EXHIBIT 10.1

 

ALPHA PRO TECH, LTD.

2004 STOCK OPTION PLAN

(As Amended on June 7, 2010)

 

SECTION 1

PURPOSE

 

The purpose of the Alpha Pro Tech, Ltd. 2004 Stock Option Plan (the “Plan”) is
to recognize the contributions made to Alpha Pro Tech, Ltd. (the “Company”) and
its Subsidiaries and Affiliated Companies and all its shareholders by Key
Employees of the Company and its Subsidiaries and Affiliated Companies to
provide such persons with additional incentive to devote themselves to the
future success of the Company and its Subsidiaries and Affiliated Companies and
to improve the ability of the Company and its Subsidiaries and Affiliated
Companies to attract, retain and motivate individuals, by providing such persons
with the opportunity to acquire or increase their proprietary interest in the
Company through receipt of grants of Stock Options to acquire shares of Common
Stock of the Company.  In addition, the Plan is intended as an additional
incentive to members of the Board of Directors of the Company who are not
employees of the Company to serve on the Board of Directors of the Company and
to devote themselves to the future success of the Company by providing them with
an opportunity to acquire or increase their proprietary interest in the Company
through receipt of grants of Options to acquire Common Stock of the Company.

 

SECTION 2

DEFINITIONS

 

As used in the Plan, the following terms shall have the meanings set forth
below:

 

2.1          “Affiliated Company” or “Affiliated Companies” means
corporation(s) or other business organization(s) in which the Company owns,
directly or indirectly, 20% or more of the voting stock or capital at the
relevant time.

 

2.2          “Agreement” means a Stock Option Agreement, granted under the Plan.

 

2.3          “Board” means the Board of Directors of the Company.

 

2.4          “Change in Control” has the meaning set forth in Section 9 of the
Plan.

 

2.5          “Code” means the internal Revenue Code of 1986, as amended from
time to time.

 

2.6          “Committee” means the Compensation Committee of the Board or such
other committee as may be designated by the Board from time to time to
administer the Plan.

 

2.7          “Common Stock” means the Common Stock, par value $.01 per share, of
the Company.

 

2.8          “Company” means Alpha Pro Tech, Ltd., a Delaware corporation.

 

2.9          “Director” means a director of the Company.

 

2.10        “Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time.

 

2.11        “Fair Market Value” means the closing sales price of the Common
Stock on the primary national securities exchange on which such stock is listed
(as reported in The Wall Street Journal, Eastern Edition). 

 

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Notwithstanding the foregoing, Fair Market Value shall be determined in a manner
consistent with avoiding adverse tax consequences under Section 409A of the
Code.

 

2.12        “Incentive Stock Option” or “ISO” means a Stock Option granted under
Section 7 of the Plan that meets the requirements of Section 422(b) of the Code
of the Code or any successor provision.

 

2.13        “Key Employee” means officers, other key employees, and consultants
of the Company or any Subsidiary or Affiliated Company selected to participate
in the Plan in accordance with Sections 3 and 4. A Key Employee may also include
a person who is granted an option  (other than an Incentive Stock Option) in
connection with the hiring of such person prior to the date the person becomes
an employee of the Company or any Subsidiary, provided that such option shall
not vest prior to the commencement of employment.

 

2.14        “Non-Employee Director” means a Director who is not an employee of
the Company or a Subsidiary or Affiliated Company.

 

2.15        “Non-Qualified Stock Option” or “NSO” means a Stock Option granted
under Section 6 or 7 of the Plan that is not an Incentive Stock Option.

 

2.16        “Participant” means any Key Employee or Non-Employee Director
selected to receive a grant of a Stock Option.

 

2.17        “Plan” means the Alpha Pro Tech, Ltd. 2004 Stock Option Plan.

 

2.18        “Stock Option” means an Incentive Stock Option or a Non-Qualified
Stock Option granted under Section 6 or 7 of the Plan.

 

2.19        “Subsidiary” means an entity of which the Company is the direct or
indirect beneficial owner of not less than 50% of all issued and outstanding
equity interest of such entity.

 

SECTION 3

ADMINISTRATION

 

3.1          THE BOARD

 

The Plan shall be administered by the Board, except that the Board may delegate
administration to the Committee, to the extent that the Committee is comprised
of at least two members of the Board who satisfy the “non-employee director”
definition set forth in Rule 16b-3 under the Exchange Act and the “outside
director” definition under Section 162(m) of the Code and the regulations
thereunder. For purposes of the Plan, the term “Board” shall refer to the Board
or, to the extent such authority has been delegated to the Committee, the
Committee.

 

3.2          AUTHORITY OF THE BOARD

 

(a)           The Board, in its sole discretion, shall determine the Key
Employees to whom, and the time or times at which Stock Options will be granted,
the form and amount of each Stock Option, the expiration date of each Stock
Option, the time or times within which the Stock Options may be exercised, the
cancellation of the Stock Option and the other limitations, restrictions, terms
and conditions applicable to the grant of the Stock Option. The terms and
conditions of the Stock Option need not be the same with respect to each Key
Employee or with respect to each Stock Option.

 

(b)           The Board may delegate its authority to grant Stock Options to Key
Employees and to determine the terms and conditions thereof to such officer of
the Company as it may determine in its discretion, on such terms and conditions
as it may impose, except with respect to grants to officers subject to
Section 16 of the Exchange Act or officers who are or may be “covered employees”
as defined in Section 162(m) of the Code, or to the extent prohibited by
applicable law, regulation or rule of a stock exchange on which the Common Stock
is listed.

 

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(c)           The Board may, subject to the provisions of the Plan, establish
such rules and regulations as it deems necessary or advisable for the proper
administration of the Plan, and may make determinations and may take such other
action in connection with or in relation to the Plan as it deems necessary or
advisable. Each determination or other action made or taken pursuant to the
Plan, including interpretation of the Plan and the specific terms and conditions
of the Stock Options granted hereunder, shall be final and conclusive for all
purposes and upon all persons.

 

(d)           No member of the Board or the Committee shall be liable for any
action taken or determination made hereunder in good faith. Service on the
Committee shall constitute service as a Director so that the members of the
Committee shall be entitled to indemnification and reimbursement as Directors of
the Company pursuant to the Company’s Certificate of Incorporation and By-Laws.

 

SECTION 4

ELIGIBILITY AND GRANTS

 

4.1          PARTICIPANTS

 

Participants shall consist of Key Employees and Non-Employee Directors.
Non-Employee Directors shall participate in, and receive grants under the Plan
only in accordance with the provisions of Sections 6 and 7 of the Plan.

 

4.2          GRANTS

 

The following Stock Options may be granted under the Plan: Incentive Stock
Options and Non-Qualified Stock Options.  Provided, however, Non-Qualified Stock
Options may only be granted to the extent the Company is considered an “eligible
issuer of service recipient stock” as such term is defined in Treasury
Regulations Section 1.409A-1(b)(5)(iii)(E).

 

4.3          AGREEMENTS

 

Each grant shall be evidenced by a written Agreement specifying the terms and
conditions of the grant. In the sole discretion of the Board, the Agreement may
condition the grant upon the Participant’s entering into one or more of the
following agreements with the Company: (a) an agreement not to compete with the
Company and its Subsidiaries and Affiliated Companies which shall become
effective as of the date of the grant and remain in effect for a specified
period of time following termination of the Participant’s employment with the
Company; (b) an agreement to cancel any employment agreement, fringe benefit or
compensation arrangement in effect between the Company and the Participant; and
(c) an agreement to retain the confidentiality of certain information. Such
agreements may contain such other terms and conditions as the Board shall
determine. If the Participant shall fail to enter into any such agreement at the
request of the Board, then the Stock Option granted or to be granted to such
Participant shall be forfeited and cancelled.

 

SECTION 5

SHARES OF COMMON STOCK SUBJECT TO THE PLAN

 

5.1          TOTAL NUMBER OF SHARES

 

The total number of shares of Common Stock that may be issued under the Plan
shall be  5,000,000 of which 4,300,000 shall be allocated for grants to Key
Employees and 700,000 shall be allocated to Non-Employee Directors. Such shares
may be either authorized but unissued shares, and shall be adjusted in
accordance with the provisions of Section 5.2 of the Plan. The number of shares
of Common Stock delivered by a Participant or withheld by the Company on behalf
of any such Participant as full or partial payment of the exercise price of a
Stock Option or of any required withholding taxes, shall once again be available
for issuance pursuant to subsequent grants of Stock Options, and shall not count
towards the aggregate number of shares of Common Stock that may be issued under
the Plan. Any shares of Common Stock subject to a grant may thereafter be
available for issuance pursuant to subsequent grants, and shall not count
towards the aggregate number of shares of Common Stock that may be issued

 

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under the Plan, if there is a lapse, forfeiture, expiration, termination or
cancellation of any such prior Stock Option grant for any reason (including for
reasons described in Section 4.3), or if shares of Common Stock are issued under
such grant and thereafter are reacquired by the Company pursuant to rights
reserved by the Company upon issuance thereof.

 

5.2          ADJUSTMENT

 

In the event of any reorganization, recapitalization, stock split, stock
distribution, merger, consolidation, split-up, spin-off, combination,
subdivision, consolidation or exchange of shares, any change in the capital
structure of the Company or any similar corporate transaction, the Board shall
make such adjustments as it deems appropriate, in its sole discretion, to
preserve the benefits or intended benefits of the Plan and Stock Option granted
under the Plan. Such adjustments may include: (a) adjustment in the number and
kind of shares reserved for issuance under the Plan; (b) adjustment in the
exercise price of outstanding Stock Options under the Plan; and (c) any other
changes that the Board determines to be equitable under the circumstances;
provided, however, no adjustments may be made if such adjustments cause the
Plan, any Agreement or any Stock Option granted hereunder to be subject to
Section 409A of the Internal Revenue Code.

 

SECTION 6

GRANTS OF STOCK OPTIONS TO NON-EMPLOYEE DIRECTORS

 

6.1          GRANTS

 

Grants of Stock Options to Non-Employee Directors shall be as follows:

 

(a)           Each individual who became a Non-Employee Director on or before
December 31, 2003 and is re-elected or continues as a Non-Employee Director at
the 2004 annual meeting of stockholders of the Company shall, on the date of
such meeting, be granted a NSO to purchase up to 15,000 shares of Common Stock.
Thereafter, each such Non-Employee Director shall be granted an additional NSO
to purchase up to 15,000 shares of Common Stock, on the date of each subsequent
annual meeting of stockholders of the Company at which such Director is
re-elected or continues as a Non-Employee Director.

 

(b)           Each individual who became or becomes a Non-Employee Director on
or after January 1, 2004, and prior to the date of the 2004 annual meeting of
stockholders of the Company shall be granted, on the date of such meeting, a NSO
to purchase up to 25,000 shares of Common Stock, provided the individual is a
Non-Employee Director on the date of such meeting. Thereafter, each such
Non-Employee Director shall be granted an additional NSO to purchase up to
15,000 shares of Common Stock, on the date of each subsequent annual meeting of
stockholders of the Company at which such Director is re-elected or continues as
a Non-Employee Director.

 

(c)           Each individual who becomes a Non-Employee Director on or after
the date of the 2004 annual meeting of stockholders of the Company shall be
granted a NSO to purchase up to 25,000 shares of Common Stock, on the date the
individual becomes a Non-Employee Director. Thereafter, each such Non-Employee
Director shall be granted an additional NSO to purchase up to 15,000 shares of
Common Stock, on the date of each subsequent annual meeting of stockholders of
the Company at which such Director is re-elected or continues as a Non-Employee
Director. The number of shares of Common Stock covered by each NSO granted to a
Non-Employee Director pursuant to Sections 6.1(a), (b) and (c) above shall be
determined by the Board in its sole discretion.

 

6.2          STOCK OPTION AGREEMENT

 

The grant of each NSO shall be evidenced by a written Stock Option Agreement
specifying the exercise period, the exercise price, the terms for payment of the
exercise price, the expiration date of the NSO, the number of shares of Common
Stock to be subject to each NSO and such other terms and conditions established
by the Board, in its sole discretion, not inconsistent with the Plan.

 

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6.3          EXERCISE PRICE AND PERIOD

 

With respect to each NSO granted to a Non-Employee Director:

 

(a)           The per share exercise price of each such NSO granted to a
Non-Employee Director shall be the Fair Market Value of the Common Stock subject
to the NSO on the date on which the NSO is granted.

 

(b)           Unless otherwise provided in the Stock Option Agreement, and
except as set forth in the next sentence hereof, each NSO shall become fully
exercisable with respect to the total number of shares of Common Stock subject
to the NSO on the first  succeeding anniversary of the date of the grant of the
NSO.  Notwithstanding the foregoing, the Board shall have the discretion to
accelerate the date as of which any NSO shall become exercisable in the event of
the Non-Employee Director’s termination of service on the Board.

 

(c)           Each NSO shall expire, and all rights to purchase shares of Common
Stock thereunder shall expire, on the date ten years after the date of grant.

 

SECTION 7

GRANTS OF STOCK OPTIONS TO KEY EMPLOYEES

 

7.1          GRANT

 

Subject to the terms of the Plan, the Board may from time to time grant Stock
Options, which may be ISOs or NSOs, to Key Employees. Unless otherwise expressly
provided at the time of the grant, Stock Options granted under the Plan to Key
Employees will be ISOs.

 

7.2          STOCK OPTION AGREEMENT

 

The grant of each Stock Option shall be evidenced by a written Stock Option
Agreement specifying the type of Stock Option granted, the exercise period, the
exercise price, the terms for payment of the exercise price, the expiration date
of the Stock Option, the number of shares of Common Stock to be subject to each
Stock Option and such other terms and conditions established by the Board, in
its sole discretion, not inconsistent with the Plan.

 

7.3          EXERCISE PERIOD

 

With respect to each Stock Option granted to a Key Employee:

 

(a)           Except as provided in Section 7.4(b), the per share exercise price
of each Stock Option shall be the Fair Market Value of the Common Stock subject
to the Stock Option on the date on which the Stock Option is granted.

 

(b)           Unless otherwise provided in the Stock Option Agreement, and
except as set forth in the next sentence hereof, each Stock Option shall become
exercisable with respect to the total number of shares of Common Stock subject
to the Stock Option on the first succeeding anniversary of the date of the grant
of the Stock Option thereunder.  Notwithstanding the foregoing, the Board shall
have the discretion to accelerate the date as of which any Stock Option shall
become exercisable in the event of the Key Employee’s termination of employment
with the Company without cause (as determined by the Board in its sole
discretion).

 

(c)           Except as provided in Section 7.4(b), each Stock Option shall
expire, and all rights to purchase shares of Common Stock thereunder shall
expire, on the date ten years after the date of grant.

 

7.4          REQUIRED TERMS AND CONDITIONS OF ISOS

 

In addition to the foregoing, each ISO granted to a Key Employee shall be
subject to the following specific rules:

 

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(a)           The aggregate Fair Market Value (determined with respect to each
ISO at the time such Option is granted) of the shares of Common Stock with
respect to which ISOs are exercisable for the first time by a Key Employee
during any calendar year (under all incentive stock option plans of the Company
and its Subsidiaries) shall not exceed $100,000. If the aggregate Fair Market
Value (determined at the time of grant) of the Common Stock subject to an ISO
which first becomes exercisable in any calendar year exceeds the limitation of
this Section 7.4(a), so much of the ISO that does not exceed the applicable
dollar limit shall be an ISO and the remainder shall be a NSO; but in all other
respects, the original Stock Option Agreement shall remain in full force and
effect.

 

(b)           Notwithstanding anything herein to the contrary, if an ISO is
granted to a Key Employee who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company (or its parent or
subsidiaries within the meaning of Section 422(b)(6) of the Code): (i) the
purchase price of each share of Common Stock subject to the ISO shall be not
less than 110% of the Fair Market Value of the Common Stock on the date the ISO
is granted; and (ii) the ISO shall expire, and all rights to purchase shares of
Common Stock thereunder shall expire, no later than the fifth anniversary of the
date the ISO was granted.

 

(c)           No ISOs shall be granted under the Plan after ten years from the
earlier of the date the Plan is adopted or approved by stockholders of the
Company.

 

SECTION 8

EXERCISE OF STOCK OPTIONS

 

8.1          NOTICE

 

A Participant entitled to exercise a Stock Option may do so by delivering
written notice to that effect specifying the number of shares of Common Stock
with respect to which the Stock Option is being exercised and any other
information the Board may prescribe. All notices or requests provided for herein
shall be delivered to the Secretary of the Company.

 

8.2          PAYMENT OF EXERCISE PRICE

 

The Board in its sole discretion may make available one or more of the following
alternatives for the payment of the Stock Option exercise price:

 

(a)           in cash;

 

(b)           in cash received from a broker-dealer to whom the Participant has
submitted an exercise notice together with irrevocable instructions to deliver
promptly to the Company the amount of sales proceeds from the sale of the shares
subject to the Stock Option to pay the exercise price;

 

(c)           by delivering previously acquired shares of Common Stock that are
acceptable to the Board and that have an aggregate Fair Market Value on the date
of exercise equal to the Stock Option exercise price; or

 

(d)           by certifying to ownership by attestation of such previously
acquired shares of Common Stock.

 

The Board shall have the sole discretion to establish the terms and conditions
applicable to any alternative made available for payment of the Stock Option
exercise price.

 

8.3          STOCK CERTIFICATES

 

The Company shall issue, in the name of the Participant, stock certificates
representing the total number of shares of Common Stock issuable pursuant to the
exercise of any Stock Option as soon as reasonably practicable after such
exercise; provided that any shares of Common Stock purchased by a Participant
through a broker-dealer pursuant to Section 8.2(b) or Section 11(b) shall be
delivered to such broker-dealer in accordance with 12 C.F.R. §220.3(e)(4) or
other applicable provision of law.

 

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SECTION 9

CHANGE IN CONTROL

 

9.1          EFFECT OF CHANGE IN CONTROL

 

(a)           Notwithstanding any of the provisions of the Plan or any
outstanding Stock Option Agreement, upon a Change in Control of the Company (as
defined in Section 9.2): (i) all outstanding Options shall become fully
exercisable; (ii) all restrictions applicable to all grants shall terminate or
lapse.

 

(b)           In addition to the Board’s authority set forth in Section 3, upon
such Change in Control of the Company, the Board is authorized, and has sole
discretion, as to any grant, either at the time of such grant hereunder or any
time thereafter, to take any one or more of the following actions: (i) provide
for the purchase of any outstanding Stock Option, for an amount of cash equal to
the difference between the exercise price and the then Fair Market Value of the
Common Stock covered thereby had such Stock Option been currently exercisable;
(ii) make such adjustment to any such grant then outstanding as the Board deems
appropriate to reflect such Change in Control; and (iii) cause any such grant
then outstanding to be assumed, by the acquiring or surviving corporation, after
such Change in Control; provided, however, the Board may not take any actions
that would cause the Plan, any Agreement or any Stock Option granted hereunder
to be subject to Section 409A of the Internal Revenue Code.

 

9.2          DEFINITION OF CHANGE IN CONTROL

 

“Change in Control” shall mean the occurrence, at any time during the specified
term of a   grant under the Plan, of any of the following events:

 

(a)           Any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity (other than the Company or a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company), or any syndicate or group deemed to be a person under
Section 14(d)(2) of the Exchange Act, is or becomes the “beneficial owner” (as
defined in Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), directly or indirectly, of securities of the Company representing 25% or
more of the combined voting power of the Company’s then outstanding securities
entitled to vote generally in the election of directors;

 

(b)           The Company is party to a merger, consolidation, reorganization or
other similar transaction with another corporation or other legal person unless,
following such transaction, more than 50% of the combined voting power of the
outstanding securities of the surviving, resulting or acquiring corporation or
person or its parent entity entitled to vote generally in the election of
directors (or persons performing similar functions) is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners of the Company’s outstanding securities
entitled to vote generally in the election of directors immediately prior to
such transaction, in substantially the same proportions as their ownership,
immediately prior to such transaction, of the Company’s outstanding securities
entitled to vote generally in the election of directors;

 

(c)           The Company sells all or substantially all of its business and/or
assets to another corporation or other legal person unless, following such sale,
more than 50% of the combined voting power of the outstanding securities of the
acquiring corporation or person or its parent entity entitled to vote generally
in the election of directors (or persons performing similar functions) is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners of the Company’s
outstanding securities entitled to vote generally in the election of directors
immediately prior to such sale, in substantially the same proportions as their
ownership, immediately prior to such sale, of the Company’s outstanding
securities entitled to vote generally in the election of directors; or

 

(d)           During any period of two consecutive years or less (not including
any period prior to the approval of the Plan by the Board), individuals who at
the beginning of such period constituted the Board (and any new Directors, whose
appointment or election by the Board or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds of the Directors then
still in office who either were Directors at the beginning of the period or
whose appointment, election or nomination for election was so approved) cease
for any reason to constitute a majority of the Board.

 

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SECTION 10

POSTPONEMENT

 

The Board may postpone any grant or exercise of a Stock Option for such time as
the Board in its sole discretion may deem necessary in order to permit the
Company:

 

(a)           to effect, amend or maintain any necessary registration of the
Plan or the shares of Common Stock issuable upon the exercise of an Option,
under the Securities Act of 1933, as amended, or the securities laws of any
applicable jurisdiction;

 

(b)           to permit any action to be taken in order to (i) list such shares
of Common Stock on a stock exchange if shares of Common Stock are then listed on
such exchange or (ii) comply with restrictions or regulations incident to the
maintenance of a public market for its shares of Common Stock, including any
rules or regulations of any stock exchange on which the shares of Common Stock
are listed; or

 

(c)           to determine that such shares of Common Stock and the Plan are
exempt from such registration or that no action of the kind referred to in
(b)(ii) above needs to be taken; and the Company shall not be obligated by
virtue of any terms and conditions of any provision of the Plan to sell or issue
shares of Common Stock in violation of the Securities Act of 1933 or the law of
any government having jurisdiction thereof.

 

Any such postponement shall not extend the term of a grant and neither the
Company nor its Directors or officers shall have any obligation or liability to
a Participant, the Participant’s successor or any other person with respect to
any shares of Common Stock as to which the grant shall lapse because of such
postponement, nor shall such postponement result in the Plan providing for the
deferral of compensation as defined in Section 409A of the Code.

 

SECTION 11

PAYMENT OF TAXES

 

In connection with any grant, and as a condition to the issuance or delivery of
any shares of Common Stock to the Participant in connection therewith, the
Company may require the Participant to pay the Company an amount equal to the
minimum amount of the tax the Company or any Subsidiary or Affiliated Company
may be required to withhold to obtain a deduction for federal, state or local
income tax purposes as a result of such grant or to comply with applicable law.
The Board in its sole discretion may make available one or more of the following
alternatives for the payment of such taxes:

 

(a)           in cash;

 

(b)           in cash received from a broker-dealer to whom the Participant has
submitted notice together with irrevocable instructions to deliver promptly to
the Company the amount of sales proceeds from the sale of the shares subject to
the grant to pay the withholding taxes;

 

(c)           by directing the Company to withhold such number of shares of
Common Stock otherwise issuable in connection with the grant having an aggregate
Fair Market Value equal to the minimum amount of tax required to be withheld;

 

(d)           by delivering previously acquired shares of Common Stock of the
Company that are acceptable to the Board that have an aggregate Fair Market
Value equal to the amount required to be withheld; or

 

(e)           by certifying to ownership by attestation of such previously
acquired shares of Common Stock.

 

The Board shall have the sole discretion to establish the terms and conditions
applicable to any alternative made available for payment of the required
withholding taxes.

 

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SECTION 12

NONTRANSFERABILITY

 

Stock Options granted under the Plan, and any rights and privileges pertaining
thereto, may not be transferred, assigned, pledged or hypothecated in any
manner, or be subject to execution, attachment or similar process, by operation
of law or otherwise, other than:

 

In the case of ISO’s:

 

(a)           by will or by the laws of descent and distribution;

 

(b)           pursuant to the terms of a qualified domestic relations order to
which the Participant is a party that meets the requirements of any relevant
provisions of the Code; or

 

In the case of NSO’s:

 

(a)           Any NSO granted pursuant to the Plan shall be transferable to any
member of such Optionee’s “immediate family” (as such term is defined in
Rule 16a-1(c) promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, or any successor rule or
regulation) or to a trust or family partnership whose beneficiaries are members
of such optionee’s “immediate family” or to a qualified charitable organization
to which contributions are deductible for tax purpose pursuant to Section 170 of
the Internal Revenue Code of 1986, as amended.

 

SECTIONS 13

TERMINATION OR AMENDMENT OF PLAN

 

(a)           Except as described in (b) below, the Board may terminate,
suspend, or amend the Plan, in whole or in part, from time to time, without the
approval of the stockholders of the Company, unless such approval is required by
applicable law, regulation or rule of any stock exchange on which the shares of
Common Stock are listed. No amendment or termination of the Plan shall adversely
affect the right of any Participant under any outstanding grant in any material
way without the written consent of the Participant, unless such amendment or
termination is required by applicable law, regulation or rule of any stock
exchange on which the shares of Common Stock are listed. Subject to the
foregoing, the Board may correct any defect or supply an omission or reconcile
any inconsistency in the Plan or in any granted hereunder in the manner and to
the extent it shall deem desirable, in its sole discretion, to effectuate the
Plan.

 

(b)           Notwithstanding the foregoing, there shall be no amendment to the
Plan or any outstanding Stock Option Agreement that results in the repricing of
Stock Options.

 

(c)           The Board shall have the authority to amend the Plan to the extent
necessary or appropriate to comply with applicable law, regulation or accounting
rules in order to permit Key Employees who are located outside of the United
States to participate in the Plan.

 

(d)           The Plan is intended to provide compensation that is exempt from
Section 409A of the Code and shall not be amended in a manner that would cause
the Plan or any Agreement or Stock Option granted hereunder to fail to comply
with the requirements of Section 409A of the Code.

 

SECTION 14

AMENDMENT OF STOCK OPTION AGREEMENTS

 

The Board shall have the authority to amend any Stock Option Agreement at any
time; provided however, that no such amendment shall adversely affect the right
of any Participant under any outstanding Stock Option Agreement in any material
way without the written consent of the Participant, unless such amendment is
required by applicable law, regulation or rule of any stock exchange on which
the shares of Common Stock are listed.

 

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SECTION 15

NO CONTRACT OF EMPLOYMENT

 

Neither the adoption of the Plan nor the grant of any Stock Option under the
Plan shall be deemed to obligate the Company or any Subsidiary or Affiliated
Company to continue the employment of any Participant for any particular period,
nor shall the granting of a Stock Option constitute a request or consent to
postpone the retirement date of any Participant.

 

SECTION 16

APPLICABLE LAW

 

All questions pertaining to the validity, construction and administration of the
Plan and all Stock Options granted under the Plan shall be determined in
conformity with the laws of the State of Delaware, without regard to the
conflict of law provisions of any state, and, in the case of Incentive Stock
Options, Section 422 of the Code and regulations issued thereunder.

 

SECTION 17

REGISTRATION OF OPTION SHARES

 

No shares will be issued and delivered upon exercise of any option unless a
registration statement under the Securities Act of 1933, as amended, with
respect to the shares of Common Stock to be reserved for issuance upon the
exercise of options to be granted under the 2004 Plan has become effective, and
unless all other applicable laws and regulations have been complied with.

 

SECTION 18

EFFECTIVE DATE

 

The Plan succeeded the 1993 Incentive Stock Option Plan (the “1993 Plan”) and
the 1993 Directors Stock Option Plan (the “Directors Plan”). Both the 1993 Plan
and the Directors Plan expired by their terms in September 2003 and
October 2003, respectively.  The Plan was adopted by the Board on April 28,
2004, and became effective on June 8, 2004, the date the Plan was approved by
the stockholders of the Company.  An amendment to the Plan became effective on
June 7, 2010, the date the amendment was approved by the stockholders of the
Company.

 

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