Document:

ex101102809.htm

    EXHIBIT
10.1

     

    
      

    

    
      
        

      

    FREEDOM
ENVIRONMENTAL INVESTMENT GROUP CORP

    

    2009
STOCK OPTION PLAN

    ______________________________________

    

    1. Purpose.  The
purpose of this Plan is to advance the interests of Freedom Environmental
Investment Group Corp. (the “Company”), by providing an additional incentive to
attract, retain and motivate highly qualified and competent persons who are key
to the Company, including key employees, consultants, independent contractors,
Officers and Directors, and upon whose efforts and judgment the success of the
Company and its Subsidiaries is largely dependent, by authorizing the grant of
options to purchase Common Stock of the Company and other related benefits to
persons who are eligible to participate hereunder, thereby encouraging stock
ownership in the Company by such persons, all upon and subject to the terms and
conditions of this Plan.

    

    2. Definitions.  As
used herein, the following terms shall have the meanings indicated:

    (a) “Board”
shall mean the Board of Directors of the Company.

    

    (b) “Cause”
shall mean any of the following:

    

    (i) a
determination by the Company that there has been a willful, reckless or grossly
negligent failure by the Optionee to perform his or her duties as an employee of
the Company;

    

    (ii) a
determination by the Company that there has been a willful breach by the
Optionee of any of the material terms or provisions of any employment agreement
between such Optionee and the Company;

    

    (iii) any
conduct by the Optionee that either results in his or her conviction of a felony
under the laws of the United States of America or any state thereof, or of an
equivalent crime under the laws of any other jurisdiction;

    

    (iv) a
determination by the Company that the Optionee has committed an act or acts
involving fraud, embezzlement, misappropriation, theft, breach of fiduciary duty
or material dishonesty against the Company, its properties or
personnel;

    

    (v) any act
by the Optionee that the Company determines to be in willful or wanton disregard
of the Company’s best interests, or which results, or is intended to result,
directly or indirectly, in improper gain or personal enrichment of the Optionee
at the expense of the Company;

    

    (vi) a
determination by the Company that there has been a willful, reckless or grossly
negligent failure by the Optionee to comply with any rules, regulations,
policies or procedures of the Company, or that the Optionee has engaged in any
act, behavior or conduct demonstrating a deliberate and material violation or
disregard of standards of behavior that the Company has a right to expect of its
employees; or

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    if the
Optionee, while employed by the Company and for two years thereafter, violates a
confidentiality and/or noncompete agreement with the Company, or fails to
safeguard, divulges, communicates, uses to the detriment of the Company or for
the benefit of any person or persons, or misuses in any way, any Confidential
Information; provided,
however, that, if the Optionee has entered into a written employment
agreement with the Company which remains effective and which expressly provides
for a termination of such Optionee’s employment for “cause,” the term “Cause” as
used herein shall have the meaning as set forth in the Optionee’s employment
agreement in lieu of the definition of “Cause” set forth in this Section
2(b).

    

    (c) “Change
of Control” shall mean the acquisition by any person or group (as that term is
defined in the Exchange Act, and the rules promulgated pursuant to that act) in
a single transaction or a series of transactions of thirty percent (30%) or more
in voting power of the outstanding stock of the Company and a change of the
composition of the Board of Directors so that, within two years after the
acquisition took place, a majority of the members of the Board of Directors of
the Company, or of any corporation with which the Company may be consolidated or
merged, are persons who were not directors or officers of the Company or one of
its Subsidiaries immediately prior to the acquisition, or to the first of a
series of transactions which resulted in the acquisition of thirty percent (30%)
or more in voting power of the outstanding stock of the Company.

    

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

     
 

    (e) “Committee”
shall mean the stock option committee appointed by the Board or, if not
appointed, the Board.

    

    (f) “Common
Stock” shall mean the Company’s Common Stock, par value $.001 per
share.

    

    (g) “Director”
shall mean a member of the Board.

    

    (h) “Employee”
shall mean any person, including officers, directors, consultants and
independent contractors employed by the Company or any parent or Subsidiary of
the Company within the meaning of Section 3401(c) of the regulators promulgated
thereunder.

    

    (i) “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

    

    (j) “Fair
Market Value” of a Share on any date of reference shall be the Closing Price of
a share of Common Stock on the business day immediately preceding such date,
unless the Committee in its sole discretion shall determine otherwise in a fair
and uniform manner.  For this purpose, the “Closing Price” of the
Common Stock on any business day shall be (i) if the Common Stock is listed or
admitted for trading on any United States national securities exchange, or if
actual transactions are otherwise reported on a consolidated transaction
reporting system, the last reported sale price of the Common Stock on such
exchange or reporting system, as reported in any newspaper of general
circulation, (ii) if the Common Stock is quoted on The Nasdaq Stock Market
(“Nasdaq”), or any similar system of automated dissemination of quotations of
securities prices in common use, the mean between the closing high bid and low
asked quotations for such day of the Common Stock on such system, or
(iii) if neither clause (i) nor (ii) is applicable, the mean between the
high bid and low asked quotations for the Common Stock as reported by the
National Quotation Bureau, Incorporated if at least two securities dealers have
inserted both bid and asked quotations for the Common Stock on at least five of
the 10 preceding days.  If the information set forth in
clauses (i) through (iii) above is unavailable or inapplicable to the
Company (e.g., if the Company’s Common Stock is not then publicly traded or
quoted), then the “Fair Market Value” of a Share shall be the fair market value
(i.e., the price at which a willing seller would sell a Share to a willing buyer
when neither is acting under compulsion and when both have reasonable knowledge
of all relevant facts) of a share of the Common Stock on the business day
immediately preceding such date as the Committee in its sole and absolute
discretion shall determine in a fair and uniform manner.

      

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

     

    (k) “Incentive
Stock Option” shall mean an incentive stock option as defined in Section 422 of
the Code.

    

    (l) “Non-Statutory
Stock Option” or “Nonqualified Stock Option” shall mean an Option which is not
an Incentive Stock Option.

    

    (m) “Officer”
shall mean the Company’s chairman, president, principal financial officer,
principal accounting officer (or, if there is no such accounting officer, the
controller), any vice-president of the Company in charge of a principal business
unit, division or function (such as sales, administration or finance), any other
officer who performs a policy-making function, or any other person who performs
similar policy-making functions for the Company.  Officers of
Subsidiaries shall be deemed Officers of the Company if they perform such
policy-making functions for the Company.  As used in this paragraph,
the phrase “policy-making function” does not include policy-making functions
that are not significant.  Unless specified otherwise in a resolution
by the Board, an “executive officer” pursuant to Item 401(b) of Regulation S-K
(17 C.F.R. § 229.401(b)) shall be only such person designated as an “Officer”
pursuant to the foregoing provisions of this paragraph.

    

    (n) “Option”
(when capitalized) shall mean any stock option granted under this
Plan.

    

    (o) “Optionee”
shall mean a person to whom an Option is granted under this Plan or any person
who succeeds to the rights of such person under this Plan by reason of the death
of such person.

    

    (p) “Plan”
shall mean this 2009 Stock Option Plan of the Company, which Plan shall be
effective upon approval by the Board, subject to approval, within 12 months of
the date thereof by holders of a majority of the Company’s issued and
outstanding Common Stock of the Company.

    

    (q) “Share”
or “Shares” shall mean a share or shares, as the case may be, of the Common
Stock, as adjusted in accordance with Section 10 of this Plan.

    

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

     

    3. Shares and
Options.  Subject to adjustment in accordance with Section 10
hereof, the Company may issue up to three million, five hundred thousand
(3,500,000) Shares from Shares held in the Company’s treasury or from authorized
and unissued Shares through the exercise of Options issued pursuant to the
provisions of this Plan.  If any Option granted under this Plan shall
terminate, expire, or be canceled, forfeited or surrendered as to any Shares,
the Shares relating to such lapsed Option shall be available for issuance
pursuant to new Options subsequently granted under this Plan.  Upon
the grant of any Option hereunder, the authorized and unissued Shares to which
such Option relates shall be reserved for issuance to permit exercise under this
Plan.  Subject to the provisions of Section 14 hereof, an Option
granted hereunder shall be either an Incentive Stock Option or a Non-Statutory
Stock Option as determined by the Committee at the time of grant of such Option
and shall clearly state whether it is an Incentive Stock Option or Non-Statutory
Stock Option.  All Incentive Stock Options shall be granted within 10
years from the effective date of this Plan.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    4. Limitations.  Options
otherwise qualifying as Incentive Stock Options hereunder will not be treated as
Incentive Stock Options to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the Shares, with respect to
which Options meeting the requirements of Code Sec­tion 422(b) are
exercisable for the first time by any individual during any calendar year (under
all stock option or similar plans of the Company and any Subsidiary), exceeds
$100,000.

    

    5. Conditions for Grant of
Options.

    

    (a) Each
Option shall be evidenced by an option agreement that may contain any term
deemed necessary or desirable by the Committee, provided such terms are not
inconsistent with this Plan or any applicable law.  Optionees shall be
those persons selected by the Committee from the class of all regular Employees
of the Company or its Subsidiaries, including Employee Directors and Officers
who are regular or former regular employees of the Company, Directors who are
not regular employees of the Company, as well as consultants to the
Company.  Any person who files with the Committee, in a form
satisfactory to the Committee, a written waiver of eligibility to receive any
Option under this Plan shall not be eligible to receive any Option under this
Plan for the duration of such waiver.

    

    (b) In
granting Options, the Committee shall take into consideration the contribution
the person has made, or is expected to make, to the success of the Company or
its Subsidiaries and such other factors as the Committee shall
determine.  The Committee shall also have the authority to consult
with and receive recommendations from Officers and other personnel of the
Company and its Subsidiaries with regard to these matters.  The
Committee may from time to time in granting Options under this Plan prescribe
such terms and conditions concerning such Options as it deems appropriate,
provided that such terms and conditions are not more favorable to an Optionee
than those expressly permitted herein; provided further, however, that to the
extent not cancelled pursuant to Section 9(b) hereof, upon a Change in Control,
any Options that have not yet vested, may, in the sole discretion of the
Committee, vest upon such Change in Control.

    

    (c) The
Options granted to employees under this Plan shall be in addition to regular
salaries, pension, life insurance or other benefits related to their employment
with the Company or its Subsidiaries.  Neither this Plan nor any
Option granted under this Plan shall confer upon any person any right to
employment or continuance of employment (or related salary and benefits) by the
Company or its Subsidiaries.

    

    6. Exercise
Price.  The exercise price per Share of any Option shall be any
price determined by the Committee but in no event shall the exercise price per
Share of any Option be less than the Fair Market Value of the Shares underlying
such Option on the date such Option is granted and, in the case of an Incentive
Stock Option granted to a 10% stockholder, the per Share exercise price will not
be less than 110% of the Fair Market Value.  Re-granted Options, or
Options which are canceled and then re-granted covering such canceled Options,
will, for purposes of this Section 6, be deemed to have been granted on the date
of the re-granting.

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    
       
7. Exercise of
Options.

     

    (a) An Option
shall be deemed exercised when (i) the Company has received written notice
of such exercise in accordance with the terms of the Option, (ii) full
payment of the aggregate option price of the Shares as to which the Option is
exercised has been made, (iii) the Optionee has agreed to be bound by the
terms, provisions and conditions of any applicable stockholders’ agree­ment,
and (iv) arrangements that are satisfactory to the Committee in its sole
discretion have been made for the Optionee’s payment to the Company of the
amount that is necessary for the Company or the Subsidiary employing the
Optionee to withhold in accordance with applicable Federal or state tax
withholding requirements.  Unless further limited by the Committee in
any Option, the exercise price of any Shares purchased pursuant to the exercise
of such Option shall be paid in cash, by certified or official bank check, by
money order, with Shares or by a combination of the above; provided, however,
that the Committee in its sole discretion may accept a personal check in full or
partial payment of any Shares.  The Company in its sole discretion
may, on an individual basis or pursuant to a general program established by the
Committee in connection with this Plan, lend money to an Optionee to exercise
all or a portion of the Option granted hereunder.  If the exercise
price is paid in whole or part with the Optionee’s promissory note, such note
shall (i) provide for full recourse to the maker, (ii) be
collateralized by the pledge of the Shares that the Optionee purchases upon
exercise of such Option, (iii) bear interest at a rate no less than the
rate of interest payable by the Company to its principal lender, and
(iv) contain such other terms as the Committee in its sole discretion shall
require.

    

    (b) No
Optionee shall be deemed to be a holder of any Shares subject to an Option
unless and until a stock certificate or certificates for such Shares are issued
to such person(s) under the terms of this Plan.  No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as expressly provided
in Section 10 hereof.

    

    (c) Any
Option may, in the discretion of the Committee, be exercised pursuant to a
“cashless” or “net issue” exercise.  In lieu of exercising the Option
as specified in subsection (a) above, the Optionee may pay in whole or in part
with Shares, the number of which shall be determined by dividing (a) the
aggregate Fair Value of such Shares otherwise issuable upon exercise of the
Option minus the aggregate Exercise Price of such Option by (b) the Fair Value
of one such Share, or the Optionee may pay in whole or in part through a
reduction in the number of Shares received through the exercise of the Option
equal to the quotient of the (a) aggregate Fair Value of all the Shares issuable
upon exercise of the Option minus the aggregate Exercise Price of such Option
(b) divided by the Fair Value of one such share.  If the exercise
price is paid in whole or in part with Shares, the value of the Shares
surrendered shall be their Fair Market Value on the date the Option is
exercised.

    

    8. Exercisability of
Options.  Any Option shall become exercisable in such amounts,
at such intervals, upon such events or occurrences and upon such other terms and
conditions as shall be provided in an individual Option agreement evidencing
such Option, except as otherwise provided in Section 5(b) or this Section
8.

    

    (a) The
expiration date(s) of an Option shall be determined by the Committee at the time
of grant, but in no event shall an Option be exercisable after the expiration of
10 years from the date of grant of the Option.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

                (b)
Unless otherwise expressly provided in any Option as approved by the Committee,
notwithstanding the exercise schedule set forth in any Option, each outstanding
Option, may, in the sole discretion of the Committee, become fully exercisable
upon the date of the occurrence of any Change of Control, but, unless otherwise
expressly provided in any Option, no earlier than six months after the date of
grant, and if and only if Optionee is in the employ of the Company on such
date.

    

    (c) The
Committee may in its sole discretion accelerate the date on which any Option may
be exercised and may accelerate the vesting of any Shares subject to any Option
or previously acquired by the exercise of any Option.

    

    9. Termination of Option
Period.

    

    (a) Unless
otherwise expressly provided in any Option, the unexercised portion of any
Option shall automatically and without notice immediately terminate and become
forfeited, null and void at the time of the earliest to occur of the
following:

    

    (i) three
months after the date on which the Optionee’s employment is terminated for any
reason other than by reason of (A) Cause, (B) the termination of the
Optionee’s employment with the Company by such Optionee following less than 60
days’ prior written notice to the Company of such termination (an “Improper
Termination”), (C) a mental or physical disability (within the meaning of
Section 22(e) of the Code) as determined by a medical doctor satisfactory to the
Committee, or (D) death;

    

    (ii) immediately
upon (A) the termination by the Company of the Optionee’s employment for
Cause, or (B) an Improper Termination;

    

    (iii) one year
after the date on which the Optionee’s employment is terminated by reason of a
mental or physical disability (within the meaning of Code Section 22(e)) as
determined by a medical doctor satisfactory to the Committee or the later of
three months after the date on which the Optionee shall die if such death shall
occur during the one-year period specified herein; or

    

    (iv) the later
of (a) one year after the date of termination of the Optionee’s employment by
reason of death of the employee, or (b) three months after the date on which the
Optionee shall die if such death shall occur during the one year period
specified in Subsection 9(a)(iii) hereof.

    

    (b) The
Committee in its sole discretion may, by giving written notice (“cancellation
notice”), cancel effective upon the date of the consummation of any corporate
transaction described in Sub­sec­tion 10(d) hereof, any Option that
remains unexercised on such date.  Such cancellation notice shall be
given a reasonable period of time prior to the proposed date of such
cancellation and may be given either before or after approval of such corporate
transaction.

    

    (c) Upon
termination of Optionee’s employment as described in this Section 9, or
otherwise, any Option (or portion thereof) not previously vested or not yet
exercisable pursuant to Section 8 of this Plan or the vesting schedule set forth
in such Option shall be immediately canceled.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

           10. Adjustment of
Shares.

     

                  
(a) If at any time while this Plan is in effect or unexercised Options are
outstanding, there shall be any increase or decrease in the number of issued and
outstanding Shares through the declaration of a stock dividend or through any
recapitalization resulting in a stock split, combination or exchange of Shares
(other than any such exchange or issuance of Shares through which Shares are
issued to effect an acquisition of another business or entity or the Company’s
purchase of Shares to exercise a “call” purchase option), then and in such
event:

    

    (i) appropriate
adjustment shall be made in the maximum number of Shares available for grant
under this Plan, so that the same percentage of the Company’s issued and
outstanding Shares shall continue to be subject to being so
optioned;

    

    (ii) appropriate
adjustment shall be made in the number of Shares and the exercise price per
Share thereof then subject to any outstanding Option, so that the same
percentage of the Company’s issued and outstanding Shares shall remain subject
to purchase at the same aggregate exercise price; and

    

    (iii) such
adjustments shall be made by the Committee, whose determination in that respect
shall be final, binding and conclusive.

    

    (b) Subject
to the specific terms of any Option, the Committee may change the terms of
Options outstanding under this Plan, with respect to the option price or the
number of Shares subject to the Options, or both, when, in the Committee’s sole
discretion, such adjustments become appropriate by reason of a corporate
transaction described in Subsection 10(d) hereof, or otherwise.

    

    (c) Except as
otherwise expressly provided herein, the issuance by the Company of shares of
its capital stock of any class, or securities convertible into or exchangeable
for shares of its capital stock of any class, either in connection with a direct
or underwritten sale, or upon the exercise of rights or warrants to subscribe
therefor or purchase such Shares, or upon conversion of obligations of the
Company into such Shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of or
exercise price of Shares then subject to outstanding Options granted under this
Plan.

    

    (d) Without
limiting the generality of the foregoing, the existence of outstanding Options
granted under this Plan shall not affect in any manner the right or power of the
Company to make, authorize or consummate (i) any or all adjustments,
reclassifications, recapitalizations, reorganizations or other changes in the
Company’s capital structure or its business; (ii) any merger or
consolidation of the Company or to which the Company is a party; (iii) any
issuance by the Company of debt securities, or preferred or preference stock
that would rank senior to or above the Shares subject to outstanding Options;
(iv) any purchase or issuance by the Company of Shares or other classes of
common stock or common equity securities; (v) the dissolution or
liquidation of the Company; (vi) any sale, transfer, encumbrance, pledge or
assignment of all or any part of the assets or business of the Company; or
(vii) any other corporate act or proceeding, whether of a similar character
or otherwise.

    

    (e) The
Optionee shall receive written notice within a reasonable time prior to the
consummation of such action advising the Optionee of any of the
foregoing.  The Committee may, in the exercise of its sole discretion,
in such instances declare that any Option shall terminate as of a date fixed by
the Board and give each Optionee the right to exercise his or her
Option.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

           
11. Transferability.  No Option or stock
appreciation right granted hereunder shall be sold, pledged, assigned,
hypothecated, disposed or otherwise transferred by the Optionee other than by
will or the laws of descent and distribution, unless otherwise authorized by the
Board, and no Option or stock appreciation right shall be exercisable during the
Optionee’s lifetime by any person other than the Optionee.

    

    12. Issuance of
Shares.  As a condition of any sale or issuance of Shares upon
exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:

    

    (i) a
representation and warranty by the Optionee to the Company, at the time any
Option is exercised, that he is acquiring the Shares to be issued to him for
investment and not with a view to, or for sale in connection with, the
distribution of any such Shares; and

    (ii) an
agreement and undertaking to comply with all of the terms, restrictions and
provisions set forth in any then applicable stockholders’ agreement relating to
the Shares, including, without limitation, any restrictions on transferability,
any rights of first refusal and any option of the Company to “call” or purchase
such Shares under then applicable agreements, and

    (iii) any
restrictive legend or legends, to be embossed or imprinted on Share
certificates, that are, in the discretion of the Committee, necessary or
appropriate to comply with the provisions of any securities law or other
restriction applicable to the issuance of the Shares.

    

    13. Stock Appreciation
Rights.  The Committee may grant stock appreciation rights to
Employees, either or tandem with Options that have been or are granted under the
Plan or with respect to a number of Shares on which an Option is not
granted.  A stock appreciation right shall entitle the holder to
receive, with respect to each Share as to which the right is exercised, payment
in an amount equal to the excess of the Share’s Fair Market Value on the date
the right is exercised over its Fair Market Value on the date the right was
granted.  Such payment may be made in cash or in Shares valued at the
Fair Market Value as of the date of surrender, or partly in cash and partly in
Shares, as determined by the Committee in its sole discretion.  The
Committee may establish a maximum appreciation value payable for stock
appreciation rights.

    

    14. Restricted Stock
Awards.   The Committee may grant restricted stock awards
under the Plan in Shares or denominated in units of Shares.  The
Committee, in its sole discretion, may make such awards subject to conditions
and restrictions, as set forth in the instrument evidencing the award, which may
be based on continuous service with the Company or the attainment of certain
performance goals related to profits, profit growth, cash-flow or shareholder
returns, where such goals may be stated in absolute terms or relative to
comparison companies or indices to be achieved during a period of
time.

    

    15. Administration of this
Plan.

    

    (a) This Plan
shall be administered by the Committee, which shall consist of not less than two
Directors.  The Committee shall have all of the powers of the Board
with respect to this Plan.  Any member of the Committee may be removed
at any time, with or without cause, by resolution of the Board and any vacancy
occurring in the membership of the Committee may be filled by appointment by the
Board.

    

    (b) Subject
to the provisions of this Plan, the Committee shall have the authority, in its
sole discretion, to:  (i) grant Options, (ii) determine the
exercise price per Share at which Options may be exercised, (iii) determine
the Optionees to whom, and time or times at which, Options shall be granted,
(iv) determine the number of Shares to be represented by each Option,
(v) determine the terms, conditions and provisions of each Option granted
(which need not be identical) and, with the consent of the holder thereof,
modify or amend each Option, (vi) defer (with the consent of the Optionee)
or accelerate the exercise date of any Option, and (vii) make all other
determinations deemed necessary or advisable for the administration of this
Plan, including re-pricing, canceling and regranting Options.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

    (c) The
Committee, from time to time, may adopt rules and regulations for carrying out
the purposes of this Plan.  The Committee’s determinations and its
interpretation and construction of any provision of this Plan shall be final,
conclusive and binding upon all Optionees and any holders of any Options granted
under this Plan.

    

    (d) Any and
all decisions or determinations of the Committee shall be made either (i) by a
majority vote of the members of the Committee at a meeting of the Committee or
(ii) without a meeting by the unanimous written approval of the members of the
Committee.

    

    (e) No member
of the Committee, or any Officer or Director of the Company or its Subsidiaries,
shall be personally liable for any act or omission made in good faith in
connection with this Plan.

    

    16. Incentive Options for 10%
Stockholders.  Notwithstanding any other provisions of this
Plan to the contrary, an Incentive Stock Option shall not be granted to any
person owning directly or indirectly (through attribution under Section 424(d)
of the Code) at the date of grant, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company (or of its
Subsidiary) at the date of grant unless the exercise price of such Option is at
least 110% of the Fair Market Value of the Shares subject to such Option on the
date the Option is granted, and such Option by its terms is not exercisable
after the expiration of 10 years from the date such Option is
granted.

    

    17. Interpretation.

    

    (a) This Plan
shall be administered and interpreted so that all Incentive Stock Options
granted under this Plan will qualify as Incentive Stock Options under Section
422 of the Code.  If any provision of this Plan should be held invalid
for the granting of Incentive Stock Options or illegal for any reason, such
determination shall not affect the remaining provisions hereof, and this Plan
shall be construed and enforced as if such provision had never been included in
this Plan.

    

    (b) This Plan
shall be governed by the laws of the State ofArizona.

    

    (c) Headings
contained in this Plan are for convenience only and shall in no manner be
construed as part of this Plan or affect the meaning or interpretation of any
part of this Plan.

    

    (d) Any
reference to the masculine, feminine, or neuter gender shall be a reference to
such other gender as is appropriate.

    

    (e) Time
shall be of the essence with respect to all time periods specified for the
giving of notices to the company hereunder, as well as all time periods for the
expiration and termination of Options in accordance with Section 9 hereof (or as
otherwise set forth in an option agreement).

    

    18. Amendment and
Discontinuation of this Plan.  Either the Board or the
Com­mittee may from time to time amend this Plan or any Option without the
consent or approval of the stockholders of the Company; provided, however, that,
except to the extent provided in Section 9, no amendment or suspension of this
Plan or any Option issued hereunder shall substantially impair any Option
previously granted to any Optionee without the consent of such
Optionee.

    

    19. Termination
Date.  This Plan shall terminate ten years after the date of
adoption by the Board of Directorsexhibit10_1.htm

Exhibit 10.1

Execution Copy

 

 

WAIVER

 

This Waiver (“Waiver”) is entered into as of October 27, 2009 by and among Select Comfort Corporation (the “Company”), JPMorgan Chase Bank, National Association, as Administrative
Agent and Collateral Agent, Bank of America, N.A., as Syndication Agent, and the financial institutions signatories hereto as lenders (the “Lenders”).

 

 

RECITALS

 

A.           The undersigned are parties to that certain Credit Agreement dated as of June 9, 2006, as amended pursuant to Amendment No. 1 to Credit Agreement dated as of June 28, 2007, Amendment No. 2 to Credit Agreement dated as of February 1, 2008, Amendment No. 3 to Credit
Agreement dated as of May 30, 2008, Amendment No. 4 to Credit Agreement dated as of December 2, 2008, Amendment No. 5 to Credit Agreement dated as of January 2, 2009, Amendment No. 6 to Credit Agreement dated as of January 15, 2009 ("Amendment No. 6"), Amendment No. 7 to Credit Agreement dated as of January 31, 2009, Amendment No. 8 to Credit Agreement dated as of February 28, 2009, Amendment No. 9 to Credit Agreement dated as of April 18, 2009,
Amendment No. 10 to Credit Agreement dated as of May 8, 2009, Amendment No. 11 to Credit Agreement dated as of May 22, 2009 ("Amendment No. 11"), Amendment No. 12 to Credit Agreement dated as of September 4, 2009, and Amendment No. 13 to Credit Agreement dated as of September 22, 2009 (the “Credit Agreement”).  Unless otherwise specified herein, capitalized terms used in this Waiver shall have the meanings ascribed to them
by the Credit Agreement.

 

B.           The Company has requested that the Administrative Agent and the Lenders grant a limited waiver with respect to the Credit Agreement.

 

C.           The Administrative Agent and the undersigned Lenders are willing to grant such waiver on the terms and conditions set forth below.

 

Now, therefore, in consideration of the mutual execution hereof and other good and valuable consideration, the parties hereto agree as follows:

 

1.   Limited Waiver.  Upon satisfaction of the conditions to effectiveness set forth in paragraph 3 below, the Administrative Agent and the Lenders
signatory hereto hereby waive the Company’s (i) breach of Section 5.01(a) of the Credit Agreement occasioned by its delivery of an audit for fiscal year 2008 with a “going concern” qualification, (ii) breach of Section 6.09 of the Credit Agreement for the respective fiscal period ending on or about December 31, 2008 and other applicable fiscal periods ending on or prior to a Waiver Termination Event, (iii) breach of Section 6.10 of the Credit Agreement for the respective fiscal period ending
on or about March 31, 2009 and other applicable fiscal periods ending on or prior

 

 

 

 

 

to a Waiver Termination Event, and (iv) breach of the financial covenant set forth in Section 6.12 of the Credit Agreement for the fiscal period ending on or about December 31, 2008 and other applicable fiscal periods ending on or prior to a Waiver Termination Event, provided such waivers shall expire
on the occurrence of any Waiver Termination Event, and upon such expiration the terms and provisions of Sections 5.01(a), 6.09, 6.10 and 6.12 of the Credit Agreement shall be effective with the same force and effect under the Credit Agreement as if such waivers had not been given.  As used in this paragraph 1, “Waiver Termination Event” means the earliest to occur of (A) 5 p.m. Chicago time on November 10, 2009, and (B) if at any time Capital Expenditures for the period commencing on the
first day of the fiscal month for January, 2009 through the date of determination exceeds $4,000,000 in the aggregate.

 

            2.   Representations
and Warranties of the Company.  The Company and each Subsidiary Guarantor represents and warrants that:

 

           (a)           Its execution, delivery and performance of this Waiver has been duly authorized by all necessary corporate
action and this Waiver is its legal, valid and binding obligation enforceable against it in accordance with its terms, except as the enforcement thereof may be subject to (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors’ rights generally and (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

           (b)           Each of the representations and warranties contained in the Credit Agreement and the other Credit Documents
is true and correct in all material respects on and as of the date hereof as if made on the date hereof (except any such representation or warranty that expressly relates to or is made expressly as of a specific earlier date, in which case such representation or warranty shall be true and correct with respect to or as of such specific earlier date).

 

                    (c)           After giving effect to this Waiver, no Default has occurred and is continuing.

 

           3.   Effective
Date.  This Waiver shall become effective upon receipt by the Administrative Agent of (i) duly executed counterparts of this Waiver from the Company, the Subsidiary Guarantors and the Required Lenders, (ii) the Reaffirmation of Guaranty in the form attached hereto as Exhibit A executed by each of the Subsidiary Guarantors, (iii) payment to the Administrative Agent, in immediately available funds for the ratable benefit of the Lenders,
of an amendment and waiver fee of $50,000, which fee shall be deemed fully earned and nonrefundable on the Effective Date, and (iv) payment of all other fees due the Administrative Agent, including, without limitation, all fees and out-of-pocket costs and expenses of counsel to the Administrative Agent and of the financial advisor retained by its counsel invoiced through the date hereof.

 

           4.   Reference
to and Effect Upon the Credit Agreement.

 

          (a)           Except as specifically amended above, the Credit Agreement and the other

 

 

- 2 -

 

       Credit Documents shall remain in full force and effect and are hereby ratified and confirmed.  Without limiting the generality of the foregoing, the Company hereby reaffirms its obligations under paragraph 4(b) of Amendment No. 6 with
respect to the deposit into a cash collateral account with the Collateral Agent of any federal or state income tax refunds received hereafter by or for the benefit of the Company or any Subsidiary Guarantor, and its obligations under Section 6.16, as amended by Amendment No. 11.

 

          (b)           The execution, delivery and effectiveness of this Waiver shall not operate as a waiver of any right, power
or remedy of the Administrative Agent or any Lender under the Credit Agreement or any Credit Document, nor constitute a waiver of any provision of the Credit Agreement or any Credit Document, except as specifically set forth herein.  Upon the effectiveness of this Waiver, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of similar import shall mean and be a reference to the Credit Agreement as amended
hereby.

 

          5.   Release
of Claims and Waiver.  Each of the Company and the Subsidiary Guarantors hereby releases, remises, acquits and forever discharges each of the Lenders and such Lender’s employees, agents, representatives, consultants, attorneys, fiduciaries, servants, officers, directors, partners, predecessors, successors and assigns, subsidiary corporations, parent corporations, and related corporate divisions (all of the foregoing hereinafter called the “Released
Parties”), from any and all actions and causes of action, judgments, executions, suits, debts, claims, demands, liabilities, obligations, damages and expenses of any and every character, known or unknown, direct and/or indirect, at law or in equity, of whatsoever kind or nature, for or because of any matter or things done, omitted or suffered to be done by any of the Released Parties prior to and including the date of execution hereof, and in any way directly or indirectly arising out of or in any
way connected to this Waiver, the Collateral, the Loans, the Credit Agreement, or the other Credit Documents (all of the foregoing hereinafter called the “Released Matters”).  Each of the Company and the Subsidiary Guarantors acknowledges that the agreements in this paragraph are intended to be in full satisfaction of all or any alleged injuries or damages arising in connection with the Released Matters. Each of the
Company and the Subsidiary Guarantors represents and warrants to the Lenders that it has not purported to transfer, assign or otherwise convey any right, title or interest of the Company or the Subsidiary Guarantors in any Released Matter to any other person and that the foregoing constitutes a full and complete release of all Released Matters.

 

         6.   Costs
and Expenses.  The Company hereby affirms its obligations under Section 9.03 of the Credit Agreement to reimburse the Administrative Agent for all reasonable costs and out-of-pocket expenses paid or incurred by the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Waiver, including but not limited to the reasonable fees, charges and disbursements of attorneys for the Administrative Agent with respect thereto.

 

         7.   Governing
Law.  This Agreement shall be construed in accordance with and governed by the law of the State of New York (without regard to conflict of law provisions thereof).

 

 

- 3 -

 

 

 

         8.   Headings.  Section
headings in this Waiver are included herein for convenience of reference only and shall not constitute a part of this Waiver for any other purposes.

 

         9.   Counterparts.  This
Waiver may be executed in any number of counterparts, each of which when so executed shall be deemed an original but all such counterparts shall constitute one and the same instrument.

 

[signature pages follow]

 

- 4 -  

  

  

IN WITNESS WHEREOF, the parties have executed this Waiver as of the date and year first above written.

 

SELECT COMFORT CORPORATION,

Borrower

 

By  /s/ James C. Raabe

Name:  James C. Raabe

Title:  CFO

 

 

- 5 -  

  

  

JPMORGAN CHASE BANK, NATIONAL

ASSOCIATION, individually as a Lender, as

Administrative Agent and as Collateral Agent

 

By  /s/ Patricia S. Carpen                                                                           

Name:  Patricia S. Carpen

Title:    Vice President

 

BANK OF AMERICA, N.A., individually as a

Lender and as Syndication Agent

 

By                                                                           

Name:

Title:

 

CITICORP USA, INC., as a Lender

 

By  /s/ Sugam Mehta                                                                           

Name:  Sugam Mehta

Title:    Vice President

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as a Lender

 

By  /s/ Troy Jefferson 

Name:  Troy Jefferson

Title:    Vice President

 

BRANCH BANKING AND TRUST CO., as a Lender

 

By  /s/ Troy R. Weaver

Name:  Troy R. Weaver

Title:    Senior Vice President

 

- 6 -  

  

  

EXHIBIT A

 

REAFFIRMATION OF GUARANTY

 

Each of the undersigned hereby acknowledges receipt of a copy of the Waiver (“Waiver”) dated as of October 27, 2009, and reaffirms its obligations under the Subsidiary Guaranty dated as of June 9, 2006 in favor of JPMorgan Chase Bank, National Association,
as Administrative Agent, and the Lenders (as defined in the Waiver).

 

Dated as of October 27, 2009

 

 

SELECT COMFORT RETAIL CORPORATION

 

By  /s/ James C. Raabe                                                                           

Name:  James C. Raabe

Title:    CFO

SELECT COMFORT CANADA HOLDING INC.

 

By  /s/ James C. Raabe                                                                           

Name:  James C. Raabe

Title:    CFO

SELECTCOMFORT.COM CORPORATION

 

By  /s/ James C. Raabe                                                                           

Name:  James C. Raabe

Title:    CFO

- 7 -

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