1994 STOCK OPTION
PLAN
of
MICROFRAME,
INC.
1.
PURPOSES OF THE PLAN.
This stock option plan (the “Plan”) is designed to
provide an incentive to key employees (including officers and
directors who are key employees) and consultants who are not
employees or directors of Microframe, Inc., a New Jersey
corporation (the “Company”), and its present and future
subsidiary corporations, as defined in Paragraph 19
(“Subsidiaries”), and to offer an additional inducement
in obtaining the services of such individuals. The Plan provides
for the grant of “incentive stock options”
(“ISOs”) within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”),
and nonqualified stock options (“NQSOs”), but the
Company makes no warranty as to the qualification of any option as
an “incentive stock option” under the Code.
2.
STOCK SUBJECT TO THE
PLAN. Subject to the provisions of Paragraph 12, the aggregate
number of shares of Common Stock, $.001 par value per share, of the
Company (“Common Stock”) for which options may be
granted under the Plan shall not exceed 250,000. Such shares of
Common Stock may, in the discretion of the Board of Directors of
the Company (the “Board of Directors”), consist either
in whole or in part of authorized but unissued shares of Common
Stock or shares of Common Stock held in the treasury of the
Company. The Company shall at all times during the term of the Plan
reserve and keep available such number of shares of Common Stock as
will be sufficient to satisfy the requirements of the Plan. Subject
to the provisions of Paragraph 13, any shares of Common Stock
subject to an option which for any reason expires, is cancelled or
is terminated unexercised or which ceases for any reason to be
exercisable shall again become available for the granting of
options under the Plan.
3.
ADMINISTRATION OF THE
PLAN. The Plan shall be administered by a committee of the Board of
Directors (the “Committee”) consisting of not less than
two Directors, each of whom shall be a “disinterested
person” within the meaning of Rule 16b-3 (or any successor
rule or regulation) promulgated under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). A majority of
the members 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, and any acts approved in writing by all members
without a meeting, shall be the acts of the Committee.
Subject to the express
provisions of the Plan, the Committee shall have the authority, in
its sole discretion, to determine the key employees and consultants
who shall receive options; the times when they shall receive
options; whether an Employee Option (as defined in Paragraph 19)
shall be an ISO or a NQSO; the number of shares of Common Stock to
be subject to each option; the term of each option; the date each
option shall become exercisable; whether an option shall be
exercisable in whole, in part or in installments, and, if in
installments, the number of shares of Common Stock to be subject to
each installment; whether the installments shall be
cumulative; the date each installment shall become exercisable and
the term of each installment; whether to accelerate the date of
exercise of any installment; whether shares of Common Stock may be
issued on exercise of an option as partly paid, and, if so, the
dates when future installments of the exercise price shall become
due and the amounts of such installments; the exercise price of
each option; the form of payment of the exercise price; the fair
market value of a share of Common Stock; the amount, if any,
necessary to satisfy the Company’s obligation to
withhold taxes or other amounts; whether to restrict the sale or
other disposition of the shares of Common Stock acquired upon the
exercise of an option and to waive any such restriction; whether to
subject the exercise of all or any portion of an option to the
fulfillment of contingencies as specified in the Contract (as
described in Paragraph 11), including without limitation,
contingencies relating to entering into a covenant not
to
compete with the
Company and its Parent (as defined in Paragraph 19) and
Subsidiaries, to financial objectives for the Company, a
Subsidiary, a division, a product line or other category, and/or
the period of continued relationship of the optionee with the
Company or its Subsidiaries, and to determine whether such
contingencies have been met; to construe the respective Contracts
and the Plan; with the consent of the optionee, to cancel or modify
an option, provided such option as modified would be permitted to
be granted on such date under the terms of the Plan; to prescribe,
amend and rescind rules and regulations relating to the Plan; and
to make all other determinations necessary or advisable for
administering the Plan. The determinations of the Committee on the
matters referred to in this Paragraph 3 shall be
conclusive.
No member or former
member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any
option granted hereunder. In addition, the Company shall
indemnify and hold each member and former member of the Committee
harmless from and against any liability, claim for damages and
expenses in connection therewith incurred by reason of any
action or failure to act under or in connection with the Plan or
any option granted hereunder, to the fullest extent permitted with
respect to directors of the Company under the Company’s
certificate of incorporation, by-laws or applicable law.
4.
ELIGIBILITY. The
Committee may, consistent with the purposes of the Plan, grant
options from time to time, to key employees (including officers and
directors who are key employees) and to consultants of the Company
or any of its Subsidiaries. Options granted shall cover such
number of shares of Common Stock as the Committee may determine;
provided, however, that the maximum number of shares subject to
options that may be granted to any person during any calendar year
under the Plan shall not exceed 75,000 shares; and further provided
that the aggregate market value (determined at the time the option
is granted) of the shares of Common Stock for which any eligible
person may be granted ISOs under the Plan or any other plan of the
Company, or of a Parent or a Subsidiary of the Company, which are
exercisable for the first time by such optionee during any calendar
year shall not exceed $100,000. The $100,000 ISO limitation shall
be applied by taking ISOs into account in the order in which they
were granted. Any option (or the portion thereof) granted in excess
of such amount shall be treated as a NQSO.
5.
EXERCISE PRICE. The
exercise price of the shares of Common Stock under each option
shall be determined by the Committee; provided, however, that the
exercise price of an ISO shall not be less than 100% of the fair
market value of the Common Stock subject to such option on the
date of grant; and further provided, that if, at the time an
ISO is granted, the optionee owns (or is deemed to own under
Section 424(d) of the Code) stock possessing more than 10% of the
total combined voting power of all classes of stock of the
Company, of any of its Subsidiaries or of a Parent, the exercise
price of such ISO shall not be less than 110% of the fair market
value of the Common Stock subject to such ISO on the date of
grant.
The fair market value
of a share of Common Stock on any day shall be (a) if the principal
market for the Common Stock is a national securities exchange, the
average between the high and low sales prices per share of the
Common Stock on such day as reported by such exchange or on a
consolidated tape reflecting transactions on such exchange, (b) if
the principal market for the Common Stock is not a national
securities exchange and the Common Stock is quoted on the National
Association of Securities Dealers Automated Quotations System
(“NASDAQ”), and (i) if actual sales price information
is available with respect to the Common Stock, the average
between the high and low sales prices per share of the Common Stock
on such day on NASDAQ, or (ii) if such information is not
available, the average between the highest bid and the lowest asked
prices for the Common Stock on such day on NASDAQ, or (c) if the
principal market for the Common Stock is not a national securities
exchange and the Common Stock is not quoted on NASDAQ, the average
between the highest bid and lowest asked prices per
share
ii
for the Common Stock on
such day as reported on the NASDAQ OTC Bulletin Board Service,
National Quotation Bureau, Incorporated or a comparable service;
provided that if clauses (a), (b) and (c) of this Paragraph are all
inapplicable, or if no trades have been made or no quotes are
available for such day, the fair market value of a share of
Common Stock shall be determined by the Committee by any method
consistent with applicable regulations adopted by the Treasury
Department relating to stock options.
6.
TERM. The term of each
option granted pursuant to the Plan shall be such term as is
established by the Committee, in its sole discretion, at or
before the time such option is granted; provided, however, that the
term of each ISO granted pursuant to the Plan shall be for a period
not exceeding 10 years from the date of grant thereof, and further,
provided, that if, at the time an ISO is granted, the optionee owns
(or is deemed to own under Section 424(d) of the Code) stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company, of any of its Subsidiaries or of a
Parent, the term of the ISO shall be for a period not
exceeding five years from the date of grant. Options shall be
subject to earlier termination as hereinafter provided.
7.
EXERCISE. An option (or
any part or installment thereof), to the extent then exercisable,
shall be exercised by giving written notice to the Company at its
principal office (at present 21 Meridian Road, Edison, New Jersey
08820, Attn.: Stock Option Committee), stating which option is
being exercised, specifying the number of shares of Common
Stock as to which such option is being exercised and accompanied by
payment in full of the aggregate exercise price therefor (or the
amount due on exercise if the Contract permits installment
payments) (a) in cash or by certified check or (b) if the Contract
at the time of grant so permits, with previously acquired shares of
Common Stock having an aggregate fair market value, on the date of
exercise, equal to the aggregate exercise price of all options
being exercised, or with any combination of cash, certified check
or shares of Common Stock. In such case, fair market value shall be
determined in accordance with Paragraph 5.
The Committee may, in
its discretion, permit payment of the exercise price of an option
by delivery by the optionee of a properly executed exercise notice,
together with a copy of his irrevocable instructions to a broker
acceptable to the Committee to deliver promptly to the Company
the amount of sale or loan proceeds sufficient to pay such exercise
price. In connection therewith, the Company may enter into
agreements for coordinated procedures with one or more brokerage
firms.
A person entitled to
receive Common Stock upon the exercise of an
