DATARAM CORPORATION
2001 STOCK OPTION PLAN
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1. PURPOSES. The purposes of the Dataram Corporation 2001
Stock Option Plan are to give officers and other employees, consultants and
non-employee directors of the Company and its Affiliates an opportunity to
acquire shares of Stock, to provide an incentive for such employees,
consultants and directors to continue to promote the best interests of the
Company and its Affiliates and enhance its long-term performance and to
provide an incentive for such employees, consultants and directors to join or
remain with the Company and its Affiliates. Toward these objectives, the
Committee may grant Options to such employees, directors and consultants, all
pursuant to the terms and conditions of the Plan.
2. DEFINITIONS. As used in the Plan, the following
capitalized terms shall have the meanings set forth below:
(a) "AFFILIATE" - other than the Company, (i) any
corporation or limited liability company in an unbroken chain of corporations
or limited liability companies ending with the Company if each corporation or
limited liability company owns stock or membership interests (as applicable)
possessing more than fifty percent (50%) of the total combined voting power
of all classes of stock in one of the other corporations or limited liability
companies in such chain; (ii) any corporation, trade or business (including,
without limitation, a partnership or limited liability company) which is more
than fifty percent (50%) controlled (whether by ownership of stock, assets or
an equivalent ownership interest or voting interest) by the Company or one of
its Affiliates; or (iii) any other entity, approved by the Committee as an
Affiliate under the Plan, in which the Company or any of its Affiliates has a
material equity interest.
(b) "AGREEMENT" - a written stock option award agreement
evidencing an Option, as described in Section 3(e).
(c) "BENEFICIAL OWNERSHIP" - (including correlative
terms) shall have the same meaning given such term in Rule 13d-3 promulgated
under the Exchange Act.
(d) "BOARD" - the Board of Directors of the Company.
(e) "CHANGE IN CONTROL" - the occurrence of any of the
following:
(i) an acquisition in one transaction or a series of
related transactions (other than directly from the Company or pursuant to
Options granted under the Plan or other similar awards granted by the
Company) of any Voting Securities by any Person, immediately after which such
Person has Beneficial Ownership of fifty percent (50%) or more of the
combined voting power of the Company's then outstanding Voting Securities;
PROVIDED, HOWEVER, in determining whether a Change in Control has occurred
pursuant to this Section 2(f), Voting Securities which are acquired in a Non-
Control Acquisition shall not constitute an acquisition that would cause a
Change in Control;
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(ii) the individuals who, immediately prior to the
Effective Date, are members of the Board (the "INCUMBENT BOARD"), cease for
any reason to constitute at least a majority of the members of the Board;
PROVIDED, HOWEVER, that if the election, or nomination for election, by the
Company's common stockholders, of any new director was approved by a vote of
at least a majority of the Incumbent Board, such new director shall, for
purposes of the Plan, be considered as a member of the Incumbent Board;
PROVIDED FURTHER, HOWEVER, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result
of either an actual or threatened "Election Contest" (as described in Rule
14a-11 promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board (a "PROXY CONTEST") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
(iii) the consummation of:
(A) a merger, consolidation or reorganization
involving the Company UNLESS:
(1) the stockholders of the Company,
immediately before such merger, consolidation or reorganization, own,
directly or indirectly, immediately following such merger, consolidation or
reorganization, more than fifty percent (50%) of the combined voting power of
the outstanding voting securities of the corporation resulting from such
merger or consolidation or reorganization (the "SURVIVING CORPORATION") in
substantially the same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization,
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute at least a
majority of the members of the board of directors of the Surviving
Corporation, or a corporation Beneficially Owning, directly or indirectly, a
majority of the voting securities of the Surviving Corporation, and
(3) no Person, OTHER THAN (i) the Company,
(ii) any Related Entity (as defined in Section 2(p)), (iii) any employee
benefit plan (or any trust forming a part thereof) that, immediately prior to
such merger, consolidation or reorganization, was maintained by the Company,
the Surviving Corporation, or any Related Entity or (iv) any Person who,
together with its Affiliates, immediately prior to such merger, consolidation
or reorganization had Beneficial Ownership of fifty percent (50%) or more of
the then outstanding Voting Securities, owns, together with its Affiliates,
Beneficial Ownership of fifty percent (50%) or more of the combined voting
power of the Surviving Corporation's then outstanding voting securities
(a transaction described in clauses (1)
through (3) above is referred to herein as a "NON-CONTROL TRANSACTION");
(B) a complete liquidation or dissolution of the
Company; or
(C) an agreement for the sale or other
disposition of all or substantially all of the assets or business of the
Company to any Person (other than a transfer to a Related Entity or the
distribution to the Company's stockholders of the stock of a Related Entity
or any other assets).
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Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "SUBJECT PERSON") acquired Beneficial
Ownership of fifty percent (50%) or more of the combined voting power of the
then outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Company which, by reducing the number of Voting Securities
then outstanding, increases the proportional number of shares Beneficially
Owned by the Subject Persons, PROVIDED that if a Change in Control would
occur (but for the operation of this sentence) as a result of the acquisition
of Voting Securities by the Company, and (1) before such share acquisition by
the Company the Subject Person becomes the Beneficial Owner of any new or
additional Voting Securities in a related transaction or (2) after such share
acquisition by the Company the Subject Person becomes the Beneficial Owner of
any new or additional Voting Securities which in either case increases the
percentage of the then outstanding Voting Securities Beneficially Owned by
the Subject Person, then a Change in Control shall be deemed to occur. Solely
for purposes of this Section 2(f), (x) "Affiliate" shall mean, with respect
to any Person, any other Person that, directly or indirectly, controls, is
controlled by, or is under common control with, such Person; (y) any
"Relative" (for this purpose, "Relative" means a spouse, child, parent,
parent of spouse, sibling or grandchild) of an individual shall be deemed to
be an Affiliate of such individual for this purpose; and (z) neither the
Company nor any Person controlled by the Company shall be deemed to be an
Affiliate of any holder of Common Stock.
(g) "CODE" - the Internal Revenue Code of 1986, as it may
be amended from time to time, including regulations and rules thereunder and
successor provisions and regulations and rules thereto.
(h) "COMMITTEE" - the Compensation and Stock Option
Committee of the Board, or such other Board committee as may be designated by
the Board to administer the Plan.
(i) "COMPANY" - Dataram Corporation, a New Jersey
corporation, or any successor entity.
(j) "DISQUALIFIED OPTION" - the meaning given such term
in Section 10(d).
(k) "DISQUALIFYING DISPOSITION" - the meaning given such
term in Section 10(d).
(l) "EFFECTIVE DATE" - the date on which the Plan is
effective, as determined pursuant to Section 15.
(m) "EXCHANGE ACT" - the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
(n) "FAIR MARKET VALUE" - of a share of Stock as of a
given date shall be: (i) if the Stock is listed or admitted to trading on an
established stock exchange (including, for this purpose, the Nasdaq National
Market), the closing sale price for a share of Stock on the composite tape or
in Nasdaq National Market trading as reported in THE WALL STREET JOURNAL (or,
if not so reported, such other nationally recognized reporting source as the
Committee shall select) for such date, or, if no such prices are reported for
such date, the most recent day for which such prices are available shall be
used; (ii) if the Stock is not then listed or admitted to trading on such a
stock exchange, the mean of the closing representative bid and asked prices
for the Stock on such date as reported by the Nasdaq Small Cap Market or, if
not so reported, by the OTC Bulletin Board (or any successor or similar
quotation system regularly reporting the market value of the Stock in the
over-the-counter market), or, if no such prices are reported for such date,
the most recent day for which such prices are available shall be used; or
(iii) in the event neither of the valuation methods provided for in clauses
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(i) and (ii) above are practicable, the fair market value of a share of Stock
determined by such other reasonable valuation method as the Committee shall,
in its discretion, select and apply in good faith as of the given date;
PROVIDED, HOWEVER, that for purposes of Incentive Stock Options, "fair market
value" shall be determined subject to Section 422(c)(7) of the Code.
(o) "ISO" or "INCENTIVE STOCK OPTION" - a right to
purchase Stock granted to an Optionee under the Plan in accordance with the
terms and conditions set forth in Section 6 and which conforms to the
applicable provisions of Section 422 of the Code.
(p) "NON-CONTROL ACQUISITION" - an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof) maintained by (A)
the Company or (B) any corporation or other Person of which a majority of its
voting power or its voting equity securities or equity interest is owned,
directly or indirectly, by the Company (a "RELATED ENTITY"), (ii) the Company
or any Related Entity, (iii) Robert V. Tarantino or any entity of which he is
affiliated or associated, or (iv) any Person in connection with a Non-Control
Transaction.
(q) "NOTICE" - written notice actually received by the
Company at its executive offices on the day of such receipt, if received on
or before 1:30 p.m., on a day when the Company's executive offices are open
for business, or, if received after such time, such notice shall be deemed
received on the next such day, which notice may be delivered in person to the
Company's Secretary or sent by facsimile to the Company at (732) 271-9686, or
sent by certified or registered mail or overnight courier, prepaid, addressed
to the Company at 394 Elizabeth Avenue, Somerset, New Jersey 08873,
Attention: Secretary.
(r) "OPTION" - a right to purchase Stock granted to an
Optionee under the Plan in accordance with the terms and conditions set forth
in Section 6. Options may be either ISOs or stock options other than ISOs.
(s) "OPTIONEE" - an individual who is eligible, pursuant
to Section 5, and who has been selected, pursuant to Section 3(c), to
participate in the Plan, and who holds an outstanding Option granted to such
individual under the Plan in accordance with the terms and conditions set
forth in Section 6.
(t) "PERSON" - "person" as such term is used for purposes
of Section 13(d) or 14(d) of the Exchange Act, including, without limitation,
any individual, corporation, limited liability company, partnership, trust,
unincorporated organization, government or any agency or political
subdivision thereof, or any other entity or any group of Persons.
(u) "PLAN" - this Dataram Corporation 2001 Stock Option
Plan.
(v) "PREDECESSOR PLAN" - the Company's 1992 Incentive and
Non-Statutory Stock Option Plan, as amended.
(w) "SECURITIES ACT" - the Securities Act of 1933, as it
may be amended from time to time, including the regulations and rules
promulgated thereunder and successor provisions and regulations and rules
thereto.
(x) "STOCK" - the common stock of the Company, without
par value.
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(y) "SUBSIDIARY" - any present or future corporation
which is or would be a "subsidiary corporation" of the Company as the term is
defined in Section 424(f) of the Code.
(z) "VOTING SECURITIES" - all the outstanding voting
securities of the Company entitled to vote generally in the election of the
Board.
3. ADMINISTRATION OF THE PLAN. (a) The Committee shall have
exclusive authority to operate, manage and administer the Plan in accordance
with its terms and conditions. Notwithstanding the foregoing, in its absolute
discretion, the Board may at any time and from time to time exercise any and
all rights, duties and responsibilities of the Committee under the Plan,
including, but not limited to, establishing procedures to be followed by the
Committee, but excluding matters which under any applicable law, regulation
or rule, including, without limitation, any exemptive rule under Section 16
of the Exchange Act (including Rule 16b-3, or any successor rule, as the same
may be amended from time to time) or Section 162(m) of the Code, are required
to be determined in the sole discretion of the Committee. If and to the
extent that no Committee exists which has the authority to administer the
Plan, the functions of the Committee shall be exercised by the Board.
(b) The Committee shall be appointed from time to time by
the Board, and the Committee shall consist of not less than three members of
the Board. Appointment of Committee members shall be effective upon their
acceptance of such appointment. Committee members may be removed by the Board
at any time either with or without cause, and such members may resign at any
time by delivering notice thereof to the Board. Any vacancy on the Committee,
whether due to action of the Board or any other reason, shall be filled by
the Board.
(c) The Committee shall have full authority to grant,
pursuant to the terms of the Plan, Options to those individuals who are
eligible to receive Options under the Plan. In particular, the Committee
shall have discretionary authority, in accordance with the terms of the Plan,
to: determine eligibility for participation in the Plan; select, from time to
time, from among those eligible, the employees, directors and consultants to
whom Options shall be granted under the Plan, which selection may be based
upon information furnished to the Committee by the Company's or an
Affiliate's management; determine whether an Option shall take the form of an
ISO or an Option other than an ISO; determine the number of shares of Stock
to be included in any Option and the periods for which Options will be
outstanding; establish and administer any terms, conditions, performance
criteria, restrictions, limitations, forfeiture, vesting or exercise
schedule, and other provisions of or relating to any Option; grant waivers of
terms, conditions, restrictions and limitations under the Plan or applicable
to any Option, or accelerate the vesting or exercisability of any Option;
amend or adjust the terms and conditions of any outstanding Option and/or
adjust the number and/or class of shares of Stock subject to any outstanding
Option; at any time and from time to time after the granting of an Option,
specify such additional terms, conditions and restrictions with respect to
any such Option as may be deemed necessary or appropriate to ensure
compliance with any and all applicable laws or rules, including, but not
limited to, terms, restrictions and conditions for compliance with applicable
securities laws, regarding an Optionee's exercise of Options by tendering
shares of Stock or under any "cashless exercise" program established by the
Committee, and methods of withholding or providing for the payment of
required taxes; offer to buy out an Option previously granted, based on such
terms and conditions as the Committee shall establish with and communicate to
the Optionee at the time such offer is made; and, to the extent permitted
under the applicable Agreement, permit the transfer of an Option or the
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exercise of an Option by one other than the Optionee who received the grant
of such Option (other than any such a transfer or exercise which would cause
any ISO to fail to qualify as an "incentive stock option" under Section 422
of the Code).
(d) The Committee shall have all authority that may be
necessary or helpful to enable it to discharge its responsibilities with
respect to the Plan. Without limiting the generality of the foregoing
sentence or Section 3(a), and in addition to the powers otherwise expressly
designated to the Committee in the Plan, the Committee shall have the
exclusive right and discretionary authority to interpret the Plan and the
Agreements; construe any ambiguous provision of the Plan and/or the
Agreements and decide all questions concerning eligibility for and the amount
of Options granted under the Plan. The Committee may establish, amend, waive
and/or rescind rules and regulations and administrative guidelines for
carrying out the Plan and may correct any errors, supply any omissions or
reconcile any inconsistencies in the Plan and/or any Agreement or any other
instrument relating to any Options. The Committee shall have the authority to
adopt such procedures and subplans and grant Options on such terms and
conditions as the Committee determines necessary or appropriate to permit
participation in the Plan by individuals otherwise eligible to so participate
who are foreign nationals or employed outside of the United States, or
otherwise to conform to applicable requirements or practices of jurisdictions
outside of the United States; and take any and all such other actions it
deems necessary or advisable for the proper operation and/or administration
of the Plan. The Committee shall have full discretionary authority in all
matters related to the discharge of its responsibilities and the exercise of
its authority under the Plan. Decisions and actions by the Committee with
respect to the Plan and any Agreement shall be final, conclusive and binding
on all persons having or claiming to have any right or interest in or under
the Plan and/or any Agreement.
(e) Each Option shall be evidenced by an Agreement, which
shall be executed by the Company and the Optionee to whom such Option has
been granted, unless the Agreement provides otherwise; two or more Options
granted to a single Optionee may, however, be combined in a single Agreement.
An Agreement shall not be a precondition to the granting of an Option; no
person shall have any rights under any Option, however, unless and until the
Optionee to whom the Option shall have been granted (i) shall have executed
and delivered to the Company an Agreement or other instrument evidencing the
Option, unless such Agreement provides otherwise, and (ii) has otherwise
complied with the applicable terms and conditions of the Option. The
Committee shall prescribe the form of all Agreements, and, subject to the
terms and conditions of the Plan, shall determine the content of all
Agreements. Any Agreement may be supplemented or amended in writing from time
to time as approved by the Committee; PROVIDED that the terms and conditions
of any such Agreement as supplemented or amended are not inconsistent with
the provisions of the Plan.
(f) A majority of the members of the entire Committee
shall constitute a quorum and the actions of a majority of the members of the
Committee in attendance at a meeting at which a quorum is present, or actions
by a written instrument signed by all members of the Committee, shall be the
actions of the Committee.
(g) The Committee may consult with counsel who may be
counsel to the Company. The Committee may, with the approval of the Board,
employ such other attorneys and/or consultants, accountants, appraisers,
brokers and other persons as it deems necessary or appropriate. In accordance
with Section 12, the Committee shall not incur any liability for any action
taken in good faith in reliance upon the advice of such counsel or other
persons.
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(h) In serving on the Committee, the members thereof
shall be entitled to indemnification as directors of the Company, and to any
limitation of liability and reimbursement as directors with respect to their
services as members of the Committee.
(i) Except to the extent prohibited by applicable law,
including, without limitation, the requirements applicable under Section
162(m) of the Code to any Option intended to be "qualified performance-based
compensation," or the requirements for any Option granted to an officer or
director to be covered by any exemptive rule under Section 16 of the Exchange
Act (including Rule 16b-3, or any successor rule, as the same may be amended
from time to time), or the applicable rules of a stock exchange, the
Committee may, in its discretion, allocate all or any portion of its
responsibilities and powers under this Section 3 to any one or more of its
members and/or delegate all or any part of its responsibilities and powers
under this Section 3 to any person or persons selected by it; PROVIDED,
HOWEVER, that the Committee may not delegate its authority to correct errors,
omissions or inconsistencies in the Plan. Any such authority delegated or
allocated by the Committee under this paragraph (i) of Section 3 shall be
exercised in accordance with the terms and conditions of the Plan and any
rules, regulations or administrative guidelines that may from time to time be
established by the Committee, and any such allocation or delegation may be
revoked by the Committee at any time.
4. SHARES OF STOCK SUBJECT TO THE PLAN. (a) The shares of
stock subject to Options granted under the Plan shall be 1,800,000 shares of
Stock. Such shares of Stock subject to the Plan may be either authorized and
unissued shares (which will not be subject to preemptive rights) or
previously issued shares acquired by the Company or any Subsidiary.
(b) The numbers of shares of Stock specified in this
Section 4 shall be adjusted as provided in Section 10.
(c) Any shares of Stock subject to an Option which for
any reason expires or is terminated or canceled without having been fully
exercised by delivery of shares of Stock may again be granted pursuant to an
Option under the Plan, subject to the limitations of this Section 4.
(d) If the option exercise price of an Option granted
under the Plan is paid by tendering to the Company shares of Stock already
owned by the holder of such option (or such holder and his or her spouse
jointly), only the number of shares of Stock issued net of the shares of
Stock so tendered shall be deemed delivered for purposes of determining the
total number of shares of Stock that may be delivered under the Plan.
(e) Any shares of Stock delivered under the Plan in
assumption or substitution of outstanding stock options, or obligations to
grant future stock options, under plans or arrangements of an entity other
than the Company or an Affiliate in connection with the Company or an
Affiliate acquiring such another entity, or an interest in such an entity, or
a transaction otherwise described in Section 6(j), shall not reduce the
maximum number of shares of Stock available for delivery under the Plan.
5. ELIGIBILITY. Executive employees and other employees,
including officers, of the Company and the Affiliates, directors (whether or
not also employees), and consultants of the Company and the Affiliates, shall
be eligible to become Optionees and receive Options in accordance with the
terms and conditions of the Plan, subject to the limitations on the granting
of ISOs set forth in Section 6(h).
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6. TERMS AND CONDITIONS OF STOCK OPTIONS. All Options to
purchase Stock granted under the Plan shall be either ISOs or Options other
than ISOs. To the extent that any Option does not qualify as an Incentive
Stock Option (whether because of its provisions or the time or manner of its
exercise or otherwise), such Option, or the portion thereof which does not so
qualify, shall constitute a separate Option other than an Incentive Stock
Option. Each Option shall be subject to all the applicable provisions of the
Plan, including the following terms and conditions, and to such other terms
and conditions not inconsistent therewith as the Committee shall determine
and which are set forth in the applicable Agreement. Options need not be
uniform as to all grants and recipients thereof.
(a) The option exercise price per share of shares of
Stock subject to each Option shall be determined by the Committee and stated
in the Agreement; PROVIDED, HOWEVER, that, subject to paragraph (h)(iii)
and/or (j) of this Section 6, if applicable, such price applicable to any ISO
shall not be less than one hundred percent (100%) of the Fair Market Value of
a share of Stock at the time that the Option is granted.
(b) Each Option shall be exercisable in whole or in such
installments, at such times and under such conditions as may be determined by
the Committee, in its discretion in accordance with the Plan, and stated in
the Agreement, and, in any event, over a period of time ending not later than
ten (10) years from the date such Option was granted, subject to paragraph
(h)(iii) of this Section 6.
(c) An Option shall not be exercisable with respect to a
fractional share of Stock or the lesser of one hundred (100) shares and the
full number of shares of Stock then subject to the Option. No fractional
shares of Stock shall be issued upon the exercise of an Option.
(d) Each Option may be exercised by giving Notice to the
Company specifying the number of shares of Stock to be purchased, which shall
be accompanied by payment in full including applicable taxes, if any, in
accordance with Section 9. Payment shall be in any manner permitted by
applicable law and prescribed by the Committee, in its discretion, and set
forth in the Agreement, including, in the Committee's discretion, and subject
to such terms, conditions and limitations as the Committee may prescribe,
payment in accordance with a "cashless exercise" arrangement established by
the Committee and/or in Stock owned by the Optionee or by the Optionee and
his or her spouse jointly and acquired more than six (6) months prior to such
tender.
(e) No Optionee or other person shall become the
beneficial owner of any shares of Stock subject to an Option, nor have any
rights to dividends or other rights of a shareholder with respect to any such
shares until he or she has exercised his or her Option in accordance with the
provisions of the Plan and the applicable Agreement.
(f) An Option may be exercised only if at all times
during the period beginning with the date of the granting of the Option and
ending on the date of such exercise, the Optionee was an employee, director
or consultant of the Company or an Affiliate, as applicable. Notwithstanding
the preceding sentence, the Committee may determine in its discretion that an
Option may be exercised prior to expiration of such Option following
termination of such continuous employment, directorship or consultancy,
whether or not exercisable at the time of such termination, to the extent
provided in the applicable Agreement.
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(g) Subject to the terms and conditions and within the
limitations of the Plan, the Committee may modify, extend or renew
outstanding Options granted under the Plan, or accept the surrender of
outstanding Options (up to the extent not theretofore exercised) and
authorize the granting of new Options in substitution therefor (to the extent
not theretofore exercised).
(h) (i) Each Agreement relating to an Option shall state
whether such Option will or will not be treated as an ISO. No ISO shall be
granted unless such Option, when granted, qualifies as an "incentive stock
option" under Section 422 of the Code. No ISO shall be granted to any
individual otherwise eligible to participate in the Plan who is not an
employee of the Company or a Subsidiary on the date of granting of such
Option. Any ISO granted under the Plan shall contain such terms and
conditions, consistent with the Plan, as the Committee may determine to be
necessary to qualify such Option as an "incentive stock option" under Section
422 of the Code. Any ISO granted under the Plan may be modified by the
Committee to disqualify such Option from treatment as an "incentive stock
option" under Section 422 of the Code.
(ii) Notwithstanding any intent to grant ISOs, an
Option granted under the Plan will not be considered an ISO to the extent
that it, together with any other "incentive stock options" (within the
meaning of Section 422 of the Code, but without regard to subsection (d) of
such Section) under the Plan and any other "incentive stock option" plans of
the Company, any Subsidiary and any "parent corporation" of the Company
within the meaning of Section 424(e) of the Code, are exercisable for the
first time by any Optionee during any calendar year with respect to Stock
having an aggregate Fair Market Value in excess of $100,000 (or such other
limit as may be required by the Code) as of the time the Option with respect
to such Stock is granted. The rule set forth in the preceding sentence shall
be applied by taking Options into account in the order in which they were
granted.
(iii) No ISO shall be granted to an individual
otherwise eligible to participate in the Plan who owns (within the meaning of
Section 424(d) of the Code), at the time the Option is granted, more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Company or a Subsidiary or any "parent corporation" of the Company within
the meaning of Section 424(e) of the Code. This restriction does not apply if
at the time such ISO is granted the Option exercise price per share of Stock
subject to the Option is at least 110% of the Fair Market Value of a share of
Stock on the date such ISO is granted, and the ISO by its terms is not
exercisable after the expiration of five years from such date of grant.
(i) An Option and any shares of Stock received upon the
exercise of an Option shall be subject to such other transfer and/or
ownership restrictions and/or legending requirements as the Committee may
establish in its discretion and which are specified in the Agreement and may
be referred to on the certificates evidencing such shares of Stock. The
Committee may require an Optionee to give prompt Notice to the Company
concerning any disposition of shares of Stock received upon the exercise of
an ISO within: (i) two (2) years from the date of granting such ISO to such
Optionee or (ii) one (1) year from the transfer of such shares of Stock to
such Optionee or (iii) such other period as the Committee may from time to
time determine. The Committee may direct that an Optionee with respect to an
ISO undertake in the applicable Agreement to give such Notice described in
the preceding sentence, at such time and containing such information as the
Committee may prescribe, and/or that the certificates evidencing shares of
Stock acquired by exercise of an ISO refer to such requirement to give such
Notice.
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(j) In the event that a transaction described in Section
424(a) of the Code involving the Company or a Subsidiary is consummated, such
as the acquisition of property or stock from an unrelated corporation,
individuals who become eligible to participate in the Plan in connection with
such transaction, as determined by the Committee, may be granted Options in
substitution for stock options granted by another corporation that is a party
to such transaction. If such substitute Options are granted, the Committee,
in its discretion and consistent with Section 424(a) of the Code, if
applicable, and the terms of the Plan, though notwithstanding paragraph (a)
of this Section 6, shall determine the option exercise price and other terms
and conditions of such substitute Options.
7. TRANSFER, LEAVE OF ABSENCE. A transfer of an employee
from the Company to an Affiliate (or, for purposes of any ISO granted under
the Plan, a Subsidiary), or vice versa, or from one Affiliate to another (or
in the case of an ISO, from one Subsidiary to another), and a leave of
absence, duly authorized in writing by the Company or a Subsidiary or
Affiliate, shall not be deemed a termination of employment of the employee
for purposes of the Plan or with respect to any Option (in the case of ISOs,
to the extent permitted by the Code).
8. RIGHTS OF EMPLOYEES AND OTHER PERSONS. (a) No person
shall have any rights or claims under the Plan except in accordance with the
provisions of the Plan and the applicable Agreement.
(b) Nothing contained in the Plan or in any Agreement
shall be deemed to (i) give any employee or director the right to be retained
in the service of the Company or any Affiliate nor restrict in any way the
right of the Company or any Affiliate to terminate any employee's employment
or any director's directorship at any time with or without cause or (ii)
confer on any consultant any right of continued relationship with the Company
or any Affiliate, or alter any relationship between them, including any right
of the Company or an Affiliate to terminate its relationship with such
consultant.
(c) The adoption of the Plan shall not be deemed to give
any employee of the Company or any Affiliate or any other person any right to
be selected to participate in the Plan or to be granted an Option.
(d) Nothing contained in the Plan or in any Agreement
shall be deemed to give any employee the right to receive any bonus, whether
payable in cash or in Stock, or in any combination thereof, from the Company
or any Affiliate, nor be construed as limiting in any way the right of the
Company or any Affiliate to determine, in its sole discretion, whether or not
it shall pay any employee bonuses, and, if so paid, the amount thereof and
the manner of such payment.
9. TAX WITHHOLDING OBLIGATIONS. (a) The Company and/or any
Affiliate are authorized to take whatever actions are necessary and proper to
satisfy all obligations of Optionees (including, for purposes of this Section
9, any other person entitled to exercise an Option pursuant to the Plan or an
Agreement) for the payment of all Federal, state, local and foreign taxes in
connection with any Options (including, but not limited to, actions pursuant
to the following paragraph (b) of this Section 9).
(b) Each Optionee shall (and in no event shall Stock be
delivered to such Optionee with respect to an Option until), no later than
the date as of which the value of the Option first becomes includible in the
gross income of the Optionee for income tax purposes, pay to the Company in
cash, or make arrangements satisfactory to the Company, as determined in the
Committee's discretion, regarding payment to the Company of, any taxes of any
kind required by law to be withheld with respect to the Stock or other
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property subject to such Option, and the Company and any Affiliate shall, to
the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to such Optionee. Notwithstanding the
above, the Committee may, in its discretion and pursuant to procedures
approved by the Committee, permit the Optionee to (i) elect withholding by
the Company of Stock otherwise deliverable to such Optionee pursuant to his
or her Option (provided, HOWEVER, that the amount of any Stock so withheld
shall not exceed the amount necessary to satisfy required Federal, state,
local and foreign withholding obligations using the minimum statutory rate)
and/or (ii) tender to the Company Stock owned by such Optionee (or by such
Optionee and his or her spouse jointly) and acquired more than six (6) months
prior to such tender in full or partial satisfaction of such tax obligations,
based, in each case, on the Fair Market Value of the Stock on the payment
date as determined by the Committee.
10. CHANGES IN CAPITAL. (a) The existence of the Plan and
any Options granted hereunder shall not affect in any way the right or power
of the Board or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the Company's
capital structure or its business, any merger or consolidation of the Company
or an Affiliate, any issue of debt, preferred or prior preference stock ahead
of or affecting Stock, the authorization or issuance of additional shares of
Stock, the dissolution or liquidation of the Company or its Affiliates, any
sale or transfer of all or part of its assets or business or any other
corporate act or proceeding.
(b)(i) Upon changes in the outstanding Stock by reason of
a stock dividend, stock split, reverse stock split, subdivision,
recapitalization, reclassification, merger, consolidation (whether or not the
Company is a surviving corporation), combination or exchange of shares of
Stock, separation, or reorganization, or in the event of an extraordinary
dividend, "spin-off," liquidation, other substantial distribution of assets
of the Company or acquisition of property or stock or other change in capital
of the Company, or the issuance by the Company of shares of its capital stock
without receipt of full consideration therefor, or rights or securities
exercisable, convertible or exchangeable for shares of such capital stock, or
any similar change affecting the Company's capital structure, the aggregate
number, class and kind of shares of stock available under the Plan as to
which Options may be granted and the number, class and kind of shares under
each outstanding Option and the exercise price per share applicable to any
such Options shall be appropriately adjusted by the Committee in its
discretion to preserve the benefits or potential benefits intended to be made
available under the Plan or with respect to any outstanding Options or
otherwise necessary to reflect any such change.
(ii) Fractional shares of Stock resulting from any
adjustment in Options pursuant to Section 10(b)(i) shall be aggregated until,
and eliminated at, the time of exercise of the affected Options. Notice of
any adjustment shall be given by the Committee to each Optionee whose Option
has been adjusted and such adjustment (whether or not such Notice is given)
shall be effective and binding for all purposes of the Plan.
(c) In the event of a Change in Control:
(i) Immediately prior thereto, all outstanding
Options shall be accelerated and become immediately exercisable as to all of
the shares of Stock covered thereby, notwithstanding anything to the contrary
in the Plan or the Agreement.
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(ii) In its discretion, and on such terms and
conditions as it deems appropriate, the Committee may provide, either by the
terms of the Agreement applicable to any Option or by resolution adopted
prior to the occurrence of the Change in Control, that any outstanding Option
shall be adjusted by substituting for Stock subject to such Option stock or
other securities of the surviving corporation or any successor corporation to
the Company, or a parent or subsidiary thereof, or that may be issuable by
another corporation that is a party to the transaction resulting in the
Change in Control, whether or not such stock or other securities are publicly
traded, in which event the aggregate exercise price shall remain the same and
the amount of shares or other securities subject to the Option shall be the
amount of shares or other securities which could have been purchased on the
closing date or expiration date of such transaction with the proceeds which
would have been received by the Optionee if the Option had been exercised in
full (or with respect to a portion of such Option, as determined by the
Committee, in its discretion) prior to such transaction or expiration date
and the Optionee exchanged all of such shares in the transaction.
(iii) In its discretion, and on such terms and
conditions as it deems appropriate, the Committee may provide, either by the
terms of the Agreement applicable to any Option or by resolution adopted
prior to the occurrence of the Change in Control, that any outstanding Option
shall be converted into a right to receive cash on or following the closing
date or expiration date of the transaction resulting in the Change in Control
in an amount equal to the highest value of the consideration to be received
in connection with such transaction for one share of Stock, or, if higher,
the highest Fair Market Value of the Stock during the thirty (30) consecutive
business days immediately prior to the closing date or expiration date of
such transaction, less the per share exercise price of such Option,
multiplied by the number of shares of Stock subject to such Option, or a
portion thereof.
(iv) The Committee may, in its discretion, provide
that an Option cannot be exercised after such a Change in Control, to the
extent that such Option is or becomes fully exercisable on or before such
Change in Control or is subject to any acceleration, adjustment or conversion
in accordance with the foregoing paragraphs (i), (ii) or (iii) of this
Section 10.
No Optionee shall have any right to prevent the
consummation of any of the foregoing acts affecting the number of shares of
Stock available to such Optionee. Any actions or determinations of the
Committee under this subsection 10(c) need not be uniform as to all
outstanding Options, nor treat all Optionees identically. Notwithstanding the
foregoing adjustments, in no event may any Option be exercised after ten (10)
years from the date it was originally granted, and any changes to ISOs
pursuant to this Section 10 shall, unless the Committee determines otherwise,
only be effective to the extent such adjustments or changes do not cause a
"modification" (within the meaning of Section 424(h)(3) of the Code) of such
ISOs or adversely affect the tax status of such ISOs.
(d) If, as a result of a Change in Control transaction,
an ISO fails to qualify as an "incentive stock option," within the meaning of
Section 422 of the Code, either because of the failure of the Optionee to
meet the holding period requirements of Code Section 422(a)(1) (a
"Disqualifying Disposition") or the exercisability of such Option is
accelerated pursuant to Section 10(c)(i), or any similar provision of the
applicable Agreement, in connection with such Change in Control and such
acceleration causes the aggregate Fair Market Value (determined at the time
the Option is granted) of the shares of Stock with respect to which such
Option, together with any other "incentive stock options," as provided in
Section 6(h)(ii), are exercisable for the first time by such Optionee during
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the calendar year in which such accelerated exercisability occurs to exceed
the limitations set forth in Section 6(h)(ii) (a "Disqualified Option"); or
any other exercise, payment, acceleration, adjustment or conversion of an
Option in connection with a Change in Control transaction results in any
additional taxes imposed on an Optionee, then the Company may, in the
discretion of the Committee, make a cash payment to or on behalf of the
Optionee who holds any such Option equal to the amount that will, after
taking into account all taxes imposed on the Disqualifying Disposition or
other exercise, payment, acceleration, adjustment or conversion of the
Option, as the case may be, and the receipt of such payment, leave such
Optionee in the same after-tax position the Optionee would have been in had
the Code Section 422(a)(1) holding period requirements been met at the time
of the Disqualifying Disposition or had the Disqualified Option continued to
qualify as an "incentive stock option," within the meaning of Code Section
422 on the date of such exercise or otherwise equalize the Optionee for any
such taxes; PROVIDED, HOWEVER, that the amount, timing and recipients of any
such payment or payments shall be subject to such terms, conditions and
limitations as the Committee shall, in its discretion, determine. Without
limiting the generality of the PROVISO contained in the immediately preceding
sentence, in determining the amount of any such payment or payments referred
to therein, the Committee may adopt such methods and assumptions as it
considers appropriate, and the Committee shall not be required to examine or
take into account the individual tax liability of any Optionee.
11. MISCELLANEOUS PROVISIONS. (a) The Plan shall be
unfunded. The Company shall not be required to establish any special or
separate fund or to make any other segregation of assets to assure the
issuance of shares of Stock or the payment of cash upon exercise or payment
of any Option. Proceeds from the sale of shares of Stock pursuant to Options
granted under the Plan shall constitute general funds of the Company.
(b) Except as otherwise provided in this paragraph (b) of
Section 11 or by the Committee, an Option by its terms shall be personal and
may not be sold, transferred, pledged, assigned, encumbered or otherwise
alienated or hypothecated otherwise than by will or by the laws of descent
and distribution and shall be exercisable during the lifetime of an Optionee
only by him or her. An Agreement may permit the exercise or payment of an
Optionee's Option (or any portion thereof) after his or her death by or to
the beneficiary most recently named by such Optionee in a written designation
thereof filed with the Company, or, in lieu of any such surviving
beneficiary, as designated by the Optionee by will or by the laws of descent
and distribution. In the event any Option is exercised by the executors,
administrators, heirs or distributees of the estate of a deceased Optionee,
or such an Optionee's beneficiary, or the transferee of an Option, in any
such case pursuant to the terms and conditions of the Plan and the applicable
Agreement and in accordance with such terms and conditions as may be
specified from time to time by the Committee, the Company shall be under no
obligation to issue Stock thereunder unless and until the Committee is
satisfied that the person or persons exercising such Option is the duly
appointed legal representative of the deceased Optionee's estate or the
proper legatee or distributee thereof or the named beneficiary of such
Optionee, or the valid transferee of such Option, as applicable.
(c) (i) If at any time the Committee shall determine, in
its discretion, that the listing, registration and/or qualification of shares
of Stock upon any securities exchange or under any state, Federal or foreign
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the sale or
purchase of shares of Stock hereunder, no Option may be granted, exercised or
paid in whole or in part unless and until such listing, registration,
qualification, consent and/or approval shall have been effected or obtained,
or otherwise provided for, free of any conditions not acceptable to the
Committee.
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(ii) If at any time counsel to the Company shall be of
the opinion that any sale or delivery of shares of Stock pursuant to an
Option is or may be in the circumstances unlawful or result in the imposition
of excise taxes on the Company or any Affiliate under the statutes, rules or
regulations of any applicable jurisdiction, the Company shall have no
obligation to make such sale or delivery, or to make any application or to
effect or to maintain any qualification or registration under the Securities
Act, or otherwise with respect to shares of Stock or Options and the right to
exercise any Option shall be suspended until, in the opinion of such counsel,
such sale or delivery shall be lawful or will not result in the imposition of
excise taxes on the Company or any Affiliate.
(iii) Upon termination of any period of suspension
under this Section 11(c), any Option affected by such suspension which shall
not then have expired or terminated shall be reinstated as to all shares
available before such suspension and as to the shares which would otherwise
have become available during the period of such suspension, but no suspension
shall extend the term of any Option.
(d) The Committee may require each person receiving Stock
in connection with any Option under the Plan to represent and agree with the
Company in writing that such person is acquiring the shares of Stock for
investment without a view to the distribution thereof. The Committee, in its
absolute discretion, may impose such restrictions on the ownership and
transferability of the shares of Stock purchasable or otherwise receivable by
any person under any Option as it deems appropriate. Any such restrictions
shall be set forth in the applicable Agreement, and the certificates
evidencing such shares may include any legend that the Committee deems
appropriate to reflect any such restrictions.
(e) By accepting any benefit under the Plan, each
Optionee and each person claiming under or through such Optionee shall be
conclusively deemed to have indicated their acceptance and ratification of,
and consent to, all of the terms and conditions of the Plan and any action
taken under the Plan by the Committee, the Company or the Board, in any case
in accordance with the terms and conditions of the Plan.
(f) The Committee may, in its discretion, extend one or
more loans to Optionees who are directors, key employees or consultants of
the Company or an Affiliate in connection with the exercise or receipt of an
Option granted to any such individual. The terms and conditions of any such
loan shall be established by the Committee.
(g) Neither the adoption of the Plan nor anything
contained herein shall affect any other compensation or incentive plans or
arrangements of the Company or any Affiliate (other than the Predecessor
Plan, as provided in paragraph (h) of this Section 11), or prevent or limit
the right of the Company or any Affiliate to establish any other forms of
incentives or compensation for their directors, employees or consultants or
grant or assume options or other rights otherwise than under the Plan.
(h) The Plan shall be governed by and construed in
accordance with the laws of the State of New Jersey, without regard to such
state's conflict of law provisions, and, in any event, except as superseded
by applicable Federal law.
(i) The words "Section," "subsection" and "paragraph"
herein shall refer to provisions of the Plan, unless expressly indicated
otherwise. Wherever any words are used in the Plan or any Agreement in the
masculine gender they shall be construed as though they were also used in the
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feminine gender in all cases where they would so apply, and wherever any
words are used herein in the singular form they shall be construed as though
they were also used in the plural form in all cases where they would so
apply.
(j) The Company shall bear all costs and expenses
incurred in administering the Plan, including expenses of issuing Stock
pursuant to any Options granted hereunder.
12. LIMITS OF LIABILITY. (a) Any liability of the Company
or an Affiliate to any Optionee with respect to any Option shall be based
solely upon contractual obligations created by the Plan and the Agreement.
(b) None of the Company, any Affiliate, any member of the
Committee or the Board or any other person participating in any determination
of any question under the Plan, or in the interpretation, administration or
application of the Plan, shall have any liability, in the absence of bad
faith, to any party for any action taken or not taken in connection with the
Plan, except as may expressly be provided by statute.
13. LIMITATIONS APPLICABLE TO CERTAIN OPTIONS SUBJECT TO
EXCHANGE ACT SECTION 16 AND CODE SECTION 162(m). Unless stated otherwise in
the Agreement, notwithstanding any other provision of the Plan, any Option
granted to an officer or director of the Company who is then subject to
Section 16 of the Exchange Act, shall be subject to any additional
limitations set forth in any applicable exemptive rule under Section 16 of
the Exchange Act (including Rule 16b-3, or any successor rule, as the same
may be amended from time to time) that are requirements for the application
of such exemptive rule, and the Plan and applicable Agreement shall be deemed
amended to the extent necessary to conform to such limitations. Furthermore,
unless stated otherwise in the Agreement, notwithstanding any other provision
of the Plan, any Option granted to an employee of the Company or an Affiliate
intended to qualify as "other performance-based compensation" as described in
Section 162(m)(4)(C) of the Code shall be subject to any additional
limitations set forth in Section 162(m) of the Code or any regulations or
rulings issued thereunder (including any amendment to any of the foregoing)
that are requirements for qualification as "other performance-based
compensation" as described in Section 162(m)(4)(C) of the Code, and the Plan
and applicable Agreement shall be deemed amended to the extent necessary to
conform to such requirements.
14. AMENDMENTS AND TERMINATION. The Board may, at any time
and with or without prior notice, amend, alter, suspend or terminate the
Plan, retroactively or otherwise; PROVIDED, HOWEVER, unless otherwise
required by law or specifically provided herein, no such amendment,
alteration, suspension or termination shall be made which would impair the
previously accrued rights of any holder of an Option theretofore granted
without his or her written consent, or which, without first obtaining
approval of the stockholders of the Company (where such approval is necessary
to satisfy (i) any applicable requirements under the Code relating to ISOs or
for exemption from Section 162(m) of the Code; (ii) the then-applicable
requirements of Rule 16b-3 promulgated under the Exchange Act, or any
successor rule, as the same may be amended from time to time; or (iii) any
other applicable law, regulation or rule), would:
(a) except as is provided in Section 10, increase the
maximum number of shares of Stock which may be sold or awarded under the Plan
or increase the limitations set forth in Section 6(k) on the maximum number
of shares of Stock that may be subject to Options granted to an Optionee;
(b) except as is provided in Section 10, decrease the
minimum option exercise price requirements of Section 6(a);
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(c) change the class of persons eligible to receive
Options under the Plan; or
(d) extend the duration of the Plan or the period during
which Options may be exercised under Section 6(b).
The Committee may amend the terms of any Option
theretofore granted, including any Agreement, retroactively or prospectively,
but no such amendment shall materially impair the previously accrued rights
of any Optionee without his or her written consent.
15. DURATION. Following the adoption of the Plan by the
Board, the Plan shall become effective as of the date on which it is approved
by the holders of a majority of the Company's outstanding Stock which is
present and voted at a meeting, or by written consent in lieu of a meeting
(the "Effective Date"), which approval must occur within the period ending
twelve (12) months after the date the Plan is adopted by the Board. The Plan
shall terminate upon the earliest to occur of:
(a) the effective date of a resolution adopted by the
Board terminating the Plan;
(b) the date all shares of Stock subject to the Plan are
delivered pursuant to the Plan's provisions; or
(c) ten (10) years from the Effective Date. No Option
may be granted under the Plan after the earliest to occur of the events or
dates described in the foregoing paragraphs (a) through (c) of this Section
15; HOWEVER, Options theretofore granted may extend beyond such date.
No such termination of the Plan shall affect the
previously accrued rights of any Optionee hereunder and all Options
previously granted hereunder shall continue in force and in operation after
the termination of the Plan, except as they may be otherwise terminated in
accordance with the terms of the Plan or the Agreement.
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