EXHIBIT 4.2
CELERITY SYSTEMS, INC.
INCENTIVE STOCK OPTION PLAN
1. PURPOSE. The purpose of the Celerity Systems, Inc. Incentive Stock
Option Plan (the "Plan") is to offer an opportunity for officers and employees
of Celerity Systems, Inc., a Tennessee corporation (the "Company"), and its
subsidiaries to participate in the growth of the Company, thus stimulating their
efforts on behalf of the Company and strengthening their desire to remain with
the Company or one of its subsidiaries.
2. ADMINISTRATION. The Plan will be administered by a Committee of not
less than three Directors of the Company appointed by the Company's Board of
Directors (the "Committee"). The Committee is authorized to interpret and
administer the Plan, and its interpretations and decisions shall be final and
conclusive. Whether authorized leave of absence shall constitute termination of
employment for purposes of the Plan shall be determined by the Committee. The
Committee may, with the consent of the optionee, make such modifications to an
outstanding stock option as it, in its sole discretion, shall deem advisable.
The Committee shall have full power to grant options that qualify as incentive
stock options ("Incentive Stock Options") under Section 422A of the internal
Revenue Code of 1986, as amended (the "Code"), and options that do not so
qualify.
3. SHARES SUBJECT TO THE PLAN. Options may be granted from time to time
to purchase shares of the $.001 par value Common Stock ("Common Stock") of the
Company not to exceed 447,323 shares in the aggregate. The shares may be
authorized but unissued or reacquired shares. If any option is surrendered
before exercise or for any reason ceases to be exercisable in whole or in part,
the shares allocated to the unexercised portion of such option shall continue to
be available under the Plan.
4. PARTICIPANTS. Options to purchase Common Stock of the Company under
this Plan may be granted only to officers and other employees of the Company and
its subsidiaries (as such term is defined in Section 435 of the Code), including
officers and employees who are members of the Board of Directors. Employment by
the Company shall be deemed to include employment by a subsidiary. From such
eligible officers and employees, the Committee shall from time to time choose
those to whom options shall be granted. In selecting the individuals to whom
options shall be granted, as well as in determining the number of shares subject
to each option, the Committee shall consider the positions and responsibilities
of the employees being considered, the nature of the services and
accomplishments of each, the value to the Company or one of its subsidiaries of
their services, their present and potential contribution to the success of the
Company or one of its subsidiaries, the anticipated number of years of service
remaining, and such other factors as the Committee may deem appropriate.
5. TERM OF THE PLAN. The Plan will become effective upon approval thereof
by the holders of a majority of the shares of voting stock of the Company
entitled to vote. Incentive Stock Options may be granted hereunder at any time
within ten (10) years from the date of approval by the Company's shareholders.
6. OPTION PRICE. The option price per share shall be determined by the
Committee from time to tune, but, in the case of options that are intended to
qualify as Incentive Stock Options under Section 422A of the Code, the price
shall not be less than the par value per share or 100% of the fair market value
per share on the date an option is granted, whichever is greater. The option
price for an employee owning more than 10% of the total combined voting power of
all classes of stock of the Company or of its parent or subsidiary (as those
terms are defined in Section 425 of the Code) shall not be less than 110% of the
fair market value per
share on the date an option is granted. Fair market value shall be determined
by the Board of Directors
7. OPTION PERIOD. The term of each Incentive Stock Option shall be fixed
by the Committee, but in no event shall any Incentive Stock Option permit the
exercise thereof after the expiration of ten (10) years from the date such
option is granted. No Incentive Stock Option issued to any person at a time when
such person owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of its parent or subsidiary
corporations (as those terms are defined in Section 425 of the Code) shall
permit the exercise thereof after the expiration of five (5) years from the date
such option is granted.
8. MAXIMUM AMOUNT OF INCENTIVE STOCK OPTIONS. With respect to options
that are intended to qualify as Incentive Stock Options under Section 422A of
the Code (i) granted by the Company under this Plan, or (ii) granted by a
subsidiary or a parent corporation (as defined in Section 425 of the Code) under
a plan described in Code Section 422A(b), and subsequently adopted by the
Company, the aggregate fair market value (determined at the time the option is
granted) of the Common Stock with respect to which such Incentive Stock Options
are exercisable for the first time in any calendar year by any individual shall
not exceed $100,000.
9. STOCK OPTION AGREEMENT Each stock option granted under this Plan shall
be offered to the employee in the form of a Stock Option Agreement which the
employee may accept in writing by agreeing to comply with the terms of the
offer. Such Stock Option Agreements shall contain the following provisions and
such other provisions as the Committee may determine (which determinations need
not be uniform as between the various Stock Option Agreements):
a. The number of shares to which the option relates, the option
price and the period within which the option may be exercised.
b. A provision that the option is not transferable by the optionee
to whom it is granted otherwise than by will or the laws of descent and
distribution; and a provision that the option is exercisable during the lifetime
of the employee only by him or his legal representative while he is in the
employ of the Company or within three months following termination of
employment.
c. A provision that no option granted under the Plan may be
exercised at any time after its term. Subject to such limitation, every option
shall be exercisable in full for all shares not theretofore exercised (i) by the
optionee within three months after the dare the optionee for any reason except
death ceases to be an employee of the Company, and (ii) by the person designated
in the optionee's will for such purpose or by the optionee's executor or
administrator as circumstances provide within twelve (12) months from the date
of the optionee's death, provided the optionee dies while he is employed by the
Company or dies within three months after he ceases to be an employee.
d. A provision that the Company shall not be required to issue or
deliver any certificate for shares of its Common Stock purchased upon the
exercise of any part of an option granted under this Plan prior to the
completion of any registration or other qualification of such shares under any
state or federal law or ruling or regulation of any governmental regulatory body
which the Company shall, in its sole discretion, determine is necessary or
advisable.
e. A provision that if any person holding Common Stock (the
"Employee") at any time proposes to sell all or any portion of the Common Stock,
whether
pursuant to this Plan or otherwise, then the Employee shall so inform the
Company by notice in writing (the "Notice") stating the number of shares that
are the subject of such proposed sale (the "Offered Shares"), the identity of
the proposed purchaser, and other terms and conditions of such proposed sale,
including any consideration proposed to be received for the Offered Shares (and,
if the proposed sale is to be wholly or partly for a consideration other than
money, the Notice shall state the proposed price as being equal to the amount of
monetary consideration, if any, plus the fair market value of the other
consideration). The Notice shall constitute an irrevocable offer to sell the
offered Shares to the Company at the same price and on the same terms and
conditions as offered by the prospective purchaser named in the Notice. The
Company shall have thirty (30) days after receiving the Notice given by the
Employee within which to notify the Employee in writing of its election to
purchase all of the Offered Shares at the price and on the terms set forth in
the Notice. If the Company elects to purchase the Offered Shares, within thirty
(30) days after receiving notice of such election the Employee shall deliver to
the Company, against receipt from the Company of the required consideration
therefor, a certificate or certificates representing the Offered Shares to be
purchased, duly endorsed by the Employee or accompanied by duly executed
instruments necessary to transfer the Offered Shares. If the Company elects not
to purchase the Offered Shares within the thirty (30) day period provided for
hereinabove, then the Offered Shares not to be so purchased by the Company may
be disposed of by the Employee to the prospective purchaser named in the Notice
for a price and on terms and conditions not more favorable to such purchaser
than those set forth in the Notice, at any time within thirty (30) days after
the expiration of the thirty (30) day period provided for hereinabove for the
Company to accept the offer contained in the Notice. Any Offered Shares sold to
such purchaser shall remain subject to all the terms and conditions of this
Plan, and in particular this
ARTICLE 9, in the hands of such purchaser, and such purchaser shall, prior to
the transfer of the Offered Shares so purchased, acknowledge in writing
agreement to be bound by the terms and provisions thereof. Any Offered Shares
not so disposed of within such thirty (30) day period shall remain subject to
all the terms and provisions of this Plan, and in particular this ARTICLE 9 The
Employee agrees that each certificate representing shares of the Stock owned by
him, whether now owned or hereafter acquired, whether pursuant to this Plan or
otherwise, shall have placed thereon any legend deemed by the Company to be
necessary or desirable to restrict the transfer of such shares in accordance
with the provisions hereof.
10. EFFECT OF CHANGES IN COMMON STOCK OF THE COMPANY.
a. In the event of a change in the capitalization of the Company which
is limited to a change of all of its authorized shares with par value into the
same number of shares with a different par value or without par value, the
shares resulting from any such change shall be deemed to be Common Stock within
the meaning of the Plan.
b. If the outstanding Common Stock of the Company is changed by any
action such as or similar to a declaration of a stock dividend or a split-up or
combination of shares, the maximum number of shares for which options may be
granted under this Plan, the number of shares reserved for future options, the
number of shares covered by options then outstanding and the Option prices,
shall be appropriately adjusted.
c. If the Company shall not be the surviving corporation in any
merger, reorganization, liquidation or consolidation, or if substantially all of
the property or more than 50% of the stock of the Company shall be acquired by
another corporation, the Board of Directors of the Company, or the hoard of
directors of any corporation assuming the obligations of the Company hereunder,
shall either (i) make appropriate provisions for protection of any
outstanding options by substitution on an equitable basis of appropriate stock
of the Company, or of the merged, consolidated or otherwise reorganized
corporation which will be issuable in respect in the shares of Common Stock of
the Company, or (ii) upon written notice to the employee provide that the option
shall terminate unless exercised within ninety (90) days of the date of such
notice. If an option is terminated pursuant to action by a board of directors
under this subsection, the optionee shall receive a cash payment equal to the
difference between (i) the fair market value on the termination date of the
shares subject to the option and (ii) the option price of such shares. For
purposes of the foregoing, the termination date shall be a date specified in the
notice from a board of directors.
d. In the event of any other recapitalization, reclassification,
reorganization or change of the Company's capital or business structure, the
Committee may in its discretion make an adjustment in the number or kind of
shares for which options may be granted under this Plan, the number and/or kind
of shares covered by options then outstanding and the option prices, and its
determination in that respect shall be final and conclusive.
e. Except as provided in this ARTICLE 10, the optionee shall have no
rights by reason of any subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other increase or decrease in
rile number of shares of stock of any class or by reason of any dissolution,
liquidation merger, consolidation or reorganization. The existence of the Plan
or of options thereunder shall not prevent any of the foregoing changes or
exchanges.
f. All adjustments provided for in this ARTICLE 10 shall be made by
the Committee, whose determination in that respect shall be final.
11. EXERCISE OF RIGHTS. No shares shall be issued until all required
payment therefor (including payment of all required taxes) has been made. The
granting of an option to an individual shall give such individual no rights as a
stockholder except as to shares issued to him.
12. AMENDMENT OF THE PLAN. This Plan may be terminated at any time by
the Board of Directors of the Company, except with respect to any options then
outstanding under the Plan. The Board of Directors may make such modifications
of the Plan as it shall deem advisable, but may not, without approval of the
stockholders of the Company, (a) increase the maximum number of shares as to
which options may be granted under the Plan (other than as provided in ARTICLE
10 above), (b) extend the period during which options may be granted or
exercised, (c) extend the date within which options may be granted under this
Plan, or (d) withdraw the administration of the Plan from a committee of
Directors of the Company, or (e) change the class of employee eligible to
receive options.
The foregoing Celerity Systems, Inc. Incentive Stock Option Plan was
adopted by the Board of Directors of the Company on August 10, 1995.
Celerity Systems, Inc.
By: /s/ Mahomed Youssef
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Chairman
The foregoing Celerity Systems, Inc. Incentive Stock Option Plan was
approved by the shareholders of the Company on August 10, 1995.
Celerity Systems, Inc.
By: /s/ Glenn West
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Secretary