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Exhibit 10.4
A.C. MOORE ARTS & CRAFTS, INC.
FORM OF OPTION AGREEMENT
AGREEMENT made the ____________, between A.C. MOORE ARTS &
CRAFTS, INC.
(the "Company"), a Pennsylvania corporation
having a principal place of business
in Berlin, New Jersey and
_____________________________________ (the
"Participant").
WHEREAS, the Company desires to grant to the Participant an Option
to
purchase shares of its common stock, no par
value (the "Shares") under and for
the purposes of the 2002 Stock Option Plan
of the Company (the "Plan");
provided, however, the Option granted
hereby shall not be exercisable unless the
Company has issued shares of its common
stock to the public in an IPO ("as
defined in the Plan") in 2002;
WHEREAS, the Company and the Participant understand and agree that
any
terms used and not defined herein have the
same meanings as in the Plan;
WHEREAS, the Company and the Participant each intend that the
Option
granted herein shall be an Incentive Stock
Option ("ISO").
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter
set forth and for other good and valuable
consideration, the parties hereto
agree as follows:
1. GRANT OF OPTION.
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The Company hereby irrevocably grants to the Participant the right
and
option to purchase all or any part of an
aggregate of ______ Shares, which
Option must be exercised based upon the
earliest date granted and on the terms
and conditions and subject to all the
limitations set forth herein and in the
Plan, which is incorporated herein by
reference. The Participant acknowledges
receipt of a copy of the Plan.
2. PURCHASE PRICE.
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The purchase price of the Shares covered by the Option shall be
$________ per Share, subject to adjustment,
as provided in the Plan, in the
event of a stock split, reverse stock split
or other events affecting the
holders of Shares. Payment shall be made in
accordance with Paragraph 7 of the
Plan.
3. EXERCISE OF OPTION.
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Subject to the terms and conditions set forth in this Agreement and
the
Plan, the Option granted hereby shall be
exercisable as follows:
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On the first anniversary of the date of this
up to 1/3 of the Shares
Agreement
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On the second anniversary of the date of this
an additional 1/3 of the Shares
Agreement
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On the third anniversary of the date of this
an
additional 1/3 of the Shares
Agreement
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Should the Company (i) merge or consolidate with another
corporation
under circumstances where the Company is
not the surviving corporation, (ii)
sell all or substantially all of its
assets, (iii) liquidate or dissolve, or
(iv) register the transfer of eighty
percent (80%) or more of its outstanding
Common stock to persons who were not owners
(or considered to be owners pursuant
to Section 318 of the Code) of common stock
immediately prior to such transfer,
and the Participant continues his/her
employment with the Company, or its
successor, for a period of not less than
twelve (12) months from the date of the
merger, sale or transfer then 100% of such
Option not yet vested shall vest at
the end of such 12-month term, and the
holder of this Option shall have the
right to exercise any and all of the Option
shares, unless this Option has
otherwise expired or been terminated
pursuant to its terms or the terms hereof.
At any time after the Company is involved in a merger,
consolidation,
sale or transfer as described above,
and
a) the
Participant shall fail to be vested with power and
authority analogous to the Participant's title and/ or office
prior to the merger, consolidation, sale or transfer, or
b) the
Participant shall lose any significant duties or
responsibilities attending such office, or
c) if
there shall occur a reduction in the Participant's base
compensation, or
d) the
Participant's employment with the Company, or its
successor, is terminated without cause;
then 100% of such option not yet vested
shall immediately vest and the holder of
this Option shall have the right,
immediately prior to the effectiveness of such
event, to exercise any and all of the
Option shares, unless this option has
otherwise expired or been terminated
pursuant to its terms hereof.
4. TERM
OF OPTION
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The Option shall terminate ten (10) years from the date of this
Agreement, but shall be subject to earlier
termination as provided herein or in
the Plan.
(a) If the Participant retires and qualifies for Normal
Retirement (which means obtaining age 65 or later with at least
five
(5) years of continuous service) and ceases to be an employee,
director
2
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or consultant of the Company or of an Affiliate may exercise any
option
granted to him or her to the extent that the right to purchase
shares
has vested on the date of such termination of service at any
time
within five (5) years of termination of service.
(b) A participant who retires and qualifies for a Special
Service Retirement (which means obtaining age 65 or later with at
least
ten (10) years of continuous service or age 60 with at least
fifteen
(15) years of continuous service) and ceases to be an employee
or
director of the Company or an Affiliate and who has been granted
an
Option which has vested on the date of termination of service
may
exercise said Option anytime within five (5) years of termination
of
service and those Options which have been granted and not vested
will
continue to vest over the remaining unvested term and upon full
vesting
will be exercisable by the Participant at any time over five (5)
years
from the date of vesting.
(c) If the Participant does not qualify for Normal Retirement
or Special Service Retirement and ceases to be an employee,
director or
consultant of the Company or of an Affiliate, the option may be
exercised within ninety (90) days after the date the Participant
ceases
to be an employee, director or consultant of the Company or an
Affiliate, but may not be exercised thereafter.
(d) Notwithstanding anything stated herein no grant of a prior
Option shall exceed beyond ten (10) years from the date of the
Option
Agreement original grant.
In the event the Participant's employment, directorship or
consultancy
is terminated for "cause" (as defined in
the Plan), the Participant's right to
exercise any unexercised portion of this
Option shall cease forthwith, and this
Option shall thereupon terminate.
Notwithstanding anything herein to the
contrary, if subsequent to the
Participant's termination as an employee,
director or consultant but prior to the
exercise of the Option, the Board of
Directors of the Company determines that,
either prior or subsequent to the
Participant's termination, the Participant
engaged in conduct which would
constitute "cause", then the Participant
shall forthwith cease to have any right
to exercise the Option.
In the event of Disability of the Participant, as determined in
accordance with the Plan, the Option shall
be exercisable any time within five
(5) years after the date that the
Participant became Disabled. In such event,
the Option shall be exercisable:
a)
