OPTEX
SYSTEMS HOLDINGS, INC.
2009
STOCK OPTION PLAN
ARTICLE
I
PURPOSE
AND ADOPTION OF THE PLAN
1.01 Purpose. The
purpose of the Optex Systems Corporation (“Company”) 2009 Stock Option Plan is
to assist the Company (as defined below) in attracting and retaining highly
competent employees and to act as an incentive in motivating selected officers
and other employees of the Company and its subsidiaries, and directors and
consultants of the Company and its subsidiaries, to achieve long-term corporate
objectives.
1.02 Adoption and
Term. The Plan has been approved by the Board of Directors and
shareholders of the Company. The Plan is effective from the date approved by the
shareholders of the Company (the “Effective Date”) and shall remain in effect
until terminated by action of the Board; provided, however, that no Option (as defined
below) or Stock Purchase Right (as defined below) may be granted hereunder after
the tenth anniversary of the Effective Date.
ARTICLE
II
DEFINITIONS
For the
purpose of this Plan, the following capitalized terms shall have the following
meanings:
2.01 Applicable
Laws means the requirements relating to the administration of stock
option plans under U.S. state corporate laws, U.S. federal and state securities
laws, the Code, any stock exchange or quotation system on which the Common Stock
is listed or quoted and the applicable laws of any foreign country or
jurisdiction where Options or Stock Purchase Rights are, or will be, granted
under the Plan.
2.02 Beneficiary means an
individual, trust or estate who or which, by a written designation of the
Participant filed with the Company or by operation of law, succeeds to the
rights and obligations of the Participant under the Plan and the Option
Agreement or Restricted Stock Purchase Agreement upon the Participant’s
death.
2.03 Board means the Board of
Directors of the Company.
2.04 Code means the Internal
Revenue Code of 1986, as amended. References to a section of the Code
shall include that section and any comparable section or sections of any future
legislation that amends, supplements or supersedes said section
2.05 Committee means the
Committee defined in Section 3.01.
2.06 Company means Optex
Systems Corporation., a Delaware corporation, and its successors.
2.07 Common Stock means the
Common Stock of the Company, par value $.001 per share.
2.08 Date of Grant means the
date designated by the Committee as the date as of which it grants an Option or
Stock Purchase Right, which shall not be earlier than the date on which the
Committee approves the granting of such Option or Stock Purchase
Right.
2.09 Exchange Act means the
Securities Exchange Act of 1934, as amended.
2.10 Fair Market Value means,
as of any applicable date, the fair market value of the Common Stock as
determined by the Board based upon such evidence as it may think necessary or
desirable.
2.11 Incentive Stock Option
means a stock option within the meaning of Section 422 of the Code.
2.12 Merger means any merger,
reorganization, consolidation, exchange, transfer of assets or other transaction
having similar effect involving the Company.
2.13 Nonstatutory Stock Option
means a stock option which is not an Incentive Stock Option.
2.14 Option Agreement means a
written agreement between the Company and a Participant, specifically setting
forth the terms and conditions of an Option granted under the Plan,
substantially in the form of Exhibit A attached
hereto or such other form as shall be determined from time to time by the
Committee.
2.15 Option Price, with
respect to Options, shall have the meaning set forth in Section
6.01(b).
2.16 Option Term means, with
respect to an Option, the period of time set forth in the Option Agreement
during which the Option may be exercised.
2.17 Options means all
Nonstatutory Stock Options and Incentive Stock Options granted at any time under
the Plan.
2.18 Participant means a
person designated to receive an Option or Stock Purchase Right under the Plan in
accordance with Section 4.03.
2.19 Plan means the Treasure
Mountain Holdings, Inc. 2005 Stock Option Plan as described herein, as the same
may be amended from time to time.
2.20 Restricted Stock means
shares of Common Stock acquired pursuant to a grant of Stock Purchase Rights
under Article V of the Plan.
2.21 Restricted Stock Purchase
Agreement means a written agreement between the Company and an Optionee
evidencing the terms and restrictions applying to stock purchased under a Stock
Purchase Right. Each Restricted Stock Purchase Agreement is subject to the terms
and conditions of the Plan and shall be substantially in the form of Exhibit B attached
hereto or such other form as shall be determined from time to time by the
Committee.
2.22 Stock Purchase Right
means the right to purchase Common Stock pursuant to Article V of the Plan, as
evidenced by a notice of grant included within the applicable Restricted Stock
Purchase Agreement (the “Notice of Grant”).
2.23 Ten Percent Shareholder
means any individual who, at the time an Option is granted, owns stock
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company.
ARTICLE
III
ADMINISTRATION
The Plan
shall be administered by the Board or, in the discretion of the Board, by a
committee of the Board (the “Committee”) comprised of at least two
persons. The Committee or Board shall have exclusive and final
authority in each determination, interpretation or other action affecting the
Plan and its Participants. The Board or Committee shall have the sole
discretionary authority to interpret the Plan, to establish and modify
administrative rules for the plan, to impose such conditions and restrictions on
Options and Stock Purchase Rights as it determines appropriate, and to take such
steps in connection with the Plan and Options and Stock Purchase Rights granted
hereunder as it may deem necessary or advisable. The Board or
Committee may delegate such of its powers and authority under the Plan as it
deems appropriate to designated officers or employees of the
Company. In the event of such delegation of authority or exercise of
authority by the Board or Committee, references in the Plan to the Committee
shall be deemed to refer to the delegate of the Board or the Committee as the
case may be. For purposes of this Plan, references to the Committee
shall be deemed references to the Board to the extent that the Board has not
appointed a Committee to administer the Plan.
ARTICLE
IV
SHARES
AND PARTICIPATION
4.01 Number of Shares
Issuable. The total number of shares initially authorized to
be issued under the Plan shall be 6,000,000 shares of Common Stock. The number
of shares available for issuance under the Plan shall be further subject to
adjustment in accordance with Section 7.06. The shares to be offered
under the Plan shall be authorized and unissued Common Stock, or issued Common
Stock which shall have been reacquired by the Company,
4.02 Shares Subject to Terminated
Options and Stock Purchase Rights. Common Stock covered by any
unexercised portions of terminated Options and Stock Purchase Rights (including
canceled Options and Stock Purchase Rights) granted under Articles V and VI of
the Plan and Common Stock subject to any Options and Stock Purchase Rights which
are otherwise surrendered by a Participant may again be subject to new Options
and Stock Purchase Rights under the Plan.
4.03 Participation.
Participants in the Plan shall be such consultants, directors, officers
and other employees of the Company and its subsidiaries as the Committee, in its
sole discretion, may designate from time to time. The Committee’s designation of
a Participant in any year shall not require the Committee to designate such
person to receive Options, Stock Purchase Rights or grants in any other
year. The Committee shall consider such factors as it deems pertinent
in selecting Participants and in determining the type and amount of their
respective Options and Stock Purchase Rights.
ARTICLE
V
STOCK
PURCHASE RIGHTS
5.01 Rights to Purchase. Stock
Purchase Rights may be issued either alone, in addition to, or in tandem with
other awards granted under the Plan and/or cash awards made outside of the Plan.
After the Committee determines that it will offer Stock Purchase Rights under
the Plan, it shall advise the offeree in writing or electronically, by means of
a Restricted Stock Purchase Agreement, of the terms, conditions and restrictions
related to the offer, including the number of shares of Common Stock that the
offeree shall be entitled to purchase and the price to be paid for such shares.
The offer shall be accepted by execution of the Restricted Stock Purchase
Agreement.
5.02 Repurchase Option. Unless
the Committee determines otherwise, the Restricted Stock Purchase Agreement
shall grant the Company a repurchase option exercisable upon the voluntary or
involuntary termination of the purchaser's service with the Company for any
reason (including death or “Permanent Disability” (as defined in Section 6.03)).
The purchase price for shares repurchased pursuant to the Restricted Stock
Purchase Agreement shall be the original price paid by the purchaser and may be
paid by cancellation of any indebtedness of the purchaser to the Company. The
repurchase option shall lapse at a rate determined by the Committee. In the
event that the Restricted Stock Purchase Agreement does not provide for a
lapsing schedule, the restrictions shall lapse as to (a) one third of the shares
subject to the Restricted Stock Purchase Agreement on the first anniversary of
the grant of the Stock Purchase Right, (b) one third of the shares subject to
the Restricted Stock Purchase Agreement on the second anniversary of the grant
of the Stock Purchase Right and (c) one third of the shares subject to the
Restricted Stock Purchase Agreement on the third anniversary of the grant of the
Stock Purchase Right.
5.03 Other Provisions. The
Restricted Stock Purchase Agreement shall contain such other terms, provisions
and conditions not inconsistent with the Plan as may be determined by the
Committee in its sole discretion.
5.04 Rights as a Shareholder.
Once the Stock Purchase Right is exercised, the purchaser shall have the rights
equivalent to those of a shareholder, and shall be a shareholder when his or her
purchase is entered upon the records of the duly authorized transfer agent of
the Company. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Stock Purchase Right is exercised;
provided, however, that
Participants are entitled to share adjustments to reflect capital changes under
Section 7.06.
ARTICLE
VI
STOCK
OPTIONS
6.01 Option
Awards.
(a) General. The
Committee may grant, to such Participants as the Committee may select, Options
entitling the Participant to purchase shares of Common Stock from the Company in
such number, at such price, and on such terms and subject to such conditions,
not inconsistent with the terms of this Plan, as may be established by the
Committee. The terms of any Option granted under this Plan shall be
set forth in an Option Agreement.
(b) Purchase Price of
Options. The Option Price of each share of Common Stock which
may be purchased upon exercise of any Option granted under the Plan shall be
determined by the Committee; provided, however, that (i)
with respect to Incentive Stock Options, the Option Price per share shall in all
cases be equal to or greater than the Fair Market Value of a share of Common
Stock on the Date of Grant as required under Section 422 of the Code, and (ii)
with respect to any Incentive Stock Option granted to any Ten Percent
Shareholder, the Option Price per share shall in all cases be equal to or
greater than 110 percent of the Fair Market Value of a share of Common Stock on
the Date of Grant as required under Section 422 of the Code.
(c) Designation of
Options. Except as otherwise expressly provided in the Plan,
the Committee may designate, at the time of the grant of each Option, the Option
as an Incentive Stock Option or a Nonstatutory Stock Option.
(d) Incentive Stock Option
Limitations. No Participant may be granted Incentive Stock
Options under the Plan (or any other plans of the Company), which would result
in shares with an aggregate Fair Market Value (measured on the Date of Grant) of
more than $100,000 first becoming exercisable in any one calendar year. No
Participant may be granted Incentive Stock Options under the Plan (or any other
plans of the Company) unless the Participant is an employee of the Company or
its Subsidiaries. An individual shall not cease to be an employee in the case of
(i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company and its subsidiaries. For
purposes of an Option initially granted as an Incentive Stock Option, if a leave
of absence of more than three months precludes such Option from being treated as
an Incentive Stock Option under the Code, such Option thereafter shall be
treated as a Nonstatutory Stock Option for purposes of this Plan. Neither
service as a director nor payment of a director’s fee by the Company shall be
sufficient to constitute “employment” by the Company.
(e) Rights as a
Shareholder. A Participant or a transferee of an Option
pursuant to Section 7.04 shall have no rights as a shareholder with respect to
Common Stock covered by an Option until the Participant or transferee shall have
become the holder of record of any such shares, and no adjustment shall be made
for dividends in cash or other property or distributions or other rights with
respect to any such Common Stock for which the record date is prior to the date
on which the Participant or a transferee of the Option shall have become the
holder of record of any such shares covered by the Option; provided, however, that
Participants are entitled to share adjustments to reflect capital changes under
Section 7.06.
(f) Vesting. In the event that an
Option Agreement does not provide for a vesting schedule, the Options covered
thereby shall become exercisable as to (a) one third of the shares subject to
the Option Agreement on the first anniversary of the grant of the Option, (b)
one third of the shares subject to the Option on the second anniversary of the
grant of the Option and (c) one third of the shares subject to the Option on the
third anniversary of the grant of the Option.
6.02 Terms
of Stock Options.
(a) Conditions on
Exercise. An Option Agreement with respect to Options may
contain such waiting periods, exercise dates and restrictions on exercise
(including, but not limited to, periodic installments) as may be determined by
the Committee as of the Date of Grant.
(b) Duration of
Options. Options shall terminate after the first to occur of
the following events:
(i) Expiration
of the Option as provided in the Option Agreement;
(ii) Termination
of the Option as provided in Section 6.03, following the Participant’s
termination of employment; or
(iii) Ten
years from the Date of Grant (five years from the Date of Grant in the case of
any Incentive Stock Option granted to a Ten Percent Shareholder).
(c) Acceleration of Exercise
Time. The Committee, in its sole discretion, shall have the
right (but shall not in any case be obligated), exercisable at any time after
the Date of Grant, to permit the exercise of any Option prior to the time such
Option would otherwise become exercisable under the terms of the Option
Agreement.
(d) Extension of Exercise
Time. The Committee, in its sole discretion, shall have the
right (but shall not in any case be obligated), exercisable on or at any time
after the Date of Grant, to permit any Option granted under this Plan to be
exercised after its expiration date, subject, however, to the limitation
described in Section 6.02(b)(iii).
6.03 Exercise
of Options upon Termination of Employment.
(a) General. In the
event of the termination of employment of the Participant by the Participant or
the Company and its subsidiaries for any reason whatsoever other than death,
Permanent Disability (as defined in Section 6.03(b)) or retirement after
attainment of age 65, (i) any Options that were not vested prior to the date of
such termination of employment shall terminate on such date and (ii) any Options
that were vested prior to the date of such termination of employment (and which
were not previously exercised) shall terminate on the ninetieth (90th) day
following the date of such termination of employment or the last day of the
Option Term, whichever is earlier.
(b) Death, Permanent Disability or
Retirement. In the event of the termination of the employment
of the Participant by reason of death, Permanent Disability or retirement after
attainment of age 65, any Options that were vested prior to the date of such
termination (and which were not previously exercised), together with any other
Options designated by the Committee, shall terminate on the earlier of (i) the
first anniversary of the date of such termination and (ii) the last day of the
Option Term. Any Options that were not vested prior to the date of
such termination and do not become vested pursuant to the immediately preceding
sentence shall terminate as of the date of such termination. As used
in this Plan, the term “Permanent Disability” means the Participant being deemed
to have suffered a disability that makes the Participant eligible for immediate
benefits under any long-term disability plan of the Company, as in effect from
time to time.
(c) Termination of Employment. For
purposes of the Plan, there shall have been a termination of employment of a
Participant if such Participant is no longer an employee, consultant, director
or officer of the Company or of any of its subsidiaries.
6.04 Exercise
Procedures. Each Option granted under the Plan shall be
exercised by written notice to the Company which must be received by the officer
or employee of the Company designated in the Option Agreement on or before the
close of business on the expiration date of the Option. The Option
Price of shares purchased upon exercise of an Option granted under the Plan
shall be paid in full in cash by the Participant pursuant to the Option
Agreement; provided, however, that the
Committee may (but shall not be required to) permit payment to be made by
delivery to the Company of either (a) Common Stock (which may include shares
otherwise issuable in connection with the exercise of the Option, subject to
such rules as the Committee deems appropriate), (b) any combination of cash and
Common Stock, or (c) such other consideration as the Committee deems
appropriate. In the event that any Common Stock shall be transferred
to the Company to satisfy all or any part of the Option Price, the part of the
Option Price deemed to have been satisfied by such transfer of Common Stock
shall be equal to the product derived by multiplying the Fair Market Value of a
share of Common Stock as of the date of exercise times the number of shares of
Common Stock transferred to the Company. The Participant may not
transfer to the Company in satisfaction of the Option Price any fractional share
of Common Stock. Any part of the Option Price paid in cash upon the
exercise of any Option shall be added to the general funds of the Company and
may be used for any proper corporate purpose. Unless the Committee
shall otherwise determine, any Common Stock transferred to the Company as
payment of all or part of the Option Price upon the exercise of any Option shall
be held as treasury shares.
ARTICLE
VII
MISCELLANEOUS
7.01 Plan Provisions Control Option and
Stock Purchase Right Terms. The terms of the Plan shall govern
all Options and Stock Purchase Rights granted under the Plan, and in no event
shall the Committee have the power to grant any option or stock purchase right
under the Plan which is contrary to any of the provision of the
Plan. In the event any provision of any Options or Stock Purchase
Rights granted under the Plan shall conflict with any term in the Plan as
constituted on the Date of Grant of such Option or Stock Purchase Right, the
term in the Plan as constituted on the Date of Grant of such Option or Stock
Purchase Right shall control. Except as provided in Section 7.03 and
Section 7.06, the terms of any Option or Stock Purchase Right granted under the
Plan may not be changed after the Date of Grant of such Option or Stock Purchase
Right so as to materially decrease the value of the Option or Stock Purchase
Right without the express written approval of the holder.
7.02 Option
Agreement. No person shall have any rights under any Option
granted under the Plan unless and until the Company and the Participant to whom
such Option shall have been granted shall have executed and delivered an Option
Agreement or received any other Option acknowledgment authorized by the
Committee expressly granting the Option to such person and containing provisions
setting forth the terms of the Option.
7.03 Modification of Option After
Grant. No Option or Stock Purchase Right granted under the
Plan to a participant may be modified (unless such modification does not
materially decrease the value of the Option or Stock Purchase Right) after the
Date of Grant except by express written agreement between the Company and the
Participant, provided that any such change (a) shall not be inconsistent with
the terms of the Plan, and (b) shall be approved by the Committee.
7.04 Limitation on
Transfer. Unless determined otherwise by the Committee, a
Participant’s rights and interest under the Plan may not be assigned or
transferred other than by will or the laws of descent and distribution, and
during the lifetime of a Participant, only the Participant personally (or the
Participant’s personal representative) may exercise rights under the
Plan. The Participant’s Beneficiary may exercise the Participant’s
rights to the extent they are exercisable under the Plan following the death of
the Participant. In the event that the Committee makes an Option or Stock
Purchase Right transferable, such Option or Stock Purchase Right shall contain
such additional terms and conditions as the Committee deems
appropriate.
7.05 Taxes. The Company
shall be entitled, if the Committee deems it necessary or desirable, to withhold
(or secure payment from the Participant in lieu of withholding) the amount of
any withholding or other tax required by law to be withheld or paid by the
Company with respect to any amount payable and/or shares issuable with respect
to such Participant’s Option or Stock Purchase Right, or with respect to any
income recognized upon a disqualifying disposition of shares received pursuant
to the exercise of an Incentive Stock Option, and the Company may defer payment
or issuance of shares upon exercise of an Option or Stock Purchase Right unless
indemnified to its satisfaction against any liability for any such
tax. The amount of such withholding or tax payment shall be
determined by the Committee and shall be payable by the Participant at such time
as the Committee determines. The Participant shall meet his or her
withholding requirement by direct payment to the Company in cash of the amount
of any taxes required to be withheld with respect to such Option or Stock
Purchase Right; provided, however, that the Committee may (but shall not be
required to) permit the Participant to meet his or her withholding requirement
by (i) having withheld from such Option or Stock Purchase Right at the
appropriate time that number of shares of Common Stock, rounded up to the next
whole share, whose Fair Market Value is equal to the amount of withholding taxes
due, or (ii) a combination of shares and cash.
7.06 Adjustments
to Reflect Capital Changes.
(a) Recapitalization. The
number and kind of shares subject to outstanding Options or Stock Purchase
Rights, the Option Price for such shares, the number and kind of shares
available for Options and Stock Purchase Rights subsequently granted under the
Plan and the maximum number of shares in respect of which Options can be granted
to any Participant in any calendar year shall be appropriately adjusted to
reflect any stock dividend, stock split, combination or exchange of shares,
merger, consolidation or other change in capitalization with a similar
substantive effect upon the Plan or the Options or Stock Purchase Rights granted
under the Plan. The Committee shall have the power and sole
discretion to determine the amount of the adjustment to be made in each
case.
(b) Merger. After any
Merger in which the Company is the surviving corporation, each Participant
shall, at no additional cost, be entitled upon any exercise of an Option or
Stock Purchase Right to receive (subject to any required action by
shareholders), in lieu of the number of shares of Common Stock receivable or
exercisable pursuant to such Option or Stock Purchase Right, the number and
class of shares or other securities to which such Participant would have been
entitled pursuant to the terms of the Merger if, at the time of the Merger, such
participant had been the holder of record of a number of shares equal to the
number of shares receivable or exercisable pursuant to such Option or Stock
Purchase Right. Comparable rights shall accrue to each Participant in
the event of successive Mergers of the character described above. In
the event of a Merger in which the Company is not the surviving corporation, the
surviving, continuing, successor, or purchasing corporation, as the case may be
(the “Acquiring Corporation”), shall either assume the Company’s rights and
obligations under outstanding Options and Stock Purchase Rights or substitute
comparable options and stock purchase rights in respect of the Acquiring
Corporation’s stock for such outstanding Options and Stock Purchase Rights. In
the event the Acquiring Corporation elects not to assume or substitute
comparable options and stock purchase rights for such outstanding Options and
Stock Purchase Rights, the Board shall provide that any unexercisable and/or
unvested portion of the outstanding Options and Stock Purchase Rights shall be
immediately exercisable and vested as of a date prior to such Merger or
consolidation, as the Board so determines. The exercise and/or
vesting of any Option and any Stock Purchase Right that was permissible solely
by reason of this Section 7.07(b) shall be conditioned upon the consummation of
the Merger or consolidation. Any Options and Stock Purchase Rights
which are neither assumed by the Acquiring Corporation nor exercised as of the
date of the Merger shall terminate effective as of the effective date of the
Merger.
For
purposes of the Plan, all outstanding Options and Stock Purchase Rights will be
considered assumed if, following the consummation of the Merger, the option or
stock purchase rights confers the right to purchase or receive, for each share
of stock subject to the Option or Stock Purchase Right immediately prior to the
consummation of the Merger, the consideration (whether stock, cash, or other
securities property) received in the Merger by holders of Common Stock for each
share of the Company’s Common Stock held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type
chosen by the holders of a majority of the outstanding shares of the Company’s
Common Stock); provided, however, that if such consideration received in the
Merger is not solely common stock of the successor corporation or its parent,
the Committee may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each share of stock subject to the Option or Stock Purchase
Right, to be solely common stock of the successor corporation or its parent or
subsidiary equal in fair market value to the per share consideration received by
holders of the Company’s Common Stock in the Merger.
Any outstanding Option which is assumed
or replaced in the event of a Merger and does not otherwise accelerate at
that time will automatically accelerate in the event that the Participant’s
service terminates through an “Involuntary Termination” effected within eighteen
(18) months following the effective date of such Merger. Any Option so accelerated will remain
exercisable until the earlier of (i) the expiration of the Option Term or (ii)
the end of the one-year period measured from the date of the Involuntary
Termination.
An Involuntary Termination will be
deemed to occur upon (i) the Participant's involuntary dismissal or discharge by
the Company or its subsidiaries or their successors for reasons other than cause
or (ii) such individual’s voluntary resignation following (A) a reduction in his
or her level of compensation (including base salary, fringe benefits and any
corporate-performance based bonus or incentive programs) by more than ten
percent or (B) a relocation of such individual’s place of employment by more
than fifty (50) miles, provided and only if such reduction or relocation is
effected by the Company or its subsidiaries or their successor without the
Participant’s written consent.
(c) Options to Purchase Shares of Stock
of Acquired Companies. After any Merger in which the Company
shall be a surviving corporation, the Committee may grant substituted options
outside of the terms of this Plan, pursuant to Section 424 of the Code,
replacing old options granted under a plan of another party to the Merger whose
shares or stock subject to the old options may no longer be issued following the
Merger. The foregoing manner of application of the foregoing
provisions shall be determined by the Committee in its sole
discretion. Any such application may provide for the elimination of
any fractional shares, which might otherwise become subject to any
Options.
7.07 No Right to
Employment. No employee or other person shall have any claim
of right to be granted an Option under this Plan. Neither the Plan
nor any action taken hereunder shall be construed as giving any employee any
right to be retained in the employ of the Company or any of its
subsidiaries.
7.08 Options Not Includable for Benefit
Purposes. Common Stock received by a Participant pursuant to
the provisions of the Plan shall not be included in the determination of
benefits under any pension, group insurance or other benefit plan applicable to
the Participant, which is maintained by the Company, except as may be provided
under the terms of such plans or determined by the Board.
7.09 Governing Law. All
determinations made and actions taken pursuant to the Plan shall be governed by
the laws of the State of Delaware and construed in accordance therewith (except
where the law of the state of incorporation of the Company
controls).
7.10 No Strict
Construction. No rule of strict construction shall be implied
against the Company, the Board, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any Option or Stock Purchase
Right granted under the Plan or any rule or procedure established by the
Committee.
7.11 Captions. The
captions (i.e., all Section headings) used in the Plan are for convenience only,
do not constitute a part of the Plan, and shall not be deemed to limit,
characterize or affect in any way any provisions of the Plan, and all provisions
of the Plan shall be construed as if no captions have been used in the
Plan.
7.12 Severability. Whenever
possible, each provision in the Plan and every Option and Stock Purchase Right
at any time granted under the Plan shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of the Plan or
any Option or Stock Purchase Right at any time granted under the Plan shall be
held to be prohibited by or invalid under applicable law, then (a) such
provision shall be deemed amended to accomplish the objectives of the provision
as originally written to the fullest extent permitted by law and (b) all other
provisions of the Plan and every other Option and Stock Purchase Right at any
time granted under the Plan shall remain in full force and effect.
7.13 Amendment
and Termination.
(a) Amendment. The
Board shall have complete power and authority to amend the Plan at any
time. No termination or amendment of the Plan may, without the
consent of the Participant to whom any Option or Stock Purchase Right shall
theretofore have been granted under the Plan, adversely affect the right of such
individual under such Option or Stock Purchase Right.
(b) Termination. The
Board shall have the right and the power to terminate the Plan at any time;
provided, however, that the Plan shall terminate no later than ten years after
the adoption of the Plan by the Board. No Option or Stock Purchase
Right shall be granted under the Plan after the termination of the Plan, but the
termination of the Plan shall not have any other effect and any Option or Stock
Purchase Right outstanding at the time of the termination of the Plan may be
exercised after termination of the Plan at any time prior to the expiration date
of such Option or Stock Purchase Right to the same extent such Option or Stock
Purchase Right would have been exercisable had the Plan not
terminated.
7.14 Limitations. The
following limitations shall apply to grants of Options:
(i) No
Participant shall be granted, in any fiscal year of the Company, Options to
purchase more than 1,000,000 shares of Common Stock, other than grants made to
the chief executive officer of the Company pursuant to an employment agreement
approved by the Board of Directors of the Company, in which case the maximum
number of shares covered by Options granted to such officer in any fiscal year
shall not exceed 5% of the Company’s outstanding common stock, calculated on a
fully diluted basis.
(ii) The
foregoing limitation shall be adjusted proportionately in connection with any
change in the Company's capitalization as described in Section
7.06(b).
(iii) If
an Option is canceled in the same fiscal year of the Company in which it was
granted (other than in connection with a transaction described in Section
7.06(b)), the canceled Option will be counted against the limits set forth in
subsections (i) and (ii) above.
7.15 Conditions Upon Issuance of
Shares.
(a) Legal Compliance. Shares
of Common Stock shall not be issued pursuant to the exercise of an Option or
Stock Purchase Right unless the exercise of such Option or Stock Purchase Right
and the issuance and delivery of such shares shall comply with Applicable Laws
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
(b) Investment
Representations. As a condition to the exercise of an Option or Stock
Purchase Right, the Company may require the person exercising such Option or
Stock Purchase Right to represent and warrant at the time of any such exercise
that the shares of Common Stock are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is
required.
(c) Additional
Conditions. The Committee shall have the authority to
condition the grant of any Option or Stock Purchase Right in such other manner
that the Committee determines to be appropriate, provided that such condition is
not inconsistent with the terms of the Plan. Such conditions may include, among
other things, obligations of Optionees to execute lock-up agreements and
shareholder agreements in the future.
(d) Other. The
Company shall have the right but not the obligation to file a resale
registration statement on behalf of one or more Optionees with respect to shares
underlying options on Form S-8 or other applicable registration
statement.
7.16. Inability to Obtain Authority.
The inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any shares of Common Stock hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such shares as to which such requisite authority shall not have been
obtained.
7.17. Reservation of Shares. The
Company, during the term of this Plan, will at all times reserve and keep
available such number of shares of Common Stock as shall be sufficient to
satisfy the requirements of the Plan.