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GIGA-TRONICS INCORPORATED
RESTATED 1990 STOCK OPTION PLAN
AS AMENDED JUNE 20, 1997
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ARTICLE ONE
GENERAL PROVISIONS
1. PURPOSES OF THE PLAN
A. This Restated 1990 Stock Option Plan (the "Plan"), as restated
effective July 23, 1992 and amended May 17, 1994 and June 20, 1997,is intended
to promote the interests of Giga-tronics Incorporated, a California corporation
(the "Company"), by providing a method whereby the Company's employes are to be
offered equity incentives intended to encourage such individuals to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Company and to continue to render services to the Company or its parent or
subsidiary corporations.
B. For purposes of the Plan, the following definitions shall be in
effect:
BOARD: the Company's Board of Directors.
COMMON STOCK: The Common Stock issuable under the Plan shall be
shares of the Company's common stock, no par value.
DISABILITY: The permanent incapacity of an individual, by reason
of physical or mental illness, to perform his/her usual duties for the
Company. Disability shall be determined by the Committee after
consideration of such medical evidence as it may require.
EMPLOYEE: An individual shall be considered to be an Employee
for so long as such individual remains in the employ of the Company or one
or more of its parent or subsidiary corporations.
FAIR MARKET VALUE: The Fair Market Value per share of Common
Stock on any relevant date under the Plan shall be the mean between the
highest bid and lowest asked prices (or, if such information is available,
the closing selling price) per share of Common Stock on such date in the
over-the-counter market, as such prices are reported by the National
Association of Securities Dealers on the Nasdaq National Market (or any
successor system). Should the Common Stock become traded on a national
securities exchange, then the Fair market Value per share shall be the
closing selling price on such exchange on the date in question, as such
price is quoted on the composite tape of transactions on such exchange. If
there is no reported sale of Common Stock on the over-the-counter market
(or national securities exchange) on the date in question, then the Fair
Market Value shall be the mean between the highest bid and lowest asked
prices (or closing selling price) on the last preceding date for which
such quotations exist.
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PARENT: A corporation shall be deemed to be a parent of the
Company if it is a corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, provided each such
corporation in the unbroken chain (other than the Company) owns, at
the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.
SECTION 16(B) INSIDER: An individual shall be considered to be a
Section 16(b) Insider on any relevant date under the Plan if such
individual is at the time subject to the short-swing profit
restrictions of Section 16(b) of the Securities Exchange Act of 1934
by reason of his or her affiliation with the Company.
SERVICE: An individual shall be deemed to be in the Service of
the Company for so long as such individual (i) renders service on a
periodic basis to the Company or one or more of its parent or
subsidiary corporations as an Employee or (ii) serves as a
non-employee member of the Company's Board of Directors.
SUBSIDIARY: A corporation shall be deemed to be a subsidiary of
the Company if it is one of the corporations (other than the Company)
in an unbroken chain of corporations beginning with the Company,
provided each such corporation (other than the last corporation in the
unbroken chain) owns, at the time of determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain. For
purposes of all non-statutory option grants under Article Two and all
Corporate Transaction provisions of the Plan, the term "subsidiary"
shall also include any partnership, joint venture or other business
entity of which the Company owns, directly or indirectly through
another subsidiary corporation, more than a fifty percent (50%)
interest in voting power, capital or profits.
C. Stock option grants made to any individual under the Plan shall
not in any way affect, limit or restrict such individual's eligibility to
participate in any other stock plan or other compensation or benefit plan,
arrangement or practice now or hereafter maintained by the Company or any parent
or subsidiary corporation.
II. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by a committee (the "Committee")
of two (2) or more Board members appointed by the Board. The Board shall have
the authority to fill any and all vacancies on the Committee, however caused.
B. Subject to the express provisions of the Plan, the Committee
shall have plenary authority:
(i) to make discretionary option grants to Employees under the
Discretionary Option Grant Program set forth in Article Two;
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(ii) to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, and to make all other determinations
deemed necessary or advisable in administering the Plan; and
(iii) to change the terms and conditions of any outstanding
option grant under the Discretionary Option Grant Program, provided such action
does not, without the consent of the holder, adversely affect the rights and
obligations such individual may have under the Plan or the outstanding grant.
C. Determinations of the Committee on all matters relating to the
Plan and any option grants or stock issuances made hereunder shall be final,
binding and conclusive on all persons having any interest in the Plan or any
options granted or shares issued under the Plan.
III. PLAN STRUCTURE AND ELIGIBILITY
A. The Plan as amended May 1994 shall consist only of the
Discretionary Option Grant Program set forth in Article Two. The terms and
provisions of Articles One and Five of the Plan shall also be applicable to
such program.
B. The individuals eligible to participate in the Discretionary
Option Grant Program ("Optionees") shall be limited to Employees (including
officers and directors) of the Company or its parent or subsidiary
corporations. Non-employee members of the Board shall not be eligible to
participate in the Discretionary Option Grant Program.
C. Members of the Committee shall not, during their period of
Committee service, participate in the Discretionary Option Grant Program of
Article II of this Plan or in any other stock option, stock bonus, stock
purchase or stock plan of the Company or its parent or subsidiary corporations.
IV. STOCK SUBJECT TO THE PLAN
A. The Common Stock issuable under the Plan shall be made available
either from authorized but unissued shares of Common Stock or from shares of
Common Stock reacquired by the Company on the open market. The aggregate number
of shares of Common Stock issuable over the term of this Plan shall not exceed
700,000 shares (subject to adjustment from time to time in accordance with
paragraph C. below).
B. Should an option expire or terminate for any reason prior to
exercise or surrender in full (including options cancelled in accordance with
the cancellation-regrant provisions of Article Two below), the shares subject
to the portion of the option not so exercised or surrendered shall be available
for subsequent option grants under the Plan. Shares subject to any stock
appreciation rights exercised in accordance with the Stock Appreciation Right
provisions of Articles Two and all share issuances under the Plan shall reduce
on a share-for-
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share basis the number of shares of Common Stock available for subsequent
option grants under this Plan. If the exercise price of an outstanding option
under the Plan is paid with shares of Common Stock or if shares of Common Stock
otherwise issuable under the Plan are withheld by the Company in satisfaction
of the withholding taxes incurred in connection with the exercise of an
outstanding option under the Plan, then the number of shares of Common Stock
available for issuance under the Plan shall be reduced by the gross number of
shares for which the option is exercised, and not by the net number of shares
of Common Stock actually issued.
C. In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock dividend, stock split, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without receipt of consideration, then appropriate adjustments
shall be made to (i) the maximum number and/or class of shares issuable under
this Plan, to reflect the effect of such change upon the Company's capital
structure, (ii) the class and/or maximum number of securities for which stock
options and separately exercisable stock appreciation rights may be granted to
any one participant in the aggregate after April 30, 1994 and (iii) the number
and/or class of shares and the exercise price per share of the stock subject to
each outstanding option in order to preclude the dilution or enlargement of
benefits thereunder. The adjustments determined by the Committee shall be
final, binding and conclusive.
D. In the event that (i) the Company is the surviving entity in any
Corporate Transaction which does not result in the termination of outstanding
options pursuant to the Corporate Transaction provisions of the Plan or (ii) the
outstanding options under the Plan are to be assumed in connection with such
Corporate Transaction, then each such continuing or assumed option shall,
immediately after such Corporate Transaction, be appropriately adjusted to
apply and pertain to the number and class of securities which would be issuable,
in consummation of such Corporate Transaction, to an actual holder of the same
number of shares of Common Stock as are subject to such option immediately prior
to such Corporate Transaction. Appropriate adjustments shall also be made to the
exercise price payable per share, provided the aggregate option price shall
remain the same, and to the number and class of securities which remain issuable
under this Plan.
E. In no event may any one individual participating in the Plan be
granted stock options and separately exercisable stock appreciation rights for
more than 200,000 shares in the aggregate over the remaining term of the Plan,
subject to adjustment from time to time in accordance with paragraph C. above.
For purposes of such limitation, no stock options or stock appreciation rights
granted prior to May 1, 1994 shall be taken into account.
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ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
A. The Committee shall have plenary authority (subject to the
express provisions of the Plan) to determine which Employees are to be granted
options under this Discretionary Option Grant Program, the number of shares to
be covered by each such option, the status of the granted option as either an
incentive stock option which meets the requirements of Section 422 of the
Internal Revenue Code ("Incentive Option") or a non-statutory option not
intended to meet such requirements, the time or times at which such option is
to become exercisable and the maximum term for which the option is to remain
outstanding.
B. The granted options shall be evidenced by instruments in such
form as the Committee shall from time to time approve; provided however, that
each such instrument shall comply with and incorporate the terms and conditions
specified below.
1. Option Price.
a. The option price per share shall be fixed by the Committee, but
in no event shall the option price per share be less than eighty percent (80%)
of the Fair Market Value per share of Common Stock on the date of the option
grant.
b. The option price shall become immediately due upon exercise of
the option and shall, subject to the loan provisions of this Article Two, be
payable in one of the alternative forms specified below:
(A) full payment in cash or check made payable to the Company's
order;
or
(B) full payment in shares of Common Stock held by the Optionee
for the requisite period necessary to avoid a charge to the Company's
reported earnings and valued at Fair Market Value on the Exercise Date (as
such term is defined below); or
(C) full payment in a combination of shares of Common Stock
held by the Optionee for the requisite period necessary to avoid a charge
to the Company's reported earnings and valued at Fair Market Value on the
Exercise Date and cash or check made payable to the Company's order; or
(D) full payment through a sale and remittance procedure
pursuant to which the Optionee (I) shall provide irrevocable written
instructions to a designated brokerage firm to effect the immediate sale
of the purchased shares and remit to the
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Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate option price payable for the
purchased shares plus all applicable Federal and State income and
employment taxes required to be withheld by the Company by reason of such
purchase and (II) shall concurrently provide written directives to the
Company to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale transaction.
c. For purposes of subparagraph b. above, the Exercise Date shall
be the date on which written notice of the option exercise is delivered to the
Company. Except to the extent the sale and remittance procedure is utilized in
connection with the option exercise, payment of the option price for the
purchased shares must accompany the exercise notice.
2. Term and Exercise of Options.
a. Each option granted under this Discretionary Option Grant
Program shall be exercisable in one or more installments over the Optionee's
period of Service as shall be determined by the Committee and shall be set
forth in the instrument evidencing such option; provided, however, that (i) no
such option shall become exercisable in whole or in part within the first six
(6) months after the grant date, except as otherwise provided in Section III of
this Article Two and (ii) no such option shall have a term in excess of ten
(10) years from the grant date.
b. During the lifetime of the optionee, the option, together with
any stock appreciation rights pertaining to such option, shall be exercisable
only by the optionee and shall not be assignable or transferable by the
optionee other than a transfer of the option effected by will or by the laws of
descent and distribution following the optionee's death.
3. Termination of Service.
a. Should an Optionee cease to continue in Service for any reason
(other than termination set forth in subparagraph c. below) while the holder of
one or more outstanding options under this Discretionary Option Grant Program,
then such options shall not be exercisable at any time after the earlier of (i)
the specified expiration date of the option term or (ii) the expiration of the
limited period of time (not to exceed twelve (12) months after the Optionee's
cessation of Service) specified by the Committee in the option agreement. Each
such option shall, during the applicable period following cessation of Service,
be exercisable only to the extent of the number of shares (if any) in which the
Optionee is vested on the date of such cessation of Service.
b. Any option granted to an Optionee under this Discretionary
Option Grant Program and outstanding in whole or in part on the date of the
Optionee's death may be subsequently exercised but only to the extent of the
number of shares (if any) in which the Optionee is vested on the date of
his/her cessation of Service (less any shares subsequently purchased by the
optionee prior to death), by the personal representative of the Optionee's
estate
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or by the person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and distribution. Any
such exercise must occur prior to the earlier of (i) the expiration date of the
option term or (ii) the expiration of the limited period of time (not to exceed
twelve (12) months following the Optionee's cessation of Service) specified by
the Committee in the option agreement.
c. If the Optionee's Service is terminated for any of the following
reasons, then all outstanding options granted the Optionee under this
Discretionary Option Grant Program shall immediately terminate and cease to be
exercisable immediately upon such termination of Service:
(1) Optionee's intentional misconduct or continuing gross
neglect of duties which materially and adversely affects the business and
operations of the Company or any parent or subsidiary corporation employing
Optionee;
(2) Optionee's unauthorized use or disclosure (or attempt
thereat) of confidential information or trade secrets of the Company or its
parent or subsidiary corporations; or
(3) Optionee's commission of an act involving embezzlement,
theft, fraud, falsification of records, destruction of property or
commission of a crime or other offense involving money or other property of
the Company or any parent or subsidiary corporation employing Optionee.
The reasons for termination of Optionee's Service set forth in
this subparagraph c. are not intended to be, and are not inclusive of, all acts
or omissions which the Company may deem to constitute misconduct or other
grounds for terminating the Optionee's (or any other individual's) Service.
d. The Committee shall have complete discretion, exercisable either
at the time the option is granted or at any time while the option remains
outstanding, to establish as a provision applicable to the exercise of one or
more options granted under this Discretionary Option Grant Program that during
the limited period of exercisability following cessation of Service, the option
may be exercised not only with respect to the number of shares in which the
Optionee is vested at the time of such cessation of Service but also with
respect to one or more subsequent installments of purchasable shares in which
the Optionee would otherwise have vested had the Optionee continued in Service.
In addition, the Committee shall have similar discretion to extend the period of
time during which the option is to remain exercisable following the optionee's
cessation of Service, but in no event shall such period extend beyond the
specified expiration date of the option term.
4. Shareholder Rights. An option holder shall have none of the
rights of a shareholder with respect to any shares covered by the option until
such individual shall have exercised the option, paid the option price and
satisfied all other conditions precedent to the
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issuance of certificates for the purchased shares.
II. STOCK APPRECIATION RIGHTS
A. Each Section 16(b) Insider shall have a limited stock
appreciation right ("Limited Right") in tandem with each option grant (whether
an Incentive Option or a non-statutory option) made to such individual under
this Discretionary Option Grant Program. The Limited Right shall entitle the
Section 16(b) Insider to surrender the underlying option in connection with a
Change in Control (as defined below) for an appreciation distribution from the
Company in an amount equal to the excess of (I) the Change in Control Price (as
defined below) of the number of shares in which the Section 16(b) Insider is at
the time vested under the surrendered option over (II) the aggregate option
price payable for such vested shares.
B. The terms and conditions applicable to each such Limited Right
shall be as follows:
1. The option may only be surrendered during the thirty
(30)-day period following the Change in Control. However, the Section 16(b)
Insider may not surrender any option which (I) has not been outstanding for
at least six (6) months prior to the surrender date and (II) is not at the
time exercisable for any vested shares.
2. For purposes of calculating the appreciation distribution
payable by the Company on each surrendered option, the Change in Control
Price per share of the vested Common Stock subject to the surrendered
option shall be deemed to be equal to the greater of (a) the Fair Market
Value per share on the option surrender date or (b) the highest reported
price per share paid in effecting the Change in Control. However, if the
option is an Incentive Option, then the Change in Control Price of the
vested shares subject to the surrendered option shall not exceed the value
per share determined under clause (a) above.
3. The appreciation distribution shall be made entirely in
cash, and neither the approval of the Committee nor the consent of the
Board shall be required in connection with such surrender and distribution.
The shares of Common Stock subject to each surrendered option shall not be
available for subsequent issuance under this Plan.
4. A Change in Control shall be deemed to occur in the event
any of the following transactions is effected:
(i) the acquisition by a person or group of related
persons, other than the Company or any person controlling, controlled
by or under common control with the Company, of beneficial ownership
(as determined pursuant to the provisions of
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Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
securities of the Company representing thirty percent (30%) or more of the
combined voting power of the Company's then outstanding securities pursuant
to a transaction or series of related transactions which the Board does not
approve; or
(ii) the first date within any period of twelve (12) consecutive
months or less on which there is effected any change in the composition of
the Board such that the majority of the Board (determined by rounding up to
the next whole number) ceases to be comprised of individuals who either (A)
have been members of the Board continuously since the beginning of such
period or (B) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in
clause (A) who were still in office at the time such election or nomination
was approved by the Board.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. Upon the occurrence of any of the following transactions (a "Corporate
Transaction") to which the Company is a party and for which the approval of the
Company's shareholders is obtained:
(i) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of which
is to change the State of the Company's incorporation.
(ii) the sale, transfer or other disposition of all or substantially
all of the assets of the Company to any entity other than a parent or
subsidiary of the Company, or
(iii) any reverse merger in which the Company is the surviving entity
but in which fifty percent (50%) or more of the Company's outstanding
voting stock is transferred to holders different from those who held the
stock immediately prior to such merger,
the exercisability of each option outstanding under this Discretionary
Option Grant Program (whether or not such option has been outstanding for a
period of six (6) months shall be automatically accelerated so that each such
option shall, immediately prior to the specified effective date for the
Corporate Transaction, become fully exercisable with respect to the total number
of shares of Common Stock purchasable under such option and may be exercised for
all or any portion of such shares. However, the instrument evidencing an option
grant under this Discretionary Option Grant Program may provide that such option
shall not be so accelerated if and to the extent: (i) such option is, in
connection with the Corporate Transaction, either to be
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assumed by the successor corporation or parent thereof or to be replaced with a
comparable option to purchase shares of the capital stock of the successor
corporation or parent thereof, or (ii) such option is to be replaced by a
comparable cash incentive program of the successor corporation based on the
value of the option at the time of the Corporate Transaction, or (iii) the
acceleration of such option is subject to other applicable limitations imposed
by the Committee at the time of grant. The determination of comparability under
clause (i) or (ii) above shall be made by the Committee, and its determination
shall be final, binding and conclusive. The Committee shall have the discretion,
exercisable either in advance of any actually-anticipated Corporate Transaction
or at the time of an actual Corporate Transaction, to provide (upon such terms
and conditions as it may deem appropriate) for either the automatic acceleration
of one or more assumed or replaced options which are not otherwise to be
accelerated in connection with the Corporate Transaction or the automatic
vesting of any cash incentive programs implemented in replacement of such
options, in the event the Optionee's employment should subsequently terminate
within a designated period following the effective date of such Corporate
Transaction.
B. Immediately following the consummation of the Corporate Transaction,
all outstanding options under this Discretionary Option Grant Program shall, to
the extent not previously exercised or assumed by the successor corporation or
its parent company, terminate and cease to be outstanding.
C. Upon the occurrence of any of the following transactions (a "Change
in Control"):
(i) the acquisition by a person or group of related persons,
other than the Company or any person controlling, controlled by or under
common control with the Company, of beneficial ownership (as determined
pursuant to the provisions of Rule 13d-3 under the Securities Exchange Act
of 1934, as amended) of securities of the Company representing thirty
percent (30%) or more of the combined voting power of the Company's then
outstanding securities pursuant to a transaction or series of related
transactions which the Board does not approve; or
(ii) the first date within any period of twelve (12) consecutive
months or less on which there is effected any change in the composition of
the Board such that the majority of the Board (determined by rounding up to
the next whole number) ceases to be comprised of individuals who either (A)
have been members of the Board continuously since the beginning of such
period or (B) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in
clause (A) who were still in office at the time such election or nomination
was approved by the Board;
the exercisability of each option outstanding under this Discretionary
Option Grant Program (whether or not such option has been outstanding for a
period of six (6) months) shall
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be automatically accelerated so that each such option shall become exercisable,
immediately prior to such Change in Control, for the full number of shares
purchasable under such option and may be exercised for all or any portion of
such shares at any time thereafter until the expiration or sooner termination of
the option term. However, an outstanding option under this Discretionary Option
Grant Program shall not be so accelerated if and to the extent one or more
limitations imposed by the Committee at the time of grant preclude such
acceleration upon a Change in Control. The Committee shall have the discretion,
exercisable either in advance of any actually-anticipated Change in Control or
at the time of an actual Change in Control, to provide (upon such terms and
conditions as it may deem appropriate) for the automatic acceleration of one or
more outstanding options which are not otherwise to be accelerated upon a Change
in Control, in the event the Optionee's employment should subsequently terminate
within a designated period following the effective date of such Change in
Control.
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D. In the event a particular transaction qualifies as both a
Corporate Transaction and a Change in Control, the provisions of Section III.A
shall be controlling.
E. The grant of options under this Discretionary Option Grant
Program shall in no way affect the right of the Company to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
IV. INCENTIVE OPTIONS
A. The terms and conditions specified below shall be applicable to
all Incentive Options granted under this Discretionary Option Grant Program.
Options which are specifically designated as "non-statutory" options when issued
under this Discretionary Option Grant Program shall not be subject to such terms
and conditions.
1. Option Price. The option price per share of the Common
Stock subject to an Incentive Option shall in no event be less than one
hundred percent (100%) of the Fair Market Value per share of Common Stock
on the grant date.
2. 10% Stockholder. If any individual to whom an Incentive
Option is to be granted pursuant to the provisions of this Discretionary
Option Grant Program is on the grant date the owner of stock (as determined
under Section 425(d) of the Internal Revenue Code) possessing 10% or more
of the total combined voting power of all classes of stock of the Company
or any one of its parent or subsidiary corporations (such person to be
herein referred to as a 10% Stockholder), then (i) the option price per
share shall not be less than one hundred and ten percent (110%) of the Fair
Market Value per share of Common Stock on the grant date and (ii) the
maximum term of the option shall not exceed five (5) years from the grant
date.
3. Dollar Limitation. The aggregate fair market value
(determined on the basis of the Fair Market Value in effect on the
respective date or dates of grant) of the Common Stock for which one or
more options granted to any Employee under this Plan (or any other option
plan of the Company or its parent or subsidiary corporations) may for the
first time become exercisable as incentive stock options under the Federal
tax laws during any one calendar year shall not exceed the sum of One
Hundred Thousand Dollars. ($100,000). To the extent the Employee holds two
or more such options which become exercisable for the first time in the
same calendar year, the foregoing limitation on the exercisability thereof
as incentive stock options under the Federal tax laws shall be applied on
the basis of the order in which such options are granted.
B. Except as modified by the preceding provisions of this Incentive
Options
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section, all the provisions of this Discretionary Option Grant Program shall be
applicable to the Incentive Options granted hereunder.
V. CANCELLATION AND RE-GRANT OF OPTIONS
A. The Committee shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under this Discretionary Option
Grant Program and to grant in substitution therefor new options under this Plan
covering the same or different numbers of shares of Common Stock but having an
option price per share not less than (i) eighty percent (80%) of the Fair
Market Value per share of Common Stock on the new grant date, or (ii) one
hundred percent (100%) of such Fair Market Value if the new option is to be an
Incentive Option, or (iii) one hundred and ten percent (110%) of such Fair
Market Value if the new option is to be an Incentive Option subject to the
provisions of Section IV.A.2.
VI. LOANS OR GUARANTEE OF LOANS
A. The Committee may assist any Employee (including any officer or
director) in the exercise of one or more outstanding options under this
Discretionary Option Grant Program by (a) authorizing the extension of a loan
to such Employee from the Company, (b) permitting the Employee to pay the
option price for the purchased Common Stock in installments over a period of
years or (c) authorizing a guarantee by the Company of a third-party loan to
the Employee. The terms of any loan, installment method of payment or
guarantee (including the interest rate and terms of repayment) shall be
established by the Committee in its sole discretion. Loans, installment
payments and guarantees may be granted without security or collateral, but the
maximum credit available to the optionee shall not exceed the sum of (i) the
aggregate option price of the purchased shares plus (ii) any Federal and State
income and employment tax liability incurred by the Employee in connection
with the exercise of the option.
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ARTICLE THREE
MISCELLANEOUS
I. TAX WITHHOLDING
A. The Company's obligation to deliver shares or cash upon the
exercise or surrender of stock options or stock appreciation rights granted
under the Discretionary Option Grant Program shall be subject to the
satisfaction of all applicable Federal, State and local income and employment
tax withholding requirements.
B. The Committee may, in its discretion and upon such terms and
conditions as it may deem appropriate (including the applicable safe-harbor
provisions of SEC Rule 16b-3 or any successor rule or regulation) provide any
or all holders of outstanding option grants under the Discretionary Option
Grant Program with the election to have the Company withhold, from the shares
of Common Stock purchased or issued pursuant to such options, a portion of
those shares with an aggregate Fair Market Value equal to the designated
percentage (any multiple of 5% specified by the Optionee) of the Federal and
State income taxes ("Taxes") incurred in connection with their acquisition. In
lieu of such direct withholding, one or more Optionees may also be granted the
right to deliver shares of Common Stock to the Company in satisfaction of such
Taxes. The withheld or delivered shares shall be valued at the Fair Market
Value on the applicable determination date for such Taxes or such other date
required by the applicable safe-harbor provisions of SEC Rule 16b-3.
II. AMENDMENT OF THE PLAN
A. Except to the extent otherwise provided in this Article Three,
the Board shall have the complete and exclusive authority to amend or modify
the Plan at any time. However, without the consent of the shareholders, the
Board may not make any other change with respect to which the Board determines
that shareholder approval is required by applicable law or regulatory standards.
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III. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan was initially adopted by the Board on June 26, 1990 and
approved by the Company's shareholders at the 1990 Annual Meeting. The
Committee may grant stock options under the Discretionary Option Grant Program
at any time prior to the date fixed herein for termination of the Plan.
B. The Board amended and restated the Plan effective May 8, 1991 to
implement the automatic option grant program for certain non-employee Board
members and to conform the provisions of the Plan to recent changes in the SEC
rules under Section 16 of the Securities Exchange Act of 1934 applicable to
transactions effected under the Plan by Section 16(b) Insiders. The May 1991
restatement was approved by the Company's shareholders at the 1991 Annual
Meeting. The May 1991 restatement was approved by the Company's shareholders at
the 1991 Annual Meeting. The May 1991 restatement shall apply only to options
granted under the Plan from and after the May 8, 1991 effective date. Each
option (together with any related stock appreciation right) issued and
outstanding under the Plan immediately prior to such effective date shall
continue to be governed by the terms and conditions of the Plan (and the option
agreement evidencing such option and stock appreciation right) as in effect on
the date such option was previously granted, and nothing in the May 1991
restatement shall be deemed to affect or otherwise modify the rights or
obligations of the holders of such options with respect to the acquisition of
shares of Common Stock thereunder or the exercise of their outstanding stock
appreciation rights.
C. On July 23, 1992, the Board adopted a restatement of the Plan to
bring the Plan into compliance with recent SEC interpretive rulings under Rule
16b-3, as amended May 1, 1991, under the Securities Exchange Act of 1934. The
July 1992 restatement shall apply only to options granted under the Plan from
and after the July 23, 1992 effective date. Each option (together with any
related stock appreciation right) issued and outstanding under the Plan
immediately prior to such effective date shall continue to be governed by the
terms and conditions of the Plan (and the option agreement evidencing such
option and stock appreciation right) as in effect on the date such option was
previously granted, and nothing in the July 1992 restatement shall be deemed to
affect or otherwise modify the rights or obligations of the holders of such
options with respect to the acquisition of shares of Common Stock thereunder or
the exercise of their outstanding stock appreciation rights.
D. The sale and remittance procedure for the exercise of
outstanding options shall be available for all options granted under the Plan
after April 30, 1991 and for all non-statutory options outstanding under the
Plan on such date. The Committee may also allow such procedure to be utilized
in connection with one or more disqualifying dispositions of Incentive Option
shares effected after such date.
15.
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E. On May 17, 1994, the Board amended the Plan to increase the
number of shares of Common Stock issuable over the term of the Plan by an
additional 100,000 shares, and such amendment was approved by the shareholders
at the 1994 Annual Meeting. In addition, the May 1994 amendment eliminated the
automatic option grant program previously in effect under the Plan for
non-employee Board members, retroactive to January 1, 1993.
F. On June 20, 1997, the board amended the Plan to increase the
number of shares of Common Stock issuable over the term of the Plan by an
additional 300,000 shares, and such amendment shall be submitted for
shareholder approval at the 1997 Annual Meeting. The 300,000-share increase
became effective immediately upon authorization by the Board, but no option
granted on the basis of such increase shall be exercisable unless and until the
increase shall have been approved by the Company's shareholders. If such
shareholder approval is not obtained at the 1997 Annual Meeting, then any
options previously granted on the basis of the 300,000-share increase shall
terminate and no further options based on such increases shall be granted.
Those options granted under the Plan which are not based on such increase shall
remain outstanding in accordance with the terms and conditions of the
respective instruments evidencing such options, whether or not the requisite
shareholder approval is obtained. Subject to the foregoing limitations, the
Plan Administrator may grant options under the Plan at any time before the date
fixed herein for termination of the Plan. In addition, the June 1997 amendment
eliminated certain restrictions, including restrictions on amendments to the
Plan, as permitted by amendments to Rule 16b-3 issued by the Securities and
Exchange Commission under Section 16(b) of the Securities Exchange Act of 1934.
G. The Plan shall in all events terminate upon the earlier of (i)
the tenth (10th) anniversary of the date of its adoption by the Board or (ii)
the date on which all shares available for issuance under the Plan shall have
been issued or cancelled pursuant to the exercise or surrender of stock options
and/or stock appreciation rights under the Plan. If the date of termination is
determined under clause (i) above, then any stock options and stock
appreciation rights at the time outstanding under the Plan shall continue to
have force and effect in accordance with the provisions of the instruments
evidencing such grants.
H. Options may be granted under this Plan to purchase shares of
Common Stock in excess of the number of shares then available for issuance
under the Plan, provided (i) an amendment to increase the maximum number of
shares issuable under the Plan is adopted by the Board prior to the initial
grant of any such option and within one year thereafter such amendment is
approved by the Company's shareholders and (ii) each option granted is not to
become exercisable, in whole or in part, at any time prior to the obtaining of
such shareholder approval.
16.
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IV. MISCELLANEOUS PROVISIONS
A. Any cash proceeds received by the Company from the issuance of
shares hereunder shall be used for general corporate purposes.
B. The implementation of the Plan, the granting of any stock option,
and the issuance of Common Stock hereunder, shall be subject to the Company's
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, and the stock options granted under it and
the Common Stock issued pursuant to it.
C. Neither the action of the Company in establishing the Plan, nor
any action taken by the Board or the Committee hereunder, nor any provision of
the Plan itself shall be construed so as to grant any individual the right to
remain in the employ or service of the Company or any of its parent or
subsidiary corporations for any period of specific duration, and the Company
(or any parent or subsidiary retaining the services of such individual) may
terminate such individual's employment or service at any time and for any
reason, with or without cause.
D. Nothing contained in the Plan shall be construed to limit the
authority of the Company to exercise its corporate rights and powers, including
(without limitation) the right of the Company (a) to grant options for proper
corporate purposes otherwise than under this Plan to any Employee or other
person, firm or company or association or (b) to grant options to, or assume
the option of, any person in connection with the acquisition (by purchase,
lease, merger, consolidation or otherwise) of the business and assets (in whole
or in part) of any person, firm, company or association.