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As filed with the Securities and Exchange Commission on July 20, 1998
Registration No. 33-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
UNDER
THE SECURITIES ACT OF 1933
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COMNET CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 52-0852578
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
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4200 PARLIAMENT PLACE
SUITE 600
LANHAM, MARYLAND 20706-1860
(301)918-0400
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
1995 COMNET CORPORATION
INCENTIVE STOCK OPTION, NON-QUALIFIED
STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
1995 COMNET CORPORATION
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
(FULL TITLE OF THE PLANS)
ROBERT S. BOWEN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
4200 PARLIAMENT PLACE
SUITE 600
LANHAM, MARYLAND 20706-1860
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(301) 731-2300
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
ARNOLD R. WESTERMAN, ESQ.
ARENT FOX KINTNER PLOTKIN & KAHN
1050 CONNECTICUT AVENUE, N.W.
WASHINGTON, DC 20036-5339
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CALCULATION OF REGISTRATION FEE
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================================================================================================================================
TITLE OF SECURITIES AMOUNT PROPOSED PROPOSED AMOUNT OF REGISTRATION
TO BE REGISTERED TO BE MAXIMUM MAXIMUM FEE
REGISTERED OFFERING PRICE AGGREGATE
PER SHARE OFFERING PRICE
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COMMON STOCK, $.50 PAR VALUE 825,000 $12.43(1) $10,260,937.50(1) $2,950.00
================================================================================================================================
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(1) ESTIMATED SOLELY FOR PURPOSES OF CALCULATING THE REGISTRATION FEE IN
ACCORDANCE WITH RULE 457(h) OF THE SECURITIES ACT OF 1933 AND BASED ON THE
AVERAGE OF THE HIGH AND LOW PRICES OF THE COMMON STOCK AS REPORTED ON THE
NASDAQ NATIONAL STOCK MARKET ON JULY 14, 1998.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION*
* Information about the Registrant required by Part I to be
contained in a Section 10(a) prospectus is omitted from the
Registration Statement in accordance with Rule 428 under the
Securities Act of 1933, as amended (the "Securities Act"), and
the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents previously filed by the Registrant with the
Securities and Exchange Commission (the "Commission") are incorporated by
reference in this Registration Statement:
1. The Registrant's Annual Report on Form 10-K for the fiscal year
ended March 31, 1998.
2. All other reports filed pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") since
the end of the fiscal year ended March 31, 1998.
3. The description of the Registrant s Common Stock contained in
the Registration Statement on Form 8-A (No. 0-06355), filed on
June 12, 1972 with the Commission pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), including any subsequent amendment or report filed for
the purpose of updating such description.
In addition, all documents subsequently filed by the Registrant pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing
of a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Registration Statement to the
extent that a statement herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded to constitute a part of this
Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
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ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, as amended,
provides that a corporation shall have the power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director, officer, employee or agent of the corporation or is or was serving at
its request in such capacity in another corporation or business association,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 102(b)(7) of the Delaware General Corporation Law, as amended,
permits a corporation to provide in its certificate of incorporation that a
director of the corporation shall not be personally liable to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) under Section 174 of the Delaware General Corporation Law; or (iv)
for any transaction from which the director derived an improper personal
benefit.
Article ELEVENTH of the Registrant's Certificate of Incorporation
provides for the elimination of personal liability of a director for breach of
fiduciary duty as permitted by Section 102(b)(7) of the Delaware General
Corporation Law.
Article VII of the Registrant s By-Laws, as amended, provides that the
Registrant shall indemnify directors and officers to the fullest extent
permitted by the Delaware General Corporation Law.
The Registrant has in effect a directors and officers liability
insurance policy under which the directors and officers of the Registrant are
insured against loss arising from claims made against them due to wrongful acts
while acting in their individual and collective capacities as directors and
officers, subject to certain exclusions.
Each current member of the Registrant's Board of Directors is
signatory to an indemnification agreement (the "Indemnification Agreement")
with the Registrant. Each Indemnification Agreement provides that the
Registrant shall indemnify each director or officer who is a party to an
Indemnification Agreement if he was or is a party to or threatened to be made a
party to any threatened, pending or completed action, suit or proceeding
(except a derivative proceeding) by reason of the fact that he is or was a
director or officer of the Registrant, or is or was serving at its request in
certain capacities for another entity, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement (if such settlement is
approved in advance by the Registrant) incurred in connection with such
actions, suits or proceedings. The indemnification is limited to instances
where the indemnitee acted in good faith and in a manner he reasonably believed
to be in, or not
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opposed to, the best interests of the Registrant, and with respect to any
criminal action, had no reasonable cause to believe his conduct was unlawful.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
See Exhibit Index on page 7.
ITEM 9. UNDERTAKINGS
(a) The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made of the securities registered hereby, a post-effective
amendment to this Registrant Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration
Statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in this Registration Statement or any material change to such
information in this Registration Statement;
provided, however, that the undertakings set forth in paragraphs (1)(i) and
(1)(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
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(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The Registrant hereby further undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan s
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant, unless in the opinion of its counsel the
matter has been settled by controlling precedent, will submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lanham, State of Maryland, on the 6th day of June,
1998.
COMNET CORPORATION
By: /s/
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Robert S. Bowen
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints Robert S. Bowen and/or Ronald F.
Friedman true and lawful attorney-in-fact and agent with power of substitution
and resubstitution, for him, and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post effective
amendments) to this Registration Statement on Form S-8, and to file the same,
with all exhibits thereto, and all documents in connection therewith, with the
Commission, granting unto said attorney-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done to comply with the provisions of the
Securities Act and all requirements of the Commission, hereby ratifying and
confirming all that said attorney-in-fact or any of them, or their or his or
her substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated:
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SIGNATURES TITLE DATE
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/s/ President, Chief Executive Officer June 6, 1998
- ------------------------------------------- and Director
Robert S. Bowen
/s/ Executive Vice President, June 6, 1998
- ------------------------------------------- Chief Financial Officer,
Mark D. Funston Treasurer and Director
/s/ Director June 6, 1998
- -------------------------------------------
Ronald F. Friedman
/s/ Director June 6, 1998
- -------------------------------------------
James V. Manning
/s/ Director June 6, 1998
- -------------------------------------------
Charles J. Sindelar
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Director June __, 1998
- -------------------------------------------
James P. Marden
/s/ Director June 6, 1998
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Charles A. Mele
/s/ Director June 6, 1998
- -------------------------------------------
Richard H. Eisenberg
/s/ Director June 6, 1998
- -------------------------------------------
Bruce J. Spohler
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EXHIBIT INDEX
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Page
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Exhibit
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4. Instruments defining the rights of securityholders:
(a) 1995 Incentive Stock Option, Non-qualified Stock Option and Stock Appreciation Rights Plan and exhibits. 8
(b) 1995 Non-Employee Directors Stock Option Plan
and exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5. Opinion of Arent Fox Kintner Plotkin & Kahn re: validity of securities registered. . . . . . . . . . . . . . . 19
23. Consents of experts and counsel:
(a) Consent of Coopers & Lybrand (certified public accountants) . . . . . . . . . . . . . . . . . . . . . 20
(b) Consent of Arent Fox Kintner Plotkin & Kahn (counsel): included in exhibit 5 . . . . . . . . . . . . . 18
24. Power of Attorney: included on signature page.
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<PAGE> 1
EXHIBIT 4(A) 1995 INCENTIVE STOCK OPTION, NON-
QUALIFIED STOCK OPTION AND STOCK
APPRECIATION RIGHTS PLAN AND EXHIBITS
COMNET CORPORATION, a Delaware corporation (hereinafter referred to as
the "Company"), adopted and established a non-qualified stock option and stock
appreciation incentive unit plan (the "Plan") for its officers and other key
employees (whether full-time or otherwise) effective as of September 12, 1995,
the date it was approved by the Company's shareholders at their annual meeting.
The provisions of the Plan are set forth below:
SECTION ONE
DESIGNATION AND PURPOSE OF THE PLAN
A. Designation. This document is designated the "COMNET CORPORATION
INCENTIVE STOCK OPTION, NON-QUALIFIED STOCK OPTION AND STOCK APPRECIATION UNIT
PLAN" (hereinafter referred to as the "Plan").
B. Purpose. The purpose of the Plan is to advance the growth and
development of the Company by affording an opportunity to the officers and
other employees (whether full-time or otherwise) of the Company or a Subsidiary
to invest in shares of the Company's Stock and/or to receive a cash or Stock
distribution representing increases in the value of the Company's Stock. The
acquisition of such Stock by such employees and/or the payment of cash
distributions to such employees, who contribute to responsible for the
Company's success, provides a continuing incentive for them to promote the best
interests of the Company and induces them to continue their employment with the
Company or a Subsidiary. Finally, the Plan will enable the Company or a
Subsidiary to attract competent personnel to enter its employ.
SECTION TWO
DEFINITIONS
The following definitions shall be applicable to the terms used in the
Plan:
A. "Code" means the Internal Revenue Code of 1986, as presently in
effect or as hereafter amended.
B. "Committee" means the Compensation Committee appointed to
administer the Plan pursuant to Section Four.
C. "Company" means COMNET Corporation, a Delaware corporation.
D. "Eligible Individual" means any officer or other key employee
(whether full-time or otherwise) of the Company or a Subsidiary. Options and
Stock Units may be granted under the Plan only to such officers and other key
employees (whether full-time or otherwise) of the Company or a Subsidiary.
E. "Incentive Stock Option" shall mean an option granted under this
Plan that meets the requirements of Code Section 422.
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F. "Incentive Stock Option Plan" shall mean that part of the Plan the
provisions of which are specifically designated as relating solely to Incentive
Stock Options as well as those provisions of the Plan which relate to Options
generally or to both Options and Stock Units.
G. "Non-Qualified Stock Option" means any options granted under the
Plan that are not Incentive Stock Options.
H. "Non-Qualified Stock Option Plan" shall mean that part of the Plan
the provisions of which are specifically designated as relating solely to
Non-Qualified Stock Options as well as those provisions of the Plan which
relate to Options generally or to both Options and Stock Units.
I. "Option" shall mean an Incentive Stock Option and a Non-Qualified
Stock Option granted under this Plan to purchase authorized but unissued or
treasury shares of the Company's Stock.
J. "Participant" means any Eligible Individual who is granted an
Option or Stock Unit as provided in this Plan, and shall also mean the
successor in interest, if any, of a deceased Eligible Individual.
K. "Plan" shall mean the COMNET Corporation Incentive Stock Option,
Non-Qualified Stock Option and Stock Appreciation Unit Plan as set forth in
this document, and as hereafter amended, the provisions of which, unless
otherwise designated, form a part of each of the incentive Stock Options Plan,
the Non-Qualified Stock Option Plan, and the Stock Appreciation Unit Plan.
L. "Redemption Date" for a Stock Unit shall be the earlier of (i) the
date so designated in the written instrument granting the Stock Unit, which
shall in no event be earlier than the first anniversary of the date of grant of
the Stock Unit (except as otherwise expressly provided herein) nor later than
the tenth anniversary of the date of grant of the Stock Unit; (ii) the date of
the death of the Participant to whom the Stock Unit was granted; or (iii) the
date which is the first day of the sixth month following the termination of
employment of the Participant to whom the Stock Unit was granted if such
termination of employment is due to "total disability" of the Participant. If
the termination of employment is due to any other cause which the Committee, in
its sole discretion, determines should permit a redemption rather than a
forfeiture of outstanding vested Stock Units, the redemption rules of Section
Twelve A shall apply.
M. "Stock" means the Common Stock of the Company.
N. "Stock Appreciation Unit Plan" shall mean that part of the Plan
the provisions of which are specifically designated as relating solely to Stock
Units as well as those provisions of the Plan which relate to both Stock Units
and Options.
O. "Stock Unit" means a stock appreciation incentive unit granted to
a Participant by the Committee under this Plan.
P. "Subsidiary" shall mean an affiliate controlled by the Company,
directly or indirectly, through one or more intermediaries, subject to Section
Twelve(A)(vi), below.
Q. "Vesting Date" for a Stock Unit shall mean the date or dates upon
which all or any portion of the Stock Units shall become nonforfeitable in the
event of the subsequent total disability or death of the participant or in the
event of the termination of employment of the Participant for other causes
approved by the Committee.
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R. Wherever appropriate, words used in this Plan in the singular may
mean the plural, the plural may mean the singular, and the masculine may mean
the feminine or neuter.
SECTION THREE
STOCK SUBJECT TO STOCK OPTIONS AND STOCK UNITS
Subject to the adjustment provided in Section Ten, the total number of
shares of Stock which may be delivered to all participants upon the exercise of
all Options granted under this Plan, shall not exceed 600,000 and the total
number of shares of Stock which may be so issued may be increased only by a
resolution adopted by the Board of Directors of the Company and approved by the
stockholders of the Company. Shares delivered under this Plan upon the
exercise of an Option shall be fully paid and non-assessable. Subject to the
adjustment provided in Section Ten, the total number of Stock Units which may
be issued by the Committee to all Participants under this Plan shall not exceed
100,000 and the total of such Stock Units may be increased only by a resolution
adopted by the Board of Directors of the Company and approved by the
stockholders of the Company. Such Stock may either be authorized and unissued
or treasury stock. Subject to the adjustment provided in Section Ten, the
total number of Shares of Stock which may be issued by the Committee in
redemption of Stock Units to all Participants under the Plan shall not exceed
75,000 shares and the total number of shares of Stock which may be so issued
may be increased only by a resolution adopted by the Board of Directors of the
Company and approved by the stockholders of the Company.
SECTION FOUR
ADMINISTRATION OF THE PLAN
A. Appointment of Committee. The Board of Directors shall appoint a
Compensation Committee (the "Committee") which shall consist of not less than
three (3) members of such Board of Directors, none of whom is, or has been
during the one (1) year period prior to his appointment, an Eligible
Individual, who shall not be eligible during the period of service on the
Committee. In addition, the Board of Directors may designate a member of the
Committee to act as Chairman of the Committee. The Board of Directors, in its
sole discretion, may at any time, remove any member of the Committee and
appoint a director to fill any vacancy on the Committee. No individual may
participate as a member of the Committee in the administration of this Plan if
he shall have been eligible to receive a grant of an award of any options or
stock appreciation rights of the Company or any of its affiliates (as that term
is used in SEC Rule 16b-3) under this Plan or any other discretionary plan of
the Company or its affiliates (as that term is used in SEC Rule 16b-3) at any
time within one year prior to serving on the Committee.
B. Committee Meetings. The Committee shall hold its meetings at such
times and places as are specified by the Committee. A majority of the
Committee shall constitute a quorum. All actions of the Committee shall be
taken by a majority of a quorum present at the meeting duly called by any
member of the Committee; provided, however, that any action taken by a written
document signed by a majority of the Committee members shall be as effective as
actions taken by the Committee at a meeting duly called and held.
C. Committee Powers. Subject to the terms and provisions of this
Plan, the Committee shall have full power and authority to (i) designate the
Eligible Individuals to whom Options or Stock Units shall be granted, (ii)
determine the number of Options and/or Stock Units to be granted to each
Participant, (iii) determine the Redemption Date of any Stock Units and the
Vesting Date for any Stock Units, (iv) determine whether a vested Stock Unit
shall be redeemed for cash or for Stock or for a combination of cash and Stock,
(v) determine the purchase price to be paid for each share of Stock deliverable
upon the exercise of any Options, which shall be
<PAGE> 4
at least equal to the fair market value of a share of Stock at the time the
Option is granted, (vi) determine the period during which an Option may be
exercised, which period may not (except as otherwise expressly provided herein
commence prior to the first anniversary of the date of grant of the Options nor
extend beyond the tenth anniversary of the date of grant of the Options, (vii)
establish the provisions of Non-Qualified Options to avoid such Options being
deemed to constitute incentive stock options under Section 422 of the Code and
regulations thereunder, including but not limited to extending the terms of
Non-Qualified Options to a term not to exceed ten years and seven days and
(viii) determine any other conditions to which the exercise of an Option shall
be subject, including, subject to the provisions of Section Twelve, the effect
upon an Option of the termination of employment or death of a Participant. The
Committee shall have all rights, powers and authority necessary or appropriate
to administer this Plan in accordance with its terms, including, without
limitation, the power to make binding interpretations of this Plan and to
resolve all questions (whether express or implied) arising thereunder. The
Committee may prescribe such rules and regulations for administering this Plan
as the Committee, in its sole discretion, deems necessary or appropriate.
SECTION FIVE
SELECTION OF PARTICIPANTS
In determining which Eligible Individuals shall be granted Options
and/or Stock Units, the Committee shall evaluate, inter alia, (i) the duties
and responsibilities of the Eligible Individuals, (ii) their past and
prospective contributions to the success of the Company, (iii) the extent to
which they are performing and will continue to perform valuable services for
the benefit of the Company, and (iv) such other factors as the Committee deems
relevant.
SECTION SIX
ISSUANCE OF OPTIONS AND STOCK UNITS
A. Form of Options and Stock Units. Subject to the provisions of
this Plan, each group of Options and/or Stock Units granted to a Participant
shall be set forth in a written instrument upon such terms and conditions as
the Committee determines. The Redemption Date of any Stock Unit and the
Vesting Date of any Stock Unit shall be set forth in such written instrument.
Each such instrument shall incorporate the provisions of this Plan by
reference.
B. Date of Grant of Stock Units and Options. The date of grant for a
Stock Unit shall be the date on which the Stock Unit instrument was issued to
the Participant and for an Option shall be the date such options were granted
by the Committee.
C. Delivery of Shares on Exercise of Option. Except as otherwise
expressly provided herein, no Option may be exercised prior to the first
anniversary of the date of grant of the Option. Upon exercise of any Option,
or any portion thereof, the Committee shall deliver to the Participant such
number of shares of Stock as the Participant elects to purchase, as soon as
practicable after the Committee receives (i) written notice of such exercise
under and pursuant to the terms and conditions of the applicable Option
document and (ii) the full purchase price for such shares which shall be paid
in cash or shares of stock, or a combination thereof. The Participant shall be
entitled to pyramid the shares received upon exercise of Options by
simultaneously delivering such shares of stock in payment of the purchase price
of shares subject to additional Options; any share delivered in payment of the
exercise price must have been held of record by the Optionee for a least six
(6) months or such other period as may be required to avoid any adverse effect
on the financial position of the Company or a Subsidiary as a result of
incurring compensation expense or otherwise. Such shares, which shall
<PAGE> 5
be fully paid and non-assessable upon the issuance thereof, shall be
represented by a certificate or certificates registered in the name of the
Participant and stamped with any appropriate legend.
SECTION SEVEN
VESTING AND REDEMPTION OF STOCK UNITS
A. Vesting. The amount to be paid in redemption of any Stock Unit as
of the Redemption Date of such Stock Unit shall be equal to the percentage of
the "Stock Unit Value" of the Stock Unit in which the Participant has a vested
interest as of the Redemption Date. The Committee may, in its discretion,
issue Stock Units to a participant in which the Participant has an immediate
fully vested interest or may impose such vesting requirements, expressed in
terms of years of continuous employment with the Company and/or a Subsidiary,
as the Committee, in its sole discretion, may determine is appropriate in any
given situation.
B. Stock Unit Value. The "Stock Unit Value" of a Stock Unit shall be
determined as of the Redemption Date of the Stock Unit and shall consist of the
appreciation, if any, in the value of one share of Stock of the Company,
between (i) the value of one share of the Company's Stock as of the date of
grant of the Stock Unit, and (ii) the value of one share of Stock of the
Company as of the Redemption Date of such Stock Unit.
C. Payment of Stock Unit Value. Each Stock Unit granted to a
Participant which has become vested shall be redeemed by the Committee on the
Redemption Date of such Stock Unit. The "Stock Unit Value" of the Stock Unit
shall be paid to the Participant in cash, in Stock or in a combination of cash
and Stock as soon as is practicable after the Redemption Date, at the
discretion of the Committee. To the extent that payment of the Stock Unit
Value is made in shares of Stock, the value of the Company's Stock as of the
Redemption Date shall be used in determining the number of shares of Stock to
be received by the Participant. Any shares of stock received by a Participant
upon exercise of a Stock Unit shall be non-transferable until a period of at
least six months has elapsed since the date of the grant of such Stock Unit.
SECTION EIGHT
NON-TRANSFERABILITY OF OPTIONS AND STOCK UNITS
Any Option or Stock Unit granted to an Eligible Individual may not be
sold, exchanged, assigned, pledged, discounted, hypothecated or otherwise
transferred except by will or by the laws of descent and distribution. During
the lifetime of the Eligible Individual to whom an Option or Stock Unit is
issued, such Option or Stock Unit may be exercised only by the Eligible
Individual to whom it was issued or his representative. Upon any attempt to so
sell, transfer, assign, pledge, discount, hypothecate or otherwise transfer any
Option or Stock Unit, or any right thereunder, contrary to the provisions
hereof, such Option of Stock Unit and all rights thereunder shall immediately
become null and void.
SECTION NINE
COMPLIANCE WITH SECURITIES LAWS
Unless a registration statement under the Securities Act of 1933 is
then in effect with respect to the Stock a Participant receives upon the
exercise of an Option or the redemption of a Stock Unit the Committee, in its
discretion, may require, at the time that a Participant so receives such Stock,
that the Participant agrees in writing to acquire any such Stock he may so
receive for investment and not for distribution, or to consent to such other
agreement as the Committee, in its discretion, may deem to be necessary to
comply with the
<PAGE> 6
requirements of the Securities Act of 1933 or any applicable state securities
laws. A reference to any such agreement shall be inscribed on the Stock
certificate(s). Each Option shall be subject to the requirement that, if at
any time the Committee determines, in its discretion, that the listing,
registration or qualification of the shares of Stock subject to the Option upon
any securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the issuance or purchase of shares
thereunder, the Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained and the same shall have been free of any conditions not
acceptable to the Committee.
SECTION TEN
CHANGES IN CAPITAL STRUCTURE OF COMPANY
In the event of the splitting or consolidation of shares of Stock of
the Company, the payment of a stock dividend by the Company or a similar
transaction, the number of shares of Stock specified in Section Three of this
Plan, the number of shares of Stock upon which the value of each outstanding
Stock Unit shall be based and the value per share and the number and price per
share of shares subject to then outstanding Options shall be proportionately
adjusted.
SECTION ELEVEN
REORGANIZATION, DISSOLUTION, LIQUIDATION
CHANGE OF CONTROL OR SIMILAR EVENT
A. Treatment of Options. In the event of an occurrence of any of the
following events and upon approval of the Committee:
(i) the commencement of a bona fide "tender offer" acceptable
to the Company's Board for the shares of the Company as provided under Rule
14d-2 promulgated under the Federal Securities Exchange Act of 1934, as
amended, or any subsequent comparable Federal rule or regulation governing
tender offers;
(ii) a successful tender offer not previously approved by the
Company's Board of Directors resulting in a change of control of the Board;
(iii) the Company's execution of an agreement concerning the
sale of substantially all of its assets (other than to a subsidiary in a mere
corporate restructuring);
(iv) the Company's adoption of a plan of dissolution or
liquidation; or
(v) the Company's execution of an agreement concerning a
merger or consolidation involving the Company in which the Company is not the
surviving corporation or if, immediately following such merger or
consolidation, less than fifty percent (50%) of the surviving corporation's
outstanding voting stock is held by persons who were shareholders of the
Company immediately prior to such merger or consolidation; each Participant
shall have the right, immediately following such occurrence, to exercise his or
her Option in full to the extent not theretofore exercised regardless of any
provision herein or any provision in the Option contract providing for the
deferment of the vesting or exercise thereof.
The Participant shall be entitled to exercise the options regardless of whether
the tender offer (described in subsection A(i), directly above), is successful,
regardless of whether the dissolution or liquidation is consummated, and
regardless of whether the other corporation which is the surviving corporation
in a merger
<PAGE> 7
or consolidation shall adopt and maintain any plan under which options are
granted to the Participant. In the event the agreement concerning the sale of
substantially all of its assets or the agreement concerning a merger or
consolidation is not consummated by the parties, then the Options not exercised
prior to the formal determination by the Board that the contemplated
transaction will not be consummated shall on and after the date of such
determination again be subject to the exercise restrictions set forth in the
Option agreement. In the case of a merger, consolidation, reorganization,
reclassification, sale of assets or similar event, all outstanding Options
shall pertain to the securities or other property to which a holder of the
number of shares of Stock covered by the Option would have been entitled to
receive in connection with such event, and in the case of any other event
specified herein, each outstanding Option shall remain outstanding and
exercisable in accordance with its terms.
B. Treatment of Stock Units. In the event of an occurrence of any of
the following events and upon approval of the Committee:
(i) the commencement of a bona fide "tender offer" acceptable
to the Company's Board for the shares of the Company as provided under Rule
14d-2 promulgated under the Federal Securities Exchange Act of 1934, as
amended, or any subsequent comparable Federal rule or regulation governing
tender offers;
(ii) a successful tender offer not previously approved by the
Company's Board of Directors resulting in a change of control of the Board;
(iii) the Company's execution of an agreement concerning the
sale of substantially all of its assets (other than to a subsidiary in a mere
corporate restructuring);
(iv) the Company's adoption of a plan of dissolution or
liquidation; or
(v) the Company's execution of an agreement concerning a
merger or consolidation involving the Company in which the Company is not the
surviving corporation or if, immediately following such merger or
consolidation, less than fifty percent (50%) of the surviving corporation's
outstanding voting stock is held by persons who were shareholders of the
Company immediately prior to such merger or consolidation; the Redemption Date
with respect to all Stock Units theretofore granted hereunder and outstanding
at that time shall be the date of such event, regardless of any provision
herein or any provision in the Stock Unit contract providing for the deferment
of the vesting or redemption of any provision herein or any provision in the
Stock Unit contract providing for the deferment of the vesting or redemption
thereof.
The Participant shall be entitled to require redemption (the "Redemption Date")
of the Stock Units regardless of whether the tender offer is successful,
regardless of whether the dissolution or liquidation is consummated, and
regardless of whether the other corporation which is the surviving corporation
in a merger or consolidation shall adopt and maintain any plan under which
Stock Units are granted to the Participant. In the event the agreement
concerning the sale of substantially all of its assets or the agreement
concerning a merger or consolidation is not consummated by the parties, then
the Stock Units not exercised prior to the formal determination by the Board
that the contemplated transaction will not be consummated shall on and after
the date of such determination again be subject to the vesting restrictions set
forth in the Option agreement.
In the case of a merger, consolidation, reorganization,
reclassification, sale of assets or similar event, the Stock Unit Value of any
Stock Unit upon the redemption of such Stock Unit shall be determined on the
basis of the difference, if any, between (i) the value of a single share of the
Company's Stock as of the date of grant of such Stock Unit, and (ii) the
current value, as of the Redemption Date of such Stock Unit, of the shares of
stock or other securities into which a single share of the Company's Stock
would have been converted on the date of such reclassification, consolidation,
merger, reorganization, sale of assets or other similar event.
<PAGE> 8
SECTION TWELVE
TERMINATION OF EMPLOYMENT
A. Severance.
(i) Stock Units - Termination of Employment. In the event
that a Participant's employment with the Company or a Subsidiary terminates for
any reason, other than due to his death or "total disability," any Stock Unit
granted to him will be forfeited, whether or not such Stock Unit had been
vested, unless the Committee, in its sole discretion, decides to authorize the
redemption of the Stock Unit, to the extent then vested. If the Committee so
decides to redeem the Stock Unit, it shall be redeemed as of the third business
day following the next date on which quarterly and/or annual summary statements
of sales and sales earnings of the Company are released for publication on a
wire service, in a financial news service, in a newspaper of general
publication or are otherwise made publicly available.
(ii) Stock Units - Total Disability. In the event that a
Participant's employment with the Company or a Subsidiary is terminated due to
his incurring a "total disability", any Stock Units granted to him will be
redeemed, to the extent then vested, upon the expiration of six (6) months
following the date of termination of employment due to a "total disability".
(iii) Options - Termination of Employment. In the event that
a Participant's employment with the Company or a Subsidiary terminates for any
reason, other than due to his death or "total disability", any Option granted
to such Participant will expire in accordance with the provisions of the
Options document dealing with the effect of a termination of employment. Such
provisions must provide for an expiration of the Option not later than six (6)
months after the date of such termination. Notwithstanding the foregoing, in
the event that the Participant's employment is terminated for cause any Option
granted to him shall be revoked as of the date his employment terminates.
Notwithstanding any other provisions of this Plan, no payment under any Stock
Unit or issuance of any Stock pursuant to any Option or Stock Unit shall be
made and all rights of the Participant who received such Option or Stock Unit
(or his designated beneficiary or legal representatives) under this Plan shall
be forfeited if, prior to the time of such payment or issuance, the Participant
(1) shall be employed without the Company s or affiliate s consent by a
competitor of, or shall be engaged in any activity in competition with, the
Company or an affiliate; (2) divulges without the consent of the Company any
secret or confidential information belonging to the Company or an affiliate;
(3) has been dishonest or fraudulent in any matter affecting the Company; or
(4) has committed any act which, in the sole judgment of the Committee, has
been substantially detrimental to the interests of the Company. The Company
shall give a Participant written notice of the occurrence of any such event
(described in the foregoing clauses (1) - (4)) prior to making any such
forfeiture. The determination of the Committee as to the occurrence of any of
the events specified in the foregoing clauses (1)-(4) of this Section 11 shall
be conclusive and binding upon all persons for all purposes. Any Award shall
be subject to forfeiture for the reasons provided in this Section in such
manner as shall be provided by the Committee.
(iv) Options - Total Disability. In the event that a
Participant's employment with the Company or a Subsidiary is terminated due to
his incurring a "total disability," any Option granted to such Participant will
expire twelve months after the date of such termination.
(v) Definition of "Total Disability". For purposes of this
Section Twelve, a Participant is totally disabled if he is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than
twelve (12) months.
<PAGE> 9
(vi) Definition of "Subsidiary". For purposes of this
Section Twelve, a Participant's employer shall continue to be deemed a
Subsidiary notwithstanding that such entity is no longer directly or indirectly
controlled by the Company and therefore no longer a Subsidiary, provided that
the Participant's employer was a Subsidiary at the time the Options or Stock
Units were granted to such Participant.
B. Death. If a Participant dies while in the employ of the
Company or a Subsidiary, his vested Stock Units will be redeemed as soon as is
practicable after his death and the proceeds of such redemption shall be paid
over to the executor or administrator of the estate of the Participant or to
the person to whom the Stock Units shall pass by will or by the laws of descent
and distribution. If a Participant dies while in the employ of the Company or
a Subsidiary, any Option may provide that it can be exercisable not later than
six months after his death by the executor or administrator of the estate of
the Participant or by the person to whom the Option shall pass by will or by
the laws of descent and distribution, but only to the extent the Participant
was entitled to exercise the Options as of the date of his death.
SECTION THIRTEEN
PARTICIPANT'S RIGHTS AS A HOLDER OF SHARES
A Participant has no rights as a stockholder with respect to any
shares of Stock paid in redemption of any Stock Units or acquired pursuant to
the exercise of an Option until the date a certificate is issued to him for
such shares. Except as otherwise provided in Section Ten of this Plan, no
adjustment shall be made for dividends or other rights for which the record
date occurs prior to the date such stock certificate is issued.
SECTION FOURTEEN
AMENDMENTS TO THE PLAN
The Board of Directors of the Company may amend or terminate this Plan
at any time; provided, however, that (i) any such amendment or termination
shall not adversely affect the rights of Participants under Options or Stock
Units granted prior thereto; and (ii) any amendment which increases the total
number of Options, Stock Units or shares of Stock covered by this Plan, changes
the definition of Eligible Individual, changes the criteria for becoming a
member of the Compensation Committee or any other material change to this Plan
shall be subject to obtaining the approval thereof by the Company's
stockholders. Notwithstanding the foregoing, this Plan shall not be amended
more than once every six months, other than to comport with changes in the, the
Code, the Employee Retirement Income Security Act of 1974, as amended or the
rules thereunder.
SECTION FIFTEEN
EFFECTIVE AND EXPIRATION DATES OF THE PLAN
This Plan shall be effective on September 12, 1995, after approval of
it by the Company's shareholders. No Option shall be granted after September
10, 2005.
SECTION SIXTEEN
INCENTIVE STOCK OPTIONS PROVISIONS
The provisions of this Section Sixteen shall apply only to Incentive
Stock Options.
<PAGE> 10
A. Over Ten-Percent Shareholders. Incentive Stock Options shall not
be issued to individuals then owning more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any parent or
subsidiary of the Company.
B. Limit. Incentive Stock Options shall not be granted which will
cause the aggregate fair market value (determined at the time each Option is
granted) of the Stock for which options are granted to any Eligible Individual
under all incentive stock option plans of the Company during the calendar year
to exceed $100,000 plus the "unused limit carry-over" referred to in Section
422(b)(8) of the Internal Revenue Code of 1954.
<PAGE> 1
EXHIBIT 4(B) 1995 NON-EMPLOYEE DIRECTORS STOCK
OPTION PLAN AND EXHIBITS
1. DEFINITIONS. The terms below shall be defined
as indicated.
1.1 Administrator means the Board or any executive officer or
officers of the Company designated by the Board.
1.2 Board means the Board of Directors of the Company, including any
directors who may be Optionees.
1.3 Change in Control means the occurrence of and of the following:
(i) Any "person," as defined in Section 3(a)(9) of the Exchange Act
and as used in Sections 13(d) and 14(d) thereof, including a "group" as defined
in Section 13(d) of the Exchange Act (but excluding the Company and any
successor to the Company which became a successor of the Company in a
transaction that did not involve a Change in Control, any Subsidiary and any
employee benefit plan sponsored or maintained by the Company or any Subsidiary
and any employee benefit plan sponsored or maintained by the Company or any
Subsidiary, including any trustee of any such plan acting as trustee), becomes
directly or indirectly the "beneficial owner"(as defined in Rule 13d-3 under
the Exchange Act) of, or makes an offer to purchase, securities of the Company
representing 50% or more of the combined voting power of the Company's then
outstanding securities with respect to the election of directors.
(ii) During any period of twelve (12) consecutive months during the
existence of the Plan, the individuals who, at the beginning of such period,
constitute the Board (the "Incumbent Directors") cease for any reason other
than death to constitute at least a majority thereof; provided, however, that a
director who was not a director at the beginning of such 12-month period shall
be deemed to have satisfied such requirement and be an Incumbent Director if
such director was elected by, or on the recommendation of or with the approval
of, at least two-thirds of the directors of the Company who then qualified as
Incumbent Directors either because they were directors at the beginning of such
12-month period or by operation of this clause (ii).
(iii) The stockholders of the Company approve a merger or
consolidation of the Company or a reclassification of its voting stock without
the consent or approval of a majority of the Incumbent Directors.
(iv) The stockholders of the Company approve a sale or other
disposition of all or substantially all of the Company's assets.
(v) The stockholders of the Company approve or adopt a plan of
liquidation, dissolution or winding up.
1.4 Code means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereof.
1.5 Common Stock means the Company's common stock, par value $.50,
subject to the provisions of Section 9.
1.6 Company means COMNET Corporation, a Delaware corporation, and any
successor corporation which adopts the Plan.
<PAGE> 2
1.7 Exchange Act means the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute thereof.
1.8 Fair Market Value means, on a specified date, the last sales
price of a Share traded on the over-the counter market, as reported on the
NASDAQ National Market System, or the last closing price for a Share on the
stock exchange, if any, on which Shares are primarily traded (or if no Shares
were traded on such date, then on the last previous date on which any Shares
were so traded), or if none of the above is applicable, the value of a Share
for such date as established by a nationally recognized appraisal firm or
investment bank, using any reasonable method of valuation.
1.9 Non-Employee Director means a director of the Company who is not
an officer or employee of the Company or any subsidiary.
1.10 Option means an option to purchase Shares granted by the Company
pursuant to the Plan.
1.11 Option Agreement means a written agreement as described in
Section 7 between the Company and the Optionee evidencing an option.
1.12 Option Period means the period from the date of the granting of
an Option to the date on which that Option terminates pursuant to Section 5.2
hereof.
1.13 Option Price means the price to be paid for the Shares purchased
pursuant to an Option.
1.14 Optionee means any person who is granted an Option under the
Plan.
1.15 Plan means the Company's 1995 Non-Employee Directors Stock
Option Plan, as adopted by the Board in substantially the form set forth herein
and as the same may be amended or otherwise modified from time to time.
1.16 Shares means shares of Common Stock.
1.17 Subsidiary means a subsidiary of the Company as defined under
Section 424 of the Code.
2. PURPOSE; CONSTRUCTION.
2.1 The Plan is intended to encourage ownership of Common Stock by
directors of the Company, upon whose judgment and interest the Company is
dependent for its successful operationand growth, in order to increase their
proprietary interest in the Company's success and to encourage them to serve as
directors of the Company.
2.2 The Plan is intended to comply with the terms and provisions of
Rule 16b-3 promulgated under the Exchange Act. Any provision of the Plan or
any option Agreement inconsistent with the terms of such Rule in effect on such
date shall be inoperative and shall not affect the validity of the Plan, such
Option Agreement or any other provision thereof.
3. ADMINISTRATION AND INTERPRETATION. The terms and conditions under which
options shall be granted under the Plan are set forth in Section 5. Subject to
the provisions of Section 12, the Administrator shall have authority to
interpret the provisions of the Plan, to establish such rules and procedures as
may be necessary or advisable to administer the Plan and to make all
determinations necessary or advisable for the administration of the Plan;
provided, however, that no such interpretation or determination shall change or
affect the selection of participants eligible to receive grants under the Plan,
the number of shares covered by or the timing of any grant of Options
<PAGE> 3
under the Plan or the terms and conditions thereof. The interpretation and
construction by the Administrator of any provision of the Plan or of any Option
Agreement shall be final and conclusive.
4. ELIGIBLE PERSONS. Options shall be granted pursuant to the provisions
hereof to persons who are Non-Employee Directors at the time of grant.
5. GRANT OF OPTIONS.
5.1 Procedure. Subject to the provisions of Section 8.1 limiting the
maximum number of Shares subject to purchase under Options, (a) each
Non-Employee Director whose initial term commences after the date of adoption
of the Plan by the Board shall be granted an option as of the date such
director is first elected to the Board of Directors to purchase 5,000 Shares,
and (b) on the first day of each fiscal year of the Company, each Non-Employee
Director (including Non-Employee Directors whose initial terms commenced on or
before the date of adoption of the Plan by the Board) shall be granted an
option to purchase 5,000 Shares. Each such Option shall become exercisable as
to 20% of the Shares covered thereby on each of the first five successive
anniversaries of the date of grant; provided, however, that upon the occurrence
of a Change in Control any portion of each such Option not then exercisable
shall immediately and automatically (without notice) become fully exercisable.
The Option Price for each option shall be the Fair Market Value of a Share on
the date of grant. No Option shall be granted under the Plan except as
provided in this Section 5.1.
5.2 Termination. The unexercised portion of each Option (both vested and
non-vested) shall automatically and without notice terminate and become null
and void upon the earlier of the following:
(i) The fifteenth anniversary of the date of grant; or
(ii) Subject to the provisions of this Section 5.2, thirty (30)
days following the date of termination of the Optionee's status
as a director of the Company.
Notwithstanding the foregoing, if an Optionee ceases to be a director of the
Company due to retirement on or after attaining the age of 65 (or such earlier
date as such Optionee shall be permitted to retire under the Company's
retirement policy then in effect) or due to disability (the existence of which
disability shall be determined by the Administrator in its sole discretion,
which determination shall be conclusive), any unexercised portion of the Option
that was otherwise exercisable on the date such Optionee ceases to be a
director of the Company shall be exercisable by the Optionee at any time within
the 30 day period following the date of termination of such Optionee's status
as a director, and if an Optionee dies while a director of the Company or
within 30 days following the date of termination of such Optionee's status as a
director, any unexercised portion of the Option that was otherwise exercisable
on the date of such Optionee's death shall be exercisable by the Optionee's
personal representatives or heirs at law if no personal representative is
required by the governing state law, at any time within the one (1) year period
from the date of such Optionee's death; provided, however, that notwithstanding
anything to the contrary contained herein, in no event shall any option be
exercisable following the fifteenth anniversary of the date of grant.
5.3 Additional Grants. Nothing contained in the Plan shall be
construed to preclude the granting of an Option or Options pursuant to Section
5.1 to an Optionee in addition to an Option or options for the purchase of
Shares already held by that Optionee or the granting of more than one option
pursuant to Section 5.1 to an Optionee at the same time.
5.4 Subject to Exchange Rules. Any and all grants of Options shall
be subject to all applicable rules and regulations of any exchange on which the
Company's Common Stock may then be listed.
<PAGE> 4
6. EFFECTIVE AND EXPIRATION DATES OF PLAN. The Plan shall be effective on
September 12, 1995, after approval by the Company's stockholders at the 1995
annual meeting of stockholders. No Option shall be granted after September 10,
2005.
7. OPTION AGREEMENTS. Option Agreements shall be in such form as the
Administrator shall approve or determine; provided, however, that all Option
Agreements shall comply with and be subject to the following terms and
conditions.
7.1 Manner, Time, and Medium of Payment. An Option shall be exercised
in the manner set forth in the Option Agreement relating thereto and payment in
full of the Option Price for all Shares shall be made at the time of exercise.
Payment shall be in United States dollars in the form of cash, certified check
or bank draft, or by delivery of fully paid Shares valued at their Fair Market
Value on the date of exercise, or, if the Option Agreement so provides (subject
to compliance with any applicable rules promulgated under Section 16 of the
Exchange Act requiring elections to be made six (6) months in advance or during
a window period or as may otherwise hereafter be required), by withholding
Shares with respect to which the Optionee has exercised such Option having a
Fair Market Value on the date of exercise equal to the sum of the Option Price
for the withheld Shares and the remaining shares with respect to which the
Optionee has exercised such option, or any combination of such methods of
payment.
7.2 Number of Shares. Subject to Section 9, the Option Agreement
shall state the number of Shares to which it pertains.
7.3 Date of Exercise. An Option may be exercised, to the extent
vested, in whole or in part from time to time during the Option Period.
Notwithstanding anything in this Plan or any Option Agreement to the contrary,
no Option shall be exercisable prior to the approval of this Plan by the
stockholders of the Company.
7.4 Reorganization. In case the Company is merged or consolidated
with another corporation, or in case of a reorganization, separation or
liquidation of the Company, the Board or the board of directors of any
corporation assuming the obligations of the Company hereunder shall either (i)
make appropriate provisions for the protection of any outstanding options by
the substitution on an equitable basis of appropriate securities of the
Company, or appropriate shares or other securities of the merged, consolidated,
or otherwise reorganized corporation, or the appropriate adjustment in the
Option Price, or both, or (ii) give written notice to Optionees that their
Options must be exercised, to the extent then exercisable after giving due
effect to Section 7.3, within 60 days of the date of such notice or they will
terminate, and to the extent that such Options are not exercised within such
60-day period they shall terminate and be of no further effect.
7.5 Assignability. No option shall be assignable or transferable
except by will, by the laws of descent and distribution or pursuant to a
qualified domestic relations order (as defined in the Code), and no option may
be exercised other than by an Optionee or, after the death of an Optionee, by
that Optionee's personal representatives, heirs, or legatees.
7.6 No Right to Continue as Director. Nothing in the Plan nor in any
option granted under the Plan shall confer (or be deemed to confer) any right
on any Optionee to continue as a director of the Company or any Subsidiary or
shall interfere in any way with the right of the Board or the stockholders of
the Company, or the board of directors or stockholders (including the Company)
of any subsidiary, to terminate such status at any time, with or without cause
and with or without notice except as otherwise provided by the certificate of
incorporation or by laws of the Company or such Subsidiary or applicable law.
<PAGE> 5
7.7 Rights as a Stockholder. An Optionee shall have no rights as a
stockholder with respect to Shares covered by any Option until the date the
Company has issued or delivered such Shares to the Optionee, and then only as
to such Shares as are actually issued and delivered to the Optionee.
7.8 Other Provisions. Option Agreements shall contain such other
terms and conditions not inconsistent with the Plan as the Administrator shall
deem advisable.
7.9 Compliance with Law. Notwithstanding any provision of the Plan
or any Option Agreement to the contrary, no option may be granted or exercised
at any time when such Option or the granting or exercise thereof or payment
therefor may result in the violation of any law or governmental order or
regulation.
7.10 Securities Laws. The Company intends to register the Shares
issuable pursuant to exercise of Options under the Securities Act of 1933, as
amended, and to effect similar compliance under applicable state laws, but
shall be under no obligation to do so. The Administrator may require, as a
condition of the issuance and delivery of certificates evidencing Shares
issuable pursuant to exercise of Options, that the Optionee make such
covenants, agreements and representations, including, without limitation, as to
compliance with applicable securities laws, and that such certificates bear
such legends, as the Administrator in its sole discretion deems necessary or
desirable.
8. SHARES AVAILABLE FOR OPTION.
8.1 Maximum. Subject to Sections 7.4 and 9, no more than 150,000
Shares shall be subject to purchase pursuant to options granted under the Plan,
which Shares may be either Shares held in treasury or authorized but unissued
Shares. At all times during the term of the Plan, the Company shall have
reserved that number of Shares less an amount equal to the number of Shares
held in treasury and the number of Shares which have been issued pursuant to
the exercise of Options. At all times after termination of the Plan the
Company shall have reserved for issuance a number of Share; equal to the
aggregate number of Shares subject to outstanding options less the number of
Shares held in treasury.
8.2 Expiration or Termination. If any outstanding option under the Plan
expires for any reason or is terminated prior to the expiration date of the
Plan as set forth in Section 6, the Shares allocable to any unexercised portion
of such Option may again be subject to an option.
9. RECAPITALIZATION OR CHANGE IN PAR VALUE OF COMMON STOCK. The aggregate
number of Shares purchasable under options granted and which may be granted
pursuant to the Plan and the option Price for Shares covered by each
outstanding option shall all be proportionately adjusted, as deemed appropriate
by the Administrator, if the Shares are split up, converted, exchanged,
reclassified or in any way substituted for. The Administrator shall provide
for appropriate adjustments of the numbers of shares purchasable under the Plan
and of outstanding options in the event of stock dividends or distributions of
assets or securities of other companies owned by the Company to stockholders
relating to Common Stock for which the record date is prior to the date the
Shares purchased by exercise of an Option are issued or transferred, except
that no such adjustment shall be made for cumulative stock dividends of ten
percent (10%) or less (in the aggregate) or cash dividends. Any such
adjustment may include an adjustment of the Option Price or the number of
Shares for which an Option may be exercised, or may provide for an escrow of
assets or securities so distributed to be available upon future exercise. In
the event of a change in the Company's presently authorized Common Stock which
is limited to a change of all of its presently authorized Shares of Common
Stock with par value into the same number of shares without par value, or any
change of the then authorized Shares of Common Stock with par value into the
same number of shares of Common Stock with a different par value, the shares
resulting from any such change shall be deemed to be Shares as defined in
Section 1, and no change in the number of Shares covered by each option or in
the Option Price shall take place.
<PAGE> 6
10. INDEMNIFICATION; RELIANCE; EXCULPATION.
10.1 Indemnification. Each person who is or shall have been a member
of the Board of the Company shall be indemnified and held harmless by the
Company against and from any and all loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit, or proceeding to which such person may
be a party or in which such person may be involved by reason of any action
taken or failure to act under the Plan and against and from any and all amounts
paid by such person in settlement thereof (with the Company's written approval)
or paid by such person in satisfaction of a judgment in any such action, suit,
or proceeding to the fullest extent permitted by the Delaware General
Corporation Law, subject, however, to the condition that upon the institution
of any such claim, action, suit, or proceeding such person shall in writing
give the Company an opportunity to intervene at the Company's expense on his or
her behalf. The foregoing right of indemnification shall not be exclusive of
any other right to which such person may be entitled as a matter of law or
otherwise, or any power that the Company may have to indemnify such person or
hold his or her harmless.
10.2 Reliance. Each member of the Board and each officer and
employee of the Company in performing duties under the Plan shall be entitled
to rely upon information and reports furnished in connection with the
administration of this Plan by any duly authorized officer or agent of the
Company.
10.3 Exculpation. No a member of the Board and no officer or
employee of the Company shall be liable for any action or determination made in
good faith with respect to the Plan or any Option granted under the Plan.
11. INCOME TAX WITHHOLDING. Any Option Agreement may include provisions that
if the Company or a Subsidiary shall be required to withhold any amounts by
reason of any federal, state or local tax rules or regulations in respect of
the issuance of Shares pursuant to the exercise of an Option, the Company or
the Subsidiary shall be entitled to deduct and to withhold such amount from any
cash payments to be made to the Optionee. The Administrator may establish such
rules and procedures, including, without limitation, any rules or procedures
necessary to comply with Rule 16b-3, as it may deem necessary or advisable in
connection with the withholding taxes relating to the exercise of any option.
12. AMENDMENT OR TERMINATION OF PLAN. The Plan may be terminated and may be
modified or amended by the Board at any time and from time to time; provided,
however, that (i) no modification or amendment increasing the aggregate number
of Shares which may be issued under Options, materially increasing benefits
accruing to Optionees, or materially modifying the requirements as to
eligibility to receive options hereunder shall be effective without stockholder
approval, (ii) no such termination, modification, or amendment of the Plan
shall alter or affect the terms of any then outstanding Options previously
granted hereunder without the consent of the holder thereof and (iii) the
provisions of Section 5 with respect to the number of Shares for which Options
shall be granted, the timing of such grants and the Option Price for such
Options shall not be amended more than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder.
13. SET-OFF. If at any time an Optionee is indebted to or otherwise obligated
to make any payment to the Company or any Subsidiary, the Company may (a)
withhold from the Optionee (i) following the exercise by the Optionee of an
Option, Shares issuable to the Optionee having a Fair Market Value on the date
of exercise up to the amount of indebtedness to the Company or (ii) following
the sale by an Optionee of Shares received pursuant to the exercise of an
Option amounts due to an Optionee in connection with the sale of such Shares up
to the amount of the indebtedness to the Company, or (b) take any substantially
similar action. The Company may establish such rules and procedures as it may
deem necessary or advisable in connection with the taking of any action
contemplated by this Section 13.
<PAGE> 7
14. HEADINGS. The section headings contained herein have no substantive
meaning or content and are not part of this Plan.
<PAGE> 1
EXHIBIT 5 OPINION OF ARENT FOX KINTNER PLOTKIN &
KAHN RE: VALIDITY OF SECURITIES
REGISTERED
[ARENT FOX LETTERHEAD]
July 8, 1998
The Board of Directors
COMNET Corporation
4200 Parliament Place
Suite 600
Lanham, Maryland 20706-1860
Gentlemen:
We have acted as counsel to COMNET Corporation, (the "Company"), with
respect to the Company's Registration Statement on Form S-8, filed by the
Company with the Securities and Exchange Commission (the "Commission") in
connection with the registration under the Securities Act of 1933, as amended,
of (i) 675,000 shares of Common Stock, $.50 par value (the "Shares"), subject
to the 1995 COMNET Corporation Incentive Stock Option, Non-qualified Stock
Option and Stock Appreciation Rights Plan (the "Stock Option Plan") and (ii)
150,000 Shares subject to the 1995 COMNET Corporation Non-employee Directors=
Stock Option Plan (the "Non-employee Directors Plan").
As counsel to the Company, we have examined the Company's Certificate
of Incorporation and such records, certificates and other documents of the
Company, as well as relevant statutes, regulations, published rulings and such
questions of law, as we considered necessary or appropriate for the purpose of
this opinion.
Based on the foregoing, we are of the opinion that the 675,000 Shares
subject to the Stock Option Plan, when issued and paid for in accordance with
the terms of the Stock Option Plan, and the 150,000 Shares subject to the
Non-employee Directors Plan, when issued and paid for in accordance with the
terms of the Non-employee Directors Plan, will be validly issued, fully paid
and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references to our firm in the Registration
Statement. In giving this consent, we do not hereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the General Rules and Regulations
thereunder.
Very truly yours,
ARENT FOX KINTNER PLOTKIN & KAHN
By: /s/ Arnold R. Westerman
----------------------------
Arnold R. Westerman
<PAGE> 1
EXHIBIT 23(A) CONSENT OF PRICEWATERHOUSECOOPERS
(CERTIFIED PUBLIC ACCOUNTANTS)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
COMNET Corporation on Form S-8 (File No. 33-__________) of our report dated
June 12, 1998, on our audits of the consolidated financial statements and
financial statement schedule of COMNET Corporation.
PRICEWATERHOUSECOOPERS, L.L.P.
McLean, Virginia
July 8, 1998
