1
Exhibit 10.2
NETGENICS, INC.
1996 STOCK OPTION PLAN
EFFECTIVE DATE: NOVEMBER 20, 1996
AS AMENDED ON MARCH 20, 1998 AND SEPTEMBER 4, 1998
2
NETGENICS, INC.
1996 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Plan is to provide additional
incentive to those officers, key employees and consultants of the Company and
its Subsidiaries whose substantial contributions are essential to the continued
growth and success of the Company's business in order to strengthen their
commitment to the Company and its Subsidiaries, to motivate such officers and
employees to faithfully and diligently perform their assigned responsibilities
and to attract and retain competent and dedicated individuals whose efforts will
result in the long term growth and profitability of the Company. An additional
purpose of the Plan is to build a proprietary interest among the Company's
Non-Employee Directors and thereby secure for the Company's stockholders the
benefits associated with common stock ownership by those who will oversee the
Company's future growth and success. To accomplish such purposes, the Plan
provides that the Company may grant Incentive Stock Options, or Nonqualified
Stock Options. The provisions of the Plan are intended to satisfy the
requirements of Section 16(b) of the Exchange Act.
2. DEFINITIONS. For purposes of this Plan:
(a) "Agreement" means the written agreement
evidencing the grant of an Option and setting forth the terms and conditions
thereof.
(b) "Affiliate" means a corporation which, for
purposes of Section 424 of the Code, is a parent or subsidiary of the Company,
direct or indirect.
(c) "Board" means the Board of Directors of the
Company.
(d) "Change in Capitalization" means any increase,
reduction, or change or exchange of Shares for a different number or kind of
shares or other securities of the Company by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, issuance of warrants or
rights, stock dividend, stock split or reverse stock split, combination or
exchange of Shares, repurchase of Shares, change in corporate structure or
otherwise.
(e) "Change in Control" means one of the following
events:
(i) any "person" (as defined in Sections
13(d) and 14(d) of the Exchange Act), other than the Company, any
trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any Subsidiary, or any corporation owned,
directly or indirectly, by the stockholders of the Company, in
substantially the same proportions as their ownership of stock of the
Company, acquires "beneficial ownership" (as defined in rule 13d-3
under the Exchange Act) of securities representing 35% of the combined
voting power of the Company; or (ii) during any period of not more than
two consecutive years, individuals who at the beginning of such period
constitute the Board and any new directors (other than any director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in subsections 2(e)(i),
2(e)(iii) or 2(e)(iv)) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the
3
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; or (iii) the stockholders
of the Company approve a merger other than (A) a merger that would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any Subsidiary, at least 50% of the combined
voting power of all classes of stock of the Company or such surviving entity
outstanding immediately after such merger or (B) a merger effected to implement
a recapitalization of the Company (or similar transaction) in which no person
acquires more than 50% of the combined voting power of the Company's then
outstanding securities; or (iv) the stockholders of the Company approve a plan
of complete liquidation of the Company or a sale of all or substantially all of
the assets of the Company.
(f) "Code" means the Internal Revenue Code of 1986,
as amended.
(g) "Committee," means a committee appointed by the
Board to administer the Plan to perform the functions set forth herein.
(h) "Company" means NetGenics, Inc., a Delaware
corporation.
(i) "Consultants" includes scientific advisors and
other consultants to the Company, including observers of the Board of Directors,
as determined from time to time by the Board.
(j) "Disability" means the inability, due to illness
or injury, to engage in any gainful occupation for which the individual is
suited by education, training or experience, which condition continues for at
least six (6) months.
(k) "Eligible Employee" means any officer or other
key employee or consultant or member of the Scientific Advisory Board of the
Company or a Subsidiary designated by the Committee as eligible to receive
Options subject to the conditions set forth herein.
(l) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(m) "Fair Market Value" means the fair market value
of the Shares as determined by the Committee in its sole discretion; PROVIDED,
HOWEVER, that (A) if the Shares are the admitted to trading on a national
securities exchange, the Fair Market Value on any date shall be the last sale
price reported for the Shares on such exchange on such date or on the last date
preceding such date on which a sale was reported, (B) if the Shares are admitted
to quotation on the National Association of Securities Dealers Automated
Quotation System ("Nasdaq") or other comparable quotation system and have been
designated as a National Market System ("NMS) security, the Fair Market Value on
any date shall be the last sale price reported for the Shares on such system on
such date or
-3-
4
on the last day preceding such date on which a sale was reported or (C) if the
Shares are admitted to quotation on Nasdaq Stock Market and have not been
designated a NMS security, the Fair Market Value on any date shall be the
average of the highest bid and lowest asked prices of the shares on such system
on such date.
(n) "Incentive Stock Option" means an incentive stock
option within the meaning of Section 422 of the Code.
(o) "Non-Employee Director" shall have the definition
set forth in Section 16(b)3(b)(3) of the Exchange Act.
(p) "Nonqualified Stock Option" means an Option that
is not an Incentive Stock Option.
(q) "Option" means a Incentive Stock Option, a
Nonqualified Stock Option, or either or both of them, as the context requires.
(r) "Optionee" means a person to whom an Option has
been granted under the Plan.
(s) "Parent" means any corporation in an unbroken
chain of corporations ending with the Company, if, at the time of the granting
of the Option, each of the corporations other than the Company owns stock
possessing 50% or more of the total combined voting power of all classes of
stock of one of the other corporations in such chain.
(t) "Participant" means a Key Employee, director or
consultant to whom one or more Options are granted under the Plan. As used
herein, "Participant" shall include "Participant's Survivors" where the context
requires.
(u) "Plan" means the NetGenics, Inc. 1996 Stock
Option Plan, as amended from time to time.
(v) "Securities Act" means the Securities Act of
1933, as amended.
(w) "Shares" means shares of the common stock, $.00l
par value per share, of the Company (including any new, additional or different
stock or securities resulting from a Change in Capitalization), as the case may
be.
(x) "Subsidiary" means any corporation in an unbroken
chain of corporations beginning with the Company, if, at the time of the
granting of the Option, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
-4-
5
(y) "Ten-Percent Stockholder" means an
Eligible Employee, who, at the time an Incentive Stock Option is to be
granted to such Eligible Employee, owns (within the meaning of Section
422(b)(6) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company,
a Parent or a Subsidiary within the meaning of Sections 424(e) and
424(f), respectively, of the Code.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board or by
a Committee, which Committee shall at all times satisfy the provisions of Rule
16b-3 under the Exchange Act. All references herein to the Committee and the
rights, duties and obligations of the Committee shall also be references to the
Board and the rights, duties and obligations of the Board if the Board is
administering the Plan directly. The Committee shall hold meetings at such times
as may be necessary for the proper administration of the Plan. The Committee
shall keep minutes of its meetings. A majority of the Committee shall constitute
a quorum and a majority of a quorum may authorize any action. Any decision
reduced to writing and signed by a majority of the members of the Committee
shall be fully effective as if it had been made at a meeting duly held. No
member of the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan or Options, and
all members of the Committee shall be fully indemnified by the Company with
respect to any such action, determination or interpretation. The Company shall
pay all expenses incurred in the administration of the Plan.
(b) Subject to the express terms and conditions set
forth herein, the Committee shall have the power from time to time:
(i) to determine those Eligible Employees to
whom Options shall be granted under the Plan and the number of
Nonqualified Stock Options and/or Incentive Stock Options, (provided,
however, that in no event shall options to purchase more than One
Million (1,000,000) Shares be granted to any Participant in any
calendar year) to be granted to each Eligible Employee and to prescribe
the terms and conditions (which need not be identical) of each Option,
including the purchase price per share of each Option;
(ii) to construe and interpret the Plan and
the Options granted hereunder and to establish, amend and revoke rules
and regulations for the administration of the Plan, including, but not
limited to, correcting any defect or supplying any omission, or
reconciling any inconsistency in the Plan or in any Agreement, in the
manner and to the extent it shall deem necessary or advisable to make
the Plan fully effective, and all decisions and determinations by the
Committee in the exercise of this power shall be final and binding upon
the Company or a Subsidiary, and the optionees, as the case may be;
(iii) to determine the duration and purposes
for leaves of absence which may be granted to an Optionee without
constituting a termination of employment or service for purposes of the
Plan; and
-5-
6
(iv) generally, to exercise such powers and
to perform such acts as are deemed necessary or advisable to promote
the best interests of the Company with respect to the Plan.
4. STOCK SUBJECT TO PLAN.
(a) The maximum number of Shares that may be issued
or transferred pursuant to Options is 4,000,000 (or the number and kind of
shares of stock or other securities that are substituted for those Shares or to
which those Shares are adjusted upon a Change in Capitalization), and the
Company shall reserve for the purposes of the Plan, out of its authorized but
unissued Shares or out of Shares held in the Company's treasury, or partly out
of each, such number of Shares as shall be determined by the Board.
(b) Whenever any outstanding Option or portion
thereof expires, is cancelled or is otherwise terminated (other than by exercise
of the Option), the Shares allocable to the unexercised portion of such Option
may again be the subject of Options hereunder, to the extent permitted by Rule
16b-3 under the Exchange Act.
5. ELIGIBILITY. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Eligible Employees
who will receive Options.
6. OPTIONS. The Committee may grant Options in accordance with
the Plan, the terms and conditions of which shall be set forth in an Agreement.
Each Option and Agreement shall be subject to the following conditions:
(a) PURCHASE PRICE. The purchase price or the manner
in which the purchase price is to be determined for Shares under each Option
shall be set forth in the Agreement; PROVIDED, HOWEVER, that the purchase price
per Share under each Nonqualified Stock Option shall not be less than 50% of the
Fair Market Value of a Share at the time the Option is granted, 100% in the case
of an Incentive Stock Option generally and 110% in the case of an Incentive
Stock Option granted to a Ten-Percent Stockholder.
(b) DURATION. Options granted hereunder shall be for
such term as the Committee shall determine; PROVIDED, HOWEVER, that no Option
shall be exercisable after the expiration of ten (10) years from the date it is
granted (five (5) years in the case of an Incentive Stock Option granted to a
Ten Percent Stockholder). The Committee may, subsequent to the granting of any
Option, extend the term thereof but in no event shall the term as so extended
exceed the maximum term provided for in the preceding sentence.
(c) NON-TRANSFERABILITY. No Option granted hereunder
shall be transferable by the Optionee to whom such option is granted otherwise
than by will or the laws of descent and distribution, and an option may he
exercised during the lifetime of such optionee only by the Optionee or such
optionee's guardian or legal representative. The terms of such Option shall be
binding upon the beneficiaries, executors, administrators, heirs and successors
of the Optionee.
(d) VESTING. Subject to subsection 6(e) below, unless
otherwise set forth in the Agreement, each Option shall become exercisable as to
20 percent of the Shares
-6-
7
covered by the Option on the first anniversary of the date the option was
granted and as to an additional 20 percent of the Shares covered by the Option
on each of the following four (4) anniversaries of such date of grant. To the
extent not exercised, installments shall accumulate and be exercisable, in whole
or in part, at any time after becoming exercisable, but not later than the date
the option expires. The Committee may accelerate the exercisability of any
option or portion thereof at any time.
(e) ACCELERATED VESTING. Notwithstanding the
provisions of subsection 6(d) above, each Option granted to an optionee shall
become immediately exercisable in full upon the occurrence of a Change in
Control.
(f) TERMINATION OF EMPLOYMENT. In the event that an
Optionee ceases to be employed by the Company or any Subsidiary, any outstanding
Options held by such Optionee shall, unless the Agreement evidencing such Option
provides otherwise, terminate as follows:
(i) If the Optionee's termination of
employment is due to his death or disability, the Option (to the extent
exercisable at the time of the Optionee's termination of employment)
shall be exercisable for a period of one (1) year following such
termination of employment, and shall thereafter terminate; and
(ii) Except as otherwise provided in the
pertinent Option Agreement, the following rules apply if the
Participant's service (whether as an employee, director or consultant)
with the Company or an Affiliate is terminated "for cause" prior to the
time that all of his or her outstanding Options have been exercised:
a. All outstanding and unexercised options
as of the date the Participant is notified his or her
service is terminated "for cause" will immediately be
forfeited.
b. For purposes of this Paragraph, "cause"
shall include (and is not limited to) dishonesty with
respect to the employer, insubordination, substantial
malfeasance or nonfeasance of duty, unauthorized
disclosure of confidential information, and conduct
substantially prejudicial to the business of the
Company or any Affiliate. The determination of the
Committee as to the existence of cause will be
conclusive on the Participant and the Company.
c. "Cause" is not limited to events which
have occurred prior to a Participant's termination of
service, nor is it necessary that the Committee's
finding of "cause" occur prior to termination. If the
Committee determines, subsequent to a Participant's
termination of service but prior to the exercise of
an Option, that either prior or subsequent to the
Participant's termination the Participant engaged in
conduct which would constitute "cause", then the
right to exercise any Option is forfeited.
d. Any definition in an agreement between
the Participant and the Company or an Affiliate,
which contains a conflicting definition of "cause"
for termination and which is in effect at the time of
such
-7-
8
termination, shall supersede the definition in this
Plan with respect to such Participant.
(iii) If the Optionee's termination of
employment is for any other reason (including an
Optionee's ceasing to be employed by a Subsidiary as
a result of the sale of such Subsidiary or an
interest in such Subsidiary), the Option (to the
extent exercisable at the time of the Optionee's
termination of employment) shall be exercisable for a
period of thirty (30) days following such termination
of employment , and shall thereafter terminate.
Notwithstanding the foregoing, the Committee may provide,
either at the time an Option is granted or thereafter, that the option may be
exercised after the periods provided for in this Section 6(f), but in no event
beyond the term of the Option.
(g) METHOD OF EXERCISE. The exercise of an option
shall be made only by a written notice delivered to the Secretary of the Company
at the Company's principal executive office, specifying the number of Shares to
be purchased and accompanied by payment therefor and otherwise in accordance
with the Agreement pursuant to which the Option was granted. The purchase price
for any Shares purchased pursuant to the exercise of an Option shall be paid in
full upon such exercise in cash, by check, or, at the discretion of the
Committee and upon such terms and conditions as the Committee shall approve, by
transferring Shares to the Company or by such other method as the Committee may
determine. Any Shares transferred to the Company as payment of the purchase
price under an Option shall be valued at their Fair Market Value on the day
preceding the date of exercise of such Option. If requested by the Committee,
the Optionee shall deliver the Agreement evidencing the Option to the Secretary
of the Company who shall endorse thereon a notation of such exercise and return
such Agreement to the Optionee. Not less than 100 Shares may be purchased at any
time upon the exercise of an Option unless the number of Shares so purchased
constitutes the total number of Shares then purchasable under the Option.
(h) RIGHTS OF OPTIONEES. No Optionee shall be deemed
for any purpose to be the owner of any Shares subject to any option unless and
until (i) the Option shall have been exercised pursuant to the terms thereof,
(ii) the Company shall have issued and delivered the Shares to the Optionee, and
(iii) the Optionee's name shall have been entered as a stockholder of record on
the books of the Company. Thereupon, the Optionee shall have full voting,
dividend and other ownership rights with respect to such Shares.
(i). LIMITATION ON YEARLY EXERCISE. Incentive Stock
Option Agreements shall restrict the amount of Options which may be exercisable
in any calendar year (under this or any other Incentive Stock Option plan of the
Company or an Affiliate) so that the aggregate Fair Market Value (determined at
the time each Incentive Stock Option is granted) of the stock with respect to
which Incentive Stock Options are exercisable for the first time by the
Participant in any calendar year does not exceed one hundred thousand dollars
($100,000), provided that this subparagraph (e) shall have no force or effect if
its inclusion in the Plan is not necessary for options issued as Incentive Stock
Options to qualify as Incentive Stock Options pursuant to Section 422(d) of the
Code.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
-8-
9
(a) In the event of a Change of Capitalization, the
Committee shall conclusively determine the appropriate adjustments, if any, to
the maximum number and class of shares of stock with respect to which Options
may be granted under the Plan, and to the number and class of shares of stock as
to which Options have been granted under the Plan, and the purchase price
therefor, if applicable.
(b) Any such adjustment in the Shares or other
securities subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 424 of the Code.
8. NON-EMPLOYEE DIRECTOR OPTIONS. Notwithstanding any of the
other provisions of the Plan to the contrary, the provisions of this Section 8
shall apply only to grants of Options to Non-Employee Directors. Except as set
forth in this Section 8, the other provisions of the Plan shall apply to grants
of Options to Non-Employee Directors to the extent not inconsistent with this
Section. For purposes of interpreting Section 6 of the Plan, a Non- Employee
Director's service as a member of the Board shall be deemed to be employment
with the Company or its Subsidiaries.
(a) GENERAL. Non-Employee Directors shall receive
Nonqualified Stock Options in accordance with this Section 8 and may not be
granted Incentive Stock Options under this Plan. Prior to the Offering Date, the
purchase price or the manner in which the purchase price is to be determined for
Shares purchasable under Options granted to Non-Employee Directors shall be
determined by the Board. On and after the offering Date, the purchase price per
Share purchasable under options granted to Non-Employee Directors shall be the
Fair Market Value of a Share on the date of grant. No Agreement with any
Non-Employee Director may alter the provisions of this Section and no Option
granted to a Non-Employee Director may be subject to a discretionary
acceleration of exercisability.
(b) INITIAL GRANT. On the effective date of this
Plan, and after Board approval of such grant, each Non-Employee Director as of
such date shall be granted automatically, without action by the Committee, an
Option to purchase 50,000 Shares.
(c) GRANTS TO NEW NON-EMPLOYEE DIRECTORS. Each
Non-Employee Director who, after the effective Date of this Plan is elected or
appointed to the Board for the first time will, at the time such director is
elected or appointed and duly qualified, and after Board approval of such grant,
be granted automatically, without action by the Committee, an option to purchase
50,000 Shares.
(d) VESTING. Subject to accelerated vesting pursuant
to Section 6(e) hereof, each option granted to Non-Employee Directors shall be
exercisable as to 33-1/3 percent of the Shares covered by the Option on each of
the first three anniversaries of the date the Option was granted. To the extent
not exercised, installments shall accumulate and be exercisable, in whole or in
part, at any time after becoming exercisable, but not later than the date the
Option expires. Sections 6(d) and 6(f) hereof shall not apply to options granted
to Non-Employee Directors.
-9-
10
(e) DURATION. Subject to the immediately following
sentence, each Option granted to a Non-Employee Director shall be for a term of
10 years. Upon the cessation of a Non-Employee Director's membership on the
Board for any reason, Options granted to such Non-Employee Director shall expire
upon the earlier of (i) three (3) years from the date of such cessation of Board
membership or (ii) expiration of the term of the Option. The Committee may not
provide for an extended exercise period beyond the periods set forth in this
Section 8(e).
9. RELEASE OF FINANCIAL INFORMATION. A copy of the Company's
annual report to stockholders shall be delivered to each Optionee if and at the
time any such report is distributed to the Company's stockholders. Upon request
by any Optionee, the Company shall furnish to such Optionee a copy of its most
recent annual report and each quarterly report and current report filed under
the Exchange Act since the end of the Company's prior fiscal year.
10. TERMINATION AND AMENDMENT OF THE PLAN. The Plan shall
terminate on the day preceding the tenth anniversary of its effective date,
except with respect to Options outstanding on such date, and no Options may be
granted thereafter. The Board may sooner terminate or amend the Plan at any
time, and from time to time; PROVIDED, HOWEVER, that, except as provided in
Section 7 hereof, no amendment shall be effective unless approved by the
stockholders of the Company where stockholder approval of such amendment is
required (a) to comply with Rule 16b-3 under the Exchange Act subsequent to the
registration of a class of equity securities of the Company under Section 12 of
the Exchange Act of (b) to comply with any other law, regulation or stock
exchange rule.
Except as provided in Section 7 hereof, rights and
obligations under any Option granted before any amendment of the Plan shall not
be adversely altered or impaired by such amendment, except with the consent of
the Optionee.
11. NON-EXCLUSIVITY OF THE PLAN. The adoption of the Plan by
the Board shall not be construed as amending, modifying or rescinding any
previously approved incentive arrangement or as creating any limitations on the
power of the Board to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan, and such arrangements may be either applicable
generally or only in specific cases.
12. LIMITATION OF LIABILITY. As illustrative of the
limitations of liability of the Company, but not intended to be exhaustive
thereof, nothing in the Plan shall be construed to:
(a) give any employee any right to be granted an
Option other than at the sole discretion of the Committee;
(b) give any person any rights whatsoever with
respect to Shares except as specifically provided in the Plan;
(c) limit in any way the right of the Company or its
Subsidiaries to terminate the employment of any person at any time; or
-10-
11
(d) be evidence of any agreement or understanding,
expressed or implied, that the Company or its Subsidiaries will employ any
person in any particular position, at any particular rate of compensation or for
any particular period of time.
13. REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.
(a) This Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance with the laws of the
State of Delaware, without giving effect to the choice of law principles
thereof.
(b) The obligation of the Company to sell or deliver
Shares with respect to options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
(c) Subsequent to the registration of a class of
equity securities of the Company under Section 12 of the Exchange Act, any
provisions of the Plan inconsistent with Rule 16b-3 under Exchange Act shall be
inoperative and shall not affect the validity of the Plan.
(d) Except as otherwise provided in Section 12, the
Board may make such changes as may be necessary or appropriate to comply with
the rules and regulations of any government authority or to obtain for Optionees
granted Incentive Stock Options, the tax benefits under the applicable
provisions of the Code and regulations promulgated thereunder.
(e) Each Option is subject to the requirement that,
if at any time the Committee determines, in its absolute discretion, that the
listing, registration or qualification of Shares issuable pursuant to the Plan
is required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
the issuance of Shares, no Options shall be granted or payment made or Shares
issued, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions as
acceptable to the Committee.
(f) In the event that the disposition of Shares
acquired pursuant to the Plan is not covered by a then current registration
statement under the Securities Act and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act or regulations thereunder, and the Committee may
require an Optionee receiving Shares pursuant to the Plan, as a condition
precedent to receipt of such Shares, to represent to the Company in writing that
the Shares acquired by such optionee are acquired for investment only and not
with a view to distribution.
14. MISCELLANEOUS.
(a) MULTIPLE AGREEMENTS. The terms of each Option may
differ from other options granted under the Plan at the same time, or at any
other time. The Committee may also grant more than one option to a given
Optionee during the term of the Plan, either in addition to, or in substitution
for, one or more Options previously granted to that Optionee. The
-11-
12
grant of multiple Options may be evidenced by a single Agreement or multiple
Agreements, as determined by the Committee.
(b) WITHHOLDING OF TAXES. The Company shall have the
right to deduct from any payment of cash to any Optionee an amount equal to the
federal, state and local income taxes and other amounts required by law to be
withheld with respect to any Option. Notwithstanding anything to the contrary
contained herein, if an Optionee is entitled to receive Shares upon exercise of
an option, the Company shall have the right to require such Optionee, prior to
the delivery of such Shares, to pay to the Company the amount of any federal,
state or local income taxes and other amounts that the Company is required by
law to withhold. The Agreement evidencing any Incentive Stock Options granted
under this Plan shall provide that if the Optionee makes a disposition, within
the meaning of Section 424(c) of the Code and regulations promulgated
thereunder, of any Share or Shares issued to such optionee pursuant to such
Optionee's exercise of the Incentive Stock option, and such disposition occurs
within the two year period commencing on the day after the date of grant of such
option or within the one- year period commencing on the day after the date of
transfer of the Share or Shares to the Optionee pursuant to the exercise of such
Option, such optionee shall, within ten (10) days of such disposition, notify
the Company thereof and thereafter immediately deliver to the Company any amount
of federal, state or local income taxes and other amounts that the Company
informs the Optionee the Company is required to withhold.
(c) DESIGNATION OF BENEFICIARY. Each Optionee may,
with the consent of the Committee, designate a person or persons to receive in
the event of such Optionee's death, any Option or any amount of Shares payable
pursuant thereto, to which such Optionee would then be entitled. Such
designation shall be made upon forms supplied by and delivered to the Company
and may be revoked or changed in writing. In the event of the death of an
Optionee and in the absence of a beneficiary validly designated under the Plan
who is living at the time of such Optionee's death, the Company shall deliver
such options and/or amounts payable to the executor or administrator of the
estate of the Optionee, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its discretion, may
deliver such Options and/or amounts payable to the spouse or to any one or more
dependents or relatives of the Optionee, or if no spouse, dependent or relative
is known to the Company, then to such other person as the Company may designate.
15. EFFECTIVE DATE. The effective date of the Plan is November
20, 1996.
-12-