MERCURY COMPUTER SYSTEMS, INC.
1997 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN.
This stock option plan (the "Plan") is intended to encourage ownership
of the stock of Mercury Computer Systems, Inc. (the "Company") by employees and
advisors of the Company and its subsidiaries, to induce qualified personnel to
enter and remain in the employ of the Company or its subsidiaries and otherwise
to provide additional incentive for optionees to promote the success of its
business.
2. STOCK SUBJECT TO THE PLAN.
(a) The maximum number of shares of common stock, par value $.01 per
share, of the Company (the "Common Stock") for which options may be granted
under this Plan shall be five million six hundred fifty thousand (5,650,000)
shares. The maximum number of shares of Common Stock available for granting
incentive stock options under this Plan shall be five million six hundred fifty
thousand (5,650,000) shares. These limitations and all other limitations on the
number of shares referenced in this Plan shall be subject to adjustment as
provided in Section 12 of the Plan. Shares issued under the Plan may be
authorized but unissued shares of Common Stock, or shares of Common Stock held
in treasury by the Company.
(b) If an option granted hereunder shall expire or terminate for any
reason without having vested fully or having been exercised in full, the
unvested and/or unpurchased shares subject thereto shall again be available for
subsequent option grants under the Plan.
(c) Stock issuable upon exercise of an option granted under the Plan
may be subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Committee.
3. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a committee (the "Committee")
consisting of two or more members of the Company's Board of Directors. The
selection of persons for participation in the Plan and all decisions concerning
the timing, pricing and amount of any grant or award under the Plan shall be
made solely by the Committee. The Board of Directors may from time to time
appoint a member or members of the Committee in substitution for or in addition
to the member or members then in office and may fill vacancies on the Committee
however caused. The Committee shall choose one of its members as Chairman and
shall hold meetings at such times and places as it shall deem advisable. A
majority of the
members of the Committee shall constitute a quorum and any action may be taken
by a majority of those present and voting at any meeting. Any action may also be
taken without the necessity of a meeting by a written instrument signed by a
majority of the Committee. The decision of the Committee as to all questions of
interpretation and application of the Plan shall be final, binding and
conclusive on all persons. The Committee shall have the authority to adopt,
amend and rescind such rules and regulations as, in its opinion, may be
advisable in the administration of the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any option agreement granted hereunder in the manner and to the extent it shall
deem expedient to carry the Plan into effect and shall be the sole and final
judge of such expediency. No Committee member shall be liable for any action or
determination made in good faith.
4. TYPE OF OPTIONS.
Options granted pursuant to the Plan shall be authorized by action of
the Committee and may be designated as either incentive stock options meeting
the requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or non-qualified options which are not intended to meet the
requirements of such Section 422 of the Code, the designation to be in the sole
discretion of the Committee. The Plan shall be administered by the Committee in
such manner as to permit options to qualify as incentive stock options under the
Code.
5. ELIGIBILITY.
Options designated as incentive stock options shall be granted only to
employees (including officers and directors who are also employees) of the
Company and any of its subsidiaries. Options designated as non-qualified options
may be granted to officers, directors, employees, consultants, and advisors of
the Company or of any of its subsidiaries. "Subsidiary" or "subsidiaries" shall
be as defined in Section 424 of the Code and the Treasury Regulations
promulgated thereunder (the "Regulations") and shall include present and future
subsidiaries.
The Committee shall, from time to time, at its sole discretion, select
from such eligible individuals those to whom options shall be granted and shall
determine the number of shares to be subject to each option. In determining the
eligibility of an individual to be granted an option, as well as in determining
the number of shares to be granted to any individual, the Committee in its sole
discretion shall take into account the position and responsibilities of the
individual being considered, the nature and value to the Company or its
subsidiaries of his or her service and accomplishments, his or her present and
potential contribution to the success of the Company or its subsidiaries, and
such other factors as the Committee may deem relevant.
- 2 -
No option designated as an incentive stock option shall be granted to
any employee of the Company or any subsidiary if such employee owns, immediately
prior to the grant of an option, stock representing more than 10% of the
combined voting power of all classes of stock of the Company or a parent or a
subsidiary, unless the purchase price for the stock under such option shall be
at least 110% of its fair market value at the time such option is granted and
the option, by its terms, shall not be exercisable more than five years from the
date it is granted. In determining the stock ownership under this paragraph, the
provisions of Section 424(d) of the Code shall be controlling. In determining
the fair market value under this paragraph, the provisions of Section 7 hereof
shall apply.
The maximum number of shares of the Company's Common Stock with respect
to which an option or options may be granted to any employee in any one taxable
year of the Company shall not exceed 100,000 shares, taking into account shares
granted during such taxable year under options that are terminated or repriced.
6. OPTION AGREEMENT.
(a) Each option shall be evidenced by an option agreement (the
"Agreement") duly executed on behalf of the Company and by the optionee to whom
such option is granted, which Agreement shall comply with and be subject to the
terms and conditions of the Plan. The Agreement may contain such other terms,
provisions and conditions which are not inconsistent with the Plan as may be
determined by the Committee, provided that options designated as incentive stock
options shall meet all of the conditions for incentive stock options as defined
in Section 422 of the Code. The date of grant of an option shall be as
determined by the Committee. More than one option may be granted to an
individual.
(b) Unless the Agreement specifies otherwise, the Committee may cancel,
rescind, suspend, withhold or otherwise limit or restrict any option (whether
vested or unvested, exercised or unexercised) at any time if the optionee is not
in compliance with all applicable provisions of the Agreement and the Plan, or
if the optionee engages in any "Detrimental Activity." For purposes of this
Section 6, "Detrimental Activity" shall include: (i) the rendering of services
for any organization or engaging directly or indirectly in any business which is
or becomes competitive with the Company, or which organization or business, or
the rendering of services to such organization or business, is or becomes
otherwise prejudicial to or in conflict with the interests of the Company; (ii)
the disclosure to anyone outside the Company, or the use in other than the
Company's business, without prior written authorization from the Company, of any
confidential information or material, as defined in the Company's Employee
Confidentiality Agreement or such other agreement regarding confidential
information and intellectual property that the optionee and the Company may
enter into (collectively, the "Confidentiality
- 3 -
Agreement"), relating to the business of the Company, acquired by the optionee
either during or after employment with the Company; (iii) the failure or refusal
to disclose promptly and to assign to the Company, pursuant to the
Confidentiality Agreement or otherwise, all right, title and interest in any
invention or idea, patentable or not, made or conceived by the optionee during
employment by the Company, relating in any manner to the actual or anticipated
business, research or development work of the Company or the failure or refusal
to do anything reasonably necessary to enable the Company to secure a patent
where appropriate in the United States and in other countries; (iv) activity
that results in termination of the optionee's employment for cause; (v) a
material violation of any rules, policies, procedures or guidelines of the
Company; (vi) any attempt directly or indirectly to induce any employee of the
Company to be employed or perform services elsewhere or any attempt directly or
indirectly to solicit the trade or business of any current or prospective
customer, supplier or partner of the Company; or (vii) the optionee being
convicted of, or entering a guilty plea with respect to, a crime, whether or not
connected with the Company.
(c) Upon exercise, payment, or delivery pursuant to an option, the
optionee shall certify in a manner acceptable to the Company that he or she is
in compliance with the terms and conditions of the Plan. In the event an
optionee engages in any Detrimental Activity as set forth in paragraphs
(b)(i)-(viii) of this Section 6 prior to, or during the six (6) months after,
any exercise, payment, or delivery pursuant to an option, such exercise,
payment, or delivery may be rescinded by the Company within two (2) years
thereafter. In the event of any such rescission, the optionee shall pay to the
Company the amount of any gain realized or payment received as a result of the
rescinded exercise, payment, or delivery, in such manner and on such terms and
conditions as may be required, and the Company shall also be entitled to set-off
against the amount of any such gain any amount owed to the optionee by the
Company, and to be reimbursed for any attorney's fees or other costs or expenses
incurred in enforcing this Section 6 of the Plan.
7. OPTION PRICE.
The option price or prices of shares of the Company's Common Stock for
options designated as non-qualified stock options shall be determined by the
Committee, but in no event shall the option price of a non-qualified stock
option be less than 100% of the fair market value of such Common Stock at the
time the option is granted, as determined by the Committee. The option price or
prices of shares of the Company's Common Stock for incentive stock options shall
be not less than the fair market value of such Common Stock at the time the
option is granted as determined by the Committee in accordance with the
Regulations promulgated under Section 422 of the Code. If the shares of Common
Stock are listed on any
- 4 -
national securities exchange, or traded on the National
Association of Securities Dealers Automated Quotation System ("Nasdaq") National
Market System, the fair market value of a share of Common Stock on the date of
grant of an option shall be the closing price, if any, on the largest such
exchange, or if not traded on an exchange, the Nasdaq National Market System on
such day, or if the date of grant is not a business day, the business day
immediately preceding the date of the grant, or if there are no sales of shares
of Common Stock on the date of grant or on the business day immediately
preceding the date of grant, the fair market value of a share of Common Stock
shall be determined by taking a weighted average of the means between the
highest and lowest sales on the nearest date before and the nearest date after
the date of grant in accordance with Treasury Regulations Section 25.2512-2. If
the shares are not then either listed on any such exchange or quoted in
NASDAQ/NM, the fair market value shall be the mean between the average of the
"Bid" and the average of the "Ask" prices, if any, as reported in the National
Daily Quotation Service for the date of grant, or if the date of grant is not a
business day the business day immediately preceding the date of the grant of the
option, or, if none, shall be determined by taking a weighted average of the
means between the highest and lowest sales prices on the nearest date before and
the nearest date after the date of grant in accordance with Treasury Regulations
Section 25.2512-2. If the fair market value cannot be determined under the
preceding two sentences, it shall be determined in good faith by the Committee.
8. MANNER OF PAYMENT; MANNER OF EXERCISE.
(a) Options granted under the Plan may provide for the payment of the
exercise price, as determined by the Committee and set forth in the Option
Agreement, by delivery of (i) cash or a check payable to the order of the
Company in an amount equal to the exercise price of such options, (ii) shares of
Common Stock of the Company owned by the optionee having a fair market value
equal in amount to the exercise price of the options being exercised, (iii) any
combination of (i) and (ii), provided, however, that payment of the exercise
price by delivery of shares of Common Stock of the Company owned by such
optionee may be made only if such payment does not result in a charge to
earnings for financial accounting purposes as determined by the Committee, or
(iv) payment may also be made by delivery of a properly executed exercise notice
to the Company, together with a copy of irrevocable instruments to a broker to
deliver promptly to the Company the amount of sale or loan proceeds to pay the
exercise price. The fair market value of any shares of the Company's Common
Stock which may be delivered upon exercise of an option shall be determined by
the Committee in accordance with Section 7 hereof. To facilitate clause (iv)
above, the Company may enter into agreements for coordinated procedures with one
or more brokerage firms. The date of exercise shall be the date of delivery of
such exercise notice.
- 5 -
(b) To the extent that the right to purchase shares under an option has
accrued and is in effect, options may be exercised in full at one time or in
part from time to time, by giving written notice, signed by the person or
persons exercising the option, to the Company, stating the number of shares with
respect to which the option is being exercised, accompanied by payment in full
for such shares as provided in subparagraph (a) above. Upon such exercise,
delivery of a certificate for paid-up non-assessable shares shall be made at the
principal office of the Company to the person or persons exercising the option
at such time, during ordinary business hours, after 9:00 a.m. but not more than
thirty (30) days from the date of receipt of the notice by the Company, as shall
be designated in such notice, or at such time, place and manner as may be agreed
upon by the Company and the person or persons exercising the option. Upon
exercise of the option and payment as provided above, the optionee shall become
a stockholder of the Company as to the Shares acquired upon such exercise.
9. VESTING OF OPTIONS.
Except as otherwise provided in an optionee's Agreement, each
option granted under the Plan shall, subject to Section 10 and Section 12
hereof, be exercisable with reference to the option's Vesting Reference Date
(the date selected by the Committee) as follows: prior to the First Anniversary
Date of the Vesting Reference Date - zero percent (0%); on the First Anniversary
Date of the Vesting Reference Date - twenty five percent (25%); on the Second
Anniversary Date of the Vesting Reference Date - fifty percent (50%); on the
Third Anniversary Date of the Vesting Reference Date - seventy-five percent
(75%); and on the Fourth Anniversary Date of the Vesting Reference Date - one
hundred percent (100%). Notwithstanding any other provisions of this section, in
the event of a Change of Control (as hereinafter defined) of the Company, fifty
percent (50%) of the unvested shares of each Participant with a minimum of six
months' service will automatically be fully Vested; in the event of a Change of
Control of the Company not approved by the Board of Directors prior to such
Change of Control, all of the Shares shall be fully Vested immediately upon such
Change of Control. For purposes of the Plan, a "Change of Control" shall be
deemed to have occurred if any of the following conditions have occurred: (1)
the merger or consolidation of the Company with another entity where the Company
is not the surviving entity and where after the merger or consolidation (i) its
stockholders prior to the merger or consolidation hold less than 50% of the
voting stock of the surviving entity and (ii) its Directors prior to the merger
or consolidation are less than a majority of the Board of the surviving entity;
(2) the sale of all or substantially all of the Company's assets to a third
party and subsequent to the transaction (i) its stockholders hold less than 50%
of the stock of said third party and (ii) its Directors are less than a majority
of the Board of said third party; (3) a transaction or series of related
transactions, including a
- 6 -
merger of the Company with another entity where the Company is the surviving
entity, whereby 50% or more of the voting stock of the Company is transferred to
parties who are not prior thereto stockholders or affiliates of the Company; or
(4) the Continuing Directors shall not constitute a majority of the Board of
Directors of the Company. The term "Continuing Directors" shall mean a member of
the Board of Directors of the Company who either was a member of the Board of
Directors of the Company on the date this Plan was adopted by the Board of
Directors or who subsequently became a director of the Company and whose initial
appointment, initial election or initial nomination for election by the
Company's shareholders subsequent to such date was approved by a vote of a
majority of the Continuing Directors then on the Board of Directors of the
Company.
To the extent that an option to purchase shares is not
exercised by an optionee when it becomes initially exercisable, it shall not
expire but shall be carried forward and shall be exercisable, on a cumulative
basis, until the expiration of the exercise period. No partial exercise may be
made for less than fifty (50) full shares of Common Stock.
Notwithstanding the foregoing, the Committee may in its
discretion (i) specifically provide for another time or times of exercise (but
not delay a vesting period) or (ii) accelerate the exerciseability of any option
subject to such terms and conditions as the Committee deems necessary and
appropriate.
10. TERM AND EXERCISABILITY OF OPTIONS; RELATIONSHIP TO VESTING;
NON-EMPLOYEE OPTIONS.
(a) TERM AND EXERCISABILITY.
(1) The term of each option shall be as stated in the
optionee's Agreement, provided , however, that the term of an
option shall not exceed ten (10) years from the date of the
granting thereof, subject to earlier termination as provided
in the Plan and the Agreement.
(2) Except as otherwise provided in the optionee's
Agreement, or this Section 10, an option granted to any
employee who ceases to be an employee of the Company or one of
its subsidiaries shall terminate ninety (90) days after the
date of such optionee ceases to be an employee of the Company
or one of its subsidiaries, or on the last day of the term of
the option, whichever occurs first.
(3) Except as otherwise provided in the optionee's
Agreement, if such termination of employment is because of
dismissal for cause or because the employee is in breach of
any employment agreement, such option will terminate on the
date the optionee ceases to be an employee of the Company or
one of its subsidiaries, or on the last day of the term of the
option, whichever occurs first.
- 7 -
(4) Except as otherwise provided in the optionee's
Agreement, if such termination of the employment is because
the optionee has become permanently disabled (within the
meaning of Section 22(e)(3) of the Code), such option shall
terminate on the last day of the twelfth month from the date
such optionee ceases to be an employee, or on the last day of
the term of the option, whichever occurs first.
(5) Except as otherwise provided in the optionee's
Agreement, in the event of the death of an optionee, any
option granted to such optionee shall terminate on the last
day of the twelfth month from the date of death, or on the
last day of the term of the option, whichever occurs first.
(6) Except as otherwise provided in the optionee's
Agreement, if such termination of employment is because of the
retirement of the optionee on or after attaining the minimum
age, completing the minimum number of years of service, and
satisfying of all other conditions specified for retirement
status under the Company's Retirement Policy Statement as in
effect at the time of the grant of the option, such option
will terminate on the date that is five (5) years after the
date the optionee ceases to be an employee of the Company or
one of its subsidiaries, or the last day of the term of the
option, whichever occurs first.
(7) Notwithstanding subparagraphs (2) through (6)
above, the Committee shall have the authority to extend the
expiration date of any outstanding option in circumstances in
which it deems such action to be appropriate.
(b) RELATIONSHIP TO VESTING. Except as otherwise provided in the
optionee's agreement, an option granted to an employee who ceases to be an
employee of the Company or one of its subsidiaries, whether by having become
permanently disabled, as defined in Sedition 22(e)(3) of the Code, by death, or
otherwise, shall be exercisable only to the extent that the right to purchase
shares under such option has vested and accrued on the date that such optionee
ceases to be an employee of the Company or one of its subsidiaries.
(c) NON-EMPLOYEE OPTIONS. The term of an option granted to a
non-employee director, a consultant, or any other person who is not an employee
of the Company or one of its subsidiaries shall be stated in the optionee's
Agreement, provided, however, that the term of an option shall not exceed ten
(10) years from the date of the granting thereof, subject to earlier termination
as provided in the Plan and the Agreement. An option granted to a non-employee
director, a consultant, or any other person who is not an employee of the
Company or one of its subsidiaries shall be exercisable only to the extent so
provided in the optionee's Agreement.
11. OPTIONS NOT TRANSFERABLE.
The right of any optionee to exercise any option granted to him or her
shall not be assignable or transferable by such optionee otherwise than by will
or the laws of descent and distribution, and any such option shall be
exercisable during the lifetime of such optionee only by him; provided, however,
that in
- 8 -
the case of a non-qualified stock option, the Committee may permit
transferability of such options on such terms and conditions as determined by
the Committee and set forth in the Option Agreement. Any option granted under
the Plan shall be null and void and without effect upon the bankruptcy of the
optionee to whom the option is granted, or upon any attempted assignment or
transfer, except as herein provided, including without limitation any purported
assignment, whether voluntary or by operation of law, pledge, hypothecation or
other disposition, attachment, divorce, trustee process or similar process,
whether legal or equitable, upon such option.
12. RECAPITALIZATIONS, REORGANIZATIONS AND THE LIKE.
(a) In the event that the outstanding shares of the Common Stock of the
Company are 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 any
reorganization, merger, consolidation, recapitalization, reclassification, stock
split-up, combination of shares, or dividends payable in capital stock,
appropriate adjustment shall be made in the number and kind of shares as to
which options may be granted under the Plan and as to which outstanding options
or portions thereof then unexercised shall be exercisable, to the end that the
proportionate interest of the optionee shall be maintained as before the
occurrence of such event; such adjustment in outstanding options shall be made
without change in the total price applicable to the unexercised portion of such
options and with a corresponding adjustment in the option price per share.
(b) In addition, unless otherwise determined by the Committee in its
sole discretion, in the case of any Change of Control of the Company, the
purchaser(s) of the Company's assets or stock may, in his, her or its
discretion, deliver to the optionee the same kind of consideration that is
delivered to the stockholders of the Company as a result of such sale,
conveyance or Change of Control, or the Committee may cancel all outstanding
options in exchange for consideration in cash or in kind, which consideration in
both cases shall be equal in value to the value of those shares of stock or
other securities the optionee would have received had the option been exercised
(to the extent then exercisable) and no disposition of the shares acquired upon
such exercise been made prior to such Change of Control, less the option price
therefor. Upon receipt of consideration by the optionee, his or her option shall
immediately terminate and be of no further force and effect. The value of the
stock or other securities the optionee would have received if the option had
been exercised shall be determined in good faith by the Committee, and in the
case of shares of the Common Stock of the Company, in accordance with the
provisions of Section 7 hereof. The Committee shall also have the power and
right to accelerate the exercisability of any options, notwithstanding any
limitations in this Plan or in the Agreement upon such Change of Control. Upon
- 9 -
such acceleration, any options or portion thereof originally designated as
incentive stock options that no longer qualify as incentive stock options under
Section 422 of the Code as a result of such acceleration shall be redesignated
as non-qualified stock options.
(c) Upon dissolution or liquidation of the Company, all options granted
under this Plan shall terminate, but each optionee (if at such time in the
employ of or otherwise associated with the Company or any of its subsidiaries)
shall have the right, immediately prior to such dissolution or liquidation, to
exercise his or her option to the extent then exercisable.
(d) No fraction of a share shall be purchasable or deliverable upon the
exercise of any option, but in the event any adjustment hereunder of the number
of shares covered by the option shall cause such number to include a fraction of
a share, such fraction shall be adjusted to the nearest smaller whole number of
shares.
13. NO SPECIAL EMPLOYMENT RIGHTS.
Nothing contained in the Plan or in any option granted under the Plan
shall confer upon any option holder any right with respect to the continuation
of his or her employment by the Company (or any subsidiary thereof) or interfere
in any way with the right of the Company (or any subsidiary thereof), subject to
the terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
option holder from the rate in existence at the time of the grant of an option.
Whether an authorized leave of absence, or absence in military or government
service, shall constitute termination of employment shall be determined by the
Committee at the time.
14. WITHHOLDING.
The Company's obligation to deliver shares upon the exercise of any
option granted under the Plan and any payments or transfers under Section 12
hereof shall be subject to the option holder's satisfaction of all applicable
Federal, state and local income, excise, employment and any other tax
withholding requirements.
15. RESTRICTIONS ON ISSUE OF SHARES.
(a) Notwithstanding the provisions of Section 8, the Company may delay
the issuance of shares covered by the exercise of an option and the delivery of
a certificate for such shares until one of the following conditions shall be
satisfied:
(1) The shares with respect to which such option has
been exercised are at the time of the issue of such shares effectively
registered or qualified under applicable Federal and state securities acts now
in force or as hereafter amended; or
- 10 -
(2) Counsel for the Company shall have given an opinion,
which opinion shall not be unreasonably conditioned or withheld, that such
shares are exempt from registration and qualification under applicable Federal
and state securities acts now in force or as hereafter amended.
(b) It is intended that all exercises of options shall be effective,
and the Company shall use its best efforts to bring about compliance with the
above conditions within a reasonable time, except that the Company shall be
under no obligation to qualify shares or to cause a registration statement or a
post-effective amendment to any registration statement to be prepared for the
purpose of covering the issue of shares in respect of which any option may be
exercised, except as otherwise agreed to by the Company in writing.
16. PURCHASE FOR INVESTMENT; RIGHTS OF HOLDER ON SUBSEQUENT
REGISTRATION.
Unless the shares to be issued upon exercise of an option granted under
the Plan have been effectively registered under the Securities Act of 1933, as
now in force or hereafter amended, the Company shall be under no obligation to
issue any shares covered by any option unless the person who exercises such
option, in whole or in part, shall give a written representation and undertaking
to the Company which is satisfactory in form and scope to counsel for the
Company and upon which, in the opinion of such counsel, the Company may
reasonably rely, that he or she is acquiring the shares issued pursuant to such
exercise of the option for his or her own account as an investment and not with
a view to, or for sale in connection with, the distribution of any such shares,
and that he or she will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer under the
Securities Act of 1933, or any other applicable law, and that if shares are
issued without such registration, a legend to this effect may be endorsed upon
the securities so issued. In the event that the Company shall, nevertheless,
deem it necessary or desirable to register under the Securities Act of 1933 or
other applicable statutes any shares with respect to which an option shall have
been exercised, or to qualify any such shares for exemption from the Securities
Act of 1933 or other applicable statutes, then the Company may take such action
and may require from each optionee such information in writing for use in any
registration statement, supplementary registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers and
directors and controlling persons from such holder against all losses, claims,
damages and liabilities arising from such use of the information so furnished
and caused by any untrue statement of any material fact therein or caused by the
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made.
- 11 -
17. MODIFICATION OF OUTSTANDING OPTIONS.
The Committee may authorize the amendment of any outstanding option
with the consent of the optionee when and subject to such conditions as are
deemed to be in the best interests of the Company and in accordance with the
purposes of this Plan.
18. APPROVAL OF STOCKHOLDERS.
The Plan shall be subject to approval by the vote of stockholders
holding at least a majority of the voting stock of the Company present, or
represented, and entitled to vote at a duly held stockholders' meeting, or by
written consent of the stockholders as provided for under applicable state law,
within twelve (12) months after the adoption of the Plan by the Board of
Directors and shall take effect as of the date of adoption by the Board of
Directors upon such approval. The Committee may grant options under the Plan
prior to such approval, but any such option shall become effective as of the
date of grant only upon such approval and, accordingly, no such option may be
exercisable prior to such approval.
19. TERMINATION AND AMENDMENT.
Unless sooner terminated as herein provided, the Plan shall terminate
ten (10) years from the date upon which the Plan was duly adopted by the Board
of Directors of the Company. The Board of Directors may at any time terminate
the Plan or make such modification or amendment thereof as it deems advisable;
provided, however, that except as provided in this Section 19, the Board of
Directors may not, without the approval of the stockholders of the Company
obtained in the manner stated in Section 19, increase the maximum number of
shares for which options may be granted or change the designation of the class
of persons eligible to receive options under the Plan, or make any other change
in the Plan which requires stockholder approval under applicable law or
regulations.
20. RESERVATION OF STOCK.
The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of the Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.
21. LIMITATION OF RIGHTS IN THE OPTION SHARES.
An optionee shall not be deemed for any purpose to be a stockholder of
the Company with respect to any of the options except to the extent that the
option shall have been exercised with respect thereto and, in addition, a
certificate shall have been issued theretofore and delivered to the optionee.
22. NOTICES.
Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of
- 12 -
business, attention: President, and, if to an optionee, to the address as
appearing on the records of the Company.
- 13 -