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.
(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.
(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.
(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 inconsistent therewith, as the Committee
shall determine:
(A)
Awards of restricted stock may be in addition to or in lieu of option
grants. Awards may be conditioned on the attainment of particular performance
goals based on criteria established by the Committee at the time of each award
of restricted stock. During a period set forth in the agreement (the
“Restriction Period”), the recipient shall not be permitted to sell, transfer,
pledge, or otherwise encumber the shares of restricted stock; except that such
shares may be used, if the agreement permits, to pay the option price pursuant
to any option granted under this Plan, provided an equal number of shares
delivered to the Participant shall carry the same restrictions as the shares
so
used. Shares of restricted stock shall become free of all restrictions if during
the Restriction Period, (i) the recipient dies, (ii) the recipient’s
directorship, employment, or consultancy terminates by reason of permanent
disability, as determined by the Committee, (iii) the recipient retires after
attaining both 59 1/2 years of age and five years of continuous service with
the
Company and/or a division or subsidiary, or (iv) if provided in the agreement,
there is a “change in control” of the Company (as defined in such agreement).
The Committee may require medical evidence of permanent disability, including
medical examinations by physicians selected by it. Unless and to the extent
otherwise provided in the agreement, shares of restricted stock shall be
forfeited and revert to the Company upon the recipient’s termination of
directorship, employment or consultancy during the Restriction Period for any
reason other than death, permanent disability, as determined by the Committee,
retirement after attaining both 59 1/2 years of age and five years of continuous
service with the Company and/or a subsidiary or division, or, to the extent
provided in the agreement, a “change in control” of the Company (as defined in
such agreement), except to the extent the Committee, in its sole discretion,
finds that such forfeiture might not be in the best interests of the Company
and, therefore, waives all or part of the application of this provision to
the
restricted stock held by such recipient. Certificates for restricted stock
shall
be registered in the name of the recipient but shall be imprinted with the
appropriate legend and returned to the Company by the recipient, together with
a
stock power endorsed in blank by the recipient. The recipient shall be entitled
to vote shares of restricted stock and shall be entitled to all dividends paid
thereon, except that dividends paid in Common Stock or other property shall
also
be subject to the same restrictions.
(B)
Restricted Stock shall become free of the foregoing restrictions upon
expiration of the applicable Restriction Period and the Company shall then
deliver to the recipient Common Stock certificates evidencing such stock.
Restricted stock and any Common Stock received upon the expiration of the
restriction period shall be subject to such other transfer restrictions and/or
legend requirements as are specified in the applicable agreement.
(j)
Bonuses and Past Salaries and Fees Payable in
Unrestricted Stock.
(A)
In lieu of cash bonuses otherwise payable under the Company’s or
applicable division’s or subsidiary’s compensation practices to employees and
consultants eligible to participate in this Plan, the Committee, in its sole
discretion, may determine that such bonuses shall be payable in restricted
or
unrestricted Common Stock or partly in Common Stock and partly in cash. Such
bonuses shall be in consideration of services previously performed and as an
incentive toward future services and shall consist of shares of unrestricted
Common Stock subject to such terms as the Committee may determine in its sole
discretion. The number of shares of unrestricted Common Stock payable in lieu
of
a bonus otherwise payable shall be determined by dividing such bonus amount
by
the fair market value of one share of Common Stock on the date the bonus is
payable, with fair market value determined as of such date in accordance with
Section 6(b). In the event restricted Common Stock is issued in lieu of a bonus,
a discount to fair market value may be taken at the discretion of the
Committee.
(B)
In lieu of salaries and fees otherwise payable by the Company’s to
employees, attorneys and consultants eligible to participate in this Plan that
were incurred for services rendered during 2004, the Committee, in its sole
discretion, may determine that such unpaid salaries and fees shall be payable
in
restricted or unrestricted Common Stock or partly in Common Stock and partly
in
cash. Such awards shall be in consideration of services previously performed
and
as an incentive toward future services and shall consist of shares of
unrestricted Common Stock subject to such terms as the Committee may determine
in its sole discretion. The number of shares of unrestricted Common Stock
payable in lieu of salaries and fees otherwise payable shall be determined
by
dividing each calendar month’s of unpaid salary or fee amount by the average
trading value of the Common Stock for the calendar month during which the
subject services were provided. In the event restricted Common Stock is issued
in lieu of salary, a discount to fair market value may be taken at the
discretion of the Committee.
(k)
No
Rights as Stockholder.
No
Participant shall have any rights as a stockholder with respect to shares
covered by an option until the option is exercised by the written notice and
accompanied by payment as provided in clause (d) above.
(l)
Extraordinary
Corporate Transactions.
The
existence of outstanding options shall not affect in any way the right or power
of the Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, exchanges, or other changes in the Company’s
capital structure or its business, or any merger or consolidation of the
Company, or any issuance of Common Stock or other securities or subscription
rights thereto, or any issuance of bonds, debentures, preferred or prior
preference stock ahead of or affecting the Common Stock or the rights thereof,
or the dissolution or liquidation of the Company, or any sale or transfer of
all
or any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise. If the Company recapitalizes or
otherwise changes its capital structure, or merges, consolidates, sells all
of
its assets or dissolves (each of the foregoing a “Fundamental Change”), then
thereafter upon any exercise of an option theretofore granted the Participant
shall be entitled to purchase under such option, in lieu of the number of Shares
as to which option shall then be exercisable, the number and class of Shares
and
other securities to which the Participant would have been entitled pursuant
to
the terms of the Fundamental Change if, immediately prior to such Fundamental
Change, the Participant had been the holder of record of the number of Shares
as
to which such option is then exercisable. If (i) the Company shall not be the
surviving entity in any merger or consolidation (or survives only as a
subsidiary of another entity), (ii) the Company sells all or substantially
all
of its assets to any other person or entity (other than a wholly-owned
subsidiary), (iii) any person or entity (including a “group” as contemplated by
Section 13(d)(3) of the Exchange Act) acquires or gains ownership or control
of
(including, without limitation, power to vote) more than 50% of the outstanding
Shares, (iv) the Company is to be dissolved and liquidated, or (v) as a result
of or in connection with a contested election of directors, the persons who
were
directors of the Company before such election shall cease to constitute a
majority of the Board (each such event in clauses (i) through (v) above is
referred to herein as a “Corporate Change”), the Committee, in its sole
discretion, may accelerate the time at which all or a portion of a Participant’s
options may be exercised for a limited period of time before or after a
specified date.
(m)
Changes
in Company’s Capital Structure.
If
the
outstanding Shares or other securities of the Company, or both, for which the
option is then exercisable shall at any time be changed or exchanged by
declaration of a stock dividend, stock split, combination of shares,
recapitalization, or reorganization, the number and kind of Shares or other
securities which are subject to the Plan or subject to any options theretofore
granted, and the option prices, shall be appropriately and equitably adjusted
so
as to maintain the proportionate number of shares or other securities without
changing the aggregate option price.
(n)
Acceleration
of Options.
Except
as
hereinbefore expressly provided, (i) the issuance by the Company of Shares
or
any class of securities convertible into Shares of any class, for cash,
property, labor or services, upon direct sale, upon the exercise of rights
or
warrants to subscribe therefor, or upon conversion of shares or obligations
of
the Company convertible into such shares or other securities, (ii) the payment
of a dividend in property other than Common Stock or (iii) the occurrence of
any
similar transaction, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason thereof shall be made with respect to,
the
number of Shares subject to options theretofore granted or the purchase price
per share, unless the Committee shall determine, in its sole discretion, that
an
adjustment is necessary to provide equitable treatment to Participant.
Notwithstanding anything to the contrary contained in this Plan, the Committee
may, in its sole discretion, accelerate the time at which any option may be
exercised, including, but not limited to, upon the occurrence of the events
specified in this Section 6, and is authorized at any time (with the consent
of
the Participant) to purchase options pursuant to Section 7.
SECTION
7. RELINQUISHMENT OF OPTIONS.
(a)
The Committee, in granting options hereunder, shall have discretion to
determine whether or not options shall include a right of relinquishment as
hereinafter provided by this Section 7. The Committee shall also have discretion
to determine whether an option agreement evidencing an option initially granted
by the Committee without a right of relinquishment shall be amended or
supplemented to include such a right of relinquishment. Neither the Committee
nor the Company shall be under any obligation or incur any liability to any
person by reason of the Committee’s refusal to grant or include a right of
relinquishment in any option granted hereunder or in any option agreement
evidencing the same. Subject to the Committee’s determination in any case that
the grant by it of a right of relinquishment is consistent with Section 1
hereof, any option granted under this Plan, and the option agreement evidencing
such option, may provide:
(i)
That the Participant, or his or her heirs or other legal representatives
to the extent entitled to exercise the option under the terms thereof, in lieu
of purchasing the entire number of shares subject to purchase thereunder, shall
have the right to relinquish all or any part of the then unexercised portion
of
the option (to the extent then exercisable) for a number of Shares to be
determined in accordance with the following provisions of this clause
(i):
(A)
The written notice of exercise of such right of relinquishment shall
state the percentage of the total number of Shares issuable pursuant to such
relinquishment (as defined below) that the Participant elects to
receive;
(B)
The number of Shares, if any, issuable pursuant to such relinquishment
shall be the number of such shares, rounded to the next greater number of full
shares, as shall be equal to the quotient obtained by dividing (i) the
Appreciated Value by (ii) the purchase price for each of the Shares specified
in
such option; (x) the total current market value of the Shares covered by the
option or the portion thereof to be relinquished over (y) the total purchase
price for such shares specified in such option;
(ii)
That such right of relinquishment may be exercised only upon receipt by
the Company of a written notice of such relinquishment which shall be dated
the
date of election to make such relinquishment; and that, for the purposes of
this
Plan, such date of election shall be deemed to be the date when such notice
is
sent by registered or certified mail, or when receipt is acknowledged by the
Company, if mailed by other than registered or certified mail or if delivered
by
hand or by any telegraphic communications equipment of the sender or otherwise
delivered, provided, that, in the event the method just described for
determining such date of election shall not be or remain consistent with the
provisions of Section 16(b) of the Exchange Act or the rules and regulations
adopted by the Commission thereunder, as presently existing or as may be
hereafter amended, which regulations exempt from the operation of Section 16(b)
of the Exchange Act in whole or in part any such relinquishment transaction,
then such date of election shall be determined by such other method consistent
with Section 16(b) of the Exchange Act or the rules and regulations thereunder
as the Committee shall in its discretion select and apply;
(iii)
That the “current market value” of a share of Common Stock on a
particular date shall be deemed to be its fair market value on that date as
determined in accordance with Paragraph 6(b); and
(iv)
That the option, or any portion thereof, may be relinquished only to the
extent that (A) it is exercisable on the date written notice of relinquishment
is received by the Company, and
(B)
the
holder of such option pays, or makes provision satisfactory to the Company
for
the payment of, any taxes which the Company is obligated to collect with respect
to such relinquishment.
(b)
The Committee shall have sole discretion to consent to or disapprove, and
neither the Committee nor the Company shall be under any liability by reason
of
the Committee’s disapproval of, any election by a holder of an option to
relinquish such option in whole or in part as provided in Paragraph 7(a), except
that no such consent to or approval of a relinquishment shall be required under
the following circumstances. Each Participant who is subject to the short-swing
profits recapture provisions of Section 16(b) of the Exchange Act (“Covered
Participant”) shall not be entitled to receive Shares when options are
relinquished during any window period commencing on the third business day
following the Company’s release of a quarterly or annual summary statement of
sales and earnings and ending on the twelfth business day following such release
(“Window Period”). A Covered Participant shall be entitled to receive Shares
upon the relinquishment of options outside a Window Period.
(c)
The Committee, in granting options hereunder, shall have discretion to
determine the terms upon which such options shall be relinquishable, subject
to
the applicable provisions of this Plan, and including such provisions as are
deemed advisable to permit the exemption from the operation from Section 16(b)
of the Exchange Act of any such relinquishment transaction, and options
outstanding, and option agreements evidencing such options, may be amended,
if
necessary, to permit such exemption. If an option is relinquished, such option
shall be deemed to have been exercised to the extent of the number of Shares
covered by the option or part thereof which is relinquished, and no further
options may be granted covering such Shares.
(d)
Neither any option nor any right to relinquish the same to the Company as
contemplated by this Paragraph 7 shall be assignable or otherwise transferable
except by will or 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.
(e)
Except as provided in Section 7(f) below, no right of relinquishment may
be exercised within the first six months after the initial award of any Option
containing, or the amendment or supplementation of any existing option agreement
adding, the right relinquishment.
(f)
No right of relinquishment may be exercised after the initial award of
any option containing, or the amendment or supplementation of any existing
option agreement adding the right of relinquishment, unless such right of
relinquishment is effective upon the Participant’s death, disability or
termination of his relationship with the Company for a reason other than “for
cause.”
SECTION
8. AMENDMENTS OR TERMINATION.
The
Board
may amend, alter or discontinue the Plan, but no amendment or alteration shall
be made which would impair the rights of any Participant, without his consent,
under any option theretofore granted, or which, without the approval of the
stockholders, would: (i) except as is provided in Section 6(k) of the Plan,
increase the total number of shares reserved for the purposes of the Plan
(except pursuant to Section 3 of the Plan), (ii) change the class of persons
eligible to participate in the Plan as provided in Section 4 of the Plan, (iii)
extend the applicable maximum option period provided for in Section 6(a) of
the
Plan, (iv) extend the expiration date of this Plan set forth in Section 15
of
the Plan, (v) except as provided in Section 6(k) of the Plan, decrease the
option price of any option granted under the Plan or (vi) withdraw the
administration of the Plan from the Committee.
SECTION
9. COMPLIANCE WITH OTHER LAWS AND REGULATIONS.
The
Plan,
the grant and exercise of options thereunder, and the obligation of the Company
to sell and deliver shares under such options, shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any governmental or regulatory agency as may be required. The Company shall
not be required to issue or deliver any certificates for Shares prior to the
completion of any registration or qualification of such shares under any federal
or state law or issuance of any ruling or regulation of any government body
which the Company shall, in its sole discretion, determine to be necessary
or
advisable. Any adjustments provided for in subparagraphs 6(j), (k) and (i)
shall
be subject to any shareholder action required by Delaware corporate
law.
SECTION
10. PURCHASE FOR INVESTMENT.
Unless
the options and Shares covered by this Plan have been registered under the
Securities Act of 1933, as amended, and the Company has determined that such
registration is unnecessary, each person acquiring or exercising an option
under
this Plan may be required by the Company to give a representation in writing
that he or she is acquiring such option or such shares for his own account
for
investment and not with a view to, or for sale in connection with, the
distribution of any part thereof.
SECTION
11. TAXES.
(a)
The Company may, but is not obligated to, make such provisions as it may
deem appropriate for the withholding of any taxes which it determines is
required in connection with any options granted under this Plan.
(b)
Notwithstanding the terms of Paragraph 11 (a), any Participant may pay
all or any portion of the taxes required to be withheld by the Company or paid
by him or her in connection with the exercise of a Nonqualified Option by
electing to have the Company withhold Shares, or by delivering previously owned
Shares, having a fair market value, determined in accordance with Paragraph
6(b), equal to the amount required to be withheld or paid. A Participant must
make the foregoing election on or before the date that the amount of tax to
be
withheld is determined (“Tax Date”). All such elections are irrevocable and
subject to disapproval by the Committee. Elections by Covered Participants
are
subject to the following additional restrictions: (i) such election may not
be
made within six months of the grant of an option, provided that this limitation
shall not apply in the event of death or disability, and (ii) such election
must
be made either six months or more prior to the Tax Date or in a Window Period.
Where the Tax Date in respect of an option is deferred until six months after
exercise and the Covered Participant elects share withholding, the full amount
of Shares will be issued or transferred to him upon exercise of the option,
but
he or she shall be unconditionally obligated to tender back to the Company
the
number of shares necessary to discharge the Company’s withholding obligation or
his estimated tax obligation on the Tax Date.
SECTION
12. REPLACEMENT OF OPTIONS.
The
Committee from time to time may permit a Participant under the Plan to surrender
for cancellation any unexercised outstanding option and receive from the Company
in exchange an option for such number of Shares as may be designated by the
Committee. The Committee may, with the consent of the person entitled to
exercise any outstanding option, amend such option, including reducing the
exercise price of any option to not less than the fair market value of the
Common Stock at the time of the amendment and extending the term
thereof.
SECTION
13. NO RIGHT TO COMPANY EMPLOYMENT.
Nothing
in this Plan or as a result of any option granted pursuant to this Plan shall
confer on any Participant any right to continue in the employ of the Company
or
interfere in any way with the right of the Company to terminate any
Participant's employment at any time. The option agreements may, but is not
obligated, contain such provisions as the Committee may approve with reference
to the effect of approved leaves of absence.
SECTION
14. LIABILITY OF COMPANY.
The
Company and any Affiliate which is in existence or hereafter comes into
existence shall not be liable to a Participant or other persons as
to:
(a)
The
Non-Issuance of Shares.
The
non-issuance or sale of Shares as to which the Company has been unable to obtain
from any regulatory body having jurisdiction the authority deemed by the
Company’s counsel to be necessary to the lawful issuance of any Shares
hereunder; and
(b)
Tax
Consequences
.
Any
tax
consequence expected, but not realized, by any Participant or other person
due
to the exercise of any option granted hereunder.
SECTION
15. EFFECTIVENESS AND EXPIRATION OF PLAN.
The
Plan
shall be effective on the date the Board adopts the Plan. If the stockholders
of
the Company fail to approve the Plan within twelve months of the date the Board
approved the Plan, the Plan shall terminate and all options previously granted
under the Plan shall become void and of no effect. The Plan shall expire ten
years after the date the Board approves the Plan and thereafter no option shall
be granted pursuant to the Plan.
SECTION
16. NON-EXCLUSIVITY OF THE PLAN.
Neither
the adoption by the Board nor the submission of the Plan to the stockholders
of
the Company for approval shall be construed as creating any limitations on
the
power of the Board to adopt such other incentive arrangements as it may deem
desirable, including without limitation, the granting of restricted stock or
stock options otherwise than under the Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.
SECTION
17. GOVERNING LAW.
This
Plan
and any agreements hereunder shall be interpreted and construed in accordance
with the internal laws of the State of Delaware without reference to choice
of
law principals and applicable federal law.
SECTION
18. CASHLESS EXERCISE.
The
Committee also may allow cashless exercises as permitted under Federal Reserve
Board’s Regulation T, subject to applicable securities law restrictions or by
any other means which the Committee determines to be consistent with the Plan’s
purpose and applicable law.
SECTION
19. PROCEEDS FROM EXERCISE
The
proceeds from such exercise of options under the Plan shall be added to the
general funds of the Company and shall be used for general corporate
purposes.
IN
WITNESS WHEREOF, and as conclusive evidence of the adoption of the foregoing
by
directors of the Company, Coda Octopus Group, Inc., has caused these presents
to
be duly executed in its name and behalf by its proper officers thereunto duly
authorized as of this [ ] 2008.
CODA
OCTOPUS GROUP, INC.
By:
_________________________ Jason Reid
Its:
President
Its:
Secretary