IMAGE GUIDED TECHNOLOGIES, INC.
1994 STOCK OPTION PLAN
I. PURPOSE
The IMAGE GUIDED TECHNOLOGIES, INC. 1994 STOCK OPTION PLAN ("Plan")
provides for the grant of Stock Options to employees, directors and
consultants of Pixsys, Inc. (the "Company"), and such of its subsidiaries (as
defined in Section 424(f) of the Internal Revenue Code of 1986 (the "Code")
as the Board of Directors of the Company shall from time to time designate
("Participating Subsidiaries") in order to advance the interests of the
Company and its Participating Subsidiaries through the motivation, attraction
and retention of key personnel.
II. INCENTIVE STOCK OPTIONS AND NON-INCENTIVE STOCK OPTIONS
The Stock Options granted under the Plan may be either:
a) Incentive Stock Options ("ISOs") which are intended to be
"Incentive Stock Options" as that term is defined in Section 422 of the Code; or
b) Nonstatutory Stock Options ("NSOs") which are intended to be
options that do not qualify as "Incentive Stock Options" under Section 422 of
the Code.
Subject to the other provisions of the Plan, a Participant may receive ISOs and
NSOs at the same time, provided that the ISOs and NSOs are clearly designated as
such, and the exercise of one does not affect the exercise of the other.
Except as otherwise expressly provided herein, all of the provisions and
requirements of the Plan relating to Stock Options shall apply to ISOs and NSOs.
III. ADMINISTRATION
The Plan shall be administered by the Board of Directors (the "Board") of
the Company or by a committee of two or more directors ("Committee") appointed
by the Board, each of whom shall be a "non-employee director" as defined in
Rule
16b-3 under the Securities Exchange Act of 1934,as amended (the "Exchange
Act"). The Committee or the Board of Directors, as the case may be,shall
have full authority to administer the Plan, including authority tointerpret
and construe any provision of the Plan and any Stock Options granted
thereunder, and to adopt such rules and regulations for administering the
Plan as it may deem necessary in order to comply with the requirements of the
Code or in order that Stock Options that are intended to be ISOs will be
classified as incentive stock options under the Code, or in order to conform
to any regulation or to any change in any law or regulation applicable
thereto.
All actions taken and all interpretations and determinations made by the
Board or Committee in good faith (including determinations of Fair Market Value)
shall be final and binding upon all Participants, the Company and all other
interested persons. No member of the Board or Committee shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan, and all members of the Board and Committee shall, in
addition to their rights as directors, be fully protected by the Company with
respect to any such action, determination or interpretation. Rule 16b-3 under
the Exchange Act provides that the grant of a stock option to a director or
officer of a company will be exempt from the provisions of Section 16(b) of the
Exchange Act if the conditions set forth in said Rule are satisfied. Unless
otherwise specified by the Board or Committee, grants of Stock Options
hereunder to individuals who are officers or directors of the Company shall
be made in a manner that satisfies the conditions of said Rule.
IV. DEFINITIONS
4.1 "STOCK OPTION." A Stock Option is the right granted under the Plan to
an Employee, director, or consultant to purchase at such time or times, on such
terms and at such price or prices ("Option Price") as are determined by the
Board or Committee, the number of shares of Common Stock determined by the Board
or Committee.
4.2 "COMMON STOCK." A share of Common Stock means a share of authorized
but unissued or reacquired common stock of the Company.
4.3 "FAIR MARKET VALUE." If the Common Stock is traded publicly, the Fair
Market Value of a share of Common Stock on any date shall be the average of the
representative closing bid and asked prices, as quoted by the National
Association of Securities Dealers through NASDAQ (its automated system for
reporting quotes), for the date in question, or, if the Common Stock is
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listed on the NASDAQ National Market System or is listed on a national stock
exchange, the officially quoted closing price on NASDAQ or such exchange, as the
case may be, on the date in question. If the Common Stock is not traded
publicly, the Fair Market Value of a share of Common Stock on any date shall be
determined in good faith by the Board of Directors or the Committee after such
consultations with outside legal, accounting and other experts as the Board of
Directors or the Committee may deem advisable.
4.4 "EMPLOYEE." An Employee is an employee of the Company or any
Participating Subsidiary.
4.5 "PARTICIPANT." A Participant is an Employee, director or consultant
to whom a Stock Option is granted.
V. ELIGIBILITY AND PARTICIPATION
Grants of ISOs and NSOs may be made to Employees of the Company or any
Participating Subsidiary. Grants of NSOs may be made to Employees of,
directors of or consultants to the Company or any Participating Subsidiary.
Any director of the Company or of a Participating Subsidiary who is also an
Employee shall also be eligible to receive ISOs. The Board or Committee
shall from time to time determine the Participants to whom Stock Options
shall be granted, the type of Stock Option granted, the number of shares of
Common Stock subject to each Stock Option to be granted to each such
Participant, the Option Price of such Stock Option, and all other terms and
conditions of the Stock Option, all as provided in the Plan. The Option
Price of any ISO shall be not less than the Fair Market Value of a share of
Common Stock on the date on which the Stock Option is granted, and the Option
Price of an NSO may not be less than 85% of the Fair Market Value on the date
the NSO is granted. If an ISO is granted to an Employee who then owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any parent or subsidiary corporation of the Company,
the Option Price of such ISO shall be at least 110% of the Fair Market Value
of the Common Stock subject to the ISO at the time such ISO is granted, and
such ISO shall not be exercisable after five years after the date on which it
was granted. Each Stock Option shall be evidenced by a written agreement
("Option Agreement") containing such terms and provisions as the Board or
Committee may determine, subject to the provisions of the Plan.
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VI. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
6.1 MAXIMUM NUMBER. Subject to adjustment as provided in Section 6.2
below, the maximum aggregate number of shares of Common Stock that may be made
subject to Stock Options shall be 800,000 shares of Common Stock. Such shares
may either be authorized but unissued or treasury shares of the Company. The
aggregate Fair Market Value (determined as of the time the ISO is granted) of
the stock as to all ISOs granted to an individual which may first become
exercisable in a particular calendar year may not exceed $100,000. If any
shares of Common Stock subject to Stock Options are not purchased or otherwise
paid for before such Stock Options expire, such shares may again be made subject
to Stock Options.
6.2 ADJUSTMENTS. In the event the outstanding shares of Common Stock of
the Company are increased, decreased, changed into or exchanged for a different
number or kind of securities of the Company, through reorganization,
recapitalization, reclassification, stock dividend, stock split, or other change
in corporate structure, an appropriate and proportionate adjustment shall be
made in the numbers, kinds, and prices of the Stock Options granted under the
Plan (but not in the aggregate purchase price), and in the total number of
shares of Common Stock with respect to which Stock Options may be granted
hereunder. If any adjustment shall result in a fractional share, the fraction
shall be disregarded, and the Company shall have no obligation to make any cash
or other payment with respect to such a fractional share. Any adjustment shall
be made by the Board, whose determination in that respect, and as to whether any
adjustment needs to be made, shall be final, binding and conclusive.
VII. EXERCISE OF STOCK OPTIONS
7.1 TIME OF EXERCISE. Subject to the provisions of the Plan, the Board or
Committee, in its discretion, shall determine the time when a Stock Option, or a
portion of a Stock Option, shall become exercisable, and the time when a Stock
Option, or a portion of a Stock Option, shall expire. Such time or times shall
be set forth in the Option Agreement evidencing such Stock Options. A Stock
Option shall expire, to the extent not exercised, no later than the tenth
anniversary of the date on which it was granted. The Board or Committee may
accelerate the vesting of any Participant's Stock Option by giving written
notice to the Participant and, with the consent of the holder thereof, modify,
amend or terminate any Stock Option. Upon receipt of such notice, the
Participant and the Company shall amend the Option Agreement to reflect the new
vesting schedule.
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The acceleration of the exercise period of a Stock Option shall not affect the
expiration date of that Stock Option.
7.2 EXCHANGE OF OUTSTANDING STOCK. The Board or Committee, in its sole
discretion, may permit a Participant to surrender to the Company shares of the
Common Stock previously acquired by the Participant as part or full payment for
the exercise of a Stock Option. Such surrendered shares shall be valued at
their Fair Market Value on the date of exercise.
7.3 PAYMENT. The exercise price shall be paid in full at the time of
exercise of the Stock Options in cash or in such other form of lawful
consideration as the Board of Directors or the Committee may approve from time
to time, including, without limitation, the transfer of outstanding shares of
Common Stock as provided in Section 7.2.
7.4 TERMINATION OF EMPLOYMENT BEFORE EXERCISE. If the employment of a
Participant who was an Employee of the Company or a Participating Subsidiary
when the Stock Option was granted shall terminate for any reason other than
the Participant's death or disability, any Stock Options then held by the
Participant, to the extent then exercisable under the applicable Option
Agreement(s), shall remain exercisable after the termination of his
employment for a period of three months (but not later than the specified
expiration date). If the Participant's employment is terminated because the
Participant is disabled within the meaning of Section 22(e)(3) of the Code,
any Stock Option then held by the Participant, to the extent then exercisable
under the applicable Option Agreement(s), shall remain exercisable after the
termination of his employment for a period of twelve months (but not later
than the specified expiration date). If the Participant dies while employed
by the Company or a Participating Subsidiary, or during the three-month or
twelve-month periods referred to above, his Stock Options may be exercised to
the extent that they were exercisable on the date of cessation of his
employment by his estate, or duly appointed representative, or beneficiary
who acquires the Stock Options by will or by the laws of descent and
distribution, and each of his Stock Options shall terminate on the first
anniversary of the date of his death (but not later than the specified
expiration dates). To the extent a Stock Option either (i) has not yet
become exercisable on termination of employment (I.E., not vested) or (ii) is
exercisable on such termination but is not exercised during the applicable
period, it shall be deemed to have been forfeited and of no further force or
effect. Notwithstanding anything in this Section 7.4 to the contrary, the
Board or Committee may, in its sole discretion, provide (whether by initial
grant or subsequent modification or amendment with the consent of the holder
thereof) other and different provisions with respect to termination,
expiration and exercisability for NSOs in the event of termination of
employment, engagement or term, as the case may be, death or disability of
any Employee, consultant or director (such provisions shall be set forth in
the Stock Option Agreements evidencing such NSOs).
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7.5 DISPOSITION OF FORFEITED STOCK OPTIONS. Any shares of Common Stock
subject to Stock Options forfeited by a Participant shall not thereafter be
eligible for purchase by the Participant, but may be made subject to Stock
Options granted to other Participants.
VIII. NO CONTRACT OF EMPLOYMENT
Nothing in this Plan shall confer upon the Participant the right to
continue in the employ of the Company, or any Participating Subsidiary, nor
shall it interfere in any way with the right of the Company, or any such
Participating Subsidiary, to discharge the Participant at any time for any
reason whatsoever, with or without cause. Nothing in this Article VIII shall
affect any rights or obligations of the Company or any Participant under any
written contract of employment.
IX. NO RIGHTS AS A STOCKHOLDER
A Participant shall have no rights as a stockholder with respect to any
shares of Common Stock subject to a Stock Option. Except as provided in Section
6.2, no adjustment shall be made in the number of shares of Common Stock issued
to a Participant, or in any other rights of the Participant upon exercise of a
Stock Option by reason of any dividend, distribution or other right granted to
stockholders for which the record date is prior to the date of exercise of the
Participant's Stock Option.
X. ASSIGNABILITY
No Stock Option granted under this Plan, nor any other rights acquired by
Participant under this Plan, shall be assignable or transferable by a
Participant, other than by will or the laws of descent and distribution, and
Stock Options issued to a Participant are exercisable during his lifetime only
by him. Notwithstanding the preceding sentence, the Board or Committee may, in
its sole discretion, permit the assignment or transfer of an NSO and the
exercise thereof by a person other than a Participant, on such terms and
conditions as the Board or Committee in its sole discretion may determine. Any
such terms shall be determined at the time the NSO is granted, and shall be set
forth in the Option Agreement. In the event of his death, the Stock Option may
be exercised by the Personal Representative of the Participant's estate or by
the successor or successors in
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interest determined under the Participant's will or under the applicable laws of
descent and distribution.
XI. MERGER OR LIQUIDATION OF THE COMPANY
11.1 LIQUIDATION. In the event of a dissolution or liquidation of the
Company, all Stock Options shall terminate immediately prior to the consummation
of such dissolution or liquidation, unless otherwise provided by the Board. The
Board may, in the exercise of its sole discretion, give each Participant the
right to exercise his or her Stock Option(s) as to Shares as to which the Stock
Option(s) would not otherwise be exercisable.
11.2 SALE OF ASSETS, MERGER OR CONSOLIDATION. In the event of a sale of
all or substantially all of the assets of the Company, or the merger or
consolidation of the Company with or into another corporation in a transaction
in which the Company does not survive, the Board, in its sole discretion, may
provide for the acceleration of the exercise date of some or all of the
non-exercisable portion of any outstanding Stock Options, and/or may provide for
the termination of any Stock Options immediately prior to the consummation of
the transaction, and/or may provide for the replacement of any Stock Options
with comparable options to purchase stock of such other corporation.
XII. AMENDMENT
The Board of Directors may from time to time alter, amend, suspend or
discontinue the Plan, including, where applicable, any modifications or
amendments as it shall deem advisable in order that ISOs will be classified as
incentive stock options under the Code, or in order to conform to any regulation
or to any change in any law or regulation applicable thereto; provided, however,
that no such action shall adversely affect the rights and obligations with
respect to Stock Options at any time outstanding under the Plan; and provided
further that no such action shall, without the approval of the stockholders of
the Company, (i) increase the maximum number of shares of Common Stock that may
be made subject to Stock Options (unless necessary to effect the adjustments
required by Section 6.2), (ii) materially increase the benefits accruing to
Participants under the Plan, or (iii) materially modify the requirements as to
eligibility for participation in the Plan.
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XIII. REGISTRATION OF OPTIONED SHARES
The Stock Options shall not be exercisable unless the purchase of such
optioned shares is pursuant to an applicable effective registration statement
under the Securities Act of 1933, as amended, or unless, in the opinion of the
Company, the proposed purchase of such optioned shares would be exempt from the
registration requirements of the Securities Act of 1933, as amended, and from
the registration or qualification requirements of applicable state securities
laws. As a condition to the exercise of a Stock Option, the Company may impose
various conditions, including a requirement that the person exercising such
Stock Option represent and warrant, at the time of such exercise, that the
Shares are being purchased for investment and without any present intention to
sell or distribute the Shares to be received.
XIV. WITHHOLDING TAXES
The Company or Participating Subsidiary shall take such steps as it
shall deem necessary or appropriate for the withholding of any taxes which
the Company or the Participating Subsidiary is required by any law or
regulation of any governmental authority, whether federal, state or local,
domestic or foreign to withhold in connection with any Stock Options. All
withholding taxes may, at the sole discretion of the Board or Committee, be
satisfied by the withholding of a sufficient number of exercised Shares
which, valued at Fair Market Value on the date of exercise, would be equal to
the total withholding obligation of the Optionee for the exercise of such
Stock Option.
XV. BROKERAGE ARRANGEMENTS
The Board or Committee, in its discretion, may enter into arrangements with
one or more banks, brokers, or other financial institutions to facilitate the
disposition of shares acquired upon exercise of Stock Options including, without
limitation, arrangements for the simultaneous exercise of Stock Options and the
sale of shares acquired upon exercise.
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XVI. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board of Directors nor the
submission of the Plan to stockholders of the Company for approval shall be
construed as creating any limitations on the power or authority of the Board of
Directors to adopt such other or additional incentive or other compensation
arrangements of whatever nature as the Board of Directors may deem necessary or
desirable or preclude or limit the continuation of any other plan, practice or
arrangement for the payment of compensation or fringe benefits to employees,
consultants or directors generally, or to any class or group of employees, which
the Company or any Participating Subsidiary now has lawfully put into effect,
including, without limitation, any retirement, pension, savings and stock
purchase plan, insurance, death and disability benefits and executive short-term
incentive plans.
XVII. EFFECTIVE DATE
This Plan was adopted by the Board of Directors and became effective on
March 15, 1994, subject to the approval of the Company's shareholders within
twelve (12) months thereafter. No Stock Options shall be granted subsequent to
ten years after the effective date of the Plan. Stock Options outstanding
subsequent to ten years after the effective date of the Plan shall continue to
be governed by the provisions of the Plan.
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