EXHIBIT 10.1
HOLLIS-EDEN PHARMACEUTICALS, INC.
1997 INCENTIVE STOCK OPTION PLAN
As Amended on March 18, 2002
INTRODUCTION
Hollis-Eden Pharmaceuticals, Inc., a Delaware corporation (hereinafter
referred to as the "Corporation"), hereby establishes an incentive compensation
plan to be known as the "Hollis-Eden Pharmaceuticals, Inc. 1997 Incentive Stock
Option Plan" (hereinafter referred to as the "Plan"), as set forth in this
document. The Plan permits the grant of Non-Qualified Stock Options and
Incentive Stock Options. The Plan became effective on February 5, 1997.
The purpose of the Plan is to promote the success and enhance the value of
the Corporation by linking the personal interests of Participants to those of
the Corporation's stockholders by providing Participants with an incentive for
outstanding performance. The Plan is further intended to assist the Corporation
in its ability to motivate, and retain the services of, Participants upon whose
judgment, interest and special effort the successful conduct of its operations
is largely dependent.
DEFINITIONS
For purposes of this Plan, the following terms shall be defined as follows
unless the context clearly indicates otherwise:
(a) "Award Agreement" shall mean the written agreement, executed by an
appropriate officer of the Corporation, pursuant to which a Plan Award is
granted.
(b) "Board of Directors" shall mean the Board of Directors of the
Corporation.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations thereunder.
(d) "Committee" shall mean the Committee hereinafter described in Section
I.
(e) "Common Stock" shall mean the common stock, par value $.01 per share,
of the Corporation.
(f) "Consultant" shall mean an individual who is in a Consulting
Relationship with the Corporation or any Parent or Subsidiary.
(g) "Consulting Relationship" shall mean the relationship that exists
between an individual and the Corporation (or any Parent or Subsidiary) if
(i) such individual or (ii) any entity of which such individual is an
executive officer or owns a substantial equity interest has entered into a
written consulting contract with the Corporation or any Parent or Subsidiary.
(h) "Corporation" shall mean Hollis-Eden Pharmaceuticals, Inc., a
Delaware corporation.
(i) "Disability" shall have the same meaning as the term "permanent and
total disability" under Section 22(e)(3) of the Code.
(j) "Employee" shall mean a common-law employee of the Company or of any
Parent or Subsidiary.
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
(l) "Executive" means an employee of the Corporation or of any Parent or
Subsidiary whose compensation is subject to the deduction limitations set
forth under Code Section 162(m).
(m) "Fair Market Value" of the Corporation's Common Stock on a Trading Day
shall mean the last reported sale price for Common Stock or, in case no such
reported sale takes place on such
Trading Day, the average of the closing bid and asked prices for the Common
Stock for such Trading Day, in either case on the principal national
securities exchange on which the Common Stock is listed or admitted to
trading, or if the Common Stock is not listed or admitted to trading on any
national securities exchange, but is traded in the over-the-counter market,
the closing sale price of the Common Stock or, if no sale is publicly
reported, the average of the closing bid and asked quotations for the Common
Stock, as reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or any comparable system or, if the
Common Stock is not listed on NASDAQ or a comparable system, the closing sale
price of the Common Stock or, if no sale is publicly reported, the average of
the closing bid and asked prices, as furnished by two members of the National
Association of Securities Dealers, Inc. who make a market in the Common Stock
selected from time to time by the Corporation for that purpose. In addition,
for purposes of this definition, a "Trading Day" shall mean, if the Common
Stock is listed on any national securities exchange, a business day during
which such exchange was open for trading and at least one trade of Common
Stock was effected on such exchange on such business day, or, if the Common
Stock is not listed on any national securities exchange but is traded in the
over-the-counter market, a business day during which the over-the-counter
market was open for trading and at least one "eligible dealer" quoted both a
bid and asked price for the Common Stock. An "eligible dealer" for any day
shall include any broker-dealer who quoted both a bid and asked price for
such day, but shall not include any broker-dealer who quoted only a bid or
only an asked price for such day. In the event the Corporation's Common Stock
is not publicly traded, the Fair Market Value of such Common Stock shall be
determined by the Committee in good faith.
(n) "Incentive Stock Option" shall mean a stock option satisfying the
requirements for tax-favored treatment under Section 422 of the Code.
(o) "Non-Qualified Option" shall mean a stock option which does not
satisfy the requirements for, or which is not intended to be eligible for,
tax-favored treatment under Section 422 of the Code.
(p) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option granted pursuant to the provisions of Section V hereof.
(q) "Optionee" shall mean a Participant who is granted an Option under the
terms of this Plan.
(r) "Outside Directors" shall mean members of the Board of Directors of
the Corporation who are classified as "outside directors" under Section
162(m) of the Code.
(s) "Parent" shall mean a parent corporation of the Corporation within the
meaning of Section 424(e) of the Code.
(t) "Participant" shall mean any Employee or other person participating
under the Plan.
(u) "Plan Award" shall mean an Option granted pursuant to the terms of
this Plan.
(v) "Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
(w) "Subsidiary" shall mean a subsidiary corporation of the Corporation
within the meaning of Section 424(f) of the Code.
(x) "Termination of Consulting Relationship" shall mean the cessation,
abridgement or termination of a Consultant's Consulting Relationship with the
Corporation or any Parent or Subsidiary as a result of (i) the Consultant's
death or Disability (ii) the cancellation, annulment, expiration, termination
or breach of the written consulting contract between the Corporation (or any
Parent or Subsidiary) and the Consultant (or any other entity) giving rise to
the Consulting Relationship or (iii) if the written consulting contract is
not directly between the Corporation (or any Parent or Subsidiary) and the
Consultant, the Consultant's termination of service with, or sale of all or
substantially all of his equity interest in, the entity which has entered
into the written consulting contract with the Corporation, Parent or
Subsidiary.
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SECTION I
ADMINISTRATION
The Plan shall be administered by the Committee, which shall be composed
solely of at least two Non-Employee Directors, as defined in Rule 16b-3(b)(3)
promulgated under the Exchange Act, and who also qualify as "Outside Directors".
Subject to the provisions of the Plan, the Committee may establish from time to
time such regulations, provisions, proceedings and conditions of awards which,
in its sole opinion, may be advisable in the administration of the Plan. A
majority of the Committee shall constitute a quorum, and, subject to the
provisions of Section IV of the Plan, the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in writing
by a majority of the Committee, shall be the acts of the Committee as a whole.
SECTION II
SHARES AVAILABLE
Subject to the adjustments provided in Section VI of the Plan, the aggregate
number of shares of the Common Stock which may be granted for all purposes under
the Plan shall be 3,750,000 shares. Shares of Common Stock underlying awards of
securities (derivative or not) and shares of Common Stock awarded hereunder
(whether or not on a restricted basis) shall be counted against the limitation
set forth in the immediately preceding sentence and may be reused to the extent
that the related Plan Award to any individual is settled in cash, expires, is
terminated unexercised, or is forfeited. Common Stock granted to satisfy Plan
Awards under the Plan may be authorized and unissued shares of the Common Stock,
issued shares of such Common Stock held in the Corporation's treasury or shares
of Common Stock acquired on the open market.
SECTION III
ELIGIBILITY
Officers and key employees of the Corporation, or of any Parent or
Subsidiary, who are regularly employed on a salaried basis as common law
employees, Consultants, and directors of the Corporation or of any Parent or
Subsidiary who are not Employees, shall be eligible to participate in the Plan.
Where appropriate under this Plan, directors who are not Employees shall be
referred to as "employees" and their service as directors as "employment".
SECTION IV
AUTHORITY OF COMMITTEE
The Plan shall be administered by, or under the direction of, the Committee,
which shall administer the Plan so as to comply at all times with Section 16 of
the Exchange Act and the rules and regulations promulgated thereunder, to the
extent such compliance is required, and shall otherwise have plenary authority
to interpret the Plan and to make all determinations specified in or permitted
by the Plan or deemed necessary or desirable for its administration or for the
conduct of the Committee's business. Subject to the provisions of Section X
hereof, all interpretations and determinations of the Committee may be made on
an individual or group basis and shall be final, conclusive and binding on all
interested parties. Subject to the express provisions of the Plan, the Committee
shall have authority, in its discretion, to determine the persons to whom Plan
Awards shall be granted, the times when such Plan Awards shall be granted, the
number of Plan Awards, the exercise price of each Plan Award, the period(s)
during which a Plan Award shall be exercisable (whether in whole or in part),
the restrictions to be applicable to Plan Awards and the other terms and
provisions thereof (which need not be identical). In addition, the authority of
the Committee shall include, without limitation, the following:
(a) Financing. The arrangement of temporary financing for an Optionee by
registered broker-dealers, under the rules and regulations of the Federal
Reserve Board, for the purpose of assisting an Optionee in the exercise of an
Option, such authority to include the payment by the Corporation of the
commissions of the broker-dealer.
(b) Procedures for Exercise of Option. The establishment of procedures for
an Optionee to exercise an Option by (i) payment of cash (including check),
(ii) payment pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board which, prior to the
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issuance of Common Stock, results in either the receipt of cash (or check) by
the Corporation or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Corporation from the sales proceeds, (iii)
provided that at the time of exercise the Common Stock is publicly traded and
quoted regularly in the Wall Street Journal, payment by delivery of
already-owned shares of Common Stock, held for the period required to avoid a
charge to the Corporation's reported earnings, and owned free and clear of
any liens, claims, encumbrances or security interests, which Common Stock
shall be valued at its Fair Market Value on the date of exercise or (iv)
payment by a combination of the methods of payment permitted by clauses
(b)(i) through (b)(iii) above.
(c) Withholding. The establishment of a procedure whereby a number of
shares of Common Stock or other securities may be withheld from the total
number of shares of Common Stock or other securities to be issued upon
exercise of an Option or for the tender of shares of Common Stock owned by
any Participant to meet any obligation of withholding for taxes incurred by
the Participant upon such exercise.
SECTION V
STOCK OPTIONS
The Committee shall have the authority, in its discretion, to grant Incentive
Stock Options or to grant Non-Qualified Stock Options or to grant both types of
Options. Notwithstanding anything contained herein to the contrary, an Incentive
Stock Option may be granted only to common law employees of the Corporation or
of any Parent or Subsidiary now existing or hereafter formed or acquired, and
not to any director or officer who is not also such a common law employee. In
order for an Option grant to satisfy the "performance-based compensation"
exemption to the deduction limitation under Code Section 162(m), the maximum
number of shares of Common Stock subject to Options which may be granted to any
single Executive during any one calendar year is 250,000. The terms and
conditions of the Options shall be determined from time to time by the
Committee; provided, however, that the Options granted under the Plan shall be
subject to the following:
(a) Exercise Price. The Committee shall establish the exercise price at
the time any Option is granted at such amount as the Committee shall
determine; provided, however, that the exercise price for each share of
Common Stock purchasable under any Incentive Stock Option granted hereunder
shall be such amount as the Committee shall, in its best judgment, determine
to be not less than one hundred percent (100%) of the Fair Market Value per
share of Common Stock at the date the Option is granted; and provided,
further, that in the case of an Incentive Stock Option granted to a person
who, at the time such Incentive Stock Option is granted, owns shares of stock
of the Corporation or of any Parent or Subsidiary which possess more than ten
percent (10%) of the total combined voting power of all classes of shares of
stock of the Corporation or of any Parent or Subsidiary, the exercise price
for each share of Common Stock shall be such amount as the Committee, in its
best judgment, shall determine to be not less than one hundred ten percent
(110%) of the Fair Market Value per share of Common Stock at the date the
Option is granted. The exercise price will be subject to adjustment in
accordance with the provisions of Section VI of the Plan.
(b) Payment of Exercise Price. The price per share of Common Stock with
respect to each Option shall be payable at the time the Option is exercised.
Such price shall be payable in cash or pursuant to any of the methods set
forth in Sections IV(a) or (b) hereof, as determined by the Participant.
Shares of Common Stock delivered to the Corporation in payment of the
exercise price shall be valued at the Fair Market Value of the Common Stock
on the date preceding the date of the exercise of the Option.
(c) Exercisability of Options. Except as provided in Section V(e) hereof,
each Option shall be exercisable in whole or in installments, and at such
time(s), and subject to the fulfillment of any conditions on, and to any
limitations on, exercisability as may be determined by the Committee at the
time of the grant of such Options. The right to purchase shares of Common
Stock shall be cumulative so that when the right to purchase any shares of
Common Stock has accrued such shares of Common Stock or any part thereof may
be purchased at any time thereafter until the expiration or termination of
the Option.
(d) Expiration of Options. No Incentive Stock Option by its terms shall be
exercisable after the expiration of ten (10) years from the date of grant of
the Option; provided, however, in the case of an Incentive Stock Option
granted to a person who, at the time such Option is granted, owns shares of
stock of the Corporation or of any Parent or Subsidiary possessing more than
ten percent (10%) of the total
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combined voting power of all classes of shares of stock of the Corporation or
of any Parent or Subsidiary, such Option shall not be exercisable after the
expiration of five (5) years from the date such Option is granted.
(e) Exercise Upon Optionee's Termination of Employment or Termination of
Consulting Relationship. If the employment of an Optionee by the Corporation
or by any Parent or Subsidiary is terminated for any reason other than death,
any Incentive Stock Option granted to such Optionee may not be exercised
later than three (3) months (one (1) year in the case of termination due to
Disability) after the date of such termination of employment. For purposes of
determining whether any Optionee has incurred a termination of employment (or
a Termination of Consulting Relationship), an Optionee who is both an
employee (or a Consultant) and a director of the Corporation and/or any
Parent or Subsidiary shall (with respect to any Non-Qualified Option that may
have been granted to him) be considered to have incurred a termination of
employment (or a Termination of Consulting Relationship) only upon his
termination of service both as an employee (or as a Consultant) and as a
director.
(f) Maximum Amount of Incentive Stock Options. Each Plan Award under which
Incentive Stock Options are granted shall provide that to the extent the
aggregate of the (i) Fair Market Value of the shares of Common Stock
(determined as of the time of the grant of the Option) subject to such
Incentive Stock Option and (ii) the fair market values (determined as of the
date(s) of grant of the option(s) of all other shares of Common Stock subject
to incentive stock options granted to an Optionee by the Corporation or any
Parent or Subsidiary, which are exercisable for the first time by any person
during any calendar year, exceed(s) one hundred thousand dollars ($100,000),
such excess shares of Common Stock shall not be deemed to be purchased
pursuant to Incentive Stock Options. The terms of the immediately preceding
sentence shall be applied by taking all options, whether or not granted under
this Plan, into account in the order in which they are granted.
SECTION VI
ADJUSTMENT OF SHARES; MERGER OR
CONSOLIDATION, ETC. OF THE CORPORATION
(a) Recapitalization, Etc. In the event there is any change in the Common
Stock of the Corporation by reason of any reorganization, recapitalization,
stock split, stock dividend or otherwise, there shall be substituted for or
added to each share of Common Stock theretofore appropriated or thereafter
subject, or which may become subject, to any Option, the number and kind of
shares of stock or other securities into which each outstanding share of Common
Stock shall be so changed or for which each such share shall be exchanged, or to
which each such share be entitled, as the case may be, and the per share price
thereof also shall be appropriately adjusted. Notwithstanding the foregoing, (i)
each such adjustment with respect to an Incentive Stock Option shall comply with
the rules of Section 424(a) of the Code and (ii) in no event shall any
adjustment be made which would render any Incentive Stock Option granted
hereunder to be other than an incentive stock option for purposes of Section 422
of the Code.
(b) Merger, Consolidation or Change in Control of Corporation. Upon (i) the
merger or consolidation of the Corporation with or into another corporation
(pursuant to which the stockholders of the Corporation immediately prior to such
merger or consolidation will not, as of the date of such merger or
consolidation, own a beneficial interest in shares of voting securities of the
corporation surviving such merger or consolidation having at least a majority of
the combined voting power of such corporation's then outstanding securities), if
the agreement of merger or consolidation does not provide for (1) the
continuance of the Options granted hereunder or (2) the substitution of new
options for Options granted hereunder, or for the assumption of such Options by
the surviving corporation, (ii) the dissolution, liquidation, or sale of all or
substantially all the assets of the Corporation to a person unrelated to the
Corporation or to a direct or indirect owner of a majority of the voting power
of the Corporation's then outstanding voting securities (such sale of assets
being referred to as an "Asset Sale") or (iii) a Change in Control of the
Corporation, the vesting and exercisability of Options theretofore granted and
still outstanding (and not otherwise expired) shall be accelerated in full
immediately prior to the effective date of such merger, consolidation,
dissolution, liquidation, Asset Sale or Change in Control. The Corporation, to
the extent practicable, shall give advance notice to affected Optionees of such
merger, consolidation, dissolution, liquidation, Asset Sale or Change in Control
of the Corporation. All such Options which are not exercised prior to the
effective date of such merger, consolidation, dissolution, liquidation or Asset
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Sale shall be forfeited as of the effective time of such merger, consolidation,
dissolution, liquidation or Asset Sale (but not in the case of a Change in
Control of the Corporation).
(c) Definition of Change in Control of the Corporation. As used herein, a
"Change in Control of the Corporation" shall be deemed to have occurred if any
person (including any individual, firm, partnership or other entity) together
with all Affiliates and Associates (as defined under Rule 12b-2 of the General
Rules and Regulations promulgated under the Exchange Act) of such person (but
excluding (i) a trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation or any subsidiary of the Corporation, (ii) a
corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of the
Corporation, (iii) the Corporation or any subsidiary of the Corporation or (iv)
only as provided in the immediately following sentence, a Participant together
with all Affiliates and Associates of the Participant) is or becomes the
Beneficial Owner (as defined in Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of the Corporation representing 40% of
more of the combined voting power of the Corporation's then outstanding
securities. The provisions of clause (iv) of the immediately preceding sentence
shall apply only with respect to the Option(s) held by the Participant who,
together with his Affiliates or Associates, if any, is or becomes the direct or
indirect Beneficial Owner of the percentage of securities set forth in such
clause.
SECTION VII
MISCELLANEOUS PROVISIONS
(a) Administrative Procedures. The Committee may establish any procedures
determined by it to be appropriate in discharging its responsibilities under
the Plan. Subject to the provisions of Section X hereof, all actions and
decisions of the Committee shall be final.
(b) Assignment or Transfer. No grant or award of any Plan Award (other than a
Non-Qualified Option) or any rights or interests therein shall be assignable or
transferable by a Participant except by will or the laws of descent and
distribution. During the lifetime of a Participant, Incentive Stock Options
granted hereunder shall be exercisable only by the Participant.
(c) Investment Representation. With respect to shares of Common Stock
received pursuant to the exercise of an Option, the Committee may require, as a
condition of receiving such securities, that the Participant furnish to the
Corporation such written representations and information as the Committee deems
appropriate to permit the Corporation, in light of the existence or nonexistence
of an effective registration statement under the Securities Act to deliver such
securities in compliance with the provisions of the Securities Act.
(d) Withholding Taxes. In the case of the issuance or distribution of Common
Stock or other securities hereunder upon the exercise of any Plan Award, the
Corporation, as a condition of such issuance or distribution, may require the
payment (through withholding from the Participant's salary, reduction of the
number of shares of Common Stock or other securities to be issued, or otherwise)
of any such taxes. Each Participant may satisfy the withholding obligations by
paying to the Corporation a cash amount equal to the amount required to be
withheld or by tendering to the Corporation a number of shares of Common Stock
having a value equivalent to such cash amount, or by use of any available
procedure as described under Section IV(c) hereof.
(e) Costs and Expenses. The costs and expenses of administering the Plan
shall be borne by the Corporation and shall not be charged against any award nor
to any employee receiving a Plan Award.
(f) Other Incentive Plans. The adoption of the Plan does not preclude the
adoption by appropriate means of any other incentive plan for employees.
(g) Plurals and Gender. Where appearing in the Plan, masculine gender shall
include the feminine and neuter genders, and the singular shall include the
plural, and vice versa, unless the context clearly indicates a different
meaning.
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(h) Headings. The headings and sub-headings in this Plan are inserted for the
convenience of reference only and are to be ignored in any construction of the
provisions hereof.
(i) Severability. In case any provision of this Plan shall be held illegal or
void, such illegality or invalidity shall not affect the remaining provisions of
this Plan, but shall be fully severable, and the Plan shall be construed and
enforced as if said illegal or invalid provisions had never been inserted
herein.
(j) payments Due Missing Persons. The Corporation shall make a reasonable
effort to locate all persons entitled to benefits under the Plan; however,
notwithstanding any provisions of this Plan to the contrary, if, after a period
of one (1) year from the date such benefits shall be due, any such persons
entitled to benefits have not been located, their rights under the Plan shall
stand suspended. Before this provision becomes operative, the Corporation shall
send a certified letter to all such persons at their last known addresses
advising them that their rights under the Plan shall be suspended. Subject to
all applicable state laws, any such suspended amounts shall be held by the
Corporation for a period of one (1) additional year and thereafter such amounts
shall be forfeited and thereafter remain the property of the Corporation.
(k) Liability and Indemnification. (i) Neither the Corporation nor any Parent
or Subsidiary shall be responsible in any way for any action or omission of the
Committee, or any other fiduciaries in the performance of their duties and
obligations as set forth in this Plan. Furthermore, neither the Corporation nor
any Parent or Subsidiary shall be responsible for any act or omission of any of
their agents, or with respect to reliance upon advice of their counsel provided
that the Corporation and/or the appropriate Parent or Subsidiary relied in good
faith upon the action of such agent or the advice of such counsel.
(ii) Except for their own gross negligence or willful misconduct regarding
the performance of the duties specifically assigned to them under, or their
willful breach of the terms of, this Plan, the Corporation, each Parent and
Subsidiary and the Committee shall be held harmless by the Participants, former
Participants, beneficiaries and their representatives against liability or
losses occurring by reason of any act or omission. Neither the Corporation, any
Parent or Subsidiary, the Committee, nor any agents, employees, officers,
directors or shareholders of any of them, nor any other person shall have any
liability or responsibility with respect to this Plan, except as expressly
provided herein.
(l) Incapacity. If the Committee shall receive evidence satisfactory to it
that a person entitled to receive payment of any Plan Award is, at the time when
such benefit becomes payable, a minor, or is physically or mentally incompetent
to receive such Plan Award and to give a valid release thereof, and that another
person or an institution is then maintaining or has custody of such person and
that no guardian, committee or other representative of the estate of such person
shall have been duly appointed, the Committee may make payment of such Plan
Award otherwise payable to such person to such other person or institution,
including a custodian under a Uniform Gifts to Minors Act, or corresponding
legislation (who shall be an adult, a guardian of the minor or a trust company),
and the release by such other person or institution shall be a valid and
complete discharge for the payment of such Plan Award.
(m) Cooperation of Parties. All parties to this Plan and any person claiming
any interest hereunder agree to perform any and all acts and execute any and all
documents and papers which are necessary or desirable for carrying out this Plan
or any of its provisions.
(n) Governing Law. All questions pertaining to the validity, construction
and administration of the Plan shall be determined in accordance with the laws
of the State of California.
(o) Nonguarantee of Employment or Consulting Relationship. Nothing contained
in this Plan shall be construed as a contract of employment (or as a consulting
contract) between the Corporation (or any Parent or Subsidiary), and any
employee or Participant, as a right of any employee or Participant to be
continued in the employment of or in a Consulting Relationship with) the
Corporation (or any Parent or Subsidiary), or as a limitation on the right of
the Corporation or any Parent or Subsidiary to discharge any of its employees
(or Consultants), at any time, with or without cause.
(p) Notices. Each notice relating to this Plan shall be in writing and
delivered in person or by certified mail to the proper address. All notices to
the Corporation or the Committee shall be addressed to it at the Corporation's
then principal executive offices, Attn: Corporate Secretary. All notices to
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Participants, former Participants, beneficiaries or other persons acting for or
on behalf of such persons shall be addressed to such person at the last address
for such person maintained in the Committee's records.
(q) Written Agreements. Each Plan Award shall be evidenced by a signed
written agreement (the "Award Agreements") between the Corporation and the
Participant containing the terms and conditions of the award.
SECTION VIII
AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Corporation shall have the right to amend,
suspend or terminate the Plan at any time, provided that no amendment shall be
made which shall increase the total number of shares of the Common Stock of the
Corporation which may be issued and sold pursuant to Incentive Stock Options,
reduce the minimum exercise price in the case of an Incentive Stock Option or
modify the provisions of the Plan relating to eligibility with respect to
Incentive Stock Options unless such amendment is made by or with the approval of
the stockholders within 12 months of the effective date of such amendment, but
only if such approval is required by any applicable provision of law. The Board
of Directors of the Corporation shall also be authorized to amend the Plan and
the Options granted thereunder to maintain qualification as "incentive stock
options" within the meaning of Section 422 of the Code, if applicable. Except as
otherwise provided herein, no amendment, suspension or termination of the Plan
shall alter or impair any Plan Awards previously granted under the Plan without
the consent of the holder thereof.
SECTION IX
TERM OF PLAN
The Plan shall automatically terminate on the day immediately preceding the
tenth anniversary of the date the Plan was adopted by the Board of Directors of
the Corporation, unless sooner terminated by such Board of Directors. No Plan
Awards may be granted under the Plan subsequent to the termination of the Plan.
SECTION X
CLAIMS PROCEDURES
(a) Denial. If any Participant, former Participant or beneficiary is denied
any vested benefit to which he is, or reasonably believes he is, entitled under
this Plan, either in total or in an amount less than the full vested benefit to
which he would normally be entitled, the Committee shall advise such person in
writing the specific reasons for the denial. The Committee shall also furnish
such person at the time with a written notice containing (i) a specific
reference to pertinent Plan provisions, (ii) a description of any additional
material or information necessary for such person to perfect his claim, if
possible, and an explanation of why such material or information is needed and
(iii) an explanation of the Plan's claim review procedure.
(b) Written Request for Review. Within 60 days of receipt of the information
stated in subsection (a) above, such person shall, if he desires further review,
file a written request for reconsideration with the Committee.
(c) Review of Document. So long as such person's request for review is
pending (including the 60 day period in subsection (b) above), such person or
his duly authorized representative may review pertinent Plan documents and may
submit issues and comments in writing to the Committee.
(d) Committee's Final and Binding Decision. A final and binding decision
shall be made by the Committee within 60 days of the filing by such person of
this request for reconsideration; provided, however, that if the Committee, in
its discretion, feels that a hearing with such person or his representative is
necessary or desirable, this period shall be extended for an additional 60 days.
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(e) Transmittal of Decision. The Committee's decision shall be conveyed to
such person in writing and shall (i) include specific reasons for the decision,
(ii) be written in a manner calculated to be understood by such person and (iii)
set forth the specific references to the pertinent Plan provisions on which the
decision is based.
(f) Limitation on Claims. Notwithstanding any provisions of this Plan to the
contrary, no Participant (nor the estate or other beneficiary of a Participant)
shall be entitled to assert a claim against the Corporation (or against any
Parent or Subsidiary) more than three years after the date the Participant (or
his estate or other beneficiary) initially is entitled to receive benefits
hereunder.
9