VCS TECHNOLOGIES, INC.
1997 INCENTIVE STOCK OPTION PLAN
1 Options Granted Under Plan. Under this Incentive Stock Option Plan (the
"Plan") of VCS Technologies, Inc. (the "Company") stock options which qualify as
incentive stock options ("Options") under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), may be granted to eligible employees to
purchase shares of the Company's common stock (the "Common Stock"). The Plan is
designed to enable the Company to attract, retain and motivate its employees by
providing for or increasing the proprietary interests of such employees in the
Company.
2 Stock Subject to Plan. The maximum number of shares of the Company's Common
Stock subject to this Plan and for which Options granted hereunder may therefore
be exercised is seven hundred and fifty thousand (750,000) shares. Shares of
Common Stock subject to the unexercised portions of any Options granted under
this Plan which expire or terminate or are canceled may again be subject to
Options under the Plan.
3 Eligible Employees. The employees eligible to be considered for the grant of
Options hereunder are any persons regularly employed by the Company in any
capacity on a full-time, salaried basis.
4 Option Terms.
4.1 Exercise Price. Except as otherwise provided herein, the exercise
price for each Option granted hereunder will be fixed by the Board and will be
not less than 100% of the Fair Market Value (as defined in Section 14 herein) of
the Common Stock on the date of the grant of the Option. Neither the Company,
the Company's Board of Directors (the "Board") nor any member thereof makes or
will make any representation or warranty to any Optionee regarding the Federal
or State income tax consequences or effects of participation in the Plan.
4.2 Granting of Options. Subject to the provisions and limitations of
this Plan, and subject to applicable securities, tax and other laws and
regulations, Options may be granted at such time or times and pursuant to such
terms and conditions as may be determined by the Board.
4.3 Duration. Options may not be granted under this Plan after December
27, 2006. Each Option will provide that it may be exercised in not more than
such number of installments as set forth in the "Incentive Stock Option
Agreement" for such Option between the Company and the Optionee; provided,
however, that no Option will be exercised in full or in part after the
expiration of ten (10) years from the date such Option is granted.
4.4 Payment. Payment for Common Stock purchased upon any exercise of an
Option granted under this Plan will be made in full in cash (including payment
by check) concurrently with such exercise.
4.5 Cessation of Employment. Except as otherwise specifically provided
in the Incentive Stock Option Agreement, in the event an Optionee retires or
otherwise ceases to be employed by the Company for any reason, including leaves
of absences (other than a termination by death, permanent or total disability
within the meaning of Section 22(e) of the Code, or for cause), such Optionee
will have the right to exercise any Options which became exercisable prior to
retirement or cessation of employment but only within a period of three (3)
months from the date of cessation of employment (but in any event not later than
the termination date of the Option), after which time any unexercised portion of
all outstanding Options will expire. In no event and under no circumstances may
an Option be exercised by an employee (or his personal representative) after
termination of the Optionee's employment for cause.
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4.6 Disability. In the case of an Optionee who becomes permanently
disabled within the meaning of Section 22(e)(3) of the Code while in the employ
of the Company, any Option which was exercisable on the date when such Optionee
became disabled may be exercised within one (1) year after such Optionee ceases
employment (but in no event later than the termination date of the Option) after
which time any unexercised portion of all outstanding Options will expire.
4.7 Death. In the event of the death of an Optionee while in the employ
of the Company, the estate of the deceased Optionee will have the right to
exercise any Options which became exercisable prior to the Optionee's death but
only within a period of one (1) year from the date of the Optionee's death (but
in no event later that the termination date of the Option) after which time any
unexercised portion of all outstanding Options will expire. In the event an
Option is exercised by the estate of an Optionee, the Company will be under no
obligation to issue shares of Common Stock upon exercise unless and until the
Company is satisfied that the person exercising the Option is the duly appointed
legal representative of the Optionee's estate.
4.8 Nontransferability. Each Option granted under this Plan is
nontransferable by the Optionee other than by will or the laws of descent and
distribution, and is exercisable only in accordance with the provisions of this
Plan.
5 Incentive Stock Option Agreement. Each Option granted under this Plan will be
evidenced by a Incentive Stock Option Agreement. All forms of Incentive Stock
Option Agreement will contain such provisions, restrictions, and conditions as
are not inconsistent with this Plan but need not be identical. The provisions of
this Plan will be incorporated by reference in each Incentive Stock Option
Agreement. Options granted under this Plan will contain such other terms and
provisions as the Board may authorize, including but not limited to:
(i) vesting schedules governing the exercisability of such
Options;
(ii) provisions for acceleration of such vesting schedules in
certain events;
(iii) arrangements whereby the Company may fulfill any tax
withholding obligations it may have in connection with the
exercise of such Options;
(iv) provisions imposing restrictions upon the transferability of
shares of Common Stock acquired on exercise of such Option,
whether required by this Plan or applicable securities laws or
imposed for other reasons; and
(v) provisions regarding the termination or survival of any such
Option upon the Optionee's death, retirement or other
terminations of employment and the extent, if any, to which
any such Option may be exercised after such event.
6 Adjustments. In the event the Common Stock is changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation (whether by reason of merger, consolidation,
reorganization or otherwise), or if the number of outstanding shares of Common
Stock are increased through a stock split or the payment of a stock dividend,
then there will be substituted for or added to each share of Common Stock which
is subject to an Option the number and kind of shares of securities into which
each outstanding share of Common Stock is changed. Outstanding Options will also
be amended as to price and other terms if necessary to reflect the foregoing
events. No right to purchase fractional shares will result from any adjustment
in Options pursuant to this Section 6. In case of any such adjustment, the
shares subject to the Option will be rounded down to the nearest whole share.
Notice of any adjustment will be given by the Company to the holder of each such
Option which will have been so adjusted and such adjustment (whether or not
notice is given) will be effective and binding for all purposes of the Plan. Any
other provision hereof to the contrary notwithstanding, in the event the Company
is a party to a merger or other reorganization, outstanding Options will be
subject to
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the agreement of merger or reorganization. Such agreement may provide, without
limitation, for the assumption of outstanding Options by the surviving company
or its parent, for the continuation by the Company (if the Company is a
surviving entity), for accelerated vesting and accelerated expiration, or for
settlement in cash.
7 Administration. The Plan will be administered by the Board or a committee
appointed by the Board (the "Committee"). For purposes of this Plan and any
Incentive Stock Option Agreement, any action taken with respect to this Plan or
any Incentive Stock Option Agreement by the Committee will be binding in the
same manner as if such action were taken by the Board. The interpretation and
construction by the Board of any term or provision of the Plan or of any Option
granted under it, including without limitation any determination of adjustments
required pursuant to Section 6 hereof, will be conclusive, and such
interpretation and construction will be binding upon all those who hold or are
eligible to receive Options under the Plan. The Board may from time to time
adopt rules and regulations for carrying out this Plan and, subject to the
provisions of this Plan, may prescribe the form of the instruments evidencing
any Option granted under this Plan. Subject to the provisions of this Plan, the
Board will have full and final authority in its discretion to select the
employees to be granted Options, to authorize granting such Options and to
determine the number of shares to be subject thereto, the exercise prices, the
terms of exercise, expiration dates and other pertinent provisions thereof.
8 Amendment and Termination. The Board may alter, amend, suspend or terminate
this Plan, provided that no such action will deprive any of the Optionee's
rights under an Option without the Optionee's consent. Except as herein
provided, no such action of the Board, unless taken with the approval of the
stockholders of the Company, may:
(i) increase the maximum number of shares for which Options
granted under this Plan may be exercised;
(ii) alter the class of employees eligible to receive Options under
the Plan; or
(iii) amend the Plan in any other manner which the Board, in its
discretion, determines should become effective only if
approved by the stockholders even though such stockholder
approval is not expressly required by this Plan.
9 Financial Assistance. The Company is vested with authority under this Plan to
assist any employee to whom an Option is granted hereunder (including any
director or officer of the Company or any of its subsidiaries who is also an
employee of the Company) in the payment of the purchase price payable on
exercise of that Option, by lending the amount of such purchase price to such
employee on such terms and at such rates of interest and upon such security (or
unsecured) as will have been authorized by or under authority of the Board.
10 Limitations of Rights of Optionees.
10.1 Certificates. A person to whom an Option is granted under this
Plan will not have any interest in the shares of Common Stock underlying the
Option, and will not have any of the rights or privileges of a shareholder with
respect to such shares, until the Option is exercised and the shares of Common
Stock are purchased.
10.2 No Violations. No shares of stock issuable under the Plan will be
issued and no certificate therefor delivered unless and until, in the opinion of
legal counsel for the Company, such securities may be issued and delivered
without causing the Company to be in violation of or to incur any liability
under any federal, state or other securities law, or any other requirement of
law or of any regulatory body having jurisdiction over the Company.
10.3 No Right to Employment. The receipt of an Option does not give the
Optionee any right to continued employment by the Company for any period, nor
will the granting of the Option
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or the issuance of shares on exercise thereof give the Company any right to the
continued services of the Optionee for any period.
10.4 Express Grant. Nothing contained in this Plan will constitute the
granting of an Option hereunder, which will occur only pursuant to express
authorization by the Board.
11 Company's Right of First Purchase. Until such time as the Company's Common
Stock is Publicly Traded (as defined in Section 13.1 herein), any shares of
Common Stock issued upon the exercise of any Option will be subject to the
Company's right of first purchase. By virtue of that right, (a) such shares of
Common Stock may not be transferred during the Optionee's lifetime to any person
other than members of the Optionee's Immediate Family (as defined in Section
13.2 herein), a partnership whose members are the Optionee and/or members of the
Optionee's Immediate Family, or a trust for the benefit of the Optionee and/or
members of the Optionee's Immediate Family, unless such transfer occurs within
the thirty (30) days immediately following either (i) the expiration of thirty
(30) days following written notice by the Optionee to the Company identifying
the prospective transferee and offering the Company the first opportunity to
purchase such stock at its Fair Market Value in cash, or (ii) the Company's
election to not purchase such shares of Common Stock after receipt of such
notice; and (b) upon the Optionee's death, the Company will have the right to
purchase all or some of such stock at its Fair Market Value within nine (9)
months after the date of death. This right of first purchase will continue to
apply to any such stock after the transfer during the Optionee's lifetime of
that stock to a member of the Optionee's Immediate Family or to a family
partnership or trust as aforesaid, and after any transfer of that stock with
respect to which the Company expressly waived its right of first purchase
without also waiving it as to any subsequent transfers thereof, but it will not
apply after a transfer of that stock with respect to which the Company was
offered but did not exercise or waive its right of first purchase or more than
nine months after the Optionee's death. The Company may assign all or any
portion of its right of first purchase to any one or more of its stockholders,
or to a pension or retirement plan or trust for employees of the Company, who
may then exercise the right so assigned.
12 Legends on Share Certificates.
12.1 For so long as the Common Stock is not Publicly Traded, in
addition to any other legends which may be prescribed by law, the following
legend (or substantially the following legend) will appear on each certificate
representing the Common Shares issued upon the exercise of each Option:
"The Securities represented by this Certificate have been
issued and are being held pursuant to the 1997 Incentive Stock
Option Plan of VCS Technologies, Inc., and may only be
transferred, sold or otherwise disposed of pursuant to the
terms thereof."
12.2 For so long as the Common Stock is not Publicy Traded, the
certificates representing the Common shares may, at the absolute discretion of
the Company, be subject to a stop transfer order, and bear the following or
substantially similar legend and such other legends as may be required by the
Company:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities laws and neither such
securities nor any interest therein may be offered, sold,
pledged, assigned or otherwise transferred unless (1) a
registration statement with respect thereto is effective under
the Act and any applicable state securities laws or (2) the
Company receives an opinion of counsel to the holder of such
securities, which counsel and opinion are reasonably
satisfactory to the Company, that such
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securities may be offered, sold, pledged, assigned or
transferred in the manner contemplated without an effective
registration statement under the Act or applicable state
securities laws."
13 Certain Definitions. In addition to the terms defined elsewhere in this
Plan, the following terms will have the following definitions:
13.1 Fair Market Value Defined. The "Fair Market Value" of corporate
stock will mean the price at which one could reasonably expect such stock to be
sold in an arm's length transaction, for cash, other than on an installment
basis, to a person not employed by, controlled by, in control of or under common
control with the issuer of such stock. Such Fair Market Value will be that which
has currently or most recently been determined for this purpose by the Board, or
at the sole discretion of the Board by an independent appraiser or appraisers
selected by the Board, in either case giving due consideration to recent
transactions involving shares of such stock, if any, the issuer's net worth,
prospective earning power and dividend-paying capacity, the goodwill of the
issuer's business, the issuer's industry position and its management, that
industry's economic outlook, the values of securities of issuers whose stock is
publicly traded and which are engaged in similar businesses, the effect of
transfer restrictions to which such stock may be subject under law and under the
applicable terms of any contract governing such stock, the absence of a public
market for such stock and such other matters as the Board or its appraiser or
appraisers deem pertinent. The determination by the Board or its appraiser or
appraisers of the Fair Market Value will, if not unreasonable, be conclusive and
binding notwithstanding the possibility that other persons might make a
different, and also reasonable, determination. If the Fair Market Value to be
used was thus fixed more than sixteen months prior to the day as of which Fair
Market Value is being determined, it will in any event be no less than the book
value of the stock being valued at the end of the most recent period for which
financial statements of the issuer are available.
13.2 Immediate Family. An individual's "Immediate Family" includes only
his or her spouse, parents or other ancestors, and children and other direct
descendants of that individual or of his or her spouse (including such ancestors
and descendants by adoption).
13.3 Publicly Traded. Corporate stock is "Publicly Traded" if stock of
that class is listed or admitted to unlisted trading privileges on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. ("NASD") or if sales or bid and offer quotations are reported for that
class of stock in the automated quotation system ("NASDAQ") operated by the
NASD.
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