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Exhibit 99.3
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WITI CORPORATION
1996 STOCK OPTION PLAN
Effective November 1, 1996
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TABLE OF CONTENTS
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Page
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ARTICLE 1 - INTRODUCTION........................................................................................ 1
1.1 Establishment....................................................................................... 1
1.2 Purposes............................................................................................ 1
1.3 Effective Date...................................................................................... 1
ARTICLE 2 - DEFINITIONS......................................................................................... 1
2.1 Affiliated Corporation.............................................................................. 1
2.2 Board............................................................................................... 1
2.3 Code................................................................................................ 1
2.4 Committee........................................................................................... 2
2.5 Disabled or Disability.............................................................................. 2
2.6 Eligible Consultants................................................................................ 2
2.7 Eligible Employees.................................................................................. 2
2.8 Fair Market Value................................................................................... 2
2.9 Incentive Stock Option.............................................................................. 2
2.10 Non-Qualified Option................................................................................ 2
2.11 Option.............................................................................................. 3
2.12 Option Certificate.................................................................................. 3
2.13 Option Holder....................................................................................... 3
2.14 Option Price........................................................................................ 3
2.15 Share............................................................................................... 3
2.16 Stock............................................................................................... 3
ARTICLE 3 - PLAN ADMINISTRATION................................................................................. 3
ARTICLE 4 - STOCK SUBJECT TO THE PLAN........................................................................... 4
4.1 Number of Shares.................................................................................... 4
4.2 Adjustments for Stock Split, Stock Dividend, Etc.................................................... 4
4.3 Adjustment for Certain Distributions of Property.................................................... 4
4.4 Distributions of Capital Stock and Indebtedness..................................................... 4
4.5 No Rights as Stockholder............................................................................ 4
4.6 Fractional Shares................................................................................... 5
4.7 Determination by the Committee, Etc................................................................. 5
ARTICLE 5 - PARTICIPATION....................................................................................... 5
ARTICLE 6 - STOCK OPTIONS....................................................................................... 5
6.1 Grant of Options to Eligible Employees and Eligible Consultants..................................... 5
6.2 Option Certificates................................................................................. 6
6.3 Certain Option Terms................................................................................ 6
6.4 Restrictions on Incentive Stock Options............................................................. 9
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ARTICLE 7 - CORPORATE REORGANIZATION............................................................................ 9
7.1 Reorganization...................................................................................... 9
7.2 Required Notice..................................................................................... 9
7.3 Acceleration of Exercisability...................................................................... 10
ARTICLE 8 - COMPANY RIGHT TO REPURCHASE STOCK.................................................................. 10
8.1 Company Right of First Refusal..................................................................... 10
8.2 Marking of Certificates............................................................................ 11
ARTICLE 9 - EMPLOYMENT; TRANSFERABILITY........................................................................ 11
9.1 Employment......................................................................................... 11
9.2 Other Employee Benefits............................................................................ 11
9.3 Transferability.................................................................................... 12
ARTICLE 10 - SECURITIES LAW RESTRICTIONS....................................................................... 12
ARTICLE 11 - WITHHOLDING....................................................................................... 12
ARTICLE 12 - MISCELLANEOUS..................................................................................... 12
12.1 Expiration......................................................................................... 12
12.2 Amendments, Etc.................................................................................... 12
12.3 Treatment of Proceeds.............................................................................. 13
12.4 Section Headings................................................................................... 13
12.5 Severability....................................................................................... 13
12.6 Notices............................................................................................ 13
12.7 Gender and Number.................................................................................. 13
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WITI CORPORATION
1996 STOCK OPTION PLAN
ARTICLE 1
INTRODUCTION
1.1 Establishment. WITI Corporation, a Colorado corporation
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(hereinafter referred to, together with its Affiliated Corporations (as defined
in subsection 2.1) as the "Company," except where the context otherwise
requires), hereby establishes the WITI Corporation 1996 Stock Option Plan (the
"Plan") for certain employees of the Company and certain consultants to the
Company.
1.2 Purposes. The purposes of the Plan are to provide those who are
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selected for participation in the Plan with added incentive to continue in the
long-term service of the Company and to create in such persons a more direct
interest in the future success of the operations of the Company by relating
incentive compensation to increases in stockholder value, so that the income of
those participating in the Plan is more closely aligned with the income of the
Company's stockholders. The Plan is also designed to provide a financial
incentive that will help the Company attract, retain and motivate the most
qualified employees and consultants.
1.3 Effective Date. The effective date of the Plan shall be November
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1, 1996 (the "Effective Date"), subject to approval by the affirmative votes of
the holders of a majority of the shares of the Company pursuant to applicable
Colorado law within one year following the Effective Date. If the stockholders
of the Company do not approve the Plan as specified above, Options granted under
the Plan shall be deemed to be rescinded without any further action by the Board
or the Company, and the Plan shall automatically terminate.
ARTICLE 2
DEFINITIONS
The following terms shall have the meanings set forth below:
2.1 "Affiliated Corporation" means any corporation or other entity
(including but not limited to a partnership) that is affiliated with WITI
Corporation through stock ownership or otherwise and is treated as a common
employer under the provisions of Sections 414(b) and (c) of the Code, and, for
purposes of Incentive Stock Options granted pursuant to the Plan, means any
parent or subsidiary of the Company as defined in Section 424 of the Code.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
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2.4 "Committee" mean the committee appointed pursuant to Section
3.1. If the Board does not appoint a separate Committee, the Board shall serve
as the Committee.
2.5 "Disabled" or "Disability" shall have the meaning given to such
terms in Section 22(e)(3) of the Code.
2.6 "Eligible Consultants" means those consultants and other
individuals who provide services to the Company and whose judgment, initiative
and effort are important to the Company for the management and growth of its
business. For purposes of the Plan, Eligible Consultants include only those
individuals who do not receive wages from the Company subject to the withholding
of federal income tax under Section 3401 of the Code.
2.7 "Eligible Employees" means those employees (including, without
limitation, officers and directors who are also employees) of the Company, whose
judgment initiative and efforts are important to the Company for the management
and growth of its business. For purposes of the Plan, an employee is an
individual whose wages from the Company are subject to the withholding of
federal income tax under Section 3401 of the Code.
2.8 "Fair Market Value" of a Share of Stock shall be determined as
follows:
(a) Prior to the date that Shares of the Company's Stock are
sold to the public in an initial public offering (the "IPO") and the
Company becomes subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (a "Public Company"), the Fair Market
Value of a Share of Stock shall be such value as the Board may determine in
its sole discretion.
(b) If the Company becomes a Public Company, the "Fair Market
Value" of a Share of Stock shall be based upon the last reported sale price
of the Stock on the NASDAQ National Market System on the day the
determination is to be made, or if no sale took place on such day, the
average of the closing bid and asked prices of the Stock on the NASDAQ
National Market System on such day, or if the market is closed on such day,
the last day prior to the date of determination on which the market was
open for the transaction of business, as reported by NASDAQ. If, however,
the Stock should be listed or admitted for trading on a national securities
exchange, the Fair Market Value of a share of the Stock shall be the last
sales price, or if no sales took place, the average of the closing bid and
asked prices on the day the determination is to be made, or if the market
is closed on such day, the last day prior to the date of determination on
which the market was open for the transaction of business, as reported in
the principal consolidated transaction reporting system for the principal
national securities exchange on which the Stock is listed or admitted for
trading.
(2.9) "Incentive Stock Option" means any Option designated as such
and granted in accordance with the requirements of Section 422 of the Code.
(2.10) "Non-Qualified Option" means any Option other than an Incentive
Stock Option.
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(2.11) "Option" means a right granted under the Plan to purchase
Stock at a stated price for a specified period of time.
(2.12) "Option Certificate" shall have the meaning given to such term
in Section 6.2 hereof.
(2.13) "Option Holder" mean an Eligible Employee or Eligible
Consultant designated by the Committee from time to time during the term of the
Plan to receive one or more Options under the Plan.
(2.14) "Option Price" means the price at which shares of Stock
subject to an Option may be purchased, determined in accordance with subsection
6.3(b).
(2.15) "Share" means a share of Stock.
(2.16) "Stock" means the Common Stock, $.001 par value, of the
Company.
ARTICLE 3
PLAN ADMINISTRATION
The Committee shall be responsible for administration of the Plan.
The Committee shall consist of members of the Board and/or officers of the
Company who are empowered hereunder to take actions in the administration of the
Plan. Members of the Committee shall be appointed from time to time by the
Board, shall serve at the pleasure of the Board and may resign at any time upon
written notice to the Board. Unless the Board designates specific members of
the Committee, the entire Board shall serve as the Committee. From and after
the time that the Company becomes a Public Company, the Committee shall be so
constituted that it satisfies the requirement of "disinterested administration"
imposed by Rule 16b-3 promulgated by the Securities Exchange Commission under
the Securities Exchange Act of 1934, as such rule may be amended from time to
time, and each successor applicable rule thereunder. The Committee shall
determine the form or forms of the Option Certificates and other agreements with
Option Holders which shall evidence the particular provisions, terms,
conditions, rights and duties of the Company and the Option Holders with respect
to Options granted pursuant to the Plan, which provisions need not be identical
except as may be provided herein. The Committee may from time to time adopt
such rules and regulations for carrying out the purposes of the Plan as it may
deem proper and in the best interests of the Company. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in the Plan or in
any agreement entered into hereunder in the manner and to the extent it shall
deem expedient and it shall be the sole and final judge of such expediency. No
member of the Committee shall be liable for any action or determination made in
good faith. The determinations, interpretations and other actions of the
Committee pursuant to the provisions of the Plan shall be binding and conclusive
for all purposes on all persons.
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ARTICLE 4
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. The total number of Shares as to which Options
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may be granted pursuant to the Plan shall be 633,000 in the aggregate. Such
number shall be adjusted in accordance with the provisions of Section 4.2.
Shares issued upon the exercise of Options shall be applied to reduce the
maximum number of Shares remaining available for use under the Plan. Shares
underlying expired or terminated and unexercised Options are available for grant
of Options under the Plan. The Company shall at all times during the term of the
Plan and while any Options are outstanding retain as authorized and unissued
Stock, or as treasury Stock, at least the number of Shares from time to time
required under the provisions of the Plan, or otherwise assure itself of its
ability to perform its obligations hereunder.
4.2 Adjustments for Stock Split, Stock Dividend, Etc. If the Company
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shall at any time increase or decrease the number of its outstanding Shares by
means of payment of a stock dividend or any other distribution upon such Shares
payable in Stock, or through a stock split, subdivision, consolidation,
combination, reclassification or recapitalization involving the Stock, or change
in any way the rights and privileges of such Shares, then the numbers, rights
and privileges of the following shall be increased, decreased or changed in like
manner as if the corresponding Shares had been issued and outstanding, fully
paid and nonassessable at the time of such occurrence: (a) the Shares as to
which Options may be granted under the Plan; and (b) the Shares then subject to
each outstanding Option. Upon any occurrence described in this Section 4.2, the
total Option Price under each then outstanding Option shall remain unchanged but
shall be apportioned ratably over the increased or decreased number of Shares
subject to the Option.
4.3 Adjustments for Certain Distributions of Property. If the Company
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shall at any time distribute with respect to its Stock assets or securities of
other persons (excluding cash dividends or distributions payable out of capital
surplus and dividends or other distributions referred to in Section 4.2 or 4.4),
the Option Price of outstanding Options shall be adjusted to reflect the fair
market value of the assets or securities distributed, the Company shall provide
for the delivery upon exercise of such Options of cash in all amount equal to
the fair market value of the assets or securities distributed or a combination
of such actions shall be taken, all as determined by the Committee in its
discretion. Fair market value of the assets or securities distributed for this
purpose shall be as determined by the Committee.
4.4 Distributions of Capital Stock and Indebtedness. If the Company
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shall at any time distribute with respect to its Stock shares of its capital
stock (other than Stock) or evidences of indebtedness, then a proportionate part
of such capital stock and evidences of indebtedness shall be set aside for each
outstanding Option and, upon the exercise of such Option, delivered to the
Option Holder.
4.5 No Rights as Stockholder. An Option Holder shall have none of the
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rights of a stockholder with respect to the Shares subject to an Option until
such Shares are transferred to the Option Holder upon the exercise of such
Option. Except as provided in this Article 4, no adjustment shall be made for
dividends, rights or other property distributed to stockholders
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(whether ordinary or extraordinary) for which the record date is prior to the
date such Shares are so transferred.
4.6 Fractional Shares. No adjustment or substitution provided for in
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this Article 4 shall require the Company to issue a fractional share. The total
substitution or adjustment with respect to each Option shall be limited by
deleting any fractional share.
4.7 Determination by the Committee, Etc. Adjustments under this
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Article 4 shall be made by the Committee, whose determinations with regard
thereto shall be final and binding.
ARTICLE 5
PARTICIPATION
In accordance with the provisions of the Plan, the Committee shall, in
its sole discretion, select Option Holders from among Eligible Employees and
Eligible Consultants to whom Options will be granted and shall specify the
number of Shares subject to each Option and such other terms and conditions of
each Option as the Committee may deem necessary or desirable and consistent with
the terms of the Plan. Eligible Employees shall be selected from the employees
of the Company who are performing services in the management, operation and
growth of the Company, and contribute, or are expected to contribute, to the
achievement of long-term corporate objectives. Eligible Consultants shall be
selected from the consultants and other individuals who provide services to the
Company with respect to the operation and growth of the Company and who
contribute, or are expected to contribute, to the achievement of long-term
corporate objectives. Eligible Employees and Eligible Consultants may be
granted from time-to-time one or more Options. The grant of each such Option
shall be separately approved by the Committee, and receipt of one such Option
shall not result in automatic receipt of any other Option. Upon determination
by the Committee that an Option is to be granted to an Eligible Employee or
Eligible Consultant, when notice shall be given to such person, specifying the
terms, conditions, rights and duties related thereto.
ARTICLE 6
STOCK OPTIONS
6.1 Grant of Options to Eligible Employees and Eligible Consultants.
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Coincident with or following designation for participation in the Plan, Eligible
Employees, Eligible Consultants and members of the Board of Directors may be
granted one or more Options. The Committee in its sole discretion shall
designate whether an Option is to be considered an Incentive Stock Option or a
Non-Qualified Option. Incentive Stock Options may be granted only to Eligible
Employees. The Committee may grant both an Incentive Stock Option and a Non-
Qualified Option to an Eligible Employee at the same time or at different times.
Incentive Stock Options and Non-Qualified Options, whether granted at the same
or different times, shall be deemed to have been awarded in separate grants and
shall be clearly
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identified, and in no event shall the exercise of one Option affect the right to
exercise any other Option or affect the number of Shares for which any other
Option may be exercised. An Option shall be considered as having been granted on
the date specified in the grant resolution of the Committee.
6.2 Option Certificates. Each Option granted under the Plan shall be
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evidenced by a written stock option certificate (an "Option Certificate") issued
in the name of the Option Holder and in such form as may be approved by the
Committee. The Option Certificate shall incorporate and conform to the terms and
conditions set forth herein, as well as such other terms and conditions, not
inconsistent herewith, as the Committee may consider appropriate in each case.
6.3 Certain Option Terms. Options granted pursuant to the Plan shall
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have terms and conditions consistent with the following in addition to the terms
and conditions set forth elsewhere herein:
(a) Number of Shares. Each Option shall relate to a specified
number of Shares determined by the Committee.
(b) Price. Each Option shall have an Option Price that is
determined by the Committee. Incentive Stock Options shall have an Option Price
that is equal to or greater than the Fair Market Value of the Stock on the date
the Option is granted.
(c) Duration and Exercise of Options. Each Option shall relate
to a specified period of time, as determined by the Committee, within which the
Option may be exercised by the Option Holder (the "Option Period"). The Option
Period must end, in all cases, not more than ten years from the date the Option
is granted. Each Option shall become exercisable (vest) over such period of
time, if any, as is determined by the Committee.
(d) Termination of Employment or Service, Death, Disability,
Etc. The Committee may specify the period after which an Option may be exercised
following termination of the employment of an Eligible Employee or termination
of the relationship with an Eligible Consultant. The effect of this subsection
6.3(d) shall be limited to determining the consequences of a termination and
nothing in this subsection 6.3(d) shall restrict or otherwise interfere with the
Company's discretion with respect to the termination of any person's employment
or other relationship. If the Committee does not so specify, the following shall
apply:
(i) If the employment or consulting relationship of an
Option Holder by or with the Company terminates for any reason other
than death or Disability within six months after the date the Option
is granted or if the employment or consulting relationship of the
Option Holder by or with the Company is terminated within the Option
Period for cause, as determined by the Company, the Option shall
thereafter be void for all purposes. As used in this subsection
6.3(d), "cause" shall mean a gross violation, as determined by the
Company, of the Company's established policies and procedures.
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(ii) If the employment or consulting relationship of the
Option Holder terminates because the Option Holder becomes Disabled
within the Option Period, the Option may be exercised by the Option
Holder (or, in the case of his or her death after becoming Disabled,
by those entitled to do so under his or her will or by the laws of
descent and distribution) within one year following such termination
(if otherwise within the Option Period), but not thereafter. In any
such case, the Option may be exercised only as to the Shares as to
which the Option had become vested and exercisable on or before the
date of termination because of Disability.
(iii) If the Option Holder dies within the Option Period,
while employed by the Company, while a consultant to the Company or
within the three-month period referred to in (iv) below, the Option
may be exercised by those entitled to do so under his or her will or
by the laws of descent and distribution within one year following his
death (if otherwise within the Option Period), but not thereafter. In
any such case the Option may be exercised only as to the Shares as to
which the Option had become vested and exercisable on or before the
date of the Option Holder's death.
(iv) If the employment or consulting relationship of the
Option Holder by or with the Company terminates within the Option
Period for any reason other than for cause, Disability or death, and
such termination occurs more than six months after the Option is
granted, the Option may be exercised by the Option Holder within three
months following the date of such termination (if otherwise within the
Option Period), but not thereafter. In any such case, the Option may
be exercised only as to the Shares as to which the Option had become
vested and exercisable on or before the date of termination.
(v) In all of the foregoing cases, the Option may only be
exercised with respect to Shares as to which the Option had become
vested on or before the date of termination of employment.
(e) Consideration for Grant of Option. The Committee may require
each Eligible Employee who is granted an Option to agree to remain in the
employment of the Company, at the pleasure of the Company, for a continuous
period of time after the date an Option is granted, at the salary rate or other
compensation in effect on the date of such agreement or at such changed rate as
may be fixed, from time to time, by the Company. Nothing in this paragraph shall
offset or impair the Company's right to terminate the employment of any
employee. The Committee may require each Eligible Consultant who is granted an
Option to agree to comply with all of the terms and conditions or specified
terms and conditions of the agreement between such Eligible Consultant and the
Company. If an Option Holder violates any such agreement, the Company may, in
its sole discretion, rescind the transfer of any Shares to the Option Holder
pursuant to the exercise of any portion of the Option. Upon notice of any such
rescission, the Option Holder will deliver promptly to the Company certificates
representing the Shares, duly endorsed for transfer to the Company.
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(f) Exercise, Payments, Etc.
(i) Manner of Exercise. The method for exercising each
Option granted hereunder shall be by delivery to the Company of
written notice specifying the number of Shares with respect to which
such Option is exercised. If the Shares of Stock covered by this
Option are not issued in a registered transaction, the issuance of the
Shares will be subject to the receipt by the Company of appropriate
investment representations from the Option Holder and the certificate
representing such Shares of Stock shall bear such legends as may be
required by the Company in order to assure compliance with federal and
state securities laws.
The purchase of such Shares shall take place at the
principal offices of the Company within thirty days following delivery
of such notice, at which time the Option Price of the Shares shall be
paid in full by any of the methods set forth below or a combination
thereof. The Option shall be exercised when the Option Price for the
number of Shares as to which the Option is exercised is paid to the
Company in full. A properly executed certificate or certificates
representing the Shares shall be delivered to or at the direction of
the Option Holder upon payment therefor. If Options on less than all
Shares evidenced by an Option Certificate are exercised, the Company
shall deliver a new Option Certificate evidencing the Option on the
remaining Shares upon delivery of the Option Certificate for the
Option being exercised.
(ii) Manner of Payment. The Option Price shall be paid by
any of the following methods or any combination of the following
methods at the option of the Option Holder, or by any other method
approved by the Committee upon the request of the Option Holder: (A)
cash; (B) certified, cashier's or other check acceptable to the
Company, payable to the order of the Company; or (C) if permitted by
the Committee in its sole discretion, through delivery to the Company
of the Option Holder's full recourse promissory note, containing such
provisions for repayment, interest and security as shall be specified
by the Committee.
(g) Withholding.
(i) Non-Qualified Options. Upon exercise of an Option, the
Option Holder shall make appropriate arrangements with the Company to
provide for the amount of additional withholding required by Sections
3102 and 3402 of the Code and applicable state income tax laws.
(ii) Incentive Options. If an Option Holder makes a
disposition (as defined in Section 424(c) of the Code) of any Stock
acquired pursuant to the exercise of an Incentive Stock Option prior
to the expiration of two years from the date on which the Incentive
Stock Option was granted or prior to the expiration of one year from
the date on which the Option was exercised, the Option Holder shall
send written notice to the Company at its principal office in Boulder,
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Colorado (Attention: Chief Financial Officer) of the date of such
disposition, the number of shares disposed of, the amount of proceeds
received from such disposition and any other information relating to
such disposition as the Company may reasonably request. The Option
Holder shall, in the event of such a disposition, make appropriate
arrangements with the Company to provide for the amount of additional
withholding, if any, required by Sections 3102 and 3402 of the Code
and applicable state income tax laws.
6.4 Restrictions on Incentive Stock Options.
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(a) Initial Exercise. The aggregate Fair Market Value of the
----------------
Shares with respect to which Incentive Stock Options are exercisable for the
first time by an Option Holder in any calendar year, under the Plan or
otherwise, shall not exceed $100,000. For this purpose, the Fair Marker Value of
the Shares shall be determined as of the date of grant of the Option.
(b) Ten Percent Stockholders. Incentive Stock Options granted to
------------------------
an Option Holder who is the holder of record of stock of the Company having more
than ten percent of the total combined voting power of all classes of
outstanding stock of the Company shall have an Option Price equal to 110% of the
Fair Market Value of the Shares on the date of grant of the Option and the
Option Period for any such Option shall not exceed five years.
ARTICLE 7
CORPORATE REORGANIZATION
7.1 Reorganization. Upon the occurrence of any of the following
--------------
events, if the notice required by Section 7.2 shall have first been given, the
Plan and all Options then outstanding hereunder shall automatically terminate
and be of no further force and effect whatsoever, without the necessity for any
additional notice or other action by the Board or the Company: (a) the merger or
consolidation of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification or change of outstanding shares of
Stock); or (b) the sale or conveyance of the property of the Company as an
entirety or substantially as an entirety (other than a sale or conveyance in
which the Company continues as a holding company of an entity or entities that
conduct the business or businesses formerly conducted by the Company); or (c)
the dissolution or liquidation of the Company.
7.2 Required Notice. At least 30 days' prior written notice of any
---------------
event described in Section 7.1 shall be given by the Company to each Option
Holder, unless in the case of the events described in clauses (a) or (b) of
Section 7.1, the Company, or the successor or purchaser, as the case may be,
shall make adequate provision for the assumption of the outstanding Options or
the substitution of new options for the outstanding Options on terms comparable
to the outstanding Options except that the Option Holder shall have the right
thereafter to purchase the kind and amount of securities or property or cash
receivable upon such merger, consolidation, sale or conveyance by a holder of
the number of Shares that would have
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been receivable upon exercise of the Option immediately prior to such merger,
consolidation, sale or conveyance (assuming such holder of Stock failed to
exercise any rights of election and received per share the kind and amount of
consideration received per share by a majority of the non-electing shares). The
provisions of this Article 7 shall similarly apply to successive mergers,
consolidations, sales or conveyances. Such notice shall be deemed to have been
given when delivered personally to an Option Holder or when mailed to an Option
Holder by registered or certified mail, postage prepaid, at such Option Holder's
address last known to the Company.
7.3 Acceleration of Exercisability. Option Holders notified in
------------------------------
accordance with Section 7.2 may exercise their Options at any time before the
occurrence of the event requiring the giving of notice (but subject to
occurrence of such event), to the extent such Options are exercisable and any
vesting requirements with respect to periods of employment or otherwise have
been satisfied. In addition, the Committee, in its sole discretion, may
accelerate the vesting of any Option, in full or in part, in the event of an
occurrence described in this Article 7.
ARTICLE 8
COMPANY RIGHT TO REPURCHASE STOCK
8.1 Company Right of First Refusal.
------------------------------
(a) If an Option Holder (or in the event of the death of an
Option Holder, such Option Holder's personal representative, estate or devisee,
as the case may be) at any time proposes to transfer any of the Shares of Stock
acquired pursuant to the Plan to a third party, the Option Holder shall make a
written offer (the "Offer") to sell all of the Stock acquired pursuant to the
Plan then owned by the Option Holder (or thereafter acquired by the Option
Holder's estate or personal representative pursuant to any Option hereunder) to
the Company at the "purchase price" as hereinafter defined. In the case of a
proposed sale of any of the Stock to a third party, the Offer shall state the
name of the proposed transferee and the terms and conditions of the proposed
transfer. The Company shall have the right to elect to purchase all (but no less
than all) of the Shares of Stock. The Company shall have the right to elect to
purchase the Shares of Stock for a period of 20 days after receipt by the
Company of the Offer.
(b) The Company shall exercise its right to purchase the Stock
by giving written notice of its exercise to the Option Holder (or his personal
representative or estate, as the case may be). If the Company elects to purchase
the stock, payment for the Shares of Stock shall be made in full by Company
check. Any such payment shall be made within ten days after the election to
purchase has been exercised.
(c) If the Stock is not purchased pursuant to the foregoing
provisions, the Shares of Stock may be transferred by the Option Holder to the
proposed transferee named in the Offer to the Company, in the case of a proposed
sale to a third party, but only upon the terms and conditions stated in the
Offer to the Company. However, if such transfer is not made within 120 days
following the termination of the Company's right to purchase, a new offer must
be made to the Company before the Option Holder can transfer any portion of his
Shares and the
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provisions of this Section 8.1 shall again apply to such transfer. In the event
that the Company's right of first refusal under this Section 8.1 is created by
an event other than a proposed transfer to a third party, the Shares of Stock
shall remain subject to the provisions of this Section 8.1 in the hands of the
registered owner of the Stock.
(d) The purchase price for each share of Stock purchased by the
Company pursuant to this Section shall be the amount offered by the proposed
third party purchaser.
(e) After the Company has become a Public Company, and so long
as the Company is a Public Company, the provisions of this Section 8.1 shall not
be applicable.
8.2 Marking of Certificates. Each certificate representing Shares of
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Stock acquired pursuant to this Plan shall bear the following legend:
The shares of stock represented by this Certificate are
subject to all the terms of the WITI Corporation Stock
Option Plan, as the Plan may be amended from time to
time ("Plan") and to the terms of a [Non-qualified
Stock Option Certificate] [Incentive Stock Option
Certificate] between the Company and the Option Holder
(the "Certificate"). Copies of the Plan and the
Certificate are on file at the office of the Company.
The Plan and the Certificate, among other things, limit
the right of the owner to transfer or sell the shares
represented hereby and provides in certain
circumstances the shares may be purchased by the
Company.
ARTICLE 9
EMPLOYMENT; TRANSFERABILITY
9.1 Employment. Nothing contained in the Plan or in any Option
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granted under the Plan shall confer upon any Option Holder any right with
respect to the continuation of his employment by or service with the Company, or
interfere in any way with the right of the Company, subject to the terms of any
separate employment agreement or other contract to the contrary, at any time to
terminate the employment or service of such Option Holder or to increase or
decrease the compensation of the Option Holder from the rate in existence at the
time of the grant of an Option. The Committee shall determine whether an
authorized leave of absence, or absence in military or government service, shall
constitute a termination of employment.
9.2 Other Employee Benefits. The amount of any compensation deemed to
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be received by an Option Holder as a result of the exercise of an Option shall
not constitute "earnings" with respect to which any other employee benefits of
such person are determined,
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including without limitation benefits under any pension, profit sharing, life
insurance or salary continuation plan.
9.3 Transferability. No right or interest of any Option Holder in an
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Option granted pursuant to the Plan shall be assignable or transferable during
the lifetime of the Option Holder, either voluntarily or involuntarily, or be
subjected to any lien, directly or indirectly, by operation of law, or
otherwise, including execution, levy, garnishment, attachment, pledge or
bankruptcy. In the event of an Option Holder's death, an Option Holder's rights
and interests in Options shall be transferable by will or pursuant to the laws
of descent and distribution. Each Option granted under the Plan shall be
exercisable during the Holder's lifetime only by the Option Holder or, in the
event of Disability or incapacity, by the Option Holder's guardian or legal
representative.
ARTICLE 10
SECURITIES LAW RESTRICTIONS
Each Option shall be subject to the requirement that if at any time
counsel to the Company shall determine that the listing, registration or
qualification of the Shares subject to such Option upon any securities exchange
or under any state or federal law, or the consent or approval of any
governmental or regulatory body, is necessary as a condition of, or in
connection with, the issuance or purchase of Shares thereunder, such Option may
not be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained on
conditions acceptable to the Committee. Nothing herein shall be deemed to
require the Company to apply for or obtain such listing, registration or
qualification.
ARTICLE 11
WITHHOLDING
The Company's obligations to deliver Shares upon the exercise of an
Option shall be subject to the Option Holder's satisfaction of all applicable
federal, state and local income and other tax withholding requirements
ARTICLE 12
MISCELLANEOUS
12.1 Expiration. The Plan shall terminate whenever the Board adopts a
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resolution to that effect. If not sooner terminated by the Board, the Plan shall
terminate and expire on September 1, 2006. After termination, no additional
Options shall be granted under the Plan, but the Company shall continue to
recognize Options previously granted.
12.2 Amendments, Etc. The Board may from time to time amend, modify,
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suspend or terminate the Plan. Nevertheless, no such amendment, modification,
suspension or
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termination shall, without the consent of the Option Holder, impair any Option
previously granted under the Plan or deprive any Option Holder of any Shares
that he may have acquired through or as a result of the Plan.
12.3 Treatment of Proceeds. Proceeds from the sale of Stock pursuant
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to Options granted under the Plan shall constitute general funds of the Company.
12.4 Section Headings. The section headings are included herein only
----------------
for convenience, and they shall have no effect on the interpretation of the
Plan.
12.5 Severability. If any article, section, subsection or specific
------------
provision is found to be illegal or invalid of any reason, such illegality or
invalidity shall not affect the remaining provisions of the Plan, and the Plan
shall be construed and enforced as if such illegal and invalid provision had
never been set forth in the Plan.
12.6 Notices. All notices required or permitted under the Plan shall
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be given by certified mail or personal delivery and shall be effective when
delivered or, on the third day after deposit in the United States mails with
adequate postage, addressed as follows:
(a) If intended for the Option Holder, to the Option Holder's
address as listed in the records of the Company.
(b) If intended for the Company, to the address of the principal
business office of the Company.
12.7 Gender and Number. Except when otherwise indicated by the
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context, the masculine gender shall include the feminine gender, and the
definition of any term herein in the singular shall also include the plural.
Adopted as of November 1, 1996.
WITI CORPORATION
By: /s/ J. Bruce Donaldson
----------------------------
Name: J. BRUCE DONALDSON
--------------------------
Title: PRESIDENT & CEO
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