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).  


 


1

















 


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.


 

















 


(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 


 

















 


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.


 

















 


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:


 

















 


(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.


 

















 


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.


 

















 


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.


 

















 


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.


 

















 


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.