Document:

Exhibit 10.9

 

Panolam Holdings Co.

 

2005
Equity Incentive Plan

 

EMPLOYEE
NON STATUTORY STOCK OPTION AGREEMENT

REFERENCE
NUMBER:                          

 

SECTION 1.                            GRANT OF OPTION.

 

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

 

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

 

(c)                                  Duration of this Agreement. This Agreement shall apply both
to this option and to the Shares acquired upon the exercise of such Option
until the Company shall no longer have Right of First Offer with respect to any
Shares acquired (or that may be acquired) by exercising this Option.

 

SECTION 2.                            RIGHT TO EXERCISE.

 

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

 

SECTION 3.                            NO TRANSFER OR ASSIGNMENT OF OPTION.

 

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

 

SECTION 4.                            EXERCISE PROCEDURES.

 

(a)                                  Notice of Exercise. The Optionee or the Optionee’s
representative may exercise this option by giving written notice to the
Company specifying the election to exercise this option, the number of Shares
for which it is being exercised and the form of payment. Exhibit A
is an example of a “Notice of Exercise”. The Notice of Exercise shall be signed
by the person

 

 

exercising this option. In the event that this option
is being exercised by the Optionee’s representative, the notice shall be
accompanied by proof (satisfactory to the Company) of the representative’s
right to exercise this option. The Optionee or the Optionee’s representative
shall deliver to the Company, at the time of giving the notice, payment in a form permissible
under Section 5 for the full amount of the Purchase Price.

 

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

 

(c)                                  Escrow. If Shares will be deposited in escrow, the Optionee
shall deliver to the Company, together with the Notice of Exercise and Purchase
Price, a duly-executed blank Stock Power (in the form attached hereto as Exhibit B).
All regular cash dividends paid on Shares held in escrow shall be paid directly
to the Optionee and shall not be held in escrow. Shares together with any other
assets or securities held in escrow hereunder, shall be surrendered to the
Company for repurchase and cancellation upon the Company’s exercise of its
Right of First Offer. In any event, all Shares which have vested (and any other
vested assets and securities attributable thereto) shall be released within
sixty (60) days upon the later of (i) the date the Optionee’s Service
terminates or (ii) the lapse of the Right of First Offer.

 

(d)                                 Withholding Requirements. The Company may withhold any
tax (or other governmental obligation) as a result of the exercise of this
option as a condition to the exercise of this option, and the Optionee shall
make arrangements satisfactory to the Company to enable it to satisfy all such
withholding requirements.

 

SECTION 5.                            PAYMENT FOR SHARES.

 

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

 

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

 

SECTION 6.                            TERM AND EXPIRATION.

 

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

 

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

 

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

 

2

 

(ii)                                  The
date three (3) months after the termination of the Optionee’s Service for
any reason other than Cause, death or Disability (or such later date as the
Board of Directors may determine);

 

(iii)                               The date six (6) months
after the termination of the Optionee’s Service by reason of Disability (or
such later date as the Board of Directors may determine) or retirement
pursuant to any then current formal retirement policy of the Company;

 

(iv)                              The
date twelve (12) months after the Optionee’s death; or

 

(v)                                 The
date of termination of the Optionee’s Service if such termination is for Cause
or if Cause exists on such date.

 

The Optionee (or
in the case of the Optionee’s death or Disability, the Optionee’s
representative) may exercise all or part of this option at any time
before its expiration under the preceding sentence, but only to the extent that
this option had become exercisable for vested Shares on or before the date the
Optionee’s Service terminates. When the Optionee’s Service terminates, this
option shall expire immediately with respect to the number of Shares for which
this option is not yet vested. The Company shall also have the right not to
deliver Shares upon the exercise of this option if, after the exercise of this
option, the Optionee’s Service is terminated for Cause or it is determined that
Cause existed on such date.

 

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

 

SECTION 7.                            RIGHT OF FIRST OFFER.

 

(a)                                  Right of First Offer. Shares that have been acquired upon
the exercise of this option shall in any event be subject to a Right of First
Offer. In the event that the Optionee wishes to sell or otherwise dispose of
any or all of such Shares or any interest therein (other than a Permitted
Transfer) or receives a bona fide offer to purchase or otherwise acquire such
Shares from any third party, such Right of First Offer would apply.

 

(b)                                 Right of First Offer Notice. If the Optionee desires to
transfer Shares, the Optionee shall provide the Company with a Right of First
Offer notice (“ROFO Notice”) describing fully the proposed transfer, including
the number of Shares proposed to be transferred, the proposed transfer price,
the name and address of the proposed Transferee (if any) and proof satisfactory
to the Company that the proposed sale or transfer will not violate any
applicable federal or state securities laws. A sample ROFO Notice is attached
hereto as Exhibit C. The ROFO Notice shall be signed both by the
Optionee and in the case of an offer made by a third-party by the proposed
Transferee as well. The Company shall have the right to purchase all, and not
less than all, of the Shares that are the subject of the ROFO Notice on the
terms of the proposal described in such notice (subject, however, to any change
in such terms permitted under Subsection (c) below) by delivery of a
Notice of Exercise of the Right of First Offer within thirty (30) days after
the date

 

3

 

when the ROFO Notice was received by the Company. A
sample Notice of Exercise of the Right of First Offer is attached hereto as Exhibit D.

 

(c)                                  Lapse of Right of First Offer. If the Company fails to
exercise its Right of First Offer within thirty (30) days after receipt of
the ROFO Notice, the Optionee may, not later than ninety (90) days
following the Company’s receipt of the ROFO Notice, conclude the transfer of
the Shares subject to the ROFO Notice on the terms and conditions described in
such notice, provided that any such sale is made in compliance with applicable
federal and state securities laws and not in violation of any other contractual
restrictions to which the Optionee is bound. Any proposed transfer on terms and
conditions different from those described in the ROFO Notice, as well as any
subsequent proposed transfer by the Optionee, shall again be subject to the
Right of First Offer and shall require compliance with the procedure described
in Subsection (b) above. If the Company exercises its Right of First
Offer, the parties shall consummate the sale of the Shares on the terms set
forth in the ROFO Notice within sixty (60) days after the date when the
Company received the ROFO Notice (or within such longer period as may have
been specified in the ROFO Notice); provided, however, that in
the event the ROFO Notice provided that payment for the Shares was to be made
in a form other than cash or cash equivalents paid at the time of
transfer, the Company shall have the option of paying for the Shares with cash
or cash equivalents equal to the present value of the consideration described
in the ROFO Notice.

 

(d)                                 Termination of Rights as Stockholder. If the Company makes
available, at the time and place and in the amount and form provided in
this Agreement, the consideration for the Shares to be purchased in accordance
with this Section 7, then after such time the person from whom such Shares
are to be purchased shall no longer have any rights as a holder of such Shares
(other than the right to receive payment of such consideration in accordance
with this Agreement). Such Shares shall be deemed to have been purchased in
accordance with the applicable provisions hereof, whether or not the
certificate(s) therefor have been delivered as required by this Agreement.

 

(e)                                  Additional Shares or Substituted Securities. In the event of
the declaration of a stock dividend, the declaration of an extraordinary
dividend payable in a form other than stock, a spin-off, a stock split, an
adjustment in conversion ratio, a recapitalization or a similar transaction
affecting the Company’s outstanding securities without receipt of
consideration, any new, substituted or additional securities or other property
(including money paid other than as an ordinary cash dividend) which are by
reason of such transaction distributed with respect to any Shares subject to
this Section 7 or into which such Shares thereby become convertible shall
immediately be subject to this Section 7.

 

SECTION 8.                            LEGALITY OF INITIAL ISSUANCE.

 

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

 

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

 

4

 

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

 

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

 

SECTION 9.                            REGISTRATION RIGHTS.

 

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

 

SECTION 10.                     RESTRICTIONS
ON TRANSFER.

 

(a)                                  Permitted Transfers. Section 7(a) shall not apply
to any of the following “Permitted Transfers”: (i) a transfer by
beneficiary designation, will or intestate succession or (ii) a transfer
to the Optionee’s spouse, children or grandchildren (or their issue) or to a
trust established by the Optionee for the benefit of the Optionee or the
Optionee’s spouse, children or grandchildren (or their issue), provided in
either case that the Transferee agrees in writing on a form prescribed by
the Company to be bound by all provisions of this Agreement and the Option is
intended to be a Nonstatutory Option. If the Optionee transfers any Shares
acquired under this Agreement, either under this Subsection or after the
Company has failed to exercise the Right of First Offer, then such rights shall
be applicable to the Transferee to the same extent as to the Optionee.

 

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

 

(c)                                  Market Stand-Off. In connection with any underwritten public
offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act, including the Company’s
Initial Public Offering, the Optionee shall not directly or indirectly sell,
make any short sale of, loan, hypothecate, pledge, offer, grant or sell any
option or other contract for the purchase of, purchase any option or other
contract for the sale of, or otherwise dispose of or transfer, or agree to
engage in any of the foregoing transactions with respect to, any Shares
acquired under this Agreement without the prior written consent of the Company
or its underwriters. Such restriction (the “Market Stand-Off”) shall be in
effect for such period of time following the date of the final prospectus for
the offering as may be requested by the Company or such underwriters. In
no event, however, shall such period exceed one hundred eighty (180) days. The
Market Stand-Off shall in any event terminate two (2) years after the date
of the Company’s Initial Public Offering. In the event of the declaration of a
stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a
recapitalization or a similar transaction affecting the Company’s outstanding
securities without receipt of consideration, any new, substituted or additional
securities which are by reason of such

 

5

 

transaction distributed with respect to any Shares
subject to the Market Stand-Off, or into which such Shares thereby become
convertible, shall immediately be subject to the Market Stand-Off. In order to
enforce the Market Stand-Off, the Company may impose stop-transfer
instructions with respect to the Shares acquired under this Agreement until the
end of the applicable stand-off period. The Company’s underwriters shall be
beneficiaries of the agreement set forth in this Subsection (c). This Subsection (c) shall
not apply to Shares registered in the public offering under the Securities Act,
and the Optionee shall be subject to this Subsection (c) only if the
directors and officers of the Company are subject to similar arrangements.

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

SECTION 11.                     ADJUSTMENT
OF SHARES.

 

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

 

SECTION 12.                     MISCELLANEOUS
PROVISIONS.

 

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

 

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

 

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

 

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

 

(e)                                  Waiver. The failure of the Company in any instance to
exercise the Right of First Offer shall not constitute a waiver of any other
repurchase rights and/or rights of first offer that may subsequently arise
under the provisions of this Agreement or any other agreement between the
Company and the Optionee. No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or condition
whether of like or different nature.

 

7

 

(f)                                    Assignment. The Company may assign the Right of First
Offer to any person or entity selected by the Board of Directors, including,
without limitation, one or more stockholders of the Company.

 

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

 

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

 

SECTION 13.                     DEFINITIONS.

 

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

 

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

 

(c)                                  “Cause” shall mean with respect to the Optionee, “Cause” as
defined in any employment agreement between the Company and the Optionee or the
following:

 

(i)                                     any
conviction or plea of guilty or nolo contendere to a felony,

 

(ii)                                  any
willful misconduct, or

 

(iii)                               any willful breach of
any written policy or any confidential or proprietary information, non-compete
or non-solicitation covenant for the benefit of the Company or any of its
affiliates.

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

(n)                                 “Fair Market Value” shall mean the fair market value of a
Share, as determined by the Board of Directors in good faith. Such
determination shall be conclusive and binding on all persons.

 

(o)                                 “Initial Public Offering” shall mean a firm commitment
underwritten public offering of Shares or other event the result of which is
that Shares are tradable on the New York Stock Exchange, American Stock
Exchange, NASDAQ National Market or similar market system.

 

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

 

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

 

(r)                                    “Optionee” shall mean the person named in the Notice.

 

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

 

(t)                                    “Permitted Transfers” shall have the meaning described in Section 11(a) of
this Agreement.

 

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

 

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

 

(w)                               “Right of First Offer” shall mean the Company’s right of
first offer described in Section 7.

 

9

 

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

 

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

 

(z)                                   “Share” shall mean one share of common stock of the Company,
with a par value of $.001 as adjusted in accordance with Section 7 of the
Plan (if applicable).

 

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

 

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

 

10

 

EXHIBIT A

 

SAMPLE
NOTICE OF EXERCISE

 

Panolam Holdings
Co.

[Address]

 

Attn:  Corporate Secretary

 

To the Corporate
Secretary:

 

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

 

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

 

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

 

	
  No. Shares to be Acquired

  	
   

  	
  Type of Option

  	
   

  	
  Exercise Price

  	
   

  	
  Total

  
	
   

  	
   

  	
  Nonstatutory

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Incentive

  	
   

  	
   

  	
   

  	
   

  
	
  Estimated
  Withholding

  	
   

  	
  Nonstatutory
  only

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Amount
  Paid

  	
   

  	
   

  

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature of
  Optionee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee’s Name
  and Mailing Address

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee’s
  Social Security Number

  
	
   

  	
   

  
	
   

  	
   

  	
   

  

 

11

 

EXHIBIT B

 

STOCK
POWER

 

FOR VALUE
RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto Panolam Holdings Co. (the “Company”),                                
(               )
shares of the common stock, par value $.001 per share, of the Company standing
in his/her/their/its name on the books of the Company represented by
Certificate No.                       
herewith and do(es) hereby irrevocably constitute and appoint                                     
his/her/their/its attorney-in-fact, with full power of substitution, to
transfer such shares on the books of the Company.

 

 

	
  Dated:

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name and
  Mailing Address

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

Instructions:                         Please do not fill in any blanks other than the signature line and
printed name and mailing address. Please print your name exactly as you would
like your name to appear on the issued stock certificate. The purpose of this
assignment is to enable the Company to exercise the Right of First Offer without
requiring additional signatures on your part.

 

 

EXHIBIT C

 

RIGHT OF
FIRST OFFER NOTICE

 

 

[Date]

 

Panolam Holdings
Co.

[insert
address and contact information]

 

Re:                               Right of First Offer

 

Dear [Contact Person]:

 

This Right of
First Offer Notice is prepared in accordance with the terms of the Panolam
Holdings Co. 2005 Equity Incentive Plan (the “Plan”).

 

1.                                       Offer                     (only items checked below apply)

 

o                            I have received a
firm offer to purchase (or I intend to transfer) shares of common stock of Panolam
Holdings Co. (“Common Stock”) that I acquired upon the exercise of one or more
stock options granted pursuant to the Plan in accordance with the terms described
below:

 

	
  No. Shares to Be

  Sold/Transferred

  	
   

  	
  Price per Share

  	
   

  	
  Form of Payment

  	
   

  	
  Date of Sale

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

o                            I intend to offer
for sale (or otherwise transfer) shares of Common Stock that I acquired upon
the exercise of one or more stock options granted pursuant to the Plan in
accordance with the terms described below:

 

	
  No. Shares to Be

  Sold/Transferred

  	
   

  	
  Price per Share

  	
   

  	
  Form of Payment

  	
   

  	
  Date of Sale

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

2.                                       Proposed
Transferee

 

The name, address
and contact information of the proposed transferee are as follows:

 

	
  Name of Proposed
  Transferee:

  	
   

  	
   

  

 

 

	
  Company (if
  different then above):

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Contact Person:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Contact Phone
  Number:

  	
   

  	
   

  

 

3.                                       Representations
of Proposed Transferor

 

a.                                       I
certify that the statements made by me in this notice are true and correct as
of the date of this notice.

 

b.                                      To
the best of my knowledge, the proposed sale or transfer of my shares of Common
Stock as described in this will not violate any applicable federal or state
securities laws. If requested by the Company, I will submit a letter to that
effect prior to the proposed transfer prepared by an attorney familiar with
relevant securities laws, who is reasonably satisfactory to the Company.

 

c.                                       I
acknowledge and agree that any proposed transfer on terms and conditions
different from those described in this notice shall again be subject to the
Company’s Right of First Offer and shall require a submission of an additional
Right of First Offer Notice.

 

d.                                      I
acknowledge and agree that if the Company elects to exercise its Right of First
Offer, once it makes available the purchase price for those shares, I shall no
longer be considered a stockholder with respect to those shares.

 

 

	
  Very truly
  yours,

  
	
   

  
	
   

  
	
   

  
	
  [Signature
  of Proposed Transferor]

  

 

 

Acknowledgment of
Proposed Transferee

 

I have reviewed
the terms of this Right of First Offer Notice and agree that I have made a firm
offer or intend to accept transfer of shares of Common Stock in accordance with
the terms described in this notice.

 

	
  Proposed
  Transferee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  

 

2

 

EXHIBIT D

 

RIGHT OF
FIRST OFFER

EXERCISE
NOTICE

 

 

[Date]

 

Re:                               Exercise of Right of First Offer

 

Dear Proposed Transferee:

 

The Company wishes
to exercise its Right of First Offer under the Panolam Holdings Co. 2005 Equity
Incentive Plan (the “Plan”) and buy back from you shares of Common Stock that
you acquired upon the exercise of one or more stock options granted pursuant to
the Plan. Payment will be made in accordance with the terms contained in your
Right of First Offer Notice dated [insert date]  [except  that payment will be made
entirely in cash]. The purchase shall be made on [insert date that is no later than 30 days later than the ROFO Notice
Date or, if later, the proposed date of sale in the Notice].

 

*     *    
*

 

Should you have
any additional questions, please contact [insert contact person and
contact information].

 

Very truly yours,Exhibit 10.10

 

Panolam Holdings Co.

 

2005
Equity Incentive Plan

 

EXECUTIVE
NON STATUTORY STOCK OPTION AGREEMENT

REFERENCE
NUMBER: 2005-1

 

SECTION 1.         GRANT OF OPTION.

 

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

 

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

 

SECTION 2.         RIGHT TO
EXERCISE.

 

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

 

SECTION 3.         NO TRANSFER OR
ASSIGNMENT OF OPTION.

 

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

 

SECTION 4.         EXERCISE
PROCEDURES.

 

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

 

 

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

 

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

 

SECTION 5.         PAYMENT FOR
SHARES.

 

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

 

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

 

SECTION 6.         TERM AND
EXPIRATION.

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

SECTION 7.         RIGHT OF FIRST
OFFER.

 

[intentionally
omitted]

 

SECTION 8.         LEGALITY OF
INITIAL ISSUANCE.

 

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

 

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

 

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

 

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

 

SECTION 9.         REGISTRATION
RIGHTS.

 

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

 

SECTION 10.       RESTRICTIONS ON
TRANSFER.

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 11.       ADJUSTMENT OF
SHARES.

 

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

 

4

 

SECTION 12.       MISCELLANEOUS
PROVISIONS.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 13.       DEFINITIONS.

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

EXHIBIT A

 

SAMPLE
NOTICE OF EXERCISE

 

Panolam Holdings
Co.

[Address]

 

Attn:  Corporate Secretary

 

To the Corporate
Secretary:

 

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

 

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

 

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

 

	
  No. Shares to be Acquired

  	
   

  	
  Type of Option

  	
   

  	
  Exercise Price

  	
   

  	
  Total

  
	
   

  	
   

  	
  Nonstatutory

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Incentive

  	
   

  	
   

  	
   

  	
   

  
	
  Estimated
  Withholding

  	
   

  	
  Nonstatutory
  only

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Amount
  Paid

  	
   

  	
   

  

 

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature of
  Optionee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee’s Name
  and Mailing Address

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee’s
  Social Security Number

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