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EXHIBIT 10.3
U.S. PHYSICAL THERAPY, INC.
1992 STOCK OPTION PLAN, AS AMENDED
Scope and Purpose of Plan
This U.S. Physical Therapy, Inc. 1992 Stock Option Plan (the "Plan")
provides for the granting of:
(a) Incentive Options (hereinafter defined) to certain key employees
of U.S. Physical Therapy, Inc., a Nevada corporation (the "Corporation"), or of
its Affiliates (hereinafter defined), and
(b) Nonstatutory Options (hereinafter defined) to certain key
employees and nonemployee directors of the Corporation or of its Affiliates or
of U.S. PT Management, Ltd., a Texas limited partnership ("USPTM").
The purpose of the Plan is to provide an incentive for key employees and
directors of the Corporation or its Affiliates or USPTM to remain in the service
of the Corporation or its Affiliates or USPTM, to extend to them the opportunity
to acquire a proprietary interest in the Corporation so that they will apply
their best efforts for the benefit of the Corporation, and to aid the
Corporation in attracting able persons to enter the service of the Corporation
and its Affiliates or USPTM.
SECTION 1. Definitions.
1.1 "Affiliates" shall mean (a) any corporation, other than the
Corporation, in an unbroken chain of corporations ending with the Corporation if
each of the corporations, other than the Corporation, owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain and (b)any corporation,
other than the Corporation, in an unbroken chain of corporations beginning with
the Corporation if each of the corporations, other than the last corporation in
the unbroken chain, owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
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1.2 "Agreement" shall mean the written agreement between the
Corporation and a Holder evidencing the Option granted by the Corporation and
the understanding of the parties with respect thereto.
1.3 "Board of Directors" shall mean the board of directors of the
Corporation.
1.4 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.5 "Committee" shall mean the committee appointed pursuant to
Section 3 hereof by the Board of Directors to administer this Plan.
1.6 "Eligible Individuals" shall mean (a) key employees, including
officers and directors who are also employees of the Corporation or of any of
its Affiliates or of USPTM, (b) nonemployee directors (including advisory
directors) and officers of the Corporation or of any of its Affiliates.
Notwithstanding the foregoing provisions of this Paragraph 1.6, to ensure that
the requirements of Subparagraph 3.1(a) are satisfied, the Board of Directors
may from time to time specify individuals who shall not be eligible for the
grant of Options or options or stock appreciation rights or allocations of stock
under any plan of the Corporation or its Affiliates (as such terms are used in
subsection (d)(3) of Rule 16b-3 promulgated under the Act); provided, however,
that the Board of Directors may at any time determine that any individual who
has been so excluded from eligibility shall become eligible for grants of
Options and grants of such options or stock appreciation rights or allocations
of stock under any plans of the Corporation and its Affiliates.
1.7 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
1.8 "Fair Market Value" shall mean:
(a) If shares of Stock of the same class are listed or
admitted to unlisted trading privileges on any national or regional securities
exchange at the date of determining the Fair Market Value, the last reported
sale price on such exchange on the last business day prior to the date in
question; or
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(b) If shares of Stock of the same class shall not be listed
or admitted to unlisted trading privileges as provided in Subparagraph 1.8(a)
and sales prices therefor in the over-the-counter market shall be reported by
the National Association of Securities Dealers, Inc. Automated Quotations, Inc.
("NASDAQ") National Market System at the date of determining the Fair Market
Value, the last reported sale price so reported on the last business day prior
to the date in question; or
(c) If shares of Stock of the same class shall not be listed
or admitted to unlisted trading privileges as provided in Subparagraph 1.8(a)
and sales prices therefor shall not be reported by the NASDAQ National Market
System as provided in Subparagraph 1.8(b), and bid and asked prices therefor in
the over-the-counter market shall be reported by NASDAQ (or, if not so reported,
by the National Quotation Bureau Incorporated) at the date of determining the
Fair Market Value, the average of the closing bid and asked prices on the last
business day prior to the date in question; and
(d) If shares of Stock of the same class shall not be listed
or admitted to unlisted trading privileges as provided in Subparagraph 1.8(a)
and sales prices or bid and asked prices therefor shall not be reported by
NASDAQ (or the National Quotation Bureau Incorporated) as provided in
Subparagraph 1.8(b) or Subparagraph 1.8(c) at the date of determining the Fair
Market Value, the value determined in good faith by the Board of Directors.
For purposes of valuing Incentive Options, the Fair Market Value of Stock shall
be determined without regard to any restriction other than one which, by its
terms, will never lapse.
1.9 "Holder" shall mean an Eligible Individual to whom an Option has
been granted.
1.10 "Incentive Options" shall mean stock options that are intended
to satisfy the requirements of section 422 of the Code.
1.11 "Nonstatutory Options" shall mean stock options that are not
intended to satisfy the requirements of section 422 of the Code.
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1.12 "Options" shall mean either Incentive Options or Nonstatutory
Options, or both.
1.13 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.14 "Stock" shall mean the Corporation's authorized common stock,
$0.01 par value per share, together with any other securities with respect to
which Options granted hereunder may become exercisable.
SECTION 2. Stock and Maximum Number of Shares Subject to the Plan.
2.1 Description of Stock and Maximum Shares Allocated. The Stock
which may be issued upon the exercise of an Option may either be unissued or
reacquired shares of Stock, as the Board of Directors may, in its sole and
absolute discretion, from time to time determine.
Subject to the adjustments provided for in Paragraph 6.6, (i) the
aggregate number of shares of Stock to be issued pursuant to the exercise of all
Options granted hereunder may equal but shall not exceed 2,330,000 shares of
Stock and (ii) the maximum number of shares of Stock subject to Options that may
be granted to any officer or other employee during any calendar year shall not
exceed 100,000 shares of Stock.
2.2 Restoration of Unpurchased Shares. If an Option granted
hereunder expires or terminates for any reason during the term of this Plan and
prior to the exercise of the Option in full, the shares of Stock subject to but
not issued under such Option shall again be available for Options granted
hereunder subsequent thereto.
SECTION 3. Administration of the Plan.
3.1 Committee. The Plan shall be administered by the Committee. The
Committee shall consist of not less than two individuals. In the event that
Stock is registered under Section 12 of the Exchange Act, all members of the
Committee shall be directors.
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3.2 Duration, Removal, Etc. The members of the Committee shall serve
at the pleasure of the Board of Directors, which shall have the power, at any
time and from time to time, to remove members from the Committee or to add
members thereto. Vacancies on the Committee, however caused, shall be filled by
action of the Board of Directors.
3.3 Meetings and Actions of Committee. The Committee shall elect one
of its members as its Chairman and shall hold its meetings at such times and
places as it may determine. All decisions and determinations of the Committee
shall be made by the majority vote or decision of all of its members present at
a meeting; provided, however, that any decision or determination reduced to
writing and signed by all of the members of the Committee shall be as fully
effective as if it had been made at a meeting duly called and held. The
Committee may make any rules and regulations for the conduct of its business
that are not inconsistent with the provisions hereof and with the bylaws of the
Corporation as it may deem advisable.
3.4 Committee's Powers. Subject to the express provisions hereof,
the Committee shall have the authority, in its sole and absolute discretion, (a)
to adopt, amend, and rescind administrative and interpretive rules and
regulations relating to the Plan; (b) to determine the terms and provisions of
the respective Agreements (which need not be identical), including provisions
defining or otherwise relating to (i) subject to Section 6 of the Plan, the term
and the period or periods and extent of exercisability of the Options, (ii) the
extent to which the transferability of shares of Stock issued upon exercise of
Options is restricted, (iii) the effect of termination of employment upon the
exercisability of the Options, and (iv) the effect of approved leaves of absence
(consistent with any applicable regulations of the Internal Revenue Service);
(c) to accelerate the time of exercisability of any Option that has been
granted; (d) to construe the terms of any Agreement and the Plan; and (e) to
make all other determinations and perform all other acts necessary or advisable
for administering the Plan, including the delegation of such ministerial acts
and responsibilities as the Committee deems appropriate. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any Agreement in the manner and to the extent it shall deem expedient
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to carry it into effect, and it shall be the sole and final judge of such
expediency. The Committee shall have full discretion to make all determinations
on the matters referred to in this Paragraph 3.4; such determinations shall be
final, binding and conclusive.
SECTION 4. Eligibility and Participation.
4.1 Eligible Individuals. Options may be granted hereunder only to
persons who are Eligible Individuals at the time of the grant thereof.
Notwithstanding any provision contained herein to the contrary, a person shall
not be eligible to receive an Incentive Option hereunder unless he is an
employee of the Corporation or an Affiliate, nor shall a person be eligible to
receive an Incentive Option hereunder if he, at the time such Option is granted,
would own (within the meaning of Sections 422 and 424 of the Code) stock
possessing more than ten percent (10%) of the total combined voting power or
value of all classes of stock of the Corporation or of an Affiliate unless at
the time such Incentive Option is granted the exercise price per share of Stock
is at least one hundred and ten percent (110%) of the Fair Market Value of each
share of Stock to which the Incentive Option relates and the Incentive Option is
not exercisable after the expiration of five (5) years from the date it is
granted.
4.2 No Right to Option. The adoption of the Plan shall not be deemed
to give any person a right to be granted an Option.
SECTION 5. Grant of Options and Certain Terms of the Agreements.
Subject to the express provisions hereof, the Committee shall determine
which Eligible Individuals shall be granted Options hereunder from time to time.
In making grants, the Committee shall take into consideration the contribution
the potential Holder has made or may make to the success of the Corporation or
its Affiliates or of USPTM and such other considerations as the Board of
Directors may from time to time specify. The Committee shall also determine the
number of shares subject to each of such Options, and shall authorize and cause
the Corporation to grant Options in accordance with such determinations.
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The date on which the Committee completes all action constituting an
offer of an Option to an individual, including the specification of the number
of shares of Stock to be subject to the Option, shall be the date on which the
Option covered by an Agreement is granted, even though certain terms of the
Agreement may not be at such time determined and even though the Agreement may
not be executed until a later time. For purposes of the preceding sentence, an
offer shall be deemed made if the Committee has completed all such action except
communication of the grant of the Option to the potential Holder. In no event,
however, shall a Holder gain any rights in addition to those specified by the
Committee in its grant, regardless of the time that may pass between the grant
of the Option and the actual execution of the Agreement by the Corporation and
the Holder.
Each Option granted hereunder shall be evidenced by an Agreement,
executed by the Corporation and the Eligible Individual to whom the Option is
granted, incorporating such terms as the Committee shall deem necessary or
desirable. More than one Option may be granted hereunder to the same Eligible
Individual and be outstanding concurrently hereunder. In the event an Eligible
Individual is granted one or more Incentive Options and one or more Nonstatutory
Options, such grants shall be evidenced by separate Agreements, one for each of
the Incentive Option grants and one for each of the Nonstatutory Option grants.
Each Agreement may contain or otherwise provide for conditions giving
rise to the forfeiture of the Stock acquired pursuant to an Option granted
hereunder or otherwise and such restrictions on the transferability of shares of
the Stock acquired pursuant to an Option granted hereunder or otherwise as the
Committee in its sole and absolute discretion shall deem proper or advisable.
Such conditions giving rise to forfeiture may include, but need not be limited
to, the requirement that the Holder render substantial services to the
Corporation or its Affiliates or of USPTM for a specified period of time.
SECTION 6. Terms and Conditions of Options.
All Options granted hereunder shall comply with, be deemed to include,
and shall be subject to the following terms and conditions:
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6.1 Number of Shares. Each Agreement shall state the number of
shares of Stock to which it relates.
6.2 Exercise Price. Each Agreement shall state the exercise price
per share of Stock. The exercise price per share of Stock subject to an
Incentive Option shall not be less than the greater of (a) the par value per
share of the Stock or (b) 100% of the Fair Market Value per share of the Stock
on the date of the grant of the Option. The exercise price per share of Stock
subject to a Nonstatutory Option shall not be less than the par value per share
of the Stock. The exercise price per share of Stock subject to either an
Incentive Option or a Nonstatutory Option shall be determined by the Committee
upon the granting of the Option, subject to the restrictions set forth above.
6.3 Medium and Time of Payment, Method of Exercise, and Withholding
Taxes. The exercise price of an Option shall be payable upon the exercise of the
Option in a manner that is acceptable to the Committee in its sole discretion,
which form may include cash, shares of Stock or a share or shares of Stock owned
by the Holder and surrendered for actual or deemed multiple exchanges of shares
of Stock, or any combination thereof. Exercise of an Option shall not be
effective until the Corporation has received written notice of exercise,
specifying the number of whole shares to be purchased and accompanied by payment
in full of the aggregate exercise price of the number of shares purchased. The
Corporation shall not in any case be required to sell, issue, or deliver a
fractional share of Stock with respect to any Option.
The Committee may, in its discretion, require a Holder to pay to the
Corporation at the time of exercise of an Option or portion thereof the amount
that the Corporation deems necessary to satisfy its obligation to withhold
Federal, state or local income or other taxes incurred by reason of the
exercise. Where the exercise of an Option does not give rise to an obligation to
withhold Federal income or other taxes on the date of exercise, the Corporation
may, in its discretion, require a Holder to place shares of Stock purchased
under the Option in escrow for the benefit of the Corporation until such time as
Federal income or other tax withholding is no longer required with respect to
such shares or until such withholding is required on amounts included in the
gross income of the Holder as a result of the exercise of an Option or
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the disposition of shares of Stock acquired pursuant thereto. At such later
time, the Corporation, in its discretion, may require a Holder to pay to the
Corporation the amount that the Corporation deems necessary to satisfy its
obligation to withhold Federal, state or local income or other taxes incurred by
reason of the exercise of the Option or the disposition of shares of Stock. Upon
receipt of such payment by the Corporation, such shares of Stock shall be
released from escrow to the Holder.
6.4 Term, Time of Exercise, and Transferability of Stock and
Options. In addition to such other terms and conditions as may be included in a
particular Agreement granting an Option, an Option shall be exercisable during a
Holder's lifetime only by the Holder or by the Holder's guardian or legal
representative in accordance with the next sentence. An Option shall not be
transferable other than by will or the laws of descent and distribution. The
provisions of the remainder of this Paragraph 6.4 shall apply to the extent a
Holder's Agreement does not expressly provide otherwise.
If a Holder (a) voluntarily ceases to be an Eligible Individual or (b)
ceases to be an Eligible Individual by reason that his status as such was
terminated by the Corporation or one of its Affiliates or by USPTM (with or
without cause), the Option shall terminate thirty days after such Holder ceases
to be an Eligible Individual.
Notwithstanding the foregoing, if a Holder ceases to be an Eligible
Individual by reason of (a) disability (as defined in Section 22(e)(3) of the
Code) or (b) death, then the Holder shall have the right for twelve months after
the date of disability or death to exercise an Option to the extent such Option
is exercisable on the date of his disability.
That portion of the Option which is not exercisable on the date the
Holder ceases to be an Eligible Individual shall terminate and be forfeited to
the Corporation on the date of such cessation.
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Notwithstanding any other provision of this Plan, no Incentive Option
shall be exercisable after the expiration of ten (10) years from the date it is
granted, or the period specified in Paragraph 4.1, if applicable. The Committee
shall have authority to prescribe in any Agreement that the Option evidenced
thereby may be exercised in full or in part as to any number of shares subject
thereto at any time or from time to time during the term of the Option, or in
such installments at such times during said term as the Committee may prescribe.
Except as provided above and unless otherwise provided in any Agreement, an
Option may be exercised at any time or from time to time during the term of the
Option. Such exercise may be as to any or all whole (but no fractional) shares
which have become purchasable under the Option.
Within a reasonable time or such time as may be permitted by law after
the Corporation receives written notice that the Holder has elected to exercise
all or a portion of an Option, accompanied by payment in full of the aggregate
Option exercise price of the number of shares of Stock purchased, the
Corporation shall issue and deliver a certificate representing the shares
acquired in consequence of the exercise and any other amounts payable in
consequence of such exercise. In the event that a Holder exercises both an
Incentive Option, or portion thereof, and a Nonstatutory Stock Option, or a
portion thereof, separate Stock certificates shall be issued, one for the Stock
subject to the Incentive Option and one for the Stock subject to the
Nonstatutory Stock Option. The number of the shares of Stock transferable due to
an exercise of an Option under this Plan shall not be increased due to the
passage of time, except as may be provided in an Agreement. However, this number
of such shares of Stock which are transferable may increase due to the
occurrence of certain events which are fully described in Paragraph 6.6.
Nothing herein or in any Option granted hereunder shall require the
Corporation to issue any shares upon exercise of any Option if such issuance
would, in the opinion of counsel for the Corporation, constitute a violation of
the Securities Act or any similar or superseding statute or statutes, or any
other applicable statute or regulation, as then in effect. At the time of any
exercise of an Option, the Corporation may, as a condition precedent to the
exercise of such Option, require from the Holder of the Option (or in the event
of his death, his legal representatives, heirs,
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legatees, or distributees) such written representations, if any, concerning his
intentions with regard to the retention or disposition of the shares being
acquired by exercise of such Option and such written covenants and agreements,
if any, as to the manner of disposal of such shares as, in the opinion of
counsel to the Corporation, may be necessary to ensure that any disposition by
such Holder (or in the event of his death, his legal representatives, heirs,
legatees, or distributees), will not involve a violation of the Securities Act
or any similar or superseding statute or statutes, or any other applicable state
or federal statute or regulation, as then in effect. Shares of Stock issued upon
exercise of any Option shall not be transferable until after six months from the
date the Option is granted. Certificates for shares of Stock, when issued, may
have the following or similar legend (in the event the shares of stock covered
by Options granted under this Plan are not then registered under the Securities
Act and under applicable state securities laws), or statements of other
applicable restrictions, endorsed thereon, and, as described in the preceding
sentence, may not be immediately transferable:
The shares of Stock evidenced by this certificate have been issued to
the registered owner in reliance upon written representations that
these shares have been purchased for investment. These shares have
not been registered under the Securities Act of 1933, as amended, or
any applicable state securities laws, in reliance upon an exception
from registration. Without such registration, these shares may not be
sold, transferred, assigned or otherwise disposed of unless, in the
opinion of the Corporation and its legal counsel, such sale,
transfer, assignment or disposition will not be in violation of the
Securities Act of 1933, as amended, applicable rules and regulations
of the Securities and Exchange Commission, and any applicable state
securities laws.
6.5 Limitation on Aggregate Value of Shares That May Become First
Exercisable During Any Calendar Year Under an Incentive Option. Except as is
otherwise provided in the second paragraph of Paragraph 6.6, with respect to any
Incentive Option granted under this Plan, the sum of:
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(a) the aggregate Fair Market Value of shares of Stock subject to
such Incentive Option that first become purchasable in a calendar year under
such Incentive Option, and
(b) the aggregate Fair Market Value of shares of Stock or stock of
any Affiliate (or a predecessor of the Corporation or an Affiliate) subject to
any other incentive stock option (within the meaning of Section 422 of the Code)
of the Corporation or its Affiliates (or a predecessor corporation of any such
corporation), that first become purchasable in a calendar year under such
incentive stock option may not (with respect to any Holder) exceed $100,000,
with such Fair Market Value to be determined as of the date the Incentive Option
or such other incentive stock option is granted.
For purposes of this Paragraph 6.5, "predecessor corporation" means (i)
a corporation that was a party to a transaction described in Section 424(a) of
the Code (or which would be so described if a substitution or assumption under
such section had been effected) with the Corporation, (ii) a corporation which,
at the time the new incentive stock option (within the meaning of section 422 of
the Code) is granted, is an Affiliate of the Corporation or (iii) a predecessor
corporation of any such corporations.
6.6 Adjustments Upon Changes in Capitalization, Merger, Etc.
Notwithstanding any other provision hereof, in the event of any change in the
number of outstanding shares of Stock
(a) effected without receipt of consideration therefor by the
Corporation, by reason of a stock dividend, or split, combination, exchange of
shares or other recapitalization, merger, or otherwise, in which the Corporation
is the surviving corporation, or
(b) by reason of a spin-off of a part of the Corporation into a
separate entity, or assumptions and conversions of outstanding grants due to an
acquisition by the Corporation of a separate entity,(1) the aggregate number and
class of the reserved shares and the maximum number of shares subject to Options
that may be granted to any officer or other employee during any calendar year,
(2) the number and class of shares subject to each outstanding Option and (3)
the exercise price of each outstanding
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Option shall be automatically adjusted to accurately and equitably reflect the
effect thereon of such change (provided, however, that any fractional share
resulting from such adjustment may be eliminated) so that the total number of
outstanding shares subject to an Option shall be equivalent to the amount
specified in Paragraph 2.1 of the Plan. In the event of a dispute concerning
such adjustment, the Committee has full discretion to determine the resolution
of the dispute. Such determination shall be final, binding and conclusive. The
number of reserved shares or the number of shares subject to any outstanding
Option shall be automatically reduced by any fraction included therein which
results from any adjustment made pursuant to this Paragraph 6.6.
The following provisions of this Paragraph 6.6 shall apply unless a
Holder's Agreement provides otherwise. In the event of:
(a) a dissolution or liquidation of the Corporation,
(b) a merger or consolidation (other than a merger effecting a
reincorporation of the Corporation in another state or any other merger or a
consolidation in which the stockholders of the surviving corporation and their
proportionate interests therein immediately after the merger or consolidation
are substantially identical to the stockholders of the Corporation and their
proportionate interests therein immediately prior to the merger or
consolidation) in which the Corporation is not the surviving corporation (or
survives only as a subsidiary of another corporation in a transaction in which
the stockholders of the parent of the Corporation and their proportionate
interests therein immediately after the transaction are not substantially
identical to the stockholders of the Corporation and their proportionate
interests therein immediately prior to the transaction; provided, however, that
the Board of Directors may at any time prior to such a merger or consolidation
provide by resolution that the foregoing provisions of this parenthetical shall
not apply if a majority of the board of directors of such parent immediately
after the transaction consists of individuals who constituted a majority of the
Board of Directors immediately prior to the transaction), or
(c) a transaction in which any person becomes the owner of 50% or
more of the total combined voting power of all classes of stock of the
Corporation (provided, however, that the Board of
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Directors may at any time prior to such transaction provide by resolution that
this subparagraph (c) shall not apply if such acquiring person is a corporation
and a majority of the board of directors of the acquiring corporation
immediately after the transaction consists of individuals who constituted a
majority of the Board of Directors immediately prior to the acquisition of such
50% or more total combined voting power)the Plan and all Options outstanding
hereunder shall terminate, except to the extent provision is made in writing in
connection with such transaction for the continuation of the Plan and/or the
assumption of the Options theretofore granted, or for the substitution for such
Options of new options covering the stock of a successor corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to the number and
kinds of shares and exercise prices, in which event the Plan and Options
theretofore granted shall continue in the manner and under the terms so
provided. In the event of any such termination of the Plan, each individual
holding an Option shall have the right (subject to the general limitations on
exercise set forth in Section 6.4 above), immediately prior to the occurrence of
such termination and during such period occurring prior to such termination as
the Board of Directors in its sole discretion shall determine and designate, to
exercise such Option in whole or in part, whether or not such Option was
otherwise exercisable at the time such termination occurs. The Board shall send
written notice of an event that will result in such a termination to all
individuals who hold Options not later than the time at which the Corporation
gives notice thereof to its stockholders.
6.7 Rights as a Stockholder. A Holder shall have no right as a
stockholder with respect to any shares covered by his Option until a certificate
representing such shares is issued to him. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash or other property) or
distributions or other rights for which the record date is prior to the date
such certificate is issued, except as provided in paragraph 6.6 hereof.
6.8 Modification, Extension and Renewal of Options. Subject to the
terms and conditions of and within the limitations of the Plan, the Committee
may modify, extend or renew outstanding Options granted under the Plan, or
accept the surrender of Options outstanding hereunder (to the extent not
theretofore exercised) and
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authorize the granting of new Options hereunder in substitution therefor (to the
extent not theretofore exercised). The Committee may not, however, without the
consent of the Holder, modify any outstanding Options so as to specify a higher
or lower exercise price or base amount or accept the surrender of outstanding
Incentive Options and authorize the granting of new Options in substitution
therefor specifying a higher or lower exercise price. In addition, no
modification of an Option granted hereunder shall, without the consent of the
Holder, alter or impair any rights or obligations under any Option theretofore
granted hereunder to such Holder under the Plan, except as may be necessary,
with respect to Incentive Options, to satisfy the requirements of Section 422 of
the Code.
6.9 Furnish Information. Each Holder shall furnish to the
Corporation all information requested by the Corporation to enable it to comply
with any reporting or other requirement imposed upon the Corporation by or under
any applicable statute or regulation.
6.10 Obligation to Exercise; Termination of Employment. The granting
of an Option hereunder shall impose no obligation upon the Holder to exercise
the same or any part thereof. In the event of a Holder's termination of
employment with the Corporation or an Affiliate or USPTM, the unexercised
portion of an Option granted hereunder shall terminate in accordance with
paragraph 6.4 hereof.
6.11 Agreement Provisions. The Agreements authorized under the Plan
shall contain such provisions in addition to those required by the Plan
(including, without limitation, restrictions or the removal of restrictions upon
the exercise of the Option and the retention or transfer of shares thereby
acquired) as the Committee shall deem advisable. Each Agreement shall identify
the Option evidenced thereby as an Incentive Option and a Nonstatutory Option,
as the case may be, and no Agreement shall cover both an Incentive Option and a
Nonstatutory Option. Each Agreement relating to an Incentive Option granted
hereunder shall contain such limitations and restrictions upon the exercise of
the Incentive Option to which it relates as shall be necessary for the Incentive
Option to which such Agreement relates to constitute an incentive stock option,
as defined in Section 422 of the Code.
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SECTION 7. Duration of Plan.
No Incentive Options may be granted hereunder after the date that is ten
(10) years from the earlier of (a) the date the Plan is adopted by the Board of
Directors or (b) the date the Plan is approved by stockholders of the
Corporation. In addition, with respect to shares of Stock not currently covered
by an outstanding Option, this Plan may be terminated at any time by the Board
of Directors.
SECTION 8. Amendment of Plan.
The Board of Directors may at any time terminate or from time to time
amend or suspend the Plan; provided, however, that no such amendment shall,
without approval of the stockholders of the Corporation, except as provided in
Section 6, (a) increase the aggregate number of shares of Stock as to which
Options may be granted under the Plan; (b) increase the maximum period during
which Options may be exercised; or (c) extend the effective period of the Plan.
No Option may be granted during any suspension of the Plan or after the Plan has
been terminated and no amendment, suspension or termination shall, without a
Holder's consent, alter or impair any of the rights or obligations under any
Option theretofore granted to such Holder under the Plan.
SECTION 9. General.
9.1 Application of Funds. The proceeds received by the Corporation
from the sale of shares pursuant to Options shall be used for general corporate
purposes.
9.2 Right of the Corporation and Affiliates to Terminate. Nothing
contained in the Plan, or in any Agreement, shall confer upon any Holder the
right to continue in the employ of the Corporation or any Affiliate, or
interfere in any way with the rights of the Corporation or any Affiliate to
terminate his employment any time.
9.3 Authority of Committee. In addition to its authority expressed
herein, the Committee shall have full and absolute discretion to make
determinations under the Plan and any Agreement and to interpret the provisions
of the Plan and any Agreement.
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9.4 No Liability for Good Faith Determinations. Neither the members
of the Board of Directors nor any member of the Committee shall be liable for
any act, omission, or determination taken or made in good faith with respect to
the Plan or any Option granted under it, and members of the Board of Directors
and the Committee shall be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage, or expense (including
attorneys' fees, the costs of settling any suit, provided such settlement is
approved by independent legal counsel selected by the Corporation, and amounts
paid in satisfaction of a judgment, except a judgment based on a finding of bad
faith) arising therefrom to the full extent permitted by law and under any
directors and officers liability or similar insurance coverage that may from
time to time be in effect.
9.5 Information Confidential. As partial consideration for the
granting of each Option hereunder, the Agreement may, in the Committee's sole
and absolute discretion, provide that the Holder shall agree with the
Corporation that he will keep confidential all information and knowledge that he
has relating to the manner and amount of his participation in the Plan;
provided, however, that such information may be disclosed as required by law and
may be given in confidence to the Holder's spouse, tax and financial advisors,
or to a financial institution to the extent that such information is necessary
to secure a loan. In the event any breach of this promise comes to the attention
of the Committee, it shall take into consideration such breach, in determining
whether to recommend the grant of any future Option to such Holder, as a factor
militating against the advisability of granting any such future Option to such
individual.
9.6 Other Benefits. Participation in the Plan shall not preclude the
Holder from eligibility in any other stock option plan of the Corporation or any
Affiliate or any old age benefit, insurance, pension, profit sharing,
retirement, bonus, or other extra compensation plans which the Corporation or
any Affiliate has adopted, or may, at any time, adopt for the benefit of its
employees.
9.7 Execution of Receipts and Releases. Any payment of cash or any
issuance or transfer of shares of Stock to the Holder, or to his legal
representative, heir, legatee, or distributee, in
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accordance with the provisions hereof, shall, to the extent thereof, be in full
satisfaction of all claims of such persons hereunder. The Committee may require
any Holder, legal representative, heir, legatee, or distributee, as a condition
precedent to such payment, to execute a release and receipt therefor in such
form as it shall determine.
9.8 No Guarantee of Interests. Neither the Committee nor the
Corporation guarantees the Stock of the Corporation from loss or depreciation.
9.9 Payment of Expenses. All expenses incident to the
administration, termination, or protection of the Plan, including, but not
limited to, legal and accounting fees, shall be paid by the Corporation or its
Affiliates; provided, however, the Corporation or an Affiliate may recover any
and all damages, fees, expenses, and/or costs arising out of any actions taken
by the Corporation to enforce its rights hereunder.
9.10 Corporation Records. Records of the Corporation or its
Affiliates regarding the Holder's period of employment, termination of
employment and the reason therefor, leaves of absence, re-employment, and other
matters shall be conclusive for all purposes hereunder, unless determined by the
Committee to be incorrect.
9.11 Information. The Corporation and its Affiliates shall, upon
request or as may be specifically required hereunder, furnish or cause to be
furnished, all of the information or documentation which is necessary or
required by the Committee to perform its duties and functions under the Plan.
9.12 No Liability of Corporation. The Corporation assumes no
obligation or responsibility to the Holder or his legal representatives, heirs,
legatees, or distributees for any act of, or failure to act on the part of, the
Committee.
9.13 Corporation Act. Any action required of the Corporation shall be
by resolution of its Board of Directors, by a person authorized to act by
resolution of the Board of Directors, or by a person authorized to act by the
bylaws of the Corporation.
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9.14 Severability. If any provision of this Plan is held to be
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions hereof, but such provision shall be fully severable and
the Plan shall be construed and enforced as if the illegal or invalid provision
had never been included herein.
9.15 Notices. Whenever any notice is required or permitted hereunder,
such notice must be in writing and personally delivered or sent by mail or by a
nationally recognized courier service. Any notice required or permitted to be
delivered hereunder shall be deemed to be delivered on the date on which it is
personally delivered, or, if mailed, whether actually received or not, on the
third business day after it is deposited in the United States mail, certified or
registered, postage prepaid, addressed to the person who is to receive it at the
address which such person has previously specified by written notice delivered
in accordance herewith or, if by courier, 24 hours after it is sent, addressed
as described in this Section, or, if by facsimile machine, the time mechanically
recorded on the document by the facsimile process. The Corporation or a Holder
may change, at any time and from time to time, by written notice to the other,
the address which it or he had previously specified for receiving notices. Until
changed in accordance herewith, the Corporation and each Holder shall specify as
its and his address for receiving notices the address set forth in the Agreement
pertaining to the shares to which such notice relates.
9.16 Waiver of Notice. Any person entitled to notice hereunder may
waive such notice.
9.17 Successors. The Plan shall be binding upon the Holder, his legal
representatives, heirs, legatees, and distributees, upon the Corporation, its
successors, and assigns, and upon the Committee and its successors.
9.18 Headings. The titles and headings of Sections and Paragraphs are
included for convenience of reference only and are not to be considered in
construction of the provisions hereof.
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9.19 Governing Law. All questions arising with respect to the
provisions of the Plan shall be determined by application of the laws of the
State of Nevada except to the extent Nevada law is preempted by federal law.
Questions arising with respect to the provisions of an Agreement that are
matters of contract law shall be governed by the laws of the state specified in
the Agreement, except to the extent preempted by federal law and except to the
extent that Nevada corporate law conflicts with the contract law of such state,
in which event Nevada corporate law shall govern. The obligation of the
Corporation to sell and deliver Stock hereunder is subject to applicable laws
and to the approval of any governmental authority required in connection with
the authorization, issuance, sale, or delivery of such Stock.
9.20 Word Usage. Words used in the masculine shall apply to the
feminine where applicable, and wherever the context of this Plan dictates, the
plural shall be read as the singular and the singular as the plural.
SECTION 10. Approval of Stockholders.
The Plan shall take effect on the date it is adopted by the Board of
Directors. However, if this Plan is not approved by the holders of a majority of
the outstanding shares of equity securities of the Corporation having voting
rights within twelve months of the date of adoption by the Board of Directors,
none of the Options granted hereunder shall constitute Incentive Options.
* * * *
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