EXHIBIT 4.1
NATIONAL HEALTH LABORATORIES INCORPORATED
1994 STOCK OPTION PLAN
1. Purpose; Restrictions on Amount Available under the
Plan.
This 1994 Stock Option Plan ("Plan") is intended
to encourage stock ownership by employees of National Health
Laboratories Incorporated (the "Company") and employees of
Affiliated Corporations (as defined in Section 2(a) hereof),
so that they may acquire or increase their proprietary
interest in the Company, and to encourage such employees to
remain in the employ of the Company and to put forth maximum
efforts for the success of the business. It is further
intended that options granted by the Committee pursuant to
Section 6 of this Plan shall constitute "incentive stock
options" ("Incentive Stock Options") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as
thereafter amended, and the regulations issued thereunder
(the "Code"), and options granted by the Committee pursuant
to Section 7 of this Plan shall constitute "nonqualified
stock options" ("Nonqualified Stock Options"). Grants under
this Plan may consist of Incentive Stock Options,
Nonqualified Stock Options (collectively, "Options") or
stock appreciation rights ("Rights"), which Rights may be
either granted in conjunction with Options ("Related
Rights") or unaccompanied by Options ("Free Standing
Rights"), as hereinafter set forth.
2. Definitions.
As used in this Plan, the following words and
phrases shall have the meanings indicated:
(a) "AFFILIATE CORPORATION" or "AFFILIATE" shall
mean any corporation, directly or indirectly, through one or
more intermediaries, controlling, controlled by, or under
common control with the Company.
(b) "CHANGE IN CONTROL" shall mean circumstances
under which Ronald O. Perelman, individually, or his estate,
heirs or personal representative or any trust created for
the benefit of his children, or any corporation or other
entity which such persons control, directly or indirectly,
cease to maintain "beneficial ownership" (as defined in
Rule 13d-3 of the Exchange Act), individually or in the
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aggregate, of securities of the Company representing five
percent (5%) or more of the combined voting power of the
Company's then outstanding securities.
(c) "DISABILITY" shall mean an optionee's
inability to engage in any substantial gainful activity by
reason of medically determinable physical or mental
impairment that can be expected to result in death or that
has lasted or can be expected to last for a continuous
period of not less than twelve (12) months.
(d) "EXCHANGE ACT" shall mean the Securities
Exchange Act of 1934, as amended.
(e) "FAIR MARKET VALUE" per share as of a
particular date shall mean (i) the closing sales price per
share of Common Stock (as defined in Section 5 hereof) on a
national securities exchange for the last preceding date on
which there was a sale of such Common Stock on such
exchange, or (ii) if the shares of Common Stock are then
traded on an over-the-counter market, the average of the
closing bid and asked prices for the shares of Common Stock
in such over-the-counter market for the last preceding date
on which there was a sale of such Common Stock in such
market, or (iii) if the shares of Common Stock are not then
listed on a national securities exchange or traded in an
over-the-counter market, such value as the Committee in its
discretion may determine.
(f) "PARENT CORPORATION" shall mean any
corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if, at the time of
granting an Option, each of such corporations (other than
the Company) owns 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.
(g) "RETIREMENT" shall mean an optionee's
termination of employment in accordance with the provisions
of the Company's Employee Retirement Plan at such Optionee's
Normal Retirement Date, as defined in such plan.
(h) "SUBSIDIARY CORPORATION" shall mean any
corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of
granting an option, each of such corporations other than the
last corporation in the unbroken chain owns stock possessing
fifty percent (50%) or more of the total combined voting
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power of all classes of stock in one of the other
corporations in such chain.
(i) "TEN PERCENT STOCKHOLDER" shall mean an
Optionee who, at the time an Incentive Stock Option is
granted, owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock
of the Company or of its Parent Corporation or Subsidiary
corporations.
3. Administration.
The Plan shall be administered by a committee (the
"Committee") appointed by the Board of Directors of the
Company (the "Board"), which shall be comprised of three or
more persons, each of whom shall qualify as (a) an "outside
director" within the meaning of Section 162(m) of the Code
and (b) a "disinterested person" as described in
Rule 16b-3(c)(2)(i) promulgated under the Exchange Act.
The Committee shall have the authority in its
discretion, subject to and not inconsistent with the express
provisions of the Plan, to administer the Plan and to
exercise all the powers and authorities either specifically
granted to it under the Plan or necessary or advisable in
the administration of the Plan, including, without
limitation, the authority to grant Options; to determine
which Options shall constitute Incentive Stock Options and
which Options shall constitute Nonqualified Stock Options;
to determine which Rights (if any) shall be granted in
conjunction with Options; to determine the purchase price of
the shares of Common Stock covered by each Option (the
"Option Price"); to determine the persons to whom, and the
time or times at which, Options shall be granted; to
determine the number of shares to be covered by each Option;
to interpret the Plan; to prescribe, amend and rescind rules
and regulations relating to the Plan; to determine the terms
and provisions of the agreements (which need not be
identical) entered into in connection with Options and/or
Rights granted under the Plan ("Option Agreements"); and to
make all other determinations deemed necessary or advisable
for the administration of the Plan. The Committee may
delegate to one or more of its members or to one or more
agents such administrative duties as may be deemed
advisable, and the Committee or any person to whom it has
delegated duties as aforesaid may employ one or more persons
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to render advice with respect to any responsibility the
Committee or such person may have under the Plan.
No member of the Board of Directors or Committee
shall be liable for any action taken or determination made
in good faith with respect to the Plan or any Option or
Right granted hereunder.
4. Eligibility.
Options, Rights, or both Options and Rights may be
granted to key employees (including, without limitation,
officers and directors who are employees) of the Company or
its present or future Affiliate Corporations, except that
Incentive Stock Options shall be granted only to individuals
who, on the date of such grant, are employees of the Company
or a Parent Corporation or a Subsidiary Corporation. In
determining the persons to whom Options and/or Rights shall
be granted and the number of shares to be covered by each
option and any Rights, the Committee shall take into account
the duties of the respective persons, their present and
potential contributions to the success of the Company and
such other factors as the Committee shall deem relevant in
connection with accomplishing the purpose of the Plan. A
person to whom an Option has been granted hereunder is
sometimes referred to herein as an "Optionee."
An Optionee shall be eligible to receive more than
one grant of an Option during the term of the Plan, but only
on the terms and subject to the restrictions hereinafter set
forth.
5. Stock.
The stock subject to Options and Rights hereunder
shall be shares of the Company's common stock, par value
$0.01 per share ("Common Stock"). Such shares may, in whole
or in part, be authorized but unissued shares or shares that
shall have been or that may be reacquired by the Company.
The aggregate number of shares of Common Stock as to which
Options and Rights may be granted from time to time under
the Plan shall not exceed 3,000,000. No person may be
granted Options or Rights under the Plan representing an
aggregate of more than 750,000 shares of Common Stock. The
limitations established by the preceding two sentences shall
be subject to adjustment as provided in Section 8(i) hereof.
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To the extent that (1) any Option expires or is
terminated without being exercised or surrendered, (2) any
option is surrendered on exercise of a Right for cash or the
issuance of fewer shares of Common Stock than issuable under
such surrendered Option or (3) any Free Standing Right
expires or is terminated without being exercised, the shares
of Common Stock issuable thereunder, less such shares
issued, shall become available for grants of options or
Rights.
6. Incentive Stock Options.
Options granted pursuant to this Section 6 are
intended to constitute Incentive Stock Options and shall be
subject to the following special terms and conditions, in
addition to the general terms and conditions specified in
Section 8 hereof.
(a) VALUE OF SHARES. The aggregate Fair Market
Value (determined as of the date the Incentive Stock Option
is granted) of the shares of Common Stock with respect to
which Options granted under this Plan and all other option
plans of the Company, any Parent Corporation and any
Subsidiary Corporation become exercisable for the first time
by an optionee during any calendar year shall not exceed
$100,000.
(b) TEN PERCENT STOCKHOLDERS. In the case of an
Incentive Stock Option granted to a Ten Percent Stockholder,
(i) the Option Price shall not be less than one hundred ten
percent (110%) of the Fair Market Value of a share of Common
Stock of the Company on the date of grant of such Incentive
Stock Option, and (ii) the exercise period shall not exceed
five (5) years from the date of grant of such Incentive
Stock Option.
7. Nonqualified Stock Options.
Options granted pursuant to this Section 7 are
intended to constitute Nonqualified Stock Options and shall
be subject only to the general terms and conditions
specified in Sections 5 and 8 hereof.
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8. Terms and Conditions of Options.
Each Option granted pursuant to the Plan shall be
evidenced by a written Option Agreement between the Company
and the optionee, which agreement shall comply with and be
subject to the following terms and conditions:
(a) NUMBER OF SHARES. Each Option Agreement
shall state the number of shares of Common Stock to which
the Option relates.
(b) TYPE OF OPTION. Each Option Agreement shall
specifically identify the portion, if any, of the Option
which constitutes an Incentive Stock Option and the portion,
if any, which constitutes a Nonqualified Stock Option.
(c) OPTION PRICE. Each Option Agreement shall
state the Option Price per share of Common Stock, which, in
the case of Incentive Stock Options, shall be not less than
one hundred percent (100%) of the Fair Market Value of a
share of Common Stock of the Company on the date of grant of
the Option and shall be further subject to the limitation
described in Section 6(b) hereof. The Option Price shall be
subject to adjustment as provided in Section 8(i) hereof.
The date on which the Committee adopts a resolution
expressly granting an option shall be considered the day on
which such option is granted.
(d) MEDIUM AND TIME OF PAYMENT. The Option Price
shall be paid in full, at the time of exercise, in cash or
in shares of Common Stock having a Fair Market Value equal
to such Option Price or in a combination of cash and such
shares, and may be effected in whole or in part (i) with
monies received from the Company at the time of exercise as
a compensatory cash payment, or (ii) with monies borrowed
from the Company pursuant to repayment terms and conditions
as shall be determined from time to time by the Committee,
in its discretion, separately with respect to each exercise
of options and each optionee; provided, however, that each
such method and time for payment and each such borrowing and
terms and conditions of security, if any, and repayment
shall be permitted by and be in compliance with applicable
law.
(e) TERM AND EXERCISE OF OPTIONS. Options shall
be exercised over the exercise period as and at the times
and upon the conditions that the Committee may determine, as
reflected in the Option Agreement; provided, however, that
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the Committee shall have the authority to accelerate the
exercisability of any outstanding option at such time and
under such circumstances as it, in its sole discretion,
deems appropriate. The exercise period shall be determined
by the Committee; provided, however, that in the case of an
Incentive Stock option, such exercise period shall not
exceed ten (10) years from the date of grant of such
Incentive Stock Option and such exercise period shall be
further limited in circumstances described in Section 6(b)
hereof. The exercise period shall be subject to earlier
termination as provided in Section 8(f) and 8(g) hereof. An
Option may be exercised, as to any or all full shares of
Common Stock as to which the Option has become exercisable,
by giving written notice of such exercise to the Committee;
provided, however, that an Option may not be exercised at
any one time as to fewer than one hundred (100) shares (or
such number of shares as to which the Option is then
exercisable if such number of shares is less than one
hundred (100)).
(f) TERMINATION OF EMPLOYMENT. Except as
provided in this Section 8(f) and in Section 8(g) hereof, an
Option may not be exercised unless the Optionee is then in
the employ of (1) the Company, (2) an Affiliate Corporation
or (3) a corporation issuing or assuming the Option in a
transaction to which Section 424 of the Code applies or a
parent corporation or subsidiary corporation of the
corporation described in this Clause 3, and unless the
Optionee has remained continuously so employed since the
date of grant of the Option. In the event that the
employment of an Optionee shall terminate (other than by
reason of death, Disability or Retirement), all options of
such Optionee that are exercisable at the time of such
termination may, unless earlier terminated in accordance
with their terms, be exercised within three (3) months after
such termination. Nothing in the Plan or in any Option or
Right granted pursuant hereto shall confer upon an
individual any right to continue in the employ of the
Company or any of its Affiliate Corporations or interfere in
any way with the right of the Company or any such Affiliate
Corporation to terminate such employment at any time.
(g) ACCELERATION OF BENEFITS UPON DEATH,
DISABILITY OR RETIREMENT OF OPTIONEE OR A CHANGE IN CONTROL.
If (i) an Optionee shall die while employed by the Company
or an Affiliate Corporation thereof, (ii) an Optionee shall
die within three (3) months after the termination of such
Optionee's employment, (iii) the Optionee's employment shall
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terminate by reason of Disability or Retirement, or
(iv) there is a Change in Control, then in any such case all
options theretofore granted to such Optionee (whether or not
then exercisable) may, unless earlier terminated or expired
in accordance with their terms, be exercised by the Optionee
or by the Optionee's estate or by a person who acquired the
right to exercise such Option by bequest or inheritance or
otherwise by reason of the death or Disability of the
Optionee, at any time within one year after the date of
death, Disability or Retirement of the Optionee or the
Change in Control.
(h) NONTRANSFERABILITY OF OPTIONS. Options
granted under the Plan shall not be transferable otherwise
than by will or by the laws of descent and distribution, and
Options may be exercised, during the lifetime of the
Optionee, only by the Optionee or by his guardian or legal
representative.
(i) EFFECT OF CERTAIN CHANGES.
(1) If there is any change in the number of
outstanding shares of Common Stock by reason of any stock
dividend, stock split, recapitalization, combination,
exchange of shares, merger, consolidation, liquidation,
split-up, spin-off or other similar change in
capitalization, any distribution to common shareholders,
including a rights offering, other than cash dividends, or
any like change, then the number of shares of Common Stock
available for Options and Rights, the number of such shares
covered by outstanding Options and Rights, and the price per
share of such Options or the applicable market value of
Rights, shall be proportionately adjusted by the Committee
to reflect such change or distribution; provided, however,
that any fractional shares resulting from such adjustment
shall be eliminated.
(2) In the event of a change in the Common
Stock of the Company as presently constituted, which is
limited to a change of all of its authorized shares with par
value into the same number of shares with a different par
value or without par value, the shares resulting from any
such change shall be deemed to be the Common Stock within
the meaning of the Plan.
(3) To the extent that the foregoing
adjustments relate to stock or securities of the Company,
such adjustments shall be made by the Committee, whose
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determination in that respect shall be final, binding and
conclusive, provided that each Inventive Stock Option
granted pursuant to this Plan shall not be adjusted in a
manner that causes such option to fail to continue to
qualify as an Incentive Stock Option within the meaning of
Section 422 of the Code.
(j) RIGHTS AS A STOCKHOLDER. An Optionee or a
transferee of an Option shall have no rights as a
stockholder with respect to any shares covered by the Option
until the date of the issuance of a stock certificate to him
for such shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or
other property) or distribution of other rights for which
the record date is prior to the date such stock certificate
is issued, except as provided in Section 8(i) hereof.
(k) OTHER PROVISIONS. The Option Agreements
authorized under the Plan shall contain such other
provisions, including, without limitation, (i) the granting
of Rights, (ii) the imposition of restrictions upon the
exercise of an Option, and (iii) in the case of an Incentive
Stock Option, the inclusion of any condition not
inconsistent with such Option qualifying as an Incentive
Stock Option, as the Committee shall deem advisable.
9. Stock Appreciation Rights.
(a) Grant and Exercise. In the case of a
Nonqualified Stock Option, Related Rights may be granted
either at or after the time of the grant of such Option. In
the case of an Incentive Stock Option, Related Rights may be
granted only at the time of the grant of the Incentive Stock
Option.
A Related Right or applicable portion thereof
granted with respect to a given Option shall terminate and
no longer be exercisable upon the termination or exercise of
the related Option, except that, unless otherwise provided
by the Committee at the time of grant, a Related Right
granted with respect to less than the full number of shares
covered by a related Option shall only be reduced if and to
the extent that the number of shares covered by the exercise
or termination of the related Option exceeds the number of
shares not covered by the Right.
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A Related Right may be exercised by an Optionee,
in accordance with paragraph (b) of this Section 9, by
surrendering the applicable portion of the related Option.
Upon such exercise and surrender, the Optionee shall be
entitled to receive an amount determined in the manner
prescribed in paragraph (b) of this Section 9. Options
which have been so surrendered, in whole or in part, shall
no longer be exercisable to the extent the Related Rights
have been exercised.
(b) Terms and Conditions. Rights shall be
subject to such terms and conditions, not inconsistent with
the provisions of the Plan, as shall be determined from time
to time by the Committee and as evidenced by a written
Option Agreement between the Company and the Optionee,
including the following:
(1) Related Rights shall be exercisable only
at such time or times and to the extent that the Options to
which they relate shall be exercisable in accordance with
the provisions of Sections 6, 7, 8 and this Section 9 of the
Plan; provided, however, that any Related Right shall not be
exercisable during the first six (6) months of the term of
the Related Right, except that this additional limitation
shall not apply in the event of death of the Optionee prior
to the expiration of the six (6) month period.
(2) Upon the exercise of a Related Right, an
Optionee shall be entitled to receive up to, but not more
than, an amount in cash or shares of Common Stock equal in
value to the excess of the Fair Market Value of one
(1) share of Common Stock over the option price per share
specified in the related Option multiplied by the number of
shares in respect of which the Related Right shall have been
exercised, with the Committee having the right to determine
the form of payment.
(3) Related Rights shall be transferable
only when and to the extent that the underlying Option would
be transferable under paragraph (h) of Section 8 of the
Plan.
(4) A Related Right granted in connection
with an Incentive Stock Option may be exercised only if and
when the market price of the Common Stock subject to the
Incentive Stock Option exceeds the exercise price of such
Option.
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(5) Free Standing Rights shall be
exercisable at such time or times and subject to such terms
and conditions as shall be determined by the Committee at or
after grant; provided, however, that Free Standing Rights
shall not be exercisable during the first (6) six months of
the term of the Free Standing Right, except that this
limitation shall not apply in the event of death of the
recipient of the Free Standing Right prior to the expiration
of the six-month period.
(6) The term of each Free Standing Right
shall be fixed by the Committee, but no Free Standing Right
shall be exercisable more than ten (10) years after the date
such right is granted.
(7) Upon the exercise of a Free Standing
Right, a recipient shall be entitled to receive up to, but
not more than, an amount in cash or shares of Common Stock
equal in value to the excess of the Fair Market Value of one
share of Common Stock over the price per share specified in
the Free Standing Right (which shall be no less than one
hundred percent (100%) of the Fair Market Value of the
Common Stock on the date of grant) multiplied by the number
of shares in respect of which the right is being exercised,
with the Committee having the right to determine the form of
payment.
(8) No Free Standing Right shall be
transferable by the recipient otherwise than by will or by
the laws of descent and distribution, and all such rights
shall be exercisable, during the recipient's lifetime, only
by the recipient or his legal guardian or legal
representative.
(9) In the event of the termination of
employment of a recipient of a Free Standing Right, such
right shall be exercisable to the same extent that an Option
would have been exercisable in the event of the termination
of employment of an Optionee.
10. Agreement by Optionee Regarding Withholding Taxes.
If the Committee shall so require, as a condition
of exercise, each Optionee shall agree that:
(a) no later than the date of exercise of any
Option or Right granted hereunder, the Optionee will pay to
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the Company or make arrangements satisfactory to the
Committee regarding payment of any federal, state or local
taxes of any kind required by law to be withheld upon the
exercise of such Option or Right (any such tax, a
"Withholding Tax"); and
(b) the Company shall, to the extent permitted or
required by law, have the right to deduct any Withholding
Tax from any payment of any kind otherwise due to the
Optionee.
11. Gross-Up for Excise Tax.
An Option Agreement may provide that in the event
that an Optionee becomes entitled by reason of a Change of
Control to the accelerated vesting of an Option, if such
Optionee will be subject to the excise tax (the "Excise
Tax") under Section 4999 of the Code, the Company shall pay
to such Optionee as additional compensation an amount (the
"Gross-Up Payment") which, after taking into account any
federal, state and local income tax and Excise Tax upon the
payment provided for by this Section 10, shall be equal to
the amount of such Excise Tax. For purposes of determining
whether an Optionee will be subject to the Excise Tax and
the amount of such Excise Tax, (i) any other payments or
benefits received or to be received by such Optionee in
connection with a Change in Control of the Company or the
Optionee's termination of employment (whether pursuant to
the terms of the Option Agreement or any other plan,
arrangement or agreement with the Company, any entity whose
actions result in a Change in Control of the Company or any
entity affiliated with the Company or such entity) shall be
treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) of the
Code shall be treated as subject to the Excise Tax, unless
in the opinion of tax counsel selected by the Company's
independent auditors and reasonably acceptable to the
Optionee such other payments or benefits (in whole or in
part) do not constitute parachute payments, including by
reason of Section 280G(b)(4)(A) of the Code, or such excess
parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered,
within the meaning of Section 280G(b)(4)(B) of the Code, or
are otherwise not subject to the Excise Tax, (ii) the amount
of payments or benefits treated as subject to the Excise Tax
shall be equal to the lesser of (A) the total amount of
payments or benefits conferred on such Optionee by reason of
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the Change of Control or (B) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the
Code (after applying clause (i), above), and (iii) the value
of any noncash benefits or any deferred payment or benefit
shall be determined by the Company's independent auditors in
accordance with the principles of Sections 280G(d)(3) and
(4) of the Code. For purposes of determining the amount of
the Gross-Up Payment, the Optionee shall be deemed to pay
federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and
locality of the Optionee's residence on the date on which
the Excise Tax is incurred, net of the maximum reduction in
federal income taxes which could be obtained from deduction
of such state and local taxes. In the event that the Excise
Tax is subsequently determined to be less than the amount
taken into account hereunder, the Optionee shall repay to
the Company, at the time that the amount of such reduction
in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that
portion of the Gross-Up Payment attributable to the Excise
Tax and federal, state and local income tax deduction) plus
interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code. In the event
that the Excise Tax is determined to exceed the amount taken
into account hereunder (including by reason of any payment
the existence or amount of which cannot be determined at the
time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess (plus
any interest, penalties or additions payable by the Optionee
with respect to such excess) at the time that the amount of
such excess finally is determined. The Optionee and the
Company each shall reasonably cooperate with the other in
connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise
Tax.
12. Termination and Amendment.
Unless the Plan shall theretofore have been
terminated as hereinafter provided, the Plan shall terminate
on, and no Option or Right shall be granted after, February,
2004. The Plan may be terminated, modified or amended by
the shareholders of the Company. The Board may at any time
terminate, modify or amend the Plan in such respects as it
shall deem advisable; provided, however, that the Board may
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not, without approval by the holders of a majority of the
voting shares of the Company:
(i) increase (except as provided in Section 8(i)
hereof) the maximum number of shares of Common Stock as
to which Options or Rights may be granted under the
Plan;
(ii) change the class of employees eligible to
receive Options or Rights; or
(iii) adopt any other amendments to the Plan that
are considered material for purposes of Rule 16b-3(b)
under the Exchange Act.
No termination, modification or amendment of the Plan may,
without the consent of the employee to whom any Option or
Right shall theretofore have been granted, adversely affect
the rights of such employee or his or her transferee (as
provided herein) under such Option or Right.
13. Effectiveness; Approval of Stockholders.
The Plan shall take effect upon its adoption by
the Board of Directors, but its effectiveness and the
exercise of any Options or Rights shall be subject to the
approval of the holders of a majority of the voting shares
of the Company, which approval must occur within twelve
(12) months after the date the Plan is adopted by the Board.
14. Effect of Headings.
The section and subsection heading contained
herein are for convenience only and shall not affect the
construction hereof.