Exhibit 4.1
STRATA OIL & GAS INC.
2006 STOCK OPTION PLAN
1. Purpose.
The purpose of the Strata Oil & Gas Inc.2006 Stock Option Plan ("Plan")
is to provide to key employees, officers, directors, consultants and agents of
Strata Oil & Gas Inc. (the "Corporation") or any of its subsidiaries, added
incentive for high levels of performance and to reward unusual efforts which
increase the earnings and long-term growth of the Corporation. It is intended to
accomplish the foregoing by providing for the grant of "Incentive Stock Options"
and "Nonqualified Stock Options" to qualified eligible individuals. Except where
the context otherwise requires, the term "Corporation" shall include Strata Oil
& Gas Inc., a Canadian corporation, and all present and future subsidiaries of
the Corporation as defined in Section 424(e) and 424(f) of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Certain Definitions.
As used in this Plan, the following words and phrases shall have the respective
meanings set forth below, unless the context clearly indicates a contrary
meaning.
(a) "Board of Directors" shall mean the Board of Directors of the
Corporation.
(b) "Cause" shall mean any one or more of the following:
(i) a material breach of any term of employment, consultation
or engagement with the Corporation by the Optionee,
(ii) the continuing, repeated willful failure or refusal by
the Optionee to substantially perform his responsibilities on behalf of the
Corporation,
(iii) an act or omission of the Optionee that is materially
adverse to the business, goodwill or reputation of the Corporation,
(iv) an act of dishonesty,
(v) the commission of a felony,
(vi) the breach of a fiduciary duty or fraud,
(vii) an act of moral turpitude,
(viii) a determination by a physician licensed in the
jurisdiction where the Optionee is employed that the Optionee is a chronic
alcoholic or a narcotics addict, or any "cause" for termination or discharge as
may be otherwise defined in any employment, consultation or engagement agreement
between the Optionee and the Corporation.
The determination of the Option Committee with respect to whether a termination
for Cause has occurred shall be submitted to the Board of Directors, whose
decision shall be final and conclusive.
(c) "Change of Control" shall mean (i) an acquisition of any voting
securities of the Corporation (the "Voting Securities") by any "Person" (as the
term person is used for purposes of Section 13(d) or 14(d) of the Exchange Act),
immediately after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of forty percent (40%)
or more of the then outstanding shares or the combined voting power of the
Corporation's then outstanding Voting Securities; (ii) the individuals who, as
of the Effective Date are members of the Board (the "Incumbent Board"), cease
for any reason to constitute at least two-thirds of the members of the Board;
provided, however, that if the election, or nomination of the members of the
Corporation's common stockholders, of any new director was approved by a vote of
at least two-thirds of the Incumbent Board, such new director shall, for
purposes of this Plan, be considered as a member of the Incumbent Board; (iii)
the consummation of (x) a merger, consolidation or reorganization with or into
the Corporation or in which securities of the Corporation are issued unless such
merger, consolidation or reorganization is a "Non-Control Transaction"; (iv) a
complete liquidation or dissolution of the Corporation; or (v) the sale or other
disposition of all or substantially all of the assets of the Corporation to any
Person (other than a transfer to a Subsidiary or the distribution to the
Corporation's stockholders of the stock of a Subsidiary or any other assets).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the "Subject Person") acquired Beneficial Ownership
of more than the permitted amount of the then outstanding Shares or Voting
Securities as a result of the acquisition of Shares or Voting Securities by the
Corporation which, by reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Shares or
Voting Securities by the Corporation, and after such share acquisition by the
Corporation, the Subject Person becomes the Beneficial Owner of any additional
Shares or Voting Securities which increases the percentage of the then
outstanding Shares or Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.
(d) "Disability" shall mean the inability to engage in any substantial
gainful activity by reason of any medically determined physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than six (6) months as
determined by the Option Committee in their sole discretion.
(e) "Effective Date" shall mean the earlier date on which the Plan is
approved by either the Board or a majority of the outstanding shares of capital
stock of the Corporation entitled to vote thereon.
(f) "Exchange Act" shall mean the Securities and Exchange Act of 1934,
as amended.
(g) "Fair Market Value per Share" shall mean as of any date the fair
market value of each of the Shares on such date (the "applicable date") as
determined by the Option Committee in good faith. The Option Committee is
authorized to make its determination as to the fair market value on the
following basis: (i) if the Shares are not traded on a securities exchange and
are not quoted on the National Association of Securities Dealers, Inc.'s
Automated Quotation System ("NASDAQ"), but are quoted on the Over The Counter
Electronic Bulletin Board operated by NASDAQ, "Fair Market Value per Share"
shall be the mean between the average daily bid and average daily asked prices
of the Shares on the applicable date, as published on such bulletin board; (ii)
if the Shares are not traded on a securities exchange and are quoted on NASDAQ,
"Fair Market Value per Share" shall be the closing transaction price of the
Shares on the applicable date, as reported on NASDAQ; (iii) if the Shares are
traded on a securities exchange, "Fair Market Value per Share" shall be the
daily closing price of the Shares, on such securities exchange as of the
applicable date; or (iv) if the Shares are traded other than as described in
(i), (ii) or (iii) above, or if the Shares are not publicly traded, "Fair Market
Value per Share" shall be the value determined by the Option Committee in good
faith based upon the fair market value as determined by completely independent
and well qualified experts. In the case of Shares described in (i), (ii) or
(iii) above, if no prices are reported for the Shares on the applicable date,
the "Fair Market Value per Share" shall be the price reported for such Shares on
the next preceding date on which there were reported prices.
(h) "Granting Date" shall mean the date on which the grant of an Option
is made effective by the Option Committee.
(i) "Incentive Stock Option" shall mean an Option intended to qualify
for treatment as an incentive stock option under Section 422 of the Code, and
designated as an Incentive Stock Option.
(j) "Non-Control Transaction" shall mean a merger, consolidation or
reorganization with or into the Corporation or in which securities of the
Corporation are issued where:
(a) the stockholders of the Corporation, immediately before
such merger, consolidation or reorganization, own directly or indirectly
immediately following such merger, consolidation or reorganization, at least
fifty percent (50%) of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the same
proportion as their ownership of the Voting Securities immediately before such
merger, consolidation or reorganization,
(b) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for such merger,
consolidation or reorganization constitute at least two-thirds of the members of
the board of directors of the Surviving Corporation, or a corporation
beneficially directly or indirectly owning a majority of the Voting Securities
of the Surviving Corporation, and
(c) no Person other than (1) the Corporation, (2) any
Subsidiary, (3) any employee benefit plan (or any trust forming a part thereof)
that, immediately prior to such merger, consolidation or reorganization, was
maintained by the Corporation or any Subsidiary, or (4) any Person who,
immediately prior to such merger, consolidation or reorganization had Beneficial
Ownership of thirty percent (30%) or more of the then outstanding Voting
Securities or Shares, has Beneficial Ownership of thirty percent (30%) or more
of the combined voting power of the Surviving Corporation's then outstanding
voting securities or its common stock.
(k) "Nonqualified Stock Option" shall mean an Option issued under this
Plan that does not constitute an Incentive Stock Option.
(l) "Option" shall man any option to purchase Shares of the Corporation
granted under the Plan, which may be either an Incentive Stock Option or a
Nonqualified Stock Option.
(m) "Option Agreement" shall mean the document setting forth the terms
and conditions of each Option.
(n) "Option Committee" shall mean the Committee selected and designated
by the Board of Directors to administer the Plan, consisting of not less than
two (2) members of the Board of Directors.
(o) "Optionee" shall mean the holder of an Option.
(p) "Retirement" shall have the meaning ascribed by the Option
Committee.
(q) "Securities Act" shall mean the Securities Act of 1933, as amended.
(r) "Shares" shall mean the shares of common stock, no par value, of
the Corporation.
(s) "Subsidiary" shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, if 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.
(t) "Ten Percent Shareholder" shall mean an individual who, at the time
an Option is granted, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Corporation or its parent, if any.
3. Stock Options.
(a) In General. Awards under the Plan shall be granted in the form of
Options which may either qualify for treatment as Incentive Stock Options or as
Nonqualified Stock Options.
(b) Limitation on Number of Shares. The aggregate number of Shares
which may be issued and purchased under the Plan shall not exceed 4,000,000
Shares, subject to any Share adjustments pursuant to Section 9. Shares may be
either authorized and unissued Shares or issued Shares reacquired by the
Corporation. The total number of Shares subject to Options authorized under the
Plan shall be subject to increase or decrease, as necessary, in order to give
effect to the adjustment provisions of Section 9 hereof and to give effect to
any amendment adopted as provided in Section 15 hereof. Notwithstanding the
above limitation, any Shares subject to an Option which terminates, is cancelled
or expires for any reason without being exercised in full, may again be subject
to an Option under the Plan, unless the Plan shall have been terminated. At the
discretion of the Option Committee, existing Options may be cancelled and new
options granted at a lower price in the event of a decline in the market value
of the Shares. If Shares issued upon exercise of an Option under the Plan are
tendered to the Corporation in partial or full payment of the exercise price of
an Option granted under the Plan, such tendered Shares shall not be available
for subsequent Option grants under the Plan.
4. Eligibility.
(a) In General. Only officers, key employees and directors who are also
employees of the Corporation shall be eligible to receive grants of Incentive
Stock Options. Officers, key employees, consultants, agents and all directors of
the Corporation (whether or not employees of the Corporation) shall be eligible
to receive grants of Nonqualified Stock Options. Within the foregoing limits,
the Option Committee, in its sole and absolute discretion, shall, from time to
time, determine (i) the individuals or the class of individuals to whom Options
may be granted hereunder, (ii) the number of Shares to be covered by each of the
Options granted hereunder, (iii) the
purchase price of the Shares and the method of payment for such Shares, (iv)
the terms and provisions of the respective Option Agreement and (v) the times at
which such Options shall be granted. The Option Committee shall take into
account such factors as it shall deem relevant in connection with accomplishing
the purpose of the Plan as set forth in Section 1 hereof. All such
determinations and designations of individuals eligible to receive Options under
the Plan shall be made in the absolute discretion of the Option Committee and
shall not require the approval of the stockholders, except as expressly set
forth herein.
(b) Additional Options. An individual who has been granted an Option
may be granted additional Options if the Option Committee shall so determine. In
addition, new Options may be granted in substitution for Options previously
granted under this Plan or another plan of the Corporation or under the plan of
another corporation assumed by the Corporation. No Options shall be granted
under this Plan after the expiration of the tenth (10th) anniversary of the
adoption of the Plan by the Board of Directors.
(c) Certain Limitations. Incentive Stock Options may not be granted to
an Optionee to the extent that the aggregate Fair Market Value per Share
(determined as of the Granting Date) of all Shares subject to the Incentive
Stock Options granted under the Plan (or granted under any other incentive stock
option plan of the Corporation) which are exercisable for the first time by such
Optionee during the same calendar year exceeds One Hundred Thousand Dollars
($100,000).
(d) Option Agreement. Each Option granted pursuant to the Plan shall
be evidenced by a written Option Agreement entered into between the Corporation
and the Optionee which shall contain such terms and provisions, including, but
not limited to, the period of exercise, whether in installments or otherwise,
the exercise price and such other terms and conditions as the Option Committee
shall, in its sole discretion, determine to be appropriate and within the
contemplation of the Plan. The terms and conditions of such written Option
Agreement need not be the same for all Options granted under the Plan.
5. Administration of Plan.
(a) Option Committee. This Plan shall be administered by the Option
Committee, subject to the approval and ratification by the Board of Directors.
Any action of the Option Committee with respect to administration of the Plan
shall be taken pursuant to (i) a majority vote at a meeting of the Option
Committee (to be documented by minutes), or (ii) the unanimous written consent
of its members. The Option Committee may meet in person, by telephone, or by any
other means which it deems to be advisable and convenient. All actions taken by
the Option Committee shall be submitted to the Board of Directors for
ratification and approval. If there is no Option Committee, the Board of
Directors shall act in lieu thereof.
(b) Vacancies. Vacancies in the Option Committee shall be filled by the
Board of Directors. In addition, the Board of Directors may at any time remove
one or more members of the Option Committee and substitute others, and a
majority of disinterested members of the Board of Directors shall at all times
have the right to exercise any and all rights and powers of the Option
Committee.
(c) Authority. The Option Committee shall have the authority,
exercisable in its discretion, subject to express provisions of this Plan and
subject to the approval and ratification by the Board of Directors, to: (i)
construe and interpret the provisions of the Plan, decide all questions and
settle all controversies and disputes which may arise in connection with the
Plan; (ii) prescribe, amend and rescind rules and regulations relating to the
administration of the Plan; (iii) determine the exercise price of the Shares
covered by each Option granted hereunder and the method of payment for such
Shares, the individuals to whom, and the time or times at which, any Option
granted hereunder shall be granted and exercisable, the number of Shares covered
by each Option granted hereunder, (iv) determine the terms and provisions of the
respective Option Agreements (which need not be identical); (v) determine, in
the case of employees, whether Options shall be Incentive Stock Options or
Nonqualified Stock Options; (vi) determine the duration and purposes of leaves
of absence which may be granted to eligible individuals without constituting a
termination of their employment for purposes of the Plan; and (vii) make all
other determinations necessary or advisable for the administration of the Plan.
Determinations of the Option Committee on matters referred to in this Section
shall be conclusive and binding on all parties howsoever concerned. With respect
to Incentive Stock Options, the Option Committee shall administer the Plan in
compliance with the provisions of Code Section 422 as the same may hereafter be
amended from time to time. No member of the Option Committee shall be liable for
any action, omission or determination made in good faith in connection with the
Plan.
6. Exercise Price.
(a) Nonqualified Stock Options. The exercise price of each Option
intended to qualify as an Incentive Stock Option shall be determined by the
Option Committee, but shall in no event be less than one hundred percent (100%)
of the Fair Market Value per Share on the Granting Date of the Incentive Stock
Option.
(b) Incentive Stock Option. The exercise price of each Option intended
to qualify as an Incentive Stock Option shall be determined by the Option
Committee, but shall in no event be less than one hundred percent (100%) of the
Fair Market Value per Share on the Granting Date of the Incentive Stock Option.
In the case of an Option intended to qualify as an Incentive Stock Option, which
is granted to a Ten Percent Shareholder, the exercise price per share shall in
no event be less than 110% of the Fair Market Value per Share determined as of
the Granting Date.
7. Period of Exercise and Certain Limitations on Right to Exercise.
(a) Period of Exercise. Each Option granted under the Plan shall be
exercisable at such times and under such conditions as may be determined by the
Option Committee at the Granting Date and as shall be set forth in the Option
Agreement; provided, however, in no event shall an Option be exercisable after
the expiration of ten (10) years from its Granting Date, and in the case of an
Incentive Stock Option granted to a Ten Percent Shareholder, such Option shall
not be exercisable later than five (5) years after its Granting Date. In no
event may an Optionee defer the date on which the Optionee has the right to
exercise the Option under the terms of its original grant.
(b) Change of Control. Unless otherwise provided in any Option
Agreement, all Options granted pursuant to the Plan shall become fully and
immediately exercisable with respect to all Shares subject thereto, upon a
Change of Control.
(c) Effect of Termination of Employment or Other Relationship. The
effect of the termination of an Optionee's employment or other relationship with
the Corporation on such Optionee's eligibility to exercise any Options awarded
pursuant to the Plan shall be as follows:
(i) Disability or Death. If an Optionee ceases to be employed
by, or ceases to have a relationship with, the Corporation by reason of
Disability or death, any Option heretofore granted which remains unexercised at
the time of termination shall become fully vested and exercisable and shall
expire not later than one (1) year thereafter. During such one (1) year period
and prior to the expiration of the Option by its terms, the Optionee, or his or
her executor or administrator or the person or persons to whom the Option is
transferred by will or the applicable laws of descent and distribution, may
exercise such Option, and except as so exercised, such Option shall expire at
the end of one (1) year period unless such Option by its terms expires before
such date. The decision as to whether a termination by reason of Disability has
occurred shall be made by the Option Committee, whose decision shall be final
and conclusive.
(ii) Retirement. If the Optionee ceases to be employed by, or
ceases to have a relationship with the Corporation by reason of Retirement, any
Option heretofore granted which remains unexercised at the time of such
Retirement shall become fully vested and exercisable and shall expire, in the
case of an Incentive Stock Option, not later than three (3) months thereafter,
or, in the case of a Nonqualified Stock Option, not later tha n one (1) year
thereafter. During such period and prior to the expiration of the Option by its
terms, such Option may be exercised by the Optionee, and except as so exercised,
shall expire at the end of such relevant period unless such Option by its terms
expires before such date. The decision as to whether a termination is by reason
of Retirement shall be made by the Option Committee, whose decision shall be
final and conclusive.
(iii) Voluntary Termination or Termination by the Corporation.
If an Optionee's employment by, or relationship with, the Corporation is
terminated voluntarily or, by the Corporation, whether such termination is for
Cause or for no reason whatsoever, any Option heretofore granted which remains
unexercised at the time of such termination shall expire immediately, provided,
however, that the Option Committee may, in its sole and absolute discretion,
within thirty (30) days of such termination, waive the expiration of any Option
awarded under the Plan, by giving written notice of such waiver to the Optionee
at such Optionee's last known address. In the event of such waiver, the Optionee
may exercise any such Options only to such extent, for such time, and upon such
terms and conditions set forth in subparagraph (i) above. The determination as
to whether a termination is voluntary or for Cause shall be made by the Option
Committee, whose decision shall be final and conclusive.
(d) Shares held for Investment. The Option Committee may, if it or
counsel for the Corporation shall deem it necessary or desirable for any reason,
require as a condition of exercise, that the Optionee or any other person
entitled to exercise an Option hereunder, represent in writing to the
Corporation at the time of exercise of such Option that it is their intention to
acquire the Shares as to which the Option is being exercised for investment
purposes and not with a view to the sale or distribution thereof.
(e) Transferability. Options granted under the Plan to an Optionee
shall not be transferable other than by will or the laws of descent and
distribution, and such Options shall be exercisable, during the Optionee 's
lifetime, only by him or his legal guardian or legal representative. A transfer
of an Option by will or the laws of descent and distribution shall not be
effective unless the Option Committee shall have been furnished with such
evidence as it may deem necessary to establish the validity of the transfer.
(f) Intended Treatment as Incentive Stock Options. Incentive Stock
Options granted pursuant to this Plan are intended to qualify as "incentive
stock options" pursuant to Code Section 422 and shall, whenever possible, be
construed and administered so as to implement that intent. If all or any part of
an Option granted hereunder with the intention of qualifying as an Incentive
Stock Option, shall fail to so qualify, such Option or portion thereof that
fails to so qualify shall be deemed a Nonqualified Stock Option granted
hereunder.
8. Payment of Exercise Price and Cancellation of Options.
(a) Notice of Exercise. An Option granted under the Plan shall be
exercised by giving written notice to the Secretary of the Corporation (or such
other person designated by the Option Committee) of the Optionee's intention to
exercise one or more Options hereunder and by delivering payment of the exercise
price therewith, which shall be paid in full at the time of such exercise.
(b) Method of Settlement. The consideration to be paid for the Shares
to be issued upon exercise of an Option, shall consist of cash or, with the
approval of the Option Committee (which may be withheld in its sole discretion),
Shares having a fair market value on the date of exercise, as determined by the
Option Committee, at least equal to the exercise price or a combination of cash
and Shares or, with the approval of the Option Committee (which may be withheld
in its sole discretion) may also be effected wholly or partly by monies borrowed
from the Corporation pursuant to a promissory note, the terms and conditions of
which shall be determined from time to time by the Option Committee, in its
discretion, separately with respect to each exercise of Options and each
Optionee, or by such other method of payment as may be determined by the Option
Committee in its sole discretion; provided, that each such method and time for
payment and each such borrowing and terms and conditions of repayment shall then
be permitted by and be in compliance with applicable law. An Optionee may
purchase less than the total number of Shares for which an Option is then
exercisable, provided, however, that any partial exercise of an Option may not
be less than for one hundred (100) Shares and shall not include any fractional
Shares
.. No Optionee or legal representative of an Optionee, as the case may be, will
be, or will be deemed to be, the owner of any Shares covered by an Option unless
and until certificates for the Shares are issued to the Optionee or such
Optionee's representative under the Plan.
9. Share Adjustment.
If the outstanding Shares of the class then subject to this Plan are
increased or decreased, or are changed into or exchanged for a different number
or kind of shares or securities or other forms of property (including cash) or
rights, as a result of one or more reorganizations, recapitalizations,
spin-offs, stock splits, reverse stock splits, stock dividends or the like, the
Option Committee shall appropriate adjustments shall be made in the number
and/or kind of Shares or securities or other forms of property (including cash)
or rights for which Options may thereafter be granted under the Plan and for
which Options then outstanding under the Plan may thereafter be exercised as do
not cause the Plan to be treated as a "nonqualified deferred compensation plan"
within the meaning of Code Section 409A or any Options issued thereunder as
being issued under a "nonqualified deferred compensation plan" within the
meaning of Code Section 409A. Any fractional Shares resulting from such
adjustment shall be eliminated by rounding to the nearest whole number.
Appropriate amendments to the Option Agreements shall be executed by the
Corporation and the Optionees to the extent the Option Committee determines that
such amendments are necessary or desirable to reflect such Share adjustments. If
determined by the Option Committee to be appropriate, in the event of any Share
adjustment involving the substitution of securities of a corporation other than
the Corporation, the Option Committee shall make arrangements for the assumption
by such other corporation of any Options then or thereafter outstanding under
the Plan, without any change in the total exercise price applicable to the
unexercised portion of the Options but with an appropriate adjustment to the
number of securities, kind of securities and exercise price for each of the
securities subject to the Options. The determination by the Option Committee as
to what adjustment, amendments or arrangements shall be made pursuant to this
Section 9 and the extent thereof, shall be final and conclusive.
In the event of the proposed dissolution or liquidation of the Corporation, or a
proposed sale of substantially all of the assets of the Corporation, or in the
event of any merger or consolidation of the Corporation with or into another
corporation, or in the event of any corporate separation or division, including,
but not limited to, a split-up, split-off or spin-off, or other transaction in
which the outstanding Shares then subject to Options under the Plan are changed
into or exchanged for property (including cash), rights and/or securities other
than, or in addition to, shares of the Corporation, the Option Committee may
provide that the holder of each Option then exercisable shall have the right to
exercise such Option solely for the kind and amount of shares of stock and other
securities, property, cash or any combination thereof receivable upon such
dissolution, liquidation, sale, consolidation or merger, or similar corporate
event, by a holder of the number of Shares for which such Option might have been
exercised immediately prior to such dissolution, liquidation, sale,
consolidation or merger or similar corporate event; or, in the alternative, the
Option Committee may provide that each Option granted under the Plan shall
terminate as of a date to be fixed by the Bo ard of Directors, provided, that no
less than thirty (30) days prior written notice of the date so fixed shall be
given to each Optionee who shall have the right, during such thirty (30) day
period preceding such termination, to exercise the Options as to all or any part
of the Shares covered thereby, including Shares as to which such Options would
not otherwise be exercisable.
10. Substitute Options.
The Corporation may grant options under the Plan in substitution for
options held by employees of another corporation who become employees of the
Corporation as the result of a merger or consolidation of the employing
corporation with the Corporation, or as a result of the acquisition by the
Corporation, of property or stock of the employing corporation. The Corporation
may direct that substitute options be granted on such terms and conditions as
the Board of Directors considers appropriate in the circumstances.
11. Other Employee Benefits.
Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of Shares received
upon such exercise shall not constitute compensation for purposes of determining
such employee's benefits under any other employee benefit plan or program in
which the employee is a participant at any time, including, without limitation,
benefits under any bonus, pension, profit-sharing, life insurance or salary
continuation plan, except as otherwise specifically determined by the Board of
Directors.
12. Terms and Conditions of Options.
(a) Withholding of Taxes. As a condition to the exercise, in whole or
in part, of any Options, the Option Committee may in its sole discretion require
the Optionee to pay, in addition to the exercise price of the Shares covered by
the Options an amount equal to any Federal, provincial, state or local taxes
that may be required to be withheld in connection with the exercise of such
Options. Alternatively, the Corporation may issue or transfer the Shares
pursuant to exercise of the Options net of the number of Shares sufficient to
satisfy the withholding tax requirements. For withholding tax purposes, the
Shares shall be valued on the date the withholding obligation is incurred. In
the event an Optionee makes a Code Section 83(b) election in connection with a
Nonqualified Stock Option granted under the Plan, the Optionee shall immediately
notify the Corporation of such election. In the case of an Incentive Stock
Option, an Optionee who disposes of Shares acquired pursuant to such Incentive
Stock Option either (a) within two (2) years after the Granting Date or (b)
within one (1) year after the issuance of such Shares to the Optionee upon
exercise thereof, shall notify the Corporation of such disposition and the
amount realized upon such disposition.
(b) No Rights to Continued Employment or Relationship. Nothing
contained in the Plan or in any Option Agreement shall obligate the Corporation
to continue to employ or to continue any other relationship with any Optionee
for any period or interfere in any way with the right of the Corporation to
reduce such Optionee's compensation or to terminate the Corporation's employment
or relationship with any Optionee at any time.
(c) Time of Granting Options. The Granting Date shall be the day the
Corporation executes the Option Agreement; provided, however, that if
appropriate resolutions of the Option Committee indicate that an Option is to be
granted as of and on some prior or future date, the Granting Date shall be such
prior or future date.
(d) Privileges of Stock Ownership. No Optionee shall be entitled to the
privileges of stock ownership as to any Shares not actually issued and delivered
to such Optionee. No Shares shall be issued upon the exercise of any Option
unless and until, in the opinion of the Corporation's counsel, all applicable
laws, rules and regulations of any governmental or regulatory agencies and any
exchanges upon which stock of the Corporation may be listed, shall have been
fully complied with.
(e) Securities Laws Compliance. The Corporation will diligently comply
with all applicable securities laws before any Options are granted under the
Plan and before any Shares are issued pursuant to the exercise of any Options.
Without limiting the generality of the foregoing, the Corporation may require
from the Optionee such investment representation or such agreement, if any, as
counsel for the Corporation may consider necessary or advisable in order to
comply with the Securities Act as then in effect, and may require that the
Optionee agree that any sale of the Shares will be made only in such manner as
is permitted by the Option Committee. The Option Committee in its discretion may
cause the Options and Shares underlying such Options to be registered under the
Securities Act by the filing of a Form S-8 Registration Statement covering the
Options and Shares. The Optionee shall take any action reasonably requested by
the Corporation in connection with registration or qualification of the Shares
under federal and state securities laws.
(f) Option Agreement. Each Incentive Stock Option and Nonqualified
Stock Option granted under this Plan shall be evidenced by a written Option
Agreement executed by the Corporation and the Optionee containing such terms and
conditions as are deemed desirable by the Option Committee and are not
inconsistent with the purpose of the Plan as set forth in Section 1.
13. Restricted Shares.
(a) In General. The Option Committee may, in its discretion, issue
restricted Shares upon the exercise of any Options granted under the Plan. Such
restricted Shares shall be subject to such vesting requirements and restrictions
on transferability as may be determined by the Option Committee.
(b) Legend. All stock certificates issued with respect to restricted
Shares shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Shares.
(c) Rights Appurtenant to Restricted Shares. The issuance of restricted
Shares shall not affect the rights of the Optionee as a stockholder of the
Corporation including, but not limited to the right to receive dividends on and
to vote with respect to such restricted Shares, except that additional shares
issued with respect to res
tricted Shares including, but not limited to, stock dividends or stock splits or
any securities issued in exchange for restricted Shares shall be subject to the
same restrictions as are applicable to the restricted Shares.
14. Plan Amendment and Termination.
(a) Authority of Option Committee. In addition to the authority of the
Option Committee set forth in Section 5, the Option Committee may at any time
discontinue granting Options under the Plan or otherwise suspend, amend or
terminate the Plan and may, with the consent of an Optionee, make such
modification of the terms and conditions of Options theretofore granted as it
shall deem advisable. Any amendment or modification made pursuant to the
provisions of this Section shall be effective immediately upon adoption, unless
otherwise provided therein, subject to approval thereof (i) within twelve (12)
months before or after the effective date of such amendment or modification by
stockholders of the Corporation holding not less than a majority vote of the
voting power of the Corporation voting in person or by proxy at a duly held
stockholders meeting when required to maintain or satisfy the requirements of
Code Section 422 with respect to Incentive Stock Options, or Code Section 162(m)
with respect to performance-based compensation, (ii) by any appropriate
governmental agency if required, or (iii) by a securities exchange or automated
quotation system if required. No Option may be granted during any suspension or
after termination of the Plan.
(b) Ten (10) Year Maximum Term. Unless previously terminated by the
Option Committee, this Plan shall terminate on the tenth (10th) anniversary of
the Effective Date. No Options shall be granted under the Plan thereafter.
(c) Effect on Options Granted. Any amendment, suspension or termination
of the Plan shall not, without the consent of the Optionee, alter or impair any
rights or obligations under any Option theretofore granted.
15. Effective Date of Plan.
The Plan shall be effective upon the approval of the Board of Directors of the
Corporation (the "Effective Date").
16. Miscellaneous Provisions.
(a) Limitation on Benefits. No Option may be exercised, to the extent
such exercise will create an "excess parachute payment" as defined in Section
280G of the Code.
(b) Exculpation and Indemnification. The Corporation shall indemnify
and hold harmless the Option Committee from and against any and all liabilities,
costs and expenses incurred by such persons as a result of any act, or omission
to act, in connection with the performance of such persons' duties,
responsibilities and obligations under the Plan, other than such liabilities,
costs and expenses as may result from gross negligence, bad faith, willful
conduct and/or criminal acts of such persons.
(c) Use of Proceeds. The proceeds from the exercise of Shares granted
under the Plan shall constitute and be considered as general funds of the
Corporation which may be used for any and all corporate purposes as determined
by the Board of Directors.
(d) Compliance with Applicable Laws. The inability of the Corporation
to obtain from any regulatory body having jurisdiction, the authority deemed by
the Corporation's counsel to be necessary to the lawful issuance and sale of any
Shares upon the exercise of an Option shall relieve the Corporation of any
liability in respect of the non-issuance or sale of such Shares as to which
requisite authority shall not have been obtained.
(e) Non-Uniform Determinations. The Option Committee's determination
under the Plan (including without limitation determinations of the persons to
receive Options, the form, amount and timing of such Options, the terms and
provisions of such Options and the Option Agreements evidencing same) need not
be uniform and may be made by it selectively among persons who receive, or are
eligible to receive, Options under the Plan, whether or not such persons are
similarly situated.