EXHIBIT 99.1
NETOPS CORPORATION 1997 LONG-TERM INCENTIVE PLAN
NETOPS CORPORATION
1997 LONG-TERM INCENTIVE PLAN
Preamble. NetOps Corporation, a Delaware corporation (the "Company") hereby
adopts the NetOps Corporation 1997 Long-Term Incentive Plan.
I. Purpose of the Plan. The purposes of the NetOps Corporation 1997 Long-Term
Incentive Plan (the "Plan") are (i) to associate more closely the interests of
certain key contributors to the success of the Company with those of the
Company's stockholders by encouraging stock ownership, (ii) to provide long-term
incentives and rewards to those persons who are in a position to contribute to
the long-term success and growth of the Company and its subsidiaries, and (iii)
to assist the Company and its Affiliates (as hereinafter defined) and directors
in retaining and attracting key employees, independent contractors, directors
and other service providers. Awards under the Plan may be made to employees of
the Company and its Affiliates, and other key service providers to the Company
and its Affiliates, including, but not limited to, consultants to the Company or
any Affiliate.
II. Administration.
a. The Committee. The Plan shall be administered by a Committee of the
Company's Board of Directors (the "Plan Committee") appointed by the
Board of Directors. The Plan Committee may be the Compensation
Committee of the Board of Directors. Six months prior to the Company
becoming a publicly held corporation, the Board of Directors shall
review the membership of the Plan Committee and revise such
membership, as necessary, so that each member is a "non-employee
director" (as defined in Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended). If the Board of Directors has not
appointed a Plan Committee, the Plan shall be administered by the
Board of Directors as a whole, and in such event, references in the
Plan to the Committee shall be to the Board of Directors as a whole.
b. Authority and Discretion of Committee. Subject to the express
provisions of the Plan and consistent with the provisions of the
Stock Purchase and Investor Rights Agreement and the other investor
documents provided for therein, each of which is dated as of October
15, 1997 (collectively, the "Purchase Agreement"), and the Company's
Certificate of Incorporation and By-laws and provided that all
actions taken shall be consistent with the purposes of the Plan, the
Committee shall have full and complete authority and the sole
discretion to: (i) select the individuals to whom awards shall be
granted under the Plan (the "Participants"); (ii) determine the size
and the form of the award or awards to be granted to any
Participant; (iii) determine the time or times such awards shall be
granted; (iv) establish the terms and conditions upon which such
awards may be exercised and/or transferred; (v) alter any
restrictions; and (vii) adopt such rules and regulations, establish,
define and/or interpret any other terms and conditions, and make all
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other determinations (which may be on a case-by-case basis) deemed
necessary or desirable for the administration of the Plan.
III. Awards. Awards under the Plan may include any or all of the following, as
described herein: Stock Options, including incentive Stock Options and options
which do not qualify as incentive Stock Options with or without Stock
Appreciation Rights, or Restricted Share Awards with or without Performance
Shares, or Warrants.
a. Stock Options. Stock Options ("Stock Options") are rights to
purchase shares of common stock of the Company ("Common Stock") at a
stated price (determined by the Committee) on the date of grant for
a predetermined period of time.
i. The Committee may grant Stock Options either alone or in
conjunction with Stock Appreciation Rights as described in
paragraph (c) below. It shall determine the number of shares
of Common Stock to be covered by each such Stock Option.
ii. The Committee will determine the conditions of Stock Option
exercise as well as the conditions upon which Stock Options
shall lapse, but in no event may any portion of a Stock Option
be exercisable later than ten years from the date of the
grant.
iii. The Committee may provide for acceleration of option exercise
in case of acquisition or significant change in ownership of
the Company.
iv. The purchase price of shares purchased pursuant to any Stock
Option shall be determined by the Committee, and shall be paid
in full upon exercise, either (a) in cash, (b) by delivery of
shares of Common Stock (valued at their Fair Market Value on
the date of purchase, as defined in Section IV) or (c) a
combination of cash and Common Stock. In addition, the
Committee may provide for the cashless exercise of options.
b. Incentive Stock Options. An option designated by the Committee as an
"incentive Stock Option" is intended to qualify as an "incentive
stock option" within the meaning of Subsection (b) of Section 422 of
the internal Revenue Code of 1986, as amended (the "Code") and shall
satisfy, in addition to the conditions of Section III (a), the
conditions set forth in this Section III (b).
i. Except as set forth in subparagraph (v) below, an Incentive
Stock Option shall not be granted to an individual who, on the
date of grant, owns stock possessing more than ten percent of
the total combined voting power of all classes of stock of the
Company or of any subsidiary corporation.
ii. The exercise price of an Incentive Stock Option will not be
less than the Fair Market Value of the stock on the date the
option is granted.
iii. To the extent that the aggregate fair market value of stock
with respect to which Incentive Stock Options are exercisable
for the first time by any
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individual during any calendar year under all plans maintained
by the Company or any subsidiary exceeds $100,000, such excess
shall be treated as options which are not Incentive Stock
Options.
iv. Incentive Stock Options may only be granted to common law
employees of the Company or its subsidiaries.
v. Notwithstanding paragraph (b)(i) hereof, the Committee may
grant Incentive Stock Options to 10-percent shareholders
provided that (i) the exercise price of any options granted
pursuant to this paragraph (b)(v) shall be at least 110
percent of the Fair Market Value of the Stock for which such
option may be exercised on the date such option is granted and
(ii) such option by its terms is not exercisable after the
expiration of 5 years from the date it is granted.
c. Nonqualified Stock Options. An option designated by the Committee as
a Qualified Stock Option" is intended to qualify as a "non-statutory
stock option" within the meaning of Section 83 of the Code and shall
satisfy the conditions of Section IV(a). Non-qualified stock options
maybe granted to (1) individuals who are key employees (including
officers and directors who are also key employees) of the Company or
of any subsidiary, (ii) Directors who are not otherwise employees of
the Company or a subsidiary; or (iii) employees and other persons
who are consultants to or otherwise perform services to or for the
benefit of the Company, any subsidiary, or any affiliated entity
(whether or not a member of the Company's consolidated group), all
as the Committee shall determine from time to time.
d. Stock Appreciation Rights. "Stock Appreciation Rights" are rights to
receive cash and/or Common Stock in lieu of the purchase of shares
under a related Stock Option. The Committee may grant Stock
Appreciation Rights to any recipient of a Stock Option either at the
time of the grant of the Stock Option or subsequently, by amendment
to such grant. All Stock Appreciation Rights shall be granted under
and subject to the following terms and conditions, and such other
terms and conditions as the Committee may establish:
i. Bach Stock Appreciation Right shall be exercisable at the same
times and with regard to the same number of shares as the
related Stock Option is exercisable.
ii. Each Stock Appreciation Right shall entitle the holder thereof
to surrender to the Company a portion of or all of the
unexercised, but exercisable, related Stock Option, and to
receive with respect to each share of Common Stock represented
by such surrendered portion cash or shares of Common Stock of
a value equal to the amount by which the Fair Market Value of
each such share on the date of exercise exceeds the option
price provided in the related Stock Option. The recipient
shall not be required
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to pay the Stock Option exercise price upon surrender of the
Stock Option or exercise of the related Stock Appreciation
Right
iii. Each surrender of a portion of or all of a Stock Option upon
the exercise of a Stock Appreciation Right shall cause a share
for share reduction in the number of shares of Common Stock
covered by the related Stock Option.
iv. Notwithstanding any other provision of the Plan, the Committee
may from tune to time determine the maximum amount of cash or
stock which may be paid or issued upon exercise of Stock
Appreciation Rights (a) in any year and/or (b) to any
particular Participant In no event, however, may the cash
portion of such payment exceed 50% of the total amount due.
Any other limitation on payments may be changed by the
Committee from time tom tune, provided that no such change
shall require the holder to return to the Company any amount
theretofore received upon the exercise of Stock Appreciation
Rights.
e. Restricted Stock Awards. "Restricted Stock Awards" are grants of
Common Stock to a Participant subject to the restrictions described
in the following subsections.
i. The Committee may award Restricted Stock alone or in
conjunction with Performance Shares as described in paragraph
(f) below. The Committee shall further determine the number of
shares of Restricted Stock to be awarded.
ii. Restricted Stock may be subject to such terms and conditions
as the Committee may determine which may include, without
limitation, a provision that the Restricted Stock will be
forfeited unless the recipient remains in the employ of the
Company or a subsidiary for a minimum period of time, or a
provision that the Restricted Stock will be forfeited unless
the Company or a subsidiary achieve specified earnings, sales
or other performance-based goals. In addition, the Committee
may condition the grant of Restricted Stock on the agreement
of the recipient to make an election to disregard the risk of
forfeiture of the Restricted Stock pursuant to Section 83(b)
of the Internal Revenue Code of 1986, as amended. The period
during which any Restricted Stock remains subject to
forfeiture shall be determined by the Committee but shall not
be less than one year nor more than ten years. Upon the
satisfaction of any vesting requirement specified in the grant
of the Restricted Stock, such Restricted Stock will cease to
be Restricted Stock and, other than restrictions, if any,
imposed by federal or state securities or similar laws, shall
be freely transferable by the owner.
iii. Restricted Stock may not be sold, transferred or otherwise
disposed of, pledge, or otherwise encumbered.
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iv. In the event a recipient is an employee and there is a
termination of employment for any reason except death,
retirement or permanent disability, Restricted Stock shall be
delivered to the Company within 30 days following such
termination and then shall be deemed void for all corporate
purposes.
v. Upon the occurrence of the earlier of the death, retirement,
or permanent disability of the recipient of a Restricted Stock
Award, the restrictions against disposition and the obligation
of resale to the Company of shares as to which such
restrictions and obligations have not otherwise lapsed shall
immediately lapse.
vi. In addition to the terms provided in paragraph (e)(ii) above,
the Committee may, in its discretion, provide for accelerated
lapse of restrictions in case of acquisition or other change
of ownership of the Company.
vii. Certificates issued in respect of Restricted Stock granted
under the Plan shall be registered in the name of the
recipient but shall bear the following legend:
"The transferability of this certificate and the shares
of stock represented hereby is restricted and the shares
are subject to the further terms and conditions
contained in the 1997 Long-Term Incentive Plan of NetOps
Corporation (the "Company"). Copies of said plan are on
file in the office of the Treasurer of the Company at
the Company's offices in Dover, Delaware."
viii. In order to enforce the restrictions, terms and conditions on
Restricted Stock, each recipient thereof shall, immediately
upon receipt of a certificate or certificates representing
such shares, deposit such certificates together with stock
powers and other instructions of transfer as the Committee may
require, appropriately endorsed in blank, with the Company as
Escrow Agent under an escrow agreement m such form as shall be
determined by the Committee.
f. Performance Shares. Performance Shares are rights to payment in cash
of an amount equal to the Fair Market Value of Company Common Stock
on the date the restrictions lapse on an accompanying Restricted
Stock Award. The Committee may grant Performance Shares to a
recipient of Restricted Stock either at the time of the award of the
Restricted Stock or subsequently by amendment of such award. Any
number of Performance Shares up to an amount equal the
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number of shares of the accompanying Restricted Stock Award may be
granted by the Committee.
g. Warrants. Warrants are rights to purchase shares of Common Stock of
the Company at a stated exercise price for a predetermined time.
i. The Committee shall determine the number of shares of Common
Stock to be subject to each Warrant and shall issue Warrants
at the exercise price of not less than the Fair Market Value
per share as of the date of issuance of the Warrant.
ii. The Committee will determine the terms and conditions of
Warrant exercise, but in no event may any Warrant be
exercisable later than ten (10) years from the date of grant.
iii. The purchase price of shares purchased pursuant to any Warrant
exercise shall be paid in cash.
iv. The Committee will determine the conditions and terms upon
which Warrants may be forfeited, provided the Committee may in
its discretion issue Warrants without forfeiture conditions.
v. A Warrant Shall be treated as an option that does not qualify
for the tax treatment provided in Section 421 of the Code. The
Committee as part of the grant or issuance of Warrants may
commit the Company to reimburse the Participant/grantee for
the federal and state income taxes which may be imposed by
virtue of the exercise of the Warrant.
h. Special Rules for Awards to Covered Employees. Awards to Covered
Employees (as defined in Section 162(m)(3) of the Code) shall be
made only in compliance with all of the following conditions:
i. Only the Committee shall have authority to make awards to
Covered Employees; and
ii. Covered Employees shall be eligible to receive only awards,
the economic benefits of which are a function of the increase
in the value of the underlying stock after the date of the
grant.
Section IV. Miscellaneous Provisions.
1. Rights of Recipients of Awards. The holder of Stock Appreciation Rights or
any option granted under the Plan shall have no rights as a stockholder of
the Company with respect thereto unless and until certificates for shares
are issued. The holder of a Restricted Stock Award will be entitled to
receive any dividends on such shares in the same amount and at the same
time as declared on shares of Common Stock of the Company and shall be
entitled to vote such shares as a stockholder of record.
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a. Assignment of Options and Stock Appreciation Rights. No option or
Stock Appreciation Right or any rights or interests of the recipient
therein shall be assignable or transferable by such recipient except
by will or the laws of descent and distribution. During the lifetime
of the recipient, such option or Stock Appreciation Right shall be
exercisable only by, or payable only to, the recipient thereof.
b. Further Agreements. All Stock Options, Stock Appreciation Rights,
Restricted Stock Awards, and Performance Share Awards granted under
this Plan shall be evidenced by agreements in such form and
containing such terms and conditions (not inconsistent with this
Plan) as the Committee may require.
c. Replacement Options and Stock. Upon cancellation of an outstanding
option or the forfeiture of Restricted Stock, replacement options or
replacement stock may be issued in an amount and with such terms as
the Committee may determine.
d. Legal and Other Requirements. No shares of Common Stock shall be
issued or transferred upon exercise of any award under the Plan
unless and until all legal requirements applicable to the issuance
or transfer of such shares and such other requirements as are
consistent with the Plan have been complied with to the satisfaction
of the Committee. The Committee may require that prior to the
issuance or transfer of Common Stock hereunder, the recipient
thereof shall enter into a written agreement to comply with any
restrictions on subsequent disposition that the Committee or the
Company deem necessary or advisable under any applicable law,
regulation or official interpretation thereof. Certificates of stock
issued hereunder may be legended to reflect such restrictions.
e. Withholding of Taxes. Pursuant to applicable Federal, state, local,
or foreign laws, the Company may be required to collect income or
other taxes upon the grant of certain awards, the exercise of an
option, or Stock Appreciation Right, or the lapse of restrictions on
a Restricted Stock Award. The Company may deduct from payments made
under the Plan, or require, as a condition to such award, or to the
exercise of an option or Stock Appreciation Right, that the
recipient pay the Company, at such time as the Committee or the
Company determine, the amount of any taxes which the Committee or
the Company, in their discretion, determine are required to be
withheld.
f. Right to Awards. No employee of the Company or other person shall
have any claim or right to be a Participant in this Plan or to be
granted an award hereunder. Neither this Plan nor any action taken
hereunder shall be construed as giving any Participant any right to
be retained in the employ of the Company. Nothing contained
hereunder shall be construed as giving any Participant or any other
person any equity or interest of any kind in any assets of the
Company or creating a trust of any kind or a fiduciary relationship
of any kind between the Company and any such person. As to any claim
for any unpaid amounts under the Plan, any Participant or any other
person having a claim for payments shall be an unsecured creditor.
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g. Fair Market Value. The "Fair Market Value" of Common Stock shall be
(x) if the Common Stock of the Company is listed on a national stock
exchange or traded in the over-the-counter market, the closing price
reported on the day immediately preceding the date of grant, (y) if
the Common Stock is not listed on a national stock exchange or
traded in the over-the-counter market but private sales of Common
Stock have taken place within the 60 days preceding a grant, the
sales price per share in such private sale unless the Board of
Directors determines in good faith that such price does not
accurately reflect the value of the Common Stock or (z) in other
cases, the value determined by the Board of Directors in good faith
based upon the earnings of the Company and a multiple of earnings
determined by the Board of Directors for similar companies.
h. Permanent Disability. Permanent Disability" shall mean a finding by
the Committee that a Participant is fully and permanently unable to
be gainfully employed because of a physical or mental disability.
i. Retirement. "Retirement" shall mean any date on which an employee
terminates employment with the Company on or after attaining age 62.
j. Indemnity. Neither the Board of Directors nor the Committee, nor any
members of either, nor any employees of the Company or any
subsidiary, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with
their responsibilities with respect to the Plan, and the Company
hereby agrees to indemnify the members of the Board of Directors,
the members of the Committee, and the employees of the Company and
its subsidiaries in respect of any claim, loss, damage, or expense
(including counsel fees) arising from any such act, omission,
interpretation, construction or determination to the full extent
permitted by law.
2. Affiliate. For the purposes of this Plan, the term "Affiliate" means with
respect to a specified Person, any Person that directly or indirectly
controls, is controlled by, or is under common control with, the specified
Person. As used in this definition, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise. The term
"Person" means any individual, corporation, association, partnership
(general or limited), joint venture, trust, estate, limited liability
company, or other legal entity or organization. An entity which is
included with the "affiliated group" of the Company as defined by Section
1504 of the Code, or an entity which is consolidated with the Company for
financial reporting purposes, shall in any case be considered an
"Affiliate" as defined herein.
Section V. Amendment and Termination; Adjustments Upon Changes in Stock. The
Board of Directors of the Company may at any time, and from time to time, amend,
suspend or terminate the Plan in whole or in part; provided, however, that the
Board of Directors may not materially increase the benefits accruing to
participants under the Plan, increase the number of shares of Common Stock
reserved for purposes of the Plan, or materially modify the requirements as to
eligibility for participation in the Plan without further approval by the
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affirmative vote of at least a majority of the holders of the outstanding shares
of Common Stock Except as provided herein, no amendment, suspension or
termination of the Plan may affect the rights of a Participant to whom an award
has been granted without such Participant's consent. If there shall be any
change in the stock subject to the Plan or to any option, Warrant, Stock
Appreciation Right, Restricted Stock Award or Performance Share Award granted
under the Plan, through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split or other change in the corporate structure,
appropriate adjustments may be made by the Board of Directors of the Company (or
if the company is not the surviving corporation in any such transaction, the
Board of Directors of the surviving corporation) in the aggregate number and
kind of shares and the price per share subject to outstanding options, Warrants,
Stock Appreciation Rights, Restricted Awards or Performance Share Awards.
Section VI. Shares of Stock Available. The aggregate number of Stock Options and
Restricted Stock Awards under the Plan shall not exceed One Million Three
Hundred Thirty-One Thousand Two Hundred Fifty (1,331,250) of the authorized but
unissued shares of the Company's Common Stock (including shares that again
become available for grant due to cancellation, lapse, or expiration of, or
reacquisition of shares under, outstanding awards). The total number of Stock
Options and Restricted Stock Awards which may be issued hereunder will be
reduced by the exercise of an option by the number of shares exercised; by the
exercise of a Stock Appreciation Right, by an amount equal to the number of
shares covered by the option canceled due to Stock Appreciation Right exercised;
and by the number of shares which are released due to the lapse of restrictions
in case of a Restricted Stock Award. The grant and payment of Performance Shares
shall not affect the number of shares of Common Stock subject to the Plan. Any
shares subject to an option hereunder that for any reason is canceled (other
than because of the exercise of an attached Stock Appreciation Right) or expires
unexercised or shares reacquired because restrictions do not lapse on Restricted
Stock Awards will be available for further awards. Shares of Common Stock to be
delivered under the Plan may be authorized, but unissued shares, treasury
shares, or shares reacquired on the open market.
Section VII. Effective Date and Term of the Plan. Subject to shareholder
approval, the effective date of the Plan is October ___ 1997, and awards under
the Plan may be made for a period often years commencing on such date. The
period during which an option or other award may be exercised may extend beyond
that time as provided herein.
The foregoing 1997 Long-Term Incentive Plan was adopted by the directors
of NetOps Corporation by unanimous written consent.
Secretary
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