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EXHIBIT 99.1
STOCKER & YALE, INC.
1996 STOCK OPTION AND INCENTIVE PLAN
AMENDED AND RESTATED EFFECTIVE MAY 20, 1999
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the Stocker & Yale, Inc. 1996 Stock Option and
Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable
the officers, employees, Directors and other key persons of Stocker & Yale, Inc.
(the "Company") and its Subsidiaries upon whose judgment, initiative and efforts
the Company largely depends for the successful conduct of its business to
acquire a proprietary interest in the Company. It is anticipated that providing
such persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and strengthening their desire to remain
with the Company.
The following terms shall be defined as set forth below:
"ACT" means the Securities Exchange Act of 1934, as amended.
"ADMINISTRATOR" means the Board of Directors of the Company or a
Committee of not less than two Independent Directors.
"AWARD" or "AWARDS," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Restricted Stock Awards, Unrestricted Stock Awards, Performance Share
Awards and Dividend Equivalent Rights.
"BOARD" means the Board of Directors of the Company.
"CAUSE" as such term relates to the termination of any person means the
occurrence of one or more of the following: (i) such person is convicted of,
pleads guilty to, or confesses to any felony or any act of fraud,
misappropriation or embezzlement which has an immediate and materially adverse
effect on the Company or any Subsidiary, as determined by the Board in good
faith in its sole discretion, (ii) such person engages in a fraudulent act to
the material damage or prejudice of the Company or any Subsidiary or in conduct
or activities materially damaging to the property, business or reputation of the
Company or any Subsidiary, all as determined by the Board in good faith in its
sole discretion, (iii) any material act or omission by such person involving
malfeasance or negligence in the performance of such person's duties to the
Company or any Subsidiary to the material detriment of the Company or any
Subsidiary, as determined by the Board in good faith in its sole discretion,
which has not been corrected by such person within 30 days after written notice
from the Company of any such act or omission, (iv) failure by such person to
comply in any material respect with the terms of his employment
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agreement, if any, or any written policies or directives of the Board as
determined by the Board in good faith in its sole discretion, which has not been
corrected by such person within 30 days after written notice from the Company of
such failure, or (v) material breach by such person of his noncompetition
agreement with the Company, if any, as determined by the Board in good faith in
its sole discretion.
"CHANGE OF CONTROL" is defined in Section 14.
"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"COMMITTEE" means a committee of two or more Non-Employee Directors
appointed by the Board to administer the Plan.
"DISABILITY" means an individual's inability to perform his normal
required services for the Company and its Subsidiaries for a period of six
consecutive months by reason of the individual's mental or physical disability,
as determined by the Administrator in good faith in its sole discretion.
"DIVIDEND EQUIVALENT RIGHT" means Awards granted pursuant to Section 9.
"EFFECTIVE DATE" means the date on which the Plan is approved by
stockholders as set forth in Section 16.
"FAIR MARKET VALUE" on any given date means the value determined by the
Administrator in accordance with Section 3(e).
"INCENTIVE STOCK OPTION" means any Stock Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the Code.
"INDEPENDENT DIRECTOR" means a member of the Board who is not also an
employee of the Company or any Subsidiary.
"NON-EMPLOYEE DIRECTOR" means any Independent Director who is both a
"Non- Employee Director" within the meaning of Rule 16b-3(b)(3)(i) promulgated
under the Act or any successor definition under said rule, and an "outside
director" within the meaning of Section 162(m) of the code and the regulations
promulgated thereunder.
"NON-QUALIFIED STOCK OPTION" means any Stock Option that is not an
Incentive Stock Option.
"OPTION" or "STOCK OPTION" means any option to purchase shares of Stock
granted pursuant to Section 5.
"PERFORMANCE SHARE AWARD" means Awards granted pursuant to Section 8.
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"RESTRICTED STOCK AWARD" means Awards granted pursuant to Section 6.
"RETIREMENT" means an individual's termination of employment (or other
business relationship) with the Company and its Subsidiaries after attainment of
age 65 or attainment of age 58 and completion of 10 years of service.
"STOCK" means the Common Stock, par value $.001 per share, of the
Company, subject to adjustments pursuant to Section 3.
"SUBSIDIARY" means any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities, beginning with
the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
"UNRESTRICTED STOCK AWARD" means any Award granted pursuant to
Section 7.
SECTION 2. ADMINISTRATION OF PLAN; AUTHORITY TO SELECT PARTICIPANTS AND
DETERMINE AWARDS AND FAIR MARKET VALUE
(a) POWERS OF ADMINISTRATOR. The Administrator shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:
(i) to select the officers, employees and key persons of the
Company and its Subsidiaries to whom Awards may from time to time be
granted;
(ii) to determine the time or times of grant, and the extent, if
any, of Incentive Stock Options, Non-Qualified Stock Options,
Restricted Stock Awards, Unrestricted Stock Awards, Performance Share
Awards and Dividend Equivalent Rights, or any combination of the
foregoing, granted to any one or more participants;
(iii) to determine the number of shares of Stock to be covered by
any Award;
(iv) to determine and modify from time to time the terms and
conditions, including restrictions, not inconsistent with the terms of
the Plan, of any Award, which terms and conditions may differ among
individual Awards and participants, and to approve the form of written
instruments evidencing the Awards;
(v) to accelerate at any time the exercisability or vesting of
all or any portion of any Award;
(vi) to determine the Fair Market Value of Stock for all purposes
of the Plan in accordance with Section 3(e);
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(vii) subject to the provisions of Section 5(a)(iii), to extend
at any time the period in which Stock Options may be exercised;
(viii) to determine at any time whether, to what extent, and
under what circumstances Stock and other amounts payable with respect
to an Award shall be deferred either automatically or at the election
of the participant and whether and to what extent the Company shall
pay or credit amounts constituting interest (at rates determined by
the Administrator) or dividends or deemed dividends on such deferrals;
and
(ix) at any time to adopt, alter and repeal such rules,
guidelines and practices for administration of the Plan and for its
own acts and proceedings as it shall deem advisable; to interpret the
terms and provisions of the Plan and any Award (including related
written instruments); to make all determinations it deems advisable
for the administration of the Plan; to decide all disputes arising in
connection with the Plan; and to otherwise supervise the
administration of the Plan.
All decisions and interpretations of the Administrator shall be binding
on all persons, including the Company and Plan participants.
(c) DELEGATION OF AUTHORITY TO GRANT OPTIONS. The Administrator may, in
its sole discretion, delegate to the Chairman of the Board of the Company power
and authority, under Section 2(b) (including paragraphs (i) through (iv)
thereof) and Section 5, to grant Options to employees of the Company effective
on the first day of the employee's employment with the Company; provided,
however, that no such grant shall be made to an employee who is subject to the
reporting requirements of Section 16 of the Act; and provided further that the
power and authority delegated hereunder shall not include any power and
authority conferred by paragraphs (v) through (viii) of Section 2(b) or by
Section 13 or any power and authority under Section 5 to alter the rights of the
employee or otherwise exercise discretion with respect to the Option after the
grant date. The power and authority delegated hereunder shall be subject to such
additional limitations as the Administrator may specify.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) STOCK ISSUABLE. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be six hundred thousand (600,000)
shares. For purposes of this limitation, the shares of Stock underlying any
Awards which are forfeited, canceled, reacquired by the Company, satisfied
without the issuance of Stock or otherwise terminated (other than by exercise)
shall be added back to the shares of Stock available for issuance under the
Plan. Subject to such overall limitation, shares of Stock may be issued up to
such maximum number pursuant to any type or types of Award; provided, however,
that Stock Options with respect to no more than forty thousand (40,000) shares
of Stock may be granted to any one individual participant during any calendar
year period. The shares available for
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issuance under the Plan may be authorized but unissued shares of Stock or shares
of Stock reacquired by the Company.
(b) RECAPITALIZATIONS. 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, the outstanding shares of
Stock are increased or decreased or are exchanged for a different number or kind
of shares or other securities of the Company, or 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 Stock or other securities, the
Administrator shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, (ii) the number
of Stock Options that can be granted to any one individual participant, (iii)
the number and kind of shares or other securities subject to any then
outstanding Awards under the Plan, and (iv) the price for each share subject to
any then outstanding Stock Options under the Plan, without changing the
aggregate exercise price (i.e., the exercise price multiplied by the number of
Stock Options) as to which such Stock Options remain exercisable. The adjustment
by the Administrator shall be final, binding and conclusive. No fractional
shares of Stock shall be issued under the Plan resulting from any such
adjustment, but the Administrator in its discretion may make a cash payment in
lieu of fractional shares.
(c) MERGERS. Upon consummation 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 Board, 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 Stock Options: (i) provide that such Stock
Options shall be assumed or equivalent options shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written
notice to the optionee, provide that all unexercised Stock 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, and/or (iii) in the event of a business combination under the terms of
which holders of the Stock of the Company will receive upon consummation thereof
a cash payment for each share surrendered in the business combination, make or
provide for a cash payment to the optionee equal to the difference between (A)
the value (as determined by the Administrator) of the consideration payable per
share of Stock pursuant to the business combination (the "Merger Price") times
the number of shares of Stock subject to such outstanding Stock 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 Stock Options in exchange for
the termination of such Stock Options.
(d) SUBSTITUTE AWARDS. The Administrator may grant Awards under the
Plan in substitution for stock and stock based awards held by employees of
another corporation who become employees of the Company or a Subsidiary as the
result of a merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the
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Company or a Subsidiary of property or stock of the employing corporation. The
Administrator may direct that the substitute awards be granted on such terms and
conditions as the Administrator considers appropriate in the circumstances.
(e) FAIR MARKET VALUE. Fair market value shall be based on the last
reported sale price at which Stock is traded on such date or, if no Stock is
traded on such date, the next preceding date on which the Stock was traded. The
price at which Stock is traded shall be determined based on the NASDAQ SmallCap
system (or the NASDAQ National Market System, if applicable), or in the event
that the Stock is not traded on either the NASDAQ SmallCap System or the NASDAQ
National Market system, the price at which Stock is traded shall be determined
on the Vancouver Stock Exchange (provided that the price shall be expressed in
the currency of the United States).
SECTION 4. ELIGIBILITY
Participants in the Plan will be such full or part-time officers, and
other employees and key persons of the Company and its Subsidiaries who are
responsible for or contribute to the management, growth or profitability of the
Company and its Subsidiaries as are selected from time to time by the
Administrator, in its sole discretion, or by the Chairman of the Board of the
Company pursuant to authority delegated under Section 2(c). Independent
Directors are also eligible to participate in the Plan but only to the extent
provided in Section 5(c) and Section 7 below.
SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock
Options or NonQualified Stock Options. Incentive Stock Options may be granted
only to employees of the Company or any Subsidiary that is a "subsidiary
corporation" within the meaning of Section 424(f) of the Code. To the extent
that any Option does not qualify as an Incentive Stock Option, it shall be
deemed a Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after May 20,
2009.
(a) STOCK OPTIONS GRANTED TO EMPLOYEES AND KEY PERSONS. The
Administrator in its discretion may grant Stock Options to eligible employees
and key persons of the Company or any Subsidiary. Stock Options granted to
employees pursuant to this Section 5(a) shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable:
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(i) EXERCISE PRICE. The exercise price per share for the Stock covered
by a Stock Option granted pursuant to this Section 5(a) shall be determined
by the Administrator at the time of grant but shall not be less than 100%
of the Fair Market Value on the date of grant in the case of Incentive
Stock Options, or 85% of the Fair Market Value on the date of grant, in the
case of Non-Qualified Stock Options. Notwithstanding the foregoing, with
respect to Non-Qualified Stock Options which are granted in lieu of cash
bonus, the exercise price per share shall not be less than 50% of the Fair
Market Value on the date of grant. If an employee owns or is deemed to own
(by reason of the attribution rules applicable under Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock of
the Company or any parent or subsidiary corporation and an Incentive Stock
Option is granted to such employee, the option price of such Incentive
Stock Option shall be not less than 110% of the Fair Market Value on the
grant date.
(ii) GRANT OF DISCOUNT OPTIONS IN LIEU OF CASH BONUS. Upon the request
of an eligible employee and with the consent of the Administrator, such
employee may elect each calendar year to receive a Non-Qualified Stock
Option in lieu of any cash bonus to which he may become entitled during the
following calendar year pursuant to any other plan of the Company, but only
if such employee makes an irrevocable election to waive receipt of all or a
portion of such cash bonus. Such election shall be made on or before the
date set by the Administrator which date shall be no later than 15 days (or
such shorter period permitted by the Administrator) preceding January 1 of
the calendar year for which the cash bonus would otherwise be paid. A
Non-Qualified Stock Option shall be granted to each employee who made such
an irrevocable election on the date the waived cash bonus would otherwise
be paid. The exercise price per share shall be determined by the
Administrator but shall not be less than 50% of the Fair Market Value of
the Stock on the date the Stock Option is granted. The number of shares of
Stock subject to the Stock Option shall be determined by dividing the
amount of the waived cash bonus by the difference between the Fair Market
Value of the Stock on the date the Stock Option is granted and the exercise
price per Stock Option. The Stock Option shall be granted for whole number
of shares so determined; the value of any fractional share shall be paid in
cash.
(iii) OPTION TERM. The term of each Stock Option shall be fixed by the
Administrator, but no Incentive Stock Option shall be exercisable more than
ten years after the date the option is granted. If an employee owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock of
the Company or any Subsidiary or parent corporation and an Incentive Stock
Option is granted to such employee, the term of such option shall be no
more than five years from the date of grant.
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(iv) EXERCISABILITY; RIGHTS OF A STOCKHOLDER. Stock Options shall
become vested and exercisable at such time or times, whether or not in
installments, as shall be determined by the Administrator at or after the
grant date; provided, however, that Stock Options granted in lieu of cash
bonus shall be exercisable in full as of the grant date. The Administrator
may at any time accelerate the exercisability of all or any portion of any
Stock Option. An optionee shall have the rights of a stockholder only as to
shares acquired upon the exercise of a Stock Option and not as to
unexercised Stock Options.
(v) METHOD OF EXERCISE. Stock Options may be exercised in whole or in
part, by giving written notice of exercise to the Company, specifying the
number of shares to be purchased. Payment of the purchase price may be made
by one or more of the following methods:
(A) In cash, by certified or bank check or other instrument
acceptable to the Administrator;
(B) In the form of shares of Stock that are not then subject to
restrictions under any Company plan and that have been held by the
optionee for at least six months, if permitted by the Administrator in
its discretion. Such surrendered shares shall be valued at Fair Market
Value on the exercise date; or
(C) By the optionee delivering to the Company a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the purchase price; provided that in the event
the optionee chooses to pay the purchase price as so provided, the
optionee and the broker shall comply with such procedures and enter
into such agreements of indemnity and other agreements as the
Administrator shall prescribe as a condition of such payment
procedure.
Payment instruments will be received subject to collection. The delivery of
certificates representing the shares of Stock to be purchased pursuant to
the exercise of a Stock Option will be contingent upon receipt from the
optionee (or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase price
for such shares and the fulfillment of any other requirements contained in
the Stock Option or applicable provisions of laws.
(vi) TERMINATION BY REASON OF DEATH. Any Stock Option held by an
optionee whose employment by (or other business relationship with) the
Company and its Subsidiaries is terminated by reason of death shall become
fully exercisable and may thereafter be exercised by the legal
representative or legatee of the optionee, for a period of 12 months (or
such longer period as the Administrator shall specify at any
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time) from the date of death, or until the expiration of the stated term of
the Option, if earlier.
(vii) TERMINATION BY REASON OF DISABILITY.
(A) Any Stock Option held by an optionee whose employment by (or
other business relationship with) the Company and its Subsidiaries is
terminated by reason of Disability shall become fully exercisable and
may thereafter be exercised, for a period of 12 months (or such longer
period as the Administrator shall specify at any time) from the date
of such termination of employment (or business relationship), or until
the expiration of the stated term of the Option, if earlier.
(B) The Administrator shall have sole authority and discretion to
determine whether a participant's employment (or business
relationship) has been terminated by reason of Disability.
(C) Except as otherwise provided by the Administrator at any
time, the death of an optionee during the period provided in this
Section 5(a)(vii) for the exercise of a Stock Option shall extend such
period for 12 months from the date of death, subject to termination on
the expiration of the stated term of the Option, if earlier.
(viii) TERMINATION BY REASON OF RETIREMENT.
(A) Any Stock Option held by an optionee whose employment by (or
business relationship with) the Company and its Subsidiaries is
terminated by reason of Retirement may thereafter be exercised, to the
extent it was exercisable at the time of such termination, for a
period of 12 months (or such other period as the Administrator shall
specify at any time) from the date of such termination of employment
(or business relationship), or until the expiration of the stated term
of the Option, if earlier.
(B) Except as otherwise provided by the Administrator at any
time, the death of an optionee during a period provided in this
Section 5(a)(viii) for the exercise of a Stock Option shall extend
such period for 12 months from the date of death, subject to
termination on the expiration of the stated term of the Option, if
earlier.
(ix) TERMINATION FOR CAUSE. If any optionee's employment by (or
business relationship with) the Company and its Subsidiaries is terminated
for Cause, any Stock Option held by such optionee, including any Stock
Option that is immediately exercisable at the time of such termination,
shall immediately terminate and be of no further force and effect;
provided, however, that the Administrator may, in its sole
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discretion, provide that such Stock Option can be exercised for a period of
up to 30 days from the date of termination of employment (or business
relationship) or until the expiration of the stated term of the Option, if
earlier.
(x) OTHER TERMINATION. Unless otherwise determined by the
Administrator, if an optionee's employment by (or business relationship
with) the Company and its Subsidiaries terminates for any reason other than
death, Disability, Retirement, or for Cause, any Stock Option held by such
optionee may thereafter be exercised, to the extent it was exercisable on
the date of termination of employment (or business relationship), for three
months (or such longer period as the Administrator shall specify at any
time) from the date of termination of employment (or business relationship)
or until the expiration of the stated term of the Option, if earlier.
(xi) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent required
for "incentive stock option" treatment under Section 422 of the Code, the
aggregate Fair Market Value (determined as of the time of grant) of the
shares of Stock with respect to which Incentive Stock Options granted under
this Plan and any other plan of the Company or its parent and subsidiary
corporations become exercisable for the first time by an optionee during
any calendar year shall not exceed $100,000. To the extent that any Stock
Option exceeds this limit, it shall constitute a Non-Qualified Stock
Option.
(b) RELOAD OPTIONS. At the discretion of the Administrator, Options
granted under Section 5(a) may include a "reload" feature pursuant to which an
optionee exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(v)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with the same expiration
date as the original Option being exercised, and with such other terms as the
Administrator may provide) to purchase that number of shares of Stock equal to
the number delivered to exercise the original Option.
(c) STOCK OPTIONS GRANTED TO INDEPENDENT DIRECTORS.
(i) AUTOMATIC GRANT OF OPTIONS.
(A) Each Independent Director who is first elected to serve
as a Director on or after the effective date of the Plan shall be
granted, on the fifth business day after his election, a
Non-Qualified Stock Option to acquire 4,000 shares of Stock.
(B) Each Independent Director who is serving as Director of
the Company on the fifth business day after each annual meeting
of shareholders, beginning with the later of (i) the 1996 annual
meeting or (ii) the annual meeting following the grant of a Stock
Option to the Independent Director pursuant to
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(A) above, shall automatically be granted on such day a
Non-Qualified Stock Option to acquire 2,000 shares of Stock.
(C) The exercise price per share for the Stock covered by a
Stock Option granted under this Section 5(c) shall be equal to
the Fair Market Value of the Stock on the date the Stock Option
is granted.
(ii) EXERCISE; TERMINATION.
(A) Except as provided in Section 14, an Option granted
under Section 5(c) shall be exercisable after the second
anniversary of the grant date; provided, however, that any Option
so granted shall become exercisable upon the termination of
service of the Independent Director because of Disability or
death. An Option issued under this Section 5(c) shall not be
exercisable after the expiration of ten years from the date of
grant.
(B) If an Independent Director ceases to be a Director for
any reason other than Cause or death, an Option granted under
this Section 5(c) may thereafter be exercised, to the extent it
was exercisable on the date such optionee ceases to be a
Director, for a period of six months from such date or until the
expiration of the stated term of the Option, if earlier. If the
optionee ceases to be a Director for Cause, all rights in an
Option granted under this Section 5(c) shall terminate
immediately on the date he ceases to be a Director.
(C) Notwithstanding paragraph (B) above, any Option granted
to an Independent Director and outstanding on the date of his
death may be exercised by the legal representative or legatee of
the optionee for a period of twelve months from the date of death
or until the expiration of the stated term of the Option, if
earlier.
(D) Options granted under this Section 5(c) may be exercised
only by written notice to the Company specifying the number of
shares to be purchased. Payment of the full purchase price of the
shares to be purchased may be made by one or more of the methods
specified in Section 5(a)(v). An optionee shall have the rights
of a stockholder only as to shares acquired upon the exercise of
a Stock Option and not as to unexercised Stock Options.
(iii) LIMITED TO INDEPENDENT DIRECTORS. The provisions of this
Section 5(c) shall apply only to Options granted or to be granted to
Independent Directors, and shall not be deemed to modify, limit or
otherwise apply to any other provision of this Plan or to any Option
issued under this Plan to a participant who is not an Independent
Director of the Company. To the extent inconsistent with the
provisions of any other Section of this Plan, the provisions of this
Section 5(c) shall govern the rights and obligations of
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the Company and Independent Directors respecting Options granted or to
be granted to Independent Directors.
(d) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of
descent and distribution and all Stock Options shall be exercisable,
during the optionee's lifetime, only by the optionee. Notwithstanding
the foregoing, the Administrator may provide in an option agreement
evidencing a Non-Qualified Stock Option that the optionee may
transfer, without consideration for the transfer, such Non-Qualified
Stock Option to members of his immediate family, to trusts for the
benefit of such family members and to partnerships in which such
family members are the only partners or to charitable organizations,
provided that the transferee agrees in writing with the Company to be
bound by all of the terms and conditions of the Plan and the
application option agreement.
(e) FORM OF SETTLEMENT. Shares of Stock issued upon exercise of a
Stock Option shall be free of all restrictions under the Plan, except
as otherwise provided in the Plan.
SECTION 6. RESTRICTED STOCK AWARDS
(a) NATURE OF RESTRICTED STOCK AWARDS. The Administrator may grant
Restricted Stock Awards to any employee or key person of the Company or any
Subsidiary. A Restricted Stock Award is an Award entitling the recipient to
acquire, at no cost or for a purchase price determined by the Administrator,
shares of Stock subject to such restrictions and conditions as the Administrator
may determine at the time of grant ("Restricted Stock"). Conditions may be based
on continuing employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives.
(b) RIGHTS AS A STOCKHOLDER. Upon execution of a written instrument
setting forth the Restricted Stock Award and paying any applicable purchase
price, a participant shall have the rights of a stockholder with respect to the
voting of the Restricted Stock, subject to such conditions contained in the
written instrument evidencing the Restricted Stock Award. Unless the
Administrator shall otherwise determine, certificates evidencing the Restricted
Stock shall remain in the possession of the Company until such Restricted Stock
is vested as provided in Section 6(e) below.
(c) RESTRICTIONS. Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the written instrument evidencing the
Restricted Stock Award. In the case of Restricted Stock granted to an employee,
if the participant's employment with the Company and its Subsidiaries terminates
for any reason other than death or Disability, the Company shall have the right,
at the discretion of the Administrator, to repurchase Restricted Stock with
respect to which conditions have not lapsed at their purchase price, or to
require forfeiture of such shares to the Company if acquired at no cost, from
the participant or the participant's legal representative.
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The Company must exercise such right of repurchase or forfeiture not later than
the ninetieth (90th) day following such termination of employment (unless
otherwise specified in the written instrument evidencing the Restricted Stock
Award). Restricted Stock granted to a key person who is not an employee shall be
subject to such forfeiture and repurchase provisions as the Administrator shall
specify.
(d) VESTING OF RESTRICTED STOCK. The Administrator at the time of grant
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the Company's right of
repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be
Restricted Stock and shall be deemed "vested." A participant whose employment is
terminated for reason of death or Disability shall become fully vested on his
termination date in any Restricted Stock he received as an employee to the
extent such vesting is otherwise contingent only on continued service with the
Company. Where vesting is contingent on attainment of pre-established
performance goals, the vesting of Restricted Stock in the case of death or
Disability shall remain dependent on the attainment of such goals and shall be
determined as of such date or dates specified by the Administrator.
(e) WAIVER, DEFERRAL AND REINVESTMENT OF DIVIDENDS. The written
instrument evidencing the Restricted Stock Award may require or permit the
immediate payment, waiver, deferral or investment of dividends paid on the
Restricted Stock.
SECTION 7. UNRESTRICTED STOCK AWARDS
(a) GRANT OR SALE OF UNRESTRICTED STOCK. The Administrator may, in its
sole discretion, grant (or sell at a purchase price determined by the
Administrator) an Unrestricted Stock Award to any employee or key person of the
Company or any Subsidiary, pursuant to which such employee or key person may
receive shares of Stock free of any restrictions ("Unrestricted Stock") under
the Plan. Unrestricted Stock Awards may be granted or sold as described in the
preceding sentence in respect of past services or other valid consideration, or
in lieu of any cash compensation due to such employee or key person.
(b) ELECTIONS TO RECEIVE UNRESTRICTED STOCK IN LIEU OF COMPENSATION.
Upon the request of an employee or a key person and with the consent of the
Administrator, each employee or key person may, pursuant to an irrevocable
written election delivered to the Company no later than the date or dates
specified by the Administrator, receive a portion of the cash compensation
otherwise due to such employee or key person in the form of shares of
Unrestricted Stock (valued at Fair Market Value on the date or dates the cash
compensation would otherwise be paid).
(c) ELECTIONS TO RECEIVE UNRESTRICTED STOCK IN LIEU OF DIRECTOR FEES.
Each Independent Director may, pursuant to an irrevocable written election
delivered to the
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Company no later than the date or dates specified by the Administrator, receive
all or a portion of such Independent Director's director fees in shares of
Unrestricted Stock (valued at Fair Market Value on the date or dates that the
director fees would otherwise be paid in cash).
(d) DEFERRAL OF AWARDS. Each Independent Director who has made an
election to receive shares of Unrestricted Stock under Section 8(c) above will
have the right to defer receipt of up to 100% of such shares of Unrestricted
Stock payable to such Independent Director in accordance with such rules and
procedures as may from time to time be established by the Administrator for that
purpose, provided that such election shall not be effective before the beginning
of the next calendar year. The deferred Unrestricted Stock shall be entitled to
receive Dividend Equivalent Rights settled in shares of Stock.
(e) RESTRICTIONS ON TRANSFERS. The right to receive Unrestricted Stock
on a deferred basis may not be sold, assigned, transferred, pledged or otherwise
encumbered, other than by will or the laws of descent and distribution.
SECTION 8. PERFORMANCE SHARE AWARDS
(a) NATURE OF PERFORMANCE SHARE AWARDS. A Performance Share Award is an
Award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Administrator may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. Performance Share Awards may be granted under the Plan to any employees or
key persons of the Company or any Subsidiary, including those who qualify for
awards under other performance plans of the Company. The Administrator in its
sole discretion shall determine whether and to whom Performance Share Awards
shall be made, the performance goals applicable under each such Award, the
periods during which performance is to be measured, and all other limitations
and conditions applicable to the awarded Performance Shares; provided, however,
that the Administrator may rely on the performance goals and other standards
applicable to other performance unit plans of the Company in setting the
standards for Performance Share Awards under the Plan.
(b) RESTRICTIONS ON TRANSFER. Performance Share Awards and all rights
with respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered.
(c) RIGHTS AS A SHAREHOLDER. A participant receiving a Performance
Share Award shall have the rights of a shareholder only as to shares actually
received by the participant under the Plan and not with respect to shares
subject to the Award but not actually received by the participant. A participant
shall be entitled to receive a stock certificate evidencing the acquisition of
shares of Stock under a Performance Share Award only upon satisfaction of all
conditions specified in the written instrument evidencing the Performance Share
Award (or in a performance plan adopted by the Administrator).
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(d) TERMINATION. Except as may otherwise be provided by the
Administrator at any time prior to termination of employment (or other business
relationship), a participant's rights in all Performance Share Awards shall
automatically terminate upon the participant's termination of employment by (or
business relationship with) the Company and its Subsidiaries for any reason.
(e) ACCELERATION, WAIVER, ETC. At any time prior to the participant's
termination of employment (or other business relationship) by the Company and
its Subsidiaries, the Administrator may in its sole discretion accelerate, waive
or, subject to Section 12, amend any or all of the goals, restrictions or
conditions imposed under any Performance Share Award.
SECTION 9. DIVIDEND EQUIVALENT RIGHTS
(a) DIVIDEND EQUIVALENT RIGHTS. A Dividend Equivalent Right is an Award
entitling the recipient to receive credits based on cash dividends that would be
paid on the shares of Stock specified in the Dividend Equivalent Right (or other
award to which it relates) if such shares were held by the recipient. A Dividend
Equivalent Right may be granted hereunder to an eligible employee or key person,
as a component of another Award or as a freestanding award. A Dividend
Equivalent Right may also be granted to an Independent Director pursuant to
Section 7(e). The terms and conditions of Dividend Equivalent Rights shall be
specified in the grant. Dividend equivalents credited to the holder of a
Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional shares of Stock, which may thereafter accrue additional
equivalents. Any such reinvestment shall be at Fair Market Value on the date of
reinvestment or such other price as may then apply under a dividend reinvestment
plan sponsored by the Company, if any. Dividend Equivalent Rights may be settled
in cash or shares of Stock or a combination thereof, in a single installment or
installments. A Dividend Equivalent Right granted as a component of another
Award may provide that such Dividend Equivalent Right shall be settled upon
exercise, settlement, or payment of, or lapse of restrictions on, such other
award, and that such Dividend Equivalent Right shall expire or be forfeited or
annulled under the same conditions as such other award. A Dividend Equivalent
Right granted as a component of another Award may also contain terms and
conditions different from such other award.
(b) INTEREST EQUIVALENTS. Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.
SECTION 10. TAX WITHHOLDING
(a) PAYMENT BY PARTICIPANT. Each participant shall, no later than the
date as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of,
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any Federal, state, or local taxes of any kind required by law to be withheld
with respect to such income. The Company and its Subsidiaries shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the participant.
(b) PAYMENT IN STOCK. Subject to the approval of the Administrator, a
participant may elect to have such tax minimum withholding obligation satisfied,
in whole or in part, by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with an aggregate
Fair Market Value (as of the date the withholding is effected) that would
satisfy the minimum withholding amount due, or (ii) transferring to the Company
shares of Stock owned by the participant with an aggregate Fair Market Value (as
of the date the withholding is effected) that would satisfy the minimum
withholding amount due.
SECTION 11. TRANSFER, LEAVE OF ABSENCE, ETC
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; or
(b) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing.
SECTION 12. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the
Administrator may, at any time, amend or cancel any outstanding Award (or
provide substitute Awards at the same or reduced exercise or purchase price or
with no exercise or purchase price in a manner not inconsistent with the terms
of the Plan, but such price, if any, must satisfy the requirements which would
apply to the substitute or amended Award if it were then initially granted under
this Plan) for the purpose of satisfying changes in law or for any other lawful
purpose, but no such action shall adversely affect rights under any outstanding
Award without the holder's consent. If and to the extent determined by the
Administrator to be required to ensure that Incentive Stock Options granted
under the Plan are qualified under Section 422 of the Code, Plan amendments
shall be subject to approval by the Company stockholders.
SECTION 13. STATUS OF PLAN
With respect to the portion of any Award which has not been exercised and
any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Administrator shall otherwise expressly
determine in connection with any Award or Awards. In its sole
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discretion, the Administrator may authorize the creation of trusts or other
arrangements to meet the Company's obligations to deliver Stock or make payments
with respect to Awards hereunder, provided that the existence of such trusts or
other arrangements is consistent with the foregoing sentence.
SECTION 14. CHANGE OF CONTROL PROVISIONS
Upon the occurrence of a Change of Control as defined in this Section 14:
(a) Each outstanding Stock Option shall automatically become fully
exercisable notwithstanding any provision to the contrary herein.
(b) Each Restricted Stock Award and Performance Share Award shall be
subject to such terms, if any, with respect to a Change of Control as have been
provided by the Administrator in connection with such Award.
(c) "CHANGE OF CONTROL" shall mean the occurrence of any one of the
following events:
(i) any "PERSON," as such term is used in Sections 13(d) and 14(d) of
the Act (other than the Company, any of its Subsidiaries, or any trustee,
fiduciary or other person or entity holding securities under any employee
benefit plan or trust of the Company or any of its Subsidiaries), together
with all "affiliates" and "associates" (as such terms are defined in Rule
12b-2 under the Act) of such person, shall become the "beneficial owner"
(as such term is defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing 25% or more of either
(A) the combined voting power of the Company's then outstanding securities
having the right to vote in an election of the Company's Board of Directors
("Voting Securities") or (B) the then outstanding shares of Stock of the
Company (in either such case other than as a result of an acquisition of
securities directly from the Company); or
(ii) persons who, as of the Effective Date, constitute the Board of
Directors (the "Incumbent Directors") cease for any reason, including,
without limitation, as a result of a tender offer, proxy contest, merger or
similar transaction, to constitute at least a majority of the Board,
provided that any person becoming a director of the Company subsequent to
the Effective Date whose election or nomination for election was approved
by a vote of at least a majority of the Incumbent Directors shall, for
purposes of this Plan, be considered an Incumbent Director; or
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company or any Subsidiary where the
shareholders of the Company, immediately prior to the consolidation or
merger, would not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 under the Act),
directly or indirectly, shares representing in the aggregate 80% or more of
the
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voting shares of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any),
(B) any sale, lease, exchange or other transfer (in one transaction or a
series of transactions contemplated or arranged by any party as a single
plan) of all or substantially all of the assets of the Company or (C) any
plan or proposal for the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
have occurred for purposes of the foregoing clause (i) solely as the result of
an acquisition of securities by the Company which, by reducing the number of
shares of Stock or other Voting Securities outstanding, increases (x) the
proportionate number of shares of Stock beneficially owned by any person to 25%
or more of the shares of Stock then outstanding or (y) the proportionate voting
power represented by the Voting Securities beneficially owned by any person to
25% or more of the combined voting power of all then outstanding Voting
Securities; PROVIDED, HOWEVER, that if any person referred to in clause (x) or
(y) of this sentence shall thereafter become the beneficial owner of any
additional shares of Stock or other Voting Securities (other than pursuant to a
stock split, stock dividend, or similar transaction), then a "CHANGE OF CONTROL"
shall be deemed to have occurred for purposes of the foregoing clause (i).
SECTION 15. GENERAL PROVISIONS
(a) NO DISTRIBUTION; COMPLIANCE WITH LEGAL REQUIREMENTS. The Administrator
may require each person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Administrator may require the placing of
such stop-orders and restrictive legends on certificates for Stock and Awards as
it deems appropriate.
(b) DELIVERY OF STOCK CERTIFICATES. Delivery of stock certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.
(c) OTHER COMPENSATION ARRANGEMENTS; NO EMPLOYMENT RIGHTS. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.
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SECTION 16. EFFECTIVE DATE OF PLAN
This Plan, as amended and restated in its entirety as set forth herein,
shall become effective upon approval by the holders of a majority of the shares
of Stock of the Company present or represented and entitled to vote at a meeting
of stockholders. Subject to such approval by the stockholders and to the
requirement that no Stock may be issued hereunder prior to such approval, Stock
Options and other Awards may be granted hereunder on and after adoption of this
Plan by the Board.
SECTION 17. GOVERNING LAW
This Plan shall be governed by the laws of the Commonwealth of
Massachusetts except to the extent such law is preempted by federal law.
SECTION 18. VANCOUVER STOCK EXCHANGE
It is the intention of the Company that the Plan, and the awards
granted hereunder, meet the rules of the Vancouver Stock Exchange, to the extent
that the grant of any option or award, or the issuance of Stock upon the
exercise of any such option or award, is subject to such rules. The
Administrator shall have the power to include in any awards granted such
additional provisions, limitations or restrictions as may be required by the
applicable rules of the Vancouver Stock Exchange, provided however that the
Administrator may not expand the class of individuals eligible to participate in
the Plan, increase the number of shares reserved for issuance under the Plan,
extend the maximum term of options beyond ten years or permit issuance of
Incentive Options at below the price specified in 5(a). The exercise price of
shares in respect of any award granted hereunder shall not be less than the
exercise price required under such rules of the Vancouver Stock Exchange as may
be applicable at the time of such grant.
DATE APPROVED BY BOARD OF DIRECTORS: March 19, 1996
Amended and Restated Plan approved by: December 20, 1999.
Amendment approved: January 29, 1998
Amendment approved: March 1999
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DATE APPROVED BY BOARD OF SHAREHOLDERS: May 7, 1996
Amendment approved: May 7, 1996
Amendment approved: May 5, 1998
Amendment approved: May 20, 1999
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