Varitek Industries, Inc. 2002 Stock Option Plan



Exhibit 10.2 
 
VARITEK INDUSTRIES, INC. 
 
2002 STOCK OPTION PLAN 
 
1. Purpose. 
 
(a) The purpose of this 2002 Stock Option Plan (the “Plan”) of Varitek Industries, Inc., a Texas corporation, is to provide a
means by which key Employees and Directors of and Consultants to the Company and its Affiliates may be given an opportunity to purchase Common Stock of the Company. 
 
(b) The Company, by means of the Plan, seeks to retain the services of persons who are now Employees or
Directors of or Consultants to the Company or its Affiliates, to secure and retain the services of new Employees, Directors and Consultants, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its
Affiliates. 
 
(c) The Company intends that the
Options issued under the Plan shall, in the discretion of the Board or any Committee to which responsibility for administration of the Plan has been delegated pursuant to subsection 3(c), be either Incentive Stock Options or Nonstatutory Stock
Options. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and in such form as issued pursuant to Section 6 hereof, and a separate certificate or certificates will be issued for
shares purchased upon exercise of each type of Option. 
 
2.
Definitions. 
 
(a) “Affiliate”
means any parent or subsidiary corporation, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f) respectively, of the Code. 
 
(b) “Board” means the Board of Directors of the Company. 
 
(c) “Code” means the Internal Revenue Code of 1986. 
 
(d) “Committee” means a Committee appointed by the
Board in accordance with subsection 3(c) of the Plan. 
 
(e) “Common Stock” means the Company’s common stock, no par value. 
 
(f) “Company” means Varitek Industries, Inc., a Texas corporation. 
 
(g) “Consultant” means any person, including an advisor, engaged by the Company or an Affiliate to
render consulting services and who is compensated for such services. 
 
(h) “Continuous Status as an Employee, Director or Consultant” means the employment of the Employee or relationship as a Director or Consultant is not interrupted or 









terminated. The Board, in its sole discretion, may determine whether Continuous Status as an Employee, Director or Consultant shall be
considered interrupted in the case of: (i) any leave of absence approved by the Board, including sick leave, military leave or any other personal leave; or (ii) transfers between locations of the Company or among the Company, Affiliates and their
successors. 
 
(i) “Director” means a
member of the Board. 
 
(j) “Employee”
means any person, including Officers and Directors, employed by the Company or any Affiliate of the Company. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment”
by the Company. 
 
(k) “Exchange Act”
means the Securities Exchange Act of 1934, as amended. 
 
(l) “Fair Market Value” means the value of the Common Stock of the Company as determined in good faith by the Board. 
 
(m) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422
of the Code and the regulations promulgated thereunder. 
 
(n) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option. 
 
(o) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules
and regulations promulgated thereunder. 
 
(p)
“Option” means a stock option granted pursuant to the Plan. 
 
(q) “Option Agreement” means a written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and
conditions of the Plan. 
 
(r) “Optionee”
means an Employee, Director or Consultant who holds an outstanding Option. 
 
(s) “Plan” means this Stock Option Plan. 
 
(t) “Rule 16a-12” means Rule 16a-12 under the Exchange Act or any successor to Rule 16a-12. 
 
(u) “Securities Act” means the Securities Act of
1933, as amended. 
 

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3. Administration.

 
(a) The Plan shall be administered by the Board
unless and until the Board delegates administration to a Committee, as provided in subsection 3(c). 
 
(b) The Board shall have the power, subject to and within the limitations of the express provisions of the Plan: 
 
(i) To determine from time to time which of
the persons eligible under the Plan shall be granted Options; when and how each Option shall be granted; whether an Option will be an Incentive Stock Option or a Nonstatutory Stock Option; the provisions of each Option granted (which need not be
identical), including the exercise price of such Option and time or times such Option may be exercised in whole or in part; and the number of shares for which an Option shall be granted to each such person. 
 
(ii) To construe and interpret the Plan and
Options granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board in the exercise of this power may correct any defect, omission or inconsistency in the Plan or in any Option Agreement, in a manner
and to the extent it shall deem necessary or expedient to make the Plan fully effective. 
 
(iii) To amend the Plan or an Option as provided in Section 11. 
 
(iv) Generally, to exercise such powers and
to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company. 
 
(c) The Board may delegate administration of the Plan to a Committee composed of not fewer than two members of the Board. If
administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board (and references in this Plan to the Board shall thereafter be to the Committee),
subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan.

 
4. Shares Subject to the Plan. 
 
(a) Subject to the provisions of Section 10 relating to
adjustments upon changes in stock, the stock that may be sold pursuant to Options shall be Common Stock of the Company and shall not exceed in the aggregate 4,000,000 shares of Common Stock of the Company. If any Option shall for any reason expire
or otherwise terminate, in whole or in part, without having been exercised in full, the Common Stock not purchased under such Option shall revert to and again become available for issuance under the Plan. 
 
(b) The Common Stock subject to the Plan may be unissued
shares or reacquired shares purchased on the market or otherwise. 
 

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5. Eligibility.

 
(a) Subject to the following provisions of this
Section, all Employees and Directors of and Consultants to the Company and its Affiliates are eligible to participate in the Plan. Incentive Stock Options may be granted only to Employees. Nonstatutory Stock Options may be granted to Employees,
Directors and Consultants. 
 
(b) No person shall
be eligible for the grant of an Incentive Stock Option if, at the time of grant, such person owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent of the total combined voting power of all classes
of stock of the Company or of any of its Affiliates unless the exercise price of such Option is at least one hundred ten percent of the Fair Market Value of such stock at the date of grant and the Option is not exercisable after the expiration of
five years from the date of grant. 
 
6. Option Provisions.
Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by
reference in the Option or otherwise) the substance of each of the following provisions: 
 
(a) Term. No Option shall be exercisable after the expiration of ten years from the date it was granted. 
 
(b) Price. The exercise price of each Incentive Stock Option shall be not less than one hundred percent of the Fair Market Value of
the Common Stock subject to the Option on the date the Option is granted. The exercise price of each Nonstatutory Stock Option shall be as determined in the discretion of the Board. 
 
(c) Consideration. The purchase price of Common Stock acquired pursuant to an Option shall be paid, to
the extent permitted by applicable statutes and regulations, either (i) in cash at the time the Option is exercised, or (ii) at the discretion of the Board or the Committee, at the time of either the grant or the exercise of the Option, (A) by
delivery to the Company of other Common Stock of the Company, (B) according to a deferred payment or other arrangement (which may include, without limiting the generality of the foregoing, the use of other Common Stock of the Company) with the
person to whom the Option is granted or to whom the Option is transferred pursuant to subsection 6(d), or (C) in any other form of legal consideration that may be acceptable to the Board. In the case of any deferred payment arrangement, interest
shall be payable at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest under any applicable provisions of the Code of any amounts other than amounts stated to be interest under the
deferred payment arrangement. 
 
(d)
Transferability. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of the person to whom the Incentive Stock Option is granted only by
such person. A Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order satisfying the requirements of Rule 16a-12 (a “QDRO”), and
shall be exercisable during the lifetime of the person to whom the Option is 

 

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granted only by such person or any transferee pursuant to a QDRO. The person to whom the Option is granted may, by delivering written notice
to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionee, shall thereafter be entitled to exercise the Option. 
 
(e) Vesting. The total number of shares of Common Stock subject to an Option may, but need not, be
allotted in periodic installments (which may, but need not, be equal). The Option Agreement may provide that from time to time during each of such installment periods the Option may become exercisable (“vest”) with respect to some or all
of the shares allotted to that period, and may be exercised with respect to some or all of the shares allotted to such period and/or any prior period as to which the Option became vested but was not fully exercised. The Option may be subject to such
other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The provisions of this subsection are subject to any Option provisions governing the
minimum number of shares as to which an Option may be exercised. 
 
(f) Securities Law Compliance. The Company may require any Optionee, or any person to whom an Option is transferred under subsection 6(d), as a condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and
business matters, and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Option; and (2) to give written assurances satisfactory to the Company stating that such
person is acquiring the Common Stock subject to the Option for such person’s own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to
such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise of the Option has been registered under a then currently effective registration statement under the Securities Act, or (ii) as to any particular requirement,
a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on Common Stock
certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock. 
 
(g) Termination of Employment or Relationship as a Director
or Consultant. In the event an Optionee’s Continuous Status as an Employee, Director or Consultant terminates (other than upon the Optionee’s death or disability), the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it at the date of termination) but only within such period of time ending on the earlier of (i) the date three months after the termination of the Optionee’s Continuous Status as an Employee, Director or
Consultant, or such longer or shorter period specified in the Option Agreement, or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionee does not exercise his or her Option within the
time specified in the Option Agreement, the Option shall terminate, and the Common Stock covered by such Option shall revert to and again become available for issuance under the Plan. 
 

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(h)
Disability of Optionee. In the event an Optionee’s Continuous Status as an Employee, Director or Consultant terminates as a result of the Optionee’s disability, which the Board may define, the Optionee may exercise his or her Option
(to the extent that the Optionee was entitled to exercise it at the date of termination), but only within such period of time ending on the earlier of (i) the date twelve months following such termination (or such longer or shorter period specified
in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the Common Stock covered by the
unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the
Common Stock covered by such Option shall revert to and again become available for issuance under the Plan. 
 
(i) Death of Optionee. In the event of the death of an Optionee during, or within a period specified in the Option Agreement after
the termination of, the Optionee’s Continuous Status as an Employee, Director or Consultant, the Option may be exercised (to the extent the Optionee was entitled to exercise the Option at the date of death) by the Optionee’s estate, by a
person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionee’s death pursuant to subsection 6(d), but only within the period ending on the earlier of (i) the
date eighteen months following the date of death (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of such Option as set forth in the Option Agreement. If, at the time of death, the Optionee was
not entitled to exercise his or her entire Option, the Common Stock covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after death, the Option is not exercised within the
time specified herein, the Option shall terminate, and the Common Stock covered by such Option shall revert to and again become available for issuance under the Plan. 
 
(j) Early Exercise. The Option may, but need not, include a provision whereby the Optionee may elect
at any time while an Employee, Director or Consultant to exercise the Option as to any part or all of the Common Stock subject to the Option prior to the full vesting of the Option. Any unvested Common Stock so purchased may be subject to a
repurchase right in favor of the Company or to any other restriction the Board determines to be appropriate. 
 
(k) Withholding. To the extent provided by the terms of an Option Agreement, the Optionee may satisfy any federal, state or local
tax withholding obligation relating to the exercise of such Option by any of the following means or by a combination of such means: (1) tendering a cash payment; (2) authorizing the Company to withhold shares from the shares of the Common Stock of
the Company otherwise issuable to the participant as a result of the exercise of the option; or (3) delivering to the Company owned and unencumbered shares of the Common Stock of the Company. 
 

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7. Covenants of the
Company. 
 
(a) During the terms of the
Options, the Company shall keep reserved and available at all times the number of shares of Common Stock which may be purchased pursuant to the exercise of such Options. 
 
(b) The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the
Plan such authority as may be required to issue and sell shares of Common Stock upon exercise of the Options; provided however, that this undertaking shall not require the Company to register under the Securities Act either the Plan, any
Option or any Common Stock issued or issuable pursuant to any such Option. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for
the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Options unless and until such authority is obtained. 
 
8. Use of Proceeds from Sale of Stock. Proceeds from the sale of Common
Stock pursuant to the exercise of Options shall constitute general funds of the Company. 
 
9. Miscellaneous. 
 
(a) The Board shall have the power to accelerate the time at which an Option may first be exercised or the time during which an Option or any part thereof will vest pursuant to subsection 6(e), notwithstanding the provisions in the
Option stating the time at which it may first be exercised or the time during which it will vest. 
 
(b) Neither an Optionee nor any person to whom an Option is transferred under subsection 6(d) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares of Common Stock subject to such Option unless and until such person has satisfied all requirements for exercise of the Option pursuant to its terms. 
 
(c) Nothing in the Plan or any instrument executed or Option
granted pursuant thereto shall confer upon any Employee, Director, Consultant or Optionee any right to continue in the employ of the Company or any Affiliate (or to continue acting as a Director or Consultant) or shall affect the right of the
Company or any Affiliate to terminate the employment or relationship as a Director or Consultant of any Employee, Director, Consultant or Optionee with or without cause. 
 
(d) To the extent that the aggregate Fair Market Value (determined at the time of grant) of stock with
respect to which Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year under all plans of the Company and its Affiliates exceeds $100,000, the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as Nonstatutory Stock Options. 
 
(e) The Board or the Committee shall have the authority to effect, at any time and from time to time (i) the repricing of any outstanding
Options under the Plan to reduce the 

 

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exercise price of such Options and/or (ii) with the consent of the affected holders of Options, the cancellation of any outstanding Options
and the grant in substitution therefor of new Options under the Plan covering the same or different numbers of shares of Common Stock, but having an exercise price per share not less than one hundred percent of the Fair Market Value of the Common
Stock in the case of an Incentive Stock Option or, in the case of a ten percent stockholder (as discussed in subsection 5(b)), not less than one hundred ten percent of the Fair Market Value per share of Common Stock on the new grant date.

 
10. Adjustments Upon Changes in Stock. 
 
(a) If any change is made in the Common Stock subject to the
Plan, or subject to any Option (through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the Plan will be appropriately adjusted in the classes and maximum number of Common Stock shares subject to the Plan pursuant to subsection 4(a) and the outstanding Options will be appropriately adjusted in the class(es) and
number of shares and price per share of Common Stock subject to such outstanding Options. 
 
(b) In the event of: (1) a sale of substantially all of the assets of the Company; (2) a merger or consolidation in which the Company is not the surviving corporation; (3) a reverse merger in which the
Company is the surviving corporation but the shares of the Company’s Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or
(4) any other capital reorganization in which the Company’s shareholders receive less than fifty percent of the outstanding voting shares of the new or surviving corporation, then the time during which such Options may be exercised shall be
accelerated to permit the Optionee to exercise all such Options in full prior to such event, and the Options shall terminate if not exercised prior to such event. In the event that any such accelerated option vesting received or to be received by an
Optionee pursuant to this subsection 10(b) (the “Benefit”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code and (ii) but for this subsection 10(b), be subject to the excise tax imposed by
Section 4999 of the Code (the “Excise Tax”), then such Benefit shall be reduced to the extent necessary so that no portion of the Benefit will be subject to the Excise Tax, as determined in good faith by the Company; provided, however,
that if, in the absence of any such reduction (or after such reduction), the Optionee believes that the Benefit or any portion thereof (as reduced, if applicable) would be subject to the Excise Tax, the Benefit shall be reduced (or further reduced)
to the extent determined by the Optionee in his or her discretion so that the Excise Tax would not apply. If, notwithstanding any such reduction (or in the absence of such reduction), the Internal Revenue Service (“IRS”) determines that
the Optionee is liable for the Excise Tax as a result of the Benefit, then the Optionee shall be obligated to return to the Company, within thirty days of such determination by the IRS, a portion of the Benefit sufficient such that none of the
Benefit retained by the Optionee constitutes a “parachute payment” within the meaning of Code Section 280G that is subject to the Excise Tax. 
 

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11. Amendment of the Plan
and Options. 
 
(a) The Board at any time, and
from time to time, may amend the Plan. However, except as provided in Section 10 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the stockholders of the Company within twelve months before or after
the adoption of the amendment, where the amendment will: 
 
(i) Increase the number of shares of Common Stock reserved for Options under the Plan; 
 
(ii) Modify the requirements as to eligibility for participation in the Plan (to the extent such modification requires
stockholder approval in order for the Plan to satisfy the requirements of Section 422 of the Code); or 
 
(iii) Modify the Plan in any other way if such modification requires stockholder approval in order for the Plan to satisfy
the requirements of Section 422 of the Code or to comply with any other regulatory requirements. 
 
(b) The Board may in its sole discretion submit any other amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations promulgated thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers. 
 
(c) It is expressly contemplated that the Board may amend the
Plan in any respect the Board deems necessary or advisable to provide Optionees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith. 
 
(d) Rights and obligations under any Option granted before amendment of the Plan shall not be altered or impaired by any amendment of the
Plan unless (i) the Company requests the consent of the person to whom the Option was granted and (ii) such person consents in writing. 
 
(e) The Board at any time, and from time to time, may amend the terms of any one or more Options; provided however, that the rights
and obligations under any Option shall not be altered or impaired by any such amendment unless (i) the Company requests the consent of the person to whom the Option was granted and (ii) such person consents in writing. 
 

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12. Termination or
Suspension of the Plan. 
 
(a) The Board may
suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on the ten year anniversary of the date the Plan is adopted by the Board or approved by the stockholders of the Company, whichever is earlier. No Options
may be granted under the Plan while the Plan is suspended or after it is terminated. 
 
(b) Rights and obligations under any Option granted while the Plan is in effect shall not be altered or impaired by suspension or termination of the Plan, except with the consent of the person to whom
the Option was granted. 
 
13. Effective Date of
Plan. The Plan shall become effective as determined by the Board, but no Options granted under the Plan shall be exercised unless and until the Plan has been approved by the stockholders of the Company, which approval shall be within twelve
months before or after the date the Plan is adopted by the Board. 
 

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