Exhibit 4.1
SURGICAL SAFETY PRODUCTS, INC.
2003 STOCK COMPENSATION PLAN
SECTION 1. PURPOSE OF THE PLAN. The purpose of the 2003 Stock Compensation Plan
("Plan") is to maintain the ability of Surgical Safety Products, Inc., a New
York corporation (the "Company") and its subsidiaries to attract and retain
highly qualified and experienced directors, employees and consultants and to
give such directors, employees and consultants a continued proprietary interest
in the success of the Company and its subsidiaries. In addition the Plan is
intended to encourage ownership of common stock, $.001 par value ("Common
Stock"), of the Company by the directors, employees and consultants of the
Company and its Affiliates (as defined below) and to provide increased incentive
for such persons to render services and to exert maximum effort for the success
of the Company's business. The Plan provides eligible employees and consultants
the opportunity to participate in the enhancement of shareholder value by the
grants of warrants, options, restricted Common Stock, unrestricted Common Stock
and other awards under this Plan and to have their bonuses and/or consulting
fees payable in warrants, restricted Common Stock, unrestricted Common Stock and
other awards, or any combination thereof. In addition, the Company expects that
the Plan will further strengthen the identification of the directors, employees
and consultants with the stockholders. Certain options and warrants to be
granted under this Plan are intended to qualify as Incentive Stock Options
("ISOs") pursuant to Section 422 of the Internal Revenue Code of 1986, as
amended ("Code"), while other options and warrants granted under this Plan will
be nonqualified options or warrants which are not intended to qualify as ISOs
("Nonqualified Options"), either or both as provided in the agreements
evidencing the options or warrants described in Section 5. Employees,
consultants and directors who participate or become eligible to participate in
this Plan from time to time are referred to collectively herein as
"Participants". As used in this Plan, the term "Affiliates" means any "parent
corporation" of the Company and any "subsidiary corporation" of the Company
within the meaning of Code Sections 424(e) and (f), respectively.
SECTION 2. ADMINISTRATION OF THE PLAN.
(a) Committee. The Plan shall be administered by the Board of Directors of the
Company (the "Board") or a committee thereof designated by the Board with the
specific authority to administer the Plan. When acting in such capacity the
Board is herein referred to as the "Committee". If the Company is governed by
Rule 16b-3 promulgated by the Securities and Exchange Commission ("Commission")
pursuant to the Securities Exchange Act of 1934, as amended ("Exchange Act"), no
director shall serve as a member of the Committee unless he or she is a
"disinterested person" within the meaning of such Rule 16b-3.
(b) Committee Action. The Committee shall hold its meetings at such times and
places as it may determine. A majority of its members shall constitute a quorum,
and all determinations of the Committee shall be made by not less than a
majority of its members. Any decision or determination reduced to writing and
1
signed by a majority of the members shall be fully as effective as if it had
been made by a majority vote of its members at a meeting duly called and held.
The Committee may designate the Secretary of the Company or other Company
employees to assist the Committee in the administration of the Plan, and may
grant authority to such persons to execute award agreements or other documents
on behalf of the Committee and the Company. Any duly constituted committee of
the Board satisfying the qualifications of this Section 2 may be appointed as
the Committee.
(c) Committee Expenses. All expenses and liabilities incurred by the Committee
in the administration of the Plan shall he borne by the Company. The Committee
may employ attorneys, consultants, accountants or other persons.
SECTION 3. STOCK RESERVED FOR THE PLAN. Subject to adjustment as provided in
Section 5(d)(xiii) hereof the aggregate number of shares that may be optioned,
subject to conversion or issued under the Plan is 8,000,000 shares of Common
Stock, warrants, options, or any combination thereof. The shares subject to the
Plan shall consist of authorized but unissued shares of Common Stock and such
number of shares shall be and is hereby reserved for sale for such purpose. Any
of such shares which may remain unsold and which are not subject to issuance
upon exercise of outstanding options or warrants at the termination of the Plan
shall cease to be reserved for the purpose of the Plan, but until termination of
the Plan or the termination of the last of the options or warrants granted under
the Plan, whichever last occurs, the Company shall at all times reserve a
sufficient number of shares to meet the requirements of the Plan. Should any
option or warrant expire or be cancelled prior to its exercise in full, the
shares theretofore subject to such option or warrant may again be made subject
to an option or warrant under the Plan.
SECTION 4. ELIGIBILITY. The Participants shall include directors, employees,
including officers, of the Company and its divisions and subsidiaries, and
consultants and attorneys who provide bona fide services to the Company.
Participants are eligible to be granted warrants, options, restricted Common
Stock, unrestricted Common Stock and other awards under this Plan and to have
their bonuses and/or consulting fees payable in warrants, restricted Common
Stock, unrestricted Common Stock and other awards. A Participant who has been
granted an option or warrant hereunder may be granted an additional option or
warrant, options or warrants, if the Committee shall so determine.
SECTION 5. GRANT OF OPTIONS OR WARRANTS.
(a) Committee Discretion. The Committee shall have sole and absolute
discretionary authority (i) to determine, authorize, and designate those persons
pursuant to this Plan who are to receive warrants, options, restricted Common
Stock, or unrestricted Common Stock under the Plan, (ii) to determine the number
of shares of Common Stock to be covered by such grant or such options or
warrants and the terms thereof, (iii) to determine the type of Common Stock
granted: restricted Common Stock, unrestricted Common Stock or a combination of
restricted and unrestricted Common Stock , and (iv) to determine the type of
option or warrant granted: ISO, Nonqualified Option or a combination of ISO and
Nonqualified Options. The Committee shall thereupon grant options or warrants in
accordance with such determinations as evidenced by a written option or warrant
agreement. Subject to the express provisions of the Plan, the Committee shall
2
have discretionary authority to prescribe, amend and rescind rules and
regulations relating to the Plan, to interpret the Plan, to prescribe and amend
the terms of the option or warrant agreements (which need not be identical) and
to make all other determinations deemed necessary or advisable for the
administration of the Plan.
(b) Stockholder Approval. All ISOs granted under this Plan are subject to, and
may not be exercised before, the approval of this Plan by the stockholders prior
to the first anniversary date of the Board meeting held to approve the Plan, by
the affirmative vote of the holders of a majority of the outstanding shares of
the Company present, or represented by proxy, and entitled to vote thereat, or
by written consent in accordance with the laws of the State of New York,
provided that if such approval by the stockholders of the Company is not
forthcoming, all options or warrants and stock awards previously granted under
this Plan other than ISOs shall be valid in all respects.
(c) Limitation on Incentive Stock Options and Warrants. The aggregate fair
market value (determined in accordance with Section 5(d)(ii) of this Plan at the
time the option or warrant is granted) of the Common Stock with respect to which
ISOs may be exercisable for the first time by any Participant during any
calendar year under all such plans of the Company and its Affiliates shall not
exceed $1,000,000.
(d) Terms and Conditions. Each option or warrant granted under the Plan shall be
evidenced by an agreement, in a form approved by the Committee, which shall be
subject to the following express terms and conditions and to such other terms
and conditions as the Committee may deem appropriate:
(i) Option or Warrant Period. The Committee shall promptly notify the
Participant of the option or warrant grant and a written agreement
shall promptly be executed and delivered by and on behalf of the
Company and the Participant, provided that the option or warrant grant
shall expire if a written agreement is not signed by said Participant
(or his agent or attorney) and returned to the Company within 60 days
from date of receipt by the Participant of such agreement. The date of
grant shall be the date the option or warrant is actually granted by
the Committee, even though the written agreement may be executed and
delivered by the Company and the Participant after that date. Each
option or warrant agreement shall specify the period for which the
option or warrant thereunder is granted (which in no event shall
exceed ten years from the date of grant) and shall provide that the
option or warrant shall expire at the end of such period. If the
original term of an option or warrant is less than ten years from the
date of grant, the option or warrant may be amended prior to its
expiration, with the approval of the Committee and the Participant, to
extend the term so that the term as amended is not more than ten years
from the date of grant. However, in the case of an ISO granted to an
individual who, at the time of grant, owns stock possessing more than
10 percent of the total combined voting power of all classes of stock
of the Company or its Affiliate ("Ten Percent Stockholder"), such
period shall not exceed five years from the date of grant.
(ii) Option or Warrant Price. The purchase price of each share of
Common Stock subject to each option or warrant granted pursuant to the
Plan shall be determined by the Committee at the time the option or
3
warrant is granted and, in the case of ISOs, shall not be less than
100% of the fair market value of a share of Common Stock on the date
the option or warrant is granted, as determined by the Committee. In
the case of an ISO granted to a Ten Percent Stockholder, the option or
warrant price shall not be less than 110% of the fair market value of
a share of Common Stock on the date the option or warrant is granted.
The purchase price of each share of Common Stock subject to a
Nonqualified Option or Warrant under this Plan shall be determined by
the Committee prior to granting the option or warrant. The Committee
shall set the purchase price for each share subject to a Nonqualified
Option or Warrant at either the fair market value of each share on the
date the option or warrant is granted, or at such other price as the
Committee in its sole discretion shall determine.
At the time a determination of the fair market value of a share of
Common Stock is required to be made hereunder, the determination of
its fair market value shall be made by the Committee in such manner as
it deems appropriate.
(iii) Exercise Period. The Committee may provide in the option or
warrant agreement that an option or warrant may be exercised in whole,
immediately, or is to be exercisable in increments. In addition, the
Committee may provide that the exercise of all or part of an option or
warrant is subject to specified performance by the Participant.
(iv) Procedure for Exercise. Options or warrants shall be exercised in
the manner specified in the option or warrant agreement. The notice of
exercise shall specify the address to which the certificates for such
shares are to be mailed. A Participant shall be deemed to be a
stockholder with respect to shares covered by an option or warrant on
the date specified in the option or warrant agreement. As promptly as
practicable, the Company shall deliver to the Participant or other
holder of the warrant, certificates for the number of shares with
respect to which such option or warrant has been so exercised, issued
in the holder's name or such other name as holder directs; provided,
however, that such delivery shall be deemed effected for all purposes
when a stock transfer agent of the Company shall have deposited such
certificates with a carrier for overnight delivery, addressed to the
holder at the address specified pursuant to this Section 6(d).
(v) Termination of Employment. If an executive officer to whom an
option or warrant is granted ceases to be employed by the Company for
any reason other than death or disability, any option or warrant which
is exercisable on the date of such termination of employment may be
exercised during a period beginning on such date and ending at the
time set forth in the option or warrant agreement; provided, however,
that if a Participant's employment is terminated because of the
Participant's theft or embezzlement from the Company, disclosure of
trade secrets of the Company or the commission of a willful, felonious
act while in the employment of the Company (such reasons shall
hereinafter be collectively referred to as "for cause"), then any
option or warrant or unexercised portion thereof granted to said
Participant shall expire upon such termination of employment.
Notwithstanding the foregoing, no ISO may be exercised later than
three months after an employee's termination of employment for any
reason other than death or disability.
4
(vi) Disability or Death of Participant. In the event of the
determination of disability or death of a Participant under the Plan
while he or she is employed by the Company, the options or warrants
previously granted to him may be exercised (to the extent he or she
would have been entitled to do so at the date of the determination of
disability or death) at any time and from time to time, within a
period beginning on the date of such determination of disability or
death and ending at the time set forth in the option or warrant
agreement, by the former employee, the guardian of his estate, the
executor or administrator of his estate or by the person or persons to
whom his rights under the option or warrant shall pass by will or the
laws of descent and distribution, but in no event may the option or
warrant be exercised after its expiration under the terms of the
option or warrant agreement. Notwithstanding the foregoing, no ISO may
be exercised later than one year after the determination of disability
or death. A Participant shall be deemed to be disabled if, in the
opinion of a physician selected by the Committee, he or she is
incapable of performing services for the Company of the kind he or she
was performing at the time the disability occurred by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or to be of long, continued and indefinite
duration. The date of determination of disability for purposes hereof
shall be the date of such determination by such physician.
(vii) Assignability. An option or warrant shall not be assignable or
otherwise transferable, in whole or in part, by a Participant except
that an option or warrant may be transferable to a member of the
Participant's immediate family or to a trust in which the Participant
and members of his immediate family are the only beneficiaries.
(viii) Incentive Stock Options. Each option or warrant agreement may
contain such terms and provisions as the Committee may determine to be
necessary or desirable in order to qualify an option or warrant
designated as an incentive stock option.
(ix) Restricted Stock Awards. Awards of restricted stock under this
Plan shall be subject to all the applicable provisions of this Plan,
including the following terms and conditions, and to such other terms
and conditions not inconsistent therewith, as the Committee shall
determine:
(A) Awards of restricted stock may be in addition to or in lieu
of option or warrant grants. Awards may be conditioned on the
attainment of particular performance goals based on criteria
established by the Committee at the time of each award of
restricted stock. During a period set forth in the agreement (the
"Restriction Period"), the recipient shall not be permitted to
sell, transfer, pledge, or otherwise encumber the shares of
restricted stock; except that such shares may be used, if the
agreement permits, to pay the option or warrant price pursuant to
any option or warrant granted under this Plan, provided an equal
number of shares delivered to the Participant shall carry the
same restrictions as the shares so used. Shares of restricted
stock shall become free of all restrictions if during the
Restriction Period, (i) the recipient dies, (ii) the recipient's
directorship, employment, or consultancy terminates by reason of
5
permanent disability, as determined by the Committee, (iii) the
recipient retires after attaining both 59 1/2 years of age and
five years of continuous service with the Company and/or a
division or subsidiary, or (iv) if provided in the agreement,
there is a "change in control" of the Company (as defined in such
agreement). The Committee may require medical evidence of
permanent disability, including medical examinations by
physicians selected by it. Unless and to the extent otherwise
provided in the agreement, shares of restricted stock shall be
forfeited and revert to the Company upon the recipient's
termination of directorship, employment or consultancy during the
Restriction Period for any reason other than death, permanent
disability, as determined by the Committee, retirement after
attaining both 59 1/2 years of age and five years of continuous
service with the Company and/or a subsidiary or division, or, to
the extent provided in the agreement, a "change in control" of
the Company (as defined in such agreement), except to the extent
the Committee, in its sole discretion, finds that such forfeiture
might not be in the best interests of the Company and, therefore,
waives all or part of the application of this provision to the
restricted stock held by such recipient. Certificates for
restricted stock shall be registered in the name of the recipient
but shall be imprinted with the appropriate legend and returned
to the Company by the recipient, together with a stock power
endorsed in blank by the recipient. The recipient shall be
entitled to vote shares of restricted stock and shall be entitled
to all dividends paid thereon, except that dividends paid in
Common Stock or other property shall also be subject to the same
restrictions.
(B) Restricted Stock shall become free of the foregoing
restrictions upon expiration of the applicable Restriction Period
and the Company shall then deliver to the recipient Common Stock
certificates evidencing such stock. Restricted stock and any
Common Stock received upon the expiration of the restriction
period shall be subject to such other transfer restrictions
and/or legend requirements as are specified in the applicable
agreement.
(x) Bonuses and Past Salaries and Fees Payable in Unrestricted Stock.
(A) In lieu of cash bonuses otherwise payable under the Company's
or applicable division's or subsidiary's compensation practices
to employees and consultants eligible to participate in this
Plan, the Committee, in its sole discretion, may determine that
such bonuses shall be payable in unrestricted Common Stock or
partly in unrestricted Common Stock and partly in cash. Such
bonuses shall be in consideration of services previously
performed and as an incentive toward future services and shall
consist of shares of unrestricted Common Stock subject to such
terms as the Committee may determine in its sole discretion. The
number of shares of unrestricted Common Stock payable in lieu of
a bonus otherwise payable shall be determined by dividing such
bonus amount by the fair market value of one share of Common
Stock on the date the bonus is payable, with fair market value
determined as of such date in accordance with Section 5(d)(ii).
(B) In lieu of salaries and fees otherwise payable by the Company
to employees, attorneys and consultants eligible to participate
6
in this Plan that were incurred for services rendered during,
prior or after the year of 2003, the Committee, in its sole
discretion, may determine that such unpaid salaries and fees
shall be payable in unrestricted Common Stock or partly in
unrestricted Common Stock and partly in cash. Such awards shall
be in consideration of services previously performed and as an
incentive toward future services and shall consist of shares of
unrestricted Common Stock subject to such terms as the Committee
may determine in its sole discretion. The number of shares of
unrestricted Common Stock payable in lieu of salaries and fees
otherwise payable shall be determined by dividing each calendar
month's of unpaid salary or fee amount by the average trading
value of the Common Stock for the calendar month during which the
subject services were provided.
(xi) No Rights as Stockholder. No Participant shall have any rights as
a stockholder with respect to shares covered by an option or warrant
until the option or warrant is exercised as provided in clause (d)
above.
(xii) Extraordinary Corporate Transactions. The existence of
outstanding options or warrants shall not affect in any way the right
or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations, exchanges, or
other changes in the Company's capital structure or its business, or
any merger or consolidation of the Company, or any issuance of Common
Stock or other securities or subscription rights thereto, or any
issuance of bonds, debentures, preferred or prior preference stock
ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of
all or any part of its assets or business, or any other corporate act
or proceeding, whether of a similar character or otherwise. If the
Company recapitalizes or otherwise changes its capital structure, or
merges, consolidates, sells all of its assets or dissolves (each of
the foregoing a "Fundamental Change"), then thereafter upon any
exercise of an option or warrant theretofore granted the Participant
shall be entitled to purchase under such option or warrant, in lieu of
the number of shares of Common Stock as to which option or warrant
shall then be exercisable, the number and class of shares of stock and
securities to which the Participant would have been entitled pursuant
to the terms of the Fundamental Change if, immediately prior to such
Fundamental Change, the Participant had been the holder of record of
the number of shares of Common Stock as to which such option or
warrant is then exercisable. If (i) the Company shall not be the
surviving entity in any merger or consolidation (or survives only as a
subsidiary of another entity), (ii) the Company sells all or
substantially all of its assets to any other person or entity (other
than a wholly owned subsidiary), (iii) any person or entity (including
a "group" as contemplated by Section 13(d)(3) of the Exchange Act)
acquires or gains ownership or control of (including, without
limitation, power to vote) more than 50% of the outstanding shares of
Common Stock, (iv) the Company is to be dissolved and liquidated, or
(v) as a result of or in connection with a contested election of
directors, the persons who were directors of the Company before such
election shall cease to constitute a majority of the Board (each such
event in clauses (i) through (v) above is referred to herein as a
"Corporate Change"), the Committee, in its sole discretion, may
7
accelerate the time at which all or a portion of a Participant's
option or warrants may be exercised for a limited period of time
before or after a specified date.
(xiii) Changes in Company's Capital Structure. If the outstanding
shares of Common Stock or other securities of the Company, or both,
for which the option or warrant is then exercisable at any time be
changed or exchanged by declaration of a stock dividend, stock split,
combination of shares, recapitalization, or reorganization, the number
and kind of shares of Common Stock or other securities which are
subject to the Plan or subject to any options or warrants theretofore
granted, and the option or warrant prices, shall be adjusted only as
provided in the option or warrant.
(xiv) Acceleration of Options and Warrants. Except as hereinbefore
expressly provided, (i) the issuance by the Company of shares of stock
or any class of securities convertible into shares of stock of any
class, for cash, property, labor or services, upon direct sale, upon
the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into
such shares or other securities, (ii) the payment of a dividend in
property other than Common Stock or (iii) the occurrence of any
similar transaction, and in any case whether or not for fair value,
shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number of shares of Common Stock subject to
options or warrants theretofore granted or the purchase price per
share, unless the Committee shall determine, in its sole discretion,
that an adjustment is necessary to provide equitable treatment to
Participant. Notwithstanding anything to the contrary contained in
this Plan, the Committee may, in its sole discretion, accelerate the
time at which any option or warrant may be exercised, including, but
not limited to, upon the occurrence of the events specified in this
Section 5, and is authorized at any time (with the consent of the
Participant) to purchase options or warrants pursuant to Section 6.
SECTION 6. RELINQUISHMENT OF OPTIONS OR WARRANTS.
(a) The Committee, in granting options or warrants hereunder, shall have
discretion to determine whether or not options or warrants shall include a right
of relinquishment as hereinafter provided by this Section 6. The Committee shall
also have discretion to determine whether an option or warrant agreement
evidencing an option or warrant initially granted by the Committee without a
right of relinquishment shall be amended or supplemented to include such a right
of relinquishment. Neither the Committee nor the Company shall be under any
obligation or incur any liability to any person by reason of the Committee's
refusal to grant or include a right of relinquishment in any option or warrant
granted hereunder or in any option or warrant agreement evidencing the same.
Subject to the Committee's determination in any case that the grant by it of a
right of relinquishment is consistent with Section 1 hereof, any option or
warrant granted under this Plan, and the option or warrant agreement evidencing
such option or warrant, may provide:
(i) That the Participant, or his or her heirs or other legal
representatives to the extent entitled to exercise the option or
warrant under the terms thereof, in lieu of purchasing the entire
number of shares subject to purchase thereunder, shall have the right
to relinquish all or any part of the then unexercised portion of the
option or warrant (to the extent then exercisable) for a number of
8
shares of Common Stock to be determined in accordance with the
following provisions of this clause (i):
(A) The written notice of exercise of such right of
relinquishment shall state the percentage of the total number of
shares of Common Stock issuable pursuant to such relinquishment
(as defined below) that the Participant elects to receive;
(B) The number of shares of Common Stock, if any, issuable
pursuant to such relinquishment shall be the number of such
shares, rounded to the next greater number of full shares, as
shall be equal to the quotient obtained by dividing (i) the
Appreciated Value by (ii) the purchase price for each of such
shares specified in such option or warrant;
(C) For the purpose of this clause (C), "Appreciated Value" means
the excess, if any, of (x) the total current market value of the
shares of Common Stock covered by the option or warrant or the
portion thereof to be relinquished over (y) the total purchase
price for such shares specified in such option or warrant;
(ii) That such right of relinquishment may be exercised only upon
receipt by the Company of a written notice of such relinquishment
which shall be dated the date of election to make such relinquishment;
and that, for the purposes of this Plan, such date of election shall
be deemed to be the date when such notice is sent by registered or
certified mail, or when receipt is acknowledged by the Company, if
mailed by other than registered or certified mail or if delivered by
hand or by any telegraphic communications equipment of the sender or
otherwise delivered; provided, that, in the event the method just
described for determining such date of election shall not be or remain
consistent with the provisions of Section 16(b) of the Exchange Act or
the rules and regulations adopted by the Commission thereunder, as
presently existing or as may be hereafter amended, which regulations
exempt from the operation of Section 16(b) of the Exchange Act in
whole or in part any such relinquishment transaction, then such date
of election shall be determined by such other method consistent with
Section 16(b) of the Exchange Act or the rules and regulations
thereunder as the Committee shall in its discretion select and apply;
(iii) That the "current market value" of a share of Common Stock on a
particular date shall be deemed to be its fair market value on that
date as determined in accordance with Paragraph 5(d)(ii); and
(iv) That the option or warrant, or any portion thereof, may be
relinquished only to the extent that (A) it is exercisable on the date
written notice of relinquishment is received by the Company, and (B)
the holder of such option or warrant pays, or makes provision
satisfactory to the Company for the payment of, any taxes which the
Company is obligated to collect with respect to such relinquishment.
(b) The Committee shall have sole discretion to consent to or disapprove, and
neither the Committee nor the Company shall be under any liability by reason of
the Committee's disapproval of, any election by a holder of options or warrants
9
to relinquish such options or warrants in whole or in part as provided in
Paragraph 6(a), except that no such consent to or approval of a relinquishment
shall be required under the following circumstances. Each Participant who is
subject to the short-swing profits recapture provisions of Section 16(b) of the
Exchange Act ("Covered Participant") shall not be entitled to receive shares of
Common Stock when options or warrants are relinquished during any window period
commencing on the third business day following the Company's release of a
quarterly or annual summary statement of sales and earnings and ending on the
twelfth business day following such release ("Window Period"). A Covered
Participant shall be entitled to receive shares of Common Stock upon the
relinquishment of options or warrants outside a Window Period.
(c) The Committee, in granting options or warrants hereunder, shall have
discretion to determine the terms upon which such options or warrants shall be
relinquishable, subject to the applicable provisions of this Plan, and including
such provisions as are deemed advisable to permit the exemption from the
operation from Section 16(b) of the Exchange Act of any such relinquishment
transaction, and options or warrants outstanding, and option agreements
evidencing such options, may be amended, if necessary, to permit such exemption.
If options or warrants are relinquished, such option or warrant shall be deemed
to have been exercised to the extent of the number of shares of Common Stock
covered by the option or warrant or part thereof which is relinquished, and no
further options or warrants may be granted covering such shares of Common Stock.
(d) Any options or warrants or any right to relinquish the same to the Company
as contemplated by this Paragraph 6 shall be assignable by the Participant,
provided the transaction complies with any applicable securities laws.
(e) Except as provided in Section 6(f) below, no right of relinquishment may be
exercised within the first six months after the initial award of any option or
warrant containing, or the amendment or supplementation of any existing option
or warrant agreement adding, the right of relinquishment.
(f) No right of relinquishment may be exercised after the initial award of any
option or warrant containing, or the amendment or supplementation of any
existing option or warrant agreement adding the right of relinquishment, unless
such right of relinquishment is effective upon the Participant's death,
disability or termination of his relationship with the Company for a reason
other than "for cause."
SECTION 7. AMENDMENTS OR TERMINATION. The Board may amend, alter or discontinue
the Plan, but no amendment or alteration shall be made which would impair the
rights of any Participant, without his consent, under any option or warrant
theretofore granted.
SECTION 8. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant and
exercise of options or warrants thereunder, and the obligation of the Company to
sell and deliver shares under such options or warrants, shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any governmental or regulatory agency as may be required. The Company shall
not be required to issue or deliver any certificates for shares of Common Stock
10
prior to the completion of any registration or qualification of such shares
under any federal or state law or issuance of any ruling or regulation of any
government body which the Company shall, in its sole discretion, determine to be
necessary or advisable. Any adjustments provided for in subparagraphs 5(d)(xii),
(xiii) and (xiv) shall be subject to any shareholder action required by the
corporate law of the state of incorporation of the Company.
SECTION 9. PURCHASE FOR INVESTMENT. Unless the options, warrants, and shares of
Common Stock covered by this Plan have been registered under the Securities Act
of 1933, as amended, or the Company has determined that such registration is
unnecessary, each person acquiring or exercising an option or warrant under this
Plan may be required by the Company to give a representation in writing that he
or she is acquiring such option or warrant or such shares for his own account
for investment and not with a view to, or for sale in connection with, the
distribution of any part thereof.
SECTION 10. TAXES.
(a) The Company may make such provisions as it may deem appropriate for the
withholding of any taxes which it determines is required in connection with any
options or warrants granted under this Plan.
(b) Notwithstanding the terms of Paragraph 10(a), any Participant may pay all or
any portion of the taxes required to be withheld by the Company or paid by him
or her in connection with the exercise of a nonqualified option or warrant by
electing to have the Company withhold shares of Common Stock, or by delivering
previously owned shares of Common Stock, having a fair market value, determined
in accordance with Paragraph 5(d)(ii), equal to the amount required to be
withheld or paid. A Participant must make the foregoing election on or before
the date that the amount of tax to be withheld is determined ("Tax Date"). All
such elections are irrevocable and subject to disapproval by the Committee.
Elections by Covered Participants are subject to the following additional
restrictions: (i) such election may not be made within six months of the grant
of an option or warrant, provided that this limitation shall not apply in the
event of death or disability, and (ii) such election must be made either six
months or more prior to the Tax Date or in a Window Period. Where the Tax Date
in respect of an option or warrant is deferred until six months after exercise
and the Covered Participant elects share withholding, the full amount of shares
of Common Stock will be issued or transferred to him upon exercise of the option
or warrant, but he or she shall be unconditionally obligated to tender back to
the Company the number of shares necessary to discharge the Company's
withholding obligation or his estimated tax obligation on the Tax Date.
SECTION 11. REPLACEMENT OF OPTIONS AND WARRANTS. The Committee from time to time
may permit a Participant under the Plan to surrender for cancellation any
unexercised outstanding option or warrant and receive from the Company in
exchange an option or warrant for such number of shares of Common Stock as may
be designated by the Committee. The Committee may, with the consent of the
holder of any outstanding option or warrant, amend such option or warrant,
including reducing the exercise price of any option or warrant to not less than
the fair market value of the Common Stock at the time of the amendment and
extending the exercise term of any warrant or option.
12
SECTION 12. NO RIGHT TO COMPANY EMPLOYMENT. Nothing in this Plan or as a result
of any option or warrant granted pursuant to this Plan shall confer on any
individual any right to continue in the employ of the Company or interfere in
any way with the right of the Company to terminate an individual's employment at
any time. The option or warrant agreements may contain such provisions as the
Committee may approve with reference to the effect of approved leaves of
absence.
SECTION 13. LIABILITY OF COMPANY. The Company and any Affiliate which is in
existence or hereafter comes into existence shall not be liable to a Participant
or other persons as to:
(a) The Non-Issuance of Shares. The non-issuance or sale of shares as to which
the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company's counsel to be necessary to
the lawful issuance and sale of any shares hereunder; and
(b) Tax Consequences. Any tax consequence expected, but not realized, by any
Participant or other person due to the exercise of any option or warrant granted
hereunder.
SECTION 14. EFFECTIVENESS AND EXPIRATION OF PLAN. The Plan shall be effective on
the date the Board adopts the Plan. The Plan shall expire ten years after the
date the Board approves the Plan and thereafter no option or warrant shall be
granted pursuant to the Plan.
SECTION 15. NON-EXCLUSIVITY OF THE PLAN. Neither the adoption by the Board nor
the submission of the Plan to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including without
limitation, the granting of restricted stock or stock options or warrants
otherwise than under the Plan, and such arrangements may be either generally
applicable or applicable only in specific cases.
SECTION 16. GOVERNING LAW. This Plan and any agreements hereunder shall be
interpreted and construed in accordance with the laws of the state of
incorporation of the Company and applicable federal law.
SECTION 17. CASHLESS EXERCISE. The Committee also may allow cashless exercises
as permitted under Federal Reserve Board's Regulation T, subject to applicable
securities law restrictions, or by any other means which the Committee
determines to be consistent with the Plan's purpose and applicable law. The
proceeds from such a payment shall be added to the general funds of the Company
and shall be used for general corporate purposes.
