Document:

Unassociated Document

 

Exhibit 10.4

 

EMPLOYMENT AND NON-COMPETITION AGREEMENT

THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT, is entered into as of this 15th day of September, 1999 by and between Integrated Technology USA, Inc. (the "Company"), a Delaware corporation c/o Madison Partners, 444 Madison Avenue, 38th Floor, New York, New York 10022, and Harvey Wrubel residing at 670 South Forest Drive, Teaneck, New Jersey 07666 (the "Executive").

 

W I T N E S S E T H:

WHEREAS, Empire Resources, Inc. ("ERI") and the Company are merging (the "Merger");

 

WHEREAS, the Executive is currently employed by ERI;

 

WHEREAS, the Company desires to employ the Executive and the Executive desires to be employed by the Company effective upon the consummation of the Merger; and

 

WHEREAS, the Company and the Executive desire to set forth the terms and conditions of such employment.

 

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the adequacy and receipt of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Term of Employment. The Company hereby agrees to employ the Executive and the Executive hereby accepts employment, in accordance with the terms and conditions set forth herein, for a term (the "Employment Term") commencing on the effective date of the Merger (the "Effective Date") and terminating, unless otherwise terminated earlier in accordance with Section 5 hereof, on December 31, 2002 (the "Original Employment Term"), provided that the Employment Term shall be automatically extended, subject to earlier termination as provided in Section 5 hereof, for successive additional two (2) year periods (the "Additional Terms"), unless, at least ninety (90) days prior to the end of the Original Employment Term or the then Additional Term, the Company or the Executive has notified the other in writing that the Employment Term shall terminate at the end of the then current term.

 

2. Position and Responsibilities. During the Employment Term, the Executive shall serve as an executive officer of the Company with the initial title of Vice President of Sales of the Company and the Executive shall report to the Chief Executive Officer of the Company. The Executive shall perform such services consistent with his position as may be assigned to him from time to time by the Chief Executive Officer of the Company. The Executive shall devote substantially all of his business time, attention and energies to the performance of his duties hereunder, provided that the foregoing shall not prevent the Executive from participating in charitable, community or industry affairs and from managing his and his family's passive personal investments to the extent such activities do not interfere with the performance of his duties hereunder.

 

  

  

  

 

3. Compensation and Benefits. During the Employment Term, the Company shall pay and provide the Executive the following:

 

3.1 Base Salary. The Company shall pay the Executive a base salary (the "Base Salary") at an annual rate of not less than Two Hundred Three Thousand Dollars ($203,000) per year in accordance with the Company's normal payroll practices for executives. Base Salary shall be subject to annual review by the Board of Directors of the Company (the "Board"), or a duly authorized committee thereof, for increase (but not decrease) in January of each year, commencing in January, 2000, provided that in each such January the Base Salary shall be increased by an amount necessary to adjust for any increase in the cost of living during the twelve (12) month period ending during the prior November based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) selected areas (NY-NJ-CT), all items index published by the Bureau of Labor Statistics of the United States Department of Labor. Once increased, Base Salary shall not be reduced and shall thereafter, as increased, shall be the Base Salary hereunder.

 

3.2 Commissions. The Company shall pay the Executive an annual commission (the "Annual Commission") for each fiscal year ending during the Employment Term, commencing with the fiscal year commencing on January 1, 1999, equal to ten percent (10%) of the Margin (as defined below) during each such fiscal year. Each Annual Commission shall be paid in a single cash lump sum after the end of each fiscal year based on the Company's actual receipts during such year. "Margin" shall mean, for each fiscal year, the net paid revenues (after deduction of duty and shipping) received during such fiscal year from all sales directly and solely made by the Executive reduced by all costs directly attributable to such sales (including, but not limited to, cost of materials, finance charges in accordance with the Company's policy in effect from time to time, storage charges and fees to third parties), provided that Margin shall be determined without regard to the cost of the Annual Commissions. The Annual Commission payments will be based solely on the Company's actual cash receipts (rather than receivables) for each fiscal year and direct costs shall be first attributed to any amounts from sales revenues received in installments. Any refunds, chargebacks, increases and similar adjustments for amounts received in prior fiscal years shall be adjusted in the next Annual Commission or, if none, refunded by or paid to the Executive, as appropriate. Not more than thirty (30) days after the end of each fiscal year, the Executive shall submit to the Company a written summary of his calculation of the Margin and Annual Commission payable with respect to such fiscal year (together with supporting quantitative date and the methods used to make such calculations). The Company shall have twenty (20) days to review such calculations. In the event that the Company does not agree with the Executive's calculation of the Margin or Annual Commission, the Company will provide the Executive with written notice specifying the details of such dispute within such twenty (20) day period. If the parties cannot resolve the dispute within ten (10) days,  the Margin and the Annual Commission shall be referred to the Company's independent certified public accountants, or such other party as mutually agreed by the parties hereto, for determination (the "Accountants"). The Company shall provide the Executive with a copy of the Accountants' determination (together with supporting quantitative data and the methods used to make such calculations). The Accountants' determination shall be final, binding and conclusive on the parties hereto. The Accountants' shall have thirty (30) days to perform such calculations and such calculations shall delay the payment date with regard to amounts in question, but not other amounts. All amounts shall be paid within ten (10) days of the determination (as set forth above) that such amounts are due. The Company may, in its sole discretion and without liability for lost Annual Commissions, reject sales or other transactions, compromise or settle amounts due, make refunds or not pursue collections. In no event shall the Executive be entitled to receive any Annual Commission with regard to any sales made after his date of termination.

 

  

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3.3 Employee Benefits. The Executive shall, to the extent eligible, be entitled to participate at a level commensurate with his position in all employee benefit, welfare, retirement, savings, stock option and incentive plans and programs generally provided by the Company to its senior executives from time to time.

 

3.4 Vacation. The Executive shall be entitled to paid vacation in accordance with the standard written policies of the Company with regard to vacations of executives, but in no event less than three (3) weeks per calendar year (with proration for partial years). Unused vacation shall not accrue from year to year nor be paid for.

 

4. Expenses. In accordance with its policies in effect from time to time, upon submission of appropriate documentation, the Company shall pay, or reimburse, the Executive for ordinary and necessary business expenses within such policy which the Executive incurs in connection with the performance of his duties hereunder.

 

5. Termination of Employment and the Employment Term. The Executive's employment with the Company and the Employment Term shall terminate upon the occurrence of the first of the following events:

 

5.1 Death. Automatically on the date of the Executive's death.

 

5.2 Termination By the Company for Cause. Immediately upon written notice by the Company to the Executive of a termination for Cause. "Cause" shall mean: (i) the Executive's commission of, or indictment for (A) a felony, or (B) any misdemeanor involving theft, fraud or moral turpitude; (ii) the Executive's failure to reasonably promptly follow the legal written direction of the Chief Executive Officer of the Company with regard to matters commensurate with his position; (iii) theft, dishonesty, fraud or breach of fiduciary duty by the Executive with regard to the Company; (iv) willful misconduct or gross negligence by the Executive with regard to the Company, its business, assets or employees; (v) any material breach by the Executive of this Agreement that is not cured by the Executive within twenty (20) days after receipt by the Executive of a written notice from the Company specifying the details thereof; (vi) the Executive's failure to attempt to perform his duties hereunder which is not remedied within five (5) days after receipt by the Executive of a written notice from the Company specifying the details thereof; (vii) the Executive's Material Unsatisfactory Performance (as defined below); or (viii) the Executive's inability due to injury, illness, disease or bodily or mental infirmity, to perform his material duties hereunder for a period of more than one hundred twenty (120) days during any three hundred sixty-five (365) consecutive day period. Reference in this Section 5.2 to the Company shall also include direct and indirect subsidiaries of the Company. Material Unsatisfactory Performance shall mean that, with regard to any fiscal year, the Margin (determined in accordance with Section 3.2 above) in such fiscal year is less than $500,000 (prorated for any short fiscal year). For purposes of this Section 5.2, a "sale" shall be deemed made at the earliest of (i) when an order is formally confirmed or otherwise accepted in writing by the Company, (ii) when an order number is issued, or (iii) when actions are initially taken by the Company to fill the order.

 

  

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5.3 Termination By the Company without Cause. Upon written notice by the Company to the Executive of a termination without Cause.

 

6. Consequences of a Termination of Employment.

 

6.1 Termination due to Death. If the Employment Term terminates on account of the Executive's death, (i) the Executive's estate shall be entitled to: (x) prompt payment of any unpaid Base Salary and any accrued vacation, and (y) reimbursement for any unreimbursed business expenses, and (ii) any amounts or benefits due under any benefit plan, grant or program (including, but not limited to, group health and life insurance arrangements in which the Executive participates) shall be paid in accordance with the terms of said plan, grant or program (collectively, the "Accrued Obligations"). In addition, in the event of the termination of the Executive's employment on account of his death, the Executive's estate shall be entitled to payment of any unpaid Annual Commissions on sales occurring on or prior to the date of the Executive's termination of employment.

 

6.2 Termination by the Company for Cause or Voluntary Termination by the Executive. If the Executive is terminated by the Company for Cause or the Executive terminates his employment in breach of this Agreement, the Executive shall be entitled to receive any Accrued Obligations and payment of any unpaid Annual Commissions on sales occurring on or prior to the Executive's date of termination in full settlement of all amounts owed him. In the event the Executive terminates his employment in breach of this Agreement, the Company hereby reserves all rights which it has at law arising in connection with such breach (without limitation of its rights under Section 7.6 below).

 

6.3 Termination by the Company without Cause. If the Executive is terminated by the Company without Cause, the Executive shall, subject to cutoff in accordance with Section 7.6 below, be entitled to receive in full settlement of all amounts owed to him, provided he delivers to the Company a release of all claims relating to his employment and the termination thereof (other than those specifically payable hereunder and any rights of indemnification under the Company's organizational documents) running to the Company, its subsidiaries and related entities and their respective past or present officers, directors and employees in such form as requested by the Company, the following:

 

  

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(a)           Any Accrued Obligations;

 

(b)           Payment of any unpaid Annual Commissions on sales occurring on or prior to the date of the Executive's termination of employment; and

 

(c)           Continued payment on a monthly basis of the Executive's then current monthly Base Salary (without future increase) for the number of months then remaining in the Employment Term.

 

6.4 Sales after a Termination of Employment. Notwithstanding anything herein to the contrary, in no event shall the Executive be entitled to receive Annual Commissions under this Agreement or otherwise be compensated for sales occurring following his date of termination.

 

7. Non-Competition, Non-Solicitation, Confidentiality, Return of Property.

 

7.1 Non-Competition. During the Employment Term and the twelve (12) month period thereafter or, if longer, the period during which the Executive is receiving severance payments pursuant to Section 6.3(b) above, the Executive shall not be engaged as, or be, an employee, director, partner, principal, shareholder, advisor, in any other business, activity or conduct which competes with the business of the Company, provided that, with regard to the period after the Executive's termination of employment, the foregoing shall only apply to competition with regard to aluminum and such other commodities as were being sold by the Company within six (6) months prior to the date of termination. Notwithstanding the foregoing, competition shall not include holding five percent (5%) or less of an interest in the equity or debt of any publicly traded company. For purposes of this Section 7, "Company" shall mean the Company and its subsidiaries and affiliates.

 

7.2 Non-Solicitation. During the Employment Term and the eighteen (18) month period thereafter or, if longer, the period during which the Executive is receiving severance payments pursuant to Section 6.3(b) above, the Executive shall not, directly or indirectly (i) solicit any customer, client, supplier, or middleman of the Company or induce any customer, client, supplier, or middleman of the Company to terminate, or otherwise to cease, reduce, or diminish in any way its relationship with the Company, provided that, with regard to the period after the Executive's termination of employment, the foregoing shall only apply to solicitation or inducement involving aluminum and such other commodities as were being sold by the Company within six (6) months prior to the date of termination so long as the Executive is not in violation of his obligations under Section 7.3 below, or (ii) solicit or induce, or attempt to solicit or induce, any non-clerical employees, sales representatives, agents, consultants, of the Company to terminate such person's employment, representation or other association with the Company.

 

  

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7.3 Confidentiality. The Executive specifically acknowledges that any trade secrets or confidential business and technical information of the Company or its vendors, suppliers or customers, whether reduced to writing, maintained on any form of electronic media, or maintained in mind or memory and whether compiled by the Executive or the Company (collectively, "Confidential Information"), derives independent economic value from not being readily known to or ascertainable by proper means by others; that reasonable efforts have been made by the Company to maintain the secrecy of such information; that such information is the sole property of the Company or its vendors, suppliers, or customers and that any retention, use or disclosure of such information by the Executive during the Employment Term (except in the course of performing duties and obligations of employment with the Company) or any time after termination thereof, shall constitute misappropriation of the trade secrets of the Company or its vendors, suppliers, or customers, provided that Confidential Information shall not include: (i) information that is at the time of disclosure public knowledge or generally known within the industry; (ii) information deemed in good faith by the Executive, while employed by the Company, desirable to disclose in the course of performing the Executive's duties; (iii) information the disclosure of which the Executive in good faith deems necessary in defense of the Executive's rights provided such disclosure by the Executive is limited to only disclose as necessary for such purpose; or (iv) information disclosed by the Executive to comply with a court, or other lawful compulsory, order compelling him to do so, provided the Executive gives the Company prompt notice of the receipt of such order and the disclosure by the Executive is limited to only disclosure necessary for such purpose.

 

7.4 Return of Property. Upon the termination of the Executive's employment or at any other time upon written request by the Company, the Executive shall promptly deliver to the Company all records, files, memoranda, designs, data, reports, drawings, plans, computer programs, software and other documents (and all copies or reproductions of such materials in his possession or control) belonging to the Company. Notwithstanding the foregoing, the Executive may retain his rolodex and similar phone directories (collectively, the "Rolodex") to the extent the Rolodex does not contain information other than name, address, telephone number and similar information.

 

7.5 Scope of Restrictions. If, at the time of enforcement of this Section 7, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law.

 

  

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7.6 Remedies. In the event of a material breach or threatened material breach of this Section 7, the Company, in addition to its other remedies at law or in equity, shall be entitled to injunctive or other equitable relief in order to enforce or prevent any violations of the provisions of this Section 7. In the event the Executive breaches his covenants under Section 7.1 or Section 7.2 above, the Company may immediately cease payment to the Executive of all future amounts due under Sections 6.3(b) and (c) above.

 

8. Assignment. This Agreement may be assigned by the Company only with all or substantially all of the assets of the Company or the portion of the Company with which the Executive is primarily employed. This Agreement is not assignable by the Executive. This Agreement shall inure to the benefit of and be enforceable by the parties' representatives, executors, and administrators, successors, permitted assigns, heirs, distributees, devisees, and legatees. If the Executive should die after a termination while any amounts payable to the Executive hereunder remain outstanding, all such amounts, unless otherwise provided herein, shall be paid to the Executive's devisee, legatee, or other designee or, in the absence of such designee, to the Executive's estate.

 

9. Arbitration. All disputes and controversies arising under or in connection with this Agreement, other than the seeking of injunctive or other equitable relief pursuant to Section 7 hereof, shall be settled exclusively by arbitration in New York City, New York, or such other location agreed by the parties hereto, in accordance with the rules for expedited resolution of commercial disputes of the American Arbitration Association ("AAA") then in effect. The determination of the arbitrators shall be final and binding on the parties. Judgment may be entered on the award of the arbitrator in any court having proper jurisdiction. All expenses of the AAA and the arbitrator shall be borne as determined by the arbitrator.

 

10. Miscellaneous.

 

10.1 Entire Agreement. This Agreement supersedes any and all prior agreements or understandings, oral or written, between the parties hereto with respect to the subject matter hereof.

 

10.2 Modification. This Agreement shall not be varied, altered, modified, canceled, changed, or in any way amended, nor any provision hereof waived, except by mutual agreement of the parties in a written instrument executed by the parties hereto or their legal representatives.

 

10.3 Notices. All notices hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, or one (1) day after sending by express mail or other "overnight mail service," or three (3) days after sending by certified or registered mail, postage prepaid, return receipt requested. Notice shall be sent as follows: if to the Executive, to the address as listed in the Company's records with a copy to Cheryl V. Reicin, Esq., McDermott, Will & Emory, 50 Rockefeller Plaza, New York, New York 10020, and if to the Company, to the address set forth on the first page of this Agreement, attention of the Chief Executive Officer with a copy to the Company's General Counsel. Either party may change the notice address by notice given as aforesaid.

 

  

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10.4 Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.

 

10.5 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

 

10.6 Tax Withholding. The Company may withhold from any benefits payable under this Agreement or otherwise all federal, state, city, or other taxes as may be required pursuant to any law or governmental regulation or ruling.

 

10.7 Governing Law. The provisions of this Agreement shall be construed and enforced in accordance with the laws of the state of Delaware, without regard to any otherwise applicable principles of conflicts of laws.

 

IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement as of the day and year first above written.

 

 

	 	
INTEGRATED TECHNOLOGY USA, INC.

	 
	 	 	 	 
	 	 	 	 
	
  

	
By: 

	/s/ William Spier	 
	 	 	Name: William Spier	 
	 	 	Title: 	 
	 	 	 	 
	 	/s/ Harvey Wrubel	 
	 	Harvey Wrubel	 
	 	 	 	 
	 	 	 	 

 

 

8Unassociated Document

 

Exhibit 10.5

 

INTEGRATED TECHNOLOGY USA, INC.

1996 STOCK OPTION PLAN

 

	
  

	
1.

	
Purpose.

 

The purpose of the Integrated Technology USA, Inc., 1996 Stock Option Plan (the "Plan") is to encourage and enable employees (which term, as used herein, shall include officers), and directors of Integrated Technology USA, Inc., or a parent (if any) or subsidiaries thereof (collectively, unless the context otherwise requires, the "Company"), consultants, and advisors to the Company, and other persons or entities providing goods or services to the Company to acquire a proprietary interest in the Company through the ownership of common stock of the Company ("Stock").  (Such directors, consultants, advisors, and other persons or entities providing goods or services to the Company and entitled to receive options hereunder being collectively referred to as the "Associates," and the relationship of the Associates to the Company being referred to as "association with" the Company.)  Such ownership will provide such employees and Associates with a more direct stake in the future welfare of the Company and encourage them to remain employed by or associated with the Company. It is also expected that the Plan will encourage qualified persons to seek and accept employment or association with the Company.

 

	
  

	
2.

	
Type of Options.

 

Options granted pursuant to the Plan may (subject to the following two sentences) be incentive stock options as defined in Section 422 of the Internal Revenue Code of 1986 (as from time to time amended, the "Code") (any option that is intended so to qualify as an incentive stock option being referred to herein as an "incentive option"), or options that are not incentive options, or both. Incentive options may only be granted to "employees" as defined in the provisions of the Code or regulations thereunder applicable to incentive stock options.  In the event that the Plan is not approved by the stockholders of the Company in the manner and within the time frame required by the Code for incentive options, then any options designated as incentive options shall instead be treated as options that are not incentive options.

 

	
  

	
3.

	
Effective Date and Term of Plan.

 

The Plan became effective upon being approved by the Board of Directors of the Company (the "Board") on July 29, 1996. No option may be granted under the Plan after July 29, 2006, but options previously granted may extend beyond that date.

 

	
  

	
4.

	
Administration.

 

(a)           Subject to the following sentence, the Plan shall be administered by the Board.  The Board may delegate any and all of its authority and administrative powers and functions under the Plan to one or more committees of two or more directors appointed from time to time by the Board.  Each such committee to which any duties or authority is delegated as aforesaid is referred to herein as a "Committee".  If there are multiple Committee, the authority, powers and functions delegated to each Committee may be different or the same.  Unless otherwise provided by the Board resolution establishing a Committee, (i) a  majority of the members of a Committee shall constitute a quorum, (ii) all determinations of the Committee shall be made by a  majority of its members and (iii) any determination of the Committee may be made, without notice or meeting of the Committee, by a writing signed by a majority of the Committee members.  Each reference herein to the "Plan Administrator" with respect to any authority, power or function shall mean the Board and/or any Committee to which the Board has delegated the power to exercise such authority or power or to perform such function, as the case may be.

 

  

 

  

 

(b)           The Plan Administrator shall have authority, not inconsistent with the express provisions of the Plan, (i) to grant options to such eligible employees and Associates of the Company as the Plan Administrator may select; (ii) to determine the time or times when options shall be granted and the number of shares of Stock subject to each option; (iii) to determine which options are, and which options are not, incentive options; (iv) to determine the terms and conditions of each option; (v) to prescribe the form or forms of instruments evidencing options and any other instruments required under the Plan and to change such forms from time to time; (vi) to adopt, amend and rescind rules and regulations for the administration of the Plan; and (vii) to interpret the Plan and to decide any questions and settle all controversies and disputes that may arise in connection with the Plan. Any determination, decision or action of the Plan Administrator in connection with the construction, interpretation, administration or application of the Plan shall be final and conclusive on all persons participating in the Plan.

 

	
  

	
5.

	
Shares Subject to the Plan.

 

	
  

	
(a)

	
Number of Shares.

 

Subject to adjustment as provided in Section 8, the aggregate number of shares of Stock that may be delivered upon the exercise of options granted under the Plan shall be 833,333.  If any option granted under the Plan terminates without having been exercised in full, the number of shares of Stock as to which such option was not exercised shall be available for future grants within the limits set forth in this Section 5(a).

 

	
  

	
(b)

	
Shares to be Delivered.

 

Shares delivered under the Plan shall be authorized but unissued Stock or if the Plan Administrator so decides in its sole discretion, previously issued Stock acquired by the Company and held in treasury.  No fractional shares of Stock shall be delivered under the Plan.

 

	
  

	
6.

	
Eligibility for Options.

 

Options may be granted to such Employees and Associates of the Company as the Plan Administrator shall from time to time select (subject to the second sentence of Section 2 hereof). Receipt of options under the Plan or of  awards under any other employee benefit plan of the Company shall not preclude an employee from receiving options or additional options under the Plan.

 

	
  

	
7.

	
Terms and Conditions of Options.

 

(a)           Special Rule for Incentive Options. Consistent with Section 422 of the Code and any regulations, notices or other official pronouncements of general applicability, to the extent the aggregate fair market value (determined in accordance with Section 7(b) as of the time the option is granted) of the shares of Stock with respect to which incentive options are exercisable for the first time by the optionee during any calendar year (under all plans of his employer corporation and its parent and subsidiary corporations) exceeds $100,000, such options shall not be treated as incentive options. Nothing in this special rule shall be construed as limiting the exercisability of any option, unless the Plan Administrator expressly provides for such a limitation at time of grant.

 

  

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(b)           Exercise Price. The exercise price of each option shall be determined by the Plan Administrator, subject to the following: (i) in the case of an incentive option, the exercise price per share of stock shall not be less than 100% (110% for a stock option granted to a greater than ten-percent shareholder) of the fair market value per share of Stock at the time the option is granted and (ii) in the case of all options, the exercise price per share of Stock shall not be less than the par value per share (unless the Stock subject to the option is treasury stock).  A "greater than ten-percent shareholder" shall mean for purposes of the Plan any employee who at the time of grant owns directly, or is deemed to own by reason of the attribution rules set forth in Section 424(d) of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company. The fair market value of a share of Stock as of any date shall be determined for purposes of the Plan as follows: (i) if the Stock is listed on a securities exchange or quoted through the Automated Quotation National Market System of the National Association of Securities Dealers, Inc. ("NASDAQ"), the fair market value shall equal the mean between the high and low sales prices on such exchange or through such market system, as the case may be, on such day or in the absence of reported sales on such day, the mean between the closing reported bid and asked prices on such exchange or through such market system, as the case may be, on such day, (ii) if the Stock is not listed or quoted as described in the preceding clause but is quoted through NASDAQ (but not through the National Market System), the fair market value shall equal the mean between the closing bid and asked prices as quoted by the National Association of Securities Dealers, Inc., through NASDAQ for such day and (iii) if the Stock is not listed or quoted on a securities exchange or through NASDAQ, then the fair market value shall be determined by such other method as the Plan Administrator determines to be reasonable and consistent with applicable requirements of the Code and the regulations issued thereunder applicable to incentive options;

 

provided, however, that if pursuant to clause (i) or (ii) fair market value is to be determined based upon the mean of bid and asked prices and the Plan Administrator determines that such mean does not properly reflect fair market value, then fair market value shall be determined by the Plan Administrator as provided in clause (iii).

 

(c)           Duration of Options.  An option, shall be exercisable during such period or periods as the Plan Administrator may specify. The latest date on which an option may be exercised (the "Final Exercise Date") shall be the date which is ten years (five years, in the case of an incentive option granted to a "greater than ten-percent shareholder" as defined in Section 7(b)) from the date the option was granted or such earlier date as may be specified by the Plan Administrator at the time the option is granted.

 

(d)           Exercise of Options.

 

(1)           At the time of the grant of an option, the Plan Administrator shall specify whether the option shall be exercisable in full at any time prior to the Final Exercise Date or in installments (which may be cumulative or noncumulative). In the case of an option not immediately exercisable in full, the Plan Administrator may at any time accelerate the time at which all or any part of the option may be exercised.

 

  

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(2)           The award forms or other instruments evidencing incentive options shall contain such provisions relating to exercise and other matters as are required of incentive options under the applicable provisions of the Code and the regulations thereunder, as from time to time in effect.

 

(3)           Any exercise of an option shall be in writing, signed by the proper person and delivered or mailed to the Company, accompanied by (a) the option certificate and any other documents required by the Plan Administrator and (b) payment in full for the number of shares for which the option is exercised.

 

(4)           In the case of an option that is not an incentive option, the Plan Administrator shall have the right to require that the individual exercising the option remit to the Company an amount sufficient to satisfy any federal, state, or local withholding tax requirements (or make other arrangements satisfactory to the Company with regard to such taxes) prior to the delivery of any Stock pursuant to the exercise of the option.  In the case of an incentive option, if at the time the option is exercised the Plan Administrator determines that under applicable law and regulations the Company could be liable for the withholding of any federal, state or local tax with respect to a disposition of the Stock received upon exercise, the Plan Administrator (i) shall require as a condition of exercise that the individual exercising the option agree to inform the Company promptly of any disposition (within the meaning of Section 424(c) of the Code and the regulations thereunder) of Stock received upon exercise, and (ii) may require as a condition of exercise that the individual exercising the option give such security as the Plan Administrator deems adequate to meet the potential liability of the Company for the withholding of tax, and to augment such security from time to time in any amount reasonably deemed necessary by the Plan Administrator to preserve the adequacy of such security.

 

(5)           If an option is exercised by the executor or administrator of a deceased employee or Associate, or by the person or persons to whom the option has been transferred by the employee's or Associate's will or the applicable laws of descent and distribution or otherwise, the Company shall be under no obligation to deliver Stock pursuant to such exercise until the Company is satisfied as to the authority of the person or persons exercising the option.

 

  

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(e)           Termination of Employment.

 

An employee's options shall terminate immediately upon the termination of his employment with the Company, subject to the following exceptions: (i) if the termination is by reason of the death or disability of the employee, the unexercised portion of such options shall continue to be exercisable for 12 months after such termination (but only to the extent, if any, that such options were exercisable immediately prior to the date of such termination) and (ii) if the termination is for any other reason, excluding termination for cause, the unexercised portion of such options shall continue to be exercisable for three months after such termination (but only to the extent, if any, that such options were exercisable immediately prior to the date of such termination); provided, however, that  the foregoing right of an option holder to exercise options following termination of employment is subject to the condition that the option holder shall not have conducted himself during the term of  his employment or thereafter in a manner which adversely affects the Company.  Notwithstanding the foregoing, the Plan Administrator in its discretion in any particular case may provide that upon termination of an employee's employment with the Company, the unexercised portion of his options shall continue to be exercisable for a longer or shorter period than the period provided for in the preceding sentence; provided, however, that (i) in the case of an incentive option, the Plan Administrator may not provide for a shorter or longer period after the option is granted and, in any event, may not provide for a longer period except in the case where the employee's employment is terminated by reason of death and (ii) in the case of an option that is not an incentive option, the Plan Administrator may not provide for a shorter period after the option is granted. For purposes of this Section 7(e), employment shall not be considered terminated (i) in the case of sick leave or other bona fide leave of absence approved for purposes of the Plan by the Plan Administrator, so long as the employee's right to reemployment is guaranteed either by statute or by contract, or (ii) in the case of a transfer of employment between the Company and a subsidiary or between subsidiaries, or to the employment of a corporation (or a parent or subsidiary corporation of such corporation) issuing or assuming an option in a transaction to which Section 424(a) of the Code applies.

 

(f)           Payment for Stock.

 

Stock purchased under the Plan upon exercise of an option shall be paid for as follows:

 

(i) in cash or by certified check or  bank draft or money order payable to the order of the Company; or

 

(ii) with the consent of the Plan Administrator and to the extent permitted by it (not later than the time of grant, in the case of an incentive option) as follows:

 

(A) through the delivery of shares of Stock having a fair market value (determined as provided in Section 7(b)) on the date of exercise equal to the purchase price (but only if such shares have been held by the option holder for a period of time sufficient to prevent a pyramid exercise that would create a charge to the Company's earnings); or

 

  

5

  

 

(B) by delivery of a full recourse interest bearing promissory note of the option holder to the Company, secured by a pledge of the Stock being purchased, such note to be payable in the case of an incentive option, on such terms as are specified in the option (except that, in lieu of a stated rate of interest, an incentive option may provide that the rate of interest on the note will be such rate as is sufficient, at the time the note is given, to avoid the imputation of interest under the applicable provisions of the Code); provided, that if the Stock delivered upon exercise of the option is an original issue of authorized Stock, at least so much of the exercise price as represents the par value of such Stock shall be paid in cash or by a combination of cash and Stock; or

 

(C) by delivering a properly executed exercise notice together with irrevocable instructions to a broker to sell shares acquired upon exercise of the option and promptly to deliver to the Company a portion of the proceeds thereof equal to the exercise price, or

 

(D)  any combination of any of the foregoing payment methods provided for in this Section 7(f).

 

(g) Delivery of Stock.

 

An option holder shall not have the rights of a stockholder with regard to awards under the Plan except as to Stock actually received by him under the Plan. The Company shall not be obligated to deliver any shares of Stock (a) until, in the opinion of the Company's counsel, all applicable federal and state laws and regulations have been complied with, and (b) if the outstanding Stock is at the time listed on any stock exchange, until the shares to be delivered have been listed or authorized to be listed on such exchange upon official notice of issuance, and (c) until all other legal matters in connection with the issuance and delivery of such shares have been approved by the Company's counsel. If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the option, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act and may require that the certificates evidencing such Stock bear an appropriate legend restricting transfer.

 

(h) Nontransferability of Options.

 

No option may be transferred other than by will or by the laws of descent and distribution, and during the lifetime of the employee or Associate to whom granted may be exercised only by him; provided, however, that an option that is not an incentive option may be otherwise transferred to the extent, if any, permitted by the Plan Administrator.

 

(i) Restrictions on Stock.

 

The Plan Administrator may provide that shares of Stock purchased through the exercise of options under the Plan be subject to such restrictions on resale, including restrictions requiring resale to the Company at or below fair market value, or such other restrictions, as the Plan Administrator in its sole discretion shall determine, and shall take such steps as it deems necessary or appropriate to carry out the purposes of any such restriction; provided, however, that any such restrictions relating to the shares of Stock that may be purchased upon exercise of an option may not be provided for after the option has been granted.

 

  

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8.

	
Mergers, Recapitalizations. Etc.

 

(a) In the event of a consolidation or merger in which the Company is not the surviving corporation or in the event of any transaction that results in the acquisition of substantially all of the Company's outstanding Stock by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or other transfer of substantially all of the Company's assets (all the foregoing being referred to as "Acquisition Events"), then the Plan Administrator may in its discretion terminate all outstanding options by delivering notice of termination to each option holder; provided, however, that, during the 20-day period following the date on which such notice of termination is delivered, each option holder shall have the right to exercise in full all of his options that are then outstanding (without regard to any condition with respect to the exercise of any installment that relates to the passage of time). If an Acquisition Event occurs and the Plan Administrator does not terminate the outstanding options pursuant to the preceding sentence, then the provisions of Section 8(b) shall apply.

 

(b)  In the event that the outstanding shares of Stock are changed into or exchanged for a different number or kind of shares or other securities or property (including cash) of the Company or of another corporation by reason of a stock dividend, stock split or combination of shares (excluding the stock split effected by the Company on September 10, 1996), recapitalization or other change in the Company's capital stock, reorganization, merger, sale or other transfer of substantially all the Company's assets to another corporation, consolidation, or other transaction described in Section 424(a) of the Code, the Plan Administrator shall  make appropriate adjustments (in such manner as it deems equitable in its sole discretion) in (i) the number and kind of shares of  Stock, other securities or property for the purchase of which options may be granted under the Plan, (ii) the number and kind of shares of Stock, other securities or property as to which outstanding options, or portions thereof then unexercised, shall be exercisable, (iii) the exercise price and other terms of outstanding options and (iv) any other relevant provisions of the Plan.  Any adjustment of the Plan or in outstanding options shall be effective on the effective date of the event giving rise to such adjustment. The Plan Administrator may also adjust the number of shares subject to outstanding options, the exercise price of outstanding options and the terms of outstanding options to take into consideration any other event (including, without limitation, accounting changes) if the Plan Administrator determines that such adjustment is appropriate to avoid distortion in the operation of the Plan. All determinations and adjustments made by the Plan Administrator pursuant to this Section 8(b) shall be binding on all persons.

 

(c)  The Plan Administrator may grant options under the Plan in substitution for options held by employees of another corporation who concurrently become employees of the Company or a subsidiary of the Company as the result of a merger or consolidation of the employing corporation with the Company or a subsidiary of the Company, or as the result of the acquisition by the Company of property or stock of the employing corporation. The Company may direct that substitute awards be granted on such terms and conditions as the Plan Administrator considers appropriate in the circumstances.

 

  

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9.

	
Limitation on Rights.

 

Neither the adoption of the Plan nor the grant of options shall confer upon any employee any right to continued employment with the Company or affect in any way the right of the Company to terminate the employment of an employee at any time. Except as specifically provided by the Plan Administrator in any particular case, the loss of existing or potential profit in options granted under this Plan shall not constitute an element of damages in the event of termination of the employment of an employee even if the termination is in violation of an obligation of the Company to the employee by contract or otherwise.

 

	 	
10.

	
Effect, Discontinuance, Cancellation, Amendment and Termination.

 

(a) Neither adoption of the Plan nor the grant of options to an employee shall affect the Company's right to grant to such employee options that are not subject to the Plan, to issue to such employees Stock as a bonus or otherwise, or to adopt other plans or arrangements under which Stock may be issued to employees.

 

(b) The Plan Administrator may at any time discontinue granting options under the plan. With the consent of the option holder, the Plan Administrator may at any time cancel an existing option in whole or in part and grant the option holder another option for such number of shares as the Plan Administrator specifies. The Plan Administrator may at any time or times amend the Plan, provided that (i)  no such amendment shall affect the rights of any option holder (without his consent) under any option previously granted, and (ii) without the approval of the stockholders of the Company, no such amendment shall  (a) increase the maximum number of shares available under the Plan for delivery pursuant to the exercise of incentive options, (b) change the group of employees eligible to receive incentive options, (c) reduce the price at which incentive options may be granted, (d) extend the time within which incentive options may be granted, (e) alter the Plan in such a way that incentive options already granted hereunder would not be considered incentive stock options under Section 422 of the Code, or (f) amend the provisions of this Section 8(b). The Plan Administrator may at any time terminate the Plan as to any further grants of options.

 

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