EXHIBIT 10.27
STOCK OPTION AGREEMENT
(CEO OPTIONS - SERIES A PREFERRED STOCK)
STOCK OPTION AGREEMENT (this "Option Agreement") entered into as of June 4,
2004 by and between MAAX Holdings, Inc., a Delaware corporation (the "Company"),
and Xxxxx Xxxxxx (the "Optionee").
WHEREAS, the Company has decided to grant the Optionee a nonqualified stock
option to acquire shares of the Company's series A preferred stock, US$0.01 par
value per share ("Shares"), in accordance with the MAAX Holdings, Inc. 2004
Stock Option Plan (the "Plan"); and
WHEREAS, the Optionee desires to accept such option subject to the terms
and conditions of this Option Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the Company and the Optionee,
intending to be legally bound, hereby agree as follows (capitalized terms used
but not defined herein shall have the meanings set forth in the Plan):
1. Grant of Option. As of June 4, 2004 (the "Grant Date"), the Company
grants to the Optionee an option (the "Option") to purchase, on the terms and
conditions set forth herein, all (or any part) of 42,995 Shares. This Option is
not intended to be an incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Exercise Price. The exercise price ("Exercise Price") for the Shares
covered by the Option shall be US$0.01 per share.
3. Exercisability. On the Grant Date, the Option will be fully vested and
exercisable.
4. Term of Options.
(a) Each Option shall expire on the tenth anniversary of the Grant
Date, unless terminated earlier pursuant to subsection 4(b) below.
(b) If the Optionee is terminated at any time from his or her
employment/consultancy with the Company or any of its Subsidiaries for Cause (as
defined in Schedule I attached hereto) or voluntarily terminates his
employment/consultancy with the Company or any of its Subsidiaries without Good
Reason (as defined in Schedule I attached hereto), the Option shall terminate on
the date of such termination of employment/consultancy.
5. Manner of Exercise of Option.
(a) The Optionee may exercise the Option or any portion thereof by
giving written notice to the Company stating the number of Shares (which shall
not be less than 100, unless the total Shares purchased would constitute the
total number of Shares remaining subject to the Option) to be purchased and
accompanied by payment in full of the Exercise Price for such Shares. Payment
shall be in cash by wire transfer of immediately available funds to an account
specified by the Company by a certified or bank cashier's check payable to the
Company. Upon payment, delivery of a certificate for paid-up, non-assessable
Shares shall be made at the principal office of the Company to the Optionee (or
the person entitled to exercise the Option pursuant to Section 7), not more than
10 days from the date of receipt of the notice by the Company.
(b) Notwithstanding Section 5(a) of this Option Agreement, the Company
may delay the issuance of Shares covered by the Option and the delivery of a
certificate for such Shares until one of the following conditions is satisfied:
(i) the Shares purchased pursuant to the Option are at the time of the issuance
of such Shares effectively registered or qualified under applicable federal and
state securities laws or (ii) such Shares are exempt from registration and
qualification under applicable federal and state securities laws.
6. Administration. This Option Agreement shall be administered by the
Committee pursuant to the Plan. The Committee shall be authorized to interpret
this Option Agreement and to make all other determinations necessary or
advisable for the administration of this Option Agreement, which determinations
shall be final, binding and conclusive. The Secretary or an Assistant Secretary
of the Company shall be authorized to implement this Option Agreement in
accordance with its terms and to take such actions of a ministerial nature as
shall be necessary to effectuate the intent and purposes thereof.
7. Non-Transferability. Subject to the terms of the Stockholders Agreement,
the right of the Optionee to exercise the Option shall not be assignable or
transferable other than by will or the laws of descent and distribution, and
shall be exercisable during the lifetime of the Optionee only by him (or his
legal representative or guardian in the event that the Optionee is Disabled).
Any other transfer shall be null and void and without effect, except as
hereinabove provided, including without limitation any purported assignment,
whether voluntary or by operation of law, pledge, hypothecation or other
disposition contrary to the provisions hereof, or levy of execution, attachment,
trustee process or similar process, whether legal or equitable, upon the Option.
8. Representation Letter and Investment Legend.
(a) In the event that for any reason the Shares to be issued upon
exercise of an Option are not effectively registered under the Securities Act,
on the date of exercise, the Optionee (or the person exercising the Option
pursuant to Section 7) shall provide a written representation to the Company in
the form attached hereto as Exhibit A, and the Company shall place the legend
described on Exhibit A, upon any certificate for the Shares issued by reason of
such exercise.
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(b) The Company shall be under no obligation to qualify Shares or to
cause a registration statement or a post-effective amendment to any registration
statement to be prepared for the purposes of covering the issue of Shares;
provided, that the Company will use its reasonable best efforts to comply with
any available exemption from registration and qualification of the Shares under
applicable federal and state securities laws.
9. Adjustments upon Changes in Capitalization.
(a) In the event that the outstanding Shares are changed into or
exchanged for a different number or kind of shares or other securities of the
Company or of another corporation by reason of any reorganization, merger,
consolidation, recapitalization, reclassification, stock split-up, combination
of shares, or dividends payable in capital stock, appropriate adjustment shall
be made in the number and kind of shares, and the Exercise Price therefor, as to
which the Option, to the extent not theretofore exercised, shall be exercisable.
(b) Unless otherwise determined by the Committee in its sole
discretion, in the event of a Change in Control (as hereinafter defined) of the
Company, the purchaser(s) of the Company's assets or stock may, in his, her or
its discretion, deliver to the Optionee the same kind of consideration (net of
the Exercise Price for such Shares) that is delivered to the stockholders of the
Company as a result of the Change in Control, or the Committee may, in its sole
discretion, cancel the Option, to the extent not theretofore exercised, in
exchange for consideration in cash or in kind, which consideration in either
case shall be equal in value to the value of those shares of stock or other
consideration the Optionee would have received had the Option been exercised (to
the extent the Option has not been exercised) and no disposition of the Shares
acquired upon such exercise been made prior to the Change in Control, less the
Exercise Price therefor. For the avoidance of doubt, in no event shall the
Optionee be entitled to receive in respect of any Share an amount greater than
US$16.56. Upon receipt of such consideration by the Optionee, the Option shall
immediately terminate and be of no further force and effect. The value of the
stock or other securities the Optionee would have received if the Option had
been exercised shall be determined in good faith by the Committee. A "Change in
Control" shall be deemed to have occurred if (i) any person, or any two or more
persons acting as a group, and all affiliates of such person or persons (a
"Group") who prior to such time beneficially owned less than 50% of the then
outstanding capital stock of the Company shall acquire shares of the Company's
capital stock in one or more transactions or series of transactions, including
by merger, and after such transaction or transactions such person or Group and
affiliates beneficially own 50% or more of the Company's outstanding capital
stock, or (ii) the Company shall sell all or substantially all of its assets to
any Group which, immediately prior to the time of such transaction, beneficially
owned less than a majority of the then outstanding capital stock of the Company.
(c) Upon dissolution or liquidation of the Company, the Option shall
terminate, but the Optionee (if at such time still an Employee or Consultant)
shall have the right, immediately prior to the filing of a certificate of
dissolution or liquidation, to exercise the Option.
(d) No fraction of a Share shall be purchasable or deliverable upon
the exercise of the Option, but in the event any adjustment hereunder of the
number of shares covered by the
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Option shall cause such number to include a fraction of a share, such fraction
shall be adjusted to the nearest smaller whole number of shares.
10. No Employment Rights Conferred. Nothing contained in this Option
Agreement shall be construed or deemed by any person under any circumstances to
bind the Company or any of its Subsidiaries to continue the
employment/consultancy of the Optionee for the period within which this Option
may be exercisable or for any other period.
11. Rights as a Stockholder. The Optionee shall have no rights as a
stockholder with respect to any Shares which may be purchased upon the
exercisability of this Option unless and until a certificate or certificates
representing such Shares are duly issued and delivered to the Optionee. Except
as otherwise expressly provided herein, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date the
stock certificate is issued.
12. Withholding Taxes. The Optionee hereby agrees, as a condition to any
exercise of the Option, to provide to the Company an amount sufficient to
satisfy its obligation to withhold federal, state and local taxes arising by
reason of such exercise (the "Withholding Amount"), if any, by (a) authorizing
the Company to withhold the Withholding Amount from his cash compensation, or
(b) remitting the Withholding Amount to the Company in cash; provided that, to
the extent that the Withholding Amount is not provided by one or a combination
of such methods, the Company may at its election withhold from the Shares
delivered upon exercise of the Option that number of Shares having a fair market
value (in the good faith judgment of the Committee) equal to the Withholding
Amount.
13. Execution of Stockholders Agreement. The Optionee acknowledges that he
has previously executed and delivered the Stockholders Agreement. The Optionee
further agrees that this Option Agreement, the Option and all Shares acquired by
him upon exercise of the Option will be subject to the terms and conditions of
the Stockholders Agreement, as the same may be amended or modified in accordance
with its terms, and that such Option and Shares may be acquired by the Company
in accordance with the terms thereof.
14. Governing Law. This Option Agreement shall be governed by the laws of
the State of Delaware, without regard to any conflicts of law principles thereof
that would call for the application of the laws of any other jurisdiction. Any
action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Option Agreement may be brought against either of the
parties in the courts of the State of Delaware, or if it has or can acquire
jurisdiction, in the United States District Court for the District of Delaware,
and each of the parties hereby consents to the jurisdiction of such courts (and
of the appropriate appellate courts) in any such action or proceeding and waives
any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world, whether within or without the State of Delaware.
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15. Incorporation of Terms of Plan. This Option Agreement shall be
interpreted under, and in accordance with, all of the terms and provisions of
the Plan, which are incorporated herein by reference.
* * * * * * * * *
[Signatures on Following Page]
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STOCK OPTION AGREEMENT
(CEO Preferred Stock Options)
Counterpart Signature Page
IN WITNESS WHEREOF, the Company has caused this Option Agreement to be
executed, by its officer thereunto duly authorized, and the Optionee has
executed this Option Agreement, all as of the day and year first above written.
MAAX HOLDINGS, INC. OPTIONEE
By: /s/ Xxxxx X. Xxxx /s/ Xxxxx Xxxxxx
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Name: Xxxxx X. Xxxx Name: Xxxxx Xxxxxx
Title: Vice President
Address:
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Telecopier Number:
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Social Security Number:
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SCHEDULE I
Definitions Applicable to
Stock Option Agreement
1. "Cause," shall have the meaning set forth in the executed written
employment agreement, offer letter or term sheet between the Optionee and the
Company (or a Subsidiary thereof) or, in the absence of such employment
agreement, offer letter or term sheet (or if not defined therein), the
occurrence of any of the following during the term of the Optionee's employment
or consultancy with the Company (or a Subsidiary thereof):
(a) Optionee's dishonesty, theft or fraud in connection with the
performance of his or her duties;
(b) Optionee's continued failure to perform substantially his duties
(other than as a result of a disability), which failure is not cured within 30
days of receipt of written notice thereof from the Company or a Subsidiary
thereof;
(c) Optionee's conviction of, or entering a plea of guilty or nolo
contendere to, a crime that constitutes a felony or a misdemeanor involving
moral turpitude;
(d) any willful act or omission on Optionee's part which is materially
injurious to the financial condition or business reputation of the Company or
any of its Subsidiaries;
(e) Optionee's breach of any material covenant or provision contained
in (i) Optionee's employment agreement, if any, or (ii) the Stockholders
Agreement, which breach is not cured within 30 days of receipt of written notice
thereof from the Company or a Subsidiary thereof;
(f) the Company, after reasonable investigation, finds that Optionee
has violated material written policies and procedures of the Company, including,
but not limited to, policies and procedures pertaining to harassment or
discrimination;
(g) a failure or refusal by Optionee to comply with a written
directive from the Committee (unless such directive represents an illegal act);
(h) a confirmed positive illegal drug test result for Optionee; or
(i) the discovery of outstanding indebtedness for borrowed money
incurred during the term by the Company or any of its Subsidiaries in favor of
Optionee which was not approved by the Committee prior to such incurrence.
SCHEDULE I-1
2. "Disabled," shall have the meaning set forth in the executed written
employment agreement, offer letter or term sheet between the Optionee and the
Company (or a Subsidiary thereof) or, in the absence of such employment
agreement, offer letter or term sheet (or if not defined therein), the Optionee
shall be deemed to have become "Disabled" if, during the term of the Optionee's
employment or consultancy with the Company (or a Subsidiary thereof), the
Optionee shall become physically or mentally disabled, whether totally or
partially, either permanently or so that the Optionee, in the good faith
judgment of the Committee, is unable substantially and competently to perform
his duties on behalf of the Company (or a Subsidiary thereof) for a period of
180 consecutive days or for 180 days during any one year period during the term
of employment or consultancy. In order to assist the Committee in making that
determination, the Optionee shall, as reasonably requested by the Committee, (i)
make himself available for medical examinations by one or more physicians chosen
by the Committee and (ii) grant any such physicians access to all relevant
medical information concerning him or arrange to furnish copies of all relevant
medical records to such physicians chosen by the Committee.
3. "Good Reason," shall have the meaning set forth in the executed written
employment agreement, offer letter or term sheet between the Optionee and the
Company (or a Subsidiary thereof) or, in the absence of such employment
agreement, offer letter or term sheet (or if not defined therein), "Good Reason"
shall be deemed to have occurred if, other than for Cause, during the term of
the Optionee's employment or consultancy with the Company (or a Subsidiary
thereof) the Optionee's base salary is reduced, other than in connection with an
across the board reduction of executive compensation imposed by the Committee on
management employees in response to negative financial results or other adverse
circumstances affecting the Company or its Subsidiaries.
4. "Person" shall mean an individual, corporation, partnership, limited
liability company, trust, unincorporated association, government or any agency
or political subdivision thereof, or any other entity.
5. "Subsidiary" with respect to any Person (the "parent") shall mean any
Person of which such parent, at the time in respect of which such term is used,
(a) owns directly or indirectly more than 50% of the equity or beneficial
interest, on a consolidated basis, or (b) owns directly or controls with power
to vote, indirectly through one or more Subsidiaries, shares of capital stock or
beneficial interest having the power to cast at least a majority of the votes
entitled to be cast for the election of directors, trustees, managers or other
officials having powers analogous to those of directors of a corporation. Unless
otherwise specifically indicated, when used herein, the term Subsidiary shall
refer to a direct or indirect Subsidiary of the Company.
SCHEDULE I-2
EXHIBIT A
TO STOCK OPTION AGREEMENT
Gentlemen:
In connection with the purchase by me of ___________________ shares of
preferred stock, US$0.01 par value per share, of MAAX Holdings, Inc., a Delaware
corporation (the "Company") under the nonqualified stock option granted to me
pursuant to that certain Stock Option Agreement dated June 4, 2004 (the "Option
Agreement"), I hereby acknowledge that I have been informed as follows:
1. The shares of series A preferred stock of the Company to be issued to me
upon exercise of said option have not been registered under the Securities Act
of 1933, as amended (the "Act"), and accordingly, must be held indefinitely
unless such shares are subsequently registered under the Act, or an exemption
from such registration is available.
2. Routine sales of securities made in reliance upon Rule 144 under the Act
can be made only after the holding period and in limited amounts in accordance
with the terms and conditions provided by that Rule, and with respect to which
that Rule is not applicable, registration or compliance with some other
exemption under the Act will be required.
3. The Company is under no obligation to me to register the shares or to
comply with any such exemptions under the Act, other than as set forth in the
Stockholders Agreement referenced and defined in paragraph 13 of the Option
Agreement (the "Stockholders Agreement").
4. The availability of Rule 144 is dependent upon adequate current public
information with respect to the Company being available and, at the time that I
may desire to make a sale pursuant to the Rule, the Company may neither wish nor
be able to comply with such requirement.
5. The shares of series A preferred stock of the Company to be issued to me
upon the exercise of said option are subject to the terms and conditions,
including restrictions on transfer, of the Stockholders Agreement.
In consideration of the issuance of certificates for the shares to me, I
hereby represent and warrant that I am acquiring such shares for my own account
for investment, and that I will not sell, pledge, hypothecate or otherwise
transfer such shares in the absence of an effective registration statement
covering the same, except as permitted by an applicable exemption under the Act.
In view of this representation and warranty, I agree that there may be affixed
to the certificates for the shares to be issued to me, and to all certificates
issued hereafter representing such shares (until in the opinion of counsel,
which opinion must be reasonably satisfactory in form and substance to counsel
for the Company, it is no longer necessary or required) a legend as follows:
EXHIBIT A-1
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
and may not be sold, transferred, offered for sale, pledged or
hypothecated in the absence of an effective registration statement as
to the securities under the Act or an opinion of counsel satisfactory
to the Company and its counsel that such registration is not
required."
"The securities represented by this certificate are subject to the
terms and conditions, including restrictions on transfer, of a
Stockholders Agreement among the Company and its stockholders dated as
of June 4, 2004, as amended from time to time, a copy of which is on
file at the principal office of the Company."
"The Company has multiple classes of stock. The Company will furnish
without charge to each stockholder who so requests in writing the
powers, designations, preferences and relative, participating,
optional, or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such
preferences and/or rights."
I further agree that the Company may place a stop order with its transfer
agent, prohibiting the transfer of such shares, so long as the legend remains on
the certificates representing the shares.
I hereby represent and warrant that: My financial situation is such that I
can afford to bear the economic risk of holding the shares issued to me upon
exercise of said option for an indefinite period of time, I have no need for
liquidity with respect to my investment and have adequate means to provide for
my current needs and personal contingencies, and can afford to suffer the
complete loss of my investment in such shares.
(a) I am either (please check one of the following):
(1) ___ an "accredited investor" within the meaning of Rule
501(a) under the Act, a copy of which is annexed hereto as
Annex I, and I, either alone or with my purchaser
representative (as such term is defined in Rule 501 under
the Act), have such knowledge and experience in financial
and business matters that I am capable of evaluating the
merits and risks of my investment in the shares issued to me
upon exercise of said option. I have indicated the
appropriate categories that apply to me in Annex I hereto.
(2) ___ not an "accredited investor" within the meaning of Rule
501(a) under the Act, as I do not fulfill any of the
categories set forth in Annex I, but I have such knowledge
and experience in financial and business matters that I am
capable of evaluating the merits and risks of my investment
in the shares issued to me upon exercise of said option.
EXHIBIT A-2
(b) I have been afforded the opportunity to ask questions of, and to
receive answers from, the Company and its representatives concerning the shares
issued to me upon exercise of said option and to obtain any additional
information I have deemed necessary.
(c) I have a high degree of familiarity with the business, operations,
financial condition and prospects of the Company.
Very truly yours,
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Xxxxx Xxxxxx
EXHIBIT A-3
ANNEX I
The following are "accredited investors" for purposes of the offering and sale
of Shares.
Please check all of the following categories that you fulfill.
(a) ___ a bank as defined in section 3(a)(2) of the Securities Act or a savings
and loan association or other institution as defined in section 3(a)(5)(A)
of the Securities Act, whether acting in its individual or fiduciary
capacity; broker or dealer registered pursuant to section 15 of the
Securities Exchange Act of 1934, as amended; insurance company as defined
in section 2(13) of the Securities Act; investment company registered under
the Investment Company Act of 1940, as amended, or a business development
company as defined in section 2(a)(48) of the Investment Company Act of
1940, as amended; Small Business Investment Company licensed by the U.S.
Small Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958; plan established and maintained by a
state, its political subdivisions, or any agency or instrumentality of a
state or its political subdivisions, for the benefit of its employees, if
such plan has total assets in excess of US$5,000,000; employee benefit plan
within the meaning of the Optionee Retirement Income Security Act of 1974,
as amended, if the investment decision is made by a plan fiduciary, as
defined in section 3(21) of such act, which plan fiduciary is either a
bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in
excess of US$5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors;
(b) ___ a private business development company as defined in section 202(a)(22)
of the Investment Advisers Act of 1940, as amended;
(c) ___ an organization described in section 501(c)(3) of the Internal Revenue
Code of 1986, as amended (the "Code"), a corporation, Massachusetts or
similar business trust, or a partnership, not formed for the purpose of
acquiring the Securities offered, with total assets in excess of
US$5,000,000;
(d) ___ a director or executive officer of the Company;
(e) ___ a natural person whose individual net worth,(1) individually or
together with his or her spouse, exceeds US$1,000,000;
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(1) The term "net worth" means the excess of assets at fair market value,
including home and personal property, over total liabilities, including
mortgages and income taxes on unrealized appreciation of assets.
EXHIBIT A-4
(f) (i) ___ a natural person who had an individual income(2) in excess of
US$200,000 in each of the past two years and who reasonably expects to
reach the same income level in the current year; or
(ii) ___ a natural person who had a joint income(2) with his or her spouse
in excess of US$300,000 in each of the past two years and who
reasonably expects to reach the same income level in the current year;
(g) ___ a trust, with total assets in excess of US$5,000,000, not formed for
the specific purpose of acquiring the Securities offered, whose purchase is
directed by a person who either alone or with his purchaser representative
has such knowledge and experience in financial and business matters that he
or she is capable of evaluating the merits and risks of the prospective
investment, or the Company reasonably believes immediately prior to making
any sale that such person comes within this definition;
(h) ___ an entity in which all of the equity owners are accredited investors
meeting one or more of the tests under subparagraphs (a) - (g).
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(2) For all investors, the term "individual income" means adjusted gross income
as reported for federal income tax purposes, less any income attributable
to a spouse or to property owned by a spouse, increased by the following
amounts (but not included any amounts attributable to a spouse or to
property owned by a spouse), and the term "joint income" means adjusted
gross income as reported for federal income tax purposes, including any
income attributable to a spouse or to a property owned by a spouse,
increased by the following amounts (including any amounts attributable to a
spouse or to property owned by a spouse): (i) the amount of any interest
income received which is tax exempt under section 103 of the Code; (ii) the
amount of losses claimed as a limited partner in a limited partnership (as
reported on Schedule E of Form 1040); and (iii) any deduction claimed for
depletion under section 611 et seq. of the Code.
EXHIBIT A-5
