EXHIBIT 10N
E-SYSTEMS, INC.
1988 EMPLOYEE STOCK OPTION PLAN
as amended
This 1988 Stock Option Plan adopted by the Board of Directors of E-Systems, Inc.
on December 16, 1987, and amended August 29, 1990.
W I T N E S S E T H:
1. Purpose. The Plan is to provide key employees with a proprietary interest
in the Company through the granting of options to purchase shares of the Company
and the granting of awards of shares of the Company to key employees subject to
certain restrictions, as more specifically hereinafter set forth, for the
following purposes:
(a) to increase the interest in the Company's welfare of those key
employees who share primary responsibility for the management, growth and
protection of the business of the Company;
(b) to furnish an incentive to such employees to continue their services
for the Company; and
(c) to provide a means through which the Company may attract able persons
to enter its employment.
2. Administration. The Plan shall be administered by the Compensation and
Benefits Committee ("Committee") composed of members of the Board. The
Committee, which shall consist of three members unless otherwise set a greater
number by the Board, shall be appointed and vacancies shall be filled by the
Board. The Committee shall keep minutes of its activities.
3. Participants. The Committee shall determine from time to time those key
employees of the Company or of any Subsidiary corporation of the Company to whom
options or stock awards are to be granted and the number of shares optioned or
granted to each such employee. Such employees upon the grant of options or award
of shares to them shall become participants in the Plan.
4. Restrictions on Eligibility. No option shall be granted to or award made
to:
(a) any director of the Company who is not an employee of the Company or
any of its Subsidiary corporations; or
(b) any person who is the beneficial owner of 5% or more of the total
combined voting power or value of all classes of stock of the Company or a
Subsidiary corporation; or who upon exercise of the option granted or award of
the stock awarded would become the beneficial owner of 5% or more of such
combined voting power or value of all classes of stock of the Company.
5. Shares Subject to the Plan. The Committee from time to time may provide for
options and awards of common stock under this Plan not in excess of an aggregate
of 3,500,000 shares of the Common Stock of the Company. These shares shall be
made available from either the authorized but unissued Common Stock of the
Company or treasury stock held by the Company. Other than shares that have been
subject to Stock Appreciation Rights hereunder, any shares that by reason of the
expiration of an option or otherwise are no longer subject to purchase pursuant
to an option granted, or are no longer subject to delivery under an award made,
under the Plan may be reoffered under the Plan.
6. Allotment of Shares. The Committee shall determine the number of shares of
Common Stock to be offered from time to time by grant of options or awards to
key employees of the Company or its Subsidiary corporations. The selection of an
employee as a participant in any grant of options or awards under the Plan shall
not be deemed to either entitle such employee to, or to disqualify such employee
from, any participation in any other grant of options or awards under the Plan.
7. Grant of Options and Awards. The Committee shall be responsible for and
authorized to grant options and awards under the Plan. The grant of options and
awards shall be evidenced by agreements containing such terms and provisions as
are approved by the Committee, but not more favorable than the terms of the
Plan. The Company shall execute such agreements upon instruction from the
Committee. Stock Appreciation Rights may be granted from time to time with
respect to any options granted under the Plan, as an alternative method of
exercise of any option. All provisions, terms and conditions of the E-Systems,
Inc. Stock Appreciation Rights Plan ("SAR Plan") adopted January 30, 1979 and
approved and ratified by the stockholders on April 18, 1979, and as amended, are
incorporated herein by reference. For purposes of such incorporation by
reference, the "Stock Option Plan" as defined in the SAR Plan shall be deemed to
include this Plan.
8. Option and Award Price. The price of the common stock with respect to which
an option or award is granted pursuant to this plan shall be determined by the
Committee on the date of grant or award. The exercise price of each option shall
be the fair market value of the shares on the date of option grant. The
consideration for a restricted stock award shall be nominally $1.00 per share.
The Committee shall also determine the fair market value of the stock on the
date of grant, and shall set forth the determination in its minutes; provided if
the stock is listed on a recognized securities exchange, the fair market value
will be taken as the reported average price of the stock on such exchange on the
date of grant of the option or award, or if no sale of the stock shall have been
reported on such date of grant, on the next preceding day when a sale was
reported.
9. Stock Option Exercise Period. The option period shall commence on the date
the Committee authorizes the grant of an option. The Committee may provide any
period of time for exercising an option, provided that no option shall be for a
period of more than 10 years from the date of grant of the option by the
Committee. The Committee may provide for the exercise of options in installments
and upon such terms, conditions and restrictions as may be determined by the
Committee.
10. Rights in Event of Death of Optionee. If a participant dies prior to
termination of his or her rights to exercise an option in accordance with the
provisions of the stock option agreement without having exercised his or her
option as to all shares covered thereby, the Committee may provide that the
option may be exercised by the participant's estate or a person who acquired the
right to exercise the option by bequest or inheritance or by reason of the death
of the participant, vesting the right to all unexercised shares as of the date
of the participant's death; provided the period during which the option may be
so exercised shall not continue beyond the earlier of 10 years from the date of
grant of the option or two years from the date of the participant's death.
11. Special Provisions with Respect to Restricted Stock Awards. The following
special restrictions apply to the award of shares by the Committee:
(a) Shares of common stock awarded pursuant to this Plan shall be issued
and registered in the name of the employee participant and placed in escrow. The
participant may not voluntarily dispose of such award shares prior to the
earliest of the following events:
(i) the participant's retirement under any retirement plan of the
Company or a subsidiary corporation;
(ii) the participant's death;
(iii) in extraordinary cases, with the consent of the Committee,
delivery of such shares to the participant following the participant's
termination of employment prior to retirement or death; or
(iv) expiration of the period of time specified in the award, not to
exceed ten years.
(b) The Committee may, but need not, at the time of making of an award, or
at any subsequent time prior to expiration of the restrictions set forth in
subparagraph (a) above, impose additional restrictions on voluntary disposition
and release from escrow of the shares awarded pursuant to this Plan, including,
without limitation, permitting disposition and release of shares only in
installments over a period of years.
(c) In order to administer restrictions required or permitted on the
release and delivery of award shares to a participant the certificates
evidencing such shares awarded hereunder, although issued in the name of the
participant, shall be held in escrow by an escrow agent appointed from time to
time by the Company, subject to delivery to the participant or to the Company at
such times and in such amounts as shall be directed by the Committee under the
terms of this Plan or the agreement of award with the participant. A
participant's acceptance of an award of shares pursuant to the Plan shall
constitute such participant's irrevocable power of attorney to the escrow agent
to cause the transfer and delivery to the Company of any such award shares which
the Committee shall direct to be so transferred and delivered pursuant to the
provisions of this Plan or of the award agreement with the participant.
(d) Unless otherwise provided by the Committee, the voting rights on
restricted shares shall belong to each participant with respect to those share
awards held in escrow. Dividends, if any, on shares held in escrow shall be paid
to each participant unless the Committee provides otherwise at the time of
making the award.
12. Payments and Withholding Tax.
(a) As to option shares, full payment for shares purchased upon exercise
of an option shall be made at the time of exercise. Any federal, state or local
taxes required to be paid by or withheld from the employee at the time of
exercise shall also be paid or withheld prior to delivery of any shares upon
such exercise. The exercise price of an option may be paid by delivering shares
of the Company's Common Stock valued at current market prices in exchange for
additional shares upon exercise of an employee's option. Payment may also be
made by delivering a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds to pay the exercise price and, if applicable, any required
federal, state and local taxes required to be collected by, or withheld by, the
Company in connection with such exercise. No participant shall have any rights
as a stockholder until such shares are issued upon exercise of the options.
(b) Provision for or payment by the participant of any state, federal or
local withholding taxes attributable to the exercise of an option or delivery of
any award shares shall be made in a manner satisfactory to the Company. The
Committee in its sole discretion may permit a participant to elect to have the
Company withhold, or to tender back to the Company, the number of shares
necessary to satisfy the payment of any taxes required to be paid by reason of
the exercise of an option or the delivery of any award shares.
(c) As to award shares, upon the satisfaction of any conditions for
delivery to the employee otherwise set forth in the Plan or in the share award
agreement with the participant, shares will be delivered to the participant only
upon payment by
him to the Company of the amount of any withholding tax which may be imposed
thereon under the provisions of the Internal Revenue Code as then in effect or
any law of any other taxing jurisdiction requiring payment of any such taxes or
withholding tax. Should such participant fail to make the required payment
within 30 days following the date of removal of restrictions on the delivery of
such shares, such participant shall be deemed to have instructed the escrow
agent to sell for such participant's account at the best price reasonably
obtained as many of the shares deliverable to such participant as may be
necessary to obtain the amount of the required tax payment and the balance of
such shares shall then be delivered to the participant.
13. Issuance of Shares. The provisions governing options granted and shares
awarded under this Plan shall be evidenced in an appropriate agreement with each
participant and shall set forth such terms, conditions, restrictions and
agreements as the Committee may provide; however, no such agreement shall
conflict with the terms of this Plan and, in the event of any such conflict, the
provisions of this Plan shall be deemed to control.
14. Capital Adjustments. The number of shares authorized in the aggregate for
this Plan shall be adjusted, and the number of shares of common stock covered by
each outstanding option or award granted by this Plan and the option price
(where app1icable) thereof shall be subject to an equitable adjustment, as
determined by the Committee, to reflect any stock dividend, stock split, or
share combination, or to reflect any exchange of shares, recapitalization,
merger, consolidation, reorganization, liquidation, or the like, of or by the
Company.
15. Nonassignability. The options and awards granted pursuant to this Plan
shall not be transferable (other than by will or by the laws of dissent and
distribution) assigned, pledged or hypotheticated in any way whether by
operation of law or otherwise, or be subject to execution, attachment or similar
process. Upon any attempt to so transfer, assign, pledge, hypotheticate, or upon
the levy by reason of any attachment or similar process, contrary to the
provisions hereof, of any option or award, such option or award shall
immediately become null and void. During a participant's lifetime options shall
be exercisable only by, and awards deliverable only to, him or her.
16. Termination of Options Rights and Awards. The Committee may provide for the
termination of options and the revocation of share awards in the case of a
participant's termination of employment with the Company or a Subsidiary
corporation for cause for defalcation, theft, embezzlement, falsification of
records with intent to defraud or any act involving moral turpitude or crime
constituting a felony. Upon such termination of employment, the participant's
rights to exercise any options granted pursuant to this Plan or to receive any
shares awarded pursuant hereto shall cease. In the case of award shares the
Committee shall direct the escrow agent to return all forfeited shares to the
Company.
17. Interpretation. The Committee shall interpret this Plan and shall prescribe
such rules and regulations in connection with the
operation of the Plan as it shall determine to be necessary or advisable for the
administration hereof consistent with the purposes herein contained. The
Committee shall have the power and authority to rescind, amend and modify its
rules and regulations.
18. Amendment or Discontinuation. This Plan may be amended, altered or
discontinued by the Company without approval of the shareholders, except the
Board of Directors shall not have the power or authority to change the employees
or class of employees who are eligible to participate in the Plan, increase the
aggregate number of shares which may be issued under options and awards or
materially increase the benefits accruing to participants under the Plan. In the
event any law, rule or regulation issued or promulgated by the Internal Revenue
Service, New York Stock Exchange, Securities and Exchange Commission or other
governmental agency requires the Plan to be amended, the Plan will be amended at
the time and all options and awards granted and outstanding will be subject to
such amendment.
19. Effect of the Plan. Neither the adoption of this Plan nor any action of the
Board or Committee shall be deemed to give any officer or employee any right to
be granted an option or award with respect to the Common Stock of the Company or
to any other rights whatsoever except as may be evidenced by a stock option
agreement or share award agreement and any amendment thereto, duly executed on
behalf of the Company, and then only to the extent and on terms and conditions
expressly set forth therein.
20. Term. Unless sooner terminated by action of the Board, this Plan shall
terminate December 15, 1997 and no options or awards may be granted pursuant
hereto after such date.
21. Definitions. For purposes of this Plan, unless the context requires
otherwise, the following words shall have the meanings indicated:
(a) "Plan" shall mean this 1988 Employee Stock Option Plan as amended from
time to time in accordance with the terms thereof.
(b) "Company" shall mean E-Systems, Inc. and its successors and assigns.
(c) "Board" shall mean the Board of Directors of E-Systems, Inc. and its
successors and assigns.
(d) "Committee" shall mean the Compensation and Benefits Committee
appointed by the Board and described in Paragraph 2., Administration, of this
Plan.
(e) "Common Stock" shall mean the $1.00 par value common stock of the
Company subject to the right of the Company to change the authorized number of
shares of such class and to provide no par or change in par value for such
stock.
(f) "Subsidiary corporation" shall mean any corporation (other than the
employer corporation) in an unbroken chain of corporations beginning with the
employer corporation if, at the time of the granting of the option or making of
the award hereunder, each of the corporations other than the last corporation in
the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
23. Effectiveness of the Plan. This Plan shall be subject to approval and
ratification on or before the next regular or special stockholders' meeting of
the Company by the vote of the holders of the majority of the shares of stock of
the Company present or represented at the meeting to which the Plan is
submitted. Subject to such approval and ratification, the Plan is effective at
once. Options and awards may be granted under the Plan prior to such approval
and ratification, but each such option or award granted shall be subject to the
approval and ratification of the Plan by the stockholders. If the Plan shall not
be so approved and ratified, all options and awards granted shall be of no
effect. The date of the grant of any option or award granted prior to such
approval and ratification by the stockholders shall be determined for all
purposes as if the option or award had not been subject to such approval and
ratification; however, no option granted may be exercised and no award made may
be delivered to a participant prior to such approval and ratification.