ASAHI/AMERICA, INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I -- PURPOSE
1.01. Purpose
The Asahi/America, Inc. Employee Stock Purchase Plan is intended to
provide the employees of Asahi/America Inc. and its subsidiary corporations
(hereinafter referred to, unless the context otherwise requires, as the
"Company") the opportunity to acquire a proprietary interest in the Company
through the purchase of shares of the Common Stock of the Company. It is the
intention of the Company that the Plan qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). The provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of Section 423 of the
Code.
ARTICLE II -- DEFINITIONS
2.01. "Base Pay" means regular straight-time earnings, excluding payments for
overtime, shift premium, bonuses and other special payments, commissions and
other incentive payments.
2.02. "Committee" means the individuals described in Article XI.
2.03. "Common Stock" or "stock" means the Common Stock, no par value, of the
Company.
2.04. "Employee" means any person who is customarily employed on a full-time or
part-time basis by the Company and is regularly scheduled to work more than 20
hours per week and more than five months per calendar year.
2.05. "Subsidiary Corporation" means any present or future corporation which (i)
would be a "subsidiary corporation" of Asahi/America, Inc. as that term is
defined in Section 424 of the Code and (ii) is designated as a participant in
the Plan by the Committee.
ARTICLE III -- ELIGIBILITY AND PARTICIPATION
3.01. Initial Eligibility.
Except as otherwise provided in this Plan, each and every employee of
the Company shall be eligible to participate in offerings under the Plan which
commence on or after the respective employee's commencement date of employment.
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3.02. Leave of Absence.
For purposes of participation in the Plan, an employee on leave of
absence shall be deemed to be an employee for the first 90 days of such leave of
absence and such employee's employment shall be deemed to terminate at the close
of business on the 90th day of such leave of absence unless such employee shall
have returned to regular full-time or part-time employment (as the case may be)
prior to the close of business on such 90th day. Termination of any employee's
leave of absence, other than termination of such leave of absence by return to
full time or part time employment, shall terminate an employee's employment for
all purposes of the Plan and shall terminate such employee's participation in
the Plan and right to exercise any option.
3.03. Restrictions on Participation.
Notwithstanding any provisions of the Plan to the contrary, no employee
shall be granted an option to participate in the Plan:
(a) if, immediately after the grant, such employee would own stock
and/or hold outstanding options to purchase stock possessing 5% or more
of the total combined voting power or value of all classes of stock of
the Company (for purposes of this paragraph, the rules of Section
424(d) of the Code shall apply in determining stock ownership of any
employee); or
(b) which permits his rights to purchase stock under all employee stock
purchase plans of the Company to accrue at a rate which exceeds $25,000
in fair market value of the stock (determined at the time such option
is granted) for each calendar year in which such option is outstanding.
3.04. Commencement of Participation.
An eligible employee may become a participant by completing an
authorization for a payroll deduction on the form provided by the Company and
delivering it to the Treasurer of the Company on or before the date set therefor
by the Committee, which date shall be prior to the Offering Commencement Date
for the Offering (as such terms are defined below). Payroll deductions for a
participant shall commence on the applicable Offering Commencement Date when his
authorization for a payroll deduction becomes effective and shall end on the
Offering Termination Date of the Offering to which such authorization is
applicable, unless sooner terminated by the participant as provided in Article
VIII.
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ARTICLE IV -- OFFERINGS
4.01. Annual Offerings.
The Plan will be implemented by an initial offering (the "Initial
Offering") and eight subsequent semi-annual offerings (the "Semi-Annual
Offerings" and each a "Semi-Annual Offering") of the Company's Common Stock. The
Initial Offering shall commence on July 15, 1996 (the "Plan Commencement Date"),
and shall terminate on June 30, 1997. The subsequent Semi-Annual Offerings shall
commence on the first day of July and on the first day of the following January,
and shall terminate on the 31st day of December and 30th day of June,
respectively, with the first Semi-Annual Offering commencing on July 1, 1997,
and the last Semi-Annual Offering commencing on January 1, 2001. The maximum
number of shares to be issued in the Initial and subsequent Semi-Annual
Offerings shall be:
[bullet] Initial Offering from the Plan Commencement Date to June 30, 1997:
30,000 shares.
[bullet] Semi-Annual Offering from July 1, 1997 to December 31, 1997:
15,000 shares plus unissued shares from the prior Offerings,
whether offered or not.
[bullet] Semi-Annual Offering from January 1, 1998 to June 30, 1998: 15,000
shares plus unissued shares from the prior Offerings, whether
offered or not.
[bullet] Semi-Annual Offering from July 1, 1998 to December 31, 1998:
15,000 shares plus unissued shares from the prior Offerings,
whether offered or not.
[bullet] Semi-Annual Offering from January 1, 1999 to June 30, 1999: 15,000
shares plus unissued shares from the prior Offerings, whether
offered or not.
[bullet] Semi-Annual Offering from July 1, 1999 to December 31, 1999:
15,000 shares plus unissued shares from the prior Offerings,
whether offered or not.
[bullet] Semi-Annual Offering from January 1, 2000 to June 30, 2000: 15,000
shares plus unissued shares from the prior Offerings, whether
offered or not.
[bullet] Semi-Annual Offering from July 1, 2000 to December 31, 2000:
15,000 shares plus unissued shares from the prior Offerings,
whether offered or not.
[bullet] Semi-Annual Offering from January 1, 2001 to June 30, 2001: 15,000
shares plus unissued shares from the prior Offerings, whether
offered or not.
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As used in the Plan, "Offering Commencement Date" means the Plan Commencement
Date, January 1 or July 1, as the case may be, on which the particular Offering
begins and "Offering Termination Date" means the June 30 or December 31, as the
case may be, on which the particular Offering terminates.
ARTICLE V -- PAYROLL DEDUCTIONS
5.01. Amount of Deduction.
At the time a participant files his authorization for payroll
deduction, he shall elect to have deductions made from his pay on each payday
during the time he is a participant in an Offering at the rate of 1, 2, 3, 4, 5,
6, 7, 8, 9 or 10% of his base pay in effect at the Offering Commencement Date of
such Offering, but in no event less than $10.00 per pay period. In the case of
an eligible part-time hourly employee, such employee's base pay during an
Offering shall be determined by multiplying such employee's hourly rate of pay
in effect on the Offering Commencement Date by the number of regularly scheduled
hours of work for such employee during such Offering.
5.02. Participant's Account.
All payroll deductions made for a participant shall be credited to his
account under the Plan. A participant may not make any separate cash payment
into such account except when on leave of absence and then only as provided in
Section 5.04.
5.03. Changes in Payroll Deductions.
A participant may discontinue his participation in the Plan as provided
in Article VIII, but no other change can be made during an Offering and,
specifically, a participant may not alter the amount of his payroll deductions
for that Offering.
5.04. Leave of Absence.
If a participant goes on a leave of absence, such participant shall
have the right to elect: (a) to withdraw the balance in his or her account
pursuant to Section 7.02, (b) to discontinue contributions to the Plan but
remain a participant in the Plan, or (c) remain a participant in the Plan during
such leave of absence, authorizing deductions to be made from payments by the
Company to the participant during such leave of absence and undertaking to make
cash payments to the Plan at the end of each payroll period to the extent that
amounts payable by the Company to such participant are insufficient to meet such
participant's authorized Plan deductions.
ARTICLE VI -- GRANTING OF OPTION
6.01. Number of Option Shares.
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On the Commencement Date of each Offering, a participating employee
shall be deemed to have been granted an option to purchase a maximum number of
shares of the stock of the Company equal to an amount determined as follows: an
amount equal to (i) that percentage of the employee's base pay which he has
elected to have withheld (but not in any case in excess of 10%) multiplied by
(ii) the employee's base pay during the period of the Offering plus (iii)
imputed interest (calculated as provided in Section 9.01) on that amount (iv)
divided by 85% of the market value of the stock of the Company on the applicable
Offering Commencement Date. The market value of the Company's stock shall be
determined as provided in paragraphs (a) and (b) of Section 6.02 below. An
employee's base pay during the period of an Offering shall be determined by
multiplying, in the case of the Initial Offering, his normal weekly rate of pay
(as in effect on the last day prior to the Commencement Date of the particular
Offering) by 50 or the hourly rate by 2,000 or, in the case of a Semi-Annual
Offering, by 26 or 1040, as the case may be, provided that, in the case of an
eligible part-time hourly employee, the employee's base pay during the period of
an Offering shall be determined by multiplying such employee's hourly rate of
pay in effect on the Offering Commencement Date by the number of regularly
scheduled hours of work for such employee during such Offering.
6.02. Option Price.
The option price of stock purchased with payroll deductions made during
an Offering for a participant therein shall be the lower of:
(a) 85% of the closing price of the stock on the Offering Commencement
Date or the nearest prior business day on which trading occurred on the
Nasdaq National Market; or
(b) 85% of the closing price of the stock on the Offering Termination
Date or the nearest prior business day on which trading occurred on the
Nasdaq National Market. If the Common Stock of the Company is not
admitted to trading on any of the aforesaid dates for which closing
prices of the stock are to be determined, then reference shall be made
to the fair market value of the stock on that date, as determined on
such basis as shall be established or specified for the purpose by the
Committee.
ARTICLE VII -- EXERCISE OF OPTION
7.01. Automatic Exercise.
Unless a participant gives written notice to the Company as hereinafter
provided, his option for the purchase of stock with payroll deductions made
during any Offering will be deemed to have been exercised automatically on the
Offering Termination Date applicable to such Offering, for the purchase of the
number of full shares of stock which the accumulated payroll deductions in his
account at that time plus accrued interest will purchase at the applicable
option price (but not in excess of the number of shares for
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which options have been granted to the employee pursuant to Section 6.01), and
any excess in his account at that time will be returned to him.
7.02. Withdrawal of Account.
By written notice to the Treasurer of the Company, at any time prior to
the Offering Termination Date applicable to any Offering, a participant may
elect to withdraw all the accumulated payroll deductions plus accrued interest
in his account at such time.
7.03. Fractional Shares.
Fractional shares will not be issued under the Plan and any balance in
his account which would have been used to purchase fractional shares will be
returned to any employee promptly following the termination of an Offering.
7.04. Transferability of Option.
During a participant's lifetime, options held by the participant shall
be exercisable only by the participant.
7.05. Delivery of Stock.
As promptly as practicable after the Offering Termination Date of each
Offering, the Company will deliver to each participant, as appropriate, the
stock purchased upon exercise of his option.
ARTICLE VIII -- WITHDRAWAL
8.01. In General.
As indicated in Section 7.02, a participant may withdraw payroll
deductions plus accrued interest credited to his account under the Plan at any
time by giving written notice to the Treasurer of the Company prior to the
Offering Termination Date applicable to any Offering. All of the participant's
payroll deductions credited to his account plus accrued interest will be paid to
him promptly after receipt of his notice of withdrawal, and no further payroll
deductions will be made from his pay during such Offering. The Company may, at
its option, treat any attempt to borrow by an employee on the security of his
accumulated payroll deductions as an election, under Section 7.02, to withdraw
such deductions.
8.02. Effect on Subsequent Participation.
A participant's withdrawal from any Offering will not have any effect
upon his eligibility to participate in any succeeding Offering or in any similar
plan which may hereafter be adopted by the Company.
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8.03. Termination of Employment.
Upon termination of the participant's employment for any reason,
including retirement (but excluding death while in the employ of the Company or
continuation of a leave of absence for a period beyond 90 days), the payroll
deductions plus accrued interest credited to his account will be returned to
him, or, in the case of his death subsequent to the termination of his
employment, to the person or persons entitled thereto under Section 12.01.
8.04. Termination of Employment Due to Death.
Upon termination of the participant's employment because of his death,
his beneficiary (as defined in Section 12.01) shall have the right to elect, by
written notice given to the Treasurer of the Company prior to the earlier of the
Offering Termination Date or the expiration of a period of sixty (60) days
commencing with the date of the death of the participant, either:
(a) to withdraw all of the payroll deductions plus accrued interest
credited to the participant's account under the Plan, or
(b) to exercise the participant's option for the purchase of stock on
the Offering Termination Date next following the date of the
participant's death for the purchase of the number of full shares
of stock which the accumulated payroll deductions plus accrued
interest in the participant's account at the date of the
participant's death will purchase at the applicable option price,
and any excess in such account will be returned to said
beneficiary.
In the event that no such written notice of election shall be duly received by
the office of the Treasurer of the Company, the beneficiary shall automatically
be deemed to have elected, pursuant to paragraph (b), to exercise the
participant's option.
8.05. Leave of Absence.
A participant on leave of absence shall, subject to the election made
by such participant pursuant to Section 5.04, continue to be a participant in
the Plan so long as such participant is on continuous leave of absence. A
participant who has been on leave of absence for more than 90 days and who
therefore is not an employee for the purpose of the Plan shall not be entitled
to participate in any Offering commencing after the 90th day of such leave of
absence. Notwithstanding any other provisions of the Plan, unless a participant
on leave of absence returns to regular full time or part time employment with
the Company at the earlier of: (a) the termination of such leave of absence or
(b) three months from the 90th day of such leave of absence, such participant's
participation in the Plan shall terminate on whichever of such dates first
occurs.
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ARTICLE IX -- INTEREST
9.01. Payment of Interest.
Interest will accrue on all amounts paid into the Plan or credited to
the account of any participant employee, and shall be paid on any and all money
which is distributed to an employee or his beneficiary pursuant to the
provisions of Sections 7.02, 8.01, 8.03, 8.04 and 10.01. Such distributions
shall bear simple interest during the period from the date of withholding to the
date of return at the regular passbook savings account rates per annum in effect
at the First National Bank of Boston, Boston, Massachusetts, during the
applicable Offering period or, if such rates are not published or otherwise
available for such purpose, at the regular passbook savings account rates per
annum in effect during such period at another major commercial bank in Boston,
Massachusetts, selected by the Committee. Where the amount returned represents
an excess amount in an employee's account after such account has been applied to
the purchase of stock, the employee's withholding account shall be deemed to
have been applied first toward purchase of stock under the Plan, so that
interest shall be paid on the last withholdings during the period which results
in the excess amount.
ARTICLE X -- STOCK
10.01. Maximum Shares.
The maximum number of shares of the Company's Common Stock which shall
be issued under the Plan, subject to adjustment upon changes in capitalization
of the Company as provided in Section 12.04, shall be 30,000 shares in the
Initial Offering and 15,000 shares in each Semi-Annual Offering (plus in each
Offering all unissued shares from prior Offerings, whether offered or not), not
to exceed 150,000 shares for all Offerings. If the total number of shares for
which options are exercised on any Offering Termination Date in accordance with
Article VI exceeds the maximum number of shares for the applicable Offering, the
Company shall make a pro rata allocation of the shares available for delivery
and distribution in as nearly a uniform manner as shall be practicable and as it
shall determine to be equitable, and the balance of payroll deductions plus
accrued interest credited to the account of each participant under the Plan
shall be returned to him as promptly as possible.
10.02. Participant's Interest in Option Stock.
The participant will have no interest in stock covered by his option
until such option has been exercised.
10.03. Registration of Stock.
Stock to be delivered to a participant under the Plan will be
registered in the name of the participant, or, if the participant so directs by
written notice to the Treasurer of the
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Company prior to the Offering Termination Date applicable thereto, in the names
of the participant and one such other person as may be designate by the
participant, as joint tenants with rights of survivorship or as tenants by the
entirety, to the extent permitted by applicable law.
10.04. Restrictions on Exercise.
The Board of Directors may, in its discretion, require as conditions to
the exercise of any option that the shares of Common Stock reserved for issuance
upon the exercise of the option shall have been duly listed, upon official
notice of issuance, on the Nasdaq National Stock Market or another stock
exchange, and that either:
(a) a Registration Statement under the Securities Act of 933, as
amended, with respect to said shares shall be effective, or
(b) the participant shall have represented at the time of purchase, in
form and substance satisfactory to the Company, that it is his
intention to purchase the shares for investment and not for resale
or distribution.
ARTICLE XI -- ADMINISTRATION
11.01. Appointment of Committee.
The Board of Directors shall appoint a committee (the "Committee") to
administer the Plan, which shall consist of no fewer than three members of the
Board of Directors. No member of the Committee shall be eligible to purchase
stock under the Plan. In the absence of the appointment of a separate committee
to administer the Plan, the Plan shall be administered by the Compensation
Committee of the Company's Board of Directors.
11.02. Authority of Committee.
Subject to the express provisions of the Plan, the Committee shall have
plenary authority in its discretion to interpret and construe any and all
provisions of the Plan, to adopt rules and regulations for administering the
Plan, and to make all other determinations deemed necessary or advisable for
administering the Plan. The Committee's determination on the foregoing matters
shall be conclusive.
11.03. Rules Governing the Administration of the Committee.
The Board of Directors may from time to time appoint members of the
Committee in substitution for or in addition to members previously appointed and
may fill vacancies, however caused, in the Committee. The Committee may select
one of its members as its Chairman and shall hold its meetings at such times and
places as it shall deem advisable and may hold telephonic meetings. A majority
of the Committee's members hall constitute a quorum. All determinations of the
Committee shall be made by a majority of
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its members. The Committee may correct any defect or omission or reconcile any
inconsistency in the Plan, in the manner and to the extent it shall deem
desirable. Any decision or determination reduced to writing and signed by a
majority of the members of the Committee shall be as fully effective as if it
had been made by a majority vote at a meeting duly called and held. The
Committee may appoint a secretary and shall make such rules and regulations for
the conduct of its business as it shall deem advisable.
ARTICLE XII -- MISCELLANEOUS
12.01. Designation of Beneficiary.
A participant may file a written designation of a beneficiary who is to
receive any stock and/or cash under the Plan. Such designation of beneficiary
may be changed by the participant at any time by written notice to the Treasurer
of the Company. Upon the death of a participant and upon receipt by the Company
of proof of identity and existence at the participant's death of a beneficiary
validly designated by him under the Plan, the Company shall deliver such stock
and/or cash to such beneficiary. In the event of the death of a participant and
in the absence of a beneficiary validly designated under the Plan who is living
at the time of such participant's death, the Company shall deliver such stock
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such stock and/or cash
to the spouse or to any one or more dependents of the participant as the Company
may designate. No beneficiary shall, prior to the death of the participant by
whom he has been designated, acquire any interest in the stock or cash credited
to the participant under the Plan.
12.02. Transferability.
Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive stock under the
Plan may be assigned, transferred, pledged, or otherwise disposed of in any way
by the participant other than by will or the laws of descent and distribution.
Any such attempted assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds in accordance with Section 7.02.
12.03. Use of Funds.
All payroll deductions received or held by the Company under this Plan
may be used by the Company for any corporate purpose and the Company shall not
be obligated to segregate such payroll deductions.
12.04. Adjustment Upon Changes in Capitalization.
(a) If, while any options are outstanding under the Plan, the
outstanding shares of Common Stock of the Company have increased, decreased,
changed into, or been
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exchanged for a different number or kind of shares or securities of the Company
through reorganization, merger, recapitalization, reclassification, stock split,
reverse stock split or similar transaction, appropriate and proportionate
adjustments may be made by the Committee in the number and/or kind of shares
which are subject to purchase under outstanding options and to the option
exercise price or prices applicable to such outstanding options. In addition, in
any such event, the number and/or kind of shares which may be offered in the
Offerings described in Article IV hereof shall also be proportionately adjusted.
No adjustments shall be made for stock dividends. For the purposes of this
Section, any distribution of shares to shareholders in an amount aggregating 20%
or more of the outstanding shares shall be deemed a stock split and any
distributions of shares aggregating less than 20% of the outstanding shares
shall be deemed a stock dividend.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or stock of the Company to
another corporation, the holder of each option then outstanding under the Plan
will thereafter be entitled to receive at the next Offering Termination Date
upon the exercise of such option for each share as to which such option shall be
exercised, as nearly as reasonably may be determined, the cash, securities
and/or property which a holder of one share of the Common stock was entitled to
receive upon and at the time of such transaction. The Board of Directors shall
take such steps in connection with such transactions as the Board shall deem
necessary to assure that the provisions of this Section 12.04 shall thereafter
be applicable, as nearly as reasonably may be determined, in relation to the
said cash, securities and/or property as to which such holder of such option
might thereafter be entitled to receive.
12.05. Amendment and Termination.
The Board of Directors shall have complete power and authority to
terminate or amend the Plan; provided, however, that the Board of Directors
shall not, without the approval of the stockholders of the Corporation, (i)
increase the maximum number of shares which may be issued under the Plan (except
pursuant to Section 12.04); (ii) amend the requirements as to the class of
employees eligible to purchase stock under the Plan or permit the members of the
Committee to purchase stock under the Plan. No termination, modification, or
amendment of the Plan may, without the consent of an employee then having an
option under the Plan to purchase stock, adversely affect the rights of such
employee under such option.
12.06. Effective Date.
The Plan shall become effective as of July 15, 1996, subject to
approval by the holders of the majority of the Common Stock present and
represented at a special or annual meeting of the stockholders held on or before
July 15, 1997. If the Plan is not so approved, the Plan shall not become
effective.
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12.07. No Employment Rights.
The Plan does not, directly or indirectly, create any right for the
benefit of any employee or class of employees to purchase any shares under the
Plan, or create in any employee or class of employees any right with respect to
continuation of employment by the Company, and it shall not be deemed to
interfere in any way with the Company's right to terminate, or otherwise modify,
an employee's employment at any time.
12.08. Effect of Plan.
The provisions of the Plan shall, in accordance with its terms, be
binding upon, and inure to the benefit of, all successors of each employee
participating in the Plan, including, without limitation, such employee's estate
and the executors, administrators or trustees thereof, heirs and legatees, and
any receiver, trustee in bankruptcy or representative of creditors of such
employee.
12.09. Governing Law.
The law of The Commonwealth of Massachusetts will govern all matters
relating to this Plan except to the extent it is superseded by the laws of the
United States.
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