Stock Option Plan - Arabian Shield Development Co.
STOCK OPTION PLAN
OF
ARABIAN SHIELD DEVELOPMENT COMPANY
This Stock Option Plan (the "Plan") is designed to provide for the
granting of options to key employees, including key employees who are officers
or directors, of Arabian Shield Development Company (the "Company") and its
subsidiaries. The purposes of the Plan are to provide an incentive for such key
employees to remain with the Company or its subsidiaries, to provide an
opportunity for them to acquire a proprietary interest in the Company so that
they will devote their best efforts for the benefit of the Company and to aid
the Company and its subsidiaries in attracting able persons to enter their
employ.
DEFINITIONS
As used in the Plan, the following terms shall, unless the context
otherwise requires, have the respective meanings set forth below:
(a) "Code" shall mean the Internal Revenue Code of 1954, as amended.
(b) "Common Stock" shall mean the Common Stock, par value $.10 per
share, of the Company or the other kind(s) of securities which shall
be substituted for Common Stock or to which Common Stock shall be
adjusted in accordance with Section 3.6 of the Plan. "Shares" shall
mean shares of Common Stock or shares or units of such other kinds of
securities.
(c) "Committee" shall mean the Compensation Committee of the Board of
Directors of the Company which shall consist of three or more members
of the Board of Directors, each of whom shall be selected by and serve
at the pleasure of the Board of Directors and shall be a
"disinterested person" (as that term is defined in Rule 16b-3 under
the Securities Exchange Act of 1934, as amended).
(d) "Fair Market Value" on any date shall mean (i) the closing sale
price per share of Common Stock on the principal national securities
exchange on which it is
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listed on such date or if there be no sales reported on such date, on
the most recently preceding business day on which a sale is reported,
(ii) if the Common Stock is not then listed on any national securities
exchange, the median of the average final bid and average final asked
prices for a share of Common Stork in the over-the-counter market on
such date, as reported by the National Association of Securities
Dealers Automated Quotations System (NASDAQ) or (iii) if the Common
Stock is not then listed on any national securities exchange or quoted
on NASDAQ, the amount reasonably determined by the Committee to be the
Fair Market Value per share of Common Stock on such date.
(e) "Incentive Stock Option" shall mean a stock option that meets the
requirements of Section 422A of the Code.
(f) "Non-Incentive Stock Option" shall mean a stock option that is
not an Incentive Stock Option.
(g) "Parent", as to a company, shall mean any corporation that owns,
directly or indirectly, stock possessing more than 50% of the voting
power of all classes of stock of such company.
(h) "Securities" shall mean shares of Common Stock of the Company
acquired upon exercise of options and any securities issued in respect
of such shares.
(i) "Subsidiary", as to a company, shall mean any corporation if
stock possessing more than 50% of the voting power of all classes of
stock of such corporation is owned, directly or indirectly, by such
company.
I. ADMINISTRATION
Section 1.1 Administration. The Plan shall be administered by the
Committee. The Committee from time to time may prescribe, amend and rescind such
rules, regulations, provisions and procedures, consistent with the terms of the
Plan, as, in its opinion, may be advisable in the administration of the Plan and
shall determine the provisions, which shall be consistent with the terms of the
Plan but need not be identical, of the respective agreements required by Section
1.5 of the Plan, including, without limitation, provisions (a) specifying the
term, and period or periods
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and extent of exercisability, of options, (b) imposing, and specifying the
nature and extent of, restrictions, if any, upon disposition of any Securities,
(c) specifying the circumstances, if any, under which all or part of any
Securities may be required to be forfeited and surrendered to the Company (and
the consideration, if any, to be paid by the Company for any such Securities
forfeited and surrendered) and (d) specifying the extent and times of lapse of
any such restrictions or risks of forfeiture. The Committee shall have the
authority, in its discretion, to construe and interpret the Plan and such
respective agreements and to make all other determinations necessary or
advisable for administering the Plan. A majority 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, or acts approved in writing by all members
of the Committee, shall be the acts of the Committee, unless provisions to the
contrary are embodied in the Company's Bylaws or resolutions duly adopted by the
Board of Directors. All actions taken and decisions or determinations made by
the Committee pursuant to the Plan shall be binding and conclusive on all
persons interested in the Plan. No member of the Committee shall be liable for
any action, decision or determination taken or made in good faith with respect
to the Plan or any option granted under it.
Section 1.2 Eligibility. Those individuals who become employees of the
Company and its Subsidiaries (including officers and directors thereof if they
are such employees) and who, consistent with the purposes of the Plan, are
selected by the Committee, shall be eligible to be granted options, provided,
however, that no such employee who, immediately after the grant of an option,
would own (within the meaning of Section 425(d) of the Code) stock possessing
more than 10% of the combined voting power of all classes of the Company or any
Parent or Subsidiary of the Company shall be eligible to be granted options.
From such eligible employees, the Committee shall, from time to time, choose
those, if any, to whom options shall be granted. More than one option may be
granted to the same person. The adoption of the Plan shall not be deemed to give
any person a right to be granted any option.
Section 1.3 Shares Available. The Board of Directors shall reserve for
the purposes of the Plan, out of the authorized but unissued shares of Common
Stock or out of shares of Common Stock held in the Company's Treasury, or partly
out of each, as shall be determined by the Board of
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Directors, a total of 250,000 shares of such Common Stock. Any shares delivered
upon exercise of options granted under the Plan shall reduce by the number of
shares so delivered the number of shares available for the granting of options
under the Plan. If an option granted under the Plan to any employee expires or
is cancelled or terminated unexercised as to any shares covered thereby or if
any Securities are forfeited and surrendered to the Company, such shares or
Securities shall be available for granting of options.
Section 1.4 Authority of the Committee to Grant Options. Subject to
the provisions of the Plan, the Committee shall have authority, in its
discretion, to determine the persons to whom options shall be granted, to grant
options and to determine the number of shares to be covered by any option.
Section 1.5 Agreements. The specific terms of each option granted by
the Committee pursuant to the Plan shall be determined by the Committee,
consistent with the terms of the Plan, and shall be set forth and confirmed in
an agreement which shall be in such form and contain such provisions as shall be
determined from time to time by the Committee and which shall be executed
pursuant and with reference to the Plan by the Company and the person to whom
such option is granted. Any such agreement may contain any provisions,
consistent with the terms of the Plan, as may be deemed necessary or appropriate
and approved by the Committee and may be amended from time to time by written
instrument executed by the Company and the person holding such option to
reflect any change in the provisions thereof made in accordance with the Plan.
Section 1.6 Notice of Exercise. Each exercise of an option must be
evidenced by a written notice of exercise to the Company in form satisfactory to
the Committee.
II. OPTIONS
Section 2.1 Types of Options. Both Incentive Stock Options and
Non-Incentive Stock Options may be granted under the Plan. Any option granted
under the Plan that is intended to qualify as an Incentive Stock Option shall be
designated as such by the Committee at the time the option is granted, and such
designation shall be reflected in the agreement required by Section 1.5 of the
Plan. Notwithstanding anything herein to the contrary, the aggregate Fair Market
Value (determined as of the time the option is granted) of the
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stock for which any employee may be granted Incentive Stock Options in any
calendar year under the Plan and all other plans described in Section 422A(b)(8)
of the Code shall not exceed $100,000 plus any unused limit carryover to such
year computed in accordance with Section 422A(c)(4) of the Code.
Section 2.2 Option Price. The Committee shall establish the option
price per share at the time any option is granted, and such option price per
share shall not be less than the greater of (a) 100% of the Fair Market Value
per share of the shares subject to such option on the day such option is granted
or (b) the per share par value of such shares. The option price will be subject
to adjustment in accordance with the provisions of Section 3.6 of the Plan.
Options may be granted under the Plan for terms of not more than ten (10) years
from the date of grant thereof.
Section 2.3 Continuation of Employment. Each option by its terms shall
require the employee granted such option to remain in the continuous employ of
the Company and/or a Subsidiary of the Company for such period or periods as the
Committee shall determine at the time of grant from the date of grant of his
option before the right to exercise any part of the option will accrue, provided
that the Committee at any time, or from time to time, after the time of grant
may in its discretion shorten such period or periods.
Section 2.4 Exercise of Options. Subject to the provisions of this
Article II, each option shall become and be exercisable at such time or times
and during such period or periods, in full or in such installments (which may be
cumulative or noncumulative) as may be determined by the Committee at the time
of the grant of such option, provided that the Committee at any time, or from
time to time, after the time of grant may in its discretion accelerate the
exercisability of all or any portion of any option by accelerating the date on
which it was initially to have become exercisable and/or, in the case of options
exercisable in installments, accelerating the dates on which all or any portion
of any or all of such installments were initially to have become exercisable.
Notwithstanding anything herein to the contrary, each Incentive Stock Option
granted under the Plan shall by its terms not be exercisable while there is
outstanding (within the meaning of Section 422A(c)(7) of the Code) any Incentive
Stock Option previously granted to the optionee to purchase stock in his
employer corporation or in a corporation which (at the time of granting of the
later granted Incentive Stock Option) is a Parent or Subsidiary of
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the employer corporation, or in a predecessor of any of such corporations.
Section 2.5 Payment of Option Price. The option price of each share
purchased pursuant to exercise of each option granted under the Plan shall be
paid either (i) entirely in cash or (ii) if permitted by the Committee in its
sole discretion, partially or entirely in full shares of Common Stock, with the
balance, if any, to be paid in cash. Any payment of the option price in shares
of Common Stock shall be credited toward the option price at the Fair Market
Value per share of such shares on the date of payment. Any payment to the
Company in shares of Common Stock as permitted by this Section 2.5 shall vest in
the Company good and unencumbered title thereto, free and clear of all liens,
restrictions, charges, encumbrances and adverse claims, and shall be effected by
delivery of the certificate(s) representing such shares, duly endorsed in blank
or accompanied by stock power(s) duly executed in blank and otherwise in proper
form for transfer.
III. ADDITIONAL PROVISIONS
Section 3.1 Non-Transferability. Options shall not be transferable by
the optionee otherwise than by Will or, if he dies intestate, by the laws of
descent and distribution of the jurisdiction of his domicile at the time of his
death, and such options shall be exercisable during his lifetime only by such
optionee or his guardian or legal representative.
Section 3.2 Termination of Employment. If the employment by the
Company and all its Subsidiaries of a person who is the holder of any option
shall terminate because of such person's discharge (for or without cause), his
rights under any then outstanding option shall terminate and be forfeited
immediately as to any unexercised portion thereof. If any such person shall
voluntarily terminate his employment (other than by reason of his disability),
each outstanding option held by him shall be exercisable by him at any time
prior to the expiration date of the option or within three (3) months after the
date of such termination or employment, whichever is the shorter period, but
only to the extent such option was exercisable at the date of such termination.
In the event of termination of employment by reason of disability (of which the
Committee shall be the sole judge) or the death of any such person while such
person is an employee
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of the Company or a Subsidiary of the Company, each outstanding option held by
him shall be fully exercisable (whether or not exercisable on the date of his
death or termination of employment by reason of disability) at any time prior to
the expiration date of the option or within six (6) months after the date of
death or termination of employment, whichever is the shorter period. To the
extent any option is not exercised during the period after termination of the
holder's employment specified in this Section 3.2, such option shall terminate
at the end of such period. In the case of death or disability, options shall be
exercisable by the person or persons specified in such deceased person's Will
or, if such deceased person shall have failed to make specific provision in his
Will for such exercise or shall have died intestate, or in the case of
disability, when appropriate, by such person's guardian or legal representative.
Anything to the contrary contained in this Section 3.2 notwithstanding, the
Committee, in its sole discretion, may increase the period and extent of
exercisability of any option held by (i) a person whose employment terminates as
the result of his death or disability, (ii) a person who dies or becomes
disabled during any period while his option remains exercisable under this
Section 3.2 or (iii) a person who demonstrates to the Committee special
circumstances that, in the sole judgment of the Committee, merit such increase.
Section 3.3 Leave of Absence. The Committee may make such provisions,
regarding the effect of a leave of absence of any optionee as the Committee
shall determine.
Section 3.4 Securities Laws; Compliance with Laws. Each exercise of an
option shall, at the election of the Committee, be contingent upon receipt by
the Company from the optionee (or, in the event of his death or disability, his
legal representatives, legatees or distributees) of such written representations
(if any) concerning the optionee's (or their) intentions with regard to the
acquisition, retention or disposition of the shares being acquired upon exercise
of such option and/or such written covenants and agreements (if any) as to the
acquisition, retention and disposition of such shares as, in the opinion of the
Committee, may be necessary to ensure that the acquisition and any disposition
of such shares by the optionee or such other persons will not involve a
violation of the Securities Act of 1933, as amended, or any similar or
superseding statute or statutes, or any other applicable statute or regulation,
as then in effect. Each option shall be subject to the requirement that if at
any time the Committee shall determine, in
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its discretion, that the listing, registration or qualification of Common Stock
subject to such option upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with the granting of,
such option or the issuance or delivery of shares thereunder, such option may
not be exercised unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee. Nothing in the Plan or in any option granted under
it shall require the Company to issue or deliver any shares upon exercise of any
options if such issuance or delivery would, in the opinion of counsel for the
Company, constitute a violation of the Securities Act of 1933, as amended, or
any similar or superseding statute or statutes, or any other applicable statute
or regulation, as then in effect.
Section 3.5 Issuance of Shares. A person exercising an option shall
not be treated as having become the registered owner of any shares of Common
Stock issuable or deliverable on such exercise until such shares are issued and
delivered.
Section 3.6 Adjustment of Number and Kind of Shares. The shares
available for the Plan as provided in Section 1.3 of the Plan are a part of the
Common Stock, par value $.10 per share, of the Company, presently authorized in
the Certificate of Incorporation, as amended, of the Company. In the event that
a dividend shall be declared and paid upon the Common Stock payable in shares of
Common Stock, the number of undelivered shares of Common Stock then subject to
any option and the number of shares of Common Stock at the time reserved for
sale or delivery pursuant to the Plan but not at the time covered by an Option
shall be adjusted by adding to each such share the number of shares which would
be distributable thereon if such share had been outstanding on the date fixed
for determining the stockholders entitled to receive such stock dividend. In the
event that the outstanding shares of Common Stock shall be changed into or
exchanged for a different number or kind of shares of stock or other securities
of the Company, whether through amendment of the Company's Certificate of
Incorporation, reorganization, recapitalization, stock split-up, combination of
shares, merger or consolidation (other than a merger or consolidation to which
Section 3.7 of the Plan applies), then there shall be substituted for each
undelivered share of Common Stock then subject to any option and for each share
of Common
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Stock at the time reserved for sale or delivery pursuant to the Plan but not at
the time reserved for sale or delivery pursuant to the Plan but not at the time
covered by an option, the number and kind of shares of stock or other securities
into which each outstanding share of Common Stock shall be so changed or for
which each such share shall be exchanged. In the event there shall be any
change, other than as specified above in this Section 3.6, in the outstanding
shares of Common Stock, then if the Committee shall, in its sole discretion,
determine that such change equitably requires an adjustment or change in the
number or kind of shares then reserved for sale or delivery pursuant to the Plan
but not at the time covered by an option and of undelivered shares then subject
to an option, such adjustment or change shall be made by the Committee and shall
be effective and binding for all purposes of the Plan. In the case of any such
substitution or adjustment as provided for in this Section 3.6, the option price
in each stock option agreement for each share covered thereby prior to such
substitution or adjustment will be the option price for all shares which shall
have been substituted for such share or to which such share shall have been
adjusted pursuant to this Section 3.6. The determination of the Committee as to
all adjustments and substitutions referred to in this Section 3.6 shall be
conclusive. No adjustment or substitution provided for in this Section 3.6 shall
require the Company to deliver or sell a fractional share, and any fractional
shares resulting from any adjustment or substitution pursuant to this Section
3.6 shall be eliminated from the applicable option. The provisions of this
Section 3.6 shall apply with respect to successive dividends, amendments,
reorganizations, recapitalizations, stock split-ups, combinations of shares,
mergers, consolidations and changes of the kind referred to in this Section 3.6.
Section 3.7 Business Combinations. In the event that, while any
options are outstanding under the Plan, there shall occur (a) a merger or
consolidation of the Company with or into another corporation in which the
Company shall not be the surviving corporation (for purposes of this Section
3.7, the Company shall not be deemed the surviving corporation in any such
transaction if, as the result thereof, it becomes a wholly-owned subsidiary of
another corporation), (b) a dissolution of the Company or (c) a transfer of all
or substantially all of the assets of the Company in one transaction or a series
of related transactions to one or more other persons or entities, then, with
respect to each option outstanding immediately prior to the consummation of such
transaction:
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(i) If provision is made in writing in connection with such
transaction for the continuance and/or assumption of the
options granted under the Plan, or the substitution for such
options of new options equivalent to such options, with
appropriate adjustment as to number and kind of shares or
other securities deliverable with respect, thereto, the
options granted under the Plan, or the new options substituted
therefor, shall continue, subject to such adjustment, in the
manner and under the terms provided in the respective
agreements under Section 1.5.
(ii) In the event provision is not made in connection with such
transaction for the continuance and/or assumption of the
options granted under the Plan, or for the substitution of
equivalent options, then each holder of an outstanding option
shall be entitled, immediately prior to the effective date of
such transaction, to purchase the full number of shares that
he would otherwise have been entitled to purchase during the
entire remaining term of the option and any restriction or
risk of forfeiture imposed pursuant to Section 1.1 of the Plan
shall lapse immediately prior to the effective date of such
transaction. The unexercised portion of any option shall be
deemed cancelled and terminated as of the effective date of
such transaction.
IV. MISCELLANEOUS
Section 4.1 Amendment of Plan. The Board of Directors of the Company
shall have the right to amend, suspend or terminate the Plan at any time,
provided that no amendment shall be made which shall (a) increase the total
number of shares which may be issued pursuant to options granted under the
Plan, (b) decrease the minimum option price provided for in Section 2.2 hereof,
(c) extend the term of the Plan or of any option granted under the Plan or (d)
withdraw administration of the Plan from the Committee, unless such amendment is
approved by the affirmative vote of the holders of a majority of the
outstanding shares of voting stock of all classes of the Company (voting
together and not separately by class). The Board of Directors may delegate to
the Committee all or any portion of its authority under this Section 4.1. No
amendment, suspension or termination (whether
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pursuant to this Section 4.1 or upon expiration of the stated term of the Plan)
may, without the consent of the holder of an existing option, materially and
adversely affect his rights under such option.
Section 4.2 Effective Date and Duration of Plan; Stockholder Approval.
The Plan shall become effective on May 16, 1983 and, unless sooner terminated
pursuant to the terms hereof, the Plan shall terminate on May 16, 1993. However,
the Plan, and each option granted under the Plan, will be null and void unless
the Plan is approved by the affirmative vote of the holders of a majority of the
outstanding shares of voting stock of all classes of the Company entitled to
vote thereon (voting together and not separately by class) at the Company's 1983
Annual Meeting of Stockholders.
Section 4.3 Right to Continued Employment. Nothing in the Plan or in
any option granted under it shall confer any right to continue in the employ of
the Company or any of its Subsidiaries or interfere in any way with the right of
the Company or any of its Subsidiaries to terminate any employment at any time.
Section 4.4 Requested Information. Each grantee of an option shall
furnish to the Company all information requested by the Company to enable it to
comply with any reporting or other requirements imposed upon the Company by or
under any applicable statute or regulation.
Section 4.5 Payment of Taxes. Prior to the exercise of any option or
in connection with any disposition of Shares of Common Stock acquired pursuant
to such exercise, the holder of such option shall make arrangements
satisfactory to the Company for the payment of any applicable federal or other
withholding taxes payable as a result thereof.
Section 4.6 Headings. The Article and Section headings contained in
the Plan are for convenience only and shall not affect the construction of the
Plan.
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FIRST AMENDMENT TO
STOCK OPTION PLAN OF
ARABIAN SHIELD DEVELOPMENT COMPANY
Effective January 1, 1987
The Stock Option Plan (the "Plan") of Arabian Shield Development
Company (the "Company") and its subsidiaries, adopted by the Board of Directors
of the Company on May 16, 1983, and approved by the stockholders of the Company
on July 28, 1983, is amended effective as of January 1, 1987 as follows:
1. All references to the "Code" shall mean the Internal Revenue
Code of 1986, as amended, but also such related or successor
provisions as may be applicable pursuant to subsequent
amendments.
2. Section 2.1 of the Plan is amended to read in its entirety as
follows:
Section 2.1 Types of Options. Both Incentive Stock Options and
Non-Incentive Stock Options may be granted under the Plan. Any
option granted under the Plan that is intended to qualify as
an Incentive Stock Option shall be designated as such by the
Committee at the time the option is granted, and such
designation shall be reflected in the agreement required by
Section 1.5 of the Plan. Notwithstanding anything herein to
the contrary, the aggregate Fair Market Value (determined as
of the time the option is granted) of the stock with respect
to which such options are exercisable for the first time by
any employee during any calendar year under this Plan and all
plans described in Section 422A(b) of the Code of the Company
shall not exceed $100,000. For the purpose of this Section,
any unused limit carryover shall be determined pursuant to
Section 422A(c)(4) of the Code.
3. Section 2.4 of the Plan is amended to read in its entirety as
follows:
Section 2.4 Exercise of Options. Subject to the provisions of
this Article II, each option shall become and be exercisable
at such time or times and during such period or periods, in
full or in such installments (which may be cumulative or
noncumulative) as may be determined by the Committee at the
time of the grant of such option, provided that the Committee
at any time, or from time to time, after the time of grant,
may in its discretion accelerate the exercisability of all or
any portion of any option by accelerating the date on which it
was initially to have become exercisable
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and/or, in the case of options exercisable in installments,
accelerating the dates on which all or any portion of any or
all of such installments were initially to have become
exercisable.
This First Amendment to the Company's Stock Option Plan shall be
effective as of January 1, 1987.
Adopted by the Board of Directors of the Company on January 28, 1987.
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SECOND AMENDMENT TO
STOCK OPTION PLAN OF
ARABIAN SHIELD DEVELOPMENT COMPANY
Effective December 29, 1992
The Stock Option Plan (the "Plan") of Arabian Shield Development
Company (the "Company") and its subsidiaries, adopted by the Board of Directors
of the Company on May 16, 1983, and approved by the stockholders of the Company
on July 28, 1983, as amended effective January 1, 1987, is amended effective
December 29, 1992 as follows:
1. Section 1.3 of the Plan is amended to read in its entirety as
follows:
Section 1.3 Shares Available. The Board of Directors shall
reserve for the purposes of the Plan, out of the authorized but
unissued shares of Common Stock or out of shares of Common Stock held
in the Company's Treasury, or partly out of each, as shall be
determined by the Board of Directors, a total of 500,000 shares of such
Common Stock. Any shares delivered upon exercise of options granted
under the Plan shall reduce by the number of shares so delivered the
number of shares available for the granting of options under the Plan.
If an option granted under the Plan to any employee expires or is
cancelled or terminated unexercised as to any shares covered thereby or
if any Securities are forfeited and surrendered to the Company, such
shares or Securities shall be available for granting of options.
2. Section 4.2 of the Plan is amended to read in its entirety as
follows:
Section 4.2 Effective Date and Duration Plan. The Plan shall
become effective on May 16, 1983 and, unless sooner terminated pursuant
to the terms hereof, the Plan shall terminate on May 16, 2003.
This Second Amendment to the Company's Stock Option Plan shall be
effective December 29, 1992.
Adopted by the Board of Directors of the Company on October 15, 1992.