RADIUS INC.
1986 STOCK OPTION PLAN
AS AMENDED BY THE BOARD OF DIRECTORS THROUGH DECEMBER 14, 1994
AS AMENDED BY THE SHAREHOLDERS THROUGH FEBRUARY 15, 1995
1. PURPOSE. This Stock Option Plan ("PLAN") is established to provide
incentives for selected persons to promote the financial success and progress of
Radius Inc. (the "COMPANY") by granting such persons options to purchase shares
of stock of the Company.
2. ADOPTION AND SHAREHOLDER APPROVAL. This Plan shall become effective
on the date that it is adopted by the Board of Directors (the "BOARD") of the
Company. This Plan shall be approved by the shareholders of the Company, in any
manner permitted by applicable corporate law, within twelve months before or
after the date this Plan is adopted by the Board.
3. TYPES OF OPTIONS AND SHARES. Options granted under this Plan (the
"OPTIONS") may be either (a) incentive stock options ("ISOS") within the meaning
of Section 422A of the Internal Revenue Code of 1986, as amended at the time of
Grant (the "CODE"), or (b) nonqualified stock options ("NQSOS"). The shares of
stock that may be purchased upon exercise of Options granted under this Plan
(the "SHARES") are shares of the common stock of the Company.
4. NUMBER OF SHARES. The maximum number of Shares that may be issued
pursuant to Options granted under this Plan is 2,975,000 Shares, subject to
adjustment as provided in this Plan. If any Option is terminated for any reason
without being exercised in whole or in part, the Shares thereby released from
such Option shall be available for purchase under other Options subsequently
granted under this Plan. At all times during the term of this Plan, the Company
shall reserve and keep available such number of Shares as shall be required to
satisfy the requirements of outstanding Options under this Plan.
5. ADMINISTRATION. This Plan may be administered by the Board of
Directors of the Company or a committee appointed by the Board (the
"COMMITTEE"). If two or more members of the Board are Outside Directors (as
defined in Section 6(d) of the Plan), the Committee shall be comprised of at
least two members of the Board, all of whom are Outside Directors. So long as
the Company has a class of securities registered under the Securities Exchange
Act of 1934 as then in effect (the "Exchange Act") and a majority of the Board
is not comprised of Disinterested Persons, the Company will take appropriate
steps to comply with the disinterested administration requirements of Section
16(b) of the Exchange Act, which shall consist of the appointment by the Board
of a Committee consisting of not less than two members of the Board, each of
whom is a Disinterested Person (as defined in Section 6(e) of the Plan. So long
as the Company has a class of securities registered under the Exchange Act a
majority of the Board members acting on any matters affecting the administration
of this Plan (including the grant of any Options pursuant to this Plan to any
officer or director of the Company or other person (in each case, an "INSIDER")
whose transactions in the Company's common stock are subject to Section 16(b) of
the Exchange Act) must be Disinterested Persons; provided, however, that this
restriction shall not apply to votes on the grant of any Options pursuant to
this Plan other than to Insiders. The interpretation by the Committee of any of
the provisions of this Plan or any Option granted under this Plan shall be final
and binding upon the Company and all persons having an interest in any Option or
any Shares purchased pursuant to an Option. The Committee may delegate the
authority to officers of the Company to grant Options under this Plan to
Optionees who are not Insiders of the Company. As
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used in this Plan, references to the "Committee" shall mean either the committee
appointed by the Board to administer this Plan, or the Board if no committee has
been established.
6. ELIGIBILITY. Options may be granted only to such employees, officers,
employee-directors, consultants and independent contractors of the Company or
any Parent, Subsidiary or Affiliate of the Company as the Committee shall select
from time to time in its sole discretion ("OPTIONEES"), provided that only
employees of the Company or a Parent or Subsidiary of the Company shall be
eligible to receive ISOs. Each "Named Executive Officer" (as that term is
defined in Item 402(a)(3) of Regulation S-K promulgated under the Exchange Act)
shall be eligible to receive up to 1,000,000 Shares at any time during the term
of this Plan pursuant to the grant of Awards hereunder. An Optionee may be
granted more than one Option under this Plan. A director who is not also an
employee of the Company shall not be eligible to receive Options under this
Plan. As used in this Plan, the following terms shall have the following
meanings:
(a) "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if, at the time of
granting of the Option, each of such corporations other than the Company owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
(b) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of
granting of the Option, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
(c) "AFFILIATE" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with another corporation, where "control" (including the terms
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to cause the direction of the management and policies of
the corporation, whether through the ownership of voting securities, by contract
or otherwise.
(d) "OUTSIDE DIRECTOR" shall mean any director who is NOT (i) a
current employee of the Company or any Parent, Subsidiary or Affiliate of the
Company, (ii) a former employee of the Company or any Parent, Subsidiary or
Affiliate of the Company who is receiving compensation for prior services (other
than benefits under a tax-qualified pension plan), (iii) a current or former
officer of the Company or any Parent, Subsidiary or Affiliate of the Company or
(iv) currently receiving compensation for personal services in any capacity,
other than as a director, from the Company or any Parent, Subsidiary or
Affiliate of the Company; provided, however, that at such time as the term
"Outside Director," (as used in Section 162(m) of the Code as defined in
regulations promulgated under Section 162(m) of the Code, "Outside Director"
shall have the meaning set forth in such regulations, as amended from time to
time and as interpreted by the Internal Revenue Service.
(e) "DISINTERESTED PERSON" shall have the meaning set forth in Rule
16b-3 as promulgated by the Securities and Exchange Commission (the "SEC") under
Section 16(b) of the Exchange Act, as such rule is amended from time to time and
as interpreted by the SEC.
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(f) "FAIR MARKET VALUE" shall mean the average of the last reported
bid and asked prices for common stock of the Company on the last trading day
prior to the date of determination or, in the event the common stock of the
Company is listed on a stock exchange or the NASDAQ National Market System, the
Fair Market Value shall be the closing price on such exchange or quotation
system on the date of determination.
7. TERMS AND CONDITIONS OF OPTIONS. The Committee shall determine
whether each Option is to be an ISO or an NQSO, the number of Shares for which
the Option shall be granted, the exercise price of the Option, the periods
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following terms and conditions:
(a) FORM OF OPTION GRANT. Each Option granted under this Plan shall
be evidenced by a written Stock Option Grant ("GRANT") in such form (which need
not be the same for each Optionee) as the Committee shall from time to time
approve, which Grant shall comply with and be subject to the terms and
conditions of this Plan.
(b) EXERCISE PRICE. The exercise price of an Option shall be not
less than the Fair Market Value of the Shares at the time that the Option is
granted, except that NQSOs may be granted with an exercise price equal to or
greater than 50% of the Fair Market Value of the Shares at the time the option
is granted. The exercise price of any Option granted to a person owning 10% or
more of the total combined voting power of all classes of stock of the Company
or any Parent or Subsidiary of the Company ("TEN PERCENT SHAREHOLDER") shall not
be less than 110% of the Fair Market Value of the Shares at the time of the
grant.
(c) EXERCISE PERIOD. Options shall be exercisable within the times
or upon the events determined by the Committee as set forth in the Grant,
provided, however, that no Option shall be exercisable after the expiration of
ten years from the date the Option is granted, and provided further that no
Option granted to a Ten Percent Shareholder shall be exercisable after the
expiration of five years from the date the Option is granted. No Option that is
issued as a result of any increase in the number of shares authorized to be
issued under this Plan shall be exercised prior to the time such issuance has
been approved by the shareholders of the Company.
(d) LIMITATIONS ON ISOS. If the Fair Market Value of the stock with
respect to which ISOs are exercisable for the first time by an Optionee during
any calendar year exceeds $100,000, the Options for the first $100,000 worth of
stock shall be ISOs and Options for the amount in excess of $100,000 that
becomes exercisable in that year shall be NQSOs.
(e) DATE OF GRANT. The date of grant of an Option shall be the date
on which the Committee makes the determination to grant such Option unless
otherwise specified by the Committee. The Grant representing the Option shall
be delivered to the Optionee within a reasonable time after the granting of the
Option.
8. EXERCISE OF OPTIONS.
(a) NOTICE. Options may be exercised only by delivery to the Company
of a written exercise notice in a form approved by the Committee stating the
number of Shares being purchased together with payment in full of the exercise
price for the number of Shares being purchased.
(b) PAYMENT. Payment for the Shares may be made (i) in cash (by
check), (ii) by surrender of shares of common stock of the Company that have
been owned by Optionee for more than six (6) months (and which have been paid
for within the meaning of SEC Rule 144 and,
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if such shares were purchased from the Company by use of a promissory note, such
note has been fully paid with respect to such shares) or were obtained by the
Optionee in the open public market, having a Fair Market Value equal to the
exercise price of the Option; (iii) by waiver of compensation due or accrued to
Optionee for services rendered; (iv) through a "same day sale" commitment from
the Optionee and a broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects to
exercise the Option and to sell a portion of the Shares so purchased to pay for
the exercise price and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the exercise price directly to the Company; (v)
through a "margin" commitment from the Optionee and an NASD Dealer whereby the
Optionee irrevocably elects to exercise the Option and to pledge the Shares so
purchased to the NASD Dealer in a margin account as security for a loan from the
NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the exercise price
directly to the Company; (vi) where permitted by applicable law and approved by
the Committee in its sole discretion, by tender of a full recourse promissory
note having such terms as may be approved by the Committee and bearing interest
at a rate sufficient to avoid imputation of income under Sections 483 and 1274
of the Code; or (vii) by any combination of the foregoing where approved by the
Committee in its sole discretion. Optionees who are not employees or directors
of the Company shall not be entitled to purchase Shares with a promissory note
unless the note is adequately secured by collateral other than the Shares.
(c) WITHHOLDING TAXES. Prior to issuance of the Shares upon exercise
of an Option, the Optionee shall pay or make adequate provision for any
applicable federal or state withholding obligations of the Company.
(d) LIMITATIONS ON EXERCISE. Notwithstanding the exercise periods
set forth in the Grant, exercise of an Option shall always be subject to the
following limitations:
(i) An Option shall not be exercisable unless such exercise
is in compliance with the Securities Act of 1933, as amended (the "1933 ACT"),
and all applicable state securities laws, as they are in effect on the date of
exercise.
(ii) The Committee may specify a reasonable minimum number
of Shares that may be purchased on any exercise of an Option, provided that such
minimum number will not prevent the Optionee from exercising the full number of
Shares as to which the Option is then exercisable.
9. NONTRANSFERABILITY OF OPTIONS. If an Option is an ISO, or if Optionee
is an Insider subject to Section 16(b) of the Exchange Act, then an Option may
not be transferred in any manner other than by will or by the law of descent and
distribution and may be exercised during the lifetime of the Optionee only by
the Optionee. Otherwise, an Option may only be transferred to Optionee's
immediate family, to a trust for the benefit of Optionee or Optionee's immediate
family, or to a charitable entity qualified under IRC Section 501(c), where
"immediate family" shall mean spouse, lineal descendant or antecedent, brother
or sister. The terms of this Option shall be binding upon the executors,
administrators, successors and assigns of the Optionee.
10. PRIVILEGES OF STOCK OWNERSHIP. No Optionee shall have any of the
rights of a shareholder with respect to any Shares subject to an Option until
the Option has been validly exercised. No adjustment shall be made for
dividends or distributions or other rights for
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which the record date is prior to the date of exercise, except as provided in
this Plan. The Company shall provide to each Optionee a copy of the annual
financial statements of the Company, at such time after the close of each fiscal
year of the Company as they are released by the Company to its shareholders.
11. ADJUSTMENT OF OPTION SHARES. In the event that the number of
outstanding shares of common stock of the Company is changed by a stock
dividend, stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without consideration,
the number of Shares available under this Plan and the number of Shares subject
to outstanding Options and the exercise price per share of such Options shall be
proportionately adjusted, subject to any required action by the Board or
shareholders of the Company and compliance with applicable securities laws;
provided, however, that no certificate or scrip representing fractional shares
shall be issued upon exercise of any Option and any resulting fractions of a
Share shall be ignored.
12. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Option granted
under this Plan shall confer on any Optionee any right to continue in the employ
of the Company or any Parent, Subsidiary or Affiliate of the Company or limit in
any way the right of the Company or any Parent, Subsidiary or Affiliate of the
Company to terminate the Optionee's employment at any time, with or without
cause.
13. COMPLIANCE WITH LAWS. The grant of Options and the issuance of Shares
upon exercise of any Options shall be subject to and conditioned upon compliance
with all applicable requirements of law, including without limitation compliance
with the 1933 Act, any required approval by the Commissioner of Corporations of
the State of California, compliance with all other applicable state securities
laws and compliance with the requirements of any stock exchange or national
market system on which the Shares may be listed.
14. ASSUMPTION OF OPTIONS BY SUCCESSORS. In the event of a dissolution or
liquidation of the Company, a merger in which the Company is not the surviving
corporation, or the sale of substantially all of the assets of the Company, any
or all outstanding Options shall be assumed by the successor corporation or an
equivalent option shall be substituted by such successor corporation which
assumption or substitution shall be binding upon all Optionees. In the event of
a merger in which the Company is not the surviving corporation and the successor
corporation, if any, refuses to assume the Option or substitute an equivalent
option, the Option shall accelerate and become exercisable in full at least ten
days prior to and shall expire on, (and, if the Company has reserved to itself a
right to repurchase shares issued upon exercise of Options at the original
purchase price of such shares, such right shall terminate upon), the
consummation of such merger at such times and on such conditions as the
Committee shall determine. The aggregate Fair Market Value (determined at the
time an Option is granted) of stock with respect to which ISOs granted on or
after January 1, 1987 first become exercisable in the year of such dissolution,
liquidation, merger or sale of assets cannot exceed $100,000. Any remaining
accelerated ISOs granted on or after January 1, 1987 shall be treated as NQSOs.
15. AMENDMENT OR TERMINATION OF PLAN. The Committee may at any time
terminate or amend this Plan in any respect (including, but not limited to, any
form of Grant, agreement or instrument to be executed pursuant to this Plan);
provided, however, that the Committee shall not, without the approval of the
shareholders of the Company, amend the Plan in any manner that requires such
shareholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to this Plan or pursuant to the Exchange Act
or Rule 16b-3 (or its successor) promulgated thereunder. In any case, no
amendment of this Plan may adversely affect any then outstanding Options or any
unexercised portions thereof without the written consent of the Optionee.
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16. TERM OF PLAN. Options may be granted pursuant to this Plan from time
to time within a period of ten years from the date this Plan is adopted by the
Board of Directors.
17. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself or its assignee(s) in the Grant a right to
repurchase any or all Shares held by an Optionee upon the Optionee's termination
of employment or service with the Company or its Parent, Subsidiary or Affiliate
of the Company for any reason within a specified time as determined by the
Committee at the time of grant at (a) the Optionee's original purchase price,
(b) the Fair Market Value of such Shares or (c) a price determined by a formula
or other provision set forth in the Grant.
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