ONE WORLD ONLINE.COM, INC.
STOCK OPTION PLAN
ARTICLE 1.
GENERAL PROVISIONS
1.1. PURPOSE OF THE PLAN
This Stock Option Plan (the "Plan") is intended to promote the
interests of ONE WORLD ONLINE.COM, INC., a Nevada corporation (known as Medizone
Canada Limited on the date the Plan was adopted, the "Corporation") by providing
eligible persons with the opportunity to acquire or increase their proprietary
interest in the Corporation as an incentive for them to remain in the Service of
the Corporation.
Capitalized terms shall have the meanings assigned to such terms in the
attached Appendix.
1.2. ADMINISTRATION OF THE PLAN
a. Prior to the Section 12(g) Registration Date, the Plan
shall be administered by the Board or a committee of the Board.
b. Beginning with the Section 12(g) Registration Date, the
Primary Committee shall have sole and exclusive authority to administer the Plan
with respect to Section 16 Insiders. Administration of the Plan with respect to
all other persons eligible under the Plan may, at the Board's discretion, be
vested in the Primary Committee or a Secondary Committee, or the Board may
retain the power to administer the Plan with respect to all such persons.
c. Members of the Primary Committee or any Secondary Committee
shall serve for such period of time as the Board may determine and may be
removed by the Board at any time. The Board may also terminate the functions of
any Secondary Committee at any time and reassume all powers and authority
previously delegated to such committee.
d. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority 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
interpretations of, the provisions of the Plan and any outstanding options
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan
shall be final and binding on all parties who have an interest in the Plan under
its jurisdiction or any option thereunder.
e. Service on the Primary Committee or the Secondary Committee
shall constitute service as a Board member, and members of each such committee
shall accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants under the Plan.
f. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority (subject to the
provisions of the Plan) to determine which eligible persons are to receive
option grants, the time or times when such option 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 at which each option is to become exercisable, the vesting schedule (if
any)
<PAGE>
applicable to the option shares, the acceleration of such vesting schedule, the
maximum term for which the option is to remain outstanding, whether the option
shares shall be subject to rights of repurchase and/or rights of first refusal,
and all other terms and conditions of the option grants.
1.3. ELIGIBILITY
The following persons shall be eligible to participate in the Plan:
a. Employees, as to both Incentive and/or Non-Statutory
Options,
b. non-employee members of the Board or the board of directors
of any Parent or Subsidiary as to Non-Statutory Options, and
c. consultants and other independent advisors who provide
Services to the Corporation or any Parent or Subsidiary, as to Non-Statutory
Options.
1.4. STOCK SUBJECT TO THE PLAN
a. The stock issuable under the Plan shall be shares of
authorized but unissued Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed Four Million
(4,000,000) shares, which number of shares may be changed from time to time in
accordance with Section 3.4 below.
b. Shares of Common Stock subject to outstanding options shall
be available for subsequent issuance under the Plan to the extent the options
expire or terminate for any reason prior to exercise in full. However, should
the Exercise Price be paid with shares of Common Stock or should shares of
Common Stock otherwise issuable under the Plan be withheld by the Corporation in
satisfaction of the withholding taxes incurred in connection with the exercise
of an option under the Plan, then the number of shares of Common Stock available
for issuance under the Plan shall be reduced by the gross number of shares for
which the option is exercised, and not by the net number of shares of Common
Stock issued to the holder of such option.
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, (ii) the number and/or class of securities for which
any one person may be granted options per calendar year, and (iii) the number
and/or class of securities and the Exercise Price 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.
ARTICLE 2.
OPTION GRANT PROGRAM
2.1. 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 Section 2.2
of the Plan, below.
2
<PAGE>
a. Exercise Price
(1) The Exercise Price shall be fixed by the
Plan Administrator but shall not be less than one hundred percent (100%) of the
Fair Market Value per share of Common Stock on the Grant Date.
(2) The Exercise Price shall become immediately
due upon exercise of the option and shall, subject to the provisions of Article
3.1, and the documents evidencing the option, be payable in one or more of the
forms specified below:
(a) cash or check made payable to the
Corporation,
(b) 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
(c) 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 written instructions to (a) 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) the
Corporation to deliver the certificates for the Purchased
Shares directly to such brokerage firm in order to complete
the sale.
Except to the extent the 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. However, no option shall have a term in excess
of ten (10) years measured from the 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:
(a) Any option outstanding at the time of
the Optionee's cessation of Service for any reason except
death, Permanent Disability or Misconduct shall remain
exercisable for a three (3) month period thereafter, provided
no option shall be exercisable after the Expiration Date.
(b) Any option outstanding at the time of
the Optionee's cessation of Service due to death or Permanent
Disability shall remain exercisable for a twelve (12) month
period thereafter, provided no option shall be exercisable
after the Expiration Date. Subject to the foregoing, any
option exercisable in whole or in part by the Optionee at the
time of death may be exercised subsequently by the personal
representative of the Optionee's estate or by the person or
persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and
distribution.
(c) Should the Optionee's Service be
terminated for Misconduct, then all outstanding options held
by the Optionee shall terminate immediately and cease to be
outstanding.
3
<PAGE>
(d) During the applicable post-Service
exercise period, the option may not be exercised in the
aggregate for more than the number of shares for which the
option is exercisable on the date of the Optionee's cessation
of Service; the option shall, immediately upon the Optionee's
cessation of Service, terminate and cease to be outstanding to
the extent the option is not otherwise at that time
exercisable. Upon the expiration of the applicable exercise
period or (if earlier) upon the Expiration Date, the option
shall terminate and cease to be outstanding for any shares for
which the option has not been exercised.
(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:
(a) extend the period of time for which the
option is to remain exercisable following the Optionee's
cessation of Service from the 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 Date, and/or
(b) permit the option to be exercised,
during the applicable post-Service exercise period, not only
with respect to the number of 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 shares that 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 a
holder of record of the Purchased Shares.
e. Limited Transferability of Options. During the lifetime of
the Optionee, Incentive Options may be exercised only by the Optionee, and shall
not be assignable or transferable except by will or the laws of descent and
distribution following the Optionee's death. Non-Statutory Options may be
assigned or transferred in whole or in part only (i) during the Optionee's
lifetime if in connection with the Optionee's estate plan to one or more members
of the Optionee's immediate family (spouse and children) or to a trust
established exclusively for the benefit of one or more such immediate family
members, or (ii) by will or the laws of descent and distribution following the
Optionee's death. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. 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.
2.2. INCENTIVE OPTIONS
The terms specified below shall apply to all Incentive Options. Except
as modified by the provisions of this Section 2.2, all the provisions of this
Plan shall apply to Incentive Options. Options specifically designated as
Non-Statutory Options when issued under the Plan shall not be subject to the
terms of this Section 2.2.
a. Eligibility. Incentive Options may only be granted to
Employees.
b. Exercise Price. The Exercise Price shall not be less than
one hundred percent (100%) of the Fair Market Value per share of Common Stock on
the 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
4
<PAGE>
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 in the order in which such options are granted.
d. 10% Stockholder. If an Employee to whom an Incentive Option
is granted is a 10% Stockholder, then the Exercise Price shall not be less than
one hundred ten percent (110%) of the Fair Market Value per share of Common
Stock on the Grant Date, and the option term shall not exceed five (5) years
measured from the Grant Date.
e. Holding Period. Shares purchased pursuant to an option
shall cease to qualify for favorable tax treatment as Incentive Option Shares if
and to the extent Optionee disposes of such shares within two (2) years of the
Grant Date or within one (1) year of Optionee's purchase of said shares.
2.3. CORPORATE TRANSACTION/CHANGE IN CONTROL
a. In the event of any Corporate Transaction, the Board of
Directors shall have the sole discretion to elect that each outstanding option
shall automatically accelerate 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 such option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
The Board may exercise its discretion to accelerate the vesting of options
whether or not (i) such option is, in connection with the Corporate Transaction,
either to be assumed by the successor corporation or Parent thereof or to be
replaced with a comparable option to purchase shares of the capital stock of the
successor corporation or Parent thereof, (ii) such option is to be replaced 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 such option, except to the extent that the acceleration of such
option is subject to other limitations imposed by the Plan Administrator at the
time of the option grant. The determination of option comparability under clause
(i) above shall be made by the Plan Administrator, whose determination shall be
final, binding and conclusive.
b. In the event of any Corporate Transaction, the Board of
Directors shall have sole discretion to elect that all outstanding repurchase
rights may also be terminated automatically whether or not those repurchase
rights are to be assigned to the successor corporation (or Parent thereof) in
connection with such Corporate Transaction.
c. The Plan Administrator's discretion under Sections 2.3.a.
and b. above shall be exercisable either at the time the option is granted or at
any time while the option remains outstanding, whether or not those options are
to be assumed or replaced (or those repurchase rights are to be assigned) in the
Corporate Transaction. The Plan Administrator shall also have the discretion to
grant options which do not accelerate whether or not such options are assumed
(and to provide for repurchase rights that do not terminate whether or not such
rights are assigned) in connection with a Corporate Transaction.
d. If the Board of Directors elects the automatic acceleration
of some or all of the outstanding options upon the occurrence of a Corporate
Transaction, all such outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof) immediately following the consummation of the Corporate
Transaction.
e. 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 that 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, (ii) the exercise price payable per share under each
outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same and (iii) the
5
<PAGE>
maximum number of securities and/or class of securities for which any one person
may be granted stock options.
f. The Plan Administrator shall have the discretion,
exercisable at the time the option is granted or at any time while the option
remains outstanding, to provide for the automatic acceleration of any options
assumed or replaced in a Corporate Transaction that do not otherwise accelerate
at that time (and the termination of any of the Corporation's outstanding
repurchase rights that do not otherwise terminate at the time of the Corporate
Transaction) in the event the Optionee's Service should subsequently terminate
by reason of an Involuntary Termination within eighteen (18) months following
the effective date of such Corporate Transaction. Any options so accelerated
shall remain exercisable for shares until the earlier of (i) the expiration of
the option term or (ii) the expiration of the one (1)-year period measured from
the effective date of the Involuntary Termination.
g. 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 (i) provide for the automatic acceleration of one
or more outstanding options (and the automatic termination of one or more
outstanding repurchase rights) upon the occurrence of a Change in Control or
(ii) condition any such option acceleration (and the termination of any
outstanding repurchase rights) upon the subsequent Involuntary Termination of
the Optionee's Service within a specified period (not to exceed eighteen (18)
months) following the effective date of such Change in Control. Any options
accelerated in connection with a Change in Control shall remain fully
exercisable until the expiration or sooner termination of the option term.
h. The portion of any Incentive Option accelerated in
connection with a Corporate Transaction or Change in Control shall remain
exercisable as an Incentive Option only to the extent the applicable One Hundred
Thousand Dollar ($100,000) 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.
i. 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.
ARTICLE 3.
MISCELLANEOUS
3.1. FINANCING
a. The Plan Administrator may permit any Optionee to pay the
option Exercise Price by delivering a promissory note payable in one or more
installments. 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. Promissory notes may be authorized with or without security
or collateral. In all events, the maximum credit available to the Optionee may
not exceed the sum of (i) the aggregate option Exercise Price payable for the
Purchased Shares plus (ii) the amount of any federal, state and local income and
employment tax liability incurred by the Optionee in connection with the option
exercise.
b. The Plan Administrator may, in its discretion, determine
that one or more such promissory notes shall be subject to forgiveness by the
Corporation in whole or in part upon such terms as the Plan Administrator may
deem appropriate.
3.2. TAX WITHHOLDING
a. The Corporation's obligation to deliver shares of Common
Stock upon the exercise of options under the Plan shall be subject to the
satisfaction of all applicable federal, state and local income and employment
tax withholding requirements.
6
<PAGE>
b. The Plan Administrator may, in its discretion, provide any
or all holders of Non-Statutory Options under the Plan with the right to use
shares of Common Stock in satisfaction of all or part of the Taxes incurred by
such holders in connection with the exercise of their options. Such right may be
provided to any such holder in either or both of the following formats:
(1) Stock Withholding: The election to have
the Corporation withhold, from the shares of Common Stock
otherwise issuable upon the exercise of such Non-Statutory
Option, a portion of those shares with an aggregate Fair
Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.
(2) Stock Delivery: The election to deliver
to the Corporation, at the time the Non-Statutory Option is
exercised, one or more shares of Common Stock previously
acquired by such holder (other than in connection with the
option exercise triggering the Taxes) with an aggregate Fair
Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.
3.3. EFFECTIVE DATE AND TERM OF THE PLAN
a. The Plan shall become effective on the Plan Effective Date.
However, no shares shall be issued under the Plan pursuant to Incentive Options
until the Plan is approved by the Corporation's stockholders. If such
stockholder approval is not obtained within twelve (12) months after the Plan
Effective Date, then all Incentive Options previously granted under this Plan
shall automatically convert into Non-Statutory Options.
b. The Plan shall terminate upon the earliest of (i) June 19,
2009, (ii) the date on which all shares available for issuance under the Plan
shall have been issued, or (iii) the termination of all outstanding options in
connection with a Corporate Transaction. Upon such Plan termination, all
outstanding options shall continue to have force and effect in accordance with
the provisions of the documents evidencing such options.
3.4. 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 any rights and obligations with
respect to options at the time outstanding under the Plan unless each affected
Optionee consents to such amendment or modification. In addition, amendments to
the Plan shall be subject to approval of the Corporation's stockholders to the
extent required by applicable laws or regulations.
b. Options to purchase shares of Common Stock may be granted
under the Plan that are in each instance in excess of the number of shares then
available for issuance under the Plan, provided any excess shares actually
issued are held in escrow until there is obtained Board approval (and
shareholder approval if required by applicable laws or regulations) of an
amendment sufficiently increasing the number of shares of Common Stock available
for issuance under the Plan.
3.5. 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.
3.6. REGULATORY APPROVALS
a. The implementation of the Plan, the granting of any option
under the Plan, and the issuance of any shares of Common Stock upon the exercise
of any option shall be subject to the Corporation's
7
<PAGE>
obtaining all approvals and permits required by regulatory authorities having
jurisdiction over the Plan and the options granted under it, and the shares of
Common Stock issued pursuant to the Plan.
b. No shares of Common Stock shall be issued or delivered
under the Plan unless and until there shall have been compliance with all
applicable requirements of federal and state securities laws and all applicable
listing requirements of any stock exchange (or the Nasdaq market, if applicable)
on which Common Stock is then listed for trading.
3.7. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee 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, which rights
are hereby expressly reserved by each, to terminate such person's Service at any
time for any reason, with or without cause.
IN WITNESS WHEREOF the Corporation has executed this Plan effective as
of the Effective Date.
ONE WORLD ONLINE.COM, INC.
/s/ David N. Nemelka
--------------------
By: David N. Nemelka
Its: President
8
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan
and the Plan Documents:
1. Board shall mean the Corporation's Board of Directors.
2. Change in Control shall mean a change in ownership or control
of the Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly,
by any person or related group of persons (other than the Corporation or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Corporation), of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's stockholders, which the Board does not recommend such
stockholders to accept, or
(ii) a change in the composition of the
Board over a period of thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who either (A)
have been Board members continuously since the beginning of such period or (B)
have been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who were
still in office at the time the Board approved such election or nomination.
3. Code shall mean the Internal Revenue Code of 1986, as amended.
4. Common Stock shall mean the Corporation's common stock.
5. 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.
6. Eligible Director shall mean a non-employee Board member
eligible to participate in the Plan.
7. 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.
8. Exercise Date shall mean the date on which the Corporation
shall have received written notice of the option exercise.
9. Exercise Price shall mean the exercise price per share as
specified in the Stock Option Grant.
10. Expiration Date shall mean the date on which the option
expires as specified in the Stock Option Grant.
9
<PAGE>
11. Fair Market Value per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:
(i) If the Common Stock is traded at the
time 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 or any successor system. 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 not 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.
(iv) For purposes of any option grants made
on the Underwriting Date, the Fair Market Value shall be deemed to be equal to
the price per share at which the Common Stock is sold in the initial public
offering pursuant to the Underwriting Agreement.
(v) In all instances the determination of
Fair Market Value shall be made in accordance with Regulation Sections
1.421-7(e)(2) and 20.2031-2(f)(2) as promulgated under Sections 421 and 2031 of
the Code, as then in effect.
12. Grant Date shall mean the date on which the option is granted
to Optionee as specified in the Stock Option Grant.
13. Incentive Option shall mean an option which satisfies the
requirements of Code Section 422.
14. 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 level of responsibility, (B) a reduction in his or
her level of compensation (including base salary, fringe benefits and
participation in 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 by the Corporation without the individual's
consent.
15. Market Stand Off shall mean the market stand off restriction
on disposition of the Purchased Shares as specified in Section D of the Stock
Option Exercise Notice and Purchase Agreement.
16. Misconduct shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, 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
10
<PAGE>
foregoing definition shall 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 or other person in the
Service of the Corporation (or any Parent or Subsidiary).
17. 1933 Act shall mean the Securities Act of 1933, as amended.
18. 1934 Act shall mean the Securities Exchange Act of 1934, as
amended.
19. Non-Statutory Option shall mean an option not intended to
satisfy the requirements of Code Section 422.
20. Optionee shall mean any person to whom an option is granted
under Plan.
21. Option Shares shall mean the number of shares of Common
Stock subject to the option as specified in the Stock Option Grant.
22. Owner shall mean Optionee and all subsequent holders of the
Purchased Shares who derive their chain of ownership through a Permitted
Transfer from Optionee.
23. 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 or the other corporations
in such chain.
24. Permanent Disability or Permanently Disabled shall mean the
inability of the Optionee to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.
25. Permitted Transfer shall mean (i) a gratuitous transfer of the
Purchased Shares, provided and only if Optionee obtains the Corporation's prior
written consent to such transfer, (ii) a transfer of title to the Purchased
Shares effected pursuant to Optionee's will or the laws of intestate succession
following Optionee's death, or (iii) a transfer to the Corporation in pledge as
security for any purchase-money indebtedness incurred by Optionee in connection
with the acquisition of the Purchased Shares.
26. Plan Administrator shall mean the particular entity, whether
the Board or a committee of the Board, which is authorized to administer the
Plan with respect to one or more classes of eligible persons, to the extent such
entity is carrying out its administrative functions under the Plan with respect
to the persons under its jurisdiction.
27. Plan Documents shall mean the Plan, the Stock Option Grant,
and Stock Option Exercise Notice and Purchase Agreement, collectively.
28. Plan Effective Date shall mean June 19, 1999, the date as
of which the Plan was adopted by the Board.
29. Primary Committee shall mean the committee of two (2) or more
non-employee Board members (as defined in the regulations to Section 16 of the
1934 Act) appointed by the Board to administer the Plan with respect to Section
16 Insiders.
30. Purchased Shares shall mean the shares purchased upon exercise
of the Option.
31. Recapitalization shall mean any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other charge
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.
11
<PAGE>
32. Reorganization shall mean any of the following transactions:
(i) a merger or consolidation in which the
Corporation is not the surviving entity;
(ii) a sale, transfer, or other disposition
of all or substantially all of the Corporation's assets;
(iii) a reverse merger in which the
Corporation is the surviving entity but in which the Corporation's outstanding
voting securities are transferred in whole or in part to a person or persons
different from the persons holding those securities immediately prior to the
merger; or
(iv) any transaction effected primarily to
change the state in which the Corporation is incorporated or to create a holding
company structure.
33. SEC shall mean the Securities Exchange Commission.
34. Secondary Committee shall mean a committee of two (2) or more
Board members appointed by the Board to administer the Plan with respect to
eligible persons other than Section 16 Insiders.
35. Section 12(g) Registration Date shall mean the date on which
the Common Stock is first registered under Section 12(g) of the 1934 Act.
36. Section 16 Insider shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
37. Service shall mean the performance 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.
38. Stock Exchange shall mean either the American Stock Exchange,
the New York Stock Exchange, or another regional stock exchange.
39. Stock Option Exercise Notice and Purchase Agreement shall mean
the agreement of said title in substantially the form of Exhibit A to the Stock
Option Grant, pursuant to which Optionee gives notice of his intent to exercise
the option and purchase Shares.
40. Stock Option Grant shall mean the Stock Option Grant document,
pursuant to which Optionee has been informed of the basic terms of the option
granted under the Plan.
41. Subsidiary shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other 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.
42. Taxes shall mean the Federal, state and local income and
employment tax liabilities incurred by the holder of Non-Statutory Options in
connection with the exercise of those options.
43. 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).
12
