<PAGE> 1
COGNITRONICS CORPORATION
1990 STOCK OPTION PLAN, AS AMENDED
1. PURPOSE
This incentive stock option plan (the "Plan") is intended
to provide incentives to executives and other key employees of
Cognitronics Corporation (the "Company") and its Subsidiaries by
providing them with opportunities for stock ownership under the
Plan. "Subsidiary" means any corporation in which the Company or
another Subsidiary or both owns 50% or more of the combined voting
power of all classes of stock.
.
2. ADMINISTRATION
The Plan shall be administered by a committee of not less
than three directors of the Company (the "Committee")selected
by, and serving at the pleasure of, its Board of Directors
(the "Board"). A director may not serve on the Committee
unless he is a "non-employee director" for purposes of Rule 16b-3
under the Securities Exchange Act of 1934, (or any successor rule
thereto).
The Committee shall have authority, subject to the terms
of the Plan, to determine the persons eligible for options and those
to whom options shall be granted, the number of shares to be covered
by each option,
the time or times at which options shall be granted, and the terms
and provisions of the instruments by which options shall be
evidenced, and to interpret the Plan and make all determinations
necessary or advisable for its administration. The Committee
may consult with legal counsel, who may be counsel to the
Company, and shall not incur any liability for any action taken in
good faith in reliance upon the advice of counsel. The Board
reserves to itself the right to exercise any authority granted to
the Committee hereunder.
3. ELIGIBILITY
Full-time employees, including officers, of the Company or any
Subsidiary or both, shall be eligible to participate in the Plan. A
member of the Committee shall not be eligible, while a member, to
receive an option under the Plan, but may exercise any options
previously granted to him. No employee shall be granted options with
respect to more than 100,000 shares of Common Stock in any calender
year, subject to adjustment pursuant to Section 7.
4. STOCK
The stock as to which options may be granted shall be the
Company's common stock, par value $.20 per share ("Common Stock").
When options are exercised the Company may either issue unissued
Common Stock or transfer issued Common Stock held in its treasury.
The total number of shares of Common Stock which may be sold to
employees under the Plan pursuant to options shall not exceed
1,577,500 shares. If an option expires, or is otherwise
terminated prior to its exercise, the Common Stock covered by
such option immediately prior to such expiration or other
termination shall continue to be available under the Plan.
<PAGE> 2
5. GRANTING OF OPTIONS
The "Date of Grant" of an option under the Plan shall be the
date on which the option is awarded by the Committee. The grant of
any option to any employee shall neither entitle such employee to,
nor disqualify him from, participation in any other grant of
options.
6. TERMS AND CONDITIONS OF OPTIONS
Options shall be evidenced by instruments in form approved
by the Committee. Such instruments shall conform to the following
terms and conditions:
(a) Option price. The option price per share of
Common Stock shall be the Fair Market Value of a share of
Common Stock on the Date of Grant. "Fair Market Value" shall
be the closing price of the Common Stock recorded on the
American Stock Exchange on the Date of Grant or the last
trading day prior thereto.
(b) Term and exercise of options. Each option shall expire
no later than the tenth anniversary of its Date of Grant.
Options shall become exercisable at such time or times and
subject to such terms and conditions as shall be determined by
the Committee. The Committee may waive such exercise provisions
or accelerate the exercisability of the option at any time.
After becoming exercisable, each installment (option?) shall
remain exercisable until expiration or termination of the
option. An option may be exercised from time to time, in whole
or part, up to the total number of shares with respect to which
it is then exercisable. Payment of the purchase price will be
made in such manner as the Committee may provide in the
option, which may include cash (including cash equivalents),
payroll deductions, any other manner permitted by law as
determined by the Committee or any combination of the
foregoing.
(c) Termination of employment. If an optionee ceases, other
than by reason of death or retirement, to be employed by the
Company or a Subsidiary, all options granted to him and
exercisable on the date of his termination of employment shall
terminate on the earlier of such options' expiration or three
months after the day his employment ends or as otherwise
determined by the Committee. Any installment not exercisable on
the date of such termination shall lapse and be thenceforth
unexercisable. Whether authorized leave of absence or absence
in military or governmental service may constitute employment
for the purposes of the Plan shall be conclusively determined by
the Committee.
(d) Retirement of optionee. If an optionee retires, all
options held by him on the date of his retirement shall become
exercisable on the date of his retirement and shall terminate
on the earlier of such option's expiration or the first
anniversary of the day of his retirement.
<PAGE> 3
(e) Death of optionee. If an optionee dies, his option
may be exercised, to the extent of the number of shares with
respect to which he could have exercised it on the date of his
death, by his estate, personal representative or beneficiary
who acquires the option by will or by the laws of descent and
distribution, at any time prior to the earlier of such option's
expiration or the first anniversary of the optionee's death. On
the earlier of such dates, the option shall terminate.
(f) Assignability. No option shall be assignable or
transferable by the optionee except by will or by laws of
descent and distribution, and during the lifetime of the
optionee the option shall be exercisable only by him. At the
request of an optionee, shares of Common Stock purchased on
exercise of an option may be issued or transferred in the name
of the optionee and another person jointly with the right of
survivorship.
(g) Other provisions. Instruments evidencing options may
contain such other provisions, not inconsistent with the Plan,
as the Committee deems advisable, including a requirement that
an optionee represent to the Company in writing, when an
option is granted, or when he receives shares on its exercise,
that he is accepting such option, or receiving such shares
(unless they are then covered by a Securities Act of 1933
registration statement), for his own account for investment
only. All certificates representing shares issued under the
Plan may bear a legend deemed appropriate by the Committee to
confirm an exemption from the registration requirements of the
Securities Act of 1933.
7. CAPITAL ADJUSTMENTS
The number and price of shares of Common Stock covered by each
option, the total number of shares that may be sold under the Plan,
and the maximum number of shares that may be sold, issued or
transferred to an employee, shall be proportionately adjusted to
reflect, as deemed equitable and appropriate by the Committee, any
stock dividend, stock split or share combination of the Common
Stock or recapitalization, merger, consolidation, extraordinary
dividend, spin-off, split-off or other change in the capital
structure of the Company. Any such adjustment shall preserve the
aggregate value of outstanding options.
8. INCENTIVE STOCK OPTIONS
The aggregate Fair Market Value (determined as of the time
the option is granted) of the Common Stock with respect to which
incentive stock options, as defined in Section 422 of the Internal
Revenue Code of 1986, as amended, are exercisable for the first
time by an individual in any calendar year (under the Plan or any
other plan of the Company or any of its parent or subsidiary
corporations (as such terms are defined in Section 424(e) and
(f), respectively, of the Internal Revenue Code) pursuant to
which such incentive stock options may be granted) shall not exceed
$100,000.
<PAGE> 4
9. CHANGE OF CONTROL
Notwithstanding the provisions of Section 6(b) hereof, in the
event of a Change in Control, as hereinafter defined, all options
held by an optionee shall become exercisable on the date of the
Change in Control.
"Change in Control" means an event in which:
(a) the stockholders of the Company approve (i) any
consolidation or merger of the Company or any of its
subsidiaries where the stockholders of the Company, immediately
prior to the consolidation or merger, would not, immediately
after the consolidation or merger, beneficially own, directly or
indirectly, shares representing in the aggregate more than 50%
of all votes to which all stockholders of the corporation
issuing cash or securities in the consolidation or merger (or of
its ultimate parent corporation, if any) would be entitled under
ordinary circumstances to vote in an election of directors or
where the members of the Board, immediately prior to the
consolidation or merger, would not, immediately after the
consolidation or merger, constitute a majority of the Board of
Directors of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation,
if any), (ii) any sale, lease, exchange or other transfer (in
one transaction or a series of transactions contemplated or
arranged by any person as a single plan) of all or substantially
all of the assets of the Company or (iii) any plan or proposal
for the liquidation or dissolution of the Company;
(b) persons who, as of the effective date hereof, constitute
the entire Board (as of the date hereof the "Incumbent
Directors") cease for any reason to constitute at least a
majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's
shareholders, is approved by a vote of at least a majority of
the then Incumbent Directors (other than an election or
nomination of a person whose assumption of office is the result
of an actual or threatened election contest relating to the
election of directors of the Company, as such terms are used in
Rule 14a-11 under the Securities Exchange Act of 1934, as
amended from time to time (the "Exchange Act")), shall be
considered an Incumbent Director; or
(c) any "person", as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, any of its
subsidiaries, any employee benefit plan of the Company or any of
its subsidiaries or any entity organized, appointed or
established by the Company for or pursuant to the terms of such
plan), together with all "affiliates" and "associates" (as such
terms are defined in Rule 12b-2 under the Exchange Act) of such
person, becomes the "beneficial owner" or "beneficial owners"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of securities of the Company
representing in the aggregate 20% or more of either (i) the then
outstanding shares of Common Stock or (ii) the combined voting
power of all then outstanding securities of the Company having
<PAGE> 5
the right under ordinary circumstances to vote in an election of
directors to the Board ("Voting Securities") (in either such
case other than as a result of acquisitions of such securities
directly from the Company).
Notwithstanding the foregoing, a "Change in Control" will not
have occurred for purposes of clause (c) solely as the result of an
acquisition of securities by the Company which, by reducing the
number of shares of Common Stock or other Voting Securities
outstanding, increases (i) the proportionate number of shares of
Common Stock beneficially owned by any person to 20% or more of the
shares of Common Stock then outstanding or (ii) the proportionate
voting power represented by the Voting Securities beneficially owned
by any person to 20% or more of the combined voting power of all then
outstanding Voting Securities; provided, however, that if any person
referred to in clause (i) or (ii) of this sentence thereafter becomes
the beneficial owner of any additional shares of Common Stock or
other Voting Securities (other than pursuant to a stock split, stock
dividend or similar transaction), then a "Change in Control" will
have occurred for purposes of clause (c).
10. TERM; AMENDMENT OF PLAN
The Board may discontinue the Plan at any time and may amend it
from time to time. No amendment or discontinuation of the Plan shall
adversely affect any award previously granted without the employee's
written consent. Amendments may be made without stockholder
approval except as required to satisfy applicable law or stock
exchange requirements.
11. EFFECTIVE DATE
The Plan is in accordance with a Resolution of Stockholders
duly approved at an Annual Meeting held on June 21,1990 and became
effective on June 21, 1990. It was amended by a Resolution of
Stockholders and by the Board on July 12, 1994 and further amended
by a Resolution of Stockholders and by the Board on May 9, 1996 and
by Resolutions of Stockholders on May 14, 1998, May 13, 1999 and May
11, 2000.
12. NEW YORK STATE LAW
The Terms of the Plan shall be governed by the laws of the
State of New York.
