EXHIBIT 10.1
CHARTER POWER SYSTEMS, INC.
1996 STOCK OPTION PLAN
1. PURPOSES
The purposes of the Charter Power Systems, Inc. 1996 Stock Option Plan (the
"Plan") are to aid Charter Power Systems, Inc. (the "Company") and its
subsidiaries in attracting and retaining highly capable employees and to enable
selected key employees of the Company and its subsidiaries to acquire or
increase ownership interests in the Company on a basis that will encourage them
to perform at increasing levels of effectiveness and use their best efforts to
promote the growth and profitability of the Company and its subsidiaries.
Consistent with these objectives, this Plan authorizes the granting to selected
key employees of Incentive Stock Options and Nonqualified Stock Options to
acquire shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), pursuant to the terms and conditions hereinafter set forth. As
used herein the term "subsidiary" shall have the meaning ascribed to it under
Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code").
2. DEFINITIONS
As used in this Plan, the following words shall have the following
meanings:
(a) "Board of Directors" means the Board of Directors of the Company;
(b) "Incentive Stock Option" means a stock option to purchase shares of
Common Stock which is intended to qualify as an incentive stock option as
defined in Section 422(b) of the Code;
(c) "Nonqualified Stock Option" means a stock option to purchase shares of
Common Stock that is not an Incentive Stock Option;
(d) "Option" means an Incentive Stock Option or a Nonqualified Stock
Option.
3. EFFECTIVE DATE
This Plan shall become effective on July 25, 1996 (the "Effective Date"),
subject to approval of this Plan by the holders of a majority of the capital
stock entitled to vote thereon (at the time of approval). In the event that this
Plan is not so approved, it shall not become effective.
4. ADMINISTRATION
(a) This Plan shall be administered by a committee (the "Committee"), which
may be a subcommittee of the compensation committee, consisting of at least two
members of the Board of Directors selected by the Board of Directors, or such
greater number as the Board of Directors may from time to time determine. At the
time of such selection, each such member shall not have been granted an Option
under this Plan during the one-year period prior to the later of the Effective
Date or such member's appointment to the Committee, or received stock or an
option to purchase stock of the Company or any of its "affiliates" (as such term
is defined under Rule 405 under the Securities Act of 1933, as amended) under
any other plan maintained by the Company or any of its affiliates, except as may
be otherwise provided in Rule 16b-3(c) under the Securities Exchange Act of
1934, as amended (the "Exchange Act") (or any successor rule). In addition, each
such member shall qualify as an "outside director" as defined in Section 162(m)
of the Code
and the regulations thereunder. If, at any time, there are less than two members
of the Committee eligible to serve in such capacity, the Board of Directors
shall appoint one or more other eligible members of the Board of Directors to
serve on the Committee. All Committee members shall serve, and may be removed,
at the pleasure of the Board of Directors.
(b) A majority of the members of the Committee (but not less than two)
shall constitute a quorum, and any action taken by a majority of such members
present at any meeting at which a quorum is present, or acts approved in writing
by all such members, shall be the acts of the Committee.
(c) Subject to the other provisions of this Plan, the Committee shall have
full authority to decide when Options to acquire shares of Common Stock will be
granted under this Plan, to select the key employees to whom the Options will be
granted, to determine whether the Options to be granted will be Incentive Stock
Options or Nonqualified Stock Options, and to determine the number of shares of
Common Stock to be covered by each Option, the price at which such shares may be
purchased upon the exercise of such Option (the "Option Exercise Price") and
other terms and conditions of such purchase including Company, department and
individual performance goals. In making those determinations, the Committee
shall solicit the recommendations of the Chief Executive Officer of the Company
and may take into account the key employee's present and potential contributions
to the Company's business and any other factors which the Committee may deem
relevant. Subject to the other provisions of this Plan, the Committee shall also
have full authority to interpret this Plan and any stock option agreements
evidencing Options granted hereunder, to issue rules for administering this
Plan, to change, alter, amend or rescind such rules, and to make all other
determinations necessary or appropriate for the administration of this Plan. All
determinations, interpretations and constructions made by the Committee pursuant
to this Section 4 shall be final and conclusive. No member of the Board of
Directors or the Committee shall be liable for any action, determination or
omission taken or made in good faith with respect to this Plan or any Option
granted hereunder.
5. ELIGIBILITY
(a) Subject to the provisions of Section 6 below, key employees of the
Company and its subsidiaries (including officers and directors who are
employees) shall be eligible to receive Options under this Plan.
(b) The aggregate Fair Market Value (as such term is defined in Section
7(a) below), determined as of the Date of Grant (as such term is defined in
Section 7(a) below), of the shares of stock with respect to which Incentive
Stock Options (and incentive stock options under all other incentive stock
option plans of the Company, its parent (if any) and its subsidiaries) are
exercisable for the first time by an Optionee (as such term is defined in
Section 7 below) during any calendar year may not exceed $100,000.
(c) In addition to the foregoing, the maximum number of shares with respect
to which Options may be granted to a person under this Plan during any calendar
year may not exceed 100,000 (subject to the adjustments set forth in Section
6(b) below). To the extent that the maximum number of shares with respect to
which Options may be granted to a person are not granted in a particular
calendar year (beginning with the year in which the person receives his or her
first grant of Options hereunder), such ungranted Options for that year shall
increase the maximum number of shares with respect to which Options may be
granted to such person in subsequent calendar years during the term of the Plan
until used.
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6. OPTION SHARES
(a) The shares subject to Options granted under this Plan shall be shares
of Common Stock and the aggregate number of shares with respect to which Options
may be granted shall not exceed 500,000 shares (subject to the adjustments set
forth in Section 6(b) below). If an Option expires, terminates or is otherwise
surrendered, in whole or in part, the shares allocable to the unexercised
portion of such Option shall again become available for grants of Options
hereunder. Notwithstanding the foregoing, in order to comply with Section 162(m)
of the Code, the Committee shall take into account that (1) if an Option is
canceled, the canceled Option continues to be counted against the maximum number
of shares for which Options may be granted to any person under the Plan in the
original year of grant and (2) for purposes of Section 162(m) of the Code, if
after the grant of an Option, the Committee or the Board of Directors reduces
the Option Exercise Price, the transaction is treated as a cancellation of the
Option and a grant of a new Option, and in such case, both the Option that is
deemed to be canceled and the Option that is deemed to be granted reduce the
maximum number of shares for which Options may be granted to the person under
the Plan. As determined from time to time by the Board of Directors, the shares
available under this Plan for grants of Options may consist either in whole or
in part of authorized but unissued shares of Common Stock or shares of Common
Stock which have been reacquired by the Company or a subsidiary following
original issuance.
(b) The aggregate number of shares of Common Stock as to which Options may
be granted hereunder, as provided in Section 6(a) above, the number of shares
covered by each outstanding Option and the Option Exercise Price shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split or other subdivision or
consolidation of shares or other capital adjustment, or the payment of a stock
dividend; provided, however, that any fractional shares resulting from any such
adjustment shall be eliminated. Notwithstanding the foregoing, no adjustment
shall be made upon the issuance of new shares of Common Stock for fair
consideration including the conversion of shares of Preferred Stock.
7. TERMS AND CONDITIONS OF OPTIONS
Each Option granted pursuant to this Plan shall be evidenced by a stock
option agreement between the Company and the key employee to whom the Incentive
Stock Option or Nonqualified Stock Option is granted (the "Optionee") in such
form or forms as the Committee, from time to time, shall prescribe, which
agreements need not be identical to each other but shall comply with and be
subject to the following terms and conditions:
(a) Option Exercise Price. The Option Exercise Price at which each share of
Common Stock may be purchased pursuant to a Nonqualified Stock Option intended
to be "performance-based" under Section 162(m) of the Code or an Incentive Stock
Option shall not be less than 100% of the Fair Market Value for each such share
on the date the Committee grants such Option (the "Date of Grant"). The Fair
Market Value of the shares of Common Stock on any date the Common Stock is
quoted on NASDAQ or listed upon an established stock exchange shall be,
respectively, the closing bid price of the shares of Common Stock as quoted on
NASDAQ on such date or the closing sale price of such shares as quoted on the
stock exchange on which such shares are listed, or if shares of Common Stock
were not traded on such date, on the next preceding trading day during which
such shares were traded. If the Common Stock is not quoted on NASDAQ or listed
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on an established stock exchange, then the Fair Market Value shall be determined
by such other method consistent with the Code and applicable regulations
thereunder, as the Committee shall in its discretion select and apply at the
time of grant of the Option concerned. Subject to the foregoing, the Committee
in fixing the Option Exercise Price shall have full authority and discretion and
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be fully protected in doing so. Anything contained in this Section 7(a) to the
contrary notwithstanding, in the event that the number of shares of Common Stock
subject to any Option is adjusted pursuant to Section 6(b) above, a
corresponding adjustment shall be made in the Option Exercise Price per share.
The Option Exercise Price at which each share of Common Stock may be purchased
pursuant to a Nonqualified Stock Option, other than a Nonqualified Stock Option
intended to be "performance-based" under Section 162(m) of the Code, shall be
not less than the par value of each such share on the Date of Grant.
(b) Duration of Options. Each Incentive Stock Option granted hereunder
shall expire and all rights to purchase shares of Common Stock pursuant thereto
shall cease on a date not later than the tenth anniversary of the Date of Grant
of the Option, which date shall be fixed by the Committee. Each Nonqualified
Stock Option granted hereunder shall expire and all rights to purchase shares of
Common Stock pursuant thereto shall cease on a date not later than ten years and
one day from the Date of Grant of the Option which date shall be fixed by the
Committee. (The expiration date for the Incentive Stock Option and Nonqualified
Stock Options may collectively be referred to herein as the "Expiration Date".)
(c) Vesting of Options. Each Option granted hereunder shall vest at such
time and in such amounts and based on lapse of time, or such Company, department
or individual performance goals as the Committee may specify upon the grant
thereof. Only Options which have vested may be exercised. Anything contained in
this Section 7(c) to the contrary notwithstanding, unless the Committee shall
specify otherwise, an Optionee shall become fully (100%) vested in each of his
or her Options upon his or her termination of employment with the Company or any
of its subsidiaries for reasons of death, disability or retirement. The
Committee shall, in its sole discretion, determine whether or not disability or
retirement has occurred. Notwithstanding the foregoing, the Committee at any
time may in its sole discretion limit the number of Options that can be
exercised in any taxable year of the Company, to the extent necessary to prevent
the application of Section 162(m) of the Code (or any similar or successor
provision), provided that the Committee may not postpone the earliest date on
which Options can be exercised beyond the last day of the stated term of such
Options.
(d) Merger, Consolidation, etc. In the event the Company shall, pursuant to
action by its Board of Directors, at any time propose to merge with or into,
consolidate with, or sell or otherwise transfer all or substantially all of its
assets to, another entity or in the event of the acquisition of all or
substantially all of the Company's outstanding Common Stock by a single person
or entity and/or group of entities acting in concert and provision is not made
pursuant to the terms of such transaction for (i) the continuation or assumption
by the surviving, resulting or acquiring entity of all outstanding Options, (ii)
the substitution of new options therefor, or (iii) the payment of cash or other
consideration in respect thereof, the Committee shall cause written notice of
the proposed transaction to be given to each Optionee not less than 30 days
prior to the anticipated effective date of the proposed transaction. On a date
which the Committee shall specify in such notice, which date shall not be less
than 10 days prior to the anticipated effective date of the proposed
transaction, each Optionee's Options shall become fully (100%) vested and each
Optionee shall have the right to exercise his or her Options to purchase any or
all shares then subject to such Options (conditioned on the consummation of the
proposed transaction). If the transaction is consummated, each Option, to the
extent not previously exercised prior to the effective date of the transaction,
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shall terminate on such effective date. If the transaction is abandoned or
otherwise not consummated then, to the extent that any Option not exercised
prior to such abandonment or termination shall have vested solely by operation
of this Section 7(d), such vesting shall be annulled and be of no further force
or effect, and the vesting period set forth in Section 7(c) above shall be
re-instituted, as of the date of such abandonment or termination.
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(e) Exercise of Options. A person entitled to exercise an Option may
exercise it in whole at any time, or in part from time to time, by delivering to
the Company at its principal office, directed to the attention of its Treasurer,
written notice specifying the number of shares of Common Stock with respect to
which the Option is being exercised, together with payment in full of the
purchase price for such shares. Such payment shall be made in cash or by
certified check or bank draft to the order of the Company; provided, however,
that the Committee may, in its sole discretion, authorize such payment, in whole
or in part, in any other form, including payment by personal check or by the
exchange of shares of Common Stock of the Company previously acquired by the
person entitled to exercise the Option and having a Fair Market Value on the
date of exercise equal to the price for which the shares of Common Stock may be
purchased pursuant to the Option. Subject to applicable securities laws, the
Committee may also permit "cashless exercise" of Options through the delivery of
irrevocable instructions to a broker to deliver promptly to the Company an
amount equal to the aggregate Option Exercise Price plus all applicable tax
withholding by payment through a cash or margin arrangement with such broker.
(f) Nontransferability. Options shall not be transferable other than by
will or the laws of descent and distribution and no Option may be exercised by
anyone other than the Optionee, except that, if the Optionee dies or becomes
incapacitated, the Option may be exercised by his or her estate, legal
representative or beneficiary, as the case may be, subject to all other terms
and conditions contained in this Plan.
(g) Termination and Employment. Unless the Committee shall specify
otherwise, the following rules shall apply in the event of an Optionee's
termination of employment with the Company or any of its subsidiaries:
(i) In the event of an Optionee's termination of employment with the
Company or any of its subsidiaries either (1) by the Company or any of its
subsidiaries for cause given by the Optionee, or (2) voluntarily on the
part of the Optionee, his or her Options shall immediately terminate.
(ii) In the event of an Optionee's termination of employment with the
Company or any of subsidiaries for reason of retirement or under
circumstances other than those specified in Section 7(g)(i) immediately
above, and for reasons other than death or disability, such Options shall
terminate three months after the date of such termination of employment or
on their respective Expiration Dates, whichever shall first occur;
provided, however, that if the Optionee dies within such 3 month period,
the time period set forth in Section 7(g)(iii) immediately below shall
apply.
(iii) In the event of the death or disability of an Optionee while
such Optionee is employed by the Company or any of its subsidiaries, such
Options shall terminate on the first anniversary of the Optionee's death or
disability, as the case may be, or on their respective Expiration Dates,
whichever shall first occur.
(iv) Anything contained in this Section 7(g) to the contrary
notwithstanding, an Option may only be exercised following the Optionee's
termination of employment with the Company or any of its subsidiaries for
reasons other than death, disability or retirement if, and to the extent
that, such Option was exercisable immediately prior to such termination of
employment.
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(v) An Optionee's transfer of employment between the Company and any
of its subsidiaries or between subsidiaries shall not constitute a
termination of employment and the Committee shall determine in each case
whether an authorized leave of absence for military service
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or otherwise shall constitute a termination of employment. Furthermore, the
Committee may in its discretion determine that, if an Optionee provides
consulting services to the Company after his or her cessation of
employment, the Optionee's employment will be deemed, for purposes of
Options held by him or her, to continue until the termination of his or her
consulting services or at such earlier time as the Committee may determine.
(h) No Rights as Stockholder or to Continued Employment. No Optionee shall
have any rights as a stockholder of the Company with respect to any shares
covered by an Option prior to the date of issuance to such Optionee of the
certificate or certificates for such shares, and neither this Plan nor any
Option granted hereunder shall confer upon an Optionee any right to continuance
of employment by the Company or any of its subsidiaries or interfere in any way
with the right of the Company or of its subsidiaries to terminate the employment
of such Optionee.
8. TEN PERCENT STOCKHOLDERS
The Committee shall not grant an Incentive Stock Option to an individual
who owns, at the time such Option is granted (directly or by attribution
pursuant to Section 424(d) of the Code), shares of capital stock of the Company
possessing more than 10% of the voting power of all classes of capital stock of
the Company unless, at the time such Option is granted, the price at which each
share of Common Stock may be purchased pursuant to the Option is at least 110%
of the Fair Market Value for each such share on the Date of Grant and such
Option, by its terms, is not exercisable after the expiration of five years from
the Date of Grant.
9. ISSUANCE OF SHARES; RESTRICTIONS
(a) Subject to the conditions and restrictions provided in this Section 9,
the Company shall, within 20 business days after an Option has been duly
exercised in whole or in part, deliver to the person who exercised the Option
one or more certificates, registered in the name of such person, for the number
of shares of Common Stock with respect to which the Option has been exercised.
The Company may legend any stock certificate issued hereunder to reflect any
restrictions provided for in this Section 9.
(b) Unless the shares subject to Options granted under the Plan have been
registered under the Securities Act of 1933, as amended (the "Act") (and, in the
case of any Optionee who may be deemed an "affiliate" of the Company as such
term is defined in Rule 405 under the Act, such shares have been registered
under the Act for resale by such Optionee), or the Company has determined that
an exemption from registration under the Act is available, the Company may
require prior to and as a condition of the issuance of any shares of Common
Stock, that the person exercising an Option hereunder furnish the Company with a
written representation in a form prescribed by the Committee to the effect that
such person is acquiring such shares solely with a view to investment for his or
her own account and not with a view to the resale or distribution of all or any
part thereof, and that such person will not dispose of any of such shares
otherwise than in accordance with the provisions of Rule 144 under the Act
unless and until either such shares are registered under the Act or the Company
is satisfied that an exemption from such registration is available.
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(c) Anything contained herein to the contrary notwithstanding, the Company
shall not be obligated to sell or issue any shares of Common Stock pursuant to
the exercise of an Option granted hereunder unless and until the Company is
satisfied that such sale or issuance complies with all applicable provisions of
the Act and all other laws or regulations by which the Company is bound or to
which the Company or such shares are subject.
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10. SUBSTITUTE OPTIONS
Anything contained herein to the contrary notwithstanding, Options may, at
the discretion of the Board of Directors, be granted under this Plan in
substitution for options to purchase shares of capital stock of another
corporation which is merged into, consolidated with, or all or a substantial
portion of the property or stock of which is acquired by, the Company or a
subsidiary.
11. TERM OF THE PLAN
Unless the Plan has been sooner terminated pursuant to Section 12 below,
this Plan shall terminate on, and no Options shall be granted after, the tenth
anniversary of the Effective Date. The provisions of this Plan, however, shall
continue thereafter to govern all Options theretofore granted, until the
exercise, expiration or cancellation of such Options.
12. AMENDMENT AND TERMINATION OF PLAN
The Board of Directors at any time may terminate this Plan or amend it from
time to time in such respects as it deems desirable; provided, however, that,
without the further approval of the stockholders of the Company, no amendment
shall (i) increase the maximum aggregate number of shares of Common Stock with
respect to which Options may be granted under this Plan (except by operation of
Section 6(b)), (ii) increase the maximum individual number of shares of Common
Stock with respect to which Options may be granted in any calendar year under
this Plan (except by operation of Section 6(b)), (iii) decrease the Option
Exercise Price provided for in Section 7(a) hereof, (iv) change the eligibility
provisions of Section 5 hereof, or (v) effect any change that would require
stockholder approval under Section 162(m) of the Code or Rule 16b-3 under the
Exchange Act and provided, further, that, subject to the provisions of Section 9
hereof, no termination of or amendment hereto shall adversely affect the rights
of an Optionee or other person holding an Option theretofore granted hereunder
without the consent of such Optionee or other person, as the case may be.
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