TVI CORPORATION
7100 HOLLADAY TYLER ROAD, GLENN DALE, MD 20769
PHONE 301-352-8800 FAX 301-352-8818
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS OF TVI CORPORATION
TO BE HELD ON October 31, 1998
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of TVI
Corporation ("the Company") will be held at 10:00 a.m. (EST) on Saturday,
October 31, 1998 at the Company's offices located at 7100 Holladay Tyler
Road, Glenn Dale, Maryland 20769. The shareholders will consider and act
upon the following proposals:
1. to elect four (4) directors to serve until the next annual
meeting and until their successors have been elected and qualified.
2. to ratify the appointment of Daniel G. Gilliland, C.P.A., to
serve as auditor of the Company's financial statements for the fiscal year
1997, ending December 31, 1997.
3. to approve an increase in the maximum number of shares of common
stock which the company may issue from 25,000,000 to 35,000,000.
4. to ratify, approve, and adopt all acts and decisions of the
Board of Directors made in the ordinary course of business during the
period October 1996 through May 1998 as reflected in the official Board
minutes.
5. to approve and adopt a Qualified Incentive Stock Option Plan
covering 3,000,000 shares of common stock.
Only shareholders of record on the books of the Company at the close of
business on August 31, 1998 will be entitled to notice and to vote at the
meeting or any adjournment thereof.
By Order of the Board of Directors
____________________________________
Charles L. Sample
for the Board
IMPORTANT
MANAGEMENT IS SOLICITING YOUR PROXY IF YOU DO NOT PLAN TO ATTEND
THE
MEETING. A PROXY FOR THIS PURPOSE IS ENCLOSED. IT IS IMPORTANT THAT
YOUR
SHARES BE REPRESENTED AND VOTED AT THE MEETING.<PAGE>
<PAGE>
TVI CORPORATION
PROXY STATEMENT
FOR THE ANNUAL MEETING OF THE
SHAREHOLDERS OF TVI CORPORATION
To be held October 31, 1998
This statement is furnished in connection with matters to be voted at the
annual meeting of shareholders of TVI Corporation (the Company) to be
held at 10:00 a.m. EST on Saturday, October 31, 1998 at the Company's
offices at 7100 Holladay Tyler Road, Glenn Dale, Maryland 20769, and at
any or all adjournments thereof with respect to the matters referred to
in the accompanying notice.
NOTICE
MANAGEMENT DOES SOLICIT YOUR PROXY IF YOU DO NOT PLAN TO ATTEND
THE
MEETING. A PROXY FOR THIS PURPOSE IS ENCLOSED. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED AND VOTED AT THE MEETING.
VOTING SECURITIES AND RECORD DATE
The common stock is the only outstanding class of voting securities.
Holders of record at the close of business on August 31, 1998 are
entitled to notice of the meeting and to vote at the meeting or an
adjournment thereof. At the close of business on August 31, 1998, there
were 22,956,381 shares of common stock issued, outstanding and entitled
to vote. Each share of common stock is entitled to one vote at the
meeting.
QUORUM AND MAJORITY
The presence, in person or by proxy, of the holders of a majority of the
total of the outstanding voting shares is necessary to constitute a
quorum at the annual meeting. Approval of the proposals to be presented
at the annual meeting will require the affirmative vote of the holders of
a majority of the shares present at the meeting.
MATTERS TO BE ACTED UPON
Five proposals are being presented to the shareholders for a vote at
the Annual Meeting. These proposals are presented and discussed in the
following sections.
PROPOSAL ONE: ELECTION OF DIRECTORS
Four directors are to be elected at the annual meeting and those persons
elected will hold office until the next annual meeting of shareholders
and until their successors have been elected and qualified. The bylaws
provide that the board of directors shall consist of no more than ten
members, with the actual number to be established by resolution of the
board of directors. The current board of directors has by resolution
established the number of directors at four. Current management has
nominated the four individuals for election or re-election to the board,
as described below. There may be additional nominations at the
shareholders meeting, and any such nomination duly made will be voted
upon at the meeting.
Any vacancy that occurs during the year may be filled by a majority vote
of the board of directors without any further shareholder action. The
vacancy may be filled for the remainder of the term, which is until the
next annual meeting. There has been a vacancy on the board for part of
the year 1997, which the current directors have elected not to fill,
pending this forthcoming election. There is no reason to believe that
any nominees will be unable to serve if elected, and to the knowledge of
management all nominees intend to serve the entire term for which
election is sought.
Management has nominated and recommends election of the following persons
to the TVI Board of Directors:
Nominees Age Director Since Position with Company
Allen E. Bender 68 4-11-95 Director and
President
Rudy J. Diaz 47 6-24-95 Director
Mark N. Hammond 39 7-20-96 Director
Charles L. Sample 50 3-22-95 Director and
Vice President
ALLEN E. BENDER
Mr. Bender is currently the Chief Executive Officer of the company and
has held that position since April, 1995. Prior to this employment and
for a number of years he was an independent management consultant
specializing in management, marketing, and computer systems. He is a
retired Naval officer having served 22 years as a medical technician and
hospital administrator. He holds an MS in Financial Management from
George Washington University.
RUDY J. DIAZ
Mr. Diaz is a professional marketer. He has held marketing and
management positions, primarily in the Information Technology Industry.
He has a BS in Marketing from Southern Illinois University and is
currently employed by IBM Corporation.
MARK N. HAMMOND
Mr. Hammond is currently the Chief Financial Officer of the National Soft
Drink Association. He has previously held various financial management
positions with the Association. He is a Certified Public Accountant and
has 23 years public accounting experience. He has a BS in Accounting and
is a member of several professional accountant associations.
CHARLES L. SAMPLE
Mr. Sample is Vice President and a Director of TVI Corporation. He has
varied business experience in both technical and managerial positions.
Significant experience includes performance as the CEO of an
environmental remediation firm and director of operations for a
government building contractor. He has extensive experience in
government contracting. He is a private investor and co-owner of a
private investment firm. He has a BS from the University of Maryland and
specialized education in environmental engineering.
REMUNERATION AND OTHER COMPENSATION OF MANAGEMENT
Presently the only management employees receiving salaries are the
president, Allen Bender, and the vice president, Charles Sample. The
president's salary is currently set at $60,000. The vice president's
salary is currently set at $36,000. During the year 1997, those salaries
were set at $60,000 and $36,000, respectively.
The following table sets forth, as of August 31, 1998, the number of
shares of the Company's voting securities owned to the knowledge of the
Company, by each beneficial owner of more than 5% of such voting
security, by each officer and director , and by all officers and
directors of the Company as a group. The percentages have been
calculated by combining the common stock and liquidating preferred stock
and by treating as outstanding for purposes of calculating the percentage
ownership of a particular person, all shares of the Company's stock
outstanding as of such date and all such shares issuable to such person
in the event of the exercise of the person's options or warrants, if any,
exercisable at such date or within 60 days thereafter.
OFFICERS, DIRECTORS AND NOMINEES:
Name and Address Amount of Percentage of
of Beneficial Owner Beneficial Ownership Voting Securities
Allen E. Bender 1,450,000 (1) 5.9%
2411 Pimpernel Drive
Waldorf, MD 20603
Rudy J. Diaz 360,218 (2) 1.5%
430 Newport Heights.
Alpharetta, GA 30005
Mark N. Hammond 255,000 (3) 1.0%
2303 Alstead Lane
Bowie, MD 20716
Charles L. Sample 845,000 (4) 3.5%
11615 Bonaventure Dr.
Upper Marlboro, MD 20772
All Officers and Directors 2,910,218 (5) 11.9%
Notes:
(1) Includes options for 700,000 shares
(2) Includes options for 150,000 shares
(3) Includes options for 75,000 shares
(4) Includes options for 575,000 shares
(5) Includes options for 1,500,000 shares
Management recommends a vote for these candidates.
PROPOSAL TWO: ELECTION OF AUDITOR FOR 1997
At the February 5, 1998 quarterly board meeting, the board agreed to
retain Daniel Gilliland, C.P.A., PC to prepare an audit for fiscal year
1997, subject to the approval of shareholders. Accordingly, the
shareholders will be asked to vote to ratify the retention of Mr.
Gilliland to prepare an audit for the year 1997, which audit is to comply
with all SEC requirements, and will enable the Company to resume
reporting to the SEC in compliance with all applicable law and
regulations.
Management recommends a vote for this proposal.
PROPOSAL THREE: INCREASE IN NUMBER OF AUTHORIZED COMMON SHARES
This proposal would authorize an increase in the maximum number of common
shares which could be issued from 25 million to 35 million shares.
The Company is currently authorized to issue a maximum of 25,000,000
common shares. Only one class of common stock is authorized. At August
31, 1998, the Record date for the Shareholders Meeting, there was a total
of 22, 956,381 shares issued and outstanding, leaving a total of
2,043,619 un-issued shares remaining. The Company is also authorized
to issue up to 1,200,000 shares of one class of Preferred Stock. At
August 31, 1998, there were 71,708 shares of Preferred Stock issued and
outstanding.
The amount of un-issued common shares is not adequate to meet current and
future needs of the company. Common stock is used in routine operations
by most public companies, typically to be sold to raise equity capital,
and as an incentive to attract and retain management and key personnel.
At the August 31 Record Date, the Company had insufficient shares of un-
issued stock available to meet existing commitments as follows:
143,416 shares for conversion of outstanding Preferred Stock
600,000 shares for settlement of two debts
1,690,000 shares for directors, officers, and employee options
These existing commitments currently exceed the available shares by
389,797. Additionally, the Company intends to encourage its Promissory
Note holders convert their debt in to shares.
The Company has used options in lieu of cash as remuneration for
directors since 1995. No director has been paid for services except by
the grant of options. Officers have been underpaid and have deferred
salary to conserve cash flow, and have been given options as off-setting
compensation. Employees have been given salary reductions, and were
given options as additional compensation. The Board believes that it is
essential to the Company's survival to conserve cash, and that equity
interests of officers, directors, and key employees is in the best interest
of the Company and shareholders. Accordingly, it intends to continue the
practice of using options as incentives and in lieu of cash payments.
The Board has announced its intention to obtain working capital through
a private sale of stock. The Company's working capital has been severely
limited, causing inefficiencies in its operations and hampering its
development initiatives. At present, there are no shares available to
support this financing initiative. Additionally, the Board wishes to
have the option of providing shares as remuneration for any investment
banking or promotional services it may obtain.
At the 1997 annual meeting shareholders a proposal to reverse split the
Company's stock on a one for ten basis was approved. Under this
proposal, each ten shares of outstanding common stock would have become
one share, but the maximum number of authorized shares would have
remained at 25 million.
Certain plans and expectations of the Board did not materialize, and the
Board determined that it was not in the best interest of the Company to
proceed with the reverse split. Many shareholders also reported
subsequent to the meeting that they would have preferred an increase in
the number of authorized shares to the reverse split.
The need for additional shares to support crucial operations and plans of
the Company remains as pressing as before. The only logical solutions to
this dilemma are either to reverse split the stock or to increase the
number of shares authorized to be issued.
If this proposal is rejected by the shareholders, the Board intends to
implement the one for ten reverse split authorized at the 1997
shareholders meeting. Thus, a vote against this proposal will in effect
be a vote for the one for ten reverse split.
Management recommends a vote for this proposal.
PROPOSAL FOUR: APPROVAL OF BOARD ACTS AND DECISIONS
Shareholders are being asked to ratify, approve, and adopt all acts and
decisions of the Board of Directors made in the ordinary course of
business during the period October 1996 through May 1998 as reflected in
the official Board minutes.
The company learned in April 1998 that its charter had been revoked in
October 1996 by the state of Maryland for failure to file a Property Tax
Return for the years 1993 and 1994. Any notices concerning the
delinquency were mailed to the home of the former president and the
Company was unaware of any problem. The Company immediately filed the
required Returns and paid the property tax, and in May its charter was
revived and reinstated. However, Maryland law provides that charter
revival is not complete unless and until the shareholders of the
corporation approve and ratify the acts of the Board of Directors during
the time the charter was revoked.
The Board recommends approval of this proposal.
PROPOSAL FIVE: ADOPTION OF INCENTIVE STOCK OPTION PLAN
This proposal would establish an Incentive Stock Option Plan which
would comply with Section 412 of the Internal Revenue Code. The
purpose of the Plan is to provide the Company with an effective
mechanism to attract and retain key personnel.
This Plan was adopted by the Board at its regular meeting on May 8,
1998, and is being submitted to the shareholders for approval and
adoption.
Options granted in the past have been "non-qualified" options, and as
such have certain undesirable impacts for both the optionee and the
Company.
Summary Description of the Plan
To reduce printing and mailing costs, the Plan is not re-printed in
this Proxy Statement, but will be summarized below. The full Plan will
be included in the Proxy Statement filed with the SEC, and will be
accessible through the SEC's "EDGAR" system. Copies of the Plan will
be available at the Annual Meeting, and a copy will be mailed to any
shareholder upon request.
1. Purpose
To provide an incentive stock option plan wich qualifies un der section
422 of the Revenue Code
2. Stock Provided
A total of 3,000,000 authorized but un-issued shares of common stock
may be granted under the Plan. Shares optioned but not exercised will
be remain subject to the Plan.
3. Administration
The Plan will be administered by the full Board of Directors, and a
two-thirds majority affirmative vote of the current Board members will
be required to effect a Plan action.
4. Eligibility
Options may be granted to directors, officers, or key employees of the
Company.
5. Option Agreement
Each option granted shall be evidenced by a written agreement which
sets forth all provisions, terms, and conditions of the option.
6. Option Price
The exercise price of an option shall be not less than fair market
price at the time the option is granted. Fair market value shall be
the average of the lowest and highest sale price on the date of the
grant.
7. Payment Upon Exercise
Full payment must be tendered upon exercise of an option. Payment may
be made under various arrangements authorized by the Board, including
the delivery of other Company stock, qualifying loans, or controlled
immediate sale.
8. Vesting and Exercisability
Options shall vest and become exercisable pursuant to the terms
established in the grant by the Board. Options may be immediately
exercisable, or may vest in increments over a maximum period of five
years. Once vested, an option remains exercisable until it expires or
is exercised. Options may be exercised only by the optionee during hir
or her lifetime. All remaining optioned shares will vest upon death of
the optionee.
9. Term
Options shall be exercisable for the term specified by the Board in the
grant, which term may not exceed a period of ten years.
10. Termination
Options granted to officers and employees will terminate upon cessation
of employment for any reason except death or full disability. Vested
options will terminate as specified in the grant, but in no case not
later than 90 days after cessation of employment.
11. Transferability
Options are not transferable except by will or the laws of descent and
distribution.
12. Adjustments
The number of shares covered by an option will be adjusted for the
effects of a stock dividend or split, or for a recapitalization. No
adjustment will be made for the issuance of any class of security. All
options will expire on the day before any liquidation or dissolution of
the Company.
13. No Employment Rights
The granting of an option will not confer any right of employment to
the optionee, and the Company may implement any personnel action as of
no option had been granted.
14. Withholding Tax
The Company shall insure that IRS requirements are complied with for
transactions under the Plan which impose a tax liability to the
optionee.
15. Registration of Shares
The Company shall have the right to file a registration statement for
shares covered by the Plan, but shall have no obligation to do so. If
shares issued under the exercise of an option have not been registered
or are not eligible for an exemption from registration, the share
certificate shall contain the legend indicating that the shares are
restricted.
16. Loans
The Company may make loans to optionees to enable them to exercise
options, provided that such loans are in full compliance with
applicable laws and regulations.
17. Approval of Shareholders
This Plan must be approved by vote of the shareholders at a duly held
shareholders meeting.
18. Termination and Amendment
The Plan will terminate ten years after the date of its adoption by the
Board. The Board is authorized to make changes in the Plan as
necessary to maintain compliance with IRS requirements, but all other
amendments must be approved by the shareholders.
19. Reservation of Stock
The Company shall reserve and keep available sufficient common shares
to satisfy requirements of the Plan.
20. Limitation of Optionee Rights
An optionee shall net be be deemed to be a shareholder with respect to
an option, and shall have no shareholder rights until optioned shares
have vested and shall have been exercised.
Management recommends a vote for this proposal.
OTHER MATTERS
Management does not know of any other matters which are likely to be
brought before the annual shareholders' meeting. However, in the event
that other matters properly come before the shareholders, they will be
acted upon accordingly.
STOCKHOLDER PROPOSALS
No formal proposals have been presented by stockholders to the Board at
the time of preparation of this Proxy Information Statement.
MANAGEMENT DOES SOLICIT YOUR PROXY IF YOU DO NOT PLAN TO ATTEND THE
MEETING. A PROXY FOR THIS PURPOSE IS ENCLOSED. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED AND VOTED AT THE MEETING
<PAGE>
TVI CORPORATION
1998 INCENTIVE STOCK OPTION PLAN
1. Purpose of the Plan.
This stock option plan (the "Plan") is intended to provide incentives:
(a) to the officers and other employees of TVI Corporation (the
"Company") and any present or future subsidiaries of the Company by
providing them with opportunities to purchase stock in the Company pursuant
to options granted hereunder which qualify as "incentive stock options"
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") ("ISO" or "ISOs"); and
(b) to officers, employees, directors, and consultants of the Company
and any present or future subsidiaries by providing them with opportunities
to purchase stock in the Company pursuant to options granted hereunder
which do not qualify as ISOs ("Non-Qualified Option" or "Non-Qualified
Options").
As used herein, the terms "parent" and "subsidiary" mean "parent
corporation" and "subsidiary corporation," respectively, as those terms
are defined in Section 424 of the Code and the Treasury Regulations
promulgated thereunder (the "Regulations").
2. Stock Subject to the Plan.
(a) The total number of shares of the authorized but unissued
shares of the common stock, $.01 par value, of the Company ("Common Stock")
for which options may be granted under the Plan shall not exceed 3,000,000
shares, subject to adjustment as provided in Section 11 hereof.
(b) If an option granted hereunder shall expire or terminate
for any reason without having been exercised in full, the un-purchased
shares subject thereto shall again be available for subsequent option
grants under the Plan.
(c) Stock issuable upon exercise of an option granted under
the Plan may be subject to such restrictions on transfer, repurchase rights
or other restrictions as shall be determined by the Committee (as defined
in Section 3 below).
3. Administration of the Plan.
(a) The Plan shall be administered by the full Board of Directors.
However, the Board may from time to time appoint a committee to make
recommendations concerning operation of the Plan or the granting of
options. The Board may hold a special meeting to take actions concerning
the Plan, or it may take actions concerning the Plan at a regular meeting.
(b) Subject to the terms of the Plan, the Board shall have full
authority to
(i) determine the employees of the Company and its subsidiaries to
whom ISOs may be granted, and to determine to whom Non-Qualified
Options may be granted;
(ii) determine the time or times at which options may be granted;
(iii) determine the option price of shares subject to each option
which price shall not be less than the minimum price specified in
Section 6;
(iv) determine whether each option granted shall be an ISO or a
Non-Qualified Option;
(v) determine (subject to Section 9) the time or times when each
option shall become exercisable and the duration of the exercise
period; and
(vi) determine whether restrictions such as repurchase options are to
be imposed on shares subject to options and the nature of such
restrictions.
4. Eligibility.
(a) Options designated as ISOs may be granted only to
employees and others who may eligible under the Code (including officers
who are employees) of the Company or of any of its subsidiaries.
Non-Qualified Options may be granted to any officer, employee, or
consultant of the Company or of any of its subsidiaries.
(b) In determining the eligibility of an individual to be
granted an option, as well as in determining the number of shares to be
optioned to any person, the Board shall take into account the position and
responsibilities of the person being considered, the nature and value to
the Company or its subsidiaries of his or her service and accomplishments,
his or her present and potential contribution to the success of the Company
or its subsidiaries, and such other factors as the Board may deem relevant.
(c) No option designated as an ISO shall be granted to any
employee of the Company or any subsidiary if such employee owns,
immediately prior to the grant of an option, stock representing more than
10% of the total combined voting power of all classes of stock of the
Company or a parent or a subsidiary, unless the purchase price for the
stock under such option shall be at least 110% of its fair market value at
the time such option is granted and the option, by its terms, shall not be
exercisable more than five years from the date it is granted. In
determining the stock ownership under this paragraph, the provisions of
Section 424(d) of the Code shall be controlling. In determining the fair
market value under this paragraph, the provisions of Section 6 hereof shall
apply.
(d) The maximum number of shares of Common Stock with
respect to which an Option may be granted to any employee in any taxable
year of the Company shall not exceed 1,300,000 shares, taking into account
shares subject to options granted and terminated, or repriced, during such
taxable year, subject to adjustment as provided in Section 11 hereof.
5. Option Agreement.
Each option shall be evidenced by an option agreement (the "Agreement")
duly executed on behalf of the Company and by the optionee to whom such
option is granted, which Agreement shall comply with and be subject to the
terms and conditions of the Plan.
The Agreement may contain such other terms, provisions and conditions which
are not inconsistent with the Plan as may be determined by the Board,
provided that options designated as ISOs shall meet all of the conditions
for ISOs as defined in Section 422 of the Code. The date of grant of an
option shall be as determined by the Board. More than one option may be
granted to an individual.
6. Option Price.
The option price or prices of shares of the Company's Common Stock for
options designated as Non-Qualified Options shall be as determined by the
Board, but in no event shall the option price be less than the minimum
legal consideration required therefor under the laws of the State of
Maryland or the laws of any jurisdiction in which the Company or its
successors in interest may be organized.
The option price or prices of shares of the Company's Common Stock for ISOs
shall be the fair market value of such Common Stock at the time the option
is granted as determined by the Board in accordance with the Regulations
promulgated under Section 422 of the Code as follows:
(a) If such shares are then listed on any national securities
exchange, the fair market value shall be the mean between the high and low
sales prices, if any, on such exchange on the date of the grant of the
option.
(b) If the shares are traded on the NASDAQ National Market, the fair
market value of such shares shall be the mean between the high and low
sales prices, if any, as reported in the NASDAQ National Market for the
date of the grant of the option.
(c) If the shares are not then either listed on any exchange or
quoted in the NASDAQ National Market, the fair market value shall be the
average of the "Bid" and "Ask" prices, if any, as reported in the National
Daily Quotation Service for the date of the grant of the option.
If no sales occurred on the date of the grant, market value shall be
determined by taking a weighted average of the means between the highest
and lowest sales prices or Bid/Asked prices as appropriate on the nearest
date before and the nearest date after the date of grant in accordance with
Treasury Regulations Section 25.2512-2.
If the fair market value cannot be determined under the preceding methods,
it shall be determined in good faith by the Board.
7. Manner of Payment; Manner of Exercise.
(a) Options granted under the Plan may provide for the
payment of the exercise price by delivery of
(i) cash or a check payable to the order of the Company in an amount
equal to the exercise price of such options,
(ii) shares of Common Stock of the Company owned by the optionee
having a fair market value equal in amount to the exercise price of
the options being exercised, or
(iii) any combination of (i) and (ii), provided, however, that
payment of the exercise price by delivery of shares of Common Stock of
the Company owned by such optionee may be made only under such
circumstances and on such terms as may from time to time be
established by the Board and only if provided for in the Agreement.
The fair market value of any shares of the Company's Common Stock which may
be delivered upon exercise of an option shall be determined by the Board in
accordance with Section 6 hereof. Payment may also be made by delivery of a
properly executed exercise notice to the Company, together with a copy of
irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds to pay the exercise price if provided for
in the Agreement. To facilitate the foregoing, the Company may enter into
agreements for coordinated procedures with one or more brokerage firms.
(b) To the extent that the right to purchase shares under an
option has accrued and is in effect, options may be exercised in full at
one time or in part from time to time, by giving written notice, signed by
the person or persons exercising the option, to the Company, stating the
number of shares with respect to which the option is being exercised,
accompanied by payment in full for such shares as provided in subparagraph
(a) above. Upon such exercise, delivery of a certificate for paid-up
non-assessable shares shall be made at the principal office of the Company
to the person or persons exercising the option at such time, during
ordinary business hours, after ten business days from the date of receipt
of the notice by the Company, as shall be designated in such notice, or at
such time, place and manner as may be agreed upon by the Company and the
person or persons exercising the option.
8. Exercise of Options.
Subject to the provisions of paragraphs 9 through 11, each option granted
under the Plan shall be exercisable as follows:
(a) Vesting. The option shall either be fully
exercisable on the date of grant or shall become exercisable thereafter in
such installments as the Board may specify;
(b) Full Vesting of Installments. Once an installment
becomes exercisable it shall remain exercisable until expiration of the
option, unless otherwise specified by the Board;
(c) Partial Exercise. Each option or installment may
be exercised at any time or from time to time, in whole or in part, for up
to the total number of shares with respect to which it is then exercisable;
and
(d) Acceleration of Vesting. The Board shall have the
right to accelerate the date of exercise of any installment of any option;
provided that the Board shall not, without the consent of an optionee,
accelerate the exercise date of any installment of any option granted to
any employee as an ISO if such acceleration would violate the annual
vesting limitation contained in Section 422(d) of the Code. The Board, in
its sole discretion, shall have the right to provide in any Agreement for
the acceleration of the date of exercise of any installment of any option
granted hereunder upon the occurrence of any event or circumstance as the
Board shall determine.
9. Term of Options' Exercisability.
(a) Term. Each option shall expire not more than ten (10)
years from the date of the granting thereof but shall be subject to earlier
termination as may be provided in any Agreement evidencing an option
granted hereunder.
(b) Exercisability. An option granted to an employee
optionee who ceases to be an employee of the Company or one of its
subsidiaries shall be exercisable only to the extent that the right to
purchase shares under such option has accrued and is in effect on the date
such optionee ceases to be an employee of the Company or one of its
subsidiaries.
10. Options Not Transferable.
Options granted under the Plan and the right of any optionee to exercise
any option granted to him or her shall not be assignable or transferable by
such optionee otherwise than by will or the laws of descent and
distribution, and any such option shall be exercisable during the lifetime
of such optionee only by him or her. Any option granted under the Plan
shall be null and void and without effect upon any attempted assignment or
transfer, except as herein provided, including without limitation any
purported assignment, whether voluntary or by operation of law, pledge,
hypothecation or other disposition, attachment, divorce, trustee process or
similar process, whether legal or equitable, upon such option.
11. Adjustments.
(a) Upon the occurrence of any of the following events, an
optionee's rights with respect to options granted to him or her hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company
relating to such option:
(i) Stock Dividends and Stock Splits. If the shares of
Common Stock shall be subdivided or combined into a greater or
smaller number of shares or if the Company shall issue any shares of
Common Stock as a stock dividend on its outstanding Common Stock, the
number of shares of Common Stock deliverable upon the exercise of
options shall be appropriately increased or decreased proportionately,
and appropriate adjustments shall be made in the purchase price per
share to reflect such subdivision, combination or stock dividend; and
(ii) Recapitalization or Reorganization. In the event
of a recapitalization or reorganization of the Company (except as
otherwise provided in any Agreement) pursuant to which securities of
the Company or of another corporation are issued with respect to the
outstanding shares of Common Stock, an optionee upon exercising an
option shall be entitled to receive for the purchase price paid upon
such exercise the securities the optionee would have received if the
optionee had exercised the option prior to such recapitalization or
reorganization.
(iii) Modification of ISOs. Notwithstanding the foregoing,
any adjustments made pursuant to subparagraphs (i) or (ii) with
respect to ISOs shall be made only after the Board, after consulting
with counsel for the Company, determines whether such adjustments
would constitute a "modification" of such ISOs (as that term is
defined in Section 424 of the Code) or would cause any adverse tax
consequences for the holders of such ISOs. If the Board determines
that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such
adjustments.
(iv) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, each option will
terminate immediately prior to the consummation of such proposed
action or at such other time and subject to such other conditions as
shall be determined by the Board.
(v) Issuances of Securities. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of shares subject to options. No adjustments
shall be made for dividends paid in cash or in property other than
securities of the Company.
(vi) Fractional Shares. No fractional share shall be issued
under the Plan and the optionee shall receive from the Company cash in
lieu of such fractional shares.
(vii) Adjustments. Upon the happening of any of the events
described in subparagraphs (i) or (ii) above, the class and aggregate
number of shares set forth in Section 2 and Section 4 hereof that are
subject to options which previously have been or subsequently may be
granted under the Plan shall also be appropriately adjusted to reflect
the events described in such subparagraphs. The Board or Successor
Board shall determine the specific adjustments to be made under this
paragraph 11 and, subject to Section 3, its determination shall be
conclusive.
(b) If any person or entity owning restricted Common Stock
obtained by exercise of an option made hereunder receives shares or
securities or cash in connection with a corporate transaction described in
subparagraphs (i) or (ii) above as a result of owning such restricted
Common Stock, such shares or securities or cash shall be subject to all of
the conditions and restrictions applicable to the restricted Common Stock
with respect to which such shares or securities or cash were issued, unless
otherwise determined by the Board or the Successor Board.
12. No Special Employment Rights.
Nothing contained in the Plan or in any option granted under the Plan shall
confer upon any option holder any right with respect to the continuation of
his employment by the Company (or any subsidiary) or interfere in any way
with the right of the Company (or any subsidiary), subject to the terms of
any separate employment agreement to the contrary, at any time to terminate
such employment or to increase or decrease the compensation of the option
holder from the rate in existence at the time of the grant of an option.
Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Board at the time.
13. Withholding Tax.
The Company's obligation to deliver shares upon the exercise of any Option
granted under the Plan shall be subject to the option holder's satisfaction
of all applicable Federal, state and local income, excise, employment and
any other tax withholding requirements. The Company and employee may agree
to withhold shares of Common Stock purchased upon exercise of an option to
satisfy the above-mentioned withholding requirements. The Board shall also
have the right to require that shares be withheld from delivery to satisfy
such condition.
14. Restrictions on Issue of Shares.
(a) Notwithstanding the provisions of Section 7, the Company
may delay the issuance of shares covered by the exercise of an option and
the delivery of a certificate for such shares until one of the following
conditions shall be satisfied:
(i) The shares with respect to which such option has
been exercised are at the time of the issue of such shares effectively
registered or qualified under applicable Federal and state securities
acts now in force or as hereafter amended; or
(ii) Counsel for the Company shall have given an
opinion, which opinion shall not be unreasonably conditioned or
withheld, that such shares are exempt from registration under
applicable Federal and state securities acts now in force or as
hereafter amended.
(b) It is intended that all exercises of options shall be
effective, and the Company shall use its best efforts to bring about
compliance with the above conditions within a reasonable time, except that
the Company shall be under no obligation to qualify shares or to cause a
registration statement or a post-effective amendment to any registration
statement to be prepared for the purpose of covering the issue of shares in
respect of which any option may be exercised, except as otherwise agreed to
by the Company in writing.
15. Purchase For Investment; Rights of Holder on Subsequent Registration.
Unless the shares to be issued upon exercise of an option granted under the
Plan have been effectively registered or are exempt from registration under
the Securities Act of 1933, as now in force or hereafter amended, the
Company shall be under no obligation to issue any shares covered by any
option unless the person who exercises such option, in whole or in part,
shall give a written representation and undertaking to the Company which is
satisfactory in form and scope to counsel for the Company and upon which,
in the opinion of such counsel, the Company may reasonably rely, that he or
she is acquiring the shares issued pursuant to such exercise of the option
for his or her own account as an investment and not with a view to, or for
sale in connection with, the distribution of any such shares, and that he
or she will make no transfer of the same except in compliance with any
rules and regulations in force at the time of such transfer under the
Securities Act of 1933, or any other applicable law, and that if shares are
issued without such registration, a legend to this effect may be endorsed
upon the securities so issued.
In the event that the Company shall, nevertheless, deem it necessary or
desirable to register under the Securities Act of 1933 or other applicable
statutes any shares with respect to which an option shall have been
exercised, or to qualify any such shares for exemption from the Securities
Act of 1933 or other applicable statutes, then the Company may take such
action and may require from each optionee such information in writing for
use in any registration statement, supplementary registration statement,
prospectus, or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its
officers and directors and controlling persons from such holder against all
losses, claims, damages and liabilities arising from such use of the
information so furnished and caused by any untrue statement of any material
fact therein or caused by the omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made.
16. Loans.
The Company may make loans to optionees to permit them to exercise options.
If loans are made, the requirements of all applicable Federal and state
laws and regulations regarding such loans must be met.
17. Modification of Outstanding Options.
The Board may authorize the amendment of any outstanding option with the
consent of the optionee when and subject to such conditions as are deemed
to be in the best interests of the Company and in accordance with the
purposes of this Plan.
18. Approval of Stockholders.
The Plan shall be subject to approval by the vote of stockholders holding
at least a majority of the voting stock of the Company present, or
represented, and entitled to vote at a duly held stockholders' meeting, or
by written consent of stockholders holding at least a majority of the
voting stock of the Company, within twelve (12) months after the adoption
of the Plan by the Board of Directors and shall take effect as of the date
of adoption by the Board of Directors upon such approval. The Board may
grant options under the Plan prior to such approval, but any such option
shall become effective as of the date of grant only upon such approval and,
accordingly, no such option may be exercisable prior to such approval.
19. Termination and Amendment.
Unless sooner terminated as herein provided, the Plan shall terminate ten
(10) years from the date upon which the Plan was duly adopted by the Board
of Directors of the Company. The Board of Directors may at any time
terminate the Plan or make such modification or amendment thereof as it
deems advisable; provided, however, that except as provided in this Section
19, the Board of Directors may not, without the approval of the
stockholders of the Company obtained in the manner stated in Section 18,
increase the maximum number of shares for which options may be granted or
change the designation of the class of persons eligible to receive options
under the Plan, or make any other change in the Plan which requires
stockholder approval under applicable law or regulations or any applicable
rule or regulation of any stock exchange or over-the-counter market on
which the Company's Common Stock is then listed. The Board may grant
options under the Plan prior to such approval, but any such option shall
become effective as of the date of grant only upon such approval and,
accordingly, no such option may be exercisable prior to such approval.
The Board may terminate, amend or modify any outstanding option without the
consent of the option holder, provided, however, that, except as provided
in Section 11, without the consent of the optionee, the Board shall not
change the number of shares subject to an option, nor the exercise price
thereof, nor extend the term of such option.
20. Reservation of Stock.
The Company shall at all times during the term of the Plan reserve and keep
available such number of shares of stock as will be sufficient to satisfy
the requirements of the Plan and shall pay all fees and expenses
necessarily incurred by the Company in connection therewith.
21. Limitation of Rights in the Option Shares.
An optionee shall not be deemed for any purpose to be a stockholder of the
Company with respect to
any of the options except to the extent that the option shall have been
exercised with respect thereto and, in addition, a certificate shall have
been issued theretofore and delivered to the optionee.
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