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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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REGISTRATION STATEMENT
ON FORM S-8
Under
THE SECURITIES ACT OF 1933
FASHION DYNAMICS CORP.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 88-0378451
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2500 - 1177 WEST HASTINGS STREET
VANCOUVER, BRITISH COLUMBIA
CANADA V6E 2K3
(604) 608-1610
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(Address of registrant's Principal Executive Offices)
2000 Stock Option Plan
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(Full title of the plan)
Yiu Joe Cheung, President
2500 - 1177 West Hastings Street
Vancouver, British Columbia
Canada V6E 2K3
(604) 608-1610
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(Name and address of agent for service)
Copies of all communications to:
Gary J. Kocher
Kevin L. Gruben
Preston Gates & Ellis LLP
701 Fifth Avenue, Suite 5000
Seattle, WA 98104
(206) 623-7580
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<TABLE>
<CAPTION>
Title of each class of Proposed maximum Proposed
securities to be Amount to be offering price per maximum Amount of
registered registered (1) share (2) aggregate offering registration fee (2)
- -------------------- ------------------ ------------------- price (2) -----------------------
----------------
<S> <C> <C> <C> <C>
common stock, $0.001
par value 3,900,000 $12.1875 $475,311,250. $12,548.25
</TABLE>
(1) Includes an indeterminate number of additional shares that may be
issued to adjust the number of shares issued pursuant to the stock option plan
described herein as the result of any future stock split, stock dividend or
similar adjustment of Fashion Dynamics' outstanding common stock.
(2) Estimated pursuant to Rule 457(c) solely for purposes of
calculating amount of registration fee, based upon the average of the high and
low prices reported on March 13, 2000 as reported on the OTC Bulletin Board.
The Exhibit Index appears on the Signature Page of this
registration statement.
1
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PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents are hereby incorporated by reference into this
registration statement:
(a) Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 14, 2000.
(b) The description of Fashion Dynamics' common stock, which is
contained in the Registration Statement on Form 10-SB filed on May 25, 1999
(Commission File No. 000-24757) in the section entitled "Item 11: Description of
Securities."
In addition, all documents subsequently filed pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, 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 into this registration statement and to be a
part hereof from the date of filing of such documents.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Nevada Revised Statutes provide for indemnification of the
Company's Officers, Directors and controlling persons against liabilities which
they may incur in such capacities. In general, any Officer, Director, employee
or agent may be indemnified against expenses, fines, settlements or judgments
arising in connection with a legal proceeding to which such person is a party,
if that person's actions were in good faith, were believed to be in the
Company's best interest, and were not unlawful. Unless such person is successful
upon the merits in such an action, indemnification may be awarded only after a
determination by independent decision of the Board of Directors, by legal
counsel, or by a vote of the shareholders, that the applicable standard of
conduct was met by the person to be indemnified.
The circumstances under which indemnification is granted in
connection with an action brought on behalf of the Company is generally the same
as those set forth above; however, with respect to such actions, indemnification
is granted only with respect to expenses actually incurred in connection with
the defense or settlement of the action. In such actions, the person to be
indemnified must have acted in good faith and in a manner believed to have been
in the Company's best interest, and have not been adjudged liable for negligence
or misconduct. Indemnification may also be granted pursuant to the terms of
agreements which may be entered in the future or pursuant to a vote of
shareholders or Directors.
2
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The statutory provision cited above also grants the power to the
Company to purchase and maintain insurance which protects its Officers and
Directors against any liabilities incurred in connection with their service in
such a position, and such a policy may be obtained by the Company.
Fashion Dynamics maintains directors' and officers' liability insurance
under which Fashion Dynamics' directors and officers are insured against loss
(as defined in the policy) as a result of claims brought against them for their
wrongful acts in such capacities.
ITEM 8. EXHIBITS.
The Exhibits to this registration statement are listed in the Index to
Exhibits on the signature page.
ITEM 9. UNDERTAKINGS.
(a) 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 to include
any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, 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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, 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 the
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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, 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 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 Act and will
be governed by the final adjudication of such issue.
3
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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 Vancouver, British Columbia on this 14th day of
March, 2000.
FASHION DYNAMICS CORP.
/s/ YIU JOE CHEUNG
---------------------------------
Yiu Joe Cheung
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities on March 14, 2000.
/s/ YIU JOE CHEUNG President, Secretary, Treasurer, Director
- ----------------------- (principal executive officer)
Yiu Joe Cheung
INDEX TO EXHIBITS
Exhibit Number Description
- --------------------------------------------------------------
5.1 Opinion of Counsel regarding legality
23.1 Consent of Independent Public Accountant
23.2 Consent of Counsel (included in Exhibit 5.1)
99.1 eMagin Corporation 2000 Stock Option Plan
4
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EXHIBITS 5.1 AND 23.2
{LETTERHEAD OF PRESTON GATES & ELLIS LLP}
March 14, 2000
Fashion Dynamics Corp.
2500 - 1177 West Hastings Street
Vancouver, British Columbia
Canada V6E 2K3
Re: 2000 Stock Option Plan
Ladies and Gentlemen:
In connection with the registration of 3,900,000 shares of common
stock, $0.001 par value per share (the "Common Shares") of Fashion Dynamics
Corp. (the "Company") with the Securities and Exchange Commission on a
Registration Statement on Form S-8 (the "Registration Statement"), relating to
the issuance by the Company, if any, of the Common Shares, we have examined such
documents, records and matters of law as we have considered relevant. Based upon
such examination and upon our familiarity as counsel for the Company with its
general affairs, it is our opinion that:
The Common Shares when issued in conformity with the terms and
conditions of the 2000 Stock Option Plan will be legally issued, fully paid, and
nonassessable.
We consent to the use of this opinion in the registration statement
filed with the Securities and Exchange Commission in connection with the
registration of the Shares and to the reference to our firm under the heading
"Interests of Named Experts and Counsel" in the registration statement.
Very truly yours,
PRESTON GATES & ELLIS LLP
By /s/ Gary J. Kocher
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EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
{LETTERHEAD OF BARRY L. FRIEDMAN, P.C.}
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 17, 2000
included in Fashion Dynamics Corp.'s Form 10-K for the year ended December 31,
1999 and to all references to our Firm included in this registration
statement.
/s/ Barry L. Friedman, P.C.
Las Vegas, Nevada
February 21, 2000
<PAGE>
EXHIBIT 99.1
2000 STOCK OPTION PLAN
ADOPTED: FEBRUARY 18, 2000
1. INTRODUCTIONS AND DEFINITIONS
1.1 THE PLAN
This 2000 Stock Option Plan (hereinafter, this "Plan") establishes the
right of and procedures for eMagin Corporation (the "Company") to grant stock
options to its Employees, Consultants and/or Directors (as such terms are
defined in Section 1.2 hereof). This Plan provides for the granting of two types
of options, namely (1) Incentive Stock Options, as defined and governed by
Section 422 of the Internal Revenue Code of 1986, as amended, and (2)
Nonqualified Stock Options. This Plan sets forth provisions applicable to both
types of options, to Incentive Stock Options only and to Nonqualified Stock
Options only.
1.2 DEFINITIONS
Capitalized terms used in this Plan shall have the following meanings:
"ACT" means the Securities Act of 1933, as from time to time amended,
or any replacement act or legislation.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means dishonesty, fraud, misconduct, unauthorized use or
disclosure of confidential information or trade secrets, any act of disloyalty
to the Company or any current or future subsidiary of the Company, or conviction
or confession of a crime punishable by law (except minor violations), in each
case as determined by the Board, whose determination shall be conclusive and
binding.
"CHANGE OF CONTROL EVENT" has the meaning attributed to it in Section
2.5(a).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means a committee appointed by the Board, pursuant to
Section 2.3 hereof, to administer the provisions of this Plan and in the absence
of any such committee, references to the Committee shall mean the Board.
"COMPANY" means eMagin Corporation.
"CONSULTANT" means any person engaged by the Company or any current or
future subsidiary of the Company to perform services as a non-employee service
provider, advisor or consultant pursuant to the terms of a written plan or
contract. "Consultants" is the plural of Consultant.
"DIRECTOR" means a member of the Board. "Directors" is the plural of
Director.
"EMPLOYEE" means, for purposes of this Plan, persons continuously
employed by the Company or by any current or future subsidiary of the Company on
a regular basis, whether full-time or part-time, at any time during the duration
hereof. "Employees" is the plural of Employee.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as from time
to time amended, or any replacement act or legislation.
<PAGE>
"FAIR MARKET VALUE" of the Company's common stock shall be determined
by the Board or (a) if the common stock is listed on the Nasdaq National Market,
the average of the high and low per share sales prices for the common stock as
reported by the Nasdaq National Market for a single trading day or (b) if the
common stock is listed on the New York Stock Exchange or the American Stock
Exchange, the average of the high and low per share sales prices for the common
stock as such price is officially quoted in the composite tape of transactions
on such exchange for a single trading day. If there is no such reported price
for the common stock for the date in question pursuant to items (a) or (b), then
such price on the last preceding date for which such price exists shall be
determinative of the Fair Market Value.
"INCENTIVE STOCK OPTION" means an option issued by the Company to
purchase shares of stock of the Company that meets the definition of "incentive
stock option" contained in Section 422 of the Internal Revenue Code of 1986, as
amended, and that is issued by the Company to be an Incentive Stock Option.
"Incentive Stock Options" is the plural of Incentive Stock Option.
"NONQUALIFIED STOCK OPTION" means an option issued by the Company to
purchase shares of stock of the Company that is not an Incentive Stock Option.
"Nonqualified Stock Options" is the plural of Nonqualified Stock Option.
"OPTION GAIN" means the gain represented by the Fair Market Value on
the date of exercise over the exercise price, multiplied by the number of Shares
purchased by Optionee, without regard to any subsequent decrease or increase in
Fair Market Value.
"OPTIONED SHARES" means Shares subject to a Stock Option.
"OPTIONEE" means the recipient of a Stock Option pursuant to a Stock
Option Agreement. "Optionees" is the plural of Optionee.
"PLAN" means this eMagin Corporation 2000 Stock Option Plan, which also
may be referred to as the "eMagin Corporation Stock Option Plan."
"PLAN GUIDELINES" shall mean the guidelines, rules, policies,
regulations, forms of notice and forms of agreements and instruments, if any,
adopted and amended by the Board from time to time with respect to this Plan
pursuant to Section 2.3.
"SHARES" shall mean the Shares of the Company reserved for issuance
under this Plan as further defined in Section 2.2.
"STOCK OPTION" means an agreement entered into by the Company granting
the recipient the right to purchase shares of stock of the Company, at certain
times and under certain conditions, subject to certain obligations and
responsibilities as defined in this Plan and in the written Stock Option
Agreement, whether an Incentive Stock Option or a Nonqualified Stock Option.
"Stock Options" is the plural of Stock Option.
"STOCK OPTION AGREEMENT" means the written contract by which a Stock
Option is granted by the Company to an Optionee. "Stock Option Agreements" is
the plural of Stock Option Agreement.
"SUCCESSOR CORPORATION" has the meaning set forth under Section 2.5(b).
2. GENERAL PROVISIONS APPLICABLE TO BOTH NONQUALIFIED STOCK OPTIONS AND
INCENTIVE STOCK OPTIONS GRANTED BY THE COMPANY.
2.1 OBJECTIVES OF THIS PLAN
The purpose of this Plan is to encourage ownership of common stock of
the Company by Employees and to provide a means of granting Stock Options to
Consultants and Directors. This Plan is intended to provide an incentive to
Employees for maximum effort in the successful operation of the Company and is
expected to benefit the shareholders by enabling the Company to attract and
retain personnel of the best available talent through the
<PAGE>
opportunity to share in the increased value of the Company's shares to which
such personnel have contributed. The benefits of this Plan are not a substitute
for compensation otherwise payable to Employees pursuant to the terms of their
employment.
2.2 STOCK RESERVED FOR THIS PLAN
Subject to the provisions of Section 2.10, the number of shares
reserved for issuance upon the exercise of Stock Options granted under this Plan
shall be 3,900,000 shares of the $0.001 par value common stock of the Company
(the "Shares"), which Shares shall be reserved from the Company's authorized and
unissued shares. Shares subject to any Stock Option under this Plan which are
not exercised in full or Shares as to which the right to purchase is forfeited
through default or otherwise, shall remain available for other Stock Options
under this Plan. The aggregate number of Shares subject to Stock Options under
this Plan or reserved for issuance by the Board shall not exceed the number
approved by the shareholders at the time of adoption hereof unless such increase
is approved by the Company's shareholders. Such approval shall be by the
affirmative vote of shareholders holding a majority of the issued and
outstanding shares of common stock of the Company entitled to vote at a meeting
called to approve said increase and shall occur within twelve (12) months of the
Plan's adoption by the Board.
2.3 ADMINISTRATION OF THIS PLAN
(a) This Plan shall be administered by the Board, provided that at all
times during which the Company is subject to the periodic reporting requirements
of the Exchange Act each member of the Board who participates in administration
must be a "Non-Employee Director" as that term is defined in Rule 16b-3 of the
Exchange Act.
(b) The Board may appoint a Board committee (the "Committee") to
administer this Plan in the name of the Board. The Board or the Committee so
appointed shall have full power and authority to administer and interpret this
Plan and to adopt, from time to time, such guidelines, rules, policies,
regulations, forms of notice and forms of agreements and instruments for the
administration of this Plan (collectively, "Plan Guidelines") as the Board or
such Committee, as the case may be, deems necessary or advisable. Such powers
include, but are not limited to (subject to the specific limitations described
herein), authority to determine the Employees, Consultants and Directors to be
granted Stock Options under this Plan, to determine the size, type and
applicable terms and conditions of grants to be made to such Employees,
Consultants and Directors, to determine a time when Stock Options will be
granted and to authorize grants to eligible Employees, Consultants and
Directors.
(c) The Board's interpretations of this Plan and all Stock Option
Agreements, including the definitions of terms used herein and in Stock Option
Agreements, and all actions taken and determinations made by the Board
concerning any matter arising under or with respect to this Plan or any Stock
Options granted pursuant to this Plan, shall be final, binding and conclusive on
all interested parties, including the Company, its shareholders and all former,
present and future Employees, Consultants and Directors of the Company. So long
as the Company is not subject to the reporting requirements of the Exchange Act,
the Board may delegate some or all of its power and authority hereunder to the
duly elected officers of the Company, such delegation to be subject to such
terms and conditions as the Board in its discretion shall determine. Such
delegation of authority may be contained in the Plan Guidelines. The Board may,
as to questions of accounting, rely conclusively upon any determinations made by
independent public accountants of the Company.
2.4 ELIGIBILITY; FACTS TO BE CONSIDERED IN GRANTING STOCK
OPTIONS
The Board shall have the authority to determine the persons eligible to
receive a Stock Option, the time or times at which the Optioned Shares may be
purchased and whether all of the Stock Options may be exercised at one time or
in increments.
2.5 RIGHTS OF OPTIONEE IN EVENT OF MERGER, CONSOLIDATION,
SALE OF ASSETS OR DISSOLUTION
(a) Except as provided in Section 2.5(b) hereof, and notwithstanding
anything in this Plan to the contrary, the Optionee may conditionally purchase
the full amount of Optioned Shares for which Stock Options have been granted to
the Optionee and for which the Stock Options have not been exercised under the
following conditions:
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(1) The Optionee may conditionally purchase any or all
Optioned Shares during the period commencing ten (10) days and ending five (5)
days prior to the scheduled effective date of a merger or consolidation (as such
effective date may be delayed from time to time) wherein the Company is not to
be the surviving corporation and the shareholders of the corporation immediately
prior to the merger or consolidation are not to own a majority of the capital
stock of the surviving corporation immediately after the merger or
consolidation, provided such merger or consolidation is not between or among the
Company and other corporations related to or affiliated with the Company;
(2) The Optionee may conditionally purchase any or all
Optioned Shares during the period commencing ten (10) days and ending five (5)
days prior to the scheduled closing date of a sale of all or substantially all
of the assets of the Company (as such closing date may be delayed from time to
time); and
(3) The Optionee may conditionally purchase any or all
Optioned Shares during the period commencing the date the shareholders of the
Company approve the dissolution of the Company and ending five (5) days prior to
the date of filing its Articles of Dissolution.
If the merger, consolidation, sale of assets, or acquisition of the Company
where the shareholders of the Company immediately prior to the acquisition are
not to own a majority of the capital stock of the surviving corporation
immediately after the merger or consolidation (collectively, a "Change of
Control Event"), or dissolution, as the case may be and as described in
Subsections (1) through (3) of this Section 2.5(a), once commenced, is canceled
or revoked, the conditional purchase of Shares for which the option to purchase
would not have otherwise been exercisable at the time of said cancellation or
revocation, but for the operation of this Section 2.5, shall be rescinded. With
respect to all other Shares conditionally purchased, the Optionee may rescind
such purchase at Optionee's discretion. If the Change of Control Event does
occur or Articles of Dissolution are filed, as the case may be and as described
in Subsections (1) through (3) of this Section 2.5(a), and the Optionee has not
conditionally purchased all Optioned Shares, all unexercised Stock Options that
have not been assumed pursuant to Section 2.5(b) shall terminate on the
effective, closing, or filing date, as the case may be.
(b) The Optionee shall have no right to purchase shares conditionally
in the event of a Change of Control Event if:
(1) in the opinion of the Company's outside accountants, it
would render unavailable "pooling of interest" accounting for a Change of
Control Event that would otherwise qualify for such accounting treatment; or
(2) such Stock Option is, in connection with the Change of
Control Event, either to be assumed by the successor or purchasing corporation
or parent thereof (the "Successor Corporation") or to be replaced with a
comparable award for the purchase of shares of the capital stock of the
Successor Corporation; or
(3) such Stock Option is to be replaced with a cash incentive
program of the Successor Corporation that preserves the spread existing at the
time of the Change of Control Event and provides for subsequent payout in
accordance with the same vesting schedule applicable to such Stock Option.
The determination of Stock Option comparability shall be made by the Board, and
its determination shall be conclusive and binding.
(c) If the Company shall be the surviving corporation in any merger or
consolidation or is a party to a merger or consolidation which does not
otherwise qualify as a Change of Control Event, any Stock Option granted
hereunder shall pertain and apply to the securities to which a holder of the
number of Shares of common stock subject to the Stock Option would have been
entitled.
(d) The grant of Options will in no way affect the Company's right to
adjust, reclassify, reorganize, or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
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(e) Nothing herein shall allow the Optionee to purchase Optioned
Shares, the options for which have expired.
2.6 STOCK OPTION AGREEMENTS; TERMS AND EXPIRATION OF
STOCK OPTIONS
Each Stock Option granted under this Plan shall be pursuant to a
written Stock Option Agreement in a form substantially similar to the form
attached as ANNEX A, which shall designate whether the Stock Option is an
Incentive Stock Option or Nonqualified Stock Option, shall be subject to such
amendment or modification from time to time as the Board shall deem necessary or
appropriate to comply with or take advantage of applicable laws or regulations
and shall contain or be subject to provisions as to the following effect,
together with such other provisions as the Board shall from time to time
approve:
(a) that, subject to the provisions of Section 2.6(b) below, the Stock
Option, as to the whole or any part thereof, may be exercised only by the
Optionee or Optionee's personal representative;
(b) except as may be otherwise permitted pursuant to Section 2.13(c) or
Section 3.3, that neither the whole nor any part of the Stock Option shall be
transferable by the Optionee or by operation of law other than by will of, or by
the laws of descent and distribution applicable to, a deceased Optionee and that
the Stock Option and any and all rights granted to the Optionee thereunder and
not theretofore effectively and completely exercised shall automatically
terminate and expire upon any sale, transfer, or hypothecation or any attempted
sale, transfer, or hypothecation of such rights or upon the bankruptcy or
insolvency of the Optionee or Optionee's estate;
(c) that subject to the foregoing provisions, a Stock Option may be
exercised at different times for portions of the total number of Shares for
which the right to purchase shall have vested provided that such portions are in
multiples of ten (10) shares if the Optionee holds vested Stock Options for
ninety-nine (99) or fewer Shares and otherwise in multiples of one hundred (100)
Shares;
(d) that no Optionee shall have the right to receive any dividend on or
to vote or exercise any right in respect to any Shares unless and until the
certificates for such Shares have been issued to such Optionee;
(e) that the Stock Option shall expire with respect to vested Shares at
the earliest of the following:
(1) The date specified in the Stock Option Agreement;
(2) With respect to any Employee, ninety (90) days after
voluntary or involuntary termination of Optionee's employment for any reason
other than termination as described in Paragraphs (5) or (6) below;
(3) With respect to any Consultant, ninety (90) days after the
earlier of (i) the date either the Company or Optionee notifies the other that
the Company or the Optionee, as the case may be, is terminating the consultant
relationship or (ii) the end of a period of one hundred twenty (120) days during
which the Consultant has not performed any service for the Company, unless in
either case, such termination is pursuant to events described in Paragraphs (5)
or (6) below;
(4) With respect to a Director, ninety (90) days after
resignation or removal from the Board of the Company or other cessation of
service as a director, and following, if applicable, the expiration of any lock
up or standstill period to which the Director is subject, other than cessation
of service as described in Paragraphs (5) or (6) below;
(5) Immediately upon the discharge of Optionee (removal from
the Board, in the case of a Director) for "cause" as defined in any employment
or consulting agreement between the Company and Optionee or, if there shall be
no such employment or consulting agreement, for Cause as defined herein;
(6) Twelve (12) months after Optionee's death or disability;
or
<PAGE>
(7) In the event of a Change of Control Event, or the filing
of Articles of Dissolution, as the case may be and as described in Subsections
(1) through (3) of Section 2.5(a), on the date specified in Section 2.5(a).
However, if the Change of Control Event does not occur or if Articles of
Dissolution are not filed, as the case may be and as described in Subsections
(1) through (3) of Section 2.5(a), all Stock Options which are terminated
pursuant to this Subsection (e)(7) shall be reinstated as if no action with
respect to any of said events had been contemplated or taken by any party
thereto and all Optionees shall be returned to their respective positions on the
date of termination;
(f) that, notwithstanding the provisions of Section 2.6(e) above, the
Committee, in its discretion, may extend the expiration date of vested Stock
Options;
(g) that, to the extent a Stock Option Agreement provides for the
vesting of the right to purchase in increments, such vesting shall cease as of
the date of the Optionee's death, disability, or, in the case of any Employee,
voluntary or involuntary termination of Optionee's employment with the Company
for any reason or, in the case of any Consultant, (i) the date either the
Company or Optionee notifies the other that the Company or the Optionee, as the
case may be, is terminating the consultant relationship or (ii) the end of a
period of one hundred twenty (120) days during which the Consultant has not
performed any service for the Company or, in the case of a Director, upon his
resignation or removal from the Board of the Company or other cessation of his
services as a director;
(h) that the time at which or the installments in which the Stock
Option shall become exercisable, is as set forth in the Stock Option Agreement;
provided that if not so set forth in the Stock Option Agreement, the Stock
Option will become exercisable according to the following, which may be waived
or modified by the Board at any time:
Such Stock Option shall vest as to one-quarter (1/4) of the Shares
subject thereto on the one-year anniversary
of the date the Stock Option is granted and as to one forty-eighth
(1/48) of the Shares each month thereafter.
(i) that the terms of the Stock Option Agreement shall be a contract
between the Company and the Optionee and the specific terms of any Stock Option
Agreement shall govern over the more general terms hereof; and
(j) with respect to Employees, subject to the Plan Guidelines, the
Stock Option Agreement shall not be affected by any changes of duties or
position so long as the Optionee shall continue to be an Employee, subject to
the terms hereof.
2.7 RULE 16B-3 COMPLIANCE
(a) Unless an Optionee could otherwise exercise a Stock Option or
dispose of Shares delivered upon exercise of a Stock Option granted under the
Plan without incurring liability under Section 16(b) of the Exchange Act, at
least six months shall elapse from the date of acquisition of the Stock Option
to the date of disposition of its underlying Shares.
(b) It is the intent of the Company that this Plan comply in all
respects with applicable provisions of Rule 16b-3 or Rule 15a-1(c)(3) under the
Exchange Act in connection with any grant of Stock Options to or other
transaction by an Optionee who is subject to Section 16 of the Exchange Act
(except for transactions exempted under alternative Exchange Act Rules or
acknowledged in writing to be non-exempt by such Optionee). Accordingly, if any
provision of this Plan or any Stock Option Agreement relating to a Stock Option
does not comply with the requirements of Rule 16b-3 or Rule 16a-1(c)(3) as then
applicable to such transaction, such provision will be construed or deemed
amended to the extent necessary to conform to the applicable requirements of
Rule 16b-3 or Rule 16a-1(c)(3) so that such Optionee shall avoid liability under
Section 16(b).
2.8 NOTICE OF INTENT TO EXERCISE STOCK OPTION
The Optionee (or other person or persons, if any, entitled hereunder)
desiring to exercise a Stock Option as to all or part of the Shares covered
thereby shall in writing notify the Company at its principal office, specifying
the
<PAGE>
number of Optioned Shares to be purchased and, if required by the Company,
representing in form satisfactory to the Company that the Shares are being
purchased for investment and not with a view to resale or distribution. The
Company from time to time may issue or specify to Optionees a written form for
use in connection with any such exercise. With respect to any Shares
conditionally purchased pursuant to Section 2.5(a) above and for which such
purchase has not been voluntarily or otherwise rescinded pursuant to Section
2.5(a), the Optionee shall be deemed to have given to the Company the notice of
exercise required by this Section 2.8 as of ten (10) days prior to the closing
or effective date of the Change of Control Event or the filing of Articles of
Dissolution, as the case may be and as described in Subsections (1) through (3)
of Section 2.5(a).
2.9 METHOD OF EXERCISE OF STOCK OPTION
Within ten (10) days after receipt by the Company of the notice
provided in Section 2.8, but not later than the expiration date specified in
Section 2.5(e), the Stock Option shall be exercised as to the number of Shares
specified in the notice by payment by the Optionee to the Company of the amount
specified below in Section 3.2 and Section 4.5, as applicable. Payment of such
purchase price shall be made in cash, or in accordance with procedures for a
"cashless exercise" as the same may have been established from time to time by
the Company and the brokerage firm, if any, designated by the Company to
facilitate exercises of Stock Options and sales of Shares under this Plan. The
Company has no obligation and has made no commitments to establish a procedure
for "cashless exercise". Payment in shares of the Company's common stock shall
be deemed to be the equivalent of payment in cash at the Fair Market Value of
those shares. For purposes of the preceding sentence, "Fair Market Value" shall
be determined by the Board in the same manner as utilized in determining the
Fair Market Value at the time other Stock Options are granted.
2.10 RECAPITALIZATION
The aggregate number of Shares for which Stock Options may be granted
hereunder, the number of Shares covered by each outstanding Stock Option and the
price per Share thereof in each such Stock Option Agreement shall be
proportionately adjusted for an increase or decrease in the number of
outstanding shares of common stock of the Company resulting from a stock split
or reverse split of shares or any other capital adjustment or the payment of a
stock dividend or other increase or decrease in such shares effected without
receipt of consideration by the Company excluding any decrease resulting from a
redemption of shares by the Company. If the adjustment would result in a
fractional Share the Optionee shall be entitled to one (1) additional Share,
provided that the total number of Shares to be granted under this Plan shall not
be increased above the equivalent number of Shares initially allocated or later
increased by approved amendment to this Plan. Any adjustment shall be made by
the Board whose determination shall be final, binding and conclusive.
2.11 SUBSTITUTIONS AND ASSUMPTIONS
The Board shall have the right to substitute, replace, or assume
options in connection with mergers, reorganizations, separations, or other
"corporate transactions" as that term is defined in and said substitutions and
assumptions are permitted by Section 425 of the Code and the regulations
promulgated thereunder. The number of Shares reserved pursuant to Section 2.2
may be increased by the corresponding number of options assumed and, in the case
of a substitution, by the net increase in the number of Shares subject to
options before and after the substitution.
2.12 TERMINAL DATE OF PLAN
This Plan shall not extend beyond a date ten (10) years from the date
of adoption hereof by the Board, provided that any Stock Option to purchase
shares duly granted hereunder prior to such date shall be exercisable pursuant
to its terms and the terms hereof until expiration or earlier termination of
such Stock Option.
2.13 GRANTING OF STOCK OPTIONS
(a) The granting of any Stock Option pursuant to this Plan shall be
entirely in the discretion of the Board and nothing herein contained shall be
construed to give any person any right to participate under this Plan or to
receive any Stock Option under it.
<PAGE>
(b) The granting of a Stock Option pursuant to this Plan shall not
constitute any agreement or an understanding, express or implied on the part of
the Company or a current or future subsidiary to employ or retain the Optionee
for any specified period.
(c) The Board shall have the authority to grant both transferable Stock
Options and nontransferable Stock Options and to amend outstanding
nontransferable Stock Options to provide for transferability. Each
nontransferable Stock Option intended to qualify under Rule 16b-3 or otherwise
shall provide by its terms that it is not transferable otherwise than by will or
the laws of descent and distribution or, except in the case of Incentive Stock
Options, pursuant to a "qualified domestic relations order" as defined by the
Code and is exercisable, during the Optionee's lifetime, only by the Optionee.
Each transferable Stock Option may provide for such limitations on
transferability and exercisability as the Board may designate at the time the
Stock Option is granted or is otherwise amended to provide for transferability.
2.14 WITHDRAWAL
An Optionee may at any time elect in writing to abandon a Stock Option
with respect to the number of Shares as to which the Stock Option shall not have
been exercised.
2.15 GOVERNMENT REGULATIONS
This Plan and the granting and exercise of any Stock Option hereunder
and the obligations of the Company to sell and deliver Shares under any such
Stock Option shall be subject to all applicable laws, rules and regulations and
to such approvals by any governmental agencies as may be required.
2.16 PROCEEDS FROM SALE OF STOCK
Proceeds of the purchase of Optioned Shares by an Optionee shall be
used for the general business purposes of the Company.
2.17 SHAREHOLDER APPROVAL
This Plan shall be submitted to the shareholders for their approval
within twelve (12) months from the date hereof. The Company may grant Stock
Options prior to such approval which shall be conditioned upon subsequent
shareholder approval.
2.18 COMPLIANCE WITH SECURITIES LAWS
The Board shall have the right to:
(a) require an Optionee to execute, as a condition of exercise of a
Stock Option, a letter evidencing Optionee's intent to acquire the Shares for
investment and not with a view to the resale or distribution thereof;
(b) place appropriate legends upon the certificate or certificates for
the Shares; and
(c) take such other acts as it deems necessary in order to cause the
issuance of Optioned Shares to comply with applicable provisions of state and
federal securities laws.
In furtherance of the foregoing and not by way of limitation thereof,
no Stock Option shall be exercisable unless such Stock Option and the Shares to
be issued pursuant thereto shall be registered under appropriate federal and
state securities laws, or shall be exempt therefrom, in the opinion of the Board
upon advice of counsel to the Company. Each Stock Option Agreement shall contain
adequate provisions to assure that there will be no violation of such laws. This
provision shall in no way obligate the Company to undertake registration of
Stock Options or Shares hereunder. Issue, transfer or delivery of certificates
for Shares pursuant to the exercise of Stock Options may be delayed, at the
discretion of the Board until the Board is satisfied that the applicable
requirements of the federal and state securities laws have been met.
<PAGE>
The dollar value and number of Stock Options granted under this Plan
are limited pursuant to Rule 701 promulgated by the Securities and Exchange
Commission, which provides an exemption from the registration requirements under
the Act. Any guidelines adopted pursuant to this Plan shall contain the current
limitations specified in said Rule 701 until the Company is registered under the
Act.
2.19 GOLDEN PARACHUTE TAXES
In the event that any amounts paid or deemed paid to an employee under
this Plan are deemed to constitute "excess parachute payments" as defined in
Section 280G of the Code (taking into account any other payments made under this
Plan and any other compensation paid or deemed paid to an employee), or if any
employee is deemed to receive an "excess parachute payment" by reason of his or
her vesting of Options pursuant to Section 2.5 herein, the amount of such
payments or deemed payments shall be reduced (or, alternatively the provisions
of Section 2.5 shall not act to vest options to such employee), so that no such
payments or deemed payments shall constitute excess parachute payments. The
determination of whether a payment or deemed payment constitutes an excess
parachute payment shall be in the sole discretion of the Plan Administrator.
3. PROVISIONS APPLICABLE SOLELY TO NONQUALIFIED STOCK OPTIONS
In addition to the provisions of Section 2 above, the following
paragraphs shall apply to any Stock Options granted under this Plan which are
not Incentive Stock Options.
3.1 OPTION PRICE
The option, or purchase, price of each Share optioned as a Nonqualified
Stock Option under this Plan shall be determined by the Board and set forth in
the Stock Option Agreement.
3.2 METHOD OF EXERCISE OF STOCK OPTION
The amount to be paid by the Optionee upon exercise of a Nonqualified
Stock Option shall be the exercise price provided for in the Stock Option
Agreement, together with the amount of federal, state and local income and FICA
taxes required to be withheld by the Company. If the Company has established
procedures for a "cashless exercise" pursuant to Section 2.9, an Optionee may
elect to pay Optionee's federal, state, or local income and FICA withholding tax
by having the Company withhold shares of Company common stock having a value
equal to the amount required to be withheld. The value of the shares to be
withheld is deemed to equal the Fair Market Value of the shares on the day the
option is exercised. An election by an Optionee to have shares withheld for this
purpose will be subject to the following restrictions:
(a) If an Optionee has received multiple Stock Option grants, a
separate election must be made for each grant;
(b) The election must be made prior to the day the Stock Option is
exercised;
(c) The election will be irrevocable;
(d) The election will be subject to the disapproval of the Board;
(e) If the Optionee is an "officer" of the Company within the meaning
of Section 16 of the Exchange Act ("Section 16") as defined in Rule 16a-1
promulgated by the Securities and Exchange Commission, the election may not be
made within six (6) months following the grant of the Stock Option; and
(f) If the Optionee is an "officer" of the Company within the meaning
of Section 16 as so defined, the election must be made either six (6) months
prior to the day the Stock Option is exercised or during the period beginning on
the third business day following the date of release of the Company's quarterly
or annual summary statement of sales and earnings and ending on the twelfth
(12th) business day following such date.
<PAGE>
3.3 ASSIGNMENT
The Company may allow limited assignment rights for the gifting by
Optionee of rights hereunder to vested Nonqualified Stock Options, on terms to
be determined by the Board from time to time.
4. PROVISIONS APPLICABLE SOLELY TO INCENTIVE STOCK OPTIONS
In addition to the provisions of Section 2 above, the following
paragraphs shall apply to any Stock Options granted under this Plan which are
Incentive Stock Options.
4.1 CONFORMANCE WITH INTERNAL REVENUE CODE
Stock Options granted under this Plan which are "Incentive Stock
Options" shall conform to, be governed by and be interpreted in accordance with
Section 422 of the Code and any regulations promulgated thereunder and
amendments to the Code and Regulations. Only Employees may be granted Incentive
Stock Options hereunder--Consultants and non-employee Directors may NOT receive
Incentive Stock Options hereunder.
4.2 OPTION PRICE
The option, or purchase, price of each Share optioned as an Incentive
Stock Option under this Plan shall be determined by the Board at the time of the
action for the granting of the Stock Option and set forth in the Stock Option
Agreement, but shall not, in any event, be less than the Fair Market Value of
the Company's common stock on the date of grant.
4.3 LIMITATION ON AMOUNT OF INCENTIVE STOCK OPTION
The aggregate Fair Market Value of the Optioned Shares, as determined
on the date of grant, vesting in any one calendar year with respect to which an
Employee has the right to purchase (under this Plan or any other plan of the
Company which authorizes Incentive Stock Options) shall not exceed $100,000; and
to the extent any Stock Option purporting to be an Incentive Stock Option grants
an Employee the right to purchase Optioned Shares with an aggregate Fair Market
Value vesting in any one calendar year in excess of $100,000, as so determined
(under this Plan or any other plan of the Company which authorizes Incentive
Stock Options), shall be deemed a Nonqualified Stock Option for such excess
amount.
4.4 LIMITATION ON GRANTS TO SUBSTANTIAL SHAREHOLDERS
It is the Company's intent that it will not grant Incentive Stock
Options to any Employee who, immediately prior to the grant of a Stock Option
hereunder, owns stock in the Company representing more than ten percent (10%) of
the voting power of all classes of stock of the Company, unless the per share
option price specified by the Board for the Incentive Stock Options granted such
an Employee is at least one hundred ten percent (110%) of the Fair Market Value
of the Company's stock on the date of grant and such Stock Option, by its terms,
is not exercisable after the expiration of five (5) years from the date such
Stock Option is granted. Any Stock Option that by its terms purports to be an
Incentive Stock Option that is issued to an Employee who owns stock in the
Company representing more than ten percent (10%) of the voting power of all
classes of stock of the Company that does not have an exercise price of at least
one hundred ten percent (110%) of the Fair Market Value of the Company's stock
on the date of grant or that is, by its terms, exercisable after the expiration
of five (5) years from the date such Stock Option is granted, shall be deemed a
Nonqualified Stock Option.
4.5 METHOD OF EXERCISE OF STOCK OPTION
The amount to be paid by the Optionee upon exercise of an Incentive
Stock Option shall be the purchase price per share provided for in the Stock
Option Agreement.
<PAGE>
5. TERMINATION AND AMENDMENT
This Plan, the Plan Guidelines and all rules and regulations adopted in
respect hereof may be terminated, suspended, or amended at any time by a
majority vote of the Board, provided that no such action shall adversely affect
any material rights of Optionees granted under this Plan prior to such action
without the consent of such Optionees and provided further that to the extent
required for compliance with Section 422 of the Code or any applicable law or
regulation, shareholder approval will be required for any amendment that will
(a) increase the total number of shares as to which Options may be granted under
the Plan, (b) modify the class of persons eligible to receive Options, or (c)
otherwise require shareholder approval under any applicable law or regulation.
The Board may amend the terms and conditions of outstanding Stock Options,
provided, however, that (i) no such amendment would be materially adverse to the
holders of such Stock Options without their consent, (ii) no such amendment
shall extend the period for exercise of a Stock Option, and (iii) the amended
terms of a Stock Option would be permitted under this Plan. Any change or
adjustment to an outstanding Incentive Stock Option shall not, without the
consent of the Optionee, be made in a manner so as to constitute a
"modification" that would cause such Incentive Stock Option to fail to continue
to qualify as an Incentive Stock Option.
6. FOREIGN EMPLOYEES
Without amending this Plan, the Board may grant Stock Options to
eligible Employees who are foreign nationals on such terms and conditions
different from those specified in this Plan as may in the judgment of the Board
be necessary or desirable to foster and promote achievement of the purposes of
this Plan, and, in furtherance of such purposes the Board may make such
modifications, amendments, procedures, subplans, and the like as may be
necessary or advisable to comply with the provisions of the laws in other
countries in which the Company operates or has Employees.
7. REGISTRATION, LISTING AND QUALIFICATION OF SHARES
Each Stock Option shall be subject to the requirement that if at any
time the Board shall determine that the registration, listing, or qualification
of the Shares covered thereby upon any securities exchange or under any foreign,
federal, state, or local law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Stock Option or the purchase of shares thereunder, no
such Stock Option may be exercised unless and until such registration, listing,
qualification, consent, or approval shall have been effected or obtained free of
any condition not acceptable to the Board. Any person exercising a Stock Option
shall make such representations and agreements and furnish such information as
the Board may request to assure compliance with the foregoing or any other
applicable legal requirements.
8. NO RIGHTS TO STOCK OPTIONS OR EMPLOYMENT; NO RESTRICTIONS
No Employee or other person shall have any claim or right to be granted
a Stock Option under this Plan. Having received a Stock Option under this Plan
shall not give an Employee or other person any right to receive any other grant
or Stock Option under this Plan. An Optionee shall have no rights to or interest
in any Stock Option except as set forth herein. Neither this Plan nor any action
taken hereunder shall be construed as giving any Employee any right to be
retained in the employ of the Company or any Consultant or Director any right to
be retained or engaged by the Company, or otherwise in any way affect any right
and power of the Company to terminate the employment or engagement of any
Employee, Consultant or Director at any time with or without assigning a reason
therefor. Nothing in this Plan shall restrict the Company's rights to adopt
other option plans pertaining to any or all of the Employees, Consultants or
Directors covered under this Plan or other Employees, Consultants or Directors
not covered under this Plan.
Each Stock Option granted hereunder may be affected, with regard to
both vesting schedule and termination, by leaves of absence, a reduction in the
number of hours worked, partial disability and other changes in Optionee's
Employee, Consultant or Director status, as the case may be. The Company's
policies in such matters shall be contained in the Plan Guidelines adopted by
the Board. The Plan Guidelines and the guidelines, rules, policies and
regulations contained therein may be amended at any time and from time to time
by the Board or the Committee, in its sole discretion and with or without
notice. Optionee's rights hereunder or under any Stock Option
<PAGE>
granted hereunder at any time shall be governed by the Plan Guidelines in effect
at the time of any change in Optionee's employment status as contemplated above.
9. COSTS AND EXPENSES
Except as provided herein with respect to the payment of taxes, all
costs and expenses of administering this Plan shall be borne by the Company and
shall not be charged to any grant or any Optionee receiving a grant. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.
10. PLAN UNFUNDED
This Plan shall be unfunded. Except for the Board's reservation of a
sufficient number of authorized shares to the extent required by law to meet the
requirements of this Plan, the Company shall not be required to establish any
special or separate fund or to make any other segregation of assets to assure
payment of any grant under this Plan.
11. GOVERNING LAW
This Plan shall be governed by and construed in accordance with the
laws of the State of Washington (without regard to the legislative or judicial
conflict of laws rules of any state), except to the extent superseded by federal
law.
12. SEVERABILITY
In the event any provision of this Plan or any Stock Option Agreement
is found to be invalid or unenforceable, such provision shall be deemed reformed
to the extent necessary to render it valid and enforceable. The invalidity or
unenforceability of any provision in this Plan or any Stock Option Agreement
shall not in any way affect the validity or enforceability of any other
provision of this Plan or the Stock Option Agreement, as the case may be and
this Plan and the Stock Option Agreement shall be construed in all respects as
if such invalid or unenforceable provision had never been included.
<PAGE>
ANNEX A
Stock Option No. ______
EMAGIN CORPORATION (THE "COMPANY")
STOCK OPTION AGREEMENT FOR PURCHASE OF STOCK
We are pleased to inform you that the Company has granted to you, as
the individual named below (the "Optionee"), this Stock Option. This Stock
Option Agreement is a contract between you and the Company. It grants to you
certain defined rights, at certain times and under certain conditions, to
purchase shares of the Company's common stock, and in exchange you accept
certain obligations and responsibilities, as described below and in the
Company's 2000 Stock Option Plan (the "Plan") and the attached Terms and
Conditions.
FOR VALUABLE CONSIDERATION, the Company does hereby grant to the
Optionee, as of the Date of Option Grant specified below, the right and option
to purchase the number of shares of common stock of the Company specified below
(the "Option Shares") for the Exercise Price Per Share specified below, and the
right to purchase the Option Shares under this Stock Option Agreement shall
accrue and vest according to the Vesting Schedule specified below:
- --------------------------------------------------------------------------------
NAME OF OPTIONEE:
- --------------------------------------------------------------------------------
TYPE OF OPTION:
- --------------------------------------------------------------------------------
NUMBER OF OPTION SHARES:
- --------------------------------------------------------------------------------
EXERCISE PRICE PER SHARE:
- --------------------------------------------------------------------------------
DATE OF OPTION GRANT:
- --------------------------------------------------------------------------------
TERM OF OPTION: __ YEARS FROM DATE OF OPTION GRANT
- --------------------------------------------------------------------------------
VESTING SCHEDULE:
- --------------------------------------------------------------------------------
EXECUTED as of the Date of Option Grant.
eMagin Corporation
By
---------------------------------------
Its
---------------------------------------
BY SIGNING BELOW AND ENTERING INTO THIS STOCK OPTION AGREEMENT,
OPTIONEE AGREES TO THE TERMS HEREOF AND ALL OBLIGATIONS AND
RESPONSIBILITIES AS DESCRIBED IN THE PLAN AND THE ATTACHED TERMS AND
CONDITIONS.
OPTIONEE
, as Optionee
--------------------------
<PAGE>
TERMS AND CONDITIONS OF STOCK OPTION AGREEMENT
STOCK OPTIONS ARE SUBJECT TO THE TERMS HEREOF AND OF THE
COMPANY'S 2000 STOCK OPTION PLAN ("PLAN").
CAPITALIZED TERMS USED IN THIS STOCK OPTION AGREEMENT (THIS "AGREEMENT"),
IF NOT OTHERWISE DEFINED, HAVE THE MEANINGS GIVEN THEM IN THE PLAN.
1. a. Any Option Shares which become purchasable ("vest") but are not
purchased on a vesting date or anniversary date, as the case may be, may be
purchased on any subsequent date, provided all options for the purchase of
Option Shares must be exercised within the time periods specified in Section 2
below.
b. Optionees shall have conditional purchase rights in the
event of any Change of Control Event or liquidation as described in the Plan.
2. All UNVESTED options shall expire upon the consummation of a Change
of Control Event or any termination of Optionee's employment with or provision
of services to the Company for any reason, whether voluntary or involuntary, or
upon the death or disability of Optionee, as more fully described in the Plan.
Subject to the terms hereof, all VESTED options (i.e., options for
which the right to purchase has accrued) shall expire at the earliest of the
following:
a. The earlier of the end of the Term of Option specified on
the first page of this Agreement or ten (10) years from the Date of Option Grant
specified on the first page of this Agreement;
b. If Optionee is or becomes an Employee, ninety (90) days
after voluntary or involuntary termination of Optionee's employment other than
termination as described in Paragraphs (e) or (f) below;
c. If Optionee is or becomes a Consultant, ninety (90) days
after the earlier of (i) the date either the Company or Optionee notifies the
other that the Company or the Optionee, as the case may be, is terminating the
consultant relationship or (ii) the end of a period of one hundred twenty (120)
days during which the Consultant has not performed any service for the Company,
unless in either case, such termination is pursuant to events described in
Paragraphs (e) or (f) below;
d. If Optionee is a Director, ninety (90) days after
resignation or removal from the Board of the Company or other cessation of
service as a Director and following any applicable lockup or standstill period
to which such Director is subject, other than cessation of service as described
in Paragraphs (e) or (f) below;
e. Upon discharge of Optionee (removal from the Board, in the
case of a Director) for "cause" as defined in any employment or consulting
agreement between the Company and Optionee or, if there shall be no such
employment or consulting agreement, for Cause, as defined in the Plan;
f. Twelve (12) months after Optionee's death or disability; or
g. In the event of a Change of Control Event or dissolution as
described in the Plan. However, if the Change of Control Event or dissolution,
as the case may be and as described in the Plan, is not finalized, all options
which are terminated pursuant to this Subsection (g) shall be reinstated as
described in the Plan.
Notwithstanding the above, the Committee, in its discretion, may extend
the expiration date of VESTED Stock Options.
Optionee agrees that all vested and unvested options granted pursuant
to this Stock Option shall expire in accordance with the provisions of this
paragraph 2 following involuntary or voluntary termination of Optionee's
employment with, engagement by or services to the Company, as applicable, for
any reason. Optionee hereby waives the right to recover as damages any vested or
unvested stock options which expire according to this paragraph 2. This waiver
shall include, but not be limited to, damages related to any claims Optionee may
have against the Company to which Optionee may be entitled by virtue of
employment with the Company or the termination of Optionee's employment, such as
claims arising under any federal, state or local law relating to employment
rights and/or benefits and any other legal or equitable grounds.
2
<PAGE>
3. This Stock Option may be exercised at different times for portions
of the total number of Option Shares for which the right to purchase shall have
accrued and vested hereunder, provided that such portions are in multiples of
ten (10) shares if the Optionee holds vested portions for ninety-nine (99) or
fewer shares and otherwise in multiples of one hundred (100) shares.
4. This Stock Option shall be adjusted for recapitalizations, stock
splits, stock dividends and the like as described in the Plan.
5. This is not an employment contract and while the benefits, if any,
of this Stock Option may be an incident of the Optionee's employment with or
provision of services to the Company, the terms and conditions of such
employment or provision of services are otherwise wholly independent hereof.
6. Neither this Stock Option nor any right under this Agreement is
assignable and rights under this Agreement may be exercised only by the Optionee
or a person to whom the rights under this Agreement shall pass by will or the
laws of descent and distribution.
7. The Optionee shall indicate Optionee's intention to exercise this
Stock Option with respect to vested Option Shares by notifying the Company in
writing of such intention in the form of the Notice of Exercise attached hereto
as EXHIBIT A, indicating the number of Option Shares Optionee intends to
purchase and, within ten (10) days thereafter, paying to the Company an amount
sufficient to cover the total option price of such Option Shares together with
the amount of federal, state and local income and FICA taxes required to be
withheld by the Company, if any, as provided in the Plan. Payment of the
Exercise Price Per Share specified on the first page of this Agreement shall be
made in cash or in accordance with such procedures for a "cashless exercise" as
may be established from time to time by the Company and the brokerage firm, if
any, designated by the Company to facilitate exercises of Stock Options and
sales of Option Shares under the Plan.
8. If the Optionee, immediately prior to the grant of an Incentive
Stock Option hereunder, owns stock in the Company representing more than ten
percent (10%) of the voting power of all classes of stock of the Company, the
Exercise Price Per Share specified on the first page of this Agreement for
Incentive Stock Options granted hereunder shall be not less than one hundred ten
percent (110%) of the Fair Market Value of the Company's common stock on the
Date of Option Grant specified on the first page of this Agreement and such
Incentive Stock Option shall not be exercisable after the expiration of five (5)
years from said Date of Option Grant and notwithstanding any pricing or vesting
terms hereof which appear at variance with the foregoing, all pricing and
vesting terms hereof shall be deemed hereby to conform with the foregoing
limitations. In lieu of the foregoing, the Optionee may elect to have a Stock
Option that purports to be an Incentive Stock Option treated as a Non-Qualified
Stock Option pursuant to the original terms of this Agreement.
9. Notwithstanding the foregoing, no Stock Option shall be exercisable
and rights under this Agreement are not enforceable, unless and until all
requirements imposed by or pursuant to Section 2.18 of the Plan are satisfied.
SECTION 2.18 of THE Plan DESCRIBES CERTAIN IMPORTANT CONDITIONS
RELATING TO FEDERAL AND STATE SECURITIES LAWS THAT MUST BE SATISFIED BEFORE THIS
OPTION CAN BE EXERCISED AND BEFORE THE COMPANY CAN ISSUE ANY OPTION SHARES TO
THE OPTIONEE. AT THE PRESENT TIME THE PLAN IS NOT REGISTERED AND, ALTHOUGH
SHARES MAY BE ISSUED UPON EXERCISE, THE SHARES SO ISSUED ARE NOT FREELY
TRADABLE.
THERE CAN BE NO ASSURANCE THAT THE EXEMPTION(S) ALLOWING ISSUANCE OF
THE SHARES UPON EXERCISE WILL REMAIN AVAILABLE, NOR IS THERE ASSURANCE THAT
ISSUED SHARES WILL BE REGISTERED OR THAT ONCE REGISTERED THE REGISTRATION WILL
BE MAINTAINED. IF THE SHARES ARE NOT REGISTERED OR IF THE REGISTRATION IS NOT
MAINTAINED, THE OPTIONEE WILL NOT BE ABLE TO TRADE SHARES OBTAINED UPON EXERCISE
OF THIS STOCK OPTION UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. AT THE
PRESENT TIME, EXEMPTIONS FROM REGISTRATION UNDER
3
<PAGE>
FEDERAL AND STATE SECURITIES LAWS ARE VERY LIMITED AND MIGHT BE UNAVAILABLE TO
THE OPTIONEE PRIOR TO THE EXPIRATION OF THIS OPTION. AS A CONSEQUENCE OF THE
FOREGOING, THE OPTIONEE MIGHT NOT HAVE AN OPPORTUNITY TO EXERCISE THIS OPTION
AND TO RECEIVE OPTION SHARES UPON SUCH EXERCISE AND, IF THE OPTIONEE IS ABLE TO
EXERCISE THIS OPTION AND TO RECEIVE OPTION SHARES UPON SUCH EXERCISE, THE
OPTIONEE MIGHT NOT HAVE THE OPPORTUNITY TO TRADE SUCH OPTION SHARES.
10. NO RIGHTS TO STOCK OPTIONS OR EMPLOYMENT; NO RESTRICTIONS
Neither Optionee nor any other person shall have any claim or right to
be granted a Stock Option under the Plan. Having received a Stock Option under
the Plan shall not give Optionee any right to receive any other grant or option
under the Plan. Optionee shall have no rights to or interest in any Option
except as set forth herein, in the Plan, or in another Option specifically
granted by the Company to Optionee. Neither this Option, the Plan, nor any
action taken hereunder or under the Plan shall be construed as giving any
Employee, Consultant or Director any right to be retained in the employ of, or
be engaged as a Consultant to, or serve as a Director of, the Company, as the
case may be, or otherwise in any way affect any right and power of the Company
to terminate the employment or engagement of any Employee, Consultant or
Director at any time with or without assigning a reason therefor. Nothing in the
Plan restricts the Company's rights to adopt other option plans pertaining to
any or all of the Employees, Consultants or Directors covered under the Plan or
other Employees, Consultants or Directors not covered under the Plan.
THIS AGREEMENT AND THE STOCK OPTION REPRESENTED HEREBY MAY BE AFFECTED,
WITH REGARD TO BOTH VESTING SCHEDULE AND TERMINATION, BY LEAVES OF ABSENCE, A
REDUCTION IN THE NUMBER OF HOURS WORKED, PARTIAL DISABILITY AND OTHER CHANGES IN
OPTIONEE'S EMPLOYEE, CONSULTANT OR DIRECTOR STATUS, AS THE CASE MAY BE. THE
COMPANY'S POLICIES IN SUCH MATTERS, IF ANY, SHALL BE CONTAINED IN THE PLAN
GUIDELINES ADOPTED BY THE BOARD. THE PLAN GUIDELINES AND THE RULES, POLICIES AND
REGULATIONS CONTAINED THEREIN MAY BE AMENDED AT ANY TIME AND FROM TIME TO TIME
BY THE BOARD OF DIRECTORS OF THE COMPANY, OR THE COMMITTEE APPOINTED BY SUCH
BOARD, IN ITS SOLE DISCRETION AND WITH OR WITHOUT NOTICE. OPTIONEE'S RIGHTS
HEREUNDER OR UNDER THE PLAN AT ANY TIME SHALL BE GOVERNED BY THE PLAN GUIDELINES
IN EFFECT AT THE TIME OF ANY CHANGE IN OPTIONEE'S STATUS AS CONTEMPLATED ABOVE.
11. The Stock Option represented by this Agreement is granted pursuant
to and is controlled by the Plan and by the Plan Guidelines, if any, as adopted
by the Board and amended from time to time. Optionee, by execution hereof,
acknowledges receipt of the Plan and the Plan Guidelines as they currently exist
and acceptance of the terms and conditions of the Plan, the Plan Guidelines and
of this Agreement.
12. If any provision of this Agreement is held to be unenforceable for
any reason, it shall be modified rather than voided, if possible, in order to
achieve the intent of the parties to this option to the extent possible. In any
event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent.
<PAGE>
EXHIBIT A
EMAGIN CORPORATION
NOTICE OF EXERCISE
OF
STOCK OPTION
TO: EMAGIN CORPORATION (the "Company")
The undersigned hereby exercises Stock Option No. _______, granted on
__________, _____, by the Company pursuant to its 2000 Stock Option Plan, to
purchase __________ Shares of Common Stock of the Company at a price of
$________ per Share, for a total purchase price of $________.
THE SHARES ARE BEING ACQUIRED BY THE UNDERSIGNED FOR INVESTMENT
PURPOSES ONLY AND NOT WITH ANY PRESENT INTENTION TO TRANSFER OR DISTRIBUTE THE
SAME.
By this exercise, the undersigned agrees (i) to provide for the payment
by the undersigned to the Company (in the manner designated by the Company) of
the Company's withholding obligation, if any, relating to the exercise of the
foregoing Stock Option and (ii) if this exercise relates to an Incentive Stock
Option, to notify the Company in writing within fifteen (15) days after the date
of any disposition of any of the Shares of Common Stock issued upon exercise of
the foregoing Stock Option that occurs within two (2) years after the date of
grant of such Stock Option or within one (1) year after such Shares of Common
Stock are issued upon exercise of the foregoing Stock Option.
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