Exhibit 10(c)
BOSTON ACOUSTICS, INC.
(MASSACHUSETTS CORPORATION)
1997 STOCK PLAN
1. Purpose. The purpose of this plan (the "Plan") is to secure for
Boston Acoustics, Inc. (the "Company") and its shareholders the benefits arising
from capital stock ownership by employees, officers and directors and
consultants of the Company and its parent and subsidiary corporations who are
expected to contribute to the Company's future growth and success. This Plan is
intended to provide incentives: (i) to employees, officers, directors and
consultants of the Company by providing them with opportunities to purchase
shares of the Company's Common Stock, $0.01 par value ("Common Stock"), pursuant
to options granted hereunder ("Options") and (ii) to directors of the Company by
providing them with the opportunity to purchase shares of Common Stock directly
from the Company ("Purchases"). Except where the context otherwise requires, the
term "Company" shall include the parent and all present and future subsidiaries
of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue
Code of 1986, as amended or replaced from time to time (the "Code"). Those
provisions of the Plan which make express reference to Section 422 shall apply
only to ISOs (as that term is defined in the Plan).
2. Administration and Types of Options.
(a) Administration. Except as otherwise provided in Section
24, the Plan shall be administered by a compensation committee (the
"Committee") of not less than two directors of the Company appointed by
the Board of Directors of the Company (the "Board") each of whom is not
an employee of the Company and who qualifies as a "disinterested
person" within the meaning of Rule 16b-3(c)(2)(i) promulgated under the
Securities Exchange Act of 1934, as amended (the "Act"). Subject to
ratification of the grant or authorization of each Option by the Board
(if so required by applicable state law), and subject to the terms of
the Plan, the Committee, shall have the authority to (i) determine the
employees of the Company (from among the class of employees eligible
under Section 3 to receive ISOs (as such term is defined below)) to
whom ISOs may be granted, and to determine (from among the class of
individuals and entities eligible under Section 3 to receive
Non-Qualified Options(as such term is defined below)) to whom
Non-Qualified Options may be granted; (ii) determine the time or times
at which Options may be granted; (iii) determine the option price of
shares subject to each Option, which price shall not be less than the
minimum price specified in Section 6(a); (iv) determine whether each
Option granted shall be an ISO or a Non-Qualified Option; (v) determine
(subject to Section 8) the time or times when each Option shall become
exercisable and the duration of the exercise period; (vi) determine
whether restrictions such as repurchase options are to be imposed on
shares subject to Options and the nature of such restrictions, if any,
and (vii) interpret the Plan and prescribe and rescind rules and
regulations relating to it. If the Committee determines to issue a
Non-Qualified Option, it shall take whatever actions it deems
necessary, under Section 422 of the
Code and the regulations promulgated thereunder, to ensure that such
Option is not treated as an ISO. The interpretation and construction by
the Committee of any provisions of the Plan or of any Option granted
under it shall be final unless otherwise determined by the Board. The
Committee may from time to time adopt such rules and regulations for
carrying out the Plan as it may deem best. No member of the Board or
the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Option or any Purchase
granted under it.
(b) Compensation Committee. The Committee may select one of
its members as its chairman, and shall hold meetings at such times and
places as it may determine. Acts by a majority of the Committee, or
acts reduced to or approved in writing by a majority of the members of
the Committee, shall be valid acts of the Committee.
(c) Applicability of Rule 16b-3. Those provisions of the Plan
which make express reference to Rule 16b-3 shall apply only to such
persons as are required to file reports under Section 16(a) of the
Exchange Act (a "Reporting Person").
(d) Types of Options. Options granted pursuant to the Plan may
be either incentive stock options ("ISOs") meeting the requirements of
Section 422 of the Code or non-qualified stock options ("Non-Qualified
Options") which are not intended to meet the requirements of Section
422 of the Code.
3. Eligibility.
(a) Options. ISOs may be granted to any employee of the
Company. Those officers and directors of the Company who are not
employees of the Company may not be granted ISOs under the Plan.
Non-Qualified Options may be granted to any director, officer, employee
or consultant of the Company. The Committee may take into consideration
a recipient's individual circumstances in determining whether to grant
an ISO or a Non-Qualified Option. Granting an Option to any individual
or entity shall neither entitle that individual or entity to, nor
disqualify him, her or it from, participation in any other grant of an
Option.
(b) Purchases. Eligibility for Purchases under the Plan shall
be determined in accordance with Section 24 of the Plan.
4. Stock Subject to Plan.
(a) Options. Subject to adjustment as provided in Section 15
below, the maximum number of shares of Common Stock of the Company
which may be issued and sold pursuant to Options issued under the Plan
is 300,000 shares. The shares may be authorized, but unissued, or
reacquired Common Stock. If an Option granted under the Plan shall
expire or terminate for any reason without having been exercised
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in full, the unpurchased shares subject to such Option shall again be
available for subsequent Option grants under the Plan. No shares issued
upon exercise of any Option shall be returned to the Plan nor become
available under the Plan for future distribution.
(b) Purchases. Subject to adjustment as provided in Section 15
below, the maximum number of shares of Common Stock of the Company
which may be issued and sold under Section 24 of the Plan is 20,000
shares. The shares may be authorized, but unissued, or reacquired
Common Stock. No shares issued and sold under Section 24 of the Plan
shall be returned to the Plan nor become available under the Plan for
future distribution.
5. Forms of Option Agreements. As a condition to the grant of an Option
under the Plan, each recipient of an Option shall execute an option agreement in
such form not inconsistent with the Plan as may be approved by the Committee.
Such option agreements may differ among recipients.
6. Exercise Price.
(a) General. The price per share of stock deliverable upon the
exercise of an Option shall be determined by the Committee, but it
shall not be less than the par value per share of the stock; provided,
that in the case of an ISO, the exercise price shall not be less than
100% of the fair market value of such stock, as determined by the
Committee, at the time of grant of such Option, or less than 110% of
such fair market value in the case of Options described in Section
11(b).
(b) Fair Market Value. If, at the time an Option is granted
under the Plan or Common Stock is delivered to the Company, the
Company's Common Stock is publicly traded, the "fair market value"
shall be determined as of the last business day for which the prices or
quotes discussed in this sentence are available prior to the date such
Option is granted or Common Stock is delivered to the Company and shall
mean (i) the last reported sale price (on that date) of the Common
Stock on the principal national securities exchange on which the Common
Stock is traded, if the Common Stock is then traded on a national
securities exchange; or (ii) the last reported sale price (on that
date) of the Common Stock on the NASDAQ National Market System, if the
Common Stock is not then traded on a national securities exchange; or
(iii) the closing bid price (or average of bid prices) last quoted (on
that date) by an established quotation service for over-the-counter
securities, if the Common Stock is not reported on the NASDAQ National
Market System. However, if the Common Stock is not publicly traded at
the time an Option is granted or the Common Stock is delivered, the
"fair market value" shall be deemed to be the fair market value of the
Common Stock as determined by the Committee after it takes into
consideration all factors which it deems appropriate.
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(c) Payment of Exercise Price. Payment of the exercise price
of Options granted under the Plan may be made (i) by delivery of cash
or a check to the order of the Company in an amount equal to the
exercise price of such Options, (ii) if authorized by the applicable
option agreement or at the discretion of the Committee, by delivery to
the Company of shares of Common Stock of the Company beneficially owned
by the optionee for more than six months and which the optionee may
freely transfer having a fair market value equal in amount to the
exercise price of the options being exercised, (ii) by any other means
(including, without limitation, by delivery of a promissory note of the
optionee payable on such terms as are specified by the Committee) which
the Committee determines are consistent with the purpose of the Plan
and with then applicable laws and regulations (including, without
limitation, the provisions of Rule 16b-3, to the extent that the Common
Stock is registered under the Exchange Act, and Regulation T
promulgated by the Federal Reserve Board) or (iii) by any combination
of such methods of payment. The fair market value of any shares of the
Company's Common Stock or other non-cash consideration which may be
delivered upon exercise of an Option shall be determined by the
Committee.
7. Option Period. Each Option and all rights thereunder shall expire on
such date as shall be set forth in the applicable option agreement, except that,
in the case of an ISO, such date shall not be later than ten years after the
date on which the Option is granted and, in all cases, Options shall be subject
to earlier termination as provided in the Plan.
8. Exercise of Options. Each Option granted under the Plan shall be
exercisable either in full or in installments at such time or times and during
such period as shall be set forth in the agreement evidencing such option,
subject to the provisions of the Plan. Notwithstanding the foregoing, Options
granted under the Plan to the Reporting Persons shall not be exercisable in any
part until at least six months after the date of grant.
9. Nontransferability.
(a) Nontransferability of Options. ISOs and Non-Qualified
Options granted to Reporting Persons shall not be assignable or
transferable by the person to whom they are granted, either voluntarily
or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the optionee, shall be
exercisable only by the optionee; provided, that Non-Qualified Options
held by Reporting Persons may be transferred pursuant to a qualified
domestic relations order (as defined in Rule 16b-3). Non-Qualified
Options held by persons other than Reporting Persons shall be subject
to restrictions on transferability in the Plan or provided in the
applicable option agreement.
(b) Nontransferability of Rights Under Purchase Elections. Any
right under a Purchase Election shall not be assignable or transferable
by the director who made such Purchase Election, either voluntarily or
by operation of law, except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations
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order (as defined in Rule 16b-3).
10. Effect on Option of Termination of Employment or Other
Relationship. Except as provided in Section 11(d) with respect to ISOs, and
subject to the provisions of the Plan, the Committee shall determine the period
of time during which an optionee may exercise an Option following (i) the
termination of the optionee's employment or other relationship with the Company
or (ii) the death or disability of the optionee. Such periods shall be set forth
in the agreement evidencing such Option.
11. ISOs. Options granted under the Plan which are intended to be ISOs
shall be subject to the following additional terms and conditions:
(a) Express Designation. All under the Plan
shall, at the time of grant, be specifically designated as such in the
option agreement covering such ISOs.
(b) 10% Shareholder. If any employee to whom an ISO is to be
granted under the Plan is, at the time of the grant of such Option, the
owner of stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company (after taking into account
the attribution of stock ownership rules of Section 424(d) of the
Code), then the following special provisions shall be applicable to the
ISO granted to such individual:
(i) the purchase price per share of the Common
Stock subject to such ISO shall not be less
than 110% of the fair market value of one
share of Common Stock at the time of grant;
and
(ii) the exercise period of such ISO shall not
exceed five years from the date of grant.
(c) Dollar Limitation. For so long as the Code shall so
provide, Options granted to any employee under the Plan (and any other
stock option plans of the Company) which are intended to constitute
ISOs shall not constitute ISOs to the extent that such options, in the
aggregate, become exercisable for the first time in any one calendar
year for shares of Common Stock with an aggregate fair market value
(determined as of the respective date or dates of grant) of more than
$100,000.
(d) Termination of Employment, Death or Disability. No ISO may
be exercised unless, at the time of such exercise, the optionee is, and
has been continuously since the date of grant of his or her Option,
employed by the Company, except that:
(i) an ISO may be exercised within the period of
three months after the date the optionee
ceases to be an employee of the
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Company (or within such lesser period as may
be specified in the applicable option
agreement); provided that the agreement with
respect to such Option may designate a
longer exercise period and that the exercise
after such three-month period shall be
treated as the exercise of a Non-Qualified
Option under the Plan;
(ii) if the optionee dies while in the employ of
the Company, or within three months after
the optionee ceases to be such an employee,
the ISO may be exercised by the person to
whom it is transferred by will or the laws
of descent and distribution within the
period of one year after the date of death
(or within such lesser period as may be
specified in the applicable option
agreement); and
(iii) if the optionee becomes disabled (within the
meaning of Section 22(e)(3) of the Code or
any successor provision thereto) while in
the employ of the Company, the ISO may be
exercised within the period of one year
after the date the optionee ceases to be
such an employee because of such disability
(or within such lesser period as may be
specified in the applicable option
agreement).
For all purposes of the Plan and any Option granted hereunder,
"employment" shall be defined in accordance with the provisions of Section
1.421-7(h) of the Income Tax Regulations (or any successor regulations).
Notwithstanding the foregoing provisions, no ISO may be exercised after its
expiration date.
12. Additional Option Provisions
(a) Additional Option Provisions. The Committee may, in its
sole discretion, include additional provisions in Option agreements
covering options granted under the Plan, including without limitation
restrictions on transfer, repurchase rights, commitments to pay cash
bonuses, to make, arrange for or guaranty loans or to transfer other
property to optionees upon exercise of Options, or such other
provisions as shall be determined by the Committee; provided that such
additional provisions shall not be inconsistent with any other term or
condition of the Plan and such additional provisions shall not cause
any ISO granted under the Plan to fail to qualify as an ISO within the
meaning of Section 422 of the Code.
(b) Option Acceleration, Extension, Etc. The Committee may, in
its sole discretion, (i) accelerate the date or dates on which all or
any particular Option or Options granted under the Plan may be
exercised or (ii) extend the dates during which all, or any particular,
Option or Options granted under the Plan may be exercised;
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provided that no such extension shall be permitted if it would cause
the Plan to fail, to comply with Section 422 of the Code or with Rule
16b-3 as then in effect, to the extent that the Common Stock is
registered under the Exchange Act.
13. General Restrictions.
(a) Investment Representations. The Company may require any
person to whom an Option is granted or shares are to be sold hereunder,
as a condition of exercising such Option or purchasing shares pursuant
to Section 24, to give written assurances in substance and form
satisfactory to the Company to the effect that such person is acquiring
the Common Stock for his or her own account for investment and not with
any present intention of selling or otherwise distributing the same,
and to such other effect as the Company deems necessary or appropriate
in order to comply with federal and applicable state securities laws,
or with covenants or representations made by the Company in connection
with any public offering of its Common Stock.
(b) Compliance with Securities Laws. Each Option shall be
subject to the requirement that if, at any time, counsel to the Company
shall determine that the listing, registration or qualification of the
shares subject to such Option upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental or
regulatory body, or that the disclosure of non-public information or
the satisfaction of any other condition is necessary as a condition of,
or in connection with, the issuance or purchase of shares thereunder,
such Option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, or
satisfaction of such condition shall have been effected or obtained on
conditions acceptable to the Committee. Nothing herein shall be deemed
to require the Company to apply for or to obtain such listing,
registration or qualification, or to satisfy such condition.
14. Rights as a Shareholder. Neither a holder of an Option nor a
director having made a Purchase Election shall have any rights as a shareholder
with respect to any shares covered by the Option or Purchase Election
(including, without limitation, any rights to receive dividends or non-cash
distributions with respect to shares subject thereto) until the date of issue of
a stock certificate to him or her for such shares. No adjustment shall be made
for dividends or other rights for which the record date is prior to the date
such stock certificate is issued.
15. Adjustment Provisions for Recapitalizations and Related
Transactions.
(a) Adjustments Relating to Options. If, through or as a
result of any merger, consolidation, sale of all or substantially all
of the assets of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or
other similar transaction, (i) the outstanding shares of Common Stock
are increased, decreased or exchanged for a different number or kind of
shares or
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other securities of the Company, or (ii) additional shares or new or
different shares or other securities of the Company or other
non-cash assets are distributed with respect to such shares of
Common Stock or other securities, an appropriate and proportionate
adjustment may be made in (x) the maximum number and kind of shares
reserved for issuance pursuant to Options issued under the Plan, (y)
the number and kind of shares or other securities subject to any
then outstanding Options under the Plan, and (z) the price for each
share subject to any then outstanding Options, without changing the
aggregate purchase price as to which such Options remain
exercisable. Notwithstanding the foregoing, no adjustment shall be
made pursuant to this Section 15 to the extent such adjustment would
cause any ISO issued under the Plan to fail to comply with Section
422 of the Code or the Plan to fail to comply with Rule 16b-3 as
then in effect, to the extent that the Common Stock is registered
under the Exchange Act.
(b) Committee Authority to Make Adjustments. Any adjustments
under Section 15(a) will be made by the Committee, whose determination
as to what adjustments, if any, will be made and the extent thereof
will be final, binding and conclusive. No fractional shares will be
issued under the Plan on account of any such adjustments.
(c) Adjustments Relating to Purchasers. If, through or as a
result of any merger, consolidation, sale of all or substantially all
of the assets of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or
other similar transaction, (i) the outstanding shares of Common Stock
are increased, decreased or exchanged for a different number or kind of
shares or other securities of the Company, or (ii) additional shares or
new or different shares or other securities of the Company or other
non-cash assets are distributed with respect to such shares of Common
Stock or other securities, an appropriate and proportionate adjustment
may be made in (x) the maximum number and kind of shares reserved for
issuance pursuant to Section 24 of the Plan, (y) the number and kind of
shares or other securities subject to any then outstanding Purchase
Elections, and (z) the price for each share subject to any then
outstanding Purchase Election, without changing the aggregate purchase
price as to such Purchases which have not yet occurred. Notwithstanding
the foregoing, no adjustment shall be made pursuant to this Section
15(c) to the extent such adjustment would cause any ISO issued under
the Plan to fail to comply with Section 422 of the Code or the Plan to
fail to comply with Rule 16b-3 as then in effect, to the extent that
the Common Stock is registered under the Exchange Act.
(d) Board Authority to Make Adjustments. Any adjustment under
Section 15(c) will be made by the Board, whose determination as to what
adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive. No fractional shares will be issued under the
Plan on account of any such adjustments.
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16. Merger, Consolidation, Asset Sale, Liquidation, etc.
(a) Options. In the event of a consolidation or merger or sale
of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash
or other property of any other corporation or business entity or in the
event of a liquidation of the Company, the Committee, or the board of
directors of any corporation assuming the obligations of the Company
may in its discretion, take any one or more of the following actions,
as to outstanding Options: (i) provide that such Options shall be
assumed, or equivalent options shall be substituted, by the acquiring
or succeeding corporation (or an affiliate thereof), provided that any
such options substituted for ISOs shall meet the requirements of
Section 424(a) of the Code, (ii) upon written notice to the optionees,
provide that all unexercised Options will terminate immediately prior
to the consummation of such transaction unless exercised by the
optionee within a specified period following the date of such notice,
(iii) in the event of a merger under the terms of which holders of the
Common Stock of the Company will receive upon consummation thereof a
cash payment for each share surrendered in the merger (the "Merger
Price"), make or provide for a cash payment to the optionees equal to
the difference between (A) the Merger Price times the number of shares
of Common Stock subject to such outstanding Options (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the
aggregate exercise price of all such outstanding Options in exchange
for the termination of such options, and (iv) provide that all or any
outstanding Options shall become exercisable in full immediately prior
to such event; provided that notwithstanding anything to the contrary
in this Section 16(a), any action taken by the Committee hereunder
shall be in compliance with Rule 16b-3 as in effect at the time of such
action and the conditions thereof necessary to maintain qualification
of the Plan under Rule 16b-3, to the extent that the Common Stock is
registered under the Exchange Act. In the case of any Option which by
the terms of the grant thereof (or the agreement or instrument
governing such grant) or pursuant to a decision by the Committee under
this Section 16(a) provides for such option becoming exercisable in
full upon a Change in Control or otherwise under this Section 16, such
option shall be deemed vested on the day immediately prior to the day
on which such Change in Control occurs and such optionee shall be given
prior written notice of such Change in Control sufficient to permit
such optionee to exercise such Options. For purposes of this Plan, a
"Change in Control" occurs if the Company (i) ceases operations; (ii)
merges or consolidates with another entity and is not the surviving
entity; (iii) sells or otherwise transfers all or substantially all of
its operating assets; or (iv) if more than 50% of the capital stock of
the Company is transferred in a single transaction or in a series of
related transactions other than a public offering of stock of the
Company to a single person, entity or group of persons acting in
concert.
(b) Substitute Options. The Company may grant Options under
the Plan in substitution for options held by employees of another
corporation who become employees of the Company, or of a subsidiary of
the Company, as the result of a
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merger or consolidation of the employing corporation with the Company
or a subsidiary of the Company, or as a result of the acquisition by
the Company, or one of its subsidiaries, of property or stock of the
employing corporation. The Company may direct that substitute Options
be granted on such terms and conditions as the Committee considers
appropriate in the circumstances.
(c) Purchases. In the event of a consolidation or merger or
sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash
or other property of any other corporation or business entity or in the
event of a liquidation of the Company, any election to Purchase shares
of Common Stock pursuant to Section 24 of the Plan shall automatically
be cancelled and any Fee Deductions shall be paid to the appropriate
directors promptly, together with interest on such Fee Deductions,
calculated in accordance with Section 24(e) of the Plan.
17. No Special Employment Rights. Nothing contained in the Plan or in
any Option shall confer upon any optionee any right with respect to the
continuation of his or her employment by the Company or interfere in any way
with the right of the Company at any time to terminate such employment or to
increase or decrease the compensation of the optionee.
18. Other Employee Benefits. Except as to plans which by their terms
include such amounts as compensation, the amount of any compensation deemed to
be received by an employee as a result of the exercise of an Option or the sale
of shares received upon such exercise will not constitute compensation with
respect to which any other employee benefits of such employee are determined,
including, without limitation, benefits under any bonus, pension,
profit-sharing, life insurance or salary continuation plan, except as otherwise
specifically determined by the Committee or required by law.
19. Amendment of the Plan.
(a) The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect, except that if at any
time the approval of the shareholders of the Company is required under
Section 422 of the Code or any successor provision with respect to
ISOs, or under Rule 16b-3 as then in effect, to the extent that the
Common Stock is registered under the Exchange Act, the Board of
Directors may not effect such modification or amendment without such
approval.
(b) The termination or any modification or amendment of the
Plan shall not, without the consent of an optionee, affect his or her
rights under an Option previously granted to him or her. With the
consent of the optionee affected, the Board of Directors may amend
outstanding option agreements in a manner not inconsistent with the
Plan. The Board of Directors shall have the right to amend or modify
(i) the terms and provisions of the Plan and of any outstanding ISOs
granted
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under the Plan to the extent necessary to qualify any or all such
Options for such favorable federal income tax treatment (including
deferral of taxation upon exercise) as may be afforded incentive stock
options under Section 422 of the Code and (ii) the terms and provisions
of the Plan and of any outstanding option to the extent necessary to
ensure the qualification of the Plan under Rule 16b-3 as then in
effect, to the extent that the Common Stock is registered under the
Exchange Act.
20. Withholding.
(a) The Company shall have the right to deduct from payments
of any kind otherwise due to the optionee any federal, state or local
taxes of any kind required by law to be withheld with respect to any
shares issued upon exercise of Options under the Plan. Subject to the
prior approval of the Company, which may be withheld by the Company in
its sole discretion, the optionee may elect to satisfy such
obligations, in whole or in part, (i) by causing the Company to
withhold shares of Common Stock otherwise issuable pursuant to the
exercise of an option or (ii) by delivering to the Company shares of
Common Stock already owned by the optionee. The shares so delivered or
withheld shall have a fair market value equal to such withholding
obligation. The fair market value of the shares used to satisfy such
withholding obligation shall be determined by the Company as of the
date that the amount of tax to be withheld is to be determined. Such
determination of the fair market value shall be made in accordance with
Section 6(b). An optionee who has made an election pursuant to this
Section 20(a) may only satisfy his or her withholding obligation with
shares of Common Stock which are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements.
(b) Notwithstanding the foregoing, in the case of a Reporting
Person, no election to use shares for the payment of withholding taxes
shall be effective unless made in compliance with any applicable
requirements of Rule 16b-3 as then in effect.
21. Cancellation and New Grant of Options, etc. The Board of Directors
shall have the authority to effect, at any time and from time to time, with the
consent of the affected optionees, (i) the cancellation of any or all
outstanding Options under the Plan or the Company's 1986 Incentive Stock Option
Plan and the grant in substitution therefor of new Options under the Plan
covering the same or different numbers of shares of Common Stock and having an
exercise price per share which may be lower or higher than the exercise price
per share of the cancelled Options or (ii) the amendment of the terms of any and
all outstanding Options under the Plan to provide an exercise price per share
which is higher or lower than the then current exercise price per share of such
outstanding Options.
22. Effective Date and Duration of the Plan.
(a) Effective Date. The Plan shall become effective when
adopted by the Board of Directors, but no ISO granted under the Plan
shall become exercisable unless
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and until the Plan shall have been approved by the Company's
shareholders. If such shareholder approval is not obtained within
twelve months after the date of the Board's adoption of the Plan, no
Options previously granted under the Plan shall be deemed to be ISOs
and no ISOs shall be granted thereafter. Amendments to the Plan not
requiring shareholder approval shall become effective when adopted by
the Board of Directors; amendments requiring shareholder approval (as
provided in Section 19) shall become effective when adopted by the
Board of Directors, but no ISO granted after the date of such amendment
shall become exercisable (to the extent that such amendment to the Plan
was required to enable the Company to grant such ISO to a particular
optionee) unless and until such amendment shall have been approved by
the Company's shareholders. If such shareholder approval is not
obtained within twelve months of the Board's adoption of such
amendment, any ISOs granted on or after the date of such amendment
shall terminate to the extent that such amendment to the Plan was
required to enable the Company to grant such Option to a particular
optionee. Subject to this limitation, Options may be granted under the
Plan at any time after the effective date and before the date fixed for
termination of the Plan.
(b) Termination. Unless sooner terminated in accordance with
Section 16, the Plan shall terminate, with respect to ISOs, upon the
earlier of (i) the close of business on the day next preceding the
tenth anniversary of the date of its adoption by the Board of
Directors, or (ii) the date on which all shares available for issuance
pursuant to Options issued under the Plan shall have been issued
pursuant to the exercise or cancellation of Options granted under the
Plan. Unless sooner terminated in accordance with Section 16, the Plan
shall terminate with respect to Non-Qualified Options on the date
specified in (ii) above and with respect to Purchases on the date on
which all shares available for issuance pursuant to Section 24 of the
Plan shall have been issued. If the date of termination is determined
under (i) above, then Options outstanding on such date shall continue
to have force and effect in accordance with the provisions of the
instruments evidencing such Options.
23. Provision for Foreign Participants. The Board of Directors may,
without amending the Plan, modify awards or options granted to participants who
are foreign nationals or employed outside the United States to recognize
differences in laws, rules, regulations or customs of such foreign jurisdictions
with respect to tax, securities, currency, employee benefit or other matters.
24. Purchases of Stock by Directors Who are not Officers or Employees.
(a) The Company will issue shares of Common Stock on the last
day of the fiscal year (the "Purchase Date") to any director of the
Company who is not an officer or an employee of the Company (an
"Eligible Director") and has made a then effective Purchase Election
pursuant Section 24(b).
(b) An Eligible Director may elect to purchase shares (a
"Purchase Election") by
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submitting an election form to the Vice President-Finance on or before
the 20th of August in the fiscal year in which he or she intends to
participate. On such election form, a director shall (i) state the
percentage to be deducted from the fee earned by such Eligible Director
for service as a director of the Company (a "Fee"), (ii) authorize the
purchase of Common Stock for him or her in accordance with the terms of
the Plan, (iii) agree to hold any shares of Common Stock purchased
pursuant to this Section 24 for at least six months from the date of
acquisition and (iv) consent to the placement of a stop order on the
books of the Company with regard to such shares for a period of at
least six months from the date of acquisition.
(c) Unless an Eligible Director files a new election form
which either changes the rate of deduction from his or her Fee or
indicates his or her withdrawal from the Plan, his or her deductions
and purchases will continue at the same rate, provided he or she
remains an Eligible Director. During a fiscal year, an Eligible
Director may change the rate of deduction from his or her Fee or
withdraw from the Plan at any time prior to the last Saturday in
September. Any change or withdrawal indicated on a new election form
received by the Vice President-Finance on or after the last Saturday in
September will be effective as of the first day of the following fiscal
year.
(d) On the date on which cash payments of Fees are made, or
would have been made (the "Deduction Date"), the Company will deduct
from cash payments of Fees to each Eligible Director such amount
indicated on his or her then effective Purchase Election, if any (a
"Fee Deduction"). Any Fee Deduction made pursuant to this Section 24
will be held in the general funds of the Company. The maximum amount an
Eligible Director may have deducted in a fiscal year is $8,500.
(e) All Fee Deductions shall accrue interest at the prime rate
reported in the Wall Street Journal at the Deduction Date from the
Deduction Date through the last day of the Company's fiscal year.
(f) Each Eligible Director who has elected to participate
pursuant to a then effective Purchase Election and is a director of the
Company as of the last day of the fiscal year shall acquire from the
Company such whole number of shares of Common Stock which his or her
Fee Deductions during the fiscal year and interest accrued thereon will
purchase at the Purchase Price (as such term is defined below). Any
balance of the Fee Deductions and interest accrued thereon will be
refunded to the Eligible Director promptly.
(g) The purchase price (the "Purchase Price") of Common Stock
to be issued to any Eligible Director pursuant to this Section 24 shall
be the fair market value of the Common Stock on the Purchase Date.
"Fair market value" shall mean (i) the last reported sale price of the
Common Stock on the Purchase Date on the principal national securities
exchange on which the Common Stock is traded, if the
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Common Stock is then traded on a national securities exchange; or (ii)
the last reported sale price on the Purchase Date of the Common Stock
on the NASDAQ National Market System, if the Common Stock is not then
traded on a national securities exchange; or (iii) the closing bid
price (or average of bid prices) last quoted on the Purchase Date by an
established quotation service for over-the-counter securities, if the
Common Stock is not reported on the NASDAQ National Market System. If
no prices or quotes discussed in the preceding sentence are available
on the Purchase Date, such quotes or prices shall be determined as of
the last business day for which such prices or quotes are available
prior to the Purchase Date. However, if the Common Stock is not
publicly traded at the Purchase Date, the "fair market value" shall be
deemed to be the fair market value of the Common Stock as determined by
the Board of Directors after it takes into consideration all factors
which it deems appropriate.
(h) Purchases pursuant to this Section 24 shall be generally
administered by the Board of Directors. The provisions of this Section
24 are to be construed as a "formula plan" as defined by Rule 16b-3. As
such, the provision of Section 24 shall not be amended more than once
every six (6) months, other than to comply with changes in the Code,
the Employee Retirement Income Security Act, or the rules thereunder.
Adopted by the Board of Directors on
May 28, 1997
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