EXHIBIT 10.1
TEMPTRONIC CORPORATION
1998 Incentive and Non-Statutory Stock Option Plan
SECTION 1. PURPOSE
This 1998 Incentive and Non-Statutory Stock Option Plan (the "Plan") is
intended as a performance incentive for officers and employees of Temptronic
Corporation, a Massachusetts 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 ("Non-Statutory 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 Non-Statutory Options.
2.2 Administration by the Board. This Plan shall be administered by the
Board of Directors of the Company (the "Board"). The Board 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 responsibility for Plan
operation, management and administration on such terms, consistent with the
Plan, as the Board may establish; (vi) the power to delegate to other persons
the responsibility for performing ministerial acts in furtherance of the
Plan's purpose; 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 Board shall have full and final
authority in its discretion to determine: (i) the number of shares subject to
each option; (ii) the time or times at which options will be granted; (iii)
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
(iv) the time or times when each option shall become exercisable, the
conditions under which exercise may be accelerated and the duration of the
exercise period, which shall not exceed the limitations specified in Section
5.1(a).
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2.3 Appointment and Proceedings of Committee. The Board may appoint a
Stock Option Committee (the "Committee") which shall consist of at least
three members of the Board. The Board may from time to time appoint members of
the Committee in substitution for or in addition to members previously
appointed, and may fill vacancies, however caused, in the Committee. The
Committee shall select one of its members as its chairman and 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 the 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.
2.4 Powers of Committee. Subject to the provisions of this Plan and the
approval of the Board, the Committee shall have the power to make
recommendations to the Board as to whom options should be granted, the number
of shares to be covered by each option, the time or times of option grants,
and the terms and conditions of each option. In addition, the Committee shall
have authority to interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to the Plan, and to exercise the administrative and
ministerial powers of the Board with regard to aspects of the Plan other than
the granting of options. The interpretation and construction by the Committee
of any provisions of the Plan or of any option granted hereunder and the
exercise of any power delegated to it hereunder shall be final, unless
otherwise determined by the Board. 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 granted hereunder.
SECTION 3. STOCK
3.1 Shares Subject to Plan. The stock subject to the options granted
under the Plan shall be 250,000 shares of the Company's authorized but
unissued common stock, $.01 par value ("Common Stock"). The total number of
shares that may be issued pursuant to options granted under the Plan shall not
exceed an aggregate of 250,000 shares of Common Stock. 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.
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.
Non-Statutory 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 other persons who have provided, are providing or will provide services
to the Company or a corporation or other business entity that is or becomes a
Subsidiary.
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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-l0%
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 Non-Statutory
Option.
SECTION 5. TERMS OF THE OPTION AGREEMENTS
5.1 Mandatory Terms. Each option agreement shall contain such
provisions as the Board or the Committee 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
Board or the Committee. 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). For the purpose of the
Plan the fair market value of the Common Stock shall be determined by the
Board or the Committee. The price at which shares may be purchased pursuant
to Non-Statutory Options shall be specified by the Board or the Committee at
the time the option is granted, and may be less than, equal to or greater than
the fair market value of the shares of Common Stock on the date such Non-
Statutory Option is granted, but shall not be less than the par value of
shares of Common Stock.
(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
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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 there upon terminate and become null and
void.
(e) Termination of Employment or Death of Optionee. Except as may
be otherwise expressly provided in the terms and conditions of the option
granted to an Optionee, options granted hereunder shall terminate on the
earliest to occur of:
(i) the date of expiration thereof;
(ii) if the Optionee is employed by the Company and such employment
is terminated by the Company for cause, as hereinafter defined, on the date of
such termination; or
(iii) if the Optionee is employed by the Company and such employment
is terminated for any reason other than death or for cause as aforesaid, on
the earlier of the date of expiration thereof or 60 days following the date of
such termination.
Until the date on which the option so expires, the Optionee may exercise
that portion of his option which is exercisable at the time of termination of
such relationship.
An employment relationship between the Company and the optionee shall be
deemed to exist during any period during which the Optionee is employed by the
Company or by any Subsidiary. Whether authorized leave of absence or absence
on military government service shall constitute termination of the employment
relationship between the Company and the Optionee shall be determined by the
Board or the Committee 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.
In the event of the death of an Optionee while in an employment or other
relationship with the Company and before the date of expiration of such
option, such option shall terminate on the earlier of such date of expiration
or 180 days following the date of such death. After the death of the
Optionee, his 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 prior to such termination, to exercise the
option to the extent the Optionee was entitled to exercise such option as of
the date of his death.
(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
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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 Board or the Committee may in its
discretion provide; upon the grant of any option hereunder, that the Company
shall have the right from time to time 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 in such a manner
as is fixed or determined by the Board or the Committee at the time the option
for the shares subject to repurchase was granted. The Board or the Committee
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 Board or the
Committee 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 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 (the "Notice"). The Notice shall be
accompanied by payment for such shares, any required payment of withholding
taxes, and such documents, including without limitation an investment letter
and an agreement relating to restrictions on transfer, rights of first refusal
and Company buy-back rights (if applicable), as may reasonably be required or
requested by the Company.
6.2 Means of Payment and Delivery. Payment for the shares of Common
Stock purchased pursuant to the exercise of an option shall be made either (i)
in cash equal to the option price for the number of shares specified in the
Notice (the "Total Option Price"), or (ii) if authorized by the applicable
option agreement, in shares of Common Stock of the Company having a fair
market value equal to or less than the Total Option Price, plus cash in an
amount equal to the excess, if any, of the Total Option Price over the fair
market value of such shares of Common Stock. For the purpose of the preceding
sentence, 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 or other appropriate
person 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 or other appropriate person,
at the address specified pursuant to Section 6.1.
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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 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; and (ii) 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 Board or the Committee and such determinations shall be
conclusive. The Board or the Committee 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
corporations, or if the Company is liquidated, or if there is a sale or other
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disposition of substantially all of the Company's capital stock or assets to a
third party or parties (each hereinafter referred to as a "Transaction"), in
any such event while unexercised options remain outstanding under the Plan,
then: (i) subject to the Board's powers under clauses (ii) and (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 Board may accelerate the time for exercise of all
unexercised and unexpired options, effective as of a date prior to the
effective date of such Transaction; or (iii) all outstanding options may be
canceled by the Board 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) each holder of an option shall have the right to exercise such
option to the extent that the same is then exercisable or, if the Board shall
have accelerated the time for exercise of all unexercised and unexpired
options, in full, prior to the effective date of such Transaction, and (z) to
the extent not so exercised, all of such options shall be canceled prior to or
as of such effective date.
SECTION 9. AMENDMENT 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) change in substance
the provisions of Section 4 hereof relating to eligibility to participate in
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 Board's or Committee'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
Board or the Committee shall be entitled, among other things, to make
nonuniform and selective determinations, and to enter into nonuniform and
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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
Board or the Committee 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 Board or the
Committee. 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.
SECTION 12. "LOCKUP" AGREEMENT
The Board or the Committee 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 OF PLAN
The effective date of the Plan is October 26, 1998, the date on which it
was approved by the Board. No option may be granted under the Plan after the
tenth anniversary of such effective date. Subject to the foregoing, options
may be granted under the Plan at any time subsequent to October 26, 1998;
provided, however, that (a) no Incentive Option shall be exercised or
exercisable unless the stockholders of the Company shall have approved the
Plan no later than one year from such effective date, and (b) all Incentive
Options issued prior to the date of such stockholders' approval shall contain
a reference to such condition.
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