EXHIBIT 10.1
IONICS, INCORPORATED
1979 Stock Option Plan
As Amended through February 17, 1994
1. Purposes of Plan.
This 1979 Stock Option Plan (hereinafter called the "Plan") of Ionics,
Incorporated (hereinafter called the "Company") is intended to advance the
interests of the Company (and its subsidiaries) by providing a means whereby
key employees of the Company, that is, those who are largely responsible for
its management and its technical and business success, and are expected to
continue in this role, may be offered incentives in addition to the other
incentives which they may hold, such as pensions, etc.
2. Definitions.
2.1 "Subsidiaries" or "Subsidiary" shall mean a corporation,
partnership or other entity whose controlling stock or other ownership
interest is owned directly or indirectly by the Company.
2.2 A "key employee" shall mean an employee of the Company or of any
of its Subsidiaries who is engaged in an important executive, administrative
or technical function who is classified by the Administrators of the Plan as
such within the purposes of the Plan.
3. Effective Date and Duration.
The Plan will become effective immediately upon its adoption by the
Board of Directors of the Company, subject, however, to approval by the
holders of a majority of the outstanding shares of its capital stock having
voting rights present at the meeting when the matter was acted upon. The
Plan shall remain in effect until the close of business on February 15, 1997
(the "Termination Date").
4. Stock Subject to the Plan.
Subject to adjustment as provided hereinbelow, the total aggregate
number of shares of Common Stock, One Dollar ($1) per share par value
(hereinafter "Common Stock"), of the Company which are to be issued and
delivered upon exercise of options granted pursuant to this Plan
(hereinafter called the "Options" and each singly an "Option") or pursuant
to the earn out of Performance Units under this Plan, shall not exceed
1,455,000 shares of said Common Stock. Such shares may either be authorized
and unissued shares of Common Stock or issued shares of Common Stock which
shall have been reacquired by the Company and held as treasury shares. In
the event that any Options granted under the Plan shall be surrendered to
the Company or shall terminate, lapse or expire for any reason without
having been exercised in full, the shares not purchased under such Options
shall be available again for the purposes of issuance pursuant to the Plan.
In the event that the outstanding shares of the Common Stock of the
Company are hereafter increased or decreased or 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 reorganization, merger,
consolidation, recapitalization, reclassification, stock split-up,
combination of shares, or dividends payable in stock, corresponding
adjustments as determined by the Board of Directors in their sole discretion
to be appropriate shall forthwith be made in the Option price and in the
number and kind of shares for the purchase of which Options may theretofore
or thereafter be granted under the Plan; provided, however, the aggregate
total Option price of Options then outstanding and unexercised shall not be
changed thereby.
5. Administration of the Plan.
The Plan shall be administered by the Board of Directors of the Company
or such committee composed of its Directors as may be delegated this duty
and function by resolution of the Board of Directors (said Board or said
Committee, as the case may be, being hereinafter referred to as the
"Administrators"). The Administrators shall be comprised of, to the extent
required by applicable regulations under Section 162(m) of the Code, two or
more outside Directors as defined in applicable regulations thereunder and,
to the extent required by Rule 16b-3 promulgated under the Securities
Exchange Act of 1934 or any successor provision, disinterested Directors. A
majority of the Administrators acting upon a particular matter shall have no
personal interest in the Option or matter with which they are concerned.
Subject to the express provisions of the Plan, the Administrators
acting by a majority of their number at a meeting or by written consent
shall have plenary authority in their discretion to grant Options under the
Plan, and in relation thereto to determine from time to time those officers
or employees of the Company or of its Subsidiaries who are to receive
Options, the number of shares to be optioned to each, the Option price
(which shall not be less than the par value of the stock subject to the
Option) and the terms and conditions upon which the Options are to be
granted, which need not be identical; including, without limitation,
requirements that an exercise of the Option may be conditioned in whole or
in part upon duration of the optionee's employment, his attainment of
specified performance criteria, his refraining from competitive activities
and other conditions. Options may be granted at any time prior to
termination of the Plan and the Options granted may extend beyond the
Termination Date.
Subject to the express provisions of the Plan, the Administrators may
(1) construe the respective stock Option agreements and the Plan, prescribe,
amend, and rescind rules and regulations relating to the Plan and make all
other determinations necessary or advisable for administering the Plan, and
(2) correct any defect or supply any omission or reconcile any inconsistency
in the Plan or in any stock Option agreement and in the manner and to the
extent they shall deem expedient to carry it into effect and (3) constitute
and appoint a person or persons selected by them to execute and deliver in
the name and on behalf of the Administrators all such agreements,
instruments and other documents (including without limitation of the
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generality of the foregoing documents evidencing amendments of individual
stock Options and other actions delegated to the Administrators by the votes
of the Board of Directors adopted at their meeting on February 18, 1982,
relating to "incentive stock options").
The Administrators shall have the authority in their discretion to
determine from time to time those officers or employees of the Company or of
its Subsidiaries who are eligible to receive Performance Units, as
hereinafter defined. In connection therewith the Administrators shall have
the authority to prescribe the number of Performance Units to be granted to
any key employee and all terms thereof and to adopt, amend and rescind rules
and regulations for the administration of Performance Units.
6. Persons to whom Options and Performance Units may be Granted.
Only persons who are officers of, or who are "key employees" of the
Company or any of its Subsidiaries, and who accept an Option or Performance
Unit granted hereunder, as the case may be, and subject to all of the terms
and conditions of this Plan, may be granted any Options or Performance Units
under this Plan. During any one-year period, no individual shall be granted
Options and/or Performance Units which could result in the issuance to such
individual of more than 100,000 shares of Common Stock.
7. The Option Price.
The price payable upon exercise of an Option granted hereunder (the
"Option Price") shall be an amount as specified by the Administrators which
shall not be less than the par value of the stock which is subject to the
Option and which shall be paid upon exercise of the Option (1) in cash, (2)
with shares of the Company of the same class as the shares issuable upon
exercise of the Option, previously acquired by the optionee and having an
aggregate fair market value equal to the aggregate Option Price payable, or
(3) in any combination of cash and of such shares so valued. In the event
such shares are delivered to pay all or a portion of the Option Price -
(a) such shares shall be valued at the closing price for such stock on
the American Stock Exchange or other exchanges or markets where
such shares are primarily traded, as reported on the date of such
delivery of the shares, and
(b) a number of the shares being issued upon exercise of the Option
which is equal to the number of shares of such stock delivered in
payment of the Option Price shall be issued free from repurchase
rights of the Company under said Plan or stock Option agreement
evidencing the Option.
8. The Duration of the Options.
The duration of the Options granted hereunder shall be as determined by
the Administrators but shall not exceed a period of ten years from the date
of grant. Notwithstanding the preceding sentence, the duration of Options
not designated as Incentive Stock Options pursuant to Section 17 may be a
period of ten years and one day from the date of grant.
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9. Nontransferability of Options.
No Option granted under the Plan shall be encumbered, assigned, or
otherwise transferred, and an Option may be exercised during the lifetime of
the Optionee only by such person, and the stock Option agreement covering
the Option shares shall so provide.
10. Exercise of Options.
The exercise, in whole or in part, of any Option granted under the Plan
shall be :
(a) subject to compliance of all conditions or restrictions stated in
Section 11 of this Plan or imposed at the time the Option is
granted, and
(b) exercisable only by the employee to whom granted and while he
remains in the employment of the Company or any of its
Subsidiaries, except that -
(1) if the employee holding the Option ceases to remain in such
employment for any reason other than his or her voluntary
termination or his or her being terminated by the Company (or
its Subsidiary employing said employee) because of his
malfeasance, violation of this or any other agreement with
the Company (or its employing Subsidiary), or other like
justifiable cause, the employee shall have the right within
thirty (30) days after said termination to exercise the
Option to the extent it would have been exercisable by the
employee immediately before the employee's termination, and
(2) if the employee holding the Option shall die while in said
employment or within said 30-day period after its termination
as described in sub-paragraph (1) above, the Option, to the
extent exercisable by said employee at the time of his death,
may be exercised within ninety (90) days after his death by
the executor or administrator of the employee's estate.
Options shall be exercised in each instance by the person entitled to
exercise them by giving written notice of exercise to the Company (to its
Treasurer) substantially in the form of Exhibit A annexed hereto and
tendering payment of the entire Option Price payable.
Unless the shares deliverable upon exercise of Options are registered
or qualified for public sale by an effective Registration Statement of the
Company under the Securities Act of 1933, as amended (or any superseding
law) and are registered or qualified for sale under all applicable state
securities laws, the person to whom the stock is issued and delivered
hereunder shall confirm to the Company that the recipient is purchasing the
shares for investment and not with a view to effecting any distribution or
resale of the shares.
In no instance may an Option be exercised for less than one full share
of the stock.
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11. Restrictions Applicable to Stock Issued and Delivered Under the Plan.
11.1 The Company may elect in granting an Option to include a provision
that during the period of five years from the date of grant of the
Option, the Company shall have the right to repurchase stock
acquired by exercise of the Option, at a price payable in cash
equal to the price which the Company received upon its issuance,
to the following extent
If the Repurchase right Portion of the Shares
arises prior to Subject to Repurchase
the end of first year All
the end of the second year the excess of 20% of the
Option shares held
the end of the third year the excess of 40% of the
Option shares held
the end of the fourth year the excess of 60% of the
Option shares held
the end of the fifth year the excess of 80% of the
Option shares held
After the fifth year of None
holding
and upon the following events:
(a) if the employee issued the Option shall cease to be an employee of
the Company or of any of its Subsidiaries because of the
employee's voluntary termination of said employment or his being
terminated therefrom because of his malfeasance, violation of this
or any other agreement with the Company or said Subsidiary for
like justifiable cause, and/or
(b) before the participant may sell or transfer the stock in any
manner, whether voluntarily, by action of law or otherwise.
Said right of the Company to repurchase the stock may be exercised
by the Company at any time within thirty (30) days after it has
notice of any such event. At the closing of said purchase (which
shall be held on the fifth business day following the Company's
delivery of written notice to the holder that the Company has
elected to so purchase the shares) the Company shall pay the
purchase price to the holder against its receipt of delivery of
the stock certificates representing the stock being purchased,
duly endorsed or with duly executed stock powers to effect
transfer of the stock to the Company. If the Company doers not
elect to exercise said repurchase right within said period, the
holder shall be free to sell or transfer the stock free of such
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restriction, but unless said stock has been registered or
qualified for public sale under an effective Registration
Statement or other authorization under the Securities Act of 1933,
as amended (or under any superseding law) and qualified for public
sale under any applicable state securities laws, the holder shall
not so sell or transfer without prior written notice to the
Company and furnishing to the Company an opinion of legal counsel
or of said regulatory authority, satisfactory to the Company, that
no such registration or qualification of the stock is required in
the circumstances.
11.2 Each stock certificate representing stock issued upon exercise of
an Option hereunder shall bear such legend referring to these
restrictions as the Company may require, and it shall not transfer
ownership of such stock on its records except upon compliance with
these restrictions.
12. Stock Option Agreement Required.
Each stock Option granted under the Plan shall be evidenced by a "Stock
Option Agreement" between the Company and the employee granted the Option,
to be in such form as the Administrators in granting the Option shall
determine, provided that said Stock Option Agreement shall in any event
include an undertaking on the part of the Employee to whom the Option is
granted (the "Optionee") that in consideration for the grant of such Option,
the Optionee will not at any time during his employment by the Company or by
any of its Subsidiaries (as defined in the Plan) or within two (2) years
following the date of termination of said employment, without the written
consent of the Company, directly or indirectly, accept employment from, or
engage in any work or activities as an employee, officer, Director, agent,
consultant, partner, proprietor or principal stockholder for any other
corporation, person or entity which is substantially competitive to the
business in which the Company or its Subsidiaries are then engaged.
13. Effect of the Option.
The grant of an Option under the Plan shall not entitle the Optionee to
have or claim any rights of a stockholder of the Company (whether as to
dividends, voting rights or otherwise).
Neither the grant of an Option nor the making of any Stock Option
Agreement under this Plan shall confirm upon the Optionee any right with
respect to continuation of his or her employment nor shall it affect or
restrict the right of the Company, any Subsidiary of it, or any assuming
Company, or any successor of either of them employing the Optionee to
terminate such employment at any time.
14. Termination, Suspension, Amendment or Modification of the Plan.
The Board of Directors of the Company may at any time amend, alter,
suspend or terminate the Plan provided that:
(a) No change shall be made which, in the judgment of its Board of
Directors, will have a material adverse effect upon any Option
previously granted under this Plan unless the consent of the
Optionee is obtained in writing.
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(b) Without the approval by the holders of a majority of the
outstanding shares of its capital stock having voting rights,
(1) the maximum number of shares reserved for issuance upon the
exercise of Options under the Plan may not be changed; and
(2) the classes of employees to whom Options may be granted under
the Plan may not be changed.
15. Merger, Consolidation or Sale of the Entire Business of the Company.
If, prior to the expiration of the Plan, or the period of restriction
during which the Company may have or may obtain rights to repurchase stock
issued hereunder pursuant to Section 11 of the Plan, the Company shall merge
with, consolidate in or with, or sell all or substantially all of its assets
and business to another corporation or entity (other than a company or
entity which continues under the control of the same persons who were the
stockholders or owners of the Company immediately prior to the event), all
Options then outstanding shall become subject to exercise in full and all of
said repurchase rights of the Company shall terminate as of the effective
date of said transaction.
16. Optionee Shall Comply with Applicable Laws and Regulations upon
Exercise.
Upon exercise of any Option granted hereunder, the person exercising
the Option shall file any and all reports if any, required of such person
under the Securities Exchange Act of 1934, as amended, or otherwise.
17. Incentive Stock Options.
The special terms and conditions of this Section 17 shall apply to
Stock Options granted hereunder which meet any of the following requirements
("Incentive Stock Options"):
(a) Options considered under the Internal Revenue Code to have
been granted on or after January 1, 1981, and before August
14, 1981, as to which the Optionee consents in writing to the
application of this Section 17; and
(b) Options granted on or after August 14, 1981, and before
February 18, 1982, which the Administrators designate in the
Stock Option Agreement as Incentive Stock Options, and as to
which the Optionee consents in writing to the application of
this Section 17; and
(c) Options granted on or after February 18, 1982, which the
Administrators designate in the Stock Option Agreement as
Incentive Stock Options.
The following special terms and conditions (in all of which, any
reference to the date of grant of a Stock Option shall mean the date on
which the Stock Option is considered to have been granted under Sections 421
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through 425 of the Internal Revenue Code and the regulations issued
thereunder) shall apply to all Incentive Stock Options:
17.1 Option Price. The Option Price shall be not less than the fair
market value of the stock covered by the Option, determined as of
the date of grant of the Option.
17.2 Prior Outstanding Option. No Incentive Stock Option may be
exercised while there remains outstanding, within the meaning of
Section 422A(c)(7) of the Internal Revenue Code, any other
Incentive Stock Option which was granted at an earlier date to the
Optionee to purchase stock in this Corporation or in any other
corporation which is on the date of grant of the later Option
either a parent or subsidiary corporation of this Corporation, or
a predecessor corporation of any of such corporations. The Stock
Option Agreement for every Incentive Stock Option shall include a
provision to this effect. The two preceding sentences shall have
no application to any Incentive Stock Option granted after
December 31, 1986.
17.3 No Further Grants. No Option granted after February 15, 1989,
shall be designated an Incentive Stock Option.
17.4 Ten Percent Stockholder. If any Optionee to whom an Incentive
Stock Option is to be granted pursuant to the provisions of the
Plan is on the date of grant the owner (as determined under
Section 424(d) of the Internal Revenue Code) of stock possessing
more than 10% of the total combined voting power of all classes of
stock of this Corporation or any of its subsidiaries, then the
following special provisions shall be applicable to the Option
granted to such individual:
(i) The Option Price per share of stock subject to such Incentive
Stock Option shall not be less than 110% of the fair market
value of one share of stock on the date of grant; and
(ii) The Option shall not have a term in excess of five (5) years
from the date of grant.
Except as modified by the preceding provisions of this Section 17, all
the provisions of the Plan shall be applicable to the Incentive Stock
Options granted hereunder.
18. Special Bonus Grants. The Administrators may, but shall not be
required to, grant in connection with any Option which is not designated an
Incentive Stock Option a special bonus in cash in an amount not to exceed
the combined federal and state income tax liability incurred by the Option
holder as a consequence of his acquisition of stock pursuant to the exercise
of the Option, and payment of the bonus; payable, at the discretion of the
Administrators, in whole or in part to federal and state taxing authorities
for the benefit of the Option holder at such time or times as withholding
payments of such income tax may be required, and the remainder, if any, to
be paid in cash to the Optionee at the time or times at which he is required
to make payment of such tax. In the event that an Option with respect to
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which a special bonus has been granted becomes exercisable by the personal
representative of the estate of the Optionee in accordance with Section 10,
the bonus shall be payable to or for the benefit of the estate in the same
manner and to the same extent as it would have been payable to or for the
benefit of the Optionee had he survived to the date of exercise. A special
bonus may be granted simultaneously with a related Option, or granted
separately with respect to an outstanding Option granted at an earlier date.
In the case of an Optionee who is an officer or a director of the Company,
an Option with respect to which a special bonus is granted may be exercised:
(a) no earlier than six months after the date on which the bonus is
granted; provided, however, that this limitation shall not apply
in the event that the Optionee dies or becomes disabled before the
expiration of six months after the date on which the bonus is
granted; and
(b) only within one of the following:
(i) a period beginning on the third business day and ending on
the twelfth business day following the release for
publication by the Company of a quarterly or annual summary
statement of its sales and earnings; or
(ii) a period beginning on the first day and ending on the
thirtieth day following the date of approval by the
stockholders of the Company of (x) any consolidation or
merger of the Company in which the Company does not survive
as an independent, publicly owned corporation, or pursuant
to which shares of Common Stock would be converted into
cash, securities, or other property (other than a merger in
which the holders of Common Stock immediately before the
merger have the same proportionate ownership of common stock
of the surviving corporation after the merger), or (y) a
transfer of all or substantially all of the assets of the
Company (other than a transfer to a subsidiary corporation
controlled by the Company), or (z) the liquidation or
dissolution of the Company; or
(iii) a period beginning on the first day and ending on the
thirtieth day following (x) the acquisition of beneficial
ownership of thirty percent (30%) or more of the outstanding
voting shares of the Company, whether in one transaction or
a series of transactions, by another corporation, entity or
person or group of corporations, entities or persons
theretofore beneficially owning less than thirty percent
(30%) of such shares, or (y) the first purchase of shares
pursuant to a tender or exchange offer (other than one made
by the Company) for voting shares of the Company or
securities convertible into voting shares, after which offer
the offeror, if successful, will become the beneficial owner
of at least 30% of the outstanding voting shares of the
Company.
For purposes of this Section 18, the income tax liability incurred by
the Option holder shall be calculated as described in the attached appendix
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A, as of the date on which an amount is includible in the Option holder's
income pursuant to Section 83 of the Internal Revenue Code of 1986 as a
consequence of his acquisition of stock pursuant to the exercise of an
Option. The fair market value of the Option stock shall be its closing
price on the American Stock Exchange or other exchanges or markets where
such shares are permanently traded, for the date in question, and the tax
rate applicable to an Option holder shall be the single rate or the highest
graduated rate (exclusive of surtax) applied to earned income by a relevant
taxing jurisdiction.
19. Performance Units. All Performance Units granted under the Plan shall
be on the following terms and conditions (and such other terms and
conditions that the Administrators may establish which are consistent with
the Plan):
(a) A Performance Unit is defined as the right of a key employee who
has been granted the same to receive cash and/or Common Stock
and/or Options conditioned upon and measured by the attainment of
financial goals set by the Administrators. Performance Units
granted under the Plan shall be evidenced by agreements in such
form and containing such terms and conditions, not inconsistent
with the Plan, as the Administrators may approve.
(b) The Administrators shall determine the number of Performance Units
to be granted to each key employee selected for an award and may
establish a stated value (the "Stated Value") of each Performance
Unit.
(c) Payment of Performance Units shall be made by the Company to the
extent that such Performance Units are earned out by attainment of
the performance objectives set for such Performance Units by the
Administrators pursuant to subsection (d) below. Such payment may
be in the form of the grant of Options, or, if made in cash or
shares of Common Stock, shall have a value equal to the dollar
value of the Performance Units earned out. Subject to the
provisions of Section 5, payment of the amounts to which
participants are entitled to be paid in respect of Performance
Units as provided above shall be made in cash, shares of Common
Stock or Options, or in some combination thereof, as the
Administrators may determine. The Administrators, in their sole
discretion, may defer distribution of one-half of the amount of
the payment for a period up to twelve months following the date in
which the decision as to entitlement to payment is made.
(d) The award period ("Award Period") in respect of any Performance
Units shall be a period set by the Administrators. At the time
each grant of Performance Units is made, the Administrators shall
establish performance objectives to be attained within the Award
Period as a condition of such Performance Units being earned out.
The performance objectives shall be based on a specific dollar
amount of growth or on a percentage rate of improvement in such
elements as the Company's (or a subsidiary's) earnings per share,
income, return on equity or such other measures related to growth
or improvement of the Company (or its Subsidiaries) as the
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Administrators shall determine. The Administrators shall
determine whether the performance objectives in respect of an
Award Period have been attained, as well as the value of the
Performance Units consequently earned out.
(e) In the event that recipient of a grant of Performance Units ceases
to be a key employee prior to the end of the Award Period by
reason of disability or death, his Performance Units if ultimately
earned out shall be payable at the end of the Award Period in
proportion to the active service of the key employee during the
Award Period, as determined by the Committee. Upon any other
termination of employment, Performance Units and all rights
associated therewith shall terminate unless the Administrators in
their discretion shall determine otherwise. For purposes of this
subsection, the term "disability" means disability as defined in
any disability program maintained by the Company or a subsidiary.
(f) Performance Units may not be transferred otherwise than by will or
the laws of descent.
(g) If, as a result of any change in accounting principles or
practices or the method of their application or in any tax or
other laws or regulations, the earnings per share or other
established criteria of the Company or its Subsidiaries as
reported in the Company's annual report to stockholders differs
materially from the earnings per share or other such criteria
which would have been reported absent such change, the
Administrators may, in their discretion, equitably adjust the
reported earnings per share or other such criteria used in
determining the attainment of any performance objectives
previously established by the Administrators as a condition of
earning out Performance Units.
(h) In the event of a stock dividend or other transaction described in
the last paragraph of Section 4, the Administrators may make
appropriate adjustments in performance objectives, such as
earnings per share, for outstanding Performance Units. In the
event of a merger, consolidation, acquisition or liquidation
described in the Section 15, all outstanding Performance Units and
all rights relating thereto shall terminate, except as otherwise
determined by the Administrators.
(i) No payments will be made with respect to Performance Units unless
arrangements satisfactory to the Administrators are made for any
federal income tax withholding or other withholding required.
(j) Unless Shares deliverable upon earn out of Performance Units are
registered or qualified for public sale by an effective
Registration Statement of the Company under the Securities Act of
1933, as amended (or any superseding law) and are registered or
qualified for sale under all applicable state securities laws, the
person to whom the Common Stock is delivered shall confirm to the
Company that such recipient is purchasing the Shares for
investment and not with a view to effecting any distribution or
resale of the Shares.
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