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EXHIBIT 10.11
SHOPSMITH, INC.
2000 DIRECTOR STOCK OPTION PLAN
1. PURPOSE. The purpose of the Plan is to promote the interests of the
shareholders of the Company by increasing the identity of interests between
nonemployee directors of the Company and the shareholders of the Company.
2. DEFINITIONS. For purposes of the Plan:
"ACQUISITION TRANSACTION" means (1) any sale or disposition of
a majority of the assets of the Company, (2) any merger or
consolidation to which the Company is a party and in which either the
Company is not the surviving corporation or the Shares are reclassified
or recapitalized, (3) any sale or other disposition, in a single
transaction or a series or related transactions, of 51% or more of the
outstanding Shares of the Company, or (4) the liquidation of the
Company.
"AGREEMENT" means a written agreement between the Company and
a Nonemployee Director evidencing the grant of an Option and setting
forth the terms and conditions of the Option.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" means Shopsmith, Inc., an Ohio corporation.
"FAIR MARKET VALUE" means the market price of a Share as
determined on the basis of market quotations on the date the value of a
Share is to be established, or, if no quotations are reported for such
date, on the next preceding date for which quotations are reported.
"NONEMPLOYEE DIRECTOR" means a director of the Company who is
not an employee of the Company or any subsidiary of the Company.
"OPTION" means a right to purchase Shares granted under the
Plan. Options granted under the Plan are not intended to qualify as
incentive stock options under Section 422 of the Code.
"PLAN" means this 2000 Director Stock Option Plan, as amended
from time to time.
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"QUALIFIED DOMESTIC RELATIONS ORDER" means a qualified
domestic relations order as defined in Section 414(p)(1)(B) of the Code
that satisfies the conditions of Section 414(p)(1)(A) of the Code.
"SHARES" means the Common Shares, without par value, of the
Company (including any new, additional or different shares or
securities resulting from any events described in Section 8).
3. ADMINISTRATION. The Plan shall be administered by the Board. Subject
to the express terms and conditions set forth in the Plan, the Board shall have
the power from time to time: (i) to construe and interpret the terms of the Plan
and the Options including, without limitation, to correct any defect or omission
or to reconcile any inconsistency in the Plan or in any Agreement and to
establish, amend and revoke rules and regulations for the administration of the
Plan, in the manner and to the extent the Board deems necessary or advisable to
make the Plan fully effective (and all decisions and determinations by the Board
in the exercise of this power shall be final and binding upon the Company and
each Nonemployee Director), and (ii) generally, to exercise such powers and to
perform such acts as the Board deems necessary or advisable to promote the best
interests of the Company with respect to the Plan.
4. SHARES SUBJECT TO THE PLAN. (a) The maximum number of Shares that
may be issued or delivered pursuant to Options granted under the Plan is 72,000,
subject to adjustment as provided in Section 8. Such Shares may be authorized
but unissued Shares or Shares held in treasury. The Company shall reserve, for
purposes of the Plan, out of its authorized but unissued Shares or treasury
Shares, or partly out of each, such number of Shares as shall be determined by
the Board.
(b) Whenever all or any portion of an outstanding Option expires, is
canceled or otherwise terminates (other than by exercise), the Shares subject to
the unexercised portion of the Option that has expired, been canceled or has
terminated again shall be available for the grant of Options hereunder without
reducing the number of Shares otherwise available under the Plan. Shares that
have been surrendered to the Company to satisfy all or a portion of the purchase
price of an Option thereafter shall not be available under the Plan.
5. GRANT OF OPTIONS. Each person who is a Nonemployee Director on the
effective date of the Plan shall be granted an Option to purchase 2,000 Shares.
During the term of the Plan, each person who is a Nonemployee Director
immediately following each Annual Meeting of Shareholders of the Company,
commencing with the 2000 Annual Meeting of Shareholders, automatically shall be
granted an Option to purchase 2,000 Shares, effective as of the date that such
Annual Meeting of Shareholders is concluded. No Options may be granted under the
Plan except as set forth in this Section 5.
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6. TERMS OF OPTIONS. The terms and conditions of each Option granted
under the Plan shall be set forth in an Agreement. Each Option and Agreement
shall be subject to the following conditions:
(a) EXERCISE PRICE. The exercise price per Share of each
Option shall be the Fair Market Value of a Share on the date the Option
is granted.
(b) DURATION. Each Option shall have a term extending from the
date of grant until the earlier of the date that is (i) the tenth
anniversary of the date of grant, or (ii) the first anniversary of the
date that the grantee ceases to be a director of the Company for any
reason.
(c) EXERCISABILITY. Each Option granted under the Plan shall
be fully exercisable at the time the Option is granted.
(d) NON-TRANSFERABILITY. No Option granted under the Plan
shall be pledged, assigned, hypothecated or transferred by the
Nonemployee Director other than by will or the laws of descent and
distribution or pursuant to a Qualified Domestic Relations Order.
Options may be exercised during the lifetime of a Nonemployee Director
only by the Nonemployee Director or the Nonemployee Director's guardian
or legal representative or the transferee under a Qualified Domestic
Relations Order.
(e) EXERCISE OF OPTION. (i) An Option may be exercised only by
a written notice delivered to the President or the Secretary of the
Company at the Company's principal executive office, specifying the
number of Shares to be purchased and accompanied by payment therefor
and otherwise in accordance with the Agreement. The exercise price for
the Shares to be purchased pursuant to the exercise of an Option shall
be paid in full upon such exercise in cash, by check or by transferring
Shares to the Company; provided, however, that payment by the transfer
of already owned Shares shall only be permitted if it does not result
in any charge against the income of the Company or, if so, it is
otherwise approved by the Board. Any Shares transferred to the Company
as payment of the exercise price of an Option shall be valued at their
Fair Market Value on the date the Option is exercised. If required by
the Board, the Nonemployee Director shall deliver the Agreement
evidencing the Option to the President or the Secretary of the Company,
who shall endorse on the Agreement a notation of such exercise and
shall return such Agreement to the Nonemployee Director. No fractional
Shares shall be issued upon the exercise of an Option.
(ii) If the Plan or any law, regulation or interpretation
requires the Company to take any action regarding the Shares before the
Company issues certificates for the Shares being purchased, the Company
may delay delivering the certificates for the Shares for the period
necessary to take such action; provided, however, that the Company
shall use its reasonable best efforts to promptly take any such action.
The certificate or certificates
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representing Shares acquired upon the exercise of an Option may bear a
legend restricting the transfer of such Shares to the extent required
by applicable law, regulation or interpretation, and the Company may
impose stop transfer instructions to implement such restrictions, if
applicable.
(f) AMENDMENT OF OPTIONS. Subject to the terms and provisions
of the Plan, the Board may amend any outstanding Option in any respect;
provided, however, that (i) no such amendment shall reduce the exercise
price of the Option (except to set forth an adjustment in the exercise
price made pursuant to Section 8), and (ii) the consent of the holder
of the Option to such amendment must be obtained if the amendment would
adversely affect the rights of the holder under the Option.
7. CANCELLATION OF OPTIONS. In the event any Acquisition Transaction is
authorized or approved by either the Board or the shareholders of the Company,
the Board shall have the authority in its sole discretion to cancel any Option
granted under the Plan, effective upon not less than 20 days' notice. Promptly
after such cancellation, the Company shall pay in cash to the holder of each
canceled Option an amount equal to the excess, if any, of the aggregate Fair
Market Value on the effective date of such cancellation of the Shares then
subject to the Option over the aggregate Option price of such Shares.
8. ADJUSTMENTS TO SHARES. In the event any change is made to the shares
subject to the Plan or subject to any outstanding Option granted under the Plan
(whether by reason of merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, combination of shares, exchange of shares, change
in corporate structure or otherwise), then appropriate adjustments shall be made
to the maximum number and kind of shares subject to the Plan and the number and
kind of shares and price per share subject to outstanding and future Options.
9. TERMINATION AND AMENDMENT OF THE PLAN. The Plan shall remain in
effect until terminated by the Board or such earlier date as of which the
maximum number of Shares that may be issued or delivered upon the exercise of
Options granted under the Plan have been so issued or delivered, and no Options
shall thereafter be granted under the Plan. The Board may terminate the Plan at
any time and may amend the Plan from time to time. The rights and obligations of
a Nonemployee Director with respect to any Option outstanding at the time of any
such amendment to the Plan shall not be adversely altered or impaired by such
amendment, except with the consent of such Nonemployee Director.
10. GOVERNING LAW; APPROVALS. (a) The Plan and the rights of all
persons claiming hereunder shall be construed and determined in accordance with
the laws of the State of Ohio without giving effect to the choice of law
principles thereof.
(b) The obligation of the Company to sell or deliver Shares with
respect to Options granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all
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applicable federal and state securities laws and the rules of any stock exchange
on which the Shares may be listed.
(c) If at any time the Board determines, in its absolute discretion,
that the listing, registration or qualification of Shares issuable pursuant to
the Plan is required by any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of, or in connection with, the grant of an Option or
the issuance of Shares upon the exercise of an Option, no Option shall be
granted or payment made or Shares issued, in whole or in part, unless such
listing, registration, qualification, consent or approval has been effected or
obtained free of any conditions not acceptable to the Board.
11. EFFECTIVE DATE. The Plan was adopted by the Board on February 2,
2000 and is effective on such date.
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