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Exhibit 10.4
CSP INC.
1991 Stock Option Plan
SECTION 1. Purpose
This 1991 Stock Option Plan (the "Plan") is intended to attract
and retain highly qualified and competent employees and directors,
to serve as a performance incentive for officers and employees of
CSP Inc., a Massachusetts corporation (the "Company"), or its
Subsidiaries (as hereinafter defined) and for certain other
individuals providing services to or acting as directors of the
Company or its Subsidiaries, to encourage the persons to whom
options are granted (a "Grantee" or "Grantees") to acquire or
increase a proprietary interest in the success of the Company and
to maintain and enhance the Company’s long-term performance
and profitability. The Company intends that this purpose will be
effected by the granting of incentive stock options ("Incentive
Options") as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") and other stock options
("Non-Statutory Options") under the Plan. The term "Subsidiaries"
means any corporations in which stock possessing 50% or more of the
total combined voting power of all classes of stock of any such
corporation or corporations is owned directly or indirectly by the
Company.
SECTION 2. Options to be Granted and Administration
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2.1
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Options to be Granted.
Options granted under the Plan may be either Incentive Options or
Non-Statutory Options.
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2.2
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Administration by and Powers of
the Committee. This Plan shall be administered by a
committee ( (the Committee") consisting of at least two members of
the Company’s board of directors ( the "Board"). It is the
intention of the Company that the Plan shall be administered by
"disinterested persons" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act"), but the
authority and validity of any act taken or not taken by the
Committee shall not be affected if any person administering the
Plan is not a disinterested person. Except as specifically reserved
to the Board under the terms of the Plan, and subject to
Section 4.2 hereof, the Committee shall have full and final
authority to operate, manage and administer the Plan on behalf of
the Company. This authority shall include, but not be limited to:
(i) the power to grant, modify and amend options conditionally
or unconditionally; (ii) the power to prescribe the form or
forms of the instruments evidencing options granted under this
Plan; (iii) the power to interpret the Plan; (iv) the
power to provide regulations for interpretation, management and
administration of the Plan; (v) the power to delegate to other
persons the responsibility for performing ministerial acts in
furtherance of the Plan’s purpose; and (vi) the power to
engage the services of persons or organizations in furtherance of
the Plan’s purpose, including but not limited to banks,
insurance companies, brokerage firms and consultants.
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In addition, as to each options,
except for options granted pursuant to Section 4.2, the
Committee shall have full and final authority in its discretion:
(i) to determine the number of shares subject to each option;
(ii) to determine the time or times at which options will be
granted; (iii) to determine the price for the shares subject
to each option, which price shall be subject to the applicable
requirements, if any, of Section 5(c) hereof; (iv) to
determine the duration of the exercise period of each option, which
shall not exceed the limitations
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specified in Section 5(a); and
(v) to determine the time or times when each option shall
become exercisable. The Committee may, in its sole discretion and
on a case by case basis, accelerate the schedule of the time or
times when options granted hereunder may be exercised.
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No 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.
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2.3
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Appointment and Proceedings of
Committee. The Board may from time to time appoint members
of the Committee in substitution for or in addition to members
previously appointed, and subject to Section 2.2 hereof may
fill vacancies, however caused, in the Committee. The Committee
shall select one of its members as its chairman and shall hold its
meetings at such times and places as it shall deem advisable. A
majority of its members shall constitute a quorum, and all actions
of the Committee shall require the affirmative vote of a majority
of its members. Any action may be taken by written instrument
signed by all of the members, and any action so taken shall be as
fully effective as if it had been taken by a vote of a majority of
the members at a meeting duly called and held.
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SECTION 3. Stock
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3.1
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Shares Subject to Plan.
The stock subject to options granted under the Plan shall be shares
of the Company’s common stock, $.01 par value ("Common
Stock"), either authorized but unissued or held in treasury. The
total number of shares that may be issued pursuant to options
granted under the Plan shall not exceed an aggregate of 250,000
shares of Common Stock, of which not more than 20,000 shares may be
issued pursuant to Section 4.2 hereof. Such numbers of shares
shall be subject to adjustment in accordance with
Section 7.
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3.2
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Lapsed or Unexercised
Options. Whenever any outstanding option under the Plan
expires, is cancelled or is otherwise terminated (other than by
exercise), the shares of Common Stock allocable to the unexercised
portion of such option shall be restored to the Plan and shall
again become available for the grant of other options under the
Plan.
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SECTION 4. Eligibility
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4.1
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Eligible Grantees.
Incentive Options may be granted only to officers and other
employees of the Company or its Subsidiaries, including members of
the Board who are also employees of the Company or a Subsidiary.
Non-Statutory Options may be granted to officers or other employees
of the Company or it Subsidiaries, including members of the Board
or the board of directors of any Subsidiary, and to certain other
individuals providing services to the Company or its Subsidiaries.
Non-Statutory Options may be granted to members of the Board who
are not employees of the Company or a Subsidiary ("Outside
Directors") only as provided in Section 4.2 hereof.
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4.2
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Non-Discretionary Option Grants
to Outside Directors. Ay other provision of this Plan to the
contrary notwithstanding, Outside Directors shall not be eligible
to receive options under the Plan except pursuant to this
Section 4.2. On the last business day of January in each year
(the "Grant Date"), each Outside Director shall without any action
of the Committee be granted a Non-Statutory Option to purchase
1,000 shares of the Common Stock of the Company. Options shall be
granted pursuant to this Section 4.2 only to persons who are
serving as Outside Directors on the Grant Date. The 1,000-share
grant referred to in this Section shall be subject to adjustment in
accordance with Section 7 hereof. The purchase
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price per share of the Common Stock
under each option granted pursuant to this Section shall be equal
to the fair market value of the Common Stock on the date the option
is granted. Each such option shall expire on the third anniversary
of the date of grant and shall not be exercisable until after the
expiration of six months following the date of grant, becoming
fully exercisable at that time.
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4.3
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Limitations on 10%
Stockholders. No Incentive Option shall be granted to an
individual who, at the time the Incentive Option is Granted, owns
(including ownership attributed pursuant to Section 424 of the
Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any parent or Subsidiary of the
Company (a "greater-than-10% stockholder"), unless such Incentive
Option provides that (i) the purchase price per share shall
not be less than 110% of the fair market value of the Common Stock
at the time such Incentive Option is granted, and (ii) such
Incentive Option shall not be exercisable to any extent after the
expiration of five years from the date it is granted.
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4.4
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Limitation on Exercisable
Options. The aggregate fair market value (determined at the
time the Incentive Option is granted) of the Common Stock with
respect to which Incentive Options are exercisable for the first
time by any person during any calendar year under the Plan and
under any other option plan of the Company (or a parent or
subsidiary as defined in Section 424 of the Code) shall not
exceed $100,000. Any option granted in excess of the foregoing
limitation shall be specifically designated as being a
Non-Statutory Option.
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Section 5. Agreements Evidencing Stock
Options
Each option agreement (each, a "Plan agreement") shall contain
such provisions as the Committee shall from time to time deem
appropriate. Plan agreements need not be identical, but each such
agreement by appropriate language shall include the substance of
all of the following provisions:
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(a)
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Expiration. Subject to
Section 4.2 hereof, notwithstanding any other provision of the
Plan or of any Plan agreement, each option shall expire on the date
specified in the Plan agreement, which date shall not be later than
the tenth anniversary of the date on which the option was granted
(fifth anniversary in the case of an Incentive Option granted to a
greater-than-10% stockholder).
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(b)
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Exercise. Subject to Sections 4.2
and 6.3 hereof, each option shall be exercisable in full or in
installments (which need not be equal) and at such times as
designated by the Committee. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or in
part, at any time after becoming exercisable, but not later than
the date the option expires.
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(c)
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Purchase Price. The purchase price
per share of the Common Stock under each Incentive Option shall be
not less than the fair market value of the Common Stock on the date
the option is granted (110% of the fair market value in the case of
a greater-than-10% stockholder). Except as provided in
Section 4.2 hereof, the price at which shares may be purchased
pursuant to Non-Statutory Options shall be specified by the
Committee at the time the option is granted, and may be less than,
equal to or greater than the fair market value of the shares of
Common Stock on the date such Non-Statutory Option is granted, but
shall not be less than the par value of shares of Common Stock. For
the purpose of the Plan, the fair market value of the Common Stock
shall be the closing price per share on the date of grant of the
option as reported by a nationally recognized stock
exchange,
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or, if the Common Stock is not
listed on such an exchange, as reported by the NASDAQ National
Market System, or, if the Common Stock is not quoted on the NASDAQ
National Market System, the fair market value as determined by the
Committee.
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(d)
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Transferability of Options. Options
granted under the Plan and the rights and privileges conferred
thereby may not be transferred, assigned, pledged or hypothecated
in any manner (whether by option of law or otherwise) other than by
will or by applicable laws of descent and distribution, and shall
not be subject to execution, attachments or similar process. Upon
any attempt so to transfer, assign, pledge, hypothecate or
otherwise dispose of any option under the Plan or any right or
privilege conferred hereby, contrary to the provisions of the Plan,
or (if the Committee shall so determine) upon any levy or any
attachment or similar process upon the rights and privileges
conferred hereby, such option shall thereupon terminate and become
null and void.
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(d)
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Termination of Employment or Death
of Grantee. Except as may be otherwise expressly provided in the
terms and conditions of the Plan agreements, options granted
hereunder shall terminate on the earlier to occur of:
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(i)
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the date of expiration thereof;
or
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(ii)
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other than in the cause of
deat
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