Document:

ex4-3.htm

     

    Exhibit
4.3

    
 

    AMERICAN
BANK NOTE HOLOGRAPHICS, INC.

    2005
STOCK INCENTIVE PLAN

     

    1.   
Purpose.  The
purpose of the American Bank Note Holographics, Inc. 2005 Stock Incentive Plan
is to establish a flexible vehicle through which the Company can attract,
motivate, reward and retain key personnel of the Company and its affiliates
through the use of equity-based incentive compensation awards.

     

    2.   
Definitions.  For
purposes of the Plan, the following terms shall have the following
meanings:

     

    (a) "Award"
shall mean any Option, SAR, Restricted Stock, Deferred Stock, Performance Award
or Other Stock-Based Award granted to a participant under the Plan.

     

    (b) "Board"
shall mean the Board of Directors of the Company.

     

    (c) "Change
in Control" shall mean:  (i) a consolidation or merger in which the Company
is not the surviving corporation or which results in the acquisition of all or
substantially all of the Company's outstanding shares of Common Stock by a
single person or entity or by a group of persons and/or entities acting in
concert, (ii) the sale or other disposition of all or substantially all of the
Company's assets or (iii) the approval by the stockholders of the Company of a
plan of complete liquidation or dissolution of the Company.

     

    (d) "Code"
shall mean the Internal Revenue Code of 1986, as amended.

     

    (e) "Committee"
shall mean the Compensation Committee of the Board or such other committee
appointed by the Board to administer the Plan from time to time.  The full
Board may perform any function of the Committee hereunder, in which case the
term "Committee" shall refer to the Board.

     

    (f) "Common
Stock" shall mean the Company's common stock, par value $0.01.

     

    (g) "Company"
shall mean American Bank Note Holographics, Inc., a Delaware corporation, and
any successor thereto.

     

    (h) "Deferred
Stock" means a right, granted to a participant under Section 6(e), to receive
Common Stock or other Awards or a combination thereof at the end of a specified
deferral period. Deferred Stock may be denominated as "stock units," "restricted
stock units," "phantom shares," "performance shares," or other
appellations.

     

    (i) "Effective
Date" shall mean the date on which the Plan is approved by the Company's
stockholders.

     

    (j) "Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended.

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (k) "Fair
Market Value" shall mean the fair market value of the Common Stock as determined
in good faith by the Committee or under procedures established by the Committee.
 Unless otherwise determined by the Committee, the Fair Market Value of the
Common Stock as of any given date shall be the closing sale price per share of
Common Stock reported on a consolidated basis for securities listed on the
principal stock exchange or market on which the Common Stock is traded on the
date as of which such value is being determined or, if there is no sale on that
day, then on the last previous day on which a sale was reported.

     

    (l) "Option"
means a right, granted to a participant under Section 6(b), to purchase Common
Stock at a specified price during specified time periods.

     

    (m) "Other
Stock-Based Awards" means Awards granted to a participant under Section
6(f).

     

    (n) "Performance
Awards" means Awards granted to a participant under Section 6(g).

     

    (o) "Plan"
shall mean this American Bank Note Holographics, Inc. 2005 Stock Incentive Plan,
as amended from time to time.

     

    (p) "Restricted
Stock" means Common Stock granted to a participant under Section 6(d) which is
subject to certain restrictions and to a risk of forfeiture.

     

    (q) "Securities
Act" shall mean the Securities Act of 1933, as amended.

     

    (r) "Stock
Appreciation Right" or "SAR" means a right granted to a participant under
Section 6(c). “

     

    3.   
Administration.

     

    (a) Committee.  The Plan
will be administered by the Committee. Notwithstanding the foregoing, the Board
will have sole responsibility and authority for matters relating to the grant
and administration of Awards to non-employee directors of the Company, and
reference herein to the Committee with respect to any such matters will be
deemed to refer to the Board.

     

    (b) Responsibility and Authority of
Committee.  Subject to the provisions of the Plan, the Committee,
acting in its discretion, will have responsibility and full power and authority
to (i) select the persons to whom Awards will be made, (ii) prescribe the terms
and conditions of each Award and make amendments thereto, (iii) construe,
interpret and apply the provisions of the Plan and of any agreement or
other document evidencing an Award made under the Plan, and (iv) make any and
all determinations and take any and all other actions as it deems necessary or
desirable in order to carry out the terms of the Plan.  In exercising its
responsibilities under the Plan, the Committee may obtain at the Company's
expense such advice, guidance and other assistance from outside compensation
consultants and other professional advisers as it deems
appropriate.

     

     

    
      
         

      

      
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    (c) Delegation of Authority.
 To the fullest extent authorized under Section 157(c) and other applicable
provisions of the Delaware General Corporation Law, the Committee may delegate
to officers or managers of the Company or any affiliate, or committees thereof,
the authority, subject to such terms as the Committee shall determine, to
perform such functions, including administrative functions, as the Committee may
determine.

     

    (d) Committee Actions.  A
majority of the members of the Committee shall constitute a quorum.  The
Committee may act by the vote of a majority of its members present at a meeting
at which there is a quorum or by unanimous written consent.  The decision
of the Committee as to any disputed question, including questions of
construction, interpretation and administration, shall be final and conclusive
on all persons.  The Committee shall keep a record of its proceedings and
acts and shall keep or cause to be kept such books and records as may be
necessary in connection with the proper administration of the Plan.

     

    (e) Limitation on Repricing.  Subject to
the provisions of Section 8, in no event shall any repricing (within the meaning
of any stock exchange or market on which the shares of Common Stock may then be
listed) of Awards granted under the Plan be permitted, without the approval of
the stockholders of the Company.

     

    (f) Indemnification.  The
Company shall indemnify and hold harmless each member of the Board, the
Committee or any subcommittee appointed by the Committee and any employee of the
Company who provides assistance with the administration of the Plan from and
against any loss, cost, liability (including any sum paid in settlement of a
claim with the approval of the Board), damage and expense (including reasonable
legal fees and other expenses incident thereto and, to the extent permitted by
applicable law, advancement of such fees and expenses) arising out of
or incurred in connection with the Plan, unless and except to the extent
attributable to such person's fraud or willful misconduct.

     

    4.   
Eligibility and Certain Award
Limitations.

     

    (a) Eligibility.  Awards may
be granted under the Plan to any member of the Board (whether or not an employee
of the Company or its affiliates), to any officer or other employee of the
Company or its affiliates (including prospective officers and employees) and to
any consultant or other independent contractor who performs or will perform
services for the Company or its affiliates.

     

    (b) Per-Person Award Limitations.
 In each fiscal year during any part of which the Plan is in effect, an
eligible person may be granted Awards intended to qualify as "performance-based
compensation" under Section 162(m) of the Code relating to up to his Annual
Share Limit.  Subject to adjustment as provided in Section 8 below, an
eligible person's "Annual Share Limit" shall equal, in any year during any part
of which the eligible person is then eligible under the Plan, 50,000
shares.

     

    5.   
Aggregate Share
Limitation.  Subject to adjustment as provided in
Section 8 below, the total number of shares of Common Stock which may be
issued pursuant to the Plan shall not exceed 1,600,000 shares (the "Authorized
Shares").  In determining the number of Authorized Shares
available for issuance under the Plan at any time after the Effective Date, the

     

     

     

    
      
         

      

      
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    following
shares shall be deemed not to have been issued (and will remain available for
issuance) pursuant to the Plan:  (i) shares subject to an Award that
is forfeited, canceled, terminated or settled in cash, (ii) shares repurchased
by the Company from the recipient of an Award for not more than the original
purchase price of such shares or forfeited to the Company by the recipient of an
Award, and (iii) shares withheld or tendered by the recipient of an Award as
payment of the exercise or purchase price under an Award or the tax withholding
obligations associated with an Award. Shares of Common Stock available for
issuance under the Plan may be either authorized and unissued or held by the
Company in its treasury.  No fractional shares of Common Stock may be
issued under the Plan.

     

    6.   
Specific Terms of
Awards.

     

    (a) General.  Awards may be
granted on the terms and conditions set forth in this Section 6.  In
addition, the Committee may impose on any Award or the exercise thereof, at the
date of grant or thereafter, such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall determine,
including terms requiring forfeiture of Awards in the event of termination of
employment or service by the participant and terms permitting a participant to
make elections relating to his or her Award.  The Committee shall require
the payment of lawful consideration for an Award to the extent necessary to
satisfy the requirements of the Delaware General Corporation Law, and may
otherwise require payment of consideration for an Award except as limited by the
Plan.

     

    (b) Options.  The Committee
is authorized to grant Options to participants on the following terms and
conditions:

     

    (i) Exercise Price.  The
exercise price per share of Common Stock purchasable under an Option shall be
determined by the Committee, provided that such exercise price shall be not less
than the Fair Market Value of a share of Common Stock on the date of grant of
such Option.

     

    (ii) Option Term; Time and Method of
Exercise.  The Committee shall determine the term of each Option,
which in no event shall exceed a period of ten years from the date of
grant.  The Committee shall determine the time or times at which or the
circumstances under which an Option may be exercised in whole or in part
(including based on achievement of performance goals and/or future service
requirements), the methods by which such exercise price may be paid or deemed to
be paid and the form of such payment (including, cash, Common Stock, other
Awards or awards granted under other plans of the Company or any affiliate, or
other property (including through "cashless exercise" arrangements, to the
extent permitted by applicable law)), and the methods by or forms in which
Common Stock will be delivered or deemed to be delivered to
participants.

     

    (c) Stock Appreciation Rights.
 The Committee is authorized to grant SARs to participants on the following
terms and conditions:

     

    (i) Right to Payment.  A SAR
shall confer on the participant to whom it is granted a right to receive, upon
exercise thereof, the excess of (1) the Fair Market Value of one share of Common
Stock on the date of exercise over (2) the base price of the SAR as determined
by the Committee, which base price shall be not less than the Fair Market Value
of a share of Common Stock on the date of grant of such SAR.

     

    
      
         

      

      
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    (ii) Other Terms.  The Committee
shall determine at the date of grant or thereafter, the time or times at which
and the circumstances under which a SAR may be exercised in whole or in part
(including based on achievement of performance goals and/or future service
requirements), the method of exercise, method of settlement, method by or forms
in which Common Stock will be delivered or deemed to be delivered to
participants, whether or not a SAR shall be free-standing or in tandem or
combination with any other Award, and the maximum term of an SAR, which in no
event shall exceed a period of ten years from the date of grant.

     

    (d) Restricted
Stock.  The Committee is authorized to grant Restricted Stock
to participants on the following terms and conditions:

     

    (i) Grant and Restrictions.
 Restricted Stock shall be subject to such restrictions on transferability,
risk of forfeiture and other restrictions, if any, as the Committee may impose,
which restrictions may lapse separately or in combination, at such times, under
such circumstances (including based on achievement of performance goals and/or
future service requirements), in such installments or otherwise and under such
other circumstances as the Committee may determine at the date of grant or
thereafter.  Except to the extent restricted under the terms of the Plan or
any Award document relating to the Restricted Stock, a participant granted
Restricted Stock shall have all of the rights of a stockholder, including the
right to vote the Restricted Stock and the right to receive dividends thereon
(subject to any mandatory reinvestment or other requirement imposed by the
Committee).

     

    (ii) Forfeiture.  Except as
otherwise determined by the Committee, upon termination of employment or service
during the applicable restriction period, Restricted Stock that is at that time
subject to restrictions shall be forfeited and reacquired by the Company;
provided that the Committee may provide, by rule or regulation or in any Award
document, or may determine in any individual case, that restrictions or
forfeiture conditions relating to Restricted Stock will lapse in whole or in
part, including in the event of terminations resulting from specified
causes.

     

    (iii) Certificates for
Stock.  Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee shall determine.  If certificates
representing Restricted Stock are registered in the name of the participant, the
Committee may require that such certificates bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Restricted Stock, that the Company retain physical possession of the
certificates, and that the participant deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Stock.

     

     

    
      
         

      

      
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    (iv) Dividends and Splits.
 As a condition to the grant of an Award of Restricted Stock, the Committee
may require that any dividends paid on a share of Restricted Stock shall be
either (1) paid with respect to such Restricted Stock at the dividend payment
date in cash, in kind, or in a number of shares of unrestricted Common Stock
having a Fair Market Value equal to the amount of such dividends, or (2)
automatically reinvested in additional Restricted Stock or held in kind, subject
to the same terms as applied to the original Restricted Stock to which it
relates.  Unless otherwise determined by the Committee, Common Stock
distributed in connection with a stock split or stock dividend, and other
property distributed as a dividend, shall be subject to restrictions and a risk
of forfeiture to the same extent as the Restricted Stock with respect to which
such Common Stock or other property has been distributed.

     

    (e) Deferred Stock.  The
Committee is authorized to grant Deferred Stock to participants, which are
rights to receive Common Stock, other Awards, or a combination thereof at the
end of a specified deferral period, subject to the following terms and
conditions:

     

    (i) Award and Restrictions.
 Issuance of Common Stock will occur upon expiration of the deferral period
specified for an Award of Deferred Stock by the Committee.  In addition,
Deferred Stock shall be subject to such restrictions on transferability, risk of
forfeiture and other restrictions, if any, as the Committee may impose, which
restrictions may lapse at the expiration of the deferral period or at earlier
specified times (including based on achievement of performance goals and/or
future service requirements), separately or in combination, in installments or
otherwise, and under such other circumstances as the Committee may determine at
the date of grant or thereafter.  Deferred Stock may be satisfied by
delivery of Common Stock, other Awards, or a combination thereof, as determined
by the Committee at the date of grant or thereafter.

     

    (ii) Forfeiture.  Except as
otherwise determined by the Committee, upon termination of employment or service
during the applicable deferral period or portion thereof to which forfeiture
conditions apply (as provided in the Award document evidencing the Deferred
Stock), all Deferred Stock that is at that time subject to such forfeiture
conditions shall be forfeited; provided that the Committee may provide, by rule
or regulation or in any Award document, or may determine in any individual case,
that restrictions or forfeiture conditions relating to Deferred Stock will lapse
in whole or in part, including in the event of terminations resulting from
specified causes.

     

    (iii) Dividend Equivalents.
 Unless otherwise determined by the Committee, dividend equivalents on the
specified number of shares of Common Stock covered by an Award of Deferred Stock
shall be either (1) paid with respect to such Deferred Stock at the dividend
payment date in cash or in shares of unrestricted Common Stock having a Fair
Market Value equal to the amount of such dividends, or (2) deferred with respect
to such Deferred Stock, with the amount or value thereof automatically deemed
reinvested in additional Deferred Stock.

     

    
      
         

      

      
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    (f) Other Stock-Based Awards.
 The Committee is authorized, subject to limitations under applicable law,
to grant to participants such other Awards that may be denominated or payable
in, valued in whole or in part by reference to, or otherwise based on, or
related to, Common Stock or factors that may influence the value of Common
Stock, including, without limitation, stock bonuses, dividend equivalents,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Common Stock, purchase rights for Common Stock, Awards with
value and payment contingent upon performance of the Company or business units
thereof or any other factors designated by the Committee, and Awards valued by
reference to the book value of Common Stock or the value of securities of or the
performance of specified subsidiaries or affiliates or other business units and
awards designed to comply with or take advantage of other applicable local
laws or jurisdictions other than the United States. The Committee shall
determine the terms and conditions of such Awards.

     

    (g) Performance Awards.  The
Committee is authorized to grant Performance Awards to eligible persons on the
following terms and conditions:

     

    (i) Generally.  The
Committee may specify that any Award granted under the Plan shall constitute a
Performance Award by conditioning the grant, exercise, vesting or settlement,
and the timing thereof, upon achievement or satisfaction of such performance
conditions as may be specified by the Committee.  The Committee may use
such business criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions, and may exercise its
discretion to reduce or increase the amounts payable under any award subject to
performance conditions, except as limited under this Section 6(g) in the case of
a Performance Award intended to qualify as "performance-based compensation"
under Section 162(m) of the Code.

     

    (ii) Awards exempt under Section 162(m)
of the Code.  If the Committee determines that an Award should
qualify as "performance-based compensation" for purposes of Section 162(m) of
the Code (other than Options or SARs which otherwise qualify as
"performance-based compensation" for purposes of Section 162(m) of the Code),
the grant, exercise, vesting and/or settlement of such Performance Award shall
be contingent upon achievement of one or more pre-established, objective
performance goals.  The performance goal or goals for such Performance
Awards shall consist of one or more business criteria and a targeted level or
levels of performance with respect to each of such criteria, as specified by the
Committee consistent with this subsection (ii).  One or more of the
following business criteria for the Company, on a consolidated basis, and/or,
where appropriate, for specified subsidiaries or affiliates or other business
units of the Company, shall be used by the Committee in establishing performance
goals for such Performance Awards:  (1) revenues on a corporate or product
by product basis; (2) earnings from operations, earnings before or after taxes,
earnings before or after interest, depreciation, amortization, incentives,

     

     

    
      
         

      

      
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    service
fees or extraordinary or special items; (3) net income or net income per common
share (basic or diluted); (4) return on assets, return on investment, return on
capital, or return on equity; (5) cash flow, free cash flow, cash flow return on
investment, or net cash provided by operations; (6) economic value created or
added; (7) operating margin or profit margin; and/or (8) stock price, dividends
or total stockholder return.  The targeted level or levels of performance
with respect to such business criteria may be established at such levels and in
such terms as the Committee may determine, in its discretion, including in
absolute terms, as a goal relative to performance in prior periods, or as a goal
compared to the performance of one or more comparable companies or an index
covering multiple companies.  All determination by the Committee as to the
establishment of performance goals, the amount potentially payable in respect of
Performance Awards, the level of actual achievement of the specified performance
goals relating to Performance Awards and the amount of any final Performance
Award shall be recorded in writing.  Specifically, the Committee shall
certify in writing, in a manner conforming to applicable regulations under
Section 162(m) of the Code, prior to settlement of each such award, that the
performance objective relating to the Performance Award and other material terms
of the Award upon which settlement of the award was conditioned have been
satisfied.

     

    7.   Limits on Transferability;
Beneficiaries.  No Award or other right or interest of a
participant under the Plan shall be pledged, hypothecated or otherwise
encumbered or subject to any lien, obligation or liability of such participant
to any party (other than the Company or an affiliate thereof), or assigned or
transferred by such participant otherwise than by will or the laws of descent
and distribution or to a beneficiary upon the death of a participant, and such
Awards or rights that may be exercisable shall be exercised during the lifetime
of the participant only by the participant or his or her guardian or legal
representative, except that Awards (other than Options intended to qualify as
"incentive stock options" (as defined in Section 422 of the Code)) and other
rights may be transferred to one or more transferees during the lifetime of the
participant, and may be exercised by such transferees in accordance with the
terms of such Award, but only if and to the extent such transfers are permitted
by the Committee, subject to any terms and conditions which the Committee may
impose thereon.  A beneficiary, transferee, or other person claiming
any rights under the Plan from or through any participant shall be subject to
all terms and conditions of the Plan and any Award document applicable to such
participant, except as otherwise determined by the Committee, and to any
additional terms and conditions deemed necessary or appropriate by the
Committee.  For purposes hereof, "beneficiary" shall mean the legal
representatives of the participant's estate entitled by will or the laws of
descent and distribution to receive the benefits under a participant's Award
upon a participant's death, provided that, if and to the extent authorized by
the Committee, a participant may be permitted to designate a beneficiary, in
which case the "beneficiary" instead will be the person, persons, trust or
trusts (if any are then surviving) which have been designated by the participant
in his or her most recent written beneficiary designation filed with the
Committee to receive the benefits specified under the participant's Award upon
such participant's death.

     

    
      
         

      

      
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    8.   
Capital Changes, Reorganization,
Sale.

     

     

    (a) Adjustments upon Changes in
Capitalization.  The aggregate number and class of Authorized
Shares, the aggregate number and class of shares referenced by the Annual Share
Limit, the number and class of shares and the exercise price per share covered
by each outstanding Option, the number and class of shares and the base price
per share covered by each outstanding SAR, the number and class of shares
covered by each outstanding Deferred Stock Award, Performance Award and Other
Stock-Based Award, any per-share base or purchase price or target market price
included in the terms of any such Award, and any related terms shall all be
adjusted proportionately or as otherwise appropriate to reflect any
increase or decrease in the number of issued shares of Common Stock resulting
from a split-up or consolidation of shares or any like capital adjustment, or
the payment of any stock dividend, and/or to reflect a change in the character
or class of shares covered by the Plan arising from a readjustment or
recapitalization of the Company's capital stock.

     

    (b) Effect of Change in Control on
Options and SARs.  Each outstanding Option and SAR at the time of a
Change in Control that is not otherwise fully exercisable shall automatically
accelerate so that each such Option or SAR shall, at least fifteen (15) days
prior to the Change in Control, become fully exercisable (and the Board shall
notify each participant of such acceleration at least fifteen (15) days
prior to the Change in Control), provided that no acceleration of exercisability
shall occur with respect to an outstanding Option or SAR if and to the extent
such Option or SAR is, in connection with the Change in Control, to be assumed
or otherwise continued in full force or effect by the successor entity (or
parent thereof) pursuant to the terms of the Change in Control transaction.
 Upon the consummation of the Change in Control, all outstanding Options
and SARs shall terminate and cease to be outstanding, except to the extent
assumed by the successor entity (or parent thereof) or otherwise expressly
continued in full force and effect pursuant to the terms of the Change in
Control transaction.  Each Option and SAR which is assumed (or is otherwise
to continue in effect) in connection with a Change in Control shall be
appropriately adjusted, immediately after such Change in Control, to apply to
the number and class of securities which would have been issuable to the
participant upon consummation of such Change in Control had the Option or SAR
been exercised immediately prior to such Change in Control, provided the
aggregate exercise price of each Option and the aggregate base price for each
SAR shall remain the same.  The Committee, acting in its discretion, may
accelerate vesting of Restricted Stock, Deferred Stock, Other Stock-Based Awards
and Performance Awards, provide for cash settlement and/or make such other
adjustments to the terms of such awards as it deems appropriate in the context
of a Change in Control, taking into account the manner in which outstanding
Options and SARs are being treated.

     

    (c) Fractional Shares.  In
the event of any adjustment in the number of shares covered by any Award
pursuant to the provisions hereof, any fractional shares resulting from such
adjustment will be disregarded and each such Award will cover only the number of
full shares resulting from the adjustment.

     

    (d) Determination of Board to be
Final.  All adjustments under this Section 8 shall be made by
the Board, and its determination as to what adjustments shall be made, and the
extent thereof, shall be final, binding and conclusive.

     

     

    
      
         

      

      
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    9.   
Tax
Withholding.  As a condition to the exercise of any Award, the
delivery of any shares of Common Stock pursuant to any Award, the lapse of
restrictions on any Award or the settlement of any Award, or in connection with
any other event that gives rise to a federal or other governmental tax
withholding obligation on the part of the Company or an affiliate relating to an
Award, the Company and/or the affiliate may (a) deduct or withhold (or cause to
be deducted or withheld) from any payment or distribution to an Award recipient
whether or not pursuant to the Plan or (b) require the recipient to remit cash
(through payroll deduction or otherwise), in each case in an amount sufficient
in the opinion of the Company to satisfy such withholding
obligation.  If the event giving rise to the withholding obligation
involves a transfer of shares of Common Stock, then, at the sole discretion of
the Committee, the recipient may satisfy the withholding obligation described
under this Section 9 by electing to have the Company withhold shares of Common
Stock or by tendering previously-owned shares of Common Stock, in each case
having a Fair Market Value equal to the amount of tax to be withheld (or by any
other mechanism as may be required or appropriate to conform with local tax and
other rules). Other provisions of the Plan notwithstanding, only the minimum
amount of Common Stock deliverable in connection with an Award necessary to
satisfy statutory withholding requirements will be withheld, except a greater
amount of Common Stock may be withheld if such withholding would not result in
additional accounting expense to the Company.

     

    10.   Amendment and
Termination.  Except as may otherwise be required by law or the
requirements of any stock exchange or market upon which the Common Stock may
then be listed, the Board, acting in its sole discretion and without further
action on the part of the stockholders of the Company, may amend the Plan at any
time and from time to time and may terminate the Plan at any time.  No
amendment or termination may affect adversely any outstanding award without the
written consent of the award recipient.

     

    11.   General
Provisions.

     

    (a) Compliance with Law.
 The Company will not be obligated to issue or deliver shares of Common
Stock pursuant to the Plan unless the issuance and delivery of such shares
complies with applicable law, including, without limitation, the Securities Act,
the Exchange Act and the requirements of any stock exchange or market upon which
the Common Stock may then be listed, and shall be further subject to the
approval of counsel to the Company with respect to such compliance.

     

    (b) Transfer Orders; Placement of
Legends.  All certificates for shares of Common Stock delivered
under the Plan shall be subject to such stock-transfer orders and other
restrictions as the Company may deem advisable under the rules, regulations, and
other requirements of the Securities and Exchange Commission, any stock exchange
or market upon which the Common Stock may then be listed, and any applicable
federal or state securities law.  The Company may cause a legend or legends
to be placed on any such certificates to make appropriate reference to such
restrictions.

     

    (c) No Employment or other Rights.
 Nothing contained in the Plan or in any Award agreement shall confer upon
any recipient of an Award any right with respect to the continuation of his or
her employment or service with the Company or an affiliate or interfere in any
way with the right of the Company and its affiliates at any time to terminate
such employment or service or to increase or decrease, or otherwise adjust, the
other terms and conditions of the recipient's employment or
service.

     

     

    
      
         

      

      
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    (d) Decisions and Determinations Final.  Except to
the extent rights or powers under the Plan are reserved specifically to the
discretion of the Board, the Committee shall have full power and authority to
interpret the Plan and any Award agreement made under the Plan and to determine
all issues which arise thereunder or in connection therewith, and the decision
of the Board or the Committee, as the case may be, shall be binding and
conclusive on all interested persons.

     

    (e) Non-exclusivity of the Plan.
 No provision of the Plan, and neither its adoption Plan by the Board or
submission to the stockholders for approval, shall be construed as creating any
limitations on the power of the Board or a committee thereof to adopt such other
incentive arrangements, apart from the Plan, as it may deem
desirable.

     

    12.   Governing Law.  All
rights and obligations under the Plan and each Award agreement or instrument
shall be governed by and construed in accordance with the laws of the State of
Delaware, without regard to its principles of conflict of laws.

     

    13.   Term of the
Plan.  The Plan shall become effective on the Effective
Date.  Unless sooner terminated by the Board, the Plan shall terminate
on the tenth anniversary of the Effective Date.  The rights of any
person with respect to an Award made under the Plan that is outstanding at the
time of the termination of the Plan shall not be affected solely by reason of
the termination of the Plan and shall continue in accordance with the terms of
the Award and of the Plan, as each is then in effect or is thereafter
amended.

     

     

     

     

     

     

     11Filed by Bowne Pure Compliance

 

Exhibit 10(a) (7)

NONDISCLOSURE AND NON-COMPETE AGREEMENT

This Agreement is entered into as of the 17th day of December, 2007, by and between Universal
Forest Products, Inc., and its affiliates and subsidiaries, 2801 East Beltline NE, Grand Rapids, MI
49525 (herein “UFP”), and William G. Currie, an individual, of 1830 Beard Drive SE, Grand Rapids,
MI 49546 (herein “Currie”).

RECITALS

	A.	 	Currie intends to retire as an officer of UFP as of July 21, 2009. UFP wishes to restrict
his services from being provided to any competitors of UFP.

The Parties agree as follows:

SECTION 1. DISCLOSURE OF INFORMATION.

Currie acknowledges that UFP’s trade secrets, private or secret processes as they exist from
time to time, and information concerning customers and their identity, products, developments,
manufacturing techniques, new product plans, equipment, inventions, discoveries, patent
applications, ideas, designs, engineering drawings, sketches, renderings, other drawings,
manufacturing and test data, computer programs, progress reports, materials, costs, specifications,
processes, methods, research, procurement and sales activities and procedures, promotion and
pricing techniques, and credit and financial data concerning customers of UFP, as well as
information relating to the management, operation, or planning of UFP, herein the (“Proprietary
Information”) are valuable, special, and unique assets of UFP, access to and knowledge of which may
be essential to the performance of Currie’s duties under this Agreement. In light of the highly
competitive nature of the industries in which UFP conducts businesses, Currie agrees that all
Proprietary Information obtained by Currie as a result of its relationship with UFP shall be
considered confidential. In recognition of this fact, Currie agrees that except as may be
necessary for UFP’s benefit, in Currie’s reasonable judgment, Currie will not, during and after the
Non-Compete Period, disclose any of such Proprietary Information to any person or entity for any
reason or purpose whatsoever without the written consent of UFP, and Currie will not make use of
any Proprietary Information for Currie’s own purposes or for the benefit of any other person or
entity (except UFP) under any circumstances.

SECTION 2. NON-COMPETITION AGREEMENT.

In order to further protect the confidentiality of the Proprietary Information and in
recognition of the highly competitive nature of the industries in which UFP conducts its
businesses, and for the consideration set forth herein, Currie further agrees that during
and for the period commencing on July 21, 2009 and ending on July 21, 2012 (the “Non-Compete
Period”):

 

 

 

2.1 Currie will not directly or indirectly engage in any Business Activities (hereinafter
defined), other than on behalf of UFP, whether such engagement is as an officer, director,
proprietor, employee, partner, investor (other than as a holder of less than 1% of the outstanding
capital stock of a publicly-traded corporation), advisor, agent, or other participant, in any
geographic area in which the products or services of UFP have been distributed or provided during
the period of Currie’s consulting relationship with UFP. For purposes of this Agreement, the term
“Business Activities” shall mean the design, development, manufacture, sale, marketing, or
servicing of UFP’s products, together with all other activities engaged in by UFP or any of its
subsidiaries at any time during Currie’s relationship with UFP, and activities in any way related
to activities with respect to which Currie renders consulting services under this Agreement.

2.2 Currie will not directly or indirectly engage in any of the Business Activities (other
than on behalf of UFP) by supplying products or providing services to any customer with whom UFP
has done any business during the consulting relationship with UFP, whether such engagement is as an
officer, director, proprietor, employee, partner, investor (other than as a holder of less than one
percent (1%) of the outstanding capital stock of a publicly traded corporation), advisor, agent, or
other participant.

2.3 Assistance to Others. Currie will not directly or indirectly assist others in
engaging in any of the Business Activities in any manner prohibited to Currie under this Agreement.

2.4 UFP’s Employees. Currie will not directly or indirectly induce employees of UFP
to engage in any activity hereby prohibited to Currie or to terminate their employment with UFP.

2.5 Non-Compete Payments. In exchange for Currie’s agreements and obligations under
this Section 2, Currie will receive a payment of Forty One Thousand Six Hundred Sixty Six Dollars
($41,666.00) per month for the term of the Non-Compete Period, subject to earlier termination upon
the death or Disability of Currie. Disability shall mean a physical or mental injury or illness
that totally and permanently renders Currie unable to perform all of the functions called for under
this Agreement.

 

2

 

SECTION 3. INTERPRETATION.

Although Currie and UFP consider the restrictions contained in Sections 1 and 2 of this
Agreement reasonable for the purpose of preserving the goodwill, proprietary rights, and going
concern value of UFP, if a final judicial determination is made by a court
having jurisdiction that the time or territory or any other restriction contained in Section 2
is an unenforceable restriction on the activities of Currie, the provisions of such restriction
shall not be rendered void but shall be deemed amended to apply as to such maximum time and
territory and to such other extent as such court may judicially determine or indicate to be
reasonable. Alternatively, if the court referred to above finds that any restriction contained in
Section 2 or any remedy provided in Section 4 of this Agreement is unenforceable, and such
restriction or remedy cannot be amended so as to make it enforceable, such finding shall not affect
the enforceability of any of the other restrictions contained in this Agreement or the availability
of any other remedy. The provisions of Sections 1 and 2 shall in no respect limit or otherwise
affect the obligations of Currie under other agreements with UFP.

SECTION 4. REMEDIES.

Currie acknowledges and agrees that UFP’s remedy at law for a breach or threatened breach of
any of the provisions of Sections 1 and 2 of this Agreement would be inadequate and, in recognition
of this fact, in the event of a breach or threatened breach by Currie of any of the provisions of
Sections 1 and 2, Currie agrees that, in addition to its remedies at law, at UFP’s option, all
rights of Currie, and obligations of UFP, under this Agreement may be terminated. UFP shall be
entitled to equitable relief in the form of specific performance, temporary restraining order,
temporary or permanent injunction, or any other equitable remedy which may then be available. UFP
shall not be required to post bond, and Currie agrees not to oppose UFP’s request for equitable
relief. Currie acknowledges that the granting of a temporary injunction, temporary restraining
order or permanent injunction merely prohibiting the use of Proprietary Information would not be an
adequate remedy upon breach or threatened breach of Sections 1 and 2, and consequently agrees upon
any such breach or threatened breach to the granting of injunctive relief prohibiting the design,
development, manufacture, marketing or sale of products and providing of services of the kind
designed, developed, manufactured, marketed, sold or provided by UFP or its subsidiaries during the
term of Currie’s relationship with UFP. Nothing contained in this Section 4 shall be construed as
prohibiting UFP from pursuing, in addition, any other remedies available to it for such breach or
threatened breach.

SECTION 5. MISCELLANEOUS PROVISIONS.

5.1 Assignment. This Agreement shall not be assignable by either party, except by UFP
to any subsidiary or affiliate of UFP (now or hereafter existing) or to any successor in interest
to UFP’s business, provided that in the case of an assignment to an affiliate or subsidiary, UFP
shall remain liable as a guarantor for payments due to Currie hereunder.

 

3

 

5.2 Binding Effect. The provisions of this Agreement shall be binding upon and inure
to the benefit of the heirs, personal representatives, successors, and assigns of the parties.

5.3 Notice. Any notice or other communication required or permitted to be given under
this Agreement shall be in writing and shall be mailed by certified mail, return receipt requested,
postage prepaid, addressed to the parties at the address stated on the first page of this
Agreement. The address of a party to which notices or other communications shall be mailed may be
changed from time to time by giving written notice to the other party.

5.4 Litigation Expense. In the event of a default under this Agreement, the
defaulting party shall reimburse the non-defaulting party for all costs and expenses reasonably
incurred by the non-defaulting party in connection with the default, including without limitation
reasonable attorney’s fees. The non-defaulting party may seek reimbursement in a court of competent
jurisdiction. Additionally, in the event a suit or action is filed to enforce this Agreement or
with respect to this Agreement, the prevailing party or parties shall be reimbursed by the other
party for all costs and expenses incurred in connection with the suit or action, including without
limitation reasonable attorney’s fees at the trial level and on appeal.

5.5 Waiver. No waiver of any provision of this Agreement shall be deemed, or shall
constitute, a waiver of any other provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party
making the waiver.

5.6 Applicable Law. This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of Michigan.

5.7 Entire Agreement. This Agreement constitutes the entire Agreement between the
parties pertaining to its subject matter, and it supersedes all prior contemporaneous agreements,
representations, and understandings of the parties. No supplement, modification, or amendment of
this Agreement shall be binding unless executed in writing by all parties.

[SIGNATURES ON FOLLOWING PAGE.]

 

4

 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	UNIVERSAL FOREST PRODUCTS, INC.:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Matthew J. Missad	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Its:
	 	Executive Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ William G. Currie	 	 
	 	 	 	 	 
	 	 	William G. Currie	 	 

 

5

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