AMENDMENT AND MODIFICATION
TO INCENTIVE STOCK OPTION PLAN
OF SETECH, INC.
____________________________________________________________________
This Amendment to the Aviation Education Systems, Inc. Incentive Stock
Option Plan (the "Plan") shall be effective as of the date of approval by the
Board of Directors of SETECH, Inc(formerly known as Aviation Education Systems,
Inc.) (the "Company") and the execution hereof
by the President of the Company.
1. Background. The Company has previously adopted the Plan by due
action of the Board of Directors of the Company, and the Company has registered
the Plan with the Securities and Exchange Commission by its filing of an S-8
Registration Statement on May 22, 1996, and subsequent to such filing, the
Company has changed its name from Aviation Education Systems, Inc. to SETECH,
Inc. The Company is further desirous of amending and modifying the Plan as is
herein set forth.
2. Amendment. The Plan, as filed with the Securities and Exchange
Commission, is hereby expressly reconfirmed, and except as is herein amended
shall be deemed to be in full force and effect.
2.01 The name of the Plan shall hereinafter be "SETECH, Inc. Incentive
Option Plan" and all references to "Company" shall hereinafter be deemed to
refer to "SETECH, Inc."
2.02 Section 2 of the Plan is hereby amended by the deletion of the
second sentence thereof and the substitution in lieu thereof of the following:
Each Committee member shall be ineligible, and shall have been
ineligible for the one-year period prior to appointment thereto, for selection
as a person to whom stock options may be granted pursuant to this Plan, and
shall be a "non-employee director" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended from time to time (the "1934 Act")
(or any successor rule of similar import).
2.03 Section 6.c. is hereby amended by the deletion in the next to the
last sentence of such subsection of the word "fourth," and by substitution in
lieu thereof of the word "first."
2.04 Section 13 of the Plan is hereby amended and modified by its
deletion in the entirety and by substitution in lieu thereof of the followin
13. Change In Control Provisions.
a. In the event of (1) a Change in Control (as defined) or (2)
a Potential Change in Control (as defined), but only if and to the extent so
determined by the Committee or the Board of Directors at or after grant
(subject to any right of approval expressly reserved by the Committee or the
Board of Directors at the time of such determination), the following
acceleration and valuation provisions shall apply:
(i) Any stock options awarded under the Plan not
previously exercisable and vested shall become fully exercisable
and vested.
(ii) The value of all outstanding stock options, to the
extent vested, shall, unless otherwise determined by the
Committee in its sole discretion at or after grant but prior to
any Change in Control, be cashed out on the basis of the Change
in Control Price (as defined by the Committee) as of the date such
Change in Control or such Potential Changein Control is
determined to have occurred or such other date as theCommittee
may determine prior to the Change in Control.
Notwithstanding the previously-stated intention that this Plan
shall grant Incentive Stock Options, if the operation of this provision
results in the optionee's exercise of an option grant and/or the
disposition of stock acquired by the optionee's exercise of an option
prior to the time provided in Code Section 422 for an Incentive Stock
Option, the tax treatment available under Code Section 422 shall not be
available to the optionee.
b. As used herein, the term "Change in Control" means the
happening of any of the following:
(i) Any person or entity, including a "group" as defined
in Section 13(d)(3) of the 1934 Act, other than the Company, a
subsidiary of the Company, or any employee benefit plan of the
Company or its subsidiaries, hereafter becomes the beneficial
owner of the company's securities having 50 percent or more of
the combined voting power of the then outstanding securities of
the Company that may be cast for the election of directors of
the Company (other than as a result of an issuance of securities
initiated by the Company in the ordinary course of business), or
(ii) As the result of, or in connection with, any cash
tender or exchange offer, merger or other business combination,
sale of assets or contested election, or any combination of the
foregoing transactions, less than a majority of the combined
voting power of the then outstanding securities of the Company
or any successor corporation or entity entitled to vote
generally in the election of directors of the Company or such
other corporation or entity after such transaction, are held in
the aggregate by holders of the company's securities entitled to
vote generally in the election of directors of the Company
immediately prior to such transactions; or
(iii) During any period of two consecutive years,
individuals who at the beginning of any such period constitute
the Board of Directors cease for any reason to constitute at
least a majority thereof, unless the election, or the nomination
for election by the Company's stockholders, of each director of
the Company first elected during such period was approved by a
vote of at least two-thirds of the directors of the Company then
still in office who were directors of the Company at the
beginning of any such period.
c. As used herein, the term "Potential Change in Control" means
the happening of any of the following:
(i) The approval by stockholders of an agreement by
the Company, the consummation of which would result in a Change in
Control of the Company; or
(ii) The acquisition of beneficial ownership, directly
or indirectly, by any entity, person or group (other than the
Company, a wholly-owned subsidiary thereof or any employee benefit
plan of the Company or its subsidiaries (including any trustee of
such plan acting as such trustee)) of securities of the Company
representing 5 percent or more of the combined voting power of
the Company's outstanding securities and the adoption by the Board
of Directors of a resolution to the effect that a Potential Change
in Control of the Company has occurred for purposes of this Plan.
2.05 Section 14 of the Plan is hereby amended and modified by
its deletion in the entirety.
3. Approval. This Amendment to the Plan has been approved by a
majority vote of the Board of Directors of the Company on this ______ day
of January, 1999.
SETECH, INC.
By: ______________________________
Thomas Eisenman, President
Date: January ______, 1999