As filed with the Securities and Exchange Commission on January 11, 2000
Registration No. 333-_______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
XYBERNAUT CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 54-1799851
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12701 FAIR LAKES CIRCLE, FAIRFAX, VIRGINIA 22033
(Address of Principal Executive Offices) (Zip Code)
1996 OMNIBUS STOCK INCENTIVE PLAN
1997 STOCK INCENTIVE PLAN
and
1999 STOCK INCENTIVE PLAN
(Full title of the plan)
EDWARD G. NEWMAN
12701 FAIR LAKES CIRCLE
FAIRFAX, VIRGINIA 22033
(703) 631-6925
(Name, address and telephone number, including area code, of agent for service)
with a copy to:
Martin Eric Weisberg, Esq.
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
(212) 704-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Proposed Proposed
Title of each class of securities Amount To Maximum Maximum Amount Of
to be registered Be Registered Aggregate Price Aggregate Registration
Per Share Offering Price Fee
- ------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value per share 5,300,000 (1) $5.657 (2) $29,982,100 $8,334.99
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(1) Pursuant to Rule 416(b), there shall also be deemed covered hereby all
additional securities resulting from anti-dilution adjustments under the
1996 Omnibus Stock Incentive Plan, the 1997 Stock Incentive Plan and the
1999 Stock Incentive Plan.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h) and (c), the average ($5.657) of the closing bid
($5.625) and closing asked ($5.688) price on the Nasdaq SmallCap Market on
January 6, 2000.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by the registrant with the
Securities and Exchange Commission (Commission File No.0-15086) pursuant to
Section 13(a) of the Securities Exchange Act of 1934 (the "1934 Act") are
incorporated herein by reference:
(a) The registrant's Annual Report on Form 10-KSB for the
year ended December 31, 1998;
(b) The registrant's Quarterly Reports on Form 10-QSB for
the quarters ended March 31, 1999, June 30, 1999 and
September 30, 1999; and
(c) The description of the registrant's common stock
contained in the registrant's registration statement
on Form SB-2/A filed on July 15,1996, including any
amendment or report filed for the purpose of updating
such descriptions.
All documents filed subsequent to the date of this
registration statement pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934
Act and prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of the filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this registration statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not required, inasmuch as the registrant's common stock is
registered under Section 12 of the Exchange Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The description of the indemnification and insurance provided
to the officers and directors of the Registrant contained under "Management" in
the registrant's registration statement on Form SB-2/A (Registration No.
333-04156) is hereby incorporated by reference.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
See Exhibit Index on page 9 of this registration statement.
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of this
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in this registration statement, notwithstanding
the foregoing, any increase or decrease in
volume of securities offered if the total
dollar value of securities offered would not
exceed that which was registered) and any
deviation from the low or high end of the
estimated maximum offering range may be
reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price
represent no more than 20 percent change in the
maximum aggregate offering price set forth in
"Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in this registration
statement or any material change to such
information in this Registration Statement;
<PAGE>
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8, and the information required to
be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions described in Item 6
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fairfax, the Commonwealth of Virginia on January
6, 2000.
XYBERNAUT CORPORATION
By: /s/ Edward G. Newman
------------------------
Edward G. Newman
Chairman of the Board, President
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature below constitutes and appoints each of Edward G. Newman and Steven A.
Newman his true and lawful attorney-in-fact and agent, each with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities indicated on the 6th day of January, 2000.
Signature Title
--------- -----
By:/s/ Edward G. Newman Chairman of the Board, President and Chief
----------------------- Executive Officer
Edward G. Newman
By:/s/ Martin Eric Weisberg Secretary and Director
-------------------------
Martin Eric Weisberg
<PAGE>
By: /s/ Lt. Gen. Harry E. Soyster Director
------------------------------
Lt. Gen. Harry E. Soyster
By:/s/ James J. Ralabate Director
-----------------------------
James J. Ralabate
By: /s/ Keith P. Hicks Director
-----------------------------
Keith P. Hicks
By: /s/ Steven A. Newman Director
-----------------------------
Steven A. Newman
By:/s/ Phillip E. Pearce Director
------------------------------
Phillip E. Pearce
By:/s/ Eugene J. Amobi Director
------------------------------
Eugene J. Amobi
*By:/s/ Edward G. Newman Director
-----------------------------
Edward G. Newman
Attorney-in-fact
<PAGE>
SECURITIES AND
EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
-------------
EXHIBITS
TO
REGISTRATION STATEMENT
ON
FORM S-8
UNDER
THE SECURITIES ACT OF 1933
-------------
XYBERNAUT CORPORATION
(EXACT NAME OF ISSUER AS SPECIFIED
IN ITS CHARTER)
JANUARY 6, 2000
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
5.1 Opinion of Parker Chapin Flattau & Klimpl, LLP, as to the legality of the
common stock being offered.
23.1 Consent of Parker Chapin Flattau & Klimpl, LLP (included in their opinion filed
as Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP
24.1 Power of attorney of certain officers and directors of the registrant (contained in
the signature page).
99.1 1996 Omnibus Stock Incentive Plan.
99.2 1997 Stock Incentive Plan.
99.3 1999 Stock Incentive Plan.
</TABLE>
EXHIBIT 5.1
January 11, 2000
Xybernaut Corporation
12701 Fair Lakes Circle
Fairfax, Virginia 22033
Gentlemen:
We have acted as counsel to Xybernaut Corporation, a Delaware
corporation (the "Company") in connection with its Registration Statement on
Form S-8 (the "Registration Statement") to be filed with the Securities and
Exchange Commission relating to the registration of (i) 5,300,000 shares of
Common Stock, par value $.01 per share (the "Common Stock"), of the Company
issuable upon exercise of options granted pursuant to Section 701 under the
Securities Act of 1933, as amended (the "Rule 701 Issuances"); (ii) 650,000
shares of Common Stock issuable upon exercise of options granted or to be
granted under the Company's 1996 Omnibus Stock Incentive Plan (the "1996 Plan");
(iii) 1,650,000 shares of Common Stock issuable upon exercise of options granted
or to be granted pursuant to the Company's 1997 Stock Incentive Plan (the "1997
Plan"); and (iv) 3,000,000 shares of Common Stock issuable upon the exercise of
options granted or to be granted pursuant to the Company's 1999 Stock Incentive
Plan (the "1999 Plan"). All of such shares are collectively referred to herein
as the "Shares".
In connection with the foregoing, we have examined, among other things,
the agreements relating to the Rule 701 Issuances, the 1996 Plan, the 1997 Plan
and the 1999 Plan, the Registration Statement and originals or copies,
satisfactory to us, of all such corporate records and of all such agreements,
certificates and other documents as we have deemed relevant and necessary as a
basis for the opinion hereinafter expressed. In such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity with the original documents of
documents submitted to us as copies. As to any facts material to such opinion,
we have, to the extent that relevant facts were not independently established by
us, relied on certificates of public officials and certificates, oaths and
declarations of officers or other representatives of the Registrant.
Based upon and subject to the foregoing, we are of the opinion that the
Shares to be issued pursuant to the exercise of options granted or to be granted
under the Rule 701 Issuances, the 1996 Plan, the 1997 Plan and the 1999 Plan
will be, when issued pursuant to the provisions of Rule 701, the 1996 Plan, the
1997 Plan and the 1999 Plan, as applicable, validly issued, fully paid and
non-assessable.
<PAGE>
We hereby consent to the filing of a copy of this opinion as an exhibit
to the Registration Statement.
Very truly yours,
/s/ Parker Chapin Flattau & Klimpl, LLP
--------------------------------------
Parker Chapin Flattau & Klimpl, LLP
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated April 14, 1999 relating to the
consolidated financial statements, which appears in Xybernaut Corporation's
Annual Report on Form 10-KSB for the year ended December 31, 1998.
/s/ PricewaterhouseCoopers LLP
McLean, Virginia
January 11, 2000
EXHIBIT 99.1
XYBERNAUT CORPORATION
1996 OMNIBUS STOCK INCENTIVE PLAN
1. General. This omnibus Stock Incentive Plan (the "Plan") provides
eligible employees of Xybernaut Corporation (the "Company") with the opportunity
to acquire or expand their equity interest in the Company by making available
for award or purchase shares of $.Ol par value common stock of the company
("Common Shares"), through the granting of nontransferable options to purchase
Common Shares ("Stock Options"), the granting of Common Shares subject to
temporal restrictions on transfer and substantial risks of forfeiture
("Restricted Stock"), and the granting of nontransferable options to receive
payments based on the appreciation of Common Shares ("SARs"). Stock Options,
Restricted Stock and SARs shall be collectively referred to herein as "Grants";
an individual grant of Stock Options, Restricted Stock or SARs shall be
individually referred to herein as a "Grant". It is intended that key employees
may be granted, simultaneously or from time to time, Stock Options that qualify
as incentive stock options ("Incentive Stock Options") under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") or Stock Options that do
not so qualify ("Non-qualified Stock Options"). No provision of the Plan is
intended or shall be construed to grant employees alternative rights in any
Incentive Stock Option granted under the Plan so as to prevent such Option from
qualifying under Section 422 of the Code.
2. Purpose of the Plan. The purpose of the Plan is to provide
continuing incentives to key employees of the Company and of any subsidiary
corporation of the Company, by encouraging such key employees to acquire new or
additional share ownership in the
<PAGE>
Company, thereby increasing their proprietary interest in the Company's business
and enhancing their personal interest in the Company's success.
For purposes of the Plan, a "subsidiary corporation" consists
of any corporation fifty percent (50%) of the stock of which is directly or
indirectly owned or controlled by the company.
3. Effective Date of the Plan. The Plan shall become effective upon
its adoption by the Board of Directors, subject to approval by holders of a
majority of the outstanding shares of voting capital stock of the Company. If
the Plan is not so approved within twelve (12) months after the date the Plan is
adopted by the Board of Directors, the Plan and any Grants made hereunder shall
be null and void. However, if the Plan is so approved, no further shareholder
approval shall be required with respect to the making of Grants pursuant to the
Plan, except as provided in Section 12 hereof.
4. Administration of the Plan. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company, or by any other
committee selected by such Board of Directors by majority vote and composed of
no fewer than two (2) members of such Board of Directors (the "Committee"). No
person shall be appointed to the Committee who, during the one year period
immediately preceding such person's appointment to the Committee, has received
any Grants under the Plan or any similar stock option or stock incentive plan,
other than a formula-based plan, maintained by the Company or any subsidiary
corporation. A member of the Committee shall not be eligible to participate in
this Plan while serving on the Committee.
<PAGE>
A majority of the Committee shall constitute a quorum. The acts of a
majority of the members present at any meeting at which a quorum is present (or
acts unanimously approved in writing by the members of the Committee) shall
constitute binding acts of the Committee.
Subject to the terms and conditions of the Plan, the Committee shall
be authorized and empowered:
(1) To select the key employees to whom Grants may be made;
(2) To determine the number of Common Shares to be covered by any
Grant;
(3) To prescribe the terms and conditions of any Grants made under the
Plan, and the form(s) and agreement (s) used in connection with such Grants,
which shall include agreements governing the granting of Restricted Stock, Stock
Options and/or SARS;
(4) To determine the time or times when Stock Options and/or SARs will
be granted and when they will terminate in whole or in part;
(5) To determine the time or times when Stock options and SARs that
are granted may be exercised;
(6) To determine, at the time a Stock Option is granted under the
Plan, whether such Option is an incentive Stock Option entitled to the benefits
of Section 422 of the Code;
(7) To establish any other Stock option agreement provisions not
inconsistent with the terms and conditions of the Plan or, where the Stock
Option is an Incentive Stock Option, with the terms and conditions of Section
422 of the Code; and
-3-
<PAGE>
(8) To determine whether SARs will be made part of any Grants
consisting of Stock Options, and to approve any SARs made part of any such
Grants pursuant to Section 9 hereof.
5. Employees Eligible for Grants. Grants may be made from time to time
to those key employees of the Company or a subsidiary corporation, who are
designated by the Committee in its sole and exclusive discretion. Key employees
may include, but shall not necessarily be limited to, members of the Board of
Directors (excluding members of the Committee), and officers, of the Company and
any subsidiary corporation; however, Stock Options intended to qualify as
Incentive Stock Options shall only be granted to key employees while actually
employed by the Company or a subsidiary corporation. The Committee may grant
more than one Stock Option, with or without SARS, to the same key employee. No
Stock Option shall be granted to any key employee during any period of time when
such key employee is on a leave of absence.
6. Shares Subject to the Plan. The shares to be issued pursuant to any
Grant made under the Plan shall be Common Shares. Either Common Shares held as
treasury stock, or authorized and unissued Common Shares, or both, may be so
issued, in such amount or amounts within the maximum limits of the Plan as the
Board of Directors shall from time to time determine. In the event a SAR is
granted in tandem with a Stock Option pursuant to Section 9 and such SAR is
thereafter exercised in whole or in part, then such Stock Option or the portion
thereof to which the duly exercised SAR relates shall be deemed to have been
exercised for purposes of such Option, but may be made available for reoffering
under the Plan to any eligible employee.
-4-
<PAGE>
Subject only to the provisions of the next succeeding
paragraph of this Section 6, the aggregate number of Common Shares made subject
to all Grants under the Plan shall be six hundred and fifty thousand (650,000)
Common Shares. Such aggregate number of Common Shares shall not include any
Common Shares reacquired or never issued due to a forfeiture, exchange or
relinquishment of rights under a Grant made hereunder.
If, at any time subsequent to the date of adoption of the Plan
by the Board of Directors, the number of common Shares are increased or
decreased, or changed into or exchanged for a different number or kind of shares
of stock or other securities of the Company or of another corporation (whether
as a result of a stock split, stock dividend, combination or exchange of shares,
exchange for other securities, reclassification, reorganization, redesignation,
merger, consolidation, recapitalization or otherwise): (i) there shall
automatically be substituted for each Common Share subject to an unexercised
Stock Option or SAR (in whole or in part) granted under the Plan, the number and
kind of shares of stock or other securities into which each outstanding Common
Share shall be changed or for which each such Common Share shall be exchanged;
(ii) the option price per Common Share or unit of securities shall be increased
or decreased proportionately so that the aggregate purchase price for the
securities subject to a Stock Option or SAR shall remain the same as immediately
prior to such event; and (iii) any outstanding Restricted Stock that is
converted, exchanged or otherwise changed into a different number or kind of
stock or security, shall continue to be subject to any and all terms, conditions
and restrictions originally applicable to such Restricted Stock. In addition to
the foregoing, the Committee shall be entitled in the event of any such
increase, decrease or exchange of Common Shares to make other adjustments to the
securities subject to a Stock Option or SAR, the
-5-
<PAGE>
provisions of the Plan, and to any related Stock Option or SAR agreements
(including adjustments which may provide for the elimination of fractional
shares), where necessary to preserve the terms and conditions of any Grants
hereunder.
7. Stock Option Provisions.
(1) General. The Committee may grant to key employees (also referred
to as "optionees") nontransferable Stock Options that either qualify as
Incentive Stock Options under Section 422 of the Code or do not so qualify.
However, any Stock Option which is an Incentive Stock Option shall only be
granted within 10 years from the earlier of (i) the date this Plan is adopted by
the Board of Directors of the company; or (ii) the date this Plan is approved by
the shareholders of the Company.
(2) Stock Option Price. The option price per Common Share which may be
purchased under an Incentive Stock Option under the Plan shall be determined by
the Committee at the time of Grant, but shall not be less than one hundred
percent (100%) of the fair market value of a Common Share, determined as of the
date such Option is granted; however, if a key employee to whom an Incentive
Stock Option is granted is, at the time of the grant of such Option, an "owner,"
as defined in Section 422 (b) (6) of the Code (modified as provided in Section
424(d) of the Code) of more than ten percent (10!k) of the total combined voting
power of all classes of stock of the Company or any subsidiary corporation (a
"Substantial Shareholder"), the price per Common Share of such Option, as
determined by the Committee, shall not be less than one hundred ten percent
(110%) of the fair market value of a Common Share on the date such option is
granted. The option price per Common Share under each Stock Option granted
pursuant to the Plan which is not an incentive Stock Option shall be determined
-6-
<PAGE>
by the Committee at the time of Grant. Except as specifically provided above,
the fair market value of a Common Share shall be determined in accordance with
procedures to be established by the Committee. The day on which the Committee
approves the granting of a Stock Option shall be considered the date on which
such Option is granted.
(3) Period of Stock Option. The Committee shall determine when each
Stock Option is to expire. However, no Incentive Stock Option shall be
exercisable for a period of more than ten (10) years from the date upon which
such Option is granted. Further, no Incentive Stock Option granted to an
employee who is a Substantial Shareholder at the time of the grant of such
Option shall be exercisable after the expiration of (5) years from the date of
grant of such option.
(4) Limitation on Exercise and Transfer of Stock Options. Only the key
employee to whom a Stock Option is granted may exercise such Option, except
where a guardian or other legal representative has been duly appointed for such
employee, and except as otherwise provided in the case of such employee's death.
No Stock Option granted hereunder shall be transferable by an optionee other
than by will or the laws of descent and distribution. No Stock Option granted
hereunder may be pledged or hypothecated, nor shall any such Option be subject
to execution, attachment or similar process.
(5) Employment, Holding Period Requirements For Certain Options. The
Committee may condition any Stock Option granted hereunder upon the continued
employment of the optionee by the Company or by a subsidiary corporation, and
may make any such Stock Option immediately exercisable. However, the Committee
will require that, from and after the date of grant of any Incentive Stock
Option granted hereunder until the day three (3) months
-7-
<PAGE>
prior to the date such Option is exercised, such optionee must be an employee of
the Company or of a subsidiary corporation, but always subject to the right of
the Company or any such subsidiary corporation to terminate such optionee
employment during such period. Each Stock Option shall be subject to such
additional restrictions as to the time and method of exercise as shall be
prescribed by the Committee. Upon completion of such requirements, if any, a
Stock Option or the appropriate portion thereof may be exercised in whole or in
part from time to time during the option period; however, such exercise right(s)
shall be limited to whole shares.
(6) Payment for Stock Option Price. A Stock Option shall be exercised
by an optionee giving written notice to the Company of his intention to exercise
the same, accompanied by full payment of the purchase price. Such purchase price
shall be paid with cash or check, or with a surrender of Common Shares having a
fair market value on the date of exercise equal to that portion of the purchase
price for which payment in cash or check is not made. The Committee may, in its
sole discretion, approve other methods of exercise for a Stock Option or payment
of the option price, provided that no such method shall cause any option granted
under the Plan as an Incentive Stock Option to not qualify under Section 422 of
the Code, or cause any Common Share issued in connection with the exercise of an
option not to be a fully paid and nonassessable Common Share.
(7) Certain Reissuances of Stock Options. To the extent Common Shares
are surrendered by an optionee in connection with the exercise of a Stock Option
in accordance with Section 7(f), new Stock options shall automatically be
granted to such optionee (to the extent Common Shares remain available for
Grants); such newly granted stock Options shall have the following terms and
conditions:
-8-
<PAGE>
(1) The number of Common Shares shall be equal to the number of
Common Shares being surrendered by the optionee;
(2) The option price per Common Share shall be equal to the fair
market value of Common Shares, determined on the date of
exercise of the Stock options whose exercise caused such
Grant; and
(3) A majority of the Committee shall constitute a quorum. The
acts of a majority of the members present at any meeting at
which a quorum is present (or acts unanimously approved in
writing by the members of the Committee) shall constitute
binding acts of the Committee. The terms and conditions of
such Stock Options shall in all other respects replicate
such terms and conditions of the Stock Options whose
exercise caused such Grant, except to the extent such terms
and conditions are determined not to be wholly consistent
with the general provisions of this section 7, or in
conflict with the remaining provisions of this Plan.
(8) Cancellation and Replacement of Stock Options and Related Rights.
The Committee may at any time or from time to time permit the voluntary
surrender by an optionee who is the holder of any outstanding Stock Options
under the Plan, where such surrender is conditioned upon the granting to such
optionee of new Stock Options for such number of shares as the Committee shall
determine, or may require such a voluntary surrender as a condition precedent to
the grant of new Stock Options. The Committee shall determine the terms and
-9-
<PAGE>
conditions of new Stock Options, including the prices at and periods during
which they may be exercised, in accordance with the provisions of this Plan, all
or any of which may differ from the terms and conditions of the Stock Options
surrendered. Any such new Stock Options shall be subject to all the relevant
provisions of this Plan. The Common Shares subject to any Stock Option so
surrendered shall no longer be charged against the limitation provided in
Section 6 of this Plan and may again become shares subject to the Plan. The
granting of new Stock options in connection with the surrender of outstanding
Stock Options under this Plan shall be considered for the purposes of the Plan
as the granting of new Stock Options and not an alteration, amendment or
modification of the Plan or of the Stock options being surrendered
(9) Limitation on Exercisable Incentive Stock Options. The aggregate
fair market value of the Common Shares first becoming subject to exercise as
Incentive Stock Options by a key employee during any given calendar year shall
not exceed the sum of one hundred thousand dollars ($100,000). Such aggregate
fair market value shall be determined as of the date such Option is granted,
taking into account, in the order in which granted, any other incentive stock
options granted by the Company, or by a parent or subsidiary thereof.
8. Restricted Stock.
(1) Grant. The Committee shall determine the key employees to whom,
and the time or times at which, Grants of Restricted Stock will he made, the
number of shares of Restricted Stock to be granted, the price (if any) to be
paid by such key employees (subject to Section 8 (b)), the time or times within
which such Restricted Stock grants may be subject to forfeiture, and the other
terms and conditions of the grants in addition to those set forth in Section
8(b). The Committee may condition the grant of Restricted Stock upon the
attainment of
-10-
<PAGE>
specified performance goals or such other factors as the Committee may determine
in its sole discretion.
(2) Terms and Conditions. Restricted Stock granted under the Plan
shall contain any terms and conditions, not inconsistent with the provisions of
the Plan, imposed by the Committee. A key employee who receives a grant of
Restricted Stock shall not have any rights with respect to such Grant, unless
and until such key employee has executed an agreement evidencing such Grant in
the form approved from time to time by the Committee, has delivered a fully
executed copy thereof to the Company, and has otherwise complied with the
applicable terms and conditions of such Grant. In addition, Restricted Stock
granted under the Plan shall be subject to the following terms and conditions:
(1) The purchase price for Common Shares consisting of
Restricted Stock, if any, will be equal to their stated
value.
(2) Grants of Restricted Stock shall only be accepted by
executing a Restricted Stock agreement and paying whatever
price (if any) is required under Section 8(b)(i).
(3) Each key employee granted Restricted Stock shall be issued a
stock certificate in respect of such shares of Restricted
Stock. Such certificate shall be registered in the name of
such key employee, and shall bear an appropriate legend
referring to the terms, conditions, and restrictions
applicable to such Grant.
(4) Any stock certificates evidencing Common Shares consisting
of Restricted Stock shall either (A) be held in custody by
the
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Company until the employment and other restrictions thereon
shall all have lapsed; or (B) be affixed with a legend,
identifying such Shares as Restricted Stock and expressly
prohibiting the sale, transfer, tender, pledge, assignment
or encumbrance of such Shares, as the Committee shall
determine. With respect to any Restricted Stock held in
custody by the Company, the key employee granted such
Restricted Stock shall deliver to the Company a stock power,
endorsed in blank, relating to the Common Shares represented
by such Stock. With respect to any Restricted Stock held by
a key employee under legend, the key employee granted such
Restricted Stock shall deliver to the Company an
acknowledgment that such stock remains subject to a
substantial risk of forfeiture in the event of termination
of employment under certain circumstances.
(5) Subject to the provisions of the Plan and the Restricted
Stock agreement, during a temporal period set by the
Committee and commencing with the date of such Grant (the
"Restriction Period"), a key employee shall not be permitted
to sell, transfer, tender, pledge, assign or otherwise
encumber any Restricted Stock granted under the Plan.
However, the Committee, in its sole discretion, may provide
for the lapse of such transfer or other restrictions in
installments, or accelerate or waive such restrictions in
whole or in
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part, based on service, performance or other factors and
criteria selected by the Committee.
(6) Except as provided in this Section 6(b) (vi) and
Section 8 (b) (v), a key employee shall have, with
respect to shares of Restricted Stock granted to him,
all of the rights of a shareholder of the Company,
including the right to vote such Stock and the right to
receive any dividends thereon. The Committee, in its
sole discretion and as determined at the time of a
Grant of Restricted Stock, may permit or require cash
dividends otherwise due and payable to be deferred and,
if the Committee so determines, reinvested either in
additional Restricted Stock (to the extent Common
Shares are available), or otherwise. Stock dividends
issued with respect to Restricted Stock shall be
treated as additional shares of Restricted stock. As
Restricted Stock, such additional Common Shares will be
subject to the same restrictions, terms and conditions
applicable to the Restricted Stock with respect to
which such additional Common Shares were issued.
(7) No Restricted Stock shall be transferable by a key
employee other than by will or by the laws of descent
and distribution.
(3) Minimum Value Provisions. To ensure that Grants of Restricted
Stock reflect the performance of the Company and service of the key employee,
the Committee may provide, in its sole discretion, for a tandem
performance-based award, or other grant, designed to
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guarantee a minimum value, payable in cash or Common Shares, to the recipient of
a Restricted Stock Grant, subject to such performance, future service, deferral
and other terms and conditions as may be specified by the Committee.
9. Stock Appreciation Rights. A key employee may be granted the right
to receive a payment based on the increase in the value of common Shares
occurring after the date of such Grant; such rights shall be known as Stock
Appreciation Rights ("SARs"). SARs may (but need not) be granted to a key
employee in tandem with, and exercisable in lieu of exercising, a Grant of Stock
Options. SARs will be granted upon terms and conditions specified by the
Committee, if the Company is the employer of the key employee, or by a
subsidiary corporation subject to the Committee Is approval, if such subsidiary
corporation is the employer of the key employee. No optionee shall be entitled
to SAR rights solely as a result of the grant of a Stock Option to him. Any such
rights, if granted, may only be exercised by the holder thereof, either with
respect to all, or a portion, of the Stock Option to which it applies. When
granted in tandem with a Stock Option, an SAR shall provide that the holder of a
Stock option shall have the right to receive an amount equal to one hundred
percent (100%) of the excess, if any, of the fair market value of the Common
Shares covered by such Option, determined as of the date of exercise of such SAR
by the Committee (in the same manner as such value is determined for purposes of
the granting of Stock Options), over the price to be paid for such Common Shares
under such Option. Such amount shall he payable by either the Company or the
subsidiary corporation, whichever is the employer of the key employee, in one or
more of the following manners, as determined by the Committee, if the Company is
the employer of the key employee,
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<PAGE>
or by the subsidiary corporation subject to the Committee's approval, if such
subsidiary corporation is the employer of the key employee:
(1) cash (or check);
(2) fully paid Common Shares having a fair market value equal to such
amount; or
(3) a combination of cash (or check) and Common Shares. In no event
may any person exercise any SARs granted hereunder unless (i) such person is
then permitted to exercise the Stock Option or the portion thereof with respect
to which such SARs relate, and -(ii) the fair market value of the Common Shares
covered by the Stock Option, determined as provided above, exceeds the option
price of such Common Shares. Upon the exercise of any SARS, the Stock Option, or
that portion thereof to which such SARs relate, shall be canceled and
automatically extinguished. A SAR granted in tandem with a Stock Option
hereunder shall be made a part of the Stock Option agreement to which such SAR
relates, in a form approved by the Committee and not inconsistent with this
Plan. The granting of a Stock Option or SAR shall impose no obligation upon the
optionee to exercise such Stock Option or SAR. The Company's or a subsidiary
corporation's obligation to satisfy SARs shall not be funded or secured in any
manner. No SAR granted hereunder shall be transferable by the key employee
granted such SAR, other than by will or the laws of descent and distribution.
After the Grant of an SAR, an optionee intending to rely on an
exemption from Section 16(b) of the Securities Exchange Act of 1-934 (the
"Exchange Act") shall be required to hold such SAR for six (6) months from the
date the price for such SAR is fixed to the date of cash settlement.
Additionally, in order to remain exempt from Section 16 (b) of the Exchange
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<PAGE>
Act, an SAR must be exercised by an optionee subject to such Section only during
the period beginning on the third business day following the release of a
summary statement of the Company's quarterly or annual sales and earnings and
ending on the twelfth business day following said date.
10. Termination of Employment. If a key employee ceases to be an
employee of the Company and every subsidiary corporation, for a reason other
than death, retirement, or permanent and total disability, his Grants shall,
unless extended by the Committee on or before his date of termination of
employment, terminate on the effective date of such termination of employment.
Neither the key employee nor any other person shall have any right after such
date to exercise all or any part of his Stock Options or SARS, and all
Restricted Stock which is not vested or otherwise subject to restriction shall
thereupon be forfeited, and/or declared void and without value.
If termination of employment is due to death or permanent and total
disability, then outstanding Stock Options and SARs may be exercised within the
one (1) year period ending on the anniversary of such death or permanent and
total disability. In the case of death, such outstanding Stock Options and SARs
shall be exercised by such key employee's estate, or the person designated by
such key employee by will, or as otherwise designated by the laws of descent and
distribution. Notwithstanding the foregoing, in no event shall any Stock Option
or SAR be exercisable after the expiration of the option period, and in the case
of exercises made after a key employee's death, not to any greater extent than
the key employee would have been entitled to exercise such Option or SAR at the
time of his death. Restricted Stock held by a key employee whose employment by
the Company or any subsidiary corporation terminates by
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<PAGE>
reason of death shall thereupon vest and all restrictions and risks of
forfeiture thereon shall thereupon lapse.
Subject to the discretion of the Committee, in the event a key
employee terminates employment with the Company and all subsidiary corporations
because of normal or early retirement under any pension plan, or permanent and
total disability, (a) any then outstanding Stock Options and/or SAR held by such
key employee shall lapse at the earlier of the end of the term of such Stock
Option or SAR, or three (3) months after such retirement or permanent and total
disability; and (b) any Restricted Stock held by such key employee shall
thereafter vest and any applicable restrictions shall lapse, to the extent such
Restricted Stock would have become vested or no longer subject to restriction
within one year from the time of termination had the key employee continued to
fulfill all of the conditions of the Restricted Stock during such period (or on
such accelerated basis as the Committee may determine at or after date of
Grant).
In the event an employee of the Company or one of its subsidiary
corporations is granted a leave of absence by the Company or such subsidiary
corporation to enter military service or because of sickness, his employment
with the Company or such subsidiary corporation shall not be considered
terminated, and he shall be deemed an employee of the Company or such subsidiary
corporation during such leave of absence or any extension thereof granted by the
Company or such subsidiary corporation.
11. Change of Control. Upon the occurrence of a Change of Control (as
defined below), notwithstanding any other provisions hereof or of any agreement
to the contrary, all Stock options and SARs granted under this Plan shall become
immediately exercisable in full
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<PAGE>
and all Restricted Stock grants shall become immediately vested and any
applicable restrictions shall lapse.
For purposes of this Plan, a Change of Control shall be deemed to have
occurred if: (i) a tender offer shall be made and consummated for the ownership
of 25% or more of the outstanding voting securities of the Company; (ii) the
Company shall be merged or consolidated with another corporation and, as a
result of such merger or consolidation, less than 75% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the former shareholders of the Company as the same shall have
existed immediately prior to such merger or consolidation; (iii) the Company
shall sell substantially all of its assets to any purchaser other then a wholly
owned subsidiary; or (iv) a person, within the meaning of Section 3 (a) (9) or
of Section 13(d)(3) (as in effect on the date hereof) shall acquire, other than
by reason of inheritance, twenty-five percent (25%) or more of the outstanding
voting securities of the Company (whether directly, indirectly, beneficially or
of record). For purposes of this Plan ownership of voting securities shall take
into account and shall include ownership as determined by applying the
provisions of Rule 13d-3(d)(1)(i) as in effect on the date hereof pursuant to
the Exchange Act.
12. Amendments to Plan. The Committee is authorized to interpret this
Plan and from time to time adopt any rules and regulations for carrying out this
Plan that it may deem advisable. Subject to the approval of the Board of
Directors of the Company, the Committee may at any time amend, modify, suspend
or terminate this Plan. In no event, however, without the approval of
shareholders, shall any action of the Committee or the Board of Directors result
in:
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<PAGE>
(1) Materially amending, modifying or altering the eligibility
requirements provided in Section 5 hereof;
(2) Materially increasing, except as provided in Section 6 hereof, the
maximum number of shares subject to Grants; or
(3) Materially increasing the benefits accruing to participants under
this Plan; except to conform this Plan and any agreements made hereunder to
changes in the Code or governing law.
13. Investment Representation, Approvals and Listing. The Committee
may, if it deems appropriate, condition its grant of any Stock Option hereunder
upon receipt of a representation from the optionee which is substantially as
follows (and subject to modification from time to time in the discretion of the
Committee):
I agree that any Common Shares of Xybernaut Corporation which I may
acquire pursuant to this Stock Option shall he acquired for investment
purposes only and not with a view to distribution or resale, and may
not be transferred, sold, assigned, pledged, hypothecated or otherwise
disposed of by me unless (i) a registration statement or
post-effective amendment to a registration statement under the
Securities Act of 1933, as amended, with respect to said Common Shares
has become effective so as to permit the sale or other disposition of
said shares by me; or (ii) there is presented to Xybernaut Corporation
an opinion of counsel satisfactory to Xybernaut Corporation to the
effect that the sale or other proposed disposition of said Common
Shares by me may lawfully be made otherwise than pursuant to an
effective registration statement or post-effective amendment to a
registration statement relating to the said shares under the
Securities Act of 1933, as amended."
The Company shall not be required to issue any certificate or
certificates for Common Shares upon the exercise of any Stock Option or a SAR
granted under this Plan prior to (i) the obtaining of any approval from any I
governmental agency which the Company shall, in its sole discretion, determine
to be necessary or advisable; (ii) the admission of such shares to
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<PAGE>
listing on any national securities exchange on which the Common Shares may be
listed; (iii) the completion of any registration or other qualifications of the
Common Shares under any state or federal law or ruling or regulations of any
governmental body which the Company shall, in its sole discretion, determine to
be necessary or advisable or the determination by the Company, in its sole
discretion, that any registration or other qualification of the Common Shares is
not necessary or advisable; and (iv) the obtaining of an investment
representation from the optionee in the form stated above or in such other form
as the Company, in its sole discretion, shall determine to be adequate.
14. General Provisions. The form and substance of Stock Option
agreements, Restricted Stock agreements, and SAR agreements made hereunder,
whether granted at the same or different times, need not be identical. Nothing
in this Plan or in any agreement shall confer upon any employee any right to
continue in the employ of the Company or any of its subsidiary corporations, to
be entitled to any remuneration or benefits not set forth in this Plan or such
Grant, or to interfere with or limit the right of the Company or any subsidiary
corporation to terminate his employment at any time, with or without cause.
Nothing contained in this Plan or in any Stock Option agreement or SAR shall be
construed as entitling any optionee to any rights of a shareholder as a result
of the grant of a Stock Option or an SAR, until such time as Common Shares are
actually issued to such optionee pursuant to the exercise of such Option or SAR.
This Plan may be assumed by the successors and assigns of the Company. The
liability of the Company under this Plan and any sale made hereunder is limited
to the obligations set forth herein with respect to such sale and no term or
provision of this Plan shall be construed to impose any liability on the Company
in favor of any employee with respect to any lose, cost or
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<PAGE>
expense which the employee may incur in connection with or arising out of any
transaction in connection with this Plan. The cash proceeds received by the
Company from the issuance of Common Shares pursuant to this Plan will be used
for general corporate purposes. The expense of administering this Plan shall be
borne by the Company. The captions and section numbers appearing in this Plan
are inserted only as a matter of convenience. They do not define, limit,
construe or describe the scope or intent of the provisions of this Plan.
15. Termination of This Plan. This Plan shall terminate on January 1,
2006, and thereafter no Stock Options or Restricted Stock or SARs shall be
granted hereunder. All Stock options and SARs outstanding at the time of
termination of this Plan shall continue in full force and effect according to
their terms and the terms and conditions of this Plan.
IN WITNESS WHEREOF, the Company, by order of its Board of Directors,
has caused the undersigned, duly authorized officers to execute this Plan as of
the day and year first above written.
XYBERNAUT CORPORATION
By:
------------------------------
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EXHIBIT 99.2
1997 STOCK INCENTIVE PLAN
OF
XYBERNAUT CORPORATION
1. PURPOSES OF THE PLAN. This stock incentive plan (the "Plan") is
designed to provide an incentive to key employees (including directors and
officers who are key employees) and to consultants and directors who are not
employees of XYBERNAUT CORPORATION, a Delaware corporation (the "Company"), or
any of its Subsidiaries (as defined in Paragraph 18), and to offer an additional
inducement in obtaining the services of such persons. The Plan provides for the
grant of "incentive stock options" ("ISOs") within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), nonqualified stock
options which do not qualify as ISOs ("NQSOs"), stock appreciation rights
("SARs") and stock of the Company which may be subject to contingencies or
restrictions (collectively, "Awards"). The Company makes no representation or
warranty, express or implied, as to the qualification of any option as an
"incentive stock option" under the Code.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph
11, the aggregate number of shares of Common Stock, $.01 par value per share, of
the Company ("Common Stock") for which Awards may be granted under the Plan
shall not exceed 1,650,000. Such shares of Common Stock may, in the discretion
of the Board of Directors of the Company (the "Board of Directors"), consist
either in whole or in part of authorized but unissued shares of Common Stock or
shares of Common Stock held in the treasury of the Company. Subject to the
provisions of Paragraph 12, any shares of Common Stock subject to an option or
SAR which for any reason expires, is canceled or is terminated unexercised or
which ceases for any reason to be exercisable or a restricted stock Award which
for any reason is forfeited, shall again become available for the granting of
Awards under the Plan. The Company shall at all times during the term of the
Plan reserve and keep available such number of shares of Common Stock as will be
sufficient to satisfy the requirements of the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Board of Directors or a committee of the Board of Directors consisting of not
less than two directors, each of whom shall be a "non-employee director" within
the meaning of Rule 16b-3 (as defined in Paragraph 18) (collectively, the
"Committee"). Unless otherwise provided in the By-laws of the Company or by
resolution of the Board of Directors, a majority of the members of the Committee
shall constitute a quorum, and the acts of a majority of the members present at
any meeting at which a quorum is present, and any acts approved in writing by
all members without a meeting, shall be the acts of the Committee.
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Subject to the express provisions of the Plan, the Committee shall
have the authority, in its sole discretion, to determine: the key employees,
consultants and directors who shall be granted Awards; the type of Award to be
granted; the times when an Award shall be granted; the number of shares of
Common Stock to be subject to each Award; the term of each option and SAR; the
date each option and SAR shall become exercisable; whether an option or SAR
shall be exercisable in whole or in installments and, if in installments, the
number of shares of Common Stock to be subject to each installment, whether the
installments shall be cumulative, the date each installment shall become
exercisable and the term of each installment; whether to accelerate the date of
exercise of any option or SAR or installment thereof; whether shares of Common
Stock may be issued upon the exercise of an option as partly paid and, if so,
the dates when future installments of the exercise price shall become due and
the amounts of such installments; the exercise price of each option and the base
price of each SAR; the price, if any, to be paid for a share Award; the form of
payment of the exercise price of an option; the form of payment upon exercise of
an SAR; whether to restrict the sale or other disposition of a stock Award or
the shares of Common Stock acquired upon the exercise of an option or SAR and,
if so, to determine whether such contingencies and restrictions have been met
and whether and under what conditions to waive any such contingency or
restriction; whether and under what conditions to subject all or a portion of
the grant or exercise of an option or SAR, the vesting of a stock Award or the
shares acquired pursuant to the exercise of an option or SAR to the fulfillment
of certain contingencies or restrictions as specified in the contract referred
to in Paragraph 10 hereof (the "Contract"), including without limitation,
contingencies or restrictions relating to entering into a covenant not to
compete with the Company, any of its Subsidiaries or a Parent (as defined in
Paragraph 18), to financial objectives for the Company, any of its Subsidiaries
or a Parent, a division of any of the foregoing, a product line or other
category, and/or to the period of continued employment of the Award holder with
the Company, any of its Subsidiaries or a Parent, and to determine whether such
contingencies or restrictions have been met; whether an Award holder is Disabled
(as defined in Paragraph 18); the amount, if any, necessary to satisfy the
obligation of the Company, a Subsidiary or Parent to withhold taxes or other
amounts; the Fair Market Value (as defined in Paragraph 18) of a share of Common
Stock; to construe the respective Contracts and the Plan; with the consent of
the Award holder, to cancel or modify an Award, provided, that the modified
provision is permitted to be included in an Award granted under the Plan on the
date of the modification, and further, provided, that in the case of a
modification (within the meaning of Section 424(h) of the Code) of an ISO, such
Award as modified would be permitted to be granted on the date of such
modification under the terms of the Plan; to prescribe, amend and rescind rules
and regulations relating to the Plan; to approve any provision which under Rule
16b-3 requires the approval of the Board of Directors, a committee of
non-employee directors or the stockholders to be exempt (unless otherwise
specifically provided herein); and to make all other determinations necessary or
advisable for administering the Plan. Any controversy or claim arising out of or
relating to the Plan, any Award granted under the Plan or any Contract shall be
determined unilaterally by the Committee in its sole discretion. The
determinations of the Committee on the matters referred to in this Paragraph 3
shall be conclusive and binding on the parties. No member
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or former member of the Committee shall be liable for any action, failure to act
or determination made in good faith with respect to the Plan or any Award or
Contract hereunder.
4. OPTIONS
(a) GRANT. The Committee may from time to time, consistent with the
purposes of the Plan, grant options to such key employees (including officers
and directors who are key employees) of, and consultants to, the Company or any
of its Subsidiaries, and such Outside Directors, as the Committee may determine,
in its sole discretion. Such options granted shall cover such number of shares
of Common Stock as the Committee may determine, in its sole discretion, as set
forth in the applicable Contract; provided, however, that the maximum number of
shares subject to options or SARs that may be granted to any employee during any
calendar year under the Plan (the "162(m) Maximum") shall be 350,000 shares; and
further, provided, that the aggregate Fair Market Value (determined at the time
the option is granted) of the shares of Common Stock for which any eligible
employee may be granted ISOs under the Plan or any other plan of the Company, of
any of its Subsidiaries or of a Parent, which are exercisable for the first time
by such optionee during any calendar year shall not exceed $100,000. Such ISO
limitation shall be applied by taking ISOs into account in the order in which
they were granted. Any option granted in excess of such ISO limitation amount
shall be treated as a NQSO to the extent of such excess.
(b) EXERCISE PRICE. The exercise price of the shares of Common
Stock under each option shall be determined by the Committee, in its sole
discretion, as set forth in the applicable Contract; provided, however, that the
exercise price per share of an ISO shall not be less than the Fair Market Value
of a share of Common Stock on the date of grant; and further, provided, that if,
at the time an ISO is granted, the optionee owns (or is deemed to own under
Section 424(d) of the Code) stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, of any of its Subsidiaries
or of a Parent, the exercise price per share of such ISO shall not be less than
110% of the Fair Market Value of a share of Common Stock on the date of grant.
(c) TERM. The term of each option granted pursuant to the Plan
shall be determined by the Committee, in its sole discretion, as set forth in
the applicable Contract; provided, however, that the term of each ISO shall not
exceed 10 years from the date of grant thereof; and further, provided, that if,
at the time an ISO is granted, the optionee owns (or is deemed to own under
Section 424(d) of the Code) stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, of any of its Subsidiaries
or of a Parent, the term of the ISO shall not exceed five years from the date of
grant. Options shall be subject to earlier termination as hereinafter provided.
(d) EXERCISE. An option (or any part or installment thereof), to
the extent then exercisable, shall be exercised by giving written notice to the
Company at its then
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principal office stating which option is being exercised, specifying the number
of shares of Common Stock as to which such option is being exercised and
accompanied by payment in full of the aggregate exercise price therefor (or the
amount due upon exercise if the Contract permits installment payments) (a) in
cash or by certified check or (b) if the applicable Contract permits, with
previously acquired shares of Common Stock having an aggregate Fair Market Value
on the date of exercise equal to the aggregate exercise price of all options
being exercised, or with any combination of cash, certified check or shares of
Common Stock having such value. The Company shall not be required to issue any
shares of Common Stock pursuant to any such option until all required payments,
including any required withholding, have been made.
The Committee may, in its sole discretion, permit payment of all or a
portion of the exercise price of an option by delivery by the optionee of a
properly executed notice, together with a copy of his irrevocable instructions
to a broker acceptable to the Committee to deliver promptly to the Company the
amount of sale or loan proceeds sufficient to pay such exercise price. In
connection therewith, the Company may enter into agreements for coordinated
procedures with one or more brokerage firms.
An optionee entitled to receive Common Stock upon the exercise of an
option shall not have the rights of a stockholder with respect to such shares of
Common Stock until the date of issuance of a stock certificate for such shares
or, in the case of uncertificated shares, until an entry is made on the books of
the Company's transfer agent representing such shares; provided, however, that
until such stock certificate is issued or book entry is made, any optionee using
previously acquired shares of Common Stock in payment of an option exercise
price shall continue to have the rights of a stockholder with respect to such
previously acquired shares.
In no case may an option be exercised with respect to a fraction of a
share of Common Stock. In no case may a fraction of a share of Common Stock be
purchased or issued under the Plan.
(e) RELOAD OPTIONS. An optionee who, at a time when he is eligible
to be granted options under the Plan, uses previously acquired shares of Common
Stock to exercise an option granted under the Plan (the "prior option"), shall,
upon such exercise, be automatically granted an option (the "reload option") to
purchase the same number of shares of Common Stock so used (or if there is not a
sufficient number of shares available for grant under the Plan remaining, such
number of shares as are then available). Such reload options shall be of the
same type and have the same terms as the prior option (except to the extent
inconsistent with the terms of the Plan); provided, however, that the exercise
price per share of the reload option shall be equal to the Fair Market Value of
a share of Common Stock on the date of grant of the reload option, and further,
provided, that if the prior option was an ISO and at the time the reload option
is granted, the optionee owns (or is deemed to own under Section 424(d) of the
Code) stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company, of any of its Subsidiaries or of a Parent, the
exercise price per share shall be equal to
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110% of the Fair Market Value of a share of Common Stock on the date of grant
and the term of such option shall not exceed five years.
5. STOCK APPRECIATION RIGHTS.
(a) GRANT. The Committee may from time to time, consistent with the
purposes of the Plan, grant SARs to such key employees (including officers and
directors who are key employees) of, and consultants to, the Company or any of
its Subsidiaries, and such Outside Directors, as the Committee may determine in
its sole discretion. An SAR shall entitle the holder thereof to be paid,
promptly after exercise, in cash, by check or with shares of Common Stock having
an aggregate Fair Market Value on the date of exercise or any combination
thereof, as determined by the Committee, in its sole discretion, an amount equal
to the excess, if any, of the Fair Market Value on the exercise date of the
shares of Common Stock as to which the SAR is exercised over the base price of
such shares. The Contract may (but shall not be required to) provide for such
amount to be multiplied by a performance factor as set forth in the Contract;
provided, however, that such performance factor shall meet the requirements for
"qualified performance-based compensation" within the meaning of Section 162(m)
of the Code.
(b) BASE PRICE. The base price of the shares of Common Stock
subject to each SAR shall be determined by the Committee in its sole discretion;
provided, however, that the base price per share shall not be less than the Fair
Market Value of a share of Common Stock on the date of grant.
(c) TERM. The term of each SAR granted pursuant to the Plan shall
be determined by the Committee, in its sole discretion, as set forth in the
applicable Contract; provided, however, that the term of each SAR shall not
exceed 10 years from the date of grant. SARs shall be subject to earlier
termination as provided in the Plan.
(d) EXERCISE. An SAR (or any part or installment thereof), to the
extent then exercisable, shall be exercised by giving written notice to the
Company at its then principle office stating which SAR is being exercised and
specifying the number of shares of Common Stock as to which such SAR is being
exercised.
The holder of an SAR who receives shares of Common Stock upon the
exercise of an SAR shall not have the rights of a stockholder with respect to
such shares of Common Stock until the date of issuance of a stock certificate
for such shares or, in the case of uncertificated shares, until an entry is made
on the books of the Company's transfer agent representing such shares.
In no case may an SAR be exercised with respect to a fraction of a
share of Common Stock.
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6. RESTRICTED STOCK. The Committee may from time, consistent with the
purposes of the Plan, grant shares of Common Stock to such key employees
(including officers and directors who are key employees) of, or consultants to,
the Company or any of its Subsidiaries, as the Committee may determine, in its
sole discretion. The grant may cover such number of shares as the Committee may
determine, in its sole discretion, and require the Award holder to pay such
price per share therefor, if any, as the Committee may determine, in its sole
discretion. Such shares may be subject to such contingencies and restrictions as
the Committee may determine, as set forth in the Contract. Upon the issuance of
the stock certificate for a share Award, or in the case of uncertificated
shares, the entry on the books of the Company's transfer agent representing such
shares, notwithstanding any contingencies or restrictions to which the shares
are subject, the Award holder shall be considered to be the record owner of the
shares, and subject to the contingencies and restrictions set forth in the
Award, shall have all rights of a stockholder of record with respect to such
shares, including the right to vote and to receive distributions. Upon the
occurrence of any such contingency or restriction, the Award holder may be
required to forfeit all or a portion of such shares back to the Company. The
shares shall vest in the Award holder when all of the restrictions and
contingencies lapse. Accordingly, the Committee may require that such shares be
held by the Company, together with a stock power duly endorsed in blank by the
Award holder, until the shares vest in the Award holder.
7. TERMINATION OF RELATIONSHIP. Except as may otherwise be expressly
provided in the applicable Contract, if an Award holder's relationship with the
Company, its Subsidiaries and Parent as an employee or a consultant has
terminated for any reason (other than as a result of his death or Disability),
the Award holder may exercise the options and SARs granted to him as an employee
of, or consultant to, the Company or any of its Subsidiaries, to the extent
exercisable on the date of such termination, at any time within three months
after the date of termination, but not thereafter and in no event after the date
the Award would otherwise have expired; provided, however, that if such
relationship is terminated either (a) for Cause (as defined in Paragraph 18), or
(b) without the consent of the Company, such option shall terminate immediately.
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and the Company, any of its Subsidiaries
or a Parent if, at the time of the determination, the individual was an employee
of such corporation for purposes of Section 422(a) of the Code. As a result, an
individual on military, sick leave or other bona fide leave of absence shall
continue to be considered an employee for purposes of the Plan during such leave
if the period of the leave does not exceed 90 days, or, if longer, so long as
the individual's right to reemployment with the Company, any of its Subsidiaries
or a Parent is guaranteed either by statute or by contract. If the period of
leave exceeds 90 days and the individual's right to reemployment is not
guaranteed by statute or by contract, the employment relationship shall be
deemed to have terminated on the 91st day of such leave.
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Except as may otherwise be expressly provided in the applicable
Contract, options and SARs granted under the Plan shall not be affected by any
change in the status of the Award holder so long as he continues to be an
employee of, or a consultant to, the Company, or any of its Subsidiaries or a
Parent (regardless of having changed from one to the other or having been
transferred from one corporation to another).
Except as may otherwise be expressly provided in the applicable
Contract, if an Award holder's relationship with the Company as an Outside
Director ceases for any reason (other than as a result of his death or
Disability) then options and SARs granted to such holder as an Outside Director
may be exercised, to the extent exercisable on the date of such termination, at
any time within three months after the date of termination, but not thereafter
and in no event after the date the Award would otherwise have expired; provided,
however, that if such relationship is terminated for Cause, such Award shall
terminate immediately. An Award granted to an Outside Director, however, shall
not be affected by the Award holder becoming an employee of, or consultant to,
the Company, any of its Subsidiaries or a Parent.
Except as may otherwise be expressly provided in the Contract, upon
the termination of the relationship of an Award holder as an employee of, or
consultant to, the Company, and its Subsidiaries and Parent, or as an Outside
Director, for any reason (including his death or Disability), the share Award
shall cease any further vesting and the unvested portion of such Award as of the
date of such termination shall be forfeited to the Company for no consideration.
Nothing in the Plan or in any Award granted under the Plan shall
confer on any Award holder any right to continue in the employ of, or as a
consultant to, the Company, any of its Subsidiaries or a Parent, or as a
director of the Company, or interfere in any way with any right of the Company,
any of its Subsidiaries or a Parent to terminate the Award holder's relationship
at any time for any reason whatsoever without liability to the Company, any of
its Subsidiaries or a Parent.
8. DEATH OR DISABILITY. Except as may otherwise be expressly provided
in the applicable Contract, if an Award holder dies (a) while he is an employee
of, or consultant to, the Company, any of its Subsidiaries or a Parent, (b)
within three months after the termination of such relationship (unless such
termination was for Cause or without the consent of the Company) or (c) within
one year following the termination of such relationship by reason of his
Disability, the options and SARs that were granted to him as an employee of, or
consultant to, the Company or any of its Subsidiaries, may be exercised, to the
extent exercisable on the date of his death, by his Legal Representative (as
defined in Paragraph 18) at any time within one year after death, but not
thereafter and in no event after the date the option would otherwise have
expired.
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Except as may otherwise be expressly provided in the applicable
Contract, if an Award holder's relationship as an employee of, or consultant to,
the Company, any of its Subsidiaries or a Parent has terminated by reason of his
Disability, the options and SARs that were granted to him as an employee of, or
consultant to the Company or any of its Subsidiaries may be exercised, to the
extent exercisable upon the effective date of such termination, at any time
within one year after such date, but not thereafter and in no event after the
date the option would otherwise have expired.
Except as may otherwise be expressly provided in the applicable
Contract, if an Award holder's relationship as an Outside Director terminates as
a result of his death or Disability, the options and SARs granted to him as an
Outside Director may be exercised, to the extent exercisable on the date of such
termination, at any time within one year after the date of termination, but not
thereafter and in no event after the date the Award would otherwise have
expired. In the case of the death of the Award holder, the Award may be
exercised by his Legal Representative.
9. COMPLIANCE WITH SECURITIES LAWS. It is a condition to the issuance
of any share Award and exercise of any option or SAR that either (a) a
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Common Stock to be issued upon
such grant or exercise shall be effective and current at the time of exercise,
or (b) there is an exemption from registration under the Securities Act for the
issuance of the shares of Common Stock upon such exercise. Nothing herein shall
be construed as requiring the Company to register shares subject to any Award
under the Securities Act or to keep any Registration Statement effective or
current.
The Committee may require, in its sole discretion, as a condition to
the receipt of an Award or the exercise of any option or SAR that the Award
holder execute and deliver to the Company his representations and warranties, in
form, substance and scope satisfactory to the Committee, which the Committee
determines are necessary or convenient to facilitate the perfection of an
exemption from the registration requirements of the Securities Act, applicable
state securities laws or other legal requirement, including, without limitation,
that (a) the shares of Common Stock to be received under the Award or issued
upon the exercise of the option or SAR are being acquired by the Award holder
for his own account, for investment only and not with a view to the resale or
distribution thereof, and (b) any subsequent resale or distribution of shares of
Common Stock by such Award holder will be made only pursuant to (i) a
Registration Statement under the Securities Act which is effective and current
with respect to the shares of Common Stock being sold, or (ii) a specific
exemption from the registration requirements of the Securities Act, but in
claiming such exemption, the Award holder shall prior to any offer of sale or
sale of such shares of Common Stock provide the Company with a favorable written
opinion of counsel satisfactory to the Company, in form, substance and scope
satisfactory to the Company, as to the applicability of such exemption to the
proposed sale or distribution.
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In addition, if at any time the Committee shall determine, in its sole
discretion, that the listing or qualification of the shares of Common Stock
subject to any Award or option on any securities exchange, Nasdaq or under any
applicable law, or the consent or approval of any governmental agency or
regulatory body, is necessary or desirable as a condition to, or in connection
with, the granting of an Award or the issuing of shares of Common Stock
thereunder, such Award may not be granted and such option or SAR may not be
exercised in whole or in part unless such listing, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
10. AWARD CONTRACTS. Each Award shall be evidenced by an appropriate
Contract which shall be duly executed by the Company and the Award holder, and
shall contain such terms, provisions and conditions not inconsistent herewith as
may be determined by the Committee. The terms of each Award and Contract need
not be identical.
11. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding any
other provision of the Plan, in the event of a stock dividend, recapitalization,
merger in which the Company is the surviving corporation, spin-off, split-up,
combination or exchange of shares or the like which results in a change in the
number or kind of shares of Common Stock which is outstanding immediately prior
to such event, the aggregate number and kind of shares subject to the Plan, the
aggregate number and kind of shares subject to each outstanding Award, the
exercise price of each option, the base price of each SAR, any contingencies and
restrictions based on the number or kind of shares, and the 162(m) Maximum shall
be appropriately adjusted by the Board of Directors, whose determination shall
be conclusive and binding on all parties. Such adjustment may provide for the
elimination of fractional shares which might otherwise be subject to Awards
without payment therefor.
In the event of (a) the liquidation or dissolution of the Company, (b)
a merger in which the Company is not the surviving corporation or a
consolidation, or (c) any transaction (or series of related transactions) in
which (i) more than 50% of the outstanding Common Stock is transferred or
exchanged for other consideration or (ii) shares of Common Stock in excess of
the number of shares of Common Stock outstanding immediately preceding the
transaction are issued (other than to stockholder of the Company with respect to
their shares of stock in the Company, any outstanding options, SARs or unvested
stock shall terminate upon the earliest of any such event, unless other
provision is made therefor in the transaction.
12. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted by
the Board of Directors on April 10, 1997. No ISO may be granted under the Plan
after April 9, 2007. The Board of Directors, without further approval of the
Company's stockholders, may at any time suspend or terminate the Plan, in whole
or in part, or amend it from time to time in such respects as it may deem
advisable, including, without limitation, in order that ISOs granted hereunder
meet the requirements for "incentive stock options" under the Code, to comply
with the provisions of Rule 16b-3, Section 162(m) of the Code, or any change in
applicable law,
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regulations, rulings or interpretations of any governmental agency or regulatory
body; provided, however, that no amendment shall be effective without the
requisite prior or subsequent stockholder approval which would (a) except as
contemplated in Paragraph 11, increase the maximum number of shares of Common
Stock for which Awards may be granted under the Plan or the 162(m) Maximum, (b)
change the eligibility requirements to receive Awards hereunder, or (c) make any
change for which applicable law, regulation, ruling or interpretation by the
applicable governmental agency or regulatory authority requires stockholder
approval. No termination, suspension or amendment of the Plan shall adversely
affect the rights of any Award holder under an Award without his prior consent.
The power of the Committee to construe and administer any Awards granted under
the Plan prior to the termination or suspension of the Plan nevertheless shall
continue after such termination or during such suspension.
13. NON-TRANSFERABILITY. No option or SAR granted under the Plan shall
be transferable otherwise than by will or the laws of descent and distribution,
and options and SARs may be exercised, during the lifetime of the Award holder,
only by him or his Legal Representatives. Except as may otherwise be expressly
provided in the Contract, a stock Award, to the extent not vested, shall not be
transferable otherwise than by will or the laws of descent and distribution.
Except to the extent provided above, Awards may not be assigned, transferred,
pledged, hypothecated or disposed of in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process,
and any such attempted assignment, transfer, pledge, hypothecation or
disposition shall be null and void ab initio and of no force or effect.
14. WITHHOLDING TAXES. The Company, a Subsidiary or Parent may
withhold (a) cash or (b) with the consent of the Committee, shares of Common
Stock to be issued under a stock Award or upon exercise of an option or SAR
having an aggregate Fair Market Value on the relevant date, or a combination of
cash and shares having such value, in an amount equal to the amount which the
Committee determines is necessary to satisfy the obligation of the Company, any
of its Subsidiaries or a Parent to withhold federal, state and local taxes or
other amounts incurred by reason of the grant, vesting, exercise or disposition
of an Award, or the disposition of the underlying shares of Common Stock.
Alternatively, the Company may require the holder to pay to the Company such
amount, in cash, promptly upon demand.
15. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such legend
or legends upon the certificates for shares of Common Stock issued under a stock
Award or upon exercise of an option or SAR under the Plan and may issue such
"stop transfer" instructions to its transfer agent in respect of such shares as
it determines, in its discretion, to be necessary or appropriate to (a) prevent
a violation of, or to perfect an exemption from, the registration requirements
of the Securities Act and any applicable state securities laws, (b) implement
the provisions of the Plan or any agreement between the Company and the Award
holder with respect to such shares of Common Stock, or (c) permit the Company to
determine the
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occurrence of a "disqualifying disposition," as described in Section 421(b) of
the Code, of the shares of Common Stock issued or transferred upon the exercise
of an ISO granted under the Plan.
The Company shall pay all issuance taxes with respect to the issuance
of shares of Common Stock under a stock Award or upon the exercise of an option
or SAR granted under the Plan, as well as all fees and expenses incurred by the
Company in connection with such issuance.
16. USE OF PROCEEDS. The cash proceeds received upon the exercise of
an option, or grant of a stock Award under the Plan shall be added to the
general funds of the Company and used for such corporate purposes as the Board
of Directors may determine.
17. SUBSTITUTIONS AND ASSUMPTIONS OF AWARDS OF CERTAIN CONSTITUENT
CORPORATIONS. Anything in this Plan to the contrary notwithstanding, the Board
of Directors may, without further approval by the stockholders, substitute new
Awards for prior options, SARs or restricted stock of a Constituent Corporation
(as defined in Paragraph 18) or assume the prior options or restricted stock of
such Constituent Corporation.
18. DEFINITIONS. For purposes of the Plan, the following terms shall
be defined as set forth below:
(a) "Cause" shall mean (i) in the case of an employee or
consultant, if there is a written employment or consulting agreement between the
Award holder and the Company, any of its Subsidiaries or a Parent which defines
termination of such relationship for cause, cause as defined in such agreement,
and (ii) in all other cases, cause as defined by applicable state law.
(b) "Constituent Corporation" shall mean any corporation which
engages with the Company, any of its Subsidiaries or a Parent in a transaction
to which Section 424(a) of the Code applies (or would apply if the option
assumed or substituted were an ISO), or any Subsidiary or Parent of such
corporation.
(c) "Disability" shall mean a permanent and total disability within
the meaning of Section 22(e)(3) of the Code.
(d) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(e) "Fair Market Value" of a share of Common Stock on any day shall
mean (i) if the principal market for the Common Stock is a national securities
exchange, the average of the highest and lowest sales prices per share of Common
Stock on such day as reported
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by such exchange or on a composite tape reflecting transactions on such
exchange, (ii) if the principal market for the Common Stock is not a national
securities exchange and the Common Stock is quoted on Nasdaq, and (A) if actual
sales price information is available with respect to the Common Stock, the
average of the highest and lowest sales prices per share of Common Stock on such
day on Nasdaq, or (B) if such information is not available, the average of the
highest bid and lowest asked prices per share of Common Stock on such day on
Nasdaq, or (iii) if the principal market for the Common Stock is not a national
securities exchange and the Common Stock is not quoted on Nasdaq, the average of
the highest bid and lowest asked prices per share of Common Stock on such day as
reported on the OTC Bulletin Board Service or by National Quotation Bureau,
Incorporated or a comparable service; provided, however, that if clauses (i),
(ii) and (iii) of this subparagraph are all inapplicable, or if no trades have
been made or no quotes are available for such day, the Fair Market Value of a
share of Common Stock shall be determined by the Board of Directors by any
method consistent with applicable regulations adopted by the Treasury Department
relating to stock options.
(f) "Legal Representative" shall mean the executor, administrator
or other person who at the time is entitled by law to exercise the rights of a
deceased or incapacitated optionee with respect to an option granted under the
Plan.
(g) "Nasdaq" shall mean the Nasdaq Stock Market.
(h) "Outside Director" shall mean a person who is a director of the
Company, but on the date of grant is not an employee of, or consultant to, the
Company, any of its Subsidiaries or a Parent.
(i) "Parent" shall have the same definition as "parent corporation"
in Section 424(e) of the Code.
(j) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the
Exchange Act, as the same may be in effect and interpreted from time to time.
(k) "Subsidiary" shall have the same definition as "subsidiary
corporation" in Section 424(f) of the Code.
19. GOVERNING LAW; CONSTRUCTION. The Plan, the Awards and Contracts
hereunder and all related matters shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to conflict
of law provisions that would defer to the substantive laws of another
jurisdiction.
Neither the Plan nor any Contract shall be construed or interpreted
with any presumption against the Company by reason of the Company causing the
Plan or Contract to be drafted. Whenever from the context it appears
appropriate, any term stated in either the singular or plural shall include the
singular
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and plural, and any term stated in the masculine, feminine or neuter gender
shall include the masculine, feminine and neuter.
20. PARTIAL INVALIDITY. The invalidity, illegality or unenforceability
of any provision in the Plan, any Award or Contract shall not affect the
validity, legality or enforceability of any other provision, all of which shall
be valid, legal and enforceable to the fullest extent permitted by applicable
law.
21. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by a
majority of the votes present in person or by proxy and entitled to vote hereon
at the next duly held meeting of the Company's stockholders at which a quorum is
present. No Award granted hereunder may vest or be exercised prior to such
approval; provided, however, that the date of grant of any Award shall be
determined as if the Plan had not been subject to such approval. Notwithstanding
the foregoing, if the Plan is not approved by a vote of the stockholders of the
Company on or before April 9, 1998, the Plan and any Awards granted hereunder
shall terminate.
B-13
EXHIBIT 99.3
1999 STOCK INCENTIVE PLAN
OF
XYBERNAUT CORPORATION
1. PURPOSES OF THE PLAN. This stock incentive plan (the "Plan") is
designed to provide an incentive to key employees (including directors and
officers who are key employees) and to consultants and directors who are not
employees of XYBERNAUT CORPORATION, a Delaware corporation (the "Company"), or
any of its Subsidiaries (as defined in Paragraph 18), and to offer an additional
inducement in obtaining the services of such persons. The Plan provides for the
grant of "incentive stock options" ("ISOs") within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), nonqualified stock
options which do not qualify as ISOs ("NQSOs"), stock appreciation rights
("SARs") and stock of the Company which may be subject to contingencies or
restrictions (collectively, "Awards"). The Company makes no representation or
warranty, express or implied, as to the qualification of any option as an
"incentive stock option" under the Code.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph
11, the aggregate number of shares of Common Stock, $.01 par value per share, of
the Company ("Common Stock") for which Awards may be granted under the Plan
shall not exceed 3,000,000. Such shares of Common Stock may, in the discretion
of the Board of Directors of the Company (the "Board of Directors"), consist
either in whole or in part of authorized but unissued shares of Common Stock or
shares of Common Stock held in the treasury of the Company. Subject to the
provisions of Paragraph 12, any shares of Common Stock subject to an option or
SAR which for any reason expires, is canceled or is terminated unexercised or
which ceases for any reason to be exercisable or a restricted stock Award which
for any reason is forfeited, shall again become available for the granting of
Awards under the Plan. The Company shall at all times during the term of the
Plan reserve and keep available such number of shares of Common Stock as will be
sufficient to satisfy the requirements of the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Board of Directors or a committee of the Board of Directors consisting of not
less than two directors, each of whom shall be a "non-employee director" within
the meaning of Rule 16b-3 (as defined in Paragraph 18) (collectively, the
"Committee"). Unless otherwise provided in the By-laws of the Company or by
resolution of the Board of Directors, a majority of the members of the Committee
shall constitute a quorum, and the acts of a majority of the members present at
any meeting at which a quorum is present, and any acts approved in writing by
all members without a meeting, shall be the acts of the Committee.
Subject to the express provisions of the Plan, the Committee shall
have the authority, in its sole discretion, to determine: the key employees,
consultants and directors who
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shall be granted Awards; the type of Award to be granted; the times when an
Award shall be granted; the number of shares of Common Stock to be subject to
each Award; the term of each option and SAR; the date each option and SAR shall
become exercisable; whether an option or SAR shall be exercisable in whole or in
installments and, if in installments, the number of shares of Common Stock to be
subject to each installment, whether the installments shall be cumulative, the
date each installment shall become exercisable and the term of each installment;
whether to accelerate the date of exercise of any option or SAR or installment
thereof; whether shares of Common Stock may be issued upon the exercise of an
option as partly paid and, if so, the dates when future installments of the
exercise price shall become due and the amounts of such installments; the
exercise price of each option and the base price of each SAR; the price, if any,
to be paid for a share Award; the form of payment of the exercise price of an
option; the form of payment upon exercise of an SAR; whether to restrict the
sale or other disposition of a stock Award or the shares of Common Stock
acquired upon the exercise of an option or SAR and, if so, to determine whether
such contingencies and restrictions have been met and whether and under what
conditions to waive any such contingency or restriction; whether and under what
conditions to subject all or a portion of the grant or exercise of an option or
SAR, the vesting of a stock Award or the shares acquired pursuant to the
exercise of an option or SAR to the fulfillment of certain contingencies or
restrictions as specified in the contract referred to in Paragraph 10 hereof
(the "Contract"), including without limitation, contingencies or restrictions
relating to entering into a covenant not to compete with the Company, any of its
Subsidiaries or a Parent (as defined in Paragraph 18), to financial objectives
for the Company, any of its Subsidiaries or a Parent, a division of any of the
foregoing, a product line or other category, and/or to the period of continued
employment of the Award holder with the Company, any of its Subsidiaries or a
Parent, and to determine whether such contingencies or restrictions have been
met; whether an Award holder is Disabled (as defined in Paragraph 18); the
amount, if any, necessary to satisfy the obligation of the Company, a Subsidiary
or Parent to withhold taxes or other amounts; the Fair Market Value (as defined
in Paragraph 18) of a share of Common Stock; to construe the respective
Contracts and the Plan; with the consent of the Award holder, to cancel or
modify an Award, provided, that the modified provision is permitted to be
included in an Award granted under the Plan on the date of the modification, and
further, provided, that in the case of a modification (within the meaning of
Section 424(h) of the Code) of an ISO, such Award as modified would be permitted
to be granted on the date of such modification under the terms of the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan; to
approve any provision which under Rule 16b-3 requires the approval of the Board
of Directors, a committee of non-employee directors or the stockholders to be
exempt (unless otherwise specifically provided herein); and to make all other
determinations necessary or advisable for administering the Plan. Any
controversy or claim arising out of or relating to the Plan, any Award granted
under the Plan or any Contract shall be determined unilaterally by the Committee
in its sole discretion. The determinations of the Committee on the matters
referred to in this Paragraph 3 shall be conclusive and binding on the parties.
No member or former member of the Committee shall be liable for any action,
failure to act or determination made in good faith with respect to the Plan or
any Award or Contract hereunder.
4. OPTIONS
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(a) GRANT. The Committee may from time to time, consistent with the
purposes of the Plan, grant options to such key employees (including officers
and directors who are key employees) of, and consultants to, the Company or any
of its Subsidiaries, and such Outside Directors, as the Committee may determine,
in its sole discretion. Such options granted shall cover such number of shares
of Common Stock as the Committee may determine, in its sole discretion, as set
forth in the applicable Contract; provided, however, that the maximum number of
shares subject to options or SARs that may be granted to any employee during any
calendar year under the Plan (the "162(m) Maximum") shall be 350,000 shares; and
further, provided, that the aggregate Fair Market Value (determined at the time
the option is granted) of the shares of Common Stock for which any eligible
employee may be granted ISOs under the Plan or any other plan of the Company, of
any of its Subsidiaries or of a Parent, which are exercisable for the first time
by such optionee during any calendar year shall not exceed $100,000. Such ISO
limitation shall be applied by taking ISOs into account in the order in which
they were granted. Any option granted in excess of such ISO limitation amount
shall be treated as a NQSO to the extent of such excess.
(b) EXERCISE PRICE. The exercise price of the shares of Common
Stock under each option shall be determined by the Committee, in its sole
discretion, as set forth in the applicable Contract; provided, however, that the
exercise price per share of an ISO shall not be less than the Fair Market Value
of a share of Common Stock on the date of grant; and further, provided, that if,
at the time an ISO is granted, the optionee owns (or is deemed to own under
Section 424(d) of the Code) stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, of any of its Subsidiaries
or of a Parent, the exercise price per share of such ISO shall not be less than
110% of the Fair Market Value of a share of Common Stock on the date of grant.
(c) TERM. The term of each option granted pursuant to the Plan
shall be determined by the Committee, in its sole discretion, as set forth in
the applicable Contract; provided, however, that the term of each ISO shall not
exceed 10 years from the date of grant thereof; and further, provided, that if,
at the time an ISO is granted, the optionee owns (or is deemed to own under
Section 424(d) of the Code) stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, of any of its Subsidiaries
or of a Parent, the term of the ISO shall not exceed five years from the date of
grant. Options shall be subject to earlier termination as hereinafter provided.
(d) EXERCISE. An option (or any part or installment thereof), to
the extent then exercisable, shall be exercised by giving written notice to the
Company at its then principal office stating which option is being exercised,
specifying the number of shares of Common Stock as to which such option is being
exercised and accompanied by payment in full of the aggregate exercise price
therefor (or the amount due upon exercise if the Contract permits installment
payments) (a) in cash or by certified check or (b) if the applicable Contract
permits, with previously acquired shares of Common Stock having an aggregate
Fair Market Value on the date of exercise equal to the aggregate exercise price
of all options being exercised, or with any combination of cash, certified check
or shares of Common Stock having such value. The
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Company shall not be required to issue any shares of Common Stock pursuant to
any such option until all required payments, including any required withholding,
have been made.
The Committee may, in its sole discretion, permit payment of all or a
portion of the exercise price of an option by delivery by the optionee of a
properly executed notice, together with a copy of his irrevocable instructions
to a broker acceptable to the Committee to deliver promptly to the Company the
amount of sale or loan proceeds sufficient to pay such exercise price. In
connection therewith, the Company may enter into agreements for coordinated
procedures with one or more brokerage firms.
An optionee entitled to receive Common Stock upon the exercise of an
option shall not have the rights of a stockholder with respect to such shares of
Common Stock until the date of issuance of a stock certificate for such shares
or, in the case of uncertificated shares, until an entry is made on the books of
the Company's transfer agent representing such shares; provided, however, that
until such stock certificate is issued or book entry is made, any optionee using
previously acquired shares of Common Stock in payment of an option exercise
price shall continue to have the rights of a stockholder with respect to such
previously acquired shares.
In no case may an option be exercised with respect to a fraction of a
share of Common Stock. In no case may a fraction of a share of Common Stock be
purchased or issued under the Plan.
(e) RELOAD OPTIONS. An optionee who, at a time when he is eligible
to be granted options under the Plan, uses previously acquired shares of Common
Stock to exercise an option granted under the Plan (the "prior option"), shall,
upon such exercise, be automatically granted an option (the "reload option") to
purchase the same number of shares of Common Stock so used (or if there is not a
sufficient number of shares available for grant under the Plan remaining, such
number of shares as are then available). Such reload options shall be of the
same type and have the same terms as the prior option (except to the extent
inconsistent with the terms of the Plan); provided, however, that the exercise
price per share of the reload option shall be equal to the Fair Market Value of
a share of Common Stock on the date of grant of the reload option, and further,
provided, that if the prior option was an ISO and at the time the reload option
is granted, the optionee owns (or is deemed to own under Section 424(d) of the
Code) stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company, of any of its Subsidiaries or of a Parent, the
exercise price per share shall be equal to 110% of the Fair Market Value of a
share of Common Stock on the date of grant and the term of such option shall not
exceed five years.
5. STOCK APPRECIATION RIGHTS.
(a) GRANT. The Committee may from time to time, consistent with the
purposes of the Plan, grant SARs to such key employees (including officers and
directors who are key employees) of, and consultants to, the Company or any of
its Subsidiaries, and such Outside Directors, as the Committee may determine in
its sole discretion. An SAR shall entitle
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the holder thereof to be paid, promptly after exercise, in cash, by check or
with shares of Common Stock having an aggregate Fair Market Value on the date of
exercise or any combination thereof, as determined by the Committee, in its sole
discretion, an amount equal to the excess, if any, of the Fair Market Value on
the exercise date of the shares of Common Stock as to which the SAR is exercised
over the base price of such shares. The Contract may (but shall not be required
to) provide for such amount to be multiplied by a performance factor as set
forth in the Contract; provided, however, that such performance factor shall
meet the requirements for "qualified performance-based compensation" within the
meaning of Section 162(m) of the Code.
(b) BASE PRICE. The base price of the shares of Common Stock
subject to each SAR shall be determined by the Committee in its sole discretion;
provided, however, that the base price per share shall not be less than the Fair
Market Value of a share of Common Stock on the date of grant.
(c) TERM. The term of each SAR granted pursuant to the Plan shall
be determined by the Committee, in its sole discretion, as set forth in the
applicable Contract; provided, however, that the term of each SAR shall not
exceed 10 years from the date of grant. SARs shall be subject to earlier
termination as provided in the Plan.
(d) EXERCISE. An SAR (or any part or installment thereof), to the
extent then exercisable, shall be exercised by giving written notice to the
Company at its then principle office stating which SAR is being exercised and
specifying the number of shares of Common Stock as to which such SAR is being
exercised.
The holder of an SAR who receives shares of Common Stock upon the
exercise of an SAR shall not have the rights of a stockholder with respect to
such shares of Common Stock until the date of issuance of a stock certificate
for such shares or, in the case of uncertificated shares, until an entry is made
on the books of the Company's transfer agent representing such shares.
In no case may an SAR be exercised with respect to a fraction of a
share of Common Stock.
6. RESTRICTED STOCK. The Committee may from time, consistent with the
purposes of the Plan, grant shares of Common Stock to such key employees
(including officers and directors who are key employees) of, or consultants to,
the Company or any of its Subsidiaries, as the Committee may determine, in its
sole discretion. The grant may cover such number of shares as the Committee may
determine, in its sole discretion, and require the Award holder to pay such
price per share therefor, if any, as the Committee may determine, in its sole
discretion. Such shares may be subject to such contingencies and restrictions as
the Committee may determine, as set forth in the Contract. Upon the issuance of
the stock certificate for a share Award, or in the case of uncertificated
shares, the entry on the books of the Company's transfer agent representing such
shares, notwithstanding any contingencies or restrictions to which the shares
are subject, the Award holder shall be considered to be the record owner of the
shares, and
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subject to the contingencies and restrictions set forth in the Award, shall have
all rights of a stockholder of record with respect to such shares, including the
right to vote and to receive distributions. Upon the occurrence of any such
contingency or restriction, the Award holder may be required to forfeit all or a
portion of such shares back to the Company. The shares shall vest in the Award
holder when all of the restrictions and contingencies lapse. Accordingly, the
Committee may require that such shares be held by the Company, together with a
stock power duly endorsed in blank by the Award holder, until the shares vest in
the Award holder.
7. TERMINATION OF RELATIONSHIP. Except as may otherwise be expressly
provided in the applicable Contract, if an Award holder's relationship with the
Company, its Subsidiaries and Parent as an employee or a consultant has
terminated for any reason (other than as a result of his death or Disability),
the Award holder may exercise the options and SARs granted to him as an employee
of, or consultant to, the Company or any of its Subsidiaries, to the extent
exercisable on the date of such termination, at any time within three months
after the date of termination, but not thereafter and in no event after the date
the Award would otherwise have expired; provided, however, that if such
relationship is terminated either (a) for Cause (as defined in Paragraph 18), or
(b) without the consent of the Company, such option shall terminate immediately.
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and the Company, any of its Subsidiaries
or a Parent if, at the time of the determination, the individual was an employee
of such corporation for purposes of Section 422(a) of the Code. As a result, an
individual on military, sick leave or other bona fide leave of absence shall
continue to be considered an employee for purposes of the Plan during such leave
if the period of the leave does not exceed 90 days, or, if longer, so long as
the individual's right to reemployment with the Company, any of its Subsidiaries
or a Parent is guaranteed either by statute or by contract. If the period of
leave exceeds 90 days and the individual's right to reemployment is not
guaranteed by statute or by contract, the employment relationship shall be
deemed to have terminated on the 91st day of such leave.
Except as may otherwise be expressly provided in the applicable
Contract, options and SARs granted under the Plan shall not be affected by any
change in the status of the Award holder so long as he continues to be an
employee of, or a consultant to, the Company, or any of its Subsidiaries or a
Parent (regardless of having changed from one to the other or having been
transferred from one corporation to another).
Except as may otherwise be expressly provided in the applicable
Contract, if an Award holder's relationship with the Company as an Outside
Director ceases for any reason (other than as a result of his death or
Disability) then options and SARs granted to such holder as an Outside Director
may be exercised, to the extent exercisable on the date of such termination, at
any time within three months after the date of termination, but not thereafter
and in no event after the date the Award would otherwise have expired; provided,
however, that if such relationship is terminated for Cause, such Award shall
terminate immediately. An Award granted to an Outside
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Director, however, shall not be affected by the Award holder becoming an
employee of, or consultant to, the Company, any of its Subsidiaries or a Parent.
Except as may otherwise be expressly provided in the Contract, upon
the termination of the relationship of an Award holder as an employee of, or
consultant to, the Company, and its Subsidiaries and Parent, or as an Outside
Director, for any reason (including his death or Disability), the share Award
shall cease any further vesting and the unvested portion of such Award as of the
date of such termination shall be forfeited to the Company for no consideration.
Nothing in the Plan or in any Award granted under the Plan shall
confer on any Award holder any right to continue in the employ of, or as a
consultant to, the Company, any of its Subsidiaries or a Parent, or as a
director of the Company, or interfere in any way with any right of the Company,
any of its Subsidiaries or a Parent to terminate the Award holder's relationship
at any time for any reason whatsoever without liability to the Company, any of
its Subsidiaries or a Parent.
8. DEATH OR DISABILITY. Except as may otherwise be expressly provided
in the applicable Contract, if an Award holder dies (a) while he is an employee
of, or consultant to, the Company, any of its Subsidiaries or a Parent, (b)
within three months after the termination of such relationship (unless such
termination was for Cause or without the consent of the Company) or (c) within
one year following the termination of such relationship by reason of his
Disability, the options and SARs that were granted to him as an employee of, or
consultant to, the Company or any of its Subsidiaries, may be exercised, to the
extent exercisable on the date of his death, by his Legal Representative (as
defined in Paragraph 18) at any time within one year after death, but not
thereafter and in no event after the date the option would otherwise have
expired.
Except as may otherwise be expressly provided in the applicable
Contract, if an Award holder's relationship as an employee of, or consultant to,
the Company, any of its Subsidiaries or a Parent has terminated by reason of his
Disability, the options and SARs that were granted to him as an employee of, or
consultant to the Company or any of its Subsidiaries may be exercised, to the
extent exercisable upon the effective date of such termination, at any time
within one year after such date, but not thereafter and in no event after the
date the option would otherwise have expired.
Except as may otherwise be expressly provided in the applicable
Contract, if an Award holder's relationship as an Outside Director terminates as
a result of his death or Disability, the options and SARs granted to him as an
Outside Director may be exercised, to the extent exercisable on the date of such
termination, at any time within one year after the date of termination, but not
thereafter and in no event after the date the Award would otherwise have
expired. In the case of the death of the Award holder, the Award may be
exercised by his Legal Representative.
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9. COMPLIANCE WITH SECURITIES LAWS. It is a condition to the issuance
of any share Award and exercise of any option or SAR that either (a) a
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Common Stock to be issued upon
such grant or exercise shall be effective and current at the time of exercise,
or (b) there is an exemption from registration under the Securities Act for the
issuance of the shares of Common Stock upon such exercise. Nothing herein shall
be construed as requiring the Company to register shares subject to any Award
under the Securities Act or to keep any Registration Statement effective or
current.
The Committee may require, in its sole discretion, as a condition to
the receipt of an Award or the exercise of any option or SAR that the Award
holder execute and deliver to the Company his representations and warranties, in
form, substance and scope satisfactory to the Committee, which the Committee
determines are necessary or convenient to facilitate the perfection of an
exemption from the registration requirements of the Securities Act, applicable
state securities laws or other legal requirement, including, without limitation,
that (a) the shares of Common Stock to be received under the Award or issued
upon the exercise of the option or SAR are being acquired by the Award holder
for his own account, for investment only and not with a view to the resale or
distribution thereof, and (b) any subsequent resale or distribution of shares of
Common Stock by such Award holder will be made only pursuant to (i) a
Registration Statement under the Securities Act which is effective and current
with respect to the shares of Common Stock being sold, or (ii) a specific
exemption from the registration requirements of the Securities Act, but in
claiming such exemption, the Award holder shall prior to any offer of sale or
sale of such shares of Common Stock provide the Company with a favorable written
opinion of counsel satisfactory to the Company, in form, substance and scope
satisfactory to the Company, as to the applicability of such exemption to the
proposed sale or distribution.
In addition, if at any time the Committee shall determine, in its sole
discretion, that the listing or qualification of the shares of Common Stock
subject to any Award or option on any securities exchange, Nasdaq or under any
applicable law, or the consent or approval of any governmental agency or
regulatory body, is necessary or desirable as a condition to, or in connection
with, the granting of an Award or the issuing of shares of Common Stock
thereunder, such Award may not be granted and such option or SAR may not be
exercised in whole or in part unless such listing, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
10. AWARD CONTRACTS. Each Award shall be evidenced by an appropriate
Contract which shall be duly executed by the Company and the Award holder, and
shall contain such terms, provisions and conditions not inconsistent herewith as
may be determined by the Committee. The terms of each Award and Contract need
not be identical.
11. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding any
other provision of the Plan, in the event of a stock dividend, recapitalization,
merger in which the Company is the surviving corporation, spin-off, split-up,
combination or exchange of shares or the like which results in a change in the
number or kind of shares of
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Common Stock which is outstanding immediately prior to such event, the aggregate
number and kind of shares subject to the Plan, the aggregate number and kind of
shares subject to each outstanding Award, the exercise price of each option, the
base price of each SAR, any contingencies and restrictions based on the number
or kind of shares, and the 162(m) Maximum shall be appropriately adjusted by the
Board of Directors, whose determination shall be conclusive and binding on all
parties. Such adjustment may provide for the elimination of fractional shares
which might otherwise be subject to Awards without payment therefor.
In the event of (a) the liquidation or dissolution of the Company, (b)
a merger in which the Company is not the surviving corporation or a
consolidation, or (c) any transaction (or series of related transactions) in
which (i) more than 50% of the outstanding Common Stock is transferred or
exchanged for other consideration or (ii) shares of Common Stock in excess of
the number of shares of Common Stock outstanding immediately preceding the
transaction are issued (other than to stockholder of the Company with respect to
their shares of stock in the Company, any outstanding options, SARs or unvested
stock shall terminate upon the earliest of any such event, unless other
provision is made therefor in the transaction.
12. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted by
the Board of Directors on November 12, 1999. No ISO may be granted under the
Plan after November 12, 2009. The Board of Directors, without further approval
of the Company's stockholders, may at any time suspend or terminate the Plan, in
whole or in part, or amend it from time to time in such respects as it may deem
advisable, including, without limitation, in order that ISOs granted hereunder
meet the requirements for "incentive stock options" under the Code, to comply
with the provisions of Rule 16b-3, Section 162(m) of the Code, or any change in
applicable law, regulations, rulings or interpretations of any governmental
agency or regulatory body; provided, however, that no amendment shall be
effective without the requisite prior or subsequent stockholder approval which
would (a) except as contemplated in Paragraph 11, increase the maximum number of
shares of Common Stock for which Awards may be granted under the Plan or the
162(m) Maximum, (b) change the eligibility requirements to receive Awards
hereunder, or (c) make any change for which applicable law, regulation, ruling
or interpretation by the applicable governmental agency or regulatory authority
requires stockholder approval. No termination, suspension or amendment of the
Plan shall adversely affect the rights of any Award holder under an Award
without his prior consent. The power of the Committee to construe and administer
any Awards granted under the Plan prior to the termination or suspension of the
Plan nevertheless shall continue after such termination or during such
suspension.
13. NON-TRANSFERABILITY. No option or SAR granted under the Plan shall
be transferable otherwise than by will or the laws of descent and distribution,
and options and SARs may be exercised, during the lifetime of the Award holder,
only by him or his Legal Representatives. Except as may otherwise be expressly
provided in the Contract, a stock Award, to the extent not vested, shall not be
transferable otherwise than by will or the laws of descent and distribution.
Except to the extent provided above, Awards may not be assigned, transferred,
pledged, hypothecated or disposed of in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process,
and any such attempted
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assignment, transfer, pledge, hypothecation or disposition shall be null and
void ab initio and of no force or effect.
14. WITHHOLDING TAXES. The Company, a Subsidiary or Parent may
withhold (a) cash or (b) with the consent of the Committee, shares of Common
Stock to be issued under a stock Award or upon exercise of an option or SAR
having an aggregate Fair Market Value on the relevant date, or a combination of
cash and shares having such value, in an amount equal to the amount which the
Committee determines is necessary to satisfy the obligation of the Company, any
of its Subsidiaries or a Parent to withhold federal, state and local taxes or
other amounts incurred by reason of the grant, vesting, exercise or disposition
of an Award, or the disposition of the underlying shares of Common Stock.
Alternatively, the Company may require the holder to pay to the Company such
amount, in cash, promptly upon demand.
15. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such legend
or legends upon the certificates for shares of Common Stock issued under a stock
Award or upon exercise of an option or SAR under the Plan and may issue such
"stop transfer" instructions to its transfer agent in respect of such shares as
it determines, in its discretion, to be necessary or appropriate to (a) prevent
a violation of, or to perfect an exemption from, the registration requirements
of the Securities Act and any applicable state securities laws, (b) implement
the provisions of the Plan or any agreement between the Company and the Award
holder with respect to such shares of Common Stock, or (c) permit the Company to
determine the occurrence of a "disqualifying disposition," as described in
Section 421(b) of the Code, of the shares of Common Stock issued or transferred
upon the exercise of an ISO granted under the Plan.
The Company shall pay all issuance taxes with respect to the issuance
of shares of Common Stock under a stock Award or upon the exercise of an option
or SAR granted under the Plan, as well as all fees and expenses incurred by the
Company in connection with such issuance.
16. USE OF PROCEEDS. The cash proceeds received upon the exercise of
an option, or grant of a stock Award under the Plan shall be added to the
general funds of the Company and used for such corporate purposes as the Board
of Directors may determine.
17. SUBSTITUTIONS AND ASSUMPTIONS OF AWARDS OF CERTAIN CONSTITUENT
CORPORATIONS. Anything in this Plan to the contrary notwithstanding, the Board
of Directors may, without further approval by the stockholders, substitute new
Awards for prior options, SARs or restricted stock of a Constituent Corporation
(as defined in Paragraph 18) or assume the prior options or restricted stock of
such Constituent Corporation.
18. DEFINITIONS. For purposes of the Plan, the following terms shall
be defined as set forth below:
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(a) "Cause" shall mean (i) in the case of an employee or
consultant, if there is a written employment or consulting agreement between the
Award holder and the Company, any of its Subsidiaries or a Parent which defines
termination of such relationship for cause, cause as defined in such agreement,
and (ii) in all other cases, cause as defined by applicable state law.
(b) "Constituent Corporation" shall mean any corporation which
engages with the Company, any of its Subsidiaries or a Parent in a transaction
to which Section 424(a) of the Code applies (or would apply if the option
assumed or substituted were an ISO), or any Subsidiary or Parent of such
corporation.
(c) "Disability" shall mean a permanent and total disability within
the meaning of Section 22(e)(3) of the Code.
(d) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(e) "Fair Market Value" of a share of Common Stock on any day shall
mean (i) if the principal market for the Common Stock is a national securities
exchange, the average of the highest and lowest sales prices per share of Common
Stock on such day as reported by such exchange or on a composite tape reflecting
transactions on such exchange, (ii) if the principal market for the Common Stock
is not a national securities exchange and the Common Stock is quoted on Nasdaq,
and (A) if actual sales price information is available with respect to the
Common Stock, the average of the highest and lowest sales prices per share of
Common Stock on such day on Nasdaq, or (B) if such information is not available,
the average of the highest bid and lowest asked prices per share of Common Stock
on such day on Nasdaq, or (iii) if the principal market for the Common Stock is
not a national securities exchange and the Common Stock is not quoted on Nasdaq,
the average of the highest bid and lowest asked prices per share of Common Stock
on such day as reported on the OTC Bulletin Board Service or by National
Quotation Bureau, Incorporated or a comparable service; provided, however, that
if clauses (i), (ii) and (iii) of this subparagraph are all inapplicable, or if
no trades have been made or no quotes are available for such day, the Fair
Market Value of a share of Common Stock shall be determined by the Board of
Directors by any method consistent with applicable regulations adopted by the
Treasury Department relating to stock options.
(f) "Legal Representative" shall mean the executor, administrator
or other person who at the time is entitled by law to exercise the rights of a
deceased or incapacitated optionee with respect to an option granted under the
Plan.
(g) "Nasdaq" shall mean the Nasdaq Stock Market.
(h) "Outside Director" shall mean a person who is a director of the
Company, but on the date of grant is not an employee of, or consultant to, the
Company, any of its Subsidiaries or a Parent.
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(i) "Parent" shall have the same definition as "parent corporation"
in Section 424(e) of the Code.
(j) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the
Exchange Act, as the same may be in effect and interpreted from time to time.
(k) "Subsidiary" shall have the same definition as "subsidiary
corporation" in Section 424(f) of the Code.
19. GOVERNING LAW; CONSTRUCTION. The Plan, the Awards and Contracts
hereunder and all related matters shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to conflict
of law provisions that would defer to the substantive laws of another
jurisdiction.
Neither the Plan nor any Contract shall be construed or interpreted
with any presumption against the Company by reason of the Company causing the
Plan or Contract to be drafted. Whenever from the context it appears
appropriate, any term stated in either the singular or plural shall include the
singular and plural, and any term stated in the masculine, feminine or neuter
gender shall include the masculine, feminine and neuter.
20. PARTIAL INVALIDITY. The invalidity, illegality or unenforceability
of any provision in the Plan, any Award or Contract shall not affect the
validity, legality or enforceability of any other provision, all of which shall
be valid, legal and enforceable to the fullest extent permitted by applicable
law.
21. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by a
majority of the votes present in person or by proxy and entitled to vote hereon
at the next duly held meeting of the Company's stockholders at which a quorum is
present. No Award granted hereunder may vest or be exercised prior to such
approval; provided, however, that the date of grant of any Award shall be
determined as if the Plan had not been subject to such approval. Notwithstanding
the foregoing, if the Plan is not approved by a vote of the stockholders of the
Company on or before April 9, 1998, the Plan and any Awards granted hereunder
shall terminate.
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