EXHIBIT 4.2
SAND TECHNOLOGY INC.
1996 STOCK OPTION PLAN
ARTICLE 1 -- PURPOSE
1.1 PURPOSE
The purpose of this 1996 Stock Option Plan (the "Plan") is to further the
growth, development and financial success of Sand Technology Inc. (the
"Corporation") and its Subsidiaries by aligning the personal interests of
employees and non-employee directors, through the ownership of Class A
Common Shares without par value of the Corporation and related incentives,
to those of the Corporation. The Plan is further intended to provide
flexibility to the Corporation in its ability to compensate employees and
to motivate, attract and retain the services of such employees who have the
ability to enhance the value of the Corporation and its Subsidiaries. The
Plan permits the granting of stock options and restricted stock awards as
provided for in the Plan.
ARTICLE 2 -- DEFINITIONS
2.1 "Award" means an Option or Restricted Stock grant under the Plan.
2.2 "Board" means the Board of Directors of the Corporation.
2.3 "Change in Control" means (a) a merger or consolidation to which the
Corporation is a party and following which the shareholders of the
Corporation prior to such merger or consolidation do not have the voting
power to elect a majority of the members of the Board of Directors of the
resulting entity; (b) any person (as such term is used in Sections 13 (d)
and 14(d) (2) of the Exchange Act of 1934, as amended), becoming the
beneficial owner, directly or indirectly, of more than 50% of any class of
the share capital of the Corporation or of shares having more than 50% of
the aggregate voting power of the share capital of the Corporation; (c) a
sale or transfer of substantially aIl of the assets of the Corporation (in
one transaction or a series of related transactions) to an entity that is
not a Subsidiary; (d) a liquidation or reorganization of the Corporation in
which the Corporation is not the surviving corporation other than a
liquidation or reorganization in which the holders of the Class A Common
Shares of the Corporation immediately prior to the liquidation or
reorganization have the same proportionate ownership of the surviving
corporation after the liquidation or reorganization; or (e) during any
period of two consecutive years or less beginning after adoption of the
Plan, individuals who at the beginning of such period are members of the
Board and any new director(s) (other than directors designated by a person
who has entered into an agreement with the Corporation to effect a
transaction of the type described in clauses (i) through (iv) above)
whose election by the Board or nomination for election by the shareholders
was approved by a vote of at least two-thirds of the directors still in
office who satisfy this test, cease for any reason to constitute a majority
of the Board.
2.4 "Code" means the Internal Revenue Code of 1986 as amended from time to
time.
2.5 "Committee" means the committee appointed by the Board to administer the
Plan at all times and consisting of not less than two members of the Board
each of whom is a "disinterested person" as defined in Rule 16b-3
promulgated under the Securities and Exchange Act of 1934, as amended (the
"1934 Act") and an "outside director" as defined for purposes of Section
162(m) of the Code.
2.6 "Corporation" means Sand Technology Inc., a corporation existing under the
Canada Business Corporations Act, or its successor.
2.7 "Employee" means any person who is a regular full-time employee of the
Corporation or a Subsidiary, non-employee directors of the Corporation or
of a Subsidiary regular full-time consultants to the Corporation for a
period of at least six (6) consecutive months, as may be selected by the
Committee from time to time.
2.8 "Non-Qualified Option" means an option granted under the Plan which is not
intended to be an Incentive Option.
2.9 "Option" means a Non-Qualified Option and means an Award granted under the
Plan by the Committee to an Employee in the form of a right to purchase
Shares evidenced by an option agreement containing such provisions as the
Committee may establish.
2.10 "Permanent Disability" shall mean a physical or mental condition of an
Employee that (i) in the judgment of the Committee, permanently prevents
such Employee from being able to continue to serve as an active Employee in
a capacity comparable to that in which the Employee served prior to the
disability, or (ii) causes the Employee to become eligible for long-term
disability benefits under any long-term disability insurance plan then in
effect with the Corporation or a Subsidiary that at such time is his or her
employer.
2.11 "Plan" means this 1996 Stock Option Plan.
2.12 "Restricted Period" means that period of time, if any, which begins on the
date of an Award of Restricted Stock to an Employee, and which terminates
on the date upon which all restrictions with respect to such Restricted
Stock shall lapse or otherwise be terminated.
2.13 "Restricted Stock Agreement" means a written agreement, signed by the
Employee and the Corporation, which sets forth the number of Shares awarded
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to the Employee, the restrictions, if any, applicable to the Shares, the
price, if any, to be paid by the Employee for the Shares, and such other
terms and conditions as shall be deemed to be necessary or desirable by the
Committee.
2.14 "Restricted Stock" means such Shares as may be granted to an Employee
subject to such restrictions, if any, as may be determined by the
Committee.
2.15 "Retirement" shall mean the cessation of employment of an Employee by
reason of retirement, provided that the Employee has reached the age of 65
years, or the Committee, in its sole and absolute discretion, deems the
Employee to have retired.
2.16 "Shares" or "Stock" means the Class A Common Shares without par value of
the Corporation or any successor, including any adjustments in the event of
changes in capital structure of the type described in the Plan.
2.17 "Subsidiary" means any corporate entity, of which a majority of the voting
common or capital stock is owned directly or indirectly by the Corporation.
ARTICLE 3 -- ADMINISTRATION 0F THE PLAN
3.1 ADMINISTRATION BY THE COMMITTEE
The Plan shall be administered by the Committee. Members of the Committee
are not eligible for Awards under the Plan. Unless otherwise required by
law or rules it may establish, the Committee may act through written
consent of all its members, or vote of a majority comprised of at least two
of its members, and may hold telephonic meetings where all participating
members can hear each other. A majority comprised of at least two members
shall constitute a quorum of the Committee. The Board may in its discretion
at any time and from time to time alter the membership of the Committee
consistent with the requirements set forth in the Plan.
3.2 POWERS
The Committee shall have full and final authority in its discretion to
operate, interpret, manage, administer and make determinations under or
relevant to the Plan on behalf of the Corporation. This authority includes,
but is not limited to:
(a) the power to select Employees to receive Awards from time to time and
determine the type and terms and conditions of Awards;
(b) the power to grant Awards conditionally or unconditionally, on such
terms, conditions and restrictions not inconsistent with the
provisions of the Plan as it prescribes from time to time, including
the power to determine the option exercise or purchase price of the
Shares subject to each Award
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and the time or times when the benefits of each Award shall become
vested, exercisable, or free of restrictions, as the case may be,
and the duration of any exercise, vesting or restricted period;
(c) the power to determine the number of Shares subject to each Award, and
the time or times when Awards are made;
(d) the power to prescribe the form or forms of the instruments evidencing
Awards granted under the Plan, to construe and interpret the Plan and
the provisions of said instruments, and to make determinations of
facts relevant to the administration of the Plan and the benefits
under the Plan;
(e) the power to adopt, amend and rescind regulations consistent with the
provisions of the Plan for the operation, interpretation, management
and administration of the Plan;
(f) the power to delegate responsibility for the operation, management and
administration of the Plan, subject to the oversight and control of
the Committee, on such terms, consistent with the Plan, as the
Committee may establish;
(g) the power to delegate to other persons the responsibility for
performing appropriate functions in furtherance of the purpose of the
Plan;
(h) the power to engage or authorize the engagement of the services of
persons, companies or organizations in furtherance of the purpose of
the Plan, including but not limited to, banks, insurance companies,
brokerage firms and consultants; and
(i) the power to waive or modify terms, conditions, restrictions and
forfeitures of Awards, in whole or in part, for such periods and for
such Employees, and on such terms as it shall determine.
ARTICLE 4 -- ELIGIBILITY AND SHARES SUBJECT TO THE PLAN
4.1 ELIGIBLE EMPLOYEES
Awards may be granted only to Employees selected or approved by the
Committee in its sole and absolute discretion. Employees who serve on the
Board will be eligible for Awards, but they will not be eligible to
participate in the administration of the Plan or to be a member of the
Committee. No Employee may be granted Awards for more than 5% of the Shares
of the Corporation.
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4.2 RELEVANT FACTORS
In selecting Employees to whom Awards shall be granted, the Committee shall
weigh such factors as are relevant to accomplish the purpose of the Plan.
An Employee who has been granted an Award may be granted additional Awards,
if the Committee so determines.
4.3 NUMBER OF SHARES SUBJECT TO THE PIAN
Subject to the provisions of Article 10 of the Plan, the aggregate number
of Shares for which Awards may be granted under the Plan shall not exceed
900,000 Shares. The Committee has the authority to grant all Shares under
the Plan as Non-Qualified Options or Restricted Stock, or in any
combination of them. The Shares to be delivered upon exercise of Options or
the grant of Restricted Stock under the Plan shall be made available from
the authorized but unissued Shares of the share capital of the Corporation.
The grant of an Option under the Plan shall reduce the number of Shares
which thereafter may be available for future grants under the Plan,
provided that if an Option under the Plan shall expire or terminate
unexercised as to any Shares covered by such Option, such Shares shall
thereafter be available for the granting of other Awards under the Plan.
Shares issued as Restricted Stock under the Plan that are later forfeited
shall be cancelled and the reserve for issuance under the Plan shall then
be increased by an equal number.
4.4 NON-TRANSFERABILITY OF AWARDS
No Award granted under the Plan shall be transferable by the Employee
otherwise than by will or the laws of descent and distribution, or pursuant
to a qualified domestic relations order, and such Award may be exercised
during the lifetime of the Employee only by the Employee.
ARTICLE 5 -- OPTION AWARDS
5.1 OPTION AWARDS
The Committee shall establish from time to time the provisions relating to
the exercise price per Share, expiration date, waiting period, cumulative
rights, vesting and such other terms and conditions of Non-Qualified
Options granted under the Plan.
ARTICLE 6 -- MATTERS RELATIVE TO OPTIONS
6.1 VESTING OF OPTIONS
Each Option granted under the Plan shall provide that it is to be exercised
within a period of ten (10) years after the date on which the Option is
granted, providing that the options granted and outstanding under the
Plan on December 15, 2005 may be exercised within an additional period of
ten (10) years.
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6.2 EXERCISE
Each Option granted under the Plan shall be exercisable on such date or
dates, during such period, for such number of Shares, and upon such terms
as shall be provided in the option agreement evidencing such Option, which
shall be approved by the Committee.
6.3 NOTICE OF EXERCISE
A person electing to exercise an Option shall give written notice of
exercise to the person at the Corporation designated to receive such
notice. The exercise notice shall specify the number of Shares the optionee
has elected to purchase and be accompanied by payment in full of the
aggregate purchase price of the Shares. Payment shall be made by certified
cheque or such other form of payment as the Committee may accept. Until an
optionee has been issued a certificate or certificates for the Shares so
purchased, he or she shall possess no rights of a record holder with
respect to any of such Shares.
6.4 PARTICULAR CIRCUMSTANCES EFFECT ON OPTIONS
No Option shall be affected by any change of duties or position of the
optionee (including transfer to or from a Subsidiary), so long as he or she
continues to be an Employee. Except in cases of death, Permanent
Disability, Retirement or other circumstances specified by the Committee in
its discretion (including, but not limited to, a 30-day extension for
exercise following termination of employment), if an optionee shall cease
to be an Employee, all Options held by such person will terminate on the
date of termination of the person's employment, and up to such date shall
be exercisable only to the extent of the purchase rights, if any, which
have accrued as of such date. Nevertheless, the Committee, in its sole and
absolute discretion, upon any such cessation of employment, may determine
(but be under no obligation to determine) that such accrued purchase rights
shall be deemed to include additional Shares covered by such Option and may
be extended for an additional period of time. In case of dismissal for
cause, the Corporation may revoke alI rights of the Employee to purchase
Shares that have not previously been issued to the Employee. In the event
of any Change in Control, all Options outstanding shall become immediately
exercisable for the full number of Shares subject to option regardless of
any vesting or exercise schedule otherwise specified in such Options, and
optionees shall be entitled to at least a 20-day prior written notice, and
the opportunity to exercise such rights, before any transaction in
connection with the Change in Control may defeat or nullify the economic
benefit of such Options.
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6.5 RETIREMENT OF OPTIONEE
Should an optionee begin Retirement while in possession of an Option under
the Plan, vesting and exercisability of such Option shall continue as if
the optionee were still an employee.
6.6 DISABILITY OF OPTIONEE
Should an optionee be determined by the Committee to have suffered a
Permanent Disability while in possession of an Option under the Plan,
vesting will forthwith accelerate, such that the Option immediately becomes
100% vested, and the optionee or his or her legal representative will have
one year from the date of determination of the Permanent Disability to
exercise such Option, at which time the Option will expire and no longer be
exercisable, provided that in any case the Option shall expire no later
than the last day of its original term.
6.7 DEATH OF OPTIONEE
Should an optionee (including one determined to have suffered a Permanent
Disability under Section 6.6 above) die while in possession of the right to
exercise an Option under the Plan, vesting will forthwith accelerate, such
that the Option immediately becomes 100% vested. Thereafter, such person
(s) who shall have been designated as beneficiary by the optionee, or in
the absence of such designation, such person as shall be responsible for
the administration of the will or estate of the optionee or, in the absence
of the appointment of such person within six months of the date the
optionee died, the person(s) who shall be entitled to acquire the property
of the optionee, by will or by the laws of descent and distribution (the
"beneficiary"), may exercise such Option. This exercise may occur at any
time within one year from the date of death. Nevertheless, any such Option
shall expire no later than the Iast day of the original term of such
Option.
6.8 MINIMUM SIX-MONTH HOLDING PERIOD
Subject to Section 6.4 of the Plan, if an Option is exercised within the
six-month period commencing on the date of grant, no Shares purchased upon
such exercise may be sold until such period has elapsed. The Corporation
may establish such rules and procedures as it deems appropriate to enforce
this restriction.
ARTICLE 7 -- PROVISIONS APPLICABLE TO RESTRICTED STOCK AWARDS
7.1 RESTRICTED STOCK AWARDS
No more than one-third of the Shares subject to a Restricted Stock Award to
any Employee shall be granted without restrictions and, with respect to the
balance of
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such Shares, no restrictions shall lapse prior to the expiration of one
year from the date of the Award. If any Shares are granted without
restrictions, none of them may be sold by the Employee until six months
after the date they were granted. Each award to an Employee shall be
evidenced by an appropriate Restricted Stock Agreement in a form and with
terms, conditions and restrictions approved by the Committee.
7.2 SHARE CERTIFICATES
At the time Restricted Stock is granted to an Employee, Shares representing
the Restricted Stock shall be registered in the name of such Employee or a
third party who wilI hold the Shares on behalf of the Employee, but for the
duration of any Restricted Period applicable to it, shall be held by the
Corporation for the account of such Employee in certificated or
uncertificated form. Any certificates for such Shares that are issued shall
be held by the Corporation and shall bear the following legend: "The sale
or other transfer of the Shares represented by this certificate, whether
voluntary, involuntary, or by operation of law, is subject to certain
restrictions on transfer set forth in the Sand Technology Inc. 1996 Stock
Option Plan. The rules of such Plan may be obtained from the Secretary of
Sand Technology Inc." If and to the extent that the Restricted Stock is
released from the applicable restrictions, the legend shall be removed from
such certificate and the certificate shall be promptly delivered to the
Employee.
7.3 DIVIDENDS, VOTING AND TRANSFERS
During the Restricted Period, the Employee (or any third party who will
hold the Shares on behalf of the Employee) shall have the right to receive
any dividends payable with respect to Restricted Stock and to exercise the
voting rights attaching to it. The Restricted Stock shall, however, be
subject to the following restrictions during any applicable Restricted
Period, together with such other restrictions as the Committee shall deem
appropriate:
(a) none of the Restricted Stock may be sold, exchanged, transferred,
assigned, pledged, or otherwise encumbered or disposed of by the
Employee during the applicable Restricted Period; and
(b) subject to the other provisions of this Article, if such Employee
ceases to be an Employee prior to the expiration or other termination
of the applicable restriction, any Restricted Stock granted to such
Employee which is still subject to restriction shall be forfeited and
all rights of the Employee to such Restricted Stock shall terminate
without further obligation on the part of the Corporation.
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7.4 FORFEITURE TERMS
Except as otherwise provided in a Restricted Stock Agreement or determined
by the Committee, upon the forfeiture of any Restricted Stock with respect
to which applicable restrictions have not lapsed, such Restricted Stock
shall, at the option of the Committee, (i) if a purchase price had been
paid for such Restricted Stock, be deemed to be offered for sale by the
Employee to the Corporation for a period of 30 days after the date of such
forfeiture at a price equal to the lesser of (y) the market value of the
Restricted Stock at such time or (z) the same price paid initially for such
Restricted Stock, or (ii) if no purchase price had been paid for such
Restricted Stock, be forfeited by the Employee and shall revert to the
Corporation without further action on the part of anyone.
7.5 FINANCIAL HARDSHIP
With respect to any Employee, the Committee may, in its sole and absolute
discretion, accelerate the lapse of any restrictions with respect to
Restricted Stock granted to such Employee if, at the time of such
acceleration, the Committee determines that as the result of an
unanticipated emergency, such Employee will suffer severe financial
hardship if such lapse of restrictions is not accelerated. The extent to
which any such lapse of restrictions shall be accelerated shall be limited
to the acceleration necessary to satisfy the needs of the Employee arising
from the financial hardship.
7.6 MODIFICATION OF AWARDS
The Committee may, in its sole discretion, prescribe that any restrictions
on any Restricted Stock and under any applicable Restricted Stock Agreement
shall lapse in accordance with such schedule and in accordance with such
terms and conditions, other than the schedule or terms and conditions for
which provision was originally made, as provided by the Committee;
provided, however, that such modified schedule and terms and conditions
shall be more favourable to the Employee affected than the original
schedule or terms and conditions.
7.7 PARTICULAR CIRCUMSTANCES
With respect to any Employee, if (i) such Employee ceases to be an Employee
of the Corporation or any Subsidiary prior to the expiration of the
applicable Restricted period by reason of death, Permanent Disability or
Retirement or (ii) a Change in Control occurs, all restrictions set forth
in the applicable Restricted Stock Agreement shall terminate as to the
related Restricted Stock, and certificates for the appropriate number of
Shares free of the restrictions of the Plan and such Restricted Stock
Agreement shall be delivered to the Employee or his or her beneficiary or
estate, as the case may be. Unless otherwise determined by the Committee or
provided in a Restricted Stock Agreement, if an Employee ceases to be an
Employee prior to the end of the applicable Restricted
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Period for any other reason, such Employee shall immediately forfeit all
shares of Restricted Stock granted to such Employee which then remain
subject to restriction.
7.8 LAPSE OF RESTRICTIONS
At the end of the applicable Restricted Period or at such earlier time as
provided for the Plan, all restrictions contained in the Plan and the
applicable Restricted Stock Agreement shall terminate as to the related
Restricted Stock, and certificates for the appropriate number of Shares
free of the restrictions of the Plan and the Restricted Stock Agreement,
registered in the name of the Employee, shall be delivered to the Employee
or his or her beneficiary or estate, as the case may be.
7.9 AWARDS HEID BY THIRD PARTIES
Notwithstanding any provision to the contrary in the Plan, the Committee
may, in lieu of Awards of Restricted Stock made directly to an Employee,
grant Restricted Stock to one or more nominees or trustees for the benefit
of such Employee as the Committee may designate. In such event, the rights
of such Employee in the Restricted Stock so granted are to be governed
exclusively by such terms of trust, or otherwise as are approved by the
Committee. The Committee shall administer the Plan, and make provisions
relative to any such Awards, in a manner designed to provide the Employee
with rights and entitlements which shall approximate as closely as possible
those rights and entitlements specified in this Article.
ARTICLE 8 -- RIGHTS AS AN EMPLOYEE
8.1 NO IMPLIED RIGHTS
Awards under the Plan are discretionary and are not a part of regular
salary. Awards may not be used in determining the amount of compensation
for any purpose under any benefit plan of the Corporation or any
Subsidiary, except as the Committee may from time to time expressly
provide. Neither the Plan nor any action taken under the Plan shall be
construed as giving an Employee the right to any Award, and an Award under
the Plan shall not be construed as giving an Employee any right to be
retained in the employ or service of the Corporation or any of its
Subsidiaries for any period of time, regardless of the terms or conditions
of the Award or the manner in which such terms or conditions are described
in the applicable Award instrument.
8.2 BENEFICIARY DESIGNATION
If allowed by the Committee from time to time, an Employee may designate a
person or persons to receive, in the event of his or her death, any rights
to which
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he or she would be entitled under the Plan. Such a designation shall be
made in writing and filed with the Committee or such person as it may
designate. A beneficiary designation may be changed or revoked by an
Employee at any time by filing a written statement of such change or
revocation with the Committee. If an Employee dies having failed to
designate a beneficiary or if the beneficiary of the Employee does not
survive the Employee, then the estate of the Employee shall be deemed to be
his or her beneficiary.
8.3 OPTIONS NOT INCLUDED FOR BENEFIT PURPOSES
Income recognized by an Employee pursuant to the provisions of the Plan
shall not be included in the determination of benefits under any employee
pension benefit plan (as such term is defined in Section 3 (2) of ERISA or
the rules thereunder) or group insurance or other benefit plans applicable
to the Employee that are maintained by the Corporation or any of its
Subsidiaries, except as may be provided under the terms of such plans or
determined by resolution of the Board.
ARTICLE 9 -- AMENDMENT 0F THE PLAN
9.1 AMENDMENT OF PLAN
The Board (excluding any members entitled to an Award under the Plan) may
amend the Plan from time to time, except that amendments must be approved
by shareholders of the Corporation to the extent required under Section 16
(b) of the Securities Exchange Act of 1934 and other applicable
legislation.
9.2 EFFECT ON AWARDS
Awards granted prior to suspension or termination of the Plan may not be
amended or cancelled except with the consent of the Employee recipient of
the Award. Any dispute or disagreement that may arise under or as a result
of, relating to or pursuant to, any Award or agreement evidencing the same
shall be determined by the Committee, which determination shall be
conclusive, binding and final for all purposes with respect to all persons.
ARTICLE 10 -- CHANGES IN CAPITAL STRUCTURE
10.1 ADJUSTMENTS DUE TO CAPITAL CHANGES
The option agreements evidencing Awards granted under the Plan shall be
subject to adjustment in the event of changes in the outstanding share
capital of the Corporation by reason of stock dividends, stock splits,
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the
date of an Award to the same extent as such occurrence would affect an
actual share issued and
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outstanding on the effective date of such change. In the event of any such
change, the aggregate number and classes of shares for which Awards may
thereafter be granted under the Plan shall be appropriately adjusted as
determined by the Committee so as to reflect such change.
ARTICLE 11 -- WITHHOLDING 0F TAXES
11.1 COLLECTION OF TAXES DUE
The Corporation and its Subsidiaries shall have the right, before a
certificate for any Share is delivered, to deduct or withhold from any
payment owed to an Employee, any amount that is necessary in order to
satisfy any withholding requirement that the Corporation or the Subsidiary
in good faith believes is imposed upon it in connection with Federal,
state, provincial or local taxes, including transfer taxes, as a result of
the issuance of, or lapse of restrictions on, such Shares, or otherwise
require such Employee to make provision for payment of any such withholding
amount.
11.2 PAYMENT AND DELIVERY OF SHARES
Unless otherwise provided by the Committee and subject to the provisions of
Section 6.3, the Corporation, in its discretion and subject to such rules
and restrictions as it may establish from time to time, may:
(a) accept payment for the Shares related to an Award by any manner of
lawful consideration permitted by applicable statute;
(b) issue the Shares registered in the name of the Employee to the custody
of his or her broker when requested in writing by the Employee with
his or her exercise notice and when preceded by full payment or the
irrevocable commitment of a stockbroker on behalf of the Employee to
pay the Corporation any balance due on the purchase price for such
Shares following their issuance, whereupon such issuance and payment
will be viewed as contemporaneous.
ARTICLE 12 -- GOVERNMENTAL AND OTHER REGULATIONS
12.1 EFFECT OF APPLICABLE LAWS
The Plan and any Award under the Plan shall comply with all applicable
Federal, Provincial and state laws, rules and regulations of Canada and the
United States, including the Securities Act (Quebec), the Securities Act of
1933 and the Securities Exchange Act of 1934, and to such approvals by any
regulatory or governmental agency of Canada and the United States as may be
required. The issuance or delivery of any Award or of any Shares under an
Award, may be postponed by the Corporation for such period as may be
required to comply with
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any applicable requirements under securities laws, any applicable listing
requirements of any national securities exchange or automated quotation
system where the Shares are listed, and requirements under any other law or
regulation applicable to the issuance or delivery of such Shares. The
Corporation shall not be obligated to issue or deliver any Share if its
issuance or delivery shall constitute a violation of any provision of any
law or of any regulation of any governmental authority or any national
securities exchange or automated quotation system where the Shares are
listed. Other than as expressly provided in Section 7.9 above, neither the
Plan nor any Award shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the
Corporation or any of its Subsidiaries and an Employee or any other person.
ARTICLE 13 -- EFFECTIVE DATE AND TERM 0F THE PLAN
13.1 EFFECTIVE DATE AND TERM
The Plan shall become effective upon its adoption by the Board and its
approval by the shareholders of the Corporation, and shall continue until
such time as it may be terminated by action of the Board or the
Shareholders of the Corporation. All Options granted prior to shareholder
approval are granted conditional upon shareholder approval of the Plan.
ARTICLE 14 -- MISCELLANEOUS PROVISIONS
14.1 OPTION AGREEMENT
Options shall be evidenced by written option agreements in the form
approved by the Committee.
14.2 INDEMNIFICATION
In addition to such other rights of indemnification as they may have as
Directors or as members of the Board, the members of the Board and the
Committee shall be indemnified by the Corporation against the reasonable
expenses, including attorneys' fees actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in
connection with any appeal, to which they or any of them may be a party by
reason of any action taken or failure to act under or in connection with
the Plan or any option granted under it, and against all amounts paid by
them in settlement (provided such settlement is approved by independent
legal counsel selected by the Corporation) or paid by them in satisfaction
for a judgment in any such action, suit or proceeding, except in relation
to matters as to which it shall be adjudged in such action, suit or
proceeding that such Board member is liable for gross negligence or wilful
misconduct in the performance of his duties. Within ten (10) days after
institution of any such action, suit or proceeding a Board member shall
notify the Corporation of the institution of the Suit and grant the
Corporation the
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opportunity, at its own expense, to handle and defend the same. Failure to
provide such notice shall, at the option of the Corporation, relieve the
Corporation of the indemnification obligations set forth in this Section
14.2.
14.3 NO OBLIGATION TO EXERCISE OPTION
The grant of an Option shall impose no obligation upon the optionee to
exercise such Option.
14.4 SINGULAR, PLURAL, GENDER
The singular shall include the plural and the masculine pronoun shall
include the feminine gender.
14.5 HEADINGS
Headings of Articles and Sections are inserted for convenience and
reference only; they constitute no part of the Plan.
14.6 COMPLIANCE WITH RULE 16b-3
It is the intent of the Corporation that the Plan comply in all respects
with Rule 16b-3 of the Securities Exchange Act of 1934 in connection with
any Option granted to a person who is subject to Section 16 of the said
Act. Accordingly, any provision of the Plan or any option agreement that
does not comply with the requirements of such Rule 16b-3 as then applicable
to any such person shall be construed or deemed amended to the extent
necessary to conform to such requirements, except that such automatic
amendment shall not apply to any other participant in the Plan who is not
(at the time of such application) subject to Section 16 of the Act. Any
action taken by the Committee pursuant to the Plan that does not comply
with the requirements of such Rule 16b-3 shall be null and void.
14.7 GOVERNING LAW
The Plan and all determinations made and actions taken pursuant to the Plan
shall be governed by the laws of the State of Delaware.
14.8 SEVERABILITY
Whenever possible, each provision of the Plan and every Option at any time
granted under the Plan shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of the Plan
or any Option at any time granted under the Plan shall be held to be
prohibited by or invalid under applicable law, then (a) such provision
shall be deemed amended to accomplish the objectives of the provision as
originally written to the fullest extent permitted
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by law and (b) all other provisions of the Plan and every other Option at
any time granted under the Plan shall remain in full force and effect.
AS AMENDED TO REFLECT (I) SHARE SUBDIVISION ON A TWO-FOR-ONE BASIS ON DECEMBER
31, 1996, (II) THE RESOLUTION OF THE DIRECTORS OF NOVEMBER 9, 1999 WHICH WAS
RATIFIED BY THE SHAREHOLDERS ON DECEMBER 17, 1999 TO INCREASE THE MAXIMUM
AGGREGATE NUMBER OF SHARES AVAILABLE BY 200 000, (III) THE CHANGE OF NAME OF
THE CORPORATION EFFECTIVE JANUARY 1, 2000, AND (IV) THE EXTENSION OF THE LIFE
OF THE PLAN AND OF THE OPTIONS OUTSTANDING UNDER THE PLAN FOR AN ADDITIONAL
TEN YEARS.
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