EXHIBIT 99.1
TOLL BROTHERS, INC.
KEY EXECUTIVES AND
NON-EMPLOYEE DIRECTORS
STOCK OPTION PLAN
(1993)
1. Purpose. The Plan is intended as an additional
incentive to certain key executives and the non-employee members
of the Board of Directors (together the "Optionees") to enter
into or remain in the employ of Toll Brothers, Inc., a Delaware
corporation (the "Company") or any Affiliate (as defined below),
or serve on the Board of Directors of the Company (the "Board of
Directors") or of any Affiliate, and to devote themselves to the
Company's success by providing them with an opportunity to
acquire or increase their proprietary interest in the Company
through receipt of rights (the "Options") to acquire the
Company's Common Stock, par value $0.01 per share (the "Common
Stock"). Each Option granted under the Plan to an employee of
the Company or an Affiliate is intended to be an incentive stock
option ("ISO") within the meaning of section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), for
federal income tax purposes, except to the extent (i) any such
ISO grant would exceed the limitation of subsection 6(a), (ii)
any Option is specifically designated at the time of grant (the
"Grant Date") as not being an ISO, and (iii) any Option is
granted under Section 8. No Option granted to a person who is
not an employee of the Company or any Affiliate on the Grant Date
shall be an ISO.
For purposes of the Plan, the term "Affiliate"
shall mean a corporation which is a parent corporation or a
subsidiary corporation with respect to the Company within the
meaning of section 424(e) or (f) of the Code.
2. Administration. The Plan shall be administered by
the Board of Directors of the Company, without participation by
any director on any matter pertaining to him, and by a Stock
Option Committee composed of two or more of its members to
operate and administer the Plan in its stead. The Stock Option
Committee or the Board of Directors in its administrative
capacity with respect to the Plan is referred to herein as the
"Committee". Notwithstanding anything in this Section 2 to the
contrary, in the case of the non-employee members of the Board of
Directors who are granted Options in accordance with the
provisions of Section 8, the members of the Stock Option
Committee to whom such Options will be granted, the timing of
grants of such Options, the Option Price (as defined in
subsection 6(b)) of such Options and the number of Option Shares
(as defined in Section 4) included in such Options shall be as
specifically set forth in Section 8 respectively.
The Committee shall hold meetings at such times
and places as it may determine. Acts approved at a meeting by a
majority of the members of the Committee or acts approved in
writing by the unanimous consent of the members of the Committee
shall be the valid acts of the Committee.
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Except with respect to Options which may be
granted to members of the Stock Option Committee under Section 8,
the Stock Option Committee shall from time to time at its
discretion direct the Company to grant Options pursuant to the
provisions of the Plan. The Committee shall have plenary
authority to determine the Optionees to whom and the times at
which Options shall be granted, the number of Option Shares (as
defined in Section 4) to be granted and the price and other terms
and conditions thereof, including a specification with respect to
whether an Option is intended to be an ISO subject, however, to
the express provisions of the Plan. In making such
determinations, the Committee may take into account the nature of
the Optionee's services and responsibilities, the Optionee's
present and potential contribution to the Company's success, the
recommendations of those employees or officers of the Company
with knowledge of the performance of the Optionee, and such other
factors as it may deem relevant. The interpretation and
construction by the Committee of any provision of the Plan or of
any Option granted under it shall be final, binding and
conclusive.
No member of the Board of Directors or the
Committee shall be personally liable for any action or
determination made in good faith with respect to the Plan or any
Option granted under it. No member of the Committee shall be
liable for any act or omission of any other member of the
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Committee or for any act or omission on his own part, including
but not limited to the exercise of any power and discretion given
to him under the Plan, except those resulting from (i) any breach
of such member's duty of loyalty to the Company or its
stockholders, (ii) acts or omissions not in good faith or
involving intentional misconduct or a knowing violation of law,
(iii) acts or omissions that would result in liability under
Section 174 of the General Corporation Law of the State of
Delaware, as amended, and (iv) any transaction from which the
member derived an improper personal benefit.
In addition to such other rights of
indemnification as he may have as a member of the Board of
Directors or the Committee, and with respect to administration of
the Plan and the granting of Options under it, each member of the
Board of Directors and of the Committee shall be entitled without
further act on his part to indemnity from the Company for all
expenses (including the amount of any judgment and the amount of
approved settlements made with a view to the curtailment of costs
of litigation, other than amounts paid to the Company itself)
reasonably incurred by him in connection with or arising out of
any action, suit or proceeding with respect to the administration
of the Plan or the granting of Options under it in which he may
be involved by reason of his being or having been a member of the
Board of Directors or the Committee, whether or not he continues
to be such member of the Board of Directors or the Committee at
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the time of the incurring of such expenses; provided, however,
that such indemnity shall not include any expenses incurred by
such member of the Board of Directors or the Committee: (i) in
respect of matters as to which he shall be finally adjudged in
such action, suit or proceeding to have been guilty of gross
negligence or willful misconduct in the performance of his duties
as a member of the Board of Directors or the Committee; or (ii)
in respect of any matter in which any settlement is effected to
an amount in excess of the amount approved by the Company on the
advice of its legal counsel; and provided further, that no right
of indemnification under the provisions set forth herein shall be
available to or accessible by any such member of the Board of
Directors or the Committee unless within five days after
institution of any such action, suit or proceeding he shall have
offered the Company in writing the opportunity to handle and
defend such action, suit or proceeding at its own expense. The
foregoing right of indemnification shall inure to the benefit of
the heirs, executors or administrators of each such member of the
Board of Directors or the Committee and shall be in addition to
all other rights to which such member of the Board of Directors
or the Committee would be entitled as a matter of law, contract
or otherwise.
3. Eligibility. Those key executives of the Company
or its Affiliates (who may also be directors of the Company or
its Affiliates) who the Committee determines from time to time should
be eligible to participate in the Plan because they are critical to the
operations of the Company or because the Committee determines that such
employees are or may become "covered employees", as that term is used in
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section 162(m) of the Code, and the non-employee members of the
Board of Directors shall be eligible to receive Options
hereunder; provided, however, that non-employee members of the
Board of Directors are only eligible to be granted an Option
under Section 8. The Committee, in its sole discretion, shall
determine whether an individual, other than a non-employee member
of the Board of Directors, qualifies as eligible to participate in
the Plan. An Optionee may receive more than one Option, but only
on the terms and subject to the restrictions of the Plan.
4. Option Shares. The aggregate maximum number of
shares of the Common Stock for which Options may be issued under
the Plan is One Million (1,000,000) shares, adjusted as provided
in Section 11 (the "Option Shares"). Option Shares shall be
issued from authorized and unissued Common Stock or Common Stock
held in or hereafter acquired for the treasury of the Company.
If any outstanding Option granted under the Plan expires, lapses
or is terminated for any reason, the Option Shares allocable to
the unexercised portion of such Option may again be the subject
of an Option granted pursuant to the Plan.
5. Term of Plan. The Plan is effective as of
December 17, 1993, the date on which it was adopted by the Board
of Directors, subject to the approval by vote of a majority of
the outstanding voting stock of the Company on or before December
17, 1994. No Option may be granted under the Plan after December
17, 2003.
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6. Terms and Conditions of Options. Options granted
pursuant to the Plan shall be evidenced by written documents (the
"Option Documents") in such form as the Committee shall from time
to time approve, which Option Documents shall comply with and be
subject to the following terms and conditions and such other
terms and conditions which the Committee shall from time to time
require which are not inconsistent with the terms of the Plan.
However, the provisions of this Section 6 shall not apply for
Options granted to members of the Stock Option Committee under
Section 8 except as otherwise provided for in Section 8.
(a) Number of Option Shares. Each Option
Document shall state the number of Option Shares to which it
pertains. In no event shall the aggregate fair market value of
the Option Shares (determined at the time the ISO is granted)
with respect to which an ISO is exercisable for the first time by
the Optionee during any calendar year (under all incentive stock
option plans of the Company or its Affiliates) exceed $100,000.
No key executive shall be granted Options for more than 200,000
Option Shares during any calendar year.
(b) Option Price. Each Option Document shall
state the price at which Option Shares may be purchased (the
"Option Price"), which shall be equal to 100% of the fair market
value of the Common Stock on the date the Option is granted as
determined by the Committee; provided, however, that if an ISO is
granted to an Optionee who then owns, directly or by attribution
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under section 424(d) of the Code, shares possessing more than ten
percent of the total combined voting power of all classes of
stock of the Company or an Affiliate, then the Option Price shall
be at least 110% of the fair market value of the Option Shares on
the date the Option is granted. Notwithstanding the foregoing,
if the Common Stock is traded in a public market, then the fair
market value per share shall be the mean between the closing
"bid" and "asked" prices thereof or the mean between the highest
and lowest quoted selling prices thereof, as applicable, on the
day the Option is granted as reported in customary financial
reporting services.
(c) Medium of Payment. An Optionee shall pay for
Option Shares: (i) in cash, (ii) by certified check payable to
the order of the Company, or (iii) by such other mode of payment
as the Committee may approve, including payment through a broker
in accordance with procedures permitted by Regulation T of the
Federal Reserve Board. Furthermore, the Committee may provide in
an Option Document that payment may be made in whole or in part
in shares of the Common Stock held by the Optionee for more than
one year. If payment is made in whole or in part in shares of
the Common Stock, then the Optionee shall deliver to the Company
certificates registered in the name of such Optionee representing
shares of Common Stock legally and beneficially owned by such
Optionee, free of all liens, claims and encumbrances of every
kind and having a fair market value on the date of delivery of
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such notice that is not greater than the Option Price of the Option
Shares with respect to which such Option is to be exercised, accompanied
by stock powers duly endorsed in blank by the record holder of the
shares represented by such certificates. In the event that certificates
for shares of the Company's Common Stock delivered to the Company
represent a number of shares in excess of the number of shares required
to make payment for the Option Price of the Option Shares (or relevant
portion thereof) with respect to which such Option is to be exercised by
payment in shares of Common Stock, the stock certificate issued to the
Optionee shall represent the Option Shares in respect of which payment
is made, and such excess number of shares. Notwithstanding the
foregoing, the Board of Directors, in its sole discretion, may refuse to
accept shares of Common Stock in payment of the Option Price. In that
event, any certificates representing shares of Common Stock which were
delivered to the Company shall be returned to the Optionee with notice
of the refusal of the Board of Directors to accept such shares in
payment of the Option Price. The Board of Directors may impose such
limitations and prohibitions on the use of shares of the Common Stock to
exercise an Option as it deems appropriate, subject to the provisions of
the Plan.
(d) Termination of Options. No Option shall be
exercisable after the first to occur of the following:
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(i) Expiration of the Option term specified
in the Option Document, which for an ISO shall not exceed (A) ten
years from the Grant Date or (B) five years from the Grant Date
if the Optionee on the date of grant owns, directly or by
attribution under section 424(d) of the Code, shares possessing
more than ten percent of the total combined voting power of all
classes of stock of the Company or of an Affiliate and for any
other Option shall not exceed ten years and one day from the date
of grant;
(ii) Expiration of three months (or such
shorter period as the Committee may select) from the date the
Optionee's employment or service with the Company or its
Affiliates terminates for any reason other than: (a) disability
(within the meaning of section 22(e)(3) of the Code) or death or
(b) circumstances described by paragraph (d)(vi), below;
(iii) Expiration of one year from the date the
Optionee's employment with the Company or its Affiliates
terminates by reason of the Optionee's disability (within the
meaning of section 22(e)(3) of the Code) or death;
(iv) The date, if any, set by the Committee
under terms specified in an Option Document to be an accelerated
expiration date in the event of a "Change in Control" (as defined
in subsection 6(f) below) provided an Optionee who holds an
Option is given written notice at least 30 days before the date
so fixed.
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(v) The date set by the Committee to be an
accelerated expiration date after a finding by the Committee that
a change in the financial accounting treatment for Options from
that in effect on the date the Plan was adopted adversely affects
or, in the determination of the Committee, may adversely affect
in the foreseeable future, the Company, provided the Committee
may take whatever other action, including acceleration of any
exercise provisions, it deems necessary should it make the
determination referred to hereinabove.
(vi) A finding by the Committee, after full
consideration of the facts presented on behalf of both the
Company and the Optionee, that the Optionee has breached his
employment or service contract with the Company or an Affiliate,
or has been engaged in any sort of disloyalty to the Company or
an Affiliate, including, without limitation, fraud, embezzlement,
theft, commission of a felony or proven dishonesty in the course
of his employment or service or has disclosed trade secrets of
the Company or an Affiliate. In such event, in addition to
immediate termination of the Option, the Optionee, upon a
determination by the Committee, shall automatically forfeit all
Option Shares for which the Company has not yet delivered the
share certificates upon refund by the Company of the Option
Price.
Notwithstanding the foregoing, the Committee may extend
the period during which an Option may be exercised to a date no
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later than the date of the expiration of the Option term
specified in the Option Documents.
(e) Change of Control. In the event of a Change
of Control (as defined below), the Committee may take whatever
action with respect to the Options outstanding it deems necessary
or desirable, including, without limitation, accelerating the
expiration or termination date in the respective Option Documents
to a date no earlier than thirty (30) days after notice of such
acceleration is given to the Optionees. In addition to the
foregoing, in the event of a Change of Control, Options granted
pursuant to the Plan shall become immediately exercisable in
full. A "Change of Control" shall be deemed to have occurred
upon the earliest to occur of the following events: (i) the date
the stockholders of the Company (or the Board of Directors, if
stockholder action is not required) approve a plan or other
arrangement pursuant to which the Company will be dissolved or
liquidated, or (ii) the date the stockholders of the Company (or
the Board of Directors, if stockholder action is not required)
approve a definitive agreement to sell or otherwise dispose of
substantially all of the assets of the Company, or (iii) the date
the stockholders of the Company (or the Board of Directors, if
stockholder action is not required) and the stockholders of the
other constituent corporation (or its board of directors if
stockholder action is not required) have approved a definitive
agreement to merge or consolidate the Company with or into such
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other corporation, other than, in either case, a merger or
consolidation of the Company in which holders of shares of the
Common Stock immediately prior to the merger or consolidation
will hold at least a majority of the ownership of common stock of
the surviving corporation (and, if one class of common stock is
not the only class of voting securities entitled to vote on the
election of directors of the surviving corporation, a majority of
the voting power of the surviving corporation's voting
securities) immediately after the merger or consolidation, which
common stock (and, if applicable, voting securities) is to be
held in the same proportion as such holders' ownership of Common
Stock immediately before the merger or consolidation, or (iv) the
date any entity, person or group, (within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of
1934, as amended), (other than (A) the Company or any of its
subsidiaries or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries
or (B) any person who, on the date the Plan is effective, shall
have been the beneficial owner of at least twenty percent (20%)
of the outstanding Common Stock), shall have become the
beneficial owner of, or shall have obtained voting control over,
more than fifty percent (50%) of the outstanding shares of the
Common Stock, or (v) the first day after the date this Plan is
effective when directors are elected such that a majority of the
Board of Directors shall have been members of the Board of
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Directors for less than twenty-four (24) months, unless the
nomination for election of each new director who was not a
director at the beginning of such twenty-four (24) month period
was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such
period.
(f) Transfers. No Option granted under the Plan
may be transferred, except by will or by the laws of descent and
distribution. During the lifetime of the person to whom an
Option is granted, such Option may be exercised only by him.
(g) Other Provisions. The Option Documents shall
contain such other provisions, subject to the provisions of
Section 8 including, without limitation, additional restrictions
upon the exercise of the Option or additional limitations upon
the term of the Option, as the Committee shall deem advisable.
(h) Amendment. Subject to the provisions of the
Plan, the Committee shall have the right to amend Option
Documents issued to an Optionee, subject to the Optionee's
consent if such amendment is not favorable to the Optionee except
that the consent of the Optionee shall not be required for any
amendment made under subsection 6(f).
7. Exercise. No Option shall be deemed to have been
exercised prior to the receipt by the Company of written notice
of such exercise and of payment in full of the Option Price for
the Option Shares to be purchased. Each such notice shall
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specify the number of Option Shares to be purchased and shall
(unless the Option Shares are covered by a then current
registration statement or a Notification under Regulation A under
the Securities Act of 1933 (the "Act")), contain the Optionee's
acknowledgment in form and substance satisfactory to the Company
that (a) such Option Shares are being purchased for investment
and not for distribution or resale (other than a distribution or
resale which, in the opinion of counsel satisfactory to the
Company, may be made without violating the registration
provisions of the Act), (b) the Optionee has been advised and
understands that (i) the Option Shares have not been registered
under the Act and are "restricted securities" within the meaning
of Rule 144 under the Act and are subject to restrictions on
transfer and (ii) the Company is under no obligation to register
the Option Shares under the Act or to take any action which would
make available to the Optionee any exemption from such
registration, (c) such Option Shares may not be transferred
without compliance with all applicable federal and state
securities laws, and (d) an appropriate legend referring to the
foregoing restrictions on transfer and any other restrictions
imposed under the Option Documents may be endorsed on the
certificates. Notwithstanding the above, should the Company be
advised by counsel that issuance of shares should be delayed
pending (A) registration under federal or state securities laws
(B) the receipt of an opinion that an appropriate exemption
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therefrom is available, (C) the listing or inclusion of the
shares on any securities exchange or in an automated quotation
system or (D) the consent or approval of any governmental
regulatory body whose consent or approval is necessary in
connection with the issuance of such Option Shares, the Company
may defer exercise of any Option granted hereunder until event A,
B, C, or D has occurred. No Option granted pursuant to Section 8
may be exercised until one year has elapsed from the Grant Date.
8. Grants to non-employee members of the Board of
Directors. Options granted pursuant to the Plan to non-employee
members of the Board of Directors shall be granted, without any
further action by the Committee, in accordance with the terms and
conditions set forth in this Section 8. Options granted pursuant
to this Section 8 shall be evidenced by Option Documents in such
form as the Committee shall from time to time approve, which
Option Documents shall comply with and be subject to the
following terms and conditions and such other terms and
conditions as the Committee shall from time to time require which
are not inconsistent with the terms of the Plan.
(a) Timing of Grants; Number of Option Shares
Subject of Options; Exercisability of Options; Option Price.
Each non-employee member of the Board of Directors
who was a member of the Board of Directors on December 20, 1993, shall be
granted on December 20, 1993, and on each anniversary thereafter during the
term of the Plan, an Option to purchase Fifteen Thousand (15,000) Option
Shares during the term of the Plan. Each other non-employee member of the
Board of Directors during the term of the Plan shall be granted Options as
follows: Any non-employee member of the Board of Directors who first
becomes a member of the Board of Directors on December 20 of any year
shall be granted on the date he or she first becomes a member of
the Board of Directors, and on each anniversary thereafter during the
term of the Plan, an Option to purchase Fifteen Thousand (15,000) Option
Shares. Any non-employee member of the Board of Directors who first becomes
a member of the Board of Directors at any time after December 20 of any
year and before September 1 of the following year shall be granted an
Option to purchase Ten Thousand (10,000) Option Shares at the time he or
she first becomes a member of the Board of Directors, and shall be granted
on each December 20 thereafter during the term of the Plan, an Option to
purchase Fifteen Thousand (15,000) Option Shares. Any non-employee member
of the Board of Directors who first becomes a member of the Board of
Directors at any time after August 31 of any year and before November 30 of
the same year shall be granted an Option to purchase Five Thousand (5,000)
Option Shares at the time he or she becomes a member of the Board of
Directors, and shall be granted on each December 20 thereafter during the
term of the Plan, an Option to purchase Fifteen Thousand (15,000) Option
Shares. Any non-employee member of the Board of Directors who first becomes
a member of the Board of Directors at any time after November 30 of any year
and before December 20 of the same year shall be granted on each December 20
thereafter during the term of the Plan, an Option to
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purchase Fifteen Thousand (15,000) Option Shares. Each such
Option shall be a Non-qualified Stock Option becoming exercisable
over a period of two (2) years, so that the Optionee shall have
the right to exercise the Option with respect to fifty percent
(50%) of the Option Shares covered thereby on the first
anniversary of the date of grant, and the right to exercise the
Option with respect to the remainder of such Option Shares on the
second anniversary of the date of grant. The Option Price shall
be equal to the fair market value of the Option Shares on the
date the Option is granted as determined by the Committee.
(b) Termination of Options Granted Pursuant to
Section 8. All Options granted pursuant to this Section 8 shall
be exercisable until the first to occur of the following:
(i) Expiration of ten (10) years from
the date of grant;
(ii) Expiration of three months from the
date the Optionee's service with the Company or its Affiliates
terminates for any reason other than disability (within the
meaning of section 22(e)(3) of the Code) or death; or
(iii) Expiration of one year from the
date the Optionee's service with the Company or its Affiliates
terminates by reason of the Optionee's disability (within the
meaning of section 22(e)(3) of the Code) or death.
(c) Applicability of Provisions of Section 6 to
Options Granted Pursuant to Section 8. The following provisions
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of Section 6 shall be applicable to Options granted pursuant to
this Section 8: Subsection 6(a) (provided that all Options
granted pursuant to this Section 8 shall be NSO's); Subsection
6(b) (provided, however, that the Option Price shall in all
events be the fair market value of the Option Shares on the date
of grant; Subsection 6(c) (provided, however, that the Option
Document shall in all events permit payment to be made in whole
or in part in shares of the Common Stock held by the Optionee for
more than one year; and Subsection 6(g).
9. Adjustments on Changes in Common Stock. The
aggregate number of shares of Common Stock as to which Options
may be granted hereunder, the number of Option Shares covered by
each outstanding Option and the Option Price per Option Share
shall be appropriately adjusted in the event of a stock dividend,
stock split or other increase or decrease in the number of issued
and outstanding shares of Common Stock resulting from a
subdivision or consolidation of the Common Stock or other capital
adjustment (not including the issuance of Common Stock on the
conversion of other securities of the Company which are
convertible into Common Stock) effected without receipt of
consideration by the Company. The Committee shall have authority
to determine the adjustments to be made under this Section and
any such determination by the Committee shall be final, binding
and conclusive; provided, however, that no adjustment shall be
made which will cause an ISO to lose its status as such.
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10. Amendment of the Plan. The Board of Directors
may amend the Plan from time to time in such manner as it may
deem advisable. Nevertheless, the Board of Directors may not,
without obtaining approval by vote of a majority of the
outstanding voting stock of the Company, within twelve months
before or after such action, change the class of individuals
eligible to receive an ISO, extend the expiration date of the
Plan, decrease the minimum Option Price of an ISO granted under
the Plan or increase the maximum number of shares as to which
Options may be granted. In addition, the provisions of Section 8
that determine (i) which non-employee members of the Board of
Directors shall be granted Options pursuant to Section 8; (ii)
the number of Option Shares subject to Options granted pursuant
to Section 8; (iii) the Option Price of Option Shares subject to
Options granted pursuant to Section 8; and (iv) the timing of
grants of Options pursuant to Section 8 shall not be amended more
than once every six months, other than to comport with changes in
the Code or the Employee Retirement Income Security Act of 1974,
as amended, if applicable.
11. Continued Employment. The grant of an Option
pursuant to the Plan shall not be construed to imply or to
constitute evidence of any agreements express or implied, on the
part of the Company or any Affiliate to retain the Optionee in
the employ of the Company or an Affiliate, as a member of the
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Board of Directors or in any other capacity, whichever the case
may be.
12. Withholding of Taxes. Whenever the Company
proposes or is required to issue or transfer Option Shares, the
Company shall have the right to (a) require the recipient or
transferor to remit to the Company an amount sufficient to
satisfy any federal, state and/or local withholding tax
requirements prior to the delivery or transfer of any certificate
or certificates for such Option Shares or (b) take whatever
action it deems necessary to protect its interests.
13. Interpretation. The Plan is intended to enable
transactions under the Plan with respect to directors and
officers (within the meaning of Section 16(a) under the
Securities Exchange Act of 1934, as amended) to satisfy the
conditions of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended; any provision of the Plan which
would cause a conflict with such conditions shall be deemed null
and void to the extent permitted by applicable law and in the
discretion of the Board of Directors.
14. Effective Date. This Stock Option Plan shall be
effective as of December 17, 1993, subject to approval by vote of
a majority of the outstanding voting stock of the Company
provided such vote is within twelve months of December 17, 1993.
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