<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VIRTUAL TECHNOLOGY CORPORATION
(Exact name of Registrant as Specified in its Charter)
MINNESOTA
(State of Incorporation)
IRS EIN #41-1639011
(I.R.S. Employer Identification Number)
3100 WEST LAKE STREET, SUITE 400
MINNEAPOLIS, MN 55416
(612) 915-1122
(Address, including zip code and telephone number,
including area code, or registrant's principal executive offices)
AUGUST 1999 STOCK BONUS PLAN AND
AUGUST 1999 LEGAL SERVICES CONSULTING PLAN
(Full Title of the Plan)
Messerli & Kramer P.A.
Attention: Jeffrey C. Robbins, Esq.
150 South Fifth Street, Suite 1800
Minneapolis, MN 55402
(612) 672-3600
(Name, address, including zip code and telephone number,
including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Amount Proposed maximum Proposed maximum
Title of securities to to be offering price aggregate Amount of
be registered registered per unit offering price registration fee
------------- ---------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, 162,500 $1.375 $223,438 $62.00
$.001 par value
</TABLE>
<PAGE> 2
Part II
Item 3.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this registration statement, and information that we file
later with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934.
(a) (i) The Form 10-K of Virtual Technology Corporation, filed with the SEC
on May 6, 1999.
(ii) The Form 10-SB of Virtual Technology Corporation, filed with the
SEC on February 12, 1999.
(b) All reports and other documents filed by the Company since the end of
the fiscal year covered by the Form 10-K filed May 6, 1999 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 herein and to be a part of this registration
statement from the date of the filing of such reports and documents.
(c) (i) Form of Common Stock Certificate, see Exhibit 3(a) for the Form
10-SB of Virtual Technology Corporation, filed February 12, 1999; and (ii) Form
of Stock Purchase Warrant, see Exhibit 3(b) of the Form 10-SB of Virtual
Technology Corporation, filed February 12, 1999.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
The legality of the Common Stock offered hereby will be passed upon for
the Company by Messerli & Kramer P.A. of Minneapolis, Minnesota ("Messerli &
Kramer"). As of the date of this registration statement, Messerli & Kramer owns
27,500 shares of the Registrant's Common Stock.
Item 6. Indemnification of Directors and Officers.
The Bylaws of the Company and the statutes of the State of Minnesota
give the Company the power to indemnify any director, officer, employee, or
agent who was or is a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative,
against certain liabilities and expenses incurred in connection with the action,
suit, or proceeding. The Bylaws of the Company provide that the Company shall
indemnify any such directors, officers, employees, or agents to the full extent
provided under applicable provisions of the Minnesota Statutes. These provisions
do not affect the availability of equitable remedies, such as an action to
enjoin or rescind a transaction involving a breach of fiduciary duty, although,
as a practical matter, equitable relief may not be available. In the opinion of
the Securities and Exchange Commission, such
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<PAGE> 3
indemnification is against public policy as expressed in the Securities Act. As
a result, the above provisions may not limit liability of the directors for
violations of, or relieve them from the necessity of complying with, the federal
securities laws.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
EXHIBIT NUMBER
5.1 Opinion of Messerli & Kramer P.A. re: legality of shares.
23.1 Consent of Messerli & Kramer P.A. (filed as Exhibit 5.1 herein).
23.2 Consent of Lurie, Besikof, Lapidus & Co., LLP.
23.3 Consent of Copeland Buhl & Company, P.L.L.P.
23.4 Consent of Samuel T. Kantos & Associates.
24.1 Power of Attorney is contained on the signature pages.
99.1 August 1999 Stock Bonus Plan.
99.2 1999 Incentive Compensation Plan.
99.3 August 1999 Legal Services Consulting Agreement.
Item 9. Undertakings.
1. The undersigned registrant hereby undertakes:
(a) 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. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar
value of securities offered would not exceed
that which was registered) and any deviation
from the low or high end of the estimated
maximum offering range may be reflected in
the form of prospectus filed with the
Commission
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<PAGE> 4
pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price
represent no more than a 20% change in the
maximum aggregate offering price set forth
in the "Calculation of Registration Fee"
table in the effective registration
statement, and
(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)(i) and (a)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the issuer pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference herein.
(b) 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 herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the termination of
the offering.
2. 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 herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. 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 Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE> 5
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 Minneapolis, State of Minnesota, on August 20, 1999.
VIRTUAL TECHNOLOGY CORPORATION
/s/ Greg Appelhof
-------------------------------------------
By: Greg Appelhof
Its: President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Greg Appelhof and Kenneth Israel and each
or any one of them, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto 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 in connection therewith,
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 their or his substitutes or substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE TITLE
- --------- -----
/s/ Kenneth Israel Chairman of the Board (Principal Executive
- ---------------------- Officer)
Kenneth Israel
Date: August 17, 1999
/s/ John Harvatine Chief Financial Officer (Principal Financial and
- ---------------------- Accounting Officer)
John Harvatine
Date: August 17, 1999
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<PAGE> 6
/s/ Jeff Maynard Director
- ----------------------
Jeff Maynard
Date: August 20, 1999
/s/ Philip Lacerte Director
- ----------------------
Philip Lacerte
Date: August 18, 1999
/s/ Maceo Sloan Director
- ----------------------
Maceo Sloan
Date: August 18, 1999
/s/ James Secord Director
- ----------------------
James Secord
Date: August 18, 1999
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<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF MESSERLI & KRAMER P.A.]
Virtual Technology Corporation
3100 West Lake Street
Minneapolis, MN 55416
Re: Virtual Technology Corporation - Issuance of Securities
Our File No.: 11041-1
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Virtual Technology Corporation (the "Company") of the
Registration Statement on Form S-8 (the "Registration Statement") with the
Securities and Exchange Commission covering the sale of 162,500 shares, in the
aggregate, of the Company's common stock (the "Capital Shares") that will be
issued to certain of the Company's employees pursuant to the August 1999 Stock
Bonus Plan (the "Plan") and to Jeffrey C. Robbins pursuant to a legal services
consulting agreement (the "Consulting Agreement").
In connection with this opinion, we have examined the Registration Statement,
the Company's Amended and Restated Articles of Incorporation and Bylaws, and
such other documents, records, certificates, memoranda, and other instruments as
we deem necessary as a basis for this opinion. We have assumed a genuineness in
authenticity of all documents submitted to us as originals, the conformity to
originals of all documents submitted to us as copies thereof, and to execution
and delivery of all documents, where execution and delivery are a prerequisite
to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Capital Shares, when sold and issued in accordance with the Plan and
Consulting Agreement and the Registration Statement will be validly issued,
fully paid, and non-assessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Messerli & Kramer, P.A.
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITOR CONSENT
We consent to the incorporation by reference in this Registration
Statement of Virtual Technology Corporation on Form S-8 of our report dated
April 23, 1999, appearing in the Annual Report on Form 10-K of Virtual
Technology Corporation for the year ended January 31, 1999.
/s/ LURIE, BESIKOF, LAPIDUS & CO., LLP
August 20, 1999
Minneapolis, Minnesota
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITOR CONSENT
We hereby consent to the incorporation by reference in this
Registration Statement of Virtual Technology Corporation on Form S-8 of our
report dated April 11, 1997, appearing in the Company Registration Statements on
Form 10-K filed May 6, 1999.
/s/ COPELAND, BUHL & COMPANY, P.L.L.P.
August 18, 1999
Wayzata, Minnesota
<PAGE> 1
EXHIBIT 23.4
INDEPENDENT AUDITOR CONSENT
We consent to the incorporation by reference in this Registration
Statement of Virtual Technology Corporation on Form S-8 of our reports dated
February 10, 1999 and April 23, 1999, appearing in the Registration Statement on
Form 10-K filed on May 6, 1999.
/s/ SAMUEL T. KANTOS & ASSOCIATES
August 17, 1999
Minneapolis, Minnesota
<PAGE> 1
EXHIBIT 99.1
AUGUST 1999 STOCK BONUS PLAN
THIS STOCK BONUS PLAN (the "Stock Bonus Plan") is entered into as of
the 5th day of August, 1999 by Virtual Technology Corporation (the "Company"), a
Minnesota corporation.
WHEREAS, the Board of Directors (the "Board") of the Company has the
authority to issue awards of the Company common stock pursuant to the terms of
the 1999 Incentive Compensation Plan (the "Plan") approved by the Company
shareholders at the annual meeting occurring June 9, 1999; and
WHEREAS, by unanimous written action the Board has determined that
certain employees merit participation in the Plan at this time in recognition of
their services to the Company.
NOW, THEREFORE, the following awards of Company common stock are made
pursuant to the terms of the Plan and by unanimous written action of the Board:
EMPLOYEE SHARES AWARDED
-------- --------------
David Avendasora - 15,000
Christopher Brooder - 16,000
D.J. Paserba - 6,500
Jon-Michael Procopio - 5,000
Christy Prediger - 10,000
Matthew Prediger - 5,000
Tracy Tanhoff - 5,000
<PAGE> 1
EXHIBIT 99.2
VIRTUAL TECHNOLOGY CORPORATION
INCENTIVE PLAN
ARTICLE 1.
ESTABLISHMENT, OBJECTIVES AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. Virtual Technology Corporation, a Minnesota
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive plan to be known as the "Virtual Technology Corporation Incentive
Plan" (hereinafter referred to as the "Plan"), as set forth in this document.
The Plan permits the grant of Nonqualified Stock Options, Incentive Stock
Options, Stock Appreciation Rights, Restricted Stock, Performance Shares,
Performance Units, Cash-Based Awards, Phantom Shares and Share-Based Awards. The
Effective Date of the Plan is October 8, 1998.
1.2. OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize the
profitability and growth of the Company through annual and long-term incentives
which are consistent with the Company's goals and which link the personal
interests of Participants to those of the Company's stockholders; to provide
Participants with an incentive for excellence in individual performance; and to
promote teamwork among Participants. The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract, and retain the
services of Participants who make significant contributions to the Company's
success and to allow Participants to share in the success of the Company.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date as set
forth in Section 1.1 hereof, and shall remain in effect, subject to the right of
the Board of Directors to amend or terminate the Plan at any time pursuant to
Article 17 hereof, until all Shares subject to it shall have been purchased or
acquired according to the Plan's provisions under Awards denominated in Shares,
and with respect to all Awards, in no event may an Award be granted under the
Plan on or after the tenth anniversary of the Effective Date.
ARTICLE 2.
DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:
2.1. "AFFILIATE" shall have the meaning ascribed to such term in Rule 12b-2 of
the General Rules and Regulations of the Exchange Act.
2.2. "AWARD" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Performance Shares, Performance Units, Cash-Based Awards,
Phantom Shares or Other Share-Based Awards.
<PAGE> 2
2.3. "AWARD AGREEMENT" means an agreement entered into by the Company and each
Participant setting forth the terms and provisions applicable to Awards granted
under this Plan.
2.4. "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
2.5 "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
2.6 "CASH-BASED AWARD" means an Award granted to a Participant, as described
in Article 9 herein.
2.7. "CHANGE IN CONTROL" of the Company shall be deemed to have occurred as of
the first day (the "Date of Determination") that any one or more of the
following conditions shall have been satisfied:
(a) any person or entity, or group of persons or entities acting together,
other than the Company or an employee benefit plan of the Company, acquires
directly or indirectly the Beneficial Ownership of any voting security of the
Company and immediately after such acquisition such person, entity or group is,
directly or indirectly, the Beneficial Owner of voting securities representing
33% or more of the total voting power of all of the then-outstanding voting
securities of the Company and has a larger percentage of voting securities of
the Company than any other person, entity or group holding voting securities of
the Company, unless the transaction pursuant to which such acquisition is made
is approved by at least two-thirds (2/3) of the Board;
(b) the following individuals no longer constitute a majority of the
members of the Board: (A) the individuals who, as of the date hereof, constitute
the Board (the "Original Directors"); (B) the individuals who thereafter are
elected to the Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of the Original
Directors then still in office (such directors becoming "Additional Original
Directors" immediately following their election); and (C) the individuals who
are elected to the Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of the Original
Directors and Additional Original Directors then still in office (such directors
also becoming "Additional Original Directors" immediately following their
election);
(c) the stockholders of the Company shall approve a merger, consolidation,
recapitalization or reorganization of the Company, a reverse stock split of
outstanding voting securities, or consummation of any such transaction if
stockholder approval is not obtained, other than any such transaction which
would result in at least 75% of the total voting power represented by the voting
securities of the surviving entity outstanding immediately after such
transaction being Beneficially Owned by at least 75% of the holders of
outstanding voting securities of the Company immediately prior to the
transaction, with the voting power of each such continuing holder relative to
other such continuing holders not substantially altered in the transaction; or
<PAGE> 3
(d) the stockholders of the Company shall approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or a substantial portion of the Company's assets (i.e., 50% or
more of the total assets of the Company).
However, in no event shall a "Change in Control" be deemed to have
occurred, with respect to a Participant, if the Participant is part of a
purchasing group which consummates the Change in Control transaction. A
Participant shall be deemed "part of a purchasing group" for purposes of the
preceding sentence if the Participant is an equity participant in the purchasing
company or group (except for: (i) passive ownership of less than three percent
(3%) of the stock of the purchasing company; or (ii) ownership of equity
participant in the purchasing company or group which is otherwise not
significant, as determined prior to the Change in Control by a majority of the
Original and Additional Original Directors).
2.8. "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
2.9. "COMMITTEE" means any committee appointed by the Board to administer
Awards to Employees, as specified in Article 3 herein. Any such committee shall
be comprised entirely of Directors who are considered "outside directors" under
Section 162(m) of the Code.
2.10. "COMPANY" means Virtual Technology Corporation, a Minnesota corporation,
including any and all Subsidiaries and Affiliates, and any successor thereto as
provided in Article 20 herein.
2.11. "COVERED EMPLOYEE" means a Participant who, as of the date of vesting
and/or payout of an Award, as applicable, is one of the group of "covered
employees," as defined in the regulations promulgated under Code Section 162(m),
or any successor statute.
2.12. "DIRECTOR" means any individual who is a member of the Board of Directors
of the Company or any Subsidiary or Affiliate; provided, however, that any
Director who is employed by the Company or any Subsidiary or Affiliate shall be
considered an Employee under the Plan and shall not be considered a Director.
2.13 "EFFECTIVE DATE" shall have the meaning ascribed to such term in Section
1.1 hereof.
2.14 "EMPLOYEE" means any employee of the Company or its Subsidiaries or
Affiliates. Directors who are employed by the Company shall be considered
Employees under this Plan.
2.15 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor act thereto.
2.16 "FAIR MARKET VALUE" shall be determined on the basis of the opening sale
price on the principal securities exchange on which the Shares are traded or, if
there is no such sale on the relevant date, then on the last previous day on
which a sale was reported; or if the security is not listed for trading on a
national securities exchange, the fair market value of the security as
determined in good faith by the Board.
<PAGE> 4
2.17 "FREESTANDING SAR" means an SAR that is granted independently of any
Options, as described in Article 7 herein.
2.18. "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase Shares
granted under Article 6 herein and which is designated as an Incentive Stock
Option and which is intended to meet the requirements of Code Section 422.
2.19. "INSIDER" shall mean an individual who is, on the relevant date, an
officer, director or more than ten percent (10%) beneficial owner of any class
of the Company's equity securities that is registered pursuant to Section 12 of
the Exchange Act, all as defined under Section 16 of the Exchange Act.
2.20. "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase Shares
granted under Article 6 herein and which is not intended to meet the
requirements of Code Section 422.
2.21. "OPTION" means an Incentive Stock Option or a Nonqualified Stock Option,
as described in Article 6 herein.
2.22. "OPTION PRICE" means the price at which a Share may be purchased by a
Participant pursuant to an Option.
2.23. "PARTICIPANT" means an Employee, Director or other individual designated
by the Board who has been selected to receive an Award or who has an outstanding
Award granted under the Plan.
2.24. "PERFORMANCE-BASED EXCEPTION" means the performance-based exception from
the tax deductibility limitations of Code Section 162(m).
2.25. "PERFORMANCE SHARE" means an Award granted to a Participant, as described
in Article 9 herein.
2.26. "PERFORMANCE UNIT" means an Award granted to a Participant, as described
in Article 9 herein.
2.27. "PERIOD OF RESTRICTION" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based on the passage of time,
the achievement of performance goals, or upon the occurrence of other events as
determined by the Board, at its discretion), and the Shares are subject to a
substantial risk of forfeiture, as provided in Article 8 herein.
2.28. "PERSON" shall have the meaning ascribed to such term in Section 3(a)(9)
of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
"group" as defined in Section 13(d) thereof.
<PAGE> 5
2.29. "PHANTOM SHARES" means an Award granted to a Participant pursuant to
Article 10 herein.
2.30. "RESTRICTED STOCK" means an Award granted to a Participant pursuant to
Article 8 herein.
2.31. "SHARE-BASED AWARD" means an Award granted to a Participant pursuant to
Article 11 herein.
2.32. "SHARES" means the shares of Common Stock of the Company.
2.33. "STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted alone or in
connection with a related Option, designated as an SAR, pursuant to the terms of
Article 7 herein.
2.34. "SUBSIDIARY" means any corporation, partnership, joint venture or other
entity in which the Company has a fifty percent (50%) or greater voting
interest.
2.35. "TANDEM SAR" means an SAR that is granted in connection with a related
Option pursuant to Article 7 herein, the exercise of which shall require
forfeiture of the right to purchase a Share under the related Option (and when a
Share is purchased under the Option, the Tandem SAR shall similarly be
canceled).
ARTICLE 3.
ADMINISTRATION
3.1. GENERAL. The Plan shall be administered by the Board, or (subject to the
following) by any Committee appointed by the Board. The members of the Committee
shall be appointed from time to time by, and shall serve at the discretion of,
the Board of Directors. The Board may delegate to the Committee any or all of
the administration of the Plan; provided, however, that the administration of
the Plan with respect to Awards granted to Directors may not be so delegated. To
the extent that the Board has delegated to the Committee any authority and
responsibility under the Plan, all applicable references to the Board in the
Plan shall be to the Committee. The Committee shall have the authority to
delegate administrative duties to employees, officers or Directors of the
Company.
3.2. AUTHORITY OF THE BOARD. Except as limited by law or by the Articles of
Incorporation or Bylaws of the Company, and subject to the provisions herein,
the Board shall have full power to select Employees and Directors and other
individuals who shall participate in the Plan; determine the sizes and types of
Awards; determine the terms and conditions of Awards in a manner consistent with
the Plan; construe and interpret the Plan and any agreement or instrument
entered into under the Plan; establish, amend, or waive rules and regulations
for the Plan's administration; and (subject to the provisions of Article 17
herein) amend the terms and conditions of any outstanding Award as provided in
the Plan. Further, the Board shall make all other determinations which may be
necessary or advisable for the administration of the Plan. As permitted by law
(and subject to Section 3.1 herein), the Board may delegate its authority as
identified herein.
<PAGE> 6
3.3. DECISIONS BINDING. All determinations and decisions made by the Board
pursuant to the provisions of the Plan and all related orders and resolutions of
the Board shall be final, conclusive and binding on all persons, including the
Company, its stockholders, Directors, Employees, Participants and their estates
and beneficiaries.
ARTICLE 4.
SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1. NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as provided
in Section 4.2 herein, the number of Shares hereby reserved for issuance to
Participants under the Plan shall automatically adjust during the term of the
Plan to be the greater of (i) four million (4,000,000) or 15% of the total
number of Shares outstanding immediately prior to such grant.
4.2. ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in corporate
capitalization, such as a stock split, or a corporate transaction, such as any
merger, consolidation, separation, including a spin-off, or other distribution
of stock or property of the Company, any reorganization (whether or not such
reorganization comes within the definition of such term in Code Section 368) or
any partial or complete liquidation of the Company, such adjustment shall be
made in the number and class of Shares which may be delivered under Section 4.1,
in the number and class of and/or price of Shares subject to outstanding Awards
granted under the Plan and in the Award limits set forth in Section 4.1 as may
be determined to be appropriate and equitable by the Board, in its sole
discretion, to prevent dilution or enlargement of rights; provided, however,
that the number of Shares subject to any Award shall always be a whole number.
ARTICLE 5.
ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in this Plan include all
Employees, Directors, and other individuals designated by the Board.
5.2. ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the Board
may, from time to time, select from all eligible Employees, Directors, and other
individuals designated by the Board, those to whom Awards shall be granted and
shall determine the nature and amount of each Award.
ARTICLE 6.
STOCK OPTIONS
6.1. GRANT OF OPTIONS. Subject to the terms and provisions of the Plan, Options
may be granted to Participants in such number, and upon such terms, and at any
time and from time to time as shall be determined by the Board; provided,
however, that no Director shall be granted any ISO.
6.2. AWARD AGREEMENT. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the
<PAGE> 7
Option pertains, termination and transferability rights and such other
provisions as the Board shall determine. The Award Agreement also shall specify
whether the Option is intended to be an ISO within the meaning of Code Section
422, or an NQSO whose grant is intended not to fall under the provisions of Code
Section 422.
6.3 OPTION PRICE. The Option Price for each grant of an Option under this Plan
shall be determined by the Board.
6.4. DURATION OF OPTIONS. Each Option granted to a Participant shall expire at
such time as the Board shall determine at the time of grant; provided, however,
that no Option shall be exercisable later than the tenth (10th) anniversary date
of its grant.
6.5. EXERCISE OF OPTIONS. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Board shall in each instance approve, which need not be the same for each
grant or for each Participant.
6.6. PAYMENT. Options granted under this Article 6 shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares. The Option Price upon exercise of
any Option shall be payable to the Company in full either: (a) in cash or its
equivalent, (b) by tendering previously acquired Shares having an aggregate Fair
Market Value at the time of exercise equal to the total Option Price (provided
that the Shares which are tendered must have been held by the Participant for at
least six (6) months prior to their tender to satisfy the Option Price) or (c)
by a combination of (a) and (b). The Board also may allow cashless exercise as
permitted under Federal Reserve Board's Regulation T, subject to applicable
securities law restrictions, or by any other means which the Board determines to
be consistent with the Plan's purpose and applicable law. Subject to any
governing rules or regulations, as soon as practicable after receipt of a
written notification of exercise and full payment, the Company shall deliver to
the Participant, in the Participant's name, Share certificates in an appropriate
amount based upon the number of Shares purchased under the Option(s).
6.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Board may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.
6.8 ANNUAL DIRECTOR GRANTS. Commencing with the Company's 2001 annual
stockholders' meeting and on the date of each subsequent annual stockholders'
meeting occurring while the Plan remains in effect, each Director then serving
on the Board on the date of any such meeting shall be granted Nonqualified Stock
Options to purchase 30,000 Shares. These Nonqualified Stock Options shall be
exercisable commencing one year after the date of grant; provided, however, that
if a Director fails to serve until the annual stockholders' meeting immediately
succeeding a grant of such Options, the number of Shares that may be purchased
by such Director shall be determined by
<PAGE> 8
multiplying the number of Options granted for such year by a fraction (i) the
numerator of which is the number of days between the date such Options were
granted and the date the Director ceased serving on the Board and (ii) the
denominator of which is the number of days between the date such Options were
granted and the date of the annual stockholders' meeting immediately succeeding
the date of grant. The Option Price of each Nonqualified Stock Option granted
pursuant to this Section 6.8 shall be the Fair Market Value of a Share on the
date of grant. These Nonqualified Stock Options will expire ten years after the
date of grant.
ARTICLE 7.
STOCK APPRECIATION RIGHTS
7.1. GRANT OF SARS. Subject to the terms and conditions of the Plan, SARs may
be granted to Participants at any time and from time to time as shall be
determined by the Board. The Board may grant Freestanding SARs, Tandem SARs or
any combination of these forms of SAR. The Board shall have complete discretion
in determining the number of SARs granted to each Participant (subject to
Article 4 herein) and, consistent with the provisions of the Plan, in
determining the terms and conditions pertaining to such SARs. The grant price of
a Freestanding SAR shall equal the Fair Market Value of a Share on the date of
grant of the SAR. The grant price of Tandem SARs shall equal the Option Price of
the related Option.
7.2. EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or part of
the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable. Notwithstanding any other provision of this Plan to the contrary,
with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem
SAR will expire no later than the expiration of the underlying ISO; (ii) the
value of the payout with respect to the Tandem SAR may be for no more than one
hundred percent (100%) of the difference between the Option Price of the
underlying ISO and the Fair Market Value of the Shares subject to the underlying
ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be
exercised only when the Fair Market Value of the Shares subject to the ISO
exceeds the Option Price of the ISO.
7.3. EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised upon
whatever terms and conditions the Board, in its sole discretion, imposes upon
them.
7.4. SAR AGREEMENT. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR and such other
provisions as the Board shall determine.
7.5. TERM OF SARS. The term of an SAR granted under the Plan shall be
determined by the Board, in its sole discretion; provided, however, that such
term shall not exceed ten (10) years.
7.6. PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
<PAGE> 9
(a) the difference between the Fair Market Value of a Share on the date of
exercise over the grant price by
(b) the number of Shares with respect to which the SAR is exercised.
At the discretion of the Board, the payment upon SAR exercise may be in cash, in
Shares of equivalent value or in some combination thereof. The Board's
determination regarding the form of SAR payout shall be set forth in the Award
Agreement pertaining to the grant of the SAR.
ARTICLE 8.
RESTRICTED STOCK
8.1. GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the
Plan, the Board, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Board shall determine.
8.2. RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be evidenced
by a Restricted Stock Award Agreement that shall specify the Period(s) of
Restriction, the number of Shares of Restricted Stock granted and such other
provisions as the Board shall determine.
8.3. OTHER RESTRICTIONS. Subject to Article 12 herein, the Board shall impose
such other conditions and/or restrictions on any Shares of Restricted Stock
granted pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock, restrictions based upon the achievement of
specific performance goals (Company-wide, divisional, and/or individual),
time-based restrictions on vesting following the attainment of the performance
goals and/or restrictions under applicable federal or state securities laws. The
Company may retain the certificates representing Shares of Restricted Stock in
the Company's possession until such time as all conditions and/or restrictions
applicable to such Shares have been satisfied. Except as otherwise provided in
this Article 8, Shares of Restricted Stock covered by each Restricted Stock
grant made under the Plan shall become freely transferable by the Participant
after the last day of the applicable Period of Restriction.
8.4. VOTING RIGHTS. Participants holding Shares of Restricted Stock granted
hereunder may be granted the right to exercise full voting rights with respect
to those Shares during the Period of Restriction.
8.5. DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may be
credited with regular cash dividends paid with respect to the Shares while they
are so held. The Board may apply any restrictions to the dividends that the
Board deems appropriate. Without limiting the generality of the preceding
sentence, if the grant or vesting of Restricted Shares granted to a Covered
Employee is designed to comply with the requirements of the Performance-Based
Exception, the Board may apply any
<PAGE> 10
restrictions it deems appropriate to the payment of dividends declared with
respect to such Restricted Shares, including, without limitation, that the
dividends and/or the Restricted Shares maintain eligibility for the
Performance-Based Exception.
ARTICLE 9.
PERFORMANCE UNITS, PERFORMANCE SHARES, AND CASH-BASED AWARDS
9.1. GRANT OF PERFORMANCE UNITS/SHARES AND CASH-BASED AWARDS. Subject to the
terms of the Plan, Performance Units, Performance Shares and/or Cash-Based
Awards may be granted to Participants in such amounts and upon such terms, and
at any time and from time to time, as shall be determined by the Board.
9.2. VALUE OF PERFORMANCE UNITS/SHARES AND CASH-BASED AWARDS. Each Performance
Unit shall have an initial value that is established by the Board at the time of
grant. Each Performance Share shall have an initial value equal to the Fair
Market Value of a Share on the date of grant. Each Cash-Based Award shall have a
value as may be determined by the Board. The Board shall set performance goals
in its discretion which, depending on the extent to which they are met, will
determine the number and/or value of Performance Units/Shares and Cash-Based
Award that will be paid out to the Participant. For purposes of this Article 9,
the time period during which the performance goals must be met shall be called a
"Performance Period."
9.3. EARNING OF PERFORMANCE UNITS/SHARES AND CASH-BASED AWARDS. Subject to the
terms of this Plan, after the applicable Performance Period has ended, the
holder of Performance Units/Shares and Cash-Based Awards shall be entitled to
receive payout on the number and value of Performance Units/Shares and of
Cash-Based Awards earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the corresponding performance
goals have been achieved.
9.4. FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES AND CASH-BASED
AWARDS. Payment of earned Performance Units/Shares and Cash-Based Awards shall
be made in lump-sum payments at such time or times designated by the Board
following the close of the applicable Performance Period. Subject to the terms
of this Plan, the Board, in its sole discretion, may pay earned Performance
Units/Shares and Cash-Based Awards in the form of cash or in Shares (or in a
combination thereof) which have an aggregate Fair Market Value equal to the
value of the earned Performance Units/Shares and Cash-Based Awards at the close
of the applicable Performance Period plus or minus any investment return from
the close of the Performance Period to the date of payment as determined by the
Board in its discretion. Such Shares may be granted subject to any restrictions
deemed appropriate by the Board. The determination of the Board with respect to
the form and timing of payout of such Awards shall be set forth in the Award
Agreement pertaining to the grant of the Award. At the discretion of the Board,
Participants may be entitled to receive any dividends declared with respect to
Shares which have been earned in connection with grants of Performance Units
and/or Performance Shares which have been earned, but not yet distributed to
Participants (such dividends shall be subject to the same accrual, forfeiture
and payout restrictions as apply to dividends earned with respect to Shares of
Restricted Stock, as set forth in Section 8.5
<PAGE> 11
herein). In addition, Participants may, at the discretion of the Board, be
entitled to exercise their voting rights with respect to such Shares.
ARTICLE 10.
PHANTOM SHARES
10.1 GRANT OF PHANTOM SHARES. Subject to the terms of the Plan, Phantom Shares
may be granted to Participants in such amounts and upon such terms, and at any
time and from time to time, as shall be determined by the Board.
10.2 VALUE OF PHANTOM SHARES. Each Phantom Share shall have an initial value
equal to the Fair Market Value of a Share on the date of grant. The Board shall
establish the terms and conditions of such Award, including any vesting
provisions.
10.3 EARNING OF PHANTOM SHARES. Subject to the terms of this Plan, the holder
of any vested Phantom Shares shall be entitled to receive payout on the number
and value of Phantom Shares earned by the Participant over the Performance
Period, to be determined by the extent to which the corresponding performance
goals have been achieved.
10.4 FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. Payment of earned
Phantom Shares shall be made in a single lump sum at such time as designated by
the Board. Subject to the terms of this Plan, the Board, in its sole discretion,
may pay earned Phantom Shares in the form of cash or in Shares (or in a
combination thereof) which have an aggregate Fair Market Value equal to the
value of the earned Phantom Shares at such time as designated by the Board. Such
Shares may be granted subject to any restrictions deemed appropriate by the
Board. The determination of the Board with respect to the form of payout of such
Awards shall be set forth in the Award Agreement pertaining to the grant of the
Award. At the discretion of the Board, Participants may be entitled to receive
any dividends declared with respect to Shares which have been earned in
connection with grants of Phantom Shares which have been earned, but not yet
distributed to Participants (such dividends shall be subject to the same
accrual, forfeiture, and payout restrictions as apply to dividends earned with
respect to Shares of Restricted Stock, as set forth in Section 8.5 herein).
ARTICLE 11.
OTHER SHARE-BASED AWARDS
Subject to the terms of the Plan, the Board may grant other Share-Based
Awards under this Plan, including without limitation, those Awards pursuant to
which Shares are acquired or may in the future be acquired. The Board, in its
sole discretion, shall determine the terms and conditions of such other
Share-Based Awards.
<PAGE> 12
ARTICLE 12.
PERFORMANCE MEASURES
Unless and until the Board proposes for stockholder vote and stockholders
approve a change in the general performance measures set forth in this Article
12, the attainment of which may determine the degree of payout and/or vesting
with respect to Awards to Covered Employees which are designed to qualify for
the Performance-Based Exception, the performance measure(s) to be used for
purposes of such grants shall be chosen from among:
(a) net income (per share or otherwise and before or after taxes);
(b) return measures (including, but not limited to, return on assets,
equity or sales);
(c) cash flow return on investments which equals net cash flows divided by
stockholders' equity;
(d) net sales (per share or otherwise);
(e) operating income (per share or otherwise);
(f) Share price (including, but not limited to, growth measures and total
stockholder return); and
(g) economic value added.
The Board shall have the discretion to adjust the determinations of the degree
of attainment of the preestablished performance goals; provided, however, that
Awards which are designed to qualify for the Performance-Based Exception, and
which are held by Covered Employee, may not be adjusted upward (the Board shall
retain the discretion to adjust such Awards downward). In the event that
applicable tax and/or securities laws change to permit Board discretion to alter
the governing performance measures without obtaining stockholder approval of
such changes, the Board shall have sole discretion to make such changes without
obtaining stockholder approval. In addition, in the event that the Board
determines that it is advisable to grant Awards which shall not qualify for the
Performance-Based Exception, the Board may make such grants without satisfying
the requirements of Code Section 162(m).
ARTICLE 13.
BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with
<PAGE> 13
the Company during the Participant's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.
ARTICLE 14.
DEFERRALS
The Board may permit or require a Participant to defer such Participant's
receipt of the payment of cash or the delivery of Shares that would otherwise be
due to such Participant by virtue of the exercise of an Option or SAR, the lapse
or waiver of restrictions with respect to Restricted Stock or the satisfaction
of any requirements or goals with respect to Performance Units/Shares. If any
such deferral election is required or permitted, the Board shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
ARTICLE 15.
RIGHTS OF EMPLOYEES/DIRECTORS
15.1. EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any way
the right of the Company to terminate any Participant's employment at any time,
nor confer upon any Participant any right to continue in the employ of the
Company.
15.2. PARTICIPATION. No Employee or Director shall have the right to be selected
to receive an Award under this Plan, or, having been so selected, to be selected
to receive a future Award.
15.3. TERMINATION OF EMPLOYMENT/DIRECTORSHIP RELATIONSHIP. Each Participant's
Award Agreement shall set forth the extent to which the Participant shall have
the right to exercise and/or receive payment for any Award following termination
of the Participant's employment or directorship with the Company, or termination
of relationship with the Company. Such provisions shall be determined in the
sole discretion of the Board, shall be included in the Award Agreement entered
into with each Participant, need not be uniform among Awards and may reflect
distinctions based on the reasons for termination.
15.4. NONTRANSFERABILITY. Except as otherwise provided in a Participant's Award
Agreement, Awards may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated, other than by will or by the laws of decent and
distribution. Further, except as otherwise provided in a Participant's Award
Agreement, a Participant's rights under the Plan shall be exercisable during the
Participant's lifetime only by the Participant or the Participant's legal
representative.
ARTICLE 16.
CHANGE IN CONTROL
16.1. TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change in
Control, unless the Award Agreement otherwise provides and unless otherwise
specifically prohibited under applicable laws or by the rules and regulations of
any governing governmental agencies or national securities exchanges:
<PAGE> 14
(a) any and all Options and SARs granted hereunder shall become
immediately exercisable, and shall remain exercisable throughout their
entire term;
(b) any restriction periods and restrictions imposed on Restricted Shares
which are not performance-based shall lapse; and
(c) the target payout opportunities attainable under all outstanding
Awards of performance-based Restricted Stock, Performance Units,
Performance Shares, and Cash-Based Awards and Share-Based Awards shall be
deemed to have been fully earned for the entire Performance Period(s) as
of the Date of Determination of the Change in Control. The vesting of all
Awards denominated in Shares shall be accelerated as of the effective date
of the Change in Control, and there shall be paid out to Participants
within thirty (30) days following the effective date of the Change in
Control a pro rata number of shares based upon an assumed achievement of
all relevant targeted performance goals and upon the length of time within
the Performance Period which has elapsed prior to the Change in Control.
Awards denominated in cash shall be paid pro rata to participants in cash
within thirty (30) days following the effective date of the Change in
Control, with the proration determined as a function of the length of time
within the Performance Period which has elapsed prior to the Change in
Control, and based on an assumed achievement of all relevant targeted
performance goals.
16.2. TERMINATION, AMENDMENT AND MODIFICATIONS OF CHANGE IN CONTROL PROVISIONS.
Notwithstanding any other provision of this Plan (but subject to the limitations
of Section 17.3 hereof) or any Award Agreement provision, the provisions of this
Article 16 may not be terminated, amended or modified on or after the date of a
Change in Control to affect adversely any Award theretofore granted under the
Plan without the prior written consent of the Participant with respect to such
Participant's outstanding Awards; provided, however, the Board may terminate,
amend or modify this Article 16 at any time and from time to time prior to the
date of a Change in Control.
16.3. POOLING OF INTERESTS ACCOUNTING. Notwithstanding any other provision of
the Plan or an Award Agreement to the contrary, in the event that the
consummation of a Change in Control is contingent on using pooling of interests
accounting methodology, the Board may take any action necessary to preserve the
use of pooling of interests accounting.
ARTICLE 17.
AMENDMENT, MODIFICATION, AND TERMINATION
17.1. AMENDMENT, MODIFICATION AND TERMINATION. Subject to Section 17.3 and 17.4,
the Board may at any time and from time to time, alter, amend, suspend or
terminate the Plan in whole or in part; provided that no amendment shall be made
without stockholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirements. Prior to such approval, Awards may be
made under the Plan expressly subject to such approval.
<PAGE> 15
17.2. ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Board may make adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 4.2 hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations or accounting principles,
whenever the Board determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan; provided that no such adjustment shall be
authorized to the extent that such authority would be inconsistent with the
Plan's meeting the requirements of Section 162(m) of the Code.
17.3. AWARDS PREVIOUSLY GRANTED. Notwithstanding any other provision of the Plan
to the contrary (but subject to Sections 4.2 and 16.3 hereof), no termination,
amendment or modification of the Plan shall adversely affect in any material way
any Award previously granted under the Plan, without the written consent of the
Participant holding such Award.
17.4. COMPLIANCE WITH CODE SECTION 162(M). At all times when Code Section 162(m)
is applicable, all Awards granted under this Plan shall comply with the
requirements of Code Section 162(m); provided, however, that in the event the
Board determines that such compliance is not desired with respect to any Award
or Awards available for grant under the Plan, then compliance with Code Section
162(m) will not be required. In addition, in the event that changes are made to
Code Section 162(m) to permit greater flexibility with respect to any Award or
Awards available under the Plan, the Board may, subject to this Article 17, make
any adjustments it deems appropriate.
ARTICLE 18.
WITHHOLDING
18.1. TAX WITHHOLDING. The Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan.
18.2. SHARE WITHHOLDING. With respect to withholding required upon the exercise
of Options or SARs, upon the lapse of restrictions on Restricted Stock or upon
any other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Board, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the transaction.
All such elections shall be irrevocable, made in writing, signed by the
Participant, and shall be subject to any restrictions or limitations that the
Board, in its sole discretion, deems appropriate.
<PAGE> 16
ARTICLE 19.
INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit or proceeding against him or her; provided he
or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be entitled under
the Company's Articles of Incorporation of Bylaws, as a matter of law or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
ARTICLE 20.
SUCCESSORS
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE 21.
LEGAL CONSTRUCTION
21.1. GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
21.2. SEVERABILITY. In the event any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.
21.3. REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
21.4 SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions under
this Plan are intended to be exempt from the application of Section 16(b) of the
Exchange Act by virtue of compliance with all applicable conditions of Rule
16b-3 of the General Rules and Regulations of the Exchange Act.
21.5. GOVERNING LAW. To the extent not preempted by federal law, the Plan, and
all agreements hereunder, shall be construed in accordance with and governed by
the laws of the state of Minnesota, exclusive of its conflict of laws rules.
<PAGE> 1
EXHIBIT 99.3
AUGUST 1999 LEGAL SERVICES CONSULTING AGREEMENT
THIS LEGAL SERVICES CONSULTING AGREEMENT ("Agreement") is entered into
as of August 5, 1999 by and between Virtual Technology Corporation ("VTC"), a
Minnesota corporation and Jeffrey C. Robbins, 1800 Fifth Street Towers, 150
South Fifth Street, Minneapolis, Minnesota 55402-4218.
RECITALS
WHEREAS, VTC is a public company in the business of selling computers
and computer-related equipment on the Internet whose common stock is quoted on
the OTC bulletin board;
WHEREAS, Jeffrey C. Robbins is an attorney licensed in the State of
Minnesota who has provided general corporate legal services to VTC.
WHEREAS, VTC desires to contract with Robbins for the provision of
ongoing legal services, which services shall not be in connection with the offer
or sale of securities in a capital-raising transaction and shall not directly or
indirectly promote or maintain a market for the Company's securities, by
issuance of shares of the Company's common stock in lieu of cash payment, such
shares to be unrestricted.
AGREEMENT
NOW, THEREFORE, it is mutually agreed by and between the parties as
follows:
In consideration of the performance by Robbins of the legal services
designated herein, VTC will issue Robbins 100,000 shares of VTC's common stock
(the "Shares") whose per share value shall be based upon the opening market
price as of the date of this Agreement. These shares will be issued as soon as
practicable following execution of this Agreement and the filing of a
Registration Statement under the Securities Act of 1993, as amended on Form S-8
covering the shares.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first above written.
VIRTUAL TECHNOLOGY CORPORATION,
a Minnesota corporation
By: /s/ KENNETH ISRAEL
------------------------------------
Kenneth Israel, Chairman
/s/ JEFFREY C. ROBBINS
------------------------------------
Jeffrey C. Robbins, Service Provider
