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EXHIBIT 99.1
LTX CORPORATION
1999 STOCK PLAN
1. Definitions. As used in this 1999 Stock Plan, the following terms shall
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have the following meanings:
1.1 Board means the Company's Board of Directors.
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1.2 Code means the Federal Internal Revenue Code of 1986, as amended.
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1.3 Company means LTX Corporation.
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1.4 Fair Market Value means the value of a share of Stock of the Company
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on any date, as determined by the Board.
1.5 Grant Date means the date on which an Option or Restricted Share award
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is granted, as specified in Section 7.
1.6 Incentive Option means an Option intended to be an incentive stock
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option with the meaning of Section 422 of the Code.
1.7 Market Value means, as of a particular date, the closing price of the
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Stock on the NASDAQ National Market on that date.
1.8 Nonstatutory Option means any option that is not an Incentive Option.
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1.9 Officer means any person who has been identified by the Board as an
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"officer" for purposes of Section 16 of the Securities Exchange Act of
1934, as amended.
1.10 Option means an option to purchase shares of the stock granted under
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the Plan.
1.11 Option Agreement means an agreement between the Company and an
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Recipient, setting forth the terms and conditions of an Option.
1.12 Option Price means the price paid by an Recipient for an Option Share
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under this Plan.
1.13 Option Share means any share of Stock of the Company transferred to
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an Recipient upon exercise of an Option pursuant to this Plan.
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1.14 Plan means this 1999 Stock Plan of the Company, as amended.
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1.15 Recipient means a person eligible to receive an Option or award, as
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provided in Section 6, to whom an Option or award shall have been
granted under the Plan.
1.16 Restricted Share means a share of the Stock awarded to a Recipient,
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but subject to provisions affecting retention and transferability.
1.17 Stock means common stock, par value $ 0.05 per share, of the Company.
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1.18 Vesting Year for any portion of any Option means the calendar year in
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which that portion of the Option first becomes exercisable.
2. Purpose. This 1999 Stock Plan is intended to advance the interests of the
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Company and its stockholders by improving the Company's ability to attract and
retain qualified individuals who are in a position to contribute to the
management and growth of the Company and its subsidiaries and to provide
additional incentive for such individuals to contribute to the Company's future
success. The Plan is intended to be an incentive stock option plan within the
meaning of Section 422 of the Code, but not all Options granted hereunder are
required to be Incentive Options.
3. Term of the Plan. Options and Restricted Share awards under the Plan may be
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granted on or after June 4, 1999, but not later than June 4, 2009.
4. Stock Subject to the Plan. Subject to the provisions of Section 14 of the
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Plan, the number of shares of the Stock attributable to the exercise of Options
granted under the Plan plus the number the number of shares then issuable upon
exercise of outstanding options granted under the Plan plus the number of
Restricted Shares awarded under the Plan shall at no time exceed 4,325,000
shares. Shares to be issued upon the exercise of Options granted under the Plan
and Restricted Shares may be either authorized but unissued shares or shares
held by the Company in its treasury. If any Option expires or terminates for
any reason without having been exercised in full, the shares not purchased
thereunder shall again be available for Options thereafter to be granted. Each
Director who is not an employee of the Company or a subsidiary thereof shall
receive a Nonstatutory Option to purchase 20,000 shares of Common Stock on the
date on which he or she is first elected to the Board of Directors of the
Company and an additional Nonstatutory Option to purchase 6,000 shares of Common
Stock on the date of each annual meeting at which he or she is re-elected or
after which he continues to serve as a Director. Each Director who is not an
employee of the Company or a subsidiary thereof shall also receive a
Nonstatutory Option to purchase 3,000 shares of Common Stock in each year served
as a chairman of a Committee of the Board of Directors and a Nonstatutory Option
to purchase 1,500 shares of Common Stock in each year
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served as a member of a Committee of the Board of Directors, such options to be
issued on the date the Committees are established annually by the Board of
Directors. Each Option granted to a Director under this Section 4 shall have a
Fair Market Value exercise price per share and shall be exercisable,
cumulatively, to the extent of twenty percent of the stock covered thereby on
the first anniversary date of the grant of the Option, thirty-five percent of
the stock covered thereby on the second anniversary date of the grant of the
Option and forty-five percent of the stock covered thereby on the third
anniversary date of the grant of the Option. In the event any Director standing
for re-election is not re-elected to the Board of Directors at any meeting, all
of such Director's unexercisable Options granted prior to the date of that
meeting will become exercisable immediately.
5. Administration. The Plan shall be administered by the Board of Directors of
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the Company or by a committee composed of members of the Board (the Board of
Directors or any such committee being hereinafter referred to as the
"Committee"). With respect to directors and Officers eligible to receive
Options or Restricted Shares under this Plan, the Plan shall be administered by
a special committee (the "Special Committee") of the Board of Directors of the
Company all of whom are "Non-Employee Directors" as defined in Rule 16b-
3(b)(2)(i) under Section 16 of the Securities Exchange Act of 1934 and "outside
directors" as defined in Section 162(m) of the Code. Only the Special Committee
may grant Options to directors and Officers eligible to receive Options under
this Plan. Subject to the provisions of the Plan, the Committee or the Special
Committee, as the case may be, shall have complete authority, in its discretion,
to make the following determinations with respect to each Option to be granted
by the Company and all Restricted Shares to be awarded by the Company: (a) the
employee, director or consultant to receive the Option or award; (b) the time of
granting the Option or award; (c) the number of shares subject thereto; (d) the
Option Price; (e) the Option period; and (f) the restrictions. In making such
determinations, the Committee may take into account the nature of the services
rendered by the respective employees, directors and consultants their present
and potential contributions to the success of the Company and its subsidiaries,
and such other factors as the Committee in its discretion shall deem relevant.
Subject to the provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it, to determine the terms and provisions of the
respective Option Agreements or awards (which need not be identical), and to
make all other determinations necessary or advisable for the administration of
the Plan. The Committee's determinations on the matters referred to in this
Section 5 shall be conclusive.
6. Eligibility. An Option or award may be granted only to an employee,
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director, or consultant of one or more of the Company and its subsidiaries. A
Director of one or more of the Company and its subsidiaries who is not also an
employee of one or more of the Company and its subsidiaries shall not be
eligible to receive an Incentive Option. Any person who, within the meaning of
Section 422(b)(6) of the Code, is deemed to own stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company
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(or of its parent or subsidiary corporations) shall not be eligible to receive
an Option. In any given fiscal year, no Recipient may receive Options or awards
or both covering more than 500,000 shares of Stock (such number of shares to be
adjusted in accordance with Section 14).
7. Time of Granting Options. The granting of an Option or an award shall take
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place at the time specified by the Committee. Only if expressly so provided by
the Committee, shall the Grant Date be the date on which an Option Agreement or
Restricted Share award shall have been duly executed and delivered by the
Company and the Recipient.
8. Option Price. The Option Price under each Incentive Option shall be not
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less than 100% of the Fair Market Value of Stock on the Grant Date; the Option
Price under each Nonstatutory Option shall not be so limited.
9. Option Period. No Incentive Option may be exercised later than the tenth
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anniversary of the Grant Date. The period during which a Nonstatutory Option may
be exercised shall not be so limited. An Option may become exercisable in such
installments, cumulative or non-cumulative, as the Committee may determine. In
the case of an Option not otherwise immediately exercisable in full, the
Committee may accelerate the exercisability of such Option in whole or in part
at any time, provided the acceleration of the exercisability of any Incentive
Option would not cause the Option to fail to comply with the provisions of
Section 422 of the Code.
10. Limit on Incentive Option Characterization. No Incentive Option shall be
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considered an Incentive Option to the extent pursuant to its terms it would
permit the Recipient to purchase for the first time in any Vesting Year more
than the number of shares of Stock calculated by dividing the current limit by
the Fair Market Value on the Grant Date. The current limit for any Recipient
for any Vesting Year shall be $100,000 minus the aggregate Fair Market Value at
the date of grant of the number of shares of Stock available for purchase for
the first time in such Vesting Year under each other Incentive Option granted to
the Recipient under the Plan and each other incentive stock option granted to
the Recipient under any other incentive stock option plan of the Company (and
its parent and subsidiary corporations).
11. Exercise of Option. An Option may be exercised in accordance with its
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terms by written notice of intent to exercise the Option, specifying the number
of shares with respect to which the Option is then being exercised. The notice
shall be accompanied by (a) full payment for such shares in the form of check or
bank draft payable to the order of the Company, or (b) certificates representing
shares of the Stock with a current Market Value equal to the Option Price of the
shares to be purchased, or (c) irrevocable instructions to a brokerage firm to
sell a sufficient number of the Option Shares to generate the full exercise
price plus all applicable withholding taxes and to pay over to the Company such
proceeds of sale. Within 20 days thereafter, the Company shall deliver or cause
to be delivered to the Recipient evidence of ownership of the number of shares
then being purchased. Such shares shall be fully paid and
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nonassessable. If any law or applicable regulation of the Securities and
Exchange Commission or other public regulatory authority shall require the
Company or the Recipient to register or qualify under the Securities Act of
1933, as amended, any similar federal statute then in force or any state law
regulating the sale of securities, any Option Shares with respect to which
notice of intent to exercise shall have been delivered to the Company or to take
any other action in connection with such shares, the delivery of the certificate
or certificates for such shares shall be postponed until completion of the
necessary action, which the Company shall take in good faith and without delay.
All such action shall be taken by the Company at its own expense.
12. Termination of Employment. In the event that the Recipient's employment or
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association with the Company is terminated, whether voluntarily or by reason of
dismissal or retirement, the Option, to the extent exercisable at the date of
termination, may be exercised by the Recipient within three months after he or
she ceases to be an employee, director or consultant. In the event that the
Recipient's employment or association with the Company terminates as a result of
the death or disability of the Recipient, the Option may be fully exercised by
the Recipient or, in the event of the death of the Recipient by the person to
whom the option is transferred by will or the applicable laws of descent and
distribution, at any time within two years after the date of termination, unless
terminated earlier by its terms. Military or sick leave shall not be deemed a
termination of employment provided that it does not exceed the longer of 90 days
or the period during which the absent employee's reemployment rights are
guaranteed by statute or by contract. In the event that the Recipient's
employment or association with the Company terminates as a result of the death
or disability of the Recipient, the exercisability of any Option not otherwise
immediately exercisable in full held by such Recipient shall be accelerated and
such Options shall be fully exercisable as of the date of termination.
13. Transferability of Options. Except as otherwise provided in this
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subsection, Options shall not be transferable, and no Option or interest therein
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution. All
of a Recipient's rights in any Option may be exercised during the life of the
Recipient only by the Recipient or the Recipient's legal representative.
However, the Committee may, at or after the grant of a Nonstatutory Option,
provide that such Option may be transferred by the Recipient to an immediate
family member; provided, however, that any such transfer is without payment of
any consideration whatsoever and that no transfer of an Option shall be valid
unless first approved by the Committee, acting in its sole discretion. For this
purpose, "immediate family member" means an individual's parents, siblings,
spouse and issue, spouses of such issue and any trust for the benefit of, or the
legal representative of, any of the preceding persons, or any partnership
substantially all of the partners of which are one or more of such persons or
the Recipient.
14. Adjustment of Number of Option Shares. In the event of any change in
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corporate capitalization, such as a stock split or a corporate transaction, such
as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Section 368
of the Code) or any partial or complete liquidation of the Company, the
Committee or Board may make such substitution or adjustments in the aggregate
number and kind of shares reserved for issuance under the Plan, in the number,
kind and Option Price of shares subject to outstanding Options, and/or such
other equitable substitution or adjustments as it may determine to be
appropriate in its sole discretion; provided, however, that the number of shares
subject to any Option shall always be a whole number.
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15. Restricted Shares. Each Restricted Share award shall be evidenced by a
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Restricted Share award agreement that shall specify the number of Restricted
Shares awarded and such other provisions as the Board or Committee shall
determine. The Restricted Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until satisfaction of the
conditions as specified by the Board or Committee and set forth in the
Restricted Share award agreement. All rights with respect to Restricted Shares
granted to a Recipient under the Plan shall be available during his or her
lifetime only to the Recipient. Recipients holding Restricted Shares may
exercise full voting rights with respect to those Restricted Shares. Recipients
holding Restricted Shares will receive such cash dividends paid with respect to
the Restricted Shares as may be declared while they are so held. Without
limiting the generality of the preceding sentence, if the grant or vesting of
Restricted Shares granted to a Recipient is designed to comply with the
requirements of the performance-based exception under Section 162(m) of the
Code, the Board or Committee may apply any restrictions it deems appropriate to
the payment of dividends declared with respect to such Restricted Shares, such
that the dividends and/or the Restricted Shares maintain eligibility for the
performance-based exception.
16. Transferability. The Recipient agrees that he or she will not transfer any
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of the Option Shares or Restricted Shares unless (i) such shares are registered
under the provisions of the Securities Act of 1933, as amended, or (ii) at the
request of the Company, the transferee represents, in form satisfactory to
counsel for the Company, that he or she will not transfer, sell or otherwise
dispose of the Option Shares at any time purchased by him or her in a manner
which would violate the Securities Act of 1933, as amended (the "Act"), and the
regulations of the Securities and Exchange Commission thereunder. The Recipient
agrees that the Company may, at its discretion, make a notation on any
certificates issued upon exercise of any portion of the Option to the effect
that such certificate may not be transferred except after receipt by the Company
of an opinion of counsel satisfactory to it to the effect that such transfer
will not violate the Act and the regulations thereunder, and may issue "stop
transfer" instructions to its transfer agent, if any, and make a "stop transfer"
notation on its books as appropriate.
17. Change of Control.
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(a) Vesting of Options. In the event of a Change of Control, any Options
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outstanding as of the date such Change of Control is determined to have
occurred, and which are not then exercisable and vested, shall become fully
exercisable and vested to the full extent of the original grant.
(b) Elimination of Restrictions. In the event of a Change of Control, all
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restrictions with respect to all Restricted Shares outstanding as of the date
such Change of Control is determined to have occurred shall be eliminated.
(c) Change of Control Cash-Out. During the 60-day period from and after a
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Change of Control (the "Exercise Period"), unless the Committee shall
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determine otherwise at the time of grant of an Option, each Recipient who is an
employee or consultant of one or more of the Company and its subsidiaries shall
have the right, whether or not the Option is fully exercisable and in lieu of
the payment of the Option Price for the shares of Stock being purchased under
the Option and by giving notice to the Company, to elect (within the Exercise
Period) to surrender all or part of the Option to the Company and to receive
cash, within 30 days of such notice, in an amount equal to the amount by which
the Change of Control Price per share of Stock on the date of such election
shall exceed the Option Price per share of Stock under the Option (the "Spread")
multiplied by the number of shares of Stock as to which the right granted under
this Section 17 shall have been exercised. Notwithstanding the foregoing, if any
right granted pursuant to this Section 17 would make a Change of Control
transaction ineligible for pooling-of-interests accounting under APB No. 16 that
but for the nature of such grant would otherwise be eligible for such accounting
treatment, the Committee shall have the ability to substitute for the cash
payable pursuant to such right Stock or other securities with a fair market
value equal to the cash that would otherwise be payable hereunder.
(d) Definition of Change of Control Price. "Change of Control Price" means
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the higher of (i) the highest reported sales price, regular way, of a share of
Stock in any transaction reported on the New York Stock Exchange Composite Tape
or other national exchange on which such shares are listed or on NASDAQ National
Market during the 60-day period prior to and including the date of a Change of
Control or (ii) if the Change of Control is the result of a tender or exchange
offer or a Corporate Transaction, the highest price per share of Stock paid in
such tender or exchange offer or Corporate Transaction; provided, however, that
in the case of Incentive Options, the Change of Control Price shall be in all
cases the fair market value of the Stock on the date the right under Section
16(b) associated with such Incentive Option is exercised. To the extent that
the consideration paid in any such transaction described above consists all or
in part of securities or other noncash consideration, the value of such
securities or other noncash consideration shall be determined in the sole
discretion of the Board.
(e) Definition of Change of Control. For purposes of the Plan, a "Change of
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Control" shall mean:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (a) the then outstanding shares of Stock (the "Outstanding Company Common
Stock") or (b) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control: (A) any acquisition directly from the Company,
(B) any acquisition by the Company, (C) any acquisition by any
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employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (d) any acquisition pursuant to
a transaction which complies with clauses (A), (B) and (C) of subsection (iii)
of this Section 16; or
(ii) Individuals who, as of June 8, 1999, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
June 8, 1999 whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another entity (a "Corporate
Transaction"), in each case, unless, following such Corporate Transaction, (A)
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Corporate Transaction
beneficially own, directly or indirectly, more than 60% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Corporate
Transaction (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their immediately prior to such Corporate Transaction of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (B) no Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Corporate
Transaction) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined voting power of the
then outstanding voting of such corporation except to the extent that such
ownership existed prior to the Corporate Transaction and (C) at least a majority
of the members of the board of directors of the corporation resulting from such
Corporate Transaction were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Corporate Transaction; or
(iv) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
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18. Reservation of Stock. The Company shall at all times reserve and keep
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available such number of shares of the Stock as will be sufficient to satisfy
the requirements of this Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.
19. Limitation of Rights in the Option Shares. A Recipient shall not be deemed
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for any purpose to be a stockholder of the Company with respect to any of the
Option Shares except to the extent that the Option shall have been exercised
with respect thereto and, in addition, a certificate shall have been issued
therefore and delivered to the Recipient. Any Stock issued pursuant to the
Option shall be subject to all restrictions upon the transfer thereof which may
be now or hereafter imposed by the Articles of Organization or the By-laws of
the Company.
20. Termination and Amendment of the Plan. The Board may at any time terminate
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the Plan or make such modifications of the Plan as it shall deem advisable;
provided that no modification shall be effective to increase the number of
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shares of Stock subject to the Plan or change the number or classification of
employees eligible to receive Options until such modification is approved by the
holders of a majority of the Company's common stock represented in person or by
proxy and voting at a meeting. No termination or amendment of the Plan may,
without the consent of the Recipient to whom any Option shall theretofore have
been granted, adversely affect the rights of such Recipient under such Option.
21. Notices. Any communication or notice required or permitted to be given
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under the Plan shall be in writing, and mailed by registered or certified mail
or delivered in hand, if to the Company, to its Treasurer at University Avenue,
Westwood, Massachusetts 02090 and, if to the Recipient, to the address as the
Recipient shall last have furnished to the communicating party.
22. Withholding; Notice of Disposition of Stock Prior to Expiration of
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Specified Holding Period.
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(a) Whenever shares are to be issued in satisfaction of an Option granted
hereunder, the Company shall have the right to require the Recipient to remit to
the Company an amount sufficient to satisfy federal, state, local or other
withholding tax requirements if and to the extent required by law (whether so
required to secure for the Company an otherwise available tax deduction or
otherwise) prior to the delivery of any certificate or certificates for such
shares.
(b) The Company may require as a condition to the issuance of shares
covered by an Incentive Option that the party exercising such Option give a
written representation to the Company which is satisfactory in form and
substance to its counsel and upon which the Company may reasonably rely, that he
or she will report to the Company any disposition of such shares prior to the
expiration of the holding periods specified by Section 422(a)(1) of the Code.
If and to the extent that the realization of income in such a disposition
imposes upon the Company federal, state, local or other withholding tax
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requirements, or any other available tax deduction, the Company shall have the
right to require that the recipient remit to the Company an amount sufficient to
satisfy those requirements; and the Company may require as a condition to the
issuance of shares covered by an Incentive Option that the party exercising such
option give a satisfactory written representation promising to make such a
remittance.
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