1993 STOCK OPTION PLAN
OF
HI-SHEAR TECHNOLOGY
CORP.
Hi-Shear Technology Corp., a corporation
organized under the laws of the State of Delaware (the "Company"),
hereby adopts this 1993 Stock Option Plan (the "Plan"). The
purposes of this Plan are as follows:
(1) To
further the growth, development, and financial success of the
Company by providing additional incentives to its Directors,
Officers and Employees and employees of companies who do business
with the Company by assisting them to become owners of capital
stock of the Company and thus permitting them to benefit directly
from its growth, development and financial success.
(2) To
enable the Company to obtain and retain the services of the type of
directors, officers, and employees considered essential to the
long-range success of the Company by providing and offering them an
opportunity to become owners of capital stock of the Company under
options, including options that are intended to qualify as
"incentive stock options" under Section 422 of the Internal Revenue
Code of 1986, as amended.
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this
Plan, they shall have the meaning specified below unless the
context clearly indicates to the contrary. The masculine pronoun
shall include the feminine and neuter, and the singular shall
include the plural, where the context so indicates.
"AO Option" shall mean an Accelerated Ownership
Non-Qualified Stock Option granted in accordance with Section 4.5
hereof.
"Board" shall mean the Board of Directors of the
Company.
"Code" shall mean the Internal Revenue Code of
1986, as amended.
"Committee" shall mean the Stock Option
Committee of the Board, appointment as provided in Section
6.1.
"Common Stock" shall mean the common stock of
the Company.
"Companion Grant" shall have the definition set
forth in Section 4.9 hereof.
"Company" shall mean Hi-Shear Technology Corp.
In addition, "Company" shall mean any corporation assuming, or
issuing new employee stock options in substitution for, Options
outstanding under the Plan, in a transaction to which Section
425(a) of the Code applies.
"Director" shall mean a member of the
Board.
“Employee” shall mean any employee
(as defined in accordance with the Regulations and Revenue Rulings
then applicable under Section 3401(c) of the Code) of the Company,
whether such employee is so employed at the time this Plan is
adopted or becomes so employed subsequent to the adoption of this
Plan, and except with respect to any Incentive Stock Options,
consultants or advisors of the Company.
“Incentive Stock Option” shall mean
an Option which qualifies under Section 422 of the Code and which
is designated as an Incentive Stock Option by the
Committee.
“Non-Qualified Option” shall mean an
Option which is not an Incentive Stock Option and which is
designated as a Non-Qualified Option by the Committee.
“Officer” shall mean an officer of
the Company.
“Option” shall mean an option to
purchase capital stock of the Company granted under the Plan.
“Options” includes both Incentive Stock Options and
Non-Qualified Options.
“Optionee” shall mean a Director,
Officer or Employee to whom an Option is granted under the
Plan.
“Plan” shall mean this 1993 Stock
Option Plan of the Company.
“Restricted Stock” shall mean common
stock of the Company granted under the conditions set forth in
Section 4.10.
“Secretary” shall mean the secretary
of the Company.
“Securities Act” shall mean the
Securities Act of 1993, as amended.
“Termination of Employment” shall
mean the time when the employee-employer relationship or
directorship between the Optionee and the Company is terminated for
any reason, with or without cause, including, but not by way of
limitation, a termination by resignation, discharge, death or
retirement, but excluding terminations where there is a
simultaneous reemployment by the Company. The Committee, in its
absolute discretion, shall determine the effect of all other
matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether a
Termination of Employment resulted from a discharge for god cause,
and all questions of whether particular leaves of absence
constitute Terminations of Employment; provided, however, that,
with respect to Incentive Stock Options, a leave of absence
interrupts employment for the purposes of Section 422(a)(2) of the
Code and the then applicable Regulations and Revenue Rulings under
said Section.
ARTICLE II
SHARES SUBJECT TO
PLAN
Section
2.1 - Shares Subject
to Plan
The shares of stock subject to Options shall be
shares of the Company's par value $.001 Common Stock. The aggregate
number of such shares which may be issued upon exercise of Options
or as Restricted Stock shall not exceed 500,000.
Section
2.2 - Limitation on
Incentive Stock Option Grants
Subject to the overall limitations of Section
2.1, the aggregate fair market value (determined as of the time the
Option is granted) of stock with respect to which "incentive stock
options" (within the meaning of Section 422 of the Code) are
exercisable for the first time by any Director, Officer or Employee
in any calendar year (under the Plan and all other incentive stock
option plans of the Company) shall not exceed $100,000.
Section
2.3 - Unexercised
Options
If any Option expires or is canceled without
having been fully exercised, or is forfeited under the terms of a
Restricted Stock grant, the number of shares subject to such Option
or grant but as to which such Option was not exercised prior to its
expiration or cancellation or shares which were forfeited may again
be optioned or granted hereunder, subject to the limitations of
Sections 2.1 and 2.2.
Section
2.4 - Changes in
Company's Shares
In the event that the outstanding shares of
Common Stock of the Company are hereafter changed into or exchanged
for a different number or kind of shares or other securities of the
Company, or of another corporation, by reason or reorganization,
merger, consolidation, recapitalization, reclassification, stock
split-up, stock dividend or combination of shares, appropriate
adjustments shall be made by the Committee in the number and kind
of shares for the purchase of which Options may be granted,
including adjustments of the limitations in Sections 2.1 and 2.2 on
the maximum number and kind of shares which may be issued on
exercise of Options or Restricted Stock which may be
issued.
ARTICLE III
GRANTING OF
OPTIONS
Section
3.1 -
Eligibility
Any Director, Officer or Employee of the Company
shall be eligible to be granted Options, except as provided in
Sections 3.2 and 6.4(a). However, no Incentive Stock Option shall
be granted to any Director or other person who is not an Employee
of the Company.
Section
3.2 –
Qualification of Incentive Stock Options
No Incentive
Stock Option shall be granted unless such Option, when granted,
qualified as an “incentive stock option” under Section
422 of the Code.
Section
3.3 – Granting
of Options
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The Committee
shall from time to time, in its absolute discretion:
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Determine which
individuals are Directors, Officers or Employees or employees of
persons whom the Company does business and select among those
persons (including those to whom Options have been previously
granted under the Plan) such of them as in its opinion should be
granted Options; and
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Determine the
number of shares to be subject to such Options granted to such
selected persons, and determine whether such Options are to be
Incentive Stock Options or Non-Qualified Options, whether stock
appreciation rights should be granted for all or part of the
Options granted, and, if Non-Qualified Options, whether such
options are AO Options; and
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Determine the
terms and conditions of such Options, consistent with the
Plan.
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Upon the
selection of a Director, Officer, Employee or other person to be
granted an Option, the Committee shall instruct the Secretary to
issue such Option and may impose such conditions upon the grant of
such Option as it deems appropriate. Without limiting the
generality of the preceding sentence, the Committee may, in its
discretion and on such terms as it deems appropriate, require as a
condition to the grant of a No-Qualified Option that the Optionee
surrender for cancellation some or all of the unexercised
Non-Qualified Options which have been previously granted to him. A
Non-Qualified Option the grant of which is conditioned upon
surrendered Non-Qualified Option, may contain such other terms as
the Committee deems appropriate and shall be exercisable in
accordance with its terms, without regard to the number of shares,
priced, option period, or any other terms or condition of the
surrendered Non-Qualified Option.
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ARTICLE IV
TERMS OF OPTIONS
Section
4.1 – Option
Agreement
Each Option
shall be evidenced by a written Stock Option Agreement, which shall
be executed by the Optionee and an authorized Officer of the
Company and which shall contain such terms and conditions as the
Committee shall determine, consistent with the Plan. Stock Option
Agreements evidencing Incentive Stock Options shall contain such
terms and conditions as may be necessary to qualify Options as
“incentive stock options” under Section 422 of the
Code.
Section
4.2 - Option
Price
(a) The
price of the share subject to each Option shall be set by the
Committee; provided, however, that the price per share of shares
subject to an Incentive Stock Option shall be not less than 100% of
the fair market value of such shares on the date such Option is
granted, or 110% of the fair market value if the Optionee holds 10%
or more of the Company's Common Stock, and that the price per share
of shares subject to a Non-Qualified Option shall not be less than
85% of the fair market value of such shares on the date such Option
is granted.
(b) For
purposes of the Plan, the fair market value of a share of the
Company's stock as of a given date shall be: (i) the closing price
of a share of the Company's stock on the principal exchange on
which shares of the Company's stock are then trading, if any, on
such date, or if shares were not traded on such date, then on the
next preceding trading day during which the sale occurred; or (ii)
if such stock is not traded on an exchange but is quoted on NASDAQ
or a successor quotation system, (1) the last sales price (if the
stock is then listed as a National Market Issue under the NASD
National Market System) or (2) the mean between the closing
representative bid and asked prices (in all other cases) for the
stock on such date as reported by NASDAQ or such successor
quotation system; or (iii) if such stock is not publicly traded on
an exchange and not quoted on NASDAQ or a successor quotation
system, the mean between the closing bid and the asked prices for
the stock on such date as determined in good faith by the
Committee; or (iv) if the Company's stock is not publicly traded,
the fair market value established by the Committee acting in good
faith.
Section
4.3 - Commencement of
Exercisability
(a) Except
as the Committee may otherwise provide, or in the case of death or
disability of the Optionee, (i) no Option may be exercised in whole
or in part during the six months after such Option is granted, and
(ii) the Company common stock acquired under this Plan shall not be
sold for at least six months after acquisition.
(b) Subject
to the provisions of Sections 4.3(a), 4.3(c) and 7.3, Options shall
become exercisable at such times and in such installments (which
may be cumulative) as the Committee shall provide in the terms of
each individual Option; provided, however, that by a
reso
