Exhibit 99.01
EASTCO INDUSTRIAL SAFETY CORP.
1996 INCENTIVE STOCK OPTION PLAN
1. Purpose. The purpose of the Plan is to provide additional
incentive for such Key Employees of the Company, its Subsidiaries and
divisions, as may be designated for participation in the Plan by granting
stock incentive options and thereby encouraging such Key Employees to invest
in such shares, thereby furthering their identity of interest with the
Company's shareholders, giving them a greater personal interest and increasing
their interest in and commitment to the future growth and prosperity of the
Company.
2. Definitions. Unless otherwise required by the context, the
following terms, when used in the Plan, shall have the meanings set forth in
this section 2. In addition to the definitions provided in this section 2,
certain words and phrases used in the Plan may be defined elsewhere in the
Plan.
Act: The Securities Exchange Act of 1934, as amended.
Board of Directors or Board: The Board of Directors of the
Company.
Change of Control: Any merger or consolidation of the
Company, any tender offer, exchange offer or other purchase
of any outstanding securities of the Company, or any sale of
assets of the Company, if, as a result of such event, the
members of the Company's Board of Directors prior to such
event shall thereafter constitute less than a majority of
the Board of Directors of the Company (or of the surviving
or resulting corporation, as the case may be).
Committee: (i) The Stock Option Committee of the Board of
Directors, which shall consist of not less than two (2)
directors of the Company; or (ii) such other entity as
authorized under Rule
16b-3 promulgated under the Act, as the same may be amended
or supplemented from time to time. The members of the
Committee shall be "disinterested" persons within the
meaning of Rule 16b-3. No member of the Committee shall be
eligible to receive Incentive Stock Options unless permitted
by such Rule 16b-3.
Common Stock: The Common Stock of the Company, par value
$0.12 per share, or such other class of shares or other
securities as may be applicable pursuant to the provisions
of section 6. Company: Eastco Industrial Safety Corp. or
such amended name as utilized by the Company.
Fair Market Value: As applied to any date, the last price of
the Common Stock reported by NASDAQ, or if not applicable,
by the National Quotation Bureau or such stock exchange as
said common stock may be listed on.
Incentive Stock Option: A stock option that satisfies the
requirements of section 422 of the Internal Revenue Code.
Internal Revenue Code: The Internal Revenue Code of 1986, as
amended, and include the regulations promulgated pursuant
thereto.
Key Employee: An employee of the Company or of a
Subsidiary, including an officer or director who is an
employee, who in the opinion of the Committee can contribute
significantly to the growth and successful operations of the
Company or a Subsidiary. The grant or recommendation of the
grant of an Incentive Stock Option to an employee by the
Committee shall be deemed a determination by the Committee
that such employee is a Key Employee.
Plan: The Incentive Stock Option Plan herein set forth as
the same may from time to time be amended.
Restricted Shares: Shares of Common Stock issued or
transferred subject to restrictions as authorized by
paragraph (c) of Section
9 of the Plan.
Subsidiary: A corporation or other form of business
association of which shares (or other ownership interests)
having 50% or more of the voting power are owned or
controlled, directly or indirectly, by the Company.
3. Administration of Plan.
(a) Committee. The Plan shall be administered by a stock
option committee, or other entity as may be authorized under Rule 16b-3 of the
Act. The members of the Committee shall be appointed by and shall serve at the
pleasure of the Board, which may from time to time change the Committee's
membership.
(b) Authority. The Committee shall have the sole and
complete authority to:
(i) determine the individuals to whom
Incentive Stock Options are granted, the
amounts of Incentive Stock Options to be
granted and the time of all such grants;
(ii) determine the terms, conditions and
provisions of, and restrictions relating
to, each Incentive Stock Option granted;
(iii) interpret and construe the Plan and all
Agreements;
(iv) prescribe, amend and rescind rules and
regulations relating to the Plan;
(v) determine the content and form of all
Agreements;
(vi) determine all questions relating to
Incentive Stock Options under the Plan;
(vii maintain accounts, records and ledgers
relating to Incentive Stock Options;
(viii) maintain records concerning its decisions
and proceedings;
(ix) employ agents, attorneys, accountants or
other persons for such purposes as the
Committee considers necessary or
desirable;
(x) do and perform all acts which it may deem
necessary or appropriate for the
administration of the Plan and to carry
out the objectives of the Plan.
(c) Determinations. All determinations, interpretations, or
other actions made or taken by the Committee pursuant to the provisions of the
Plan shall be final, binding and conclusive for all purposes and upon all
persons.
(d) Delegation. Except as required by Rule 16b-3 promulgated
under the Act (and any successor to such rule) with respect to the grant of
Incentive Stock Options to Key Employees who are subject to Section 16 of the
Act, the Committee may delegate to appropriate senior officers of the Company
its duties under the Plan pursuant to such conditions and limitations as the
Committee may establish.
4. Grants of Incentive Stock Options.
Subject to the provisions of the Plan, the
Committee may at any time, or from time to time, grant Incentive Stock Options
under this Plan to, and only to, Key Employees.
5. Stock Subject to the Incentive Stock Options.
(a) Subject to the provisions of paragraph (c) of this
section 5 and of Section 7, the aggregate number of shares of Common Stock
which may be issued or transferred pursuant to Incentive Stock Options granted
under the Plan shall not exceed 300,000.
(b) Authorized but unissued shares of Common Stock and
shares of Common Stock held in the treasury, whether acquired by the Company
specifically for use under the Plan or otherwise, may be used, as the
Committee may from time to time determine, for purposes of the Plan, provided,
however, that any previously issued shares acquired or held by the Company for
the purposes of the Plan shall, unless and until transferred to
a Key Employee in accordance with the Plan, be and at all times remain
treasury shares of the Company, irrespective of whether such shares are
entered in a special account for purposes of the Plan, and shall be available
for any corporate purposes and subject to the claims of creditors of the
Company.
(c) If any shares of Common Stock subject to an Incentive
Stock Option shall not be issued or transferred and shall cease to be issuable
or transferable for any reason or if any such shares shall, after issuance or
transfer, be reacquired or repurchased by the Company or Subsidiary, the
shares not so issued or transferred or the shares so reacquired or repurchased
by the Company or a Subsidiary may again be made subject to Incentive Stock
Options.
6. Provisions of Incentive Stock Options.
(a) All Incentive Stock Options shall be subject to the
following provisions:
(1) The purchase price per share shall be
determined by the Committee from time to
time and shall in no event be less than
100% of the Fair Market Value of such
share on the date of grant.
(2) Subject to the provisions of paragraphs
(a)(5) and (a)(7) of this section 6, an
Option granted under the Plan may not be
exercised unless, at the time of such
exercise, the optionee shall be in the
employ of the Company and shall have
completed at least twelve months of
continuous employment with the Company
from the date of the grant of his Option.
However, in the event there is a Change in
Control, an Option granted under the Plan
shall become immediately vested and
exercisable.
(3) Each Option shall expire at such time as
the Committee may determine, at the time
the Option shall be granted,
but not later than ten years from the date
such Option shall have been granted.
(4) Any Option granted under the Plan may be
exercised solely by the person to whom
granted (or by his guardian or legal
representative), except as provided in
paragraph (a)(7) of this section 6 in the
case of such person's death.
(5) Absence on leave, approved by an officer
of the Company or a Subsidiary authorized
to give such approval, shall not be
considered an interruption or termination
of employment for any purpose of the Plan,
or Options granted thereunder, except that
no Option may be granted to an employee
while he is absent on leave.
(6) An Option may be exercised, in whole or in
part, at any time or from time to time
during the balance of the term of the
Option, except as limited by provisions
contained in the Option.
(7) The Option shall terminate if and when the
optionee shall cease to be an employee of
the Company and its Subsidiaries, except
as follows:
(i) If the optionee shall die while in
the employ of the Company or of a
Subsidiary, the Option shall be
exercisable, as and to the extent
exercisable by such person or
persons as shall have acquired the
optionee's rights under the Option
by will or the laws of descent and
distribution, but not later than
one year after the date of death
and not after the expiration of
the specific period fixed in the
Option grant.
(ii) If an optionee shall become
disabled (within the
meaning of section 105(d)(4) of
the Internal Revenue Code) while
in the employ of the Company or of
a Subsidiary and such optionee's
employment shall terminate by
reason of such disability the
Option shall be exercisable, as
and to the extent exercisable at
the time of the termination of his
employment, within such period as
shall be set forth in the Option
grant, but only within one year
after the termination of the
optionee's employment and not
after the expiration of the
specific period fixed in the
Option grant as in effect at the
time of the termination of his
employment.
(8) Shares purchased upon exercise of an
Option shall be paid for in full by cash,
in the equivalent amount of the Company's
Common Stock or through a "Cashless
Exercise". If a Participant elects to
utilize a Cashless Exercise, he shall be
entitled to a credit equal to the amount
of that equity by which the current Fair
Market Value exceeds the option price on
that number of options surrendered and to
utilize that credit to exercise additional
options held by him that such equity could
purchase. There shall be canceled that
number of options utilized for the credit
and for the options exercised for such
credit. For example, if the Participant
has options to acquire 20,000 shares which
are exercisable, the Fair Market Value is
$2.00 per share, the exercise price is
$1.25 per share, and the participant
elects to utilize for a credit 10,000
options ($7,500), then upon a Cashless
exercise in connection therewith he shall
be
entitled to acquire 6,000 shares of Common
Stock in exchange for the options for
10,000 shares for which a credit has been
received and options for 6,000 shares have
been exercised. The Participant will still
have exercisable options to acquire 4,000
shares of Common Stock.
(9) The Option agreements or Option grants
authorized by the Plan may contain such
other provisions as the Committee shall
deem advisable provided they do not
violate the provisions of Section 422 of
the Internal Revenue Code.
(10) The aggregate Fair Market Value
(determined as of the time of grant) of
stock for which Incentive Stock Options
are exercisable for the first time during
any calendar year by an optionee is to be
limited to $100,000, but the value may
exceed $100,000 for which options may be
granted to an optionee.
(11) In the event that any Incentive Stock
Option is granted under the Plan to any
individual who, at the time such Incentive
Stock Option is granted, owns stock
possessing more than ten percent of the
total combined voting power of all classes
of stock of the Company or of any
Subsidiary, the purchase price per share
under such Incentive Stock Option shall be
at least 110% of the fair market value of
such share at the time such Incentive
Stock Option is granted and such Incentive
Stock Option shall not be exercisable
after the expiration of five years from
the date it is granted.
(12) Upon the exercise of the Incentive Stock
Option, no disposition of such Common
Stock shall be made within two (2) years
from the date of the granting of the
Option
nor within one (1) year after the transfer
of the Common Stock to him.
7. Adjustment Provisions. In the event that any recapitalization, or
reclassification, split-up or consolidation of shares of Common Stock shall be
affected, or the outstanding shares of Common Stock are, in connection with a
merger or consolidation of the Company or a sale by the Company of all or a
part of its assets, exchanged for a different number or class of shares of
stock or other securities of any other corporation, or new, different or
additional shares or other securities of the Company or of another corporation
are received by the holder of Common Stock or any distribution is made to the
holders of Common Stock other than a cash dividend, (a) the number and class
of shares or other securities that may be issued or transferred and (b) the
option price shall in each case be equitably adjusted as the Committee may, in
the reasonable exercise of its discretion, determine. In no event may any
change be made under this section 7 in any Incentive Stock Option which would
constitute a "modification" within the meaning of Section 425(h)(3) of the
Internal Revenue Code.
8. Term. The Plan shall be deemed adopted and shall become effective
upon: (i) approval and adoption by the shareholders at a Special Meeting of
Shareholders of the Company to be held on August 12, 1996 (the "Special
Meeting") of a one-for-ten reverse stock split of the Company's Common Stock
(the "Reverse Split"); (ii) completion of the Reverse Split; and (iii)
shareholder approval and adoption of the Plan at the Special Meeting. No Stock
Incentives shall be granted under the Plan on or after May 12, 2006.
9. General Provisions.
(a) The Committee may from time to time adopt such rules and
regulations, not inconsistent with the provisions of the Plan, as it deems
necessary to determine eligibility to participate in the Plan and for the
proper administration of the Plan, and may amend or revoke any rule or
regulation so established. The Committee may make such determinations and
interpretations under or in connection with the Plan as it deems necessary or
advisable. All such rules, regulations, determinations and interpretations
shall be binding and conclusive upon the Company, its Subsidiaries, its
shareholders and all employees and upon their respective legal
representatives, beneficiaries, successors and assigns and upon all other
persons claiming under or through any of them.
(b) Any action required or permitted to be taken by the
Committee under the Plan shall require the affirmative vote of a majority of
all the members of the Committee.
(c) With respect to any shares of Common Stock issued or
transferred under the provision of the Plan, such shares may be issued or
transferred subject to such conditions, in addition to those specifically
provided in the Plan, as the Committee may direct and, without limiting the
generality of the foregoing, provision may be made in that shares issued or
transferred upon their grant or exercise shall be Restricted Shares subject to
forfeiture upon failure to comply with conditions and restrictions imposed in
the grant of such Stock Incentives.
(d) Nothing in the Plan nor in any instrument executed
pursuant thereto shall confer upon any employee any right to continue in the
employ of the Company or a Subsidiary or shall affect the right of the Company
or of a Subsidiary to terminate the employment of any employee with or without
cause.
(e) No shares of Common Stock shall be sold, issued or
transferred pursuant to an Incentive Stock Option unless and until there has
been compliance, in the opinion of counsel to the Company, with all legal
requirements, applicable to the sale, issuance or transfer of such shares. In
connection with any such sale, issuance or transfer, the person acquiring the
shares shall, if requested by the Company, give assurances satisfactory to
counsel to the Company that the shares are being acquired for investment and
not with a view to resale or distribution thereof and assurances in respect of
such other matters as the Company or a Subsidiary may deem
desirable to assure compliance with all applicable legal requirements.
(f) No employee (individually or as a member of a group),
and no beneficiary or other person claiming under or through him, shall have
any right, title or interest in or to any shares of Common Stock allocated or
reserved for the purposes of the Plan except as to such shares of Common
Stock, if any, as shall have been issued or transferred to him.
(g) No Incentive Stock Option shall be assignable or subject
to any encumbrance, pledge or charge of any nature, shall be subject to
execution, attachment or similar process, or shall be transferable other than
by will or the laws of descent and distribution, and every Stock Incentive
Option and all rights under the Plan shall be exercisable during the
employee's lifetime only by him or his guardian or legal representative.
10. Amendment or Discontinuance of Plan.
(a) The Plan may be amended by the Committee at any time,
provided that, without the approval of the shareholders of the Company, no
amendment shall be made which (i) increases the aggregate number of shares of
Common Stock that may be issued or transferred pursuant to Stock Incentive
Options as provided in paragraph (a) of Section 5, (ii) materially increases
the benefits accruing to participants under the Plan, (iii) materially
modifies the requirements as to eligibility for participation in the Plan,
(iv) amends Section 8 to extend the term of the Plan, (v) amends this section
10 or which would otherwise invalidate this Plan under Section 422 of the
Internal Revenue Code.
(b) The Committee may, by resolution adopted by a majority
of the entire Committee, discontinue the Plan.
(c) No amendment or discontinuance of the Plan by the
Committee or the shareholders of the Company shall adversely affect, except
with the consent of the holder, any Incentive Stock Option theretofore
granted.
11. Compliance with Section 422 of the Internal Revenue Code. This
Plan is intended to comply with the provisions of Section 422 of the Internal
Revenue Code and to the extent inconsistent or non-complying, the provisions
of said section shall be deemed applicable to this Plan.
12. No Guarantee of Employment by Participation.
Nothing in the Plan shall interfere with or limit in any way the
right of the Company to terminate any employee's employment at any time, nor
confer upon any employee any right to continue in the employment of the
Company.