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Form #1522

Stock option plan for officers of corporation and key employees

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Stock option plan for officers of corporation and key employees


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Stock option plan for officers of corporation and key employees.

Section 1. Establishment. There is established a stock option plan (called the "plan") pursuant to which officers and key employees of the corporation and its subsidiaries who are mainly responsible for its continued growth and development and future financial success may be granted options to purchase shares of common stock of the corporation, in order to secure to the corporation the advantages of the incentive and sense of proprietorship inherent in stock ownership by these persons.

Section 2. Administration. The plan shall be administered by a committee (called "committee") of not less than three directors of the corporation, none of whom shall be eligible to participate in the plan, who shall be appointed and serve at the pleasure of the board of directors. A majority of the committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a majority of the committee, shall be deemed the acts of the committee. Subject to the provisions of the plan and to policies determined by the board of directors, the committee is authorized to adopt rules and regulations and to take any action in the administration of the plan as it shall deem proper.

Section 3. Eligibility. Officers and key employees of the corporation and its subsidiaries (including officers and employees who are directors of the corporation) who, in the opinion of the committee, are mainly responsible for the continued growth and development and future financial success of the business shall be eligible to participate in the plan. The committee shall, in its sole discretion, from time to time, select from these eligible persons those to whom options shall be granted and determine the number of shares to be included in the option. No officer or employee shall have any right to receive an option, except as he or she is selected by the committee.

Section 4. Shares Subject to Plan. Options may be granted pursuant to the plan to purchase up to 125,000 shares of common stock (subject to adjustment as provided in section 6 of this article), which may be authorized and unissued shares or shares held in the treasury of the corporation. To the extent that options granted under the plan shall expire or terminate without being exercised, shares covered shall remain available for purposes of the plan.

Section 5. Terms of Options. Each option granted under the plan shall be evidenced by a stock option agreement between the corporation and the person to whom the option is granted and shall be subject to the following terms and conditions:

(a). The price at which each share covered by an option may be purchased shall be determined in each case by the committee but shall be not less than 95 percent of the fair market value at the time the option is granted.

(b). The aggregate number of shares covered by any option or options to one individual shall not exceed 10 percent of the aggregate number of shares subject to the plan as provided in section 4 of this article, excluding in the computation of the percentage for any individual the number of shares covered by any option previously granted to the extent that the option shall have expired or terminated without being exercised.

(c). During the lifetime of the optionee, the option may be exercised only by him or her. The option shall not be transferable by the optionee other than by will or by the laws of descent and distribution. After the death of the optionee, the option shall be transferable to the corporation for cancellation, but only upon the terms and conditions, if any, as the board of directors may determine.

(d). An option may be exercised in whole at any time, or in part from time to time, within the period or periods not to exceed 10 years from the granting of the option as may be determined by the committee and set forth in the stock option agreement (period or periods referred to as the option period) provided that,

(i). if the optionee shall cease to be employed by the corporation or any of its subsidiaries, the option may be exercised only within 3 months after the termination of employment and within the option period;

(ii). if the optionee shall die, the option may be exercised only within 15 months after death and within the option period and only by his or her personal representatives or persons entitled under the will or the laws of descent and distribution; and

(iii). the option may not be exercised for more shares (subject to adjustment as provided in section 6 of this article) after the termination of the optionee's employment or death than the optionee was entitled to purchase at the time of the termination of employment or death.

(e). The option price of each share purchased pursuant to an option shall be paid in full in cash at the time of the exercise of the option. Except in case of the exercise of an option by an executor or administrator in connection with the administration of the estate of the optionee, the person exercising the option shall certify at the time of the exercise that he or she is acquiring the shares being purchased for investment and not with any intention to resell or distribute them.

(f). In consideration for the granting of each option, the optionee shall agree to remain in the employment of the corporation or one of its subsidiaries, at the pleasure of the corporation or subsidiary, for at least two years from the date of the granting of the option or until the January first nearest his or her 65th birthday, whichever may be earlier, at the salary rate in effect at the time of the granting of the option or at a changed rate as may be fixed from time to time by the corporation or subsidiary. At the discretion of the committee, this requirement may be waived in the case of any optionee who during the two-year period enters the active service of the military forces of the United States or other United States government service connected with national defense activities. Nothing contained in the plan nor in any stock option agreement shall confer upon any optionee any right with respect to the continuance of employment by the corporation or any of its subsidiaries nor interfere in any way with the right of the corporation or any subsidiary to terminate employment or change compensation at any time.

(g). Any other terms and conditions not inconsistent with the foregoing as the committee shall approve.

Section 6. Adjustment of Number and Price of Shares.

(a). In the event that a dividend is declared upon the common stock of the corporation payable in shares of stock, the number of shares of common stock covered by each outstanding option and the number of shares available for issuance pursuant to the plan but not yet covered by an option shall be adjusted by adding the number of shares which would have been distributable if the shares had been outstanding on the date fixed for determining the shareholders entitled to receive the stock dividend.

(b). In the event that the outstanding shares of common stock of the corporation are changed into or exchanged for a different number or kind of shares of stock or other securities of the corporation or of another corporation, whether through reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation, then there shall be substituted for the shares of common stock covered by each outstanding option and for the shares available for issuance pursuant to the plan but not yet covered by an option, the number and kind of shares of stock or other securities which would have been substituted if the shares had been outstanding on the date fixed for determining the shareholders entitled to receive the changed or substituted stock or other securities.

(c). In the event there is any change, other than specified above in this section 6, in the number or kind of outstanding shares of common stock of the corporation or of any stock or other securities into which the common stock shall be changed or for which it shall have been exchanged, then if the board of directors shall determine, in its discretion, that the change equitably requires an adjustment in the number or kind of shares covered by outstanding options or which are available for issuance pursuant to the plan but not yet covered by an option. The adjustment shall be made by the board of directors and shall be effective and binding for all purposes of the plan and on each outstanding stock option agreement.

(d). No adjustment or substitution provided for in this section 6 shall require the corporation to issue or to sell a fractional share under any stock option agreement and the total adjustment or substitution with respect to each stock option agreement shall be limited accordingly.

(e). In the case of any adjustment or substitution provided for in this section 6, the option price per share in each stock option agreement shall be equitably adjusted by the board of directors to reflect the greater or lesser number of shares of stock or other securities into which the stock covered by the option may have been changed.

Section 7. Sales of Stock. Upon authorization by the board of directors and subject to the limitations as to amount set forth in section 4 and paragraph (b) of section 5 of this article, the committee may, from time to time, sell for cash common stock of the corporation to eligible officers and employees, instead of granting options to them, upon terms as the committee may determine. The selling price of the shares sold shall be determined in each case by the committee but shall be not less than 95 percent of the fair market value at the time of the sale. The purchaser shall certify that he or she is acquiring the shares being purchased for investment and not with an intention to resell or distribute them.

Contributed by
AIG Legal
 
Total Forms Contributed 75
 

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Terms Of Use

Submissions to this site, including any legal or business forms, posts, responses to questions or other communications by contributors are not intended as and should not be construed as legal advice. You are strongly encouraged to consult competent legal council before engaging in any action based upon content contained on this site.

These downloadable forms are only for personal use. Retransmission, redistribution, or any other commercial use is prohibited. This includes reposting forms from this site to another site offering free legal or other document forms for download.

Please note that the donator may have included different usage terms regarding this form, and you agree to abide by these terms. It is highly recommended that you have a licensed attorney review any legal documents for which you are searching in order to make sure that your needs are being properly and completely satisfied.

Your use of this site constitutes your acceptance of our terms of use and your agreement to hold this site, its officers, employees and any contributors to this site harmless for any damage you might incur from your use of any submissions contained on this site. If you do not agree to the above terms, please do not proceed.

These forms are provided to assist business owners and others in understanding important points to consider in different transactions. They are offered with the understanding that no legal advice, accounting, or other professional service is being offered by these documents or on this website. Laws vary in the different states. Agreements acceptable in one state may not be enforced the same way under the laws of another state. Also, agreements should relate specifically to the particular facts of each situation. Therefore, it is important to consult legal counsel whenever utilizing these forms. The Forms are not a substitute for legal advice YourFreeLegalForms.com is not engaged in recommending or referring members on the site or making claims about the competence, character or qualifications of its participating members.
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Keywords: Stock option plan, officers of corporation, key employees

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