As filed with the Securities and Exchange Commission
on March 9, 2000 File No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE CHARLES SCHWAB CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 94-3025021
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
120 Kearny Street
San Francisco, California 94108
(Address of Principal Executive Offices)
CyBerCorp, Inc. 1996 Incentive Plan
(Full Title of the Plan)
Christopher V. Dodds
Executive Vice President and Chief Financial Officer
The Charles Schwab Corporation
120 Kearny Street
San Francisco, California 94108
Telephone: 415/627-7000
(Name, Address and Telephone Number, Including Area Code,
of Agent for Service)
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Offering Aggregate Amount of
to be Amount to be Price Per Offering Registration
Registered Registered (1) Share (2) Price (2) Fee
- --------------------------------------------------------------------------------
Common Stock,
$0.01 par
value 2,051,043 $44.90625 $92,104,649.72 $24,315.63
================================================================================
(1) Pursuant to Rule 416(a) of the Securities Act of 1933, this Registration
Statement also covers an additional indeterminate number of shares which
by reason of certain events specified in the Plan may become subject to
the plan.
(2) Pursuant to Rule 457(h), the maximum offering price was calculated to be
$44.90625 on the basis of the average of the high and low prices at which
the common stock was sold on March 8, 2000.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
------------------------------------------------
The following documents filed by The Charles Schwab Corporation (the
"Registrant") with the Securities and Exchange Commission (the "Commission") are
incorporated by reference into this Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the year ended
December 31, 1998 (except for Item 8. "Financial Statements and Supple-
mentary Data," which has been updated and incorporated by reference in
this Registration Statement).
(b) The Registrant's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1999, June 30, 1999 and September 30,
1999.
(c) The following Current Reports on Form 8-K of the Registrant:
(1) The Current Report on Form 8-K dated July 6, 1999;
(2) The Current Report on Form 8-K dated January 14, 2000; and
(3) The Current Report on Form 8-K dated February 22, 2000, which
includes the Registrant's audited consolidated financial
statements for the year ended December 31, 1999.
(d) The description of the Registrant's common stock contained in the
Registration Statement on Form 8-A filed with the Commission on
September 22, 1987, under Section 12 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), including any
amendment or description filed for the purpose of updating such
description.
All reports or other documents subsequently filed by the Registrant and
the Plan pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment to this Registration Statement
which indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold hereunder, shall be deemed to be
incorporated by reference herein and to be a part of this Registration Statement
from the date of filing such reports and documents.
Any statement contained in a document incorporated by reference into
this Registration Statement shall be deemed to be modified or superseded for
purposes hereof to the extent that a statement contained herein (or in any other
subsequently filed document which also is or is deemed incorporated herein)
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed to constitute a part hereof, except as so
modified or superseded.
Item 4. Description of Securities.
--------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel.
---------------------------------------
Counsel who provided the opinion set forth in Exhibit 5 is an Assistant
Corporate Secretary of the Registrant.
II-1
<PAGE>
Item 6. Indemnification of Directors and Officers.
------------------------------------------
The Registrant's Fourth Restated Certificate of Incorporation provides
that, pursuant to Delaware law, no director of the Registrant shall be
personally liable to the Registrant or its stockholders for monetary damages for
breach of fiduciary duty as a director, with specific exceptions. The exceptions
relate to (i) any breach of a director's duty of loyalty to the Registrant or
its stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) approval by a
director of certain unlawful dividend payments, distributions or stock
redemptions or repurchases or (iv) engaging in a transaction from which a
director derives an improper personal benefit. Among the types of breaches for
which directors will not be liable are those resulting from negligent or grossly
negligent behavior.
The Registrant's Second Restated bylaws also provide for the
indemnification of both the Registrant's directors and officers within the
limitations permitted by Delaware law. Section 145 of the Delaware General
Corporation Law authorizes indemnification of directors and officers for actions
taken in good faith and in a manner reasonably believed to be in, or not opposed
to, the best interests of the corporation. This provision is sufficiently broad
to permit indemnification under certain circumstances for liabilities (and for
reimbursement of expenses incurred) arising under the Securities Act of 1933, as
amended (the "Act"). The Registrant has entered into indemnity agreements with
its directors that contain provisions that are in some respects broader than the
specified indemnification provisions contained in Delaware law.
The Registrant has obtained directors' and officers' liability and
corporation reimbursement insurance covering all officers and directors of the
Registrant and its subsidiaries and providing for the reimbursement of amounts
paid by the Registrant or its subsidiaries to directors and officers pursuant to
indemnification arrangements, subject to certain deductibles and coinsurance
provisions.
Item 7. Exemption from Registration Claimed.
-----------------------------------
Not applicable.
Item 8. Exhibits.
--------
Exhibit
Number Exhibit Description
- ------- -------------------
5 Opinion of Counsel
23.1 Independent Auditors' Consent
23.2 Consent of Counsel (included in Exhibit 5)
23.3 Powers of Attorney (included as part of the signature page to
this Registration Statement)
99 CyBerCorp, Inc. 1996 Incentive Plan
Item 9. Undertakings.
------------
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a) (3) of
the 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
II-2
<PAGE>
the aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of securi-
ties 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
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
(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 paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 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 Act,
each post-effective amendment to this 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered hereby which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Act, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act (and 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 this 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.
(5) Insofar as indemnification for liabilities arising under the 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 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 will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdic-
tion the question whether such indemnification by it is against public policy
as expressed in the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 and County of San Francisco, and the State of
California, on this 9th day of March, 2000.
THE CHARLES SCHWAB CORPORATION
(Registrant)
By: /s/ CHARLES R. SCHWAB
--------------------------
Charles R. Schwab
Chairman and
Co-Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on this 9th day of March, 2000 by
the following persons in the capacities indicated.
Signature Title
--------- -----
/s/ CHARLES R. SCHWAB
- ------------------------------------
Charles R. Schwab Chairman, Co-Chief Executive Officer
and Director
(principal executive officer)
/s/ DAVID S. POTTRUCK
- ------------------------------------
David S. Pottruck President, Co-Chief Executive Officer
and Director
(principal executive officer)
/s/ CHRISTOPHER V. DODDS
- ------------------------------------
Christopher V. Dodds Executive Vice President and
Chief Financial Officer
(principal financial and accounting
officer)
II-4
<PAGE>
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Charles R. Schwab, David S.
Pottruck and Christopher V. Dodds, his true and lawful attorney-in-fact and
agent, with full power of substitution and re-substitution, for him and in his
name, place and stead, in any and all capacities, to sign and execute on behalf
of the undersigned any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection with any such amendments, as fully to all intents and
purposes as he might or could do in person, and does hereby ratify and confirm
all that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
/s/ NANCY H. BECHTLE
------------------------------------ Director
Nancy H. Bechtle
/s/ C. PRESTON BUTCHER
------------------------------------ Director
C. Preston Butcher
/s/ DONALD G. FISHER
------------------------------------ Director
Donald G. Fisher
/s/ ANTHONY M. FRANK
------------------------------------ Director
Anthony M. Frank
/s/ FRANK C. HERRINGER
------------------------------------ Director
Frank C. Herringer
/s/ STEPHEN T. MCLIN
------------------------------------ Director
Stephen T. McLin
/s/ CONDOLEEZZA RICE
------------------------------------ Director
Condoleezza Rice
/s/ ARUN SARIN
------------------------------------ Director
Arun Sarin
/s/ GEORGE P. SHULTZ
------------------------------------ Director
George P. Shultz
/s/ ROGER O. WALTHER
------------------------------------ Director
Roger O. Walther
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit Description
- ------ -------------------
5 Opinion of Counsel
23.1 Independent Auditors' Consent
23.2 Consent of Counsel (included in Exhibit 5)
23.3 Powers of Attorney (included as part of the signature page to
this Registration Statement)
99 CyBerCorp, Inc. 1996 Incentive Plan
II-6
EXHIBIT 5
March 9, 2000
Members of the Board of Directors
The Charles Schwab Corporation
120 Kearny Street
San Francisco, CA 94108
Dear Board Members:
I am an Assistant Corporate Secretary of The Charles Schwab Corporation
(the "Registrant") and Vice President, Senior Corporate Counsel and Assistant
Corporate Secretary of Charles Schwab & Co., Inc. I am rendering this opinion in
my capacity as counsel to the Registrant in connection with the registration
under the Securities Act of 1933, as amended, of 2,051,043 shares of the
Registrant's common stock, par value, $0.01 par value (the "Common Stock"),
pursuant to a Registration Statement on Form S-8 (the "Registration Statement")
relating to the Registrant's CyBerCorp, Inc. 1996 Incentive Plan (the "Plan").
The Registration Statement is to be filed by The Charles Schwab Corporation with
the Securities and Exchange Commission on or about March 9, 2000.
I have examined or caused to be examined such corporate records,
certificates and other documents and such questions of law as I have considered
necessary or appropriate for the purposes of this opinion. On the basis of such
examination, it is my opinion that the Common Stock, when issued in the manner
contemplated by the Registration Statement and the Plan, will be validly issued,
fully paid and nonassessable.
I hereby consent to the inclusion of this opinion as an exhibit to the
Registration Statement.
Sincerely,
By: /s/ WILLIE C. BOGAN
--------------------------------
Willie C. Bogan
Senior Corporate Counsel
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of The Charles Schwab Corporation on Form S-8 of our report dated
February 16, 2000 (which report expresses an unqualified opinion and includes an
explanatory paragraph related to an accounting change to conform with Statement
of Position 98-1), appearing in the Current Report on Form 8-K of The Charles
Schwab Corporation dated February 22, 2000.
DELOITTE & TOUCHE LLP
San Francisco, California
March 9, 2000
EXHIBIT 99
CYBERCORP, INC.
1996 INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
SECTION 1. DEFINITIONS..................................................... 1
SECTION 2. SHARES OF STOCK SUBJECT TO THE PLAN............................. 7
2.1 Maximum Number of Shares.................................. 7
2.2 Limitation of Shares...................................... 7
2.3 Description of Shares..................................... 8
2.4 Registration and Listing of Shares........................ 9
SECTION 3. ADMINISTRATION OF THE PLAN...................................... 9
3.1 Committee................................................. 9
3.2 Duration, Removal, Etc..................................... 9
3.3 Meetings and Actions of Committee......................... 10
3.4 Committee's Powers........................................ 10
SECTION 4. ELIGIBILITY AND PARTICIPATION................................... 11
4.1 Eligible Individuals...................................... 11
4.2 Grant of Awards........................................... 11
4.3 Date of Grant............................................. 11
4.4 Award Agreements.......................................... 11
4.5 Limitation for Incentive Options.......................... 11
4.6 No Right to Award......................................... 12
SECTION 5. TERMS AND CONDITIONS OF OPTIONS................................. 12
5.1 Number of Shares.......................................... 12
5.2 Vesting................................................... 12
5.3 Expiration of Options..................................... 12
5.4 Exercise Price............................................ 12
5.5 Method of Exercise........................................ 12
5.6 Incentive Option Exercises................................ 13
5.7 Medium and Time of Payment................................ 13
5.8 Payment with Sale Proceeds................................ 13
5.9 Payment of Taxes.......................................... 13
5.10 Limitation on Aggregate Value of Shares That
May Become First Exercisable During Any Calendar
Year Under an Incentive Option.......................... 14
5.11 No Fractional Shares...................................... 14
5.12 Modification, Extension, and Renewal of Options........... 14
5.13 Other Agreement Provisions................................ 15
SECTION 6. STOCK APPRECIATION RIGHTS....................................... 15
6.1 Form of Right............................................. 15
6.2 Rights Related to Options................................. 15
(a) Exercise and Transfer............................ 16
<PAGE>
(b) Value of Right................................... 16
6.3 Right Without Option...................................... 16
(a) Number of Shares................................. 16
(b) Vesting.......................................... 16
(c) Expiration of Rights............................. 16
(d) Value of Right................................... 16
6.4 Limitations on Rights..................................... 17
6.5 Payment of Rights......................................... 17
6.6 Payment of Taxes.......................................... 17
6.7 Other Agreement Provisions................................ 17
SECTION 7. RESTRICTED STOCK AWARDS......................................... 18
7.1 Restrictions.............................................. 18
(a) Transferability.................................. 18
(b) Conditions to Removal of Restrictions............ 18
(c) Legend........................................... 18
(d) Possession....................................... 18
(e) Other Conditions................................. 18
7.2 Expiration of Restrictions................................ 18
7.3 Rights as Shareholder..................................... 19
7.4 Payment of Taxes.......................................... 19
7.5 Other Agreement Provisions................................ 19
SECTION 8. AWARDS TO NON-EMPLOYEE DIRECTORS................................ 19
8.1 Ineligibility for Other Awards............................ 19
8.2 Automatic Grant of Awards................................. 20
8.3 Exercisability............................................ 20
SECTION 9. ADJUSTMENT PROVISIONS........................................... 20
9.1 Adjustment of Awards and Authorized Stock................. 20
9.2 Changes in Control........................................ 21
9.3 Restructuring Without Change in Control................... 21
9.4 Notice of Restructuring................................... 23
SECTION 10. ADDITIONAL PROVISIONS.......................................... 23
10.1 Termination of Employment................................. 23
10.2 Other Loss of Eligibility - Non Employees................. 24
10.3 Death..................................................... 24
10.4 Disability................................................ 24
10.5 Leave of Absence.......................................... 25
10.6 Transferability of Awards................................. 25
10.7 Forfeiture and Restrictions on Transfer................... 25
10.8 Delivery of Certificates of Stock......................... 25
10.9 Conditions to Delivery of Stock........................... 26
10.10 Certain Directors and Officers............................ 26
10.11 Securities Act Legend..................................... 26
<PAGE>
10.12 Legend for Restrictions on Transfer....................... 27
10.13 Rights as a Shareholder................................... 27
10.14 Furnish Information....................................... 28
10.15 Obligation to Exercise.................................... 28
10.16 Adjustments to Awards..................................... 28
10.17 Remedies.................................................. 28
10.18 Information Confidential.................................. 28
10.19 Consideration............................................. 28
SECTION 11. DURATION AND AMENDMENT OF PLAN................................. 29
11.1 Duration.................................................. 29
11.2 Amendment................................................. 29
SECTION 12. GENERAL........................................................ 29
12.1 Application of Funds...................................... 29
12.2 Right of the Corporation and Subsidiaries to
Terminate Employment.................................... 29
12.3 No Liability for Good Faith Determinations................ 29
12.4 Other Benefits............................................ 30
12.5 Exclusion From Pension and Profit-Sharing Compensation.... 30
12.6 Execution of Receipts and Releases........................ 30
12.7 Unfunded Plan............................................. 30
12.8 No Guarantee of Interests................................. 31
12.9 Payment of Expenses....................................... 31
12.10 Corporation Records....................................... 31
12.11 Information............................................... 31
12.12 No Liability of Corporation............................... 31
12.13 Corporation Action........................................ 31
12.14 Severability.............................................. 31
12.15 Notices................................................... 32
12.16 Successors................................................ 32
12.17 Headings.................................................. 32
12.18 Governing Law............................................. 32
12.19 Word Usage................................................ 33
<PAGE>
CYBERCORP, INC.
1996 INCENTIVE PLAN
SCOPE AND PURPOSE OF PLAN
-------------------------
CyBerCorp, Inc., a Texas corporation ("CyBerCorp"), has adopted this
1996 Incentive Plan (the "Plan") to provide for the granting of:
(a) Incentive Options (hereafter defined) to certain Key Employees
(hereafter defined);
(b) Nonstatutory Options (hereafter defined) to certain Key
Employees, Non-Employee Directors (hereafter defined) and
other persons;
(c) Restricted Stock Awards (hereafter defined) to certain Key
Employees and other persons; and
(d) Stock Appreciation Rights (hereafter defined) to certain Key
Employees and other persons.
The purpose of the Plan is to provide an incentive for Key Employees
and directors of the Corporation or its Subsidiaries (hereafter defined) to aid
the Corporation in attracting able persons to enter the service of the
Corporation and its Subsidiaries, to extend to them the opportunity to acquire a
proprietary interest in the Corporation so that they will apply their best
efforts for the benefit of the Corporation, and to remain in the service of the
Corporation or its Subsidiaries. This Plan has been adopted by the Board of
Directors and shareholders of the Corporation prior to the registration of any
of securities of the Corporation under the Exchange Act (hereafter defined) and
accordingly amounts paid under the Plan are exempt from the provisions of
Section 162(m) of the Code (hereafter defined).
SECTION 1. DEFINITIONS
1.1 "Acquiring Person" means any Person other than the Corporation, any
Subsidiary of the Corporation, any employee benefit plan of the Corporation or
of a Subsidiary of the Corporation or of a corporation owned directly or
indirectly by the shareholders of the Corporation in substantially the same
proportions as their ownership of Stock of the Corporation, or any trustee or
other fiduciary holding securities under an employee benefit plan of the
Corporation or of a Subsidiary of the Corporation or of a corporation owned
directly or indirectly by the shareholders of the Corporation in substantially
the same proportions as their ownership of Stock of the Corporation.
1.2 "Affiliate" means (a) any Person who is directly or indirectly the
beneficial owner of at least 10% of the voting power of the Voting Securities or
(b) any Person controlling,
<PAGE>
controlled by, or under common control with the Company or any Person
contemplated in clause (a) of this Subsection 1.2.
1.3 "Award" means the grant of any form of Option, Restricted Stock
Award, or Stock Appreciation Right under the Plan, whether granted individually,
in combination, or in tandem, to a Holder pursuant to the terms, conditions, and
limitations that the Committee may establish in order to fulfill the objectives
of the Plan.
1.4 "Award Agreement" means the written agreement between the
Corporation and a Holder evidencing the terms, conditions, and limitations of
the Award granted to that Holder.
1.5 "Board of Directors" means the board of directors of the Corpora-
tion.
1.6 "Business Day" means any day other than a Saturday, a Sunday, or a
day on which banking institutions in the State of Texas are authorized or
obligated by law or executive order to close.
1.7 "Change in Control" means the event that is deemed to have occurred
if:
(a) any Acquiring Person is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing fifty percent
or more of the combined voting power of the then outstanding Voting
Securities of the Corporation; or
(b) members of the Incumbent Board cease for any reason to
constitute at least a majority of the Board of Directors; or
(c) a public announcement is made of a tender or exchange
offer by any Acquiring Person for fifty percent or more of the
outstanding Voting Securities of the Corporation, and the Board of
Directors approves or fails to oppose that tender or exchange offer in
its statements in Schedule 14D-9 under the Exchange Act; or
(d) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation or
partnership (or, if no such approval is required, the consummation of
such a merger or consolidation of the Corporation), other than a merger
or consolidation that would result in the Voting Securities of the
Corporation outstanding immediately before the consummation thereof
continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity or of a parent
of the surviving entity) a majority of the combined voting power of the
Voting Securities of the surviving entity (or its parent) outstanding
immediately after that merger or consolidation; or
(e) the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all the
Corporation's assets (or, if no such approval is required, the
consummation of such a liquidation, sale, or disposition in one
transaction or series of
2
<PAGE>
related transactions) other than a liquidation, sale, or dis-
position of all or substantially all the Corporation's assets in
one transaction or a series of related transactions to a
corporation owned directly or indirectly by the shareholders of the
Corporation in substantially the same proportions as their ownership
of Stock of the Corporation.
1.8 "Code" means the Internal Revenue Code of 1986, as amended.
1.9 "Committee" means the Committee, which Committee shall administer
this Plan and is further described under Section 3.
1.10 "Convertible Securities" means evidences of indebtedness, shares
of capital stock, or other securities that are convertible into or exchangeable
for shares of Stock, either immediately or upon the arrival of a specified date
or the happening of a specified event.
1.11 "Corporation" has the meaning given to it in the second paragraph
under "Scope and Purpose of Plan."
1.12 "Date of Grant" has the meaning given it in Subsection 4.3.
1.13 "Disability" has the meaning given it in Subsection 10.4.
1.14 "Disinterested Person" has the meaning given it in Rule
16b-3(c)(2)(i).
1.15 "Effective Date" means August 1, 1996.
1.16 "Eligible Individuals" means (a) Key Employees, (b) Non-Employee
Directors only for purposes of Nonstatutory Options pursuant to Section 8, and
(c) any other Person that the Committee designates as eligible for an Award
(other than for Incentive Options) because the Person performs, or has
performed, valuable services for the Corporation or any of its Subsidiaries
(other than services in connection with the offer or sale of securities in a
capital-raising transaction) and the Committee determines that the Person has a
direct and significant effect on the financial development of the Corporation or
any of its Subsidiaries. Notwithstanding the foregoing provisions of this
Subsection 1.16, to ensure that the requirements of the fourth sentence of
Subsection 3.1 are satisfied, the Board of Directors may from time to time
specify individuals who shall not be eligible for the grant of Awards or equity
securities under any plan of the Corporation or its Affiliates. Nevertheless,
the Board of Directors may at any time determine that an individual who has been
so excluded from eligibility shall become eligible for grants of Awards and
grants of such other equity securities under any plans of the Corporation or its
Affiliates so long as that eligibility will not impair the Plan's satisfaction
of the conditions of Rule 16b-3.
1.17 "Employee" means any employee of the Corporation or of any of its
Subsidiaries, including officers and directors of the Corporation who are also
employees of the Corporation or of any of its Subsidiaries.
3
<PAGE>
1.18 "Exchange Act" means the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder, or any successor law, as it may be
amended from time to time.
1.19 "Exercise Notice" has the meaning given it in Subsection 5.5.
1.20 "Exercise Price" has the meaning given it in Subsection 5.4.
1.21 "Fair Market Value" means, for a particular day:
(a) If shares of Stock of the same class are listed or
admitted to unlisted trading privileges on any national or regional
securities exchange at the date of determining the Fair Market Value,
then the last reported sale price, regular way, on the composite tape
of that exchange on the last Business Day before the date in question
or, if no such sale takes place on that Business Day, the average of
the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to unlisted trading
privileges on that securities exchange; or
(b) If shares of Stock of the same class are not listed or
admitted to unlisted trading privileges as provided in Subsection
1.21(a) and sales prices for shares of Stock of the same class in the
over-the-counter market are reported by the National Association of
Securities Dealers, Inc. Automated Quotations, Inc. ("NASDAQ") National
Market System (or such other system then in use) at the date of
determining the Fair Market Value, then the last reported sales price
so reported on the last Business Day before the date in question or, if
no such sale takes place on that Business Day, the average of the high
bid and low asked prices so reported; or
(c) If shares of Stock of the same class are not listed or
admitted to unlisted trading privileges as provided in Subsection
1.21(a) and sales prices for shares of Stock of the same class are not
reported by the NASDAQ National Market System (or a similar system then
in use) as provided in Subsection 1.21(b), and if bid and asked prices
for shares of Stock of the same class in the over-the-counter market
are reported by NASDAQ (or, if not so reported, by the National
Quotation Bureau Incorporated) at the date of determining the Fair
Market Value, then the average of the high bid and low asked prices on
the last Business Day before the date in question; or
(d) If shares of Stock of the same class are not listed or
admitted to unlisted trading privileges as provided in Subsection
1.21(a) and sales prices or bid and asked prices therefor are not
reported by NASDAQ (or the National Quotation Bureau Incorporated) as
provided in Subsection 1.21(b) or Subsection 1.21(c) at the date of
determining the Fair Market Value, then the value determined in good
faith by the Committee, which determination shall be conclusive for all
purposes; or
(e) If shares of Stock of the same class are listed or
admitted to unlisted trading privileges as provided in Subsection
1.21(a) or sales prices or bid and asked prices
4
<PAGE>
therefor are reported by NASDAQ (or the National Quotation Bureau
Incorporated) as provided in Subsection 1.22(b) or Subsection 1.22(c)
at the date of determining the Fair Market Value, but the volume of
trading is so low that the Board of Directors determines in good
faith that such prices are not indicative of the fair value of the
Stock, then the value determined in good faith by the Committee, which
determination shall be conclusive for all purposes notwithstanding the
provisions of Subsections 1.21(a), (b), or (c).
For purposes of valuing Incentive Options, the Fair Market Value of Stock shall
be determined without regard to any restriction other than one that, by its
terms, will never lapse. For purposes of the redemption provided for in
Subsection 9.3(d)(v), Fair Market Value shall have the meaning and shall be
determined as set forth above; provided, however, that the Committee, with
respect to any such redemption, shall have the right to determine that the Fair
Market Value for purposes of the redemption should be an amount measured by the
value of the shares of Stock, other securities, cash, or property otherwise
being received by holders of shares of Stock in connection with the
Restructuring and upon that determination the Committee shall have the power and
authority to determine Fair Market Value for purposes of the redemption based
upon the value of such shares of stock, other securities, cash, or property. Any
such determination by the Committee, as evidenced by a resolution of the
Committee, shall be conclusive for all purposes.
1.22 "Fiscal Year" means the fiscal year of the Corporation ending on
December 31 of each year.
1.23 "Holder" means an Eligible Individual to whom an outstanding Award
has been granted.
1.24 "Incumbent Board" means the individuals who, as of the Effective
Date, constitute the Board of Directors and any other individual who becomes a
director of the Corporation after that date and whose election or appointment by
the Board of Directors or nomination for election by the Corporation's
shareholders was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board.
1.25 "Incentive Option" means an incentive stock option as defined
under Section 422 of the Code and regulations thereunder.
1.26 "Key Employee" means any Employee whom the Committee identifies as
having a direct and significant effect on the performance of the Corporation or
any of its Subsidiaries.
1.27 "Non-Employee Director" means a director of the Corporation who
while a director is not an Employee.
1.28 "Nonstatutory Option" means a stock option that does not satisfy
the requirements of Section 422 of the Code or that is designated at the Date of
Grant or in the applicable Award Agreement to be an option other than an
Incentive Option.
1.29 "Non-Surviving Event" means an event of Restructuring as
described in either Subsection 1.37(b) or Subsection 1.37(c).
5
<PAGE>
1.30 "Normal Retirement" means the separation of the Holder from
employment with the Corporation and its Subsidiaries with the right to receive
an immediate benefit under a retirement plan approved by the Corporation. If no
such plan exists, Normal Retirement shall mean separation of the Holder from
employment with the Corporation and its Subsidiaries at age 62 or later.
1.31 "Option" means either an Incentive Option or a Nonstatutory
Option, or both.
1.32 "Person" means any person or entity of any nature whatsoever,
specifically including (but not limited to) an individual, a firm, a company, a
corporation, a partnership, a trust, or other entity. A Person, together with
that Person's affiliates and associates (as "affiliate" and "associate" are
defined in Rule 12b-2 under the Exchange Act for purposes of this definition
only), and any Persons acting as a partnership, limited partnership, joint
venture, association, syndicate, or other group (whether or not formally
organized), or otherwise acting jointly or in concert or in a coordinated or
consciously parallel manner (whether or not pursuant to any express agreement),
for the purpose of acquiring, holding, voting, or disposing of securities of the
Corporation with that Person, shall be deemed a single "Person."
1.33 "Plan" means the Corporation's 1996 Incentive Plan, as it may be
amended from time to time.
1.34 "Restricted Stock" means Stock that is nontransferable or subject
to substantial risk of forfeiture until specific conditions are met.
1.35 "Restricted Stock Award" means the grant or purchase, on the terms
and conditions of Section 7 or that the Committee otherwise determines, of
Restricted Stock.
1.36 "Restructuring" means the occurrence of any one or more of the
following:
(a) The merger or consolidation of the Corporation with any
Person, whether effected as a single transaction or a series of related
transactions, with the Corporation remaining the continuing or
surviving entity of that merger or consolidation and the Stock
remaining outstanding and not changed into or exchanged for stock or
other securities of any other Person or of the Corporation, cash, or
other property;
(b) The merger or consolidation of the Corporation with any
Person, whether effected as a single transaction or a series of related
transactions, with (i) the Corporation not being the continuing or
surviving entity of that merger or consolidation or (ii) the
Corporation remaining the continuing or surviving entity of that merger
or consolidation but all or a part of the outstanding shares of Stock
are changed into or exchanged for stock or other securities of any
other Person or the Corporation, cash, or other property; or
(c) The transfer, directly or indirectly, of all or
substantially all of the assets of the Corporation (whether by sale,
merger, consolidation, liquidation, or otherwise) to any Person,
whether effected as a single transaction or a series of related
transactions.
6
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1.37 "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the Exchange
Act as adopted in Exchange Act Release No. 34-29131 (April 26, 1991), or any
successor rule, as it may be amended from time to time.
1.38 "Securities Act" means the Securities Act of 1933 and the rules
and regulations promulgated thereunder, or any successor law, as it may be
amended from time to time.
1.39 "Stock" means the common stock, $1.00 par value per share, of
CyBerCorp, or any other securities that are substituted for the Stock as
provided in Section 9.
1.40 "Stock Appreciation Right" means the right to receive an amount
equal to the excess of the Fair Market Value of a share of Stock (as determined
on the date of exercise) over, as appropriate, the Exercise Price of a related
Option or the Fair Market Value of the Stock on the Date of Grant of the Stock
Appreciation Right.
1.41 "Subsidiary" means, with respect to any Person, any corporation,
or other entity of which a majority of the Voting Securities is owned, directly
or indirectly, by that Person.
1.42 "Total Shares" has the meaning given it in Subsection 9.2.
1.43 "Voting Securities" means any securities that are entitled to vote
generally in the election of directors, in the admission of general partners or
in the selection of any other similar governing body.
SECTION 2. SHARES OF STOCK SUBJECT TO THE PLAN
2.1 Maximum Number of Shares. Subject to the provisions of Subsection
-------------------------
2.2 and Section 9, the aggregate number of shares of Stock that may be issued or
transferred pursuant to Awards under the Plan shall be 1,000 shares.
2.2 Limitation of Shares. For purposes of the limitations specified in
--------------------
Subsection 2.1, the following principles shall apply:
(a) the following shall count against and decrease the number
of shares of Stock that may be issued for purposes of Subsection 2.1:
(i) shares of Stock subject to outstanding Options, outstanding shares
of Restricted Stock, and shares subject to outstanding Stock
Appreciation Rights granted independent of Options (based on a good
faith estimate by the Corporation or the Committee of the maximum
number of shares for which the Stock Appreciation Right may be settled
(assuming payment in full in shares of Stock)), and (ii) in the case of
Options granted in tandem with Stock Appreciation Rights, the greater
of the number of shares of Stock that would be counted if one or the
other alone was outstanding (determined as described in clause (i)
above);
(b) the following shall be added back to the number of shares
of Stock that may be issued for purposes of Subsection 2.1: (i) shares
of Stock with respect to which Options, Stock Appreciation Rights
granted independent of Options, or Restricted Stock
7
<PAGE>
Awards expire, are canceled, or otherwise terminate without being
exercised, converted, or vested, as applicable, and (ii) in the case
of Options granted in tandem with Stock Appreciation Rights, shares
of Stock as to which an Option has been surrendered in connection
with the exercise of a related ("tandem") Stock Appreciation Right,
to the extent the number surrendered exceeds the number issued upon
exercise of the Stock Appreciation Right; provided that, in any case,
the holder of such Awards did not receive any dividends or other
benefits of ownership with respect to the underlying shares being
added back, other than voting rights and the accumulation (but not
payment) of dividends of Stock;
(c) shares of Stock subject to Stock Appreciation Rights
granted independent of Options (calculated as provided in clause (a)
above) that are exercised and paid in cash shall be added back to the
number of shares of Stock that may be issued for purposes of Subsection
2.1, provided that the Holder of such Stock Appreciation Right did not
receive any dividends or other benefits of ownership, other than voting
rights and the accumulation (but not payment) of dividends, of the
shares of Stock subject to the Stock Appreciation Right;
(d) shares of Stock that are transferred by a Holder of an
Award (or withheld by the Corporation) as full or partial payment to
the Corporation of the purchase price of shares of Stock subject to an
Option or the Corporation's or any Subsidiary's tax withholding
obligations shall not be added back to the number of shares of Stock
that may be issued for purposes of Subsection 2.1 and shall not again
be subject to Awards; and
(e) if the number of shares of Stock counted against the
number of shares that may be issued for purposes of Subsection 2.1 is
based upon an estimate made by the Corporation or the Committee as
provided in clause (a) above and the actual number of shares of Stock
issued pursuant to the applicable Award is greater or less than the
estimated number, then, upon such issuance, the number of shares of
Stock that may be issued pursuant to Subsection 2.1 shall be further
reduced by the excess issuance or increased by the shortfall, as
applicable.
Notwithstanding the provisions of this Subsection 2.2, no Stock shall be treated
as issuable under the Plan to Eligible Individuals subject to Section 16 of the
Exchange Act if otherwise prohibited from issuance under Rule 16b-3.
2.3 Description of Shares. The shares to be delivered under the Plan
---------------------
shall be made available from (a) authorized but unissued shares of Stock, (b)
Stock held in the treasury of the Corporation, or (c) previously issued shares
of Stock reacquired by the Corporation, including shares purchased on the open
market, in each situation as the Board of Directors or the Committee may
determine from time to time at its sole option.
2.4 Registration and Listing of Shares. From time to time, the Board of
----------------------------------
Directors and appropriate officers of the Corporation shall and are authorized
to take whatever actions are necessary to file required documents with
governmental authorities, stock exchanges, and other
8
<PAGE>
appropriate Persons to make shares of Stock available for issuance pursuant to
the exercise of Awards.
SECTION 3. ADMINISTRATION OF THE PLAN
3.1 Committee. The Committee shall administer the Plan with respect to
---------
all Eligible Individuals who are subject to Section 16(b) of the Exchange Act,
but shall not have the power to appoint members of the Committee or to
terminate, modify, or amend the Plan. The Board of Directors may administer the
Plan with respect to all other Eligible Individuals, or may delegate all or part
of that duty to the Committee. Except for references in Subsections 3.1, 3.2 and
3.3, and unless the context otherwise requires, references herein to the
Committee shall also refer to the Board of Directors as administrator of the
Plan for Eligible Individuals who are subject to Section 16(b) of the Exchange
Act. The Committee shall be constituted so that, as long as Stock is registered
under Section 12 of the Exchange Act, each member of the Committee shall be a
Disinterested Person and so that the Plan in all other applicable respects will
qualify transactions related to the Plan for the exemptions from Section 16(b)
of the Exchange Act provided by Rule 16b-3, to the extent exemptions thereunder
may be available. No discretion regarding Awards to Eligible Individuals who are
subject to Section 16(b) of the Exchange Act shall be afforded to a person who
is not a Disinterested Person. The number of Persons that shall constitute the
Committee shall be determined from time to time by a majority of all the members
of the Board of Directors and, unless that majority of the Board of Directors
determines otherwise or Rule 16b-3 is amended to require otherwise, shall be no
less than two Persons. Persons elected to serve on the Committee as
Disinterested Persons shall not be eligible to receive Awards or equity
securities under any plan of the Corporation or its affiliates while they are
serving as members of the Committee; shall not have received Awards or such
equity securities under any plan of the Corporation or its affiliates within one
year before their appointment to the Committee becomes effective; and shall not
be eligible to receive Awards or such equity securities under any plan of the
Corporation or its affiliates for such period following service on the Committee
as may be required by Rule 16b-3 for that person to remain a Disinterested
Person, in each case except for Awards or equity securities granted as provided
in paragraphs (c)(2)(i)(A), (B), (C), or (D) of Rule 16b-3. Notwithstanding the
foregoing, the Board of Directors may designate the Compensation Committee
(regardless of its composition) of the Board of Directors to serve as the
Committee hereunder, provided that the Stock is not registered under Section 12
of the Exchange Act.
3.2 Duration, Removal, Etc. The members of the Committee shall serve at
----------------------
the discretion of the Board of Directors, which shall have the power, at any
time and from time to time, to remove members from or add members to the
Committee. Removal from the Committee may be with or without cause. Any
individual serving as a member of the Committee shall have the right to resign
from membership in the Committee by at least three days' written notice to the
Board of Directors. The Board of Directors, and not the remaining members of the
Committee, shall have the power and authority to fill all vacancies on the
Committee. The Board of Directors shall promptly fill any vacancy that causes
the number of members of the Committee to be below two or any other number that
Rule 16b-3 may require from time to time.
9
<PAGE>
3.3 Meetings and Actions of Committee. The Board of Directors shall
-----------------------------------
designate which of the Committee members shall be the chairman of the Committee.
If the Board of Directors fails to designate a Committee chairman, the members
of the Committee shall elect one of the Committee members as chairman, who shall
act as chairman until he ceases to be a member of the Committee or until the
Board of Directors elects a new chairman. The Committee shall hold its meetings
at those times and places as the chairman of the Committee may determine. At all
meetings of the Committee, a quorum for the transaction of business shall be
required and a quorum shall be deemed present if at least a majority of the
members of the Committee are present. At any meeting of the Committee, each
member shall have one vote. All decisions and determinations of the Committee
shall be made by the majority vote or majority decision of all of its members
present at a meeting at which a quorum is present; provided, however, that any
decision or determination reduced to writing and signed by all of the members of
the Committee shall be as fully effective as if it had been made at a meeting
that was duly called and held. The Committee may make any rules and regulations
for the conduct of its business that are not inconsistent with the provisions of
the Plan, the Articles or Certificate of Incorporation of the Corporation, the
by-laws of the Corporation, and Rule 16b-3 so long as it is applicable, as the
Committee may deem advisable.
3.4 Committee's Powers. Subject to the express provisions of the Plan
-------------------
and Rule 16b-3, the Committee shall have the authority, in its sole and absolute
discretion, to (a) adopt, amend, and rescind administrative and interpretive
rules and regulations relating to the Plan; (b) determine the Eligible
Individuals to whom, and the time or times at which, Awards shall be granted;
(c) determine the amount of cash and the number of shares of Stock, Stock
Appreciation Rights, or Restricted Stock Awards, or any combination thereof,
that shall be the subject of each Award; (d) determine the terms and provisions
of each Award Agreement (which need not be identical), including provisions
defining or otherwise relating to (i) the term and the period or periods and
extent of exercisability of the Options, (ii) the extent to which the
transferability of shares of Stock issued or transferred pursuant to any Award
is restricted, (iii) the effect of termination of employment of the Holder on
the Award, and (iv) the effect of approved leaves of absence (consistent with
any applicable regulations of the Internal Revenue Service); (e) accelerate,
pursuant to Section 9, the time of exercisability of any Option that has been
granted; (f) construe the respective Award Agreements and the Plan; (g) make
determinations of the Fair Market Value of the Stock pursuant to the Plan; (h)
delegate its duties under the Plan to such agents as it may appoint from time to
time, provided that the Committee may not delegate its duties with respect to
making Awards to, or otherwise with respect to Awards granted to, Eligible
Individuals who are subject to Section 16(b) of the Exchange Act; and (i) make
all other determinations, perform all other acts, and exercise all other powers
and authority necessary or advisable for administering the Plan, including the
delegation of those ministerial acts and responsibilities as the Committee deems
appropriate. Subject to Rule 16b-3, the Committee may correct any defect, supply
any omission, or reconcile any inconsistency in the Plan, in any Award, or in
any Award Agreement in the manner and to the extent it deems necessary or
desirable to carry the Plan into effect, and the Committee shall be the sole and
final judge of that necessity or desirability. The determinations of the
Committee on the matters referred to in this Subsection 3.4 shall be final and
conclusive.
SECTION 4. ELIGIBILITY AND PARTICIPATION
10
<PAGE>
4.1 Eligible Individuals. Awards may be granted pursuant to the Plan
---------------------
only to persons who are Eligible Individuals at the time of the grant thereof.
4.2 Grant of Awards. Subject to the express provisions of the Plan, the
---------------
Committee shall determine which Eligible Individuals shall be granted Awards
from time to time. In making grants, the Committee shall take into consideration
the contribution the potential Holder has made or may make to the success of the
Corporation or its Subsidiaries and such other considerations as the Board of
Directors may from time to time specify. The Committee shall also determine the
number of shares subject to each of the Awards and shall authorize and cause the
Corporation to grant Awards in accordance with those determinations.
4.3 Date of Grant. The date on which the Committee completes all action
-------------
resolving to offer an Award to an individual, including the specification of the
number of shares of Stock to be subject to the Award, shall be the date on which
the Award covered by an Award Agreement is granted (the "Date of Grant"), even
though certain terms of the Award Agreement may not be determined at that time
and even though the Award Agreement may not be executed until a later time. In
no event shall a Holder gain any rights in addition to those specified by the
Committee in its grant, regardless of the time that may pass between the grant
of the Award and the actual execution of the Award Agreement by the Corporation
and the Holder.
4.4 Award Agreements. Each Award granted under the Plan shall be
-----------------
evidenced by an Award Agreement that is executed by the Corporation and the
Eligible Individual to whom the Award is granted and incorporating those terms
that the Committee shall deem necessary or desirable. More than one Award may be
granted under the Plan to the same Eligible Individual and be outstanding
concurrently. In the event an Eligible Individual is granted both one or more
Incentive Options and one or more Nonstatutory Options, those grants shall be
evidenced by separate Award Agreements, one for each of the Incentive Option
grants and one for each of the Nonstatutory Option grants.
4.5 Limitation for Incentive Options. Notwithstanding any provision
----------------------------------
contained herein to the contrary, (a) a person shall not be eligible to receive
an Incentive Option unless he is an Employee of the Corporation or a corporate
Subsidiary (but not a partnership Subsidiary) and (b) a person shall not be
eligible to receive an Incentive Option if, immediately before the time the
Option is granted, that person owns (within the meaning of Sections 422 and
424(d) of the Code) stock possessing more than ten percent of the total combined
voting power or value of all classes of outstanding stock of the Corporation or
a Subsidiary. Nevertheless, Subsection 4.5(b) shall not apply if, at the time
the Incentive Option is granted, the Exercise Price of the Incentive Option is
at least one hundred ten percent of Fair Market Value and the Incentive Option
is not, by its terms, exercisable after the expiration of five years from the
Date of Grant.
4.6 No Right to Award. The adoption of the Plan shall not be deemed to
-----------------
give any Person a right to be granted an Award.
SECTION 5. TERMS AND CONDITIONS OF OPTIONS
11
<PAGE>
All Options granted under the Plan shall comply with, and the related
Award Agreements shall be deemed to include and be subject to, the terms and
conditions set forth in this Section 5 (to the extent each term and condition
applies to the form of Option) and also to the terms and conditions set forth in
Sections 9 and 10; provided, however, that the Committee may authorize an Award
Agreement that expressly contains terms and provisions that differ from the
terms and provisions set forth in Subsections 9.2, 9.3, and 9.4 and any of the
terms and provisions of Section 10 (other than Subsections 10.9 and 10.10).
5.1 Number of Shares. Each Award Agreement shall state the total number
----------------
of shares of Stock to which it relates.
5.2 Vesting. Each Award Agreement shall state the time or periods in
-------
which, or the conditions upon satisfaction of which, the right to exercise the
Option or a portion thereof shall vest and the number of shares of Stock for
which the right to exercise the Option shall vest at each such time, period, or
fulfillment of condition.
5.3 Expiration of Options. No Option shall be exercised after the
----------------------
expiration of a period of ten years commencing on the Date of Grant of the
Option; provided, however, that any portion of a Nonstatutory Option that
pursuant to the terms of the Award Agreement under which such Nonstatutory
Option is granted shall not become exercisable until the date which is the tenth
anniversary of the Date of Grant of such Nonstatutory Option may be exercisable
for a period of 30 days following the date on which such portion becomes
exercisable.
5.4 Exercise Price. Each Award Agreement shall state the exercise price
--------------
per share of Stock (the "Exercise Price"); provided, however, that the exercise
price per share of Stock subject to an Incentive Option shall not be less than
the greater of (a) the par value per share of the Stock or (b) 100% of the Fair
Market Value per share of the Stock on the Date of Grant of the Option.
5.5 Method of Exercise. The Option shall be exercisable only by written
------------------
notice of exercise (the "Exercise Notice") delivered to the Corporation during
the term of the Option, which notice shall (a) state the number of shares of
Stock with respect to which the Option is being exercised, (b) be signed by the
Holder of the Option or, if the Holder is dead or becomes affected by a
Disability, by the person authorized to exercise the Option pursuant to
Subsections 10.3 and 10.4, (c) be accompanied by the Exercise Price for all
shares of Stock for which the Option is being exercised, and (d) include such
other information, instruments, and documents as may be required to satisfy any
other condition to exercise contained in the Award Agreement. The Option shall
not be deemed to have been exercised unless all of the requirements of the
preceding provisions of this Subsection 5.5 have been satisfied.
5.6 Incentive Option Exercises. Except as otherwise provided in
--------------------------
Subsection 10.4, during the Holder's lifetime, only the Holder may exercise an
Incentive Option.
5.7 Medium and Time of Payment. The Exercise Price of an Option shall
--------------------------
be payable in full upon the exercise of the Option (a) in cash or by an
equivalent means acceptable to the Committee, (b) on the Committee's prior
consent, with shares of Stock owned by the Holder (including shares received
upon exercise of the Option or restricted shares already held by the
12
<PAGE>
Holder) and having a Fair Market Value at least equal to the aggregate
Exercise Price payable in connection with such exercise, or (c) by any
combination of clauses (a) and (b). If the Committee elects to accept shares of
Stock in payment of all or any portion of the Exercise Price, then (for
purposes of payment of the Exercise Price) those shares of Stock shall be deemed
to have a cash value equal to their aggregate Fair Market Value determined as
of the date the certificate for such shares is delivered to the Corporation.
If the Committee elects to accept shares of restricted Stock in payment
of all or any portion of the Exercise Price, then an equal number of shares
issued pursuant to the exercise shall be restricted on the same terms and for
the restriction period remaining on the shares used for payment.
5.8 Payment with Sale Proceeds. In addition, at the request of the
----------------------------
Holder and to the extent permitted by applicable law, the Committee may (but
shall not be required to) approve arrangements with a brokerage firm under which
that brokerage firm, on behalf of the Holder, shall pay to the Corporation the
Exercise Price of the Option being exercised and the Corporation shall promptly
deliver the exercised shares of Stock to the brokerage firm. To accomplish this
transaction, the Holder must deliver to the Corporation an Exercise Notice
containing irrevocable instructions from the Holder to the Corporation to
deliver the Stock certificates representing the shares of Stock directly to the
broker. Upon receiving a copy of the Exercise Notice acknowledged by the
Corporation, the broker shall sell that number of shares of Stock or loan the
Holder an amount sufficient to pay the Exercise Price and any withholding
obligations due. The broker then shall deliver to the Corporation that portion
of the sale or loan proceeds necessary to cover the Exercise Price and any
withholding obligations due. The Committee shall not approve any transaction of
this nature if the Committee believes that the transaction would give rise to
the Holder's liability for short-swing profits under Section 16(b) of the
Exchange Act.
5.9 Payment of Taxes. The Committee may, in its discretion, require a
----------------
Holder to pay to the Corporation (or the Corporation's Subsidiary if the Holder
is an employee of a Subsidiary of the Corporation), at the time of the exercise
of an Option or thereafter, the amount that the Committee deems necessary to
satisfy the Corporation's or its Subsidiary's current or future obligation to
withhold federal, state, or local income or other taxes that the Holder incurs
by exercising an Option. In connection with the exercise of an Option requiring
tax withholding, a Holder may (a) direct the Corporation to withhold from the
shares of Stock to be issued to the Holder the number of shares necessary to
satisfy the Corporation's obligation to withhold taxes, that determination to be
based on the shares' Fair Market Value as of the date of exercise; (b) deliver
to the Corporation sufficient shares of Stock (based upon the Fair Market Value
as of the date of such delivery) to satisfy the Corporation's tax withholding
obligations, which tax withholding obligation is based on the shares' Fair
Market Value as of the later of the date of exercise or the date as of which the
shares of Stock issued in connection with such exercise become includible in the
income of the Holder; or (c) deliver sufficient cash to the Corporation to
satisfy its tax withholding obligations. Holders who elect to use such a stock
withholding feature must make the election at the time and in the manner that
the Committee prescribes. The Committee may, at its sole option, deny any
Holder's request to satisfy withholding obligations through Stock instead of
cash. In the event the Committee subsequently determines that the aggregate Fair
Market Value (as determined above) of any shares of Stock withheld or delivered
as payment of any tax withholding obligation is insufficient to discharge that
tax withholding
13
<PAGE>
obligation, then the Holder shall pay to the Corporation, immediately upon
the Committee's request, the amount of that deficiency in the form of payment
requested by the Committee.
5.10 Limitation on Aggregate Value of Shares That May Become First
-----------------------------------------------------------------
Exercisable During Any Calendar Year Under an Incentive Option. Except as is
- -----------------------------------------------------------------
otherwise provided in Subsection 9.3, with respect to any Incentive Option
granted under this Plan, the aggregate Fair Market Value of shares of Stock
subject to an Incentive Option and the aggregate Fair Market Value of shares of
Stock or stock of any Subsidiary (or a predecessor of the Corporation or a
Subsidiary) subject to any other incentive stock option (within the meaning of
Section 422 of the Code) of the Corporation or its Subsidiaries (or a
predecessor corporation of any such corporation) that first become purchasable
by a Holder in any calendar year may not (with respect to that Holder) exceed
$100,000, or such other amount as may be prescribed under Section 422 of the
Code or applicable regulations or rulings from time to time. As used in the
previous sentence, Fair Market Value shall be determined as of the Date of Grant
of the Incentive Option. For purposes of this Subsection 5.10, "predecessor
corporation" means (a) a corporation that was a party to a transaction described
in Section 424(a) of the Code (or which would be so described if a substitution
or assumption under that Section had been effected) with the Corporation, (b) a
corporation which, at the time the new incentive stock option (within the
meaning of Section 422 of the Code) is granted, is a Subsidiary of the
Corporation or a predecessor corporation of any such corporations, or (c) a
predecessor corporation of any such corporations. Failure to comply with this
provision shall not impair the enforceability or exercisability of any Option,
but shall cause the excess amount of shares to be reclassified in accordance
with the Code.
5.11 No Fractional Shares. The Corporation shall not in any case be
---------------------
required to sell, issue, or deliver a fractional share with respect to any
Option. In lieu of the issuance of any fractional share of Stock, the
Corporation shall pay to the Holder an amount in cash equal to the same fraction
(as the fractional Stock) of the Fair Market Value of a share of Stock
determined as of the date of the applicable Exercise Notice.
5.12 Modification, Extension, and Renewal of Options. Subject to the
-------------------------------------------------
terms and conditions of and within the limitations of the Plan, Rule 16b-3, and
any consent required by the last sentence of this Subsection 5.12, the Committee
may (a) modify, extend, or renew outstanding Options granted under the Plan, (b)
accept the surrender of Options outstanding hereunder (to the extent not
previously exercised) and authorize the granting of new Options in substitution
for outstanding Options (to the extent not previously exercised), and (c) amend
the terms of an Incentive Option at any time to include provisions that have the
effect of changing the Incentive Option to a Nonstatutory Option. Nevertheless,
without the consent of the Holder, the Committee may not modify any outstanding
Options so as to specify a higher or lower Exercise Price or accept the
surrender of outstanding Incentive Options and authorize the granting of new
Options in substitution therefor specifying a higher or lower Exercise Price. In
addition, no modification of an Option granted hereunder shall, without the
consent of the Holder, alter or impair any rights or obligations under any
Option theretofore granted to such Holder under the Plan except, with respect to
Incentive Options, as may be necessary to satisfy the requirements of Section
422 of the Code or as permitted in clause (c) of this Subsection 5.12.
14
<PAGE>
5.13 Other Agreement Provisions. The Award Agreements authorized under
--------------------------
the Plan shall contain such provisions in addition to those required by the Plan
(including without limitation restrictions or the removal of restrictions upon
the exercise of the Option and the retention or transfer of shares thereby
acquired) as the Committee may deem advisable. Each Award Agreement shall
identify the Option evidenced thereby as an Incentive Option or Nonstatutory
Option, as the case may be, and no Award Agreement shall cover both an Incentive
Option and a Nonstatutory Option. Each Award Agreement relating to an Incentive
Option granted hereunder shall contain such limitations and restrictions upon
the exercise of the Incentive Option to which it relates as shall be necessary
for the Incentive Option to which such Award Agreement relates to constitute an
incentive stock option, as defined in Section 422 of the Code.
SECTION 6. STOCK APPRECIATION RIGHTS
All Stock Appreciation Rights granted under the Plan shall comply with,
and the related Award Agreements shall be deemed to include and be subject to,
the terms and conditions set forth in this Section 6 (to the extent each term
and condition applies to the form of Stock Appreciation Right) and also the
terms and conditions set forth in Sections 9 and 10; provided, however, that the
Committee may authorize an Award Agreement related to a Stock Appreciation Right
that expressly contains terms and provisions that differ from the terms and
provisions set forth in Subsections 9.2, 9.3, and 9.4 and any of the terms and
provisions of Section 10 (other than Subsection 10.10).
6.1 Form of Right. A Stock Appreciation Right may be granted to an
-------------
Eligible Individual (a) in connection with an Option, either at the time of
grant or at any time during the term of the Option, or (b) independent of an
Option.
6.2 Rights Related to Options. A Stock Appreciation Right granted
---------------------------
pursuant to an Option shall entitle the Holder, upon exercise, to surrender that
Option or any portion thereof, to the extent unexercised, and to receive payment
of an amount computed pursuant to Subsection 6.2(b). That Option shall then
cease to be exercisable to the extent surrendered. Stock Appreciation Rights
granted in connection with an Option shall be subject to the terms of the Award
Agreement governing the Option, which shall comply with the following provisions
in addition to those applicable to Options:
(a) Exercise and Transfer. Subject to Subsection 10.9, a Stock
Appreciation Right granted in connection with an Option shall be
exercisable only at such time or times and only to the extent that the
related Option is exercisable and shall not be transferable except to
the extent that the related Option is transferable.
(b) Value of Right. Upon the exercise of a Stock Appreciation
Right related to an Option, the Holder shall be entitled to receive
payment from the Corporation of an amount determined by Multiplying:
(i)......The difference obtained by subtracting the
Exercise Price of a share of Stock specified in the related
Option from the Fair Market Value of a share of Stock on the
date of exercise of the Stock Appreciation Right, by
15
<PAGE>
(ii).....The number of shares as to which that Stock
Appreciation Right has been exercised.
6.3 Right Without Option. A Stock Appreciation Right granted
independent of an Option shall be exercisable as determined by the Committee and
set forth in the Award Agreement governing the Stock Appreciation Right, which
Award Agreement shall comply with the following provisions:
(a) Number of Shares. Each Award Agreement shall state the total
----------------
number of shares of Stock to which the Stock Appreciation Right
relates.
(b) Vesting. Each Award Agreement shall state the time or
-------
periods in which the right to exercise the Stock Appreciation Right or
a portion thereof shall vest and the number of shares of Stock for
which the right to exercise the Stock Appreciation Right shall vest at
each such time or period.
(c) Expiration of Rights. Each Award Agreement shall state the
---------------------
date at which the Stock Appreciation Rights shall expire if not
previously exercised.
(d) Value of Right. Each Stock Appreciation Right shall
---------------
entitle the Holder, upon exercise thereof, to receive payment of an
amount determined by multiplying:
(i) The difference obtained by subtracting the
Fair Market Value of a share of Stock on the Date of Grant of
the Stock Appreciation Right from the Fair Market Value of a
share of Stock on the date of exercise of that Stock
Appreciation Right, by
(ii) The number of shares as to which the Stock
Appreciation Right has been exercised.
6.4 Limitations on Rights. Notwithstanding Subsections 6.2(b) and
-----------------------
6.3(d), the Committee may limit the amount payable upon exercise of a Stock
Appreciation Right. Any such limitation must be determined as of the Date of
Grant and be noted on the Award Agreement evidencing the Holder's Stock
Appreciation Right.
6.5 Payment of Rights. Payment of the amount determined under
-------------------
Subsection 6.2(b) or 6.3(d) and Subsection 6.4 may be made, in the sole
discretion of the Committee unless specifically provided otherwise in the Award
Agreement, solely in whole shares of Stock valued at Fair Market Value on the
date of exercise of the Stock Appreciation Right, solely in cash, or in a
combination of cash and whole shares of Stock. If the Committee decides to make
full payment in shares of Stock and the amount payable results in a fractional
share, payment for the fractional share shall be made in cash.
6.6 Payment of Taxes. The Committee may, in its discretion, require a
----------------
Holder to pay to the Corporation (or the Corporation's Subsidiary if the Holder
is an employee of a Subsidiary
16
<PAGE>
of the Corporation), at the time of the exercise of a Stock Appreciation Right
or thereafter, the amount that the Committee deems necessary to satisfy the
Corporation's or its Subsidiary's current or future obligation to withhold
federal, state, or local income or other taxes that the Holder incurs by
exercising a Stock Appreciation Right. In connection with the exercise of a
Stock Appreciation Right requiring tax withholding, a Holder may (a) direct the
Corporation to withhold from the shares of Stock to be issued to the Holder the
number of shares necessary to satisfy the Corporation's obligation to
withhold taxes, that determination to be based on the shares' Fair Market Value
as of the date of exercise; (b) deliver to the Corporation sufficient
shares of Stock (based upon the Fair Market Value as of the date of such
delivery) to satisfy the Corporation's tax withholding obligations, which tax
withholding obligation is based on the shares' Fair Market Value as of the later
of the date of exercise or the date of which the shares of Stock issued in
connection with such exercise become includible in the income of the Holder; or
(c) deliver sufficient cash to the Corporation to satisfy its tax withholding
obligations. Holders who elect to have Stock withheld pursuant to (a) or (b)
above must make the election at the time and in the manner that the Committee
prescribes. The Committee may, in its sole discretion, deny any Holder's request
to satisfy withholding obligations through Stock instead of cash. In the event
the Committee subsequently determines that the aggregate Fair Market Value (as
determined above) of any shares of Stock withheld or delivered as payment of any
tax withholding obligation is insufficient to discharge that tax withholding
obligation, then the Holder shall pay to the Corporation, immediately upon the
Committee's request, the amount of that deficiency in the form of payment
requested by the Commission.
6.7 Other Agreement Provisions. The Award Agreements authorized
----------------------------
relating to Stock Appreciation Rights shall contain such provisions in addition
to those required by the Plan (including without limitation restrictions or the
removal of restrictions upon the exercise of the Stock Appreciation Right and
the retention or transfer of shares thereby acquired) as the Committee may deem
advisable.
SECTION 7. RESTRICTED STOCK AWARDS
All Restricted Stock Awards granted under the Plan shall comply with
and be subject to, and the related Award Agreements shall be deemed to include,
the terms and conditions set forth in this Section 7 and also to the terms and
conditions set forth in Sections 9 and 10; provided, however, that the Committee
may authorize an Award Agreement related to a Restricted Stock Award that
expressly contains terms and provisions that differ from the terms and
provisions set forth in Subsections 9.2, 9.3, and 9.4 and the terms and
provisions set forth in Section 10 (other than Subsections 10.9 and 10.10).
7.1 Restrictions. All shares of Restricted Stock Awards granted or
------------
sold pursuant to the Plan shall be subject to the following conditions:
(a) Transferability. The shares may not be sold, transferred, or
---------------
otherwise alienated or hypothecated until the restrictions are removed
or expire.
(b) Conditions to Removal of Restrictions. Conditions to
----------------------------------------
removal or expiration of the restrictions may include, but are not
required to be limited to, continuing
17
<PAGE>
employment or service as a director, officer, or Key Employee or
achievement of performance objectives described in the Award Agreement.
(c) Legend. Each certificate representing Restricted Stock
------
Awards granted pursuant to the Plan shall bear a legend making
appropriate reference to the restrictions imposed.
(d) Possession. The Committee may require the Corporation to
----------
retain physical custody of the certificates representing Restricted
Stock Awards during the restriction period and may require the Holder
of the Award to execute stock powers in blank for those certificates
and deliver those stock powers to the Corporation, or the Committee may
require the Holder to enter into an escrow agreement providing that the
certificates representing Restricted Stock Awards granted or sold
pursuant to the Plan shall remain in the physical custody of an escrow
holder until all restrictions are removed or expire.
(e) Other Conditions. The Committee may impose other
------------------
conditions on any shares granted or sold as Restricted Stock Awards
pursuant to the Plan as it may deem advisable, including without
limitation (i) restrictions under the Securities Act or Exchange Act,
(ii) the requirements of any securities exchange upon which the shares
or shares of the same class are then listed, and (iii) any state
securities law applicable to the shares.
7.2 Expiration of Restrictions. The restrictions imposed in Subsection
--------------------------
7.1 on Restricted Stock Awards shall lapse as determined by the Committee and
set forth in the applicable Award Agreement, and the Corporation shall promptly
deliver to the Holder of the Restricted Stock Award a certificate representing
the number of shares for which restrictions have lapsed, free of any restrictive
legend relating to the lapsed restrictions. Each Restricted Stock Award may have
a different restriction period as determined by the Committee in its sole
discretion. The Committee may, in its discretion, prospectively reduce the
restriction period applicable to a particular Restricted Stock Award.
7.3 Rights as Shareholder. Subject to the provisions of Subsections 7.1
---------------------
and 10.10, the Committee may, in its discretion, determine what rights, if any,
the Holder shall have with respect to the Restricted Stock Awards granted or
sold, including the right to vote the shares and receive all dividends and other
distributions paid or made with respect thereto.
7.4 Payment of Taxes. The Committee may, in its discretion, require a
----------------
Holder to pay to the Corporation (or the Corporation's Subsidiary if the Holder
is an employee of a Subsidiary of the Corporation) the amount that the Committee
deems necessary to satisfy the Corporation's or its Subsidiary's current or
future obligation to withhold federal, state, or local income or other taxes
that the Holder incurs by reason of the Restricted Stock Award. The Holder may
(a) direct the Corporation to withhold from the shares of Stock to be issued to
the Holder the number of shares necessary to satisfy the Corporation's
obligation to withhold taxes, that determination to be based on the shares' Fair
Market Value as of the date on which tax withholding is to be made; (b) deliver
to the Corporation sufficient shares of Stock (based upon the Fair Market Value
as of the date of such delivery) to satisfy the Corporation's tax withholding
obligations, which tax withholding obligation is based on the shares' Fair
Market Value as of the later of the date of
18
<PAGE>
issuance or the date as of which the shares of Stock issued become includible
in the income of the Holder; or (c) deliver sufficient cash to the Corporation
to satisfy its tax withholding obligations. Holders who elect to have Stock
withheld pursuant to (a) or (b) above must make the election at the time and in
the manner that the Committee prescribes. The Committee may, in its sole discre-
tion, deny any Holder's request to satisfy withholding obligations through
Stock instead of cash. In the event the Committee subsequently determines that
the aggregate Fair Market Value (as determined above) of any shares of Stock
withheld or delivered as payment of any tax withholding obligation is
insufficient to discharge that tax withholding obligation, then the Holder shall
pay to the Corporation, immediately upon the Committee's request, the amount of
that deficiency.
7.5 Other Agreement Provisions. The Award Agreements relating to
---------------------------
Restricted Stock Awards shall contain such provisions in addition to those
required by the Plan as the Committee may deem advisable.
SECTION 8. AWARDS TO NON-EMPLOYEE DIRECTORS
Except as otherwise provided in the applicable Award Agreement, Awards
granted pursuant to this Section 8 shall be subject to the conditions of Section
5 to the extent permitted under Rule 16b-3.
8.1 Ineligibility for Other Awards. Non-Employee Directors shall not
-------------------------------
be eligible to receive any Awards under the Plan other than the Awards specified
in this Section 8.
8.2 Grant of Awards. Unless any Non-Employee Director (or director
---------------
nominee) shall have given written notice to the Corporation that he or she
declines to accept any Award pursuant to this Subsection 8.2 on or prior to the
Date of Grant of such Award, each Non-Employee Director shall be entitled to
receive Awards as determined from time to time by the Board of Directors, acting
without the vote or participation of the Non-Employee Directors.
8.3 Exercisability. Unless otherwise specified by the Board of
--------------
Directors at the time the Award is approved, Options granted pursuant to
Subsection 8.2 shall vest immediately upon their grant, and shall be exercisable
for a period of ten years from the date of their grant.
SECTION 9. ADJUSTMENT PROVISIONS
9.1 Adjustment of Awards and Authorized Stock. The terms of an Award
------------------------------------------
and the number of shares of Stock authorized pursuant to Subsection 2.1 and
Section 8 for issuance under the Plan shall be subject to adjustment from time
to time, in accordance with the following provisions:
(a) If at any time, or from time to time, the Corporation
shall subdivide as a whole (by reclassification, by a Stock split, by
the issuance of a distribution on Stock payable in Stock, or otherwise)
the number of shares of Stock then outstanding into a greater number of
shares of Stock, then (i) the maximum number of shares of Stock
19
<PAGE>
available for the Plan as provided in Subsection 2.1 shall be increased
proportionately, and the kind of shares or other securities available
for the Plan shall be appropriately adjusted, (ii) the number of shares
of Stock (or other kind of shares or securities) that may be acquired
under any Award shall be increased proportionately, and (iii) the price
(including Exercise Price) for each share of Stock (or other kind of
shares or securities) subject to then outstanding Awards shall be
reduced proportionately, without changing the aggregate purchase price
or value as to which outstanding Awards remain exercisable or subject
to restrictions.
(b) If at any time, or from time to time, the Corporation
shall consolidate as a whole (by reclassification, reverse Stock split,
or otherwise) the number of shares of Stock then outstanding into a
lesser number of shares of Stock, then (i) the maximum number of shares
of Stock available for the Plan as provided in Subsection 2.1 shall be
decreased proportionately, and the kind of shares or other securities
available for the Plan shall be appropriately adjusted, (ii) the number
of shares of Stock (or other kind of shares or securities) that may be
acquired under any Award shall be decreased proportionately, and (iii)
the price (including Exercise Price) for each share of Stock (or other
kind of shares or securities) subject to then outstanding Awards shall
be increased proportionately, without changing the aggregate purchase
price or value as to which outstanding Awards remain exercisable or
subject to restrictions.
(c) Whenever the number of shares of Stock subject to
outstanding Awards and the price for each share of Stock subject to
outstanding Awards are required to be adjusted as provided in this
Subsection 9.1, the Committee shall promptly prepare a notice setting
forth, in reasonable detail, the event requiring adjustment, the amount
of the adjustment, the method by which such adjustment was calculated,
and the change in price and the number of shares of Stock, other
securities, cash, or property purchasable subject to each Award after
giving effect to the adjustments. The Committee shall promptly give
each Holder such a notice.
(d) Adjustments under Subsections 9(a) and (b) shall be made
by the Committee, and its determination as to what adjustments shall be
made and the extent thereof shall be final, binding, and conclusive. No
fractional interest shall be issued under the Plan on account of any
such adjustments.
9.2 Changes in Control. Any Award Agreement may provide that, upon the
------------------
occurrence of a Change in Control, one or more of the following apply: (a) each
Holder of an Option shall immediately be granted corresponding Stock
Appreciation Rights; (b) all outstanding Stock Appreciation Rights and Options
shall immediately become fully vested and exercisable in full, including that
portion of any Stock Appreciation Right or Option that pursuant to the terms and
provisions of the applicable Award Agreement had not yet become exercisable (the
total number of shares of Stock as to which a Stock Appreciation Right or Option
is exercisable upon the occurrence of a change in Control is referred to herein
as the "Total Shares"); and (c) the restriction period of any Restricted Stock
Award shall immediately be accelerated and the restrictions shall expire. An
Award Agreement does not have to provide for any of the foregoing. If a Change
in Control involves a Restructuring or occurs in connection with a series of
related
20
<PAGE>
transactions involving a Restructuring and if such Restructuring is in the
form of a Non-Surviving Event and as a part of such Restructuring shares of
Stock, other securities, cash, or property shall be issuable or deliverable in
exchange for Stock, then the Holder of an Award shall be entitled to purchase or
receive (in lieu of the Total Shares that the Holder would otherwise be entitled
to purchase or receive), as appropriate for the form of Award, the number of
shares of Stock, other securities, cash, or property to which that number of
Total Shares would have been entitled in connection with such Restructuring
(and, for Options, at an aggregate exercise price equal to the Exercise Price
that would have been payable if that number of Total Shares had been purchased
on the exercise of the Option immediately before the consummation of the
Restructuring). Nothing in this Subsection 9.2 shall impose on a Holder the
obligation to exercise any Award immediately before or upon the Change of
Control, or cause Holder to forfeit the right to exercise the Award during the
remainder of the original term of the Award because of a Change in Control.
9.3 Restructuring Without Change in Control. In the event a
--------------------------------------------
Restructuring shall occur at any time while there is any outstanding Award
hereunder and that Restructuring does not occur in connection with a Change in
Control or a series of related transactions involving a Change in Control, then:
(a) no outstanding Option or Stock Appreciation Right shall
immediately become fully vested and exercisable in full merely because
of the occurrence of the Restructuring;
(b) no Holder of an Option shall automatically be granted
corresponding Stock Appreciation Rights;
(c) the restriction period of any Restricted Stock Award shall
not immediately be accelerated and the restrictions expire merely
because of the occurrence of the Restructuring; and
(d) at the option of the Committee, the Committee may (but shall
not be required to) cause the Corporation to take any one or more of
the following actions:
(i) accelerate in whole or in part the time of
the vesting and exercisability of any one or more of the
outstanding Stock Appreciation Rights and Options so as to
provide that those Stock Appreciation Rights and Options shall
be exercisable before, upon, or after the consummation of the
Restructuring;
(ii) grant each Holder of an Option corresponding Stock
Appreciation Rights;
(iii) accelerate in whole or in part the expiration of some or
all of the restrictions on any Restricted Stock Award;
(iv) if the Restructuring is in the form of a
Non-Surviving Event, cause the surviving entity to assume in
whole or in part any one or more of the
21
<PAGE>
outstanding Awards upon such terms and provisions as the
Committee deems desirable; or
(v) redeem in whole or in part any one or more
of the outstanding Awards (whether or not then exercisable) in
consideration of a cash payment, as such payment may be
reduced for tax withholding obligations as contemplated in
Subsections 5.9, 6.6, or 7.4, as applicable, in an amount
equal to:
(A) for Options and Stock Appreciation
Rights granted in connection with Options, the excess
of (1) the Fair Market Value, determined as of the
date immediately preceding the consummation of the
Restructuring, of the aggregate number of shares of
Stock subject to the Award and as to which the Award
is being redeemed over (2) the Exercise Price for
that number of shares of Stock;
(B) for Stock Appreciation Rights not
granted in connection with an Option, the excess of
(1) the Fair Market Value, determined as of the date
immediately preceding the consummation of the
Restructuring, of the aggregate number of shares of
Stock subject to the Award and as to which the Award
is being redeemed over (2) the Fair Market Value of
that number of shares of Stock on the Date of Grant;
and
(C) for Restricted Stock Awards, the
Fair Market Value, determined as of the date
immediately preceding the consummation of the
Restructuring, of the aggregate number of shares of
Stock subject to the Award and as to which the Award
is being redeemed.
The Corporation shall promptly notify each Holder of any election or action
taken by the Corporation under this Subsection 9.3. In the event of any election
or action taken by the Corporation pursuant to this Subsection 9.3 that requires
the amendment or cancellation of any Award Agreement as may be specified in any
notice to the Holder thereof, that Holder shall promptly deliver that Award
Agreement to the Corporation in order for that amendment or cancellation to be
implemented by the Corporation and the Committee. The failure of the Holder to
deliver any such Award Agreement to the Corporation as provided in the preceding
sentence shall not in any manner affect the validity or enforceability of any
action taken by the Corporation and the Committee under this Subsection 9.3,
including without limitation any redemption of an Award as of the consummation
of a Restructuring. Any cash payment to be made by the Corporation pursuant to
this Subsection 9.3 in connection with the redemption of any outstanding Awards
shall be paid to the Holder thereof currently with the delivery to the
Corporation of the Award Agreement evidencing that Award; provided, however,
that any such redemption shall be effective upon the consummation of the
Restructuring notwithstanding that the payment of the redemption price may occur
subsequent to the consummation. If all or any portion of an outstanding Award is
to be exercised or accelerated upon or after the consummation of a Restructuring
that does not occur in connection with a Change in Control and is in the form of
a Non-Surviving Event, and as a part of that Restructuring shares of stock,
other securities, cash, or property shall be issuable or deliverable in exchange
for Stock, then the Holder of the Award
22
<PAGE>
shall thereafter be entitled to purchase or receive (in lieu of the number of
shares of Stock that the Holder would otherwise be entitled to purchase or
receive) the number of shares of Stock, other securities, cash, or property
to which such number of shares of Stock would have been entitled in connection
with the Restructuring (and, for Options, upon payment of the aggregate exercise
price equal to the Exercise Price that would have been payable if that number
of Total Shares had been purchased on the exercise of the Option immediately
before the consummation of the Restructuring) and such Award shall be subject
to adjustments that shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 9.
9.4 Notice of Restructuring. The Corporation shall attempt to keep all
-----------------------
Holders informed with respect to any Restructuring or of any potential
Restructuring to the same extent that the Corporation's shareholders are
informed by the Corporation of any such event or potential event.
SECTION 10. ADDITIONAL PROVISIONS
10.1 Termination of Employment. If a Holder is an Eligible Individual
-------------------------
because the Holder is an Employee and if that employment relationship is
terminated for any reason other than (a) that Holder's death or (b) that
Holder's Disability (hereafter defined), then any and all Awards held by such
Holder in such Holder's capacity as an Employee as of the date of the
termination that are not yet exercisable (or for which restrictions have not
lapsed) shall become null and void as of the date of such termination; provided,
however, that the portion, if any, of such Awards that are exercisable as of the
date of termination shall be exercisable for a period of the lesser of (a) the
remainder of the term of the Award or (b) the date which is 30 days after the
date of termination. Any portion of an Award not exercised upon the expiration
of the lesser of the period specified above shall be null and void unless the
Holder dies during such period, in which case the provisions of Subsection 10.3
shall govern.
10.2 Other Loss of Eligibility - Non Employees. If a Holder is an
---------------------------------------------
Eligible Individual because the Holder is serving in a capacity other than as an
Employee and if that capacity is terminated for any reason other than the
Holder's death or Disability, then that portion, if any, of any and all Awards
held by the Holder that were granted because of that capacity which are not yet
exercisable (or for which restrictions have not lapsed) as of the date of the
termination shall become null and void as of the date of the termination;
provided, however, that the portion, if any, of any and all Awards held by the
Holder that are then exercisable as of the date of the termination shall be
exercisable for a period of the lesser of (a) the remainder of the term of the
Award or (b) 30 days following the date such capacity is terminated. If a Holder
is an Eligible Individual because the Holder is serving in a capacity other than
as an Employee and if that capacity is terminated by reason of the Holder's
death or Disability, then the portion, if any, of any and all Awards held by the
Holder that are not yet exercisable (or for which restrictions have not lapsed)
as of the date of that termination for death or Disability shall become
exercisable (and the restrictions thereon, if any, shall lapse) and all such
Awards held by that Holder as of the date of termination that are exercisable
(either as a result of this sentence or otherwise) shall be exercisable for a
period of the lesser of (a) the remainder of the term of the Award or (b) the
date which is 30 days after the date of termination. Any portion of an Award not
exercised upon the
23
<PAGE>
expiration of the periods specified in (a) or (b) of the preceding two
sentences shall be null and void upon the expiration of such period, as
applicable.
10.3 Death. Upon the death of a Holder, any and all Awards held by the
-----
Holder that are not yet exercisable (or for which restrictions have not lapsed)
as of the date of the Holder's death shall become exercisable as provided below
and any restrictions shall immediately lapse as of the date of death; provided,
however, that the Awards held by the Holder as of the date of death shall be
exercisable by that Holder's legal representatives, heirs, legatees, or
distributees for a period of 30 days following the date of the Holder's death.
Any portion of an Award not exercised upon the expiration of such period shall
be null and void. Except as expressly provided in this Subsection 10.3, no Award
held by a Holder shall be exercisable after the death of that Holder.
10.4 Disability. If a Holder is an Eligible Individual because the
----------
Holder is an Employee and if that employment relationship is terminated by
reason of the Holder's Disability, then the portion, if any, of any and all
Awards held by the Holder that are not yet exercisable (or for which
restrictions have not lapsed) as of the date of that termination for Disability
shall become exercisable as provided below and any restrictions shall
immediately lapse as of the date of termination; provided, however, that the
Awards held by the Holder as of the date of that termination shall be
exercisable by the Holder, his guardian or his legal representative for a period
of 30 days following the date of such termination. Any portion of an Award not
exercised upon the expiration of such period shall be null and void unless the
Holder dies during such period, in which event the provisions of Subsection 10.3
shall govern. "Disability" shall have the meaning given it in the employment
agreement of the Holder; provided, however, that if that Holder has no
employment agreement, "Disability" shall mean, as determined by the Board of
Directors in the sole discretion exercised in good faith of the Board of
Directors, a physical or mental impairment of sufficient severity that either
the Holder is unable to continue performing the duties he performed before such
impairment or the Holder's condition entitles him to disability benefits under
any insurance or employee benefit plan of the Corporation or its Subsidiaries
and that impairment or condition is cited by the Corporation as the reason for
termination of the Holder's employment.
10.5 Leave of Absence. With respect to an Award, the Committee may, in
----------------
its sole discretion, determine that any Holder who is on leave of absence for
any reason will be considered to still be in the employ of the Corporation for
any or all purposes of the Plan and the Award Agreement of such Holder.
10.6 Transferability of Awards. In addition to such other terms and
--------------------------
conditions as may be included in a particular Award Agreement, an Award
requiring exercise shall be exercisable during a Holder's lifetime only by that
Holder or by that Holder's guardian or legal representative. An Award requiring
exercise shall not be transferrable other than by will or the laws of descent
and distribution.
10.7 Forfeiture and Restrictions on Transfer. Each Award Agreement may
---------------------------------------
contain or otherwise provide for conditions giving rise to the forfeiture of the
Stock acquired pursuant to an Award or otherwise and may also provide for those
restrictions on the transferability of shares of
24
<PAGE>
the Stock acquired pursuant to an Award or otherwise that the Committee in its
sole and absolute discretion may deem proper or advisable. The conditions
giving rise to forfeiture may include, but need not be limited to, the require-
ment that the Holder render substantial services to the Corporation or its
Subsidiaries for a specified period of time. The restrictions on transferability
may include, but need not be limited to, options and rights of first refusal in
favor of the Corporation and shareholders of the Corporation other than the
Holder of such shares of Stock who is a party to the particular Award Agreement
or a subsequent holder of the shares of Stock who is bound by that Award
Agreement.
10.8 Delivery of Certificates of Stock. Subject to Subsection 10.9, the
---------------------------------
Corporation shall promptly issue and deliver a certificate representing the
number of shares of Stock as to which (a) an Option has been exercised after the
Corporation receives an Exercise Notice and upon receipt by the Corporation of
the Exercise Price and any tax withholding as may be requested, (b) a Stock
Appreciation Right has been exercised (to the extent the Committee determines to
pay such Stock Appreciation Right in shares of Stock pursuant to Subsection 6.5)
and upon receipt by the Corporation of any tax withholding as may be requested,
and (c) restrictions have lapsed with respect to a Restricted Stock Award and
upon receipt by the Corporation of any tax withholding as may be requested. The
value of the shares of Stock or cash transferable because of an Award under the
Plan shall not bear any interest owing to the passage of time, except as may be
otherwise provided in an Award Agreement. If a Holder is entitled to receive
certificates representing Stock received for more than one form of Award under
the Plan, separate Stock certificates shall be issued with respect to Incentive
Options and Nonstatutory Options.
10.9 Conditions to Delivery of Stock. Nothing herein or in any Award
-------------------------------
granted hereunder or any Award Agreement shall require the Corporation to issue
any shares with respect to any Award if that issuance would, in the opinion of
counsel for the Corporation, constitute a violation of the Securities Act or any
similar or superseding statute or statutes, any other applicable statute or
regulation, or the rules of any applicable securities exchange or securities
association, as then in effect. At the time of any exercise of an Option or
Stock Appreciation Right, or at the time of any grant of a Restricted Stock
Award, the Corporation may, as a condition precedent to the exercise of such
Option or Stock Appreciation Right or vesting of any Restricted Stock Award,
require from the Holder of the Award (or in the event of his death, his legal
representatives, heirs, legatees, or distributees) such written representations,
if any, concerning the Holder's intentions with regard to the retention or
disposition of the shares of Stock being acquired pursuant to the Award and such
written covenants and agreements, if any, as to the manner of disposal of such
shares as, in the opinion of counsel to the Corporation, may be necessary to
ensure that any disposition by that Holder (or in the event of the Holder's
death, his legal representatives, heirs, legatees, or distributees) will not
involve a violation of the Securities Act or any similar or superseding statute
or statutes, any other applicable state or federal statute or regulation, or any
rule of any applicable securities exchange or securities association, as then in
effect.
10.10 Certain Directors and Officers. With respect to Holders who are
-------------------------------
directors or officers of the Corporation or any of its Subsidiaries and who are
subject to Section 16(b) of the Exchange Act, Awards and all rights under the
Plan shall be exercisable during the Holder's lifetime only by the Holder or the
Holder's guardian or legal representative, but not for at least
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<PAGE>
six months after grant, unless (a) the Board of Directors expressly authorizes
that an Award shall be exercisable before the expiration of the six-month period
or (b) the death or disability of the Holder occurs before the expiration of the
six-month period. In addition, no such officer or director shall exercise
any Stock Appreciation Right or have shares of Stock withheld to pay tax
withholding obligations within the first six months of the term of an Award.
Any election by any such officer or director to have tax withholding obligations
satisfied by the withholding of shares of Stock shall be irrevocable and
shall be communicated to the Committee during the period beginning on the
third day following the date of release of quarterly or annual summary state-
ments of sales and earnings and ending on the twelfth business day following
such date (the "Window Period") or by an irrevocable election communicated to
the Committee at least six months before the date of exercise of the Award
for which such withholding is desired. Any election by such an officer or
director to receive cash in full or partial settlement of a Stock Appreciation
Right, as well as any exercise by such individual of a Stock Appreciation
Right for such cash, in either case to the extent permitted under the
applicable Award Agreement or otherwise permitted by the Committee, shall be
made during the Window Period or within any other periods that the Committee
shall specify from time to time.
10.11 Securities Act Legend. Certificates for shares of Stock, when
---------------------
issued, may have the following legend, or statements of other applicable
restrictions (including, without limitation, restrictions required under any
Federal, state or foreign law), endorsed thereon and may not be immediately
transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED,
TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES
EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION OF THE
ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER)
THAT SUCH OFFER, SALE, PLEDGE, TRANSFER, OR OTHER DISPOSITION WILL NOT
VIOLATE APPLICABLE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Stock issued pursuant to an
effective registration statement under the Securities Act.
10.12 Legend for Restrictions on Transfer. Each certificate
-----------------------------------------
representing shares issued to a Holder pursuant to an Award granted under the
Plan shall, if such shares are subject to any transfer restriction, including a
right of first refusal, provided for under this Plan or an Award Agreement, bear
a legend that complies with applicable law with respect to the restrictions on
transferability contained in this Subsection 10.12, such as:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY IMPOSED BY THAT CERTAIN INSTRUMENT
ENTITLED "CYBERCORP, INC. 1996 INCENTIVE PLAN" AS ADOPTED BY CYBERCORP,
INC. (THE "CORPORATION"),
26
<PAGE>
AND AN AGREEMENT THEREUNDER BETWEEN THE CORPORATION AND THE INITIAL
HOLDER THEREOF DATED ________________, 199_, AND MAY NOT BE
TRANSFERRED, SOLD, OR OTHERWISE DISPOSED OF EXCEPT AS THEREIN PROVIDED.
THE CORPORATION WILL FURNISH A COPY OF SUCH INSTRUMENT AND AGREEMENT
TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE ON REQUEST TO
THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED
OFFICE.
10.13 Rights as a Shareholder. A Holder shall have no right as a
-------------------------
shareholder with respect to any shares covered by his Award until a certificate
representing those shares is issued in his name. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash or other property) or
distributions or other rights for which the record date is before the date that
certificate is issued, except as contemplated by Section 9 hereof. Nevertheless,
dividends, dividend equivalent rights and voting rights may be extended to and
made part of any Award denominated in Stock or units of Stock, subject to such
terms, conditions and restrictions as the Committee may establish. The Committee
may also establish rules and procedures for the crediting of interest on
deferred cash payments and dividend equivalents for deferred payment denominated
in Stock or units of Stock.
10.14 Furnish Information. Each Holder shall furnish to the Corporation
-------------------
all information requested by the Corporation to enable it to comply with any
reporting or other requirement imposed upon the Corporation by or under any
applicable statute or regulation.
10.15 Obligation to Exercise. The granting of an Award hereunder shall
----------------------
impose no obligation upon the Holder to exercise the same or any part thereof.
10.16 Adjustments to Awards. Subject to the general limitations set
---------------------
forth in Sections 5, 6, and 9, the Committee may make any adjustment in the
Exercise Price of, the number of shares subject to, or the terms of a
Nonstatutory Option or Stock Appreciation Right by canceling an outstanding
Nonstatutory Option or Stock Appreciation Right and regranting a Nonstatutory
Option or Stock Appreciation Right. Such adjustment shall be made by amending,
substituting, or regranting an outstanding Nonstatutory Option or Stock
Appreciation Right. Such amendment, substitution, or regrant may result in terms
and conditions that differ from the terms and conditions of the original
Nonstatutory Option or Stock Appreciation Right. The Committee may not, however,
impair the rights of any Holder of previously granted Nonstatutory Options or
Stock Appreciation Rights without that Holder's consent. If such action is
effected by amendment, such amendment shall be deemed effective as of the Date
of Grant of the amended Award.
10.17 Remedies. The Corporation shall be entitled to recover from a
--------
Holder reasonable attorneys' fees incurred in connection with the enforcement of
the terms and provisions of the Plan and any Award Agreement whether by an
action to enforce specific performance or for damages for its breach or
otherwise.
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<PAGE>
10.18 Information Confidential. As partial consideration for the
-------------------------
granting of each Award hereunder, the Holder shall agree with the Corporation
that he will keep confidential all information and knowledge that he has
relating to the manner and amount of his participation in the Plan; provided,
however, that such information may be disclosed as required by law and may be
given in confidence to the Holder's spouse, tax or financial advisors, or to a
financial institution to the extent that such information is necessary to secure
a loan. In the event any breach of this promise comes to the attention of the
Committee, it shall take into consideration that breach in determining whether
to recommend the grant of any future Award to that Holder, as a factor
mitigating against the advisability of granting any such future Award to that
Person.
10.19 Consideration. No Option or Stock Appreciation Right shall be
-------------
exercisable and no restriction on any Restricted Stock Award shall lapse with
respect to a Holder unless and until the Holder thereof shall have paid cash or
property to, or performed services for, the Corporation or any of its
Subsidiaries that the Committee believes is equal to or greater in value than
the par value of the Stock subject to such Award.
SECTION 11. DURATION AND AMENDMENT OF PLAN
11.1 Duration. No Awards may be granted hereunder after the date that
--------
is ten years from the earlier of (a) the date the Plan is adopted by the Board
of Directors and (b) the date the Plan is approved by the shareholders of the
Corporation.
11.2 Amendment. The Board of Directors may, insofar as permitted by
---------
law, with respect to any shares which, at the time, are not subject to Awards,
suspend or discontinue the Plan or revise or amend it in any respect whatsoever
and may amend any provision of the Plan or any Award Agreement to make the Plan
or the Award Agreement, or both, comply with Section 16(b) of the Exchange Act
and the exemptions from that Section in the regulations thereunder. The Board of
Directors may also amend, modify, suspend, or terminate the Plan for the purpose
of meeting or addressing any changes in other legal requirements applicable to
the Corporation or the Plan or for any other purpose permitted by law. The Plan
may not be amended without the consent of the holders of a majority of the
shares of Stock then outstanding to (a) increase materially the aggregate number
of shares of Stock that may be issued under the Plan (except for adjustments
pursuant to Section 9 hereof), (b) increase materially the benefits accruing to
Eligible Individuals under the Plan, or (c) modify materially the requirements
about eligibility for participation in the Plan; provided, however, that such
amendments may be made without the consent of shareholders of the Corporation if
changes occur in law or other legal requirements (including Rule 16b-3) that
would permit such changes. In connection with any amendment of the Plan, the
Board of Directors shall be authorized to incorporate such provisions as shall
be necessary for amounts paid under the Plan to be exempt from Section 162(m) of
the Code.
SECTION 12. GENERAL
12.1 Application of Funds. The proceeds received by the Corporation
--------------------
from the sale of shares pursuant to Awards may be used for any general corporate
purpose.
28
<PAGE>
12.2 Right of the Corporation and Subsidiaries to Terminate Employment.
-----------------------------------------------------------------
Nothing contained in the Plan, or in any Award Agreement, shall confer upon any
Holder the right to continue in the employ of the Corporation or any Subsidiary
or interfere in any way with the rights of the Corporation or any Subsidiary to
terminate the Holder's employment at any time.
12.3 No Liability for Good Faith Determinations. Neither the members of
------------------------------------------
the Board of Directors nor any member of the Committee shall be liable for any
act, omission or determination taken or made in good faith with respect to the
Plan or any Award granted under it; and members of the Board of Directors and
the Committee shall be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage, or expense (including
attorneys' fees, the costs of settling any suit, provided such settlement is
approved by independent legal counsel selected by the Corporation, and amounts
paid in satisfaction of a judgment, except a judgment based on a finding of bad
faith) arising therefrom to the full extent permitted by law and under any
directors' and officers' liability or similar insurance coverage that may from
time to time be in effect. This right to indemnification shall be in addition
to, and not a limitation on, any other indemnification rights any member of the
Board of Directors or the Committee may have.
12.4 Other Benefits. Participation in the Plan shall not preclude the
--------------
Holder from eligibility in any other stock or stock option plan of the
Corporation or any Subsidiary or any old age benefit, insurance, pension, profit
sharing retirement, bonus, or other extra compensation plans that the
Corporation or any Subsidiary has adopted, or may, at any time, adopt for the
benefit of its Employees. Neither the adoption of the Plan by the Board of
Directors nor the submission of the Plan to the shareholders of the Corporation
for approval shall be construed as creating any limitations on the power of the
Board of Directors to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options and the
awarding of stock and cash otherwise than under the Plan and such arrangements
may be either generally applicable or applicable only in specific cases.
12.5 Exclusion From Pension and Profit-Sharing Compensation. By
-----------------------------------------------------------
acceptance of an Award (regardless of form), as applicable, each Holder shall be
deemed to have agreed that the Award is special incentive compensation that will
not be taken into account in any manner as salary, compensation, or bonus in
determining the amount of any payment under any pension, retirement, or other
employee benefit plan of the Corporation or any Subsidiary, unless any pension,
retirement, or other employee benefit plan of the Corporation or Subsidiary
expressly provides that such Award shall be so considered for purposes of
determining the amount of any payment under any such plan. In addition, each
beneficiary of a deceased Holder shall be deemed to have agreed that the Award
will not affect the amount of any life insurance coverage, if any, provided by
the Corporation or a Subsidiary on the life of the Holder that is payable to the
beneficiary under any life insurance plan covering employees of the Corporation
or any Subsidiary.
12.6 Execution of Receipts and Releases. Any payment of cash or any
------------------------------------
issuance or transfer of shares of Stock to the Holder, or to his legal
representative, heir, legatee, or distributee, in accordance with the provisions
hereof, shall, to the extent thereof, be in full satisfaction of all claims of
such persons hereunder. The Committee may require any Holder, legal
29
<PAGE>
representative, heir, legatee, or distributee, as a condition precedent to such
payment, to execute a release and receipt therefor in such form as it shall
determine.
12.7 Unfunded Plan. Insofar as it provides for Awards of cash and
--------------
Stock, the Plan shall be unfunded. Although bookkeeping accounts may be
established with respect to Holders who are entitled to cash, Stock, or rights
thereto under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Corporation shall not be required to segregate any assets that
may at any time be represented by cash, Stock, or rights thereto, nor shall the
Plan be construed as providing for such segregation, nor shall the Corporation
nor the Board of Directors nor the Committee be deemed to be a trustee of any
cash, Stock, or rights thereto to be granted under the Plan. Any liability of
the Corporation to any Holder with respect to a grant of cash, Stock, or rights
thereto under the Plan shall be based solely upon any contractual obligations
that may be created by the Plan and any Award Agreement; no such obligation of
the Corporation shall be deemed to be secured by any pledge or other encumbrance
on any property of the Corporation. Neither the Corporation nor the Board of
Directors nor the Committee shall be required to give any security or bond for
the performance of any obligation that may be created by the Plan.
12.8 No Guarantee of Interests. Neither the Committee nor the Corpora-
----------------------
tion guarantees the Stock of the Corporation from loss or depreciation.
12.9 Payment of Expenses. All expenses incident to the administration,
-------------------
termination, or protection of the Plan, including, but not limited to, legal and
accounting fees, shall be paid by the Corporation or its Subsidiaries; provided,
however, the Corporation or a Subsidiary may recover any and all damages, fees,
expenses, and costs arising out of any actions taken by the Corporation to
enforce its right to purchase Stock under this Plan.
12.10 Corporation Records. Records of the Corporation or its
---------------------
Subsidiaries regarding the Holder's period of employment, termination of
employment and the reason therefor, leaves of absence, re-employment, and other
matters shall be conclusive for all purposes hereunder, unless determined by the
Committee to be incorrect.
12.11 Information. The Corporation and its Subsidiaries shall, upon
-----------
request or as may be specifically required hereunder, furnish or cause to be
furnished all of the information or documentation which is necessary or required
by the Committee to perform its duties and functions under the Plan.
12.12 No Liability of Corporation. The Corporation assumes no
----------------------------
obligation or responsibility to the Holder or his legal representatives, heirs,
legatees, or distributees for any act of, or failure to act on the part of, the
Committee.
12.13 Corporation Action. Any action required of the Corporation shall
-------------------
be by resolution of its Board of Directors or by a person authorized to act by
resolution of the Board of Directors.
12.14 Severability. In the event that any provision of this Plan, or
------------
the application hereof to any Person or circumstance, is held by a court of
competent jurisdiction to be invalid, illegal,
30
<PAGE>
or unenforceable in any respect under present or future laws effective during
the effective term of any such provision, such invalid, illegal, or unenforce-
able provision shall be fully severable; and this Plan shall then be
construed and enforced as if such invalid, illegal, or unenforceable
provision had not been contained in this Plan; and the remaining provisions
of this Plan shall remain in full force and effect and shall not be affected
by the illegal, invalid, or unenforceable provision or by its severance from
this Plan. Furthermore, in lieu of each such illegal, invalid, or unenforceable
provision, there shall be added automatically as part of this Plan a provision
as similar in terms to such illegal, invalid, or unenforceable provision as
may be possible and be legal, valid, and enforceable. If any of the terms
or provisions of this Plan conflict with the requirements of Rule 16b-3 (as
those terms or provisions are applied to Eligible Individuals who are subject
to Section 16(b) of the Exchange Act), then those conflicting terms or provi-
sions shall be deemed inoperative to the extent they so conflict with the
requirements of Rule 16b-3 and, in lieu of such conflicting provision, there
shall be added automatically as part of this Plan a provision as similar in
terms to such conflicting provision as may be possible and not conflict with
the requirements of Rule 16b-3. If any of the terms or provisions of this Plan
conflict with the requirements of Section 422 of the Code (with respect to
Incentive Options), then those conflicting terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of Section
422 of the Code and, in lieu of such conflicting provision, there shall be added
automatically as part of this Plan a provision as similar in terms to such
conflicting provision as may be possible and not conflict with the
requirements of Section 422 of the Code. With respect to Incentive Options, if
this Plan does not contain any provision required to be included herein under
Section 422 of the Code, that provision shall be deemed to be incorporated
herein with the same force and effect as if that provision had been set out at
length herein; provided, however, that, to the extent any Option that is
intended to qualify as an Incentive Option cannot so qualify, that Option (to
that extent) shall be deemed a Nonstatutory Option for all purposes of the Plan.
12.15 Notices. Whenever any notice is required or permitted hereunder,
-------
such notice must be in writing and personally delivered or sent by mail. Any
notice required or permitted to be delivered hereunder shall be deemed to be
delivered on the date on which it is actually received by the Corporation
addressed to the attention of the Corporate Secretary at the Corporation's
office as specified in the applicable Award Agreement. The Corporation or a
Holder may change, at any time and from time to time, by written notice to the
other, the address which it or he had previously specified for receiving
notices. Until changed in accordance herewith, the Corporation and each Holder
shall specify as its and his address for receiving notices the address set forth
in the Award Agreement pertaining to the shares to which such notice relates.
Any person entitled to notice hereunder may waive such notice.
12.16 Successors. The Plan shall be binding upon the Holder, his legal
----------
representatives, heirs, legatees, and distributees, upon the Corporation, its
successors and assigns and upon the Committee and its successors.
12.17 Headings. The titles and headings of Sections and Subsections are
included for convenience of reference only and are not to be considered in
construction of the provisions hereof.
31
<PAGE>
12.18 Governing Law. All questions arising with respect to the
--------------
provisions of the Plan shall be determined by application of the laws of the
State of Texas, without giving effect to any conflict of law provisions thereof,
except to the extent Texas law is preempted by federal law. Questions arising
with respect to the provisions of an Award Agreement that are matters of
contract law shall be governed by the laws of the state specified in the Award
Agreement, except to the extent that Texas corporate law conflicts with the
contract law of such state, in which event Texas corporate law shall govern
irrespective of any conflict of law principles. The obligation of the
Corporation to sell and deliver Stock hereunder is subject to applicable
federal, state and foreign laws and to the approval of any governmental
authority required in connection with the authorization, issuance, sale, or
delivery of such Stock.
12.19 Word Usage. Words used in the masculine shall apply to the
-----------
feminine where applicable, and wherever the context of this Plan dictates, the
plural shall be read as the singular and the singular as the plural.
EXECUTED as of the 1st day of August, 1996.
CYBERCORP, INC.,
a Texas corporation
By:
-----------------------------
Philip R. Berber, President
32
