<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1999
Registration No. 333-_____
================================================================================
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PROXICOM, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
52-1770631
(IRS employer identification number)
11600 Sunrise Valley Drive
Reston, VA 20191
(703) 262-3200
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
------------------------
PROXICOM, INC. AMENDED AND RESTATED 1996 STOCK OPTION PLAN
PROXICOM, INC. 1997 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
PROXICOM, INC. EMPLOYEE STOCK PURCHASE PLAN
(Full Title of the Plans)
------------------------
Christopher Capuano, Esq.
Proxicom, Inc.
11600 Sunrise Valley Drive
Reston, VA 20191
(703) 262-3200
(Name, address and telephone number of Agent for Service)
Copy to:
David B. H. Martin, Jr.
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE (2) PRICE (1)(2) FEE (1)(2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 8,350,000 $20.86 $174,181,000 $48,423
- ---------------------------------------------------------------------------------------------------------------------------------
=================================================================================================================================
</TABLE>
(1) The Registrant is registering 7,000,000, 350,000 and 1,000,000 shares of its
common stock, par value $.01 per share ("Common Stock"), respectively, for
issuance pursuant to its Amended and Restated 1996 Stock Option Plan, 1997 Stock
Option Plan for Non-Employee Directors and Employee Stock Purchase Plan,
respectively.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h) of the Securities Act of 1933, as amended.
================================================================================
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<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION
The Company will deliver to each employee selected to participate
in the Amended and Restated 1996 Stock Option Plan, 1997 Stock Option Plan for
Non-Employee Directors, and Employee Stock Purchase Plan (the "Plans") the
documents containing the information required by Part I of Form S-8 to be
included in this registration statement. In accordance with Rule 428(b)(1) under
the Securities Act of 1933, as amended (the "Securities Act") and the
instructions to Part I of Form S-8, these documents will not be filed with the
Securities and Exchange Commission (the "Commission") as part of any prospectus
or prospectus supplement. The Company filed copies of the Plans as exhibits to
its registration statement on Form S-1, SEC Registration Statement No.
333-72297, with the exception of the Amended and Restated 1996 Stock Option
Plan which is being filed herewith.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
If participants in the Plans call or write to Christopher Capuano,
Esq., Proxicom, Inc., 11600 Sunrise Valley Drive, Reston, VA 20191 (703)
262-3200, the Company will provide them with copies of the documents
incorporated by reference in Item 3 of Part II of this registration statement
and other documents required to be delivered to participants in the Plans
pursuant to Rule 428(b) under the Securities Act, without charge. The documents
incorporated by reference in Item 3 of Part II of this registration statement
are incorporated by reference in the Section 10(a) prospectuses for each of the
respective Plans.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Proxicom, Inc. (the "Company" or the "Registrant") hereby
incorporates by reference into this registration statement the following
documents filed by it with the Commission: (1) prospectus filed with the
Commission on April 20, 1999 pursuant to Securities Act Rule 424(b); and (2)
registration statement on Form 8-A filed with the Commission on April 9, 1999.
In addition, all documents and reports filed by the Company
subsequent to the date hereof 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 reregisters all
securities remaining unsold, shall be deemed to be incorporated by reference in
this registration statement and to be part hereof from the date of filing of
such documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this registration statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
registration statement.
2
<PAGE> 3
ITEM 4. DESCRIPTION OF SECURITIES.
The Company's Common Stock is registered with the Commission under
Section 12 of the Exchange Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Amended and Restated Certificate of Incorporation and Amended and
Restated Bylaws of the Registrant provide for the indemnification of the
Registrant's directors and officers to the fullest extent authorized by, and
subject to the conditions set forth in the General Corporation Law of the State
of Delaware (the "DGCL"), except that the Registrant will indemnify a director
or officer in connection with a proceeding (or part thereof) initiated by such
person only if such proceeding (or part thereof) was authorized by the
Registrant's Board of Directors. The indemnification provided under the Amended
and Restated Certificate of Incorporation and Amended and Restated Bylaws
includes the right to be paid by the Registrant the expenses (including
attorneys' fees) in advance of any proceeding for which indemnification may be
had in advance of its final disposition, provided that the payment of such
expenses (including attorneys' fees) incurred by a director or officer in
advance of the final disposition of a proceeding may be made only upon delivery
to the Registrant of an undertaking by or on behalf of such director or officer
to repay all amounts so paid in advance if it is ultimately determined that such
director or officer is not entitled to be indemnified. Pursuant to the Amended
and Restated Bylaws, if a claim for indemnification is not paid by the
Registrant within 60 days after a written claim has been received by the
Registrant, the claimant may at any time thereafter bring an action against the
Registrant to recover the unpaid amount of the claim, and, if successful in
whole or in part, the claimant will be entitled to be paid also the expense of
prosecuting such action.
As permitted by the DGCL, the Registrant's Amended and Restated
Certificate of Incorporation provides that directors of the Registrant shall not
be liable to the Registrant or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Registrant or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, relating to
unlawful payment of dividends or unlawful stock purchase or redemption or (iv)
for any transaction from which the director derived an improper personal
benefit. As a result of this provision, the Registrant and its stockholders may
be unable to obtain monetary damages from a director for breach of his or her
duty of care.
Under the Amended and Restated Bylaws, the Registrant has the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Registrant, or is or was serving at
the request of the Registrant as a director, officer, employee, partner (limited
or general) or agent of another corporation or of a partnership, joint venture,
limited liability company, trust or other enterprise, against any liability
asserted against such person or incurred by such person in any such capacity, or
arising out of such person's status as such, and related expenses, whether or
not the Registrant would have the power to indemnify such person against such
liability under the provisions of the DGCL. The Registrant maintains director
and officer liability insurance on behalf of its directors and officers.
3
<PAGE> 4
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
--- -------
<S> <C>
4.1 Amended and Restated Certificate of Incorporation of the Registrant.*
4.2 Amended and Restated Bylaws of the Registrant.*
4.3 Form of Common Stock Certificate of the Registrant.*
5 Legal Opinion of Christopher Capuano, Esq.
23 Consent of PricewaterhouseCoopers LLP.
24 Power of Attorney (included on signature page)
99.1 Proxicom, Inc. Amended and Restated 1996 Stock Option Plan
99.2 Proxicom, Inc. 1997 Stock Option Plan for Non-Employee Directors*
99.3 Proxicom, Inc. Employee Stock Purchase Plan*
*Incorporated by reference to the Registrants' Registration Statement
on Form S-1, SEC Registration Statement No. 333-72297.
</TABLE>
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement;
4
<PAGE> 5
(iii) 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.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the registration statement is on Form S-8 (as in
this case), and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement 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.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant or expenses incurred or
paid by a director, officer or controlling person in 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 of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
5
<PAGE> 6
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 Reston, state of Virginia on May 28, 1999.
PROXICOM, INC.
By: /s/ Raul J. Fernandez
--------------------------------
Raul J. Fernandez
Chairman, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Raul J. Fernandez and Kenneth J. Tarpey, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement or any
Registration Statement relating to this Registration Statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ Raul J. Fernandez Chairman, President and Chief Executive Officer May 28, 1999
- ------------------------- (Principal Executive Officer)
Raul J. Fernandez
/s/ Kenneth J. Tarpey Senior Vice President, Chief Financial Officer and May 28, 1999
- ------------------------- Treasurer (Principal Financial and Accounting Officer)
Kenneth J. Tarpey
</TABLE>
<PAGE> 7
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 28th day of May, 1999.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C>
/s/ Brenda A. Wagner Senior Vice President,
- ---------------------------- Organizational Strategies and Director
Brenda A. Wagner
/s/ David C. Hodgson Director
- ----------------------------
David C. Hodgson
/s/ Jack Kemp Director
- ----------------------------
Jack Kemp
/s/ Theodore J. Leonsis Director
- ----------------------------
Theodore J. Leonsis
/s/ John A. McKinley, Jr. Director
- ----------------------------
John A. McKinley, Jr.
/s/ Mario M. Morino Director
- ----------------------------
Mario M. Morino
</TABLE>
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
--- -------
<S> <C>
4.1 Amended and Restated Certificate of Incorporation of the Registrant.*
4.2 Amended and Restated Bylaws of the Registrant.*
4.3 Form of Common Stock Certificate of the Registrant.*
5 Legal Opinion of Christopher Capuano, Esq.
23 Consent of PricewaterhouseCoopers LLP.
24 Power of Attorney (included on signature page)
99.1 Proxicom, Inc. Amended and Restated 1996 Stock Option Plan
99.2 Proxicom, Inc. 1997 Stock Option Plan for Non-Employee Directors*
99.3 Proxicom, Inc. Employee Stock Purchase Plan*
*Incorporated by reference to the Registrants' Registration Statement
on Form S-1, SEC Registration Statement No. 333-72297.
</TABLE>
<PAGE> 1
EXHIBIT 5
LEGAL OPINION OF CHRISTOPHER CAPUANO, ESQ.
May 28, 1999
Board of Directors
Proxicom, Inc.
11600 Sunrise Valley Drive
Reston, Virginia 20191
Re: 1996 Stock Option Plan, 1997 Stock Option Plan for Non-Employee Directors
and Employee Stock Purchase Plan (the "Plans")
Proxicom, Inc. Registration Statement on Form S-8
Gentlemen and Ladies:
I am the Vice President, General Counsel and Corporate Secretary
of Proxicom, Inc., a Delaware corporation (the "Company"), and I have acted as
legal counsel to the Company in connection with the filing with the Securities
and Exchange Commission of a Registration Statement on Form S-8 under the
Securities Act of 1933, as amended (the "Registration Statement"), relating to
8,350,000 shares (the "Shares") of the Company's common stock, par value $.01
per share (the "Common Stock"), issuable under the Plans.
In my capacity as General Counsel of the Company, I have examined
and am familiar with (i) the Registration Statement; (ii) the Plans; (iii) the
Amended and Restated Certificate of Incorporation and the Amended and Restated
Bylaws of the Company, each as amended to date; (iv) certain resolutions adopted
by the Board of Directors of the Company relating to the issuance of the Shares
pursuant to the Plans and certain related matters; and (v) such agreements,
certificates of public officials, certificates of officers or representatives of
the Company and others and such other documents, certificates and records as I
have deemed necessary or appropriate as a basis for the opinions set forth
herein. In such examination, I have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to me as originals, the conformity to original documents of all
documents submitted to me as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. As to any facts material
to the opinion expressed herein that I have not independently established or
verified, I have relied upon statements and representations of officers and
other representatives of the Company and others.
Based upon and subject to the foregoing, I am of the opinion that
the Shares have been duly authorized for issuance and, when the Shares have been
paid for and certificates therefor have been issued and delivered in accordance
with the terms of the Program, the Shares will be validly issued, fully paid and
nonassessable.
I hereby consent to the filing of this opinion letter as Exhibit 5
to the Registration Statement. In giving this opinion and consent, I do not
admit that I am an "expert" within the meaning of the Securities Act of 1933, as
amended.
Very truly yours,
/s/ Christopher Capuano
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of Proxicom, Inc.
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated February 5, 1999, except
as to the pooling of interests with ad hoc Interactive, Inc. which is as of
March 26, 1999, which appears in Proxicom, Inc.'s registration statement on Form
S-1 (SEC File No. 333-72297).
/s/ PricewaterhouseCoopers LLP
McLean, Virginia
May 21, 1999
<PAGE> 1
PROXICOM, INC. EXHIBIT 99.1
AMENDED AND RESTATED 1996 STOCK OPTION PLAN
Proxicom, Inc., a Delaware corporation (the "Company"), sets forth herein
the terms of the 1996 Stock Option Plan (the "Plan") as follows:
1. PURPOSE
Under the Plan, Awards may be granted to Eligible Employees and Eligible
Nonemployees to purchase shares of the Company's capital stock. The Plan is
designed to enable the Company to attract, retain and motivate its Employees,
consultants and others by providing for or increasing the proprietary interests
of such persons in the Company.
2. DEFINITIONS
For purposes of interpreting the Plan and related documents (including
Agreements), the following definitions shall apply:
2.1. "AFFILIATE" means the Company and any company or other trade
or business that is controlled by or under common control with the Company,
determined in accordance with the principles of Section 414(b) and 414(c) of the
Code and the regulations thereunder, or is an affiliate of the Company within
the meaning of Rule 405 of Regulation C under the Securities Act.
2.2. "AGREEMENT" means the Stock Option Agreement under which the
Grantee accepts the Award terms and conditions and receives an Award pursuant to
the Plan.
2.3. "AWARD" means individually, collectively or in tandem, an
incentive award granted under the Plan, whether in the form of Options, SARs,
Restricted Stock Awards, or performance shares, or such other form and subject
to such terms as the Committee may determine.
2.4. "AWARD PRICE" means the purchase price for each share of
Common Stock subject to an Award.
2.5. "BOARD" means the Board of Directors of the Company.
2.6. "CODE" means the Internal Revenue Code of 1986, as amended.
Any section thereof referenced in the Plan or an Agreement shall include the
rules and regulations thereunder, and any successor provisions thereto.
2.7. "COMMITTEE" means the Compensation Committee of the Board,
which must consist of no fewer than two members of the Board who satisfy the
definition under Rule 16b-3 of the Exchange Act for "nonemployee director".
2.8. "COMMON STOCK" means common stock, par value $.01, issued by
the Company.
2.9. "COMPANY" means Proxicom, Inc., a Delaware corporation, any
Affiliates and any other entity as determined by the Committee.
2.10. "EFFECTIVE DATE" means August 26, 1996, the date of adoption
of the Plan by the Board.
2.11. "ELIGIBLE EMPLOYEE" means any Employee of the Company who
the Committee selects to receive an Award.
2.12. "ELIGIBLE NONEMPLOYEE" means any former Employee, consultant
or advisor to the Company who the Committee selects to receive an Award.
2.13. "EMPLOYEE" means, for the purposes of the Plan, an
individual who is an employee of the Company.
2.14. "EMPLOYER" means the Company.
<PAGE> 2
2.15. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
now in effect or as hereafter amended. Any section thereof referenced in the
Plan or an Agreement shall include the rules and regulations thereunder, and any
successor provisions thereto.
2.16. "FAIR MARKET VALUE" means the value of each share of Common
Stock subject to the Plan determined as follows: (a) if on the Grant Date or
other determination date the shares of Common Stock are listed on an established
national or regional stock exchange, are admitted to quotation on the National
Association of Securities Dealers Automated Quotation System, or are publicly
traded on an established securities market, the Fair Market Value of the shares
of Common Stock shall be the closing price of the shares of Common Stock on such
exchange or in such market (the highest such closing price if there is more than
one such exchange or market) on the trading day immediately preceding the Grant
Date or such other determination date (or if there is no such reported closing
price, the Fair Market Value shall be the mean between the highest bid and
lowest asked prices or between the high and low sale prices on such trading
day); or (b) if no sale of the shares of Common Stock is reported for such
trading day, on the next preceding day on which any sale shall have been
reported. If the shares of Common Stock are not listed on such an exchange,
quoted on such System or traded on such a market, Fair Market Value shall be
determined by the Board or Committee in good faith.
2.17. "GRANT DATE" means for a particular Award (i) the date as of
which the Committee approves the Award or (ii) any other date specified by the
Committee, if any.
2.18. "GRANTEE" means an individual to whom one or more Awards
have been granted.
2.19. "INCENTIVE STOCK OPTION" or "ISO" means an incentive stock
option within the meaning of section 422 of the Code. Any Option that is not
specifically designated as an Incentive Stock Option shall under no
circumstances be considered an Incentive Stock Option.
2.20. "NONQUALIFIED STOCK OPTION" means any Option that does not
qualify under section 422 of the Code.
2.21. "OPTION" means an option granted by the Company to purchase
Common Stock pursuant to the provisions of the Plan, including ISOs,
Nonqualified Stock Options and Reload Options.
2.22. "OPTION PERIOD" means the period during which Options may be
exercised as defined in section 13.
2.23. "OPTION TERM" means the period defined under section 13
herein.
2.24. "PLAN" means the Proxicom, Inc. 1996 Stock Option Plan, as
amended.
2.25. "PUBLICLY TRADED" means that time when the shares of Common
Stock are listed on an established national or regional stock exchange, are
admitted to quotation on the National Association of Securities Dealers
Automated Quotation System, or are publicly traded on an established securities
market
2.26. "RELOAD OPTION" means the right to receive a further Option
for a number of shares of Common Stock surrendered by the Grantee upon exercise
of the original Option.
2.27. "RESTRICTED PERIOD" means the period of time from the date
of grant of Restricted Stock until the lapse of restrictions attached thereto
under the terms of the Agreement granting such Restricted Stock, pursuant to the
provisions of the Plan or by action of the Committee.
2.28. "RESTRICTED STOCK" shall mean an Award granted by the
Committee entitling the Grantee to acquire, at no cost or for a purchase price
determined by the Committee at the time of grant, shares of Common Stock which
are subject to restrictions in accordance with the provisions hereof.
<PAGE> 3
2.29. "SECURITIES ACT" means the Securities Act of 1933, as now in
effect or as hereafter amended. Any section thereof referenced in the Plan or an
Agreement shall include the rules and regulations thereunder, and any successor
provisions thereto.
2.30. "STOCK APPRECIATION RIGHT" or "SAR" means a grant entitling
the Grantee to receive an amount in cash or shares of Common Stock or a
combination thereof having a value equal to (or if the Committee shall so
determine at the time of a grant, less than) the excess of the Fair Market Value
of a share of Common Stock on the date of exercise over the Fair Market Value of
a share of Common Stock on the date of grant (or over the Award Price, if the
SAR was granted in tandem with an Option), multiplied by the number of shares
with respect to which the SAR shall have been exercised, with the Committee
having sole discretion to determine the form or forms of payment at the time of
grant of the SAR.
2.31. "STOCK AWARDS" means any Award which is in the form of
Restricted Stock and any outright grants of Common Stock approved by the
Committee pursuant to the Plan.
2.32. "STOCKHOLDER" means a holder of record of at least one share
of the voting stock of the Company.
2.33. "TERMINATION OF EMPLOYMENT" means that event when a person
is no longer employed by the Company or any Affiliate as an employee, advisor,
consultant or otherwise. The Committee may in its discretion determine (a)
whether any leave of absence constitutes a termination of employment for
purposes of the Plan; (b) the impact, if any, of any such leave of absence on
awards theretofore made under the Plan; and (c) when a change in a nonemployee's
association with the Company constitutes a termination of employment for
purposes of the Plan. Such determinations of the Committee shall be final,
binding and conclusive.
3. ADMINISTRATION
3.1 ADMINISTRATION OF THE PLAN
Prior to the time that the securities of the Company become Publicly Traded, the
Plan shall be administered by the Board (unless and until the Board appoints the
Committee and the members thereof to administer the Plan), in which case the
term "Committee" when used herein with respect to the administration of the Plan
shall be deemed to mean the Board. After the securities of the Company become
Publicly Traded, the Plan shall be administered by the Committee.
3.2 SCOPE OF AUTHORITY
The Committee shall have the full power and authority to take all actions and to
make all determinations required or provided for under the Plan, any Award
granted or Agreement entered into hereunder, and all such other actions and
determinations not inconsistent with the specific terms and provisions of the
Plan deemed by the Committee to be necessary or appropriate to the
administration of the Plan, any Award or Agreement entered into hereunder.
Actions of the Committee shall be taken by the vote of a majority of its
members; provided, however, that the Plan shall be administered so that Awards
granted under the Plan will qualify for the benefits provided by Rule 16b-3 (or
any successor rule) under the Exchange Act and section 162(m) of the Code, and
the regulations thereunder to the extent the Committee intends such grant to
quality under section 162(m). The interpretation and construction by the
Committee of any provision of the Plan or of any Award granted or Agreement
entered into hereunder shall be final and conclusive.
3.3 NO LIABILITY
No member of the Board or of the Committee shall be liable for any action or
determination made, or any failure to take or make an action or determination,
in good faith with respect to the Plan or any Option granted or Agreement
entered into hereunder.
<PAGE> 4
4. AWARDS; COMMON STOCK
4.1 Awards
Awards granted under the Plan may be Incentive Stock Options, Nonqualified Stock
Options, Restricted Stock, Stock Appreciation Rights, and performance shares,
all as more fully set forth herein. No Incentive Stock Option may be granted to
a person who is not an employee of the Company on the date of grant. Unless
otherwise specified in a particular grant, Awards granted under the Plan are
intended to qualify as performance-based compensation for the purposes of
section 162(m) of the Code. Notwithstanding the foregoing, Awards granted under
the Plan may also be Deferred Stock Awards as more fully described in Section
29.
4.2 COMMON STOCK
The stock that may be issued pursuant to Awards granted under the Plan shall be
Common Stock, which shares may be treasury shares or authorized but unissued
shares. The number of shares of Common Stock that may be issued pursuant to
Awards granted under the Plan shall not exceed in the aggregate 7,000,000 shares
of Common Stock, which number of shares is subject to adjustment and increase.
If any Award expires, terminates or is terminated for any reason prior to
exercise in full, the shares of Common Stock that were subject to the
unexercised portion of such Award shall be available for future Awards granted
under the Plan. When the exercise price for an Award under this Plan is paid
with previously outstanding shares or with shares as to which the Award is being
exercised, as permitted in section 13, only the number of shares of stock issued
net of the shares of stock tendered shall be deemed delivered for purposes of
determining the maximum number of shares of Stock available for delivery under
the Plan. Shares of stock delivered under the Plan in settlement, assumption or
substitution of outstanding awards (or obligations to grant future awards) under
the plans or arrangements of another entity shall not reduce the maximum number
of shares of stock available for delivery under the Plan, to the extent that
such settlement, assumption or substitution as a result of the Company or an
Affiliate acquiring another entity (or an interest in another entity).
5. ELIGIBILITY
Awards may be granted under the Plan to all current and former officers and
executive, administrative, technical or professional employees of the Company;
to current and former consultants of the Company; and to any other individual
whose participation in the Plan is determined to be in the best interests of the
Company by the Committee. An individual may hold more than one Award, subject to
such restrictions as are provided herein.
6. EFFECTIVE DATE AND PLAN TERM
6.1 EFFECTIVE DATE
The Plan is effective as of August 26, 1996, the date of adoption by the Board,
subject to Stockholders' approval of the Plan within one year of such Effective
Date by a majority of the votes cast at a duly held meeting of the Stockholders
of the Company at which a quorum representing a majority of all outstanding
Common Stock is present, either in person or by proxy, and voting on the matter,
or by written consent in accordance with applicable state law and the
Certificate of Incorporation and By-Laws of the Company and in a manner that
satisfies the requirements of section 162(m) of the Code; provided, however,
that upon approval of the Plan by the Stockholders of the Company, all Awards
granted under the Plan on or after the Effective Date shall be fully effective
as if the Stockholders of the Company had approved the Plan on the Effective
Date. If the Stockholders fail to approve the Plan within one year of such
Effective Date, any Awards granted hereunder shall be null, void and of no
effect.
6.2 TERM
The Plan shall terminate on the date ten (10) years after the Effective Date.
<PAGE> 5
7. GRANT OF AWARDS
7.1 AWARDS
The Committee shall determine the type or types of Awards to be made to each
Grantee. Awards may be granted singly, in combination or in tandem subject to
restrictions set forth herein. Without limiting the foregoing, the Committee may
at any time amend the terms of outstanding Awards or issue new Awards in
exchange for the surrender and cancellation of outstanding Awards. The date on
which the Committee approves the Award shall be considered the date on which
such Award is granted, unless the Committee approves a separate grant date. The
terms and conditions of the Awards granted under this section shall be
determined from time to time by the Committee, as set forth in the Agreement,
and the conditions herein.
7.2 NONQUALIFIED OPTIONS
The Award Price for each share of Common Stock issuable pursuant a Nonqualified
Stock Option shall be set by the Committee, but may not be less than par value.
7.3 INCENTIVE STOCK OPTIONS
The Award Price for each share of Common Stock issuable pursuant to an Incentive
Stock Option may not be less than the Fair Market Value on the Grant Date.
7.4 INCENTIVE STOCK OPTIONS - SPECIAL RULES
Options granted in the form of ISOs shall be subject to the following
provisions:
(a) Grant. No Incentive Option shall be granted pursuant to
this plan more than ten (10) years after the Effective
Date.
(b) Annual Limit. An Option shall constitute an ISO only to the
extent that the aggregate Fair Market Value (determined at
the time the Option is granted) of the Common Stock with
respect to which ISOs are exercisable for the first time by
any Grantee during any calendar year under the Plan and all
other plans of the Grantee's employer Company and its
parent and Affiliates does not exceed $100,000. This
limitation shall be applied by taking Options into account
in the order in which such Options were granted.
(c) 10% Stockholder. If any Grantee to whom an ISO is to be
granted pursuant to the provisions of the Plan is, on the
date of grant, an individual described in section 422(b)(6)
of the Code, then the following special provisions shall be
applicable to the Option granted to such individual:
(i) the Award Price of shares subject to such ISO shall
not be less than 110% of the Fair Market Value of
Common Stock on the date of grant; and
(ii) the Option shall not have a term in excess of five
(5) years from the date of grant.
7.5 CHANGES IN LAW
The Committee may establish rules with respect to, and may grant to Eligible
Employees and Eligible Nonemployees, Options to comply with any amendment to the
Code made after the Effective Date.
7.6 RELOAD OPTIONS
Without in any way limiting the authority of the Committee to make Awards
hereunder, the Committee shall have the authority to grant Reload Options. Any
such Reload Option shall be subject to such other terms and conditions as the
Committee may determine. Notwithstanding the above, (i) the Committee shall have
the right, in its sole discretion, to withdraw a Reload Option to the extent
that the grant thereof will result in any adverse accounting consequences to the
Company and (ii) no additional Reload Options shall be granted upon the exercise
of a Reload Option.
<PAGE> 6
8. AGREEMENTS
All Awards granted pursuant to the Plan shall be evidenced by written Agreements
in such form or forms as the Committee shall from time to time determine.
Agreements covering Awards need not contain similar provisions; provided,
however, that all such Agreements shall comply with the terms of the Plan and
all applicable laws and regulations. By accepting an Award pursuant to the Plan,
a Grantee thereby agrees that the Award shall be subject to all of the terms and
provisions of the Plan and the applicable Agreement.
9. STOCK APPRECIATION RIGHTS
The Committee shall have the authority to grant SARs to Eligible Employees and
Eligible Nonemployees either alone or in connection with an Option. SARs granted
in connection with an Option shall be granted either at the time of grant of the
Option or by amendment to the Option. SARs granted in connection with an Option
shall be subject to the same terms and conditions as the related Option and
shall be exercisable only at such times and to such extent as the related Option
is exercisable. An SAR granted in connection with an Option may be exercised
only when the Fair Market Value of the Common Stock of the Company exceeds the
Award Price of the related Option. An SAR granted in connection with an Option
shall entitle the Grantee to surrender to the Company unexercised the related
Option, or any portion thereof and to receive from the Company cash and/or
shares of Common Stock equal to that number of shares of Common Stock having an
aggregate value equal to the excess of (i) the Fair Market Value of one share of
Common Stock on the day of the surrender of such Option over (ii) the Award
Price per share of Common Stock multiplied by (iii) the number of shares of
Common Stock that may be exercised under the Option, or surrendered; provided,
however, that no fractional shares shall be issued. An SAR granted singly shall
entitle the Grantee to receive the excess of (i) the Fair Market Value of a
share of Common Stock on the date of exercise over (ii) the Fair Market Value of
a share of Common Stock on the date of grant of the SAR, multiplied by (iii) the
number of SARs exercised. Payment of any fractional shares of Common Stock shall
be made in cash.
10. RESTRICTED STOCK
The Committee may in its sole discretion grant Restricted Stock to Eligible
Employees and Eligible Nonemployees, subject to the following provisions. At the
time a grant of Restricted Stock is made, the Committee shall establish a period
of time (the "Restricted Period") applicable to such Restricted Stock. Each
grant of Restricted Stock may be subject to a different Restricted Period. The
Committee may, in its sole discretion, at the time a grant of Restricted Stock
is made, prescribe restrictions in addition to or other than the expiration of
the Restricted Period, including the satisfaction of corporate or individual
performance objectives, which may be applicable to all or any portion of the
Restricted Stock. Such performance objectives shall be established in writing by
the Committee prior to the ninetieth day of the year in which the grant is made
and while the outcome is substantially uncertain. Performance objectives shall
be based on Common Stock price, market share, sales, earnings per share, return
on equity or costs.
Performance objectives may include positive results, maintaining the status quo
or limiting economic losses. The Committee also may, in its sole discretion,
shorten or terminate the Restricted Period or waive any other restrictions
applicable to all or a portion of the Restricted Stock. Restricted Stock may not
be sold, transferred, assigned, pledged or otherwise encumbered or disposed of
during the Restricted Period or prior to the satisfaction of any other
restrictions prescribed by the Committee with respect to such Restricted Stock.
10.1 RESTRICTIONS
A Common Stock certificate representing the number of shares of Restricted Stock
granted shall be held in custody by the Company for the Grantee's account. The
Grantee shall have all rights and privileges of a Stockholder as to such
Restricted Stock, including the right to receive dividends and the right to vote
such shares, except that subject to the provisions below, the following
restrictions shall apply: (i) The Grantee shall not be entitled to delivery of
the certificate until the expiration of
<PAGE> 7
the Restricted Period; (ii) none of the shares of Restricted Stock may be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of during the
Restricted Period; (iii) the Grantee shall, if requested by the Company, execute
and deliver to the Company, a Common Stock power endorsed in blank. If a Grantee
ceases to be an Employee of the Company prior to the expiration of the
Restricted Period applicable to such shares, shares of Restricted Stock still
subject to restrictions shall be forfeited unless otherwise determined by the
Committee, and all rights of the Grantee to such shares shall terminate without
further obligation on the part of the Company.
10.2 DELIVERY OF RESTRICTED SHARES
At the end of the Restricted Period, a Common Stock certificate for the number
of shares of Restricted Stock with respect to which the restrictions have lapsed
shall be delivered (less any amount in satisfaction of any withholding
obligation), free of all such restrictions, except applicable securities laws,
to the Grantee. The Company shall not be required to deliver any fractional
shares of Common Stock but shall pay, in lieu thereof, the Fair Market Value (as
of the date the restrictions lapse) of such fractional share to the Grantee.
Notwithstanding the foregoing, the Committee may authorize the delivery of the
Restricted Stock to a Grantee during the Restricted Period, in which event any
Common Stock certificates in respect of any shares of Restricted Stock thus
delivered to a Grantee during the Restricted Period applicable to such shares
shall bear an appropriate legend referring to the terms and conditions,
including the restrictions, applicable thereto.
11. PERFORMANCE SHARES
The Committee may in its sole discretion grant performance share awards to such
individuals and under such terms and conditions as the Committee shall
determine, subject to the provisions of the Plan. Such an award shall entitle a
Grantee to acquire shares of Common Stock of the Company, or to be paid the
value thereof in cash, as the Committee shall determine, if specified
performance goals are met. Performance shares may be awarded independently of or
in connection with any other Award under the Plan. The Grantee of a performance
share award will have the rights of a shareholder only as to shares for which a
certificate has been issued pursuant to the award and not with respect to any
other shares subject to the award. Except as otherwise may be provided by the
Committee at any time prior to termination of employment, the rights of a
Grantee of a performance share award shall automatically terminate upon the
Grantee's Termination of Employment for any reason.
12. AWARD PRICE
The purchase price of each share of Common Stock subject to an Award shall be
fixed by the Committee and stated in each Agreement.
13. TERM, VESTING AND EXERCISE OF AWARDS
13.1 TERM
Each Award granted under the Plan shall terminate and all rights to purchase
Common Stock thereunder shall cease upon the expiration of ten (10) years from
the Grant Date, as otherwise provided herein, or on such date prior thereto as
may be fixed by the Committee and stated in the Agreement relating to such
Award; provided, however, that in the event the Grantee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b)(6) and 424(d) of the Code (relating to Common Stock ownership of
more than 10 percent), an Option granted to such Grantee which is intended to be
an Incentive Stock Option shall in no event be exercisable after the expiration
of five years from the Grant Date (collectively, the "Option Term").
13.2 VESTING
Unless otherwise expressly provided in an Agreement and approved by the
Committee, Options granted hereunder shall become vested and exercisable at the
following schedule if the Grantee is an Employee on the relevant anniversary
date and has not experienced a Termination of Employment prior to such
anniversary date: no more than 25% of the total number of shares optioned on the
first anniversary of the Grant Date;
<PAGE> 8
no more than 50% of the total number of shares optioned on the second
anniversary of the Grant Date; no more than 75% of the total number of shares
optioned on the third anniversary of the Grant Date; and 100% of the total
number of shares optioned on and after the fourth anniversary of the Grant Date.
All Awards that do not vest are forfeited.
13.3 EXERCISE BY GRANTEE
Only the Grantee receiving an Award (or, in the event of the Grantee's legal
incapacity or incompetency, the Grantee's guardian or legal representative, and
in the case of the Grantee's death, the Grantee's estate) may exercise the
Award.
13.4 LIMITATIONS ON EXERCISE AND SALE; FORFEITURE
The Committee, subject to the terms and conditions of the Plan, may in its sole
discretion provide in an Agreement that an Option may not be exercised in whole
or in part for any period or periods of time during which such Option is
outstanding as the Committee shall determine (and as set forth in the Agreement
relating to such Option). Any such limitation on the exercise of an Option
contained in any Agreement may be rescinded, modified or waived by the
Committee, in its sole discretion, at any time and from time to time after the
date of grant of such Option. The Committee may also include such other terms
and conditions as it deems effect the purpose of the Plan and are in the best
interest of the Company.
13.5 METHOD OF EXERCISE
(a) Payment. An Award that is exercisable hereunder may be
exercised by delivery to the Company on any business day, at its principal
office addressed to the attention of the Committee (or such other person
identified in an Agreement), of written notice of exercise, which notice shall
specify the number of shares for which the Award is being exercised, and shall
be accompanied by payment in full of the Award Price of the shares of Common
Stock for which the Award is being exercised. Payment of the Award Price for the
shares of Common Stock purchased pursuant to the exercise of an Award shall be
made, as determined by the Committee and set forth in the Agreement pertaining
to an Award, (i) in cash or by certified check payable to the order of the
Company; (ii) to the extent the Company is not prohibited from purchasing or
acquiring shares of Common Stock, through the tender to the Company of shares of
Common Stock, which shares shall be valued, for purposes of determining the
extent to which the Award Price has been paid thereby, at their Fair Market
Value on the date of exercise; or (iii) by a combination of the methods
described in sections 13.5(a)(i) and (ii) hereof, or such other method permitted
by the Committee; provided, however, that the Committee may in its discretion at
any time impose such limitations or prohibitions on the use of shares of Common
Stock to exercise Awards as it deems appropriate. If and while payment with
Common Stock is permitted for the exercise of an Award granted under this Plan
in accordance with the foregoing provision, the instrument evidencing the Award
may also provide that, in lieu of using previously outstanding shares therefore,
the Grantee may pay the Award Price by directing the Company to retain so many
of the underlying shares as have a market value on the date of exercise equal to
the Award Price, and any such exercise will cause the surrender and cancellation
of the Award to the extent of the shares so retained by the Company. As soon as
practical after receipt of the foregoing written notice of exercise, full
payment of the Award Price, and full payment of all amounts due to satisfy any
applicable tax withholding requirements (which the Grantee shall be required to
pay in cash, rather than by application of shares of Common Stock otherwise
deliverable upon exercise of the Award), the Company shall deliver to the
Grantee, in the Grantee's name, a certificate evidencing the number of shares of
Common Stock purchased upon exercise of the Award. An attempt to exercise any
Award granted hereunder other than as set forth above shall be invalid and of no
force and effect.
An Agreement may provide that on and after the date shares of Common Stock are
publicly traded on an established securities market, payment in full of the
Award Price need not accompany the written notice of exercise provided the
notice directs that the Common Stock certificate or certificates for the shares
for which the Award is exercised be delivered to a licensed broker acceptable to
the Company as the agent for the individual exercising the Award and, at the
time such Common Stock certificate or certificates are delivered, the broker
tenders to the Company cash (or cash equivalents acceptable to the Company)
equal to the Award Price.
<PAGE> 9
(b) Rights. Except as provided in section 10.1, an individual
holding or exercising an Award shall have none of the rights of a Stockholder
until the shares of Common Stock covered thereby are fully paid and issued to
such individual and, except as provided in section 21 hereof, no adjustment
shall be made for dividends or other rights for which the record date is prior
to the date of such issuance.
13.6 FINANCIAL ASSISTANCE
The Company is vested with authority under this Plan to assist any Employee to
whom an Award is granted hereunder in the payment of the Award Price payable on
exercise of the Award, by lending part or all of the amount of such Award Price
to such Employee on such terms and at such rates of interest and upon such
security (or no security) as shall have been authorized by or under authority of
the Committee. The Company is under no obligation to provide such assistance,
however.
14. TRANSFERABILITY OF AWARDS; COMPANY'S RIGHT OF FIRST PURCHASE
14.1 TRANSFERABILITY
Unless otherwise expressly provided in an Agreement, no Award granted under the
Plan may be sold, transferred, pledged, assigned, hypothecated or otherwise
alienated, other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order, as defined under the Code or
the Employee Retirement Income Security Act, as amended, or the rules
thereunder. The designation of a beneficiary with respect to an Award shall not
constitute a transfer for purposes of this section.
14.2 RIGHT OF FIRST PURCHASE
While and so long as the securities of the Company have not been Publicly Traded
for at least ninety (90) days, any Common Stock issued on exercise of any Award
granted under this Plan shall be subject to the Company's right of first
purchase. By virtue of that right, (a) such Common Stock may not be transferred
during the Grantee's lifetime to any person other than the Grantee's spouse,
brothers/sisters, parents or other ancestors, and children and other direct
descendants of that individual or of his or her spouse ("Immediate Family"); a
partnership whose members are the Grantee and/or members of the Grantee's
Immediate Family; or a trust for the benefit of the Grantee and/or members of
the Grantee's Immediate Family, unless such transfer occurs within fifteen (15)
days following the expiration of thirty (30) days after the Company has been
given a written notice which correctly identified the prospective transferee or
transferees and which offered the Company an opportunity to purchase the Common
Stock at its Fair Market Value in cash, and such offer was not accepted within
thirty (30) days after the Company's receipt of that notice; and (b) upon the
Grantee's death, the Company shall have the right to purchase all or some of
such Common Stock at its Fair Market Value within nine (9) months after the date
of death. This right of first purchase shall continue to apply to any such
Common Stock after the transfer during the Grantee's lifetime of that Common
Stock to a member of the Grantee's Immediate Family or to a family partnership
or trust as aforesaid, and after any transfer of that Stock with respect to
which the Company expressly waived its right of first purchase without also
waiving it as to any subsequent transfers thereof, but it shall not apply after
a transfer of that Common Stock with respect to which the Company was offered
but did not exercise or waive its right of first purchase or more than nine
months after the Grantee's death. The Company may assign all or any portion of
its right of first purchase to any one or more of its Stockholders, or to a
pension, retirement or savings plan for Employees of the Company, who may then
exercise the right so assigned. Stock certificates evidencing Common Stock
subject to this right of first purchase shall be appropriately legended to
reflect that right.
15. TERMINATION OF EMPLOYMENT
In the case of Termination of Employment, unless otherwise provided in an
Agreement and other than upon death or Disability (as hereafter defined), Awards
otherwise exercisable on the date of the Termination of Employment will remain
exercisable for a period of three (3) months. If, on the date of the Termination
of Employment, the Grantee is not entitled to exercise the Grantee's entire
Award, the Common Stock
<PAGE> 10
covered by the unexercisable portion of the Award shall revert to the Plan. If,
after Termination of Employment, the Grantee does not exercise the Award within
the time prescribed, the Award shall terminate and the Common Stock covered by
such Award shall revert to the Plan. For purposes of the Plan, a Termination of
Employment with the Company or an Affiliate shall not be deemed to occur if the
Grantee is immediately thereafter employed with the Company or any Affiliate.
16. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
16.1 DEATH
If a Grantee dies while employed by the Company or an Affiliate, the executors,
administrators, legatees or distributees of such Grantee's estate shall have the
right (subject to the general limitations on exercise set forth in section 13
hereof), at any time within one (1) year (unless otherwise provided in an
Agreement) after the date of such Grantee's death and prior to the end of the
Award Term, to exercise any Award held by such Grantee at the date of such
Grantee's death, to the extent such Award was otherwise exercisable immediately
prior to such Grantee's death.
16.2 DISABILITY
If a Grantee experiences a Termination of Employment with the Company or an
Affiliate by reason of a "permanent and total disability" within the meaning of
Section 22(e)(3) of the Code ("Disability") of such Grantee, then such Grantee
shall have the right (subject to the general limitations on exercise set forth
in section 13 hereof), at any time within one (1) year (unless otherwise
provided in an Agreement) after such Termination of Employment and prior to the
expiration of the Award Term, to exercise, in whole or in part, any Award held
by such Grantee at the date of such Termination of Employment, to the extent
such Award was exercisable immediately prior to such Termination of Employment.
17. USE OF PROCEEDS
The proceeds received by the Company from the sale of Common Stock pursuant to
Awards granted under the Plan shall constitute general funds of the Company.
18. SECURITIES LAWS
The Company shall not be required to sell or issue any Award or shares of Common
Stock under any Award if the sale or issuance of such Award or shares would
constitute a violation of any provisions of any law or regulation of any
governmental authority, including, without limitation, any federal or state
securities laws or regulations. If at any time the Company shall determine, in
its discretion, that the listing, registration or qualification of any shares
subject to the Award upon any securities exchange or under any state or federal
law, or the consent of any government regulatory body, is necessary or desirable
as a condition of, or in connection with, the issuance or purchase of shares,
the Award may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company, and any delay
caused thereby shall in no way affect the date of termination of the Award.
Specifically in connection with the Securities Act, upon exercise of any Award,
unless a registration statement under the Securities Act is in effect with
respect to the shares of Common Stock covered by such Award, the Company shall
not be required to sell or issue such shares unless the Company has received
evidence satisfactory to the Company that the Grantee may acquire such shares
pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Company shall be final and conclusive.
The Company may, but shall in no event be obligated, to register any securities
covered hereby pursuant to the Securities Act. The Company shall not be
obligated to take any affirmative action in order to cause the exercise of an
Award or the issuance of shares pursuant thereto to comply with any law or
regulation of any governmental authority. As to any jurisdiction that expressly
imposes the requirement that an Award shall not be exercisable unless and until
the shares of Common Stock covered by such Award are registered or are subject
to an available exemption from registration, the exercise of such Award (under
circumstances
<PAGE> 11
in which the laws of such jurisdiction apply) shall be deemed conditioned upon
the effectiveness of such registration or the availability of such an exemption.
19. EXCHANGE ACT: RULE 16B-3
19.1 GENERAL
The Plan is intended to comply with Rule 16b-3 (and any successor thereto)
("Rule 16b-3") under the Exchange Act. Any provision or action inconsistent with
Rule 16b-3 shall, to the extent permitted by law and determined to be advisable
by the Committee, be inoperative and void.
19.2 RESTRICTION ON TRANSFER OF COMMON STOCK
Unless otherwise permitted under an exemption under Rule 16b-3, no officer or
other "insider" of the Company subject to section 16 of the Exchange Act shall
be permitted to sell Common Stock (which such "insider" had received upon
exercise of an Award) during the six months immediately following the grant of
such Award.
20. AMENDMENT AND TERMINATION
The Board may, at any time and from time to time, amend, suspend or terminate
the Plan or an Agreement governing any Award that has not vested. Except as
permitted under this Plan, no amendment, suspension or termination of the Plan
or an Agreement shall, without the consent of the Grantee, alter or impair
rights or obligations under any vested Award.
21. EFFECT OF CHANGES IN CAPITALIZATION
21.1 CHANGES IN COMMON STOCK
If the shares of Common Stock are changed into or exchanged for a different
number or kind of shares or securities of the Company, whether through
reorganization, recapitalization, reclassification, stock dividend or other
distribution, split, reverse split, combination of interest, exchange of
interests, change in corporate structure or the like, an appropriate and
proportionate adjustment shall be made in the number and kind of shares of
Common Stock subject to the Plan and in the number, kind and per share exercise
price of shares of Common stock subject to unexercised Awards, or portions
thereof granted prior to any such change. In the event of any such adjustment in
an outstanding Award, the Grantee thereafter shall have the right to purchase
the number of shares of Common Stock under such Award at the per share price, as
so adjusted, which the Grantee could purchase at the total purchase price
applicable to the Award immediately prior to such adjustment.
21.2 REORGANIZATION WITH COMPANY SURVIVING
Subject to section 20, if the Company shall be the surviving entity in any
reorganization, merger, consolidation or the like of the Company with one or
more other entities, any Award theretofore granted pursuant to the Plan shall
apply to the securities resulting immediately following such reorganization,
merger, consolidation or the like, with a corresponding proportionate adjustment
of the number of shares and Award Price per share so that the aggregate number
of shares and Award Price thereafter shall be the same as the aggregate share
number and Award Price immediately prior to such reorganization, merger,
consolidation or the like.
21.3 OTHER REORGANIZATIONS; SALE OF ASSETS OR COMMON STOCK
Unless otherwise provided in an Agreement, upon the dissolution or liquidation
of the Company, or upon a merger, consolidation or reorganization of the Company
with one or more other entities in which the Company is not the surviving
entity, or upon a sale of substantially all of the assets of the Company to
another entity, or upon any transaction (including, without limitation, a merger
or reorganization in which the Company is the surviving entity) approved by the
Board that results in any person or entity (other than persons who are holders
of Common Stock of the Company at the time the Plan is approved by the
Stockholders and other than an Affiliate) owning fifty (50) percent or more of
the combined voting power of all classes of Common Stock of the Company, the
Plan and all Awards outstanding hereunder shall terminate on the date of such
transaction, except to the extent provision is made in connection with such
transaction for the continuation of the Plan and/or the assumption of the Awards
<PAGE> 12
theretofore granted, or for the substitution for such Awards of new awards
covering the Common Stock of a successor entity, or a parent or Affiliate
thereof, with appropriate adjustments as to the number and kinds of shares and
exercise prices, in which event the Plan and Awards theretofore granted shall
continue in the manner and under the terms so provided. In the event of any such
termination of the Plan, each Grantee shall have the right (subject to the
general limitations on exercise set forth in section 13 hereof and except as
otherwise specifically provided in the Agreement relating to such Award),
immediately prior to the occurrence of such termination and during such period
occurring prior to such termination as the Committee in its sole discretion
shall designate, to exercise such Award in whole or in part, to the extent such
Award was otherwise exercisable at the time such termination occurs. The
Committee shall send written notice of an event that will result in such a
termination to all Grantees not later than the time at which the Company gives
notice thereof to its stockholders. Notwithstanding anything herein to the
contrary, the Committee in its discretion may provide for the acceleration of
the vesting of any Award in the case of a merger, a significant sale of the
common stock or assets of the Company (as determined by the Committee).
21.4 ADJUSTMENTS
Adjustments under this Section 21 relating to Common Stock or securities of the
Company shall be made by the Committee, whose determination in that respect
shall be final and conclusive. No fractional shares of Common Stock or units of
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share or unit.
21.5 NO LIMITATIONS ON COMPANY
The grant of an Award pursuant to the Plan shall not affect or limit in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
consolidate, dissolve or liquidate, or to sell or transfer all or any part of
its business or assets.
22. WITHHOLDING
The Company or an Affiliate may be obligated to withhold federal and local
income taxes and Social Security taxes to the extent that an Grantee realizes
income in connection with the exercise of an Award. The Company or a Affiliate
may withhold amounts needed to cover such taxes from payments otherwise due and
owing to an Grantee, and upon demand the Grantee will promptly pay to the
Company or a Affiliate having such obligation any additional amounts as may be
necessary to satisfy such withholding tax obligation. Such payment shall be made
in cash or cash equivalents. The Company may also withhold shares or amounts
payable to a Grantee pursuant to court order.
23. DISCLAIMER OF RIGHTS
The existence of this Plan does not, and no provision in the Plan or in any
Award granted or Agreement entered into pursuant to the Plan shall be construed
to, create an employment contract; confer upon any individual the right to
receive an Award; permit a Grantee to remain in the employ of the Company or
alter a Grantee's status as an at-will employee; or allow the Grantee to
interfere in any way with the right and authority of the Company either to
increase or decrease the compensation of any individual at any time, or to
terminate any employment or other relationship between any individual and the
Company. The obligation of the Company to pay any benefits pursuant to the Plan
shall be interpreted as a contractual obligation to pay only those amounts
described herein, in the manner and under the conditions prescribed herein. The
Plan shall in no way be interpreted to require the Company to transfer any
amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any Grantee or beneficiary under the terms of the Plan.
24. NONEXCLUSIVITY
Neither the adoption of the Plan nor the submission of the Plan to the
Stockholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements
<PAGE> 13
(which arrangements may be applicable either generally to a class or classes of
individuals or specifically to a particular individual or individuals) as the
Board in its discretion determines desirable, including, without limitation, the
granting of Common Stock options otherwise than under the Plan.
25. GOVERNING LAW
This Plan and all Agreements shall be executed and performed under, and all
Awards to be granted hereunder shall be provided under and governed by, the laws
of the Commonwealth of Virginia (but not including the choice of law rules
thereof). Any disputes concerning the Plan or an Agreement shall be brought
before the federal or state courts of the Commonwealth of Virginia.
26. BINDING EFFECT
Subject to all restrictions provided in this Plan and all applicable laws, this
Plan and all Agreements hereunder shall be binding on and inure to the benefit
of the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
27. DISMISSAL FOR CAUSE
Notwithstanding any other provision in this Plan or an Agreement, in the event
that a Grantee's employment is terminated by reason of a Dismissal for Cause,
the Award shall expire on the day immediately preceding the date of the
Termination of Employment. "Dismissal for Cause" means Termination of Employment
for: (a) theft or embezzlement of property of the Company; (b) fraud or other
wrongdoing against the Company; (c) a conviction of a crime of moral turpitude;
(d) receipt of consideration or acceptance of benefits from, or the
participation in business activities with, persons doing business with the
Company in violation of the business ethics of the Company; (e) malicious
destruction of property of the Company; (f) improper disclosure of confidential
information of the Company; (g) actively engaging in or working for a business
in competition with the Company while employed by the Company; or (h) such other
reason that has a material adverse effect on the Company. The Committee shall
have the sole discretion to determine whether a Termination of Employment has
occurred by reason of Dismissal for Cause.
28. MISCELLANEOUS REQUIREMENTS
28.1 OTHER AWARD PROVISIONS
Awards granted under the Plan shall contain such other terms and provisions that
are not inconsistent with this Plan as the Committee may authorize in its
discretion, providing for (a) special vesting schedules governing the
exercisability of an Award; (b) provisions for acceleration of such vesting
schedules in certain events; (c) arrangements whereby the Company may fulfill
any tax obligations for Employees in connection with an Award; (d) provisions
imposing restrictions upon the transferability of stock acquired on exercise of
such Award, whether required by this Plan or applicable securities laws or
imposed for other reasons; and (e) provisions regarding the termination or
survival of any such Award upon the Grantee's death, retirement or other
termination of employment and the extent, if any, to which any such Award may be
exercised after such event. Any dispute concerning an Award must be brought in
the federal or state courts of Virginia. In interpreting any inconsistencies,
gaps or discrepancies between or among any documents, the Plan shall control
over an Agreement (unless there is an express specific exception in an Agreement
to the Plan), and an Agreement shall control over any letter or other notice or
document describing a grant of an Award.
28.2 CONSENTS
If the Committee shall at any time determine that any Consent (as hereafter
defined) is necessary or desirable as a condition of, or in connection with, the
granting of any Award under the Plan, the issuance or purchase of shares or
other rights thereunder, or the taking of any other action thereunder ("Plan
Action"), then such Plan Action shall not be taken, in whole or in part, unless
and until such Consent shall have been effected or obtained to the full
satisfaction of the Committee. "Consent" with respect to any Plan Action means
(a) any and all listings,
<PAGE> 14
registrations or qualifications in respect thereof upon any securities exchange
or under any federal, state or local law, rule or regulation; (b) any and all
written agreements and representations by the Grantee with respect to the
disposition of shares of Common Stock, or with respect to any other matter,
which the Committee shall deem necessary or desirable to comply with the terms
of any such listing, registration, or qualification or to obtain an exemption
from the requirement that any such listing, qualification or registration be
made; and (c) any and all other consents, clearances and approvals in respect of
a Plan Action.
28.3 NOTICE
Any notice required to be given to the Company hereunder shall be in writing and
shall be addressed to Corporate Secretary, Proxicom, Inc. 11600 Sunrise Valley
Drive, Reston, Virginia 20191, or at such other address the Company may
hereafter designate to the Grantee. Any notice to be given to the Grantee
hereunder shall be addressed to the Grantee at the address set forth beneath
his/her signature hereto, or as such other address as the Grantee may hereafter
designate to the Company by notice as provided herein. A notice shall be deemed
to have been duly given when personally delivered or mailed by registered mail
or certified mail to the party entitled to receive it.
28.4 NOTICE OF SECTION 83(b) ELECTION AND DISQUALIFYING
DISPOSITION
If any Grantee shall, in connection with the acquisition of Common Stock make
the election permitted under section 83(b) of the Code (i.e., an election to
include in gross income in the year of transfer the amounts specified in section
83(b)), such Grantee shall notify the Company within ten (10) days of filing the
notice of election with the Internal Revenue Service. Further, Grantee must
notify the Company of any disposition of any Common Stock issued pursuant to the
exercise of such Award under the circumstances described in section 421(b) of
the Code (relating to certain disqualifying dispositions) within 10 days of such
disposition.
29. DEFERRED STOCK AWARDS
29.1. NATURE OF DEFERRED STOCK AWARDS.
The Committee shall have the authority to grant Deferred Stock Awards to
employees of ad hoc Interactive, Inc., a subsidiary of the Company, or to such
Eligible Employees or Eligible Nonemployees as it deems appropriate. A Deferred
Stock Award is an Award of phantom Common Stock units to a Grantee, subject to
restrictions and conditions as the Board may determine at the time of grant.
Conditions may be based on continuing employment (or other business
relationship) and/or achievement of pre-established performance goals and
objectives. The grant of a Deferred Stock Award is contingent on the Grantee
executing the Deferred Stock Award Agreement. The terms and conditions of each
such agreement shall be determined by the Board, and such terms and conditions
may differ among individual Awards and Grantees. At the end of the deferral
period, the Deferred Stock Award, to the extent vested, shall be paid to the
Grantee in the form of shares of Common Stock.
29.2. RIGHTS AS A STOCKHOLDER.
During the deferral period, a Grantee shall have no rights as a Stockholder;
provided, however, that the Grantee may be credited with Dividend Equivalent
Rights with respect to the phantom Common Stock units underlying the Grantee's
Deferred Stock Award, subject to such terms and conditions as the Board may
determine. For the purpose of this Section 29.2, Dividend Equivalent Right means
a right, granted to a Grantee hereof, to receive cash, Common Stock, other
Awards or other property equal in value to dividends paid with respect to a
specified number of shares of Common Stock, or other periodic payments.
29.3. RESTRICTIONS.
A Deferred Stock Award may not be sold, assigned, transferred, pledged or
otherwise encumbered or disposed of during the deferral period.
<PAGE> 15
The Plan was duly adopted and approved by the Board on August 26, 1996 and was
duly adopted and approved by the Stockholders of the Company on August 26, 1996.
The Plan was amended and restated May 24, 1999.
/s/ Christopher Capuano
-----------------------
Christopher Capuano
Proxicom, Inc.
General Counsel and Secretary
