**Exhibit 10.1**

 

**HEMACARE CORPORATION**

**1996STOCK INCENTIVE PLAN**

(As Amended and RestatedThrough May 24, 2005)(As Further Amended as of January 26, 2006)

 

SECTION 1.Purposes.

 

The purposes of the HemaCare Corporation 1996 Stock Incentive Plan (the“Plan”) are to (i) enable HemaCare Corporation (the “Company”) and RelatedCompanies (as defined below) to attract, motivate and retain top-qualitydirectors, officers, employees, consultants, advisers and independentcontractors (including without limitation dealers, distributors and otherbusiness entities or persons providing services on behalf of the Company or aRelated Company), (ii) provide substantial incentives for such directors,officers, employees, consultants, advisers and independent contractors of theCompany or a Related Company (“Participants”) to act in the best interests ofthe shareholders of the Company and (iii) reward extraordinary effort byParticipants on behalf of the Company or a Related Company. For purposes of thePlan, a “Related Company” means any corporation, partnership, joint venture orother entity in which the Company owns, directly or indirectly, at least atwenty percent (20%) beneficial ownership interest.

 

SECTION 2.Types of Awards. Awards under the Plan may be in the form of (i) StockOptions or (ii) Restricted Stock.

 

SECTION 3.Administration.

 

3.1           Exceptas otherwise provided herein, the Plan shall be administered by theCompensation Committee of the Board of Directors of the Company (the “Board”)or such other committee of directors as the Board shall designate, whichcommittee in either such case shall consist solely of not less than two “non-employeedirectors” (as such term is defined in Rule 16b-3 under the SecuritiesExchange Act of 1934 (the “Exchange Act”) or any successor rule (“Rule 16b-3”))who shall serve at the pleasure of the Board, each of whom shall also be an “outsidedirector” within the meaning of Section 162(m) of the Internal RevenueCode and Section 1.162-27 of the Treasury Regulations or any successor provision(s)thereto (“Section 162(m)”); provided, however, that if there are not twopersons on the Board who meet the foregoing qualifications, any such committeemay be comprised of two or more directors of the Company, none of which is anofficer (other than a non-employee Chairman of the Board of the Company) or anemployee of the Company or a Related Company. If no such committee has beenappointed by the Board, the Plan shall be administered by the Board, and thePlan shall be administered by the Board to the extent provided in the lastsentence of this Section. Such committee as shall be designated to administerthe Plan, if any, or the Board is referred to herein as the “Committee.”  Notwithstanding any other provision of thePlan to the contrary, if such a committee has been designated to administer thePlan, all actions with respect to the administration of the Plan in respect ofthe members of such committee shall be taken by the Board.

 

3.2           TheCommittee shall have the following authority with respect to awards under thePlan to Participants:  to grant awards toeligible Participants under the Plan; to adopt, alter and repeal suchadministrative rules, guidelines and practices governing the Plan as it shalldeem advisable; to interpret the terms and provisions of the Plan and any awardgranted under the Plan; and to otherwise supervise the administration of thePlan. In particular, and without limiting its authority and powers, theCommittee shall have the authority:

 

(a)           to determine whetherand to what extent any award or combination of awards will be grantedhereunder;

 

(b)           to select theParticipants to whom awards will be granted;

 

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(c)           to determine the numberof shares of the common stock of the Company (the “Stock”) to be covered byeach award granted hereunder, provided that no Participant will be grantedStock Options on or with respect to more than 250,000 shares of Stock in anycalendar year;

 

(d)           to determine the termsand conditions of any award granted hereunder, including, but not limited to,any vesting or other restrictions based on performance and such other factorsas the Committee may determine, and to determine whether the terms andconditions of the award are satisfied;

 

(e)           to determine thetreatment of awards upon a Participant’s retirement, disability, death,termination for cause or other termination of employment or other qualifyingrelationship with the Company or a Related Company;

 

(f)            to determine thatamounts equal to the amount of any dividends declared with respect to thenumber of shares covered by an award (i) will be paid to the Participantcurrently or (ii) will be deferred and deemed to be reinvested or (iii) willotherwise be credited to the Participant, or that the Participant has no rightswith respect to such dividends;

 

(g)           to determine whether,to what extent, and under what circumstances Stock and other amounts payablewith respect to an award will be deferred either automatically or at theelection of a Participant, including providing for and determining the amount(if any) of deemed earnings on any deferred amount during any deferral period;

 

(h)           to provide that theshares of Stock received as a result of an award shall be subject to a right offirst refusal, pursuant to which the Participant shall be required to offer tothe Company any shares that the Participant wishes to sell, subject to suchterms and conditions as the Committee may specify;

 

(i)            to amend the terms ofany award, prospectively or retroactively; provided, however, that no amendmentshall impair the rights of the award holder without his or her consent; and

 

(j)            to substitute newStock Options for previously granted Stock Options, or for options grantedunder other plans, in each case including previously granted options havinghigher option prices.

 

3.3           Alldeterminations made by the Committee pursuant to the provisions of the Planshall be final and binding on all persons, including the Company and allParticipants.

 

3.4           TheCommittee may from time to time delegate to one or more officers of the Companyany or all of its authorities granted hereunder except with respect to awardsgranted to persons subject to Section 16 of the Exchange Act. TheCommittee shall specify the maximum number of shares that the officer orofficers to whom such authority is delegated may award, and the Committee mayin its discretion specify any other limitations or restrictions on theauthority delegated to such officer or officers.

 

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SECTION 4.Stock Subject to Plan.

 

4.1           Thetotal number of shares of Stock reserved and available for distribution underthe Plan shall be 2,500,000 (subject to adjustment as provided in Section 4.3);provided, however, that no award of a Stock Option or Restricted Stock may bemade at any time if, after giving effect to such award, the total number ofshares of Stock issuable upon exercise of all outstanding options and warrantsof the Company (whether or not under the Plan) plus the total number of sharesof Stock called for under any stock bonus or similar plan of the Company(including shares of Stock underlying awards of Stock Options or RestrictedStock under the Plan) would exceed thirty percent (30%) of the totalnumber of shares of Stock outstanding at the time of such award. For purposesof the foregoing:  (i) those sharesissuable upon exercise of rights, options or warrants, or under a stockpurchase plan, meeting the requirements for exclusion set forth at any time andfrom time to time in Rule 260.140.45 of the California Commissioner ofCorporations shall not be counted against the thirty percent (30%)limitation; (ii) any outstanding preferred or senior common shares of theCompany convertible into Stock shall be deemed converted in determining thetotal number of outstanding shares of Stock at any time; and (iii) anyshares of Stock subject to promotional waivers under Rule 260.141 of theCalifornia Commissioner of Corporations shall not be deemed to be outstanding. Sharesof Stock issuable in connection with any award under the Plan may consist ofauthorized but unissued shares or treasury shares.

 

4.2           Tothe extent a Stock Option terminates without having been exercised, or sharesawarded are forfeited, the shares subject to such award shall again beavailable for distribution in connection with future awards under the Plan,subject to the limitations set forth in Section 4.1, unless the forfeitingParticipant received any benefits of ownership such as dividends from theforfeited award.

 

4.3           Inthe event of any merger, reorganization, consolidation, sale of substantiallyall assets, recapitalization, Stock dividend, Stock split, spin-off, split-up,split-off, distribution of assets or other change in corporate structureaffecting the Stock, a substitution or adjustment, as may be determined to beproportionate by the Committee in its sole discretion, shall be made in theaggregate number of shares reserved for issuance under the Plan, the number ofshares subject to outstanding awards and the amounts to be paid by award holderor the Company, as the case may be, with respect to outstanding awards;provided, however, that no such adjustment shall increase the aggregate valueof any outstanding award. In the event any change described in this Section 4.3occurs and an adjustment is made in the outstanding Stock Options, a similaradjustment shall be made in the maximum number of shares covered by StockOptions that may be granted to any employee pursuant to Section 3.2(c).

 

SECTION 5.Eligibility.

 

Participantsunder the Plan shall be selected from time to time by the Committee, in itssole discretion, from among those eligible.

 

SECTION 6.Stock Options.

 

6.1           TheStock Options awarded to officers and employees under the Plan may be of twotypes:  (i) Incentive Stock Optionswithin the meaning of Section 422 of the Internal Revenue Code or anysuccessor provision thereto (“Section 422”); and (ii) Non-QualifiedStock Options. If any Stock Option does not qualify as an Incentive Stock Option,or the Committee at the time of grant determines that any Stock Option shall bea Non-Qualified Stock Option, it shall constitute a Non-Qualified Stock Option.Stock Options awarded to any Participant who is not an officer or employee ofthe Company or a Related Company shall be Non-Qualified Stock Options.

 

6.2           Subjectto the following provisions, Stock Options awarded to Participants under thePlan shall be in such form and shall have such terms and conditions as theCommittee may determine:

 

(a)           Option Price.The option price per share of Stock purchasable under a Stock Option shall bedetermined by the Committee; provided, however, that the option price per

 

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share of Stockshall be not less than one hundred percent (100%) of the “Fair Market Value”(as defined below) of the Stock on the date of grant of the Stock Option; andprovided, further, that if at the time of grant the Participant owns, or wouldbe considered to own by reason of Section 424(d) of the InternalRevenue Code or any successor provision thereto, more than tenpercent (10%) of the total combined voting power of all classes of stockof the Company or any parent or subsidiary of the Company, the option price pershare of Stock shall be not less than one hundred ten percent (110%) ofthe Fair Market Value of the Stock on the date of grant of the Stock Option. Forpurposes of the Plan, “Fair Market Value” in relation to a share of the Stockmeans, if the Stock is publicly traded, the closing per share bona fide bidprice of the Stock on such date. In any situation not covered above, the FairMarket Value shall be determined by the Committee in accordance with one of thevaluation methods described in Section 20.2031-2 of the Federal Estate TaxRegulations or any successor provision thereto.

 

(b)           Option Term.The term of each Stock Option shall be fixed by the Committee, but in no eventlonger than one hundred twenty (120) months after the date of grant ofsuch Stock Option.

 

(c)           Exercisability. StockOptions shall be exercisable at such time or times and subject to such termsand conditions as shall be determined by the Committee; provided, however, thatin the case of Stock Options awarded to Participants other than directors,officers, consultants or independent contractors, Stock Options under any awardshall become exercisable at the rate of at least twenty percent (20%) peryear over five (5) years from the date the Stock Option is granted. Ifthe Committee provides that any Stock Option is exercisable only ininstallments, the Committee may waive such installment exercise provisions atany time in whole or in part.

 

(d)           Method of Exercise.Stock Options may be exercised in whole or in part at any time during theoption period by giving written notice of exercise to the Company specifyingthe number of shares to be purchased, accompanied by payment of the purchaseprice. Payment of the purchase price shall be made in such manner as theCommittee may provide in the award, which may include cash (including cashequivalents), delivery of shares of Stock already owned by the optionee orsubject to awards hereunder, any other manner permitted by law as determined bythe Committee, or any combination of the foregoing. The Committee may provide thatall or part of the shares received upon the exercise of a Stock Option whichare paid for using Restricted Stock shall be restricted in accordance with theoriginal terms of the award in question.

 

(e)           No Shareholder Rights.An optionee shall have no rights to dividends or other rights of a shareholderwith respect to shares subject to a Stock Option until the optionee has givenwritten notice of exercise and has paid for such shares.

 

(f)            Surrender Rights.The Committee may provide that Stock Options may be surrendered for cash uponany terms and conditions set by the Committee.

 

(g)           Non-Transferability;Limited Transferability. A Stock Option Agreement may permit an optionee totransfer the Stock Option to his or her children, grandchildren or spouse (“ImmediateFamily”), to one or more trusts for the benefit of such Immediate Familymembers, or to one or more partnerships in which such Immediate Family membersare the only partners if (i) the agreement setting forth such Stock Optionexpressly provides that such Stock Option may be transferred only with theexpress written consent of the Committee, and (ii) the optionee does notreceive any consideration in any form whatsoever for such transfer. Any Stock Optionso transferred shall continue to be subject to the same terms and conditions aswere applicable to such Stock Option immediately prior to the transfer thereof.Any Stock

 

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Option not(x) granted pursuant to any agreement expressly allowing the transfer ofsuch Stock Option or (y) amended expressly to permit its transfer shallnot be transferable by the optionee otherwise than by will or by the laws ofdescent and distribution, and such Stock Option shall be exercisable during theoptionee’s lifetime only by the optionee.

 

(h)           Termination of Relationship.If an optionee’s employment or other qualifying relationship with the Companyor a Related Company terminates by reason of death, disability, retirement,voluntary or involuntary termination or otherwise, the Stock Option shall beexercisable to the extent determined by the Committee; provided, however, thatunless employment or such other qualifying relationship is terminated for cause(as may be defined by the Committee in connection with the grant of any StockOption), the Stock Option shall remain exercisable (to the extent that it wasotherwise exercisable on the date of termination) for (A) at leastsix (6) months from the date of termination if termination was causedby death or disability or (B) at least ninety (90) days from the dateof termination if termination was caused by other than death or disability. TheCommittee may provide that, notwithstanding the option term fixed pursuant to Section 6.2(b),a Stock Option which is outstanding on the date of an optionee’s death shallremain outstanding for an additional period after the date of such death. Forthe purposes of this Plan, “termination for cause” shall mean any fraudulent ordishonest act or gross abuse of authority with respect to the Company thatlikely will result in material harm to the Company or any illegal act or drug,alcohol or substance abuse.

 

(i)            Option Grants to Participants Subject to Section 16.If for any reason any Stock Option granted to a Participant subject to Section 16of the Exchange Act is not approved in the manner provided for inclause (d)(1) or (d)(2) of Rule 16b-3, neither the StockOption (except upon its exercise) nor the Stock underlying the Stock Option maybe disposed of by the Participant until six months have elapsed following thedate of grant of the Stock Option, unless the Committee otherwise specificallypermits such disposition.

 

6.3           Notwithstandingthe provisions of Section 6.2, no Incentive Stock Option shall (i) havean option price which is less than one hundred percent (100%) of the FairMarket Value of the Stock on the date of the award of the Stock Option (or lessthan one hundred ten percent (110%) of the Fair Market Value of the Stockon the date of award of the Stock Option if the Participant owns, or would beconsidered to own by reason of Section 424(d) of the Internal RevenueCode or any successor provision thereto, more than ten percent (10%) ofthe total combined voting power of all classes of stock of the Company or anyparent or subsidiary of the Company at the time of the grant of the StockOption), (ii) be exercisable more than ten (10) years after thedate such Incentive Stock Option is awarded (five (5) years after thedate of award if the Participant owns, or would be considered to own by reasonof Section 424(d) of the Internal Revenue Code or any successorprovision thereto, more than ten percent (10%) of the total combinedvoting power of all classes of stock of the Company or any parent or subsidiaryof the Company at the time of the grant of the Stock Option), (iii) beawarded more than ten (10) years after the effective date of the Plan(or the latest restatement of the Plan) or (iv) be transferable other thanby will or by the laws of descent and distribution. In addition, the aggregateFair Market Value (determined as of the time a Stock Option is granted) ofStock with respect to which Incentive Stock Options granted after December 31,1986 are exercisable for the first time by a Participant in any calendar year(under the Plan and any other plans of the Company or any subsidiary or parentcorporation) shall not exceed $100,000.

 

SECTION 7.Restricted Stock.

 

Subject to thefollowing provisions, all awards of Restricted Stock to Participants shall bein such form and shall have such terms and conditions as the Committee maydetermine:

 

(a)           The Restricted Stockaward shall specify the number of shares of Restricted Stock to be awarded, theprice, if any, to be paid by the recipient of the Restricted Stock and

 

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the date ordates on which, or the conditions upon the satisfaction of which, theRestricted Stock will vest. The vesting of Restricted Stock may be conditionedupon the completion of a specified period of service with the Company or aRelated Company, upon the attainment of specified performance goals or uponsuch other criteria as the Committee may determine.

 

(b)           Stock certificatesrepresenting the Restricted Stock awarded to an employee shall be registered inthe Participant’s name, but the Committee may direct that such certificates beheld by the Company on behalf of the Participant. Except as may be permitted bythe Committee, no share of Restricted Stock may be sold, transferred, assigned,pledged or otherwise encumbered by the Participant until such share has vestedin accordance with the terms of the Restricted Stock award. At the timeRestricted Stock vests, a certificate for such vested shares shall be deliveredto the Participant (or his or her designated beneficiary in the event ofdeath), free of all restrictions.

 

(c)           The Committee mayprovide that the Participant shall have the right to vote or receive dividends,or both, on Restricted Stock. The Committee may provide that Stock received asa dividend on, or in connection with a stock split of, Restricted Stock shallbe subject to the same restrictions as the Restricted Stock.

 

(d)           Except as may beprovided by the Committee, in the event of a Participant’s termination ofemployment or other qualifying relationship with the Company or a RelatedCompany before all of his or her Restricted Stock has vested, or in the eventany conditions to the vesting of Restricted Stock have not been satisfied priorto any deadline for the satisfaction of such conditions set forth in the award,the shares of Restricted Stock which have not vested shall be forfeited, andthe Committee may provide that the lower of (i) any purchase price paid bythe Participant and (ii) the Restricted Stock’s aggregate Fair MarketValue on the date of forfeiture shall be paid in cash to the Participant.

 

(e)           The Committee maywaive, in whole or in part, any or all of the conditions to receipt of, orrestrictions with respect to, any or all of the Participant’s Restricted Stock.

 

(f)            If for any reason anyRestricted Stock awarded to a Participant subject to Section 16 of theExchange Act is not approved in the manner provided for in clause (d)(1) or(d)(2) of Rule 16b-3, the Restricted Stock may not be disposed of bythe Participant until six months have elapsed following the date of award ofthe Restricted Stock, unless the Committee otherwise specifically permits suchdisposition.

 

SECTION 8.Substitute Options in Business Combinations.

 

If the Company at any time should succeed to the business of anothercorporation through a merger or consolidation, or through the acquisition ofstock or assets of such corporation or its related companies who, in connectionwith such succession, become employees of the Company or a Related Company insubstitution for options to purchase stock of such acquired corporation held bythem at the time of such succession. The Committee, in its sole discretion,shall determine the extent to which such substitute Stock Options shall begranted (if at all), the persons to receive such substitute Stock Options (whoneed not be all optionees of such corporation) the ***proportionate***number and type of Stock Options to be received by each such person, theexercise price of such Stock Options (which may be determined without regard toSection 6) and the terms and conditions of such substitute Stock Options;provided, however, that the exercise price of each substitute Stock Optionshall be an amount that, in the sole judgment of the Committee (and if theStock Options to be granted are intended to be Incentive Stock Options, incompliance with Section 424(a) of the Code), the economic benefitprovided by such Stock Option is not greater than the

 

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economic benefit represented by the stock option of the acquiredcorporation as of the date of the Company’s acquisition of such corporation. Anysubstitute Stock Option granted under this Section 8 shall expire upon theexpiration date of such other stock option or, if earlier, ten (10) yearsafter the date of grant of the substitute Stock Option, and, notwithstanding Section 6shall be exercisable during the period(s) in which the other stock option wouldhave been exercisable ***and in no event shall ithave an exercise period more than 120 months from the date the substitute StockOption is granted***. Any provision of this Section 8 to thecontrary notwithstanding, no Stock Option shall be granted, nor any actiontaken, permitted or omitted, which would have the effect of causing the Plan orany awards hereunder to fail to qualify for exemption Rule 16b-3, withoutthe express approval of the Board.

 

SECTION 9.Election to Defer Awards.

 

The Committeemay permit a Participant to elect to defer receipt of an award for a specifiedperiod or until a specified event, upon such terms as are determined by theCommittee.

 

SECTION 10.Tax Withholding.

 

10.1         EachParticipant shall, no later than the date as of which the value of an awardfirst becomes includible in such person’s gross income for applicable taxpurposes, pay to the Company, or make arrangements satisfactory to theCommittee (which may include delivery of shares of Stock already owned by theoptionee or subject to awards hereunder) regarding payment of, any federal,state, local or other taxes of any kind required by law to be withheld withrespect to the award. The obligations of the Company under the Plan shall beconditional on such payment or arrangements, and the Company (and, whereapplicable, any Related Company), shall, to the extent permitted by law, havethe right to deduct any such taxes from any payment of any kind otherwise dueto the Participant.

 

10.2         Tothe extent permitted by the Committee, and subject to such terms and conditionsas the Committee may provide, a Participant may elect to have the withholdingtax obligation, or any additional tax obligation with respect to any awardshereunder, satisfied by (i) having the Company withhold shares of Stockotherwise deliverable to such person with respect to the award or (ii) deliveringto the Company shares of unrestricted Stock.

 

SECTION 11.Amendments and Termination.

 

No awards maybe granted under the Plan more than ten (10) years after the date ofapproval of the Plan by the shareholders of the Company. The Board maydiscontinue the Plan at any earlier time and may amend it from time to time. Noamendment or discontinuation of the Plan shall adversely affect any awardpreviously granted without the award holder’s written consent. Amendments maybe made without shareholder approval except (i) if and to the extentnecessary to satisfy any applicable mandatory legal or regulatory requirements(including the requirements of any stock exchange or over-the-counter market onwhich the Stock is listed or qualified for trading and any requirements imposedunder any state securities laws or regulations as a condition to theregistration of securities distributable under the Plan or otherwise), or (ii) asrequired for the Plan to satisfy the requirements of Section 162(m), Section 422or any other non-mandatory legal or regulatory requirements if the Board ofDirectors deems it desirable for the Plan to satisfy any such requirements.

 

SECTION 12.Change of Control.

 

12.1         Inthe event of a Change of Control, unless otherwise determined by the Committeeat the time of grant or by amendment (with the holder’s consent) of such grant:

 

(a)           all outstanding StockOptions awarded under the Plan shall become fully exercisable and vested; and

 

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(b)           the restrictionsapplicable to any outstanding Restricted Stock awards under the Plan shalllapse and such shares and awards shall be deemed fully vested.

 

12.2         A“Change of Control” shall be deemed to occur if:

 

(a)           individuals who, as of July 19,1996, constitute the entire Board of Directors of the Company (“IncumbentDirectors”) cease for any reason to constitute at least a majority of theBoard; provided, however, that any individual becoming a director subsequent tosuch date whose election, or nomination for election by the Company’sshareholders, was approved by a vote of at least a majority of the thenIncumbent Directors (other than an election or nomination of an individualwhose assumption of office is the result of an actual or threatened electioncontest relating to the election of directors of the Company, as such terms areused in Rule 14a-11 under the Exchange Act), also shall be an IncumbentDirector;

 

(b)           the shareholders of theCompany shall approve (i) any merger, consolidation or recapitalization ofthe Company (or, if the capital stock of the Company is affected, anysubsidiary of the Company) or any sale, lease, or other transfer (in onetransaction or a series of transactions contemplated or arranged by any partyas a single plan) of all or substantially all of the assets of the Company(each of the foregoing being an “Acquisition Transaction”) where (1) theshareholders of the Company immediately prior to such Acquisition Transactionwould not immediately after such Acquisition Transaction beneficially own,directly or indirectly, shares representing in the aggregate more than fiftypercent (50%) of (A) the then outstanding common stock of thecorporation surviving or resulting from such merger, consolidation orrecapitalization or acquiring such assets of the Company, as the case may be(the “Surviving Corporation”), (or of its ultimate parent corporation, if any)and (B) the Combined Voting Power (as defined below) of the thenoutstanding Voting Securities (as defined below) of the Surviving Corporation(or of its ultimate parent corporation, if any) or (2) the IncumbentDirectors at the time of the initial approval of such Acquisition Transactionwould not immediately after such Acquisition Transaction constitute a majorityof the Board of Directors of the Surviving Corporation (or of its ultimateparent corporation, if any) or (ii) any plan or proposal for theliquidation or dissolution of the Company; or

 

(c)           any Person (as definedbelow) shall become the beneficial owner (as defined in Rules 13d-3 and13d-5 under the Exchange Act), directly or indirectly, of securities of theCompany representing in the aggregate forty percent (40%) or more ofeither (i) the then outstanding shares of Company Common Stock or (ii) theCombined Voting Power of all then outstanding Voting Securities of the Company;provided, however, that notwithstanding the foregoing, a Change of Control ofthe Company shall not be deemed to have occurred for purposes of this clause (c) solelyas the result of:

 

(1)           an acquisition ofsecurities by the Company which, by reducing the number of shares of CompanyCommon Stock or other Voting Securities outstanding, increases (i) theproportionate number of shares of Company Common Stock beneficially owned byany Person to forty percent (40%) or more of the shares of Company CommonStock then outstanding or (ii) the proportionate voting power representedby the Voting Securities beneficially owned by any Person to fortypercent (40%) or more of the Combined Voting Power of all then outstandingVoting Securities; or

 

(2)           an acquisition ofsecurities directly from the Company except that this paragraph (2) shallnot apply to:

 

(A)          any conversion of asecurity that was not acquired directly from the Company; or

 

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(B)           any acquisition ofsecurities if the Incumbent Directors at the time of the initial approval ofsuch acquisition would not immediately after (or otherwise as a result of) suchacquisition constitute a majority of the Board of the Company;

 

provided,however, that if any Person referred to in clauses (1) or (2) ofthis clause (c) shall thereafter become the beneficial owner of anyadditional shares of Company Common Stock or other Voting Securities of theCompany (other than pursuant to a stock split, stock dividend or similartransaction or an acquisition exempt under such clause (2)), then a Changeof Control shall be deemed to have occurred for purposes of thisclause (c).

 

For purposesof this Section 12.2:

 

(i)            “Person” shall meanany individual, entity (including, without limitation, any corporation,partnership, trust, joint venture, association or governmental body) or group(as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Actand the rules and regulations thereunder); provided, however, that “Person”shall not include the Company, any of its subsidiaries, any employee benefitplan of the Company or any of its majority-owned subsidiaries or any entityorganized, appointed or established by the Company or such subsidiary for orpursuant to the terms of any such plan.

 

(ii)           “Voting Securities”shall mean all securities of a corporation having the right under ordinarycircumstances to vote in an election of the Board of Directors of suchcorporation.

 

(iii)          “Combined Voting Power”shall mean the aggregate votes entitled to be cast generally in the election ofdirectors of a corporation by holders of then outstanding Voting Securities ofsuch corporation.

 

SECTION 13.General Provisions.

 

13.1         Ifthe granting of any award under the Plan or the issuance, purchase or deliveryof Stock thereunder shall require, in the determination of the Committee fromtime to time and at any time, (i) the listing, registration orqualification of the Stock subject or related thereto upon any securitiesexchange or over-the-counter market or under any federal or state law or (ii) theconsent or approval of any government regulatory body, then any such awardshall not be granted or exercised, in whole or in part, unless such listing,registration, qualification, consent or approval shall have been effected orobtained on conditions, if any, as shall be acceptable to the Committee. Inaddition, in connection with the granting or exercising of any award under thePlan, the Committee may require the recipient to agree not to dispose of anyStock issuable in connection with such award, except upon the satisfaction ofspecified conditions, if the Committee determines such agreement is necessaryor desirable in connection with any requirement or interpretation of anyfederal or state securities law, rule or regulation.

 

13.2         Nothingset forth in this Plan shall prevent the Board from adopting other oradditional compensation arrangements. Neither the adoption of the Plan nor anyaward hereunder shall confer upon any employee of the Company, or of a RelatedCompany, any right to continued employment, and no award under the Plan shallconfer upon any director any right to continued service as a director.

 

13.3         Determinationsby the Committee under the Plan relating to the form, amount, and terms andconditions of awards need not be uniform, and may be made selectively amongpersons who receive or are eligible to receive awards under the Plan, whetheror not such persons are similarly situated.

 

13.4         Nomember of the Board or the Committee, nor any officer or employee of theCompany acting on behalf of the Board or the Committee, shall be personallyliable for any action, determination or

 

 

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interpretation taken or madewith respect to the Plan, and all members of the Board or the Committee and allofficers or employees of the Company acting on their behalf shall, to theextent permitted by law, be fully indemnified and protected by the Company inrespect of any such action, determination or interpretation.

 

SECTION 14.Provision of Financial Information.

 

EachParticipant then holding unexercised Stock Options or shares of RestrictedStock the restrictions on which have not then lapsed shall be furnished withfinancial statements of the Company at least annually not later than the timesuch financial statements are delivered to shareholders of the Company.

 

SECTION 15.Effective Date of Plan.

 

The Plan shallbe effective upon the later of (i) the approval of the Plan by theshareholders of the Company by a majority of the votes cast at a duly heldmeeting of shareholders at which a quorum representing at least a majority ofthe outstanding shares is, either in person or by proxy, present and voting onthe Plan, (ii) August 15, 1996 and (iii) the date upon which theCompany becomes subject to the version of Rule 16b-3 adopted by theSecurities and Exchange Commission in Release No. 34-37260 promulgatedunder the Exchange Act.

 

The Plan wasduly approved by the shareholders of the Company on July 19, 1996. ThePlan, as amended and restated, was most recently adopted by the Board ofDirectors on September 17, 1996. The Plan became effective on September 17,1996, upon the election by the Board on that date for the Company to becomesubject to the version of Rule 16b-3 adopted by the Securities andExchange Commission in Release No. 34-37260 promulgated under the ExchangeAct.

 

 

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