Exhibit (10)(e)
ADAGE, INC.
1997 STOCK OPTION PLAN
ARTICLE I
GENERAL
1.01 Purpose. The purposes of this Stock Option Plan are to:
(a) closely associate the economic interests of the Employees and Directors
of the Company with the economic interests of the shareholders of the Company;
(b) promote the success of the Company's business;
(c) maintain competitive compensation levels for the Employees of the
Company; and
(d) provide an incentive to the Employees and Directors of the Company
to continue in the employment or service of the Company.
1.02 Construction. The Plan (and the Options granted hereunder), as it
applies to Options granted to Employees of the Company, is intended to qualify
as a tax qualified, incentive stock option plan, and to be described under Code
Section 422 and Regulations issued thereunder. To the extent the Plan (and the
Options granted hereunder) applies to Directors and to Employees to whom the
Committee intends to grant nonqualified stock options, the Plan is intended to
be a nonqualified, stock option plan under Code Section 83 and Regulations
issued thereunder. The Plan, and the Options granted hereunder, shall be
interpreted and construed to achieve the intended purpose.
1.03 Effective Date. The Plan is effective as of October 13, 1997.
ARTICLE II
DEFINITIONS
As used in the Plan, capitalized words in the Plan shall be defined as
follows:
2.01 "Beneficiary" means the person designated in the last will and
testament of the Optionee as the beneficiary of the Optionee with respect to the
Option. In the absence of such designation, the beneficiary of the Optionee
shall be determined under the laws of descent and distribution of the state of
domicile of the Optionee at the time of the Optionee's death.
2.02 "Board" means the Board of Directors of the Company.
2.03 "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
2.04 "Committee" means the committee of individuals appointed by the Board
in accordance with Section 3.01 below to administer the Plan. Such Committee
shall consist of three or more individuals. In the event the Board fails to
appoint a committee of individuals, however, the entire Board shall comprise the
Committee.
2.05 "Common Stock" means the voting common stock of the Company.
2.06 "Company" means Adage, Inc., a Pennsylvania corporation, its parents
(if any), and any present or future subsidiaries.
2.07 "Director" means a member of the Board that is not an Employee of the
Company.
2.08 "Employee" means a common law employee of the Company, or any
subsidiary of the Company.
2.09 "Grant Date" means the date an Option is granted to an Employee or
Director and shall mean the date selected by the Committee as of which the
Committee allots a specific number of Shares to an Optionee pursuant to the
Plan.
2.10 "Option" means the stock option granted pursuant to the Plan, which if
granted to an Employee may be designated as being intended to qualify as a tax
qualified, incentive stock option within the meaning of Code Section 422, and if
granted to a Director or Employee, may be designated as being intended to be
treated as a nonqualified, stock option within the scope of Code Section 83.
2.11 "Option Agreement" means the written agreement between the Company and
the Optionee evidencing the grant of the Option by the Company to the Optionee.
2.12 "Optionee" means an Employee or Director who has been granted an
Option pursuant to the Plan, and who has executed an Option Agreement.
2.13 "Plan" means this 1997 Stock Option Plan.
2.14 "Share" means one share of Common Stock, as adjusted for
recapitalization transactions in accordance with Section 7.01 below.
2.15 "Regulations" means Treasury Regulations promulgated in accordance
with the Code.
2
ARTICLE III
ADMINISTRATION
3.01 The Committee. The Plan shall be administered by the Committee. The
Committee may select one of its members as its chairperson, and shall hold
meetings at such time and places as it may determine. Acts by a majority of the
Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee. Furthermore,
members of the Committee who are either (i) eligible for Options pursuant to the
Plan or (ii) have been granted Options may vote on any matters affecting the
administration of the Plan or the grant of any Options pursuant to the Plan.
However, no such member shall vote upon the granting to himself or herself of
Options, but any such member may be counted in determining the existence of a
quorum at any meeting of the Committee during which action is taken with respect
to the granting of Options.
3.02 Authority of Committee. The Committee shall have the authority, in its
sole discretion, but subject to the terms of the Plan, to:
(a) grant Options to Employees and Directors in accordance with the terms
of the Plan in such amount and on such terms as the Committee shall determine;
(b) impose such limitations, restrictions and conditions upon any such
award as the Committee shall deem appropriate, provided such limitation,
restriction and/or condition, in the case of a grant of an Option to an Employee
that is intended to be a tax qualified stock option, is consistent with Code
Section 422, the Regulations thereunder, and this Plan; and
(c) in its discretion, interpret the Plan, adopt, amend and rescind rules
and regulations relating to the Plan, and make all other determinations, and
take all other actions necessary or appropriate for the implementation and
administration of the Plan.
3.03 Grant of Option to Members of Board. In the event the Company
registers any class of any equity security pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), any grant of
an Option to a member of the Board (made at any time from the effective date of
such registration until six months after the termination of such registration)
must be approved by a majority of the other members of the Board; provided,
however, that if a majority of the Board is eligible for selection in the Plan
or in any other stock option or other stock plan of the Company, or has been so
eligible at any time within the preceding year, any grant of an Option to a
member of the Board must be made by, or only in accordance with the
recommendation of the Committee or a committee consisting of three or more
persons, who may but need not be Directors or Employees of the Company,
appointed by the Board but having full authority to act in the matter, none of
whom is eligible for selection in this Plan or any other stock option or other
stock plan of the Company or has been eligible at any time within the preceding
year. The requirements imposed
3
by the preceding sentence shall also apply with respect to grants to officers
who are also Directors. Once appointed, such committee shall continue to serve
for such purposes until otherwise directed by the Board. All grants of Options
to members of the Board shall in all other respects be made in accordance with
the provisions of this Plan applicable to other eligible persons.
3.04 Decisions Final. All actions, decisions, interpretations and
determinations of the Committee on all matters relating to the administration
and operation of the Plan shall be within the Committee's sole discretion and
shall be final and conclusive. No members of the Committee shall be liable for
any action taken or decision made in good faith relating to the Plan or any
award thereunder.
3.05 Indemnification of Committee. The Company indemnifies and holds
harmless the members of the Committee in their capacity as Committee members
against all liability and expenses (including reasonable attorney, paralegal,
and professional fees and court costs) arising from any threatened, pending or
completed action, suit, proceeding (including administrative proceedings or
investigations) or appeal, incurred by reason of the fact that such individual
is or was a member of the Committee, provided that such individual (i) acted, or
failed to act, in good faith and in a manner he or she reasonably believed to be
in, or not opposed to, the best interests of the Company as well as the
Employees, Directors and Optionees, or (ii) with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful.
ARTICLE IV
ELIGIBILITY AND SCOPE
4.01 Eligibility for Participation. Optionees under the Plan shall be
selected by the Committee from amongst the Employees and Directors of the
Company. In the case of an Optionee that is an Employee of the Company, such
person must be employed by the Company at the time the Option is granted, and
may not be a member of the Committee at such time or during the period described
in Section 3.01 above. In making this selection and in determining the form and
amount of awards, the Committee shall consider any factors deemed relevant,
including the Employee's or Director's functions, responsibilities, value of
services to the Company, and past and potential contributions to the Company's
profitability and growth.
4.02 Aggregate Limitations on Awards. Subject to the recapitalization
provisions of Section 7.01 below, the maximum number of Shares of Common Stock
which may be issued under the Plan shall be 1,500,000. The Shares of Common
Stock may be authorized but unissued Shares, or may be treasury stock of the
Company. If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
4
to an Option shall again become available for a future grant under the Plan,
unless the Plan previously shall have been terminated.
ARTICLE V
GRANT OF OPTIONS
5.01 Grant of Options. The Committee may, from time to time and subject to
the provisions of the Plan and such rules and regulations as are prescribed by
the Committee, grant to any Employee or Director one or more Options to purchase
a stated number of Shares of Common Stock for (i) cash, (ii) the exchange for
Shares of Common Stock previously acquired by the Employee or Director, (iii) in
the discretion of the Committee, by delivery of the Optionee=s personal recourse
promissory note bearing interest payable not less than annually at no less than
100% of the lowest applicable federal rate as specified by the Internal Revenue
Code and Internal Revenue Service, or (iv) in the discretion of the Committee,
by some combination of the foregoing.
5.02 Option Agreements. The grant of an Option shall be evidenced by a
written Option Agreement, executed by the Company and the Optionee, stating the
number of Shares of Common Stock subject to the Option evidenced thereby, and in
such form as the Committee may from time to time determine. Such Option
Agreement shall state on its face whether the Option is intended to be a tax
qualified, incentive stock Option under Code Section 422 or a nonqualified,
stock option subject to Code Section 83.
5.03 Option Price.
A. With respect to an Option granted to an Employee that is intended to be
a tax qualified, incentive stock Option under Code Section 422, the price per
Share of Common Stock deliverable upon the exercise of the Option shall not be
less than one hundred percent (100%) of the fair market value of a Share of
Common Stock on the Grant Date. Notwithstanding the foregoing, in the event an
Employee to whom the Option is to be granted owns Shares of Common Stock, as of
the Grant Date, that comprise more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company, or its parent or
subsidiaries, if any, the foregoing price per Share of Common Stock shall not be
less than one hundred ten percent (110%) of the fair market value of a Share of
Common Stock on the Grant Date.
B. The price per Share specified in the agreement relating to each
nonqualified, stock Option subject to Code Section 83 granted under the Plan
shall in no event be less than the lesser of (i) the book value per Share of
Common Stock as of the end of the fiscal year of the Company immediately
preceding the date of such grant, or (ii) fifty percent (50%) of the fair market
value per Share of Common Stock on the date of such grant.
5
5.04 Determination of Fair Market Value. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded, "fair
market value" shall be determined as of the last business day for which the
prices or quotes discussed in this sentence are available prior to the date such
Option is granted and shall mean (i) the average (on that date) of the high and
low prices of the Common Stock on the principal national securities exchange on
which the Common Stock is traded, if the Common Stock is then traded on a
national securities exchange; or (ii) the last reported sale price (on that
date) of the Common Stock on the NASDAQ National Market List, if the Common
Stock is not then traded on a national securities exchange; or (iii) the closing
bid price (or average of bid prices) last quoted (on that date) by an
established quotation service for over-the-counter securities, if the Common
Stock is not reported on the NASDAQ National Market List. However, if the Common
Stock is not publicly traded at the time an Option is granted under the Plan,
"fair market value" shall be deemed to be the fair market value of the Common
Stock as determined by the Committee after taking into consideration all factors
which it deems appropriate including, without limitation, recent sale and offer
prices of the Common Stock in private transactions negotiated at arm's length.
Notwithstanding the foregoing, the fair market value of the Common Stock shall
be determined without regard to any restrictions other than a restriction which,
by its terms, will never lapse.
5.05 Maximum Amount of Grant. With respect to an Option granted to an
Employee that is intended to be a tax qualified, incentive stock Option under
Code Section 422, the aggregate, fair market value of the Shares of Common Stock
that may be subject to an Option (and to any other incentive stock options
granted by the Company or its parent or subsidiaries, if any) and that shall be
exercisable for the first time by the Optionee in a calendar year shall not
exceed $100,000.00. For purposes of this Section, the fair market value of the
Common Stock shall be determined as of the Grant Date. Such $100,000.00 limit
shall not apply to nonqualified, stock options granted to Directors or
Employees.
5.06 Term of Plan. Unless the Plan is terminated earlier by the Board, no
award of an Option shall be made under the Plan after the date which is ten (10)
years after the earlier of the date the Plan was adopted by the Board or the
date the Plan was approved by the shareholders of the Company. Provided,
however, that the Plan and all Options granted under the Plan prior to the
termination of the Plan shall remain in effect until such Options have been
exercised, satisfied or terminated in accordance with the Plan and the terms of
such Options.
5.07 Term of Options. Except as provided in Article VI below, the term of
each Option shall be no more than ten (10) years from the date of the grant.
Notwithstanding the foregoing, in the event the Employee to whom an Option
intended to be a tax qualified, incentive stock option under Code Section 422 is
to be granted owns Shares of Common Stock, as of the Grant Date, that comprise
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company, or its parent or subsidiaries, if any, the term of each
Option to such Employee shall be no more than five (5) years from the date of
the grant.
6
5.08 Other Terms. In addition to the foregoing terms and conditions, the
Committee may impose such additional terms, conditions and restrictions,
including a vesting schedule, as are not otherwise inconsistent with this Plan.
ARTICLE VI
EXERCISE OF OPTION
6.01 Procedure for Exercise.
A. Any Option granted hereunder shall be exercisable at such times and
under such terms and conditions as are determined by the Committee at the time
of the grant and as are consistent with the terms of the Plan. An Option shall
be deemed to be exercised when written notice of such exercise, along with full
payment (be it in cash, promissory note or by the transfer of other Shares, in
accordance with Section 5.01 above) for the Shares, has been delivered to the
Secretary of the Company in accordance with the terms of the Option. Until the
issuance of the stock certificate by the Company or its transfer agent, the
Optionee shall have no right to vote the Shares nor to receive dividends, and
shall not have any other rights as a stockholder of the Company with respect to
the Shares of Common Stock subject to the Option. The Company or its transfer
agent shall issue, or cause to be issued, such Common Stock certificate promptly
upon exercise of the Option.
B. The exercise of an Option in any manner shall result in a decrease in
the number of Shares available for grant under the terms of the Plan and under
the terms of the Option.
6.02 Termination of Employment. In the case of an Option granted to an
Employee that is intended to be a tax qualified, incentive stock option under
Code Section 422 (not including such an Option converted to a nonqualified stock
option within the scope of Code Section 83 under Paragraph 7.07 hereunder), in
the event the employment of the Optionee terminates, whether voluntarily or
involuntarily, such Employee may exercise his or her Options to the extent
exercisable at the time of such termination of employment. Such exercise shall
occur within the earlier of the remaining term of the option or sixty (60) days
from such termination of employment(or such shorter period as is specified by
the Committee in the Option Agreement). To the extent that the Optionee was not
entitled to exercise the Option at the effective date of the Optionee's
termination of employment or service to the Company, or the Optionee fails to
exercise the Option within the time specified, the Option shall terminate.
6.03 Disability of Optionee. In the case of an Option granted to an
Employee that is intended to be a tax qualified, incentive stock option under
Code Section 422, in the event the employment of the Optionee terminates due to
the disability of the Optionee, such Optionee may exercise his or her Options to
7
the extent exercisable at the time of such termination of employment. Such
exercise shall occur within the earlier of the remaining term of the option or
one hundred eighty (180) days after the effective date of the Optionee's
termination of employment. For purposes of this Section 6.03, "disability" shall
be as defined in Code Section 22(e)(3) and the Regulations thereunder.
B. In the case of the death of a Director or an Option granted to an
Employee that is intended to be a nonqualified stock option under Code Section
83, such Option may be exercised, to the extent exercisable at that time, at any
time during the remaining term of the Option.
6.04 Death of Optionee.
A. In the event of the death of an Employee to whom an Option that is
intended to be a tax qualified, incentive stock option under Code Section 422
has been granted, any Option exercisable on the date of the Optionee's death may
be exercised by the Beneficiary, provided that such exercise occurs within the
earlier of the remaining term of the Option or one hundred eighty (180) days
from the date of the Optionee=s death. In the event the Optionee's employment
had terminated prior to death, but the Option was still exercisable pursuant to
Sections 6.01, 6.02 or 6.03 above, the Beneficiary shall be permitted to
exercise the Option during the time periods specified in this Section 6.04.
B. In the case of the death of a Director or an Option granted to an
Employee that is intended to be a nonqualified stock option under Code Section
83, such Option may be exercised, to the extent exercisable at death, at any
time during the remaining term of the Option.
6.05 Options Non-Transferable. Any Option granted hereunder may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of, in any
manner other than by the Optionee's last will or by the laws of descent and
distribution, and may be exercised during the Optionee's lifetime, only by the
Optionee.
6.06 Manner of Payment. Upon the exercise of an Option, the Optionee shall
pay to the Company, at the Committee's discretion:
(a) the cost of the Shares of Common Stock in cash;
(b) in exchange for Shares of Common Stock previously acquired by the
Optionee that at the time of such exercise have a fair market value equal to the
exercise price;
(c) by delivery of a personal recourse note bearing interest payable not
less than annually at no less than 100% of the lowest applicable federal rate as
specified by the Internal Revenue Code and Internal Revenue Service; or
8
(d) any combination thereof.
6.07 Restrictions on Certain Shares. The Shares of Common Stock issued to
an Optionee pursuant to this Plan shall be subject to any and all federal and
state securities laws, rules and regulations generally applicable to the Common
Stock of the Company, including without limitation, any restrictions on the sale
or other transfer of the Shares of Common Stock. Any certificate representing
such Shares shall contain a restrictive legend evidencing the existence of any
such restrictions.
ARTICLE VII
MISCELLANEOUS
7.01 Recapitalizations.
A. Subject to any required action by the stockholders of the Company, the
number of Shares of Common Stock covered by each outstanding Option, and the
number of Shares of Common Stock which have been authorized for issuance under
the Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination, or reclassification of the Common Stock, or any
other increase or decrease in the number of issued Shares of Common Stock
effected without receipt of consideration by the Company. Provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Any adjustment made
pursuant to this Section shall be made by the Committee, whose determination in
that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares of Common Stock subject to an Option.
B. Except as declared by the Board, in the event of the dissolution or
liquidation of the Company, the Options granted under the Plan immediately shall
terminate.
C. In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless such successor corporation does not agree to
assume the Option or to substitute an equivalent option, in which case the
Optionee shall retain the right to exercise the Option (which right shall no
longer be subject to restrictions, including vesting provisions) as to all of
the Shares of Common Stock subject to the Option through the date of the sale of
9
the assets or the merger of the Company. Thereafter, the Option shall terminate.
In the event any of the Options are not fully vested at the time of such sale or
merger, such Options shall become fully vested and exercisable at that time.
D. In the event of a recapitalization or reorganization of the Company
(other than a transaction described in subparagraph C above) pursuant to which
securities of the Company or of another corporation are issued with respect to
the outstanding shares of Common Stock, an optionee upon exercising an Option
shall be entitled to receive for the purchase price upon such exercise the
securities he would have received if he had exercised his Option prior to such
recapitalization or reorganization.
E. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class or securities convertible into shares of stock of
any class shall affect, and no adjustment by reason thereof shall be made with
respect to the number or price of shares subject to Options. No adjustments
shall be made for dividends paid in cash or in property other than securities of
the Company.
F. No fractional shares shall be issued under the Plan and the Optionee
shall receive from the Company cash in lieu of such fractional shares.
7.02 Withholding Taxes. Whenever the Company is required to issue or
transfer Shares of Common Stock under the Plan, the Company shall have the right
to require the Optionee to remit to the Company any amount sufficient to satisfy
any required federal, state and/or local withholding taxes prior to the delivery
of any certificate or certificates for such Shares. Alternatively, the Company
may issue or transfer such Shares of Common Stock, net of the number of Shares
of Common Stock sufficient to satisfy the withholding requirements. For
withholding tax purposes, the Shares of Common Stock shall be valued on the date
the withholding obligation is incurred.
7.03 Right to Terminate Employment. Nothing in the Plan or Option, or in
any agreement entered into pursuant to the Plan shall confer upon any Employee
or Director the right to continue in the employ or service of the Company or
effect any right which the Company may have to terminate the employment or
service of such Employee or Director regardless of the effect of such
termination of employment or service on the rights of the Employee or Director
under the Plan or any Option.
7.04 Non-Uniform Determinations. The Committee's determinations under the
Plan (including without limitation determinations of the Employees or Directors
to receive awards, the form, amount and timing of such awards, the terms and
provisions of such awards and the agreements evidencing same) need not be
10
uniform and may be made by the Committee selectively among Employees or
Directors who receive, or who are eligible to receive, awards under the Plan,
whether or not such persons are similarly situated.
7.05 Leaves of Absence. Employment shall be considered as continuing
uninterrupted during any bona fide leave of absence (such as those attributable
to illness, military obligations or governmental service) provided that the
period of such leave does not exceed 90 days or, if longer, any period during
which such Optionee's right to reemployment is guaranteed by statute. A bona
fide leave of absence with the written approval of the Committee shall not be
considered an interruption of employment under the Plan, provided that such
written approval contractually obligates the Company to continue the employment
of the Optionee after the approved period of absence. Options under the Plan
shall not be affected by any change of employment within or among the Company,
so long as the Optionee continues to be an employee of the Company.
Notwithstanding the foregoing, the Committee shall be entitled to make such
rules, regulations and determinations as it deems appropriate under the Plan in
respect of any leave of absence taken by an Optionee.
7.06 Amendment of Plan.
A. The Board may, without further action by the shareholders of the
Company, and without receiving any further consideration from the Optionees,
amend this Plan or condition or modify awards under this Plan in respect to
changes in securities, taxation or other laws or rules, regulations, or
regulatory interpretations thereof applicable to this Plan, or to comply with
stock exchange rules or requirements.
B. The Committee may at any time, and from time to time, terminate, modify
or amend the Plan (including modifying the mix of Shares to be issued pursuant
to Code Sections 422 and 83) in any respect, except that without shareholder
approval, the Committee may not (i) increase the aggregate, maximum number of
Shares of Common Stock which may be issued under the Plan (other than increases
pursuant to Section 7.01), (ii) extend the period during which any award may be
granted or exercised, or (iii) extend the term of the Plan. Except as required
or permitted by the preceding paragraph, the termination, modification or
amendment of the Plan shall not affect an Optionee's rights under an award
previously granted to such Optionee.
7.07 Conversion of Qualified Options Into Non-Qualified Options. The
Committee, at the written request of any Optionee may, in its discretion, take
such actions as may be necessary to convert such Optionee's tax qualified,
incentive stock option within the meaning of Code Section 422 (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into nonqualified, stock options within the scope of
Code Section 83 at any time prior to the expiration of such Qualified Options,
regardless of whether the Optionee is an Employee of the Company at the time of
such conversion. Such actions may include, but not be limited to, extending the
exercise period or reducing the exercise price of the appropriate installments
11
of such Options. At the time of such conversion, the Committee (with the consent
of the Optionee) may impose such conditions on the exercise of the resulting
nonqualified options as the Committee, in its discretion, may determine,
provided that such conditions shall not be inconsistent with this Plan. Nothing
in the Plan shall be deemed to give any Optionee the right to have such
Optionee's tax qualified, incentive stock option converted into a nonqualified
option, and no such conversion shall occur until and unless the Committee takes
appropriate action.
7.08 Application of Funds. The proceeds received by the Company from the
sale of Shares pursuant to Options granted and purchases authorized under the
Plan shall be used for general corporate purposes.
7.09 Notice to Company of Disqualifying Disposition. Each Employee who
receives a tax qualified, incentive stock option within the meaning of Code
Section 422 must agree to notify the Company in writing immediately after the
Employee makes a "disqualifying disposition" of any Shares of Common Stock
acquired pursuant to the exercise of a tax qualified, incentive stock option. A
disqualifying disposition is any disposition (including any sale) of such Shares
of Common Stock before the later of (a) two (2) years after the date the
Employee was granted the tax qualified, incentive stock option or (b) one (1)
year after the date the Employee acquired Shares of Common Stock by exercising
the tax qualified, incentive stock option. If the Employee has died before such
Shares of Common Stock are sold, these holding period requirements do not apply
and no disqualifying disposition can occur thereafter.
7.10 Governing Law; Construction. The validity and construction of the Plan
and no instrument is evidencing Stock Rights shall be governed by the laws of
the Commonwealth of Massachusetts. In construing this Plan, the singular shall
include the plural and the masculine gender shall include the feminine and
neuter, unless the context otherwise requires.
7.11 Shareholder Approval. In the event this Plan is not adopted by the
shareholders of the Company by October 13, 1998, the Plan shall remain in
effect, but all options granted hereunder, or to be granted hereunder, shall be
nonqualified stock options under Code Section 83 and Regulations issued
thereunder.
Adopted by the Board of Directors as of October 13, 1997
12