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EX-10.A
NAPCO SECURITY SYSTEMS, INC.
AMENDED AND RESTATED
1992 INCENTIVE STOCK OPTION PLAN
(Extended 1982 Incentive Stock Option Plan)
1. Purpose of the Plan. This 1992 Incentive Stock Option Plan (hereinafter
referred to as the "Plan"), constituting a ten-year extension of the 1982
Incentive Stock Option Plan, is intended to encourage ownership of stock of
Napco Security Systems, Inc. (hereinafter referred to as the "Corporation") by
key employees of the Corporation and its subsidiaries, if any, and to provide
additional incentive for them to promote the success of the business. As used in
the Plan the term "subsidiary" shall have the same meaning as the term
"subsidiary corporation" defined in Section 425(f) of the Internal Revenue Code
of 1986, as amended (the "Code").
2. Scope of the Plan. An aggregate of Eight Hundred Fifteen Thousand Nine
Hundred Thirty-Three (815,933) shares (representing Seven Hundred Twenty-seven
Thousand Nine Hundred Thirty-three (727,933) shares for future options and
Eighty-Eight Thousand (88,000) shares for outstanding options) of the
Corporation's Common Stock, par value $.01 per share (hereinafter referred to as
"Common Stock"), shall be available and reserved for issue under the Plan
subject, however, to the provisions of Section 12 hereof. If an option should
expire or terminate for any reason without having been exercised in full, the
unpurchased shares that were subject thereto shall, unless the Plan shall have
terminated, become available for other options under the Plan. Common Stock
shall not be issued in respect of an option granted under the Plan unless the
exercise of such option and the issuance and delivery of shares of Common Stock
pursuant thereto shall comply with all relevant provisions of law, including the
Securities Act of
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1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and
regulations thereunder, and the requirements of any stock exchange upon which
the Common Stock may then be listed, and shall be further subject to the
approval of the Corporation's counsel with respect to such compliance.
3. Administration of the Plan. The Plan shall be administered by the Board
of Directors or a Stock Option Committee (hereinafter sometimes referred to as
the "Committee") of the Board of Directors of the Corporation. Directors of the
Corporation who are either eligible for options or to whom options have been
granted may vote on any matters affecting the administration of the Plan or the
granting of options under the Plan; provided, however, that no option may be
granted to a director under the Plan except by:
(a) The Committee at a meeting at which a majority of its members are
disinterested persons; or
(b) The Board of Directors at a meeting at which the majority of
directors present and a majority of the directors voting on a grant,
are disinterested persons.
For purposes of this Section 3, a "disinterested person" is a person who,
at a given meeting of the Committee or the Board of Directors, is not being
considered to receive a grant of stock options under the Plan or any other stock
option plan of the Corporation or its subsidiaries.
Without limiting the generality of the foregoing, the Board of Directors
shall have full and final authority in its discretion, but subject to the
express provisions of the Plan, to determine the fair market value of the Common
Stock covered by each option; to select the key employees of the Corporation and
its subsidiaries to whom, and the time or times at which, options shall be
granted; to determine the manner in which options may be exercised; to determine
the number of shares to be covered by each option and the consideration, if any,
to flow to the Corporation for each option; to interpret the Plan; to prescribe,
amend, and rescind rules and regulations relating
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to the Plan; to determine the terms and provisions of each option granted under
the Plan (which need not be identical); to accelerate any exercise date of any
option; to waive restrictions imposed with respect to the transferability of
stock acquired on exercise of options granted under the Plan; to cancel an
option previously granted to an optionee and issue a new option to such optionee
at a lower price, provided that such optionee's consent is first obtained; to
authorize any person to execute on behalf of the Corporation an option agreement
with respect to an option previously granted by the Board of Directors; and to
make all other determinations deemed necessary or advisable for the
administration of the Plan.
4. Eligibility. Options may be granted only to valued employees (including
officers and directors who are employees) of the Corporation or any subsidiary;
provided, however, that no option shall be granted hereunder to any person in
whose hands such option is not an "incentive stock option" within the meaning of
Section 422 of the Code by reason of the stock ownership test set forth in
Section 422(b)(6) of the Code. However, options may be granted to such persons
under the Plan if such options would qualify as incentive stock options by
virtue of meeting the option price and term requirements set forth in Section
422(c)(5) of the Code. In selecting the individuals to whom options shall be
granted, as well as in determining the number of shares subject to each option,
the Board of Directors may take into consideration the recommendation of the
members of the Board of Directors who are also employees of the Corporation or a
subsidiary and such factors as it shall deem relevant in connection with
accomplishing the purposes of the Plan. An individual who has been granted an
option may, if he is otherwise eligible, be granted an additional option or
options.
5. Option Price. The purchase price to be paid for Common Stock transferred
pursuant to the exercise of any option granted under the Plan shall be not less
than the fair market value of
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such stock on the date the option is granted as provided in Section 14 hereof
(but in no event less than the par value of the Common Stock), and shall not
thereafter be subject to reduction except as provided in Section 12 hereof;
provided, however, that the purchase price to be paid for Common Stock issued
pursuant to an option granted to an individual who, at the time of grant, owns
stock possessing more than ten percent of the total combined voting power of all
classes of stock of the Corporation or its subsidiaries, as described in Section
422(b)(6) of the Code, shall, as provided by Section 422(c)(5) of the Code, be
not less than 110% of the fair market value of the Common Stock. For purposes of
the Plan the fair market value of the Common Stock on any date shall be
determined by the Board of Directors. The proceeds of sale of Common Stock
subject to option are to be added to the general funds of the Corporation and
used for such corporate purposes as the Board of Directors may determine.
6. Term of Options. The term of each option granted under the Plan shall be
not more than five years from the date of the granting thereof, subject to its
earlier termination as hereinafter provided.
7. Non-Transferability of Options. An option granted under the Plan shall
by its terms not be transferable and an option may be exercised, during the
lifetime of the holder of the option, only by such holder. More particularly,
but without limiting the generality of the foregoing, an option may not be
assigned, transferred, pledged, or hypothecated in any way (whether by operation
of law or otherwise), and will not be subject to execution, attachment or
similar process. Any attempted assignment, transfer, pledge, hypothecation or
other disposition of any option contrary to the provisions of the Plan, and any
levy of any attachment or similar process upon an option will be null and void
and without effect, and the Board of Directors may, in its discretion, upon the
happening of any such event, terminate an option forthwith.
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8. Annual Limitation on Options Granted. To the extent that the aggregate
fair market value of stock with respect to which incentive stock options
(determined without regard to this subsection) are exercisable for the first
time by any individual during any calendar year (under all plans of the
individual's employer corporation and its parent and subsidiary corporations)
exceeds One Hundred Thousand ($100,000) Dollars, such options shall be treated
as options which are not incentive stock options.
9. Exercise of Options. Except as hereinafter provided in this Section 9
and in Sections 3 and 11, options may be exercised within the year of grant (as
the Board of Directors, in its discretion, shall determine) with respect to no
more than twenty percent (20%) of the total number of shares of Common Stock
subject to such grant. Thereafter, during each succeeding year beginning on an
anniversary date, options with respect to an additional twenty percent (20%) of
the total number of shares subject to a grant may be exercised. However, no
option shall be exercisable after the expiration of the term thereof as provided
in Section 6. Moreover, an option shall not be exercisable unless the holder
thereof shall, at the time of exercise, be an employee of the Corporation or a
subsidiary.
Notwithstanding anything herein to the contrary, to the extent that the
Corporation has entered into a written employment agreement with the holder of
the option and such agreement provides that such options will vest upon a
"change in control" of the Corporation (as defined in such agreement), such
holder's options will vest and become immediately exercisable in full upon such
a change in control.
The purchase price of any shares as to which an option shall be exercised
shall be paid in full at the time of exercise. The holder of an option shall not
have any of the rights of a stockholder with respect to the shares covered by
his option until such shares shall have been
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issued to him (as evidenced by the appropriate entry on the books of a duly
authorized transfer agent of the Corporation) upon the purchase of such shares
upon exercise of the option.
10. Consideration. The Board of Directors shall determine the nature of the
consideration flowing to the Corporation in respect of each option granted under
the Plan as well as the conditions, if any, which it may deem appropriate to
assure that such consideration shall be received by, or shall accrue to, the
Corporation. The consideration specified in any option may be different from the
consideration specified in any other option, whether granted at the same or a
different time.
11. Exercise Upon Cessation of Relationship With Corporation. The right of
a holder of an option to exercise such option shall terminate immediately upon
voluntary termination of service as an employee or dismissal, disability,
retirement, death or otherwise. Option agreements may contain such provisions as
the Board of Directors shall approve with reference to the effect of approved
leaves of absence, provided, however, that all options shall terminate not more
than five years after the date of grant.
12. Adjustments. Options granted under the Plan shall contain such uniform
provisions as the Board of Directors shall, in its sole judgment, determine for
adjustment of the number and class of shares covered thereby, or of the option
prices (but not below the par value of the Common Stock), or both, to reflect a
stock dividend, stock split-up, share combination, exchange of shares,
recapitalization, merger, consolidation, acquisition or disposition of property
or shares, reorganization, liquidation, or other similar changes or
transactions, of or by the Corporation. In any such event the aggregate number
and class of shares available for issuance under the Plan shall be appropriately
adjusted and all the provisions of the Plan with respect to the number and class
of shares so available shall likewise be adjusted.
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13. Effectiveness of the Plan. The Plan shall become effective on October
8, 1992, but shall be subject to approval by the holders of Common Stock at a
meeting of stockholders of the Corporation duly called and held no later than
twelve months after the date of adoption of the Plan by the Board of Directors.
14. Time of Granting Options. The date of grant of an option under the Plan
shall, for all purposes, be the date on which the Board of Directors makes the
determination granting such option; and no grant shall be deemed effective under
the Plan prior to such date. Notice of the determination shall be given to each
employee to whom an option is so granted within a reasonable time after the date
of such grant.
15. Termination and Amendment of the Plan. The Plan shall terminate ten
(10) years from the date on which it is adopted by the Board of Directors or the
date on which it is approved by the stockholders, whichever is earlier. Prior
thereto, the Board of Directors may terminate the Plan at any time; provided,
however, that any such termination shall not affect any options then outstanding
under the Plan. No options under the Plan may be granted after termination of
the Plan.
The Board of Directors from time to time may make such modifications or
amendments of the Plan and, with the consent of the holder of an option, of the
terms and conditions of his option, as it shall deem advisable, but may not,
without further approval of the stockholders of the Corporation, except as
provided in Section 12 hereof (a) increase the maximum number of shares which
shall be available and reserved for issue under the Plan, or (b) change the
employees or class of employees eligible to receive options, or (c) extend the
term of the Plan beyond the period provided in this paragraph.
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Neither the termination nor any modification or amendment of the Plan
shall, without the consent of the holder of an option theretofore granted under
the Plan, adversely affect the rights of such holder with respect to such
option.
16. Termination of Right of Action. Every right of action arising out of or
in connection with the Plan by or on behalf of the Corporation or a subsidiary
or by any stockholder of the Corporation or a subsidiary against any past,
present or future employee, or by an employee (past, present or future) against
the Corporation shall, irrespective of the place where an action may be brought
and irrespective of the place of residence of any such stockholder or employee,
cease and be barred by the expiration of three years from the date of the act or
omission in respect to which such right of action is alleged to have arisen.
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17. Registration Rights. If in the future the Corporation registers
additional shares with the Securities and Exchange Commission, the Corporation
will also register the shares subject to the options of this Plan.
Dated as of: October 8, 1992
Last Amended: February 22, 1999
NAPCO SECURITY SYSTEMS, INC.
By: /s/ Richard Soloway, President
ATTEST:
By: /s/ Kevin S. Buchel, Senior Vice President
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