the open market or that have been held by the Optionee for at least six
months and are not subject to restrictions under any plan of the Company and in
any event with an aggregate Fair Market Value (as of the date of such exercise)
equal to the option purchase price, (B) by the Optionee delivering to the
Company a properly executed Exercise Notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company to pay the option purchase price,
provided that in the event the Optionee chooses to pay the option purchase
price as so provided, the Optionee and the broker shall comply with such
procedures and enter into such agreements of indemnity and other agreements as
the Committee shall prescribe as a condition of such payment procedure, or (C) a
combination of (i), (ii)(A) and (ii)(B) above.

 5
 

 

(b)           Certificates
for the Option Shares so purchased will be issued and delivered to the
Optionee upon compliance to the satisfaction of the Committee with all
requirements under applicable laws or regulations in connection with such
issuance.  Until the Optionee shall have
complied with the requirements hereof and of the Plan, the Company shall be
under no obligation to issue the Option Shares subject to this Stock Option,
and the determination of the Committee as to such compliance shall be final and
binding on the Optionee.  The Optionee
shall not be deemed to be the holder of, or to have any of the rights of a
holder with respect to, any shares of Common Stock subject to this Stock Option
unless and until this Stock Option shall have been exercised pursuant to the
terms hereof, the Company shall have issued and delivered the Issued Shares to
the Optionee, and the Optionee’s name shall have been entered as a stockholder
of record on the books of the Company.  Thereupon,
the Optionee shall have full dividend and other ownership rights with respect
to such Issued Shares, subject to the terms of this Agreement.

(c)           Notwithstanding any
other provision hereof or of the Plan, no portion of this Stock Option shall be
exercisable after the Expiration Date.

4.             Incorporation of Plan.  Notwithstanding anything herein to the
contrary, this Stock Option shall be subject to and governed by all the terms
and conditions of the Plan.

5.             Transferability of Stock Option.  This Agreement
is personal to the Optionee and is not transferable by the Optionee in any
manner other than by will or by the laws of descent and distribution.  The Stock Option may be exercised during the
Optionee’s lifetime only by the Optionee (or by the Optionee’s guardian or
personal representative in the event of the Optionee’s incapacity).  The Optionee may elect to designate a
beneficiary by providing written notice of the name of such beneficiary to the
Company, and may revoke or change such designation at any time by filing
written notice of revocation or change with the Company; such beneficiary may
exercise the Optionee’s Stock Option in the event of the Optionee’s death to
the extent provided herein.  If the
Optionee does not designate a beneficiary, or if the designated beneficiary
predeceases the Optionee, the legal representative of the Optionee may exercise
this Stock Option to the extent provided herein in the event of the Optionee’s
death.

6.             [Reserved]

7.             Withholding Taxes. 
The Optionee shall, not later than the date as of which the exercise of
this Stock Option becomes a taxable event for federal income tax purposes, pay
to the Company or make arrangements satisfactory to the Committee for payment
of any federal, state and local taxes required by law to be withheld on account
of such taxable event.  Subject to
approval by the Committee, the Optionee may elect to have the minimum tax
withholding obligation satisfied, in whole or in part, by authorizing the Company
to withhold from shares of Common Stock to be issued or transferring to the
Company, a number of shares of Common Stock with an aggregate Fair Market Value
that would satisfy the minimum withholding amount due.  The Optionee acknowledges and agrees that the
Company or any Subsidiary of the Company has the right to deduct from payments
of any kind otherwise due to the Optionee, or from the Option Shares to be
issued in respect of an exercise of this Stock Option, any federal, state or
local taxes of any kind required by law to be withheld with respect to the
issuance of Option Shares to the Optionee.

 6
 

 

8.             Restrictions on Transfer of Issued Shares.  None of the Issued Shares acquired upon
exercise of the Stock Option shall be sold, assigned, transferred, pledged,
hypothecated, given away or in any other manner disposed of or encumbered,
whether voluntarily or by operation of law, unless such transfer is in
compliance with all applicable securities laws (including, without limitation,
the Securities Act of 1933, as amended, and the rules and regulations
thereunder (the “Act”)), and such disposition is in accordance with the terms
and conditions of Sections 8 and 9 and such disposition does not cause the
Company to become subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended.  In
connection with any transfer of Issued Shares, the Company may require the
transferor to provide at the Optionee’s own expense an opinion of counsel to
the transferor, satisfactory to the Company, that such transfer is in
compliance with all foreign, federal and state securities laws (including,
without limitation, the Act).  Any
attempted disposition of Issued Shares not in accordance with the terms and
conditions of Sections 8 and 9 shall be null and void, and the Company shall
not reflect on its records any change in record ownership of any Issued Shares
as a result of any such disposition, shall otherwise refuse to recognize any
such disposition and shall not in any way give effect to any such disposition
of any Issued Shares.  Subject to the
foregoing general provisions, Issued Shares may be transferred pursuant to the
following specific terms and conditions:

(a)           Transfers to
Permitted Transferees.  The Optionee
may sell, assign, transfer or give away any or all of the Issued Shares to Permitted
Transferees; provided, however, that such Permitted Transferee(s)
shall, as a condition to any such transfer, agree to be subject to the
provisions of this Agreement to the same extent as the Optionee (including,
without limitation, the provisions of Sections 8, 9, 11 and 12) and shall have
delivered a written acknowledgment to that effect to the Company.

(b)           Transfers Upon
Death.  Upon the death of the
Optionee, any Issued Shares then held by the Optionee at the time of such death
and any Issued Shares acquired thereafter by the Optionee’s legal
representative pursuant to this Agreement shall be subject to the provisions of
Sections 8, 9, 11 and 12, if applicable, and the Optionee’s estate, executors,
administrators, personal representatives, heirs, legatees and distributees
shall be obligated to convey such Issued Shares to the Company or its assigns
under the terms contemplated hereby.

(c)           Company’s Right
of First Refusal.  In the event that
the Optionee (or any Permitted Transferee holding Issued Shares subject to this
Section 8(c)) desires to sell or otherwise transfer all or any part of the
Issued Shares, the Optionee (or Permitted Transferee) first shall give written
notice to the Company of the Optionee’s (or Permitted Transferee’s) intention to
make such transfer.  Such notice shall
state the number of Issued Shares which the Optionee (or Permitted Transferee)
proposes to sell (the “Offered Shares”), the price and the terms at which the
proposed sale is to be made and the name and address of the proposed
transferee.  At any time within 30 days
after the receipt of such notice by the Company, the Company or its assigns may
elect to purchase all or any portion of the Offered Shares at the price and on
the terms offered by the proposed transferee and specified in the notice.  The Company or its assigns shall exercise
this right by mailing or delivering written notice to the Optionee (or
Permitted Transferee) within the foregoing 30-day period.  If the Company or its assigns elect to
exercise its purchase rights under this Section 8(c), the closing for such
purchase shall, in any event, take place within 45 days after the receipt by
the Company of the initial notice from the 

 7
 

 

Optionee (or Permitted Transferee).  In the event that the Company or its assigns
do not elect to exercise such purchase right, or in the event that the Company
or its assigns do not pay the full purchase price within such 45-day
period, the Optionee (or Permitted Transferee) may, within 60 days thereafter,
sell the Offered Shares to the proposed transferee and at the same price and on
the same terms as specified in the Optionee’s (or Permitted Transferee’s)
notice.  Any Shares purchased by such
proposed transferee shall no longer be subject to the terms of this
Agreement.  Any Shares not sold to the
proposed transferee shall remain subject to this Agreement.  Notwithstanding the foregoing, the
restrictions under this Section 8(c) shall terminate in accordance with
Section 13(a).

9.             Company’s Right of Repurchase.

(a)           Right of Repurchase.  The Company shall have the right, but not the
obligation (the “Repurchase Right”) upon the occurrence of any of the events
specified in Section 9(b) below (the “Repurchase Event”) to repurchase
from the Optionee (or any Permitted Transferee) some or all (as determined by
the Company) of the Issued Shares held or subsequently acquired upon exercise
of this Stock Option in accordance with the terms hereof by the Optionee (or
any Permitted Transferee) at the price specified below (the “Repurchase Price”).  The Repurchase Right may be exercised by the
Company within the later of (i) six months following the date of such event or
(ii) seven months after the exercise of this Stock Option (the “Repurchase
Period”).  The Repurchase Right shall be
exercised by the Company by giving the holder written notice on or before the
last day of the Repurchase Period of its intention to exercise the Repurchase
Right, and, together with such notice, tendering to the holder an amount equal
to the Repurchase Price of the shares, determined as provided in
Section 9(c).  The Company may
assign the Repurchase Right to one or more Persons.  Upon such notification, the Optionee and any
Permitted Transferees shall promptly surrender to the Company any certificates
representing the Issued Shares being purchased, together with a duly executed
stock power for the transfer of such Issued Shares to the Company or the
Company’s assignee or assignees.  Upon
the Company’s or its assignee’s receipt of the certificates from the Optionee
or any Permitted Transferees, the Company or its assignee or assignees shall
deliver to him, her or them a check for the Repurchase Price of the Issued
Shares being purchased; provided, however, that the Company may
pay the Repurchase Price for such shares by offsetting and canceling any
indebtedness then owed by the Optionee to the Company.  At such time, the Optionee and/or any holder
of the Issued Shares shall deliver to the Company the certificate or
certificates representing the Issued Shares so repurchased, duly endorsed for
transfer, free and clear of any liens or encumbrances.  The Repurchase Right shall terminate in
accordance with Section 13(a).

(b)           Company’s Right
to Exercise Repurchase Right.  The
Company shall have the Repurchase Right in the event that any of the following
events shall occur:

(i)            The termination of the Optionee’s
Service Relationship with the Company and its Subsidiaries for any reason
whatsoever, regardless of the circumstances thereof, and including without
limitation upon death, disability, retirement, discharge or resignation for any
reason, whether voluntarily or involuntarily; or

(ii)           The Optionee’s or Permitted
Transferee’s Bankruptcy.

 8
 

 

(c)           Determination of
Repurchase Price.  The Repurchase
Price shall be the fair market value of the Issued Shares, provided that if the
Optionee’s Service Relationship is terminated for Cause, the Repurchase Right
shall be the lesser of fair market value or the purchase price paid by Optionee
for the shares being repurchased.  For
purposes of this Section 9, the fair market value of the Issued Shares shall be
determined by the Board as of the date of the Termination Event or Bankruptcy.

10.          Escrow Arrangement.

(a)           Escrow.  In order to carry out the provisions of
Sections 8, 9 and 11 of this Agreement more effectively, the Company shall hold
any Issued Shares in escrow together with separate stock powers executed by the
Optionee in blank for transfer, and any Permitted Transferee shall, as an
additional condition to any transfer of Issued Shares, execute a like stock
power as to such Issued Shares.  The
Company shall not dispose of the Issued Shares except as otherwise provided in
this Agreement.  In the event of any repurchase
by the Company (or any of its assigns), the Company is hereby authorized by the
Optionee and any Permitted Transferee, as the Optionee’s and each such
Permitted Transferee’s attorney-in-fact, to date and complete the stock powers
necessary for the transfer of the Issued Shares being purchased and to transfer
such Issued Shares in accordance with the terms hereof.  At such time as any Issued Shares are no
longer subject to the Company’s repurchase, first refusal and drag along
rights, the Company shall, at the written request of the Optionee, deliver to
the Optionee (or the relevant Permitted Transferee) a certificate representing
such Issued Shares with the balance of the Issued Shares to be held in escrow
pursuant to this Section 10.

(b)           Remedy.  Without limitation of any other provision of
this Agreement or other rights, in the event that the Optionee, any Permitted
Transferees or any other person or entity is required to sell the Optionee’s
Issued Shares pursuant to the provisions of Section 8, 9 and 11 of this
Agreement and in the further event that he or she refuses or for any reason
fails to deliver to the Company or its designated purchaser of such Issued
Shares the certificate or certificates evidencing such Issued Shares together
with a related stock power, the Company or such designated purchaser may
deposit the applicable purchase price for such Issued Shares with a bank
designated by the Company, or with the Company’s independent public accounting
firm, as agent or trustee, or in escrow, for the Optionee, any Permitted
Transferees or other person or entity, to be held by such bank or accounting
firm for the benefit of and for delivery to him, her, them or it, and/or, in
its discretion, pay such purchase price by offsetting any indebtedness then
owed by the Optionee as provided above. 
Upon any such deposit and/or offset by the Company or its designated
purchaser of such amount and upon notice to the person or entity who was
required to sell the Issued Shares to be sold pursuant to the provisions of
Sections 8, 9 and 11, such Issued Shares shall at such time be deemed to have
been sold, assigned, transferred and conveyed to such purchaser, the holder
thereof shall have no further rights thereto (other than the right to withdraw
the payment thereof held in escrow, if applicable), and the Company shall
record such transfer in its stock transfer book or in any appropriate manner.

11.          Drag Along Right.  In the event the holders of a majority of the
Company’s equity securities then outstanding (the “Majority Shareholders”)
determine to sell or otherwise dispose of all or substantially all of the
assets of the Company or all or fifty percent (50%) or more of the capital
stock of the Company in each case in a transaction constituting a change in 

 9
 

 

control of the Company, to any non-Affiliate(s)
of the Company or any of the Majority Shareholders, or to cause the Company to
merge with or into or consolidate with any non-Affiliate(s) of the Company or
any of the Majority Shareholders (in each case, the “Buyer”) in a bona fide negotiated transaction (a “Sale”),
the Optionee, including any Permitted Transferees, shall be obligated to and
shall upon the written request of a Majority Shareholders (subject to
Section 6):  (a) sell, transfer and
deliver, or cause to be sold, transferred and delivered, to the Buyer, his or
her Issued Shares (including for this purpose all of such Optionee’s or his or
her Permitted Transferee’s Issued Shares that presently or as a result of any
such transaction may be acquired upon the exercise of options (following the
payment of the exercise price therefor)) on substantially the same terms
applicable to the Majority Shareholders (with appropriate adjustments to
reflect the conversion of convertible securities, the redemption of redeemable
securities and the exercise of exercisable securities as well as the relative
preferences and priorities of preferred stock); and (b) execute and deliver
such instruments of conveyance and transfer and take such other action,
including voting such Issued Shares in favor of any Sale proposed by the
Majority Shareholders and executing any purchase agreements, merger agreements,
indemnity agreements, escrow agreements or related documents, as the Majority
Shareholders or the Buyer may reasonably require in order to carry out the
terms and provisions of this Section 11. 
The obligations under this Section 11 shall terminate in accordance
with  Section 13(a).

12.          Lockup Provision.  The Optionee agrees, if requested by the
Company and any underwriter engaged by the Company, not to sell or otherwise
transfer or dispose of any Issued Shares (including, without limitation
pursuant to Rule 144 under the Act) held by him or her for such period
following the effective date of any registration statement of the Company filed
under the Act as the Company or such underwriter shall specify reasonably and
in good faith, not to exceed 180 days.

13.          Miscellaneous
Provisions.

(a)           Termination.  The Company’s repurchase rights under
Section 9, the restrictions on transfer of Issued Shares under
Section 8(c) and the Drag Along obligations under Section 11 shall
terminate upon the closing of the Company’s Initial Public Offering or upon
consummation of any Sale Event, in either case as a result of which shares of
the Company (or successor entity) of the same class as the Issued Shares are
registered under Section 12 of the Exchange Act and publicly traded on
NASDAQ/NMS or any national securities exchange.

(b)           Equitable
Relief.  The parties hereto agree and
declare that legal remedies may be inadequate to enforce the provisions of this
Agreement and that equitable relief, including specific performance and
injunctive relief, may be used to enforce the provisions of this Agreement.

(c)           Adjustments
for Changes in Capital Structure. 
If, as a result of any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar change in the Common Stock, the outstanding shares of Common Stock are
increased or decreased or are exchanged for a different number or kind of
shares of the Company’s stock, the restrictions contained in this Agreement
shall apply with equal force to 

 10
 

 

additional and/or substitute securities, if any,
received by the Optionee in exchange for, or by virtue of his or her ownership
of, Issued Shares.

(d)           Change
and Modifications.  This Agreement
may not be orally changed, modified or terminated, nor shall any oral waiver of
any of its terms be effective.  This
Agreement may be changed, modified or terminated only by an agreement in
writing signed by the Company and the Optionee.

(e)           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard
to conflict of law principles.

(f)            Headings.  The headings are intended only for
convenience in finding the subject matter and do not constitute part of the
text of this Agreement and shall not be considered in the interpretation of
this Agreement.

(g)           Saving Clause.  If any provision(s) of this Agreement shall
be determined to be illegal or unenforceable, such determination shall in no
manner affect the legality or enforceability of any other provision hereof.

(h)           Notices.  All notices, requests, consents and other
communications shall be in writing and be deemed given when delivered
personally, by telex or facsimile transmission or when received if mailed by
first class registered or certified mail, postage prepaid.  Notices to the Company or the Optionee shall
be addressed as set forth underneath their signatures below, or to such other
address or addresses as may have been furnished by such party in writing to the
other.

(i)            Benefit and
Binding Effect.  This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto, their
respective successors, permitted assigns, and legal representatives.  The Company has the right to assign this
Agreement, and such assignee shall become entitled to all the rights of the
Company hereunder to the extent of such assignment.

(j)            Dispute
Resolution.  Except as provided
below, any dispute arising out of or relating to this Agreement or the breach,
termination or validity hereof shall be finally settled by binding arbitration
conducted expeditiously in accordance with the J.A.M.S./Endispute Comprehensive
Arbitration Rules and Procedures (the “J.A.M.S. Rules”).  The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. §§1-16, and judgment upon the
award rendered by the arbitrators may be entered by any court having
jurisdiction thereof.  The place of
arbitration shall be Minneapolis,
MN.

The parties covenant and agree that the arbitration
shall commence within 60 days of the date on which a written demand for
arbitration is filed by any party hereto. 
In connection with the arbitration proceeding, the arbitrator shall have
the power to order the production of documents by each party and any
third-party witnesses.  In addition, each
party may take up to three (3) depositions as of right, and the arbitrator may
in his or her discretion allow additional depositions upon good cause shown by
the moving party.  However, the arbitrator
shall not have the power to order the answering of interrogatories or the
response to requests for admission.  In
connection with any arbitration, each party shall provide to the other, no
later than seven (7) 

 11
 

 

business days before the date of the arbitration, the
identity of all persons that may testify at the arbitration and a copy of all
documents that may be introduced at the arbitration or considered or used by a
party’s witness or expert.  The
arbitrator’s decision and award shall be made and delivered within six (6)
months of the selection of the arbitrator. 
The arbitrator’s decision shall set forth a reasoned basis for any award
of damages or finding of liability.  The
arbitrator shall not have power to award damages in excess of actual compensatory
damages and shall not multiply actual damages or award punitive damages or any
other damages that are specifically excluded under this Agreement, and each
party hereby irrevocably waives any claim to such damages.

The parties covenant and agree that they will
participate in the arbitration in good faith. 
This Section 13(j) applies equally to requests for temporary,
preliminary or permanent injunctive relief, except that in the case of
temporary or preliminary injunctive relief any party may proceed in court
without prior arbitration for the limited purpose of avoiding immediate and
irreparable harm.

Each of the parties hereto (i) hereby irrevocably
submits to the jurisdiction of any United States District Court of competent
jurisdiction for the purpose of enforcing the award or decision in any such
proceeding, (ii) hereby waives, and agrees not to assert, by way of motion, as
a defense, or otherwise, in any such suit, action or proceeding, any claim that
it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution
(except as protected by applicable law), that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or proceeding
is improper or that this Agreement or the subject matter hereof may not be
enforced in or by such court, and hereby waives and agrees not to seek any
review by any court of any other jurisdiction which may be called upon to grant
an enforcement of the judgment of any such court.  Each of the parties hereto hereby consents to
service of process by registered mail at the address to which notices are to be
given.  Each of the parties hereto agrees
that its, his or her submission to jurisdiction and its, his or her consent to
service of process by mail is made for the express benefit of the other parties
hereto.  Final judgment against any party
hereto in any such action, suit or proceeding may be enforced in other
jurisdictions by suit, action or proceeding on the judgment, or in any other
manner provided by or pursuant to the laws of such other jurisdiction.

(k)           Counterparts.  For the convenience of the parties and to
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.

14.          Adjustment of Option Exercise Price.  The Option Exercise Price
shall be increased by the amount of $0.83 on July 1, 2007 and each anniversary thereof
until the termination of this Stock Option.

[SIGNATURE PAGE
FOLLOWS]

 12
 

 

The foregoing
Agreement is hereby accepted and the terms and conditions thereof hereby agreed
to by the undersigned as of the date first above written.

	
  

  	
  WII COMPONENTS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Rodney Cohen

  
	
   

  	
   

  	
  Name: Rodney Cohen

  
	
   

  	
   

  	
  Title: President

  

 

The foregoing
Agreement is hereby accepted and the terms and conditions thereof hereby agreed
to by the undersigned as of the date first above written.

	
  

  	
  OPTIONEE:

  
	
   

  	
   

  
	
   

  	
  /s/ John Fitzpatrick

  
	
   

  	
  Name: John Fitzpatrick

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  1710 Shadywood Road

  
	
   

  	
  Wayzata, MN 55391

  

 

	
  SPOUSE’S CONSENT

  	
   

  
	
  I acknowledge
  that I have read the

  	
   

  
	
  foregoing
  Incentive Stock Option Agreement

  	
   

  
	
  and understand
  the contents thereof.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 13
 

 

 

	
  

  	
   

  	
  DESIGNATED BENEFICIARY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Beneficiary’s Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 14
 

 

Appendix
A

STOCK
OPTION EXERCISE NOTICE

	
  WII Components, Inc.

  	
   

  
	
  Attention: Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

Pursuant to the terms of my stock option agreement
dated                   
(the “Agreement”) under the WII Components, Inc. 2003 Stock Option and Grant
Plan, I, [Insert Name]                         ,
hereby [Circle One] partially/fully exercise such option by including herein
payment in the amount of $            
representing the purchase price for [Fill in number of Option Shares]             
option shares.  I have chosen the
following form(s) of payment:

o            1.             Cash

o            2.             Certified
or bank check payable to WII Components, Inc.

o                                    3.             Other (as described in the
Agreement (please describe))
_____________________________________________________.

In connection with my exercise of the option as set
forth above, I hereby represent and warrant to WII Components, Inc. as follows:

(i)            I am purchasing the option shares
for my own account for investment only, and not for resale or with a view to
the distribution thereof.

(ii)           I have had such an opportunity as I
have deemed adequate to obtain from WII Components, Inc. such information as is
necessary to permit me to evaluate the merits and risks of my investment in WII
Components, Inc. and have consulted with my own advisers with respect to my
investment in WII Components, Inc.

(iii)          I have sufficient experience in
business, financial and investment matters to be able to evaluate the risks
involved in the purchase of the option shares and to make an informed
investment decision with respect to such purchase.

(iv)          I can afford a complete loss of the
value of the option shares and am able to bear the economic risk of holding
such option shares for an indefinite period of time.

(v)           I understand that the option shares
may not be registered under the Securities Act of 1933 (it being understood that
the option shares are being issued and sold in reliance on the exemption
provided in Rule 701 thereunder) or any applicable state securities or “blue
sky” laws and may not be sold or otherwise transferred or disposed of in the
absence of an effective registration statement under the Securities Act of 1933
and under any applicable state securities or “blue sky” laws (or exemptions
from 

 15
 

 

 

the
registration requirement thereof).  I
further acknowledge that certificates representing option shares will bear restrictive
legends reflecting the foregoing.

	
  

  	
  Sincerely yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 16Exhibit 10.3

Incentive
Stock Option Agreement

under the WII Components, Inc.

2003 Stock Option and Grant Plan

	
  Name of Optionee:

  	
   

  	
  John Fitzpatrick (the “Optionee”)

  
	
  No. of Option Shares:

  	
   

  	
  80,000 Shares of Common
  Stock

  
	
  Grant Date:

  	
   

  	
  May 31, 2006 (the
  “Grant Date”)

  
	
  Expiration Date:

  	
   

  	
  May 31, 2016 (the
  “Expiration Date”)

  
	
  Option Exercise Price/Share:

  	
   

  	
  $5.54 (the “Option
  Exercise Price”)

  

 

Pursuant to the WII Components, Inc. 2003 Stock Option
and Grant Plan (the “Plan”), WII Components, Inc., a Delaware corporation
(together with all successors thereto, the “Company”), hereby grants to the
Optionee, who is an employee of the Company or any of its Subsidiaries, an
option (the “Stock Option”) to purchase on or prior to the Expiration Date, or
such earlier date as is specified herein, all or any part of the number of
shares of Voting Common Stock, par value $0.01 per share (“Common Stock”), of
the Company indicated above (the “Option Shares,” and such shares once issued
shall be referred to as the “Issued Shares”), at the Option Exercise Price per
share, subject to the terms and conditions set forth in this Incentive Stock
Option Agreement (this “Agreement”) and in the Plan.  This Stock Option is intended to qualify as
an “incentive stock option” as defined in Section 422(b) of the Internal
Revenue Code of 1986, as amended from time to time (the “Code”).  To the extent that any portion of the Stock
Option does not so qualify, it shall be deemed a non-qualified stock
option.

1.             Definitions.  For the purposes of this Agreement, the
following terms shall have the following respective meanings.  All capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Plan.

An “Affiliate” of
any Person means a Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with the
first mentioned Person.  A Person shall
be deemed to control another Person if such first Person possesses directly or
indirectly the power to direct, or cause the direction of, the management and
policies of the second Person, whether through the ownership of voting
securities, by contract or otherwise.

“Bankruptcy” shall
mean (i) the filing of a voluntary petition under any bankruptcy or insolvency
law, or a petition for the appointment of a receiver or the making of an
assignment for the benefit of creditors, with respect to the Optionee or any
Permitted Transferee, or (ii) the Optionee or any Permitted Transferee being subjected
involuntarily to such a petition or assignment or to an attachment or other
legal or equitable interest with respect to the Optionee’s or such Permitted
Transferee’s assets, which involuntary petition or assignment or attachment is
not discharged within 60 days after its date, and (iii) the Optionee or any
Permitted 

 

Transferee being subject to a transfer of the Stock
Option or the Issued Shares by operation of law (including by divorce, even if
not insolvent), except by reason of death.

“Cause” shall mean
a vote of the Board resolving that the Optionee should be dismissed as a result
of (i) the commission of any act by the Optionee constituting financial
dishonesty against the Company (which act would be chargeable as a crime under
applicable law); (ii) the Optionee’s engaging in any other act of dishonesty,
fraud, intentional misrepresentation, moral turpitude, illegality or harassment
which, as determined in good faith by the Board, would:  (A) materially adversely affect the business
or the reputation of the Company with its current or prospective customers,
suppliers, lenders and/or other third parties with whom it does or might do
business; or (B) expose the Company to a risk of civil or criminal legal
damages, liabilities or penalties; (iii) the repeated failure by the Optionee
to follow the directives of the Company’s chief executive officer or Board or
(iv) any material misconduct, violation of the Company’s policies, or willful
and deliberate non-performance of duty by the Optionee in connection with the
business affairs of the Company; provided, however, the Company
acknowledges and hereby agrees that, in the event Optionee is appointed to the
position of Chairman, Optionee’s responsibilities and obligations will be
reduced and that such reduction shall not in any way be deemed to constitute “Cause”
under this Agreement.

“Good Reason”
shall mean the occurrence of any of the following events: (i) a substantial
adverse change in the nature or scope of the Optionee’s responsibilities,
authorities, powers, functions or duties; (ii) a reduction in the Optionee’s
annual base salary except for across-the-board salary reductions similarly
affecting all or substantially all management employees; or (iii) the
relocation of the offices at which the Optionee is principally employed to a
location more than 50 miles from such offices; provided, however,
that the Board may appoint Optionee to the position of Chairman without
reduction in Optionee’s annual cash compensation and such appointment shall not
be deemed to constitute Good Reason.

“Permitted Transferees”
shall mean any of the following to whom the Optionee may transfer Issued Shares
hereunder (as set forth in Section 8): 
the Optionee’s spouse, children (natural or adopted), stepchildren or a
trust for their sole benefit of which the Optionee is the settlor; provided,
however, that any such trust does not require or permit distribution of
any Issued Shares during the term of this Agreement unless subject to its
terms.  Upon the death of the Optionee
(or a Permitted Transferee to whom shares have been transferred hereunder), the
term Permitted Transferees shall also include such deceased Optionee’s (or such
deceased Permitted Transferee’s) estate, executions, administrations, personal
representations, heirs, legatees and distributees, as the case may be.

“Person” shall
mean any individual, corporation, partnership (limited or general), limited
liability company, limited liability partnership, association, trust, joint
venture, unincorporated organization or any similar entity.

“Sale Event” shall
mean, regardless of form thereof, consummation of (i) the dissolution or
liquidation of the Company, (ii) the sale of all or substantially all of the
assets of the Company on a consolidated basis to an unrelated person or entity,
(iii) a merger, reorganization or consolidation in which the outstanding shares
of Stock are converted into or exchanged for securities of the successor entity
and the holders of the Company’s outstanding 

 2
 

 

voting power immediately prior to such transaction do
not own a majority of the outstanding voting power of the successor entity
immediately upon completion of such transaction, (iv) the sale of all or a
majority of the outstanding capital stock of the Company to an unrelated person
or entity or (v) any other transaction in which the owners of the Company’s
outstanding voting power immediately prior to such transaction do not own at
least a majority of the outstanding voting power of the successor entity
immediately upon completion of the transaction; provided, however,
that no such event shall constitute a Sale Event unless, if Optionee is requested
by the Board, Optionee agrees in writing to continue his Service Relationship,
if any, with the Company or its successor in substantially the same capacity as
Optionee served immediately prior to the Sale Event for a term of two (2) years.

“Service Relationship”  shall mean any relationship as an employee or
part-time employee with the Company or one of its Subsidiaries (or their
successors) such that, for example, a Service Relationship shall be deemed to
continue without interruption in the event that the Optionee’s status changes
from employee to part-time employee.

“Subsidiary” shall
mean any corporation (other than the Company) in any unbroken chain of
corporations or other entities beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
or other interests possessing 50 percent or more of the total combined voting
power of all classes of stock or in one of the other corporations in the chain.

2.             Vesting, Exercisability and
Termination.

(a)           No portion of this
Stock Option may be exercised until such portion shall have vested.

(b)           This Stock Option
shall be deemed vested and exercisable in full upon the earliest to occur of
the following:

(i)            A Sale Event; or

(ii)           June 30, 2009; provided, however, in
the event the Optionee’s Service Relationship terminates prior to June 30, 2009,
and such termination is either (a) by the Company without Cause, or (b) by the
Optionee for Good Reason, a portion of this Stock Option may vest according to
the provisions set forth in Section 2(c) of this Agreement.

No portion of this Stock Option shall vest or
become exercisable unless and until any of the events described in
subparagraphs (i) and (ii) above occur.

(c)           Termination.  Except as may otherwise be provided by the
Committee, if the Optionee’s Service Relationship is terminated, the period
within which to exercise this Stock Option may be subject to earlier
termination as set forth below:

(i)            Termination By Company Without
Cause.  In the event Optionee’s
Service Relationship is terminated by the Company without Cause, or by the
Optionee for 

 3
 

 

Good Reason
prior to June 30, 2009, and a Sale Event occurs thereafter, this Stock Option
will vest as indicated below:

	
  Determination Date:

  	
   

  	
  % of Option Vesting:

  	
   

  
	
  0-365 days after
  termination date

  	
   

  	
  100

  	
  %

  
	
  366-546 days
  after termination date

  	
   

  	
  50

  	
  %

  
	
  547-730 days
  after termination date

  	
   

  	
  25

  	
  %

  
	
  thereafter

  	
   

  	
  0

  	
  %

  

 

The date that a letter of
intent regarding a bona fide acquisition of the Company (an “LOI”) has been
approved by the Board and executed by the Company and the relevant third party
shall be the Determination Date used in the table above.  By way of illustration only, if Optionee’s
Service Relationship is terminated by the Company without Cause on February 9,
2007 and the Company executes an LOI on February 14, 2008, then, upon
consummation of the Sale Event described in the LOI, 50% of the Option shall vest
and be exercisable.

(ii)           Termination By Optionee Without
Good Reason or for Cause.  In the
event Optionee terminates the Service Relationship without Good Reason, or the
Company terminates Optionee’s Service Relationship for Cause prior to June 30,
2009, no portion of this Stock Option shall vest.

(iii)          Termination Due to Death or
Disability.  If the Optionee’s
Service Relationship terminates by reason of such Optionee’s death or
disability (as defined in Section 422(c) of the Code), this Stock Option
may be exercised, to the extent exercisable on the date of such termination, by
the Optionee, the Optionee’s legal representative or legatee for a period of 12
months from the date of death or disability or until the Expiration Date, if
earlier, subject in any event to Section 6.

(iv)          Other Termination.  If the Optionee’s Service Relationship
terminates for any reason other than death or disability, and unless otherwise
determined by the Committee, this Stock Option may be exercised, to the extent
exercisable on the date of termination, for a period of 90 days from the date
of termination or until the Expiration Date, if earlier; provided  however,
if the Optionee’s Service Relationship is terminated for Cause, this Stock
Option shall terminate immediately upon the date of such termination.

For purposes hereof, the Committee’s determination of
the reason for termination of the Optionee’s Service Relationship shall be
conclusive and binding on the Optionee and his or her representatives or legatees
or Permitted Transferees.  Any portion of
this Stock Option that is not 

 4
 

 

exercisable on the date of termination of the Service
Relationship shall terminate immediately and be null and void.

It is understood and intended that this Stock Option
is intended to qualify as an “incentive stock option” as defined in
Section 422 of the Code to the extent permitted under applicable law.  Accordingly, the Optionee understands that in
order to obtain the benefits of an incentive stock option under Section 422
of the Code, no sale or other disposition may be made of Issued Shares for
which incentive stock option treatment is desired within the one-year
period beginning on the day after the day of the transfer of such Issued Shares
to him or her, nor within the two-year period beginning on the day after
the grant of this Stock Option and further that this Stock Option must be
exercised within three (3) months after termination of employment as an
employee (or 12 months in the case of death or disability) to qualify as an
incentive stock option.  If the Optionee
disposes (whether by sale, gift, transfer or otherwise) of any such Issued
Shares within either of these periods, he or she will notify the Company within
30 days after such disposition.  The
Optionee also agrees to provide the Company with any information concerning any
such dispositions required by the Company for tax purposes.  Further, to the extent Option Shares and any
other incentive stock options of the Optionee having an aggregate Fair Market
Value in excess of $100,000 (determined as of the Grant Date) vest in any year,
such options will not qualify as incentive stock options.

3.             Exercise of Stock Option.

(a)           The Optionee may
exercise this Stock Option only in the following manner:  Prior to the Expiration Date (subject to
Section 6), the Optionee may deliver a Stock Option exercise notice (an “Exercise
Notice”) in the form of Appendix A hereto indicating his or her
election to purchase some or all of the Option Shares with respect to which
this Stock Option is exercisable at the time of such notice.  Such notice shall specify the number of
Option Shares to be purchased.  Payment
of the purchase price may be made by one or more of the methods described
below.  Payment instruments will be
received subject to collection.

(i)            in cash, by certified or bank check,
or other instrument acceptable to the Committee in U.S. funds payable to the
order of the Company in an amount equal to the purchase price of such Option
Shares; or

(ii)           if the Company’s Initial Public
Offering has occurred, then (A) through the delivery (or attestation to
ownership) of shares of Common Stock that have been purchased by the Optionee
on the open market or that have been held by the Optionee for at least six
months and are not subject to restrictions under any plan of the Company and in
any event with an aggregate Fair Market Value (as of the date of such exercise)
equal to the option purchase price, (B) by the Optionee delivering to the
Company a properly executed Exercise Notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company to pay the option purchase price,
provided that in the event the Optionee chooses to pay the option purchase
price as so provided, the Optionee and the broker shall comply with such
procedures and enter into such agreements of indemnity and other agreements as
the Committee shall prescribe as a condition of such payment procedure, or (C)
a combination of (i), (ii)(A) and (ii)(B) above.

 5
 

 

(b)           Certificates for the Option Shares so purchased will be
issued and delivered to the Optionee upon compliance to the satisfaction of the
Committee with all requirements under applicable laws or regulations in
connection with such issuance.  Until the
Optionee shall have complied with the requirements hereof and of the Plan, the
Company shall be under no obligation to issue the Option Shares subject to this
Stock Option, and the determination of the Committee as to such compliance
shall be final and binding on the Optionee. 
The Optionee shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares of Common Stock subject to
this Stock Option unless and until this Stock Option shall have been exercised
pursuant to the terms hereof, the Company shall have issued and delivered the
Issued Shares to the Optionee, and the Optionee’s name shall have been entered
as a stockholder of record on the books of the Company.  Thereupon, the Optionee shall have full
dividend and other ownership rights with respect to such Issued Shares, subject
to the terms of this Agreement.

(c)           Notwithstanding any
other provision hereof or of the Plan, no portion of this Stock Option shall be
exercisable after the Expiration Date.

4.             Incorporation of Plan.  Notwithstanding anything herein to the
contrary, this Stock Option shall be subject to and governed by all the terms
and conditions of the Plan.

5.             Transferability of Stock Option.  This Agreement
is personal to the Optionee and is not transferable by the Optionee in any
manner other than by will or by the laws of descent and distribution.  The Stock Option may be exercised during the
Optionee’s lifetime only by the Optionee (or by the Optionee’s guardian or
personal representative in the event of the Optionee’s incapacity).  The Optionee may elect to designate a
beneficiary by providing written notice of the name of such beneficiary to the
Company, and may revoke or change such designation at any time by filing
written notice of revocation or change with the Company; such beneficiary may
exercise the Optionee’s Stock Option in the event of the Optionee’s death to
the extent provided herein.  If the
Optionee does not designate a beneficiary, or if the designated beneficiary predeceases
the Optionee, the legal representative of the Optionee may exercise this Stock
Option to the extent provided herein in the event of the Optionee’s death.

6.             [Reserved]

7.             Withholding Taxes. 
The Optionee shall, not later than the date as of which the exercise of
this Stock Option becomes a taxable event for federal income tax purposes, pay
to the Company or make arrangements satisfactory to the Committee for payment
of any federal, state and local taxes required by law to be withheld on account
of such taxable event.  Subject to
approval by the Committee, the Optionee may elect to have the minimum tax
withholding obligation satisfied, in whole or in part, by authorizing the
Company to withhold from shares of Common Stock to be issued or transferring to
the Company, a number of shares of Common Stock with an aggregate Fair Market
Value that would satisfy the minimum withholding amount due.  The Optionee acknowledges and agrees that the
Company or any Subsidiary of the Company has the right to deduct from payments
of any kind otherwise due to the Optionee, or from the Option Shares to be
issued in respect of an exercise of this Stock Option, any federal, state or
local taxes of any kind required by law to be withheld with respect to the
issuance of Option Shares to the Optionee.

 6
 

 

8.             Restrictions on Transfer of Issued Shares.  None of the Issued Shares acquired upon
exercise of the Stock Option shall be sold, assigned, transferred, pledged,
hypothecated, given away or in any other manner disposed of or encumbered,
whether voluntarily or by operation of law, unless such transfer is in
compliance with all applicable securities laws (including, without limitation,
the Securities Act of 1933, as amended, and the rules and regulations
thereunder (the “Act”)), and such disposition is in accordance with the terms
and conditions of Sections 8 and 9 and such disposition does not cause the
Company to become subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended.  In
connection with any transfer of Issued Shares, the Company may require the
transferor to provide at the Optionee’s own expense an opinion of counsel to
the transferor, satisfactory to the Company, that such transfer is in
compliance with all foreign, federal and state securities laws (including,
without limitation, the Act).  Any
attempted disposition of Issued Shares not in accordance with the terms and
conditions of Sections 8 and 9 shall be null and void, and the Company shall not
reflect on its records any change in record ownership of any Issued Shares as a
result of any such disposition, shall otherwise refuse to recognize any such
disposition and shall not in any way give effect to any such disposition of any
Issued Shares.  Subject to the foregoing
general provisions, Issued Shares may be transferred pursuant to the following
specific terms and conditions:

(a)           Transfers to
Permitted Transferees.  The Optionee
may sell, assign, transfer or give away any or all of the Issued Shares to
Permitted Transferees; provided, however, that such Permitted
Transferee(s) shall, as a condition to any such transfer, agree to be subject
to the provisions of this Agreement to the same extent as the Optionee
(including, without limitation, the provisions of Sections 8, 9, 11 and 12) and
shall have delivered a written acknowledgment to that effect to the Company.

(b)           Transfers Upon
Death.  Upon the death of the
Optionee, any Issued Shares then held by the Optionee at the time of such death
and any Issued Shares acquired thereafter by the Optionee’s legal
representative pursuant to this Agreement shall be subject to the provisions of
Sections 8, 9, 11 and 12, if applicable, and the Optionee’s estate, executors,
administrators, personal representatives, heirs, legatees and distributees shall
be obligated to convey such Issued Shares to the Company or its assigns under
the terms contemplated hereby.

(c)           Company’s Right
of First Refusal.  In the event that
the Optionee (or any Permitted Transferee holding Issued Shares subject to this
Section 8(c)) desires to sell or otherwise transfer all or any part of the
Issued Shares, the Optionee (or Permitted Transferee) first shall give written
notice to the Company of the Optionee’s (or Permitted Transferee’s) intention
to make such transfer.  Such notice shall
state the number of Issued Shares which the Optionee (or Permitted Transferee)
proposes to sell (the “Offered Shares”), the price and the terms at which the
proposed sale is to be made and the name and address of the proposed
transferee.  At any time within 30 days
after the receipt of such notice by the Company, the Company or its assigns may
elect to purchase all or any portion of the Offered Shares at the price and on
the terms offered by the proposed transferee and specified in the notice.  The Company or its assigns shall exercise
this right by mailing or delivering written notice to the Optionee (or
Permitted Transferee) within the foregoing 30-day period.  If the Company or its assigns elect to
exercise its purchase rights under this Section 8(c), the closing for such
purchase shall, in any event, take place within 45 days after the receipt by
the Company of the initial notice from the 

 7
 

 

Optionee (or Permitted Transferee).  In the event that the Company or its assigns
do not elect to exercise such purchase right, or in the event that the Company
or its assigns do not pay the full purchase price within such 45-day
period, the Optionee (or Permitted Transferee) may, within 60 days thereafter,
sell the Offered Shares to the proposed transferee and at the same price and on
the same terms as specified in the Optionee’s (or Permitted Transferee’s)
notice.  Any Shares purchased by such
proposed transferee shall no longer be subject to the terms of this
Agreement.  Any Shares not sold to the
proposed transferee shall remain subject to this Agreement.  Notwithstanding the foregoing, the
restrictions under this Section 8(c) shall terminate in accordance with
Section 13(a).

9.             Company’s Right of Repurchase.

(a)           Right of
Repurchase.  The Company shall have the
right, but not the obligation (the “Repurchase Right”) upon the occurrence of
any of the events specified in Section 9(b) below (the “Repurchase Event”)
to repurchase from the Optionee (or any Permitted Transferee) some or all (as
determined by the Company) of the Issued Shares held or subsequently acquired
upon exercise of this Stock Option in accordance with the terms hereof by the
Optionee (or any Permitted Transferee) at the price specified below (the “Repurchase
Price”).  The Repurchase Right may be
exercised by the Company within the later of (i) six months following the date
of such event or (ii) seven months after the exercise of this Stock Option (the
“Repurchase Period”).  The Repurchase
Right shall be exercised by the Company by giving the holder written notice on
or before the last day of the Repurchase Period of its intention to exercise
the Repurchase Right, and, together with such notice, tendering to the holder
an amount equal to the Repurchase Price of the shares, determined as provided in
Section 9(c).  The Company may
assign the Repurchase Right to one or more Persons.  Upon such notification, the Optionee and any
Permitted Transferees shall promptly surrender to the Company any certificates
representing the Issued Shares being purchased, together with a duly executed
stock power for the transfer of such Issued Shares to the Company or the
Company’s assignee or assignees.  Upon
the Company’s or its assignee’s receipt of the certificates from the Optionee
or any Permitted Transferees, the Company or its assignee or assignees shall
deliver to him, her or them a check for the Repurchase Price of the Issued
Shares being purchased; provided, however, that the Company may
pay the Repurchase Price for such shares by offsetting and canceling any indebtedness
then owed by the Optionee to the Company. 
At such time, the Optionee and/or any holder of the Issued Shares shall
deliver to the Company the certificate or certificates representing the Issued
Shares so repurchased, duly endorsed for transfer, free and clear of any liens
or encumbrances.  The Repurchase Right
shall terminate in accordance with Section 13(a).

(b)           Company’s Right
to Exercise Repurchase Right.  The
Company shall have the Repurchase Right in the event that any of the following
events shall occur:

(i)            The termination of the Optionee’s
Service Relationship with the Company and its Subsidiaries for any reason
whatsoever, regardless of the circumstances thereof, and including without
limitation upon death, disability, retirement, discharge or resignation for any
reason, whether voluntarily or involuntarily; or

(ii)           The Optionee’s or Permitted
Transferee’s Bankruptcy.

 8
 

 

(c)           Determination of
Repurchase Price.  The Repurchase
Price shall be the fair market value of the Issued Shares, provided that if the
Optionee’s Service Relationship is terminated for Cause, the Repurchase Right
shall be the lesser of fair market value or the purchase price paid by Optionee
for the shares being repurchased.  For
purposes of this Section 9, the fair market value of the Issued Shares shall be
determined by the Board as of the date of the Termination Event or Bankruptcy.

10.          Escrow Arrangement.

(a)           Escrow.  In order to carry out the provisions of
Sections 8, 9 and 11 of this Agreement more effectively, the Company shall hold
any Issued Shares in escrow together with separate stock powers executed by the
Optionee in blank for transfer, and any Permitted Transferee shall, as an
additional condition to any transfer of Issued Shares, execute a like stock
power as to such Issued Shares.  The
Company shall not dispose of the Issued Shares except as otherwise provided in
this Agreement.  In the event of any
repurchase by the Company (or any of its assigns), the Company is hereby
authorized by the Optionee and any Permitted Transferee, as the Optionee’s and
each such Permitted Transferee’s attorney-in-fact, to date and complete the
stock powers necessary for the transfer of the Issued Shares being purchased
and to transfer such Issued Shares in accordance with the terms hereof.  At such time as any Issued Shares are no
longer subject to the Company’s repurchase, first refusal and drag along
rights, the Company shall, at the written request of the Optionee, deliver to
the Optionee (or the relevant Permitted Transferee) a certificate representing
such Issued Shares with the balance of the Issued Shares to be held in escrow
pursuant to this Section 10.

(b)           Remedy.  Without limitation of any other provision of
this Agreement or other rights, in the event that the Optionee, any Permitted
Transferees or any other person or entity is required to sell the Optionee’s
Issued Shares pursuant to the provisions of Section 8, 9 and 11 of this
Agreement and in the further event that he or she refuses or for any reason
fails to deliver to the Company or its designated purchaser of such Issued
Shares the certificate or certificates evidencing such Issued Shares together
with a related stock power, the Company or such designated purchaser may
deposit the applicable purchase price for such Issued Shares with a bank
designated by the Company, or with the Company’s independent public accounting
firm, as agent or trustee, or in escrow, for the Optionee, any Permitted
Transferees or other person or entity, to be held by such bank or accounting
firm for the benefit of and for delivery to him, her, them or it, and/or, in
its discretion, pay such purchase price by offsetting any indebtedness then
owed by the Optionee as provided above. 
Upon any such deposit and/or offset by the Company or its designated
purchaser of such amount and upon notice to the person or entity who was
required to sell the Issued Shares to be sold pursuant to the provisions of
Sections 8, 9 and 11, such Issued Shares shall at such time be deemed to have
been sold, assigned, transferred and conveyed to such purchaser, the holder
thereof shall have no further rights thereto (other than the right to withdraw
the payment thereof held in escrow, if applicable), and the Company shall
record such transfer in its stock transfer book or in any appropriate manner.

11.          Drag Along Right.  In the event the holders of a majority of the
Company’s equity securities then outstanding (the “Majority Shareholders”)
determine to sell or otherwise dispose of all or substantially all of the
assets of the Company or all or fifty percent (50%) or more of the capital
stock of the Company in each case in a transaction constituting a change in 

 9
 

 

control of the Company, to any non-Affiliate(s)
of the Company or any of the Majority Shareholders, or to cause the Company to
merge with or into or consolidate with any non-Affiliate(s) of the Company or
any of the Majority Shareholders (in each case, the “Buyer”) in a bona fide negotiated transaction (a “Sale”),
the Optionee, including any Permitted Transferees, shall be obligated to and
shall upon the written request of a Majority Shareholders (subject to
Section 6):  (a) sell, transfer and
deliver, or cause to be sold, transferred and delivered, to the Buyer, his or
her Issued Shares (including for this purpose all of such Optionee’s or his or
her Permitted Transferee’s Issued Shares that presently or as a result of any
such transaction may be acquired upon the exercise of options (following the
payment of the exercise price therefor)) on substantially the same terms applicable
to the Majority Shareholders (with appropriate adjustments to reflect the
conversion of convertible securities, the redemption of redeemable securities
and the exercise of exercisable securities as well as the relative preferences
and priorities of preferred stock); and (b) execute and deliver such
instruments of conveyance and transfer and take such other action, including
voting such Issued Shares in favor of any Sale proposed by the Majority
Shareholders and executing any purchase agreements, merger agreements,
indemnity agreements, escrow agreements or related documents, as the Majority
Shareholders or the Buyer may reasonably require in order to carry out the
terms and provisions of this Section 11. 
The obligations under this Section 11 shall terminate in accordance
with  Section 13(a).

12.          Lockup Provision.  The Optionee agrees, if requested by the
Company and any underwriter engaged by the Company, not to sell or otherwise
transfer or dispose of any Issued Shares (including, without limitation
pursuant to Rule 144 under the Act) held by him or her for such period
following the effective date of any registration statement of the Company filed
under the Act as the Company or such underwriter shall specify reasonably and
in good faith, not to exceed 180 days.

13.          Miscellaneous
Provisions.

(a)           Termination.  The Company’s repurchase rights under
Section 9, the restrictions on transfer of Issued Shares under
Section 8(c) and the Drag Along obligations under Section 11 shall
terminate upon the closing of the Company’s Initial Public Offering or upon
consummation of any Sale Event, in either case as a result of which shares of
the Company (or successor entity) of the same class as the Issued Shares are
registered under Section 12 of the Exchange Act and publicly traded on
NASDAQ/NMS or any national securities exchange.

(b)           Equitable
Relief.  The parties hereto agree and
declare that legal remedies may be inadequate to enforce the provisions of this
Agreement and that equitable relief, including specific performance and
injunctive relief, may be used to enforce the provisions of this Agreement.

(c)           Adjustments
for Changes in Capital Structure. 
If, as a result of any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar change in the Common Stock, the outstanding shares of Common Stock are
increased or decreased or are exchanged for a different number or kind of
shares of the Company’s stock, the restrictions contained in this Agreement
shall apply with equal force to 

 10
 

 

additional and/or substitute securities, if any,
received by the Optionee in exchange for, or by virtue of his or her ownership
of, Issued Shares.

(d)           Change
and Modifications.  This Agreement
may not be orally changed, modified or terminated, nor shall any oral waiver of
any of its terms be effective.  This
Agreement may be changed, modified or terminated only by an agreement in
writing signed by the Company and the Optionee.

(e)           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard
to conflict of law principles.

(f)            Headings.  The headings are intended only for
convenience in finding the subject matter and do not constitute part of the
text of this Agreement and shall not be considered in the interpretation of
this Agreement.

(g)           Saving Clause.  If any provision(s) of this Agreement shall
be determined to be illegal or unenforceable, such determination shall in no
manner affect the legality or enforceability of any other provision hereof.

(h)           Notices.  All notices, requests, consents and other
communications shall be in writing and be deemed given when delivered
personally, by telex or facsimile transmission or when received if mailed by
first class registered or certified mail, postage prepaid.  Notices to the Company or the Optionee shall
be addressed as set forth underneath their signatures below, or to such other
address or addresses as may have been furnished by such party in writing to the
other.

(i)            Benefit and
Binding Effect.  This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto, their
respective successors, permitted assigns, and legal representatives.  The Company has the right to assign this
Agreement, and such assignee shall become entitled to all the rights of the
Company hereunder to the extent of such assignment.

(j)            Dispute
Resolution.  Except as provided
below, any dispute arising out of or relating to this Agreement or the breach,
termination or validity hereof shall be finally settled by binding arbitration
conducted expeditiously in accordance with the J.A.M.S./Endispute Comprehensive
Arbitration Rules and Procedures (the “J.A.M.S. Rules”).  The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. §§1-16, and judgment upon the
award rendered by the arbitrators may be entered by any court having
jurisdiction thereof.  The place of
arbitration shall be Minneapolis,
MN.

The parties covenant and agree that the arbitration
shall commence within 60 days of the date on which a written demand for
arbitration is filed by any party hereto. 
In connection with the arbitration proceeding, the arbitrator shall have
the power to order the production of documents by each party and any third-party
witnesses.  In addition, each party may
take up to three (3) depositions as of right, and the arbitrator may in his or
her discretion allow additional depositions upon good cause shown by the moving
party.  However, the arbitrator shall not
have the power to order the answering of interrogatories or the response to
requests for admission.  In connection
with any arbitration, each party shall provide to the other, no later than
seven (7) 

 11
 

 

business days before the date of the arbitration, the
identity of all persons that may testify at the arbitration and a copy of all
documents that may be introduced at the arbitration or considered or used by a
party’s witness or expert.  The
arbitrator’s decision and award shall be made and delivered within six (6) months
of the selection of the arbitrator.  The
arbitrator’s decision shall set forth a reasoned basis for any award of damages
or finding of liability.  The arbitrator
shall not have power to award damages in excess of actual compensatory damages
and shall not multiply actual damages or award punitive damages or any other
damages that are specifically excluded under this Agreement, and each party
hereby irrevocably waives any claim to such damages.

The parties covenant and agree that they will
participate in the arbitration in good faith. 
This Section 13(j) applies equally to requests for temporary,
preliminary or permanent injunctive relief, except that in the case of
temporary or preliminary injunctive relief any party may proceed in court
without prior arbitration for the limited purpose of avoiding immediate and
irreparable harm.

Each of the parties hereto (i) hereby irrevocably
submits to the jurisdiction of any United States District Court of competent
jurisdiction for the purpose of enforcing the award or decision in any such
proceeding, (ii) hereby waives, and agrees not to assert, by way of motion, as
a defense, or otherwise, in any such suit, action or proceeding, any claim that
it is not subject personally to the jurisdiction of the above-named courts,
that its property is exempt or immune from attachment or execution (except as
protected by applicable law), that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Agreement or the subject matter hereof may not be
enforced in or by such court, and hereby waives and agrees not to seek any
review by any court of any other jurisdiction which may be called upon to grant
an enforcement of the judgment of any such court.  Each of the parties hereto hereby consents to
service of process by registered mail at the address to which notices are to be
given.  Each of the parties hereto agrees
that its, his or her submission to jurisdiction and its, his or her consent to
service of process by mail is made for the express benefit of the other parties
hereto.  Final judgment against any party
hereto in any such action, suit or proceeding may be enforced in other
jurisdictions by suit, action or proceeding on the judgment, or in any other
manner provided by or pursuant to the laws of such other jurisdiction.

(k)           Counterparts.  For the convenience of the parties and to
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.

[SIGNATURE PAGE
FOLLOWS]

 12
 

 

The foregoing Agreement is hereby accepted and the
terms and conditions thereof hereby agreed to by the undersigned as of the date
first above written.

	
  

  	
   

  	
  WII COMPONENTS, INC.

  
	
   

  	
   

  	
  By: 

  	
  /s/ Rodney Cohen

  
	
   

  	
   

  	
   

  	
  Name: Rodney Cohen

  
	
   

  	
   

  	
   

  	
  Title: President

  

 

The foregoing
Agreement is hereby accepted and the terms and conditions thereof hereby agreed
to by the undersigned as of the date first above written.

	
  

  	
   

  	
  OPTIONEE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ John Fitzpatrick

  
	
   

  	
   

  	
  Name: John Fitzpatrick

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1710 Shadywood Road

  
	
   

  	
   

  	
  Wayzata, MN 55391

  

 

	
  SPOUSE’S
  CONSENT

  	
   

  
	
  I acknowledge that I have read the

  	
   

  
	
  foregoing Incentive Stock Option Agreement

  	
   

  
	
  and understand the contents thereof.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
			

 

 13
 

 

 

	
  

  	
   

  	
  DESIGNATED BENEFICIARY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Beneficiary’s Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 14
 

 

Appendix
A

STOCK OPTION EXERCISE NOTICE

	
  WII
  Components, Inc.

  	
   

  
	
  Attention: Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

Pursuant to the terms of my stock option agreement
dated                   
(the “Agreement”) under the WII Components, Inc. 2003 Stock Option and Grant
Plan, I, [Insert Name]                         ,
hereby [Circle One] partially/fully exercise such option by including herein
payment in the amount of $            
representing the purchase price for [Fill in number of Option Shares]             
option shares.  I have chosen the following
form(s) of payment:

o            1.             Cash

o            2.             Certified
or bank check payable to WII Components, Inc.

o                                    3.             Other (as described in the
Agreement (please describe))
_____________________________________________________.

In connection with my exercise of the option as set
forth above, I hereby represent and warrant to WII Components, Inc. as follows:

(i)            I am purchasing the option shares
for my own account for investment only, and not for resale or with a view to
the distribution thereof.

(ii)           I have had such an opportunity as I
have deemed adequate to obtain from WII Components, Inc. such information as is
necessary to permit me to evaluate the merits and risks of my investment in WII
Components, Inc. and have consulted with my own advisers with respect to my investment
in WII Components, Inc.

(iii)          I have sufficient experience in
business, financial and investment matters to be able to evaluate the risks
involved in the purchase of the option shares and to make an informed
investment decision with respect to such purchase.

(iv)          I can afford a complete loss of the
value of the option shares and am able to bear the economic risk of holding
such option shares for an indefinite period of time.

(v)           I understand that the option shares
may not be registered under the Securities Act of 1933 (it being understood
that the option shares are being issued and sold in reliance on the exemption
provided in Rule 701 thereunder) or any applicable state securities or “blue
sky” laws and may not be sold or otherwise transferred or disposed of in the
absence of an effective registration statement under the Securities Act of 1933
and under any applicable state securities or “blue sky” laws (or exemptions
from 

 15
 

 

the registration requirement thereof).  I further acknowledge that certificates
representing option shares will bear restrictive legends reflecting the
foregoing.

	
  

  	
  Sincerely yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 16

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