EXHIBIT 10.13
BENTHOS, INC.
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
The purposes of the Benthos, Inc. 1998 Non-Employee Directors' Stock Option
Plan (the "Plan") are to promote the long-term success of Benthos, Inc.
("Benthos") by creating a long-term mutuality of interests between the non-
employee Directors and stockholders of Benthos, to provide an additional
inducement for such directors to remain with Benthos and to provide a means
through which Benthos may attract able persons to serve as directors of Benthos.
SECTION 1
Administration
The Plan shall be administered by a Committee (the "Committee") appointed
by the Board of Directors of Benthos (the "Board") and consisting of not less
than two members of the Board. The Committee shall keep records of action taken
at its meetings. A majority of the Committee shall constitute a quorum at any
meeting, and the acts of a majority of the members present at any meeting at
which a quorum is present, or acts approved in writing by all the members of the
Committee, shall be the acts of the Committee. At all times this membership of
the Committee shall always satisfy the requirements of Rule 16b-3 under the
Securities Exchange Act of 1934 (the "1934 Act") or any successor rule.
The Committee shall interpret the Plan and prescribe such rules,
regulations and procedures in connection with the operations of the Plan as it
shall deem to be necessary and advisable for the administration of the Plan
consistent with the purposes of the Plan. All questions of interpretation and
application of the Plan, or as to stock options granted under the Plan, shall be
subject to the determination of the Committee, which shall be final and binding.
Notwithstanding the above, the selection of the directors to whom stock
options are to be granted, the timing of such grants, the number of shares
subject to any stock option, the exercise price of any stock option, the periods
during which any stock option may be exercised and the term of any stock option
shall be determined by the Board as hereinafter provided, and the Committee
shall have no discretion as to such matters.
SECTION 2
Shares Available Under the Plan
The aggregate number of shares which may be issued and as to which grants
of stock options may be made under the Plan is 150,000 shares of the common
stock, par value $.0667 per share, of Benthos (the "Common Stock"), subject to
adjustment and substitution as set forth in Section 5. If any stock option
granted under the Plan is canceled by mutual consent or terminates or expires
for any reason without having been exercised in full, the number of shares
subject
thereto shall again be available for purposes of the Plan. The shares which may
be issued under the Plan may be either authorized but unissued shares or
treasury shares or partly each.
SECTION 3
Grant of Stock Options
Options to purchase shares of Common Stock shall be granted under the Plan
as follows: (i) immediately following the initial election of any new director
of Benthos who is not otherwise an employee of Benthos, or any subsidiary of
Benthos (a "non-employee Director"), an option shall be granted to such new non-
employee Director for the purchase of Fifteen Thousand (15,000) shares of Common
Stock, and (ii) from time to time thereafter such additional options to purchase
shares of Common Stock as the Board in its sole discretion shall determine,
shall be granted to non-employee Directors. All options granted pursuant to this
Plan shall be "nonstatutory stock options" (i.e., stock options which do not
qualify under Sections 422 or 423 of the Internal Revenue Code of 1986, as
amended (the "Code").
SECTION 4
Terms and Conditions of Stock Options
Stock options granted under the Plan shall be subject to the following terms and
conditions:
(A) The purchase price at which each stock option may be exercised (the
"option price") shall be one hundred percent (100%) of the fair market value per
share of the Common Stock covered by the stock option on the date of grant,
determined as provided in Section 4(G).
(B) The option price for each stock option shall be paid in full upon
exercise and shall be payable in cash in United States dollars (including check,
bank draft or money order); provided, however, that in lieu of such cash the
person exercising the stock option may pay the option price in whole or in part
by delivering to Benthos shares of Common Stock having a fair market value on
the date of exercise of the stock option, determined as provided in Section
4(G), equal to the option price for the shares being purchased; except that (i)
any portion of the option price representing a fraction of a share shall in any
event be paid in cash and (ii) no shares of Common Stock which have been held
for less than six months may be delivered in payment of the option price of a
stock option. Delivery of shares may also be accomplished through the effective
transfer to Benthos of shares of Common Stock held by a broker or other agent.
Benthos will also cooperate with any person exercising a stock option who
participates in a cashless exercise program of a broker or other agent under
which all or part of the shares received upon exercise of the stock option are
sold through the broker or other agent or under which the broker or other agent
makes a loan to such person. Notwithstanding the foregoing, the exercise of the
stock option shall not be deemed to occur and no shares of Common Stock will be
issued by Benthos upon exercise of the stock option until Benthos has received
payment of the option price in full.
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The date of exercise of a stock option shall be determined under procedures
established by the Committee, and as of the date of exercise the person
exercising the stock option shall be considered for all purposes to be the owner
of the shares with respect to which the stock option has been exercised. Payment
of the option price with shares of Benthos shall not increase the number of
shares of the Common Stock which may be issued under the Plan as provided in
Section 2.
(C) No stock option granted hereunder shall be exercisable during the first
year of its term, except in the event of death as provided in Section 4(E) or in
the event of a Section 6 Event as provided in Section 6. Thereafter, the
options shall be exercisable as follows: after one year from the date of grant,
the option may be exercised for one-third of the option shares, after two years
from the date of grant, the option may be exercised for two-thirds of the option
shares, and after three years from the date of grant, the option may be
exercised for all of the option shares. Subject to the preceding sentence and
subject to Section 4(E) which provides for earlier termination of a stock option
under certain circumstances, each stock option shall be exercisable for ten
years from the date of grant. A stock option to the extent exercisable may be
exercised in whole or in part.
(D) No stock option shall be transferable by the grantee otherwise than by
will, or if the grantee dies intestate, by the laws of descent and distribution
of the state of domicile of the grantee at the time of death. All stock options
shall be exercisable during the lifetime of the grantee only by the grantee or
the grantee's guardian or legal representative.
(E) If a grantee ceases to be a director of Benthos for any reason, any
outstanding stock options held by the grantee shall be exercisable according to
the following provisions:
(i) If a grantee ceases to be a director of Benthos for any reason
other than resignation, removal for cause or death, any
outstanding stock option held by such grantee shall be
exercisable by the grantee (but only if exercisable by the
grantee immediately prior to ceasing to be a director) at any
time prior to the expiration date of such stock option or within
one year after the date the grantee ceases to be a director,
whichever is the shorter period;
(ii) If during his term of office as a director a grantee resigns
from the Board or is removed from office for cause, any
outstanding stock option held by the grantee which is not
exercisable by the grantee immediately prior to resignation or
removal shall terminate as of the date of resignation or
removal, and any outstanding stock option held by the grantee
which is exercisable by the grantee immediately prior to
resignation or removal shall be exercisable by the grantee at
any time prior to the expiration date of such stock option or
within three months after the date of resignation or removal of
the grantee, whichever is the shorter period.
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(iii) Following the death of a grantee during service as a director of
Benthos, any outstanding stock option held by the grantee at the
time of death shall be exercisable, to the extent such
outstanding stock option would have been exercisable on the next
subsequent anniversary date of such option after the death of
the grantee, by the person entitled to do so under the will of
the grantee, or, if the grantee shall fail to make testamentary
disposition of the stock option or shall die intestate, by the
legal representative of the grantee at any time prior to the
expiration date of such stock option or within one year after
the date of death of the grantee, whichever is the shorter
period;
(iv) Following the death of a grantee after ceasing to be a director
and during a period when a stock option is exercisable under
clause (i) above, the stock option shall be exercisable by such
person entitled to do so under the will of the grantee or by
such legal representative at any time prior to the expiration
date of the stock option or within one year after the date of
death, whichever is the shorter period; and
(v) Following the death of a grantee after ceasing to be a director
and during a period when a stock option is exercisable under
clause (ii) above, the stock option shall be exercisable by such
person entitled to do so under the will of the grantee or by
such legal representative at any time during the shorter of the
following two periods: (i) until the expiration date of the
stock option or (ii) until three months after the grantee ceased
being a director or one year after the date of death of the
grantee (whichever is longer).
A stock option held by a grantee who has ceased to be a director of Benthos
shall terminate upon the expiration of the applicable exercise period, if any,
specified in this Section 4(E).
(F) All stock options shall be confirmed by an agreement, or an amendment
thereto, which shall be executed on behalf of Benthos by an authorized officer
of Benthos and by the grantee.
(G) Fair market value of the Common Stock shall be the closing price, as
applicable, for the date as of which fair market value is to be determined as
quoted in The Wall Street Journal (or in such other reliable publication as the
Committee, in its discretion, may determine to reply upon): (i) the closing
price per share of Common Stock for such date on (or on any composite index
including) the principal United States securities exchange registered under the
1934 Act on which the Common Stock is listed, or (ii) if the Common Stock is not
listed on any such exchange, the closing price per share of the Common Stock for
such date on the Nasdaq National Market or SmallCap Market or any successor
system then in use ("Nasdaq"). If there are no such sale price quotations for
the date as of which fair market value is to be determined but there are such
sale price quotations within a reasonable period before such date, then fair
market value shall be the
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closing price per share of Common Stock on the closest date prior to the date on
which the fair market value is to be determined. If the fair market value of the
Common Stock cannot be determined on the basis previously set forth in this
Section 4(G) for the date as of which fair market value is to be determined, the
Committee shall in good faith determine the fair market value of the Common
Stock on such date. Fair market value shall be determined without regard to any
restriction other than a restriction which, by its terms, will never lapse.
(H) The obligation of Benthos to issue shares of the Common Stock under the
Plan shall be subject to (i) the effectiveness of a registration statement under
the Securities Act of 1933, as amended, with respect to such shares, if deemed
necessary or appropriate by counsel for Benthos, (ii) the condition that the
shares shall have been listed (or authorized for listing upon official notice of
issuance) upon each stock exchange, if any, on which the Common Stock may then
be listed and (iii) all other applicable laws, regulations, rules and orders
which may then be in effect.
Subject to the foregoing provisions of this Section 4 and other provisions
of the Plan, any stock option granted under the Plan shall be subject to such
restrictions and other terms and conditions, if any, as shall be determined, in
its discretion, by the Board and set forth in the agreement referred to in
Section 4(F), or an amendment thereto; except that in no event shall the
Committee or the Board have any power or authority which would case the Plan to
fail to be a plan described in Rule 16b-3(d)(1), or any successor rule.
SECTION 5
Adjustment and Substitution of Shares
If a dividend or other distribution shall be declared upon the Common Stock
payable in shares of the Common Stock, the number of shares of the Common Stock
set forth in Section 3, the number of shares of the Common Stock then subject to
any outstanding stock options and the number of shares of the Common Stock which
may be issued under the Plan but are not then subject to outstanding stock
options on the date fixed for determining the stockholders entitled to receive
such stock dividend or distribution shall be adjusted by adding thereto the
number of shares of the Common Stock which would have been distributable thereon
if such shares had been outstanding on such date.
If the outstanding shares of the Common Stock shall be changed into or
exchangeable for a different number or kind of shares of stock or other
securities of Benthos or another corporation, whether through reorganization,
reclassification, recapitalization, stock split-up, combination of shares,
merger or consolidation, then there shall be substituted for each share of the
Common Stock set forth in Section 3, for each share of the Common Stock subject
to any then outstanding stock option and for each share of the Common Stock
which may be issued under the Plan but which is not then subject to any
outstanding stock option, the number and kind of shares of stock or other
securities into which each outstanding share of the Common Stock shall be so
changed or for which each such share shall be exchangeable.
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In case of any adjustment or substitution as provided for in the first two
paragraphs of this Section 5, the aggregate option price for all shares subject
to each then outstanding stock option prior to such adjustment or substitution
shall be the aggregate option price for all shares of stock or other securities
(including any fraction) to which such shares shall have been adjusted or which
shall have been substituted for such shares. Any new option price per share
shall be carried to at least three decimal places with the last decimal place
rounded upwards to the nearest whole number.
If the outstanding shares of the Common Stock shall be changed in value by
reason of any spin-off, split-off or split-up, or dividend in partial
liquidation, dividend in property other than cash or extraordinary distribution
to holders of the Common Stock, the Committee shall make any adjustments to any
then outstanding stock option which it determines are equitably required to
prevent dilution or enlargement of the rights of grantees which would otherwise
result from any such transaction.
No adjustment or substitution provided for in this Section 5 shall require
Benthos to issue or sell a fraction of a share or other security. Accordingly,
all fractional shares or other securities which result from any such adjustment
or substitution shall be eliminated and not carried forward to any subsequent
adjustment or substitution.
Except as provided in this Section 5, grantee shall have no rights by
reason of any issue by Benthos of stock of any class or securities convertible
into stock of any class, any subdivision or consolidation of shares of stock of
any class, the payment of any stock dividend or any other increase or decrease
in the number of shares of stock of any class.
SECTION 6
Additional Rights in Certain Events
(A) Definitions.
For purposes of this Section 6, the following terms shall have the
following meanings:
(1) The term "Person" shall be used as that term is used in Sections 13(d)
and 14(d) of the 1934 Act as in effect on the effective date of the Plan.
(2) "Beneficial Ownership" shall be determined as provided in Rule 13d-3
under the 1934 Act as in effect on the effective date of the Plan.
(3) A specified percentage of "Voting Power" of a company shall mean such
number of the Voting Shares as shall enable the holders thereof to cast such
percentage of all the votes which could be cast in an annual election of
directors (without consideration of the rights of any class of stock other than
the common stock of the company to elect directors by a separate class
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vote); and "Voting Shares" shall mean all securities of a company entitling the
holders thereof to vote in an annual election of directors (without
consideration of the rights of any class of stock other than the common stock of
the company to elect directors by a separate class vote).
(4) "Tender Offer" shall mean a tender offer or exchange offer to acquire
securities of Benthos (other than such an offer made by Benthos or any
Subsidiary), whether or not such offer is approved or opposed by the Board.
(5) "Continuing Directors" shall mean a director of Benthos who either (a)
was a director of Benthos on the effective date of the Plan or (b) is an
individual whose election, or nomination for election, as a director of Benthos
was approved by a vote of at least two-thirds of the directors then still in
office who were Continuing Directors (other than an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of directors of Benthos which would be subject
to Rule 14a-11 under the 1934 Act, or any successor Rule).
(6) "Section 6 Event" shall mean the date upon which any of the following
events occurs:
(a) Benthos acquires actual knowledge that any Person other than
Benthos, a Subsidiary or any employee benefit plan(s) sponsored by
Benthos or a Subsidiary has acquired the Beneficial Ownership,
directly or indirectly, of securities of Benthos entitling such
Person to 30% or more of the Voting Power of Benthos;
(b) A Tender Offer is made to acquire securities of Benthos entitling
the holders thereof to 30% or more of the Voting Power of Benthos;
or
(c) A solicitation subject to Rule 14a-11 under the 1934 Act (or any
successor Rule) relating to the election or removal of 50% or more
of the members of the Board or any class of the Board shall be
made by any person other than Benthos or less than 51% of the
members of the Board shall be Continuing Directors; or
(d) The stockholders of Benthos shall approve a merger, consolidation,
share exchange, division or sale or other disposition of assets of
Benthos as a result of which the stockholders of Benthos
immediately prior to such transaction shall not hold, directly or
indirectly, immediately following such transaction a majority of
the Voting Power of (i) in the case of a merger or consolidation,
the surviving or resulting corporation, (ii) in the case of a
share exchange, the acquiring corporation or (iii) in the case of
a division or sale or other disposition of assets, each surviving,
resulting or acquiring corporation which, immediately following
the transaction, holds more than
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10% of the consolidated assets of Benthos immediately prior to the
transaction;
provided however, that (i) if securities beneficially owned by a grantee are
included in determining the Beneficial Ownership of a Person referred to in
paragraph 6(a), (ii) a grantee is required to be named pursuant to Item 2 of the
Schedule 14D-1 (or any similar successor filing requirement) required to be
filed by the bidder making a Tender Offer referred to in paragraph 6(b) or (iii)
if a grantee is a "participant" as defined in Instruction 3 to Item 4 of
Schedule 14A under the 1934 Act (or any successor rule) in a solicitation (other
than a solicitation by Benthos) referred to in paragraph 6(c), then no Section 6
Event with respect to such grantee shall be deemed to have occurred by reason of
such event.
(B) Acceleration of the Exercise Date of Stock Options.
Notwithstanding any other provision contained in the Plan, in case any
"Section 6 Event" occurs all outstanding stock options (other than those held by
a person referred to in the proviso to Section 6(A)(6)) shall become immediately
and fully exercisable whether or not otherwise exercisable by their terms.
SECTION 7
Effect of the Plan on the Rights of Corporation and Stockholders
Nothing in the Plan, in any stock option granted under the Plan, or in any
stock option agreement shall confer any right to any person to continue as a
director of Benthos or interfere in any way with the rights of the stockholders
of Benthos or the Board to elect and remove directors.
SECTION 8
Amendment and Termination
The right to amend the Plan at any time and from time to time and the right
to terminate the Plan at any time are hereby specifically reserved to the Board,
provided always that no such termination shall terminate any outstanding stock
options granted under the Plan, and provided further that no amendment of the
Plan shall (i) be made without stockholder approval if stockholder approval of
the amendment is at the time required for stock options under the Plan by Nasdaq
or the rules of any stock exchange on which the Common Stock may then be listed,
(ii) amend more than once every six months the provisions of the Plan relating
to the selection of the Directors to whom stock options are to be granted, the
timing of such grants, the number of shares subject to any stock option, the
exercise price of any stock options, the periods during which any stock option
may be exercised and the term of any stock option other than to comply with
changes in the Code or the rules and regulations thereunder or (iii) otherwise
amend the Plan in any manner that would cause stock options under the Plan not
to qualify for the exemption provided
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by Rule 16b-3 under the 1934 Act, or any successor rule. No amendment or
termination of the Plan shall, without the written consent of the holder of a
stock option therefore awarded under the Plan, adversely affect the rights of
such holder with respect thereto.
Notwithstanding anything contained in the preceding paragraph or any other
provision of the Plan or any stock option agreement, the Board shall have the
power to amend the Plan in any manner deemed necessary or advisable for stock
options granted under the Plan to qualify for the exemption provided by Rule
16b-3 (or any successor rule relating to exemption from Section 16(b) of the
1934 Act), and any such amendment shall, to the extent deemed necessary or
advisable by the Board, be applicable to any outstanding stock options
theretofore granted under the Plan notwithstanding any contrary provisions
contained in any stock option agreement. In the event of any such amendment to
the Plan, the holder of any stock option outstanding under the Plan shall, upon
request of the Committee and as a condition to the exercisability of such
option, execute a conforming amendment in the form prescribed by the Committee
to the stock option agreement referred to in Section 4(F) within such reasonable
time as the Committee shall specify in such request.
SECTION 9
Effective Date and Duration of Plan
The Plan shall become effective upon approval by the affirmative vote of
the holders of a majority of the Common Stock present in person or by proxy and
entitled to vote at a duly called and convened meeting of such holders. If such
approval is obtained at the Special Meeting of Stockholders on April 3, 1998,
the Plan shall be effective on the date of such meeting. This Plan shall expire
on December 31, 2007. Termination of the Plan shall not, without the consent of
the grantee, affect such grantee's rights under any option previously granted to
such grantee.
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