2000 INCENTIVE STOCK OPTION PLAN
Effective
1. Purposes of the Plan. The purposes of this Stock Option Plan are:
to attract and retain the best available personnel for positions of
substantial responsibility,
to provide additional incentive to Employees and Consultants, and
to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the
time of grant. Stock Purchase Rights may also be granted under the
Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4
of the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
administration of stock option plans under state corporate and
securities laws and the Code.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means LinuxMall.com, Inc., a Delaware corporation.
(h) "Consultant" means any person, including an advisor, engaged
by the Company or a Parent or Subsidiary to render services
and who is compensated for such services, provided that the
term "Consultant" shall not include Directors who are paid
only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.
(i) "Continuous Status as an Employee or Consultant" means that
the employment or consulting relationship is not interrupted
or terminated by the Company, any Parent or Subsidiary.
Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) any leave of
absence approved by the Company, including sick leave,
military leave, or any other personal leave; provided,
however, that for purposes of Incentive Stock Options, any
such leave may not exceed ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed
by contract (including certain Company policies) or statute
or, if reemployment is not so guaranteed, Continuous Status as
an Employee or Consultant shall not be considered interrupted,
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but the Incentive Stock Option shall automatically be
converted into a Nonstatutory Stock Option on the ninety-first
(91st) day of such leave; or (ii) transfers between locations
of the Company or between the Company, its Parent, its
Subsidiaries or its successor.
(j) "Director" means a member of the Board.
(k) "Disability" means total and permanent disability as defined
in Section 22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the
Company. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without
limitation the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") System, the Fair Market Value of a Share of Common
Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such
system or exchange (or the exchange with the greatest volume
of trading in Common Stock) on the last market trading day
prior to the day of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but
not on the National Market System thereof) or is regularly
quoted by a recognized securities dealer but selling prices
are not reported, the Fair Market Value of a Share of Common
Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day
prior to the day of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems
reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith
by the Administrator.
(o) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422
of the Code and the regulations promulgated thereunder.
(p) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(q) "Notice of Grant" means a written notice evidencing certain
terms and conditions of an individual Option or Stock Purchase
Right grant. The Notice of Grant is part of the Option
Agreement.
(r) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.
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(s) "Option" means a stock option granted pursuant to the Plan.
(t) "Option Agreement" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of
an individual Option grant. The Option Agreement is subject to
the terms and conditions of the Plan.
(u) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower
exercise price.
(v) "Optioned Stock" means the Common Stock subject to an Option
or Stock Purchase Right.
(w) "Optionee" means an Employee or Consultant who holds an
outstanding Option or Stock Purchase Right.
(x) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(y) "Plan" means this 2000 Incentive Stock Option Plan.
(z) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11
below.
(aa) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the
terms and restrictions applying to stock purchased under a
Stock Purchase Right. The Restricted Stock Purchase Agreement
is subject to the terms and conditions of the Plan and the
Notice of Grant.
(bb) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being
exercised with respect to the Plan.
(cc) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 13 of the Plan.
(dd) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 of the Plan, as evidenced by a
Notice of Grant.
(ee) "Subsidiary" means a "subsidiary corporation",
whether now or hereafter existing, as defined in Section
424(f) of the Code.
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3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned
and sold under the Plan is 1,400,000 Shares. The Shares may be
authorized, but unissued, or reacquired Common Stock. However, should
the Company reacquire Shares which were issued pursuant to the exercise
of an Option or Stock Purchase Right, such Shares shall not become
available for future grant under the Plan.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an
Option Exchange Program, the unpurchased Shares which were subject
thereto shall become available for future grant or sale under the Plan
(unless the Plan has terminated); provided, however, that Shares that
have actually been issued under the Plan, whether upon exercise of an
Option or Right, shall not be returned to the Plan and shall not become
available for future distribution under the Plan, except that if Shares
of Restricted Stock are repurchased by the Company at their original
purchase price, and the original purchaser of such Shares did not
receive any benefits of ownership of such Shares, such Shares shall
become available for future grant under the Plan. For purposes of the
preceding sentence, voting rights shall not be considered a benefit of
Share ownership.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. If permitted by Rule
16b-3, the Plan may be administered by different bodies with
respect to Directors, Officers who are not Directors, and
Employees who are neither Directors nor Officers.
(ii) Administration With Respect to Directors and Officers
Subject to Section 16(b). With respect to Option or Stock
Purchase Right grants made to Employees who are also Officers
or Directors subject to Section 16(b) of the Exchange Act, the
Plan shall be administered by (A) the Board, if the Board may
administer the Plan in compliance with the rules governing a
plan intended to qualify as a discretionary plan under Rule
16b-3, or (B) a committee designated by the Board to
administer the Plan, which committee shall be constituted to
comply with the rules governing a plan intended to qualify as
a discretionary plan under Rule 16b-3. Once appointed, such
Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. From time to time the
Board may increase the size of the Committee and appoint
additional members, remove members (with or without cause) and
substitute new members, fill vacancies (however caused), and
remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the rules
governing a plan intended to qualify as a discretionary plan
under Rule 16b-3.
(iii) Administration With Respect to Other Persons. With
respect to Option or Stock Purchase Right grants made to
Employees or Consultants who are neither Directors nor
Officers of the Company, the Plan shall be administered by (A)
the Board or (B) a committee designated by the Board, which
committee shall be constituted to satisfy Applicable Laws.
Once appointed, such Committee shall serve in its designated
capacity until otherwise directed by the Board. The Board may
increase the size of the Committee and appoint additional
members, remove members (with or without cause) and substitute
new members, fill vacancies (however caused), and remove all
members of the Committee and thereafter directly administer
the Plan, all to the extent permitted by Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific
duties delegated by the Board to such Committee, the
Administrator shall have the authority, in its discretion:
(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(n) of the Plan;
(ii) to select the Consultants and Employees to whom
Options and Stock Purchase Rights may be granted
hereunder;
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(iii) to determine whether and to what extent Options and
Stock Purchase Rights or any combination thereof, are granted
hereunder;
(iv) to determine the number of shares of Common Stock to
be covered by each Option and Stock Purchase Right granted
hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder.
Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options or Stock
Purchase Rights may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation
regarding any Option or Stock Purchase Right or the shares of
Common Stock relating thereto, based in each case on such
factors as the Administrator, in its sole discretion, shall
determine;
(vii) to reduce the exercise price of any Option or Stock
Purchase Right to the then current Fair Market Value if the
Fair Market Value of the Common Stock covered by such Option
or Stock Purchase Right shall have declined since the date the
Option or Stock Purchase Right was granted;
(viii) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(x) to modify or amend each Option or Stock Purchase
\ Right (subject to Section 15(c) of the Plan);
(xi) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an
Option or Stock Purchase Right previously granted by the
Administrator;
(xii) to institute an Option Exchange Program;
(xiii) to determine the terms and restrictions applicable to
Options and Stock Purchase Rights and any Restricted Stock;
and
(xiv) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final
and binding on all Optionees and any other holders of Options
or Stock Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Employees, Directors and Consultants. Incentive Stock Options
may be granted only to Employees. If otherwise eligible, an Employee or
Consultant who has been granted an Option or Stock Purchase Right may be
granted additional Options or Stock Purchase Rights.
6. Limitations.
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(a) Each Option shall be designated in the Notice of Grant as
either an Incentive Stock Option or a Nonstatutory Stock
Option. However, notwithstanding such designations, to the
extent that the aggregate Fair Market Value:
(i) of Shares subject to an Optionee's incentive stock options
granted by the Company, any Parent or Subsidiary, which (ii)
become exercisable for the first time during any calendar year
(under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 6(a),
incentive stock options shall be taken into account in the
order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the time of grant.
(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing
the Optionee's employment or consulting relationship with the
Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such
employment or consulting relationship at any time, with or
without cause.
(c) The following limitations shall apply to grants of Options and
Stock Purchase Rights to Officers:
(i) no Officer shall be granted in any fiscal year of the
Company, Options and Stock Purchase Rights to purchase more
than the number of shares issuable under the Plan; and
(ii) over the remaining term of the Plan, no Officer shall be
granted Options and Stock Purchase Rights to purchase more
than the number of shares issuable under the Plan.
The foregoing limitations set forth in this Section 6(c) are
intended to satisfy the requirements applicable to Options and
Stock Purchase Rights intended to qualify as
"performance-based compensation" (within the meaning of
Section 162(m) of the Code). In the event the Administrator
determines that such limitations are not required to qualify
Options and Stock Purchase Rights as performance-based
compensation, the Administrator may modify or eliminate such
limitations.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall become
effective upon its adoption by the Board of Directors on February
9,2000, subject to its approval by the shareholders of the Company as
described in Section 19 of the Plan. It shall continue in effect for a
term of ten (10) years unless terminated earlier under Section 15 of
the Plan.
8. Term of Option. The term of each Option shall be stated in the Notice
of Grant; provided, however, that in the case of an Incentive Stock
Option, the term shall be ten (10) years from the date of grant or such
shorter term as may be provided in the Notice of Grant. Moreover, in
the case of an Incentive Stock Option granted to an Optionee who, at
the time the Incentive Stock Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock
of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Notice of Grant.
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9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be
determined by the Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the
voting power of all classes of stock of the Company
or any Parent or Subsidiary, the per Share exercise
price shall be no less than 110% of the Fair Market
Value per Share on the date of grant.
(B) granted to any Employee, the per Share exercise
price shall be no less than 100% of the Fair Market
Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be determined by the
Administrator.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which
the Option may be exercised and shall determine any conditions
which must be satisfied before the Option may be exercised. In
so doing, the Administrator may specify that an Option may not
be exercised until the completion of a service period.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option,
including the method of payment. In the case of an Incentive
Stock Option, the Administrator shall determine the acceptable
form of consideration at the time of grant. Such consideration
may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the
Optionee for more than six (6) months on the date of
surrender, and (ii) have a Fair Market Value on the date of
surrender equal to the aggregate Exercise Price of the
Exercised Shares; or
(v) delivery of Optionee's promissory note (the "Note") in the
form attached hereto as Exhibit C, in the amount of the
aggregate Exercise Price of the Exercised Shares together with
the execution and delivery by the Optionee of the Security
Agreement attached hereto as Exhibit B. The Note shall bear
interest at a rate no less than the "applicable federal rate"
prescribed under the Code and its regulations at time of
purchase, and shall be secured by a pledge of the Shares
purchased by the Note pursuant to the Security Agreement.
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(iv) any combination of the foregoing methods of payment;
or
(v) such other consideration and method of payment for
the issuance of Shares to the extent permitted by
Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms
of the Plan and at such times and under such conditions as
determined by the Administrator and set forth in the Option
Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives:
(i) written notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option,
and (ii) full payment for the Shares with respect to which the
Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the
Plan. Shares issued upon exercise of an Option shall be issued
in the name of the Optionee or, if requested by the Optionee,
in the name of the Optionee and his or her spouse. Until the
stock certificate evidencing such Shares is issued (as
evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company), no
right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for
a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as
provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the number
of Shares thereafter available, both for purposes of the Plan
and for sale under the Option, by the number of Shares as to
which the Option is exercised.
(b) Termination of Employment or Consulting Relationship. In the
event that an Optionee's Continuous Status as an Employee or
Consultant terminates (but not in the event of a change of
status from Employee to Consultant (in which case an
Employee's Incentive Stock Option shall automatically
convert to a Nonstatutory Stock Option on the ninety-first
(91st) day following such change of status) or from
Consultant to Employee), other than upon the Optionee's
death or Disability, the Optionee may exercise his or her
Option, but only within such period of time as is determined
by the Administrator, and only to the extent that the Optionee
was entitled to exercise it at the date of termination (but in
no event later than the expiration of the term of such Option
as set forth in the Notice of Grant). In the case of an
Incentive Stock Option, the Administrator shall determine such
period of time (in no event to exceed three (3) months from
the date of termination) when the Option is granted. If, at
the date of termination, the Optionee is not entitled to
exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or
her Option within the time specified by the Administrator, the
Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.
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(c) Disability of Optionee. Notwithstanding the provisions of
Section 10(b) above, in the event of termination of an
Optionee's Continuous Status as an Employee or Consultant as a
result of his total and permanent disability (as defined in
Section 22(e)(3) of the Code), Optionee may, but only within
such period of time as is determined by the Administrator, of
at least six (6) months (with such period of time in the case
of an Incentive Stock Option not exceeding twelve (12) months)
from the date of such termination (but in no event later than
the expiration date of the term of such Option as set forth in
the Option Agreement), exercise the Option to the extent
otherwise entitled to exercise it at the date of such
termination. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if
Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall
terminate.
(d) Death of Optionee. In the event of the death of an Optionee:
-----------------
(i) during the term of the Option who is at the time of his or
her death an Employee or Consultant of the Company and who
shall have been in Continuous Status as an Employee or
Consultant since the date of grant of the Option, the Option
may be exercised by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or
inheritance until the term of the option, or such shorter
period as is set forth in the option agreement, expires, and
the Option shall be treated for exercise purposes as if the
Optionee had continued living and had remained in Continuous
Status as an Employee or Consultant for six (6) months after
the date of death; or
(ii) after the termination of an Optionee's Continuous Status
as an Employee or Consultant, the Option may be exercised by
the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance until the term
of the option, or such shorter period as is set forth in the
option agreement, expires, and the Option shall be treated for
exercise purposes as if the Optionee had continued living and
had remained in Continuous Status as an Employee or Consultant
through the date of Optionee's death; and
(iii) if an Option is not exercised within the time specified
herein, the Option shall terminate.
(e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously
granted, based on such terms and conditions as the
Administrator shall establish and communicate to the Optionee
at the time that such offer is made.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards
granted under the Plan and/or cash awards made outside of the
Plan. After the Administrator determines that it will offer
Stock Purchase Rights under the Plan, it shall advise the
offeree in writing, by means of a Notice of Grant, of the
terms, conditions and restrictions related to the offer,
including the number of Shares that the offeree shall be
entitled to purchase, the price to be paid, and the time
within which the offeree must accept such offer, which shall
in no event exceed six (6) months from the date upon which
the Administrator made the determination to grant the Stock
Purchase Right. The offer shall be accepted by execution of
a Restricted Stock Purchase Agreement in the form determined
by the Administrator.
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(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant
the Company a repurchase option exercisable upon the voluntary
or involuntary termination of the purchaser's employment with
the Company for any reason (including death or Disability).
The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original
price paid by the purchaser and may be paid by cancellation of
any indebtedness of the purchaser to the Company. The
repurchase option shall lapse at a rate determined by the
Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the
Administrator in its sole discretion. In addition, the
provisions of Restricted Stock Purchase Agreements need not be
the same with respect to each purchaser.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to
those of a shareholder, and shall be a shareholder when his or
her purchase is entered upon the records of the duly
authorized transfer agent of the Company. No adjustment will
be made for a dividend or other right for which the record
date is prior to the date the Stock Purchase Right is
exercised, except as provided in Section 13 of the Plan.
12. Non-Transferability of Options and Stock Purchase Rights. An Option or
Stock Purchase Right may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the
laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
13. Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset
Sale or Change of Control.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option and Stock
Purchase Right, and the number of shares of Common Stock
which have been authorized for issuance under the Plan but
as to which no Options or Stock Purchase Rights have yet been
granted or which have been returned to the Plan upon
cancellation or expiration of an Option or Stock Purchase
Right, as well as the price per share of Common Stock covered
by each such outstanding Option or Stock Purchase Right,
shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock resulting from
a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment
shall be made by the Board, whose determination in that
respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to an Option or Stock
Purchase Right.
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(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that
an Option or Stock Purchase Right has not been previously
exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the
exercise of its sole discretion in such instances, declare
that any Option or Stock Purchase Right shall terminate as of
a date fixed by the Board and give each Optionee the right to
exercise his or her Option or Stock Purchase Right as to all
or any part of the Optioned Stock, including Shares as to
which the Option or Stock Purchase Right would not otherwise
be exercisable.
(c) Merger or Asset Sale. Subject to the provisions of paragraph
(d) hereof, in the event of a merger of the Company with or
into another corporation, or the sale of substantially all
of the assets of the Company, each outstanding Option and
Stock Purchase Right shall be assumed or an equivalent option
or right shall be substituted by the successor corporation or
a Parent or Subsidiary of the successor corporation. In the
event that the successor corporation does not agree to assume
the Option or Stock Purchase Right or to substitute an
equivalent option or right, the Administrator shall, in lieu
of such assumption or substitution, provide for the Optionee
to have the right to exercise the Option or Stock Purchase
Right as to all or a portion of the Optioned Stock, including
Shares as to which it would not otherwise be exercisable. If
the Administrator makes an Option or Stock Purchase Right
exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets, the Administrator shall notify
the Optionee that the Option or Stock Purchase Right shall be
fully exercisable for a period of fifteen (15) days from the
date of such notice, and the Option or Stock Purchase Right
will terminate upon the expiration of such period. For the
purposes of this paragraph, the Option or Stock Purchase
Right shall be considered assumed if, following the merger or
sale of assets, the option or right confers the right to
purchase, for each Share of Optioned Stock subject to the
Option or Stock Purchase Right immediately prior to the
merger or sale of assets, the consideration (whether stock,
cash, or other securities or property) received in the merger
or sale of assets by holders of Common Stock for each Share
held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the
outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets was not
solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase
Right, for each Share of Optioned Stock subject to the Option
or Stock Purchase Right, to be solely common stock of the
successor corporation or its Parent equal in fair market value
to the per share consideration received by holders of Common
Stock in the merger or sale of assets.
(d) Change in Control. In the event of a "Change in Control" of
the Company, as defined in paragraph (e) below, then the
following acceleration and valuation provisions shall apply:
(i) Except as otherwise determined by the Administrator, in
its discretion, prior to or after the occurrence of a Change
in Control, any Options and Stock Purchase Rights outstanding
on the date such Change in Control is determined to have
occurred that are not yet exercisable and vested on such date
shall become fully exercisable and vested;
(ii) Except as otherwise determined by the Administrator, in
its discretion, prior to or after the occurrence of a Change
in Control, all outstanding Options and Stock Purchase Rights,
to the extent they are exercisable and vested (including
Options and Stock Purchase Rights that shall become
exercisable and vested pursuant to subparagraph (i) above),
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shall be terminated in exchange for a cash payment equal to
the Change in Control Price, (reduced by the exercise price
applicable to such Options or Stock Purchase Rights). These
cash proceeds shall be paid to the Optionee or, in the event
of death of an Optionee prior to payment, to the estate of the
Optionee or to a person who acquired the right to exercise the
Option or Stock Purchase Right by bequest or inheritance.
(e) Definition of "Change in Control". For purposes of this
Section 13, a "Change in Control" means the happening of any
of the following:
(i) When any "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company, a
Subsidiary or a Company employee benefit plan, including any
trustee of such plan acting as trustee) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing more than twenty-five percent (25%) of
the combined voting power of the Company's then outstanding
securities entitled to vote generally in the election of
directors; or
(ii) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) at least seventy-five
percent (75%) of the total voting power represented by the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or
the stockholders of the Company approve an agreement for the
sale or disposition by the Company of all or substantially all
the Company's assets; or
(iii) A change in the composition of the Board of Directors of
the Company occurring within a two-year period, as a result of
which fewer than a majority of the directors are Incumbent
Directors. "Incumbent Directors" shall mean directors who
either (A) are directors of the Company as of the date the
Plan is approved by the stockholders, or (B) are elected, or
nominated for election, to the Board of Directors of the
Company with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or
nomination (but shall not include an individual whose election
or nomination is in connection with an actual or threatened
proxy contest relating to the election of directors to the
Company).
(f) Change in Control Price. For purposes of this Section 13,
"Change in Control Price" shall be, as determined by the
Board, (i) the highest Fair Market Value of a Share within the
60 day period immediately preceding the date of determination
of the Change in Control Price by the Board (the "60-Day
Period"), or (ii) the highest price paid or offered per Share,
as determined by the Board, in any bona fide transaction or
bona fide offer related to the Change in Control of the
Company, at any time within the 60-Day Period, or (iii) some
lower price as the Board, in its discretion, determines to be
a reasonable estimate of the fair market value of a Share.
14. Date of Grant. The date of grant of an Option or Stock Purchase Right shall
be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
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15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and
desirable to comply with Rule 16b-3 or with Section 422 of the
Code (or any successor rule or statute or other applicable
law, rule or regulation, including the requirements of any
exchange or quotation system on which the Common Stock is
listed or quoted). Such shareholder approval, if required,
shall be obtained in such a manner and to such a degree as is
required by the applicable law, rule or regulation.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights
of any Optionee, unless mutually agreed otherwise between the
Optionee and the Administrator, which agreement must be in
writing and signed by the Optionee and the Company.
16. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the
issuance and delivery of such Shares shall comply with all
relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the
rules and regulations promulgated thereunder, Applicable Laws,
and the requirements of any stock exchange or quotation system
upon which the Shares may then be listed or quoted, and shall
be further subject to the approval of counsel for the Company
with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of
an Option or Stock Purchase Right, the Company may require the
person exercising such Option or Stock Purchase Right to
represent and warrant at the time of any such exercise that
the Shares are being purchased only for investment and without
any present intention to sell or distribute such Shares if, in
the opinion of counsel for the Company, such a representation
is required.
17. Liability of Company.
(a) Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to
which such requisite authority shall not have been obtained.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock
covered by an Option or Stock Purchase Right exceeds, as of
the date of grant, the number of Shares which may be issued
under the Plan without additional shareholder approval, such
Option or Stock Purchase Right shall be void with respect to
such excess Optioned Stock, unless shareholder approval of an
amendment sufficiently increasing the number of Shares subject
to the Plan is timely obtained in accordance with Section
15(b) of the Plan.
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18. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall
be sufficient to satisfy the requirements of the Plan.
19. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months
before or after the date the Plan is adopted. Such shareholder approval
shall be obtained in the manner and to the degree required under
applicable federal and state law.
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