Exhibit 10.1
AMENDED AND RESTATED 1995 STOCK OPTION PLAN
PART I - DEFINITIONS AND ADMINISTRATIVE MATTERS
SECTION 1 - PURPOSE; DEFINITIONS
The purpose of the eGames, Inc. Amended and Restated 1995 Stock Option
Plan (the "Plan") is to enable employees, officers, directors and independent
contractors of eGames, Inc. ("the Company") to: (i) own shares of stock in the
Company, (ii) participate in the stockholder value which has been created, (iii)
have a mutuality of interest with other stockholders and (iv) enable the Company
to attract, retain and motivate employees, officers, directors and independent
contractors of particular merit.
For the purposes of the Plan, the following terms shall be defined as
set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(c) "Company" means eGames, Inc., its Subsidiaries or any successor
organization.
(d) "Disability" means permanent and total disability within the
meaning of Section 22(e)(3) of the Code.
(e) "Disinterested Person" shall have the meaning set forth in the
Rules.
(f) "Eligible Independent Contractor" means an independent contractor
hired by the Company who is neither an Employee of the Company nor a
Non-Employee Director.
(g) "Employee" means any person, including a director, who is
employed by the Company and is compensated for such employment by a
regular salary.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" means the per share value of the Stock as of
any given date, as determined by reference to the price of the last
traded share of Stock on the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System for such date or the next preceding date
that Stock was traded on such market, or, in the event the Stock is
listed on a stock exchange, the closing price per share of Stock as
reported on such exchange for such date.
(j) "Incentive Stock Option" means any Stock Option intended to be
and designated as an "Incentive Stock Option" within the meaning of
Section 422 of the Code.
(k) "Insider" means a Participant who is subject to Section 16 of
the Exchange Act.
(l) "Non-Employee Director" means any member of the Board who is not
an Employee of the Company and is not compensated for employment by
a regular salary.
(m) "Non-Qualified Stock Option" means any Stock Option that is not
an Incentive Stock Option.
(n) "Parent" means any corporation which owns stock entitling such
corporation to fifty percent (50%) or more of the voting power of the
Company.
(o) "Participant" means an Employee, officer, Non-Employee Director
or Eligible Independent Contractor to whom an award is granted pursuant
to the Plan.
(p) "Plan" means the eGames, Inc. Amended and Restated 1995 Stock
Option Plan, as hereinafter amended from time to time.
(q) "Rules" means Rule 16(b)(3) and any successor provisions
promulgated by the Securities and Exchange Commission under Section 16
of the Exchange Act.
(r) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(s) "Securities Broker" means the registered securities broker
acceptable to the Company who agrees to effect the cashless exercise
of an Option pursuant to Section 5(d) hereof.
(t) "Stock" means the Common Stock of the Company, without par value.
(u) "Stock Option" or "Option" means any option to purchase shares
of Stock (including Restricted Stock, if the Board so determines)
granted pursuant to Section 5 below.
(v) "Subsidiary" means any corporation owned, in whole or in part,
by the Company.
SECTION 2 - ADMINISTRATION
2.1 The portion of the Plan with respect to the grant of Options
pursuant to Part II shall be administered by the Board, provided, however, that
the Board reserves the right to delegate such administration to a committee of
the Board comprised of such directors as the Board may determine, and who shall
serve at the pleasure of the Board.
The Board shall have the authority to grant pursuant to the terms of
the Plan: Stock Options to Employees (including directors who are Employees) and
officers of the Company, and Eligible Independent Contractors. In particular,
the Board shall, subject to the limitations and terms of the Plan, have the
authority:
(i) to select the officers, directors (who are Employees) and
other Employees of the Company, and the Eligible Independent Contractors to whom
Stock Options may from time to time be granted hereunder;
(ii) to determine whether and to what extent incentive Stock
Options are to be granted hereunder;
(iii) to determine the number of shares to be covered by each
such award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder, including the option
or exercise price and any restrictions or limitations, based upon such factors
as the Board shall determine, in its sole discretion;
(v) to determine whether and under what circumstances a Stock
Option may be exercised and settled in cash or Stock or without a payment of
cash;
(vi) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to an award under
this Plan shall be deferred either automatically or at the election of the
Participant; and
(vii) to amend the terms of any outstanding award (with the
consent of the Participant) to reflect terms not otherwise inconsistent with the
Plan, including amendments concerning exercise price changes, vesting
acceleration or forfeiture waiver regarding any award or the extension of a
Participant's right with respect to awards granted under the Plan, as a result
of termination of employment or service or otherwise, based on such factors as
the Board shall determine, in its sole discretion.
The Board shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan, provided that the
Board may delegate to the Chief Executive Officer of the Company, or such other
officer as may be designated by the Board, the authority, subject to guidelines
prescribed by the Board, to grant Options to Employees and Eligible Independent
Contractors who are not then subject to the provisions of Section 16 of the
Exchange Act, and to determine the number of shares to be covered by any such
Option, and the Board may authorize any one or more of such persons to execute
and deliver documents on behalf of the Board, provided that no such delegation
may be made that would cause grants of Options to persons subject to Section 16
of the Exchange Act to fail to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. Determinations, interpretations
or other actions made or taken by the Board pursuant to the provisions of the
Plan shall be final and binding and conclusive for all purposes and upon all
persons.
No member of the Board or any committee designated by the Board to
administer the Plan shall be liable for any action or determination made in good
faith with respect to the Plan or any Stock Option granted under it. Nothing
herein shall be deemed to expand the personal liability of a member of the Board
or any such committee beyond that which may arise under any applicable standards
set forth in the Company's by-laws and Pennsylvania law, nor shall anything
herein limit any rights to indemnification or advancement of expenses to which
any member of the Board or such committee may be entitled under any by-law,
agreement, vote of the stockholders or directors, or otherwise.
2.2 The portion of the Plan with respect to the grant of Options to
Non-Employee Directors pursuant to Part II shall be administered by the Board.
The Board shall have the same authority with respect to the grant of Options to
Non-Employee Directors under Part II as is provided to the Board pursuant to
Section 2.1
2.3 (a) The portion of the Plan with respect to the grant of Options
pursuant to Part III shall be administered by the Board. Grants of Stock Options
under Part III of the Plan and the amount, price and timing of the awards to be
granted will be automatic, as described in Part III hereof. All questions of
interpretation of the Plan with respect to the Grant of Options pursuant to Part
III will be determined by the Board, and such determination shall, unless
otherwise determined by the Board, be final and conclusive on all persons having
any interest hereunder.
(b) The Board reserves the right to amend the terms of any
outstanding award (with the consent of the Participant) to reflect terms not
otherwise inconsistent with the Plan, including amendments concerning exercise
price changes, vesting acceleration or forfeiture waiver regarding any award or
the extension of a Participant's right with respect to awards granted under the
Plan, as a result of termination of service or otherwise, based on such factors
as the Board shall determine, in its sole discretion.
SECTION 3 - STOCK SUBJECT TO THE PLAN
3.1 The aggregate number of shares of Stock that may be issued or
transferred under the Plan is 2,950,000, subject to adjustment pursuant to
Section 3.2 below. Such shares may be authorized but unissued shares or
reacquired shares. If the number of shares of Stock issued under the Plan and
the number of shares of Stock subject to outstanding awards (taking into account
the share counting requirements established under the Rules) equals the maximum
number of shares of Stock authorized under the Plan, no further awards shall be
made unless the Plan is amended in accordance with the Rules or additional
shares of Stock become available for further awards under the Plan. If and to
the extent that Options granted under the Plan terminate, expire or are canceled
without having been exercised, such shares shall again be available for
subsequent awards under the Plan.
3.2 If any change is made to the Stock (whether by reason of merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
combination of shares, or exchange of shares or any other change in capital
structure made without receipt of consideration), then unless such event or
change results in the termination of all outstanding awards under the Plan, the
Board shall preserve the value of the outstanding awards by adjusting the
maximum number and class of shares issuable under the Plan to reflect the effect
of such event or change in the Company's capital structure, and by making
appropriate adjustments to the number and class of shares subject to an
outstanding award and/or the option price of each outstanding Option, except
that any fractional shares resulting from such adjustments shall be eliminated
by rounding any portion of a share equal to .500 or greater up, and any portion
of a share equal to less than .500 down, in each case to the nearest whole
number.
3.3 In any fiscal year of the Company, the maximum number of shares of
Common Stock with respect to which Options may be granted to any optionee shall
not exceed 5% of the Common Stock outstanding, as adjusted for stock splits,
stock dividends or other similar changes affecting the Common Stock.
SECTION 4 - DESIGNATION OF OPTIONEES
4.1 Optionees under Part II of the Plan shall be selected, from time to
time, by the Board from among those Employees and Eligible Independent
Contractors who, in the opinion of the Board, occupy responsible positions and
who have the capacity to contribute materially to the continued growth,
development and long-term success of the Company and its Subsidiaries. Optionees
under Part II may also be selected from among those Non-Employee Directors who,
in the opinion of the Board, have the capacity to devote themselves to the
Company's success.
4.2 All Non-Employee Directors on the date of grant shall be
eligible to receive Options under Part III of the Plan.
PART II - GRANTS TO EMPLOYEES, ELIGIBLE INDEPENDENT CONTRACTORS AND
NON-EMPLOYEE DIRECTORS
SECTION 5 - STOCK OPTIONS
Any Stock Option granted under Part II of the Plan shall be in such
form as the Board may from time to time approve. Stock Options granted under
Part II of the Plan may be of two types: (i) Incentive Stock Options and (ii)
Non-Qualified Stock Options. The Board shall have the authority to grant
Incentive Stock Options, Non-Qualified Stock Options or both types of Stock
Options. To the extent that any Stock Option does not qualify as an Incentive
Stock Option, it shall constitute a Non-Qualified Stock Option. The Board shall
have the authority to grant Non-Qualified Stock Options to Non-Employee
Directors under Part II. Anything in the Plan to the contrary notwithstanding,
no term of this Plan relating to Incentive Stock Options shall be interpreted,
amended or altered, nor shall any discretion or authority granted under the Plan
be so exercised, so as to disqualify the Plan under Section 422 of the Code, or,
without the consent of the optionee(s) affected, to disqualify any Incentive
Stock Option under Section 422. Options granted hereunder shall be subject to
the following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Board shall deem
appropriate:
5.1 OPTION PRICE. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Board at the time of grant; provided,
however, that the option price per share for any Stock Option shall be not less
than 100% of the Fair Market Value of the Stock on the date of grant. Any
Incentive Stock Option granted to any optionee who, at the time the Option is
granted, owns more than 10% of the voting power of all classes of stock of the
Company or of a Parent or Subsidiary corporation (within the meaning of Section
424 of the Code), shall have an exercise price no less than 110% of Fair Market
Value per share on the date of the grant.
5.2 OPTION TERM. The term of each Stock Option shall be fixed by the
Board, but no Stock Option shall be exercisable more than ten years after the
date the Stock Option is granted. However, any Incentive Stock Option granted to
any optionee who, at the time the Option is granted, owns more than 10% of the
voting power of all classes of stock of the Company or of a Parent or Subsidiary
corporation may not have a term of more than five years. No Option may be
exercised by any person after expiration of the term of the Option.
5.3 EXERCISABILITY. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Board at or after grant. If the Board provides, in its discretion, that any
Stock Option is exercisable only in installments, the Board may waive such
installment exercise provisions at any time at or after grant in whole or in
part, based on such factors as the Board shall determine, in its sole
discretion.
5.4 METHOD OF EXERCISE. Subject to whatever installment exercise
provisions apply under Section 5.3, Stock Options may be exercised in whole or
in part at any time and from time to time during the Option period, by giving
written notice of exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the purchase
price, either by cash, check, or such other instrument as the Board may accept.
As determined by the Board, in its sole discretion, at or after grant, payment
in full or in part may also be made in the form of unrestricted Stock already
owned by the optionee (based upon the Fair Market Value of a share of Stock on
the business date preceding tender if received prior to the close of the stock
market and at the Fair Market Value on the date of tender if received after the
stock market closes); provided, however, that, (i) in the case of an Incentive
Stock Option, the right to make a payment in the form of unrestricted Stock
already owned by the optionee may be authorized only at the time the Option is
granted and (ii) the Company may require that the Stock has been owned by the
Participant for a minimum period of time specified by the Board. In addition, if
such unrestricted Stock was acquired through exercise of an Incentive Stock
Option, such Stock shall have been held by the optionee for a period of not less
than the holding period described in Section 422(a)(1) of the Code on the date
of exercise, or if such Stock was acquired through exercise of a Non-Qualified
Stock Option or of an option under a similar plan of the Company, such Stock
shall have been held by the optionee for a period of more than one year on the
date of exercise, and further provided that the optionee shall not have tendered
Stock in payment of the exercise price of any other Option under the Plan or any
other stock option plan of the Company within six calendar months of the date of
exercise. To the extent permitted under the applicable laws and regulations, at
the request of the Participant, and with the consent of the Board, the Company
shall permit payment to be made by means of a "cashless exercise" of an Option.
Payment by means of a cashless exercise shall be effected by the Participant
delivering to the Securities Broker irrevocable instructions to sell a
sufficient number of shares of Stock to cover the cost and expenses associated
therewith and to deliver such amount to the Company. No shares of Stock shall be
issued until full payment therefor has been made. An optionee shall not have any
right to dividends or other rights of a stockholder with respect to shares
subject to the Option until such time as Stock is issued in the name of the
optionee following exercise of the Option in accordance with the Plan.
5.5 STOCK OPTION AGREEMENT. Each Option granted under this Plan shall
be evidenced by an appropriate Stock Option agreement, which agreement shall
expressly specify whether such Option is an Incentive Stock Option or a
Non-Qualified Stock Option and shall be executed by the Company and the
optionee. The agreement shall contain such terms and provisions, not
inconsistent with the Plan, as shall be determined by the Board. Such terms and
provisions may vary between optionees or as to the same optionee to whom more
than one Option may be granted.
5.6 REPLACEMENT OPTIONS. If an Option granted pursuant to the Plan may
be exercised by an optionee by means of a stock-for-stock swap method of
exercise as provided in 5.4 above, then the Board may, in its sole discretion
and at the time of the original Option grant, authorize the Participant to
automatically receive a replacement Option pursuant to this part of the Plan.
This replacement Option shall cover a number of shares determined by the Board,
but in no event more than the number of shares equal to the difference between
the number of shares of the original Option exercised and the net shares
received by the Participant from such exercise. The per share exercise price of
the replacement Option shall equal the then current Fair Market Value of a share
of Stock, and shall have a term extending to the expiration date of the original
Option. The Board shall have the right, in its sole discretion and at any time,
to discontinue the automatic grant of replacement Options if it determines the
continuance of such grants to no longer be in the best interests of the Company.
5.7 NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be
transferable by the optionee other than by will, by the laws of descent and
distribution, pursuant to a qualified domestic relations order, or as permitted
under the Rules, and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee. Notwithstanding the foregoing, the
Board may grant non-qualified Options that are transferable, without payment of
consideration, to immediate family members (i.e., spouses, children and
grandchildren) of the Optionee or to trusts for, or partnerships whose only
partners are, such family members. The Board may also amend outstanding
non-qualified Options to provide for such transferability.
5.8 TERMINATION OF EMPLOYMENT BY REASON OF DEATH. Unless otherwise
determined by the Board at or after grant, if any optionee dies during the
optionee's period of employment by the Company, or during the periods referred
to in Sections 5.9, 5.10 or 5.11, any Stock Option held by such optionee may
thereafter be exercised, to the extent then exercisable or on such accelerated
basis as the Board may determine at or after grant, by the legal representative
of the estate or by the legatee of the optionee under the will of the optionee,
for a period of one year (or such shorter period as the Board may specify at
grant) from the date of such death or until the expiration of the stated term of
such Stock Option, whichever period is shorter.
5.9 TERMINATION OF EMPLOYMENT BY REASON OF DISABILITY. Unless otherwise
determined by the Board at or after grant, if an optionee's employment by the
Company terminates by reason of Disability, any Stock Option held by such
optionee may thereafter be exercised by the optionee, to the extent it was
exercisable at the time of termination, or on such accelerated basis as the
Board may determine at or after grant, for a period of one year (or such shorter
period as the Board may specify at grant) from the date of such termination of
employment or until the expiration of the stated term of such Stock Option,
whichever period is shorter. In the event of termination of employment by reason
of Disability, if an Incentive Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of Section 422 of the Code, such
Stock Option will thereafter be treated as a Non-Qualified Stock Option.
5.10 TERMINATION OF EMPLOYMENT UPON RETIREMENT. Unless otherwise
determined by the Board at or after grant, if an optionee's employment
terminates due to retirement (as hereinafter defined), any Stock Option held by
such optionee may thereafter be exercised by the optionee, to the extent it was
exercisable at the date of retirement, or on such accelerated basis as the Board
may specify at grant, for a period of one-year (or such shorter period as the
Board may specify at grant) from the date of such retirement or until the
expiration of the stated term of such Stock Option, whichever period is shorter.
For purposes of this Section 5.10, "Retirement" shall mean any Employee
retirement under the Company's retirement policy.
5.11 OTHER TERMINATION OF EMPLOYMENT. Unless otherwise determined by
the Board at or after grant, in the event of termination of employment
(voluntary or involuntary) for any reason other than death, Disability or
retirement, or if an Employee is terminated for cause, any Stock Option held by
such optionee may thereafter be exercised by the optionee, to the extent it was
exercisable at the time of such termination or on such accelerated basis as the
Board may determine at or after grant, for a period of three months (or such
shorter period as the Board may specify at grant) from the date of such
termination of employment or the expiration of the stated term of such Stock
Option, whichever period is shorter. If an Employee is terminated for cause, any
Stock Option held by such Optionee shall terminate immediately.
5.12 INCENTIVE STOCK OPTION LIMITATION. The aggregate Fair Market Value
(determined as of the time of grant) of the Stock with respect to which
Incentive Stock Options are exercisable for the first time by the optionee
during any calendar year under the Plan and/or any other stock option plan of
the Company shall not exceed $100,000.
5.13 TERMINATION OF ELIGIBLE INDEPENDENT CONTRACTORS OPTIONS. The
termination provisions of Options granted to Eligible Independent Contractors
shall be determined by the Board in its sole discretion.
5.14 WITHHOLDING AND USE OF SHARES TO SATISFY TAX OBLIGATIONS. The
obligation of the Company to deliver Stock upon the exercise of any Option shall
be subject to applicable federal, state and local tax withholding requirements.
If the exercise of any Option is subject to the withholding requirements of
applicable federal tax laws, the Board, in its discretion (and subject to such
withholding rules ("Withholding Rules") as shall be adopted by the Board), may
permit the optionee to satisfy the federal withholding tax, in whole or in part,
by electing to have the Company withhold (or by delivering to the Company)
shares of Stock, which Stock shall be valued, for this purpose, at their Fair
Market Value on the date the amount of tax required to be withheld is determined
(the "Determination Date"). Such election must be made in compliance with and
subject to the Withholding Rules, and the Board may not withhold shares of Stock
in excess of the number necessary to satisfy the minimum federal income tax
withholding requirements. If Stock acquired upon the exercise of an Incentive
Stock Option is used to satisfy such withholding requirement, such Stock must
have been held by the optionee for a period of not less than the holding period
described in Section 422(a)(1) of the Code on the Determination Date. If Stock
acquired through the exercise of a Non-Qualified Stock Option or of an option
under a similar plan is delivered by the optionee to the Company to satisfy such
withholding requirement, such Stock must have been held by the optionee for a
period of more than one year on the Determination Date. For Optionees subject to
Section 16 of the Exchange Act, to the extent required by Section 16, the
election to have Stock withheld by the Company hereunder must be either (a) an
irrevocable election made six months before the Determination Date; or (b) an
irrevocable election where both the election and the Determination Date occur
during one of the ten-day periods beginning on the third business day following
the date of release of the Company's quarterly or annual summary financial data
and ending on the twelfth business day following such release.
5.15 ISSUANCE OF SHARES AND COMPLIANCE WITH SECURITIES ACTS. Within a
reasonable time after exercise of an Option, the Company shall cause to be
delivered to the optionee a certificate for the Stock purchased pursuant to the
exercise of the Option. At the time of any exercise of any Option, the Company
may, if it shall deem it necessary and desirable for any reason connected with
any law or regulation of any governmental authority relative to the regulation
of securities, require the optionee to represent in writing to the Company that
it is his or her then intention to acquire the Stock for investment and not with
a view to distribution thereof and that such optionee will not dispose of such
Stock in any manner that would involve a violation of applicable securities
laws. In such event, no Stock shall be issued to such holder unless and until
the Company is satisfied with such representation. Certificates for shares of
Stock issued pursuant to the exercise of Options may bear an appropriate
securities law legend.
5.16 TERMINATION OF NON-EMPLOYEE DIRECTORS OPTIONS. Section 11 of the
Plan shall apply to the termination of Options granted to Non-Employee Directors
under Part II.
PART III - GRANTS TO NON-EMPLOYEE DIRECTORS
SECTION 6 - GRANT OF OPTIONS
Options to purchase 10,000 shares of Common Stock, subject to
adjustment as provided in Section 3.2 (the "Initial Options") and options to
purchase 5,000 shares, subject to adjustments as provided in Section 3.2 (the
"Annual Options"), shall be granted to Non-Employee Directors as follows:
(a) Each Non-Employee Director on the 30th day after the stockholders
of the Company have approved the Plan shall be granted an Initial Option.
(b) Each Non-Employee Director who is not granted an Initial Option
pursuant to Section 6(a), shall be granted an Initial Option on the first
business day immediately following the date that such person is first elected or
appointed to serve as a Non-Employee Director.
(c) Each year on January 1, each Non-Employee Director on such date
shall be granted an Annual Option.
SECTION 7 - TYPES OF OPTIONS
All options granted under Part III of the Plan shall be non-qualified
Stock Options for purposes of the Code.
SECTION 8 - OPTION PRICE
The purchase price of each share of Stock issuable upon exercise of an
Option will be equal to the Fair Market Value of the Stock on the date of grant.
SECTION 9 - OPTION TERM AND RIGHTS TO EXERCISE
9.1 PERIOD OF OPTION AND RIGHTS TO EXERCISE. Except as set forth
herein, each Non-Employee Director who receives options under this Plan must
continue to hold office as a Non-Employee Director of the Company for six months
from the date that the Initial Option is granted and six months from the date
each Annual Option is granted before he can exercise any part thereof.
Thereafter, subject to the provisions of the Plan, options will vest and be
exercisable as follows:
(a) Initial Options.
(i) Each Initial Option will vest and be exercisable in full
six months from the date of grant.
(ii) The right to exercise an Initial Option will expire on the
fifth anniversary of the date on which the option was granted.
(iii) Once an Initial Option has become exercisable, such
option may be exercised in whole at any time or in part from time to time until
the expiration of the option, whether or not any option granted previously to
the optionee remains outstanding at the time of such exercise.
(b) Annual Options.
(i) Each Annual Option will vest and be exercisable on a
cumulative basis as to 2,500 shares beginning six months from the date of grant
and 2,500 additional shares beginning on the first anniversary of the date of
grant.
(ii) The right to exercise an Annual Option will expire on the
fifth anniversary of the date on which the option was granted.
(iii) Once each installment of an Annual Option has become
exercisable, it may be exercised in whole at any time or in part from time to
time until the expiration of the option, whether or not an option granted
previously to the optionee remains outstanding at the time of such exercise.
SECTION 10 - PAYMENT OF OPTION PRICE
Payment or provision for payment of the purchase price shall be made as
follows: (i) in cash or check; (ii) by exchange of Stock valued at its Fair
Market Value on the date of exercise; (iii) by means of a cashless exercise
procedure by the delivery to the Company of an exercise notice and irrevocable
instructions to the Securities Broker to sell a sufficient number of shares of
Stock to pay the purchase price of the shares of Common Stock as to which such
exercise relates and to deliver promptly such amount to the Company; or (iv) by
any combination of the foregoing. Where payment of the purchase price is to be
made with shares of Stock acquired through exercise of a non-qualified Stock
Option or of an option under a similar plan of the Company, such Stock shall
have been held by the optionee for a period of more than one year on the date of
exercise, and further provided that the optionee shall not have tendered Stock
in payment of the exercise price of any other Option under the Plan or any other
stock option plan of the Company within six calendar months of the date of
exercise.
SECTION 11 - TERMINATION OF SERVICE
Upon cessation of service as a Non-Employee Director (for reasons other
than retirement or death), including cessation of service due to physical or
mental disability that prevents such person from rendering further services as a
Non-Employee Director, only those options exercisable at the date of cessation
of service shall be exercisable by the Non-Employee Director, or on such
accelerated basis as the Board may determine at or after grant, for a period of
three months, or such other period as the Board may specify from time to time.
Upon the retirement or death of a Non-Employee Director, options shall be
exercisable as follows:
(a) Retirement. Upon retirement as a Non-Employee Director after the
Non-Employee Director has served for at least six consecutive years as a
director, all Options shall continue to be exercisable during their terms as if
such person had remained a Non-Employee Director.
(b) Death. In the event of the death of a Non-Employee Director while
a member of the Board, or within the period after termination of service
referred to in the first paragraph of Section 11, the Options granted to him
shall be exercisable, to the extent then exercisable, for a period of one year
from the date of the Non-Employee Director's death, or until the expiration of
the Option, whichever period is shorter.
SECTION 12 - NO GUARANTEED TERM OF OFFICE
Nothing in this Plan or any modification thereof, and no grant of an
option, or any term thereof, shall be deemed an agreement or condition
guaranteeing to any Non-Employee Director any particular term of office or
limiting the right of the Company, the Board or the stockholders to terminate
the term of office of any Non-Employee Director under the circumstances set
forth in the Company's Certificate of Incorporation or Bylaws, or as otherwise
provided by law.
SECTION 13 - OTHER RESTRICTIONS
Sections 5.5, 5.7 and 5.15 of the Plan shall apply to options granted
pursuant to Part III of the Plan.
PART IV - MISCELLANEOUS
SECTION 14 - CHANGE IN CONTROL
A "Change in Control" for purposes of this Plan shall mean any one of the events
described below:
14.1 "Any person" or "group" (as those terms are defined in the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the voting power of then outstanding
securities of the Company.
14.2 The individuals who are members of the Company's Board of Directors as of
the date hereof (the "Existing Directors"), cease, for any reason, to constitute
more than fifty percent (50%) of the number of authorized directors of the
Company as determined in the manner prescribed in the Company's Articles of
Incorporation and Bylaws; provided, however, that if the appointment, or the
election, or nomination for election, by the Company's shareholders of any new
director, was approved by a vote of at least fifty percent (50%) of the Existing
Directors, such new director shall be considered an Existing Director; provided
further, however, that no individual shall be considered an Existing Director if
such individual initially assumed office as a result of either an actual or
threatened election contest (as described in Rule 14a-12(c) promulgated under
the Exchange Act) or other actual or threatened solicitation of proxies by or on
behalf of anyone other than the Board of Directors (a "Proxy Contest"),
including by reason of any agreement intended to avoid or settle any election
contest or Proxy Contest.
14.3 The consummation of a merger, consolidation or share exchange to which the
Company is a party in which either (i) the Company will not be the surviving
corporation, or (ii) the Company will be the surviving corporation and any
outstanding shares of Common Stock will be converted into shares of any other
company.
14.4 The consummation of a sale, assignment, lease, conveyance or other
disposition of 50% or more of the assets or assets representing 50% or more of
the earning power of the Company, in one or a series of related transactions to
any Person(s).
14.5 A complete liquidation of the Company.
If a Change in Control has occurred, all outstanding options granted under the
Plan shall be immediately exercisable by the holders of the options for the
total remaining number of Shares covered by the options and shall survive any
such event.
SECTION 15 - AMENDMENTS AND TERMINATION
The Board may amend, alter or discontinue the Plan at any time and from
time to time, but no amendment, alteration or discontinuation shall be made
which would impair the rights of an optionee or Participant under a Stock Option
award theretofore granted, without the optionee's or Participant's consent, or
which, without the approval of the Company's stockholders, would require
stockholder approval under the Rules. The Board may amend the terms of any stock
option theretofore granted, prospectively or retroactively, but no such
amendment shall impair the rights of any holder without the holder's consent.
The Board may also substitute new stock options for previously granted stock
options, including previously granted stock options having higher option prices.
Subject to the above provisions, the Board shall have broad authority to amend
the Plan, to take into account changes and applicable tax laws, securities laws,
and accounting rules, as well as other developments.
SECTION 16 - UNFUNDED STATUS OF PLAN
The Plan is intended to constitute an "unfunded" plan of incentive and
deferred compensation. With respect to any payments not yet made to a
Participant or optionee by the Company, nothing contained herein shall give any
such Participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Board may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder; provided, however, that, unless the Board otherwise determines with
the consent of the affected Participant, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
SECTION 17 - GENERAL PROVISIONS
17.1 All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stop-transfer orders and other
restrictions as the Board may deem advisable under the rules, regulations and
other requirements of the Securities Act, the Exchange Act, any stock exchange
or over-the-counter market upon which the Stock is then listed, and any
applicable federal or state securities law, and the Board may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.
17.2 Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required, and such arrangements may be either
generally applicable or applicable only in specific cases.
17.3 The adoption of the Plan shall not confer upon any Participant any
right to continued employment with the Company nor shall it interfere in any way
with the right of the Company to terminate its relationship with any of its
Employees, directors or Independent Contractors at any time.
17.4 No later than the date as of which an amount first becomes
includable in the gross income of the Participant for federal income tax
purposes with respect to any award under the Plan, the Participant who is an
Employee of the Company shall pay to the Company, or make arrangements
satisfactory to the Board regarding the payment of, any federal, state, or local
taxes of any kind required by law to be withheld with respect to such amount. To
the extent permitted by the Board, in its sole discretion, the minimum required
withholding obligations may be settled with Stock, including Stock that is part
of the award that gives rise to the withholding requirement. The obligations of
the Company under the Plan shall be conditional on such payment or arrangements
and the Company shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the Participant.
17.5 The Board shall establish such procedures as it deems appropriate
for a Participant to designate a beneficiary to whom any amounts payable in the
event of the Participant's death are to be paid. The Plan shall be governed by
and subject to all applicable laws and to such approvals by any governmental or
regulatory agency as may be required.
SECTION 18 - EFFECTIVE DATE AND TERM OF PLAN
The Plan shall be effective as of the effective date the Plan is
adopted by the Board of Directors and Shareholders of the Company, (the
"Effective Date"), subject to the consent or approval of the Company's
stockholders as provided below. No Stock Option award shall be granted pursuant
to the Plan on or after ten years from the Effective Date, but Stock Options
granted prior to such tenth anniversary may be exercised after such date. If the
Plan is not approved by a majority of the votes cast at a duly held meeting at
which a quorum representing a majority of all outstanding voting stock of the
Company is, either in person or by proxy, present and voting on the Plan, within
12 months after such effective date, any Incentive Stock Options that have been
granted shall automatically become Non-Qualified Stock Options.
SECTION 19 - INTERPRETATION
A determination of the Board as to any question which may arise with
respect to the interpretation of the provisions of this Plan or any Options
shall be final and conclusive, and nothing in this Plan, or in any regulation
hereunder, shall be deemed to give any Participant, his legal representatives,
assigns or any other person any right to participate herein except to such
extent, if any, as the Board may have determined or approved pursuant to this
Plan. The Board may consult with legal counsel who may be counsel to the Company
and shall not incur any liability for any action taken in good faith in reliance
upon the advice of such counsel.
SECTION 20 - GOVERNING LAW
With respect to any Incentive Stock Options granted pursuant to the
Plan and the agreements thereunder, the Plan, such agreements and any Incentive
Stock Options granted pursuant thereto shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the laws of the
Commonwealth of Pennsylvania shall govern the operation of, and the rights of
Participants under, the Plan, the agreements and any Options granted thereunder.
SECTION 21 - COMPLIANCE WITH THE RULES
21.1 Unless an Insider could otherwise transfer shares of Stock issued
hereunder without incurring liability under Section 16(b) of the Exchange Act,
at least six months must elapse from the date of grant of an Option to the date
of disposition of the Stock issued upon exercise of such Option.
21.2 It is the intent of the Company that this Plan comply in all
respects with the Rules in connection with any grant of Options to, or other
transaction by, an Insider. Accordingly, if any provision of this Plan or any
agreement relating to an Option does not comply with the Rules as then
applicable to any such Insider, such provision will be construed or deemed
amended to the extent necessary to conform to such requirements with respect to
such person. In addition, the Board shall have no authority to make any
amendment, alteration, suspension, discontinuation, or termination of the Plan
or any agreement hereunder, or take other action if such authority would cause
an Insider's transactions under the Plan not to be exempt under the Rules.
21.3 Certain restrictive provisions of the Plan have been implemented
to facilitate the Company's and Insiders' compliance with the Rules. The Board,
in its discretion, may waive certain of these 13 14 restrictions, provided the
waiver does not relate in any way to an Insider and, provided further, such
waiver or amendment is carried out in accordance with Section 15 hereof.
SECTION 22 - SUBSTITUTION OF OPTIONS IN A MERGER, CONSOLIDATION OR
SHARE EXCHANGE
In the event that the Company becomes a party to a merger,
consolidation or share exchange (a "Business Combination") and in connection
therewith substitutes options under the Plan for options of another party to
such Business Combination, notwithstanding the provisions of the Plan, the terms
of such substituted options may have the same terms and conditions (provided
that the number of shares issuable and the exercise prices are adjusted in
accordance with the terms of the Business Combination) as the former options of
such other party to the Business Combination, provided, however, that the
exercise price of the Options to be granted under the Plan shall be lawful
consideration as determined by the Board.