AMENDED AND RESTATED
EXCELON CORPORATION
1996 INCENTIVE AND NONQUALIFIED
STOCK OPTION PLAN
SECTION 1. PURPOSE
This 1996 Incentive and Nonqualified Stock Option Plan (the "Plan") is
intended as a performance incentive for officers and employees of eXcelon
Corporation, a Delaware corporation (the "Company"), or its Subsidiaries (as
hereinafter defined) and for certain other individuals providing services to or
acting as Directors of the Company or its Subsidiaries, to enable the persons to
whom options are granted (an "Optionee" or "Optionees") to acquire or increase a
proprietary interest in the Company and its success. The Company intends that
this purpose will be effected by the granting of incentive stock options
("Incentive Options") as defined in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and other stock options ("Nonqualified Options")
under the Plan. The term "Subsidiaries" means any corporations in which stock
possessing 50% or more of the total combined voting power of all classes of
stock of such corporation or corporations is owned directly or indirectly by the
Company.
SECTION 2. OPTIONS TO BE GRANTED AND ADMINISTRATION
2.1. OPTIONS TO BE GRANTED. Options granted under the Plan may be either
Incentive Options or Nonqualified Options. If an option is intended to be an
Incentive Option, and if for any reason such option (or any portion thereof)
shall not qualify as an Incentive Option, then, to the extent of such
nonqualification, such option (or portion thereof) shall be regarded as a
Nonqualified Option appropriately granted under the Plan provided that such
option (or portion thereof) otherwise meets the Plan's requirements relating to
Nonqualified Options.
2.2. ADMINISTRATION. This Plan shall be administered by the Compensation
Committee or any other committee of the Board of Directors of the Company (the
"Board"), consisting of two or more "Outside Directors" (such committee may
hereinafter be referred to as the "Plan Administrator"). As used herein, the
term "Outside Director" means any Director who: (i) is not an employee of the
Company or of any "affiliated group" (as such term is defined in Section 1504(a)
of the Code) which includes the Company (an "Affiliate"); (ii) is not a former
employee of the Company or any Affiliate who is receiving compensation for prior
services (other than benefits under a tax-qualified retirement plan) during the
Company's or any Affiliate's taxable year; (iii) has not been an officer of the
Company or any Affiliate; and (iv) does not receive remuneration from the
Company or any Affiliate, either directly or indirectly, in any capacity other
than as a Director.
Except as specifically reserved to the Board under the terms of the Plan,
the Plan Administrator shall have full and final authority to operate, manage
and administer the Plan on behalf of the Company. This authority includes, but
is not limited to: (i) the power to grant options conditionally or
unconditionally; (ii) the power to prescribe the form or forms of the
instruments evidencing options granted under this Plan; (iii) the power to
interpret the Plan; (iv) the power to provide regulations for the operation of
the incentive features of the Plan, and otherwise to prescribe regulations for
interpretation, management and administration of the Plan; (v) the power to
delegate to other persons the responsibility for performing ministerial acts in
furtherance of the Plan's purpose; (vi) the power to make, in its sole
discretion, changes to any outstanding option granted under the Plan, including
the power to reduce the exercise price, to accelerate the vesting schedule, or
to extend the expiration date; and (vii) the power to engage the services of
persons or organizations in furtherance of the Plan's purpose, including but not
limited to banks, insurance companies, brokerage firms and consultants.
In addition, as to each option, the Plan Administrator shall have full and
final authority, in its sole discretion: (i) to determine the number of shares
subject to each option; (ii) to determine the time or times at which options
will be granted; (iii) to determine the conditions on which options will be
granted or may be exercised; (iv) to determine the option price for the shares
subject to each option, which price shall be subject to the applicable
requirements, if any, of Section 5.1(c) hereof; and (v) to determine the time or
times when each option shall become exercisable and the duration of the exercise
period, which shall not exceed the limitations specified in Section 5.1(a).
No member of the committee serving as Plan Administrator shall be liable
for any action or determination made in good faith with respect to the Plan or
any option granted thereunder.
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2.3. APPOINTMENT AND PROCEEDINGS OF COMMITTEE. The Board may, from time to
time, appoint members of the committee serving as Plan Administrator in
substitution for, or in addition to, members previously appointed and may fill
vacancies, however caused, in such committee; provided, however, that each such
appointee will be an Outside Director, as described in Section 2.2. The
committee serving as Plan Administrator shall hold its meetings at such times
and places as it shall deem advisable. A majority of its members shall
constitute a quorum, and all actions of such committee shall require the
affirmative vote of a majority of its members. Any action may be taken by a
written instrument signed by all of the members, and any action so taken shall
be as fully effective as if it had been taken by a vote of a majority of the
members at a meeting duly called and held.
SECTION 3. STOCK
3.1. SHARES SUBJECT TO PLAN. The stock subject to the options granted
under the Plan shall be shares of the Company's authorized but unissued common
stock, par value $.001 per share ("Common Stock"), or shares of the Company's
Common Stock held in treasury. The total number of shares that may be issued
pursuant to options granted under the Plan shall not exceed an aggregate of
4,700,000 shares of Common Stock, PROVIDED, HOWEVER, that (i) prior to the first
anniversary of the adoption of the Plan, no more than an aggregate maximum of
3,200,000 shares may be issued pursuant to options granted under the Plan, (ii)
prior to the second anniversary of the adoption of the Plan, no more than an
aggregate maximum of 3,500,000 shares may be issued pursuant to options granted
under the Plan, (iii) prior to the third anniversary of the adoption of the
Plan, no more than an aggregate maximum of 3,800,000 shares may be issued
pursuant to options granted under the Plan, (iv) prior to the fourth anniversary
of the adoption of the Plan, no more than an aggregate maximum of 4,100,000
shares may be issued pursuant to options granted under the Plan, (v) prior to
the fifth anniversary of the adoption of the Plan, no more than an aggregate
maximum of 4,400,000 shares may be issued pursuant to options granted under the
Plan. After the fifth anniversary of the adoption of the Plan, no more than an
aggregate maximum of 4,700,000 shares may be issued pursuant to options granted
under the Plan. Such number of shares shall be subject to adjustment as provided
in Section 7 hereof.
3.2. LAPSED OR UNEXERCISED OPTIONS. Whenever any outstanding option under
the Plan expires, is cancelled or is otherwise terminated (other than by
exercise), the shares of Common Stock allocable to the unexercised portion of
such option shall be restored to the Plan and shall again become available for
the grant of other options under the Plan.
3.3. LIMITATION ON GRANTS. In no event may any Plan participant be granted
options with respect to more than 500,000 shares of Common Stock in any fiscal
year. The number of shares of Common Stock issuable pursuant to an option
granted to a Plan participant in a fiscal year that is subsequently forfeited,
cancelled or otherwise terminated shall continue to count toward the foregoing
limitation in such fiscal year. In addition, if the exercise price of an option
is subsequently reduced, the transaction shall be deemed a cancellation of the
original option and the grant of a new one so that both transactions shall count
toward the maximum shares issuable in the fiscal year of each respective
transaction.
SECTION 4. ELIGIBILITY
4.1. ELIGIBLE OPTIONEES. Incentive Options may be granted only to officers
and other employees of the Company or its Subsidiaries, including members of the
Board who are also employees of the Company or a Subsidiary. Nonqualified
Options may be granted to officers or other employees of the Company or its
Subsidiaries, to members of the Board or the Board of Directors of any
Subsidiary whether or not employees of the Company or such Subsidiary, and to
consultants and other individuals providing services to the Company or its
Subsidiaries.
4.2. LIMITATIONS ON 10% STOCKHOLDERS. No Incentive Option shall be granted
to an individual who, at the time the Incentive Option is granted, owns
(including ownership attributed pursuant to Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of stock of the
Company or any parent or Subsidiary of the Company (a "greater-than-10%
stockholder"), unless such Incentive Option provides that (i) the purchase price
per share shall not be less than 110% of the fair market value of the Common
Stock at the time such Incentive Option is granted, and (ii) that such Incentive
Option shall not be exercisable to any extent after the expiration of five years
from the date on which it is granted.
4.3. LIMITATION ON EXERCISABLE OPTIONS. The aggregate fair market value
(determined at the time the Incentive Option is granted) of the Common Stock
with respect to which Incentive Options are exercisable for the first time by
any person during any calendar year under the Plan and under any other option
plan of the Company (or a parent or subsidiary as defined in Section 424 of the
Code) shall not exceed $100,000. Any option granted in excess of the foregoing
limitation shall be specifically designated as being a Nonqualified Option.
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4.4. OPTION GRANTS TO DIRECTORS. As compensation for services to the
Company, each Director of the Company who is not an employee of the Company (an
"Outside Director") and who is elected to the Board shall automatically be
granted upon his or her initial election a fully-vested Nonqualified Option (an
"Initial Option") to purchase 15,000 shares of Common Stock of the Company. In
addition, immediately following each annual meeting of stockholders of the
Company or special meeting in lieu thereof, there shall automatically be granted
to each Outside Director reelected at or remaining in office after such meeting
a fully-vested Nonqualified Option to purchase 5,000 shares of Common Stock.
Each Nonqualified Option granted to an Outside Director pursuant to this Section
4.4 shall expire on the tenth anniversary of the date of grant. The exercise
price of each Nonqualified Option granted pursuant to this Section 4.4 shall be
equal to the fair market value of the Common Stock on the date the Nonqualified
Option is granted, such fair market value to be determined in accordance with
the provisions of Section 5.1(c).
SECTION 5. TERMS OF THE OPTION AGREEMENTS
5.1. MANDATORY TERMS. Each option agreement shall contain such provisions
as the Plan Administrator shall from time to time deem appropriate. Option
agreements need not be identical, but each option agreement by appropriate
language shall include the substance of all of the following provisions:
(a) EXPIRATION. Notwithstanding any other provision of the Plan or
of any option agreement, each option shall expire on the date specified in the
option agreement, which date shall not be later than the tenth anniversary of
the date on which the option was granted (fifth anniversary in the case of an
Incentive Option granted to a greater-than-10% stockholder).
(b) EXERCISE. Each option shall be exercisable in full or in
installments (which need not be equal) and at such times as designated by the
Plan Administrator. To the extent not exercised, installments shall accumulate
and be exercisable, in whole or in part, at any time after becoming exercisable,
but not later than the date the option expires.
(c) PURCHASE PRICE. The purchase price per share of the Common Stock
under each Incentive Option shall be not less than the fair market value of the
Common Stock on the date the option is granted (110% of the fair market value in
the case of a greater-than-10% stockholder). The price at which shares may be
purchased pursuant to Nonqualified Options shall be specified by the Plan
Administrator at the time the option is granted, and shall be not less than fair
market value of the shares of Common Stock on the date such Nonqualified Option
is granted. For the purpose of the Plan, the fair market value of the Common
Stock shall be the closing price per share on the date of grant of the option as
reported by a nationally recognized stock exchange, or, if the Common Stock is
not listed on such an exchange, as reported by the National Association of
Securities Dealers Automated Quotation System, Inc. ("Nasdaq"), or, if the
Common Stock is not quoted on Nasdaq, the fair market value as determined by the
Plan Administrator.
(d) TRANSFERABILITY OF OPTIONS. Options granted under the Plan and
the rights and privileges conferred thereby may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than by will or by applicable laws of descent and distribution, and shall
not be subject to execution, attachment or similar process. Upon any attempt so
to transfer, assign, pledge, hypothecate or otherwise dispose of any option
under the Plan or any right or privilege conferred hereby, contrary to the
provisions of the Plan, or upon the sale or levy or any attachment or similar
process upon the rights and privileges conferred hereby, such option shall
thereupon terminate and become null and void.
(e) TERMINATION OF EMPLOYMENT OR DISABILITY OR DEATH OF OPTIONEE.
Except as may be otherwise expressly provided in the terms and conditions of the
option granted to an Optionee:
(i) Options granted hereunder shall terminate on the earliest
to occur of:
(A) the date of expiration thereof;
(B) the date of termination of the Optionee's employment
with or performance of services for the Company by the Optionee for any reason
(other than as a result of retirement, death or permanent and total disability
of the Optionee) or by the Company for cause (as hereinafter defined);
(C) thirty days after the date of termination of the
Optionee's employment with or performance of services for the Company upon
retirement or by the Company without cause (other than as a result of death or
permanent and total disability of the Optionee);
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(D) twelve months after the date of termination of the
Optionee's employment with or performance of services for the Company as a
result of the death or permanent and total disability of an Optionee. An
Optionee is permanently and totally disabled if he is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to last for a continuous period of not
less than twelve months; permanent and total disability shall be determined in
accordance with Section 22(e)(3) of the Code and the regulations issued
thereunder.
(ii) In the event of the termination of an Optionee's employment
with or performance of services for the Company by the Company without cause
(other than as a result of death or permanent and total disability of the
Optionee) or upon the Optionee's retirement, the Optionee's option shall be
exercisable during the thirty-day post-termination period described in Paragraph
5.1(e)(i)(C) only to the extent that it was exercisable at the time of such
termination of employment or performance of services. In the event of the
termination of the Optionee's employment with or performance of services for the
Company as a result of the permanent and total disability of an Optionee, the
Optionee's option shall be exercisable during the twelve-month post-termination
period referred to in Paragraph 5.1(e)(i)(D) only to the extent that it was
exercisable at the time of such termination of employment or performance of
services. In the event of the termination of the Optionee's employment with or
performance of services for the Company as a result of the death of the
Optionee, the Optionee's executor, administrator or any person or persons to
whom his option may be transferred by will or by laws of descent and
distribution shall have the right at any time during the twelve-month
post-termination period referred to in Paragraph 5.1(e)(i)(D) to exercise such
option, but only to the extent the Optionee was entitled to exercise such option
at the time of such termination of employment or performance of services.
Notwithstanding the foregoing, should the termination of the Optionee's
employment with or performance of services for the Company as a result of death
or permanent and total disability occur after the first anniversary of the date
on which the Optionee was first employed or otherwise began to serve the
Company, the option may be exercised for up to the greater of (A) 50% of all
option shares (and such shares shall be deemed vested) or (B) the number of
shares that had vested as of the date of such termination of employment with or
performance of services for the Company.
(iii) An employment relationship between the Company and the
Optionee shall be deemed to exist during any period in which the Optionee is
employed in any capacity by the Company or by any Subsidiary. Whether authorized
leave of absence or absence on military or government service shall constitute
termination of the employment relationship between the Company and the Optionee
shall be determined by the Plan Administrator at the time thereof. For purposes
of this Section 5.1(e), the term "cause" shall mean (A) any material breach by
the Optionee of any agreement to which the Optionee and the Company are both
parties, (B) any act (other than retirement) or omission to act by the Optionee
which may have a material and adverse effect on the Company's business or on the
Optionee's ability to perform services for the Company, including, without
limitation, the commission of any crime (other than minor traffic violations),
or (C) any material misconduct or material neglect of duties by the Optionee in
connection with the business or affairs of the Company or any Subsidiary or
affiliate of the Company.
(f) RIGHTS OF OPTIONEES. No Optionee shall be deemed for any purpose
to be the owner of any shares of Common Stock subject to any option unless and
until (i) the option shall have been exercised with respect to such shares
pursuant to the terms thereof, and (ii) the Company shall have issued and
delivered a certificate representing such shares. Thereupon, the Optionee shall
have full voting, dividend and other ownership rights with respect to such
shares of Common Stock.
5.2. CERTAIN OPTIONAL TERMS. The Plan Administrator may in its discretion
provide, upon the grant of any option hereunder, that the Company shall have an
option to repurchase all or any number of shares purchased upon exercise of such
option. The repurchase price per share payable by the Company shall be such
amount or be determined by such formula as is fixed by the Plan Administrator at
the time the option for the shares subject to repurchase was granted. The Plan
Administrator may also provide that the Company shall have a right of first
refusal with respect to the transfer or proposed transfer of any shares
purchased upon exercise of an option granted hereunder. In the event the Plan
Administrator shall grant options subject to the Company's repurchase rights or
rights of first refusal, the certificate or certificates representing the shares
purchased pursuant to the exercise of such option shall carry a legend
satisfactory to counsel for the Company referring to such rights.
SECTION 6. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
6.1. NOTICE OF EXERCISE. Any option granted under the Plan may be
exercised by the Optionee by delivering to the Company on any business day a
written notice specifying the option being exercised and the number of shares of
Common Stock the Optionee then desires to purchase and specifying the address to
which the certificates for such shares are to be mailed, accompanied by payment
for such shares.
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6.2. MEANS OF PAYMENT AND DELIVERY. Common Stock purchased on exercise of
an option must be paid for as follows: (a) in cash or by check (acceptable to
the Company in accordance with guidelines established for this purpose), bank
draft or money order payable to the order of the Company, or (b) through the
delivery of shares of Common Stock (which in the case of shares acquired from
the Company upon exercise of an option, have been outstanding for at least six
months) having a fair market value on the last business day preceding the date
of exercise equal to the purchase price, or (c) by delivery of an unconditional
and irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the exercise price, or (d) if so permitted by the
instrument evidencing the option (or in the case of a Nonqualified Option, by
the Plan Administrator on or after grant of the option), by delivery of a
promissory note of the Optionee to the Company, payable on such terms as are
specified by the Plan Administrator, or (e) by any combination of the
permissible forms of payment; PROVIDED, that if the Common Stock delivered upon
exercise of the option is an original issue of authorized Common Stock, at least
so much of the exercise price as represents the par value of such Common Stock
must be paid other than by the Optionee's promissory note or personal check. In
the event that payment of the option price is made under (b) above, the Plan
Administrator may provide that the Optionee be granted an additional option
covering the numbers of shares surrendered, at an exercise price equal to the
fair market value of a share of Common Stock on the date of surrender. For the
purpose of this Section, the fair market value of the shares of Common Stock so
delivered to the Company shall be determined in the manner specified in Section
5.1(c) hereof. As promptly as practicable after receipt of such written
notification and payment, the Company shall deliver to the Optionee certificates
for the number of shares with respect to which such Option has been so
exercised, issued in the Optionee's name; provided, however, that such delivery
shall be deemed effected for all purposes when the Company or a stock transfer
agent of the Company shall have deposited such certificates in the United States
mail, addressed to the Optionee, at the address specified pursuant to Section
6.1.
SECTION 7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
7.1 NO EFFECT OF OPTIONS UPON CERTAIN CORPORATE TRANSACTIONS. The
existence of outstanding options shall not affect in any way the right or power
of the Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of Common Stock, or any issue of bonds, debentures, preferred or prior
preference stock ahead of or affecting the Common Stock or the rights thereof,
or the dissolution or liquidation of the Company, or any sale or transfer of all
or any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
7.2. STOCK DIVIDENDS, RECAPITALIZATIONS, ETC. If the Company shall effect
a subdivision or consolidation of shares or other capital readjustment, the
payment of a stock dividend, or other increase or reduction of the number of
shares of the Common Stock outstanding, without receiving compensation therefor
in money, services or property, then: (i) the number, class and per share price
of shares of stock subject to outstanding options hereunder, and the number of
shares as to which automatic formula grants of options are to be made under
Section 4.4 above, shall be appropriately adjusted in such a manner as to
entitle an Optionee to receive upon exercise of an option, for the same
aggregate cash consideration, the same total number and class of shares that the
owner of an equal number of outstanding shares of Common Stock would own as a
result of the event requiring the adjustment; the number and class of shares
with respect to which options may be granted under the Plan shall be adjusted by
substituting for the total number of shares of Common Stock then reserved for
issuance under the Plan that number and class of shares of stock that the owner
of an equal number of outstanding shares of Common Stock would own as the result
of the event requiring the adjustment.
7.3. DETERMINATION OF ADJUSTMENTS. Adjustments under this Section 7 shall
be determined by the Plan Administrator and such determinations shall be
conclusive. The Plan Administrator shall have the discretion and power in any
such event to determine and to make effective provision for acceleration of the
time or times at which any option or portion thereof shall become exercisable.
No fractional shares of Common Stock shall be issued under the Plan on account
of any adjustment specified above.
7.4. NO ADJUSTMENT IN CERTAIN CASES. Except as hereinbefore expressly
provided, the issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock then subject to outstanding options.
SECTION 8. EFFECT OF CERTAIN TRANSACTIONS
If the Company is a party to a reorganization or merger with one or more
other corporations, whether or not the Company is the surviving or resulting
corporation, or if the Company consolidates with or into one or more other
<PAGE>
corporations, or if the Company is liquidated or sells or otherwise disposes of
substantially all of its assets to another corporation (each hereinafter
referred to as a "Transaction"), in any such event while unexercised options
remain outstanding under the Plan, then: (i) subject to the provisions of clause
(iii) below, after the effective date of such Transaction unexercised options
shall remain outstanding and shall be exercisable in shares of Common Stock, or,
if applicable, shares of such stock or other securities, cash or property as the
holders of shares of Common Stock received pursuant to the terms of such
Transaction; (ii) the Plan Administrator may accelerate the time for exercise of
all unexercised and unexpired options to and after a date prior to the effective
date of such Transaction; or (iii) any outstanding options may be cancelled by
the Plan Administrator as of the effective date of such Transaction, provided
that: (x) notice of such cancellation shall be given to each holder of an
option; (y) the Plan Administrator shall have accelerated the time for exercise
of all unexercised and unexpired options that it proposes to cancel; and (z)
each holder of an option shall have the right to exercise such option in full.
SECTION 9. AMENDMENT OR TERMINATION OF THE PLAN
The Board may terminate the Plan at any time, and may amend the Plan at
any time and from time to time, subject to the limitation that, except as
provided in Sections 7 and 8 hereof, no amendment shall be effective unless
approved by the stockholders of the Company in accordance with applicable law
and regulations, at an annual or special meeting held within twelve months
before or after the date of adoption of such amendment, in any instance in which
such amendment would: (i) increase the number of shares of Common Stock as to
which options may be granted under the Plan; or (ii) modify the provisions of
Section 4 hereof relating to eligibility to receive Incentive Options under the
Plan.
Except as provided in Sections 7 and 8 hereof, rights and obligations
under any option granted before termination or amendment of the Plan shall not
be altered or impaired by such termination or amendment except with the consent
of the Optionee.
SECTION 10. NON-EXCLUSIVITY OF THE PLAN; NON-UNIFORM DETERMINATIONS
Neither the adoption of the Plan by the Board nor the approval of the Plan
by the stockholders of the Company shall be construed as creating any
limitations on the power of the Board to adopt such other incentive arrangements
as it may deem desirable, including without limitation the granting of stock
options otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.
The Plan Administrator's determinations under the Plan need not be uniform
and may be made by it selectively among persons who receive or are eligible to
receive options under the Plan (whether or not such persons are similarly
situated). Without limiting the generality of the foregoing, the Plan
Administrator shall be entitled, among other things, to make non-uniform and
selective determinations, and to enter into non-uniform and selective option
agreements, as to (i) the persons to receive options under the Plan, (ii) the
terms and provisions of options, (iii) the exercise by the Plan Administrator of
its discretion in respect of the exercise of options pursuant to the terms of
the Plan, and (iv) the treatment of leaves of absence pursuant to Section 5.1(e)
hereof.
SECTION 11. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW; WITHHOLDING TAXES
The obligation of the Company to sell and deliver shares of Common Stock
with respect to options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by government
agencies as may be deemed necessary or appropriate by the Plan Administrator.
All shares sold under the Plan shall bear appropriate legends. The Company may,
but shall in no event be obligated to, register or qualify any shares covered by
options under applicable federal and state securities laws; and in the event
that any shares are so registered or qualified the Company may remove any legend
on certificates representing such shares. The Company shall not be obligated to
take any other affirmative action in order to cause the exercise of an option or
the issuance of shares pursuant thereto to comply with any law or regulation of
any governmental authority. The Plan shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts.
Whenever under the Plan shares are to be delivered upon exercise of an
option, the Company shall be entitled to require as a condition of delivery that
the Optionee remit an amount sufficient to satisfy all federal, state and other
governmental withholding tax requirements related thereto. An employee may elect
to have such tax withholding obligation satisfied, in whole or in part, by: (i)
authorizing the Company to withhold from shares of Common Stock to be issued
pursuant to the exercise of a Nonqualified Option a number of shares with an
aggregate fair market value (as defined in Section 5.1(c) hereof determined as
of the date the withholding is effected) that would satisfy the withholding
amount due with respect to such exercise; or (ii) transferring to the Company
shares of Common Stock owned by the employee with an aggregate fair market value
(as defined in Section 5.1(c) hereof determined as of the date the withholding
is effected) that would satisfy the withholding amount due. With respect to any
<PAGE>
employee who is subject to Section 16 of the Exchange Act, the following
additional restrictions shall apply:
(a) the election to satisfy tax withholding obligations relating to
an option exercise in the manner permitted by Section 11(i) above shall be made
either (1) during the period beginning on the third business day following the
date of release of quarterly or annual summary statements of sales and earnings
of the Company and ending on the twelfth business day following such date or (2)
at least six months prior to the date of exercise of the option;
(b) such election shall be irrevocable;
(c) such election shall be subject to the consent or approval of the
Plan Administrator; and
(d) the Common Stock withheld to satisfy tax withholding, if granted
at the discretion of the Plan Administrator, must pertain to an option which has
been held by the employee for at least six months from the date of grant of the
option.
SECTION 12. "LOCKUP" AGREEMENT
The Plan Administrator may in its discretion specify upon granting an
option that the Optionee shall agree, for a period of time (not to exceed 180
days) from the effective date of any registration of securities of the Company,
upon request of the Company or the underwriter or underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
shares issued pursuant to the exercise of such option, without the prior written
consent of the Company or such underwriter or underwriters, as the case may be.
SECTION 13. EFFECTIVE DATE AND DURATION OF PLAN
The Plan shall become effective upon its adoption by the Board provided
that the stockholders of the Company shall have approved the Plan within twelve
months prior to or following the adoption of the Plan by the Board. No option
may be granted under the Plan after the tenth anniversary of the effective date.
The Plan shall terminate (i) when the total amount of the Stock with respect to
which options may be granted shall have been issued upon the exercise of options
or (ii) by action of the Board pursuant to Section 9 hereof, whichever shall
first occur.
