DATARAM CORPORATION
2010 STOCK OPTION PLAN
--------------------------------
1. PURPOSES. The purposes of the Dataram Corporation 2010 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) "ADJUSTMENT EVENT" - any dividend payable in capital
stock, stock split, share combination, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares or other similar event affecting the Stock.
(b) "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.
(c) "AGREEMENT" - a written stock option award agreement
evidencing an Option, as described in Section 3(e).
(d) "BENEFICIAL OWNERSHIP" - (including correlative terms)
shall have the same meaning given such term in Rule 13d-3 promulgated under
the Exchange Act.
(e) "BOARD" - the Board of Directors of the Company.
(f) "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;
(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).
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 11(d).
(k) "DISQUALIFYING DISPOSITION" - the meaning given such
erm in Section 11(d).
(l) "EFFECTIVE DATE" - the date on which the Plan is
effective, as determined pursuant to Section 19.
(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 (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 (13) 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, or (iii) 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 7. 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 7.
(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 2010 Stock Option Plan.
(v) "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.
(w) "STOCK" - the common stock of the Company, without par
value.
(x) "SUBSIDIARY" - any corporation in which the Company
owns, directly or indirectly, stock representing 50% or more of the combined
voting power of all classes of stock entitled to vote, and any other
business organization, regardless of form, in which the Company possesses,
directly or indirectly, 50% or more of the total combined equity interests
in such organization.
(y) "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 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 13, 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.
(h) To the maximum extent provided by law and by the
Company's Certificate of Incorporation and/or By-Laws, each person who is
or shall have been a member of the Committee or of the Board shall be
indemnified and held harmless by the Company against and from any loss,
cost, liability or expense that may be imposed upon or reasonably incurred
by him or her in connection with or resulting from any claim, action, suit
or proceeding to which he or she may be made a party or in which he or she
may be involved by reason of any action taken or failure to act under the
Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company's approval, or paid by him or her in
satisfaction of any judgment in any such action, suit or proceeding against
him or her; provided he or she shall give the Company an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive and shall be independent of any other
rights of indemnification to which such persons may be entitled under the
Company's Certificate of Incorporation or By-Laws, by contract, as a matter
of law, or otherwise.
(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 900,000 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 11.
(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 7(j), shall not reduce the
maximum number of shares of Stock available for delivery under the Plan.
5. PROHIBITION AGAINST REPRICING. Except to the extent (i)
approved in advance by a majority of the shares of the Company entitled to
vote generally in the election of directors or (ii) as a result of any
Adjustment Event, the Committee shall not have the power or authority to
reduce, whether through amendment or otherwise, the exercise price of any
outstanding Option or to grant any new Option in substitution for or upon
the cancellation of Options previously granted.
6. 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 7(h).
7. 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 7, 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 7.
(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 10. 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.
(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 therefore (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.
(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 7, shall determine the option exercise price
and other terms and conditions of such substitute Options.
8. 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).
9. 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.
10. 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 10, 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 10).
(b) The Company shall have the right and power to deduct
from all amounts paid to an Optionee in cash or shares (whether under this
Plan or otherwise) or to require an Optionee to remit to the Company
promptly upon notification of the amount due, an amount (which may include
shares of Stock) to satisfy the minimum federal, state, local or foreign
taxes or other obligations required by law to be withheld with respect to
any Option under this Plan. No shares of Stock shall be issued unless and
until arrangements satisfactory to the Committee shall have been made to
satisfy the statutory minimum withholding tax obligations applicable with
respect to such Option. 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.
11. 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 therefore, 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 11(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.
(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 i.e. subject to any acceleration, adjustment or conversion in
accordance with the foregoing paragraphs (i), (ii) or (iii) of this Section
11.
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 11(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
11 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 11(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 7(h)(ii), are exercisable for the first time by such Optionee during
the calendar year in which such accelerated exercisability occurs to exceed
the limitations set forth in Section 7(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.
12. 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 12 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.
(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 12(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, 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 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.
13. 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.
14. 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.
15. SECTION 409A COMPLIANCE. The Plan is intended to be
administered in a manner consistent with the requirements, where applicable,
of section 409A of the Code. Where reasonably possible and practicable, the
Plan shall be administered in a manner to avoid the imposition on Optionees
of immediate tax recognition and additional taxes pursuant to such section
409A. Notwithstanding the foregoing, neither the Company nor the Committee
shall have any liability to any person in the event such section 409A
applies to any such Option in a manner that results in adverse tax
consequences for the Optionee or any of his or her beneficiaries or
transferees.
Solely for purposes of determining the time and form of payments due
under any Option that is considered nonqualified deferred compensation under
section 409A of the Code and that is not otherwise exempt from section 409A
of the Code, an Optionee shall not be deemed to have incurred a termination
of employment unless and until he or she shall incur a "separation from
service" within the meaning of section 409A of the Code. Notwithstanding
any other provision in this Plan, if, as of Optionee's separation from
service, the Optionee is a "specified employee" as determined by the
Company, then to the extent any amount payable under any Option that is
considered nonqualified deferred compensation under section 409A of the Code
and that is not otherwise exempt from section 409A of the Code, for which
payment is triggered by Optionee's separation from service (other than on
account of death), and that under the terms of the Option would be payable
prior to the six-month anniversary of the Optionee's separation from
service, such payment shall be delayed until the earlier to occur of (i) the
six-month anniversary of such separation from service or (ii) the date of
the Optionee's death.
16. SECTION 83(b) ELECTIONS. The Company, its Affiliates and
the Committee have no responsibility for any Optionee's election, attempt to
elect or failure to elect to include the value of any Option subject to
section 83 of the Code in the Optionee's gross income for the year of
payment pursuant to section 83(b) of the Code. Any Optionee who make an
election pursuant to section 83(b) of the Code will promptly provide the
Committee with a copy of the election form.
17. RIGHT TO OFFSET. Notwithstanding any provisions of the Plan
to the contrary, and to the extent permitted by applicable law (including
section 409A of the Code), the Company may offset any Stock to be
transferred to an Optionee (or, in the event of an Optionee's death, to his
or her beneficiary or estate) under the Plan against any amounts that such
Optionee may owe to the Company or its Affiliates.
18. 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 11, 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 7(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 11, decrease the
minimum option exercise price requirements of Section 7(a);
(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 7(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.
19. 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 19;
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.