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EXHIBIT 10.1 CODA OCTOPUS GROUP,
INC. 2008 INCENTIVE STOCK OPTION PLAN
SECTION 1. PURPOSE OF THE PLAN. The purpose of the Coda Octopus
Group, Inc. 2008 Employees, Directors and Officers Consultants
Stock Option and Stock Award Plan (“Plan”) is to
maintain the ability of Coda Octopus Group, Inc., a Delaware
corporation (the “Company”), and its subsidiaries to
attract and retain highly qualified and experienced directors,
officers, employees and consultants and to give directors,
officers, employees and consultants a continued proprietary
interest in the success of the Company and its subsidiaries. In
addition, the Plan is intended to encourage ownership of common
stock, $.001 par value (“Common Stock”), of the Company
by the employees, directors, officers, and consultants of the
Company and of its Affiliates (as defined below) and to provide
increased incentive for such persons to render services and to
exert maximum effort for the success of the Company business. The
Plan provides eligible employees, directors, officers, consultants
and affiliates the opportunity to participate in the enhancement of
shareholder value by the grants of options, stock appreciation
rights, awards of restricted stock, bonuses and/or fees payable in
unrestricted stock, or any combination thereof. In addition, the
Company expects that the Plan will further strengthen the
identification of the directors, officers, employees and
consultants with the stockholders. Certain options to be granted
under this Plan are intended to qualify as Incentive Stock Options
(“ISOs”) pursuant to Section 422 of the Internal
Revenue Code of 1986, as amended (“Code”), while other
options granted under this Plan will be nonqualified options which
are not intended to qualify as ISOs (“Nonqualified
Options”), either or both as provided in the agreements
evidencing the options as provided in Section 6 hereof. Employees,
consultants and directors who participate or become eligible to
participate in this Plan from time to time are referred to
collectively herein as “Participants.” As used in this
Plan, the term “Affiliates” means any “parent
corporation” of the Company and any “subsidiary
corporation” of the Company within the meaning of Code
Sections 424(e) and (f), respectively.
SECTION 2. ADMINISTRATION OF THE PLAN. (a) Composition of
Committee. The Plan shall be administered by the Board of
Directors of the Company (the “Board”) or a committee
of the Board. When acting in such capacity the Board is herein
referred to as the “Committee,” which shall also
designate the Chairman of the Committee. If the Company is governed
by Rule 16b-3 promulgated by the Securities and Exchange Commission
(“Commission”) pursuant to the Securities Exchange Act
of 1934, as amended (“Exchange Act”), no director shall
serve as a member of the Committee unless he or she is a
“disinterested person” within the meaning of such Rule
16b-3.
(b) Committee Action. The Committee shall hold its
meetings at such times and places as it may determine. A majority
of its members shall constitute a quorum, and all determinations of
the Committee shall be made by not less than a majority of its
members. Any decision or determination reduced to writing and
signed by a majority of the members shall be fully as effective as
if it had been made by a majority vote of its members at a meeting
duly called and held. The Committee may designate the Secretary of
the Company or other Company employees to assist the Committee in
the administration of the Plan, and may grant authority to such
persons to execute award agreements or other documents on behalf of
the Committee and the Company. Any duly constituted committee of
the Board satisfying the qualifications of this Section 2 may be
appointed as the Committee.
(c) Committee Expenses. All expenses and
liabilities incurred by the Committee in the administration of the
Plan shall be borne by the Company. The Committee may employ
attorneys, consultants, accountants or other persons.
SECTION 3. STOCK RESERVED FOR THE PLAN. Subject to adjustment as
provided in Section 6(m) hereof, the aggregate number of Shares
that may be optioned or issued under the Plan is 2,500,000. The
Shares subject to the Plan shall consist of authorized but unissued
Shares and such number of shares shall be and is hereby reserved
for sale for such purpose. Any of such Shares which may remain
unsold and which are not subject to outstanding options at the
termination of the Plan shall cease to be reserved for the purpose
of the Plan, but until termination of the Plan or the termination
of the last of the options granted under the Plan, whichever last
occurs, the Company shall at all times reserve a sufficient number
of shares to meet the requirements of the Plan. Should any option
expire or be canceled prior to its exercise in full, the Shares
theretofore subject to such option may again be made subject to an
option under the Plan. Immediately upon the grant of any option or
award, the number of Shares that may be issued or optioned under
the Plan will be increased. The increase shall be an amount such
that immediately after such increase the total number of Shares
issuable under the Plan and reserved for issuance upon exercise of
outstanding options will equal not more than 20% of the total
number of issued and outstanding Shares. Such increase in the
number of Shares subject to the Plan shall occur without the
necessity of any further corporate action of any kind or
character.
SECTION 4. ELIGIBILITY. The Participants shall include directors,
employees, including officers, of the Company and its divisions and
subsidiaries, and consultants and attorneys who provide bona
fide services to the Company. Participants are eligible to be
granted options, restricted stock, unrestricted stock and other
awards under this Plan and to have their bonuses and/or consulting
fees payable in restricted stock, unrestricted stock and other
awards. A Participant who has been granted an option hereunder may
be granted an additional option or options, if the Committee shall
so determine.
SECTION 5. GRANT OF OPTIONS. (a) Discretion. The Committee
shall have sole and absolute discretionary authority (i) to
determine, authorize, and designate those persons pursuant to this
Plan who are to receive options, restricted Shares or
non-restricted Shares under the Plan, (ii) to determine the number
of Shares to be covered by such grant or such options and the terms
thereof, (iii) to determine the type of Shares granted: restricted
Shares, unrestricted Shares or a combination of both, and (iv) to
determine the type of option granted: ISO, nonqualified option or a
combination of both determinations as evidenced by a written option
agreement. Subject to the express provisions of the Plan, the
Committee shall have discretionary authority to prescribe, amend
and rescind rules and regulations relating to the Plan, to
interpret the Plan, to prescribe and amend the terms of the option
agreements (which need not be identical) and to make all other
determinations deemed necessary or advisable for the administration
of the Plan.
(b) Stockholder Approval. All ISOs granted under this Plan
are subject to, and may not be exercised before, the approval of
this Plan by the stockholders prior to the first anniversary date
of the Board meeting held to approve the Plan, by the affirmative
vote of the holders of a majority of the outstanding shares of the
Company present, or represented by proxy, and entitled to vote
thereat, or by written consent in accordance with the laws of the
State of Delaware, provided that if such approval by the
stockholders of the Company is not forthcoming, all options and
stock awards previously granted under this Plan other than ISOs
shall be valid in all respects. 2
(c) Limitation on Incentive Stock Options. The
aggregate fair market value (determined in accordance with Section
6(b) of this Plan at the time the option is granted) of the Common
Stock with respect to which ISOs may be exercisable for the first
time by any Participant during any calendar year under all such
plans of the Company and its Affiliates shall not exceed
$1,000,000.
SECTION 6. TERMS AND CONDITIONS. Each option granted under the Plan
shall be evidenced by an agreement, in a form approved by the
Committee, which shall be subject to the following express terms
and conditions and to such other terms and conditions as the
Committee may deem appropriate.
(a) Option Period. The Committee shall promptly notify the
Participant of the option grant and a written agreement shall
promptly be executed and delivered by and on behalf of the Company
and the Participant, provided that the option grant shall expire if
a written agreement is not signed by said Participant (or his agent
or attorney) and returned to the Company within 60 days from date
of receipt by the Participant of such agreement. The date of grant
shall be the date the option is actually granted by the Committee,
even though the written agreement may be executed and delivered by
the Company and the Participant after that date. Each option
agreement shall specify the period for which the option thereunder
is granted (which in no event shall exceed ten years from the date
of grant) and shall provide that the option shall expire at the end
of such period. If the original term of an option is less than ten
years from the date of grant, the option may be amended prior to
its expiration, with the approval of the Committee and the
Participant, to extend the term so that the term as amended is not
more than ten years from the date of grant. However, in the case of
an ISO granted to an individual who, at the time of grant, owns
stock possessing more than 10 percent of the total combined voting
power of all classes of stock of the Company or its Affiliate
(“Ten Percent Stockholder”), such period shall not
exceed five years from the date of grant.
(b) Option Price. The purchase price of each Share subject
to each option granted pursuant to the Plan shall be determined by
the Committee at the time the option is granted and, in the case of
ISOs, shall not be less than 100% of the fair market value of a
Share on the date the option is granted, as determined by the
Committee. In the case of an ISO granted to a Ten Percent
Stockholder, the option price shall not be less than 110% of the
fair market value of a Share on the date the option is granted. The
purchase price of each Share subject to a Nonqualified Option under
this Plan shall be determined by the Committee prior to granting
the option. The Committee shall set the purchase price for each
Share subject to a Nonqualified Option at either the fair market
value of each Share on the date the option is granted, or at such
other price as the Committee in its sole discretion shall
determine.
At the time a determination of the fair market value of a Share is
required to be made hereunder, the determination of its fair market
value shall be made by the Committee in such manner as it deems
appropriate. (c) Exercise Period. The Committee may
provide in the option agreement that an option may be exercised in
whole, immediately, or is to be exercisable in increments. In
addition, the Committee may provide that the exercise of all or
part of an option is subject to specified performance by the
Participant. However, no portion of any option may be exercisable
by a Participant prior to the approval of the Plan by the
stockholders of the Company. 3
(d) Procedure for Exercise. Options shall be
exercised by the delivery of written notice to the Secretary of the
Company setting forth the number of shares with respect to which
the option is being exercised. Such notice shall be accompanied by
cash or cashier’s check, bank draft, postal or express money
order payable to the order of the Company, or at the option of the
Committee, in Common Stock theretofore owned by such Participant
(or any combination of cash and Common Stock). Notice may also be
delivered by fax or telecopy provided that the purchase price of
such shares is delivered to the Company via wire transfer on the
same day the fax is received by the Company. The notice shall
specify the address to which the certificates for such shares are
to be mailed. A Participant shall be deemed to be a stockholder
with respect to Shares covered by an option on the date the Company
receives such written notice and such option payment. As promptly
as practicable after receipt of such written notification and
payment, the Company shall deliver to the Participant certificates
for the number of shares with respect to which such option has been
so exercised, issued in the Participant’s name or such other
name as Participant directs; provided, however, that such delivery
shall be deemed effected for all purposes when a stock transfer
agent of the Company shall have deposited such certificates in the
United States mail, addressed to the Participant at the address
specified pursuant to this Section 6(d).
(e) Termination of Employment. If an executive officer to
whom an option is granted ceases to be employed by the Company for
any reason other than death or disability, any option which is
exercisable on the date of such termination of employment may be
exercised during a period beginning on such date and ending at the
time set forth in the option agreement; provided, however, that if
a Participant’s employment is terminated because of the
Participant’s theft or embezzlement from the Company,
disclosure of trade secrets of the Company or the commission of a
willful, felonious act while in the employment of the Company (such
reasons shall hereinafter be collectively referred to as “for
cause”), then any option or unexercised portion thereof
granted to said Participant shall expire upon such termination of
employment. Notwithstanding the foregoing, no ISO may be exercised
later than three months after an employee’s termination of
employment for any reason other than death or disability.
(f) Disability or Death of Participant . In the event of the
determination of disability or death of a Participant under the
Plan while he or she is employed by the Company, the options
previously granted to him may be exercised (to the extent he or she
would have been entitled to do so at the date of the determination
of disability or death) at any time and from time to time, within a
period beginning on the date of such determination of disability or
death and ending at the time set forth in the option agreement, by
the former employee, the guardian of his estate, the executor or
administrator of his estate or by the person or persons to whom his
rights under the option shall pass by will or the laws of descent
and distribution, but in no event may the option be exercised after
its expiration under the terms of the option agreement.
Notwithstanding the foregoing, no ISO may be exercised later than
one year after the determination of disability or death. A
Participant shall be deemed to be disabled if, in the opinion of a
physician selected by the Committee, he or she is incapable of
performing services for the Company of the kind he or she was
performing at the time the disability occurred by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or to be of long, continued and
indefinite duration. The date of determination of disability for
purposes hereof shall be the date of such determination by such
physician.
(g) Assignability. An option shall not be assignable or
otherwise transferable except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as
defined in the Code or Title I of the Employee Retirement Income
Security Act, as amended, or the rules thereunder. During the
lifetime of a Participant, an option shall be exercisable only by
the Participant.
(h) Incentive Stock Options. Each option
agreement may contain such terms and provisions as the Committee
may determine to be necessary or desirable in order to qualify an
option designated as an incentive stock option. 4
(i) Restricted Stock Awards. Awards
of restricted stock under this Plan shall be subject to all the
applicable provisions of this Plan, including the following terms
and conditions, and to such other terms and conditions not
inconsiste
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