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Exhibit 10.1
MANCHESTER EQUIPMENT CO., INC.
1996 INCENTIVE AND NON-INCENTIVE
STOCK OPTION PLAN
1. Purpose of Plan.
The purpose of this 1996 Incentive and Non-Incentive Stock Option Plan
("Plan") is to further the growth and development of Manchester Equipment Co.,
Inc. ("Company") and any direct and indirect subsidiaries thereof (collectively,
"Subsidiaries" and each, singly, a "Subsidiary") by encouraging selected
employees, directors and other persons who contribute and are expected to
contribute materially to the Company's success to obtain a proprietary interest
in the Company through the ownership of stock, thereby providing such persons
with an added incentive to promote the best interests of the Company and
affording the Company a means of attracting to its service persons of
outstanding ability.
2. Stock Subject to this Plan.
An aggregate of 1,250,000 shares of the Company's Common Stock, par
value $.01 per share ("Common Stock"), subject, however, to adjustment or change
pursuant to Article 10 hereof, shall be reserved for issuance upon the exercise
of options which may be granted from time to time in accordance with this Plan
("Options"). Such shares may be, in whole or in part, authorized but unissued
shares or issued shares which have been reacquired by the Company. If, for any
reason, an Option shall lapse, expire or terminate without having been exercised
in full, the unpurchased shares covered thereby shall again be available for
purposes of this Plan.
3. Administration.
(a) The Board of Directors has appointed a Compensation Committee
of the Board of Directors ("Committee") from among its members
to administer and help set policy for this Plan. The Committee
shall at all times be comprised only of three or more
Non-Employee Directors (as defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended). Such Committee
shall have and may exercise any and all of the powers relating
to the administration of this Plan and the grant of Options
hereunder as are set forth herein. The Board of Directors
shall have the power at any time to fill vacancies in, to
change the membership of, or to discharge such Committee. The
Committee shall select one of its members as its chairman and
shall hold its meetings at such time and at such places as it
shall deem advisable. A majority of such Committee shall
constitute a quorum and such majority shall determine its
action. Any action may be taken without a meeting by written
consent of all the members of the Committee. The Committee
shall keep minutes
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of its proceedings and shall report the same to the Board of
Directors at the next meeting of the Board.
(b) The Committee shall administer this Plan and, subject to the
provisions of this Plan, shall have sole authority in its
discretion to determine the persons to whom, and the time or
times at which, Options shall be granted, the number of shares
to be subject to each such Option and whether all or any
portion of such Options shall be incentive stock options
("Incentive Options") qualifying under Section 422 of the
Internal Revenue Code of 1986, as amended ("Code"), or stock
options which do not so qualify ("Non-Incentive Options").
Both Incentive Options and Non- Incentive Options may be
granted to the same person at the same time provided each type
of Option is clearly designated. In making such
determinations, the Committee may take into account the nature
of the services rendered by such persons, their present and
potential contributions to the Company's success and such
other factors as the Committee in its sole discretion may deem
relevant. Subject to the express provisions of this Plan, the
Committee shall also have the authority to interpret this
Plan, to prescribe, amend and rescind rules and regulations
relating thereto, to determine the terms and provisions of the
respective Option Agreements, which shall be, subject to the
rights granted to the Company and the Committee hereunder,
substantially in the forms attached hereto as Exhibit A and
Exhibit B, with such changes thereto as may be necessary to
reflect the - terms and conditions of the grant in question,
and to make all other determinations necessary or advisable
for the administration of this Plan, all of which
determinations shall be conclusive and not subject to review.
4. Eligibility for Receipt of Options.
(a) Incentive Options.
Incentive Options may be granted only to employees (including
officers) of the Company and/or any of its Subsidiaries.
The aggregate Fair Market Value (as defined in Article 5 of
this Plan), determined as of the time the Incentive Option is
granted, of the shares of the Company's Common Stock
purchasable hereunder exercisable for the first time by an
employee during any calendar year may not exceed $100,000.
A director of the Company or any Subsidiary who is not an
employee of the Company or of one of its Subsidiaries is not
eligible to receive Incentive Options under this Plan.
Further, Incentive Options may not be granted to any person
who, at the time the Incentive Option is granted, owns (or is
considered as owning within the meaning of Section 424(d) of
the Code) stock possessing more than 10% of the total combined
voting powers of all classes of stock of the Company or any
Subsidiary (a "10% Owner"), unless at the time the Incentive
Option is granted to a 10% Owner, the option price is at least
110% of the fair market value of the
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Common Stock subject thereto and such Incentive Option by its
terms is not exercisable subsequent to five years from the
date of grant.
(b) Non-Incentive Options.
Non-Incentive Options may be granted to any employees
(including employees who have been granted Incentive Options),
directors, consultants, agents, independent contractors and
other persons whom the Committee determines will contribute to
the Company's success.
(c) Notwithstanding the forgoing, the maximum aggregate number of
shares with respect to which Options, whether Incentive or
Non-Incentive, may be granted to any person eligible therefor
under this Plan within any one calendar year is 200,000
shares.
5. Option Price.
The purchase price of the shares of Common Stock under each Option
shall be determined by the Committee, which determination shall be conclusive
and not subject to review, but in no event shall such purchase price be less
than (i) 100% of the fair market value of the Common Stock on the date of grant
of Incentive Options (110% of the fair market value of Common Stock on the date
of grant where the grant of Incentive Options is made to a 10% Owner), and (ii)
85% of the fair market value of the Common Stock on the date of grant for
Non-Incentive Options.
In determining the fair market value of the Common Stock as of a
specified date ("Fair Market Value"), the Committee shall consider, if the
Common Stock is: (a) publicly traded and listed on the New York Stock Exchange
or another national securities exchange or The Nasdaq Stock Market, the closing
sale price of the Common Stock on the business day immediately preceding the
date as of which the Fair Market Value is being determined, or on the next
preceding date on which such Common Stock is traded if no Common Stock was
traded on such immediately preceding business day, or, if the Common Stock is
not so listed on a national securities exchange or The Nasdaq Stock Market, but
publicly traded, the representative closing sale price in the over-the-counter
market as quoted by the National Quotation Bureau or a recognized dealer in the
Common Stock, on the date immediately preceding the date as of which the Fair
Market Value is being determined, or on the next preceding date on which such
Common Stock is traded if no Common Stock was traded on such immediately
preceding business day; or (b) not publicly traded, the fair market value as
determined by the Committee in good faith based on such factors as it shall deem
appropriate. The Committee may also consider such other factors as it shall deem
appropriate.
For purposes of this Plan, the date of grant of an Option shall be the
date on which the Committee shall by resolution duly authorize such Option.
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6. Term of Options; Termination.
(a) The term of each Option shall be such number of years as the
Committee shall determine, subject to earlier termination as
provided herein and in the Option Agreement (and each
Incentive Option being subject to the limitations set forth in
Section 4(a) of this Plan with respect to grants to 10%
Owners), but in no event shall the term of any Option be more
than ten years from the date of grant. No Option may be
exercised following termination thereof.
(b) If an Incentive Option holder's employment with the Company or
a Subsidiary is terminated for any reason other than by reason
of death or disability (within the meaning of Section 22(e)(3)
of the Code), such holder's Incentive Option shall terminate
on the earlier of (i) three (3) months from the date of such
termination of employment, or (ii) the expiration date of the
term of such Option. Absence on leave approved by the employer
corporation shall not be considered an interruption of
employment for any purpose under this Plan.
(C) If an Incentive Option holder's employment with the Company or
a Subsidiary is terminated by reason of such holder's
disability within the meaning of Section 22(e)(3) of the Code,
subject to paragraph 6(d) hereof, such holder's Incentive
Option shall terminate on the earlier of (i) one (1) year from
the date of such termination, or (ii) the expiration date of
the term of such Option.
(d) If an Incentive Option holder dies while in the employ of the
Company or a Subsidiary (or within one (1) year following
termination of employment due to disability within the meaning
of Section 22(e)(3) of the Code), such holder's Incentive
Option shall terminate on the earlier of (i) one (1) year from
the date of death, or (ii) the expiration date of the term of
the Option. To the extent such Incentive Option was
exercisable by such holder at the date of death (or the date
of termination of employment due to disability within the
meaning of Section 22(e)(3) of the Code), such Option may be
exercised by the legatee or legatees of such person under such
person's Last Will, or by such person's personal
representative or distributees, within one (1) year from the
date of death but in no event subsequent to the expiration
date of the Incentive Option.
7. Exercise of Options.
(a) Incentive and Non-Incentive Options shall be exercisable
within the times or upon the events determined by the
Committee as set forth in the Option Agreements.
(b) An Option may not be exercised for fractional shares of the
Company's Common Stock.
(c) In the event of a Change in Control (as defined herein), all
outstanding Options shall accelerate and become immediately
fully exercisable. For purposes of this
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Plan, a "Change In Control" shall mean (i) the sale or other
disposition to a person, entity or group (as such term is
defined in Rule 13d-5 under the Securities Exchange Act of
1934, as amended) of 50% or more of the Company's consolidated
assets, (ii) the acquisition of 50% or more of the outstanding
shares by a person or group (as such term is defined in Rule
13d-5) or (iii) if the majority of the Company's Board of
Directors consists of persons other than the Continuing
Directors (as defined herein). The term "Continuing Director"
shall mean any member of the Company's Board of Directors on
the effective date of this Plan and any other member of the
Board of Directors who shall be recommended or elected to
succeed or become a Continuing Director by a majority of the
Continuing Directors who are then members of the Board of
Directors. The aggregate Fair Market Value (determined at the
time an Option is granted) of Incentive Options which first
become exercisable in the year of such Change in Control
cannot exceed $100,000. Any remaining accelerated Options
shall be Non-Incentive Options.
(d) If an Option holder ceases to be an employee, director,
consultant, agent, independent contractor or other person
employed by or engaged in performing services for the Company
and/or a Subsidiary, the Option held by such person shall be
exercisable after the date of termination of employment or
engagement only to the extent such Option was exercisable by
such holder at the date of termination. In no event shall such
option be exercisable following the expiration of its term or
earlier termination.
(e) The exercise of an Option shall be contingent upon receipt by
the Company from the holder of such Option of a written
representation that at the time of such exercise it is the
Optionholder's then present intention to acquire the Option
shares for investment and not with a view to the distribution
or resale thereof (unless a Registration Statement covering
the shares purchasable upon exercise of the Options shall have
been declared effective by the Securities and Exchange
Commission) and upon receipt by the Company of cash, or a
check to its order, for the full purchase price of such
shares. In addition, the holder of such Option must agree to
refrain from selling or offering to sell any securities of the
Company for such reasonable period of time after the effective
date of any registration statement relating to an underwritten
offering of securities of the Company, as may be requested by
the managing underwriter of such underwritten offering, and
approved by the Board of Directors. The Company shall be under
no obligation to register the Shares with the Securities and
Exchange Commission or to effect compliance with the
Securities Act of 1933 or with the registration or
qualification requirement of any state securities laws or
stock exchange.
(f) Payment for the shares of Common Stock may be made (i) in cash
or by check to the order of the Company; (ii) by surrender of
shares of Common Stock having a Fair Market Value equal to the
exercise price of the Option; or (iii) by any combination of
the foregoing
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where approved by the Committee in its sole discretion;
provided, however, in the event of payment for the shares of
Common Stock by method (ii) above, the shares of Common Stock
so surrendered, if originally issued to the Optionholder upon
exercise of an Option(s) granted by the Company, shall have
been held by the Optionholder for more than six months.
(g) The holder of an Option shall have none of the rights of a
shareholder with respect to the shares purchasable upon
exercise of the Option until a certificate for such shares
shall have been issued to the holder upon due exercise of the
Option.
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(h) The proceeds received by the Company upon exercise of an
Option shall be added to the Company's working capital and be
available for general corporate purposes.
8. Non-Transferability of Incentive Options.
No Incentive Option granted pursuant to this Plan shall be transferable
otherwise than by will or the laws of descent or distribution and an Incentive
Option may be exercised during the lifetime of the Option holder only by such
Option holder.
9. No Right of Employment.
Nothing in this Plan or in any Option Agreement granted hereunder
shall: (a) confer upon any Option holder any right to continue in the employ of
the Company or any Subsidiary or obligate the Company or any Subsidiary to
continue the engagement of any Option holder; or (b) interfere in any way with
the right of the Company or any such Subsidiary to terminate such Option
holder's employment or engagement at any time.
10. Adjustments Upon Changes in Capitalization.
If at any time after the date of grant of an Option, the Company shall
by stock dividend, split-up, combination, reclassification or exchange, or
through merger or consolidation or otherwise, change its shares of Common Stock
into a different number or kind or class of shares or other securities or
property, then the number of shares covered by such Option and the price per
share thereof shall be proportionately adjusted for any such change by the
Committee, whose determination thereon shall be conclusive. In the event that a
fraction of a share results from the foregoing adjustment, said fraction shall
be eliminated and the price per share of the remaining shares subject to the
Option adjusted accordingly.
11. Vesting of Rights Under Options.
Nothing contained in this Plan or in any resolution adopted or to be
adopted by the Committee or the shareholders of the Company shall constitute the
vesting of any rights under any Option. The vesting of such rights shall take
place only when a written Option Agreement, substantially in the form of the
Incentive Stock Option Agreement attached hereto as Exhibit A or the
Non-Incentive Stock Option Agreement attached hereto as Exhibit B (with such
changes to such Exhibits as may be necessary to reflect the terms and conditions
of the grant in question), shall be duly executed and delivered by and on behalf
of the Company and the person to whom the Option shall be granted, subject,
however, in either event, to the rights granted to the Company and the Committee
hereunder and to the terms and conditions of the Option Agreement.
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12. Withholding Taxes.
Whenever under this Plan shares are to be issued in satisfaction of the
exercise of Options granted hereunder, the Company shall have the right to
require the recipient to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements prior to the delivery of
any certificate or certificates for such shares.
13. Restrictions on Shares.
At the discretion of the Committee, the Company may reserve to itself
or its assignee(s) in the Option Agreement (a) a right of first refusal to
purchase any shares that an Optionholder (or a subsequent transferee) may
propose to transfer to a third party and (b) a right to repurchase any or all
shares held by an Optionholder upon the Optionee's termination of employment or
service with the Company or a subsidiary for any reason within a specified time
as determined by the Committee at the time of grant at (i) the Optionholder's
original purchase price, (ii) the Fair Market Value of such shares as determined
by the Committee in good faith, or (iii) a price determined by a provision set
forth in the Option Agreement.
14. Termination and Amendment.
The Committee may at any time terminate, amend or modify this Plan in
any respect (including, but not limited to, any form of grant, agreement or
instrument to be executed pursuant to this Plan); provided, however, that
shareholder approval shall be required to be obtained by the Company if required
to comply with the Incentive Option provisions or Section 162(m) of the Code, or
the listed company requirements of The Nasdaq Stock Market or of a national
securities exchange on which the shares of Common Stock are traded, or other
applicable provisions of state or federal law or self-regulatory agencies;
provided, further, that no termination, amendment or modification of this Plan
may materially adversely affect the rights of a holder of an Option previously
granted under this Plan without the written consent of such Optionholder.
15. Term of Plan.
This Plan was originally adopted by the Board of Directors on October
1, 1996 and approved by the shareholders of the Company on October 1, 1996. No
Option shall be granted pursuant to this Plan on or after September 30, 2006,
but Options theretofore granted may extend beyond that date and the terms of
this Plan shall continue to apply to such Options and to any shares of Common
Stock acquired upon exercise thereof.
16. Applicable Law.
The validity, interpretation and enforcement of this Plan shall be
governed in all respects by the laws of the State of New York and the United
States of America.
17. Issuance of Shares.
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The Shares, when issued and paid for pursuant to the Options granted
hereunder, shall be fully paid and non-assessable Shares.
18. Partial Invalidity.
The invalidity or illegality of any provision herein shall not be
deemed to affect the validity of any other provision.
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EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT
To:
We are pleased to notify you that by the determination of the
Compensation Committee (hereinafter called the "Committee") an incentive stock
option to purchase ________ shares of the Common Stock of Manchester Equipment
Co., Inc. (herein called the "Company") at a price of $______ per share has this
____ day of _______________, been granted to you under the Company's 1996
Incentive and Non-Incentive Stock Option Plan, as amended (herein called the
"Plan"). This option may be exercised only upon the terms and conditions set
forth below.
A. Purpose of Option.
The purpose of this Plan under which this incentive stock
option has been granted is to further the growth and development of the Company
and its direct and indirect subsidiaries by encouraging key employees,
directors, consultants, agents, independent contractors and other persons who
contribute and are expected to contribute materially to the Company's success to
obtain a proprietary interest in the Company through the ownership of stock,
thereby providing such persons with an added incentive to promote the best
interests of the Company, and affording the Company a means of attracting to its
service persons of outstanding ability.
1. Acceptance of Option Agreement.
Your execution of this incentive stock option
agreement will indicate your acceptance of and your willingness to be bound by
its terms; it imposes no obligation upon you to purchase any of the shares
subject to the option. Your obligation to purchase shares can arise only upon
your exercise of the option in the manner set forth in Article 3 hereof.
2. When Option May Be Exercised.
The option granted you hereunder may not be exercised
for a period of [one year] from the date of its grant by the Committee as set
forth above. Thereafter, this option shall be exercisable as follows:
(i) at the end of [one year] from the date of
grant, up to [25%] of the total shares
subject to the option;
(ii) at the end of the [second year] from the
date of grant, up to [50%] of such shares;
(iii) at the end of the [third year] from the date
of grant, up to [75%] of such shares;
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(iv) at the end of the fourth year from the date
of grant, up to [100%] of such shares.
This option may not be exercised for less than ten shares at any one time (or
the remaining shares then purchasable if less than ten) and expires at the end
of ten years from the date of grant whether or not it has been duly exercised,
unless sooner terminated as provided in Articles 5, 6 and 7 hereof.
3. How Option May Be Exercised.
This option is exercisable by a written notice signed
by you and delivered to the Company at its executive offices, signifying your
election to exercise the option. The notice must state the number of shares of
Common Stock as to which your option is being exercised, must contain a
statement by you (in a form acceptable to the Company) that such shares are
being acquired by you for investment and not with a view to their distribution
or resale (unless a registration statement covering the shares purchasable has
been declared effective by the Securities and Exchange Commission) and must be
accompanied by payment as set forth in Article 4 hereof for the full purchase
price of the share being purchased. No share shall be issued until full payment
therefor has been made.
If notice of the exercise of this option is given by
a person or persons other than you, the Company may require, as a condition to
the exercise of this option, the submission to the Company of appropriate proof
of the right of such person or persons to exercise this option.
Certificates for shares of the Common Stock so
purchased will be issued as soon as practicable. The Company, however, shall not
be required to issue or deliver a certificate for any shares until it has
complied with all requirements of the Securities Act of 1933, the Securities
Exchange Act of 1934, any stock exchange on which the Company's Common Stock may
then be listed and all applicable state laws in connection with the issuance or
sale of such shares or the listing of such shares on said exchange. Until the
issuance of the certificate for such shares, you or such other person as may be
entitled to exercise this option, shall have none of the rights of a shareholder
with respect to shares subject to this option.
You shall promptly advise the Company of any sale of
shares of Common Stock issued upon exercise of this option which occurs within
one (1) year from the date of the exercise of this option relating to the
issuance of such shares.
4. Payment of Options.
Payment for the shares of Common Stock may be made
(i) in cash or by check to the order of the Company, (ii) by surrender of
shares of Common Stock having a Fair Market Value equal to the exercise price
of the Option; or (iii) by any combination of the foregoing where approved by
the Committee in its sole discretion; provided, however, in the event of
payment for the shares of Common Stock by method (ii) above, the shares of
Common Stock so surrendered, if originally issued to you upon exercise of an
option(s) granted by the Company, shall have been held by you for more than
six months.
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5. Termination of Employment.
If your employment with the Company (or a subsidiary
thereof) is terminated for any reason other than by death or disability, this
option shall terminate three (3) months from the date of such termination of
employment (but in no event shall you be able to exercise this option after ten
years from the date this option was granted to you), provided, however, you
shall only be entitled to exercise that portion of this option which was
exercisable by you at the date of such termination of employment.
6. Disability.
If your employment with the Company (or a subsidiary
thereof) is terminated by reason of your disability, you may exercise, within
one (1) year from the date of such termination, that portion of this option
which was exercisable by you at the date of such termination, provided, however,
that such exercise occurs within ten years from the date this option was granted
to you.
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7. Death.
If you die while employed by the Company (or a
subsidiary thereof) or within one (1) year after termination of your employment
due to disability, that portion of this option which was exercisable by you at
the date of your death may be exercised by your legatee or legatees under your
Last Will, or by your personal representatives or distributees, within one (1)
year from the date of your death, provided, however, that such exercise occurs
within ten years from the date this option was granted to you.
8. Non-Transferability of Option.
This option shall not be transferable except by Last
Will or the laws of descent and distribution, and may be exercised during your
lifetime only by you.
9. Adjustments upon Changes in Capitalization.
If at any time after the date of grant of this
option, the Company shall, by stock dividend, split-up, combination,
reclassification or exchange, or through merger or consolidation, or otherwise,
change its shares of Common Stock into a different number or kind or class of
shares or other securities or property, then the number of shares covered by
this option and the price of each such share shall be proportionately adjusted
for any such change by the Committee whose determination shall be conclusive.
Any fraction of a share resulting from any adjustment shall be eliminated and
the price per share of the remaining shares subject to this options adjusted
accordingly.
10. Subject to Terms of this Plan.
This incentive stock option agreement shall be
subject in all respects to the terms and conditions of this Plan and in the
event of any question or controversy relating to the terms of this Plan, the
decision of the Committee shall be conclusive.
Sincerely yours,
MANCHESTER EQUIPMENT CO., INC.
By:______________________________________
Barry R. Steinberg, President
Agreed to and accepted this
______day of__________________, 199__.
_____________________________________
Signature of Optionholder
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EXHIBIT B
NON-INCENTIVE STOCK OPTION AGREEMENT
_______________
To:
We are pleased to notify you that by the determination of the
Compensation Committee (hereinafter called the "Committee") a non-incentive
stock option to purchase _______ shares of the Common Stock of Manchester
Equipment Co., Inc. (herein called the "Company") at a price of $_______ per
share has this ___ day of ______________, been granted to you under the
Company's 1996 Incentive and Non-Incentive Stock Option Plan, as amended (herein
called the "Plan"). This option may be exercised only upon the terms and
conditions set forth below.
1. Purpose of Option.
The purpose of this Plan under which this
non-incentive stock option has been granted is to further the growth and
development of the Company and its direct and indirect subsidiaries by
encouraging key employees, directors, consultants, agents, independent
contractors and other persons who contribute and are expected to contribute
materially to the Company's success to obtain a proprietary interest in the
Company through the ownership of stock, thereby providing such persons with an
added incentive to promote the best interests of the Company, and affording the
Company a means of attracting to its service persons of outstanding ability.
2. Acceptance of Option Agreement.
Your execution of this non-incentive stock option
agreement will indicate your acceptance of and your willingness to be bound by
its terms; it imposes no obligation upon you to purchase any of the shares
subject to the option. Your obligation to purchase shares can arise only upon
your exercise of the option in the manner set forth in Article 4 hereof.
3. When Option May Be Exercised.
THE OPTION GRANTED YOU HEREUNDER SHALL BE EXERCISABLE
AS FOLLOWS:
This option may not be exercised for less than ten
shares at any one time (or the remaining shares then purchasable if less than
ten) and expires at the end of [INDICATE TERM OF OPTION, NOT TO EXCEED TEN
YEARS] years from the date of grant whether or not it has been duly exercised,
unless sooner terminated as provided in Article 6 hereof.
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4. How Option May Be Exercised.
This option is exercisable by a written notice signed
by you and delivered to the Company at its executive offices, signifying your
election to exercise the option. The notice must state the number of shares of
Common Stock as to which your option is being exercised, must contain a
statement by you (in a form acceptable to the Company) that such shares are
being acquired by you for investment and not with a view to their distribution
or resale (unless a registration statement covering the shares purchasable has
been declared effective by the Securities and Exchange Commission) and must be
accompanied by payment as set forth in Article 5 hereof for the full purchase
price of the shares being purchased, plus such amount, if any, as is required
for withholding taxes. No share shall be issued until full payment therefor has
been made.
If notice of the exercise of this option is given by
a person or persons other than you, the Company may require, as a condition to
the exercise of this option, the submission to the Company of appropriate proof
of the right of such person or persons to exercise this option.
Certificates for shares of the Common Stock so
purchased will be issued as soon as practicable. The Company, however, shall not
be required to issue or deliver a certificate for any shares until it has
complied with all requirements of the Securities Act of 1933, the Securities
Exchange Act of 1934, any stock exchange on which the Company's Common Stock may
then be listed and all applicable state laws in connection with the issuance or
sale of such shares or the listing of such shares on said exchange. Until the
issuance of the certificate for such shares, you or such other person as may be
entitled to exercise this option, shall have none of the rights of a shareholder
with respect to shares subject to this option.
5. Payment of Options.
Payment for the shares of Common Stock may be made
(i) in cash or by check to the order of the Company, (ii) by surrender of shares
of Common Stock having a Fair Market Value equal to the exercise price of the
Option; or (iii) by any combination of the foregoing where approved by the
Committee in its sole discretion; provided, however, in the event of payment for
the shares of Common Stock by method (ii) above, the shares of Common Stock so
surrendered, if originally issued to you upon exercise of an option(s) granted
by the Company, shall have been held by you for more than six months.
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6. Termination of Employment or Engagement.
If your employment or engagement with the Company (or
a subsidiary thereof) is terminated for any reason, [INSERT TERMS UPON WHICH
NON-INCENTIVE OPTION HOLDER'S OPTIONS SHALL LAPSE AND EXPIRE.] [INSERT TERMS
UPON WHICH NON-INCENTIVE OPTIONS SHALL SURVIVE THE TERMINATION OF A HOLDER'S
EMPLOYMENT OR ENGAGEMENT, BUT IN SUCH EVENT THE OPTION SHALL BE EXERCISABLE ONLY
TO THE EXTENT EXERCISABLE ON THE DATE OF SUCH TERMINATION AND IN NO EVENT SHALL
THE OPTION BE EXERCISABLE AFTER THE EXPIRATION DATE OF THIS OPTION.] [IF THE
OPTION SURVIVES THE DEATH OF THE OPTION HOLDER, ADD LANGUAGE THAT IT MAY BE
EXERCISED BY THE HOLDER'S LEGATEE OR LEGATEES UNDER HIS LAST WILL, OR BY HIS
PERSONAL REPRESENTATIVES OR DISTRIBUTEES.]
7. Adjustments upon Changes in Capitalization.
If at any time after the date of grant of this
option, the Company shall, by stock dividend, split-up, combination,
reclassification or exchange, or through merger or consolidation, or otherwise,
change its shares of Common Stock into a different number or kind or class of
shares or other securities or property, then the number of shares covered by
this option and the price of each such share shall be proportionately adjusted
for any such change by the Committee whose determination shall be conclusive.
Any fraction of a share resulting from any adjustment shall be eliminated and
the price per share of the remaining shares subject to this option adjusted
accordingly.
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8. Subject to Terms of this Plan.
This non-incentive stock option agreement shall be
subject in all respects to the terms and conditions of this Plan and in the
event of any question or controversy relating to the terms of this Plan, the
decision of the Committee shall be conclusive.
9. Tax Status.
This option does not qualify as an "incentive stock
option" under the provisions of Section 422 of the Internal Revenue Code of
1986, as amended, and the income tax implications of your receipt of a
non-incentive stock option and your exercise of such an option should be
discussed with your tax counsel.
Sincerely yours,
MANCHESTER EQUIPMENT CO., INC.
By:______________________________________
Barry R. Steinberg, President
Agreed to and accepted this
_________day of________________, 199__
_________________________
Signature of Optionholder
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