Exhibit 10.6
As Amended and Restated
on February 6, 1987,
as Thereafter Amended
Through July 31, 1992
ELECTROMAGNETIC SCIENCES, INC.
1981 INCENTIVE STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the meanings
hereinafter set forth unless the context clearly indicates to the
contrary:
(a) "Board" shall mean the Board of Directors of the
Company.
(b) "Committee" shall mean the Stock Option Committee of
the Board.
(c) "Company" shall mean Electromagnetic Sciences, Inc.
(d) "Disabled Employee" shall mean an employee of the
Company or any Subsidiary who is unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected
to last for a continuous period of not less than twelve months.
(e) "Fair Market Value" at any time shall mean the closing
sales price, or the mean between the closing high "bid" and low
"asked" prices, as the case may be, of the Stock in the
over-the-counter market on the day on which such value is to be
determined, as reported by the National Association of Securities
Dealers Automated Quotation System or successor national
quotation service. If the Stock is listed on a national
securities exchange, "Fair Market Value" at any time shall mean
the closing sales price of the Stock on such national securities
exchange on the day on which such value is to be determined, as
reported in the composite quotations for securities traded on
such exchange provided by the National Association of Securities
Dealers or successor national quotation service. In the event no
such quotations are available for the day in question, "Fair
Market Value" at any time shall be determined by reference to the
appropriate prices on the next preceding day for which such
prices are reported.
(f) "Incentive Stock Option" shall mean an option that
complies with and is subject to the terms, limitations and
conditions of Section 422A of the Internal Revenue Code of 1986,
as it may be amended from time to time (the "Code"), and any
regulations promulgated with respect thereto (the "Regulations").
(g) "Non-Qualifying Stock Option" shall mean an option that
is not an Incentive Stock Option.
(h) "Option" shall mean an option, whether an Incentive
Stock Option or a Non-Qualifying Stock Option, to purchase Stock
granted pursuant to the provisions of Article VI hereof.
(i) "Optionee" shall mean a person to whom an Option has
been granted hereunder.
(j) "Option Price" shall mean the price at which an
Optionee may purchase a share of stock under a Stock Option
Agreement.
(k) "Parent" shall mean any corporation which owns,
directly or indirectly, the majority of the outstanding voting
stock of the Company.
(l) "Plan" shall mean the Electromagnetic Sciences, Inc.
1981 Incentive Stock Option Plan, the terms of which are set
forth herein.
(m) "Purchasable" shall refer to Stock which may be
purchased by an Optionee under the terms of this Plan after a
certain date specified in his Stock Option Agreement.
(n) "Stock" shall mean the $.10 par value common stock of
the Company or, in the event that the outstanding shares of Stock
are hereafter changed into or exchanged for shares of a different
stock or securities of the Company or some other corporation,
such other stock or securities.
(0) "Stock Option Agreement" shall mean an agreement
between the Company and the Optionee under which the Optionee may
purchase Stock hereunder.
(p) "Subsidiary" shall mean any corporation, the
majority of the outstanding voting stock of which is owned,
directly or indirectly, by the Company.
ARTICLE II
THE PLAN
2.1 Purpose. The purpose of the Plan is to advance the
interests of the Company and its shareholders by affording "key
employees", as defined in Article III hereof, of the Company and
its Subsidiaries an opportunity to acquire or increase their
proprietary interests in the Company by granting such persons
Options to purchase Stock. The Options will promote the growth
and profitability of the Company and its Subsidiaries because the
Optionees will be provided with an additional incentive to
achieve the objectives of the Company and its Subsidiaries
through participation in its success and growth and by
encouraging their continued employment.
2.2 Effective Date. The Plan became effective on October
16, 1981, which is the date of its adoption by the Board. The
Plan was approved by the holders of a majority of the shares of
capital stock of the Company represented at the annual meeting of
its stockholders held on April 23, 1982.
2.3 Termination Date. The Plan shall terminate and no
further Options shall be granted hereunder on October 16, 1991,
which is the earlier of the tenth anniversary of the date on
which the Plan was adopted by the Board or the date on which the
Plan was approved by the Company's stockholders.
ARTICLE III
PARTICIPANTS
Any "key employee," including executive personnel and
department heads (as well as officers who are also directors), of
the Company or a Subsidiary shall be eligible to participate in
the Plan, provided that they are full-time employees of the
Company or a Subsidiary. Members of the Committee who otherwise
qualify as "key employees" shall be eligible to participate.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of Committee. Subject to Section 4.4
hereof, the Plan shall be administered by the Committee. The
Committee shall select one of its members as its Chairman and
shall hold its meetings at such time and places as it may
determine. The Committee shall keep minutes of its meetings and
shall make such rules and regulations for the conduct of its
business as it may deem necessary. In administering the Plan,
the Committee's actions and determinations shall be binding on
all interested parties. Subject to the express provisions of the
Plan, the Committee shall have the sole discretion and authority
to determine the eligible "key employees," those key employees to
whom an Option will be granted, the time or times at which the
Option may be exercised, the number of shares of Stock subject to
the Option, whether the Option is an Incentive Stock Option or a
Non-Qualifying Stock Option, and the terms and conditions of the
Stock Option Agreement. Subject to the express provisions of the
Plan, the Committee shall also have complete authority to
interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it and to make all other determinations
necessary or advisable in the administration of the Plan,
including, without limitation, the amending or altering of the
Plan and any Option granted hereunder as may be required to
comply with or to conform to any federal, state or local laws or
regulations. The Committee shall have the power to authorize the
issuance of Stock in accordance with the provisions of the Plan.
No member of the Board or the Committee shall be liable to any
person for any determination made in good faith with respect to
the Plan or any Option granted hereunder.
4.2 Majority Rule. A majority of the members of the
Committee shall constitute a quorum, and any action taken by a
majority at a meeting at which a quorum is present or any action
taken without a meeting evidenced by a writing executed by all
the members of the Committee, shall constitute the action of the
Committee.
4.3 Company Assistance. The Company shall supply full and
timely information to the Committee on all matters relating to
eligible persons, their employment, death, retirement, disability
or other termination of employment, and such other pertinent
facts as the Committee may require. The Company shall furnish
the Committee with such clerical and other assistance as is
necessary in the performance of its duties.
4.4 Director and Officer Options. A committee of the Board,
consisting of two or more directors designated by the Board,
shall have sole authority and discretion to grant or modify, or
to otherwise exercise powers of the Committee with respect to,
Options to or held by employees who are directors of the Company,
or are officers of the Company for the purposes of Section 16 of
the Securities Exchange Act of 1934, as amended, provided that
no director who is not a "disinterested person," for the purposes
of Securities and Exchange Commission Rule 16b-3 or any
applicable successor thereto, shall serve on such committee.
References elsewhere in this Plan to the Board, in the context of
grants or modification of, or exercise of discretion with respect
to, Options to or held by employees who are directors or such
officers, shall be deemed to refer to such committee.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to any adjustment pursuant to the
provisions of Section 5.2 hereof for transactions occurring after
February 6, 1987, the maximum number of shares of Stock which may
be issued and sold hereunder shall not exceed 1,500,000 shares.
Shares subject to an Option may be either authorized and unissued
shares or shares issued and later acquired by the Company;
provided, however, that shares of Stock with respect to which an
Option has been exercised shall not again be available for option
hereunder. If outstanding Options granted hereunder shall
terminate or expire for any reason without being wholly exercised
prior to the end of the period during which Options may be
granted hereunder, new Options may be granted hereunder covering
the unexercised shares of the terminated or expired Options.
5.2 Antidilution. In the event that the outstanding shares
of Stock are changed into or exchanged for a different number or
kind of shares or other securities of the Company or of another
corporation by reason of merger, consolidation, reorganization,
recapitalization, reclassification, combination of shares, stock
split-up or stock dividend:
(a) The aggregate number and kind of shares of Stock
as to which Options may be granted hereunder shall be adjusted
appropriately;
(b) The rights under outstanding Options granted
hereunder, both as to the number of subject shares and the Option
Price, shall be adjusted appropriately; and
(c) Where dissolution or liquidation of the Company or
any merger or combination in which the Company is not a surviving
corporation is involved, each outstanding Option granted
hereunder shall terminate, but the Optionee shall have the right,
immediately prior to such dissolution, liquidation, merger or
combination, to exercise his Option, in whole or in part, to the
extent that it shall not have been exercised, without regard to
any installment exercise provisions, subject, however, to the
proviso contained in the following paragraph and to the
limitations set forth in Article VI hereof.
The foregoing adjustments and the manner of application
thereof shall be determined solely by the Committee, and any such
adjustment may provide for the elimination of fractional share
interests; provided, however, that no adjustment shall be made in
a manner that will cause an Incentive Stock Option held by an
Optionee to become a Non-Qualifying Stock Option without the
consent of that Optionee. The adjustments required under this
Article shall apply to any successor or successors of the Company
and shall be made regardless of the number or type of successive
events requiring adjustments hereunder.
ARTICLE VI
OPTIONS
6.1 Option Grant and Agreement. Each Option granted
hereunder shall be evidenced by minutes of a meeting or the
written consent of either the Committee or the Board and by a
written Stock Option Agreement dated as of the date of grant and
executed by the Company and the Optionee. As to each grant
hereunder, the terms of the Option, including the Option's
duration, time or times of exercise, and Option Price, shall be
stated in the Stock Option Agreement or incorporated therein by
reference to the related resolution or written consent.
6.2 Optionee Limitations.
(a) Neither the Committee nor the Board shall grant an
Incentive Stock Option to any person who, at the time the Option
would be granted, (i) is not an employee of the Company or any
Subsidiary, or (ii) owns or is considered to own stock possessing
10% of the total combined voting power of all classes of stock of
the Company, its Parent or any Subsidiary, provided, however,
that the limitation in this clause (ii) shall not apply if, at
the time an Option is granted, the Option Price is at least 110%
of the Fair Market Value of the Stock subject to the Option and
such Option by its terms would not be exercisable after five
years from the date on which the Option is granted. For the
purpose of the foregoing clause (ii), a person shall be
considered to own (x)the stock owned, directly or indirectly, by
or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors and lineal descendants; (y)the stock
owned, directly or indirectly, by or for a corporation,
partnership, estate, or trust in proportion to such persons'
stock interest, partnership interest or beneficial interest
therein; and (z)the stock which such person may purchase under
any outstanding Options of the Company, its Parent or any
Subsidiary.
(b) (i) Years Prior to 1987. The aggregate Fair Market
Value (determined as of the time any Options are granted) of the
stock for which any Optionee may be granted Incentive Stock
Options in any calendar year prior to 1987 (under all Incentive
Stock Option plans of such Optionee's employer corporation, any
parent or subsidiary of such corporation or any predecessor of
such corporations, within the meaning of the regulations under
the Internal Revenue Code of 1954, as amended), shall not exceed
$100,000 plus any unused limit carryover as was permitted by
Section 422A of that Code and such regulations;
(ii) Years After 1986. No Incentive Stock Option shall
be granted to, nor shall the exercise provisions of any
outstanding Incentive Stock Option be amended if held by, any
individual who, at the time the Incentive Stock Option is to be
granted or amended, would thereby receive or hold Incentive Stock
Options pursuant to which the aggregate Fair Market Value
(determined at the time the Incentive Stock Options are granted
or are deemed to be granted) of the stock with respect to which
Incentive Stock Options granted after December 31, 1986, are
exercisable for the first time by such individual during any
calendar year (under any incentive stock option plan of such
Optionee's employer corporation, any parent or subsidiary of such
corporation or any predecessor of such corporation, within the
meaning of the Regulations) exceeds $100,000; provided, however,
that the foregoing restriction on amendment of outstanding
Incentive Stock Options shall not preclude an amendment of the
exercise provisions of an outstanding Incentive Stock Option if,
as a result of such amendment and with the consent of the
Optionee, such Option becomes a Non-Qualifying Stock Option.
6.3 Option Price. The Option Price of the Stock subject to
each Option shall be determined by the Committee or Board, but
shall not be less than the Fair Market Value of the Stock at the
time the Option is granted.
6.4 Exercise Period. The period for the exercise of each
Option shall be determined by the Committee or Board. With
respect to Incentive Stock Options, such period shall not exceed
ten years from the date of grant of the Option, and in no
instance shall such period exceed ten years plus one day from the
date of grant of the Option.
6.5 Option Exercise. Unless otherwise provided in the
Stock Option Agreement, an Option shall be exercisable in full or
in part at any time prior to expiration of the Option. The
Committee or Board shall have the authority in its sole
discretion to prescribe in any Stock Option Agreement that the
Option may be exercised in installments during the term of the
Option.
(a) An Option may be exercised at any time or from time to
time during the term of the Option as to any or all full shares
which have become Purchasable under the provisions of the Option,
provided that no exercise may be with respect to less than 25
shares unless the number of Purchasable Shares remaining under
that Option is less than 25. The Option Price is to be paid in
full in cash upon the exercise of the Option and the Company
shall not be required to deliver certificates for such shares
until such payment has been made; provided, however, that in lieu
of cash, all or any portion of the Option Price may be paid by
tendering to the Company shares of Stock duly endorsed for
transfer and owned by the Optionee, to be credited against the
Option Price at their Fair Market Value at the time of exercise.
The holder of an Option shall not have any of the rights of a
stockholder with respect to the shares of Stock subject to the
Option until such shares have been issued or transferred to him
upon the exercise of his Option.
(b) An Option shall be exercised by written notice of
intent to exercise the Option with respect to a specified number
of shares of Stock delivered to the Company at its principal
office, and by payment in full to the Company in accordance with
paragraph 6.5(a) at said office of the amount of the Option Price
for the number of shares of Stock with respect to which the
Option is then being exercised. In addition to and at the time
of payment of the Option Price, the Optionee shall pay to the
Company in cash the full amount of any federal and state
withholding or other employment taxes applicable to the taxable
income of such Optionee resulting from such exercise; provided,
however, that in the discretion of the Committee or Board, any
Stock Option Agreement may provide that all or any portion of
such tax obligations, together with additional taxes not
exceeding the actual additional taxes to be owed by the Optionee
as a result of such exercise, may, upon the irrevocable
election of the Optionee, be paid by tendering to the Company
shares of Stock duly endorsed for transfer and owned by the
Optionee, or by authorization to the Company to withhold shares
of Stock otherwise issuable upon exercise of the Option, in
either case in that number of shares having a Fair Market Value
at the time of exercise equal to the amount of such taxes thereby
being paid, and subject, in the case of any Optionee who is
required to file reports under Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), to such
restrictions as to the approval and timing of any such election
as the Committee or Board may from time to time determine to be
necessary or appropriate to satisfy the conditions of the
exemption set forth in Rule 16b-3 under the 1934 Act.
6.6 Nontransferability of Option. No Option shall be
transferred by an Optionee otherwise than by will or the laws of
descent and distribution. During the lifetime of an Optionee,
his Option shall be exercisable only by him (or by his guardian
or legal representative, should one be appointed).
6.7 Termination of Employment. In the event of termination
of the employment by the Company or any Subsidiary of an
Optionee, other than a termination that is either (a) for cause
or (b) voluntary on the part of such person and without the
written consent of the Company or such Subsidiary, such person
may exercise his Option at any time within three months (or such
longer period not exceeding 27 months as shall be specified by
the Committee or Board) after such termination of employment, or
at any time within twelve months (or such longer period not
exceeding 36 months as shall be specified by the Committee or
Board) after such termination if such person was a Disabled
Employee upon termination, but in no event later than ten years
ten years plus one day in the case of a Non-Qualifying Stock
Option) from the date of grant thereof, to the extent of the
number of shares of Stock covered by his Option which were
Purchasable by him at the date of the termination of his
employment. As to shares of Stock not so Purchasable by him, the
Option shall terminate on that date. In the event of the
termination of the employment of an Optionee from the Company or
any Subsidiary, which termination is either (i) for cause or (ii)
voluntary on the part of such person and without the written
consent of the Company or such Subsidiary, any Option held by
him, to the extent not theretofore exercised, shall immediately
terminate and no longer be exercisable in whole or in part. Any
change in the employment of an Optionee shall not affect that
person's Options, so long as such person continues to be an
employee of the Company or any Subsidiary. Subject to the
foregoing, the Stock Option Agreement may contain such provisions
as the Committee or Board shall approve regarding the effect of
authorized leaves of absence. Nothing in the Plan or in any
Option shall confer on any person any right to continue in the
employ of the Company or any Subsidiary, or shall interfere in
any way with the right of the Company or any Subsidiary to
terminate his employment at any time.
6.8 Death of Holder of Option. In the event any Optionee
dies while he is employed by the Company or any Subsidiary, or
dies within three months (or such longer period not exceeding 27
months as shall be specified by the Committee or Board) after a
termination of employment that is neither (a) for cause nor (b)
voluntary on the part of such person and without the written
consent of the Company or such Subsidiary, any Option held by him
may be exercised (to the extent of the entire number of shares of
Stock covered by the Option, whether or not Purchasable by the
Optionee at the date of his death, unless the Optionee's
termination preceded his death, in which case the Option shall be
exercisable only to the extent of the number of shares that were
Purchasable thereunder on the date of the Optionee's termination)
by a legatee or legatees of such Option under the Optionee's
will, or by his personal representatives or distributees, at any
time after his death, but in no event after ten years (ten years
plus one day in the case of Non-Qualifying Stock Options) from
the date of the grant thereof, nor after 24 months (or such
longer period not exceeding 48 months as shall be specified by
the Committee or Board) subsequent to the death of such Optionee.
6.9 Certain Successor Options. To the extent not
inconsistent with the terms, limitations and conditions of
Section 422A of the Code and the Regulations thereunder, a Stock
Option Agreement issued to a key employee in respect of an option
held by such employee to acquire stock of any entity acquired, by
merger or otherwise, by the Company, may contain terms that
differ from those stated in this Article VI, but solely to the
extent necessary to preserve for any such employee the rights and
benefits contained in such predecessor option, or to satisfy the
requirements of Section 425(a) of the Code and the Regulations
thereunder.
ARTICLE VII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any
certificate for shares of Stock purchased upon the exercise of
any Option or any portion thereof, prior to fulfillment of all of
the following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which the Stock is then listed;
(b) The completion of any registration or other
qualification of such shares under any federal or state law or
under the rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body, which the
Committee or Board shall in its sole discretion deem necessary or
advisable;
(c) The obtaining of any approval or other clearance from
any federal or state governmental agency which the Committee or
Board shall in its sole discretion determine to be necessary or
advisable; and
(d) The lapse of such reasonable period of time following
the exercise of the Option as the Committee or Board from time to
time may establish for reasons of administrative convenience.
ARTICLE VIII
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time, upon recommendation of the
Committee and notwithstanding Section 2.3 hereof, terminate the
Plan, and may at any time and from time to time and in any
respect amend or modify the Plan; provided, however, that the
Board, without approval of the shareholders of the Company, may
not amend the Plan to:
(a) Increase the total number of shares of Stock
subject to the Plan, except as contemplated in Section 5.2
hereof;
(b) Withdraw the administration of the Plan from the
Committee;
(c) Change or modify the class of employees that may
participate in the Plan; or
(d) Otherwise materially increase the benefits
accruing to participants under the Plan.
No amendment of the Plan shall alter or impair any of the
rights or obligations under any Option theretofore granted under
the Plan without the consent of the Optionee.
To the extent specified at the time each Option hereunder is
granted, such Options are intended to be Incentive Stock Options.
The Committee or the Board may from time to time, if necessary,
amend the Plan and with the consent of each Optionee, the
Committee or the Board, in their discretion, may amend each
Option, in each instance in order to comply with any law or
regulation of the Internal Revenue Service pertaining to
Incentive Stock Options.
ARTICLE IX
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of the Plan shall not affect any other stock
option, incentive or other compensation plans in effect for the
Company or any Subsidiary, nor shall the adoption of the Plan
preclude the Company or any Subsidiary from establishing any
other forms of incentive or other compensation plan for its
employees.
ARTICLE X
MISCELLANEOUS
10.1 Plan Binding on Successors. The Plan shall be binding
upon the successors and assigns of the Company.
10.2 Singular, Plural; Gender. Whenever used herein, nouns
in the singular shall include the plural, and the masculine
pronoun shall include the feminine gender.
10.3 Headings Not Part of Plan. Headings of articles and
paragraphs hereof are inserted for convenience and reference, and
they do not constitute a part of the Plan.