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1997 Employee, Director And Consultant Stock Option Plan

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A.C. MOORE ARTS & CRAFTS, INC.


1997 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN


1. DEFINITIONS.


Unless otherwise specified or unless the context otherwise requires, the following terms, as used in this A.C. MOORE ARTS & CRAFTS, INC. 1997 Employee, Director and Consultant Stock Option Plan, have the following meanings:


Administrator means the Board of Directors, unless it
has delegated power to act on its behalf to a
committee. (See Article 4)


Affiliate means a corporation which, for purposes of Section
424 of the Code, is a parent or subsidiary of the Company,
direct or indirect.


Board of Directors means the Board of Directors of the
Company.


Code means the United States Internal Revenue Code of 1986, as
amended.


Committee means the Committee to which the Board of Directors
has delegated power to act under or pursuant to the provisions
of the Plan.


Common Stock means shares of the Company's common stock, no
par value.


Company means A.C. Moore ARTS & CRAFTS, INC., a Pennsylvania
corporation.


Disability or Disabled means permanent and total disability as
defined in Section 22(e) (3) of the Code.


Fair Market Value of a Share of Common Stock means:


(1) If the Common Stock is listed on a national securities
exchange or traded in the over-the-counter market and sales
prices are regularly reported for the Common Stock, the
average of the closing or last sale prices of the Common Stock
on the Composite Tape or other comparable reporting system for
the ten (10) consecutive trading days immediately preceding
such applicable date;


(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if
sales prices are not regularly reported for the Common Stock
for the ten


(10) days referred to in clause (1), and if bid and asked
prices for the Common Stock are regularly reported, the
average of the mean between the bid and the asked price for
the Common Stock at the close of trading in the
over-the-counter market for the ten (10) days on which Common
Stock was traded immediately preceding such applicable date;
and


(3) If the Common Stock is neither listed on a national
securities exchange nor traded in the over-the-counter market,
such value as the Administrator, in good faith, shall
determine.


ISO means an option meant to qualify as an incentive stock
option under Code Section 422.


Initial Public Offering ("IPO") means an offering by the
Company of Common Stock to the public in a firm commitment
underwriting which results in the Common Stock being a class
of securities registered under the Securities Exchange Act of
1934, as amended.


Key Employee means an employee of the Company or of an
Affiliate (including, without limitation, an employee who is
also serving as an officer or director of the company or of an
Affiliate), designated by the Administrator to be eligible to
be granted one or more Options under the Plan.


Non-Qualified Option means an option which is not intended to
qualify as an ISO.


Option means an ISO or Non-Qualified option granted under the
Plan.


Option Agreement means an agreement between the Company and a
Participant executed and delivered pursuant to the Plan.


Participant means a Key Employee, director or consultant to
whom one or more Options are granted under the Plan. As used
herein, "Participant" shall include "Participant's Survivors"
where the context requires.


Participant's Survivors means a deceased Participant's legal
representatives and/or any person or persons who acquired the
Participant's rights to an Option by will or by the laws of
descent and distribution.


Plan means this A.C. Moore Arts & Crafts, Inc. 1997
Employee, Director and Consultant Stock Option Plan.


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Profit Shares means the Shares purchased by a Participant
pursuant to one or more Options that have the value equal to
the excess of the Fair Market Value of the Shares subject to
such Option or Options over the purchase price of the option
as set forth in the applicable Option Agreement.


Shares means shares of the Common Stock as to which options
have been or may be granted under the Plan or any shares of
capital stock into which the Shares are changed or for which
they are exchanged within the provisions of Paragraph 3 of the
Plan. The Shares issued upon exercise of Options granted under
the Plan may be authorized and unissued shares or shares held
by the Company in its treasury, or both.


2. PURPOSES OF THE PLAN.


The Plan is intended to encourage ownership of Shares by Key Employees, directors and certain consultants to the Company in order to attract such people, to induce them to work for the benefit of the Company or of an Affiliate and to provide additional incentive for them to promote the success of the Company or of an Affiliate.


3. EFFECTIVENESS OF PLAN.


This Plan shall become effective on the date of its adoption by the Company's Board of Directors, subject however to approval by the holders of the Company's Common Stock in the manner as prescribed in the Code and the regulations thereunder. Options may be granted under this Plan prior to obtaining shareholder approval, provided such options shall not be exercisable before such shareholder approval is obtained.


4. SHARES SUBJECT TO THE PLAN.


The number of Shares subject to this Plan as to which Options may be granted from time to time shall be 1,000,000, or the equivalent of such number of Shares after the Administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction effected after such date in accordance with Paragraph 16 of the Plan. No individual may receive options under the Plan exercisable for more than 50% of the total number of shares of Common Stock authorized for issuance under this Plan.


If an Option ceases to be "outstanding", in whole or in part, the Shares which were subject to such Option shall be


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available for the granl such Option is exercised in full, or terminates or expires under the provisions of the Plan, or by agreement of the parties to the pertinent Option Agreement.


5. ADMINISTRATION OF THE PLAN.


The Administrator of the Plan will be the Board of Directors, except to the extent the Board of Directors delegates its authority to a Committee of the Board of Directors. Following the date on which the Common Stock is registered under the Securities and Exchange Act of 1934, as amended (the "1934 Act"), the Plan is intended to comply in all respects with Rule 16b-3 or its successors, promulgated pursuant to Section 16 of the 1934 Act with respect to Participants who are subject to Section 16 of the 1934 Act, and any provision in this Plan with respect to such persons contrary to Rule 16b-3 shall be deemed null and void to the extent permissible by law and deemed appropriate by the Administrator. Subject to the provisions of the Plan, the Administrator is authorized to:


a. Interpret the provisions of the Plan or of any option
or Option Agreement and to make all rules and
determinations which it deems necessary or advisable
for the administration of the Plan;


b. Determine which employees of the Company or of an
Affiliate shall be designated as Key Employees and
which of the Key Employees, directors and consultants
shall be granted Options;


c. Determine the number of Shares for which an Option or
Options shall be granted; and


d. Specify the terms and conditions upon which an Option
or options may be granted;


provided, however, that all such interpretations, rules,
determinations, terms and conditions shall be made and prescribed in
the context of preserving the tax status under Code Section 422 of
those Options which are designated as ISOs. Subject to the foregoing,
the interpretation and construction by the Administrator of any
provisions of the Plan or of any Option granted under it shall be
final, unless otherwise determined by the Board of Directors, if the
Administrator is other than the Board of Directors. No member of the
Administrator shall be liable for any act or omission (whether or not
negligent) taken or omitted in good faith, or for the exercise of any
authority or discretion granted in connection with the Plan to the
Administrator, or


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for the acts or omissions of any other members of the
Administrator.


6. ELIGIBILITY FOR PARTICIPATION.


The Administrator will, in its sole discretion, name the Participants in the Plan, provided, however, that each Participant must be a Key Employee, director or consultant of the Company or of an Affiliate at the time an Option is granted. Notwithstanding any of the foregoing provisions, the Administrator may authorize the grant of an Option to a person not then an employee, director or consultant of the Company or of an Affiliate. The actual grant of such Option, however, shall be conditioned upon such person becoming eligible to become a Participant at or prior to the time of the execution of the Option Agreement evidencing such Option. ISOs may be granted only to Key Employees. Non-Qualified Options may be granted to any Key Employee, director or consultant of the Company or an Affiliate. The granting of any Option to any individual shall neither entitle that individual to, nor disqualify him or her from, participation in any other grant of options.


7. TERMS AND CONDITIONS OF OPTIONS.


Each Option shall be set forth in writing in an Option Agreement, duly executed by the Company and by the Particinted subject to such conditions as the Administrator may deem appropriate including, without limitation, subsequent approval by the stockholders of the Company of this Plan or any amendments thereto. The Option Agreements shall be subject to at least the following terms and conditions:


A. Non-Qualified Options: Each Option intended to be a
Non-Qualified Option shall be subject to the terms and
conditions which the Administrator determines to be
appropriate and in the best interest of the Company,
subject to the following minimum standards for any such
Non-Qualified Option;


a. Option Price: The option price (per share) of the
Shares covered by each Option shall be determined
by the Administrator;


b. Each Option Agreement shall state the number of
Shares to which it pertains;


c. Each Option Agreement shall state the date or
dates on which it first is exercisable and the
date after which it may no longer be exercised,


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and may provide that the Option rights accrue or
become exercisable in installments over a period of
months or years, or upon the attainment of stated
goals; and


d. Provided that the Common Stock is not a class of
securities registered under the Securities
Exchange Act of 1934, as amended, exercise of any
Option may be conditioned upon the Participant's
execution of a Share purchase agreement in form
satisfactory to the Administrator providing for
certain protections for the Company and its other
shareholders including requirements that:


i. The Participant's or the Participant's
Survivors' right to sell the Shares may be
restricted; and


ii. The Participant or the Participant's
Survivors may be required to execute letters
of investment intent and must also
acknowledge that the Shares will bear
legends noting any applicable restrictions.


e. No Option may be exercised unless the Company has
issued Shares of Common Stock to the public in an
IPO in 1997.


B. ISOs: Each Option intended to be an ISO shall be issued only
to a Key Employee and be subject to at least the following
terms and conditions, with such additional restrictions or
changes as the Administrator determines are appropriate but
not in conflict with Code Section 422 and relevant regulations
and rulings of the Internal Revenue Service:


a. Minimum Standards: The ISO shall meet the minimum
standards required of Participants who are granted
Non-Qualified Options, as described above, except
clause (a) thereunder.


b. Option Price: Immediately before the Option is
granted, if the Participant owns, directly or by
reason of the applicable attribution rules in Code
Section 424(d):


i. Ten percent (10%) or less of the total
combined voting power of all classes of
share capital of the Company or an
Affiliate, the Option price (per share) of
the Shares covered by each Option shall not
be less than one hundred percent (100%) of
the Fair Market


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Value (per share) of the Shares on the date
of the grant of the Option.


ii. More than ten percent (10%) of the total
combined voting power of all classes of
share capital of the Company or an
Affiliate, the Option price (per share) of
the Shares covered by each Option shall not
be less than one hundred ten percent (110%)
of the said Fair Market Value on the date of
grant.


c. Term of Option: For Participants who own


i. Ten percent (10%) or less of the total
combined voting power of all classes of
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