NETWOLVES CORPORATION
2000 Stock Option Plan
SECTION 1. GENERAL PROVISIONS
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1.1. Name and General Purpose
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The name of this plan is the NETWOLVES CORPORATION 2000 Stock Option Plan
(hereinafter called the "2000 Plan"). The 2000 Plan is intended to be a
broadly-based incentive plan which enables NETWOLVES CORPORATION (the "Company")
and its subsidiaries and affiliates to foster and promote the interests of the
Company by attracting and retaining directors, officers and employees of, and
consultants to, the Company who contribute to the Company's success by their
ability, ingenuity and industry, to enable such directors, officers, employees
and consultants to participate in the long-term success and growth of the
Company by giving them a proprietary interest in the Company and to provide
incentive compensation opportunities competitive with those of competing
corporations.
1.2 Definitions
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a. "Affiliate" means any person or entity controlled by or under common
control with the Company, by virtue of the ownership of voting securities, by
contract or otherwise.
b. "Board" means the Board of Directors of the Company.
c. "Change in Control" means a change of control of the Company, or in any
person directly or indirectly controlling the Company, which shall mean:
(i) any person who is not currently such becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 25% or
more of the combined voting power of the Company's then outstanding voting
securities; or
(ii) three or more directors, whose election or nomination for
election is not approved by a majority of the Incumbent Board (as
hereinafter defined), are elected within any single 12-month period to
serve on the Board of Directors; or
(iii) members of the Incumbent Board cease to constitute a majority of
the Board of Directors without the approval of the remaining members of the
Incumbent Board; or
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(iv) any merger (other than a merger where the Company is the survivor
and there is no accompanying Change in Control under subparagraphs (i),
(ii) or (iii) of this paragraph (b)), consolidation, liquidation or
dissolution of the Company, or the sale of all or substantially all of the
assets of the Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur pursuant to subparagraph (i) of this definition solely because 25% or more
of the combined voting power of the Company's outstanding securities is acquired
by one or more employee benefit plans maintained by the Company or by any other
employer, the majority interest in which is held, directly or indirectly, by the
Company. For purposes of this definition, the terms "person" and "beneficial
owner" shall have the meaning set forth in Sections 3(a) and 13(d) of the
Exchange Act, and in the regulations promulgated thereunder, as in effect on
July 6, 2000; and the term "Incumbent Board" shall mean (A) the members of the
Board of Directors of the Company on July 6, 2000, to the extent that they
continue to serve as members of the Board of Directors, and (B) any individual
who becomes a member of the Board of Directors after July 6, 2000, if his
election or nomination for election as a director was approved by a vote of at
least three-quarters of the then Incumbent Board.
d. "Committee" means the Committee referred to in Section 1.3 of the 2000
Plan.
e. "Common Stock" means shares of the Common Stock, par value $.0033 per
share, of the Company.
f. "Company" means NETWOLVES CORPORATION, a corporation organized under the
laws of the State of Delaware (or any successor corporation).
g. "Fair Market Value" means the market price of the Common Stock on The
Nasdaq Stock Market on the date of the grant or as reported on any other
exchange on which the Common Stock is then traded on such date or on any other
date on which the Common Stock is to be valued hereunder. If no sale shall have
been reported on any such exchange, Fair Market Value shall be determined by the
Committee.
h. "Non-Employee Director" shall have the meaning set forth in Rule 16(b)
promulgated by the Securities and Exchange Commission ("Commission").
i. "Option" means any option to purchase Common Stock under Section 2 of
the 2000 Plan.
j. "Option Agreement" means the option agreement described in Section 2.4
of the 2000 Plan.
k. "Participant" means any director, officer, employee or consultant of the
Company, a Subsidiary or an Affiliate who is selected by the Committee to
participate in the 2000 Plan.
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l. "Subsidiary" means any corporation in which the Company possesses
directly or indirectly 50% or more of the combined voting power of all classes
of stock of such corporation.
m. "Total Disability" means accidental bodily injury or sickness which
wholly and continuously disabled an optionee. The Committee, whose decisions
shall be final, shall make a determination of Total Disability.
1.3 Administration of the Plan
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The 2000 Plan shall be administered by the Board or by the Committee
appointed by the Board. The Committee shall serve at the pleasure of the Board
and shall have such powers as the Board may, from time to time, confer upon it.
Subject to this Section 1.3, the Committee shall have sole and complete
authority to adopt, alter, amend or revoke such administrative rules, guidelines
and practices governing the operation of the 2000 Plan as it shall, from time to
time, deem advisable, and to interpret the terms and provisions of the 2000
Plan.
The Committee shall keep minutes of its meetings and of action taken by it
without a meeting. A majority of the Committee shall constitute a quorum, and
the acts of a majority of the members present at any meeting at which a quorum
is present, or acts approved in writing by all of the members of the Committee
without a meeting, shall constitute the acts of the Committee.
1.4 Eligibility
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Stock Options may be granted only to directors, officers, employees or
consultants of the Company or a Subsidiary or Affiliate. Any person who has been
granted any Option may, if he is otherwise eligible, be granted an additional
Option or Options.
1.5 Shares
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The aggregate number of shares reserved for issuance pursuant to the 2000
Plan shall be 1,500,000 shares of Common Stock, or the number and kind of shares
of stock or other securities which shall be substituted for such shares or to
which such shares shall be adjusted as provided in Section 1.6.
Such number of shares may be set aside out of the authorized but unissued
shares of Common Stock or out of issued shares of Common Stock acquired for and
held in the Treasury of the Company, not reserved for any other purpose. Shares
subject to, but not sold or issued under, any Option terminating or expiring for
any reason prior to its exercise in full will again be available for Options
thereafter granted during the balance of the term of the 2000 Plan.
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1.6 Adjustments Due to Stock Splits,
Mergers, Consolidation, Etc.
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If, at any time, the Company shall take any action, whether by stock
dividend, stock split, combination of shares or otherwise, which results in a
proportionate increase or decrease in the number of shares of Common Stock
theretofore issued and outstanding, the number of shares which are reserved for
issuance under the 2000 Plan and the number of shares which, at such time, are
subject to Options shall, to the extent deemed appropriate by the Committee, be
increased or decreased in the same proportion, provided, however, that the
Company shall not be obligated to issue fractional shares.
Likewise, in the event of any change in the outstanding shares of Common
Stock by reason of any recapitalization, merger, consolidation, reorganization,
combination or exchange of shares or other corporate change, the Committee shall
make such substitution or adjustments, if any, as it deems to be appropriate, as
to the number or kind of shares of Common Stock or other securities which are
reserved for issuance under the 2000 Plan and the number of shares or other
securities which, at such time are subject to Options.
In the event of a Change in Control, (a) all Options outstanding on the
date of such Change in Control shall, for a period of sixty (60) days following
such Change in Control, become immediately and fully exercisable, and (b) an
optionee will be permitted to surrender for cancellation within sixty (60) days
after such Change in Control any Option or portion of an Option which was
granted more than six (6) months prior to the date of such surrender, to the
extent not yet exercised, and to receive a cash payment in an amount equal to
the excess, if any, of the Fair Market Value (on the date of surrender) of the
shares of Common Stock subject to the Option or portion thereof surrendered,
over the aggregate purchase price for such Shares under the Option.
1.7 Non-Alienation of Benefits
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Except as herein specifically provided, no right or unpaid benefit under
the 2000 Plan shall be subject to alienation, assignment, pledge or charge and
any attempt to alienate, assign, pledge or charge the same shall be void. If any
Participant or other person entitled to benefits hereunder should attempt to
alienate, assign, pledge or charge any benefit hereunder, then such benefit
shall, in the discretion of the Committee, cease.
1.8 Withholding or Deduction for Taxes
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If, at any time, the Company or any Subsidiary or Affiliate is required,
under applicable laws and regulations, to withhold, or to make any deduction for
any taxes, or take any other action in connection with any Option exercise, the
Participant shall be required to pay to the Company or such Subsidiary or
Affiliate, the amount of any taxes required to be withheld, or, in lieu thereof,
at the option of the Company, the Company or such Subsidiary or Affiliate may
accept a sufficient number of shares of Common Stock to cover the amount
required to be withheld.
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1.9 Administrative Expenses
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The entire expense of administering the 2000 Plan shall be borne by the
Company.
1.10 General Conditions
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a. The Board or the Committee may, from time to time, amend, suspend or
terminate any or all of the provisions of the 2000 Plan, provided that, without
the Participant's approval, no change may be made which would alter or impair
any right theretofore granted to any Participant.
b. With the consent of the Participant affected thereby, the Committee may
amend or modify any outstanding Option in any manner not inconsistent with the
terms of the 2000 Plan, including, without limitation, and irrespective of the
provisions of Section 2.3(c) below, to accelerate the date or dates as of which
an installment of an Option becomes exercisable.
c. Nothing contained in the 2000 Plan shall prohibit the Company or any
Subsidiary or Affiliate from establishing other additional incentive
compensation arrangements for employees of the Company or such Subsidiary or
Affiliate.
d. Nothing in the 2000 Plan shall be deemed to limit, in any way, the right
of the Company or any Subsidiary or Affiliate to terminate a Participant's
employment with the Company (or such Subsidiary or Affiliate) at any time.
e. Any decision or action taken by the Board or the Committee arising out
of or in connection with the construction, administration, interpretation and
effect of the 2000 Plan shall be conclusive and binding upon all Participants
and any person claiming under or through any Participant.
f. No member of the Board or of the Committee shall be liable for any act
or action, whether of commission or omission, (i) by such member except in
circumstances involving actual bad faith, nor (ii) by any other member or by any
officer, agent or employee.
1.11 Compliance with Applicable Law
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Notwithstanding any other provision of the 2000 Plan, the Company shall not
be obligated to issue any shares of Common Stock, or grant any Option with
respect thereto, unless it is advised by counsel of its selection that it may do
so without violation of the applicable Federal and State laws pertaining to the
issuance of securities and the Company may require any stock certificate so
issued to bear a legend, may give its transfer agent instructions limiting the
transfer thereof, and may take such other steps, as in its judgment are
reasonably required to prevent any such violation.
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1.12 Effective Dates
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The 2000 Plan was adopted by the Board effective July 6, 2000. The 2000
Plan shall terminate on July 5, 2010.
Section 2. OPTION GRANTS
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2.1 Authority of Committee
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Subject to the provisions of the 2000 Plan, the Committee shall have the
sole and complete authority to determine (i) the Participants to whom Options
shall be granted; (ii) the number of shares to be covered by each Option; and
(iii) the conditions and limitations, if any, in addition to those set forth in
Sections 2 and 3 hereof, applicable to the exercise of an Option, including
without limitation, the nature and duration of the restrictions, if any, to be
imposed upon the sale or other disposition of shares acquired upon exercise of
an Option.
Stock Options granted under the 2000 Plan shall be non-qualified stock
options.
The Committee shall have the authority to grant Options.
2.2 Option Exercise Price
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The price of stock purchased upon the exercise of Options granted pursuant
to the 2000 Plan shall be the Fair Market Value thereof at the time that the
Option is granted.
The purchase price is to be paid in full in cash, certified or bank
cashier's check or, at the option of the Company, Common Stock valued at its
Fair Market Value on the date of exercise, or a combination thereof, when the
Option is exercised and stock certificates will be delivered only against such
payment.
2.3 Option Grants
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Each Option will be subject to the following provisions:
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a. Term of Option
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An Option will be for a term of not more than ten years from the date of
grant.
b. Exercise
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(i) By an Employee:
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Subject to the power of the Committee under Section 1.10(b) above and
except in the manner described below upon the death of the optionee, an Option
may be exercised only in installments as follows: up to one-third of the subject
shares on and after the first anniversary of the date of grant, up to two-thirds
of the subject shares on and after the second anniversary of the date of grant,
up to all of the subject shares on and after the third such anniversary of the
date of the grant of such Option but in no event later than the expiration of
the term of the Option.
An Option shall be exercisable during the optionee's lifetime only by the
optionee and shall not be exercisable by the optionee unless, at all times since
the date of grant and at the time of exercise, such optionee is an employee of
or providing services to the Company, any parent corporation of the Company or
any Subsidiary or Affiliate, except that, upon termination of all such
employment or provision of services (other than by death, Total Disability, or
by Total Disability followed by death in the circumstances provided below), the
optionee may exercise an Option at any time within three months thereafter but
only to the extent such Option is exercisable on the date of such termination.
Upon termination of all such employment by Total Disability, the optionee
may exercise such Options at any time within three years thereafter, but only to
the extent such Option is exercisable on the date of such termination.
In the event of the death of an optionee (i) while an employee of or
providing services to the Company, any parent corporation of the Company or any
Subsidiary or Affiliate, or (ii) within three months after termination of all
such employment or provision of services (other than for Total Disability) or
(iii) within one year after termination on account of Total Disability of all
such employment or provision of services, such optionee's estate or any person
who acquires the right to exercise such option by bequest or inheritance or by
reason of the death of the optionee may exercise such optionee's Option at any
time within the period of one year from the date of death. In the case of
clauses (i) and (iii) above, such Option shall be exercisable in full for all
the remaining shares covered thereby, but in the case of clause (ii) such Option
shall be exercisable only to the extent it was exercisable on the date of such
termination.
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(ii) By Persons other than Employees:
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If the optionee is not an employee of the Company or the parent corporation
of the Company or any Subsidiary or Affiliate, the vesting of such optionee's
right to exercise his Options shall be established and determined by the
Committee in the Option Agreement covering the Options granted to such optionee.
Notwithstanding the foregoing provisions regarding the exercise of an
Option in the event of death, Total Disability, other termination of employment
or provision of services or otherwise, in no event shall an Option be
exercisable in whole or in part after the termination date provided in the
Option Agreement.
c. Transferability
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An Option granted under the 2000 Plan shall not be transferable otherwise
than by will or by the laws of descent and distribution, or, as determined by
the Board or the Committee, to (i) a member or members of the optionee's family,
(ii) a trust, (iii) a family limited partnership or (iv) a similar estate
planning vehicle primarily for members of the optionee's family.
2.4 Agreements
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In consideration of any Options granted to a Participant under the 2000
Plan, each such Participant shall enter into an Option Agreement with the
Company providing, consistent with the 2000 Plan, such terms as the Committee
may deem advisable.
