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EXHIBIT D
STAR STATES CORPORATION
1986 STOCK OPTION PLAN
_________________________________ Restatement Effective January 1, 1992
_________________________________
1. PURPOSE The purpose of the 1986 Stock Option Pan, as herein amended and restated effective
January 1, 1992, is to attract and retain the best available personnel for positions of substantial
responsibility by providing additional incentive to such Directors and Employees to whom
Options and SARs may be granted under this Plan, and to promote the success of Star State s
Corporation. Options granted under the Plan may constitute either Incentive Options or Non-
Incentive Options.
The Plan is not intended as an agreement or promise of employment. Neither the Plan,
nor any Award granted pursuant to the Plan, shall confer on any person any right to continue in
the employ of the Company. The right of the Company to terminate an Employee is not limited
by the Plan, nor by any Award granted pursuant to the Plan, unless such right is specifically
described by the terms of any such option.
2. EFFECTIVE DATE; AMENDMENTS
The Plan was originally adopted by the Board of Directors of the Wilmington Savings
Fund Society, Federal Savings Bank on November 18, 1986 and became effective November 26,
1986. The Plan received shareholder approval on April 29, 1987. On February 27, 1992, the
Board of Directors voted to amend and restate the Plan, effective as of January 1, 1992, subje ct
to shareholder approval in accordance with Section 15 hereof.
3. DEFINITIONS
As used herein, the following definitions shall apply.
(a) "Award" shall mean an Option, SAR or any combination thereof, as provided in
the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" or "Personnel Committee" shall mean the committee appointed
under Section 4(a) hereof.
(e) "Common Stock" shall mean the common stock, par value $.01 per share, of the
Company.
(f) "Company" shall mean Star States Corporation.
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(g) "Continuous Service" or "Continuous Status as an Employee" shall mean the
absence of any interruption or termination of a Director's or Employee's service with the
Company or any present or future Parent or Subsidiary of the Company. Service shall not be
considered interrupted in the case of sick leave, military leave or any other le ave of absence
approved by the Company or in the case of transfers between payroll locations of the Corporati on
or between the Company, its Parent, its Subsidiaries or a successor.
(h) "Director" shall mean any person serving on the Board of Directors.
(i) "Employee" shall mean any person employed by the Company or any present or
future Parent of Subsidiary of the Corporation.
(j) "Option" shall mean an option, to purchase Shares, granted by the Committee
pursuant to this Plan, whether the option is an incentive stock option within the meani ng of
Section 422 of the code (an "Incentive Option"), or an option that does not so qualify (a "Non-
Incentive Option").
(k) "Option Price" shall mean the price per Option Share at which an Option may be
exercised.
(1) "Optioned Shares" shall mean Shares subject to an Option granted pursuant to
this Plan.
(m) "Optionee" shall mean any person who receives an Option or SAR pursuant to
the Plan.
(n) "Parent" shall mean any present or future corporation which would be a "parent
corporation" as defined in Subsections 424(e) and (g) of the Code.
(o) "Plan" shall mean this 1986 Stock Option Plan, as amended and restated.
(p) "Rule 16b-3" shall mean Rule 16b-3 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended.
(q) "Share" shall mean a share of Common Stock.
(r) "SAR" shall mean a stock appreciation right, granted by the Committee,
pursuant to section 9 of this Plan.
(s) "Subsidiary" shall mean any present or future corporation which would be a
"subsidiary corporation" as defined in Subsections 424(f) and (g) of the Code.
(t) "Terminating Transaction" shall mean (i) a dissolution or liquidation of the
Company, or (ii) upon a reorganization, merger or consolidation in which the Company is not the
surviving corporation, or (iii) the sale of substantially all of the assets of the Company to another
corporation, this Plan and the Awards issued hereunder shall terminate, unless provision is made
in writing in connection with such transaction for the continuance of the Plan and the assumption
of Awards theretofore granted, or (iv) the substitution for such Awards of new awards of the
successor employer corporation or a Parent or Subsidiary thereof, with appropriate adjustment as
may be determined and approved by the Board of the successor to the Company as to the numbe r
of kinds of shares and the per share exercise price, in which event this Plan and the Awards
theretofore granted or the new awards substituted therefore, shall continue in the manner and the
continuance of this Plan and for the assumption of Awards theretofore granted or the substitution
for such Awards of new awards covering the shares of a successor corporation or a Parent or
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Subsidiary thereof.
4. ADMINISTRATION
(a) The Plan shall be administered by a committee of not less than three membe rs of
the Board of Directors (the "Personnel Committee" or "Committee")
to be designated by the
Board of Directors of the Company. No member of the Personnel Committee shall be eli gible at
any time during his or her tenure on the Personnel
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Committee, or during the one year prior to such tenure, to receive Awards under the Plan. A
majority vote of the members of the Personnel Committee shall be required for all of its actions.
(b) The Personnel Committee shall have the power, subject to, and within the limit s
of, the express provisions of the Plan:
(i) To determine from time to time which of the eligible persons shall be
granted Awards under the Plan, and the time or times when, and the number of Shares for
which and Award or Awards shall be granted to such persons;
(ii) To prescribe the other terms and provisions (which need not be identical)
of each Award granted under the Plan to eligible persons;
(iii) To construe and interpret the Plan and Awards granted under it, and to
establish, amend, and revoke rules and regulations for administration. The Personnel
Committee, in the exercise of this power, may correct any defect or supply any omi ssion,
or reconcile any inconsistency in the Plan, or in any Award, in the manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective. The
Personnel Committee in exercising this power shall be final and binding upon the
Company and all persons affected thereby.
(iv) To determine the duration and purposes of leaves of absence which may
be granted to an Optionee without constituting a termination of his or her employment for
purposes of the Plan; and
(v) Generally, to exercise such powers and to perform such acts as are deemed
necessary or expedient to promote the best interests of the Company with respect to t he
Plan.
(c) A majority of the entire Committee shall constitute a quorum, and the act ion of
a majority of the Committee members present at any meeting at which a quorum is present shall
be the action of the Committee. All decisions, determinations, and interpretations of the
Committee shall be final and conclusive on all persons affected thereby and shall, as to Incentive
Options, be consistent with Section 422 of the Code. The Committee shall have all of the powers
and duties set forth herein, as well as such additional powers and duties as the Board of Directors
may delegate to it; provided, however, that the Board of Directors expressly retains the right in
its sole discretion (i) to elect and to replace the members of the Commit tee, and (ii) to terminate
or amend this Plan in any manner consistent with applicable law. The Board of Di rectors may
from time to time elect members of the Committee in substitution for in addition to members
previously elected, may fill vacancies in the Committee, however caused, and may discharge the
Committee. Duly authorized actions of the Committee shall constitute acti ons of the Board of
Directors for the purpose of this Plan and the administrative thereof.
(d) Notwithstanding anything herein to the contrary, no Employee, officer or
director of the Company or its Parent or Subsidiaries shall, as a member of the Comm ittee or
otherwise, have any vote with regard to any Award granted to himself, including, but not li mited
to:
(i) The time at which any such Award shall be granted;
(ii) The number of Shares covered by any such Award;
(iii) The time or times at which, or the period during which, any such Award
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may be exercised or whether it may be exercised in whole or in installments;
(iv) The provisions of the agreement relating to any such Award; and
(v) The Option Price of shares subject to an Option granted to him.
5. STOCK The Common Stock subject to Awards under the Plan shall be Shares of Common Stock,
or treasury shares of Common Stock. The number of shares for which Awards may be granted,
excluding the shares involved in the unexercised portion of any cancelled, terminated or expired
options, shall not exceed 1,000,000 shares of Common Stock, subject to adjustment as provided
in Section 10 hereof.
6. ELIGIBILITY
(a) The persons who shall be eligible to receive Awards under the Plan shall be full-
time Employees (i.e., persons normally employed for 2,080 or more hours per year) and
Directors who are not serving on the Committee. Subject to the following provisions, the
Personnel Committee may from time to time grant Awards to one or more eligible persons.
(b) Incentive Options granted under this Plan shall be exercisable for such periods
as shall be determined by the Personnel Committee at the time of grant of ea ch such Incentive
Option, but in no event shall an Incentive Option be exercisable after the expiration of 10 years
from the date of grant; provided, however, that if any Employee, at the time an Incent ive Option
is granted to him, owns stock representing more than 10 percent of the total combined voting
power of all classes of Common Stock (or, under Section 424(d) of the Code, is deemed to own
stock representing more than 10 percent of the total combined voting power of all such cl asses of
Common Stock, by reason of the ownership of such classes of stock, directly or indirectly, by or
for any brother, sister, spouse, ancestor or lineal descendant of such Employee, or by or for any
corporation, partnership, estate or trust of which such Employee is a shareholder, partner or
beneficiary), the Incentive Option granted to him shall not be exercisable after the expiration of
five years from the date of grant. Each Incentive Option granted under this Plan shall also be
subject to earlier termination as provided in a particular option agreement.
(c) The aggregate fair market value (determined in accordance with Section 7
hereof), as of the date the Option is granted, of the Shares with respect to which Ince ntive
Options are exercisable for the first time by an Employee during any calendar year (under all
incentive stock option plans, as defined in Section 422 of the Code, of the Company or any
present or future Parent or Subsidiary of the Company) shall not exceed $100,000.
Notwithstanding the prior provisions of this Section, the Personnel Committee may grant
Options in excess of the foregoing limitations, in which case such Options granted in excess of
such limitation shall be Non-Incentive Options, pursuant to Section 422(d) of the Code.
7. TERMS OF AWARDS
Each Award shall contain such provisions as the Personnel Committee shall from time to
time deem appropriate. Awards need not be identical, but each Award by appropriate l anguage
shall include the substance of all of the following provisions:
(a) Any Option shall expire on the date specified in the Option, which date shall not
be later than the tenth anniversary of the date on which the option was granted, exc ept that if the
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Optionee is a person described in the final clause of Section 6(b) hereof, the expiration date of an
Incentive Option shall not be later than the fifth anniversary of the date on which such Option
was granted. Any SAR shall expire on the date specified in the SAR, which date shall not be later
than the seventh anniversary of the date on which the SAR was granted. All Awards must be
granted by the tenth anniversary of the effective date of the Plan.
(b) The minimum number of shares with respect to which an option may be
exercised at any one time shall be 100 Shares, unless the number purchased is the tot al number at
the time available for purchase under the Option.
(c) Each Award shall be exercisable according to its terms, in such installments
(which need not be equal) and at such time as designated by the Personnel Committe e in the
Award; except that
(i) no Option shall be exercisable by an Optionee who is or would thereby
become a 5-percent shareholder (as that term is defined in Section 382 of the Code), and
(ii) SARs shall become exercisable according to the following schedule:
Years of Continuous Service Percentage of Total SARS
After Date of Grant of SAR Which May Be Exercised
Upon Grant 0 %
1 year but less than 2 years 20 %
2 years but less than 3 years 40 %
3 years but less than 4 years 60 %
4 years but less than 5 years 80%
5 years but less than 6 years 100%
6 years but less than 7 years 100%
7 years or more 0 %
Notwithstanding any other provisions of this Plan, but only with respect to Incentive
Options granted before January 1, 1987, no Incentive Option shall be exercisable by an Optionee
while there is outstanding within the meaning of Section 422(c)(7) of the Code any other
Incentive option granted, before the granting of such Option, to such Optionee to purchase
Common Stock, or in a Subsidiary or predecessor corporation referred to in Section 422(c)(7) of
the Code. For this purpose, an Incentive Option shall be treated as outstanding until (i) i t is
exercised in full, or (ii) the Incentive option expires solely be reason of the expirati on of its
original term.
Unless otherwise designated, no Award shall be exercisable within one year of the date
on which the Award was granted, except in the event of a change in control of the Company. In
such event, all Awards granted prior to such change in control shall become immediat ely
exercisable. The term "control"
shall refer to the acquisition of 25% percent or more of the voting
securities of the Company by any person or by a group acting in concert within the meaning of
Section 13(d) of the Securities Exchange Act of 1934 and the Charter and Bylaws of the
Company; provided, however, that no change in control shall be deemed to have occurred for the
purpose of determining the exercisability of Awards if prior to the acquisition of 25% or more of
the Common Stock, the full Board of Directors shall have adopted by not less than a two-t hirds
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vote a resolution specifically approving such acquisition. The term "person" refers to an
individual or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization, joint stock company or similar organization.
The Committee shall advise each holder of an Incentive Stock Option that in orde r for
such Option to be treated as an Incentive Stock Option under the Code, the Shares acqui red upon
exercise of such Option must not be disposed of until a date which is at least two years after the
date such option was granted and one year after the date such shares were acquired by such
Optionee. Without written notice, delivered by hand or mailed by prepaid registered or certified
mail, addressed to the Secretary of the Committee at the Company's executive offices, no
Optionee may dispose of shares acquired pursuant to the exercise of an Incentive Stock Option
within the two or one year period discussed above.
(d) The Option Price per share of Common Stock under each Non-Incentive Option and
SAR shall be determined by the Committee in its sole discretion, and shall be stated in the
Option upon its grant.
The Option Price per share of Common Stock under each Incentive Option shall be not
less than the fair market value of the Common Stock subject to the Option on the da te the option
is granted, subject to the conditions contained below with respect to 10 percent share holders. For
this purpose and any other purpose under the Plan, the fair market value of the Common Stock
shall be determined by the Personnel Committee, in its sole discretion, provided, howeve r, that
(i) the Common Stock is admitted to quotation on the National Association of Securit ies Dealers
Automated Quotation System on the date the option is granted, fair market value shall not be less
than the average of the highest bid and lowest asked prices of the Common Stock on such syste m
on such date, or (ii) if the Common Stock is admitted to trading on a national securities exchange
on the date the option is granted, fair market value shall not be less than the last sale price
reported for the Common Stock on such exchange on such date or on the last date preceding such
date on which a sale was reported. If an Employee, at the time an Incentive Opt ion is granted to
him or her, owns stock representing more than 10 percent of the total combined voting power of
all such classes of Common Stock (or, under Section 424(d) of the Code, is deemed to own st ock
representing more than 10 percent of the total combined voting power of all such classes of
stock, by reason of the ownership of such classes of stock, directly or indirectly, by or for any
brother, sister, spouse, ancestor, or lineal descendant of such Employee, or by or for any
corporation, partnership, estate or trust of which such Employee is a shareholder, partner or
beneficiary), the purchase price per share of Common Stock under each Incentive Option shal l
not be less than 110 percent of the fair market value of the Common Stock subject t o the Option
on the date the Option is granted. Each Incentive Option granted under this Plan shall also be
subject to earlier termination, as provided in this Plan or as provided in a parti cular option
agreement.
(e) The Optionee shall not be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any Shares of Common Stock subject to such Award unless and
until the Option shall have been exercised pursuant to the terms thereof, the Company shall have
issued and delivered the Shares to the Optionee, and the Optionee's name shall have be en entered
as a stockholder of record on the books of the Company. Thereupon, the Optionee shall have full
voting, dividend and other ownership rights with respect to such Shares of Common Stock. The
holder of an SAR shall have no such voting, dividend or other ownership rights until and unless
the Company shall have issued and delivered the Shares to the holder, and the holder' na me shall
have been entered as a stockholder of record on the books of the Company.
(f) Except as provided in Section 13 hereof:
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(i) All Awards granted pursuant to the Plan shall not be transferable,
except by will or the laws of descent and distribution, and shall be exercisable during t he
Optionee's lifetime only by the Optionee; and
(ii) No assignment or transfer of the option, or of the rights represented
thereby, whether voluntary or involuntary, by operation of law or otherwise, shall vest in
the assignee or transferee any interest or right in the option whatsoever, but immedia tely
upon any attempt to assign or transfer the Option the same shall terminate and be of no
force or effect.
(g) Each Award shall be subject to any provision necessary to assure compliance
with federal and state securities laws.
8. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
(a) Subject to Section 7(e) hereof, Awards granted under this Plan may be exercised
in whole or in installments, to such extent, and at such time or times during the terms thereof, as
shall be determined by the Personnel Committee at the time of grant of each such Award.
(b) An option may be exercised by the Optionee by delivering to the Personnel
Committee on any business day, a written notice specifying the number of Shares of Common
Stock the Optionee then desires to purchase (the "Notice"). Subject to Section 9(b) hereof, an
SAR may be surrendered by the Optionee by delivery to the Personnel Committee on any
business day a written novice specifying the number of SARs the Optionee then desires to
surrender.
(c) Payment for the shares of Common Stock purchased pursuant to the exercise of
an Optionee shall be in either (i) cash equal to the option Price for the number of shares specified
in the Notice (the "Total option Price"), or (ii) in the discretion of the Personnel Comm ittee,
shares of Common Stock of the Company with a fair market value, determined in accorda nce
with Section 7(d) hereof, as of the effective date of exercise of the Incentive Option, e qual to or
less than the Total Option Price, plus cash, for an amount equal to the amount, i f any, by which
the Total Option Price exceeds the fair market value of the Common Stock.
(d) Except as provided to the contrary in Sections 7(c) and 13 hereof, an Incentive
Option granted hereunder shall remain outstanding and shall be exercisable only so long as the
person to whom such Incentive Option was granted remains an Employee.
9. STOCK APPRECIATION RIGHTS
(a) The Committee may, but shall not be obligated to, from time to time, authorize
the granting of stock appreciation rights ("SARs") to such Directors or Employees as the
Committee shall in its discretion select. Each SAR may either relat e to one or more shares
subject to a specific Option or may be granted independently of any Option. The terms of suc h
SARs shall authorize the Company to accept the surrender of the SAR (or portion thereof) in
consideration for the payment by the Company of an amount equal to the excess of the fa ir
market value of the shares of Common Stock subject to such SAR (or portion thereof)
surrendered over the Option Price of the SAR. Such payment shall be made in cash, and in no
event shares of Common Stock.
(b) Any election by an Optionee to exercise the SARs in this section shall be ma de
during the period beginning on the third business day following the release for publication of
quarterly or annual financial information and ending on the twelfth business day following such
date. This condition shall be deemed to be satisfied when the specified financi al data is first
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made publicly available. Notwithstanding the foregoing, no SAR shall be exercisable (i) unless at
the time of surrender the Company and its Subsidiaries have the ability to pay cash dividends,
and (ii) to the extent that Wilmington Savings Fund Society would not, at the time of such
exercise, have sufficient capital to exceed its federal regulatory capital requirements by an
amount at least equal to the difference between the then aggregate fair marke t value of shares
subject to all SARs which are then exercisable over the aggregate exercise price of such SARs.
10. RELEASE OF FINANCIAL INFORMATION
A copy of the Company's annual report to stockholders shall be delivered to each
Optionee. Upon request, the Company shall furnish to each Optionee a copy of its most rece nt
Annual Report on Form 10-K and each Quarterly Report on Form 10-Q and Current Report on
Form 8-K filed with the Securities Exchange Commission or the applicable federal agenc y with
which such reports are filed, since the end of the Company's prior fiscal year.
11. USE OF PROCEEDS FROM STOCK
Proceeds from the sale of Common Stock pursuant to Options granted under the Plan
constitute general funds of the Company.
12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
(a) If the outstanding shares of the Company's Common Stock as a whole are
increased, decreased or changed into, or exchange for, a different number or kind of shares or
securities of the Company, whether through merger, consolidation, reorganization,
recapitalization, reclassification, stock dividend, stock split, combination of shares, c hange in
corporate structure or the like, an appropriate and proportionate adjustment shall be made in the
number and kinds of Shares subject to the Plan, and in the share exercise price of Shares subject
to the Plan, and in the number, kinds, and per share exercise price of Shares subject to
unexercised options or portions thereof granted prior to any such change. Any such adjustment in
an outstanding Award, however, shall be made without a change in the total price appl icable to
the unexercised portion of the Award, but with a corresponding adjustment in the number of
shares and price for each share of Common Stock covered by the Award.
(b) Upon the effective date of a Terminating Transaction, each Director or
Employee to whom an Award has been granted under this Plan (or such Director's or Employee's
estate or a person who acquired the right to exercise the award from such Director or Employe e
by bequest or inheritance) shall be entitled prior to the effective date of any such Terminating
Transaction, (i) to exercise, in whole or in part, his or her rights under any Award granted t o him
or her without regard to any restrictions on exercise that would otherwise apply, or (ii) to
surrender any such Award to the Company in exchange for receipt of such Shares of Common
Stock or other securities or cash as the Optionee would have received had he exercised his or her
Award in full prior to completion of such Terminating Transaction. To the extent tha t a Director
or an Employee, pursuant to this Section 12(b), has a right to exercise or surrender any Award on
account of a Terminating Transaction, the exercise or surrender of such Award shall be
contingent upon the consummation of such Terminating Transaction.
(c) Adjustments under this Section 12 shall be made by the Personnel
Committee, whose determination as to what adjustment shall be made, and the extent
thereof, shall be conclusive. The Personnel Committee shall have the discretion and power
in any such event to determine and to make effective provision for the accelerati on of the
time during which the Award may be exercised, notwithstanding the provisions of the
option setting forth the date or dates of which all or any part of it may be e xercised. No
fractional shares of Common Stock shall be issued under the Plan on account of any
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adjustment specified above.
13. TERMINATION OF EMPLOYMENT OR SERVICE
(a) In the event of the death of an Optionee while in the Continuous Service of
the Company, a Parent or a Subsidiary, the Awards, whether or not exercisable at the tim e of
the death of the Optionee, may be exercised, as provided in Section 8 hereof, by the estate of
the Optionee or by a person who acquired the right to exercise such Award by bequest or
inheritance from such Optionee, within one year after the date of such death, but not la ter
than the date on which the Award would otherwise expire.
(b) If the Continuous Service of an Optionee is terminated by reason of
disability, as defined in Section 22(e)(3) of the Code, the Awards held by such Optionee
may be exercised, whether or not exercisable at the time of such termination of Continuous
Service, within one year after such termination, but not later than the date on whic h such
Awards would otherwise expire.
(c) If the Continuous Service of an Optionee is terminated for cause, Awards
held by such Optionee shall, to the extent not theretofore exercised, be cancelled
immediately upon such termination. "Cause" is defined as the Optionee's breach of fiducia ry
duty involving personal dishonesty and intentional failure to perform stated duties or the
willful violation of any law, rule, regulation, or final cease and desist order whic h results in
loss to the Company, a Parent, or any Subsidiary thereof, except as such term is otherwise
defined in an employment contract between the Optionee and the Company, a Parent or any
Subsidiary thereof.
(d) If the Continuous Service of an Optionee is voluntarily or involuntarily
terminated upon a change in control of the Company, as defined in Section 7(c) hereof, and
other than for Cause, as provided in Section 13(c) above, the Optionee shall be permitte d to
exercise such Awards, whether or not exercisable at the time of such termination, for a
period of one year after the date of such termination, except that Incentive Options must be
exercised within three months after the date of such termination.
(e) If the Continuous Service of an Optionee is voluntarily or involuntarily
terminated for any reason other than those enumerated in subsections (a) through (d)
inclusive, above,
(i) he Optionee shall be permitted to exercise such Incentive Options
which are exercisable at the time of such termination for a period of three mont hs after the
date of such termination, but not later than the date on which the Incentive Options would
otherwise expire; and
(ii) he Optionee shall be permitted to exercise such Non-Incentive
Options which are exercisable at the time of such termination, and any SARs (whe ther or not
exercisable at the time of such termination), for a period of one year after the date of such
termination, but not later than the date on which such Non-Incentive Options or SARs would
otherwise expire.
(f) If subsection (a), (b), or (e) above determines the expiration date of an
Optionee's SARs, and if subsection 9(b)(i) or (ii) prohibits the SARs from being exercised
during the period after the Optionee terminates Continuous Service, then the SARs ma y be
exercised within one year after subsections 9(b)(i) and (ii) first cease to prohibit their
exercise, but in no event later than the date on which such SARs would otherwise expire.
14. AMENDMENT OF THE PLAN
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June 1993 4-491
The Board of Directors at any time, and from time to time, may amend the Plan, subject
to any required regulatory approval and to the limitation that, except as provided i n Section 12
hereof, no amendment shall be effective unless approved by the vote of a majority of the total
votes cast by the stockholders of the Company at an annual or special meeting held wi thin 12
months before or after the date of such amendment's adoption, where such amendment will:
(a) Increase the number of shares of Common Stock as to which Awards may be
granted under the Plan;
(b) hange in substance Section 6 hereof relating to eligibility to participate in the
Plan or Section hereof relating to administration of this Plan; or
(c) Increase the maximum terms of Awards as provided herein.
Except as provided in Section 12 hereof, rights and obligations under any Award granted
before amendment of the Plan shall not be altered or impaired by amendment of the Plan, except
with the consent of the Optionee.
15. EFFECTIVENESS OF THE RESTATED PLAN
The Plan, as amended and restated, shall become effective upon its adoption by t he Board
of Directors provided, however, that (i) the effectiveness of this Plan, as amended and resta ted,
shall be subject to the approval of the stockholders of the Company, within 12 months after the
adoption of this Plan by the Board of Directors, and (ii) the effectiveness of Awards granted
under this Plan prior to the date such stockholder approval is obtained shall be contingent on
such stockholder approval.
16. TERMINATION OR SUSPENSION OF OPTION PLAN
The Board of Directors at any time may terminate or suspend the Plan. Unless sooner
terminated, the Plan shall terminate on the tenth anniversary of the effective da te of its original
adoption (as specified in Section 2 hereof), but such termination shall not effect a ny Award
theretofore granted. An Award may not be granted while the Plan is suspended or after it is
terminated.
Rights and obligations under any Award granted while the Plan is in effect shall not be
altered nor impaired by suspension or termination of the Plan, except with the consent of t he
Optionee.
17. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board of Directors nor the submission of the Plan
to the stockholders of the Company for approval shall be construed as creating any limitati ons on
the power of the Board of Directors to adopt such other incentive arrangements as it may de em
desirable, including, without limitation, the granting of stock options otherwise than under this
Plan, and such arrangements may be either applicable generally or only in specific cases.
18. MANNER OF GRANT OF OPTIONS
Nothing contained in this Plan or in any resolution heretofore or hereafter adopted by the
Board of Directors or the Personnel Committee or any other committee or by the stockholde rs of
the Company with respect to this Plan shall constitute the granting of an option or a promise or
commitment to grant an Award under this Plan. The granting of an Award under this Plan sha ll
§4.206 PROXY STATEMENTS: STRATEGY & FORMS
4-492© 1993 Jefren Publishing Company, Inc.
be deemed to occur only upon the date on which the Personnel Committee, as provided for in
section 4 hereof, shall approve the grant of such Award.
19. TAX WITHHOLDING
The employer of an Optionee shall have the right to deduct or otherwise effect a
withholding of any amount required by federal, state, or local laws to be withheld wit h respect to
the grant or exercise of any Award or the sale of Common Stock acquired upon the exercise of an
Award in order for the employer to obtain a tax deduction available to the employer as a
consequence of such grant, exercise or sale, as the case may be. The Committee, i n its sole
discretion, may permit the Optionee to satisfy this obligation, in whole or in part, by irrevocably
electing to have the Company withhold shares of Common Stock, or to deliver to the Com pany
Shares of Common Stock that he already owns, having a value equal to the amount requi red to be
withheld. The value of Shares to be withheld, or delivered to the Company, shall be based on the
fair market value of the Shares, as determined in accordance with procedures to be established by
the Committee, on the date the amount of tax to be withheld is to be dete rmined (the "Tax
Date"). The Optionee's election to have Shares withheld, or delivered to the Company, for thi s
purpose shall be subject to the following restrictions:
(a) The election must be made prior to the Tax Date.
(b) The election must be irrevocable.
(c) The election will be subject to the disapproval of the Committee.
(d) If an Optionee is a person whose transactions in stock of the Company are
subject to Section 16(b) of the Securities Exchange Act of 1934 and the Plan is then int ended to
qualify under Rule 16b-3, such election may not be made within six months of the date the Award
is granted and must be made during the period beginning on the third business day and ending on
the twelfth business day that follows the release of the Company's quarterly or annual summary
statement of sales and earnings.
20. EXCULPATION AND INDEMNIFICATION The Company shall indemnify and hold harmless the members of the Board of Directors
and the members of the Personnel Committee, duly appointed in accordance with Secti on 4
hereof, from and against any and all liabilities, costs, and expenses incurred by such persons a s a
result of any act, or omission to act, in connection with the performance of such persons' dutie s,
responsibilities, and obligations under this Plan, other than such liabilities, costs a nd expenses as
may result from the negligence, gross negligence, bad faith, willful conduct, or criminal acts of
such persons.
21. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the laws of the State of
Delaware, except to the extent preempted by federal law. The Plan is intended to comply with
Rule 16b-3. Any provisions inconsistent with Rule 16b-3 shall be inoperative and shall not affect
the validity of the Plan, unless the Board of Directors shall expressly resolve that t he Plan is no
longer intended to comply with Rule 16b-3.
Star States Corporation 7/13/92
