Exhibit 10.3


 


GLENROSE INSTRUMENTS INC.


 


2005 STOCK OPTION AND INCENTIVE
PLAN


 


1.             Purpose and Eligibility


 


The purpose of this 2005 Stock Option and Incentive Plan (the “Plan”)
of GlenRose Instruments Inc. (the “Company”) is to provide stock options
and other equity interests in the Company (each an “Award”) to
employees, officers, directors, consultants and advisors of the Company and its
Subsidiaries, all of whom are eligible to receive Awards under the Plan.  Any person to whom an Award has been granted under
the Plan is called a “Participant”. 
Additional definitions are contained in Section 8.


 


2.             Administration


 


a.             Administration by Board of
Directors.  The Plan will be administered by the Board of
Directors of the Company (the “Board”). 
The Board, in its sole discretion, shall have the authority to grant and
amend Awards, to adopt, amend and repeal rules relating to the Plan and to
interpret and correct the provisions of the Plan and any Award.  All decisions by the Board shall be final and
binding on all interested persons. Neither the Company nor any member of the
Board shall be liable for any action or determination relating to the Plan.
Specifically, without limiting the foregoing, the Board shall have authority to
adopt special rules and sub-plans for Participants in foreign
jurisdictions to take advantage of favorable tax programs or for other legal
objectives. The Board of Directors may further, with the consent of the
affected optionee, affect the cancellation of any or all outstanding options and
the grant of new options in substitution therefor covering the same or
different numbers of shares of Common Stock having an option exercise price per
share that may be higher or lower than the exercise price per share of the
canceled options.


 


b.             Appointment of Committees.  To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a “Committee”).  All references in the Plan to the “Board”
shall mean such Committee or the Board.


 


c.             Delegation to Officers. To the extent permitted by
applicable law, the Board may delegate to one or more officers of the Company
the power to grant Awards to employees or officers of the Company or any of its
present or future subsidiary corporations and to exercise such other powers
under the Plan as the Board may determine, provided
that the Board shall fix the terms of the Awards to be granted by
such officers (including the exercise or purchase price of such Awards, which
may include a formula by which the price will be determined) and the maximum
number of securities subject to Awards that the officers may grant; provided further that no officer shall be
authorized to grant Awards to any “executive officer” of the Company (as
defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) or to any “officer” of the Company (as defined by Rule 16a-1
under the Exchange Act).


 


3.             Stock Available for Awards


 


a.             Number of Shares.  Subject to adjustment under Section 3(c),
the aggregate number of shares of Common Stock of the Company (the “Common
Stock”) that may be issued pursuant to the Plan is 700,000 shares.  If any Award expires, or is terminated,
surrendered or forfeited, in whole or in part, the unissued Common Stock
covered by such Award shall again be available for the grant of Awards under
the Plan.  If shares of Common Stock
issued pursuant to the Plan are repurchased by, or are surrendered 


 





















 


or forfeited to, the Company at no more than cost, such shares of
Common Stock shall again be available for the grant of Awards under the Plan; provided, however, that the cumulative
number of such shares that may be so reissued under the Plan will not exceed
700,000 shares.  Shares issued under the
Plan may consist in whole or in part of authorized but unissued shares or
treasury shares.


 


b.             Per-Participant Limit.  Subject to adjustment under Section 3(c),
no Participant may be granted Awards during any one fiscal year to purchase
more than 25% of the number of shares specified in Section 3(a).


 


c.             Adjustment to Common Stock.  In the event of any stock split, stock
dividend, extraordinary cash dividend, recapitalization, reorganization,
merger, consolidation, combination, exchange of shares, liquidation, spin-off,
split-up, or other similar change in capitalization or event, (i) the
number and class of securities available for Awards under the Plan and the
per-Participant share limit, (ii) the number and class of securities,
vesting schedule and exercise price per share subject to each outstanding
Option, (iii) the repurchase price per security subject to repurchase, and
(iv) the terms of each other outstanding stock-based Award shall be
adjusted by the Company (or substituted Awards may be made) to the extent the
Board shall determine, in good faith, that such an adjustment (or substitution)
is appropriate. If Section 7(e)(i) applies for any event, this Section 3(c) shall
not be applicable.


 


4.             Stock Options


 


a.             General.  The Board may grant options to purchase
Common Stock (each, an “Option”) and determine the number of shares of
Common Stock to be covered by each Option, the exercise price of each Option
and the conditions and limitations applicable to the exercise of each Option
and the Common Stock issued upon the exercise of each Option, including vesting
provisions, repurchase provisions and restrictions relating to applicable
federal or state securities laws, as it considers advisable.


 


b.             Incentive Stock Options.  An Option that the Board intends to be an “incentive
stock option” as defined in Section 422 of the Code (an “Incentive
Stock Option”) shall be granted only to employees of the Company and shall
be subject to and shall be construed consistently with the requirements of Section 422
of the Code.  The Board and the Company
shall have no liability if an Option or any part thereof that is intended to be
an Incentive Stock Option does not qualify as such. An Option or any part
thereof that does not qualify as an Incentive Stock Option is referred to
herein as a “Nonstatutory Stock Option.”


 


c.             Exercise Price.  The Board shall establish the exercise price
(or determine the method by which the exercise price shall be determined) at
the time each Option is granted and specify it in the applicable option
agreement.


 


d.             Duration of Options.  Each Option shall be exercisable at such
times and subject to such terms and conditions as the Board may specify in the
applicable option agreement.


 


e.             Exercise of Option.  Options may be exercised only by delivery to
the Company of a written notice of exercise signed by the proper person
together with payment in full as specified in Section 4(f) for the
number of shares for which the Option is exercised.


 


f.              Payment Upon Exercise.  Common Stock purchased upon the exercise of
an Option shall be paid for by one or any combination of the following forms of
payment:


 


(i)            by check payable to the
order of the Company;


 


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(ii)           except as otherwise
explicitly provided in the applicable option agreement, and only if the Common
Stock is then publicly traded, delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price, or delivery by the Participant to
the Company of a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price, plus in each case any required tax
withholding; or


 


(iii)          to the extent explicitly provided in the
applicable option agreement, by (x) delivery of shares of Common Stock owned by
the Participant valued at fair market value (as determined by the Board or as
determined pursuant to the applicable option agreement), (y) delivery of a
promissory note of the Participant to the Company (and delivery to the Company
by the Participant of a check in an amount equal to the par value of the shares
purchased), or (z) payment of such other lawful consideration as the Board may
determine.


 


g.             Repricing. The Board may, without
stockholder approval, amend any outstanding Option granted under the Plan to
provide an exercise price per share that is lower than the then-current
exercise price per share of such outstanding Option. The Board may also,
without stockholder approval, cancel any outstanding Option and grant in
substitution therefor new Options covering the same or a different number of
shares of Common Stock and having an exercise price per share lower than the then-current
exercise price per share of the cancelled Option.


 


5.             Restricted Stock


 


a.             Grants.  The Board may grant Awards entitling
recipients to acquire shares of Common Stock, subject to (i) delivery to
the Company by the Participant of cash or other lawful consideration in an
amount at least equal to the par value of the shares purchased, and (ii) the
right of the Company to repurchase all or part of such shares at their issue
price or other stated or formula price from the Participant in the event that conditions
specified by the Board in the applicable Award are not satisfied prior to the
end of the applicable restriction period or periods established by the Board
for such Award (each, a “Restricted Stock Award”).


 


b.             Terms and Conditions. The Board shall determine
the terms and conditions of any such Restricted Stock Award.  Any stock certificates issued in respect of a
Restricted Stock Award shall be registered in the name of the Participant and,
unless otherwise determined by the Board, deposited by the Participant,
together with a stock power endorsed in blank, with the Company (or its
designee).  After the expiration of the
applicable restriction periods, the Company (or such designee) shall deliver
the certificates no longer subject to such restrictions to the Participant or,
if the Participant has died, to the beneficiary designated by a Participant, in
a manner determined by the Board, to receive amounts due or exercise rights of
the Participant in the event of the Participant’s death (the “Designated
Beneficiary”).  In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant’s estate.


 


6.             Other Stock-Based Awards


 


The Board shall have the right to grant other Awards based upon the
Common Stock or the trading price thereof and having such terms and conditions
as the Board may determine, including, without limitation, the grant of shares
based upon certain conditions, the grant of securities convertible into Common
Stock and the grant of stock appreciation rights, phantom stock awards or stock
units.


 


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7.             General Provisions
Applicable to Awards


 


a.             Transferability of Awards.  Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred,
pledged or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable
only by the Participant.  References to a
Participant, to the extent relevant in the context, shall include references to
authorized transferees.


 


b.             Documentation.  Each Award under the Plan shall be evidenced
by a written instrument in such form as the Board shall determine or as
executed by an officer of the Company pursuant to authority delegated by the
Board.  Each Award may contain terms and
conditions in addition to those set forth in the Plan provided that such terms and conditions do
not contravene the provisions of the Plan.


 


c.             Board Discretion.  The terms of each type of Award need not be
identical, and the Board need not treat Participants uniformly.


 


d.             Termination of Status.  The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or
other change in the employment or other status of a Participant and the extent
to which, and the period during which, the Participant, or the Participant’s
legal representative, conservator, guardian or Designated Beneficiary, may
exercise rights under the Award.


 


e.             Acquisition of the Company


 


(i)            Consequences of an
Acquisition.  Upon the consummation of an Acquisition, the
Board or the board of directors of the surviving or acquiring entity (as used
in this Section 7(e)(i), also the “Board”), shall, as to
outstanding Awards (on the same basis or on different bases as the Board shall
specify), make appropriate provision for the continuation of such Awards
by the Company or the assumption of such Awards by the surviving or acquiring
entity and by substituting on an equitable basis for the shares then subject to
such Awards either (a) the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Acquisition, (b) shares
of stock of the surviving or acquiring corporation or (c) such other
securities or other consideration as the Board deems appropriate, the fair
market value of which (as determined by the Board in its sole discretion) shall
not materially differ from the fair market value of the shares of Common Stock
subject to such Awards immediately preceding the Acquisition. In addition to or
in lieu of the foregoing, with respect to outstanding Options, the Board may,
on the same basis or on different bases as the Board shall specify, upon
written notice to the affected optionees, provide that one or more Options then
outstanding must be exercised, in whole or in part, within a specified number
of days of the date of such notice, at the end of which period such Options
shall terminate, or provide that one or more Options then outstanding, in whole
or in part, shall be terminated in exchange for a cash payment equal to the
excess of the fair market value (as determined by the Board in its sole
discretion) for the shares subject to such Options over the exercise price
thereof.  Unless otherwise determined by
the Board (on the same basis or on different bases as the Board shall
specify), any repurchase rights or other rights of the Company that relate
to an Option or other Award shall continue to apply to consideration, including
cash, that has been substituted, assumed or amended for an Option or other
Award pursuant to this paragraph. The Company may hold in escrow all or any
portion of any such consideration in order to effectuate any continuing
restrictions.


 


(ii)           Acquisition Defined.  An “Acquisition” shall mean: (x) the
sale of the Company by merger in which the shareholders of the Company in their
capacity as such no longer own a majority of the outstanding equity securities
of the Company (or its successor); or (y) any sale of all or substantially all
of the assets or capital stock of the Company (other than in a spin-off or
similar transaction) or (z) any other acquisition of the business of the Company,
as determined by the Board.


 


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(iii)          Assumption of Options Upon
Certain Events.  In connection with a merger or consolidation
of an entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Awards under the Plan in substitution for
stock and stock-based awards issued by such entity or an affiliate
thereof.  The substitute Awards shall be
granted on such terms and conditions as the Board considers appropriate in the
circumstances.


 


f.              Withholding.  Each Participant shall pay to the Company, or
make provisions satisfactory to the Company for payment of, any taxes required
by law to be withheld in connection with Awards to such Participant no later
than the date of the event creating the tax liability.  The Board may allow Participants to satisfy
such tax obligations in whole or in part by transferring shares of Common
Stock, including shares retained from the Award creating the tax obligation,
valued at their fair market value (as determined by the Board or as determined
pursuant to the applicable option agreement). 
The Company may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to a Participant.


 


g.             Amendment of Awards.  The Board may amend, modify or terminate any
outstanding Award including, but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the
Participant’s consent to such action shall be required unless the Board
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.


 


h.             Conditions on Delivery of
Stock.  The Company will not be obligated to deliver
any shares of Common Stock pursuant to the Plan or to remove restrictions from
shares previously delivered under the Plan until (i) all conditions of the
Award have been met or removed to the satisfaction of the Company, (ii) in
the opinion of the Company’s counsel, all other legal matters in connection
with the issuance and delivery of such shares have been satisfied, including
any applicable securities laws and any applicable stock exchange or stock
market rules and regulations, and (iii) the Participant has executed
and delivered to the Company such representations or agreements as the Company
may consider appropriate to satisfy the requirements of any applicable laws, rules or
regulations.


 


i.              Acceleration.  The Board may at any time provide that any
Options shall become immediately exercisable in full or in part, that any
Restricted Stock Awards shall be free of some or all restrictions, or that any
other stock-based Awards may become exercisable in full or in part or free of
some or all restrictions or conditions, or otherwise realizable in full or in
part, as the case may be, despite the fact that the foregoing actions may (i) cause
the application of Sections 280G and 4999 of the Code if a change in control of
the Company occurs, or (ii) disqualify all or part of the Option as an
Incentive Stock Option. In the event of the acceleration of the exercisability
of one or more outstanding Options, including pursuant to paragraph (e)(i), the
Board may provide, as a condition of full exercisability of any or all such
Options, that the Common Stock or other substituted consideration, including
cash, as to which exercisability has been accelerated shall be restricted and
subject to forfeiture back to the Company at the option of the Company at the
cost thereof upon termination of employment or other relationship, with the
timing and other terms of the vesting of such restricted stock or other
consideration being equivalent to the timing and other terms of the superseded
exercise schedule of the related Option.


 


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8.             Miscellaneous


 


a.  Definitions.


 


(i)            “Company,” for
purposes of eligibility under the Plan, shall include any present or future
subsidiary corporations of GlenRose Instruments Inc., as defined in Section 424(f) of
the Code (a “Subsidiary”), and any present or future parent corporation
of GlenRose Instrument Systems Inc., as defined in Section 424(e) of
the Code.  For purposes of Awards other
than Incentive Stock Options, the term “Company” shall include any other
business venture in which the Company has a direct or indirect significant
interest, as determined by the Board in its sole discretion.


 


(ii)           “Code” means the
Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder.


 


(iii)          “employee” for
purposes of eligibility under the Plan (but not for purposes of Section 4(b))
shall include a person to whom an offer of employment has been extended by the
Company.


 


b.             No Right To Employment or
Other Status.  No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as giving a
Participant the right to continued employment or any other relationship with
the Company.  The Company expressly
reserves the right at any time to dismiss or otherwise terminate its
relationship with a Participant free from any liability or claim under the
Plan.


 


c.             No Rights As Stockholder.  Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder thereof.


 


d.             Effect on Other Benefit
Plans. The
amount of any compensation deemed to be received by a Participant as a result
of the receipt or exercise of an Award will not constitute “earnings” with
respect to which any other benefits of such Participant are determined,
including without limitation benefits under any pension, profit sharing, life
insurance or salary continuation plan.


 


e.             Authorization of Sub-Plans. The Board may from time to
time establish one or more sub-plans under the Plan for purposes of satisfying
applicable blue sky, securities or tax laws of various jurisdictions. The Board
shall establish such sub-plans by adopting supplements to this Plan containing (i) such
limitations on the Board’s discretion under the Plan as the Board deems
necessary or desirable or (ii) such additional terms and conditions not
otherwise inconsistent with the Plan as the Board shall deem necessary or
desirable. All supplements adopted by the Board shall be deemed to be part of
the Plan, but each supplement shall apply only to Participants within the
affected jurisdiction and the Company shall not be required to provide copies
of any supplement to Participants in any jurisdiction which is not the subject
of such supplement.


 


f.              Provisions for Foreign
Participants.
The Board may modify Awards granted to Participants who are foreign nationals
or employed outside the United States or establish sub-plans or procedures
under the Plan to recognize differences in laws, rules, regulations or customs
of such foreign jurisdictions with respect to tax, securities, currency,
employee benefit or other matters.


 


g.             Effective Date and Term of
Plan.  The Plan shall become effective on the date
on which it is adopted by the Board.  No
Awards shall be granted under the Plan after the completion of ten years from
the date on which the Plan was adopted by the Board, but Awards previously
granted may extend beyond that date.


 


h.             Amendment of Plan.  The Board may amend, suspend or terminate the
Plan or any portion thereof at any time.


 


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i.              Governing Law.  The provisions of the Plan and all Awards
made hereunder shall be governed by and interpreted in accordance with the laws
of Delaware, without regard to any applicable conflicts of law.


 


Adopted by the Board of Directors on


September 22, 2005


 


Approved by the stockholders on


September 22, 2005


 


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