IKONICS CORPORATION
1995 STOCK INCENTIVE PLAN
(AS PROPOSED TO BE AMENDED)
The purpose of the
IKONICS Corporation 1995 Stock Incentive Plan (the
“Plan”) is to advance the interests of the IKONICS
Corporation (the “Company”) and its stockholders by
enabling the company and its subsidiaries to attract and retain
persons of ability to perform services for the Company and its
subsidiaries by providing an incentive to such individuals through
equity participation in the Company and by rewarding such
individuals who contribute to the achievement by the Company of its
economic objectives.
The following
terms will have the meaning set forth below, unless the context
clearly otherwise requires:
2.1
“Board” means the Board of Directors of the
Company.
2.2
“Broker Exercise Notice” means a written notice
pursuant to which a Participant, upon exercise of an Option,
irrevocably instructs a broker or dealer to sell a sufficient
number of shares or loan a sufficient amount of money to pay all or
a portion of the exercise price of the Option and/or any related
withholding tax obligations and remit such sums to the Company and
directs the Company or deliver stock certificates to be issued upon
such exercise directly to such broker or dealer.
2.3
“Change in Control” means an event described in
Section 13.1 of the Plan.
2.4
“Code” means the Internal Revenue Code of 1986, as
amended.
2.5
“Committee” means the group of individuals
administering the Plan, as provided in Section 3 of the
Plan.
2.6
“Common Stock” means the common stock of the
Company’s $.10 par value, or the number and kind of shares of
stock or other securities into which such Common Stock may be
changed in accordance with Section 4.3 of the Plan.
2.7
“Disability” means the disability of the Participant
such as would entitle the Participant to receive disability income
benefits pursuant to the long-term disability plan of the Company
or Subsidiary then covering the Participant or, if no such plan
exists or is applicable to the Participant, the permanent and total
disability of the Participant within the meaning of
Section 22(e)(3) of the Code.
2.8
“Eligible Recipients” means all directors (including
non-employee directors), officers and employees of the Company or
any Subsidiary.
2.9
“Exchange Act” means the Securities Exchange Act of
1934, as amended.
2.10
“Fair Market Value” means, with respect to the Common
Stock, as of any date (or, if no shares were traded or quoted on
such date, as of the next preceding date on which there was such a
trade or quote):
a. If the
Common Stock is listed (or admitted to unlisted trading privileges)
on an exchange or reported on the NASDAQ National Market System or
bid and asked prices are reported on the NASDAQ system or a
comparable reporting service, the closing sale price or the mean of
the closing bid and asked prices, as the case may be.
b. If the
Common Stock is not so listed or reported, such price as the
Committee determines in good faith in the exercise of its
reasonable discretion.
2.11
“Incentive Award” means an Option, Stock Appreciation
Right, Restricted Stock Award, Performance Unit or Stock Bonus
granted to an Eligible Recipient pursuant to the Plan.
2.12
“Incentive Stock Option” means a right to purchase
Common Stock granted to an Eligible Recipient pursuant to
Section 6 of the Plan that qualifies as an “incentive
stock option” within the meaning of Section 422 of the
Code.
2.13
“Non-Statutory Stock Option” means a right to purchase
Common Stock granted to an Eligible Recipient pursuant to
Section 6 of the Plan that does not qualify as a Incentive
Stock Option.
2.14
“Option” means an Incentive Stock Option or a
Non-Statutory Stock Option.
2.15
“Participant” means an Eligible Recipient who receives
one or more Incentive Awards under the Plan.
2.16
“Performance Unit” means a right granted to an Eligible
Recipient pursuant to Section 9 of the Plan to receive a
payment from the Company, in the form of stock, cash or a
combination of both, upon the achievement of established
performance goals.
2.17
“Previously Acquired Shares” means shares of Common
Stock that are already owned by the Participant or, with respect to
any Incentive Award, that are to be issued upon the grant, exercise
or vesting of such Incentive Award.
2.18
“Restricted Stock Award” means an award of Common Stock
granted to an Eligible Recipient pursuant to Section 8 of the
Plan that is subject to the restrictions on transferability and the
risk of forfeiture imposed by the provisions of such
Section 8.
2.19
“Retirement” means normal or approved early termination
of employment or service pursuant to and in accordance with the
regular retirement/pension plan or practice of the Company or
Subsidiary then covering the Participant, provided that if the
Participant is not covered by any such plan or practice, the
Participant will be deemed to be covered by the Company’s
plan or practice for purposes of this determination.
2.20
“Securities Act” means the Securities Act of 1933, as
amended.
2.21
“Stock Appreciation Right” means a right granted to an
Eligible Recipient pursuant to Section 7 of the Plan to
receive a payment from the Company, in the form of stock, cash or a
combination of both, equal to the difference between the Fair
Market Value of one or more shares of Common Stock and the exercise
price of such shares under the terms of such Stock Appreciation
Right.
2.22
“Stock Bonus” means an award of Common Stock granted to
an Eligible Recipient pursuant to Section 10 of the
Plan.
2.23
“Subsidiary” means any entity that is directly or
indirectly controlled by the Company or any entity in which the
Company has a significant equity interest, as determined by the
Committee.
2.24 “Tax
Date” means the date any withholding tax obligation arises
under the Code for a Participant with respect to an Incentive
Award.
3.1 The
Committee . The Plan will be administered by the Board or by a
committee of the Board consisting of not less than two persons;
provided, however, that from and after the date on which the
Company first registers a class of its equity securities under
Section 12 of the Exchange Act, the Plan will be administered by
the Board, all of whom will be “disinterested persons”
within the meaning of Rule 16b-3 under the Exchange Act, or by
a committee consisting solely of not fewer than two members of the
Board who are such “disinterested persons.” As used in
this Plan, the term “Committee” will refer to the Board
or to such a committee, if established. To the extent consistent
with corporate law, the Committee may delegate to any officers of
the Company the duties, power and authority of the Committee under
the Plan pursuant to such conditions or limitations as the
Committee may establish; provided, however, that only the Committee
may exercise such duties, power and authority with respect to
Eligible Recipients who are subject to Section 16 of the
Exchange Act. The Committee may exercise its duties, power and
authority under the Plan in its sole and absolute discretion
without the consent of any Participant or other party, unless the
Plan specifically provides otherwise. Each determination,
interpretation or other action made or taken by the Committee
pursuant to the provisions of the Plan will be conclusive and
binding for all purposes and on all persons, and no member of the
Committee will be liable for any action or determination made in
good faith with respect to the Plan or any Incentive Award granted
under the Plan.
3.2
Authority of the Committee .
a. In
accordance with and subject to the provisions of the Plan, the
Committee will have the authority to determine all provisions of
Incentive Awards as the Committee may deem necessary or desirable
and as consistent with the terms of the Plan, including, without
limitation, the following: (i) the Eligible Recipients to be
selected as Participants; (ii) the nature and extent of the
Incentive Awards to be made to each Participant (including the
number of shares of Common Stock to be subject to each Incentive
Award, any exercise price, the manner in which Incentive Awards
will vest or become exercisable and whether Incentive Awards will
be granted in tandem with other Incentive Awards) and the form of
written agreement, if any, evidencing such Incentive Award;
(iii) the time or times when Incentive Awards will be granted;
(iv) the duration of each Incentive Award; and (v) the
restrictions and other conditions to which the payment or vesting
of Incentive Awards may be subject. In addition, the Committee will
have the authority under the Plan to pay the economic value of any
Incentive Award in the form of cash, Common Stock or any
combination of both.
b. The
Committee will have the authority under the Plan to amend or modify
the terms of any outstanding Incentive Award in any manner,
including, without limitation, the authority to modify the number
of shares or other terms and conditions of an Incentive Award,
extend the term of an Incentive Award, accelerate the
exercisability
or vesting or otherwise terminate any restrictions relating to an
Incentive Award, accept the surrender of any outstanding Incentive
Award or, to the extent not previously exercised or vested,
authorize the grant of new Incentive Awards in substitution for
surrendered Incentive Awards; provided, however that the amended or
modified terms are permitted by the Plan as then in effect and that
any Participant adversely affected by such amended or modified
terms has consented to such amendment or modification. No amendment
or modification to an Incentive Award, however, whether pursuant to
this Section 3.2 or any other provisions of the Plan, will be
deemed to be a regrant of such Incentive Award for purposes of this
Plan.
c. In the event
of (i) any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend,
stock split, combination of shares, rights offering, extraordinary
dividend or divestiture (including a spin-off) or any other change
in corporate structure or shares, (ii) any purchase,
acquisition, sale or disposition of a significant amount of assets
or a significant business; (iii) any change in accounting
principles or practices, or (iv) any other similar change, in
each case with respect to the Company or any other entity whose
performance is relevant to the grant or vesting of an Incentive
Award, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the
surviving corporation) may, without the consent of any affected
Participant, amend or modify the vesting criteria of any
outstanding Incentive Award that is based in whole or in part on
the financial performance of the Company (or any Subsidiary or
division thereof) or such other entity so as equitably to reflect
such event, with the desired result that the criteria for
evaluating such financial performance of the Company or such other
entity will be substantially the same (in the discretion of the
Committee or the board of directors of the surviving corporation)
following such event as prior to such event; provided, however,
that the amended or modified terms are permitted by the Plan as
then in effect.
4. Shares
Available for Issuance.
4.1 Maximum
Number of Shares . Subject to adjustment as provided in
Section 4.3 of the Plan, the maximum number of shares of
Common Stock that will be available for issuance under the Plan
will be 442,750 shares. The shares available for issuance under the
Plan shall be shares authorized but unissued, under the
Company’s Articles of Incorporation.
4.2
Accounting for Incentive Awards . Shares of Common Stock
that are issued under the Plan or that are subject to outstanding
Incentive Awards will be applied to reduce the maximum number of
shares of Common Stock remaining available for issuance under the
Plan. Any shares of Common Stock that are subject to an Incentive
Award that lapses, expires, is forfeited or for any reason is
terminated unexercised or unvested and any shares of Common Stock
that are subject to an Incentive Award that is settled or paid in
cash or any form other than shares of Common Stock will
automatically again become available for issuance under the Plan.
Any shares of Common Stock that constitute the forfeited portion of
a Restricted Stock Award, however, will not become available for
further issuance under the Plan.
4.3
Adjustments to Shares of Incentive Awards . In the event of
any reorganization, merger, consolidation, recapitalization,
liquidation, reclassification, stock dividend, stock
split,
combination of shares, rights offering, divestiture or
extraordinary dividend (including a spin-off) or any other change
in the corporate structure or shares of the Company, the Committee
(or, if the Company is not the surviving corporation in any such
transaction, the board of directors of the surviving corporation)
will make appropriate adjustment (which determination will be
conclusive) as to the number and kind of securities available for
issuance under the Plan and, in order to prevent dilution or
enlargement of the rights of Participants, the number, kind and,
where applicable, exercise price of securities subject to
outstanding Incentive Awards.
Participants in
the Plan will be those Eligible Recipients who, in the judgment of
the Committee, have contributed, are contributing or are expected
to contribute to the achievement of economic objectives of the
Company or its subsidiaries. Eligible Recipients may be granted
from time to time one or more Incentive Awards, singly or in
combination or in tandem with other Incentive Awards, as may be
determined by the Committee. Incentive Awards will be deemed to be
granted as of the date specified in the grant resolution of the
Committee, which date will be the date of any related agreements
with the Participant.
6.1
Grant . An Eligible Recipient may be granted one or more
Options under the Plan, and such Options will be subject to such
terms and conditions, consistent with the other provisions of the
Plan, as may be determined by the Committee. The Committee may
designate whether an Option is to be considered an Incentive Stock
Option or a Non-Statutory Stock Option.
6.2 Exercise
Price . The per share price to be paid by a Participant upon
exercise of an Option will be determined by the Committee in its
discretion at the time of the Option grant, provided that
(a) such price will not be less than 100% of the Fair Market
Value of one share of Common Stock on the date of grant with
respect to an Incentive Stock Option (110% of the Fair Market Value
if, at the time the Incentive Stock Option is granted, the
Participant owns, directly or indirectly, more than 10% of the
total combined voting power of all classes of stock of the Company
or any parent or subsidiary corporation of the Company), and
(b) such price will not be less than 85% of the Fair Market
Value of one share of Common Stock on the date of grant with
respect to a Non-Statutory Stock Option.
6.3
Exercisability and Duration . An Option will become
exercisable at such times and in such installments as may be
determined by the Committee at the time of grant; provided,
however, that no Incentive Stock Option may be exercisable after
10 years from its date of grant (five years from its date of
grant if, at the time the Incentive Stock Option is granted, the
Participant owns, directly or indirectly, more than 10% of the
total combined voting power of all classes of stock of the Company
or any parent or subsidiary corporation of the Company).
6.4 Payment
of Exercise Price . The total purchase price of the shares to
be purchased upon exercise of an Option will be paid entirely in
cash (including check, bank draft or money order); provided,
however, that the Committee may allow such payments to be made, in
whole or in part and upon such terms and conditions as may be
established by the Committee, by tender of a Broker Exercise
Notice, Previously Acquired Shares, a promissory note or by a
combination of such methods.
6.5 Manner
of Exercise . An Option may be exercised by a Participant in
whole or in part from time to time, subject to the conditions
contained in the Plan and in the agreement evidencing s
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