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Exhibit 10.14
GREGG APPLIANCES,
INC.
2005 STOCK OPTION
PLAN
Section 1. Description of
Plan . This is the 2005 Stock Option Plan dated March 8, 2005
(the “ Plan ”) of Gregg Appliances, Inc., an
Indiana corporation (the “ Company ”). This Plan
will provide a means whereby designated employees, directors,
officers or consultants of the Company may be granted options to
purchase shares of the common stock, no par value, of the Company
(the “ Shares ” or the “ Common
Stock ”). It is intended that the options under this Plan
will either qualify for treatment as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended (the
“ Code ”) and be designated “ Incentive
Stock Options ” or not qualify for such treatment and be
designated “ Nonqualified Stock Options. ”
Incentive Stock Options may only be granted to employees. This Plan
is intended to qualify as and constitute a compensatory benefit
plan under Rule 701 promulgated under the Securities Act of 1933,
as amended (such act, and the rules and regulations promulgated
thereunder, the “ Act ”).
Section 2. Purpose of
Plan . The purpose of the Plan and of granting options (the
“ Options ”) to specified persons is to further
the growth, development and financial success of the Company by
providing additional incentives to its employees, directors,
officers or consultants. By assisting such persons in acquiring
Shares, the Company can ensure that such persons will themselves
benefit directly from the Company’s growth, development and
financial success.
Section 3. Eligibility
. The persons who shall be eligible to receive grants of Options
under the Plan shall be the designated employees, directors,
officers or consultants of the Company as determined from time to
time by the Board of Directors (the “ Board ”)
of the Company. A person who holds an Option or has purchased
Shares pursuant to the exercise of the Option is herein referred to
as a “ Participant ,” and more than one Option
may be granted to any Participant.
Section 4. Administration
and Authorization .
(a) Committee . Except
as otherwise provided herein, the Plan shall be administered by the
Board or, at the Board’s option, by a compensation committee
thereof from time to time constituted, to whom administration of
this Plan has been duly delegated (the Board and/or such committee,
are referred to hereinafter as the “ Committee
”). Any action of the Committee with respect to
administration of the Plan shall be taken by a majority vote or
written consent of its members. Upon the first registration of an
equity security of the Company under the Securities Exchange Act of
1934, as amended (the “ Exchange Act ”), to the
extent possible and advisable, the Committee may be constituted so
as to permit this Plan to comply with Rule 16b-3 promulgated under
Section 16 of the Exchange Act and Section 162(m) of the
Code.
(b) Interpretation; Powers
of Committee . Subject to the express provisions of this Plan
and any express limitations on the delegated authority, the
Committee is authorized and empowered to administer the Plan and
(i) to determine the dates upon which Options shall be granted, the
exercise price of the Options, the number of Shares subject to the
Options and to specify the other terms and conditions thereof in a
manner consistent with this Plan, which terms and conditions need
not be identical as to the various Options granted; (ii) to
interpret the Plan; (iii) to grant Options; (iv) to determine
eligibility and the particular Participants; (v) to determine the
fair market value of the Shares; (vi) to accelerate the time during
which an Option may be exercised in accordance with the provisions
of Section 14 hereof, and to otherwise accelerate the time during
which an Option may be exercised, in each case notwithstanding the
provisions in the Option Agreement (as defined in Section 11
hereof) stating the time during which it may be exercised; (vii) to
exercise, terminate or waive any repurchase rights of the Company
with respect to Shares; (viii) to reissue the Plan and related
benefits hereunder as a direct plan of a subsidiary or
subsidiaries, converting the Options and Shares issued under this
Plan to options and shares of such subsidiary or subsidiaries, as
the case may be; (ix) to prescribe, amend and rescind rules
relating to the Plan; (x) to authorize any person to execute on
behalf of the Company any instrument required to effectuate the
grant of an Option previously granted by the Committee; (xi) to
determine the rights and obligations of Participants under the
Plan; and (xii) to make all other determinations deemed necessary
or advisable for the administration of the Plan.
(c) Binding
Determinations . Any action taken by, or inaction of, the
Company, the Board or the Committee relating or pursuant to this
Plan (including, without limitation, any determination of Fair
Market Value and Repurchase Price (as such terms may be defined in
the applicable Option Agreement (as defined in Section 11)) will be
within the sole discretion of that entity or body and will be
conclusive and binding upon all persons. Subject only to compliance
with the express provisions hereof, the Board and Committee may act
in their sole discretion in matters within their authority related
to this Plan.
(d) Reliance on
Experts . In making any determination or in taking or not
taking any action under this Plan, the Committee or the Board, as
the case may be, may obtain and may rely upon the advice of
experts, including employees of and professional advisors to the
Company.
(e) Delegation . The
Committee may delegate ministerial, non-discretionary functions to
individuals who are officers, employees or agents of the
Company.
(f) No Liability . No
director, officer or agent of the Company will be liable for any
action, omission or decision under this Plan taken, made or omitted
in good faith.
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Section 5. Shares Subject
to Plan .
(a) Shares Available .
The only capital stock that may be delivered under the Plan will be
the Shares.
(b) Share Limits . The
aggregate number of Shares for which Options may be granted
pursuant to the Plan shall be 2,500,000. Such number shall be
automatically adjusted for any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split
or other similar transaction of the Company. The number of Shares
which may be purchased by a Participant upon exercise of each
Option shall be determined by the Committee and set forth in each
Option Agreement. Upon the expiration or termination, in whole or
in part, for any reason of an outstanding Option or any portion
thereof which shall not have vested or shall not have been
exercised in full, or in the event Shares are tendered as payment
of the Option exercise price or any Shares acquired pursuant to the
Plan are reacquired by the Company, (a) any Shares which have not
been purchased (b) Shares tendered as payment of the Option
exercise price or (c) the Shares reacquired, as the case may be,
shall again become available for the granting of additional Options
under the Plan.
Section 6. Restrictions on
Grants; Vesting of Options . Notwithstanding any other
provisions set forth herein or in any Option Agreement, no Options
may be granted under the Plan subsequent to ten (10) years from the
date hereof. Each Option shall grant the Participant the right to
purchase a specified number of Shares at a price determined by the
Committee, as such price or the basis upon which price is
determined is set forth in each respective Option Agreement (the
“ Exercise Price ”). The shares of Common Stock
subject to Options granted under the Plan will become exercisable
in three equal annual installments with the first installment
exercisable one year from the date of grant of the Option and have
a term of seven years from the date of grant. If the Participant is
a 10% stockholder of the Company (as defined in Section 422(b)(6)
of the Code) at the time such Participant is granted an Incentive
Stock Option, the Exercise Price shall be not less than 110% of the
fair market value of such Shares on the date of grant of the
Option. Such fair market value shall be determined by the Committee
on the basis of such evidence as it deems appropriate in its sole
discretion.
Section 7. Exercise of
Options and Option Period .
(a) Exercise . Once
vested, the Options may be exercised by the Participant by (i)
giving written notice to the Company specifying the number of
Shares to be purchased and accompanied by payment of the full
Exercise Price therefor in cash, by check or in such other form of
lawful consideration as the Committee may approve from time to
time, including without limitation and in the sole discretion of
the Committee, the assignment in transfer by the Participant to the
Company of outstanding shares of Common Stock theretofore held by
the Participant in a manner intended to comply with the provisions
of Rule 16b-3 under the Exchange Act, if applicable, (ii) if
required by the Committee, delivering an agreement to be bound by
the terms and provisions of that certain Stockholders Agreement by
and among the Company, FS Equity Partners V, L.P., Gregg Investment
Corporation, LLC, Jerry W. Throgmartin,
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Gregg William Throgmartin and
Dennis L. May dated February 3, 2005, as amended (the “
Stockholders Agreement ”) and (iii) satisfying any
other requirements set forth herein or in the applicable Option
Agreements.
(b) Option Period .
Any Option and all rights thereunder shall expire not more than
seven (7) years after the date of grant; provided that, the Options
will be subject to earlier termination as set forth in Sections 13
and 14 hereof.
Section 8. Transfer and
other Limitations on Options and Shares .
(a) Limits On Exercise and
Transfer . Except as expressly provided in (or pursuant to)
Section 8(b), by applicable law or by the Option Agreement, as the
same may be amended:
(i) all Options are
non-transferable and will not be subject in any manner to sale,
transfer, anticipation, alienation, assignment, pledge, encumbrance
or charge;
(ii) Options must be
exercised only by the Participant; and
(iii) Shares issuable
pursuant to an Option must be delivered only to (or for the account
of) the Participant.
In addition, the Shares shall
be subject to the restrictions imposed in the applicable Option
Agreement.
(b) Exceptions to Limits
on Exercise and Transfer . The exercise and transfer
restrictions in Section 8(a) will not apply to:
(i) transfers to the
Company;
(ii) the designation of a
beneficiary to receive benefits if the Participant dies or, if the
Participant has died, transfers to or exercises by the
Participant’s beneficiary, or, in the absence of a validly
designated beneficiary, transfers by will or the laws of descent
and distribution; or
(iii) if the Participant has
suffered a disability, transfers or exercises on behalf of the
Participant by the Participant’s duly authorized legal
representative in accordance with the applicable Option
Agreement.
Section 9. Limitations on
Grants and Terms of Incentive Stock Options .
(a) $100,000 Limit .
The aggregate fair market value (determined as of the time an
Option is granted) of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by any Participant
in any calendar year under this Plan and any other incentive stock
option plans of the Company, its parent and its subsidiaries (as
defined in Section 422(e) and 422(f) of the Code respectively)
(which qualify under Section 422 of the Code) shall not exceed
$100,000.
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(b) Other Code Limits
. Incentive Stock Options may only be granted to employees of the
Company that satisfy the other eligibility requirements of the
Code. There will be imposed in any Option Agreement relating to
Incentive Stock Options such other terms and conditions as from
time to time are required in order that the Option be an Incentive
Stock Option under Section 422 of the Code.
Section 10. Adjustments
Upon Recapitalization or Reorganization .
(a) Adjustments .
Subject to Section 13(b) hereof, if the outstanding shares of
Common Stock of the Company are changed into, or exchanged for, a
different number or kind of shares or securities of the Company
through any capital reorganization or reclassification, or if the
number of outstanding shares is changed through a stock split or
stock dividend, an appropriate adjustment shall be made by the
Committee in the number, kind or exercise price of shares as to
which Options may be granted under the Plan. A corresponding
adjustment shall likewise be made in the number, kind or exercise
price of shares with respect to which unexercised Options have
theretofore been granted. Any such adjustment in an outstanding
Option, however, shall be made without change in the total price
applicable to the unexercised portion of the Option but with a
corresponding adjustment in the price for each Share covered by the
Option. In making such adjustments, or in determining that no such
adjustments are necessary, the Committee may rely upon the advice
of counsel and accountants to the Company, and the good faith
determination of the Committee shall be final, conclusive
and
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