Exhibit 10.12


 


EQUINOX
HOLDINGS, INC.


1998 STOCK
OPTION PLAN


 


1.                    PURPOSE


 


The purpose of the EQUINOX
HOLDING, INC. 1998 STOCK OPTION PLAN (the “Plan”) is (i) to further the
growth and success of Equinox Holdings, Inc., a Delaware corporation (the “Company”),
and its Subsidiaries (as hereinafter defined) by enabling directors, officers,
employees, consultants, or advisors of the Company or any of its Subsidiaries
to acquire shares of common stock, $.01 par value (the “Common Stock”), of the
Company, thereby increasing their personal interest in such growth and success,
and (ii) to provide a means of rewarding outstanding performance by such
persons to the Company and its Subsidiaries.


 


Options granted under the
Plan may be either “incentive stock options” (“ISOs”), intended to qualify as
such under the provisions of Section 422 of the Internal Revenue Code of
1986, as amended (the “Code”), or nonqualified stock options (“NSOs”). For
purposes of the Plan, the term “Subsidiary” shall mean “Subsidiary Corporation”
as such term is defined in Section 424(f) of the Code. Unless the
context otherwise requires, any ISO or NSO shall be referred to as an “Option”.


 


2.                    ADMINISTRATION OF THE PLAN.


 


(a)          Stock Option Committee.


 


The Plan shall be
administered by the Board of Directors of the Company (the “Board”) or an
Option Committee (the “Committee”) consisting of two or more persons appointed
to such Committee from time to time by the Board; provided, however, that (i) to
the extent necessary in order to permit officers and directors of the Company
to be exempt from the provisions of Section 16(b) of the 1934 Act
with respect to transactions pursuant to the Plan, each of such persons shall
be a “Non-Employee Director” within the meaning of Rule 16b-3 (“Rule 16b-3”)
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended (the “1934 Act”) and (ii) if such
qualification is deemed necessary in order for the grant or exercise of awards
made under the Plan to qualify for any tax or other material benefit to
participants of the Company under applicable regulations under Section 162(m)
of the Code, each of such persons shall be an “outside director” (as defined in
applicable regulations thereunder). The members of the Committee may be removed
by the Board at any time either with or without cause. Any vacancy on the
Committee, whether due to action of the Board or any other cause, shall be
filled by the Board. The term “Committee” shall, for all purposes of the Plan
other than this Section 2, be
deemed to refer to the Board if the Board is administering the Plan.


 


(b)         Procedures.


 


If the Plan is administered
by a Committee, the Committee shall from time to time select a Chairman from
among its members and shall adopt such rules and regulations as it shall
deem appropriate concerning the holding of meetings and the administration of
the Plan. A majority of the entire Committee shall constitute a quorum and the
actions of a majority of the


 





















 


members of the Committee present at a meeting at
which a quorum is present, or actions approved in writing by all of the members
of the Committee, shall be the actions of the Committee; provided, however, that if the Committee consists of only two members, both shall
be required to constitute a quorum and to act at a meeting or to approve
actions in writing,


 


(c)          Interpretations.


 


Except as otherwise
expressly provided in the Plan, the Committee shall have all powers with
respect to the administration of the Plan, including, without limitation, full power
and authority to interpret the provisions of the Plan and any Option Agreement
(as defined in Section 5(b), and to resolve all questions arising under
the Plan. All decisions of the Committee shall be conclusive and binding on all
participants in the Plan.


 


3.                    SHARES OF STOCK, SUBJECT TO THE PLAN.


 


(a)          Number of Shares.


 


Subject to the provisions of
Section 9 (relating to adjustments upon changes in capital structure and
other corporate transactions), the number of shares of Common Stock subject at
any one time to Options granted under the Plan, plus the number of shares of
Common Stock theretofore issued and delivered pursuant to the exercise of
Options granted under the Plan, shall not exceed 1,000,000 shares. If and to
the extent that Options granted under the Plan terminate, expire or are
canceled without having been fully exercised, new Options may be granted under
the Plan with respect to the shares of Common Stock covered by the unexercised
portion of such terminated, expired or canceled Options.


 


(b)         Reservation of Shares


 


The number of shares of
Common Stock reserved for issuance under the Plan shall at no time be less than
the maximum number of shares which may be purchased at any time pursuant to
outstanding Options.


 


4.                    ELIGIBILITY.


 


(a)          General.


 


Options may be granted by
the Committee under the Plan only to persons who are (i) directors,
officers or employees of the Company or any of its Subsidiaries and (ii) consultants
or advisors providing services to the Company or any of its Subsidiaries.
Options granted to employees of the Company or any of its Subsidiaries shall
be, in the discretion of the Committee, either ISOs or NSOs, and all other
Options shall be NSOs.  Notwithstanding
the foregoing, Options maybe conditionally granted to persons who are
prospective directors, officers, or employees of the Company or any of its
Subsidiaries; provided, however, that any such conditional grant of
an ISO to a prospective employee shall, by its terms, become effective no
earlier than the date on which such person actually becomes an employee.


 


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(b)         Exceptions.


 


Notwithstanding anything
contained in Section 4(a) to the contrary, no ISO may be granted
under the Plan to an employee who owns, directly or indirectly (within the
meaning of Sections 422(b)(6) and 424(d) of the Code), stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, unless (A) the Option Price (as defined in Section 6(a))
of the shares of Common Stock subject to such ISO is fixed at not less than
110% of the Fair Market Value on the date of grant (as determined in accordance
with Section 6(b)) of such shares and (B) such ISO by its terms is
not exercisable after the expiration of five years from the date it is granted.


 


5.                    GRANT OF OPTIONS.


 


(a)          General.


 


Options may be granted under
the Plan at any time and from time to time after the Effective Date (as defined
in Section 11) and on or prior to the Expiration Date (as defined in Section 12).


 


Subject to the provisions of
the Plan, the Committee shall have authority, in its sole discretion, to
determine:


 


(i) the persons (from
among the class of persons eligible to receive Options under the Plan) to whom
Options shall be granted (the “Optionees”);


 


(ii) the time or times
at which Options shall be granted;


 


(iii) the number of
shares subject to each Option;


 


(iv) the Option Price
of the shares subject to each Option, which price shall be not less than the
minimum specified in Section 4(b) or 6(a) (as applicable); and


 


(v) the time or times
when each Option shall become exercisable and the duration of the exercise
period.


 


(b)         Option Agreements.


 


Each Option granted under
the Plan shall be designated as an ISO or an NSO and shall be subject to the
terms and conditions applicable to ISOs or NSOs (as the case may be) set forth
in the Plan; provided, however, that any Option deemed by the
Committee to be an ISO that for any reason does not qualify as an incentive
stock option under Section 422 of the Code shall be treated for all
purposes under the Plan as an NSO. In addition, each Option shall be evidenced
by a written agreement (an “Option Agreement”), containing such terms and
conditions and in such form, not inconsistent with the Plan, as the Committee
shall, in its discretion, provide. Each Option Agreement shall be executed by
the Company and the Optionee.


 


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(c)          No Evidence of Employment.


 


Nothing contained in the
Plan or in any Option Agreement shall confer upon any Optionee any right with
respect to the continuation of his or her employment or other relationship with
the Company or any of its Subsidiaries or interfere in any way with the right
of the Company or any such Subsidiary, subject to the terms of any separate
agreement to the contrary, at any time to terminate such relationship or to
increase or decrease the compensation of the Optionee from the rate in
existence at the time of the grant of an Option.


 


(d)         Date of Grant.


 


The date of grant of an
Option under this Plan shall be the date as of which the Committee approves the
grant; provided, however, that in the case of an ISO, the
date of grant shall in no event be earlier than the date as of which the
Optionee becomes an employee of the Company or one of its Subsidiaries.


 


6.                    OPTION PRICE.


 


(a)          General.


 


Subject to Section 9,
the price (the “Option Price”) at which each share of Common Stock subject to
an Option granted under the Plan may be purchased shall be determined by the
Committee at the time the Option is granted; provided,
however, that (i) in
the case of an ISO and not subject to Section 4(b) and (ii) in
the case of an NSO granted at any time after the initial public offering of the
Common Stock, such Option Price shall in no event be less than 100% of the Fair
Market Value (as determined in accordance with Section 6(b)) of such share
of Common Stock.


 


(b)         Determination of Fair Market Value.


 


Subject to the requirements
of Section 422 of the Code, for purposes of the Plan, the “Fair Market
Value” of shares of Common Stock shall be equal to the fair value of such
shares on the date of grant as determined by the Committee after taking into
consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arms’ length if there is no public trading market.


 


Anything contained in the
Plan to the contrary notwithstanding, all such determinations shall be made
without regard to any restriction other than a restriction which, by its terms,
will never lapse.


 


(c)          Repricing of NSOs.


 


Subsequent to the date of
grant of any NSO, the Committee may, at its discretion and with the consent of
the Optionee, establish a new Option Price for such NSO so as to increase or
decrease the Option Price of such NSO.


 


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7.                    EXERCISE OF OPTIONS.


 


(a)          Committee Determination.


 


Each Option granted under
the Plan shall be exercisable at such time or times, or upon the occurrence of
such event or events, and for such number of shares subject to the Option, as
shall be determined by the Committee and set forth in the Option Agreement evidencing
such Option; provided, however, that if the Company files a
registration statement under the Securities Act of 1933 (the “Securities Act”)
for the initial public offering of its securities, no Option granted under the
Plan shall be exercisable during the 180-day period immediately following
the effective date of such registration statement. Subject to the proviso of the
immediately preceding sentence, if an Option is not at the time of grant
immediately exercisable, the Committee may (i) in the Option Agreement
evidencing such Option, provided for the acceleration of the exercise date or
dates of the subject Option upon the occurrence of specified events or (ii) at
any time prior to the complete termination of such Option, accelerate the
exercise date or dates of such Option.


 


(b)         Automatic Termination of Option.


 


Unless otherwise determined
by the Committee at the time of grant or, in the case of an NSO, thereafter,
the unexercised portion of any Option granted under the Plan shall
automatically terminate and shall become null and void and be of no further
force or effect upon the first to occur of the following:


 


(i) the tenth
anniversary of the date on which such Option is granted or, in the case of any
ISO granted to a person described in Section 4(b), the fifth anniversary
of the date on which such ISO is granted;


 


(ii) the expiration of
three months from the effective date of a Termination of Relationship (other
than as a result of an Involuntary Termination (as defined below) or for “Cause”
(as defined below)); provided, however, that if the Optionee shall die
during such three-month period, the time of termination of the unexercised
portion of such Option shall be determined in accordance with subparagraph (iii) below;


 


(iii) the expiration of
12 months from the date of a Termination of Relationship if such termination is
due to such Optionee’s death or permanent and total disability (within the
meaning of Section 22(e)(3) of the Code) (an “Involuntary Termination”);


 


(iv) immediately upon a
Termination of Relationship if such Termination of Relationship is for “Cause”;


 


(v)  the expiration of
such period of time or the occurrence of such event as the Committee in its
discretion may provide in the Option Agreement;


 


(vi) the effective date
of a Corporate Transaction (as defined in Section 9(b)) to which Section 9(b)(ii) (relating
to assumptions and substitutions of Options) does not apply; provided, however, that an Optionee’s right to exercise any Option outstanding
prior to such effective date shall in all events be suspended during the period
commencing 5 days prior to the proposed effective date of such Corporate
Transaction and ending on either the actual effective date


 


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of such Corporate
Transaction or upon receipt of notice from the Company that such Corporate
Transaction will not in fact occur; and


 


(vii) except to the
extent permitted by Section 9(b)(ii), the date on which an Option or any
part thereof or right or privilege relating thereto is transferred (otherwise
than by will or the laws of descent and distribution), assigned, pledged,
hypothecated, attached or otherwise disposed of by the Optionee.


 


“Cause” shall have the
meaning set forth in any employment or services agreement between the Company
or any Subsidiary thereof and the Optionee, or in the absence of either of such
agreements or definition of Cause contained therein, as defined by the
Committee. Any determinations by the Committee shall be final and conclusive
and binding upon the Optionee.


 


“Termination of Relationship”
means the termination of the employment or other relationship between the
Company or any of its Subsidiaries and any Optionee for any reason whatsoever.


 


Anything contained in the
Plan to the contrary notwithstanding, unless otherwise provided in an Option
Agreement, no Option granted under the Plan shall be affected by any change of
duties or position of the Optionee (including a transfer to or from the Company
or one of its Subsidiaries), so long as it does not result in a Termination of
Relationship.


 


(c)          Limitations on ISOs.


 


To the extent that, at the
time any portion of an ISO granted under the Plan is to become exercisable, the
aggregate Option Price of such portion, when added to the aggregate fair market
value of all stock subject to incentive stock options granted by the Company or
its Subsidiaries before the date of grant of such ISO to the Optionee that have
become or will by their terms become exercisable during that same calendar
year, exceeds $100,000, such portion shall be deemed to be an NSO.


 


8.                    PROCEDURE FOR EXERCISE. 


 


(a)          Payment.


 


At the time an Option is
granted under the Plan, the Committee shall, in its discretion, specify
one or more of the following forms of payment which may be used by an Optionee
upon exercise of his Option:


 


(i) cash or personal or
certified check payable to the Company in an amount equal to the aggregate
Option Price of the shares with respect to which the Option is being exercised;


 


(ii) a full recourse
demand note, payable by the Optionee to the Company in an amount equal to the
aggregate Option Price of the shares with respect to which the Option is being
exercised and bearing a market rate of interest as determined by the Committee;


 


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(iii)  stock
certificates (in negotiable form) representing shares of Common Stock having a
Fair Market Value on the date of exercise (as determined in accordance with Section 6(b) as
if the date of exercise were the date of grant) equal to the aggregate Option
Price of the shares with respect to which the Option is being exercised; or


 


(iv) a combination of
the methods set forth in clauses (i) and (ii).


 


(b)         Notice.


 


An Optionee (or other
person, as provided in Section 10(b)) may exercise an Option granted under
the Plan in whole or in part (but for the purchase of whole shares only), as
provided in the Option Agreement evidencing his or her Option, by delivering a
written notice (the “Notice”) to the Secretary of the Company. The Notice
shall:


 


(i) state that the
Optionee elects to exercise the Option;


 


(ii) state the number
of shares with respect to which the Option is being exercised (the “Optioned
Shares”);


 


(iii) state the method
of payment of the Optioned Shares (which method must be available to the
Optionee under the terms of his or her Option Agreement);


 


(iv) state the date
upon which the Optionee desires to consummate the purchase (which date must be
prior to the termination of such Option and no later than 30 days from the
delivery of such Notice);


 


(v) include any
representations of the Optionee required pursuant to Section 10(a);


 


(vi) if the Option is
exercised pursuant to Section 10(b) by any person other than the
Optionee, include evidence to the satisfaction of the Committee of the right of
such person to exercise the Option; and


 


(vii) include such further
provisions consistent with the Plan as the Committee may from time to time
require.


 


The exercise date of an
Option shall be the date on which the Company receives the Notice from the
Optionee.


 


Within 30 days of the
exercise of the Option, the Optionee shall deliver to the Company a copy of any
election filed by the Optionee with the Internal Revenue Service under Section 83(b) of
the Code.


 


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(c)          Issuance of Certificates.


 


The Company shall cause the
issuance of a stock certificate in the name of the Optionee (or such other
person exercising the Option in accordance with the provisions of Section 10(b))
for the Optioned Shares as soon as practicable after receipt of the Notice and
payment of the aggregate Option Price for such shares. Neither the Optionee nor
any person exercising an Option in accordance with the provisions of Section 10(b) shall
have any privileges as a stockholder of the Company with respect to any shares
of stock subject to an Option granted under the Plan until the date of issuance
of a stock certificate pursuant to this Section 8(c).


 


9.                    ADJUSTMENTS.


 


(a)          Changes in Capital Structure.


 


Subject to Section 9(b),
if the Common Stock is changed by reason of a stock split, reverse stock split,
stock dividend or recapitalization, or converted into or exchanged for other
securities as a result of a merger, consolidation or reorganization, the
Committee shall make such adjustments in the number and class of shares of
stock with respect to which Options may be granted under the Plan as shall be
equitable and appropriate in order to make such Options, as nearly as may be
practicable, equivalent to such Options immediately prior to such change. A
corresponding adjustment changing the number and class of shares allocated to,
and the Option Price of, each Option or portion thereof outstanding at the time
of such change shall likewise be made. Anything contained in the Plan to the contrary notwithstanding,
in the case of ISOs, no adjustment under this Section 9(a) shall be
appropriate if such adjustment (i) would constitute a modification,
extension or renewal of such ISOs within the meaning of Sections 422 and 424 of
the Code, and the regulations promulgated by the Treasury Department
thereunder, or (ii) would, under Section 422 of the Code and the
regulations promulgated by the Treasury Department thereunder, be considered
the adoption of a new plan requiring stockholder approval.


 


(b)         Corporate Transactions.


 


The following rules shall
apply in connection with the dissolution or liquidation of the Company a
reorganization, merger or consolidation of the Company (other than any such
transaction resulting in the stockholders of the Company prior to such
transaction owning a majority of the capital stock of the surviving entity
entitled to vote for the election of directors), or any sale of all or
substantially all assets of the Company (a “Corporate Transaction”):


 


(i) each holder of an
Option outstanding at such time shall be given (A) written notice of such
Corporate Transaction at least 20 days prior to its proposed effective date (as
specified in such notice) and (B) an opportunity, during the period
commencing with delivery of such notice and ending 10 days prior to such
proposed effective date, to exercise the Option to the full extent to which
such Option would have been exercisable by the Optionee at the expiration of
such 20-day period; provided, however, that upon the effective date of a
Corporate Transaction, all Options granted under the Plan not so exercised
shall automatically terminate; and


 


(ii) anything contained
in the Plan to the contrary notwithstanding, Section 9(b)(i) shall
not be applicable if provision shall be made in connection with such


 


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Corporate Transaction for
the assumption of outstanding Options by, or the substitution for such Options
of new options covering the stock of, the surviving, successor or purchasing
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number, kind and option prices of shares subject to such options; provided, however, that in the case of ISOs, the Committee shall, to the extent
not inconsistent with the best interests of the Company or its Subsidiaries
(such best interests to be determined in good faith by the Committee in its
sole discretion), use its best efforts to ensure that any such assumption or
substitution will not constitute a modification, extension or renewal of the
ISOs within the meaning of Section 424(h) of the Code and the
regulations promulgated by the Treasury Department thereunder.


 


(c)          Special Rules.


 


The following rules shall
apply in connection with Section 9(a) and (b) above:


 


(i) no fractional
shares shall be issued as a result of any such adjustment, and any fractional
shares resulting from the computations pursuant to Section 9(a) or (b) shall
be eliminated without consideration from the respective Options;


 


(ii) no adjustment
shall be made for cash dividends or the issuance to stockholders of rights to
subscribe for additional shares of Common Stock or other securities; and


 


(iii) any adjustments
referred to in Section 9(a) or (b) shall be made by the
Committee in its sole discretion
and shall be conclusive and binding on all persons holding Options granted
under the Plan.


 


10.              RESTRICTIONS ON OPTIONS AND OPTIONED SHARES.


 


(a)          Compliance With Securities Laws.


 


No Options shall be granted
under the Plan, and no shares of Common Stock shall be issued and delivered
upon the exercise of Options granted under the Plan, unless and until the
Company and the Optionee shall have complied with all applicable Federal or
state registration, listing and qualification requirements and all other
requirements of law or of any regulatory agencies having jurisdiction.


 


The Committee in its
discretion may, as a condition to the exercise of any Option granted under the
Plan, require an Optionee (i) to represent in writing that the shares of
Common Stock received upon exercise of an Option are being acquired for investment
and not with a view to distribution and (ii) to make such other
representations and warranties as are deemed appropriate by the Company. Stock
certificates representing shares of Common Stock acquired upon the exercise of
Options that have not been registered under the Securities Act shall, if
required by the Committee, bear the following legend:


 


“THE SHARES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES


 


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ACT OF 1933. THE
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF
COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.


 


THE SALE,
TRANSFER, ASSIGNMENT, PLEDGE OR ENCUMBRANCE OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A STOCKHOLDERS’
AGREEMENT DATED AS OF DECEMBER 31, 1998, AMONG EQUINOX HOLDINGS, INC. AND
CERTAIN HOLDERS OF THE OUTSTANDING CAPITAL STOCK OF SUCH CORPORATION. COPIES OF
SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF SUCH CORPORATION.”


 


(b)         Nonassignability of
Option Rights.


 


No Option
granted under this Plan shall be assignable or otherwise transferable by the
Optionee except by will or by the laws of descent and distribution. An Option
may be exercised during the lifetime of the Optionee only by the Optionee. If
an Optionee dies, his or her Option shall thereafter be exercisable, during the
period specified in Section 7(b)(ii) or (iii) (as the case may
be), by his or her executors or administrators to the full extent to which such
Option was exercisable by the Optionee at the time of his or her death.


 


11.              EFFECTIVE DATE OF
PLAN.


 


This Plan
shall become effective on the date (the “Effective Date”) on which the
stockholders of the Company shall have approved the Plan.


 


12.              EXPIRATION AND
TERMINATION OF THE PLAN.


 


Except with
respect to Options then outstanding, the Plan shall expire on the date (the “Expiration
Date”) which is the first to occur of (i) the tenth anniversary of the
date on which the Plan is adopted by the Board, (ii) the tenth anniversary
of the Effective Date, and (iii) the date as of which the Board, in its
sole discretion, determines that the Plan shall terminate. Any Options
outstanding as of the Expiration Date shall remain in effect until they have
been exercised or terminated or have expired by their respective terms.


 


13.              AMENDMENT OF PLAN.


 


The Board may
at any time prior to the Expiration Date modify and amend the Plan in any
respect; provided, however, that the approval of the holders of
a majority of the votes


 


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that may be cast by all of the holders of shares of
Common Stock and preferred stock of the Company, if any, entitled to vote
(voting as a single class) shall be obtained prior to any such amendment
becoming effective if and to the extent such approval is required by law or the
rules of any stock exchange or automated quotation system upon which the
Common Stock is listed or quoted, or to ensure that ISOs will continue to
qualify as incentive stock options under Section 422 of the Code or the
regulations promulgated by the Treasury Department thereunder.


 


14.              CAPTIONS.


 


The use of captions in this
Plan is for convenience. The captions are not intended to provide substantive
rights.


 


15.              DISQUALIFYING DISPOSITIONS.


 


If Optioned Shares acquired
by exercise of an ISO granted under this Plan are disposed of within two years
following the date of grant of the ISO or one year following the transfer of
the Optioned Shares to the Optionee (a “Disqualifying Disposition”), the holder
of the Optioned Shares shall, immediately prior to such Disqualifying
Disposition, notify the Company in writing of the date and terms of such
Disqualifying Disposition and provide such other information regarding the
Disqualifying Disposition as the Company may reasonably require.


 


16.              WITHHOLDING TAXES.


 


Whenever under the Plan
shares of Common Stock are to be delivered by an Optionee upon exercise of an
NSO, the Company shall be entitled to require as a condition of delivery that
the Optionee remit or, in appropriate cases, agree to remit when due, an amount
sufficient to satisfy all current or estimated future Federal, state and local
withholding tax and employment or other tax requirements relating thereto. At
the time of a Disqualifying Disposition, the Optionee shall remit to the
Company in cash the amount of any applicable Federal, state and local
withholding taxes and employment or other tax requirements relating thereto.


 


17.              OTHER PROVISIONS.


 


Each Option granted under
the Plan may contain such other terms and conditions not inconsistent with the
Plan as may be determined by the Committee, in its sole discretion.
Notwithstanding the foregoing, each ISO granted under the Plan shall include
those terms and conditions which are necessary to qualify the ISO as an “incentive
stock option” within the meaning of Section 422 of the Code and the
regulations thereunder and shall not include any terms or conditions which are
inconsistent therewith.


 


18.              NUMBER AND GENDER.


 


With respect to words used
in this Plan, the singular form shall include the plural form, the masculine
gender shall include the feminine gender, and vice-versa, as the context
requires.


 


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19.              GOVERNING LAW.


 


The validity and construction
of this Plan and the instruments evidencing the Options granted hereunder shall
be governed by the laws of the State of Delaware.


 


This Plan was originally
approved by the Board and by the stockholders of the Company on December 31,
1998.


 


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