1
Exhibit 99.1
Currency: June 29, 2001
ZEMEX CORPORATION
1999 STOCK OPTION PLAN
SECTION 1 PURPOSES.
The purposes of this 1999 Stock Option Plan, as amended from time to time (this
"PLAN"), are to encourage selected key employees, directors and consultants of
the Company and its Affiliates to acquire a proprietary and vested interest in
the growth and performance of the Company, to generate an increased incentive to
contribute to the Company's future success and prosperity, thus enhancing the
value of the Company for the benefit of share owners, and to enhance the ability
of the Company and its Affiliates to attract and retain individuals of
exceptional managerial talent upon whom, in large measure, the sustained
progress, growth and profitability of the Company depends.
SECTION 2 DEFINITIONS.
As used in this Plan, the following terms shall have the meanings set forth
below:
"AFFILIATE" shall mean (i) any entity that, directly or indirectly,
is controlled by the Company and (ii) any entity in which the
Company has a significant equity interest, in either case as
determined by the Committee.
"AWARD" shall mean any Option.
"AWARD AGREEMENT" shall mean any written agreement, contract, or
other instrument or document evidencing any Award and covering the
specific terms and conditions of such Award.
"BOARD" shall mean the Board of Directors of the Company.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COMMITTEE" shall mean a committee consisting entirely of two or
more Non- Employee Directors, who are empowered hereunder to take
all action required in the administration of the Plan and the grant
and administration of Awards hereunder.
"COMPANY" shall mean Zemex Corporation.
"CONSULTANT" shall mean any person who is engaged by the Company or
any Affiliate to render consulting or advisory services as an
independent contractor and is compensated for such services.
"DISABILITY" shall mean a Participant's permanent disability within
the meaning of Section 22(e)(3) of the Code.
"EMPLOYEE" shall mean any employee of the Company or of any
Affiliate.
"FAIR MARKET VALUE" shall mean, with respect to Shares, the closing
price of a Share quoted on The Toronto Stock Exchange or the New
York Stock Exchange whichever market represents the principal
trading market for the shares, or if the Shares are not
2
listed on The Toronto Stock Exchange or the New York Stock Exchange,
on the principal securities exchange on which such stock is listed,
or if the Shares are not listed on any such stock exchange, on the
principal securities exchange on which such stock is listed, or if
the Shares are not listed on any exchange, the last sale price, or
if none is reported, the highest closing bid quotation on the
National Association of Securities Dealers, Inc., Automated
Quotations System or any successor system then in use on the date of
grant, or if none are available on such day, on the next preceding
day for which are available, or if no such quotations are available,
the fair market value on the date of grant of a Share as determined
in good faith by the Committee. In the event the Shares are not
publicly traded at the time a determination of its fair market value
is required to be made hereunder, the determination of fair market
value shall be made in good faith by the Committee.
"INCENTIVE STOCK OPTION" shall mean an option granted under Section
6(1) of this Plan or as contemplated by Section 2(a) of the 1995
Stock Option Plan that is intended to meet the requirements of
Section 422 of the Code or any successor provision thereto.
"NON-EMPLOYEE DIRECTOR" shall mean a director of the Company who
meets the definition of (i) a "NON-EMPLOYEE DIRECTOR" set forth in
Rule 16b-3 under the Exchange Act, as amended, or any successor rule
and (ii) an "OUTSIDE DIRECTOR" set forth in Treasury Regulation
1.162-27, as amended, or any successor rule.
"NON-QUALIFIED STOCK OPTION" shall mean an option granted under
Section 6(1) or as contemplated by Section 2(b) of the 1995 Stock
Option Plan of this Plan that is not intended to be an Incentive
Stock Option.
"OPTION" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
"PARTICIPANT" shall mean any Employee, Non-Employee Director or
Consultant selected by the Committee to receive an Award under this
Plan.
"PLAN" shall mean the Company's 1999 Stock Option Plan as set forth
herein and the Company's 1995 Stock Option Plan annexed hereto as
Schedule "A" for so long as options are outstanding thereunder in
accordance with Section 13 hereof.
"1995 PLAN" shall mean the Company's 1995 Stock Option Plan annexed
hereto as Schedule "A".
"RETIREMENT" shall mean a Participant's termination of employment
with, or the termination of the provision of services for, the
Company or any Affiliate at or after age 65 (or such earlier age as
the Committee shall determine) or in any other manner determined by
the Committee to constitute retirement.
"SEC" shall mean the Securities and Exchange Commission, or any
successor thereto and shall include the staff thereof.
"SERVICE PROVIDER" means an Employee or Non-Employee Director of, or
Consultant to, the Company.
2
3
"SHARES" shall mean the common shares of the Company as constituted
on the date hereof, or, following an adjustment under Section 4(3)
of this Plan, such other securities or property as may become
subject to Awards in substitution for such common shares pursuant to
such adjustment.
SECTION 3 ADMINISTRATION.
(1) AUTHORITY OF COMMITTEE. This Plan shall be administered by the
Committee. Subject to the terms of this Plan and applicable law, and
in addition to other express powers and authorizations conferred on
the Committee by this Plan, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or
types of Awards to be granted to eligible Participants; (iii)
determine the number of Shares to be covered by, or with respect to
which payments, rights, or other matters are to be calculated in
connection with, Awards; (iv) determine the terms and conditions of
any Award; (v) determine whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares,
other securities, other Awards or other property, or cancelled,
forfeited, or suspended and the method or methods by which Awards
may be settled, exercised, cancelled, forfeited, or suspended; (vi)
determine whether, to what extent, and under what circumstances
cash, Shares, other securities, other Awards, other property, and
other amounts payable with respect to an Award shall be deferred
either automatically or at the election of the holder thereof or of
the Committee; (vii) interpret and administer this Plan and any
instrument or agreement relating to this Plan or any Award
hereunder; (viii) correct errors, omissions or inconsistencies in
this Plan or in any Award Agreement, or any other instrument
relating to an Award under this Plan, and (subject to the provisions
of Section 9) to amend the terms and conditions of any outstanding
Award to the extent such terms and conditions are within the
discretion of the Committee as provided in this Plan; (ix)
establish, amend, suspend, or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper
administration of this Plan; and (x) make any other determination
and take any other action that the Committee deems necessary or
desirable for the administration of this Plan. To the extent
necessary or appropriate, the Committee may adopt sub-plans
consistent with this Plan to conform to applicable state or foreign
securities or tax laws. A majority of the members of the Committee
may determine its actions and fix the time and place of its
meetings.
(2) DETERMINATIONS UNDER THIS PLAN. Unless otherwise expressly provided
in this Plan, all designations, determinations, interpretations, and
other decisions under or with respect to this Plan or any Award
shall be within the sole discretion of the Committee, may be made at
any time and shall be final, conclusive, and binding upon all
persons, including the Company, any Affiliate, any Participant, any
holder or beneficiary of any Award, and any shareholder of the
Company.
(3) LIABILITY OF COMMITTEE. No member of the Committee shall be liable,
in the absence of bad faith, for any act or omission with respect to
his or her services on the Committee. Service on the Committee shall
constitute service as a director of the Company (solely for purposes
of the provisions of this Section 3(3)) so that members of the
Committee shall be entitled to indemnification, any limitation of
liability and reimbursement as directors with respect to their
services as members of the Committee.
3
4
(4) DELEGATION OF CERTAIN RESPONSIBILITIES. The Committee may, in its
sole discretion, delegate to appropriate officers of the Company the
administration of this Plan; provided, however, that no such
delegation by the Committee shall be made (i) if such delegation
would not be permitted under applicable law or (ii) with respect to
the administration of this Plan as it affects executive officers or
directors of the Company, and provided further that the Committee
may not delegate its authority to correct errors, omissions or
inconsistencies in this Plan. Subject to the above limitations, the
Committee may delegate to the President or Chief Executive Officer
of the Company its authority under this Section 3 to grant Awards to
employees who are not executive officers or directors of the
Company. All authority delegated by the Committee under this Section
3(4) shall be exercised in accordance with the provisions of this
Plan and any guidelines for, conditions on, or limitations to the
exercise of such authority that may from time to time be established
by the Committee.
(5) AWARD AGREEMENTS. Each Award under this Plan shall be evidenced by
an Award Agreement which shall be signed by an officer of the
Company and by the Participant, and shall contain such terms and
conditions as may be approved by the Committee, which need not be
the same in all cases. Any Award Agreement may be supplemented or
amended in writing from time to time as approved by the Committee,
provided that the terms of such agreements as amended or
supplemented, as well as the terms of the original Award Agreement,
are not inconsistent with the provisions of this Plan. Nothing
contained in this Plan or any resolutions adopted or to be adopted
by the Board or by the shareholders of the Company shall constitute
the granting of an Award under this Plan. A Service Provider who
receives an Award under this Plan shall not, with respect to such
Award, be deemed to have become a Participant, or to have any rights
with respect to such Award, unless and until such Service Provider
has executed an Award Agreement or other instrument evidencing the
Award and shall have delivered an executed copy thereof to the
Company, and has otherwise complied with the applicable terms and
conditions of the Award.
(6) AWARDS TO OFFICERS AND DIRECTORS. Awards to officers shall be
granted by the Committee. If the Committee is not composed as
prescribed in the definition of Committee above, the Board may take
such action with respect to any Award to an officer as it deems
necessary or advisable to comply with Rule 16b-3 of the Securities
Exchange Act of 1934 and any related rules.
SECTION 4 SHARES AVAILABLE FOR AWARDS.
(1) SHARES AVAILABLE. Subject to adjustment as provided in Section 4(3),
the number of Shares with respect to which Awards may be granted
under this Plan shall be 1,500,000.
(2) TERMINATIONS AND CANCELLATIONS. If, after the effective date of this
Plan, an Award otherwise terminates or is cancelled without the
delivery of Shares or of other consideration, then the Shares
covered by such Award, or to which such Award relates, or the number
of Shares otherwise counted against the aggregate number of Shares
with respect to which Awards may be granted, to the extent of any
such termination or cancellation, shall again be Shares with respect
to which Awards may be granted.
4
5
(3) ADJUSTMENTS. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Shares
or other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company, or
other similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Committee to be appropriate
in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under this Plan,
then the Committee shall, in such manner as it may deem equitable,
adjust any or all of (i) the number of Shares or the kind of equity
securities of the Company (or the number and kind of other
securities or property) with respect to which Awards may be granted,
(ii) the number of Shares or the kind of equity securities of the
Company (or the number and kind of other securities or property)
subject to outstanding Awards, and (iii) the grant or exercise price
with respect to any Award or, if deemed appropriate, make provision
for a cash payment to the holder of an outstanding Award; provided,
however, that any adjustment of an Incentive Stock Option shall be
made in such a manner so as not to constitute a "modification"
within the meaning of Section 424(h)(3) of the Code; and provided
further, that the number of Shares subject to any Award denominated
in Shares shall always be a whole number.
(4) SOURCES OF SHARES DELIVERABLE UNDER AWARDS. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized
and unissued Shares.
(5) SINGLE PARTICIPANT LIMITATION. The aggregate number of Shares
reserved for issuance to any one Participant upon the exercise of
Options shall not exceed five percent (5%) of the total number of
Shares outstanding from time to time, provided that any reduction in
the number of outstanding Shares shall not affect any Option granted
hereunder prior to the reduction.
SECTION 5 ELIGIBILITY.
Employees, Non-Employee Directors and Consultants of the Company or any
Affiliate shall be eligible to be designated as Participants.
SECTION 6 STOCK OPTIONS.
(1) GRANT. Subject to the provisions of this Plan, the Committee shall
have the authority to determine the Employees, Consultants and
Non-Employee Directors to whom Options shall be granted, the number
of Shares to be covered by each Option, the option price therefor
and the conditions and limitations applicable to the exercise of the
Option; provided, however, that the terms and conditions of any
Incentive Stock Option granted hereunder shall be subject to, and
shall comply in all respects with, the requirements of Section 422
of the Code, as amended from time to time. The Committee shall have
the authority to grant Incentive Stock Options, or to grant
Non-Qualified Stock Options, or to grant both types of options;
provided, however that Incentive Stock Options shall not be granted
to Consultants, Non-Employee Directors, or any other persons who are
not permitted to receive Incentive Stock Options under the Code.
(2) NUMBER OF SHARES. Each Award Agreement covering Options shall state
that it covers a specified number of Shares, as determined by the
Committee.
5
6
(3) PRICE. The price at which each Share covered by an Option may be
purchased shall be determined in each case by the Committee and set
forth in the Award Agreement related to such Option, but in no event
shall the option price for each Share covered by an Incentive Stock
Option be less than the Fair Market Value of a Share on the date the
Option is granted; provided, however, that the Option Price for each
Share covered by an Incentive Stock Option granted to an Employee
who then owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any parent or
subsidiary corporation of the Company must be at least 110% of the
Fair Market Value of the Shares subject to the Incentive Stock
Option on the date the Option is granted.
(4) DURATION OF OPTIONS. Each Award Agreement covering Options shall
state the period of time, determined by the Committee, within which
the Option may be exercised by the Participant (the "OPTION
PERIOD"). The Option Period must expire, in all cases, not more than
ten years from the date an Option is granted; provided, however,
that the Option Period of an Incentive Stock Option granted to an
Employee who then owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any
parent or subsidiary corporation of the Company must expire not more
than five years from the date such an Option is granted. Each Award
Agreement shall also state the periods of time, if any, as
determined by the Committee, when incremental portions of each
Option shall vest. If any Option is not exercised during its Option
Period, it shall be deemed to have been forfeited and or no further
force or effect.
(5) CASH ELECTION. A Participant may, rather than exercise Options which
he or she is entitled to exercise under Section 6(4), elect to
require the Corporation to purchase for cancellation any such
Options, in whole or in part, and, in lieu of receiving the Shares
to which the purchased Options relate (the "DESIGNATED SHARES"), to
receive (a) cash payment of an amount equal to the product of the
number of Designated Shares multiplied by the difference between the
Fair Market Value and the exercise price per share of the Designated
Shares, less any amount withheld on account of income taxes, which
withheld income taxes or will be remitted by the Corporation or (b)
to receive that number of Common Shares, disregarding fractions,
which have an aggregate Fair Market Value equal to the product of
the number of Designated Shares multiplied by the difference between
the Fair Market Value and the exercise price per share of the
Designated Shares, less any amount withheld on account of income
taxes, which withheld income taxes will be remitted by the
Corporation. For the purposes of this section, the Fair Market Value
per share shall be the weighted average trading price of the Shares
during the five days immediately preceding the date of the
Participant's election herein.
(6) TERMINATION OF SERVICE, DEATH, DISABILITY, ETC. Except as otherwise
determined by the Committee, each Award Agreement covering Options
shall provide as follows with respect to the exercise of the
Options:
(a) If the Participant is terminated as a Service Provider
within the Option Period "for cause," the Option shall
thereafter be void for all purposes. As used in this
Sectopm 6(6)(a), "cause" shall mean (y) the intentional
disregard of, or a gross violation of, the Company's
established policies and procedures, as determined by
the Company or the Committee, and (z) if applicable, as
set forth in any employment or similar agreement between
the Participant and the Company. The
6
7
effect of this Section 6(6)(a) shall be limited to
determining the consequences of a termination, and
nothing in this Section 6(6)(a) shall restrict or
otherwise interfere with the Company's discretion with
respect to the termination of any Service Provider;
(b) If the Participant ceases to be a Service Provider due
to the Participant's Retirement, the Option may be
exercised by the Participant, within three months
following his or her Retirement if the Option is an
Incentive Stock Option or within twelve months following
his or her Retirement if the Option is a Non-Qualified
Stock Option (provided in each case that such exercise
must occur within the Option Period), but not
thereafter. In any such case, the Option may be
exercised only as to the Shares as to which the Option
had become exercisable on or before the date the
Participant ceases to be a Service Provider;
(c) If the Participant dies while he or she is a Service
Provider or within the three-month period following the
Participant's Retirement, the Option may be exercised by
those entitled to do so under the Participant's will or
by the laws of descent and distribution within twelve
months following the Participant's death (provided that
such exercise must occur within the Option Period), but
not thereafter. In any such case, the Option may be
exercised only as to the Shares as to which the Option
had become exercisable on or before the date of the
Participant's death or at such time as the Participant
ceased to be a Service Provider, whichever is earlier;
(d) If the Participant suffers a Disability while a Service
Provider, Options held by the Participant may be
exercised by the Participant within twelve months
following the date the Participant ceases to be a
Service Provider (provided that such exercise must occur
within the Option Period), but not thereafter. In any
such case, the Option may be exercised only as to the
Shares as to which the Option had become exercisable on
or before the date the Participant ceased to be a
Service Provider;
(e) If the Participant ceases to be a Service Provider
within the Option Period for any reason other than
cause, Retirement, Disability or the Participant's
death, the Option may be exercised by the Participant
within three months following the date of such cessation
(provided that such exercise must occur within the
Option Period), but not thereafter. In any such case,
the Option may be exercised only as to the Shares as to
which the Option had become exercisable on or before the
date that the Participant ceases to be a Service
Provider;
(f) Notwithstanding the provisions of this Section 6(6) or
any other provision of the plan, with respect to any
Options granted to an Employee in connection with the
commencement of employment as an Employee, the Committee
may provide for terms as to retirement, disability,
death or other termination of employment which are
different from the terms provided in this Section 6(6)
if such different terms are set forth in a written
employment agreement with the Employee, which agreement
shall have been approved by the Board, or are otherwise
provided by the Committee, subject to the approval by
the Board. Notwithstanding the foregoing, no Incentive
Stock Options may be granted pursuant to this Section
6(6)(f);
7
8
(g) Whether an authorized leave of absence or absence due to
active military service shall constitute termination as
a Service Provider shall be determined by the Committee
at the time thereof. Notwithstanding the foregoing, in
the case of Incentive Stock Options, if the period of
leave exceeds ninety (90) days, unless the individual's
right to re-employment is guaranteed by statute or
contract, the employment relationship will be deemed to
have terminated on the ninety-first (91st) day of such
leave; and
(h) If a Participant's status as a particular type of
Service Provider changes to another type of Service
Provider, the Committee, in its discretion, may
determine that any Option previously granted shall
continue in full force and effect so long as the Option
is a Non-Qualified Stock Option. The Committee shall be
permitted, in its discretion, to grant Non-Qualified
Stock Options which provide that they shall continue in
full force and effect if the Participant's status with
the Company or any Affiliate changes, but such person
continues as a Service Provider.
(7) LIMITATION ON AMOUNT OF INCENTIVE STOCK OPTIONS. The aggregate fair
market value (determined as of the time the Option is granted) of
Shares with respect to which Incentive Stock Options are exercisable
for the first time by a Participant during any calendar year under
this Plan (and all other incentive stock option plans of the
Company, any subsidiary or parent corporation of the Company) shall
not exceed US$100,000. In no event, however, shall an acceleration
of exercisability pursuant to the terms of this Plan operate to
reduce or limit the number of shares which may be exercised pursuant
to such Incentive Stock Options. Shares in excess of the US$100,000
limit described herein which become exercisable as a result of
acceleration shall be treated as Shares subject to a Non-Qualified
Stock Option.
SECTION 7 TERMS AND CONDITIONS.
(1) AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards may, in the
discretion of the Committee, be granted either alone or in addition
to, or in substitution for, any other Award granted under this Plan.
Except as otherwise provided herein, Awards granted in addition to
other Awards may be granted either at the same time as, or at a
different time from, the grant of such other Awards.
(2) FORMS OF PAYMENT BY COMPANY UNDER AWARDS. Subject to the terms of
this Plan and of any applicable Award Agreement, payments or
transfers to be made by the Company or an Affiliate upon the grant,
exercise or payment of an Award may be made in such form or forms as
the Committee shall determine, including, without limitation, cash,
other securities, other Awards or other property, or any combination
thereof, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case in accordance
with rules and procedures established by the Committee.
(3) LIMITS ON TRANSFER OF AWARDS. An Award shall not be transferable
other than by will or the laws of descent and distribution, and an
Option subject to exercise may be exercised, during the lifetime of
the Participant, only the Participant or in the event of death, the
Participant's beneficiary as hereinafter provided, or in the event
of disability, the Participant's personal representative.
8
9
(4) TERM OF AWARDS. Unless otherwise provided herein, the term of each
Award shall be for such period as may be determined by the
Committee.
(5) SHARE CERTIFICATES. All certificates for Shares or other securities
of the Company or any Affiliate delivered under this Plan pursuant
to any Award, or the exercise thereof, shall be subject to such stop
transfer orders and other restrictions as the Committee may deem
advisable under this Plan or the rules, regulations, and other
requirements of the SEC, any stock exchange upon which such Shares
or other securities are then listed, and any applicable Federal or
state laws, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.
(6) CONSIDERATION FOR GRANTS. Awards may be granted for no cash
consideration or for such minimal cash consideration as may be
required by applicable law.
(7) DELIVERY OF SHARES OR OTHER SECURITIES AND PAYMENT BY PARTICIPANT OF
CONSIDERATION. No Shares or other securities shall be delivered
pursuant to any Award until payment in full of any amount required
to be paid pursuant to this Plan or the applicable Award Agreement
is, or is arranged to be (on terms acceptable to the Committee),
received by the Company. Such payment may be made by such method or
methods and in such form or forms as the Committee shall determine,
including, without limitation, cash, Shares, other securities, other
Awards or other property, or any combination thereof; provided that
the combined value, as determined by the Committee, of all cash and
cash equivalents and the Fair Market Value of any such Shares or
other property so tendered, or arranged to be tendered, to the
Company, as of the date of such tender, is at least equal to the
full amount required to be paid pursuant to this Plan or the
applicable Award Agreement to the Company.
(8) CANCELLATION OR SUSPENSION OF AWARDS. The Committee shall have full
power and authority to determine whether, to what extent and under
what circumstances any Award shall be canceled or suspended. In
particular, but without limitation, all outstanding Awards to any
Participant shall be canceled if the Participant, without the
consent of the Committee, while employed by or providing services
for the Company or after termination of such employment or services,
becomes associated with, employed by, renders services to, or owns
any interest in (other than any nonsubstantial interest, as
determined by the Committee), any business that is in competition
with the Company or with any business in which the Company has a
substantial interest as determined by the Committee.
(9) CONDITIONS AND RESTRICTIONS ON AWARDS. At the time that an Award is
granted, the Committee may provide for any conditions and/or
restrictions which it intends to impose upon the Award and/or the
Shares subject to the Award. The Committee may accelerate the
vesting of any Participant's Option by giving written notice to the
Participant. Upon receipt of such notice, the Participant and the
Company shall amend the Award Agreement to reflect the new vesting
schedule. The acceleration of the exercise period of an Option shall
not affect the expiration date of that Option. Notwithstanding the
Committee's discretion in determining a vesting schedule, if any,
with respect to a particular Award, an Option shall become fully
vested should the Board of Directors recommend acceptance of a
take-over bid or issue-bid for Shares of the Company.
9
10
(10) OPTION EXERCISE. Options shall be exercised by the delivery of
written notice to the Company, in such form and to be filed in such
manner as the Committee shall in its sole discretion prescribe, not
later than 5:00 p.m., Toronto time, on the last day on which the
Option may be exercised. Any written notice of the exercise of an
Option shall set forth the number of Shares with respect to which
the Option is to be exercised, shall include any statement or
representation required by the applicable Award Agreement, and shall
be accompanied by paying in full the purchase price for the Shares.
(11) REGISTRATION OF OPTION SHARES. The Options shall not be exercisable
unless the purchase of the Shares is pursuant to an applicable
effective registration statement under the Securities Act of 1933,
as amended, or unless, in the opinion of counsel to the Company, the
proposed purchase of the Shares would be exempt from the
registration requirements of the Securities Act of 1933, as amended,
and from the registration or qualification requirements of
applicable state securities laws.
SECTION 8 CHANGE OF CONTROL.
(1) For purposes of this Plan, a "Change of Control" shall be deemed to
have taken place if the shareholders of the Company approve a
definitive agreement for (i) the merger or other business
combination of the Company with or into another corporation or
entity pursuant to which the shareholders of the Company do not own,
immediately after the transaction, more than 50% of the voting power
of the corporation or entity that survives the merger or business
combination, or (ii) the sale, exchange or other disposition of all
or substantially all of the assets of the Company.
(2) In the event of a Change of Control, the Committee may, in its
discretion, determine that all outstanding Options granted under
this Plan shall become exercisable in full whether or not otherwise
exercisable at such time, and any such Option shall remain
exercisable in full thereafter until it expires pursuant to its
terms.
SECTION 9 AMENDMENT AND TERMINATION.
Except to the extent prohibited by applicable law and unless otherwise expressly
provided in an Award Agreement or in this Plan:
(a) AMENDMENTS TO THIS PLAN. The Board may amend, alter,
suspend, discontinue, or terminate this Plan at any time
without the consent of any shareholder, Participant,
other holder or beneficiary of an Award, or other
person; provided that notwithstanding any other
provision of this Plan or any Award Agreement, no such
amendment, alteration, suspension, discontinuation, or
termination shall be made without shareholder approval
if such approval is necessary to comply with, or to
obtain exemptive relief under, any tax or regulatory
requirement that the Board deems desirable to comply
with;
(b) AMENDMENTS TO AWARDS. The Committee may waive any
conditions or rights under, amend any terms of, or
accelerate or alter, any Award granted hereunder,
prospectively or retroactively, without the consent of
any relevant Participant or holder or beneficiary of an
Award, provided that such action does not (i) materially
impair the rights of any Participant or holder or
beneficiary of an Award without such person's consent,
or (ii) result in a decrease in the Fair
10
11
Market Value of an Award without such Participant's or
holder's or beneficiary's consent;
(c) ADJUSTMENTS OF AWARDS UPON CERTAIN ACQUISITIONS. In the
event the Company or any Affiliate shall assume
outstanding employee awards or the right or obligation
to make future employee awards in connection with the
acquisition of another business or another corporation
or business entity, the Committee may make such
adjustments, not inconsistent with the terms of this
Plan, in the terms of Awards as it shall deem
appropriate in order to achieve reasonable comparability
or an equitable relationship between the assumed awards
and the Awards as so adjusted;
(d) ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN
UNUSUAL OR NONRECURRING EVENTS. The Committee is hereby
authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events
(including, without limitation, the events described in
Section 4(3) hereof) affecting the Company, any
Affiliate, or the financial statements of the Company or
any Affiliate, or of changes in applicable laws,
regulations, or accounting principles, whenever the
Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be
made available under this Plan; and
(e) CANCELLATION. Any provision of this Plan or any Award
Agreement to the contrary notwithstanding, the Committee
may cause any Award granted hereunder to be cancelled in
consideration of a cash payment or alternative Award
(equal to the Fair Market Value of the Award to be
cancelled) made to the holder of such cancelled Award.
SECTION 10 GENERAL PROVISIONS.
(1) REPRESENTATIONS; LEGEND. The Committee may require each person
purchasing Shares pursuant to an Option to represent to and agree
with the Company in writing that the Participant is acquiring the
Shares without a view to the distribution thereof. The certificates
for such Shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
(2) NO RIGHTS TO AWARDS. No Employee, Participant or other person shall
have any claim to be granted any Award, and there is no obligation
for uniformity of treatment of Employees, Participants, or holders
or beneficiaries of Awards. The terms and conditions of Awards need
not be the same with respect to each recipient.
(3) WITHHOLDING. A Participant may be required to pay to the Company or
any Affiliate, and the Company or any Affiliate shall have the right
and is hereby authorized to withhold from any Award, from any
payment due or transfer made under any Award or under this Plan or
from any compensation or other amount owing to a Participant, the
amount (in cash, Shares, other securities, other Awards or other
property, as determined by the Committee) of any applicable
withholding taxes in respect of an Award, its exercise, or any
payment or transfer under an Award or under this Plan and to take
such other action
11
12
as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes. In the case of payments
of Awards in the form of Shares, at the Committee's discretion, the
Participant may be required to pay to the Company or an Affiliate
the amount of any taxes required to be withheld with respect to such
Shares or, in lieu thereof, the Company or an Affiliate shall have
the right to retain (or the Participant may be offered the
opportunity to elect to tender) the number of Shares whose Fair
Market Value equals the amount required to be withheld. The
Committee may provide for additional cash payments to holders of
Awards to defray or offset any tax arising from the grant, vesting,
exercise or payments of any Award. In the discretion of the
Committee, the Company may offer loans to Participants to satisfy
withholding requirements on such terms as the Committee may
determine, which terms may in the discretion of the Committee be
non-interest bearing.
(4) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in
this Plan shall prevent the Company or any Affiliate from adopting
or continuing in effect other compensation arrangements, which may
(but need not) provide for the grant of options, restricted stock
and other types of security-based awards provided for hereunder
(subject to shareholder approval if such approval is required), and
such arrangements may be either generally applicable or applicable
only in specific cases.
(5) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of,
or to continue to render services to, the Company or any Affiliate.
Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, or otherwise terminate its relationship
with a Service Provider, free from any liability or any claim under
this Plan, except to the extent expressly provided otherwise in this
Plan or in any Award Agreement.
(6) NO RIGHTS AS SHAREHOLDER. Subject to the provisions of the
applicable Award Agreement, no Participant or holder or beneficiary
of any Award shall have any rights as a shareholder with respect to
any Shares to be distributed under this Plan until he or she has
become the holder of such Shares.
(7) GOVERNING LAW. The validity, construction, and effect of this Plan
and any rules and regulations relating to this Plan and any Award
Agreement shall be determined in accordance with the laws of the
State of Delaware and applicable United States law; provided,
however, that, to the extent Canadian federal or Ontario provincial
law is applicable to any aspect of this Plan, such law shall control
to the extent that it does not conflict with application of any
securities laws or tax laws of the United States upon the grant or
exercise of an Award.
(8) SEVERABILITY. If any provision of this Plan or any Award is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any person or Award, or would disqualify this
Plan or any Award under any law deemed applicable by the Committee,
such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be construed or deemed amended
without, in the determination of the Committee, materially altering
the intent of this Plan or the Award, such provision shall be
stricken as to such jurisdiction, person or Award and the remainder
of this Plan and any such Award shall remain in full force and
effect.
12
13
(9) OTHER LAWS. The Committee may refuse to issue or transfer any Shares
or other consideration under an Award if it determines that the
issuance or transfer of such Shares or such other consideration
might violate any applicable law or regulation, and any payment
tendered to the Company by a Participant, other holder or
beneficiary in connection with the exercise of such Award shall be
promptly refunded to the relevant Participant, holder or
beneficiary. Without limiting the generality of the foregoing, no
Award granted hereunder shall be construed as an offer to sell
securities of the Company, and no such offer shall be outstanding,
unless and until the Committee has determined that any such offer,
if made, would be in compliance with all applicable requirements of
Federal securities laws.
(10) NO TRUST OR FUND CREATED. Neither this Plan nor any Award shall
create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Company or any
Affiliate and a Participant or any other person. To the extent that
any person acquires a right to receive payments from the Company or
any Affiliate pursuant to an Award, such right shall be no greater
than the right of any unsecured general creditor of the Company or
any Affiliate.
(11) NO FRACTIONAL SHARES. No fractional Shares shall be issued or
delivered pursuant to this Plan or any Award, and the Committee
shall determine whether cash, other securities, or other property
shall be paid or transferred in lieu of any fractional Shares or
whether such fractional Shares or any rights thereto shall be
cancelled, terminated, or otherwise eliminated.
(12) HEADINGS. Headings are given to the Sections and subsections of this
Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the
construction or interpretation of this Plan or any provision
thereof.
(13) BROKERAGE ARRANGEMENTS. The Committee, in its discretion, may enter
into arrangements with one or more banks, brokerages or other
financial institutions to facilitate the disposition of Shares
acquired upon exercise of Options, including, without limitation,
the sale of the Shares acquired upon such exercise.
(14) INDEMNIFICATION. Any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative (including any action or suit by or in the right of
the Company to procure a judgment in its favor) by reason of the
fact that he or she is or was a member of the Committee, shall be
indemnified by the Company, if, as and to the extent authorized by
the laws of the Provence of Ontario, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
(if the terms of such settlement have been consented to by the
Company) actually and reasonably incurred by him or her in
connection with the defense or settlement of such action, suit or
proceeding. The indemnification expressly provided by statute in a
specific case shall not be deemed exclusive of any other rights to
which any person indemnified may be entitled under any lawful
agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as
to action in any other capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs,
personal representatives and
13
14
administrators of such a person. No right of indemnification under
the provisions set forth herein shall be available to or enforceable
by any such person unless, within sixty (60) days after institution
of any such action or proceeding, such person shall have offered the
Company, in writing, notice of and the opportunity to handle and
defend same at its own expense unless the Company shall have waived
the requirement to provide such written notice and offer.
SECTION 11 EFFECTIVE DATE OF THIS PLAN.
This Plan shall be effective on January 1, 1999 (the "EFFECTIVE DATE");
provided, however, that if this Plan is not approved by the shareholders of the
Company within the period ending twelve (12) months after the Effective Date,
none of the Options granted hereunder shall constitute Incentive Stock Options.
SECTION 12 TERM OF THIS PLAN.
No Award shall be granted under this Plan after March 27, 2005; provided,
however, that any Award theretofore granted may, and the authority of the Board
or the Committee to amend, alter, adjust, suspend, discontinue, or terminate any
such Award or to waive any conditions or rights under any such Award shall,
extend beyond such date.
SECTION 13 THE 1995 STOCK OPTION PLAN.
The Stock Options, granted under the 1995 Plan, entitling holders to purchase an
aggregate of 606,000 Shares as of April 12, 2001, shall continue to be governed
by the terms and conditions of the 1995 Plan which shall be annexed hereto as
Schedule "A". No further Stock Options shall be granted under the 1995 Plan. As
Stock Options expire unexercised or are terminated or cancelled under the 1995
Plan; the Shares covered by such Stock Options shall again be Shares with
respect to which Awards may be granted under this Plan. Subject to the limits
set in Section 4(1) of this Plan, as may be amended and approved by Shareholders
from time to time; additional Shares, currently reserved for the 1995 Plan,
shall also be Shares with respect to which Awards may be granted. Upon expiry of
the final Stock Option under the 1995 Plan on or before January 15, 2005, the
latest expiry date of the Stock Options currently outstanding under the 1995
Plan, the 1995 Plan shall terminate and Schedule "A" shall be deleted from this
Plan.
14
15
SCHEDULE "A"
ZEMEX CORPORATION
1995
STOCK OPTION PLAN
1. PURPOSE
The Zemex Corporation 1995 Stock Option Plan (the "Plan") provides for the grant
of Stock Options and Supplemental Bonuses to Employees, Consultants and/or
Eligible Nonemployee Directors of Zemex Corporation (the "Corporation"), and
such of its subsidiaries (as defined in Section 424(f) of the Internal Revenue
Code of 1986, as amended (the "Code") as the Board of Directors of the
Corporation (the "Board") shall from time to time designate ("Participating
Subsidiaries"), in order to advance the interests of the Corporation and its
Participating Subsidiaries through the motivation, attraction and retention of
their respective Employees, Consultants and/or Eligible Nonemployee Directors.
2. INCENTIVE STOCK OPTIONS AND NON-INCENTIVE STOCK OPTIONS
The Stock Options granted under the Plan may be either:
(a) Incentive Stock Options ("ISOs") which are intended to be "Incentive
Stock Options" as that term is defined in Section 422 of the Code; or
(b) Nonstatutory Stock Options ("NSOs") which are intended to be options
that do not qualify as "Incentive Stock Options" under Section 422 of
the Code.
All Stock Options shall be NSOs unless the Option Agreement clearly designates
the Stock Options granted thereunder, or a specified portion thereof, as ISOs.
Subject to the other provisions of the Plan, a Participant may receive ISOs and
NSOs at the same time, provided that the ISOs and NSOs are clearly designated as
such.
Except as otherwise expressly provided herein, all of the provisions and
requirements of the Plan relating to Stock Options shall apply to ISOs and NSOs.
3. ADMINISTRATION
3.1 COMMITTEE. The Plan shall be administered by the Compensation/Stock
Option/Pension Committee of the Board or such other committee as may be
appointed by the Board ("Committee"), which Committee shall be composed of at
least two or more members of the Board, all of whom are Disinterested Persons.
The Committee shall have full authority to administer the Plan, including
authority to interpret and construe any provision of the Plan and any Stock
Option or Supplemental Bonus granted thereunder, and to adopt such rules and
regulations for administering the Plan as it may deem necessary in order to
comply with the requirements of the Code, in order that Stock Options that are
intended to be ISOs will be classified as incentive stock options under the
Code, or in order to conform to any regulation or to any change in any law or
regulation applicable thereto. The Committee may delegate any of
15
16
its responsibilities under the Plan, other than its responsibility to grant
Stock Options, to determine whether the Supplemental Bonuses, if any, payable to
a Participant shall be paid in cash, in shares of Common Stock or a combination
thereof, or to interpret and construe the Plan. If the Board is composed
entirely of Disinterested Persons, the Board may reserve to itself any of the
authority granted to the Committee as set forth herein, and it may perform and
discharge all of the functions and responsibilities of the Committee at any time
that a duly constituted Committee is not appointed and serving. All references
in the Plan to the "Committee" shall be deemed to refer to the Board whenever
the Board is discharging the powers and responsibilities of the Committee, and
to any special committee appointed by the Board to administer particular aspects
of the Plan.
3.2 ACTIONS OF COMMITTEE. Meetings of the Committee shall be held at such
times and places as shall be determined by the Committee. A majority of the
members of the Committee shall constitute a quorum for the transaction of
business, and the vote of a majority of those members present at any meeting at
which a quorum is present shall decide any question brought before that meeting.
In addition, the Committee may take any action otherwise proper under the Plan
without a meeting by the unanimous written consent of its members. No member of
the Committee shall be liable for any act or omission of any other member of the
Committee or for any act, determination or omission made in good faith on his
own part, including but not limited to the exercise of any power or discretion
given to him under the Plan, with respect to the Plan or any award thereunder.
All actions taken and all interpretations and determinations made by the
Committee in good faith (including determinations of Fair Market Value) shall be
final and binding upon all Participants, the Corporation 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, and all members of the Committee shall, in addition to their rights as
directors, be fully protected by the Corporation with respect to any such
action, determination or interpretation.
4. DEFINITIONS
4.1 "Common Stock" means a share of authorized but unissued or authorized
and issued treasury Capital Stock (par value $1.00 per share) of the
Corporation.
4.2 "Consultant" means a person who provides services to the Corporation or
a Participating Subsidiary other than as an employee or director of the
Corporation or Participating Subsidiary, whether or not pursuant to a written
consulting agreement with the Corporation or a Participating Subsidiary.
4.3 "Disinterested Person" means a director of the Corporation who, during
the shorter of (a) the one year prior to service as an administrator of the
Plan, or (b) the period between the date of which the Corporation's Common Stock
is registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, (the "1934 Act") and the director's service as an administrator of the
Plan, has not been granted or awarded equity securities pursuant to the Plan or
any other plan of the Corporation or any of its affiliates except as may be
permitted by Rule 16b-3(c)(2) under the 1934 Act or any successor to such rule.
Notwithstanding the foregoing, prior to the date the Corporation's Common Stock
is registered pursuant to section 12 of the 1934 Act, each director shall be a
Disinterested Person for purposes of this Plan.
16
17
4.4 "Eligible Nonemployee Director" means nonemployee director of the
Corporation who is not a member of the Committee.
4.5 "Employee" means an employee of the Corporation or any Participating
Subsidiary and includes employees who are also directors of the Corporation or a
Participating Subsidiary.
4.6 "Fair Market Value" means that if the Common Stock is not traded
publicly, the Fair Market Value of a share of Common Stock on any date shall be
determine, in good faith, by the Committee after such consultation with outside
legal, accounting and other experts as the Committee may deem advisable, and the
Committee shall maintain a written record of its method of determining such
value. If the Common Stock is traded publicly the Fair Market Value of a share
of Common Stock on any date shall be the average of the representative closing
bid and asked prices, as quoted by the National Association of Securities
Dealers through NASDAQ (its automated system for reporting quotes), for the date
in question of, if the Common Stock is listed on the NASDAQ National Market
System or it listed on a national stock exchange, the officially quoted closing
price on NASDAQ or such exchange, as the case may be, on the date in question.
4.7 "Participant" means an Employee, Consultant or Eligible Nonemployee
Director to whom a Stock Option or Supplemental Bonus is granted.
4.8 "Stock Option" means the right granted under the Plan to an Employee,
Consultant, or an Eligible Nonemployee Director to purchase, at such time or
times and at such price or prices ("Option Price") as are determined by the
Committee, the number of shares of Common Stock determined by the Committee.
4.9 "Supplemental Bonus" is the right to receive payment, in shares of
Common Stock, cash or a combination of shares of Common Stock and cash of an
amount determined under Section 7.7.
5. ELIGIBILITY AND PARTICIPATION
Grants of Stock Options and Supplemental Bonuses may be made to Employees,
Consultants, and/or Eligible Nonemployee Directors. The Committee shall from
time to time determine the Employees, Consultants, and Eligible Nonemployee
Directors to whom Stock Options shall be granted, the number of shares of Common
Stock subject to each Stock Option to be granted to each such person, the Option
Price of such Stock Options and the terms and provisions of such Stock Options,
all as provided in the Plan. Notwithstanding the foregoing only Employees are
eligible to receive Stock Options which are ISOs. The Option Price of any ISO
may be more than but shall be not less than the Fair Market Value of a share of
Common Stock on the date on which the Stock Option is granted, but the Option
Price of an NSO may be more than or less than the Fair Market Value on the date
the NSO is granted if the Committee so determines. Notwithstanding the
foregoing, however the Option Price of an NSO may not be less than par value. If
an ISO is granted to an Employee who then owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Corporation or
any parent or subsidiary corporation of the Corporation, the Option Price of
such ISO shall be at least 110% of the Fair Market Value of the Common Stock
subject to the ISO at the time such ISO is granted, and such ISO shall not be
exercisable after five years after the date on which it was granted. Each Stock
Option shall be evidenced by a written agreement ("Option Agreement") containing
such terms and provisions as the Committee may determine, subject to the
provisions of the Plan.
17
18
Any director of the Corporation may by notice to the Corporation (which notice
may be oral if confirmed in writing) at any time irrevocably elect to be
ineligible for selection as a person to whom Stock Options and/or Supplemental
Bonuses may be granted.
6. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
6.1 MAXIMUM NUMBER.
(a) The stock subject to Stock Options that may be granted under the Plan
shall be shares of the Common Stock as constituted on the date the Plan
becomes effective, and any other shares into which such Common Stock
shall thereafter be changed by reason of a stock dividend,
recapitalization, merger, consolidation, amalgamation, split-up,
combination, reverse stock split, exchange of shares, rights offering,
or the like as determined by the Committee in its discretion pursuant
to the provisions of Section 6.2 of the Plan. The maximum number of
shares of Common Stock with respect to which Stock Options may be
granted under the Plan shall not exceed in the aggregate ten percent of
the number of shares of Common Stock outstanding from time to time;
provided, however, that
(i) shares of Common Stock issued pursuant to the Plan or any
other employee benefit plan or arrangement shall not be
included in the number of shares outstanding for purposes of
calculating under this sentence the number of shares as to
which Stock Options may be granted under the Plan;
(ii) any increase in the number of shares of Common Stock
outstanding in connection with an event which results in an
adjustment pursuant to Section 6.2 shall not be included in
the number of shares outstanding for purposes of calculating
under this sentence the number of shares as to which Stock
Options may be granted under the Plan;
(iii) any reduction in the number of outstanding shares of Common
Stock shall not affect any Stock Options granted under the
Plan prior to such reduction;
(iv) the class and aggregate number of shares of Common Stock which
may be subject to Stock Options granted under the Plan shall
be subject to adjustment in accordance with the provisions of
Section 6.2 of the Plan; and
(v) the Committee may grant Stock Options the exercisability of
which is conditioned upon an increase in the number of shares
of Common Stock outstanding from time to time and, until such
condition is satisfied, such Stock Options shall not be taken
into account in computing the number of shares of Common Stock
with respect to which Stock Options have been granted under
the Plan.
(b) In the event that any outstanding Stock Option for any reason shall
expire or is terminated or cancelled, the shares of Common Stock
allocable to the unexercised portion of such Stock Option may again be
subject to a Stock Option under the Plan. There shall be reserved and
kept available, free from preemptive rights, out of the Corporation's
authorized but unissued shares of Common Stock or its authorized and
issued Common Stock held in its treasury, or any combination thereof,
for sale under the Plan a number of shares of Common Stock equal to the
maximum number of shares that may be purchased pursuant to Stock
Options granted or that may be granted under the Plan.
18
19
(c) The Committee may, with the consent of the holder of any Stock Option
granted under the Plan, cancel such Stock Option and grant a new Stock
Option in substitution therefor, provided that the Stock Option as so
substituted shall satisfy all of the requirements of the Plan as of the
date such new Stock Option is granted.
(d) The aggregate Fair Market Value (determined as of the time the ISO is
granted) if the Common Stock as to which all ISOs granted to an
Employee may first become exercisable in a particular calendar year may
not exceed $100,000.
(e) No Stock Option may be granted under the Plan after March 27, 2005.
6.2 CAPITAL CHANGES. In the event any changes are made to the shares of
Common Stock, (whether by reason of merger, consolidation, reorganization,
recapitalization, stock dividend in excess of ten percent (10%) at any single
time, stock split, combination of shares, exchange of shares, change in
corporate structure or otherwise), appropriate adjustments shall be made in: (i)
the number of shares of Common Stock theretofore made subject to Stock Options,
and in the purchase price of said shares and (ii) the aggregate number of shares
which may be made subject to Stock Options. If any of the foregoing adjustments
shall result in a fractional share, the fraction shall be disregarded, and the
Corporation shall have no obligation to make any cash or other payment with
respect to such a fractional share.
7. EXERCISE OF STOCK OPTIONS
7.1 TIME OF EXERCISE.
(a) Subject to the provisions of the Plan, including without limitation
Section 7.5, the Committee, in its discretion, shall determine the time
when a Stock Option, or a portion of a Stock Option, shall become
exercisable, and the time when a stock Option, or a portion of a Stock
Option, shall expire. Such time or times shall be set forth in the
Option Agreement evidencing such Stock Option. Subject to the
provisions of Article V, an ISO shall expire, to the extent not
exercised, no later than the tenth anniversary of the date on which it
was granted, and an NSO shall expire, to the extent not exercised, no
later than 10 years after the date on which it was granted. No Stock
Option may be exercised prior to one year from the date of grant. The
Committee may accelerate the vesting of any Participant's Stock Option
by giving written notice to the Participant. Upon receipt of such
notice, the Participant and the Corporation shall amend the Option
Agreement to reflect the new vesting schedule. The acceleration of the
exercise period of a Stock Option shall not affect the expiration date
of that Stock Option.
(b) Stock Options shall be exercised by the delivery of written notice to
the Corporation, in such form and to be filed in such manner as the
Committee shall in its sole discretion prescribe, not later than 5:00
p.m., New York City time, on the last day on which such Stock Option
may be exercised. Any written notice of the exercise of a Stock Option
shall set forth the number of shares of Common Stock with respect to
which the Stock Option is to be exercised, shall include any statement
or representation required by the applicable Option Agreement, sand
shall be accompanied by paying in full of the purchase price of such
shares of Common Stock.
19
20
7.2 EXCHANGE OF OUTSTANDING STOCK. Each Stock Option shall provide that the
purchase price of the shares of Common Stock as to which a Stock Option shall be
exercised shall be paid to the Corporation at the time of exercise either in
cash or in such other consideration as the Committee in its discretion deems
appropriate, including, but not limited to, shares of Common Stock already owned
by the optionee having total Fair Market Value, as determined by the Committee,
equal to the purchase price, or a combination of cash and Common Stock having a
total Fair Market Value, as so determined, equal to the amount of the purchase
price not paid in cash. As soon as practicable after receipt of such payment,
the Corporation shall;, subject to the provisions of Sections 7.4 and 14 of the
Plan, deliver, to the grantee a certificate or certificates for the shares of
Common Stock so purchased.
7.3 USE OF PROMISSORY NOTE; EXERCISE LOANS. The Committee may, in its sole
discretion, impose terms and conditions, including condition relating to the
manner and timing of payments, on the exercise of Stock Options. Such terms and
conditions may include, but are not limited to permitting a Participant to
deliver to the Corporation his promissory note as full or partial payment of the
exercise of a Stock Option; provided that, with respect to any promissory note
given a payment or partial payment for the exercise of an ISO, all terms of such
note shall be determined at the time a Stock Option is granted and set forth in
the Option Agreement. The Committee, in its sole discretion, may authorize the
Corporation to make a loan to a Participant in connection with the exercise of
Stock Options, or authorize the Corporation to arrange or guaranty loans to a
Participant by a third party.
7.4 STOCK RESTRICTION AGREEMENT. The Committee may provide that shares of
Common Stock issuable upon the exercise of a Stock Option shall, under certain
conditions, be subject to restrictions whereby the Corporation has a right of
first refusal with respect to such shares or a right or obligation to repurchase
all or a portion of such shares, which restrictions may survive a Participant's
term of employment with the Corporation. The acceleration of time or times at
which a Stock Option becomes exercisable may be conditioned upon the
Participant's agreement to such restrictions.
7.5 TERMINATION OF EMPLOYMENT BEFORE EXERCISE.
(a) If at any time prior to the expiration of a Stock Option granted to an
Employee of the Corporation or a Participating Subsidiary, such
optionee shall not be an Employee of the Corporation or a Participating
Subsidiary, then:
(i) if such employment is terminated by retirement of or after the
earliest date on which an immediate retirement benefit is
payable in accordance with the terms of a tax-qualified
retirement plan of the Corporation or a Participating
Subsidiary or by reason of disability as determined by the
Committee in its discretion, such Stock Option may be
exercised, to the same extent it was exercisable at the date
of such termination of employment, during the three-month
period following the date of such termination (but in no event
after the expiration of such Stock Option as provided in the
Option Agreement and, in the case of an ISO, in no event
beyond ten years from the date of grant of the ISO);
(ii) if such employment is terminated by death, such Stock Option
may be exercised by the person or persons entitled to do so
under the optionee's will or, if the optionee shall have
failed to make testamentary disposition of such Stock Option
or shall have died intestate, by the optionee's legal
representative, to the same extent is was exercisable on the
date of
20
21
such optionee's death, during the twelve-month period
following the date of such optionee's death (but in no event
after the expiration of such Stock Option as provided in the
Option Agreement and, in the case of an ISO, in no event
beyond ten years from the date of grant of the ISO): and
(iii) if such employment is terminated voluntarily or involuntary
for any reason other than retirement, disability or death,
such Stock Option shall terminate and cease to be exercisable
immediately upon such termination of employment; provided,
however, that if the Board of Directors shall determine that
(A) due to special and unusual circumstances, the Stock
Option should be permitted to be exercised after
termination of employment; and
(B) taking in account the optionee's record of service
and performance during his employment and all of the
circumstances surrounding the termination of
employment, the optionee has not acted in a manner
detrimental to the Corporation or Participating
Subsidiary by which the optionee was employed,
such Stock Option may be exercised during the three-month
period following such termination of employment (but in no
event following the expiration of such Stock Option as
provided in the Option Agreement and, in the case of an ISO,
in no event beyond ten years from the date of grant of the
ISO) with respect to a number of shares as the Board of
Directors shall approve, but in no event with respect to a
number of shares of Common Stock greater than the number of
shares as to which such Stock Option remains unexercised at
the date of termination of the optionee's employment.
(iv) for purposes of the foregoing, if the 10% ownership
limitations of Article V apply to the Participant, five years
shall be substituted for ten years each place it appears in
the preceding paragraphs.
(b) If at any time prior to the expiration of a Stock Option granted to a
person who at the time of grant is a Consultant or an Eligible
Nonemployee Director, such optionee shall not be a Consultant or a
director, as the case may be, then such Stock Option may be exercised,
to the extent it was exercisable on the date the optionee ceased to be
a Consultant or a director, as the case may be, during the seven-month
period following the termination of such consultancy or directorship,
as the case may be (but in no event after the expiration of such Stock
Option as provided in the Option Agreement); provided, however, that
the Corporation may wave the Stock Option termination date otherwise
applicable under this paragraph (b) if the optionee will become an
Employee following the termination of such consultancy or directorship.
(c) Notwithstanding the provisions of this Section 7.5 or any other
provision of the Plan, with respect to any Stock Options granted to an
Employee in connection with the commencement of employment as an
Employee, the Committee may provide for terms as to retirement,
disability, death or other termination of employment which are
different from the terms provided in paragraph (a) of this Section 11
if such different terms are set forth in a written employment agreement
with such Employee, which agreement shall have been approved by the
Board, or are otherwise provided by the Committee, subject to approval
by the Board.
21
22
Notwithstanding the foregoing, no Stock Options which are ISOs may be
granted pursuant to this subparagraph.
(d) Whether authorized leave of absence or absence on military service
shall constitute severance of the employment relationship between the
Corporation or a Participating Subsidiary and the optionee shall be
determined by the Committee at the time thereof. Notwithstanding the
foregoing, in the case of Stock Options which are ISOs , if the period
of leave exceeds 90 days, unless the individual's right to reemployment
is guaranteed by statue or contract, the employment relationship will
be deemed to have terminated on the 91st day of such leave.
(e) If an optionee's status with the Corporation or a Participating
Subsidiary changes, but such optionee continues as a Consultant to the
Corporation, then the Committee in its discretion may elect that the
Stock Option previously granted shall continue in full force and effect
so long as such Stock Option is an NSO. The Committee shall be
permitted in its discretion, to grant NSOs, which provide that the
Stock Option shall continue in full force and effect if the optionee's
status with the Corporation or a Participating Subsidiary changes, but
such person continues as a Consultant to the Corporation.
7.6 DISPOSITION OF FORFEITED STOCK OPTIONS. If the Stock Option is not
exercised during the applicable period, it shall be deemed to have been
forfeited and of no further force or effect. Any shares of Common Stock subject
to Stock Options forfeited by a Participant shall not thereafter be eligible for
purchase by the Participant but may be made subject to Stock Options granted to
other Participants.
7.7 GRANT OF SUPPLEMENTAL BONUSES. The Committee, either at the time of
grant or at any time prior to exercise of any Stock Option, may provide for a
Supplemental Bonus from the Corporation or Participating Subsidiary in
connection with a specified number of shares of Common Stock then purchasable,
or which may become purchasable, under a Stock Option. Such Supplemental Bonus
shall be payable upon the exercise of the Stock Option with regard to which such
Supplemental Bonus was granted. A Supplemental Bonus shall not exceed the amount
necessary to reimburse the Participant for the income tax liability incurred by
him upon the exercise of the Stock Option calculated using the maximum combined
federal and applicable state income tax rates then in effect and taking into
account the tax liability arising from the Participant's receipt of the
Supplemental Bonus. Payment of a Participant's Supplemental Bonus shall be made
on or before the 90th day after the exercise of the Stock Option with regard to
which such Supplemental Bonus was granted. The Committee may, in its discretion,
elect to pay any part or all of the Supplemental Bonus in: (i) cash; (ii) shares
of Common Stock; or (iii) any combination of cash and shares of Common Stock.
The Committee's election pursuant to this Section 7.7 shall be made by giving
written notice to the Participant within 90-day payment period, which notice
shall specify the portion which the committee elects to pay in cash, shares or
Common Stock or a combination thereof. In the event any portion is to be paid in
shares of Common Stock, the number of shares to be delivered shall be determined
by dividing the amount which the Committee elects to pay in shares of Common
Stock by the Fair Market Value of the share of Common Stock on the date of
exercise of the Stock Option with regard to which the Supplemental Bonus was
granted. Any fractional share resulting from any such calculation shall be
disregarded. Said shares, together with any cash payable to the Participant,
shall be delivered within said 90-day payment period. Shares of Common Stock
issued pursuant to this Section 7.7 shall not be deemed to have been issued upon
the exercise of a Stock Option for purposes of the limitations imposed by
Section 6.1 of the Plan.
22
23
8. NO CONTRACT OF EMPLOYMENT
Nothing in this Plan shall confer upon the Participant the right to continue in
the employ of the Corporation, or any Participating Subsidiary, nor shall it
interfere in any way with the right of the Corporation, or any such
Participating Subsidiary, to discharge the Participant at any time for any
reason whatsoever, with or without cause. Nothing in this Article VIII shall
affect any rights or obligations of the Corporation or any Participant under any
written contract of employment.
9. NO RIGHTS AS A STOCKHOLDER
A Participant shall have no rights as a stockholder with respect to any shares
of Common Stock subject to a Stock Option. Except as provided in Section 6.2, no
adjustment shall be made in the number of shares of Common Stock issued to a
Participant, or in any other rights of the Participant upon exercise of a Stock
Option by reason of any dividend, distribution or other right granted to
stockholders for which the record date is prior to the date of exercise of the
Participant's Stock Option.
10. ASSIGNABILITY
No Stock Option or Supplemental Bonus right granted under this Plan, nor any
other rights acquired by a Participant under this Plan, shall be assignable or
transferable by a Participant, other than by will or the laws of descent and
distribution or, in the case of an NSO, pursuant to a qualified domestic
relations order as defined by the Code, Title I of the Employee Retirement
Income Security Act, or the rules thereunder. Notwithstanding the preceding
sentence, the Committee may, in its sole discretion, permit the assignment or
transfer of an NSO by a Participant other than an officer or director, and the
exercise thereof by a person other than such Participant, on such terms and
conditions as the Committee in its sole discretion may determine. Any such terms
shall be determine at the time the NSO is granted, and shall be set forth in the
Option Agreement. In the event of his death, the Stock Option or Supplemental
Bonus rights which are exercisable pursuant to the terms of the Plan may be
exercised by the Personal Representative of the Participant's estate or. Or if
no Personal Representative has been appointed, by the successor or successors in
interest determined under the Participant's will or under the applicable laws of
descent and distribution.
11. MERGER OR LIQUIDATION OF THE CORPORATION
(a) The existence of outstanding Stock Options shall not affect in any way
the right or power of the Corporation or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the Corporation's capital structure or its business,
or any merger or consolidation of the Corporation, or any issue of
bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Corporation, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
(b) If the Corporation is to be merged or amalgamated with or into another
corporation, or if the Corporation is to be reorganized, liquidated or
dissolved, or if all or substantially all of the assets or all of the
outstanding Common Stock of the Corporation is to be acquired by
another corporation (individually, a "Transaction" and collectively,
the "Transactions"), in
23
24
lieu of any outstanding Stock Options remaining exercisable for shares
of Common Stock following the effective time of the Transaction, the
Board of the Corporation may make appropriate provision, by resolution
or by the terms of the Transaction as set out in a written agreement
relating to the Transaction which has been approved by the Board and
duly executed and delivered on behalf of the Corporation to the other
party or parties to the Transaction, or otherwise, for any of the
following: (1) after the Transaction, an optionee holding an
outstanding Stock Option shall be entitled upon exercise of such Stock
Option to receive (subject to any required action by stockholders) in
lieu of the number and class of shares of stock or other securities to
which such Stock Option would have been entitled pursuant to the terms
of the Transaction if, immediately prior to the effective time of the
Transaction, such holder had been the holder of record of the number
and class of shares equal to the number and class of shares (as
constituted prior to the Transaction) as to which such Stock Option
shall be so exercised; or (2) an outstanding Stock Option (other than
any Stock Option held by an optionee who is subject to Section 16(b) of
the Securities Exchange Act of 1934, as amended, which Stock Options
will not have been granted more than six months prior to the effective
time of the Transaction) may be cancelled by the Committee as of the
effective time of the Transaction provided that (x) notice of such
cancellation shall be given to the holder of the Stock Option and (y)
the Committee shall have waived any limitations on exercise imposed
pursuant to provisions of the Plan or the Options Agreement with
respect to such Stock Option and the holder of such Stock Option shall
have the right to exercise such Stock Option in full (without regard to
any limitations on exercise imposed pursuant to provisions of the Plan
or the Option Agreement) during a 25-day period preceding the effective
time of the Transaction; or (3) at the effective time of the
Transaction the holder of an outstanding Stock Option shall be entitled
to receive cash with respect to each share as to which the Stock Option
remains unexercised at the effective time of the Transaction (without
regard to any limitations on exercise imposed pursuant to provisions of
the Plan or the Option Agreement) considering having a Fair Market
Value, as determined by the Committee, equal to the amount by which the
value (as determined by the Committee in its discretion) of the
consideration to be paid per outstanding share of Common Stock pursuant
to the terms of the Transaction exceeds the per share exercise price of
the shares of Common Stock subject to such Stock Options; or (4) there
shall be substituted for a Stock Option outstanding at the effective
time of the Transaction a stock option to purchase appropriate stock of
the Corporation or stock of the surviving consolidated or continuing
corporation in such Transaction or an affiliate of the Corporation or
such corporation, provided that the excess of the aggregate Fair Market
Value of the shares subject to the substitute stock option immediately
after such substitution over the aggregate purchase price of such
shares pursuant to such pursuant to such substitute stock option is
approximately equal to the excess of the Fair Market Value of the
shares of Common Stock subject to such Stock Option immediately before
such substitution over the aggregate purchase price of such shares of
Common Stock pursuant to such Stock Option. In connection with a
particular Transaction, the Committee may in its discretion make
provision of one of the preceding alternatives for all Stock Options or
for different of the preceding alternatives for different Stock
Options, including different Stock Options held by the same optionee.
(c) Except as hereinbefore expressly provided or as provided by the
Committee in its discretion in any particular Stock Option, the issue
by the Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or
for labor or services either upon the exercise of rights or warrants to
subscribe therefor, or upon
24
25
conversion of shares or obligations of the Corporation convertible into
such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number, class or
price of shares of Stock then subject to outstanding Stock Options.
12. AMENDMENT
The Board may from time to time alter, amend, suspend or discontinue the Plan,
including, where applicable, any modifications or amendments as it shall deem
advisable in order that ISOs will be classified as incentive stock options under
the Code, or in order to conform to any regulation or to any change in any law
or regulation applicable thereto; provided, however, that no such actions shall
adversely affect the rights and obligations with respect to Stock Options at any
time outstanding under the Plan; and provided further that no such action shall,
without the approval of the stockholders of the Corporation, (i) increase the
maximum number of shares of Common Stock that may be made subject to Stock
Options (unless necessary to effect the adjustments required by Section 6.2),
(ii) materially increase the benefits accruing to Participants under the Plan,
or (iii) materially modify the requirements as to eligibility for participation
in the Plan.
13. REGISTRATION OF OPTIONED SHARES
The Stock Options shall not be exercisable unless the purchase of such optioned
shares is pursuant to an applicable effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), or unless, in the option of
counsel to the Corporation, the proposed purchase of such optioned shares would
be exempt from the registration requirements of the 1933 Act and from the
registration or qualification requirements of applicable state securities laws.
14. WITHHOLDING TAXES
The Corporation or Participating Subsidiary may take such steps as it may deem
necessary or appropriate for the withholding of any taxes which the Corporation
or the Participating Subsidiary is required by any law or regulation or any
governmental authority, whether federal, state or local, domestic or foreign, to
withhold in connection with any Stock Option or Supplemental Bonus, including,
but not limited to, the withholding of all or any portion of any payment or the
withholding of issuance of shares of Common Stock to be issued upon the exercise
of any Stock Option or upon payment of any Supplemental Bonus, until the
Participant reimburses the Corporation or Participating Subsidiary for the
amount the Corporation or Participating Subsidiary is required to withhold with
respect to such taxes, or cancelling any portion of such payment or issuance in
an amount sufficient to reimburse itself for the amount it is required to so
withhold.
15. BROKERAGE ARRANGEMENTS
The Committee, in its discretion, may enter into arrangements with one or more
banks, broker or other financial institutions to facilitate the disposition of
shares acquired upon exercise of Stock Options or Supplemental Bonuses,
including, without limitation, arrangements for the simultaneous exercise of
Stock Options or Supplemental Bonuses, and sale of the shares acquired upon such
exercise.
25
26
16. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor the submission of the Plan to
stockholders of the Corporation for approval shall be construed as creating any
limitations on the power or authority of the Board to adopt such other or
additional incentive or other compensation arrangements of whatever nature as
the Board may deem necessary or desirable or preclude or limit the continuation
of any other plan, practice or arrangement for the payment of compensation or
fringe benefits to employees general, or to any class or group of employees,
which the Corporation or any Participating Subsidiary now has lawfully put into
effect, including, without limitation, any retirement, pension, savings and
stock purchase plan, insurance, death and disability benefits and executive
short-term incentive plans.
17. INDEMNIFICATION
Any person who was or is a party or is threatened to be made a party to any
threatened, pending or competed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including any action or suit by or in
the right of the Corporation to procure a judgment in its favor) by reason of
the fact that he is or was a member of the Committee, shall be indemnified by
the Corporation, if, as and to the extent authorized by the laws of the State of
Delaware, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement (if the terms of such settlement have been consented
to by the Corporation) actually and reasonably incurred by him in connection
with the defense or settlement of such action, suit or proceeding. The
indemnification expressly provided by statue in a specific case shall not be
deemed exclusive of any other rights to which any person indemnified may be
entitled under any lawful agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity an as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person. No right of indemnification under the provision set forth herein shall
be available to or enforceable by any such person unless, within sixty (60) days
after institution of any such action or proceeding, such person shall have
offered the Corporation, in writing, notice of and the opportunity to handle and
defend same at its own expense unless Corporation shall have waived the
requirement to provide such written notice and offer.
18. EFFECTIVE DATE
This Plan was adopted by the Board of Directors on March 27, 1995 and became
effective as of February 8, 1995 and was approved by the Corporation's
stockholders on May 1, 1995 and became effective as of February 8, 1995 and was
approved by the Corporation's stockholders on May 1, 1995. No Stock Options
shall be granted subsequent to ten years after the effective date of the Plan.
Stock Options outstanding subsequent to ten years after the effective date of
the Plan shall continue to be governed by the provisions to the Plan.
26