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EXHIBIT 10.4
1997 STOCK OPTION PLAN
OF
DAISYTEK INTERNATIONAL CORPORATION
Daisytek International Corporation, a corporation organized
under the laws of the State of Delaware, hereby adopts this 1997 Stock Option
Plan. The purpose of this Plan is to further the growth, development and
financial success of the Company by providing additional incentives to certain
of its key Employees by assisting them to become owners of the Company's Common
Stock and thus to benefit directly from its growth, development and financial
success.
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Plan, they shall
have the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter and the
singular shall include the plural, where the context so indicates.
Section 1.1 - Board
"Board" shall mean the Board of Directors of the Company.
Section 1.2 - Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.3 - Committee
"Committee" shall mean the Stock Option Committee of the Board,
appointed as provided in Section 6.1.
Section 1.4 - Company
"Company" shall mean Daisytek International Corporation, a
Delaware corporation. In addition, "Company" shall mean any corporation
assuming, or issuing new employee stock options in substitution for, Incentive
Stock Options, outstanding under the Plan, in a transaction to which Section
424(a) of the Code applies.
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Section 1.5 - Director
"Director" shall mean a member of the Board.
Section 1.6 - Employee
"Employee" shall mean any employee (as defined in accordance
with the regulations and revenue rulings then applicable under Section 3401(c)
of the Code) of the Company, or of any corporation which is then a Parent
Corporation or a Subsidiary, whether such employee is so employed at the time
this Plan is adopted or becomes so employed subsequent to the adoption of this
Plan. To the extent not included in the foregoing, "Employee" shall also mean
any officer, director, employee or consultant of the Company, or any entity
which, directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company, as the Committee
shall from time to time select in its sole discretion.
Section 1.7 - Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
Section 1.8 - Incentive Stock Option
"Incentive Stock Option" shall mean an Option which qualifies
under Section 422 of the Code and which is designated as an Incentive Stock
Option by the Committee.
Section 1.9 - Non-Qualified Option
"Non-Qualified Option" shall mean an Option which is not an
Incentive Stock Option and which is designated as a Non-Qualified Option by the
Committee.
Section 1.10 - Officer
"Officer" shall mean an officer of the Company, as defined in
Rule 16a-1(f) under the Exchange Act, as such Rule may be amended in the
future.
Section 1.11 - Option
"Option" shall mean an option to purchase Common Stock of the
Company, granted under the Plan. "Options" includes both Incentive Stock
Options and Non-Qualified Options.
Section 1.12 - Optionee
"Optionee" shall mean an Employee to whom an Option is granted
under the Plan.
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Section 1.13 - Parent Corporation
"Parent Corporation" shall mean any corporation in an unbroken
chain of corporations ending with the Company if each of the corporations other
than the Company then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
Section 1.14 - Plan
"Plan" shall mean this 1997 Stock Option Plan of Daisytek
International Corporation.
Section 1.15 - Rule 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended in the future.
Section 1.16 - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.17 - Securities Act
"Securities Act" shall mean the Securities Act of 1933, as
amended.
Section 1.18 - Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
Section 1.19 - Termination of Employment
"Termination of Employment" shall mean the time when an Optionee
ceases to be an Employee for any reason, with or without cause, including, but
not by way of limitation, by resignation, discharge, death or retirement, but
excluding terminations where there is a simultaneous reemployment by the
Company, a Parent Corporation, a Subsidiary or any entity which, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the Company. The Committee, in its absolute
discretion, and with respect to all Options hereunder, shall determine all
matters and questions relating to Termination of Employment, including, but not
by way of limitation, the question of whether a Termination of Employment is
for "cause" and what actions constitute "cause", and all questions of whether
particular leaves of absence constitute Terminations of Employment; provided,
however, that, with respect to Incentive Stock Options, a leave of absence
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shall constitute a Termination of Employment if, and to the extent that, such
leave of absence interrupts employment for the purposes of Section 422(a)(2) of
the Code and the then applicable regulations and revenue rulings under said
Section.
ARTICLE II
SHARES SUBJECT TO PLAN
Section 2.1 - Shares Subject to Plan
The shares of stock subject to Options shall be shares of the
Company's Common Stock, $.01 par value. The aggregate number of such shares
which may be issued upon exercise of Options shall be 1,000,000 shares. The
shares to be issued upon exercise of Options may be newly-issued shares or
Treasury shares.
Section 2.2 - Unexercised Options
If any Option expires or is canceled without having been fully
exercised, the number of shares subject to such Option but as to which such
Option was not exercised prior to its expiration or cancellation may again be
optioned hereunder.
Section 2.3 - Changes in Company's Shares
In the event that the outstanding shares of Common Stock of the
Company are hereafter changed into or exchanged for a different number or kind
of shares or other securities of the Company, or of another corporation, by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend or combination of shares,
appropriate adjustments shall be made by the Committee in the number and kind
of shares for the purchase of which Options may be granted, including
adjustments of the limitations in Section 2.1 on the maximum number and kind of
shares which may be issued on exercise of Options.
ARTICLE III
GRANTING OF OPTIONS
Section 3.1 - Eligibility
Any key Employee shall be eligible to be granted Options,
subject to such rules and conditions as the Committee may establish from time
to time in its sole discretion.
Section 3.2 - Qualification of Incentive Stock Options
Subject to the provisions of Section 7.7 hereof, no Incentive
Stock Option shall be
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granted unless such Option, when granted, qualifies as an "incentive stock
option" under Section 422 of the Code.
Section 3.3 - Granting of Options
(a) Subject to the provisions hereof, the Committee shall from
time to time, in its absolute discretion:
(i) Determine which Employees are key Employees and select
from among the key Employees (including those to whom Options have been
previously granted under the Plan or any other plan of the Company) such
of them as in its opinion should be granted Options; and
(ii) Determine the number of shares to be subject to such
Options granted to such selected key Employees, and determine whether
such Options are to be Incentive Stock Options or Non-Qualified Options;
and
(iii) Determine the terms and conditions of such Options,
consistent with the Plan.
(b) In selecting the key Employees to whom Options shall be
granted hereunder, the number of shares to be subject to such Options and the
terms and conditions of such Options, the Committee shall have sole and
absolute discretion and shall be free to make non-uniform and selective
determinations based upon such factors as it deems relevant.
(c) Upon the selection of a key Employee to be granted an
Option, the Committee shall instruct the Secretary to issue such Option and may
impose such conditions on the grant of such Option as it deems appropriate.
Without limiting the generality of the preceding sentence, the Committee may,
in its discretion and on such terms as it deems appropriate, require as a
condition on the grant of an Option to an Employee that the Employee surrender
for cancellation some or all of the unexercised Options which have been
previously granted to him. An Option the grant of which is conditioned upon
such surrender may have an option price lower (or higher) than the option price
of the surrendered Option, may cover the same (or a lessor or greater) number
of shares as the surrendered Option, may contain such other terms as the
Committee deems appropriate and shall be exercisable in accordance with its
terms, without regard to the number of shares, price, option period or any
other term or condition of the surrendered Option.
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ARTICLE IV
TERMS OF OPTIONS
Section 4.1 - Option Agreement
Each Option shall be evidenced by a written Stock Option
Agreement, which shall be executed by the Optionee and an authorized Officer of
the Company and which shall contain such terms and conditions as the Committee
shall determine, consistent with the Plan. Stock Option Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be
necessary to qualify such Options as "incentive stock options" under Section
422 of the Code.
Section 4.2 - Option Price
(a) The price of the shares subject to each Option shall be not
less than 100% of the fair market value of such shares on the date such Option
is granted; provided, however, that, in the case of an Incentive Stock Option,
the price per share shall not be less than 110% of the fair market value of
such shares on the date such Option is granted in the case of an individual
then owning (within the meaning of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the Company, any
Subsidiary or any Parent Corporation.
(b) For purposes of the Plan, the fair market value of a share
of the Company's Common Stock as of a given date shall be: (i) the closing
price of a share of the Company's Common Stock on the principal exchange on
which shares of the Company's Common Stock are then trading, if any, on the day
previous to such date, or, if shares were not traded on the day previous to
such date, then on the next preceding trading day during which a sale occurred;
or (ii) if such Common Stock is not traded on an exchange but is quoted on
NASDAQ or a successor quotation system, (1) the last sales price (if the
Company's Common Stock is then listed as a National Market Issue under the NASD
National Market System) or (2) the mean between the closing representative bid
and asked prices (in all other cases) for the Company's Common Stock, in each
case, as of the day previous to such date as reported by NASDAQ or such
successor quotation system; or (iii) if such Common Stock is not publicly
traded on an exchange and not quoted on NASDAQ or a successor quotation system,
the mean between the closing bid and asked prices for the Company's Common
Stock, on the day previous to such date, as determined in good faith by the
Committee; or (iv) if the Company's Common Stock is not publicly traded, the
fair market value established by the Committee acting in good faith.
Section 4.3 - Commencement of Exercisability
(a) No Option may be exercised in whole or in part during the
six months after such Option is granted.
(b) Subject to the provisions of paragraph (c) below, each
Option granted hereunder shall be subject to the following cumulative vesting
schedule:
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(i) Until the date which is one year from the date of
grant, the Option shall not be vested and shall not be exercisable as to
any of the shares subject thereto;
(ii) From and after the date which is one year from the
date of grant, the Option shall vest and be exercisable as to 15% of the
number of shares subject thereto;
(iii) From and after the date which is two years from the
date of grant, the Option shall vest and be exercisable as to 50% of the
number of shares subject thereto; and
(iv) From and after the date which is three years from
the date of grant, the Option shall be fully vested and exercisable as to
100% of the number of shares subject thereto.
(c) Subject to the provisions hereof governing Incentive Stock
Options, the Committee shall have the right to accelerate the vesting of any
outstanding Option, or any portion thereof, at any time and from time to time,
and upon such terms and conditions as it shall determine in its sole
discretion.
(d) Notwithstanding any other provision of this Plan, to the
extent that the aggregate fair market value (determined at the time the
Incentive Stock Option is granted) of the shares of the Company's stock with
respect to which "incentive stock options" (within the meaning of Section 422
of the Code) are exercisable by any Optionee for the first time by such
Optionee during any calendar year (under the Plan and all other incentive stock
option plans of the Company, any Subsidiary and any Parent Corporation) exceeds
$100,000, such Options shall be treated as Non-Qualified Options. For purposes
of this Section, Options shall be taken into account in the order in which they
were granted.
Section 4.4 - Expiration of Options
No Option may be exercised to any extent by anyone after the
first to occur of the following events:
(i) The expiration of ten years from the date the Option
was granted;
(ii) With respect to an Incentive Stock Option, in the
case of an Optionee owning (within the meaning of Section 424(d) of the
Code), at the time the Incentive Stock Option was granted, more than 10%
of the total combined voting power of all classes of stock of the
Company, any Subsidiary or any Parent Corporation, the expiration of five
years from the date the Incentive Stock Option was granted;
(iii) The date of the Optionee's Termination of Employment
for any reason, other than such Optionee's death or disability (within
the meaning of Section 22(e)(3) of the Code), unless the Committee
otherwise elects to permit the exercise of such Option for a period of
time thereafter; provided, however (a) such period of time shall end no
later than ten
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years from the date the Option was granted, (b) with respect to
Incentive Stock Options, such period of time shall not exceed three
months from such Termination of Employment and (c) the Committee may make
such elections in such manner as it deems appropriate, which may be
non-uniform and selective, and based upon such factors as it deems
relevant;
(iv) With respect to an Incentive Stock Option held by an
Optionee who is disabled (within the meaning of Section 22(e)(3) of the
Code), the expiration of one year from the date of the Optionee's
Termination of Employment for any reason other than such Optionee's death
unless the Optionee dies within said one-year period;
(v) The expiration of one year from the date of the
Optionee's death with respect to all Incentive Stock Options held by such
Optionee; and
(vi) With respect to all Options, and notwithstanding any
other provision contained herein, the date of the Optionee's Termination
of Employment in the event such Termination is for "cause" (as provided
in Section 1.19 above).
Section 4.5 - Consideration
In consideration of the granting of an Option, the Committee may
require that the Optionee shall agree to remain in the employ of the Company,
a Parent Corporation or a Subsidiary for a period of at least one year after
the Option is granted. Nothing in this Plan or in any Stock Option Agreement
hereunder shall confer upon any Optionee any right to continue in the employ of
the Company, any Parent Corporation or any Subsidiary or shall interfere with
or restrict in any way the rights of the Company, its Parent Corporations and
its Subsidiaries, which are hereby expressly reserved, to discharged any
Optionee at any time for any reason whatsoever, with or without cause.
Section 4.6 - Adjustments in Outstanding Options
In the event that the outstanding shares of the stock subject to
Options are changed into or exchanged for a different number or kind of shares
of the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split-up, stock
dividend or combination of shares, the Committee shall make an appropriate and
equitable adjustment in the number and kind of shares as to which all
outstanding Options, or portions thereof then unexercised, shall be
exercisable, to the end that after such event the Optionee's proportionate
interest shall be maintained as before the occurrence of such event. Such
adjustment in an outstanding Option shall be made without change in the total
price applicable to the Option or the unexercised portion of the Option (except
for any change in the aggregate price resulting from rounding-off of share
quantities or prices) and with any necessary corresponding adjustment in Option
price per share; provided, however, that, in the case of Incentive Stock
Options, each such adjustment shall be made in such manner as not to constitute
a "modification" within the meaning of Section 424(h)(3) of the Code. Any such
adjustment made by the Committee shall be final and binding upon all Optionees,
the Company and all other interested persons.
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Section 4.7 - Merger, Consolidation, Acquisition, Liquidation or Dissolution
By its acceptance of each Option, each Optionee agrees that the
Board shall have the power and right to declare and determine, by a duly
adopted resolution of the Board, that each Option may not be exercised after
(i) the merger or consolidation of the Company with or into another corporation
(if the Company is not the surviving corporation of such merger or
consolidation), (ii) the acquisition by another corporation or person of all or
substantially all of the Company's assets or 80% or more of the Company's then
outstanding voting stock or (iii) the liquidation or dissolution of the
Company; provided, that such resolution shall be adopted prior to the
occurrence of such merger, consolidation, acquisition, liquidation or
dissolution.
ARTICLE V
EXERCISE OF OPTIONS
Section 5.1 - Person Eligible to Exercise
During the lifetime of the Optionee, only he may exercise an
Option (or any portion thereof) granted to him. After the death of the
Optionee, any exercisable portion of an Option may, prior to the time when such
portion becomes unexercisable under the Plan or the applicable Stock Option
Agreement, be exercised by his personal representative or by any person
empowered to do so under the deceased Optionee's will or under the then
applicable laws of descent and distribution. Notwithstanding the foregoing, the
Committee may, in its sole discretion, permit the transfer of any Non-Qualified
Option, in whole or in part, and the exercise thereof by any transferee
thereof.
Section 5.2 - Partial Exercise
At any time and from time to time prior to the time when any
exercisable Option or exercisable portion thereof becomes unexercisable under
the Plan or the applicable Stock Option Agreement, such Option or portion
thereof may be exercised in whole or in part; provided, however, that the
Company shall not be required to issue fractional shares and the Committee may
require any partial exercise to be with respect to a specified minimum number
of shares.
Section 5.3 - Manner of Exercise
An exercisable Option, or any exercisable portion thereof, may
be exercised solely by delivery to the Secretary or his office of all of the
following prior to the time when such Option or such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement:
(a) Notice in writing signed by the Optionee or other person
then entitled to exercise such Option or portion, stating that such Option or
portion is exercised, such notice complying with all applicable rules
established by the Committee; and
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(b)(i) Full payment (in cash or by check) for the shares with
respect to which such Option or portion is thereby exercised; or
(ii) With the consent of the Committee, (A) shares of the
Company's Common Stock owned by the Optionee duly endorsed for transfer to the
Company or (B) except with respect to Incentive Stock Options and subject to
the requirements of Section 5.4, shares of the Company's Common Stock issuable
to the Optionee upon exercise of the Option, in each case, with a fair market
value (as determined under Section 4.2(b)) on the date of Option exercise equal
to the aggregate Option price of the shares with respect to which such Option
or portion is thereby exercised; or
(iii) With the consent of the Committee, any combination of the
consideration provided in the foregoing subsections (i) and (ii); and
(c) The payment to the Company (or other employer corporation)
of all amounts which it is required to withhold under federal, state or local
law in connection with the exercise of the Option; provided, that, with the
consent of the Committee, any combination of the following may be used to make
all or part of such payment: (i) shares of the Company's Common Stock owned by
the Optionee duly endorsed for transfer or (ii) except with respect to
Incentive Stock Options and subject to the requirements of Section 5.4, shares
of the Company's Common Stock issuable to the Optionee upon exercise of the
Option, in each case, valued in accordance with Section 4.2(b) at the date of
Option exercise; and
(d) Such representations and documents as the Committee, in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Committee may, in its absolute discretion,
also take whatever additional actions it deems appropriate to effect such
compliance including, without limitation, placing legends on share certificates
and issuing stop-transfer orders to transfer agents and registrars; and
(e) In the event that the Option or portion thereof shall be
exercised pursuant to Section 5.1 by any person or persons other than the
Optionee, appropriate proof of the right of such person or persons to exercise
the Option or portion thereof.
Section 5.4 - Certain Requirements
The Committee may, in its sole discretion, limit or restrict the
use of Shares of the Company's Common Stock issuable to the Optionee upon
exercise of the Option to satisfy the Option price or the tax withholding
consequences of such exercise (i) to the period beginning on the third business
day following the date of release of the quarterly or annual summary statement
of sales and earnings of the Company and ending on the twentieth business day
following such date or (ii) to its receipt of an irrevocable written election
by the Optionee to use shares of the Company's Common Stock issuable to the
Optionee upon exercise of the Option to pay all or part of the Option price or
the
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withholding taxes (subject to the approval of the Committee) made at least six
months prior to the payment of such Option price or withholding taxes or (iii)
in accordance with such other rules and regulations as the Committee may
determine to be necessary or appropriate from time to time.
Section 5.5 - Conditions to Issuance of Stock Certificates
The shares of stock issuable and deliverable upon the exercise
of an Option, or any portion thereof, may be either previously authorized but
unissued shares or issued shares which have then been reacquired by the
Company. The Company shall not be required to issue or deliver any certificate
or certificates for shares of stock purchased upon the exercise of any Option
or portion thereof prior to the fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed; and
(b) The completion of any registration or other qualification of
such shares under any state or federal law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental regulatory
body, which the Committee shall, in its absolute discretion, deem necessary or
advisable; and
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The payment to the Company (or other employer corporation)
of all amounts which it is required to withhold under federal, state or local
law in connection with the exercise of the Option; and
(e) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may establish from time to time for
reasons of administrative convenience.
Section 5.6 - Rights as Shareholders
The holders of Options shall not be, nor have any of the rights
or privileges of, shareholders of the Company in respect of any shares
purchasable upon the exercise of any part of an Option unless and until
certificates representing such shares have been issued by the Company to such
holders.
Section 5.7 - Transfer Restrictions
If required at any time by the Committee, no shares acquired
upon exercise of any Option by any Officer may be sold, assigned, pledged,
encumbered or otherwise transferred until at least six months have elapsed from
(but excluding) the date that such Option was granted. The
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Committee, in its absolute discretion, may impose such other restrictions on
the transferability of the shares purchasable upon the exercise of an Option as
it deems appropriate. Any such other restriction shall be set forth in the
respective Stock Option Agreement and may be referred to on the certificates
evidencing such shares. The Committee may require the Employee to give the
Company prompt notice of any disposition of shares of stock, acquired by
exercise of an Incentive Stock Option, within two years from the date of
granting such Option or one year after the transfer of such shares to such
Employee. The Committee may direct that the certificates evidencing shares
acquired by exercise of an Incentive Stock Option refer to such requirement to
give prompt notice of disposition.
ARTICLE VI
ADMINISTRATION
Section 6.1 - Stock Option Committee
The Stock Option Committee shall consist of two or more
Directors, appointed by and holding office at the pleasure of the Board. The
Board may limit the members of the Committee to directors who are both
"non-employee directors", as defined in Rule 16b-3, and "outside directors", as
defined in Section 162(m) of the Code. Subject to the limitations set forth in
the preceding sentence, the powers of the Stock Option Committee may be
exercised by the Compensation Committee of the Board. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members
may be removed by the Board at any time and may resign at any time. Vacancies
in the Committee shall be filled by the Board. The Board reserves the right to
serve as the Stock option Committee if it so elects, and, in which event, the
term "Committee" shall mean the Board.
Section 6.2 - Duties and Powers of Committee
It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions. The Committee
shall have the power to interpret the Plan and the Options and to adopt such
rules for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret, amend or revoke any such rules. Any
such interpretations and rules in regard to Incentive Stock Options shall be
consistent with the basic purpose of the Plan to grant "incentive stock
options" within the meaning of Section 422 of the Code.
Section 6.3 - Majority Rule
The Committee shall act by a majority of its members in office.
The Committee may act either by vote at a meeting or by a memorandum or other
written instrument signed by a majority of the Committee.
Section 6.4 - Compensation; Professional Assistance; Good Faith Actions
Members of the Committee shall receive such compensation for
their services as
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members as may be determined by the Board. All expenses and
liabilities incurred by members of the Committee in connection with the
administration of the Plan shall be borne by the Company. The Committee may
employ attorneys, consultants, accountants, appraisers, brokers or other
persons. The Committee, the Company and its Officers and Directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all Optionees, the
Company and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Options, and all members of the Committee
shall be fully protected by the Company in respect to any such action,
determination or interpretation. The Committee shall have the unrestricted
right to make non-uniform decisions and determinations in all matters regarding
the Plan and all Options issued hereunder.
ARTICLE VII
OTHER PROVISIONS
Section 7.1 - Options Not Transferable
No Option or interest or right therein or part thereof shall be
liable for the debts, contracts or engagements of the Optionee or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that nothing in this
Section 7.1 shall prevent transfers by will or by the applicable laws of
descent and distribution. Notwithstanding the foregoing, the Committee may, in
its discretion, permit the holder of any Non-Qualified Option to transfer such
Option, or any portion thereof, to such holder's spouse, lineal descendent or
trust established for the benefit thereof or any other person or entity.
Section 7.2 - Amendment, Suspension or Termination of the Plan
The Plan may be wholly or partially amended or otherwise
modified, suspended or terminated at any time or from time to time by the
Committee, including without limitation, any amendment to increase or decrease
the number of shares as to which Options may be granted hereunder, subject to
any requirements of shareholder approval set forth in Section 16b-3 or the
applicable provisions of the Code. Neither the amendment, suspension nor
termination of the Plan shall, without the consent of the holder of the Option,
impair any rights or obligations under any Option theretofore granted. Subject
to any applicable provisions of Section 16b-3 and the Code, the Committee and
the holder of any Option may at any time, by mutual consent, amend, modify or
otherwise waive any of the terms and provisions, including the exercise price,
of such holder's Option and Stock Option Agreement. No Option may be granted
during any period of suspension nor after termination of the Plan, and in no
event may any Option be granted under this Plan after the first to
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occur of (a) March 31, 2007 or (b) the expiration of ten years from the date
the Plan is approved by the Company's shareholders under Section 7.3.
Section 7.3 - Effective Date; Approval of Plan by Shareholders
This Plan will be effective upon its approval by the Board or
such other date as the Board shall determine; provided, however, that,
notwithstanding any other provision contained herein, no Option shall be
exercisable unless this Plan shall be approved within 12 months of its
effective date by stockholders holding at least a majority of the Company's
voting stock voting in person or by proxy at a duly held stockholders' meeting.
Section 7.4 - Effect of Plan Upon Other Option and Compensation Plans
The adoption of this Plan shall not affect any other
compensation or incentive plans in effect for the Company, any Parent
Corporation or any Subsidiary. Nothing in this Plan shall be construed to
limit the right of the Company, any Parent Corporation or any Subsidiary to (a)
establish any other forms of incentives or compensation for employees of the
Company, any Parent Corporation or any Subsidiary or (b) grant or assume
options otherwise than under this Plan in connection with any proper corporate
purpose, including, but not by way of limitation, the grant or assumption of
options in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
Section 7.5 - Titles
Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of the Plan.
Section 7.6 - Conformity to Securities Laws
The Plan is intended to conform to the extent necessary with all
provisions of the Securities Act and the Exchange Act and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder, including without limitation Rule 16b-3. Notwithstanding anything
herein to the contrary, the Plan shall be administered, and Options shall be
granted and may be exercised, only in such a manner as to conform to such laws,
rules and regulations. To the extent permitted by applicable law, the Plan and
Options granted hereunder shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.
Section 7.7 - Incentive Stock Options
With respect to Incentive Stock Options, if the Plan does not
contain any provision now or hereafter required to be included herein under
section 422 of the Code, such provision shall be deemed to be incorporated
herein with the same force and effect as if such provision had been set out
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at length herein. Notwithstanding anything contained herein, to the extent any
Option which is intended to qualify as an Incentive Stock Option cannot so
qualify, such Option, to that extent, shall be deemed to be a Non-Qualified
Option under the Code for all purposes of the Plan.
Section 7.8 - Exclusion from Pension and Profit-Sharing Computation
By acceptance of an Option, each Optionee shall be deemed to
have agreed that such grant is special incentive compensation that will not be
taken into account, in any manner, as salary, compensation or bonus in
determining the amount of any payment under any pension, retirement or other
employee benefit plan of the Company or any of its Subsidiaries, whether now
existing or hereafter arising. In addition, such Option will not affect the
amount of any life insurance coverage, if any, provided by the Company on the
life of the Optionee which is payable to such beneficiary under any life
insurance plan covering employees of the Company or any of its Subsidiaries.
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