<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 26, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-8*
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
THE TITAN CORPORATION
(Exact name of Registrant as specified in its charter)
-----------------------
Delaware 95-2588754
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
3033 Science Park Road
San Diego, CA 92121-1199
(Address of principal executive offices)
-----------------------
Options Assumed By The Titan Corporation
Originally Granted Under the
VisiCom Laboratories, Inc.
1990 Stock Option Plan and
1997 Stock Incentive Plan
(Full title of the Plan)
-----------------------
Ira Frazer
Senior Vice President,
General Counsel and Secretary
THE TITAN CORPORATION
3033 Science Park Road
San Diego, California 92121-1199
(Name and address of agent for service)
-----------------------
(619) 552-9500
(Telephone number, including area code, of agent for service)
Copies to:
Barbara L. Borden, Esq.
COOLEY GODWARD LLP
4365 Executive Drive, Suite 1100
San Diego, CA 92121
(619) 550-6000
-----------------------
* See Explanatory Note following this cover page.
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED PER SHARE OFFERING PRICE (1) REGISTRATION FEE
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 593,171 shares $ 5.10 $ 3,025,172 $ 841.00
------------------------------------------------------------------------------------------------------------------------------
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
EXPLANATORY NOTE
This Registration Statement on Form S-8 relates to 593,171 shares of common
stock of The Titan Corporation issuable under the 1990 Stock Option Plan and the
1997 Stock Incentive Plan of VisiCom Laboratories, Inc.
On August 24, 1998, by virtue of a merger of Merger Acquisition Sub, a
wholly owned subsidiary of Titan, with and into VisiCom, each outstanding share
of common stock of VisiCom was converted into .447 shares of Titan's common
stock.
Pursuant to the Merger agreement, VisiCom and Titan have taken the
necessary actions to cause Titan's common stock to be issuable under VisiCom's
option plans. Accordingly, VisiCom's common stock is no longer issuable under
its option plans.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Registrant's Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1997, the Registrant's Quarterly Report on Form 10-Q/A for the
quarter ended March 31, 1998, the Registrant's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998 the Registrant's Proxy Statement for the
1997 Annual Meeting of Stockholders filed pursuant to Rule 14a-6 of the
Exchange Act, the Registrant's Prospectus/Joint Proxy Statement dated
September 25, 1998, the Registrant's Registration Statement on Form S-4/A
(No. 333-60122) filed on September 24, 1998, the Registrant's Current Report
on Form 8-K dated February 26, 1998 and June 30, 1998, as amended by Current
Report on Form 8-K/A dated June 30, 1998, and the description of the common
stock contained in the Registrant's Registration Statement on Form 8-A filed
with the Commission by Electronic Memories and Magnetics Corporation, dated
June 16, 1969; as amended by the Form 8 filed with the Commission by the
Registrant on January 22, 1986, and the Form 8-B/A filed with the Commission
by the Registrant on July 31, 1995, each as filed by the Registrant with the
Commission, are hereby incorporated by reference in this registration
statement except as superseded or modified herein. All documents
subsequently filed with the Commission pursuant to Section 13(a), 13(c), 14
or 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 hereby have been sold or which deregisters all securities remaining
unsold, shall be deemed to be incorporated by reference into this
registration statement and to be a part hereof from the date of filing of
such reports and documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement of such action, suit or proceeding, provided that
such officer or director acted in good faith and in a manner he or she
reasonably
II-1
<PAGE>
believed to be in or not opposed to the corporation's best interest, and, for
criminal proceedings, had no reasonable cause to believe his or her conduct was
illegal. A Delaware corporation may indemnify officers and directors against
expenses (including attorney's fees) in connection with the defense or
settlement of an action by or in the right of the corporation under the same
conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must indemnify him or
her against the expenses which such officer or director actually and reasonably
incurred.
The Registrant's Bylaws contain a provision to limit the personal liability
of the directors of the Registrant for violations of their fiduciary duty,
except to the extent such limitation of liability is prohibited by the Delaware
Law. This provision eliminates each director's liability to the Registrant or
its stockholders for monetary damages except (i) for any breach of the
director's duty of loyalty to the Registrant or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware Law providing
for liability of directors for unlawful payment of dividends or unlawful stock
purchases or redemptions, or (iv) for any transaction from which a director
derived an improper personal benefit. The Registrant's Bylaws provide that the
Registrant shall indemnify directors and officers to the fullest extent
permitted by law. The effect of these provisions is to eliminate the personal
liability of directors for monetary damages for actions involving a breach of
their fiduciary duty of care, including any such actions involving gross
negligence.
In addition, Registrant has entered into indemnity agreements with its
executive officers and directors whereby Registrant obligates itself to
indemnify such officers and directors from any amounts which the officer or
director becomes obligated to pay because of any claim made against him or her
arising out of any act or omission committed while he or she is acting in his or
her capacity as a director and/or officer of Registrant.
Registrant maintains directors and officers liability insurance coverage
that insures its officers and directors against certain losses that may arise
out of their positions with the Registrant and insures the Registrant for
liabilities it may incur to indemnify its officers and directors.
II-2
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ -----------------------
<S> <C>
3.1 Registrant's Restated Certificate of Incorporation.(1)
3.2 Registrant's Certificate of Amendment of Restated Certificate of
Incorporation.(1)
3.3 Registrant's Bylaws, as amended.(2)
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Deloitte & Touche LLP.
23.4 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to
this Registration Statement.
24.1 Power of Attorney (included in Part II of this Registration
Statement).
99.1 1990 Stock Option Plan (the "1990 Plan").
99.2 1997 Stock Incentive Plan.
99.3 Form of Stock Option.
</TABLE>
- ----------------
(1) Filed as an exhibit to Registrant's 1987 Annual Report on Form 10-K and
incorporated herein by reference.
(2) Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q dated
November 13, 1995 and incorporated herein by reference.
ITEM 9. UNDERTAKINGS.
(a) RULE 415 OFFERING.
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 Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the
II-3
<PAGE>
Commission pursuant to Rule 424(b) (Section 230.424(b) of this chapter) if, in
the aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(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 the Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if this
Registration Statement is on Form S-3, Form S-8 or Form F-3 and 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 Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, 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 which remain unsold at the
termination of the offering.
(b) FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) REQUEST FOR ACCELERATION OF EFFECTIVE DATE OR FILING OF REGISTRATION
STATEMENT ON FORM S-8.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act, and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, The
Titan Corporation has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of San
Diego, County of San Diego, State of California, on October 23, 1998.
THE TITAN CORPORATION
By: /s/Gene W. Ray
--------------------------------------------
Gene W. Ray,
Chief Executive Officer and President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Gene W. Ray, Eric M. DeMarco and Ira
Frazer, and each or any one of them, as his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place, and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments, exhibits thereto and other
documents in connection therewith) to this Registration Statement and any
subsequent registration statement filed by the registrant pursuant to
Rule 462(b) of the Securities Act of 1933, as amended, which relates 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 attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/J.S. Webb October 23, 1998
- -----------------------------------
J. S. Webb Chairman of the Board of Directors
/s/Gene W. Ray October 23, 1998
- -----------------------------------
Gene W. Ray President and Chief Executive Officer (Principal Executive
Officer) and Director
/s/Eric M. DeMarco October 23, 1998
- -----------------------------------
Eric M. DeMarco Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/Charles R. Allen October 23, 1998
- -----------------------------------
Charles R. Allen Director
/s/Joseph F. Caligiuri October 23, 1998
- -----------------------------------
Joseph F. Caligiuri Director
/s/Daniel J. Fink October 23, 1998
- -----------------------------------
Daniel J. Fink Director
/s/Robert E. La Blanc October 23, 1998
- -----------------------------------
Robert E. La Blanc Director
/s/Thomas G. Pownall October 23, 1998
- -----------------------------------
Thomas G. Pownall Director
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ -----------------------
<S> <C>
3.1 Registrant's Restated Certificate of Incorporation.(1)
3.2 Registrant's Certificate of Amendment of Restated Certificate of
Incorporation.(1)
3.3 Registrant's Bylaws, as amended.(2)
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Deloitte & Touche LLP.
23.4 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to this
Registration Statement.
24.1 Power of Attorney (included in Part II of this Registration
Statement).
99.1 1990 Stock Option Plan (the "1990 Plan").
99.2 1997 Stock Incentive Plan.
99.3 Form of Stock Option.
</TABLE>
- --------------
(1) Filed as an exhibit to Registrant's 1987 Annual Report on Form 10-K and
incorporated herein by reference.
(2) Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q dated
November 13, 1995 and incorporated herein by reference.
<PAGE>
[LETTERHEAD]
October 26, 1998
The Titan Corporation
3033 Science Park Road
San Diego, CA 92121-1199
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by The Titan Corporation (the "Company") of a Form S-8
Registration Statement (the "Registration Statement") with the Securities and
Exchange Commission, covering the registration of up to 593,171 shares of the
Company's Common Stock, par value $.01 (the "Shares"), for issuance upon
exercise of options granted under the 1990 Stock Option Plan and the 1997 Stock
Incentive Plan of VisiCom Laboratories, Inc. ("VisiCom") (collectively, the
"Plans"). The options granted under the Plans are hereinafter collectively
referred to as the "Options."
In connection with this opinion, we have examined and relied upon the Plans, the
Options, the Company's Amended and Restated Articles of Incorporation and
Bylaws, and the originals or copies certified to our satisfaction of such
records, documents, certificates, memoranda and other instruments as in our
judgment are necessary or appropriate to enable us to render the opinion
expressed below. We have assumed the genuineness and authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as copies thereof and the due execution and delivery
of all documents where due execution and delivery are a prerequisite to the
effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when issued and sold in accordance with the Registration
Statement, the Plans and the Options, will be validly issued, fully paid and
nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
COOLEY GODWARD LLP
By: /s/ Barbara L. Borden
--------------------------------
Barbara L. Borden
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report, with respect to the
consolidated financial statements of The Titan Corporation, dated June 10,
1998 (except with respect to the matters discussed in Note 16, as to which
the date is June 30, 1998) included in The Titan Corporation's Form S-4
Registration Statement dated September 24, 1998 (File No. 333-60122) and to
all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
San Diego, California
October 26, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report, with respect to the
consolidated financial statements of Horizons Technology, Inc. dated March 9,
1998 included in The Titan Corporation's Form S-4 Registration Statement
dated June 10, 1998 (File No. 333-47633) and to all references to our Firm
included in this registration statement.
ARTHUR ANDERSEN LLP
San Diego, California
October 26, 1998
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of The Titan Corporation on Form S-8 of our report on DBA Systems, Inc. as of
June 30, 1997 and 1996 and for each of the years in the three year period
ended June 30, 1997, dated August 20, 1997, appearing in the Registration
Statement on Form S-4 (No. 333-45718) of the Titan Corporation.
Orlando, Florida
October 23, 1998
<PAGE>
July 14, 1995 (Revision 3)
VISICOM LABORATORIES, INC.
1990 STOCK OPTION PLAN
A Stock Option Plan is hereby adopted for the benefit of key employees,
directors and service providers of VisiCom Laboratories, Inc. and its parent or
subsidiaries, if any.
1. PURPOSE. The purpose of the Plan is to advance the growth and
prosperity of the Corporation and its shareholders by providing to key
employees, directors and service providers an incentive to serve the
Corporation. By encouraging and enabling such persons to become owners of
capital stock of the Corporation, the Corporation seeks to attract and retain
persons of training, experience and ability and to furnish additional incentives
to those persons upon whose judgment, initiative and efforts the successful
conduct of the Corporation's business depends. It is the intention of the
Corporation that this objective will be accomplished through the granting of
incentive stock options and nonqualified stock options to certain key employees,
directors and service providers of the Corporation.
2. DEFINITIONS. As used herein, the following terms shall have the
corresponding meanings.
2.1 "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the Treasury regulations promulgated thereunder.
2.2 "Committee" shall mean the VisiCom Laboratories, Inc. Stock
Option Committee, to be appointed by the Board of Directors of the Corporation.
If no such Committee is appointed, the entire Board of Directors of the
Corporation shall be deemed to constitute the Committee.
2.3 "Corporation" shall mean VisiCom Laboratories, Inc. and/or its
parent or subsidiaries, if any, as the context requires. The terms "parent" and
"subsidiary" shall mean any existing or future corporation which would be a
parent or subsidiary corporation of the Corporation, as those terms are defined
in Section 425 of the Code.
2.4 "Date of Grant" shall mean the date of grant of a Stock Option
granted hereunder as set forth in the Stock Option Agreement or other agreement
setting forth the terms of the award. In the event of a grant conditioned, among
other
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<PAGE>
July 14, 1995 (Revision 3)
things, upon shareholder ratification of this Plan, the date of such conditional
grant shall be the Date of Grant for purposes of this Plan.
2.5 "Employee" shall mean any common-law employee of the Corporation.
2.6 "Fair Market Value" shall mean the fair market value of the
Shares as determined by the Committee in good faith and with reference to the
following factors:
a. If the Shares of the same class are publicly traded in an
active market of substantial depth, the recent market price of such securities;
b. If the Shares of the same class have not been so publicly
traded, the price at which securities of reasonably comparable corporations (if
any) in the same industry are being traded, subject to appropriate adjustment
for the dissimilarities between the corporations being compared; or
c. In the absence of any reliable indicator under subsection a or
subsection b above, the earnings history, book value and prospects of the
Corporation in light of the market conditions generally.
2.7 "Holder" shall mean any person entitled to exercise a Stock
Option pursuant to the terms of the Plan.
2.8 "Plan" shall mean the VisiCom Laboratories, Inc. 1990 Stock
Option Plan, as herein adopted and as may be amended from time to time.
2.9 "Purchase Price" shall mean the price paid for Shares upon the
exercise of a Stock Option granted hereunder.
2.10 "Shares" shall mean those shares of Common Stock of the
Corporation which are available for issuance pursuant to the terms of the Plan.
2.11 "Stock Option" shall mean a stock option giving a Holder the
right to purchase Shares. A Stock Option may be an Incentive Stock Option or a
Nonqualified Stock Option. An "Incentive Stock Option" is a Stock Option which
is intended to qualify for tax treatment as an incentive stock option under
Section 422A of the Code. An Incentive Stock Option may only be granted to an
Employee. A "Nonqualified Stock Option" is a Stock Option which is intended not
to qualify for tax treatment as an incentive stock option under Section 422A of
the Code.
-2-
<PAGE>
July 14, 1995 (Revision 3)
3. TERM AND EFFECTIVE DATE OF PLAN. The plan shall be effective on the
date of the approval of the Plan by the Board of Directors of the Corporation,
provided that the Plan is approved by a majority of the shareholders of the
Corporation within one year thereafter. Unless sooner terminated by the
Committee, the term of the Plan shall be for ten (10) years from the effective
date. The termination of the Plan shall not affect any rights previously granted
under the Plan.
4. SHARES OF STOCK SUBJECT TO THE PLAN. Subject to the adjustments set
forth in the Plan, the Shares which may be issued pursuant to the Plan shall not
exceed in the aggregate three million (3,000,000) shares of the Corporation's
Common Stock, no par value. Such Shares shall be authorized and unissued shares.
Any Shares subject to a Stock Option granted under this Plan which for any
reason expires or is terminated unexercised shall again be subject to and be
available for issuance pursuant to the terms of this Plan.
5. ADMINISTRATION OF THE PLAN. Within the limitations described herein,
the Committee shall administer the Plan, select the key employees, directors and
service providers to whom Stock Options and other awards shall be granted,
determine the number of Shares to be optioned and awarded in each grant,
determine the method of payment (as described in Section 7.4) upon exercise of
each Stock Option, determine all other terms of Stock Options and other awards
granted hereunder and interpret, construe and implement the provisions of the
Plan. By the adoption of this Plan, the Board of Directors of the Corporation is
delegating to the Committee (if appointed) plenary authority to administer the
Plan. The Committee, if appointed, shall consist of not less than three (3) or
more than five (5) members, who shall serve at the pleasure of the Board of
Directors of the Corporation. Vacancies on the Committee shall be filled by the
Board of Directors of the Corporation. Upon its appointment and during its
tenure, the Committee rather than the Board of Directors of the Corporation
shall have the authority to adopt rules and regulations for carrying out the
Plan and to interpret, construe and implement the provisions of the Plan. The
Committee shall select one of its members as its Chair and shall hold its
meetings at such times and places as it determines, or it may act by written
consent or telephonic meeting. A majority of the Committee shall constitute a
quorum and the acts of a majority of the members present at any meeting at which
a quorum is present or acts reduced to and approved in writing by a majority of
the members of the Committee shall be the valid acts of the Committee. All
decisions and acts of the Committee shall be recorded in writing. Decisions of
the Committee shall be binding on the Corporation and on all Employees.
The following limitations shall apply if the Corporation becomes a
reporting company under the Securities Exchange Act of 1934 and if such
limitations are necessary in order to secure the benefits of Rule 16b-3 (or any
successor rule or
-3-
<PAGE>
July 14, 1995 (Revision 3)
regulation) of the Securities and Exchange Commission: A member of the Committee
shall not be eligible to receive any Stock Option hereunder while serving as a
member of the Committee. If an officer receives a Stock Option pursuant to this
Plan, the number, type and terms of the option must be approved by either: (a) a
majority of the Committee, all of whose members must be "disinterested" persons;
or (b) the Board of Directors of the Corporation; or (c) in the case of grants
to officers who are not directors, by a committee of three (3) or more
directors. If a director receives a Stock Option pursuant to this Plan, the
number, type and terms of the options must be approved by either: (a) a majority
of the Committee, all the members of which must be "disinterested" persons; or
(b) the Board of Directors, provided a majority of the Board of Directors are
"disinterested" persons. For purposes of this Plan, "disinterested" means a
person, who, at the time of such approval, is not eligible and has not at any
time within one year prior thereto been eligible for selection as a person to
whom stock options may be granted pursuant to this Plan or any other plan of the
Corporation or any affiliate entitling participants therein to acquire stock or
Stock Options of the Corporation or of any affiliate. Notwithstanding the above,
the Committee, in its sole discretion, may delegate its powers hereunder to
grant Stock Options and other rights to persons who are not subject to Section
16b of the Securities Exchange Act of 1934 to certain officers of the
Corporation. Any such delegation shall be in writing and shall clearly describe
any limitations to which such delegation of authority is subject.
6. INDEMNIFICATION. In addition to such other rights of indemnification
as they may have as directors or as members of the Committee, members of the
Board of Directors of the Corporation, members of the Committee and any officers
to whom authority to act for the Committee is delegated shall be indemnified by
the Corporation against all reasonable expenses, including attorneys' fees,
actually and necessarily incurred in connection with the defense of any action,
suit or proceeding, or in connection with any appeal therein, to which they or
any of them may be a party by reason of any action taken or failure to act under
or in connection with the Plan, or any right granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Corporation) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for negligence or misconduct in duties;
provided, however, that within sixty (60) days after the institution of such
action, suit or proceeding, such person shall offer to the Corporation, in
writing, the opportunity at its own expense to handle and defend the same.
7. STOCK OPTIONS. The granting of a Stock Option shall be evidenced by a
stock option agreement ("Stock Option Agreement") in such form and not
inconsistent with this Plan, as the Committee shall approve from time to time.
The terms of the
-4-
<PAGE>
July 14, 1995 (Revision 3)
Stock Option Agreements need not be identical for each grant. Each Stock Option
Agreement shall contain in substance the following terms and conditions:
7.1 PRICE. The Stock Option Agreement shall specify the Purchase
Price per Share. The Purchase Price per Share deliverable upon the exercise of
an Incentive Stock Option shall not be less than the Fair Market Value of a
Share on the Date of Grant of the Incentive Stock Option. In the case of a grant
of an Incentive Stock Option to an Employee who, at the time the Incentive Stock
Option is granted, owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Corporation, or of
any parent or subsidiary corporation, the Purchase Price per Share deliverable
upon the exercise of the Incentive Stock Option shall not be less than one
hundred ten percent (110%) of the Fair Market Value of such Share on the Date of
Grant of the Incentive Stock Option. The Purchase Price per Share deliverable
upon exercise of a Nonqualified Stock Option shall be determined by the
Committee.
7.2 NUMBER OF SHARES. The Stock Option Agreement shall specify the
number of Shares subject to the Option.
7.3 EXERCISABILITY OF STOCK OPTION. A Stock Option may be
exercisable, in part or in full, at any time and from time to time during an
exercise period, and subject to such performance criteria, conditions and
restrictions as determined by the Committee on a case by case basis for each
Stock Option, and as set forth in the Stock Option Agreement. In no event shall
the exercise period of any Incentive Stock Option granted hereunder exceed ten
(10) years from the Date of Grant of such Option; provided, however, that in the
case of a grant of an Incentive Stock Option to an Employee, who, at the time
the Incentive Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting stock of the Corporation or of any
parent or subsidiary corporation, such Incentive Stock Option shall not be
exercisable after the expiration of five (5) years from its Date of Grant. If
the exercisability of any Stock Option is subject to a vesting schedule, the
Committee may accelerate the times at which such Stock Option may be exercised.
In the event that the aggregate Fair Market Value (determined as
of the Date of Grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by an Employee during any calendar year (under
all stock option plans of the Corporation and its parent or subsidiary
corporations) exceeds $100,000, the excess shall be treated as a Nonqualified
Stock Option. In the event that more than one (1) Incentive Stock Option has
been granted, the excess shall be deemed attributable to the latest granted
Incentive Stock Option. If a Stock Option is treated in part as an Incentive
Stock Option and in part as a Nonqualified Stock Option by reason of the
limitation discussed herein, separate certificates shall be issued upon exercise
of the Stock Option identifying the Shares attributable to each portion of the
Stock Option.
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July 14, 1995 (Revision 3)
7.4 EXERCISE OF STOCK OPTION AND TIME AND METHOD OF PAYMENT. Each
Holder exercising a Stock Option pursuant to a Stock Option Agreement as herein
provided shall notify the Secretary of the Corporation (or such other officer as
designated by the Committee) of the exercise thereof, in writing, and shall pay
to the Corporation, in cash or by check, at the time of delivery of such notice,
the total Purchase Price for the number of Shares to be purchased under the
Stock Option. In the discretion of the Committee, full or partial payment of the
Purchase Price may be made on a deferred basis evidenced by a fully recourse
promissory note, containing such terms and subject to such security as the
Committee shall determine is fair and reasonable; provided, however, that in no
event shall the interest rate on any promissory note given in payment of the
Purchase Price upon exercise of an Incentive Stock Option be less than the
applicable federal rate, as defined in Section 1274(d) of the Code, on the date
of exercise of the Incentive Stock Option (or such other rate necessary to avoid
the imputation of interest under the Code). The Committee may, in its
discretion, accept full or partial payment of the Purchase Price by delivery
from the Holder of shares of Common Stock of the Corporation then owned by the
Holder. Such shares shall be valued at their Fair Market Value on the date of
exercise of the Stock Option. If payment of the Purchase Price is made by
delivery of previously acquired shares of Common Stock of the Corporation, the
certificate(s) representing such shares shall be duly executed in blank by the
Holder or shall be accompanied by a stock power for the purpose of transferring
such shares duly executed in blank by the Holder. Fractional shares of Common
Stock of the Corporation shall not be accepted in payment of the Purchase Price.
The Corporation shall issue and deliver to the Holder, as soon
as practical after receipt of notice of exercise of the Stock Option together
with payment of the applicable Purchase Price and compliance with all other
terms and conditions of exercise as set forth in the Stock Option Agreement, a
certificate or certificates in the name of the Holder for the Shares covered by
the exercised portion of the Stock Option. No fractional Shares will be issued
in connection with the exercise of any Stock Option granted hereunder.
7.5 TERMINATION OF STOCK OPTIONS. Any Stock Option not exercised
within the exercise period set forth in the Stock Option Agreement under which
the Stock Option is granted shall automatically terminate and be canceled. If
the employment or engagement of a Holder terminates within the applicable
exercise period specified in the Stock Option Agreement but prior to exercise of
the Stock Option, the Stock Option will terminate at the time employment or
engagement is terminated. Notwithstanding the preceding sentence, a Stock Option
Agreement may permit a Holder to exercise the Stock Option after termination of
employment or engagement for a specified period of time, not to exceed the
following applicable periods with respect to Incentive Stock Options:
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July 14, 1995 (Revision 3)
7.5.1 Three (3) months after the date of termination of
employment, if such termination is for reasons other than death or disability,
7.5.2 (i) The expiration date of the Stock Option or (ii) the
date twelve (12) months after the date of termination, whichever is later, if
the termination is due to disability of the Holder, or
7.5.3 (i) The expiration date of the Stock Option or (ii) the
date twelve (12) months after the date of termination, whichever is later, if
such termination was due to death of the Holder or if the Holder died within
three (3) months of termination of employment.
In each case, the Stock Option must be exercisable on the date of the
Holder's termination of employment or engagement and, unless expressly stated to
the contrary in the Stock Option Agreement, vesting of the Stock Option shall
cease on the date of such termination. In no event other than the events
described in Sections 7.5.2 and 7.5.3 above, shall the exercise of a Stock
Option occur after the applicable exercise period specified in the Stock Option
Agreement.
For purposes of this Plan, a Holder is disabled if unable to
engage in any substantial gainful activity with the Corporation by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted, or can be expected to last, for a
continuous period of not less than twelve (12) months. With respect to an
Incentive Stock Option, employment shall be determined in accordance with the
provisions of Section 1.421-7(h) of the Income Tax Regulations (or any successor
regulation). If an Incentive Stock Option is assumed or if a new Incentive Stock
Option is substituted for an Incentive Stock Option granted hereunder in a
transaction to which Section 425(a) of the Code applies, employment by the
corporation assuming the Incentive Stock Option or substituting a new Incentive
Stock Option (or by a parent or subsidiary thereof) shall be considered to be
employment with the Corporation.
With respect to a Nonqualified Stock Option, the Committee shall
determine when a Holder incurs a termination of employment or engagement.
8. RECAPITALIZATION. In the event that dividends are payable in shares of
Common Stock of the Corporation or in the event that there are splits,
subdivisions or combinations of shares of the Common Stock of the Corporation,
the number of Shares available under the Plan and under any unexercised but
granted Stock Option, whether or not fully vested, shall be increased or
decreased proportionately, as the case may be, without change in the aggregate
Purchase Price. In addition, in the event of a
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July 14, 1995 (Revision 3)
distribution of assets to shareholders of the Corporation which significantly
affects the Fair Market Value of Shares, the Purchase Price per Share shall be
decreased to reflect the distribution of assets.
9. REORGANIZATION. In the event that the Corporation and/or its
shareholders enter into an agreement to dispose of all or substantially all of
the assets of the Corporation or an amount of the outstanding stock of the
Corporation sufficient to constitute effective control of the Corporation by
means of a sale, merger, reorganization, separation, liquidation or any other
transaction, the Committee shall provide each Holder with at least ten (10)
days' advance written notice prior to consummation of any such pending sale,
merger, reorganization, separation, liquidation or other transaction to enable
the Holder to exercise any then vested Stock Option granted hereunder prior to
consummation of the transaction. Upon consummation of any sale, merger,
reorganization, separation, liquidation or other transaction in which the
Corporation does not survive, all outstanding Stock Options granted
hereunder-shall terminate and cease to be exercisable unless assumed pursuant to
a written agreement by the successor corporation or parent or subsidiary
thereof.
10. RESTRICTIONS ON TRANSFER OF SHARES. Shares issued under this Plan
shall be subject to a right of first refusal by the Corporation and to the other
conditions and restrictions in the Shareholder Stock Transfer Restrictions
Agreement. Each Holder (and the Holder's spouse if Holder is married) shall
execute such Shareholder Stock Transfer Restrictions Agreement prior to the
receipt of Shares hereunder. Appropriate legends evidencing such Shareholder
Stock Transfer Restrictions Agreement shall be placed on Shares issued under
this Plan.
11. INVESTMENT REPRESENTATIONS. The Committee may require a Holder to whom
a Stock Option is granted, as a condition of receipt and/or exercise of the
Stock Option, to give written assurances in substance and form satisfactory to
the Committee to the effect that Holder is acquiring the Stock Option, Shares
granted hereunder, as applicable, for Holder's own account and not with any
present intention of selling or otherwise distributing the same, and to such
other effects as the Committee deems necessary or appropriate in order to comply
with federal and applicable state securities laws. Appropriate legends may be
placed on any Shares issued under the Plan evidencing such representations.
12. Delivery of Financial Information. Not later than one hundred twenty
days after the end of each fiscal year of the Corporation, the Corporation shall
deliver to each holder of Shares and/or Options complete financial statements of
the Corporation
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<PAGE>
July 14, 1995 (Revision 3)
prepared in accordance with generally accepted accounting principles and audited
if available.
13. COMPLIANCE WITH SECURITIES LAWS. Stock Options may not be granted or
exercised in whole or in part if at any time the Committee determines, in its
discretion, that the granting of such Stock Option or the issuance or purchase
of shares requires either: (a) the listing, registration or qualification upon
any securities exchange or under any state or federal law of the Shares subject
to such Stock Option; or (b) the consent or approval of any government or
regulatory body. Notwithstanding the foregoing provision, such Stock Option may
be granted or exercised if such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee. Nothing in the Plan or related Stock Option
Agreements shall be deemed to require the Corporation to apply for or obtain
such listing, registration or qualification.
14. RIGHTS AS A SHAREHOLDER. A Holder shall have no rights as a
shareholder of the Corporation with respect to any Shares covered by a Stock
Option granted hereunder until said Holder tenders an effective and
unconditional notice of exercise of the Stock Option to the Corporation,
complies with all other terms and conditions of exercise and, if applicable,
pays the Purchase Price. Except as otherwise expressly provided in the Plan, no
adjustment shall be made for dividends for which the record date is prior to the
date on which the Holder tenders notice of exercise, complies with all other
terms and conditions of exercise, and pays any applicable Purchase Price. The
Committee shall use its best efforts to secure prompt issuance of stock
certificates following full performance of exercise by any Holder.
15. NON-ASSIGNABILITY OF OPTIONS. No Incentive Stock Option shall be
assignable or transferable by the Holder except by will or by the laws of
descent and distribution. During the life of the Holder, an Incentive Stock
Option shall be exercisable only by the Holder or by the duly appointed legal
representative of an incompetent Holder. The transferability of a Nonqualified
Stock Option granted hereunder shall be set forth in the Stock Option Agreement
or other Agreement evidencing the grant of the right.
16. WITHHOLDING TAXES. The Corporation shall have the right to deduct from
amounts otherwise due Holder under a Stock Option granted hereunder or from any
wages or other compensation to be paid to Holder any sums required by federal,
state and local tax law to be withheld with respect to the exercise of any Stock
Option or with respect to the disposition of Shares issued hereunder or, in the
alternative, to require the
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<PAGE>
July 14, 1995 (Revision 3)
Holder to pay such sums to the Corporation. The Corporation may, in its
discretion and upon request by Holder, withhold from the Shares to be issued to
Holder under this Plan a number of Shares (based on the Fair Market Value of the
Shares on the date of exercise of the Stock Option) necessary to satisfy any tax
withholding requirements.
17. AMENDMENT OF THE PLAN. The Plan may, at any time or from time to time,
be terminated, modified or amended by the Committee; except that, without
shareholder approval, the Committee may not increase the number of Shares which
may be issued under the Plan (other than increases due to changes in
capitalization), modify the requirements as to eligibility for participation in
the Plan, or materially increase the benefits accruing to participants under the
Plan (this last restriction shall apply only if the Corporation is a reporting
company under the Securities Exchange Act of 1934 at the time of the amendment
and the restriction is required by then current law). The termination,
modification or amendment of the Plan shall not, without the consent of a
Holder, affect the Holder's rights under any previously granted Stock Option.
With the consent of each Holder affected, the Board may amend outstanding Stock
Option Agreements and other agreements evidencing rights granted hereunder in a
manner not inconsistent with the Plan.
18. NO SPECIAL EMPLOYMENT RIGHTS. Nothing contained in this Plan or in any
Stock Option granted hereunder shall confer upon any Holder any right with
respect to continued employment or engagement with the Corporation or interfere
in any way with the right of the Corporation, subject to the terms of any
separate agreement with the Holder to the contrary, at any time to terminate
such employment or engagement or to increase or decrease the compensation or
other benefits paid to the Holder.
19. GOVERNING LAW. This Plan and any Stock Options issued hereunder shall
be governed by and construed in accordance with the laws of the State of
California.
20. FORUM. Any litigation to enforce or interpret the provisions of this
Agreement or the parties' rights and liabilities arising out of this Agreement
or the performance hereunder shall be maintained only in the courts in the
County of San Diego, California.
Approved by the Shareholders on January 15, 1991.
First Revision Approved by the Shareholders on June 29, 1993.
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<PAGE>
July 14, 1995 (Revision 3)
Second Revision Approved by the Shareholders on August 2, 1994.
Third Revision Approved by the Shareholders on July 14, 1995.
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<PAGE>
VISICOM LABORATORIES, INC.
1997 STOCK INCENTIVE PLAN
(AS ADOPTED AND EFFECTIVE APRIL 1, 1997)
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
SECTION 1. PURPOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) "Award". . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) "Board of Directors" . . . . . . . . . . . . . . . . . . . . . 1
(c) "Change in Control". . . . . . . . . . . . . . . . . . . . . . 1
(d) "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(e) "Committee". . . . . . . . . . . . . . . . . . . . . . . . . . 2
(f) "Common-Law Employee". . . . . . . . . . . . . . . . . . . . . 2
(g) "Company". . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(h) "Employee" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(i) "Exchange Act" . . . . . . . . . . . . . . . . . . . . . . . . 3
(j) "Exercise Price" . . . . . . . . . . . . . . . . . . . . . . . 3
(k) "Fair Market Value". . . . . . . . . . . . . . . . . . . . . . 3
(l) "Incentive Stock Option" or "ISO". . . . . . . . . . . . . . . 4
(m) "Nonstatutory Option" or "NSO" . . . . . . . . . . . . . . . . 4
(n) "Offeree". . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(o) "Option" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(p) "Optionee" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(q) "Outside Director" . . . . . . . . . . . . . . . . . . . . . . 4
(r) "Participant". . . . . . . . . . . . . . . . . . . . . . . . . 4
(s) "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(t) "Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . 5
(u) "Restricted Share" . . . . . . . . . . . . . . . . . . . . . . 5
(v) "Service". . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(w) "Share". . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(x) "Stock". . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(y) "Stock Award Agreement". . . . . . . . . . . . . . . . . . . . 5
(z) "Stock Option Agreement" . . . . . . . . . . . . . . . . . . . 5
(aa) "Stock Purchase Agreement". . . . . . . . . . . . . . . . . . 5
(ab) "Subsidiary". . . . . . . . . . . . . . . . . . . . . . . . . 5
(ac) "Total and Permanent Disability". . . . . . . . . . . . . . . 6
(ad) "W-2 Payroll" . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Committee Membership . . . . . . . . . . . . . . . . . . . . . 6
(b) Committee Procedures . . . . . . . . . . . . . . . . . . . . . 7
(c) Committee Responsibilities . . . . . . . . . . . . . . . . . . 7
(d) Committee Liability. . . . . . . . . . . . . . . . . . . . . . 8
(e) Financial Reports. . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4. ELIGIBILITY. . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) General Rule . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Ten-Percent Shareholders . . . . . . . . . . . . . . . . . . . 8
(c) Attribution Rules. . . . . . . . . . . . . . . . . . . . . . . 9
(d) Outstanding Stock. . . . . . . . . . . . . . . . . . . . . . . 9
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SECTION 5. STOCK SUBJECT TO PLAN. . . . . . . . . . . . . . . . . . . . . 9
(a) Basic Limitation . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Additional Shares. . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES. . . . . . . . . . . . 11
(a) Stock Purchase Agreement . . . . . . . . . . . . . . . . . . . 11
(b) Duration of Offers . . . . . . . . . . . . . . . . . . . . . . 11
(c) Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) Payment for Shares . . . . . . . . . . . . . . . . . . . . . . 11
(i) Surrender of Stock . . . . . . . . . . . . . . . . . . . 12
(ii) Promissory Notes . . . . . . . . . . . . . . . . . . . . 12
(iii) Cashless Exercise. . . . . . . . . . . . . . . . . . . . 12
(iv) Other Forms of Payment . . . . . . . . . . . . . . . . . 13
(e) Exercise of Awards on Termination of Service . . . . . . . . . 13
SECTION 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED SHARES . . . . . 13
(a) Form and Amount of Award . . . . . . . . . . . . . . . . . . . 13
(b) Exercisability . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) Effect of Change in Control. . . . . . . . . . . . . . . . . . 14
(d) Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8. TERMS AND CONDITIONS OF OPTIONS. . . . . . . . . . . . . . . . 14
(a) Stock Option Agreement . . . . . . . . . . . . . . . . . . . . 14
(b) Number of Shares . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . 15
(d) Exercisability . . . . . . . . . . . . . . . . . . . . . . . . 15
(e) Effect of Change in Control. . . . . . . . . . . . . . . . . . 15
(f) Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(g) Exercise of Options on Termination of Service. . . . . . . . . 16
(h) Payment of Option Shares . . . . . . . . . . . . . . . . . . . 16
(i) Surrender of Stock . . . . . . . . . . . . . . . . . . . 16
(ii) Promissory Notes . . . . . . . . . . . . . . . . . . . . 17
(iii) Cashless Exercise. . . . . . . . . . . . . . . . . . . . 17
(iv) Other Forms of Payment . . . . . . . . . . . . . . . . . 18
(i) No Rights as a Shareholder . . . . . . . . . . . . . . . . . . 18
(j) Modification, Extension and Assumption of Options. . . . . . . 18
SECTION 9. ADJUSTMENT OF SHARES . . . . . . . . . . . . . . . . . . . . . 18
(a) General. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Reorganizations. . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Reservation of Rights. . . . . . . . . . . . . . . . . . . . . 19
SECTION 10. WITHHOLDING TAXES. . . . . . . . . . . . . . . . . . . . . . . 19
(a) General. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Share Withholding. . . . . . . . . . . . . . . . . . . . . . . 20
(c) Cashless Exercise/Pledge . . . . . . . . . . . . . . . . . . . 20
(d) Other Forms of Payment . . . . . . . . . . . . . . . . . . . . 20
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SECTION 11. ASSIGNMENT OR TRANSFER OF AWARDS . . . . . . . . . . . . . . . 20
(a) General. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 12. LEGAL REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 13. NO EMPLOYMENT RIGHTS . . . . . . . . . . . . . . . . . . . . . 22
SECTION 14. DURATION AND AMENDMENTS. . . . . . . . . . . . . . . . . . . . 22
(a) Term of the Plan . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Right to Amend or Terminate the Plan . . . . . . . . . . . . . 23
(c) Effect of Amendment or Termination . . . . . . . . . . . . . . 23
SECTION 15. EXECUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
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<PAGE>
VISICOM LABORATORIES, INC.
1997 STOCK INCENTIVE PLAN
(AS ADOPTED AND EFFECTIVE APRIL 1, 1997)
SECTION 1. PURPOSE.
The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to acquire a proprietary interest in the success of
the Company, or to increase such interest, to encourage such selected persons to
remain in the employ of the Company and to attract new employees with
outstanding qualifications. The Plan seeks to achieve this purpose by providing
for Awards in the form of Restricted Shares and Options (which may constitute
Incentive Stock Options or Nonstatutory Stock Options) as well as the direct
award or sale of Shares of the Company's Common Stock. The Plan replaces the
VisiCom Laboratories, Inc. 1990 Stock Option Plan (the "1990 Plan").
SECTION 2. DEFINITIONS.
(a) "AWARD" shall mean any award of an Option, Restricted Share or other
right under the Plan.
(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company,
as constituted from time to time.
(c) "CHANGE IN CONTROL" shall be defined by the Committee and provided for
in the Stock Purchase Agreements, Stock Option Agreements and Stock Award
Agreements. The term "Change in Control" shall not include a transaction the
sole purpose of which is to change the state of the Company's incorporation.
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<PAGE>
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" shall mean a committee of the Board of Directors which is
authorized to administer the Plan under Section 3.
(f) "COMMON-LAW EMPLOYEE" means an individual paid from W-2 Payroll of the
Company or a Subsidiary. If, during any period, the Company (or Subsidiary, as
applicable) has not treated an individual as a Common-Law Employee and, for that
reason, has not paid such individual in a manner which results in the issuance
of a Form W-2 and withheld taxes with respect to him or her, then that
individual shall not be an eligible Employee for that period, even if any
person, court of law or government agency determines, retroactively, that that
individual is or was a Common-Law Employee during all or any portion of that
period.
(g) "COMPANY" shall mean VisiCom Laboratories, Inc., a California
corporation.
(h) "EMPLOYEE" shall mean (i) any individual who is a Common-Law Employee
of the Company or of a Subsidiary, (ii) a member of the Board of Directors,
including (without limitation) an Outside Director, or an affiliate of a member
of the Board of Directors, (iii) a member of the board of directors of a
Subsidiary, or (iv) an independent contractor who performs services for the
Company or a Subsidiary. Service as a member of the Board of Directors, a member
of the board of directors of a Subsidiary or an independent contractor shall be
considered
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<PAGE>
employment for all purposes of the Plan except the second
sentence of Section 4(a).
(i) "EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended.
(j) "EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(k) "FAIR MARKET VALUE", means the market price of Shares, determined by
the Committee as follows:
(i) If the Shares were traded over-the-counter on the date in
question but were not traded on the Nasdaq Stock Market or the Nasdaq
National Market System, then the Fair Market Value shall be equal to the
mean between the last reported representative bid and asked prices quoted
for such date by the principal automated interdealer quotation system on
which the Shares are quoted or, if the Shares are not quoted on any such
system, by the "Pink Sheets" published by the National Quotation Bureau,
Inc.;
(ii) If the Shares were traded over-the-counter on the date in
question and were traded on the Nasdaq Stock Market or the Nasdaq National
Market System, then the Fair Market Value shall be equal to the last-
transaction price quoted for such date by the Nasdaq Stock Market or the
Nasdaq National Market;
(iii) If the Shares were traded on a stock exchange on the date in
question, then the Fair Market Value shall
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be equal to the closing price reported by the applicable composite
transactions report for such date; and
(iv) If none of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith on such
basis as it deems appropriate.
In all cases, the determination of Fair Market Value by the Committee shall
be conclusive and binding on all persons.
(l) "INCENTIVE STOCK OPTION" or "ISO" shall mean an employee incentive
stock option described in Code section 422(b).
(m) "NONSTATUTORY OPTION" or "NSO" shall mean an employee stock option that
is not an ISO.
(n) "OFFEREE" shall mean an individual to whom the Committee has offered
the right to acquire Shares under the Plan (other than upon exercise of an
Option).
(o) "OPTION" shall mean an Incentive Stock Option or Nonstatutory Option
granted under the Plan and entitling the holder to purchase Shares.
(p) "OPTIONEE" shall mean an individual or estate who holds an Option.
(q) "OUTSIDE DIRECTOR" shall mean a member of the Board who is not a
Common-Law Employee of the Company or a Subsidiary.
(r) "PARTICIPANT" shall means an individual or estate who holds an Award.
(s) "PLAN" shall mean this VisiCom Laboratories, Inc., 1997 Stock
Incentive Plan.
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(t) "PURCHASE PRICE" shall mean the consideration for which one Share may
be acquired under the Plan (other than upon exercise of an Option), as specified
by the Committee.
(u) "RESTRICTED SHARE" shall mean a Share sold or granted to an eligible
Employee which is nontransferable and subject to substantial risk of forfeiture
until restrictions lapse.
(v) "SERVICE" shall mean service as an Employee.
(w) "SHARE" shall mean one share of Stock, as adjusted in accordance with
Section 9 (if applicable).
(x) "STOCK" shall mean the common stock of the Company.
(y) "STOCK AWARD AGREEMENT" shall mean the agreement between the Company
and the recipient of a Restricted Share which contains the terms, conditions and
restrictions pertaining to such Restricted Share.
(z) "STOCK OPTION AGREEMENT" shall mean the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions pertaining
to his or her Option.
(aa) "STOCK PURCHASE AGREEMENT" shall mean the agreement between the
Company and an Offeree who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such
Shares.
(ab) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation
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that attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.
(ac) "TOTAL AND PERMANENT DISABILITY" means that the Optionee is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted, or can be expected to last, for a continuous period
of not less than one year.
(ad) "W-2 PAYROLL" means whatever mechanism or procedure that the Company
or a Subsidiary utilizes to pay any individual which results in the issuance of
Form W-2 to the individual. "W-2 Payroll" does not include any mechanism or
procedure which results in the issuance of any form other than a Form W-2 to an
individual, including, but not limited to, any Form 1099 which may be issued to
an independent contractor, an agency employee or a consultant. Whether a
mechanism or procedure qualifies as a "W-2 Payroll" shall be determined in the
absolute discretion of the Company (or Subsidiary, as applicable), and the
Company or Subsidiary determination shall be conclusive and binding on all
persons.
SECTION 3. ADMINISTRATION.
(a) COMMITTEE MEMBERSHIP. The Plan shall be administered by the Committee
appointed by the Board of Directors. In the event the Company's Shares become
publicly traded, the Committee shall be comprised solely of two or more Outside
Directors
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(although Committee functions may be delegated to officers to the extent the
awards relate to persons who are not subject to the reporting requirements of
Section 16 of the Exchange Act). If no Committee has been appointed, the entire
Board shall constitute the Committee.
(b) COMMITTEE PROCEDURES. The Board of Directors shall designate one of
the members of the Committee as chairperson. The Committee may hold meetings at
such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum exists, or acts reduced
to or approved in writing by all Committee members, shall be valid acts of the
Committee.
(c) COMMITTEE RESPONSIBILITIES. The Committee has and may exercise such
power and authority as may be necessary or appropriate for the Committee to
carry out its functions as described in the Plan. The Committee has authority in
its discretion to determine eligible Employees to whom, and the time or times at
which, Awards may be granted and the number of Shares subject to each Award.
Subject to the express provisions of the respective Award agreements (which need
not be identical) and to make all other determinations necessary or advisable
for Plan administration. The Committee has authority to prescribe, amend, and
rescind rules and regulations relating to the Plan. All interpretations,
determinations, and actions by the Committee will be final, conclusive, and
binding upon all persons.
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(d) COMMITTEE LIABILITY. No member of the Board or the Committee will be
liable for any action or determination made in good faith by the Committee with
respect to the Plan or any Award made under the Plan.
(e) FINANCIAL REPORTS. To the extent required by applicable law, and not
less often than annually, the Company shall furnish to Offerees, Optionees and
Shareholders who have received Stock under the Plan its financial statements
including a balance sheet regarding the Company's financial condition and
results of operations, unless such Offerees, Optionees or Shareholders have
duties with the Company that assure them access to equivalent information. Such
financial statements need not be audited.
SECTION 4. ELIGIBILITY.
(a) GENERAL RULE. Only Employees, as defined in Section 2(h), shall be
eligible for designation as Participants by the Committee. In addition, only
individuals who are employed as Common-Law Employees by the Company or a
Subsidiary shall be eligible for the grant of ISOs.
(b) TEN-PERCENT SHAREHOLDERS. An Employee who owns more than ten percent
(10%) of the total combined voting power of all classes of outstanding stock of
the Company or any of its Subsidiaries shall not be eligible for designation as
an Offeree or Optionee unless (i) the Exercise Price for an ISO (and a NSO to
the extent required by applicable law) is at least one hundred ten percent
(110%) of the Fair Market Value of a Share
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on the date of grant, (ii) the Purchase Price of Shares is at least one hundred
percent (100%) of the Fair Market Value of a Share on the date of grant, and
(iii) in the case of an ISO, such ISO by its terms is not exercisable after
the expiration of five years from the date of grant.
(c) ATTRIBUTION RULES. For purposes of Subsection (b) above, in
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or indirectly, by or for his brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its shareholders, partners or beneficiaries. Stock
with respect to which such Employee holds an Option shall not be counted.
(d) OUTSTANDING STOCK. For purposes of Subsection (b) above, "outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant. "Outstanding Stock" shall not include shares authorized for issuance
under outstanding Options held by the Employee or by any other person.
SECTION 5. STOCK SUBJECT TO PLAN.
(a) BASIC LIMITATION. Shares offered under the Plan shall be authorized
but unissued Shares. Subject to Sections 5(b) and 9 of the Plan, the aggregate
number of Shares which may be issued or transferred pursuant to an Award under
the Plan shall not exceed one million five hundred thousand (1,500,000)
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Shares, and the number of shares that may be issued or transferred during any
12-month period to any eligible Employee pursuant to an Award unrelated to an
Option shall not exceed two hundred fifty thousand (250,000) Shares.
Additionally, Shares subject to options granted under the 1990 Plan as of the
date hereof which are not issued or are unissuable (e.g., through the
expiration, cancellation or forfeiture of options) shall also become available
for issuance under the Plan. In any event, (i) the number of Shares which are
subject to Awards or other rights outstanding at any time under the Plan shall
not exceed the number of Shares which then remain available for issuance under
the Plan; and (ii) the number of Shares which are subject to Awards or other
rights outstanding at any time under the Plan or otherwise shall not exceed the
limitation imposed by Section 260.140.45 of the Code of Regulations of the
California Commissioner of Corporations. The Company, during the term of the
Plan, shall at all times reserve and keep available sufficient Shares to satisfy
the requirements of the Plan.
(b) ADDITIONAL SHARES. In the event that any outstanding Option or other
right for any reason expires or is canceled or otherwise terminated, the Shares
allocable to the unexercised portion of such Option or other right shall again
be available for the purposes of the Plan. If a Restricted Share is forfeited
before any dividends have been paid with respect to such Restricted Share, then
such Restricted Share shall again become available for award under the Plan.
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SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES.
(a) STOCK PURCHASE AGREEMENT. Each award or sale of Shares under the Plan
(other than upon exercise of an Option) shall be evidenced by a Stock Purchase
Agreement between the Offeree and the Company. Such award or sale shall be
subject to all applicable terms and conditions of the Plan and may be subject to
any other terms and conditions which are not inconsistent with the Plan and
which the Committee deems appropriate for inclusion in a Stock Purchase
Agreement. The provisions of the various Stock Purchase Agreements entered into
under the Plan need not be identical.
(b) DURATION OF OFFERS. Any right to acquire Shares under the Plan (other
than an Option) shall automatically expire if not exercised by the Offeree
within 30 days after the grant of such right was communicated to the Offeree by
the Committee.
(c) PURCHASE PRICE. The Purchase Price of Shares to be offered under the
Plan shall not be less than eighty-five percent (85%) of the Fair Market Value
of a Share on the date of grant (100% for 10% shareholders), except as otherwise
provided in Section 4(b). Subject to the preceding sentence, the Purchase Price
shall be determined by the Committee in its sole discretion. The Purchase Price
shall be payable in a form described in Subsection (d) below.
(d) PAYMENT FOR SHARES. The entire Purchase Price of Shares issued under
the Plan shall be payable in lawful money of the United States of America at the
time when such Shares are purchased, except as provided below. Notwithstanding
any other
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provision of the Plan, Shares may, in the discretion of the Committee, be
awarded under the Plan in consideration of Services rendered to the Company or a
Subsidiary prior to the Award. Permissible forms of payment, in addition to
cash, are:
(i) SURRENDER OF STOCK. To the extent that a Purchase Option
Agreement so provides, payment may be made all or in part with Shares which
have already been owned by the Offeree or the Offeree's representative for
any time period specified by the Committee and which are surrendered to the
Company in good form for transfer. Such Shares shall be valued at their
Fair Market Value on the date when the new Shares are purchased under the
Plan.
(ii) PROMISSORY NOTES. To the extent that a Stock Purchase
Agreement so provides, payment may be made all or in part with a full
recourse promissory note executed by the Offeree. The interest rate and
other terms and conditions of such note shall be determined by the
Committee. The Committee may require that the Offeree pledge his or her
Shares to the Company for the purpose of securing the payment of such note.
In no event shall the stock certificate(s) representing such Shares be
released to the Offeree until such note is paid in full.
(iii) CASHLESS EXERCISE. To the extent that a Stock Purchase
Agreement so provides and a public market for the Shares exists, payment
may be made all or in part by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a securities broker to sell
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Shares and to deliver all or part of the sale proceeds to the Company in
payment of the aggregate Exercise Price.
(iv) OTHER FORMS OF PAYMENT. To the extent provided in the Stock
Purchase Agreement, payment may be made in any other form that is
consistent with applicable laws, regulations and rules, including payment
for past services.
(e) EXERCISE OF AWARDS ON TERMINATION OF SERVICE. Each Stock Award
Agreement shall set forth the extent to which the recipient shall have the right
to exercise the Award following termination of the recipient's Service with the
Company and its Subsidiaries. Such provisions shall be determined in the sole
discretion of the Committee, need not be uniform among all the Awards issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination of employment.
SECTION 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED SHARES.
(a) FORM AND AMOUNT OF AWARD. Each Stock Award Agreement shall specify the
number of Shares that are subject to the Award. Restricted Shares may be
awarded in combination with NSOs and such an Award may provide that the
Restricted Shares will be forfeited in the event that the related NSOs are
exercised.
(b) EXERCISABILITY. Each Stock Award Agreement shall specify the
conditions upon which Restricted Shares shall become vested, in full or in
installments.
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(c) EFFECT OF CHANGE IN CONTROL. The Committee may determine at the time
of making an Award or thereafter, that such Award shall become fully vested in
the event that a Change in Control occurs with respect to the Company.
(d) VOTING RIGHTS. Holders of Restricted Shares awarded under the Plan
shall have the same voting, dividend and other rights a the Company's other
stockholders. A Stock Award Agreement, however, may require that the holders
invested any cash dividends received in additional Restricted Shares. Such
additional Restricted Shares shall be subject to the same conditions and
restrictions as the Award with respect to which the dividends were paid. Such
additional Restricted Shares shall not reduce the number of Shares available
under Section 5.
SECTION 8. TERMS AND CONDITIONS OF OPTIONS.
(a) STOCK OPTION AGREEMENT. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical.
(b) NUMBER OF SHARES. Each Stock Option Agreement shall specify the number
of Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance
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with Section 9. The Stock Option Agreement shall also specify whether the Option
is an ISO or a Nonstatutory Option.
(c) EXERCISE PRICE. Each Stock Option Agreement shall specify the Exercise
Price. The Exercise Price of an ISO shall not be less than one hundred percent
(100%) of The Fair Market Value of a Share on the date of grant, except as
otherwise provided in Section 4(b). To the extent required by applicable law
and except as otherwise provided in Section 4(b), the Exercise Price of a
Nonstatutory Option shall not be less than eighty-five percent (85%) of the Fair
Market Value of a Share on the date of grant. Subject to the preceding two
sentences, the Exercise Price under any Option shall be determined by the
Committee in its sole discretion. The Exercise Price shall be payable in a form
described in Subsection (h) below.
(d) EXERCISABILITY. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. To the
extent required by applicable law, an Option shall become exercisable no less
rapidly than the rate of 20% per year for each of the first five years from the
date of grant. Subject to the preceding sentence, the exercisability of any
Option shall be determined by the Committee in its sole discretion.
(e) EFFECT OF CHANGE IN CONTROL. The Committee may determine, at the time
of granting an Option or thereafter, that such Option shall become fully
exercisable as to all Shares subject to such Option in the event that a Change
in Control occurs with respect to the Company.
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(f) TERM. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed ten years from the date of grant (or five
(5) years for ten percent (10%) shareholders as provided in Section 4(b)).
Subject to the preceding sentence, the Committee at its sole discretion shall
determine when an Option is to expire.
(g) EXERCISE OF OPTIONS ON TERMINATION OF SERVICE. Each Option shall set
forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's Service with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
Notwithstanding the foregoing, to the extent required by applicable law, each
Option shall provide that the Optionee shall have the right to exercise the
vested portion of any Option held at termination for at least 30 days following
termination of Service with the Company for any reason, and that the Optionee
shall have the right to exercise the Option for at least six months if the
Optionee's Service terminates due to death or Disability.
(h) PAYMENT OF OPTION SHARES. The entire Exercise Price of Shares issued
under the Plan shall be payable in lawful money of the United States of America
at the time when such Shares are purchased, except as provided below:
(i) SURRENDER OF STOCK. To the extent that a Stock Option
Agreement so provides, payment may be
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made all or in part with Shares which have already been owned by the
Optionee or the Optionee's representative for any time period specified by
the Committee and which are surrendered to the Company in good form for
transfer. Such Shares shall be valued at their Fair Market Value on the
date when the new Shares are purchased under the Plan.
(ii) PROMISSORY NOTES. To the extent that a Stock Option Agreement
or Stock Purchase Agreement so provides, payment may be made all or in part
with a full recourse promissory note executed by the Optionee or Offeree.
The interest rate and other terms and conditions of such note shall be
determined by the Committee. The Committee may require that the Optionee or
Offeree pledge his or her Shares to the Company for the purpose of securing
the payment of such note. In no event shall the stock certificate(s)
representing such Shares be released to the Optionee or Offeree until such
note is paid in full.
(iii) CASHLESS EXERCISE. To the extent that a Stock Option Agreement
so provides and a public market for the Shares exists, payment may be made
all or in part by delivery (on a form prescribed by the Committee) of an
irrevocable direction to a securities broker to sell Shares and to deliver
all
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or part of the sale proceeds to the Company in payment of the aggregate
Exercise Price.
(iv) OTHER FORMS OF PAYMENT. To the extent provided in the Stock
Option Agreement, payment may he made in any other form that is consistent
with applicable laws, regulations and rules.
(i) NO RIGHTS AS A SHAREHOLDER. An Optionee, or a transferee of an
Optionee, shall have no rights as a shareholder with respect to any Shares
covered by an Option until the date of the issuance of a stock certificate for
such Shares.
(j) MODIFICATION, EXTENSION AND ASSUMPTION OF OPTIONS. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another issuer) in return for the grant of new Options for the
same or a different number of Shares and at the same or a different Exercise
Price or for other consideration.
SECTION 9. ADJUSTMENT OF SHARES.
(a) GENERAL. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend
payable in a form other than Shares in an amount that has a material effect
on the value of Shares, a combination or consolidation of the outstanding
Stock into a lesser number of Shares, a recapitalization, a reclassification
or a similar occurrence, the Committee shall make appropriate adjustments in
one or more of (i) the number of
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Shares available for future Awards under Section 5, (ii) the number of Shares
covered by each outstanding Option or Purchase Agreement or (iii) the Exercise
Price or Purchase Price under each outstanding Option or Stock Purchase
Agreement.
(b) REORGANIZATIONS. In the event that the Company is a party to a merger
or reorganization, outstanding Options shall be subject to the agreement of
merger or reorganization.
(c) RESERVATION OF RIGHTS. Except as provided in this Section 9, an
Optionee or an Offeree shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any dividend
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number, Exercise
Price or Purchase Agreement of Shares subject to an Option or Stock Purchase
Agreement. The grant of an Award pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
SECTION 10. WITHHOLDING TAXES.
(a) GENERAL. To the extent required by applicable federal, state, local or
foreign law, a Participant or his or
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her successor shall make arrangements satisfactory to the Committee for the
satisfaction of any withholding tax obligations that arise in connection with
the Plan. The Company shall not be required to issue any Shares or make any
cash payment under the Plan until such obligations are satisfied.
(b) SHARE WITHHOLDING. The Committee may permit a Participant to satisfy
all or part of his or her withholding or income tax obligations by having the
Company withhold all or a portion of any Shares that otherwise would be issued
to him or her or by surrendering all or a portion of any Shares that he or she
previously acquired. Such Shares shall be valued at their Fair Market Value on
the date when taxes otherwise would be withheld in cash. Any payment of taxes by
assigning Shares to the Company may be subject to restrictions, including any
restrictions required by rules of any federal or state regulatory body or other
authority.
(c) CASHLESS EXERCISE/PLEDGE. The Committee may provide that if Company
Shares are publicly traded at the time of exercise, arrangements may be made to
meet the Optionee's withholding obligation by cashless exercise or pledge.
(d) OTHER FORMS OF PAYMENT. The Committee may permit such other means of
tax withholding as it deems appropriate.
SECTION 11. ASSIGNMENT OR TRANSFER OF AWARDS.
(a) GENERAL. An Award granted under the Plan shall not be anticipated,
assigned, attached, garnished, optioned, transferred or made subject to any
creditor's process, whether
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voluntarily, involuntarily or by operation of law, except as approved by the
Committee. Notwithstanding the foregoing, ISOs may not be transferable. Also
notwithstanding the foregoing, while the Shares are subject to California
Corporations Codes Section 25102(o), Offerees and Optionees may not transfer
their rights hereunder except by will, beneficiary designation or the laws of
descent and distribution, and (ii) any rights of repurchase in favor of the
Company shall take into account the provisions of Department of Corporations
Regulation Section 260.140.41 or 260.140.42, as applicable.
(b) TRUSTS. Neither this Section 11 nor any other provision of the Plan
shall preclude a Participant from transferring or assigning Restricted Shares to
(a) the trustee of a trust that is revocable by such Participant alone, both at
the time of the transfer or assignment and at all times thereafter prior to such
Participant's death, or (b) the trustee of any other trust to the extent
approved by the Committee in writing. A transfer or assignment of Restricted
Shares from such trustee to any other person than such Participant shall be
permitted only to the extent approved in advance by the Committee in writing,
and Restricted Shares held by such trustee shall be subject to all the
conditions and restrictions set forth in the Plan and in the applicable Stock
Award Agreement, as if such trustee were a party to such Agreement.
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SECTION 12. LEGAL REQUIREMENTS.
Shares shall not be issued under the Plan unless the issuance and delivery
of such Shares complies with (or is exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, state securities laws and
regulations, and the regulations of any stock exchange on which the Company's
securities may then be listed.
SECTION 13. NO EMPLOYMENT RIGHTS.
No provision of the Plan, nor any right or Option granted under the Plan,
shall be construed to give any person any right to become, to be treated as, or
to remain an Employee. The Company and its Subsidiaries reserve the right to
terminate any person's Service at any time and for any reason.
SECTION 14. DURATION AND AMENDMENTS.
(a) TERM OF THE PLAN. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's shareholders. In the event that the shareholders fail
to approve the Plan within twelve (12) months after its adoption by the Board
of Directors, any grants already made shall he null and void, and no additional
grants shall be made after such date. The Plan shall terminate automatically ten
(10) years after its adoption by the Board of Directors and may be terminated on
any earlier date pursuant to Subsection (b) below.
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(b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board of Directors may amend
the Plan at any time and from time to time. Rights and obligations under any
right or Option granted before amendment of the Plan shall not be materially
altered, or impaired adversely, by such amendment, except with consent of the
person to whom the right or Option was granted. An amendment of the Plan shall
be subject to the approval of the Company's shareholders only to the extent
required by applicable laws, regulations or rules including the rules of any
applicable exchange.
(c) EFFECT OF AMENDMENT OR TERMINATION. No Shares shall be issued or sold
under the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Shares previously issued or any Option previously
granted under the Plan.
SECTION 15. EXECUTION.
To record the adoption of the Plan by the Company, the Board of Directors
has caused its authorized officer to execute the same, to be effective as of
April 1, 1997.
VISICOM LABORATORIES, INC.
By
------------------------------------
As Its
--------------------------------
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
VISICOM LABORATORIES, INC.
1997 STOCK INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
VisiCom Laboratories, Inc., a California corporation (the "Company"), hereby
grants an Option to purchase shares of its common stock ("Shares") to the
Optionee named below. The terms and conditions of the Option are set forth in
this cover sheet, in the attachment and in the Company's 1997 Stock Incentive
Plan (the "Plan").
Stock Option No. Date of Grant:
-------------- ------------------------------
Name of Optionee:
--------------------------------------------------------------
Optionee's Social Security Number:
-------------------------------------------
Number or Shares Covered by Option:
-------------------------------------------
Exercise Price per Share:
------------------------------------------------------
[must be at least 100% fair market value on Date of Grant]
Vesting Start Date:
------------------------------------------------------------
Check here if Optionee is a 10% owner (so that exercise price
---- must be 100% of fair market value).
BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY OF WHICH IS
ALSO ATTACHED.
Optionee:
---------------------------------------------------------------------
(Signature)
Company:
---------------------------------------------------------------------
(Signature)
Title: Corporate Secretary
--------------------------------------------------------------
(Signature)
1
<PAGE>
VISICOM LABORATORIES, INC.
1997 STOCK INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
INCENTIVE STOCK This Option is intended to be an incentive stock option under
OPTION section 422 of the Internal Revenue Code and will be
interpreted accordingly.
VESTING Your right to exercise this Option vests annually over a 4
year period beginning one year after the Vesting Start Date
as shown on the cover sheet. Accordingly, this Option vests
at a rate of 25% of the Shares covered by the Option per
year from the Vesting Start Date. The number of Shares
which may be purchased under this Option by you at the
Exercise Price shall be equal to the difference between (i)
the product (rounded to the nearest integer) of the number of
full years of your continuous employment with the Company
(including all days of any approved leaves of absence) from
the Date of Grant times the number of Shares covered by this
Option times .25 minus (ii) the number of Shares purchased
pursuant to this Option prior to such exercise. The resulting
number of Shares will be rounded to the nearest whole number.
No additional Shares will vest after your Service has
terminated for any reason.
TERM Your Option will expire in any event at the close of business
at Company headquarters on the day before the fifth
anniversary of the Date of Grant, as shown on the cover
sheet. (It will expire earlier if your Service terminates, as
described below.)
REGULAR If your Service terminates for any reason except death or
TERMINATION Disability, your Option will expire at the close of business
at Company Headquarters on the 30th day after your
termination date. During that 30-day period, you may exercise
that portion of your Option that was vested on your
termination date.
DEATH If you die while in Service with the Company, your Option
will expire at the close of business at Company headquarters
on the date six months after the date of death. During that
six-month period, your estate or heirs may exercise that
portion of your Option that was vested on the date of death.
DISABILITY If your Service terminates because of your Disability, your
Option will expire at the close of business at Company
headquarters on
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the date six months after your termination date. (However, if
your Disability is not expected to result in death or to last
for a Continuous period of at least 12 months, your Option
will be eligible for ISO tax treatment only if it is
exercised within three months following the termination of
your Service.) During that six-month period, you may exercise
that portion of your Option that was vested on the date of
your Disability.
"Disability" means that you are unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment.
LEAVES OF ABSENCE For purposes of this Option, your Service does not terminate
when you go on a BONA FIDE leave of absence that was approved
by the Company in writing, if the terms of the leave provide
for continued service crediting, or when continued service
crediting is required by applicable law. However, your
Service will be treated as terminating 90 days after you went
on leave, unless your right to return to active work is
guaranteed by law or by a contract. Your Service terminates
in any event when the approved leave ends unless you
immediately return to active work. The Company determines
which leaves count for this purpose, and when your Service
terminates for all purposes under the Plan. The Company also
determines the extent to which you may exercise the vested
portion of your Option during a leave of absence.
NOTICE OF EXERCISE When you wish to exercise this Option, you must notify the
Company by filing the proper "Notice of Exercise" form at the
address given on the form. Your Notice of Exercise must
specify how many Shares you wish to purchase. Your Notice of
Exercise must also specify how your Shares should be
registered (in your name only, in your and your spouse's
names as community property or as joint tenants with right of
survivorship or in a trust for your benefit). The Notice of
Exercise will be effective when it is received by the
Company. If someone else wants to exercise this Option after
your death, that person must prove to the Company's
satisfaction that he or she is entitled to do so.
FORM OF PAYMENT When you submit your Notice of Exercise, you must include
payment of the Exercise Price for the Shares you are
purchasing. Payment may be made in one (or a combination) of
the following forms:
- Your personal check, a cashier's check or a money order.
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- Shares which you own and which are surrendered to the
Company. The value of the Shares, determined as of the
effective date of the Option exercise, will be applied to the
Exercise Price.
- To the extent that a public market for the Shares exists
as determined by the Company, by delivery (on a form
prescribed by the Committee) of an irrevocable direction to a
securities broker to sell Shares and to deliver all or part
of the sale proceeds to the Company in payment of the
aggregate Exercise Price.
WITHHOLDING You will not be allowed to exercise this Option unless you
TAXES make acceptable arrangements to pay any withholding or other
taxes that may be due as a result of the Option exercise or
the sale of Shares acquired upon exercise of this Option.
RESTRICTIONS ON By signing this Agreement, you agree not to exercise this
EXERCISE AND Option or sell any Shares acquired upon exercise of this
RESALE Option at a time when applicable laws, regulations or Company
or underwriter trading policies prohibit exercise or sale. In
particular, the Company shall have the right to designate one
or more periods of time, each of which shall not exceed 180
days in length, during which this Option shall not be
exercisable if the Company determines (in its sole
discretion) that such limitation on exercise could in any way
facilitate a lessening of any restriction on transfer
pursuant to the Securities Act or any state securities laws
with respect to any issuance of securities by the Company,
facilitate the registration or qualification of any
securities by the Company under the Securities Act or any
state securities laws, or facilitate the perfection of any
exemption from the registration or qualification requirements
of the Securities Act or any applicable state securities laws
for the issuance or transfer of any securities. Such
limitation on exercise shall not alter the vesting schedule
set forth in this Agreement other than to limit the periods
during which this Option shall be exercisable.
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If the sale of Shares under the Plan are not registered under
the Securities Act of 1933, as amended (the "Securities
Act"), but an exemption is available which requires an
investment or other representation, you shall represent and
agree at the time of exercise that the Shares being acquired
upon exercise of this Option are being acquired for
investment, and not with a view to the sale or distribution
thereof, and shall make such other representations as are
deemed necessary or appropriate by the Company and its
counsel.
THE COMPANY'S
RIGHT OF FIRST In the event that you propose to sell, pledge or otherwise
REFUSAL transfer to a third party any Shares acquired under this
Agreement, or any interest in such Shares, the Company shall
have the "Right of First Refusal" with respect to all (and
not less than all) of such Shares. If you desire to transfer
Shares acquired under this Agreement, you must give a written
"Transfer Notice" to the Company describing fully the
proposed transfer, including the number of Shares proposed to
be transferred, the proposed transfer price and the name and
address of the proposed transferee. The Transfer Notice shall
be signed both by you and by the proposed transferee and must
constitute a binding commitment of both parties to the
transfer of the Shares. The Company shall have the right to
purchase all, and not less than all, of the Shares on the
terms described in the Transfer Notice (subject, however, to
any change in such terms permitted in the next paragraph) by
delivery of a Notice of Exercise of the Right of First
Refusal within 30 days after the date when the Transfer
Notice was received by the Company. The Company's rights
under this Subsection shall be freely assignable, in whole or
in part.
If the Company fails to exercise its Right of First Refusal
within 30 days after the date when it received the Transfer
Notice, you may, not later than 90 days following receipt of
the Transfer Notice by the Company, conclude a transfer of
the Shares subject to the Transfer Notice on the terms and
conditions described in the Transfer Notice. Any proposed
transfer on terms and conditions different from those
described in the Transfer Notice, as well as any subsequent
proposed transfer by you, shall again be subject to the Right
of First Refusal and shall require compliance with the
procedure described in the paragraph above. If the Company
exercises its Right of First Refusal, the parties shall
consummate the sale of the Shares on the terms set forth in
the Transfer Notice within 60 days after the date the Company
received the Transfer Notice (or within such longer period as
may have been specified
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in the Transfer Notice); provided, however, that in the event
the Transfer Notice provided that payment for the Shares was
to be made in a form other than lawful money paid at the
time of transfer, the Company shall have the option of paying
for the Shares with lawful money equal to the present value
of the consideration described in the Transfer Notice.
The Company's Right of First Refusal shall inure to the
benefit of Its Successors and assigns and shall be binding
upon any transferee of the Shares.
The Company's Right of First Refusal shall terminate in the
event that Stock is listed or traded on an established stock
exchange.
RIGHT OF Following termination of your Service for any reason, the
REPURCHASE Company shall have the right to purchase all of those Shares
that you have or will acquire under this Option. If the
Company fails to provide you with written notice of its
intention to purchase such Shares before or within 30 days of
the date the Company receives written notice from you of your
termination of Service, the Company's right to purchase such
Shares shall terminate. If the Company exercises its right
to purchase such Shares, the Company will consummate the
purchase of such Shares within 60 days of the date of its
written notice to you. The purchase price for any Shares
repurchased shall be the higher of the Fair Market Value of
such Shares on the date of purchase or the aggregate Exercise
Price for such Shares and shall be paid in cash. The
Company's right of repurchase shall terminate in the event
that Stock is listed on an established stock exchange or is
quoted regularly on the NASDAQ National Market.
TRANSFER OF OPTION Prior to your death, only you may exercise this Option. You
cannot transfer or assign this Option. For instance, you may
not sell this Option or use it as security for a loan. If you
attempt to do any of these things, this Option will
immediately become invalid. You may, however, dispose of this
Option in your will. Regardless of any marital property
settlement agreement, the Company is not obligated to honor a
Notice of Exercise from your spouse or former spouse, nor is
the Company obligated to recognize such individual's interest
in your Option in any other way.
RETENTION RIGHTS This Agreement does not give you the right to be retained by
the Company in any capacity. The Company reserves the right
to terminate your Service at any time and for any reason.
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SHAREHOLDER Neither you, nor your estate or heirs, have any rights as a
RIGHTS Shareholder of the Company until a certificate for the shares
acquired upon exercise of this option has been issued. No
adjustments are made for dividends or other rights if the
applicable record date occurs before your stock certificate
issued, except as described in the Plan.
ADJUSTMENTS In the event of a stock split, a stock dividend or a similar
change in the Company's Stock, the number of Shares covered
by this Option and the Exercise Price per share may be
adjusted pursuant to the Plan. Your Option shall be subject
to the terms of the agreement or merger, liquidation or
reorganization in the event the Company is subject to such
corporate activity.
LEGENDS All certificates representing the Shares issued upon exercise
of this Option shall, where applicable, have endorsed thereon
the following legends:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE SUCH
SHARES SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE
REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A
COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE
SHARES REPRESENTED BY THIS CERTIFICATE.
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED.
APPLICABLE LAW This Agreement will be interpreted and enforced under the
laws of the State of California (without regard to their
choice of law provisions).
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THE PLAN AND The text of the Plan is incorporated in this Agreement by
OTHER AGREEMENTS reference. Certain capitalized terms used in this Agreement
are defined in the Plan.
This Agreement and the Plan constitute the entire
understanding between you and the Company regarding this
Option. Any prior agreements, commitments or negotiations
concerning this Option are superseded.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
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