Exhibit 10.1

 

ZORAN CORPORATION

 

1993 STOCK OPTION PLAN

 

(As Amended Through April 21, 2002)

 

 

1.        PURPOSES OF THE PLAN.  THE PURPOSES OF THIS STOCK OPTION PLAN ARE TO
ATTRACT AND RETAIN THE BEST AVAILABLE PERSONNEL FOR POSITIONS OF SUBSTANTIAL
RESPONSIBILITY, TO PROVIDE ADDITIONAL INCENTIVES TO EMPLOYEES, NON-EMPLOYEE
DIRECTORS AND CONSULTANTS OF THE COMPANY AND ITS SUBSIDIARIES, AND TO PROMOTE
THE SUCCESS OF THE COMPANY’S BUSINESS.  OPTIONS GRANTED HEREUNDER MAY BE EITHER
INCENTIVE STOCK OPTIONS OR NONSTATUTORY STOCK OPTIONS AT THE DISCRETION OF THE
COMMITTEE.

 

2.        DEFINITIONS.  AS USED HEREIN, AND IN ANY OPTION GRANTED HEREUNDER, THE
FOLLOWING DEFINITIONS SHALL APPLY:

 

(A)           “BOARD” SHALL MEAN THE BOARD OF DIRECTORS OF THE COMPANY.

 

(B)           “CODE” SHALL MEAN THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
AND ANY APPLICABLE REGULATIONS PROMULGATED THEREUNDER.

 

(C)           “COMMON STOCK” SHALL MEAN THE COMMON STOCK OF THE COMPANY.

 

(D)           “COMPANY” SHALL MEAN ZORAN CORPORATION, A DELAWARE CORPORATION.

 

(E)           “COMMITTEE” SHALL MEAN THE COMMITTEE APPOINTED BY THE BOARD IN
ACCORDANCE WITH PARAGRAPH (A) OF SECTION 4 OF THE PLAN.  IF THE BOARD DOES NOT
APPOINT OR CEASES TO MAINTAIN A COMMITTEE, THE TERM “COMMITTEE” SHALL REFER TO
THE BOARD.

 

(F)            “CONSULTANT” SHALL MEAN ANY INDEPENDENT CONTRACTOR RETAINED TO
PERFORM SERVICES FOR THE COMPANY.

 

(G)           “CONTINUOUS SERVICE” SHALL MEAN THE ABSENCE OF ANY INTERRUPTION OR
TERMINATION OF SERVICE WITH THE COMPANY, A SUCCESSOR OF THE COMPANY OR ANY
PARENT OR SUBSIDIARY, WHETHER IN THE CAPACITY OF AN EMPLOYEE, A NON-EMPLOYEE
DIRECTOR, OR A CONSULTANT.  CONTINUOUS SERVICE SHALL NOT BE CONSIDERED
INTERRUPTED (I) DURING ANY PERIOD OF SICK LEAVE, MILITARY LEAVE OR ANY OTHER
LEAVE OF ABSENCE APPROVED BY THE BOARD, (II) IN THE CASE OF TRANSFERS BETWEEN
LOCATIONS OF THE COMPANY OR BETWEEN THE COMPANY AND ANY PARENT, SUBSIDIARY OR
SUCCESSOR OF THE COMPANY, OR (III) MERELY AS A RESULT OF A CHANGE IN THE
CAPACITY IN WHICH THE OPTIONEE RENDERS SUCH SERVICE PROVIDED THAT NO
INTERRUPTION OR TERMINATION OF THE OPTIONEE’S SERVICE OCCURS.

 

(H)           “EMPLOYEE” SHALL MEAN ANY PERSON, INCLUDING OFFICERS (WHETHER OR
NOT THEY ARE DIRECTORS), EMPLOYED BY THE COMPANY OR ANY SUBSIDIARY.

 

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(I)            “EXCHANGE ACT” SHALL MEAN THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

(J)            “INCENTIVE STOCK OPTION” SHALL MEAN ANY OPTION GRANTED UNDER THIS
PLAN AND ANY OTHER OPTION GRANTED TO AN EMPLOYEE IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 422 OF THE CODE, AND THE REGULATIONS PROMULGATED
THEREUNDER.

 

(K)           “NON-EMPLOYEE DIRECTOR” SHALL MEAN ANY DIRECTOR OF THE COMPANY OR
ANY SUBSIDIARY WHO IS NOT EMPLOYED BY THE COMPANY OR SUCH SUBSIDIARY.

 

(L)            “NONSTATUTORY STOCK OPTION” SHALL MEAN AN OPTION GRANTED UNDER
THE PLAN THAT IS SUBJECT TO THE PROVISIONS OF SECTION 1.83-7 OF THE TREASURY
REGULATIONS PROMULGATED UNDER SECTION 83 OF THE CODE.

 

(M)          “OPTION” SHALL MEAN A STOCK OPTION GRANTED PURSUANT TO THE PLAN.

 

(N)           “OPTION AGREEMENT” SHALL MEAN A WRITTEN AGREEMENT BETWEEN THE
COMPANY AND THE OPTIONEE REGARDING THE GRANT AND EXERCISE OF OPTIONS TO PURCHASE
SHARES AND THE TERMS AND CONDITIONS THEREOF AS DETERMINED BY THE COMMITTEE
PURSUANT TO THE PLAN.

 

(O)           “OPTIONED SHARES” SHALL MEAN THE COMMON STOCK SUBJECT TO AN
OPTION.

 

(P)           “OPTIONEE” SHALL MEAN AN EMPLOYEE, NON-­EMPLOYEE DIRECTOR OR
CONSULTANT WHO RECEIVES AN OPTION.

 

(Q)           “PARENT” SHALL MEAN A “PARENT CORPORATION,” WHETHER NOW OR
HEREAFTER EXISTING, AS DEFINED BY SECTION 424(E) OF THE CODE.

 

(R)            “PLAN” SHALL MEAN THIS 1993 STOCK OPTION PLAN.

 

(S)           “REGISTRATION DATE” SHALL MEAN THE EFFECTIVE DATE OF THE FIRST
REGISTRATION STATEMENT FILED BY THE COMPANY PURSUANT TO SECTION 12(G) OF THE
EXCHANGE ACT WITH RESPECT TO ANY CLASS OF THE COMPANY’S EQUITY SECURITIES.

 

(T)            “SECTION 162(M)” MEANS SECTION 162(M) OF THE CODE.

 

(U)           “SECURITIES ACT” SHALL MEAN THE SECURITIES ACT OF 1933, AS
AMENDED.

 

(V)           “SHARE” SHALL MEAN A SHARE OF THE COMMON STOCK SUBJECT TO AN
OPTION, AS ADJUSTED IN ACCORDANCE WITH SECTION 11 OF THE PLAN.

 

(W)          “SUBSIDIARY” SHALL MEAN A “SUBSIDIARY CORPORATION,” WHETHER NOW OR
HEREAFTER EXISTING, AS DEFINED IN SECTION 424(F) OF THE CODE.

 

3.        STOCK SUBJECT TO THE PLAN.  SUBJECT TO THE PROVISIONS OF SECTION 11 OF
THE PLAN, THE MAXIMUM AGGREGATE NUMBER OF SHARES WHICH MAY BE ISSUED UNDER THE
PLAN SHALL BE FIVE MILLION ONE HUNDRED SEVENTY THOUSAND (5,170,000).  IF AN
OPTION EXPIRES OR BECOMES UNEXERCISABLE FOR ANY REASON WITHOUT HAVING BEEN
EXERCISED IN FULL, THE SHARES WHICH WERE SUBJECT TO THE OPTION

 

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but as to which the Option was not exercised shall, unless the Plan shall have
been terminated, become available for other Option grants under the Plan.

 

The Company intends that as long as it is not subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act and is not an investment
company registered or required to be registered under the Investment Company Act
of 1940, all offers and sales of Options and Shares issuable upon exercise of
any Option shall be exempt from registration under the provisions of Section 5
of the Securities Act, and the Plan shall be administered in such a manner so as
to preserve such exemption.  The Company intends that the Plan shall constitute
a written compensatory benefit plan within the meaning of Rule 701(b) of 17 CFR
Section 230.701 promulgated by the Securities and Exchange Commission pursuant
to such Act.  The Committee shall designate which Options granted under the Plan
by the Company are intended to be granted in reliance on Rule 701.

 

4.        ADMINISTRATION OF THE PLAN.

 

(A)           PROCEDURE.  THE PLAN SHALL BE ADMINISTERED BY THE BOARD.  THE
BOARD MAY APPOINT ONE OR MORE COMMITTEES TO ADMINISTER THE PLAN, SUBJECT TO SUCH
TERMS AND CONDITIONS AS THE BOARD MAY PRESCRIBE.  ONCE APPOINTED, THE COMMITTEE
SHALL CONTINUE TO SERVE UNTIL OTHERWISE DIRECTED BY THE BOARD.  FROM TIME TO
TIME, THE BOARD MAY INCREASE THE SIZE OF THE COMMITTEE AND APPOINT ADDITIONAL
MEMBERS THEREOF, REMOVE MEMBERS (WITH OR WITHOUT CAUSE) AND APPOINT NEW MEMBERS
IN SUBSTITUTION THEREFOR, FILL VACANCIES, HOWEVER CAUSED, AND REMOVE ALL MEMBERS
OF THE COMMITTEE AND, THEREAFTER, DIRECTLY ADMINISTER THE PLAN.

 

Members of the Board or Committee who are either eligible for Options or have
been granted Options may vote on any matters affecting the administration of the
Plan or the grant of options pursuant to the Plan, except that no such member
shall act upon the granting of an Option to himself, but any such member may be
counted in determining the existence of a quorum at any meeting of the Board or
the Committee during which action is taken with respect to the granting of an
Option to him or her.

 

The Committee shall meet at such times and places and upon such notice as the
chairperson determines.  A majority of the Committee shall constitute a quorum. 
Any acts by the Committee may be taken at any meeting at which a quorum is
present and shall be by majority vote of those members entitled to vote. 
Additionally, any acts reduced to writing or approved in writing by all of the
members of the Committee shall be valid acts of the Committee.

 

(B)           PROCEDURE AFTER REGISTRATION DATE.  NOTWITHSTANDING SUBSECTION (A)
ABOVE, AFTER THE DATE OF REGISTRATION OF THE COMPANY’S COMMON STOCK ON A
NATIONAL SECURITIES EXCHANGE OR THE REGISTRATION DATE, THE BOARD SHALL TAKE ALL
ACTION NECESSARY TO ADMINISTER THE PLAN IN ACCORDANCE WITH THE THEN EFFECTIVE
PROVISIONS OF RULE 16B-3 PROMULGATED UNDER THE EXCHANGE ACT, PROVIDED THAT ANY
AMENDMENT TO THE PLAN REQUIRED FOR COMPLIANCE WITH SUCH PROVISIONS SHALL BE MADE
CONSISTENT WITH THE PROVISIONS OF SECTION 13 OF THE PLAN, AND SAID REGULATIONS.

 

(C)           POWERS OF THE COMMITTEE.  SUBJECT TO THE PROVISIONS OF THE PLAN,
THE COMMITTEE SHALL HAVE THE AUTHORITY:  (I) TO DETERMINE, UPON REVIEW OF
RELEVANT INFORMATION, THE FAIR MARKET VALUE OF THE COMMON STOCK; (II) TO
DETERMINE THE EXERCISE PRICE OF OPTIONS TO BE

 

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granted, the Employees, Directors or Consultants to whom and the time or times
at which Options shall be granted, and the number of Shares to be represented by
each Option; (iii) to interpret the Plan; (iv) to prescribe, amend and rescind
rules and regulations relating to the Plan; (v) to determine the terms and
provisions of each Option granted under the Plan (which need not be identical)
and, with the consent of the holder thereof, to modify or amend any Option;
(vi) to authorize any person to execute on behalf of the Company any instrument
required to effectuate the grant of an Option previously granted by the
Committee; (vii) to accelerate or (with the consent of the Optionee) defer an
exercise date of any Option, subject to the provisions of Section 9(a) of the
Plan; (viii) to determine whether Options granted under the Plan will be
Incentive Stock Options or Nonstatutory Stock Options; (ix) to make all other
determinations deemed necessary or advisable for the administration of the Plan;
and (x) to designate which options granted under the Plan will be issued in
reliance on Rule 701.

 

(D)           EFFECT OF COMMITTEE’S DECISION.  ALL DECISIONS, DETERMINATIONS AND
INTERPRETATIONS OF THE COMMITTEE SHALL BE FINAL AND BINDING ON ALL POTENTIAL OR
ACTUAL OPTIONEES, ANY OTHER HOLDER OF AN OPTION OR OTHER EQUITY SECURITY OF THE
COMPANY AND ALL OTHER PERSONS.

 

5.        ELIGIBILITY AND OPTION LIMITATIONS.

 

(A)           PERSONS ELIGIBLE FOR OPTIONS.  OPTIONS UNDER THE PLAN MAY BE
GRANTED ONLY TO EMPLOYEES, NON-EMPLOYEE DIRECTORS OR CONSULTANTS WHOM THE
COMMITTEE, IN ITS SOLE DISCRETION, MAY DESIGNATE FROM TIME TO TIME.  FOR
PURPOSES OF THE FOREGOING SENTENCE, “EMPLOYEES,” “NON-EMPLOYEE DIRECTORS” AND
“CONSULTANTS” SHALL INCLUDE PROSPECTIVE EMPLOYEES, PROSPECTIVE NON-EMPLOYEE
DIRECTORS AND PROSPECTIVE CONSULTANTS TO WHOM OPTIONS ARE GRANTED IN CONNECTION
WITH WRITTEN OFFERS OF EMPLOYMENT OR OTHER SERVICE RELATIONSHIP.  INCENTIVE
STOCK OPTIONS MAY BE GRANTED ONLY TO EMPLOYEES.  ANY PERSON WHO IS NOT AN
EMPLOYEE ON THE EFFECTIVE DATE OF GRANT OF AN OPTION TO SUCH PERSON MAY BE
GRANTED ONLY A NONSTATUTORY STOCK OPTION.  AN EMPLOYEE WHO HAS BEEN GRANTED AN
OPTION, IF HE OR SHE IS OTHERWISE ELIGIBLE, MAY BE GRANTED AN ADDITIONAL OPTION
OR OPTIONS.  HOWEVER, THE AGGREGATE FAIR MARKET VALUE (DETERMINED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 8(A) OF THE PLAN) OF THE SHARES SUBJECT TO ONE OR
MORE INCENTIVE STOCK OPTIONS GRANTS THAT ARE EXERCISABLE FOR THE FIRST TIME BY
AN OPTIONEE DURING ANY CALENDAR YEAR (UNDER ALL STOCK OPTION PLANS OF THE
COMPANY AND ITS PARENTS AND SUBSIDIARIES) SHALL NOT EXCEED $100,000 (DETERMINED
AS OF THE GRANT DATE).

 

(B)           SECTION 162(M) GRANT LIMIT.  SUBJECT TO ADJUSTMENT AS PROVIDED IN
SECTION 11, NO EMPLOYEE SHALL BE GRANTED ONE OR MORE OPTIONS WITHIN ANY FISCAL
YEAR OF THE COMPANY WHICH IN THE AGGREGATE ARE FOR THE PURCHASE OF MORE THAN
FIVE HUNDRED THOUSAND (500,000) SHARES (THE “SECTION 162(M) GRANT LIMIT”).  AN
OPTION WHICH IS CANCELED IN THE SAME FISCAL YEAR OF THE COMPANY IN WHICH IT WAS
GRANTED SHALL CONTINUE TO BE COUNTED AGAINST THE SECTION 162(M) GRANT LIMIT FOR
SUCH PERIOD.

 

(C)           NO RIGHT TO CONTINUING EMPLOYMENT.  NEITHER THE ESTABLISHMENT NOR
THE OPERATION OF THE PLAN SHALL CONFER UPON ANY OPTIONEE OR ANY OTHER PERSON ANY
RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR OTHER SERVICE WITH THE
COMPANY OR ANY SUBSIDIARY, NOR SHALL THE PLAN INTERFERE IN ANY WAY WITH THE
RIGHT OF THE OPTIONEE OR THE RIGHT OF THE COMPANY (OR ANY PARENT OR SUBSIDIARY)
TO TERMINATE SUCH EMPLOYMENT OR SERVICE AT ANY TIME.

 

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(D)           OPTION REPRICING.  NO OPTION SHALL BE REPRICED WITHOUT THE
APPROVAL OF A MAJORITY OF THE SHARES OF COMMON STOCK PRESENT OR REPRESENTED BY
PROXY AND VOTING AT A MEETING OF THE STOCKHOLDERS OF THE COMPANY AT WHICH A
QUORUM REPRESENTING A MAJORITY OF ALL OUTSTANDING SHARES OF COMMON STOCK IS
PRESENT OR REPRESENTED BY PROXY.

 

6.        TERM OF PLAN.  THE PLAN SHALL BECOME EFFECTIVE UPON ITS ADOPTION BY
THE BOARD OR ITS APPROVAL BY VOTE OF THE HOLDERS OF THE OUTSTANDING SHARES OF
THE COMPANY ENTITLED TO VOTE ON THE ADOPTION OF THE PLAN (IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 18 HEREOF), WHICHEVER IS EARLIER.  IT SHALL CONTINUE IN
EFFECT FOR A TERM OF TEN (10) YEARS UNLESS SOONER TERMINATED UNDER SECTION 13 OF
THE PLAN.

 

7.        TERM OF OPTION.  UNLESS THE COMMITTEE DETERMINES OTHERWISE, THE TERM
OF EACH OPTION GRANTED UNDER THE PLAN SHALL BE TEN (10) YEARS FROM THE DATE OF
GRANT.  THE TERM OF THE OPTION SHALL BE SET FORTH IN THE OPTION AGREEMENT.  NO
INCENTIVE STOCK OPTION SHALL BE EXERCISABLE AFTER THE EXPIRATION OF TEN (10)
YEARS FROM THE DATE SUCH OPTION IS GRANTED, AND NO INCENTIVE STOCK OPTION
GRANTED TO ANY EMPLOYEE WHO, AT THE DATE SUCH OPTION IS GRANTED, OWNS (WITHIN
THE MEANING OF SECTION 424(D) OF THE CODE) MORE THAN TEN PERCENT (10%) OF THE
TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK OF THE COMPANY OR ANY PARENT
OR SUBSIDIARY SHALL BE EXERCISABLE AFTER THE EXPIRATION OF FIVE (5) YEARS FROM
THE DATE SUCH OPTION IS GRANTED.

 

8.        OPTION PRICE AND CONSIDERATION.

 

(A)           OPTION PRICE.  EXCEPT AS PROVIDED IN SUBSECTION (B) BELOW, THE
OPTION PRICE FOR THE SHARES TO BE ISSUED PURSUANT TO ANY OPTION SHALL BE SUCH
PRICE AS IS DETERMINED BY THE COMMITTEE, WHICH SHALL IN NO EVENT BE LESS THAN:
(I) IN THE CASE OF INCENTIVE STOCK OPTIONS, THE FAIR MARKET VALUE OF SUCH SHARES
ON THE DATE THE OPTION IS GRANTED; OR (II) IN THE CASE OF NONSTATUTORY STOCK
OPTIONS, 85% OF SUCH FAIR MARKET VALUE.  FAIR MARKET VALUE OF THE COMMON STOCK
SHALL BE DETERMINED BY THE COMMITTEE, USING SUCH CRITERIA AS IT DEEMS RELEVANT;
PROVIDED, HOWEVER, THAT IF THERE IS A PUBLIC MARKET FOR THE COMMON STOCK, THE
FAIR MARKET VALUE PER SHARE SHALL BE THE AVERAGE OF THE LAST REPORTED BID AND
ASKED PRICES OF THE COMMON STOCK ON THE DATE OF GRANT, AS REPORTED IN THE WALL
STREET JOURNAL (OR, IF NOT SO REPORTED, AS OTHERWISE REPORTED BY THE NASDAQ
SYSTEM) OR, IN THE EVENT THE COMMON STOCK IS LISTED ON A NATIONAL SECURITIES
EXCHANGE (WITHIN THE MEANING OF SECTION 6 OF THE EXCHANGE ACT) OR ON THE NASDAQ
NATIONAL MARKET SYSTEM (OR ANY SUCCESSOR NATIONAL MARKET SYSTEM), THE FAIR
MARKET VALUE PER SHARE SHALL BE THE CLOSING PRICE ON SUCH EXCHANGE ON THE DATE
OF GRANT OF THE OPTION, AS REPORTED IN THE WALL STREET JOURNAL.

 

(B)           TEN PERCENT SHAREHOLDERS.  NO OPTION SHALL BE GRANTED TO ANY
EMPLOYEE WHO, AT THE DATE SUCH OPTION IS GRANTED, OWNS (WITHIN THE MEANING OF
SECTION 424(D) OF THE CODE) MORE THAN TEN PERCENT (10%) OF THE TOTAL COMBINED
VOTING POWER OF ALL CLASSES OF STOCK OF THE COMPANY OR ANY PARENT OR SUBSIDIARY,
UNLESS THE OPTION PRICE FOR THE SHARES TO BE ISSUED PURSUANT TO SUCH OPTION IS
AT LEAST EQUAL TO 110% OF THE FAIR MARKET VALUE OF SUCH SHARES ON THE GRANT DATE
DETERMINED BY THE COMMITTEE IN THE MANNER SET FORTH IN SUBSECTION (A) ABOVE.

 

(C)           CONSIDERATION.  THE CONSIDERATION TO BE PAID FOR THE OPTIONED
SHARES SHALL BE PAYMENT IN CASH OR BY CHECK UNLESS PAYMENT IN SOME OTHER MANNER,
INCLUDING OTHER SHARES OF THE COMPANY’S COMMON STOCK OR SUCH OTHER CONSIDERATION
AND METHOD OF PAYMENT FOR THE

 

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issuance of Optioned Shares as may be permitted under Section 152 of the
Delaware General Corporation Law, is authorized by the Committee at the time of
the grant of the Option.  Any cash or other property received by the Company
from the sale of Shares pursuant to the Plan shall constitute part of the
general assets of the Company.

 

9.        EXERCISE OF OPTION.

 

(A)           VESTING PERIOD.  ANY OPTION GRANTED HEREUNDER SHALL BE EXERCISABLE
AT SUCH TIMES AND UNDER SUCH CONDITIONS AS DETERMINED BY THE COMMITTEE AND AS
SHALL BE PERMISSIBLE UNDER THE TERMS OF THE PLAN, WHICH SHALL BE SPECIFIED IN
THE OPTION AGREEMENT EVIDENCING THE OPTION.  UNLESS THE COMMITTEE SPECIFICALLY
DETERMINES OTHERWISE AT THE TIME OF THE GRANT OF THE OPTION, EACH OPTION SHALL
VEST AND BECOME EXERCISABLE, CUMULATIVELY, IN FOUR SUBSTANTIALLY EQUAL
INSTALLMENTS ON EACH OF THE FIRST FOUR ANNIVERSARIES OF THE DATE OF THE GRANT OF
THE OPTION, SUBJECT TO THE OPTIONEE’S CONTINUOUS SERVICE.  HOWEVER, NO OPTION
GRANTED TO A PROSPECTIVE EMPLOYEE, PROSPECTIVE NON-EMPLOYEE DIRECTOR OR
PROSPECTIVE CONSULTANT MAY BECOME EXERCISABLE PRIOR TO THE DATE ON WHICH SUCH
PERSON COMMENCES SERVICE.

 

(B)           EXERCISE PROCEDURES.  AN OPTION SHALL BE DEEMED TO BE EXERCISED
WHEN WRITTEN NOTICE OF SUCH EXERCISE HAS BEEN GIVEN TO THE COMPANY IN ACCORDANCE
WITH THE TERMS OF THE OPTION BY THE PERSON ENTITLED TO EXERCISE THE OPTION, AND
FULL PAYMENT FOR THE SHARES WITH RESPECT TO WHICH THE OPTION IS EXERCISED HAS
BEEN RECEIVED BY THE COMPANY.  AN OPTION MAY NOT BE EXERCISED FOR FRACTIONAL
SHARES OR FOR LESS THAN TEN (10) SHARES.  AS SOON AS PRACTICABLE FOLLOWING THE
EXERCISE OF AN OPTION IN THE MANNER SET FORTH ABOVE, THE COMPANY SHALL ISSUE OR
CAUSE ITS TRANSFER AGENT TO ISSUE STOCK CERTIFICATES REPRESENTING THE SHARES
PURCHASED.  UNTIL THE ISSUANCE OF SUCH STOCK CERTIFICATES (AS EVIDENCED BY THE
APPROPRIATE ENTRY ON THE BOOKS OF THE COMPANY OR OF A DULY AUTHORIZED TRANSFER
AGENT OF THE COMPANY), NO RIGHT TO VOTE OR RECEIVE DIVIDENDS OR ANY OTHER RIGHTS
AS A STOCKHOLDER SHALL EXIST WITH RESPECT TO THE OPTIONED SHARES NOTWITHSTANDING
THE EXERCISE OF THE OPTION.  NO ADJUSTMENT WILL BE MADE FOR A DIVIDEND OR OTHER
RIGHTS FOR WHICH THE RECORD DATE IS PRIOR TO THE DATE OF THE TRANSFER BY THE
OPTIONEE OF THE CONSIDERATION FOR THE PURCHASE OF THE SHARES, EXCEPT AS PROVIDED
IN SECTION 11 OF THE PLAN.  AFTER THE REGISTRATION DATE, THE EXERCISE OF AN
OPTION BY ANY PERSON SUBJECT TO SHORT-SWING TRADING LIABILITY UNDER
SECTION 16(B) OF THE EXCHANGE ACT SHALL BE SUBJECT TO COMPLIANCE WITH ALL
APPLICABLE REQUIREMENTS OF RULE 16B-3(D) OR (E) PROMULGATED UNDER THE EXCHANGE
ACT.

 

(C)           DEATH OF OPTIONEE.  IN THE EVENT OF THE DEATH DURING THE OPTION
PERIOD OF AN OPTIONEE WHO IS AT THE TIME OF HIS DEATH, OR WAS WITHIN THE NINETY
(90) DAY PERIOD IMMEDIATELY PRIOR THERETO, AN EMPLOYEE, NON-EMPLOYEE DIRECTOR OR
CONSULTANT, AND WHO WAS IN CONTINUOUS SERVICE FROM THE DATE OF THE GRANT OF THE
OPTION UNTIL THE DATE OF DEATH OR TERMINATION, THE OPTION MAY BE EXERCISED, AT
ANY TIME WITHIN ONE (1) YEAR FOLLOWING THE DATE OF DEATH, BY THE OPTIONEE’S
ESTATE OR BY A PERSON WHO ACQUIRED THE RIGHT TO EXERCISE THE OPTION BY BEQUEST
OR INHERITANCE, BUT ONLY TO THE EXTENT OF THE ACCRUED RIGHT TO EXERCISE AT THE
TIME OF THE TERMINATION OR DEATH, WHICHEVER COMES FIRST.

 

(D)           DISABILITY OF OPTIONEE.  IN THE EVENT OF THE PERMANENT AND TOTAL
DISABILITY DURING THE OPTION PERIOD OF AN OPTIONEE WHO IS AT THE TIME OF SUCH
DISABILITY, OR WAS WITHIN THE NINETY (90) DAY PERIOD PRIOR THERETO, AN EMPLOYEE,
NON-EMPLOYEE DIRECTOR OR CONSULTANT, AND WHO WAS IN CONTINUOUS SERVICE FROM THE
DATE OF THE GRANT OF THE OPTION UNTIL THE DATE OF

 

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disability or termination, the Option may be exercised at any time within one
(1) year following the date of disability, but only to the extent of the accrued
right to exercise at the time of the termination or disability, whichever comes
first, subject to the condition that no option shall be exercised after the
expiration of the Option period.

 

(E)           OTHER TERMINATION OF CONTINUOUS SERVICE.  IF THE CONTINUOUS
SERVICE OF AN OPTIONEE SHALL CEASE FOR ANY REASON OTHER THAN PERMANENT AND TOTAL
DISABILITY OR DEATH, HE OR SHE MAY, BUT ONLY WITHIN NINETY (90) DAYS (OR SUCH
OTHER PERIOD OF TIME AS IS DETERMINED BY THE COMMITTEE) AFTER THE DATE HIS OR
HER CONTINUOUS SERVICE CEASES, EXERCISE HIS OR HER OPTION TO THE EXTENT THAT HE
OR SHE WAS ENTITLED TO EXERCISE IT AT THE DATE OF SUCH TERMINATION OF CONTINUOUS
SERVICE, SUBJECT TO THE CONDITION THAT NO OPTION SHALL BE EXERCISABLE AFTER THE
EXPIRATION OF THE OPTION PERIOD.

 

(F)            EXERCISE OF OPTION WITH STOCK AFTER REGISTRATION DATE.  AFTER THE
REGISTRATION DATE, THE COMMITTEE MAY PERMIT AN OPTIONEE TO EXERCISE AN OPTION BY
DELIVERING SHARES OF THE COMPANY’S COMMON STOCK.  IF THE OPTIONEE IS SO
PERMITTED, THE OPTION AGREEMENT COVERING SUCH OPTION MAY INCLUDE PROVISIONS
AUTHORIZING THE OPTIONEE TO EXERCISE THE OPTION, IN WHOLE OR IN PART, BY:
(I) DELIVERING WHOLE SHARES OF THE COMPANY’S COMMON STOCK PREVIOUSLY OWNED BY
SUCH OPTIONEE (WHETHER OR NOT ACQUIRED THROUGH THE PRIOR EXERCISE OF A STOCK
OPTION) HAVING A FAIR MARKET VALUE EQUAL TO THE AGGREGATE OPTION PRICE FOR THE
OPTIONED SHARES ISSUABLE ON EXERCISE OF THE OPTION; AND/OR (II) DIRECTING THE
COMPANY TO WITHHOLD FROM THE SHARES THAT WOULD OTHERWISE BE ISSUED UPON EXERCISE
OF THE OPTION THAT NUMBER OF WHOLE SHARES HAVING A FAIR MARKET VALUE EQUAL TO
THE AGGREGATE OPTION PRICE FOR THE OPTIONED SHARES ISSUABLE ON EXERCISE OF THE
OPTION.  SHARES OF THE COMPANY’S COMMON STOCK SO DELIVERED OR WITHHELD SHALL BE
VALUED AT THEIR FAIR MARKET VALUE AT THE CLOSE OF THE LAST BUSINESS DAY
IMMEDIATELY PRECEDING THE DATE OF EXERCISE OF THE OPTION, AS DETERMINED BY THE
COMMITTEE, IN ACCORDANCE WITH THE PROVISIONS OF SECTION 8(A) OF THE PLAN.  ANY
BALANCE OF THE EXERCISE PRICE SHALL BE PAID IN CASH.  ANY SHARES DELIVERED OR
WITHHELD IN ACCORDANCE WITH THIS PROVISION SHALL NOT AGAIN BECOME AVAILABLE FOR
PURPOSES OF THE PLAN AND FOR OPTIONS SUBSEQUENTLY GRANTED THEREUNDER.

 

(G)           TAX WITHHOLDING.  AFTER THE REGISTRATION DATE, WHEN AN OPTIONEE IS
REQUIRED TO PAY TO THE COMPANY AN AMOUNT WITH RESPECT TO TAX WITHHOLDING
OBLIGATIONS IN CONNECTION WITH THE EXERCISE OF AN OPTION GRANTED UNDER THE PLAN,
THE OPTIONEE MAY ELECT PRIOR TO THE DATE THE AMOUNT OF SUCH WITHHOLDING TAX IS
DETERMINED (THE “TAX DATE”) TO MAKE SUCH PAYMENT, OR SUCH INCREASED PAYMENT AS
THE OPTIONEE ELECTS TO MAKE UP TO THE MAXIMUM FEDERAL, STATE AND LOCAL MARGINAL
TAX RATES, INCLUDING ANY RELATED FICA OBLIGATION, APPLICABLE TO THE OPTIONEE AND
THE PARTICULAR TRANSACTION, BY: (I) DELIVERING CASH; (II) DELIVERING PART OR ALL
OF THE PAYMENT IN PREVIOUSLY OWNED SHARES OF COMMON STOCK (WHETHER OR NOT
ACQUIRED THROUGH THE PRIOR EXERCISE OF AN OPTION); AND/OR (III) IRREVOCABLY
DIRECTING THE COMPANY TO WITHHOLD FROM THE SHARES THAT WOULD OTHERWISE BE ISSUED
UPON EXERCISE OF THE OPTION THAT NUMBER OF WHOLE SHARES HAVING A FAIR MARKET
VALUE EQUAL TO THE AMOUNT OF TAX REQUIRED OR ELECTED TO BE WITHHELD (A
“WITHHOLDING ELECTION”).  IF AN OPTIONEE’S TAX DATE IS DEFERRED BEYOND THE DATE
OF EXERCISE AND THE OPTIONEE MAKES A WITHHOLDING ELECTION, THE OPTIONEE WILL
INITIALLY RECEIVE THE FULL AMOUNT OF OPTIONED SHARES OTHERWISE ISSUABLE UPON
EXERCISE OF THE OPTION, BUT WILL BE UNCONDITIONALLY OBLIGATED TO SURRENDER TO
THE COMPANY ON THE TAX DATE THE NUMBER OF SHARES NECESSARY TO SATISFY HIS OR HER
MINIMUM WITHHOLDING REQUIREMENTS, OR SUCH HIGHER PAYMENT AS HE OR SHE MAY HAVE
ELECTED TO MAKE, WITH ADJUSTMENTS TO BE MADE IN CASH AFTER THE TAX DATE.

 

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Any withholding of Optioned Shares with respect to taxes arising in connection
with the exercise of an Option by any person subject to short-swing trading
liability under Section 16(b) of the Exchange Act shall satisfy the following
conditions:

 

(I)            AN ADVANCE ELECTION TO WITHHOLD OPTIONED SHARES IN SETTLEMENT OF
A TAX LIABILITY MUST SATISFY THE REQUIREMENTS OF RULE 16B-3(D)(1)(I), REGARDING
PARTICIPANT-DIRECTED TRANSACTIONS;

 

(II)           ABSENT SUCH AN ELECTION, THE WITHHOLDING OF OPTIONED SHARES TO
SETTLE A TAX LIABILITY MAY OCCUR ONLY DURING THE QUARTERLY WINDOW PERIOD
DESCRIBED IN RULE 16B-3(E);

 

(III)          ABSENT AN ADVANCE ELECTION OR WINDOW­-PERIOD WITHHOLDING, THE
OPTIONEE MAY DELIVER SHARES OF COMMON STOCK OWNED PRIOR TO THE EXERCISE OF AN
OPTION TO SETTLE A TAX LIABILITY ARISING UPON EXERCISE OF THE OPTION, IN
ACCORDANCE WITH RULE 16B-3(F); OR

 

(IV)          THE DELIVERY OF PREVIOUSLY ACQUIRED SHARES OF COMMON STOCK (BUT
NOT THE WITHHOLDING OF NEWLY ACQUIRED SHARES) WILL BE ALLOWED WHERE AN ELECTION
UNDER SECTION 83(B) OF THE CODE ACCELERATES THE TAX DATE TO A DAY THAT OCCURS
LESS THAN SIX (6) MONTHS AFTER THE ADVANCE ELECTION AND IS NOT WITHIN THE
QUARTERLY WINDOW PERIOD DESCRIBED IN RULE 16B-3(E).

 

Any adverse consequences incurred by an Optionee with respect to the use of
shares of Common Stock to pay any part of the option Price or of any tax in
connection with the exercise of an option, including without limitation any
adverse tax consequences arising as a result of a disqualifying disposition
within the meaning of Section 422 of the Code, shall be the sole responsibility
of the Optionee.  Shares withheld in accordance with this provision shall not
again become available for purposes of the Plan and for Options subsequently
granted thereunder.

 

10.       NON-TRANSFERABILITY OF OPTIONS.  AN OPTION MAY NOT BE SOLD, PLEDGED,
ASSIGNED, HYPOTHECATED, TRANSFERRED OR DISPOSED OF IN ANY MANNER OTHER THAN BY
WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION AND MAY BE EXERCISED, DURING THE
LIFETIME OF THE OPTIONEE, ONLY BY THE OPTIONEE.

 

11.       ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.  SUBJECT TO ANY REQUIRED
ACTION BY THE SHAREHOLDERS OF THE COMPANY, THE NUMBER OF SHARES SUBJECT TO THE
PLAN, THE SECTION 162(M) GRANT LIMIT SET FORTH IN SECTION 5(B), THE NUMBER OF
OPTIONED SHARES COVERED BY EACH OUTSTANDING OPTION, AND THE PER SHARE EXERCISE
PRICE OF EACH SUCH OPTION, SHALL BE PROPORTIONATELY ADJUSTED FOR ANY INCREASE OR
DECREASE IN THE NUMBER OF ISSUED SHARES OF COMMON STOCK RESULTING FROM A STOCK
SPLIT, REVERSE STOCK SPLIT, RECAPITALIZATION, COMBINATION, RECLASSIFICATION, THE
PAYMENT OF A STOCK DIVIDEND ON THE COMMON STOCK OR ANY OTHER INCREASE OR
DECREASE IN THE NUMBER OF SUCH SHARES OF COMMON STOCK EFFECTED WITHOUT RECEIPT
OF CONSIDERATION BY THE COMPANY; PROVIDED, HOWEVER, THAT CONVERSION OF ANY
CONVERTIBLE SECURITIES OF THE COMPANY SHALL NOT BE DEEMED TO HAVE BEEN “EFFECTED
WITHOUT RECEIPT OF CONSIDERATION.”  SUCH ADJUSTMENT SHALL BE MADE BY THE BOARD,
WHOSE DETERMINATION IN THAT RESPECT SHALL BE FINAL, BINDING AND CONCLUSIVE. 
EXCEPT AS EXPRESSLY PROVIDED HEREIN, NO ISSUE BY THE COMPANY OF SHARES

 

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of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.

 

The Committee may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the number or class of securities covered by
any Option, as well as the price to be paid therefor, in the event that the
Company effects one or more reorganizations, recapitalizations, rights
offerings, or other increases or reductions of shares of its outstanding Common
Stock, and in the event of the Company being consolidated with or merged into
any other corporation.

 

Unless otherwise determined by the Board, upon the dissolution or liquidation of
the Company the Options granted under the Plan shall terminate and thereupon
become null and void.

 

Upon any merger or consolidation, if the Company is not the surviving
corporation, the Options granted under the Plan shall either be assumed by the
new entity or shall terminate in accordance with the provisions of the preceding
paragraph.

 

12.       TIME OF GRANTING OPTIONS.  UNLESS OTHERWISE SPECIFIED BY THE
COMMITTEE, THE DATE OF GRANT OF AN OPTION UNDER THE PLAN SHALL BE THE DATE ON
WHICH THE COMMITTEE MAKES THE DETERMINATION GRANTING SUCH OPTION.  NOTICE OF THE
DETERMINATION SHALL BE GIVEN TO EACH OPTIONEE TO WHOM AN OPTION IS SO GRANTED
WITHIN A REASONABLE TIME AFTER THE DATE OF SUCH GRANT.

 

13.       AMENDMENT AND TERMINATION OF THE PLAN.  THE BOARD MAY AMEND OR
TERMINATE THE PLAN FROM TIME TO TIME IN SUCH RESPECTS AS THE BOARD MAY DEEM
ADVISABLE, EXCEPT THAT, WITHOUT APPROVAL OF THE SHAREHOLDERS OF THE COMPANY, NO
SUCH REVISION OR AMENDMENT SHALL CHANGE THE NUMBER OF SHARES SUBJECT TO THE PLAN
OR CHANGE THE DESIGNATION OF THE CLASS OF EMPLOYEES ELIGIBLE TO RECEIVE
OPTIONS.  ANY SUCH AMENDMENT OR TERMINATION OF THE PLAN SHALL NOT AFFECT OPTIONS
ALREADY GRANTED, AND SUCH OPTIONS SHALL REMAIN IN FULL FORCE AND EFFECT AS IF
THE PLAN HAD NOT BEEN AMENDED OR TERMINATED.

 

14.       CONDITIONS UPON ISSUANCE OF SHARES.  SHARES SHALL NOT BE ISSUED WITH
RESPECT TO AN OPTION UNLESS THE EXERCISE OF SUCH OPTION AND THE ISSUANCE AND
DELIVERY OF SUCH SHARES PURSUANT THERETO SHALL COMPLY WITH ALL RELEVANT
PROVISIONS OF LAW, INCLUDING, WITHOUT LIMITATION, THE SECURITIES ACT, THE
EXCHANGE ACT, THE RULES AND REGULATIONS PROMULGATED THEREUNDER, AND THE
REQUIREMENTS OF ANY STOCK EXCHANGE UPON WHICH THE SHARES MAY THEN BE LISTED, AND
SHALL BE FURTHER SUBJECT TO THE APPROVAL OF COUNSEL FOR THE COMPANY WITH RESPECT
TO SUCH COMPLIANCE.  AS A CONDITION TO THE EXERCISE OF AN OPTION, THE COMPANY
MAY REQUIRE THE PERSON EXERCISING SUCH OPTION TO REPRESENT AND WARRANT AT THE
TIME OF ANY SUCH EXERCISE THAT THE SHARES ARE BEING PURCHASED ONLY FOR
INVESTMENT AND WITHOUT ANY PRESENT INTENTION TO SELL OR DISTRIBUTE SUCH SHARES
IF, IN THE OPINION OF COUNSEL FOR THE COMPANY, SUCH A REPRESENTATION IS REQUIRED
BY ANY OF THE AFOREMENTIONED RELEVANT PROVISIONS OF LAW.

 

15.       RESERVATION OF SHARES.  DURING THE TERM OF THIS PLAN THE COMPANY WILL
AT ALL TIMES RESERVE AND KEEP AVAILABLE THE NUMBER OF SHARES AS SHALL BE
SUFFICIENT TO SATISFY THE REQUIREMENTS OF THE PLAN.  INABILITY OF THE COMPANY TO
OBTAIN FROM ANY REGULATORY BODY HAVING JURISDICTION AND

 

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authority deemed by the Company’s counsel to be necessary to the lawful issuance
and sale of any Shares hereunder shall relieve the Company of any liability in
respect of the nonissuance or sale of such Shares as to which such requisite
authority shall not have been obtained.

 

16.       INFORMATION TO OPTIONEE.  DURING THE TERM OF ANY OPTION GRANTED UNDER
THE PLAN, THE COMPANY SHALL PROVIDE OR OTHERWISE MAKE AVAILABLE TO EACH OPTIONEE
A COPY OF ITS FINANCIAL STATEMENTS AT LEAST ANNUALLY.

 

17.       OPTION AGREEMENT.  OPTIONS GRANTED UNDER THE PLAN SHALL BE EVIDENCED
BY OPTION AGREEMENTS.

 

18.       SHAREHOLDER APPROVAL.  THE PLAN SHALL BE SUBJECT TO APPROVAL BY THE
SHAREHOLDERS OF THE COMPANY WITHIN TWELVE (12) MONTHS BEFORE OR AFTER THE PLAN
IS ADOPTED. ANY OPTION GRANTED BEFORE SHAREHOLDER APPROVAL IS OBTAINED AND ANY
EXERCISE OF SUCH OPTION MUST BE RESCINDED IF SUCH SHAREHOLDER APPROVAL IS NOT
OBTAINED WITHIN TWELVE (12) MONTHS AFTER THE PLAN IS ADOPTED.  SHARES ISSUED
UPON THE EXERCISE OF SUCH OPTIONS SHALL NOT BE COUNTED IN DETERMINING WHETHER
SUCH APPROVAL IS OBTAINED.  SHAREHOLDER APPROVAL OF THE PLAN AND ANY AMENDMENTS
THERETO REQUIRING SHAREHOLDER APPROVAL SHALL BE BY THE AFFIRMATIVE VOTE OF THE
HOLDERS OF A MAJORITY OF THE CAPITAL STOCK OF THE COMPANY PRESENT OR REPRESENTED
AND ENTITLED TO VOTE AT A DULY HELD MEETING OR BY THE WRITTEN CONSENT OF THE
HOLDERS OF A MAJORITY OF THE OUTSTANDING CAPITAL STOCK OF THE COMPANY ENTITLED
TO VOTE.

 

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