EXHIBIT 10.3
MAXWELL LABORATORIES, INC.
1995 STOCK OPTION PLAN
1. Purpose. The 1995 Stock Option Plan (the "Plan") is intended to
advance the interests of Maxwell Laboratories, Inc. (the "Company"), its
shareholders and its subsidiaries by encouraging and enabling selected key
employees (including officers and directors) upon whose judgment, initiative and
effort the Company is largely dependent for the successful conduct of its
business to acquire and retain a proprietary interest in the Company by
ownership of its stock. It is intended that the Plan provide the flexibility
for the issuance of options which qualify as incentive stock options ("incentive
stock options") within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code") and options which do not so qualify ("non-
qualified stock Options").
2. Definitions.
(a) "Agreement" means the agreement between the Company and the
optionee under which an option is granted, and setting forth the terms and
conditions of the option and the optionee's rights thereunder.
(b) "Board" means the Board of Directors of the Company.
(c) "Committee" means, if there shall then be a Stock Option Committee
(the members of which shall be appointed by the Board from among the
directors of the Company) to which the Board has delegated the authority to
administer the Plan, said Stock Option Committee; or if there shall not
then be a Stock Option Committee of the Board having such delegated
authority, "Committee" means the Board.
(d) "Common Stock" means the Company's common stock.
(e) "Date of Grant" means the date on which an option under the Plan
is approved by the Committee.
(f) "Option" means an option granted under the Plan.
(g) "Optionee" means a person to whom an option, which has not
expired, has been granted under the Plan.
(h) "Subsidiary" or "Subsidiaries" means a subsidiary corporation or
corporations of the Company as defined in Section 424 of the Code.
(i) "Successor" means the legal representative of the estate of the
deceased Optionee or the person or persons who acquire the right to
exercise an Option by bequest or inheritance or by reason of the death of
any Optionee.
3. Administration of the Plan. The Plan shall be administered by the
Committee. No Option may be granted to a person who is then a member of the
Committee. The Committee shall have full and final authority in its discretion,
subject to the provisions of the Plan, to determine the number of shares and
purchase price of Common Stock covered by each Option, the individuals to whom
and the time or times at which Options shall be granted and the nature of each
Option granted under the Plan, i.e., whether the Option will be an incentive
stock option or a non-qualified stock option; to construe and interpret the
Plan; to determine the terms and provisions of the respective Agreements, which
need not be identical, including, but without limitation, terms covering the
payment of the option price, and to make all other determinations and take all
other actions deemed necessary or advisable for the proper administration of the
Plan. All such actions and determinations of the Committee shall be
conclusively binding for all purposes and upon all persons.
4. Common Stock Subject to Options. Unless amended in accordance with
the provisions of Paragraph 11, and subject to adjustment under the provisions
of Paragraph 7, the aggregate number of shares of the Company's Common Stock
which may be issued upon the exercise of Options granted under the Plan shall
not exceed 250,000. The shares of Common Stock to be issued upon the exercise
of Options may be authorized but unissued shares, shares issued and reacquired
by the Company or shares bought on the market for the purposes of the Plan. In
the event any Option shall, for any reason, terminate or expire or be
surrendered without having been exercised in full, the shares subject to such
Option but not purchased thereunder shall again be available for Options to be
granted under the Plan.
5. Participants. Options may be granted under the Plan to any person
who, in the opinion of the Committee, is a key employee of the Company or any
Subsidiary.
6. Terms and Conditions of Options. Any Option granted under the Plan
shall be evidenced by an Agreement executed by the Company and the Optionee and
shall contain such terms and be in such form as the Committee may from time to
time approve, subject to the following limitations and conditions:
(a) Option Price. The option price per share with respect to each
Option shall be determined by the Committee but shall in no instance be
less than 100% of the fair market value of a share of the Common Stock on
the Date of Grant; provided that with respect to an Optionee who owns, at
the time of grant of an Option which is an incentive stock option, more
than ten percent of the total combined voting power of all classes of stock
of the Company, the option price per share of such Option shall be at least
110% of the fair market value of the underlying shares. For the purposes
hereof, fair market value shall be as determined by the Committee and such
determination shall be binding upon the Company and upon the Optionee. The
Committee may make such determination (i) in case the Common Stock shall
not then be listed and traded upon a recognized securities exchange, upon
the basis of the mean between the closing bid and asked quotations for such
stock (or the closing selling price for such stock, if applicable) on the
Date of Grant (as reported by a newspaper of general circulation or a
recognized stock quotation service) or, in the event that there shall be no
bid or asked quotations (or reported closing selling price) on the Date of
Grant, then upon the basis of the mean between the closing bid and asked
quotations (or the closing selling price, as the case may be,) on the date
nearest preceding the Date of Grant or (ii) in case the Common Stock shall
then be listed and traded upon a recognized securities exchange upon the
basis of the closing selling price at which shares of the Common Stock were
traded on such recognized securities exchange on the Date of Grant or, if
the Common Stock was not traded on said date, upon the basis of the closing
selling price on the date nearest preceding the Date of Grant, and (iii)
upon any other factors which the Committee shall deem appropriate.
(b) Period of Option. Except for earlier termination as provided in
Subparagraphs (g) and (h) of this Paragraph 6, and in Subparagraph (b) of
Paragraph 7, the expiration date of each Option shall be fixed by the
Committee, but, notwithstanding any provision of the Plan to the contrary,
(i) with respect to an incentive stock Option, such expiration date shall
not be more than ten years from the Date of Grant or, with respect to
incentive stock options granted to an employee who owns more than ten
percent of the outstanding stock of the Company, not more than five years
from the Date of Grant, and (ii) with respect to a non-qualified stock
Option, such expiration date shall not be more than eleven years from the
Date of Grant.
(c) Vesting of Shareholder Rights. Neither an Optionee nor any
successor shall have any of the rights of a shareholder of the Company
until the Option with respect to the applicable shares shall have been duly
exercised and the certificate evidencing such shares delivered to such
Optionee or any successor.
(d) Exercise of Option. Each Option shall be exercisable in such
amounts and at such respective dates prior to the expiration of the Option
as provided in the Agreement.
(e) Payment of Option Price. Upon exercise of an Option, Optionee or
Successor shall pay the option price by delivering to the Company:
(i) cash or a check payable to the Company in an amount equal
to the option price;
(ii) a stock certificate or certificates, duly endorsed for
transfer to the Company, representing shares of Common Stock of the
Company owned by the Optionee or Successor which have a fair market
value on the date of exercise equal to the option price; or
(iii) cash or a check payable to the Company and a stock
certificate or certificates, duly endorsed for transfer to the
Company, representing shares of Common Stock owned by the Optionee or
Successor, which, when added to the amount of the cash or check, have
a fair market value on the date of exercise equal to the Option price.
For the purposes hereof, fair market value shall be determined by the
Committee and such determination shall be binding upon the Company and upon
the Optionee or Successor. The Committee may make such determination in
accordance with Paragraphs 6(a)(i) and 6(a)(ii) hereof by substituting
"date of exercise" for "Date of Grant" each time the latter appears therein
and upon any other factors which the Committee shall deem appropriate.
(f) Non-Transferability of Option. No Option shall be transferable or
assignable by an Optionee, otherwise than by will or the laws of descent
and distribution and each Option shall be exercisable during the Optionee's
lifetime only by the Optionee. No Option shall be pledged or hypothecated
in any way and no Option shall be subject to execution, attachment or
similar process.
(g) Termination of Employment. Upon termination of an Optionee's
employment with the Company and its Subsidiaries other than by reason of
the death of the Optionee, the Option privileges of such Optionee shall be
limited to the shares which were immediately purchasable by him at the date
of such termination and such Option privilege shall expire unless exercised
by him within sixty (60) days after the date of such termination. The
granting of an Option to any person shall not alter in any way the
Company's or the Subsidiary's right to terminate such person's employment
at any time for any reason, nor shall it confer upon the Optionee any
rights or privileges except as specifically provided for in the Plan.
(h) Death of Optionee. If an Optionee dies while in the employ of the
Company or any Subsidiary, the option privileges of said Optionee shall be
limited to the shares which were immediately purchasable by such Optionee
at the date of death and such option privileges shall expire unless
exercised by said Optionee's successor within one (1) year after the date
of death.
7. Adjustments.
(a) In the event that the outstanding shares of 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 a recapitalization,
reclassification, stock split-up, combination of shares, dividend or other
distribution payable in capital stock, appropriate adjustment shall be made
by the Board in the number, kind and exercise price of shares for the
purchase of which Options have theretofore been or may thereafter be
granted under the Plan.
(b) In the event that the Company shall determine to merge,
consolidate or enter into any other reorganization with or into any other
corporation, or in the event of any dissolution or liquidation of the
Company, then in any such event, at the election of the Board, (i)
appropriate adjustment shall be made by the Board in the number, kind and
exercise price of shares for the purchase of which Options have theretofore
been and/or may thereafter be granted under the Plan, or (ii) the Plan and
any Options theretofore granted under the Plan shall terminate as of the
date of such merger, consolidation, reorganization, dissolution or
liquidation, provided that written notice of such event shall have been
given to each Optionee not less than 30 days prior to the date of such
event. Upon any election by the Board pursuant to the provisions of clause
(ii) of this Subparagraph (b), each Optionee shall have the right during
the period commencing on the date the notice referred to in said clause
(ii) is given and concluding on the date of such merger, consolidation,
reorganization, dissolution or liquidation, as the case may be, to exercise
such Optionee's outstanding and unexercised stock Options, including shares
as to which such Options would not otherwise have been exercisable by
reason of an insufficient lapse of time.
(c) All adjustments and determinations under this Paragraph 7 shall be
made by the Board, whose decisions as to what adjustments or determinations
shall be made, and the extent thereof, shall be final, binding and
conclusive.
8. Dollar Limitation on Incentive Stock Options. To the extent that the
aggregate fair market value (determined as of the Date of Grant) of Common Stock
with respect to which Options intended to be incentive stock options first
become exercisable by an Optionee during any calendar year (under the Plan and
all other stock option plans of the Company or any subsidiary) exceeds $100,000,
such Options shall not be considered incentive stock options. Such $100,000
limit shall be applied by taking Options into account in the order in which they
were granted.
9. Restrictions on Issuing Shares. The exercise of each Option shall be
subject to the condition that if at any time the Company shall determine in is
discretion that (i) the satisfaction of withholding tax or other withholding
liabilities, or (ii) the listing, registration or qualification of any shares
otherwise deliverable upon such exercise upon any securities exchange or under
any state or federal law, or (iii) the consent or approval of any regulatory
body, or (iv) the perfection of any exemption from any such withholding,
listing, registration, qualification, consent or approval is necessary or
desirable as a condition of, or in connection with, such exercise or the
issuance, delivery or purchase of shares thereunder, then in any such event,
such exercise shall not be effective unless such withholding, listing
registration, qualification, consent, approval or exemption shall have been
effected, obtained or perfected free of any conditions not acceptable to the
Company.
10. Use of Proceeds. The proceeds received by the Company from the sale
of its Common Stock pursuant to the exercise of Options granted under the Plan
shall be added to the Company's general funds and used for general corporate
purposes.
11. Amendment, Suspension and Termination of the Plan. The Board may at
any time suspend or terminate the Plan or may amend it from time to time in such
respects as the Board may deem advisable in order that the Options granted
thereunder may conform to any changes in the law or in any other respect which
the Board may deem to be in the best interests of the Company; provided,
however, that without approval by the shareholders of the Company representing a
majority of the voting power, no such amendment shall (a) except pursuant to
Paragraph 7, increase the maximum number of shares for which Options may be
granted under the Plan, (b) change the provisions of Subparagraph (a) of
Paragraph 6 relating to the establishment of the Option price, (c) change the
provisions of Subparagraph (b) of Paragraph 6 relating to the expiration date of
each option or (d) change the provisions of the second sentence of this
Paragraph 11 relating to the term of this Plan. Unless the Plan shall
theretofore have been terminated by the Board or as provided in Paragraph 12,
the Plan shall terminate ten (10) years after the effective date of the Plan.
No Option may be granted during any suspension or after the termination of the
Plan. Except as otherwise provided in the Plan, no
amendment, suspension or termination of the Plan shall, without an Optionee's
consent, alter or impair any of the rights or obligations under any Option
theretofore granted to such Optionee under the Plan.
12. Effective Date of the Plan and Shareholder Approval. The effective
date of the Plan shall be the date of its approval by the Board of Directors of
the Company; provided, however, that in the event that shareholder approval of
the Plan is not secured on or before October 24, 1996, the Plan shall thereupon
terminate. Any Options granted prior to the aforesaid shareholder approval
being secured shall be subject to such approval being secured.