1
Exhibit 10.4
COLLECTORS UNIVERSE, INC.
PCGS 1999 STOCK OPTION PLAN
(ADOPTED AS OF FEBRUARY 3, 1999)
WHEREAS, Collectors Universe, Inc., a Delaware corporation (the
"Company") is acquiring on this date all of the outstanding shares of capital
stock of Professional Coin Grading Service, Inc., a Delaware corporation
("PCGS"), pursuant to a Contribution and Acquisition Agreement dated as of
February 3, 1999 (the "Contribution Agreement"), by and among the Company and
PCGS and its stockholders; and
WHEREAS, the Contribution Agreement provides for (i) all of PCGS'
outstanding shares to be contributed to the Company in exchange for shares of
Company Common Stock the number of which shall be determined by multiplying each
outstanding PCGS share by 229.632 (the "Exchange Ratio"); (ii) the Company to
assume the PCGS 1999 Stock Incentive Plan (the "PCGS Plan") and to amend that
Plan to make it a plan providing for the grant of options to purchase shares of
Common Stock of Collectors Universe (the "CUI Plan"), and (iii) to exchange, for
each outstanding option to purchase PCGS shares, whether outstanding under the
PCGS Plan or granted outside of that Plan ("PCGS Options"), an option under the
CUI Plan (a "CUI Option") entitling the holder thereof to purchase shares of
Company Common Stock, the number of which shall be determined by multiplying the
number of shares subject to such PCGS Option by the Exchange Ratio and the
exercise price of which shall be proportionately adjusted downward so that the
aggregate exercise price of each CUI Option shall be equal to the aggregate
exercise of each PCGS Option exchanged for such CUI Option;
NOW, THEREFORE, this Plan supersedes the PCGS Plan, and restates that
Plan, in its entirety as a Company Plan that incorporates amendments to the PCGS
Plan required to effectuate and evidence the assumption of the PCGS Plan by the
Company.
This 1999 STOCK OPTION PLAN (the "Plan") is hereby established by
COLLECTORS UNIVERSE, INC., a Delaware corporation (the "Company"), and adopted
by its Board of Directors as of the 3rd day of February, 1999 (the "Effective
Date"), pursuant to the terms of the Contribution Agreement and actions of the
Board of Directors and majority shareholders of the Company approving this Plan.
ARTICLE 1
PURPOSES OF THE PLAN
1.1 PURPOSES. The purposes of the Plan are (a) to enhance the Company's
ability to attract and retain the services of qualified employees, officers,
employee and non-employee directors and Service Providers, upon whose judgment,
initiative and efforts the successful conduct and development of the Company's
business largely depends, and (b) to provide additional incentives to such
Persons to devote their utmost effort and skill to the advancement and
betterment of the Company, by providing them an opportunity to participate in
the success and increased value of the Company through ownership of shares of
Common Stock in the Company.
2
ARTICLE 2
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings
indicated:
2.1 ACQUIRING PERSON. "Acquiring Person" means the Person that acquires
direct or indirect ownership of a majority or all of the outstanding shares of
voting stock of the Company or of any other corporation in which the Company may
be merged, in a Change of Control transaction effectuated by means of a merger
of the Company with and into another corporation, a reverse or forward
triangular merger or an exchange of shares of the Company's Common Stock for
shares of stock, cash or other property of the Acquiring Person and any Person
that acquires ownership of all or substantially all of the assets of the Company
in a single or series of related transactions.
2.2 ADMINISTRATOR. "Administrator" means the Board or, if the Board
delegates any of its administrative responsibilities under the Plan to the
Committee, the term Administrator as to such delegated responsibilities shall
mean the Committee.
2.3 AFFILIATED COMPANY. "Affiliated Company" means any "parent
corporation" or "subsidiary corporation" of the Company, whether now existing or
hereafter created or acquired, as those terms are defined in Sections 424(e) and
424(f) of the Code, respectively.
2.4 BOARD. "Board" means the Board of Directors of the Company.
2.5 CHANGE IN CONTROL. "Change in Control" shall mean (i) the
acquisition, directly or indirectly, by any Person or group (within the meaning
of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of the
beneficial ownership of securities of the Company possessing more than fifty
percent (50%) of the total combined voting power of all outstanding securities
of the Company, unless the Person or group of Persons acquiring such beneficial
ownership owned more than 25% of the outstanding Common Stock of the Company on
the date of adoption of this Plan, (ii) a merger or consolidation in which the
Company is not the surviving entity, except for a transaction in which holders
of outstanding voting securities of the Company immediately prior to such merger
or consolidation hold, in the aggregate, securities possessing more than fifty
percent (50%) of the total combined voting power of all outstanding voting
securities of the surviving entity immediately after such merger or
consolidation; (iii) a reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of all outstanding voting securities of the Company
are transferred to or acquired by a Person or Persons different from the persons
holding those securities immediately prior to such merger; (iv) the sale,
transfer or other disposition (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company; or (v)
the approval by the shareholders of a plan or proposal for the liquidation or
dissolution of the Company.
2.6 CODE. "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
2.7 COMMITTEE. "Committee" means a committee of two or more members of
the Board appointed to administer the Plan, as set forth in Section 7.1 hereof.
2.8 COMMON STOCK. "Common Stock" means the Common Stock, $.001 par
value of the Company, subject to adjustment pursuant to Section 4.2 hereof.
2
3
2.9 DISABILITY. "Disability" means permanent and total disability as
defined in Section 22(e)(3) of the Code. The Administrator's determination of a
Disability or the absence thereof shall be conclusive and binding on all
interested parties.
2.10 EFFECTIVE DATE. "Effective Date" means the date on which the Plan
is adopted by the Board, as set forth on the first page hereof.
2.11 EXERCISE PRICE. "Exercise Price" means the purchase price per
share of Common Stock payable upon exercise of an Option.
2.12 FAIR MARKET VALUE. "Fair Market Value" on any given date means the
value of one share of Common Stock, determined as follows:
(a) If the Common Stock is then listed or admitted to trading
on a NASDAQ market system or a stock exchange which reports closing sale prices,
the Fair Market Value shall be the closing sale price on the date of valuation
on such NASDAQ market system or principal stock exchange on which the Common
Stock is then listed or admitted to trading, or, if no closing sale price is
quoted on such day, then the Fair Market Value shall be the closing sale price
of the Common Stock on such NASDAQ market system or such exchange on the next
preceding day for which a closing sale price is reported.
(b) If the Common Stock is not then listed or admitted to
trading on a NASDAQ market system or a stock exchange which reports closing sale
prices, the Fair Market Value shall be the average of the closing bid and asked
prices of the Common Stock in the over-the-counter market on the date of
valuation.
(c) If neither (a) nor (b) is applicable as of the date of
valuation, then the Fair Market Value shall be determined by the Administrator
in good faith using any reasonable method of evaluation, which determination
shall be conclusive and binding on all interested parties.
2.13 INCENTIVE OPTION. "Incentive Option" means any Option designated
and qualified as an "incentive stock option" as defined in Section 422 of the
Code.
2.14 INCENTIVE OPTION AGREEMENT. "Incentive Option Agreement" means an
Option Agreement with respect to an Incentive Option.
2.15 NASD DEALER. "NASD Dealer" means a broker-dealer that is a member
of the National Association of Securities Dealers, Inc.
2.16 NONQUALIFIED OPTION. "Nonqualified Option" means any Option that
is not an Incentive Option. To the extent that any Option designated as an
Incentive Option fails in whole or in part to qualify as an Incentive Option,
including, without limitation, for failure to meet the limitations applicable to
a 10% Shareholder or because it exceeds the annual limit provided for in Section
5.6 below, it shall to that extent constitute a Nonqualified Option.
2.17 NONQUALIFIED OPTION AGREEMENT. "Nonqualified Option Agreement"
means an Option Agreement with respect to a Nonqualified Option.
2.18 OPTION. "Option" means any option to purchase Common Stock granted
pursuant to the Plan.
2.19 OPTION AGREEMENT. "Option Agreement" means the written agreement
entered into between the Company and the Optionee with respect to an Option
granted under the Plan.
3
4
2.20 OPTIONEE. "Optionee" means a Person that is eligible to be granted
and has been granted and holds Options under this Plan.
2.21 PERSON. "Person" means any natural person and any corporation,
limited liability company, partnership, trust, association or other entity.
2.22 SERVICE PROVIDER. "Service Provider" means a consultant or other
Person who provides services to the Company or an Affiliated Company and who the
Administrator authorizes to become an Optionee under the Plan.
2.23 10% SHAREHOLDER. "10% Shareholder" means a Person who, as of a
relevant date, owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or of an
Affiliated Company.
ARTICLE 3
ELIGIBILITY
3.1 INCENTIVE OPTIONS. Officers and other key employees of the Company
or of an Affiliated Company (including members of the Board if they are
employees of the Company or of an Affiliated Company) are eligible to receive
Incentive Options under the Plan.
3.2 NONQUALIFIED OPTIONS AND RIGHTS TO PURCHASE. Officers and other key
employees of the Company or of an Affiliated Company, members of the Board
(whether or not employed by the Company or an Affiliated Company), and Service
Providers are eligible to receive Nonqualified Options or Rights to Purchase
under the Plan.
3.3 LIMITATION ON SHARES. In no event shall any Optionee be granted
Options under this Plan in any one calendar year pursuant to which the aggregate
number of shares of Common Stock that may be acquired thereunder exceeds one
million shares (1,000,000) shares (which number shall be subject to adjustment
as provided in Section 4.2 hereof).
ARTICLE 4
PLAN SHARES
4.1 SHARES SUBJECT TO THE PLAN. A total of one million seven hundred
fifty thousand one thousand four hundred fifteen (1,751,415) shares of Common
Stock may be issued under this Plan, subject to adjustment as to the number and
kind of shares pursuant to Section 4.2 hereof. For purposes of this limitation,
in the event that (a) all or any portion of any Option granted under the Plan
can no longer under any circumstances be exercised, or (b) any shares of Common
Stock are reacquired by the Company pursuant to an Incentive Option Agreement or
a Nonqualified Option Agreement, the shares of Common Stock allocable to the
unexercised portion of such Option, or the shares so reacquired, shall again be
available for grant or issuance under the Plan.
4
5
4.2 CHANGES IN CAPITAL STRUCTURE. In the event that the outstanding
shares of Common Stock are hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, stock split, combination of shares,
reclassification, stock dividend, or other change in the capital structure of
the Company, then appropriate adjustments shall be made by the Administrator to
the aggregate number and kind of shares subject to this Plan, and the number and
kind of shares and the price per share subject to outstanding Option Agreements
in order to preserve, as nearly as practical, but not to increase, the benefits
to Optionees.
ARTICLE 5
OPTIONS
5.1 OPTION AGREEMENT. Each Option granted pursuant to this Plan shall
be evidenced by an Option Agreement which shall specify the number of shares
subject thereto, the Exercise Price per share, and whether the Option is an
Incentive Option or Nonqualified Option. As soon as is practical following the
grant of an Option, an Option Agreement shall be duly executed and delivered by
or on behalf of the Company to the Optionee to whom such Option was granted.
Each Option Agreement shall be in such form and contain such additional terms
and conditions, not inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable, including, without
limitation, the imposition of any rights of first refusal and resale obligations
upon any shares of Common Stock acquired pursuant to an Option Agreement. Each
Option Agreement may be different from each other Option Agreement.
5.2 EXERCISE PRICE. The Exercise Price per share of Common Stock
covered by each Option shall be determined by the Administrator, subject to the
following: (a) the Exercise Price of an Incentive Option shall not be less than
100% of Fair Market Value on the date the Incentive Option is granted, (b) the
Exercise Price of a Nonqualified Option shall not be less than 85% of Fair
Market Value on the date the Nonqualified Option is granted, and (c) if the
Person to whom an Option is granted is a 10% Shareholder on the date of grant,
the Exercise Price shall not be less than 110% of Fair Market Value on the date
the Option is granted.
5.3 PAYMENT OF EXERCISE PRICE. Payment of the Exercise Price shall be
made upon exercise of an Option and may be made in any of the following ways:
(a) By cash or check; or,
(b) If approved by the Administrator, then, subject to any
legal restrictions, by (i) the surrender of shares of Common Stock owned by the
Optionee that have been held by the Optionee for at least six (6) months, which
surrendered shares shall be valued at Fair Market Value as of the date of such
exercise; (ii) the delivery to the Company of Optionee's promissory note in a
form and on terms acceptable to the Administrator; (iii) the cancellation of
indebtedness of the Company to the Optionee; (iv) the waiver of compensation due
or accrued to the Optionee for services rendered; or (v) any combination of the
foregoing; or
(c) If a public market for the Common Stock exists, by (i) a
"same day sale" commitment from the Optionee and an NASD Dealer whereby the
Optionee irrevocably elects to exercise the Option and to sell a portion of the
shares so purchased to pay for the Exercise Price and whereby the NASD Dealer
irrevocably commits upon receipt of such shares to forward the Exercise Price
directly to the Company; or (ii) a "margin" commitment from the Optionee and an
NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and
to pledge the shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such shares to
forward the Exercise Price directly to the Company; or
5
6
(d) Any combination of the foregoing methods of payment or any
other consideration or method of payment that has been approved by the
Administrator and is permitted by applicable corporate law.
5.4 TERM AND TERMINATION OF OPTIONS. The term and provisions for
termination of each Option shall be as fixed by the Administrator, but no Option
may be exercisable more than ten (10) years after the date it is granted. An
Option granted to a Person who is a 10% Shareholder on the date of grant shall
not be exercisable more than five (5) years after the date it is granted.
5.5 VESTING AND EXERCISE OF OPTIONS. Each Option shall vest and become
exercisable in one or more installments at such time or times and subject to
such conditions, including without limitation the achievement of specified
performance goals or objectives, as shall be determined by the Administrator.
5.6 ANNUAL LIMIT ON INCENTIVE 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 Common Stock shall
not, with respect to which Incentive Options, granted under this Plan or under
and any other plan of the Company or any Affiliated Company, become exercisable
for the first time by an Optionee during any calendar year, exceed $100,000. The
excess, if any of the Fair Market Value of any incentive stock option that
becomes vested in any calendar year over this $100,000 limitation shall be
treated, for federal income tax purposes as a Nonqualified Option.
5.7 NONTRANSFERABILITY OF OPTIONS. No Option shall be assignable or
transferable except by will or the laws of descent and distribution, and during
the life of the Optionee shall be exercisable only by such Optionee; provided,
however, that, in the discretion of the Administrator, any Option may be
assigned or transferred in any manner which an "incentive stock option" is
permitted to be assigned or transferred under the Code.
5.8 RIGHTS AS SHAREHOLDER. An Optionee or permitted transferee of an
Option shall have no rights or privileges as a shareholder with respect to any
shares covered by an Option until such Option has been duly exercised and
certificates representing shares purchased upon such exercise have been issued
to such Person.
ARTICLE 6
ADMINISTRATION OF THE PLAN
6.1 ADMINISTRATOR. Authority to control and manage the operation and
administration of the Plan shall be vested in the Board, which may delegate such
responsibilities in whole or in part to a committee consisting of two (2) or
more members of the Board (the "Committee"). Members of the Committee may be
appointed from time to time by, and shall serve at the pleasure of, the Board.
As used herein, the term "Administrator" means the Board or, with respect to any
matter as to which responsibility has been delegated to the Committee, the term
Administrator shall mean the Committee.
6.2 POWERS OF THE ADMINISTRATOR. In addition to any other powers or
authority conferred upon the Administrator elsewhere in the Plan or by law, the
Administrator shall have full power and authority to interpret the Plan, to
create, amend or rescind and to interpret rules and regulations relating to the
Plan and, without limiting the generality of the foregoing, to:
(a) determine the Persons to whom, and the time or times at
which, Incentive Options or Nonqualified Options shall be granted and the number
of shares to be represented by each Option and the consideration to be received
by the Company upon the exercise thereof;
6
7
(b) determine the terms, conditions and restrictions contained
in, and the form of, Option Agreements;
(c) determine the identity or capacity of any Persons who may
be entitled to exercise an Optionee's rights under any Option granted under the
Plan;
(d) correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option Agreement;
(e) accelerate the vesting of any Option;
(f) extend the exercise date of any Option;
(g) provide for rights of first refusal and/or repurchase
rights;
(h) amend outstanding Option Agreements to provide for, among
other things, any change or modification which the Administrator could have
provided for upon the grant of an Option or in furtherance of the powers
provided for herein; and
(i) make all other determinations necessary or advisable for
the administration of the Plan, but only to the extent not contrary to the
express provisions of the Plan.
Any action, decision, interpretation or determination made in good faith by the
Administrator in the exercise of its authority conferred upon it under the Plan
shall be final and binding on the Company and all Optionees.
6.3 LIMITATION ON LIABILITY. No employee of the Company or member of
the Board or Committee shall be subject to any liability with respect to duties
under the Plan unless the Person acts fraudulently or in bad faith. To the
extent permitted by law, the Company shall indemnify each member of the Board or
Committee, and any employee of the Company with duties under the Plan, who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed proceeding, whether civil, criminal, administrative or
investigative, by reason of such Person's conduct in the performance of duties
under the Plan.
ARTICLE 7
CHANGE IN CONTROL
7.1 CHANGE IN CONTROL. In order to preserve an Optionee's rights in the
event of a Change in Control of the Company, the Administrator shall take one or
more of the following actions with respect to Options that are outstanding as of
the consummation date of any Change of Control transaction to which the Company
is a party (the "Existing Options"):
(a) Obtain from the Acquiring Person in the Change of Control
transaction an agreement which requires it, concurrently with the consummation
of the Change of Control Transaction, to purchase or exchange each of the
Existing Options for cash, stock or other property that is being paid or issued
to Company's stockholders in the Change of Control Transaction in an amount
equal to the difference, or spread, between (i) the value of the cash, stock or
other property that the Optionee would have received pursuant to such Change in
Control transaction in exchange for all of the shares that would be issuable
upon exercise of the Option, assuming that the Option had become fully
exercisable and had been exercised immediately prior to the consummation of such
Change in Control transaction, and (ii) the Exercise Price of such Option;
(b) Obtain from the Acquiring Person in the Change of Control
transaction an agreement that obligates the Acquiring Person to assume the
Existing Options or to grant, in substitution for the Existing Options, new
options entitling each Optionee to purchase a number of shares of voting
7
8
stock of the Acquiring Person having a Fair Market Value that is equal to the
then Fair Market Value of the shares of Common Stock of the Company that are
subject to the Existing Options, with appropriate adjustments as to the number
and kind of shares and Exercise Prices, in which event the Plan and the assumed
Options, or the new options substituted therefor (the "Substituted Options"),
shall continue in the manner and under the terms so provided; or
(c) Adjust the terms of the Options in a manner determined by
the Administrator to reflect the Change in Control or make such other provision
as the Administrator may consider equitable, if the stockholders of the Company
immediately prior to the consummation of the Change of Control transaction will
continue to own their Company shares, and this Plan will continue in effect as a
Company Plan, following the consummation of the Change of Control transaction or
if the Change of Control involves a liquidation and dissolution of the Company.
The Administrator shall cause written notice of any proposed Change of Control
transaction to be given to all Optionees not less than fifteen (15) days prior
to the anticipated effective date of the proposed Change of Control transaction;
provided, however, that any delay beyond such time period in the giving of, or
the failure to give, such notice shall not entitle any Person, including any
Optionee, to obtain a delay in the effective date or to invalidate or adversely
affect the validity of any such Change in Control transaction.
7.2 EFFECT OF CHANGE OF CONTROL TRANSACTION.
(a) If an agreement is obtained from the Acquiring Person
which provides either for (i) the payment or exchange of cash, stock or other
consideration equal to the Fair Market Value of the shares (whether or not
vested) that are subject to the Existing Options, as contemplated by Paragraph
7.1(a) above, or (ii) the issuance of Substituted Options by the Acquiring
Person, then, the Existing Options shall terminate retroactive to the effective
date of the consummation of the Change of Control transaction. If, instead, an
agreement is obtained from the Acquiring Person which provides for the
assumption of the Existing Options and the continuance of this Plan by the
Acquiring Person, the Existing Options shall continue in full force and effect,
subject to equitable adjustments provided for in that agreement.
(b) If the agreement contemplated by Paragraph 7.1(b) is
obtained, or any of the actions contemplated by Paragraph 7.1(c) is taken and,
as a result, the Optionees holding Existing Options immediately prior to the
consummation of such Change in Control either will continue to hold their
Existing Options (as adjusted in the manner set forth in Paragraph 7.1(b) or
7.1(c) above) or will receive Substituted Options pursuant to Paragraph 7.1(b),
but an Optionee's Continuous Service (as defined in the Optionee's Option
Agreement) is terminated by the Company or the Acquiring Person for any reason
during the first eighteen (18) months following such Change in Control, then,
notwithstanding any provisions to the contrary contained in the Plan or any Plan
adopted in substitution of this Plan, all of the shares of stock then subject or
covered by such Existing Options or Substitute Options, to the extent they are
not already exercisable, shall become vested and fully exercisable by the holder
of such Existing Option or Substitute Option, as the case may be, effective
retroactively to the business day immediately preceding the date of such
termination of his or her Continuous Service.
(c) If, on the other hand, the Administrator is unable to
obtain either of the agreements contemplated by Paragraph 7.1(a) and Paragraph
7(b), and the Change of Control transaction is nevertheless consummated, then,
(i) all Options that have not theretofore become fully vested and fully
exercisable shall become fully vested and exercisable, effective as of the
business day immediately preceding the date of consummation of the Change of
Control transaction; (ii) each holder of an Existing Option shall be entitled to
exercise such Option in whole or in part on or prior to the date on which the
Change of Control transaction is consummated, (iii) in the event of any such
exercise by an Optionee (which shall be deemed to have occurred immediately
prior to the consummation of the Change of
8
9
Control transaction), the Optionee shall, on such consummation, become entitled
to receive the consideration such Optionee would have received in such
transaction had he owned the shares acquired on such exercise immediately prior
to such consummation, and (iv) any Existing Option not exercised in full on or
before the effective date of the consummation of the Change of Control
transaction shall terminate as to the unexercised portion of such Option as of
such effective date. In addition, if an agreement is obtained as contemplated by
Paragraph 7.1(a) or Paragraph 7.1(b) above in connection with any Change of
Control transaction, then, on consummation of the Change of Control transaction
each Existing Option shall be converted into the right to receive the
consideration stated in such agreement and the right to exercise any Existing
Options to acquire shares of Common Stock of the Company shall terminate.
ARTICLE 8
AMENDMENT AND TERMINATION OF THE PLAN
8.1 AMENDMENTS. The Board may from time to time alter, amend, suspend
or terminate the Plan in such respects as the Board may deem advisable. No such
alteration, amendment, suspension or termination shall be made which shall
substantially affect or impair the rights of any Optionee under an outstanding
Option Agreement without such Optionee's consent. The Board may alter or amend
the Plan to comply with requirements under the Code relating to Incentive
Options or other types of options which give Optionees more favorable tax
treatment than that applicable to Options granted under this Plan as of the date
of its adoption. Upon any such alteration or amendment, any outstanding Option
granted hereunder may, if the Administrator so determines and if permitted by
applicable law, be subject to the more favorable tax treatment afforded to an
Optionee pursuant to such terms and conditions.
8.2 PLAN TERMINATION. Unless the Plan shall theretofore have been
terminated, the Plan shall terminate on the tenth (10th) anniversary of the
Effective Date and no Options may be granted under the Plan thereafter, but
Option Agreements then outstanding shall continue in effect in accordance with
their respective terms.
ARTICLE 9
TAX WITHHOLDING
9.1 WITHHOLDING. The Company shall have the power to withhold, or
require an Optionee to remit to the Company, an amount sufficient to satisfy any
applicable Federal, state, and local tax withholding requirements with respect
to any Options exercised under the Plan. To the extent permissible under
applicable tax, securities and other laws, the Administrator may, in its sole
discretion and upon such terms and conditions as it may deem appropriate, permit
an Optionee to satisfy his or her obligation to pay any such tax, in whole or in
part, up to an amount determined on the basis of the highest marginal tax rate
applicable to such Optionee, by (a) directing the Company to apply shares of
Common Stock to which the Optionee is entitled as a result of the exercise of an
Option, or (b) delivering to the Company shares of Common Stock owned by the
Optionee. The shares of Common Stock so applied or delivered in satisfaction of
the Optionee's tax withholding obligation shall be valued at their Fair Market
Value as of the date of measurement of the amount of income subject to
withholding.
ARTICLE 10
MISCELLANEOUS
10.1 BENEFITS NOT ALIENABLE. Other than as provided above, benefits
under the Plan may not be assigned or alienated, whether voluntarily or
involuntarily. Any unauthorized attempt at assignment, transfer, pledge or other
disposition shall be without effect.
9
10
10.2 NO ENLARGEMENT OF EMPLOYEE RIGHTS. This Plan is strictly a
voluntary undertaking on the part of the Company and shall not be deemed to
constitute a contract between the Company and any Optionee to be consideration
for, or an inducement to, or a condition of, the employment of any Optionee.
Nothing contained in the Plan shall be deemed to give the right to any Optionee
to be retained as an employee of the Company or any Affiliated Company or to
limit the right of the Company or any Affiliated Company to discharge any
Optionee at any time.
10.3 APPLICATION OF FUNDS. The proceeds received by the Company from
the sale of Common Stock pursuant to Option Agreements, except as otherwise
provided herein, will be used for general corporate purposes.
10
