Document:

Exhibit 10.15

 

SI INTERNATIONAL, INC.

STOCK OPTION AGREEMENT

EVIDENCING GRANT OF STOCK OPTIONS

UNDER THE SI INTERNATIONAL, INC. 

2002 AMENDED AND RESTATED OMNIBUS
STOCK INCENTIVE PLAN

 

THIS STOCK OPTION AGREEMENT (this “Agreement”) is made as of the Option Grant Date set
forth on the Initial Notice of Stock Option Grant hereto by and between (i) SI
International, Inc., a Delaware corporation (the “Company”) and (ii) the
undersigned Participant, an employee, Director or Consultant of the Company or
an Affiliate as named on the Notice of Stock Option Grant hereto. Certain
capitalized terms used herein are defined in Section 6 hereof.  Capitalized terms used but not defined herein
shall have the meaning ascribed to such terms in the SI International, Inc.
2002 Amended and Restated Omnibus Stock Incentive Plan (as amended from time to
time according to its terms, the “Plan”).

 

NOW, THEREFORE,
in consideration of the mutual promises made herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound, agree as follows:

 

1.             Grant of Stock Options.

 

(a)           Number of Options;
Exercise Price. The Company hereby grants to Participant the right to purchase, during
the period specified in Section 3 hereof, the number of shares of
Common Stock (such shares of stock hereinafter referred to as the “Shares”)
set forth on the Initial Notice of Stock Option Grant and any additional Notice
of Stock Option Grant executed by the parties subsequent to the effective date
of this Agreement (the “Options”). Each Option gives the Participant the
right, subject to the terms and conditions of the Plan and this Agreement
(unless the Notice of Stock Option Grant specifies that a different Stock Option
Agreement is applicable to the Option), to purchase shares of Common Stock at
an exercise price per share as set forth on each respective Notice of Stock
Option Grant.

 

(b)           Nature of Options.  If so designated on the respective Notice of
Stock Option Grant, the Options are intended to be “incentive stock options”
within the meaning of Section 422 of the Code or any successor provision.

 

(c)           Participant Bound by Plan.  A copy of the Plan has been provided to
Participant, and Participant has completely and carefully reviewed this
Agreement and the Plan.  As an inducement
to the Company to issue the Options to Participant, and as a condition thereto,
Participant agrees to be bound by all of the terms of the Plan and this
Agreement with respect to the Options and all Option Shares and the other
terms, conditions, and agreements set forth in this Agreement and in the
Plan.  The Plan is by this reference
incorporated herein and made a part hereof.

 

(d)           Binding Agreement;
Noncontravention.  As an inducement to the Company
to enter into this Agreement, issue the Options to Participant, and issue the
Common Stock upon exercise thereof, and as a condition thereto, Participant
represents and warrants to the Company that this Agreement constitutes the
legal, valid and binding obligation of Participant, enforceable in accordance
with its terms, and the execution, delivery and performance of this Agreement
by Participant do not and shall not conflict with, violate or cause a breach of
any agreement, contract or instrument to which Participant is a party or any
judgment, order or decree to which Participant is subject.

 

(e)           Retention of Company’s
Rights.  As a further inducement to the Company to
enter into this Agreement, issue the Options to Participant, and issue the Common
Stock upon exercise thereof, and as a condition thereto, Participant
acknowledges and agrees that no agreement or arrangement between the
Participant and the Company or any Affiliate (including, without limitation,
the grant of Options to Participant, the issuance of Option Shares upon
exercise thereof, and the execution and delivery of this Agreement) shall (i) entitle
Participant

 

 

to remain in Continuous Service with the Company or
any Affiliate for any period of time, (ii) confer upon Participant the
right to be selected again at any time in the future as a Plan participant, or (iii) provide
for any adjustment to the number of Option Shares subject to the Options upon
the occurrence of subsequent events except as provided in the Plan.

 

2.             Vesting of Options.  Options
granted hereunder may be exercised only to the extent they have become vested
in accordance with the relevant Notice of Stock Option Grant, the terms hereof,
and the Plan.  Notwithstanding the
foregoing, and except as otherwise provided herein or the Plan, all vesting
shall cease and no Unvested Options (as defined below) shall vest after the
date on which Participant terminates Continuous Service for any reason.  Options which have vested and become
exercisable pursuant to the terms of this Agreement are referred to herein as “Vested
Options,” and all other Options are referred to herein as “Unvested
Options.”

 

3.             Term and Expiration of Options. Subject to earlier expiration or
termination as provided herein or in the Plan, all of the Options shall expire
and no longer be exercisable at the close of business on the day immediately
preceding the tenth anniversary of the Option Grant Date.

 

4.             Exercise of Options. Options may be exercised in accordance with the terms of
the Plan and only to the extent they are outstanding, have become Vested
Options in accordance with Section 2, and have not yet expired in
accordance with Section 3.

 

5.             Restrictions on Transfer of Options and Option
Shares.

 

(a)           Retention of Options.  Participant shall not sell, transfer, assign,
pledge, hypothecate, or otherwise dispose of (whether with or without
consideration and whether voluntarily or involuntarily or by operation of law)
any interest in any Options (a “Transfer” of Options). Any Transfer of Options
shall cause such Options to be void ab initio.
Options may be exercised only by Participant (or by Participant’s legal
guardian or legal representative).

 

(b)           Transfers in Violation of
Agreement.  Any transfer or attempted transfer of any
Option Shares in violation of any provision of this Agreement shall be void,
and the Company shall not record any such purported transfer on its books or
treat any purported transferee of such Option Shares as the owner thereof for
any purpose.

 

6.             Definitions.

 

(a)           “Initial Notice of
Stock Option Grant” means the Notice of Stock Option Grant hereto that
specifies the terms of the Option for Shares of Common Stock granted to
Participant at the time this Agreement is executed by the parties.

 

(b)           “Notice of Stock Option
Grant” shall mean the Initial Notice of Stock Option Grant to this
Agreement and any subsequent Notices of Stock Option Grant executed by the
Company and Participant which detail the specific terms of an Option granted to
Participant under the Plan.

 

(c)           “Option Grant Date”
shall mean the date Shares of Common Stock are granted to Participant as
specified in each Notice of Stock Option Grant.

 

(d)           “Option Shares”
means (i) all shares of Common Stock issued or issuable upon exercise of
Options and (ii) any other securities issued directly or indirectly with
respect to the securities referred to in clause (i) above by way of a
stock split, stock dividend or other division of securities, or in connection
with a combination of securities, recapitalization, merger, consolidation, or
other reorganization, or upon conversion, exchange, or exercise of any of the
foregoing securities.

 

 

7.             Nonsolicitation.  As an inducement to the Company to enter into
this Agreement, issue the Options to Participant, and issue the Common Stock
upon exercise thereof, and as a condition for Participant retaining the right
to exercise the Options under the terms hereof, Participant covenants and
agrees that during Participant’s Continuous Service and for 12 months
thereafter, Participant shall not, directly or indirectly, for Participant’s
own benefit or on behalf of or through another entity: (i) induce or
attempt to induce any employee of the Company or any Affiliate to leave the
employ of the Company or any Affiliate, or in any way interfere with the
relationship between the Company or any Affiliate and any employee thereof, (ii) 
hire any person who was an employee of the Company or any Affiliate at any time
during the 24 months preceding the termination of Participant’s Continuous
Service, or (iii) induce or attempt to induce any customer, developer,
client, member, supplier, licensee, licensor, franchisee or other business
relation of the Company or any Affiliate to cease doing business with the
Company or any Affiliate, or in any way purposefully interfere with the
relationship between any such customer, developer, client, member, supplier,
licensee or business relation and the Company or any Affiliate (including,
without limitation, by making any negative or disparaging statements or communications
about the Company).

 

8.             Miscellaneous Provisions.

 

(a)           Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

(b)           Complete Agreement.  This Agreement, each Notice of Stock Option
Grant hereto and the Plan embody the complete agreement and understanding among
the parties and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.

 

(c)           Counterparts.  This Agreement may be executed in separate
counterparts, none of which need contain the signature of more than one party
hereto but each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.

 

(d)           Successors and Assigns.  Except as otherwise provided herein, this
Agreement shall bind the parties hereto and their respective successors and
assigns and shall inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns whether so expressed or not.

 

(e)           Choice of Law.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits
hereto shall be governed by the internal law, and not the law of conflicts, of
the State of Delaware.

 

(f)            Equitable Remedies.  Each of the parties to this Agreement agree
and acknowledge that money damages would not be an adequate remedy if
Participant or any other holder of Option Shares were to breach any of the provisions
of Sections  5 or 7 hereof, and that the Company may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any violations of the
provisions of Sections  5 or 7 of this Agreement

 

(g)           Amendment, Modification
and Cancellation of Outstanding Options.  The
Board may amend, modify or cancel any Option in any manner to the extent that
the Board would have had the authority under the Plan initially to grant such
Option; provided that no such amendment or modification shall impair the
rights of Participant under this Agreement without the consent of the
Participant; provided, further, that an amendment or modification
that may cause an Incentive Stock Option to become a Nonqualified Stock Option
shall not be treated as adversely affecting the rights of Participant under
this Agreement.

 

 

(h)           Business Days.  If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or legal
holiday in the State of Delaware, the time period shall be automatically
extended to the business day immediately following such Saturday, Sunday or
holiday.

 

(i)            Descriptive Headings; Interpretation;
No Strict Construction.  The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a substantive
part of this Agreement.  Whenever
required by the context, any pronoun used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular forms of
nouns, pronouns, and verbs shall include the plural and vice versa.  Reference to any agreement, document, or
instrument means such agreement, document, or instrument as amended or
otherwise modified from time to time in accordance with the terms thereof, and
if applicable hereof.  The use of the
words “include” or “including” in this Agreement shall be by way of example
rather than by limitation.  In the event
an ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.

 

[Signatures Appear on the
Following Page.]

 

 

IN WITNESS WHEREOF, the
parties hereto have executed this Stock Option Agreement and the Initial Notice
of Stock Option Grant on the Option Grant Date set forth on the Initial Notice
of Stock Option Grant.

 

By
signing below, Participant hereby:  (i) consents
to electronic access or electronic receipt of copies (instead of receiving
paper copies) of the Agreement, Notice(s) of Stock Option Grant(s), the Plan,
and the Plan Summary and Prospectus (collectively, the “Option Documents”) in
the manner designated by the Company; (ii) represents that Participant has
electronic access to the internet for purposes of receiving such information;
and (iii) acknowledges receipt of electronic copies, or that Participant
already is in possession of a paper copies, of the Option Documents.

 

Participant
may receive, without charge, upon written or oral request, paper copies of any
or all of the Option Documents by requesting them from the Company’s Stock
Option Administrator, 12012 Sunset Hills Road, Suite 800, Reston, VA
20190.  Telephone: (703) 234-7000.

 

BY
PARTICIPANT’S SIGNATURE BELOW, PARTICIPANT (A) ACKNOWLEDGES READING AND
UNDERSTANDING THE AGREEMENT AND THE PLAN, (B) AGREES TO BE BOUND BY ALL PROVISIONS
OF THE AGREEMENT AND (C) AGREES THAT THE INITIAL NOTICE OF STOCK OPTION
GRANT AND ANY SUBSEQUENT NOTICES OF STOCK OPTION GRANT, AS PART OF THE
AGREEMENT, SHALL GOVERN THE TERMS AND CONDITIONS OF THE OPTION, THE SHARES AND
THE OTHER SUBJECT MATTER OF THE AGREEMENT, SUBJECT TO THE PROVISIONS OF THE
PLAN.  IN THE EVENT OF ANY CONFLICT
BETWEEN THE TERMS OF THE INITIAL NOTICE OF STOCK OPTION GRANT OR ANY SUBSEQUENT
NOTICES OF STOCK OPTION GRANT AND THE AGREEMENT, THE AGREEMENT SHALL CONTROL.

 

	
   

  	
  SI INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PARTICIPANT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Employee No.

  

 

 

NOTICE OF STOCK OPTION GRANT
UNDER 

SI INTERNATIONAL, INC. STOCK
OPTION AGREEMENT 

 

This Notice of Stock Option Grant (this “Notice”)
sets forth certain specific terms regarding the Option for Shares of Common
Stock granted to the undersigned Participant under the SI International, Inc.
2002 Amended and Restated Omnibus Stock Incentive Plan (as amended from time to
time, the “Plan”) pursuant to the terms and conditions of the Stock
Option Agreement (the “Agreement”) by and between the Company and
Participant. This Notice of Stock Option Grant is an integral part of the
Agreement, which, with the Plan, is incorporated by reference into the
Agreement.  Capitalized terms not defined
in this Notice of Stock Option Grant shall have the meanings ascribed to such
terms in the Agreement or the Plan.

 

	
  Name of Participant:                                    

  	
  Option Grant
  Date:                               

  
	
  Number of Shares of Stock Subject to
  Option:                  

  	
  Exercise Price per Share: $           

  

 

This Option           is             is not intended to
be an “incentive stock option” within the meaning of Section 422 of the
Code.

 

Subject
to the Participant’s Continuous Service and the other terms and conditions of
this Notice, the Agreement and the Plan, the Option shall vest and become
exercisable in the following increments:

 

	
  Number of Shares of Stock
  Subject to Option

  	
   

  	
  Date Shares of Incentive Stock Subject to Option become Vested
  Options

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

In
the event of a merger of the Company with or into another corporation, or the
sale of substantially all of the assets of the Company, the Option granted
pursuant to this Notice, shall be assumed or an equivalent option or right
substituted by the successor corporation or an affiliate of the successor
corporation.  In the event that the
successor corporation refuses to assume or substitute for the Option, the
Participant shall fully vest in and have the right to exercise the Option as to
all of the Shares covered thereby, including Shares as to which it would not
otherwise be vested or exercisable.  If
an Option becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Company shall
notify the Participant in writing or electronically that the Option, shall be
fully exercisable for a period of twenty (20) days from the date of such
notice, and the Option shall terminate upon the expiration of such period.  For the purposes of this paragraph, the
Option shall be considered assumed if, following the merger or sale of assets,
the option or right confers the right to purchase or receive, for each Share
subject to the Option immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received
in the merger or sale of assets by holders of Shares held on the effective date
of the transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
shares); provided, however, that if such consideration received in the merger
or sale of assets is not solely common stock of the successor corporation or
its affiliate, the Company may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option
for each Share subject to the Option to be solely common stock of the successor
corporation or its affiliate equal in fair market value to the per share
consideration received by holders of Shares in the merger or sale of assets.

 

Participant
understands that this Option is subject to Participant’s consent to electronic
access, and acknowledgement of having accessed, the Notice, Agreement, Plan,
and Plan Summary and Prospectus (collectively, the “Option Documents”) through
the process determined by the Company. 
By signing below and accepting the grant of the Option, Participant
hereby:  (i) consents to access
electronic copies (instead of receiving paper copies) of the Option Documents
through the process determined by the Company; (ii) represents that
Participant has electronic access, including to the internet; and (iii) acknowledges
receipt of electronic copies, or that Participant already is in possession of
paper copies, of the Option Documents. 
Participant may receive, without

 

 

charge,
upon request, paper copies of any or all of the Option Documents by requesting
them from Company’s Stock Option Administrator, 12012 Sunset Hills Road, Suite 800,
Reston, VA 20190.  Telephone: (703) 234-7010.

 

BY
PARTICIPANT’S SIGNATURE BELOW, PARTICIPANT (A) ACKNOWLEDGES READING AND
UNDERSTANDING THE AGREEMENT AND THE PLAN, (B) AGREES TO BE BOUND BY ALL
PROVISIONS OF THE AGREEMENT AND (C) AGREES THAT THIS NOTICE OF STOCK
OPTION GRANT, AS PART OF THE AGREEMENT, SHALL GOVERN THE TERMS AND
CONDITIONS OF THE OPTION, THE SHARES AND THE OTHER SUBJECT MATTER OF THE
AGREEMENT, SUBJECT TO THE PROVISIONS OF THE PLAN.  IN THE EVENT OF ANY CONFLICT BETWEEN THE
TERMS OF THIS NOTICE OF STOCK OPTION GRANT AND THE AGREEMENT, THE AGREEMENT
SHALL CONTROL.

 

	
  SI INTERNATIONAL, INC.

  	
  PARTICIPANT

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:EXHIBIT 10.1

 

1995 EMPLOYEE STOCK OPTION PLAN

CUTTER & BUCK INC.

(AMENDED AND RESTATED AS OF OCTOBER 19, 2005)

 

A.                                   Purpose of the Plan.  The
purpose of this 1995 Employee Stock Option Plan is to provide for supplementary
compensation for past services and an incentive and reward to eligible key
employees, managers and officers of the CUTTER & BUCK INC. (“Company”)
or any subsidiary of the Company.  The
Company’s goal is to attract and retain the best available personnel for
positions of substantial responsibility, provide additional incentive to such
key employees, managers and officers and promote the success of the Company’s
business.

 

2.                                       Definitions.  As used herein, the following
definitions shall apply:

 

(a)                                  “Board” shall mean the Board of Directors of
the Company.

 

(b)                                 “Committee” shall mean the Compensation
Committee appointed by the Board in accordance with Section 4(a) of
the Plan.

 

(c)                                  “Common Stock” shall mean the common stock of
the Company.

 

(d)                                 “Company” shall mean CUTTER & BUCK
INC., a Washington corporation.

 

(e)                                  “Employee” shall mean any person (including
any person who may be an officer or director) employed by the Company or its
present or future subsidiaries whom the Committee may determine to be a key
employee, key managerial personnel or key officer.

 

(f)                                    “Fair Market Value” shall be determined by
the Committee.

 

(g)                                 “Incentive Stock Option” shall mean a Stock
Option conforming to the applicable provisions of Section 422 of the
Internal Revenue Code.

 

(h)                                 “Option” shall mean any stock option granted
pursuant to the Plan.  An Option granted
under this Plan shall be a “Nonqualified Stock Option” unless it meets the
qualifications for an Incentive Stock Option as specified under the Plan and is
so designated by the Committee.

 

(i)                                     “Optioned Shares” shall mean stock subject to
an Option granted pursuant to this Plan.

 

(j)                                     “Participant” shall mean an Employee who
receives a Stock Option.

 

(k)                                  “Plan” shall mean this Stock Option Plan for
key employees, managers and officers of the Company, as the same may be amended
from time to time.

 

 

(l)                                     “Share” shall mean the Common Stock of the
Company.

 

(m)                               “Taxable Year” shall mean the fiscal year of
the Company.

 

(n)                                 “Ten Percent Shareholder” shall mean any
direct or indirect owner of more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any then existing parent
or subsidiary of the Company.

 

3.                                       Stock Subject to Options. 
Except as otherwise provided in Section 17, the maximum aggregate
number of Shares which may be optioned and sold pursuant to the Plan is 319,807
Shares, which will be authorized, but unissued.

 

If
an Option should expire or become unexercisable for any reason without having
been exercised in full, the unissued Shares which were subject thereto shall,
unless the Plan shall have been terminated, become available for other Options
under the Plan.

 

4.                                       Administration of the Plan.

 

(a)                                  Appointment of Committee.  The
Plan shall be administered by the Compensation Committee consisting of three or
more members.  No member of the Committee
is eligible to receive options while serving on the Committee, and each member
shall be a disinterested person within the meaning of Rule 16b-3 of the
Securities Exchange Act of 1934.  Members
of the Committee shall be appointed by the Board and shall serve until their
resignation or removal.  The Board may
remove Committee members, with or without cause, at any time, and may also fill
any vacancies.

 

(b)                                 Procedure.  A majority of the entire
Committee shall constitute a quorum and the action of a majority of the members
present at any meeting at which a quorum is present shall be deemed the action
of the Committee.  In addition, any
decision or determination reduced to writing and signed by all of the members
of the Committee shall be fully as effective as if it has been made by a
majority vote at a meeting duly called and held.  The Committee may appoint a Secretary to keep
minutes of its meetings and may make such rules and regulations for the
conduct of its business as it shall deem advisable.

 

(c)                                  Powers of the Committee. 
Subject to the provisions of the Plan, the Committee shall have
authority:

 

(i)                                     To determine the fair market value of the
Shares covered by each Option, the Employees to whom and the time or times at
which Options shall be granted, and the number of Shares to be represented by
each Option;

 

(ii)                                  To interpret the Plan;

 

(iii)                               To prescribe, amend and rescind rules and
regulations relating to the Plan;

 

2

 

(iv)                              To determine the terms and provisions of each
Option granted under the Plan (which need not be identical), and with the
consent of the holder thereof, to modify or amend each Option;

 

(v)                                 To determine whether the Option price is
payable in money or in stock of the Company;

 

(vi)                              To authorize any person to execute on behalf
of the Company any instrument required to effectuate the grant of an Option
previously granted by the Committee;

 

(vii)                           To designate an Option as either an Incentive
Stock Option or a Nonqualified Stock Option; and

 

(viii)                        To make all other determinations deemed
necessary or advisable for the administration of the Plan.

 

(d)                                 Liability.  No member of the Committee
shall be personally liable by reason of any contract or other instrument
executed by him or her or on his or her behalf or in his or her capacity as a
member of the Committee or for any mistake of judgment made in good faith, and
the Company shall indemnify and hold harmless each member of the Committee and
each other officer, employee, or director of the Company to whom any duty or
power relating to the administration or interpretation of the Plan has been
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of the
Committee) arising out of any act or omission to act in connection with the
Plan unless arising out of such person’s own fraud or bad faith.

 

(e)                                  Effect of Committee’s Decision.  All
decisions, determinations and interpretations of the Committee shall be final
and binding on all Participants and any other holders of any Options granted
under this Plan.

 

5.                                       Eligibility.  Options may be granted only to
Employees, including Employees who are directors or officers of the Company.  An Employee who has been granted an Option
award may, if he is otherwise eligible, be granted additional Option awards.

 

Notwithstanding
any provision to the contrary, in this Section 5, no Employee may be
granted an Incentive Stock Option under this Plan if the Employee, at the time
the Incentive Stock Option is granted, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company or any then existing parent or subsidiary of the Company unless at the
time the Incentive Stock Option is granted the Incentive Stock Option price is
at least 110 percent of the fair market value of the stock subject to the
Incentive Stock Option and the Incentive Stock Option by its terms is not
exercisable after the expiration of five (5) years from the date that the
Incentive Stock Option is granted and the Incentive Stock Option conforms to
all other applicable provisions of Section 422 of the Internal Revenue
Code and Treasury Regulations thereunder.

 

3

 

6.                                       Term of Plan.  The
Plan shall become effective upon its adoption by the Board or its approval or
ratification by vote of the holders of a majority of the outstanding Shares
entitled to vote on the adoption of the Plan, whichever is earlier.  It shall continue in effect for a term of ten
(10) years unless sooner terminated under Section 16 of the Plan.

 

7.                                       Term of Option.  The
term of each Option granted under the Plan shall be determined by the
Committee, however, it shall not exceed ten (10) years from the date of
grant or five (5) years from the date of grant for a Ten Percent
Shareholder in the case of an Incentive Stock Option.

 

8.                                       Option Price.  The
Option price shall be the fair market value of the Shares at the time the
Option is granted; provided that the Option price for shares to be issued
pursuant to any Incentive Stock Option granted to a Ten Percent Shareholder
shall not be less than 110 percent of the fair market value of the Shares at
the time the Incentive Stock Option is granted.

 

9.                                       Aggregate Value.  The
aggregate fair market value (determined as of the time the Option is granted)
of the stock with respect to which Incentive Stock Options are exercisable for
the first time by a Participant during any calendar year (under this Plan, and
all other incentive stock option plans of the Company and any parent or
subsidiary of the Company) shall not exceed $100,000.

 

10.                                 Vesting of Option. 
Options shall vest in accordance with the following schedule (unless
the Committee establishes another schedule):

 

	
  Years
  Following

  	
   

  	
  Percent of Option

  
	
  Grant
  of Option Award

  	
   

  	
  Award Exercisable

  
	
   

  	
   

  	
   

  
	
  After Year 1

  	
   

  	
  20

  
	
  After Year 2

  	
   

  	
  40

  
	
  After Year 3

  	
   

  	
  60

  
	
  After Year 4

  	
   

  	
  80

  
	
  After Year 5

  	
   

  	
  100

  

 

The
vested portion of an Option award shall be exercisable at any time (but no
later than the end of the option period determined pursuant to Section 7
above), subject, however, to all other terms of the Plan and of the Option
granted to Participant.  An Option may
not be exercised for fractional shares of the Company.

 

If
a Participant dies or his or her employment is terminated due to his or her
permanent disability (as determined by the Committee) his or her Optioned
Shares shall become 100 percent vested, if not already so vested under this
Section.

 

4

 

11.                                 Additional Rights in Certain Events.

 

(a)                                  Definitions.                                  For purposes of this Section 11, the
following terms shall have the following meanings:

 

(i)                                     The term “Person” shall be used as that term
is used in Sections 13(d) and 14(d) of the 1934 Act as in
effect on the effective date of the Plan.

 

(ii)                                  “Beneficial Ownership” shall be determined as
provided in Rule 13d-3 under the 1934 Act as in effect on the effective
date of the Plan.

 

(iii)                               A specified percentage of “Voting Power” of a company shall mean such
number of the Voting Shares, as defined below, as shall enable the holders
thereof to cast such percentage of all the votes which could be cast in an
annual election of directors (without consideration of the rights of any class
of stock other than the common stock of the company to elect directors by a
separate class vote); and “Voting Shares” shall mean all securities of a
company entitling the holders thereof to vote in an annual election of
directors (without consideration of the rights of any class of stock other than
the common stock of the company to elect directors by a separate class vote).

 

(iv)                              “Tender Offer” shall mean a tender offer or exchange offer to acquire
securities of the Company (other than such an offer made by the Company or any
subsidiary), whether or not such offer is approved or opposed by the Board.

 

(v)                                 “Continuing Directors” shall mean a director
of the Company who either (a) was a director of the Company on the effective
date of the Plan or (b) is an individual whose election, or nomination for
election, as a director of the Company was approved by a vote of at least two
thirds of the directors then still in office who were Continuing Directors
(other than an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of
directors of the Company which would be subject to Rule 14a-11 under the
1934 Act, or any successor rule).

 

(vi)                              “Section 11 Event” shall mean the date upon which any of the
following events occurs:

 

(1)                                  The Company acquires actual knowledge that
any Person other than the Company, a subsidiary or any employee benefit plan(s)
sponsored by the Company or a subsidiary had acquired the Beneficial Ownership,
directly or indirectly, of securities of the Company entitling such Person to
40% or more of the Voting Power of the Company;

 

(2)                                  A Tender Offer is made to acquire securities
of the Company entitling the holder thereof to 30% or more of the Voting Power
of the Company; or

 

(3)                                  A solicitation subject to Rule 14a-11
under the 1934 Act (or

 

5

 

any
successor rule) relating to the election or removal of 50% or more of the
members of the Board or any class of the Board shall be made by any person
other than the Company or less than 51% of the members of the Board shall be
Continuing Directors; or

 

(4)                                  The shareholders of the Company shall approve
a merger, consolidation, share exchange, division or sale or other disposition
of assets of the Company as a result of which the shareholder of the Company
immediately prior to such transaction shall not hold, directly or indirectly,
immediately following such transaction a majority of the Voting Power (i) in
the case of a merger or consolidation, the surviving or resulting corporation, (ii) in
the case of a share exchange, the acquiring corporation or (iii) in the
case of a division or a sale or other disposition of assets, each surviving,
resulting or acquiring corporation which, immediately following the
transaction, holds more than 10% of the consolidated assets of the Company
immediately prior to the transaction; provided, however, that (i) if
securities beneficially owned by a grantee are included in determining the
Beneficial Ownership of a Person referred to in Section 11(a)(vi)(1), (ii) a
grantee is required to be named pursuant to Item 2 of the Schedule 14D-1
(or any similar successor filing requirement required to be filed by the bidder
making a Tender Offer referred to in Section 11(a)(vi)(2) or (iii) if
a grantee is a “participant” as defined in Instruction 3 to Item 4 of
Schedule 14A under the 1934 Act (or any successor rule) in a solicitation
(other than a solicitation by the Company) referred to in Section 11(a)(vi)(3),
then no Section 11 Event with respect to such grantee shall be deemed to
have occurred by reason of such event.

 

(b)                                 Acceleration of the Exercise Date of Stock
Options.

 

Notwithstanding
any other provision contained in the Plan, in case any “Section 11 Event”
occurs, all outstanding stock options (other than those held by a person
referred to in the proviso to Section 11(a)(vi)) shall become immediately
and fully exercisable whether or not otherwise exercisable by their terms.

 

12.                                 Exercise of Option.

 

(a)                                  Procedure for Exercise.  An
Option shall be deemed to be exercised when written notice of such exercise has
been given to the Company in accordance with the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company.  Until the issuance of the
stock certificates (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to
vote or receive dividends or any other rights as a shareholder shall exist with
respect to Optioned Shares notwithstanding the exercise of the Option.  No adjustment will be made for a dividend or
other rights for which the record date is prior to the date of exercise of the Option
except as provided in Section 17 of the Plan.

 

Notwithstanding
any provision to the contrary contained herein, both Nonqualified Stock Options
and Incentive Stock Options may with approval of the Committee be exercised by

 

6

 

means
of (i) an exchange of Shares previously held by the Participant for the
Optioned Shares, or (ii) broker-assisted cashless exercise transactions
involving brokers with which the Company has a formal understanding regarding
such transactions.  For Nonqualified
Stock Options and Incentive Stock Options, with approval of the Committee,
payment may be made by delivery (including by facsimile) to the Company or its
designated agent of an executed irrevocable instrument to a broker-dealer to
sell a sufficient portion of the shares and deliver the sale proceeds directly
to the Company to pay for the Option.  In
addition, to the extent that the Options exercised are Nonqualified Stock
Options, a Participant may with approval of the Committee satisfy his or her
requirement for federal income tax withholding by means of (i) delivery to
the Company of Shares previously held by the Participant with a Fair Market
Value equal to the withholding obligation, or (ii) allowing the Company to
withhold Optioned Shares with a Fair Market Value equal to the withholding
obligation.  Any Participant subject to Section 16(b) of
the Securities Exchange Act of 1934, as amended, who elects to exchange Shares
to be issued upon exercise of the Option for the Optioned Shares, or allows the
Company to withhold Optioned Shares with a Fair Market Value equal to the
withholding obligation must do so either (i) during the periods which
begin on the third business day following the Company’s regular release of its
quarterly and annual statements of sales and earnings and ending on the 12th
business day following such date, or (ii) pursuant to an irrevocable
election made by the Participant at least six months in advance of the date the
Option exercised becomes taxable.  For
purposes of an exchange, a delivery, or withholding, Shares held by a
Participant and Optioned Shares shall be valued at their Fair Market Value as
of the date of delivery which value shall be credited on a dollar for dollar
basis toward payment of the Option price for the Optioned Shares or the
associated tax withholding obligation.

 

(b)                                 Time of Exercise; Effect of Termination. 
Unless otherwise provided in the terms of an Option, it is the intent of
this Plan that an Option may be exercised by the Participant as provided in
this Plan only while an Employee of the Company except as set out below.  If a Participant’s employment is terminated,
the following rules control:

 

(i)                                     If the Participant dies, the persons to whom
the Participant’s rights have passed by will or the laws of descent and
distribution may exercise such rights, to the extent the Participant could have
done so immediately preceding his death. 
Any such Option must be exercised within three (3) months of the
Participant’s death, in the case of an Incentive Stock Option, and twelve (12)
months of the Participant’s death, in the case of a Nonqualified Option, but in
no event later than the end of the prescribed Option period.

 

(ii)                                  If the Participant’s employment is terminated
due to his or her embezzlement or theft of Company funds, defraudation of the
Company, violation of Company rules, regulations or policies, or any
intentional act which harms the Company, such Option, to the extent not
exercised as of the date of termination, shall be terminated as of that date.

 

(iii)                               If the Participant’s employment is terminated due to his or her
disability, as defined in Section 22(e)(3) of the Internal Revenue
Code, the Participant may exercise his or her Option, to the extent exercisable
as of the date of termination within twelve (12) months after termination, but
in no event later than the end of the prescribed Option period.

 

7

 

(iv)                              If the Participant’s employment is terminated for any reason other than
those set forth in subparagraphs (i), (ii) and (iii) above, the
Participant may exercise his or her Option, to the extent exercisable as of the
date of his termination, within three (3) months after termination in the
case of Incentive Stock Options and within one hundred (100) days after
termination in the case of Nonqualified Options, but in no event later than the
end of the prescribed Option period.

 

13.                                 Options Not Transferable. 
Options under the Plan may not be sold, pledged, assigned or transferred
in any manner other than by will or the laws of descent and distribution and
may be exercised during the Participant’s lifetime only by the Participant.

 

14.                                 Fiscal Year Amount Limitation.  No
Participant shall be granted options to purchase more than 112,500 Shares of
Company Common Stock in any Taxable Year.

 

15.                                 Disposition of Incentive Option Shares.  In
order to receive Incentive Stock Option tax treatment under Section 422 of
the Internal Revenue Code a Participant may not dispose of any Share received
pursuant to an Incentive Stock Option within two (2) years of the date of
the granting of the Option or within one (1) year after the transfer of
such Share to such Participant.

 

16.                                 Amendment or Termination of the Plan.

 

(a)                                  The Board may amend the Plan from time to
time in such respects as the Board deems advisable, except that no amendment
may, without further shareholder approval or ratification:

 

(i) Increase the total number of Shares which
may be available under Section 3 of the Plan (subject, however, to Section 19);

 

(ii) Change the definition of eligibility in Section 5
of the Plan;

 

(iii) Change the term of Option stated in Section 7
of the Plan;

 

(iv) Change the Option price established in Section 8
of the Plan.

 

(b)                                 The Board, without further approval of the
shareholders, may at any time terminate the Plan.

 

(c)                                  No amendment or termination of the Plan shall
diminish or otherwise adversely affect the rights of a Participant with respect
to a previously granted Option.

 

17.                                 Adjustments Upon Changes in Capitalization.  The
number and kind of Shares of Company stock subject to an Option and the fiscal
year amount limitation set forth in Section 14, shall be appropriately
adjusted along with a corresponding adjustment in the Option price to reflect
any stock dividend, stock split, split-up, a declaration of a distribution
payable in a form other than Common Stock in an amount that has a material
effect on the price of Common Stock or any combination or exchange of Shares,
however accomplished.  An appropriate
adjustment shall also

 

8

 

be
made with respect to the aggregate number and kind of shares remaining
available to be optioned and sold under the Plan.  Adjustments, if any, and any determinations
or interpretations, including any determination of whether a distribution has a
material effect on the price of Common Stock, made by the Committee shall be
final, binding and conclusive.

 

18.                                 Agreement and Representations of Employee.  As a
condition to the exercise of any portion of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of
exercise that the Shares are being purchased or acquired only for investment
and without any present intention to resell or distribute the Shares if, in the
opinion of counsel for the Company, such a representation is required under the
Securities Act of 1933 or any other applicable federal or state law, regulation
or rule of any governmental agency. 
Appropriate legends restricting the transfer of the Shares, unless such
Shares are registered under appropriate federal and state securities laws or
unless exemptions are available therefrom, will be placed on Share certificates
issued pursuant to this Plan.

 

19.                                 Reservations of Shares of Common Stock.  The
Company, during the term of this Plan, will at all times reserve and keep
available, and will seek or obtain from any regulatory body having jurisdiction
any requisite authority in order to issue and sell, such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.  Inability of the Company to obtain from any
regulatory body having jurisdiction the authority deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability with respect to the
nonissuance or sale of Shares as to which such requisite authority shall not
have been obtained.

 

20.                                 General Limitations and Provisions. 
Nothing contained in the Plan shall give any Employee the right to be
retained in the employment of the Company or affect the right of the Company to
dismiss any Employee.  The adoption of
the Plan shall not constitute a contract between the Company and any
Employee.  Whether or not any Options are
to be granted hereunder shall be exclusively within the discretion of the
Committee, and nothing contained herein shall be construed as giving any
Employee any right to participate hereunder. 
No Option shall be considered as compensation under any other employee
benefit plan of the Company except as otherwise determined by the Committee.

 

9

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