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EXHIBIT 10.2
INNOVA CORPORATION
DIRECTOR STOCK OPTION PLAN
INNOVA CORPORATION, a Washington corporation (the "Company"), hereby
establishes and sets forth the terms of the Innova Corporation Director Stock
Option Plan (the "Plan").
1. PURPOSE OF PLAN; EFFECTIVE DATE
The purpose of this Plan is to enable the Company to attract and retain
outside persons of the highest caliber to serve on the Company's Board of
Directors, as such persons can make important contributions to the success of
the Company. The Plan will seek to achieve this purpose by means of automatic
grants of options to acquire shares of Common Stock of the Company, $0.01 par
value per share (the "Common Stock") under the terms of this Plan. The Plan will
be effective as of June 17, 1997 (the "Effective Date").
2. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Company's Board of Directors.
Grants of options under the Plan and the amount and nature of the grants shall
be automatic as described in Section 4. However, the Board shall have the
authority to (a) administer the Plan in accordance with its express terms;
(b) determine all questions arising in connection with the administration,
interpretation, and application of the Plan; (c) correct any defect, supply any
information, and reconcile any inconsistency in such manner and to such extent
as shall be deemed necessary or advisable to carry out the purpose of the Plan;
(d) prescribe, amend, and rescind rules and regulations relating to the
administration of the Plan; and (e) make all other determinations necessary or
advisable for the administration of the Plan. All determinations made by the
Board in good faith in matters referred to in this Section 2 shall be final,
conclusive, and binding on all persons. The Board shall have all powers
necessary or appropriate to accomplish its duties under the Plan.
3. ELIGIBLE DIRECTORS
Each individual who on a Grant Date (as defined in Section 4.1
below) in any year during the term of the Plan meets the following requirements
shall be eligible to participate in the Plan (each such individual will be
referred to as an "Eligible Director"):
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(a) The individual is a member of the Company's Board
of Directors at the close of business on the Grant Date; and
(b) At no time during the calendar year in which the Grant
Date falls or during the preceding calendar year has the individual been
an employee of the Company or any of its direct or indirect
subsidiaries.
An Eligible Director will cease to be eligible for further participation in the
Plan if he or she does not meet the foregoing eligibility requirements on any
Grant Date. Such cessation of participation shall not affect the Eligible
Director's rights under any options previously granted under the Plan.
4. GRANTS OF OPTIONS
4.1 Each Eligible Director on the Effective Date (the Effective
Date shall also be included in the definition of a "Grant Date" as defined
below) is eligible to receive a one-time grant of an option to acquire up to
240,000 shares of Common Stock at an exercise price equal to the Fair Market
Value (as defined in Section 4.5 below) of the Common Stock on such Grant Date.
Effective on the date on which an Eligible Director for the first time takes
office as a member of the Board of Directors of the Company (each such date
being referred to as a "Grant Date"), provided shares of Common Stock then
remain available under Section 5 for the grant of options under this Plan, such
Eligible Director will receive a one-time grant of an option to acquire Ninety
Six Thousand (96,000) shares of Common Stock at an exercise price equal to the
Fair Market Value (as defined in Section 4.5 below) of the Common Stock on such
Grant Date.
4.2 On January 1, 1998, and on the date of the Company's annual
meeting of shareholders commencing with the annual shareholders meeting held in
1999, and in each subsequent year during which shares of Common Stock remain
available under Section 5 for the grant of options under this Plan (each such
date being referred to as a "Grant Date"), each individual who is an Eligible
Director on such Grant Date will additionally receive an option to acquire
Ninety-six thousand (96,000) shares of Common Stock at an exercise price equal
to the Fair Market Value of the Common Stock on such Grant Date.
4.3 If on any Grant Date the number of shares of Common Stock
available under Section 5 for the grant of options under this Plan is
insufficient to permit options to be granted to each Eligible Director for the
entire number of shares required by Section 4.1 or 4.2 above, then each Eligible
Director entitled to be granted an option on such Grant Date shall instead be
granted, on a proportional
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basis, an option to acquire the largest whole number of shares of Common Stock
as can then be granted without exceeding the number of shares then available.
4.4 All grants of options under Sections 4.1 and 4.2 shall occur
automatically without further action of the Board of Directors other than, to
the extent necessary, their determination of the Fair Market Value of the Common
Stock on the Grant Date; PROVIDED, HOWEVER, that as to options granted on the
Effective Date, the Board of Directors shall also determine the number of shares
covered by options granted to each Eligible Director.
4.5 For purposes of this Plan, the term "Fair Market Value" on
any date means, if the Common Stock is publicly traded, the average last sales
price (or, if no last sales prices are reported, the average of the high bid and
low asked prices) for a share of Common Stock on the twenty (20) trading days
ending on the last trading day prior to the date for which Fair Market Value is
being determined, as reported by the principal exchange on which the Common
Stock is listed, or, if the Common Stock is publicly traded but not listed on an
exchange, as reported on NASDAQ, or, if such prices or quotations are not
reported on NASDAQ, as reported by any other available source of prices or
quotations selected by the Board of Directors. If the Common Stock is not
publicly traded, or if the Fair Market Value is not determinable by any of the
foregoing means, the Fair Market Value on any day shall be determined in good
faith by the Board of Directors on the basis of such considerations as the Board
of Directors deems appropriate, including any recent third-party valuations or
appraisals.
5. SHARES AVAILABLE FOR OPTIONS
The aggregate number of shares of Common Stock reserved for issuance
upon exercise of options granted under the Plan will be Two Million Eight
Hundred Eighty Thousand (2,880,000), and options may be granted under this Plan
only with respect to the shares so reserved. This number will be subject to any
adjustment required or permitted under Sections 9 and 10 below.
6. OPTION AGREEMENT
Each option will be evidenced by a written agreement executed by the
Company and the Eligible Director. Such agreement shall contain the terms of the
option as specified herein, together with such other terms, conditions, and
provisions not inconsistent with such terms and conditions as the Company deems
advisable.
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7. EXERCISE OF OPTIONS
7.1 An option granted to an Eligible Director on the Effective
Date will thereafter be exercisable in whole or in part at any time (subject to
Section 7.2 below) prior to the date specified for its expiration in Section 7.3
below.
7.2 Except as provided in Section 7.1 above, each option granted
to an Eligible Director pursuant to Section 4.1 and 4.2 above will vest and
become exercisable as follows: 25% one year from the Grant Date with the
remainder vesting in 36 equal monthly increments, provided the individual
holding the option remains an Eligible Director on each such anniversary date.
Vested options (or vested portions thereof) will thereafter be exercisable in
whole or in part at any time prior to the date specified for expiration of the
option in Section 7.3 below. Unvested options (or portions thereof) will expire
without further vesting if, prior to the date the option (or portion thereof) is
scheduled to vest, the holder ceases to be a director of the Company for any
reason other than his or her death.
7.3 Unless an option granted hereunder expires earlier pursuant
to the provisions of Section 7.2, the option will expire ten (10) years after
its Grant Date, or one (1) year after the date of death of the option holder,
whichever occurs first.
7.4 The exercise price of any shares purchased shall be paid in
full in cash or in shares of Common Stock that have been outstanding for at
least one (1) year. Shares of Common Stock used to pay the exercise price will
be valued based on their Fair Market Value on the date the option is exercised.
7.5 Each certificate evidencing Common Stock issued upon exercise
of an option shall bear such legends as the Company, upon advice of legal
counsel, determines to be necessary or appropriate, including, without
limitation, a legend to the effect that the shares represented thereby may not
be disposed of unless the Company has received an opinion of counsel, acceptable
to the Company, that such disposition will not violate any federal or state
securities laws.
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8. NONTRANSFERABILITY
Options granted under the Plan will not be transferable by the holder
thereof other than by will or by the laws of descent and distribution, will not
be involuntarily alienable by legal process or otherwise by operation of law,
and will be exercisable during the holder's lifetime only by the holder. In the
event of the death of an option holder prior to full exercise of an option, the
option may be exercised by the person or persons to whom the option passes by
will or by applicable laws of descent and distribution.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
If the outstanding shares of Common Stock are increased, decreased,
changed into, or exchanged for a different number or kind of shares or
securities of the Company through reorganization, merger, recapitalization,
reclassification, stock split-up, or other material alteration in the capital
structure of the Company, an appropriate and proportionate adjustment shall be
made in the number and/or kind of shares as to which options will thereafter
automatically be granted. A corresponding adjustment shall be made to change the
number and/or kind of shares allocated to unexercised options or portions
thereof granted prior to any such change. However, any such adjustment in the
outstanding options shall be made without change in the total price applicable
to the unexercised portion of the options but with a corresponding adjustment in
the price for each share covered by the options. For purposes of this Section 9,
neither (a) the issuance of additional shares of Common Stock or other
securities of the Company in exchange for adequate consideration (including
services), nor (b) the conversion into Common Stock of any securities of the
Company now or hereafter outstanding, shall be deemed material alterations in
the capital structure of the Company. If the Board of Directors shall determine
that the nature of a material alteration in the capital structure of the Company
is such that it is not feasible or advisable to make adjustments to this Plan or
to the options granted hereunder, such event shall be subject to Section 10
below.
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10. OTHER SIGNIFICANT EVENTS
Upon a reorganization, merger, or consolidation of the Company with one
or more corporations as a result of which the Company is not the surviving
corporation, upon the acquisition by any person, partnership, or corporation,
without the approval of the Board of Directors, of more than 50% of the
outstanding shares of Common Stock, upon a sale of substantially all of the
property of the Company, or upon a material change in the capital structure of
the Company that is subject to this Section 10 in accordance with the last
sentence of Section 9 above, the Board of Directors of the Company shall have
the power to determine in its sole discretion, upon the effective date of such
event or within thirty (30) days thereafter, what effect, if any, such event
shall have upon options outstanding hereunder, including, without limitation,
the power to cause such options to be surrendered and canceled and payments to
be made to the holders in exchange therefor and to cause adjustments to be made
in the number and/or kind of shares with respect to which such options may be
exercised and/or in the exercise prices and other terms and conditions thereof.
Upon the dissolution or liquidation of the Company, the Plan shall terminate,
and all options theretofore granted hereunder shall terminate, unless provision
be made in connection with such transaction for the continuance of the Plan and
for the assumption of options theretofore granted or the substitution for such
options of new options covering the stock of a successor employer corporation,
or a parent or subsidiary thereof, with appropriate adjustments as to number and
kind of shares and prices, in which event the Plan and options theretofore
granted shall continue in the manner and under the terms so provided.
11. AMENDMENT OF THE PLAN
The Board of Directors of the Company may at any time discontinue the
Plan as to future grants of options and may also from time to time amend the
Plan in any respect whatsoever; PROVIDED, HOWEVER, that, without the consent of
each director and former director affected thereby, no discontinuation or
amendment will materially alter or impair any rights of the directors under the
Plan with respect to grants of options made prior to the discontinuation or
amendment.
12. TERMINATION OF THE PLAN
Unless the Plan is sooner terminated by the Board of Directors, the Plan
will terminate on the earlier of (a) June 16, 2007, or (b) one (1) year
following such time as there are no shares of Common Stock available under
Section 5 for the grant of options under this Plan, unless prior to the date of
termination Section 5 of the Plan is amended to increase the number of available
shares. The termination of the Plan
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will not alter or impair any rights or obligations under any option previously
granted under the Plan.
13. GOVERNING LAW
All determinations made and actions taken pursuant hereto shall be
governed by the laws of the State of Washington and construed accordingly.
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