<PAGE>
As filed with the Securities and Exchange Commission on May 5, 1999
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
IDENTIX INCORPORATED
--------------------
(Exact name of registrant as specified in its charter)
Delaware 94-2842496
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
510 N. Pastoria Avenue, Sunnyvale, California 94086
----------------------------------------------------
(Address of principal executive offices)
IDT HOLDINGS, INC. 1998 STOCK OPTION/STOCK ISSUANCE PLAN
IDENTICATOR CORPORATION 1995 STOCK OPTION PLAN
----------------------------------------------
(Full title of the plan)
James P. Scullion
Identix Incorporated
510 N. Pastoria Avenue
Sunnyvale, California 94086
----------------------------
(Name and address of agent for service)
(408) 731-2000
--------------
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================
Proposed Proposed
Title of maximum Maximum
securities Amount offering Aggregate Amount of
to be to be price per Offering registration
registered registered share (1) Price fee
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value 2,074,974 $9.125 $18,934,137.75 $5,264
================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(c) under the Securities Act of 1933 and based on
the average of the high and low prices reported on the American Stock
Exchange on April 29, 1999.
<PAGE>
EXPLANATORY NOTE
This Registration Statement on Form S-8 (the "Registration Statement") is
being filed by Identix Incorporated, a Delaware corporation ("Identix" or the
"Registrant"), following a merger effective on April 26, 1999 (the "Merger")
among Identix, IDT Holdings, Inc. and ID Acquisition Corp. Pursuant to the
Agreement and Plan of Reorganization and Merger among Identix, IDT Holdings,
Inc. and ID Acquisition Corp. dated November 14, 1998, as amended, Identix
assumed options under IDT Holdings, Inc. 1998 Stock Option/Stock Issuance Plan
(the "1998 Plan") and under the Identicator Corporation 1995 Stock Option Plan
(the "1995 Plan"). This Registration Statement covers 2,074,974 shares issuable
upon exercise of options assumed in the Merger under the 1998 Plan and 1995
Plan.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed or to be filed with the Commission by
Identix Incorporated are incorporated by reference in this registration
statement:
(a) Identix Annual Report on Form 10-K-A/Amendment No. 2 for the fiscal year
ended June 30, 1998, filed pursuant to Section 13 of the Exchange Act;
(b) Identix Quarterly Report on Form 10-Q for the quarter ended September 30,
1998 and Form 10-Q/A for the quarter ended December 31, 1998, filed
pursuant to Section 13 of the Exchange Act;
(c) Identix's reports on Form 8-K filed December 17, 1998 and May 4, 1999; and
(d) The description of the Common Stock of the registrant contained in the
registration statement filed by Identix under the Exchange Act registering
such Common Stock under Section 12 of the Exchange Act, as amended.
All documents subsequently filed by the registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-
effective amendment which indicates that all securities offered hereby have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this registration statement and to be part
thereof from the date of filing of such 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
Pursuant to the Delaware General Corporation Law, the Registrant has
included in its Certificate of Incorporation provisions regarding the limitation
of liability and indemnification of officers and directors of the Registrant.
Articles NINTH and TENTH of the Registrant's Certificate of Incorporation
provide as follows:
NINTH. No director of the corporation shall be personally liable to
the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability: (a) for any breach of
the director's duty of loyalty to the corporation or its stockholders; (b)
for acts or omissions not in good faith or
1
<PAGE>
which involve intentional misconduct or a knowing violation of law; (c)
under Section 174 of the Delaware General Corporation Law; or (d) for any
transaction from which the director derived any improper personal benefit.
If the Delaware General Corporation Law is amended to authorize corporate
action further eliminating or limiting the personal liability of
directors, then the liability of a director of the corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended. Any repeal or modification of this
paragraph shall not adversely affect any right or protection of a director
of the corporation existing at the time of the repeal or modification.
TENTH.
A. RIGHT TO INDEMNIFICATION
Each person who was or is made a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding"), by reason of
the fact that he or she or a person of whom he or she is the legal
representative, is or was a director or officer of the corporation or is or
was serving at the request of the corporation as a director or officer,
employee or agent of another corporation, or of a partnership, joint
venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee or agent or
in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the corporation
to provide broader indemnification rights than that law permitted the
corporation to provide before the amendment) against all expenses,
liabilities and losses including, without limitation, attorneys' fees,
judgments, fines, ERISA excise taxes and penalties and amounts paid or to
be paid in settlement) reasonably incurred or suffered by such person in
connection therewith. Such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure
to the benefit of his or her heirs, executors and administrators. However,
the corporation shall indemnify any such person seeking indemnity in
connection with an action, suit or proceeding (or part thereof) initiated
by that person only if that action, suit or proceeding (or part thereof)
was authorized by the board of directors of the corporation. The rights
set forth in this Article TENTH shall be contract rights and shall include
the right to be paid expenses incurred in defending any such proceeding in
advance of its final disposition. However, the payment of such expenses
incurred by a director or officer of the corporation in his or her capacity
as a director or officer (and not in any other capacity in which service
was or is rendered by such person while a director or officer, including,
without limitation, service to an employee benefit plan) in advance of the
final disposition of such proceeding shall be made only
2
<PAGE>
upon delivery to the corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it should be
determined ultimately that such director or officer is not entitled to be
so indemnified.
B. RIGHT OF CLAIMANT TO BRING SUIT
If a claim under Paragraph A of this Article TENTH is not paid in full
by the corporation within 90 days after a written claim has been received
by the corporation, the claimant may at any time thereafter bring suit
against the corporation to recover the unpaid amount of the claim. If
successful in whole or in part, the claimant shall be entitled to be paid
the expense of prosecuting that claim. It shall be a defense to any such
action (other than an action an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to
this corporation) that the claimant has not met the standards of conduct
which make it permissible under the Delaware General Corporation Law for
the corporation to indemnify the claimant for the amount claimed. However,
the burden of proving such defense shall be on the corporation. Neither
the failure of the corporation (including its board of directors,
independent legal counsel or its stockholders) to have made a determination
before the commencement of such action that indemnification of the claimant
is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor
an actual determination by the corporation (including its board of
directors, independent legal counsel or its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
C. NON EXCLUSIVITY OF RIGHTS
The rights conferred on any person by Paragraphs A and B of this
Article TENTH shall not be exclusive of any other rights which such person
may have or hereafter may acquire under any statute, provision of the
Certificate of Incorporation, by law, agreement, vote of stockholders or of
disinterested directors, or otherwise.
D. EXPENSES AS A WITNESS
To the extent that any director, officer, employee, or agent of the
corporation is by reason of such position, or a position with another
entity at the request of the corporation, a witness in any action, suit or
proceeding, he or she shall be indemnified and held harmless against all
costs and expenses actually and reasonably incurred by him or her on his or
her behalf in connection therewith.
3
<PAGE>
E. INDEMNITY AGREEMENTS
The corporation may enter into agreements with any director, officer,
employee or agent of the corporation or any person who serves at the
request of the corporation as a director, officer, employee, or agent of
another corporation or other enterprise, providing for indemnification to
the fullest extent permissible under the Delaware General Corporation Law
and the corporation's Certificate of Incorporation.
F. EFFECT OF REPEAL OR MODIFICATION
Any repeal or modification of this Article TENTH shall not adversely
affect any right of indemnification or advancement of expenses of a
director or officer, employee or agent of the corporation existing at the
time of such repeal or modification with respect to any action or omission
occurring before the repeal or modification.
G. SEPARABILITY
Each and every paragraph, sentence, term and provision of this Article
TENTH is separate and distinct. If any paragraph, sentence, term or
provision is held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the validity or
enforceability of any other such paragraph, sentence, term or provision.
To the extent required in order to make any such paragraph, sentence, term
or provision of this Article TENTH valid or enforceable, the corporation
shall, and the indemnitee or potential indemnitee may, request a court of
competent jurisdiction to modify the paragraph, sentence, term or provision
in order to preserve its validity and provide the broadest possible
indemnification permitted by applicable law.
H. INSURANCE
The corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss of the type referred to in this
Article TENTH, whether or not the corporation would have the power to
indemnify such person against such expense, liability or loss under
applicable law.
I. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION
The corporation may, to the extent authorized from time to time by the
board of directors, grant rights to indemnification, and to the advancement
of expenses to any employee or agent of the corporation to the fullest
extent of the
4
<PAGE>
provisions of this Article with respect to the indemnification and
advancement of expenses of directors and officers of the corporation.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
5 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Heller Ehrman White & McAuliffe
(filed as part of Exhibit 5)
23.2 Consent of Independent Accountants
23.3 Consent of Independent Accountants
25 Power of Attorney (see pages 7 and 8)
99.1 IDT Holdings, Inc. 1998 Stock Option/Stock Issuance Plan
99.2 Identicator Corporation 1995 Stock Option Plan
Item 9. Undertakings
A. 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;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
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 the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant
pursuant to
5
<PAGE>
Section 13 or 15(d) of the Exchange Act that are incorporated by reference
in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining liability under the Securities Act, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 6, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
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.
6
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sunnyvale, State of California, on this 4th day of
May, 1999.
IDENTIX INCORPORATED
By: /s/ James P. Scullion
---------------------
James P. Scullion, President, Chief Operating
Officer, Chief Financial Officer and Secretary
POWER OF ATTORNEY TO SIGN AMENDMENTS
------------------------------------
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below does hereby constitute and appoint Randall C. Fowler and James P.
Scullion, and each of them, with full power of substitution and full power to
act without the other such person's true and lawful attorney-in-fact and agent
for such person in such person's name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement on Form S-8 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 and about the premises
in order to effectuate the same as fully, to all intents and purposes, as they
or such person might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may lawfully do or cause
to be done by virtue hereof.
7
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-8 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Randall C. Fowler Chairman of the Board of Directors, May 4, 1999
- ------------------------------ Chief Executive Officer and President
Randall C. Fowler
/s/ James P. Scullion Director, President, May 4, 1999
- ------------------------------ Chief Operating Officer, Chief
James P. Scullion Financial Officer and Secretary
/s/ Randall Hawks, Jr. Director May 4, 1999
- ------------------------------
Randall Hawks, Jr.
/s/ Patrick H. Morton Director May 4, 1999
- ------------------------------
Patrick H. Morton
/s/ Charles W. Richion Director May 4, 1999
- ------------------------------
Charles W. Richion
/s/ Fred Sutter Director May 4, 1999
- ------------------------------
Fred Sutter
/s/ Larry J. Wells Director May 4, 1999
- ------------------------------
Larry J. Wells
</TABLE>
8
<PAGE>
INDEX TO EXHIBITS
5 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Heller Ehrman White & McAuliffe
(filed as part of Exhibit 5)
23.2 Consent of Independent Accountants
23.3 Consent of Independent Accountants
25 Power of Attorney (see pages 7 and 8)
99.1 IDT Holdings, Inc. 1998 Stock Option/Stock Issuance Plan
99.2 Identicator Corporation 1995 Stock Option Plan
<PAGE>
Exhibit 5
May 4, 1999
Identix Incorporated
510 North Pastoria Avenue
Sunnyvale, California 94086
Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Identix Incorporated, a Delaware corporation
(the "Company"), in connection with the Registration Statement on Form S-8 (the
"Registration Statement") which the Company filed with the Securities and
Exchange Commission on or about May 4, 1999, for the purpose of registering
under the Securities Act of 1933, as amended, 2,074,974 shares of its $.01 par
value Common Stock (the "Shares"). The Shares are issuable following a merger,
effective April 26, 1999 (the "Merger"), among the Company, IDT Holdings, Inc.
("IDT") and ID Acquisition Corp. ("Acquisition Corp."). Pursuant to the
Agreement and Plan of Reorganization and Merger among the Company, IDT and
Acquisition Corp., dated November 14, 1998, as amended on December 11, 1998,
February 3, 1999 and March 16, 1999 (the "Merger Agreement"), the Company
assumed options under IDT's 1998 Stock Option/Issuance Plan (the "1998 Plan")
and under the Identicator Corporation 1995 Stock Option Plan (the "1995 Plan").
The 2,074,974 Shares are issuable upon exercise of options issued pursuant to
the 1998 Plan and 1995 Plan (collectively, the "Plans") and assumed pursuant to
the Merger Agreement.
In connection with this opinion, we have assumed the authenticity of all
records, documents and instruments submitted to us as originals, the genuineness
of all signatures, the legal capacity of natural persons and the conformity to
the originals of all records, documents and instruments submitted to us as
copies. We have based our opinion upon our review of the following records,
documents and instruments:
(a) The Certificate of Incorporation of the Company, as amended to
date, certified by the Secretary of State of the State of Delaware
as of April 20, 1999 and certified to us by an officer of the
Company as being complete and in full force and effect as of the
date of this opinion;
(b) The Bylaws of the Company, as amended to date, certified to us by
an officer of the Company as being complete and in full force and
effect as of the date of this opinion;
<PAGE>
Identix Incorporated HELLER EHRMAN WHITE & MCAULIFFE
May 4, 1999 ATTORNEYS
Page 2
(c) A Certificate of an officer of the Company (i) attaching records
certified to us as constituting all records of proceedings and
actions of the Board of Directors and stockholders of the Company
relating to the transactions contemplated by the Merger Agreement
and (ii) certifying as to certain factual matters;
(d) A Certificate of ChaseMellon Shareholder Services, L.L.C., the
transfer agent of the Company, dated May 3, 1999, as to the number
of shares of Common Stock of the Company outstanding as of April
30, 1999;
(e) The Merger Agreement;
(f) The Plans; and
(g) The Registration Statement.
This opinion is limited to the federal laws of the United States of
America, the General Corporation Law of the State of Delaware and the laws of
the State of California. We disclaim any opinion as to any other statute, rule,
regulation, ordinance, order or other promulgation of any other jurisdiction or
any regional or local governmental body.
Based upon the foregoing and our examination of such questions of law as we
have deemed necessary or appropriate for the purpose of this opinion, and
assuming that (i) the Registration Statement becomes and remains effective
during the period when the Shares are offered, issued and sold, (ii) the Shares
to be sold are issued in accordance with the terms of the Plans, (iii) the
Company receives in cash the full consideration for the Shares as stated in the
Plans, (iv) the per share consideration for each Share is greater than the par
value of the Common Stock, and (v) all applicable securities laws are complied
with, it is our opinion that the Shares covered by the Registration Statement,
when issued by the Company, will be validly issued, fully paid and
nonassessable.
This opinion is rendered to you in connection with the Registration
Statement and is solely for your benefit. This opinion may not be relied upon by
you for any other purpose, or relied upon by any other person, firm, corporation
or other entity for any purpose, without our prior written consent. We disclaim
any obligation to advise you of any developments that occur after the date of
this opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ HELLER EHRMAN WHITE & MCAULIFFE
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference this Registration Statement
on Form S-8 of our report dated July 28, 1998 appearing on page 35 of Indentix
Incorporated's Annual Report on Form 10-K/A for the year ended June 30, 1998.
/s/ PricewaterhouseCoopers LLP
San Jose, California
May 4, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 26, 1999, relating to the
consolidated financial statements of IDT Holdings, Inc., which appears on page
F-2 of the Registration Statement on Form S-4 (File No. 333-68805) of Identix
Incorporated which is incorporated by reference in the Current Report on Form 8-
K of Identix Incorporated dated May 4, 1999.
/s/ PricewaterhouseCoopers LLP
San Jose, California
May 4, 1999
<PAGE>
Exhibit 99.1
IDT HOLDINGS, INC.
1998 STOCK OPTION/STOCK ISSUANCE PLAN
-------------------------------------
ARTICLE ONE
GENERAL PROVISIONS
------------------
I. PURPOSE OF THE PLAN
This 1998 Stock Option/Stock Issuance Plan is intended to promote the
interests of IDT Holdings, Inc., a Delaware corporation, by providing eligible
persons in the Corporation's employ or service with the opportunity to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Corporation as an incentive for them to continue in such employ or service.
Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into two (2) separate equity programs:
(i) the Option Grant Program under which eligible persons
may, at the discretion of the Plan Administrator, be granted options to
purchase shares of Common Stock, and
(ii) the Stock Issuance Program under which eligible
persons may, at the discretion of the Plan Administrator, be issued
shares of Common Stock directly, either through the immediate purchase of
such shares or as a bonus for services rendered the Corporation (or any
Parent or Subsidiary).
B. The provisions of Articles One and Four shall apply to both equity
programs under the Plan and shall accordingly govern the interests of all
persons under the Plan.
III. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by the Board. However, any or all
administrative functions otherwise exercisable by the Board may be delegated to
the Committee. Members of the Committee shall serve for such period of time as
the Board may determine and shall be subject to removal by the Board at any
time. The Board may also at any time terminate the functions of the Committee
and reassume all powers and authority previously delegated to the Committee.
B. The Plan Administrator shall have full power and authority
(subject to the provisions of the Plan) to establish such rules and regulations
as it may deem appropriate for proper administration of the Plan and to make
such determinations under, and issue such
<PAGE>
interpretations of, the Plan and any outstanding options or stock issuances
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest
in the Plan or any option or stock issuance thereunder.
IV. ELIGIBILITY
A. The persons eligible to participate in the Plan are as follows:
(i) Employees,
(ii) non-employee members of the Board or the non-
employee members of the board of directors of any Parent or Subsidiary,
and
(iii) consultants and other independent advisors who
provide services to the Corporation (or any Parent or Subsidiary).
B. The Plan Administrator shall have full authority to determine, (i)
with respect to the grants made under the Option Grant Program, which eligible
persons are to receive the option grants, the time or times when those grants
are to be made, the number of shares to be covered by each such grant, the
status of the granted option as either an Incentive Option or a Non-Statutory
Option, the time or times when each option is to become exercisable, the vesting
schedule (if any) applicable to the option shares and the maximum term for which
the option is to remain outstanding, and (ii) with respect to stock issuances
made under the Stock Issuance Program, which eligible persons are to receive
such stock issuances, the time or times when those issuances are to be made, the
number of shares to be issued to each Participant, the vesting schedule (if any)
applicable to the issued shares and the consideration to be paid by the
Participant for such shares.
C. The Plan Administrator shall have the absolute discretion either
to grant options in accordance with the Option Grant Program or to effect stock
issuances in accordance with the Stock Issuance Program.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed 800,000
shares.
B. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of Article
Two. Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the option exercise or direct issue price paid per share,
pursuant to the Corporation's repurchase rights under the Plan shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan and shall accordingly be available for reissuance through one or more
subsequent option grants or direct stock issuances under the Plan.
<PAGE>
C. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan and (ii) the number and/or class of securities and the exercise
price per share in effect under each outstanding option in order to prevent the
dilution or enlargement of benefits thereunder. The adjustments determined by
the Plan Administrator shall be final, binding and conclusive. In no event
shall any such adjustments be made in connection with the conversion of one or
more outstanding shares of the Corporation's preferred stock into shares of
Common Stock.
<PAGE>
ARTICLE TWO
OPTION GRANT PROGRAM
--------------------
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
--------
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. Exercise Price.
--------------
1. The exercise price per share shall be fixed by the Plan
Administrator in accordance with the following provisions:
(i) The exercise price per share shall not be less than
eighty-five percent (85%) of the Fair Market Value per share of Common
Stock on the option grant date.
(ii) If the person to whom the option is granted is a 10%
Stockholder, then the exercise price per share shall not be less than one
hundred ten percent (110%) of the Fair Market Value per share of Common
Stock on the option grant date.
2. The exercise price shall become immediately due upon exercise of
the option and shall, subject to the provisions of Section I of Article Four and
the documents evidencing the option, be payable in cash or check made payable to
the Corporation. Should the Common Stock be registered under Section 12 of the
1934 Act at the time the option is exercised, then the exercise price may also
be paid as follows:
(i) in shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date, or
(ii) to the extent the option is exercised for vested shares,
through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable instructions (A) to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to be
withheld by the Corporation by reason of such exercise and (B) to the
Corporation to deliver the certificates for the purchased shares directly
to such brokerage firm in order to complete the sale.
<PAGE>
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Exercise and Term of Options. Each option shall be exercisable at
----------------------------
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option grant. However, no option shall have a term in excess of ten (10)
years measured from the option grant date.
C. Effect of Termination of Service.
--------------------------------
1. The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service or death:
(i) Should the Optionee cease to remain in Service for any
reason other than death, Disability or Misconduct, then the Optionee
shall have a period of three (3) months following the date of such
cessation of Service during which to exercise each outstanding option
held by such Optionee.
(ii) Should Optionee's Service terminate by reason of
Disability, then the Optionee shall have a period of twelve (12) months
following the date of such cessation of Service during which to exercise
each outstanding option held by such Optionee.
(iii) If the Optionee dies while holding an outstanding
option, then the personal representative of his or her estate or the
person or persons to whom the option is transferred pursuant to the
Optionee's will or the laws of inheritance shall have a twelve (12)-month
period following the date of the Optionee's death to exercise such
option.
(iv) Under no circumstances, however, shall any such option
be exercisable after the specified expiration of the option term.
(v) During the applicable post-Service exercise period, the
option may not be exercised in the aggregate for more than the number of
vested shares for which the option is exercisable on the date of the
Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term,
the option shall terminate and cease to be outstanding for any vested
shares for which the option has not been exercised. However, the option
shall, immediately upon the Optionee's cessation of Service, terminate
and cease to be outstanding with respect to any and all option shares for
which the option is not otherwise at the time exercisable or in which the
Optionee is not otherwise at that time vested.
(vi) Should Optionee's Service be terminated for Misconduct,
then all outstanding options held by the Optionee shall terminate
immediately and cease to remain outstanding.
<PAGE>
2. The Plan Administrator shall have the discretion, exercisable
either at the time an option is granted or at any time while the option remains
outstanding, to:
(i) extend the period of time for which the option is to
remain exercisable following Optionee's cessation of Service or death
from the limited period otherwise in effect for that option to such
greater period of time as the Plan Administrator shall deem appropriate,
but in no event beyond the expiration of the option term, and/or
(ii) permit the option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number of vested
shares of Common Stock for which such option is exercisable at the time of
the Optionee's cessation of Service but also with respect to one or more
additional installments in which the Optionee would have vested under the
option had the Optionee continued in Service.
D. Stockholder Rights. The holder of an option shall have no
------------------
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become the
recordholder of the purchased shares.
E. Unvested Shares. The Plan Administrator shall have the discretion to
---------------
grant options which are exercisable for unvested shares of Common Stock. Should
the Optionee cease Service while holding such unvested shares, the Corporation
shall have the right to repurchase, at the exercise price paid per share, any or
all of those unvested shares. The terms upon which such repurchase right shall
be exercisable (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares) shall be established by
the Plan Administrator and set forth in the document evidencing such repurchase
right. The Plan Administrator may not impose a vesting schedule upon any option
grant or the shares of Common Stock subject to that option which is more
restrictive than twenty percent (20%) per year vesting, with the initial vesting
to occur not later than one (1) year after the option grant date. However, such
limitation shall not be applicable to any option grants made to individuals who
are officers of the Corporation, non-employee Board members or independent
consultants.
F. First Refusal Rights. Until such time as the Common Stock is
--------------------
first registered under Section 12 of the 1934 Act, the Corporation shall have
the right of first refusal with respect to any proposed disposition by the
Optionee (or any successor in interest) of any shares of Common Stock issued
under the Plan. Such right of first refusal shall be exercisable in accordance
with the terms established by the Plan Administrator and set forth in the
document evidencing such right.
G. Limited Transferability of Options. During the lifetime of the
----------------------------------
Optionee, Incentive Options shall be exercisable only by the Optionee and
shall not be assignable or transferable other than by will or by the laws of
descent and distribution following the Optionee's death. Non-Statutory Options
may, to the extent permitted by the Plan Administrator, be assigned in whole
or in part during the Optionee's lifetime to one or more members of the
Optionee's immediate family or to a trust established exclusively for one or
more
<PAGE>
such family members. The terms applicable to the assigned portion shall be the
same as those in effect for the option immediately prior to such assignment
and shall be set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate.
H. Withholding. The Corporation's obligation to deliver shares of
-----------
Common Stock upon the exercise of any options granted under the Plan shall be
subject to the satisfaction of all applicable Federal, state and local income
and employment tax withholding requirements.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Four shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options
shall not be subject to the terms of this Section II.
---
A. Eligibility. Incentive Options may only be granted to Employees.
-----------
B. Exercise Price. The exercise price per share shall not be less
--------------
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the option grant date.
C. Dollar Limitation. The aggregate Fair Market Value of the shares
-----------------
of Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any other
option plan of the Corporation or any Parent or Subsidiary) may for the first
time become exercisable as Incentive Options during any one (1) calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. 10% Stockholder. If any Employee to whom an Incentive Option is
---------------
granted is a 10% Stockholder, then the option term shall not exceed five (5)
years measured from the option grant date.
III. CORPORATE TRANSACTION
A. The shares subject to each option outstanding under the Plan at
the time of a Corporate Transaction shall automatically vest in full so that
each such option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to that option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. However, the shares subject to
an outstanding option shall not vest on such an accelerated basis if and to the
extent: (i) such option is assumed by the successor corporation (or parent
thereof) in the Corporate Transaction and any repurchase rights of the
Corporation with respect to the unvested option shares are concurrently assigned
to such successor corporation (or parent thereof) or (ii) such option is to be
replaced
<PAGE>
with a cash incentive program of the successor corporation which preserves the
spread existing on the unvested option shares at the time of the Corporate
Transaction and provides for subsequent payout in accordance with the same
vesting schedule applicable to those unvested option shares or (iii) the
acceleration of such option is subject to other limitations imposed by the
Plan Administrator at the time of the option grant.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.
C. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).
D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction, had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such
--------
securities shall remain the same.
E. The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to structure one or more options so that those options shall
automatically accelerate and vest in full (and any repurchase rights of the
Corporation with respect to the unvested shares subject to those options shall
immediately terminate) upon the occurrence of a Corporate Transaction, whether
or not those options are to be assumed in the Corporate Transaction.
F. The Plan Administrator shall also have full power and authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to structure such option so that the shares subject
to that option will automatically vest on an accelerated basis should the
Optionee's Service terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Corporate Transaction in which the option is assumed and the
repurchase rights applicable to those shares do not otherwise terminate. Any
option so accelerated shall remain exercisable for the fully-vested option
shares until the expiration or sooner termination of the option term. In
addition, the Plan Administrator may provide that one or more of the
Corporation's outstanding repurchase rights with respect to shares held by the
Optionee at the time of such Involuntary Termination shall immediately terminate
on an accelerated basis, and the shares subject to those terminated rights shall
accordingly vest at that time.
<PAGE>
G. The portion of any Incentive Option accelerated in connection with
a Corporate Transaction shall remain exercisable as an Incentive Option only to
the extent the applicable One Hundred Thousand Dollar limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under the
Federal tax laws.
H. The grant of options under the Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options covering the same or different number of
shares of Common Stock but with an exercise price per share based on the Fair
Market Value per share of Common Stock on the new option grant date.
<PAGE>
ARTICLE THREE
STOCK ISSUANCE PROGRAM
----------------------
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening option grants.
Each such stock issuance shall be evidenced by a Stock Issuance Agreement which
complies with the terms specified below.
A. Purchase Price.
--------------
1. The purchase price per share shall be fixed by the Plan
Administrator but shall not be less than eighty-five percent (85%) of the Fair
Market Value per share of Common Stock on the issue date. However, the purchase
price per share of Common Stock issued to a 10% Stockholder shall not be less
than one hundred and ten percent (110%) of such Fair Market Value.
2. Subject to the provisions of Section I of Article Four,
shares of Common Stock may be issued under the Stock Issuance Program for any
of the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or
any Parent or Subsidiary).
B. Vesting Provisions.
------------------
1. Shares of Common Stock issued under the Stock Issuance
Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service or upon attainment of specified performance
objectives. However, the Plan Administrator may not impose a vesting schedule
upon any stock issuance effected under the Stock Issuance Program which is more
restrictive than twenty percent (20%) per year vesting, with initial vesting to
occur not later than one (1) year after the issuance date. Such limitation
shall not apply to any Common Stock issuances made to the officers of the
Corporation, non-employee Board members or independent consultants.
2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or
<PAGE>
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration shall be issued subject to (i) the same
vesting requirements applicable to the Participant's unvested shares of Common
Stock and (ii) such escrow arrangements as the Plan Administrator shall deem
appropriate.
3. The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further stockholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase-money note of
the Participant attributable to such surrendered shares.
5. The Plan Administrator may in its discretion waive the
surrender and cancellation of one or more unvested shares of Common Stock (or
other assets attributable thereto) which would otherwise occur upon the non-
completion of the vesting schedule applicable to those shares. Such waiver
shall result in the immediate vesting of the Participant's interest in the
shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.
C. First Refusal Rights. Until such time as the Common Stock is
--------------------
first registered under Section 12 of the 1934 Act, the Corporation shall have
the right of first refusal with respect to any proposed disposition by the
Participant (or any successor in interest) of any shares of Common Stock issued
under the Stock Issuance Program. Such right of first refusal shall be
exercisable in accordance with the terms established by the Plan Administrator
and set forth in the document evidencing such right.
II. CORPORATE TRANSACTION
A. Upon the occurrence of a Corporate Transaction, all outstanding
repurchase rights under the Stock Issuance Program shall terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, except to the extent: (i) those repurchase
rights are assigned to the successor corporation (or parent thereof) in
connection with such Corporate Transaction or (ii) such accelerated vesting is
precluded by other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.
<PAGE>
B. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the unvested shares are issued or any time while
the Corporation's repurchase rights with respect to those shares remain
outstanding, to provide that those rights shall automatically terminate on an
accelerated basis, and the shares of Common Stock subject to those terminated
rights shall immediately vest, in the event the Participant's Service should
subsequently terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Corporate Transaction in which those repurchase rights are assigned
to the successor corporation (or parent thereof).
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held
in escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends on
the certificates evidencing those unvested shares.
<PAGE>
ARTICLE FOUR
MISCELLANEOUS
-------------
I. FINANCING
The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price under the Option Grant Program or the purchase price
for shares issued under the Stock Issuance Program by delivering a full-
recourse, interest bearing promissory note payable in one or more installments
and secured by the purchased shares. The terms of any such promissory note
(including the interest rate and the terms of repayment) shall be established by
the Plan Administrator in its sole discretion. In no event may the maximum
credit available to the Optionee or Participant exceed the sum of (i) the
aggregate option exercise price or purchase price payable for the purchased
shares (less the par value of those shares) plus (ii) any Federal, state and
local income and employment tax liability incurred by the Optionee or the
Participant in connection with the option exercise or share purchase.
II. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan shall become effective when adopted by the Board, but no
option granted under the Plan may be exercised, and no shares shall be issued
under the Plan, until the Plan is approved by the Corporation's stockholders.
If such stockholder approval is not obtained within twelve (12) months after the
date of the Board's adoption of the Plan, then all options previously granted
under the Plan shall terminate and cease to be outstanding, and no further
options shall be granted and no shares shall be issued under the Plan. Subject
to such limitation, the Plan Administrator may grant options and issue shares
under the Plan at any time after the effective date of the Plan and before the
date fixed herein for termination of the Plan.
B. The Plan shall terminate upon the earliest of (i) the expiration
--------
of the ten (10)-year period measured from the date the Plan is adopted by the
Board, (ii) the date on which all shares available for issuance under the Plan
shall have been issued as vested shares or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. All options and
unvested stock issuances outstanding at the time of a clause (i) termination
event shall continue to have full force and effect in accordance with the
provisions of the documents evidencing those options or issuances.
III. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
options or unvested stock issuances at the time outstanding under the Plan
unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws and regulations.
B. Options may be granted under the Option Grant Program and shares
may be issued under the Stock Issuance Program which are in each instance in
excess of the number
<PAGE>
of shares of Common Stock then available for issuance under the Plan, provided
any excess shares actually issued under those programs shall be held in escrow
until there is obtained stockholder approval of an amendment sufficiently
increasing the number of shares of Common Stock available for issuance under
the Plan. If such stockholder approval is not obtained within twelve (12)
months after the date the first such excess grants or issuances are made, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees and the Participants the exercise or purchase price
paid for any excess shares issued under the Plan and held in escrow, together
with interest (at the applicable Short Term Federal Rate) for the period the
shares were held in escrow, and such shares shall thereupon be automatically
cancelled and cease to be outstanding.
IV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.
V. WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock upon
the exercise of any options or upon the issuance or vesting of any shares issued
under the Plan shall be subject to the satisfaction of all applicable Federal,
state and local income and employment tax withholding requirements.
VI. REGULATORY APPROVALS
The implementation of the Plan, the granting of any options under the
Plan and the issuance of any shares of Common Stock (i) upon the exercise of any
option or (ii) under the Stock Issuance Program shall be subject to the
Corporation's procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the options granted under it and
the shares of Common Stock issued pursuant to it.
VII. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the Participant
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.
VIII. FINANCIAL REPORTS
The Corporation shall deliver a balance sheet and an income statement
at least annually to each individual holding an outstanding option under the
Plan, unless such individual is a key Employee whose duties in connection with
the Corporation (or any Parent or Subsidiary) assure such individual access to
equivalent information.
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
-----
B. Code shall mean the Internal Revenue Code of 1986, as amended.
----
C. Committee shall mean a committee of two (2) or more Board members
---------
appointed by the Board to exercise one or more administrative functions under
the Plan.
D. Common Stock shall mean the Corporation's common stock.
------------
E. Corporate Transaction shall mean either of the following
---------------------
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
F. Corporation shall mean IDT Holdings, Inc., a Delaware corporation,
-----------
and any successor corporation to all or substantially all of the assets or
voting stock of IDT Holdings, Inc. which shall by appropriate action adopt the
Plan.
G. Disability shall mean the inability of the Optionee or the
----------
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment and shall be determined by
the Plan Administrator on the basis of such medical evidence as the Plan
Administrator deems warranted under the circumstances.
H. Employee shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
I. Exercise Date shall mean the date on which the Corporation shall
-------------
have received written notice of the option exercise.
J. Fair Market Value per share of Common Stock on any relevant date
-----------------
shall be determined in accordance with the following provisions:
<PAGE>
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market. If there is no closing selling price for the Common Stock
on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(iii) If the Common Stock is at the time neither listed on any
Stock Exchange nor traded on the Nasdaq National Market, then the Fair
Market Value shall be determined by the Plan Administrator after taking
into account such factors as the Plan Administrator shall deem appropriate.
K. Incentive Option shall mean an option which satisfies the
----------------
requirements of Code Section 422.
L. Involuntary Termination shall mean the termination of the Service
-----------------------
of any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a
change in his or her position with the Corporation which materially
reduces his or her duties and responsibilities or the level of management
to which he or she reports, (B) a reduction in his or her level of
compensation (including base salary, fringe benefits and target bonuses
under any corporate-performance based bonus or incentive programs) by
more than fifteen percent (15%) or (C) a relocation of such individual's
place of employment by more than fifty (50) miles, provided and only if
such change, reduction or relocation is effected without the individual's
consent.
M. Misconduct shall mean the commission of any act of fraud,
----------
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall
<PAGE>
not be deemed to be inclusive of all the acts or omissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).
N. 1934 Act shall mean the Securities Exchange Act of 1934, as
--------
amended.
O. Non-Statutory Option shall mean an option not intended to satisfy
--------------------
the requirements of Code Section 422.
P. Option Grant Program shall mean the option grant program in effect
--------------------
under the Plan.
Q. Optionee shall mean any person to whom an option is granted under
--------
the Plan.
R. Parent shall mean any corporation (other than the Corporation) in
------
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
S. Participant shall mean any person who is issued shares of Common
-----------
Stock under the Stock Issuance Program.
T. Plan shall mean the Corporation's 1998 Stock Option/Stock Issuance
----
Plan, as set forth in this document.
U. Plan Administrator shall mean either the Board or the Committee
------------------
acting in its capacity as administrator of the Plan.
V. Service shall mean the provision of services to the Corporation
-------
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant.
W. Stock Exchange shall mean either the American Stock Exchange or
--------------
the New York Stock Exchange.
X. Stock Issuance Agreement shall mean the agreement entered into by
------------------------
the Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.
Y. Stock Issuance Program shall mean the stock issuance program in
----------------------
effect under the Plan.
Z. Subsidiary shall mean any corporation (other than the Corporation)
----------
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other
<PAGE>
than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
AA. 10% Stockholder shall mean the owner of stock (as determined
---------------
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
<PAGE>
Exhibit 99.2
IDENTICATOR
1995 NONQUALIFIED STOCK OPTION PLAN
1. PURPOSE OF PLAN.
The purpose of the Plan is to assist the Company in retaining valued
employees, consultants and directors by offering them a greater stake in the
Company's success and a closer identity with it, and to aid in attracting
individuals whose services would be helpful to the Company and would contribute
to its success.
2. DEFINITIONS.
(a) "Board" means the Board of directors of the Company.
-----
(b) "Code" means the Internal Revenue Code of 1986 as amended.
----
(c) "Committee" means the committee described in Paragraph 5.
---------
(d) "Company" means Identicator.
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(e) "Date of Grant" means the date on which an Option is granted.
-------------
(f) "Fair Market Value" means on any given date the fair market value
-----------------
of Shares as determined by the Board in good faith.
(g) "Option" means any stock option granted under the Plan and described
------
in Paragraph 3(a).
(h) "Optionee" means a person to whom an Option has been granted under
--------
the Plan, which Option has not been exercised and has not expired or
terminated.
(i) "Plan" means the Identicator 1995 Stock Option Plan, as hereinafter
----
amended from time to time.
(j) "Share" or "Shares" means a share or shares of Common Stock, $0.1 par
----- ------ ----
value, of the Company.
3. RIGHTS TO BE GRANTED.
Rights that may be granted under the Plan are:
(a) Nonqualified Options, which give the Optionee the right to purchase
a specified number of Shares for a price as determined by the Board and set
forth in an Option Agreement.
<PAGE>
4. STOCK SUBJECT TO PLAN.
The Shares delivered may, at the Company's option, be either treasury
Shares or Shares originally issued for such purpose. If an Option terminates or
expires without having been exercised in whole or in part, other Options may be
granted covering the Shares as to which the Option was not exercised.
5. ADMINISTRATION OF PLAN.
(a) Until such time as the Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, the Committee
shall be the Board.
(b) Authority. Subject to the general purposes, terms, and conditions
---------
of the Plan, the Board shall have full power to implement and carry out the
Plan including, but not limited to, the following:
(i) to select the persons to whom Options may from time to time
be granted hereunder,
(ii) to determine whether and to what extent Options are granted
hereunder,
(iii) to determine the number of Shares to be covered by each such
Option granted hereunder,
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Option granted hereunder, including, but not
limited to, the share price and any restriction or limitation, or any vesting
acceleration or waiver of forfeiture restrictions regarding any Option and/or
the Shares relating thereto, based in each case on such factors as the Board
shall determine in its sole discretion;
(vi) to determine whether and under what circumstances an Option
may be settled in cash instead of Shares;
(vii) to determine the form of payment that will be acceptable
consideration for exercise of an Option granted under the Plan; and
(viii) to reduce the exercise price of any Option.
The Board shall have the authority to construe and interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
correct any defect or omission or reconcile any inconsistency in the Plan or any
Option granted hereunder, and to make all other determinations necessary or
advisable for the administration of the Plan.
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<PAGE>
6. GRANT OF RIGHTS.
The Committee may grant Options to eligible employees of the Company, and
to consultants to and officers and directors of the Company.
7. ELIGIBILITY.
Eligible individuals to whom Options may be granted shall be executive
officers and other key employees of the Company, and consultants to and
directors of the Company.
8. OPTION AGREEMENTS AND TERMS.
All options shall be evidenced by Option Agreements that shall be executed
on behalf of the Company and by the respective Optionees. The terms of each
such agreement shall be determined from time to time by the Board consistent,
however, with the following:
(a) Time to Grant. All Stock Options shall be granted within 10 years
-------------
from the date of adoption of the Plan by the Board.
(b) Option Price. The option price per Share to any Stock Option shall
------------
be determined by the Board but shall not be less than 100% of the Fair Market
Value of such Share on the Date of Grant.
(c) Restrictions on Transferability. No Option shall be transferable
-------------------------------
otherwise than by will or the laws of descent and distribution and, during the
lifetime of the Optionee, shall be exercisable only by him or her. Upon the
death of the an Optionee, the person to whom the rights shall have passed by
will or by the laws of descent and distribution may exercise any Options only
in accordance with the provisions of Paragraph 8(g).
(d) Payment Upon Exercise of Options. Full payment for Shares purchased
--------------------------------
upon the exercise of an Option shall be made in cash or, at the election of
the Optionee and as the Board may, in its sole discretion, approve, by
promissory note(s) secured by common shares.
(e) Issuance of Certificate Upon Exercise of Options; Payment of Cash.
-----------------------------------------------------------------
Only whole Shares shall be issuable upon exercise of Options. Any right to a
fractional Share shall be satisfied in cash. Subject to Paragraph 8(k), upon
payment of the option price, a certificate for the number of whole Shares and
a check for the Fair Market Value on the date of exercise of any fractional
Share to which the Optionee is entitled shall be delivered to such Optionee by
the Company; provided, however, that if the Optionee is an employee of the
-----------------
Company, the Optionee has remitted to the Company an amount, determined by the
Company, necessary to satisfy applicable federal, state or local tax
-3-
<PAGE>
withholding requirements, or made other arrangements with the Company for the
satisfaction of such tax withholding requirements. The Company shall not be
obligated to deliver any certificates for Shares until there has been
compliance with such laws or regulations as it may deem applicable. The
Company shall use its best efforts to effect such compliance.
(f) Stock Withholding to Satisfy Withholding Tax Obligations. When an
--------------------------------------------------------
Optionee incurs a tax liability in connection with the exercise or vesting of
any Option, which tax liability is subject to tax withholding under applicable
tax laws, and the Optionee is obligated to pay the Company an amount required
to be withheld under applicable tax laws, the Optionee may satisfy the
withholding tax obligation by electing to have the Company withhold from the
Shares to be issued that number of Shares having a Fair Market Value equal to
the amount required to be withheld determined on the date that the amount of
tax to be withheld is to be determined (the "Tax Date"). All elections by
Optionee to have Shares withheld for his purpose shall be made in writing in a
form acceptable to the BOARD and shall be subject to the following
restrictions:
(i) the election must be made on or prior to the applicable Tax
Date;
(ii) once made, the election shall be irrevocable as to the
particular Shares as to which the election is made; and
(iii) all elections shall be subject to the consent or disapproval
of the Board.
(g) Periods of Exercise of Options
------------------------------
(i) An Option shall be exercisable in whole or in part at such
time as may be determined by the Board and stated in the Option Agreement;
provided however, that no Option shall be exercisable after ten years from the
- ----------------
Date of Grant.
(ii) In the event that an Optionee ceases employment with the
Company for any reason other than death, any Option held by such Optionee
shall not be exercisable for a period ending more than three months following
the date the Optionee ceases employment with the Company as set forth in the
Option Agreement; provided however, that if such cessation of employment with
----------------
the Company is due to the disability (as determined by the Board) of the
Optionee, he or she shall have the right to exercise his or her Options to the
extent determined by the Board in its discretion and set forth in the Option
agreement for a period ending not more than one year following such cessation,
even if the date of exercise is within any time period prescribed by the Plan
or an Option agreement prior to which such Option shall be exercisable.
(iii) In the event that an Optionee ceases employment with the
Company by reason of his or her death, any Option held at death by such
Optionee shall not be
-4-
<PAGE>
exercisable after more than one year from the date of death as set forth in
the Option agreement; provided, however, that in such event, the person to whom
-------- -------
the rights of the Optionee shall have passed by will or by the laws of descent
and distribution may exercise any of the decedent's Options to the extent
determined by the BOARD in its discretion and set forth in the Option agreement,
even if the date of exercise is within any time period prescribed by the Plan or
an Option agreement prior to which such Option shall not be exercisable.
(h) Date of Exercise. The date of exercise of an Option shall be the
----------------
date on which written notice of exercise, addressed to the Company at its main
office to the attention of its Secretary, is hand delivered, telecopied or
mailed first-class postage prepaid, provided, however, that the Company shall
-------- -------
not be obligated to deliver any certificates for Shares pursuant to the
exercise of an Option until the Optionee shall have made payment in full of
the option price for such Shares. Each such exercise shall be irrevocable when
given. Each notice of exercise must specify the Stock Option being exercised.
(i) Leave of Absence. The employment relationship shall not be
----------------
considered interrupted (1) in the case of sick leave, military leave or any
other leave of absence approved by the Board so long as the actual period of
any such leave does not exceed the period approved by the Company.
(j) Multiple Grants of NonQualified Options. The grant, exercise,
---------------------------------------
termination or expiration of any Stock Option shall have no effect upon any
other Stock Option held by the same Optionee.
(k) Restrictions on Transfer. Unless and until Shares issued upon the
------------------------
exercise of Options are not subject to any restrictions on the sale or other
transfer thereof pursuant to agreement or otherwise, certificates for such
Shares shall be held by the Company for the account of the person to whom such
Shares have been issued, and certificates for such Shares shall be delivered
to such person only upon receipt by the Company of evidence reasonably
satisfactory to it that any such restrictions have expired and are of no force
or effect or that any contemplated sale or other transfer of such Shares shall
comply with all applicable restrictions. Certificates for the Shares will bear
the following legend:
"The shares represented by this certificate have not been registered under
the securities act of 1933 or any applicable state blue sky laws and are
subject to additional restrictions on transfer pursuant to agreement
between the company and the holder hereof. Accordingly, these shares may
not be sold or otherwise transferred except upon receipt by the company of
evidence reasonably satisfactory to it that such transaction is in
compliance with all such restrictions."
-5-
<PAGE>
9. RIGHTS AS SHAREHOLDERS.
An Optionee shall not have any right as a shareholder with respect to any
Shares subject to his or her Options until the date of the issuance of a stock
certificate to him or her for such Shares.
10. CHANGES IN CAPITALIZATION.
In the event of a stock dividend, stock split, recapitalization,
combination, subdivision, issuance or rights, or other similar corporate change,
the Board shall make full anti-dilution adjustments in the aggregate number of
Shares that may be covered by Options issued pursuant to the Plan, the number of
Shares subject to, and the option price of, each then outstanding Option.
11. MERGER, DISPOSITIONS AND CERTAIN OTHER TRANSACTIONS.
If, during the term of any option, the Company shall be merged into or
consolidated with or otherwise combined with or acquired by another person or
entity, or there is a divisive reorganization or a liquidation or partial
liquidation of the Company, the Company may choose to take no action with regard
to the options outstanding or, notwithstanding any other provision of the Plan,
to take any of the following courses of action (unless otherwise provided in any
option agreement):
(a) Not less than 30 days nor more than 60 days prior to any such
transaction, all Optionees shall be notified that their Options shall expire
on the 15th day after the date of such notice in which event all Optionees
shall have the right to exercise any or all of their Options prior to such new
expiration date; or
(b) The Company shall provide in any agreement with respect to any such
merger consolidation, combination or acquisition that the surviving, new or
acquiring corporation shall grant options to the Optionees to acquire shares
in such corporation with respect to which:
(i) the excess of the fair market Value of the shares of such
corporation immediately after the consummation of such merger, consolidation,
combination or acquisition over the option price, shall be as nearly equal to,
but not greater than, the excess of the Fair Market Value of the Shares over
the option price of Options, immediately prior to the consummation of such
merger, consolidation, combination or acquisition; and
(ii) on a share-by-share basis, the ratio of the option price to
the fair market value of the shares of the surviving, new, or acquiring
corporation immediately after such merger, consolidation, combination or
acquisition is nor more favorable to the Optionee than the ratio of the option
price to the Fair Market Value of the Shares immediately before such merger,
consolidation, combination or acquisition; or
-6-
<PAGE>
(c) The Company shall take such other action as the Board shall
determine to be reasonable under the circumstances in order to permit
Optionees to realize the value of Options granted to them under the Plan.
12. AMENDMENTS.
The Plan may be amended by the Board, but no outstanding Option shall be
affected by any such amendment without the written consent of the Optionee or
other person then entitled to exercise such Option.
13. SECURITIES LAW.
The Board shall have the power to make each grant under the Plan subject to
such conditions as it deems necessary or appropriate to comply with the then
existing requirements of the Securities Act of 1933 or the Securities Exchange
Act of 1934, including Rule 16b-3 (or any similar rule) of the Securities and
Exchange Commission.
14. EFFECTIVE DATE AND TERM OF PLAN.
The Plan shall become effective on August 3, 1995, the date on which the
Plan is adopted by the Board, and shall expire on the tenth anniversary of the
Board adoption, unless sooner terminated by the Board.
15. GENERAL.
Each Option shall be evidenced by a written instrument containing such
terms and conditions not inconsistent with the Plan as the Board may determine.
The issuance of Shares on the exercise of an Option shall be subject to all of
the applicable requirements of California Law and other applicable laws,
including federal or state securities laws, and all Shares issued under the Plan
shall be subject to the terms and restrictions contained in the Certificate of
Incorporation of the Company, as amended from time to time. Among other things,
the Optionee may be required to deliver an investment representation to the
Company in connection with any exercise of such Option or to agree to refrain
from selling or otherwise disposing of the Shares acquired for a specified
period of time or on specified terms.
16. BUYOUT PROVISIONS.
The Board may at any time offer to buy out for a payment in cash or Shares
an Option previously granted, based on such terms and conditions as the Board
shall establish and communicate to the Optionee at the time such offer is made.
-7-
<PAGE>
17. EMPLOYMENT RELATIONSHIP.
Nothing in the Plan or any award made thereunder shall interfere with or
limit in any way the right of the Company to terminate any Optionee's employment
or consulting relationship at any time, with or without cause, nor confer upon
any Optionee any right to continue in the employ or service of the Company.
18. NONEXCLUSIVITY OF THE PLAN.
Neither the adoption of the Plan by the Board, nor any provision of the
Plan shall be construed as creating any limitation on the power of the Board to
adopt such additional compensation arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.
-8-
