CHATCOM, INC.
EXHIBIT 10.3
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ASTRO SCIENCES CORPORATION
1994 STOCK OPTION PLAN
1. Purpose; Effectiveness of the Plan
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1.1 The purpose of the Plan is to advance the interests of the Company
and its stockholders by helping the Company obtain and retain the service of
employees, officers, consultants, and directors, upon whose judgment, initiative
and efforts the Company is substantially dependent, and to provide those persons
with further incentives to advance the interests of the Company.
1.2 The Plan will become effective on the date of its adoption by the
Board, provided the Plan is approved by the stockholders of the Company
(excluding holders of shares of Stock issued by the Company pursuant to the
exercise of options granted under this Plan) within twelve (12) months before or
after that date. If the Plan is not so approved by the stockholders of the
Company, any options granted under this Plan will be rescinded and will be void.
This Plan will remain in effect until it is terminated by the Board (or the
Committee, as defined hereafter), under Section 9 hereof, or September 1, 2004,
whichever is earlier. This Plan will be governed by, and construed in accordance
with, the laws of the State of California.
2. Certain Definitions
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Unless the context otherwise requires, the following defined terms (together
with other capitalized terms defined elsewhere in this Plan) will govern the
construction of this Plan, and of any stock option agreements entered into
pursuant to this Plan:
2.1 "10% Stockholder" means a person who owns, either directly or
indirectly by virtue of the ownership attribution provisions set forth in
Section 424(d) of the Code at the time he or she is granted an Option, stock
possessing more than 10 percent (10%) of the total combined voting power or
value of all classes of stock of the Company and/or of its subsidiaries.
2.2 "1993 Act" means the federal Securities Act of 1933, as amended.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Called for under an Option," or words to similar effect, means
issuable pursuant to the exercise of an Option.
CHATCOM, INC.
2.5 "Code" means the Internal Revenue Code of 1986, as amended
(references herein to Sections of the Code are intended to refer to Sections of
the Code as enacted at the time of this Plan's adoption by the Board and as
subsequently amended, or to any substantially similar successor provisions of
the code resulting from recodification, renumbering or otherwise).
2.6 "Committee" means a committee of two or more Non-Employee Directors
(as defined in Rule 16b-3 or its successors under the Exchange Act) appointed by
the Board, to administer and interpret this Plan; provided that the term
"Committee" will refer to the Board during such times as no Committee is
appointed by the Board.
2.7 "Company" means Astro Sciences Corporation, a California
corporation.
2.8 "Disability" has the same meaning as "permanent and total
disability," as defined in Section 22(e)(3) of the Code.
2.9 [Reserved]
2.10 "Eligible Participants" means persons who, at a particular time,
are employees, officers, consultants, or directors of the Company or its
subsidiaries.
2.11 "Fair Market Value" means, with respect to the Stock and as of the
date an ISO is granted hereunder, the market price per share of such Stock
determined by the Committee, consistent with the requirements of Section 422 of
the Code and to the extent consistent therewith, as follows:
(a) If the Stock was traded on a stock exchange on the date in
question, then the Fair Market Value will be equal to the closing price
reported by the applicable composite-transactions report for such date;
(b) If the Stock was traded over-the-counter on the date in
question and was classified as a national market issue, then the Fair Market
Value will be equal to the last-transaction price quoted by the NASDAQ
system for such date;
(c) If the Stock was traded over-the-counter on the date in
question but was not classified as a national market issue, then the Fair
Market Value will be equal to the average of the last reported
representative bid and asked prices quoted by the NASDAQ system for such
date; and
(d) If none of the foregoing provisions is applicable, then the
Fair
CHATCOM, INC.
Market Value will be determined by the Committee in good faith on such basis
as it deems appropriate.
2.12 "[Reserved]
2.13 "ISO" has the same meaning as "incentive stock option," as defined
in Section 422 of the Code.
2.14 "Just Cause Termination" means a termination by the Company of an
Optionee's employment by and/or service to the Company (or if the Optionee is a
director, removal of the Optionee from the Board by action of the stockholders
or, if permitted by applicable law and the Bylaws of the Company, the other
directors), in connection with the good faith determination of the Company's
Board of Directors (or of the Company's stockholders if the Optionee is a
director and the removal of the Optionee from the Board is by action of the
stockholders, but in either case excluding the vote of the Optionee if he or she
is a director or a stockholder) that the Optionee has engaged in any acts
involving dishonesty or moral turpitude or in any acts that materially and
adversely affect the business, affairs or reputation of the Company or its
subsidiaries.
2.15 "NSO" means any option granted under this Plan whether designated
by the Committee as a "non-qualified stock option," a "non-statutory stock
option" or otherwise, other than an option designated by the Committee as an ISO
or any option so designated but which, for any reason, fails to qualify as an
ISO pursuant to Section 422 of the Code and the rules and regulations
thereunder.
2.16 "Option" means an option granted pursuant to this Plan entitling
the option holder to acquire shares of Stock issued by the Company pursuant to
the valid exercise of the option;
2.17 "Option Agreement" means an agreement between the Company and an
Optionee, in form and substance satisfactory to the Committee or the Board in
its sole discretion, consistent with this Plan.
2.18 "Option Price" with respect to any particular Option means the
exercise price at which the Optionee may acquire each share of the Option Stock
called for under such Option.
2.19 "Option Stock" means Stock issued or issuable by the Company
pursuant to the valid exercise of an Option.
2.20 "Optionee" means an Eligible Participant to whom Options are
granted hereunder, and any transferee thereof pursuant to a Transfer authorized
under this Plan.
2.21 "Plan" means this 1994 Stock Option Plan of the Company.
CHATCOM, INC.
2.22 "QDRO" has the same meaning as a "qualified domestic relations
order" as defined in Section 414(p) of the Code.
2.23 "Stock" means shares of the Company's Common Stock, no par value.
2.24 "Subsidiary" has the same meaning as "Subsidiary Corporation" as
defined in Section 424(f) of the Code.
2.25 "Transfer," with respect to Option Stock, includes, without
limitation, a voluntary or involuntary sale, assignment, transfer, conveyance,
pledge, hypothecation, encumbrance, disposal, loan, gift, attachment or levy of
such Option Stock, including without limitation an assignment for the benefit of
creditors of the Optionee, a transfer by operation of law, such as a transfer by
will or under the laws of descent and distribution, an execution of judgment
against the Option Stock or the acquisition of record or beneficial ownership
thereof by a lender or creditor, a transfer pursuant to a QDRO, or to any decree
of divorce, dissolution or separate maintenance, any property settlement, any
separation agreement or any other agreement with a spouse (except for estate
planning purposes) under which a part or all of the shares of Option Stock are
transferred or awarded to the spouse of the Optionee or are required to be sold;
or a transfer resulting from the filing by the Optionee of a petition for
relief, or the filing of an involuntary petition against such Optionee, under
the bankruptcy laws of the United States or of any other nation.
3. Eligibility
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The Company may grant Options under this Plan only to persons who are
Eligible Participants as of the time of such grant. Subject to the provisions of
Section 4.4, 5 and 6 hereof, there is no limitation on the number of Options
that may be granted to an Eligible Participant.
4. Administration
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4.1 Committee. The Committee, if appointed by the Board, will
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administer this Plan. If the Board, in its discretion, does not appoint such a
Committee, the Board itself will administer this Plan and take such other
actions as the Committee is authorized to take hereunder; provided that the
Board may take such actions hereunder in the same manner as the Board may take
other actions under the Company's Articles of Incorporation and Bylaws
generally.
4.2 Authority and Discretion of Committee. The Committee will have
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full and final authority in its discretion, at any time and from time to time,
subject
CHATCOM, INC.
only to the express terms, conditions and other provisions of the Company's
Articles of Incorporation, Bylaws and this Plan, and the specific limitations on
such discretion set forth herein:
(a) to select and approve the persons who will be granted Options
under this Plan from among the Eligible Participants, and to grant to any
person so selected one or more Options to purchase such number of shares of
Option Stock as the Committee may determine;
(b) to determine the period or periods of time during which
Options may be exercised, the Option Price and the duration of such Options
and other matters to be determined by the Committee in connection with
specific Option grants and Option Agreements as specified under this Plan;
(c) to interpret this Plan, to prescribe, amend and rescind rules
and regulations relating to this Plan, and to make all other determinations
necessary or advisable for the operation and administration of this Plan;
and
(d) to delegate all or a portion of its authority under
subsections (a) and (b) of this Section 4.2 to one or more directors of the
Company who are executive officers of the Company, but only in connection
with Options granted to Eligible Participants who are not subject to the
reporting and liability provisions of Section 16 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
thereunder, and subject to such restrictions and limitations (such as the
aggregate number of shares of Option Stock called for by such Options that
may be granted) as the Committee may decide to impose on such delegate
directors.
4.3 [Reserved]
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4.4 Designation of Options. Except as otherwise provided herein, the
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Committee will designate any Option granted hereunder either as an ISO or as an
NSO. To the extent that the Fair Market Value (determined at the time the Option
is granted)of Stock with respect to which all ISOs are exercisable for the first
time by any individual during any calendar year (pursuant to this Plan and all
other plans of the Company and/or its subsidiaries) exceeds $100,000, such
option will be treated as an NSO. Notwithstanding the general eligibility
provisions of Section 3 hereof, the Committee may grant ISOs only to persons who
are employees of the Company and/or its subsidiaries.
4.5 Option Agreements. Options will be deemed granted hereunder only
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upon the execution and delivery of an Option Agreement by the Optionee and a
duly authorized officer of the Company. Options will not be deemed granted
hereunder merely upon the authorization of such grant by the Committee.
CHATCOM, INC.
5. Shares Reserved for Options
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5.1 Option Pool. The aggregate number of shares of Option Stock
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that may be issued pursuant to the exercise of Options granted under this Plan
will not exceed two million (2,000,000) (the "Option Pool"), provided that such
number will be increased by the number of shares of Option Stock that the
Company subsequently may reacquire through repurchase or otherwise. Shares of
Option Stock that would have been issuable pursuant to Options, but that are no
longer issuable because all or part of those Options have terminated or expired,
will be deemed not to have been issued for purposes of computing the number of
shares of Option Stock remaining in the Option Pool and available for issuance.
5.2 Adjustments Upon Changes in Stock. In the event of any change
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in the outstanding Stock of the Company as a result of a stock split, reverse
stock split, stock dividend, recapitalization, combination, or reclassification,
appropriate proportionate adjustments will be made in: (i) the aggregate number
of shares of Option Stock in the Option Pool that may be issued pursuant to the
exercise of Options granted hereunder; (ii) the Option Price and the number of
shares of Option Stock called for in each outstanding Option granted hereunder;
and (iii) other rights and matters determined on a per share basis under this
Plan or any Option Agreement hereunder. Any such adjustments will be made only
by the Board, and when so made will be effective, conclusive and binding for all
purposes with respect to this Plan and all Options then outstanding. No such
adjustments will be required by reason of the issuance or sale by the Company
for cash or other consideration of additional shares of its Stock or securities
convertible into or exchangeable for shares of its Stock.
6. Terms of Stock Option Agreements
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Each Option granted pursuant to this Plan will be evidenced by an
agreement (an "Option Agreement") between the Company and the person to whom
such Option is granted, in form and substance satisfactory to the Committee in
its sole discretion, consistent with this Plan. Without limiting the foregoing,
each Option Agreement (unless otherwise stated therein) will be deemed to
include the following terms and conditions:
6.1 Covenants of Optionee. At the discretion of the Committee, the
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person to whom an Option is granted hereunder, as a condition to the granting of
the Option, must execute and deliver to the Company a confidential information
agreement approved by the Committee. Nothing contained in this Plan, any Option
Agreement, or in any other agreement executed in connection with the granting of
an Option under this Plan will confer upon any Optionee any right with respect
to the continuation of his or her status as an employee of, consultant or
independent contractor to, or director of, the Company or its subsidiaries.
CHATCOM, INC.
6.2 Vesting Periods. Except as otherwise provided herein, each
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Option Agreement may specify the period or periods of time within which each
Option or portion thereof will first become exercisable (the "Vesting Period")
with respect to the total number of shares of Option Stock called for thereunder
(the "Total Award Option Stock"). Such Vesting Periods will be fixed by the
Committee in its discretion, and may be accelerated or shortened by the
Committee in its discretion.
6.3 Exercise of the Option.
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(a) Mechanics and Notice. An Option may be exercised to the
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extent exercisable:
(1) by giving written notice of exercise to the Company,
specifying the number of full shares of Option Stock to be purchased and
accompanied by full payment of the Option Price thereof and the amount of
withholding taxes pursuant to subsection 6.3(b) below; and
(2) by giving assurances satisfactory to the Company that
the shares of Option Stock to be purchased upon such exercise are being
purchased for investment and not with a view to resale in connection with
any distribution of such shares in violation of the 1933 Act; provided,
however, that in the event the Option Stock called for under the Option is
registered under the 1933 Act, or in the event resale of such Option stock
without such registration would otherwise be permissible, this second
condition will be inoperative if, in the opinion of counsel for the Company,
such condition is not required under the 1933 Act, or any other applicable
law, regulation or rule of any governmental agency.
(b) Withholding Taxes. As a condition to the issuance of the
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shares of Option Stock upon full or partial exercise of an NSO granted under
this Plan, the Optionee will pay to the Company in cash, or in such other
form as the Committee may determine in its discretion, the amount of the
Company's tax withholding liability required in connection with such
exercise. For purposes of this subsection 6.3(b), "tax withholding
liability" will mean all federal and state income taxes, social security
tax, and any other taxes applicable to the compensation income arising from
the transaction required by applicable law to be withheld by the Company.
6.4 Payment of Option Price. Each Option Agreement will specify
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the Option Price with respect to the exercise of Option Stock thereunder, to be
fixed by the Committee in its discretion, but in no event will the Option Price
for an ISO granted hereunder be less than the Fair Market Value (or, in case the
Optionee is a 10% Stockholder, one hundred ten percent (110%) of such Fair
Market Value) of the Option Stock at the time such ISO is granted, and in no
event will the Option Price for
CHATCOM, INC.
an NSO granted hereunder be less than 75% of Fair Market Value of the Option
Stock at the time such NSO is granted. The Option Price will be payable to the
Company in United States dollars in cash or by check, or such other legal
consideration as may be approved by the Committee, in its discretion.
(a) For example, the Committee, in its discretion, may permit
a particular Optionee to pay all or a portion of the Option Price, and/or
the tax withholding liability set forth in subsection 6.3(b) above, with
respect to the exercise of an Option either by surrendering shares of Stock
already owned by such Optionee or by withholding shares of Option Stock,
provided that the Committee determines that the Fair Market Value of such
surrendered Stock or withheld Option Stock is equal to the corresponding
portion of such Option Price and/or tax withholding liability, as the case
may be, to be paid for therewith.
(b) If the Committee permits an Optionee to pay any portion of
the Option Price and/or tax withholding liability with shares of Stock with
respect to the exercise of an Option (the "Underlying Option") as provided
in subsection 6.4(a) above, then the Committee, in its discretion, may grant
to such Optionee (but only if Optionee remains an Eligible Participant at
that time) additional NSOs, the number of shares of Option Stock called for
thereunder to be equal to all or a portion of the Stock so surrendered or
withheld (a "Replacement Option"). Each Replacement Option will be evidenced
by an Option Agreement. Unless otherwise set forth therein, each Replacement
Option will be immediately exercisable upon such grant (without any Vesting
Period) and will be coterminous with the Underlying Option. The Committee,
in its sole discretion, may establish such other terms and conditions for
Replacement Options as it deems appropriate.
6.5 Termination of the Option.
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(a) Early Termination. Except as otherwise provided herein,
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each Option Agreement will specify the period of time, to be fixed by the
Committee in its discretion, during which the Option granted therein will be
exercisable, not to exceed ten (10) years from the date of grant in the case
of an ISO (the "Option Period"); provided that the Option Period will not
exceed five (5) years from the date of grant in the case of an ISO granted
to a 10% Stockholder. To the extent not previously exercised, each Option
will terminate upon the expiration of the Option Period specified in the
Option Agreement; provided, however, that each such Option will terminate,
if earlier: (i) ninety (90) days after the date that the Optionee ceases to
be an Eligible Participant for any reason, other than by reason of death or
disability or a Just Cause Termination; (ii) twelve (12) months after the
date that the Optionee ceases to be an Eligible Participant by reason of
such person's death or disability; or (iii) immediately as of the date that
the Optionee ceases to be an Eligible Participant by reason of a Just Cause
Termination.
CHATCOM, INC.
(b) Corporate Transactions. In the event of a sale of all or
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substantially all of the assets of the Company, or a merger or consolidation
or other reorganization in which the Company is not the surviving
corporation, or in which the Company becomes a subsidiary of another
corporation, or a reverse merger in which the Company is the surviving
corporation but the shares of stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property (any of the
foregoing events, a "Corporate Transaction"), then notwithstanding anything
else herein, and unless the Board, in its sole discretion, determines
otherwise, the successor corporation must agree to assume the outstanding
Options or substitute therefor comparable options of such successor
corporation, or a parent or subsidiary of such successor corporation. If for
whatever reason the successor corporation does not assume the outstanding
Options or substitute therefor comparable options of such successor
corporation, or a parent or subsidiary of such successor corporation, then
in that event, the Board or the Committee shall notify each Optionee not
less than thirty (30) days prior thereto of the pendency of a Corporate
Transaction. Upon delivery of such notice, any Option outstanding shall be
exercisable in full and not only as to those shares with respect to
installments, if any, have been accrued; subject, however, to earlier
expiration or termination as provided elsewhere in this Plan.
6.6 Options Nontransferable. No Option will be transferable by the
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Optionee otherwise than by will or the laws of descent and distribution, or in
the case of an NSO, pursuant to a QDRO. During the lifetime of the Optionee, the
Option will be exercisable only by him or her, or the transferee of an NSO if it
was transferred pursuant to a QDRO.
6.7 Qualification of Stock. The right to exercise an Option will
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be further subject to the requirement that if at any time the Board determines,
in its discretion, that the listing, registration or qualification of the shares
of Option Stock called for thereunder upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental regulatory
authority, is necessary or desirable as a condition of or in connection with the
granting of such Option or the purchase of shares of Option Stock thereunder,
the Option may not be exercised, in whole or in part, unless and until such
listing, registration, qualification, consent or approval is effected or
obtained free of any conditions not acceptable to the Board, in its discretion.
6.8 Additional Restrictions on Transfer. By accepting Options
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and/or Option Stock under this Plan, the Optionee will be deemed to represent,
warrant and agree as follows:
(a) Securities Act of 1933. The Optionee understands that the
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shares of Option Stock have not been registered under the 1933 Act, and that
such shares are not freely tradeable and must be held indefinitely unless
such shares
CHATCOM, INC.
are either registered under the 1933 Act or an exemption from such
registration is available. The Optionee understands that the Company is
under no obligation to register the shares of Option Stock.
(b) Other Applicable Laws. The Optionee further understands
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that Transfer of the Option Sock requires full compliance with the
provisions of all applicable laws.
(c) Investment Intent. Unless a registration statement is in
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effect with respect to the sale of Option Stock obtained through exercise of
Options granted hereunder. Upon exercise of any Option: (1) the Optionee
will purchase the Option Stock for his or her own account and not with a
view to distribution within the meaning of the 1933 Act, other than as may
be effected in compliance with the 1933 Act and the rules and regulations
promulgated thereunder; (2) no one else will have any beneficial interest in
the Option Stock; and (3) he or she has no present intention of disposing of
the Option Stock at any particular time.
6.9 Compliance with Laws. Notwithstanding any other provision of
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this Plan, Options may be granted pursuant to this Plan, and Option Stock may be
issued pursuant to the exercise thereof by an Optionee, only after there has
been compliance with all applicable federal and state laws, and all of the same
will be subject this overriding condition. The Company will not be required to
register or qualify Option Stock with the Securities and Exchange Commission or
any State agency, except that the Company will register with, or as required by
local law, file for and secure an exemption from such registration requirements
from, the applicable securities administrator and other officials of each
jurisdiction in which an Eligible Participant would be granted an Option
hereunder prior to such grant.
6.10 Stock Certificates. Certificates representing the Option
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Stock issued pursuant to the exercise of Options will bear all legends required
by law and necessary to effectuate this Plan's provisions. The Company may place
a "stop transfer" order against shares of the Option Stock until all
restrictions and conditions set forth in this Plan and in the legends referred
to in this Section 6.10 have been complied with.
6.11 Notices. Any notice to be given to the Company under the
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terms of an Option Agreement will be addressed to the Company at its principal
executive office, Attention: Corporate Secretary, or at such other address as
the Company may designate in writing. Any notice to be given to an Optionee will
be addressed to the Optionee at the address provided to the Company by the
Optionee. Any such notice will be deemed to have been duly given if and when
enclosed in a properly sealed envelope, addressed as aforesaid, registered and
deposited, postage and registry fee prepaid, in a post office or branch post
office regularly maintained by the United States Government.
CHATCOM, INC.
6.12 Other Provisions. The Option Agreement may contain such other
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terms, provisions and conditions, including such special forfeiture conditions,
rights of repurchase, rights of first refusal and other restrictions on Transfer
of Option Stock issued upon exercise of any Options granted hereunder, not
inconsistent with this Plan, as may be determined by the Committee in its sole
discretion.
6.13 [Reserved]
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7. Proceeds From Sale of Stock
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Cash proceeds from the sale of shares of Option Stock issued from time to
time upon the exercise of Options granted pursuant to this Plan will be added to
the general funds of the Company and as such will be used from time to time for
general corporate purposes.
8. Modification, Extension and Renewal of Options
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Subject to the terms and conditions and within the limitations of this Plan,
the Committee may modify, extend or renew outstanding Options granted under this
Plan, or accept the surrender of outstanding Options (to the extent not
theretofore exercised) and authorize the granting of new Options in substitution
therefor (to the extent not theretofore exercised). Notwithstanding the
foregoing, however, no modification of any Option will, without the consent of
the holder of the Option, alter or impair any rights or obligations under any
Option theretofore granted under this Plan.
9. Amendment and Discontinuance
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The Board may amend, suspend or discontinue this Plan at any time or from
time to time; provided that no action of the Board will cause ISOs granted under
this Plan not to comply with Section 422 of the Code unless the Board
specifically declares such action to be made for that purpose. Moreover, no such
action may alter or impair any Option previously granted under this Plan without
the consent of the holder of such Option.
10. Plan Compliance with Rule 16b-3
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With respect to persons subject to Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Plan Administrators fails so to
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Plan Administrators.
11. Copies of Plan
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CHATCOM, INC.
A copy of this Plan will be delivered to each Optionee at or before the time
he or she executes an Option Agreement.
Date Plan Adopted by Board of Directors: August 31, 1994
Date Plan Adopted by Stockholders: November 22, 1994
ASTRO SCIENCES CORPORATION,
a California corporation
By: /s/ A. Charles Lubash
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A. Charles Lubash,
President
Attest:
/s/ James R. Spievak
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James R. Spievak, Secretary