EXHIBIT 10.12
IMTEK OFFICE SOLUTIONS, INC.
1998 STOCK OPTION PLAN
1. PURPOSE. The purpose of this Imtek Office Solutions, Inc. Stock
Option Plan (the "Plan") is to further the long term stability and financial
success of Imtek Office Solutions, Inc. (the "Company") by attracting and
retaining key employees and obtaining the services of directors and consultants
through the use of stock incentives. It is believed that ownership of Company
Stock will stimulate the efforts of those employees and consultants upon whose
judgment and interest the Company is and will be largely dependent for the
successful conduct of its business. It is also believed that Incentive Awards
granted to such employees under this Plan will strengthen their desire to remain
with the Company and will further the identification of those employees' and
directors' interests with those of the Company's shareholders. The Plan is
intended to conform to the provisions of Securities and Exchange Commission Rule
16b-3, if the Company Stock becomes Publicly Traded in the future.
2. DEFINITIONS. As used in the Plan, the following terms have the
meanings indicated:
(a) "Act" means the Securities Exchange Act of 1934, as
amended.
(b) "Applicable Withholding Taxes" means the aggregate amount
of federal, state and local income and payroll taxes that the Company
is required to withhold in connection with any exercise of a
Nonstatutory Stock Option by an employee.
(c) "Board" means the board of directors of the Company.
(d) "Change of Control" means, before the Company Stock is
Publicly Traded, an event described in (i), (ii) or (iii):
(i) the closing date of any sale or other disposition
of substantially all the assets of the Company other than in
the ordinary course of business.
(ii) any person or persons shall be the owner of more
than 50% of the Company Stock, other than the person or
persons who own Company Stock as of the Effective Date (the
"Existing Shareholders"), any trusts, partnerships or
corporations controlled by the Existing Shareholders, the
Company, any subsidiary of the Company, any employee benefit
plan of the Company or any subsidiary, or any entity holding
Company Stock for or pursuant to the terms of any such
employee benefit plan.
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(iii) an initial public offering of the Company
Stock, to the extent provided in an option agreement.
A Change of Control means, after the Company Stock is Publicly
Traded, an event described in (iv), (v), (vi), or (vii):
(iv) The acquisition by a Group of Beneficial
Ownership of 35% or more of the Stock or the Voting Power of
the Company, but excluding for this purpose: (A) any
acquisition by the Company (or a subsidiary), or an employee
benefit plan of the Company; or (B) any acquisition of Common
Stock of the Company by management employees of the Company.
"Group" means any individual, entity or group within the
meaning of Section 13(d)(3) or 14(d)(2) of the Act,
"Beneficial Ownership" has the meaning in Rule 13d-3
promulgated under the Act, "Stock" means the then outstanding
shares of common stock, and "Voting Power" means the combined
voting power of the outstanding voting securities entitled to
vote generally in the election of directors.
(v) Individuals who constitute the Board on the date
immediately after the Company Stock becomes Publicly Traded
(the "Incumbent Board") cease to constitute at least a
majority of the Board, provided that any director whose
nomination was approved by a majority of the Incumbent Board
shall be considered a member of the Incumbent Board unless
such individual's initial assumption of office is in
connection with an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Act).
(vi) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, in
which the owners of more than 50% of the Stock or Voting Power
of the Company do not, following such reorganization, merger
or consolidation, beneficially own, directly or indirectly,
more than 50% of the Stock or Voting Power of the corporation
resulting from such reorganization, merger or consolidation.
(vii) A complete liquidation or dissolution of the
Company or of its sale or other disposition of all or
substantially all of the assets of the Company, or the
approval by the Shareholders of the Company of any such event.
(e) "Code" means the Internal Revenue Code of 1986, as
amended.
(f) "Committee" means the committee appointed by the Board as
described under Section 12.
(g) "Company" means Imtek Office Solutions, Inc., a Delaware
corporation.
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(h) "Company Stock" means Common Stock, $.000001 par value, of
the Company. If the par value of the Company Stock is changed, or in
the event of a change in the capital structure of the Company (as
provided in Section 11), the shares resulting from such a change shall
be deemed to be Company Stock within the meaning of the Plan.
(i) "Date of Grant" means the date on which an Incentive Award
is granted by the Committee.
(j) "Disability" or "Disabled" means, as to an Incentive Stock
Option, a Disability within the meaning of Code section 22(e)(3). As to
all other Incentive Awards, the Committee shall determine whether a
Disability exists and such determination shall be conclusive.
(k) "Fair Market Value" means as of the Date of Grant (or, if
there were no trades on the Date of Grant, the last preceding day on
which Company Stock is traded if the Company Stock is actively traded)
(i) if the Company Stock is traded on an exchange the average of the
highest and lowest registered sales prices of the Company Stock at
which it is traded on the immediately prior trading day on the exchange
on which it generally has the greatest trading volume, (ii) if the
Company Stock is traded on the over-the-counter market, the average
between the lowest bid and highest asked prices as reported by THE WALL
STREET JOURNAL on the immediately prior trading day, or (iii) if shares
of Common Stock are not traded on any exchange or over-the-counter
market, the fair market value shall be determined by the Committee
using any reasonable method in good faith.
(l) "Incentive Award" means, collectively, the award of an
Nonstatutory Stock Option or Incentive Stock Option under the Plan.
(m) "Incentive Stock Option" means an Option intended to meet
the requirements of, and qualify for favorable federal income tax
treatment under, Code section 422.
(n) "Non-Employee Director" means a member of the Board who is
not an employee of the Company, a Parent or a Subsidiary.
(o) "Nonstatutory Stock Option" means an Option that does not
meet the requirements of Code section 422, or, even if meeting the
requirements of Code section 422, is not intended to be an Incentive
Stock Option and is so designated.
(p) "Option" means a right to purchase Company Stock granted
under the Plan, at a price determined in accordance with the Plan.
(q) "Parent" means, with respect to any corporation, a parent
of that corporation within the meaning of Code section 424(e).
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(r) "Participant" means any employee who receives an Incentive
Award under the Plan.
(s) "Publicly Traded" means after a registration statement
with respect to Company Stock filed by the Company with the Securities
and Exchange Commission has become effective.
(t) "Rule 16b-3" means Rule 16b-3 of the Securities and
Exchange Commission promulgated under the Act. A reference in the Plan
to Rule 16b-3 shall include a reference to any corresponding rule (or
number redesignation) of any amendments to Rule 16b-3 enacted after the
effective date of the Plan's adoption. The provisions of the Plan
relating to Rule 16b-3 shall be applicable only if the Company Stock
becomes Publicly Traded.
(u) "Subsidiary" means, with respect to any corporation, a
subsidiary of that corporation within the meaning of Code section
424(f).
(v) "10% Shareholder" means a person who owns, directly or
indirectly, stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any Parent or
Subsidiary of the Company. Indirect ownership of stock shall be
determined in accordance with Code section 424(d).
3. GENERAL. Incentive Awards under the Plan may be either Incentive
Stock Options or Nonstatutory Stock Options.
4. STOCK. Subject to Section 11 of the Plan, there shall be reserved
for issuance under the Plan an aggregate of 750,000 shares of Company Stock,
which shall be authorized, but unissued shares. Shares allocable to Options or
portions thereof granted under the Plan that expire or otherwise terminate
unexercised may again be subjected to an Incentive Award under the Plan. The
Committee is expressly authorized to make an Incentive Award to a Participant
conditioned upon the surrender for cancellation of an option granted under an
existing Incentive Award. For purposes of determining the number of shares that
are available for Incentive Awards under the Plan, such number shall include the
number of shares surrendered by an optionee or retained by the Company in
payment of Applicable Withholding Taxes. No more than 200,000 shares may be
allocated to the Incentive Awards that are granted to any individual Participant
during any single calendar year.
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5. ELIGIBILITY.
(a) All present and future employees of the Company and
individuals who are consultants to the Company (or any Parent or Subsidiary of
the Company, whether now existing or hereafter created or acquired) shall be
eligible to receive Incentive Awards under the Plan. The Committee shall have
the power and complete discretion, as provided in Section 12, to select eligible
employees to receive Incentive Awards and to determine for each employee the
terms and conditions, the nature of the award and the number of shares to be
allocated to each employee as part of each Incentive Award. Non-Employee
Directors are eligible to receive Incentive Awards in accordance with Section
13.
(b) The grant of an Incentive Award shall not obligate the
Company or any Parent or Subsidiary of the Company to pay a Participant any
particular amount of remuneration, to continue the employment of the Participant
after the grant or to make further grants to the Participant at any time
thereafter.
6. STOCK OPTIONS.
(a) Whenever the Committee deems it appropriate to grant
Options, notice shall be given to the Participant stating the number of shares
for which Options are granted, the Option price per share, whether the Options
are Incentive Stock Options or Nonstatutory Stock Options, and the conditions to
which the grant and exercise of the Options are subject. This notice, when duly
accepted in writing by the Participant, shall become a stock option agreement
between the Company and the Participant.
(b) The exercise price of shares of Company Stock covered by
an Incentive Stock Option shall be not less than 100% of the Fair Market Value
of such shares on the Date of Grant; provided that if an Incentive Stock Option
is granted to a Participant who, at the time of the grant, is a 10% Shareholder,
then the exercise price of the shares covered by the Incentive Stock Option
shall be not less than 110% of the Fair Market Value of such shares on the Date
of Grant.
(c) The exercise price of shares covered by a Nonstatutory
Stock Option shall be not less than 100% of the Fair Market Value of such shares
on the Date of Grant.
(d) Options may be exercised in whole or in part at such times
as may be specified by the Committee in the Participant's stock option
agreement; provided that, the exercise provisions for Incentive Stock Options
shall in all events not be more liberal than the following provisions:
(i) No Incentive Stock Option may be exercised after
ten years (or, in the case of an Incentive Stock Option
granted to a 10% Shareholder, five years) from the Date of
Grant.
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(ii) An Incentive Stock Option by its terms, shall be
exercisable in any calendar year only to the extent that the
aggregate Fair Market Value (determined at the Date of Grant)
of the Company Stock with respect to which Incentive Stock
Options are exercisable for the first time during the calendar
year does not exceed $100,000 (the "Limitation Amount").
Incentive Stock Options granted under the Plan and all other
plans of the Company and any Parent or Subsidiary of the
Company shall be aggregated for purposes of determining
whether the Limitation Amount has been exceeded. The Board may
impose such conditions as it deems appropriate on an Incentive
Stock Option to ensure that the foregoing requirement is met.
(iii) If Incentive Stock Options that first become
exercisable in a calendar year exceed the Limitation Amount,
the excess Options will be treated as Nonstatutory Stock
Options to the extent permitted by law. If an Option
designated as an Incentive Stock Option otherwise fails to
qualify as an incentive stock option under the Code, the
Option shall be treated as a Nonstatutory Stock Option.
(e) The Committee may, in its discretion, grant Options that
by their terms become fully exercisable upon a Change of Control,
notwithstanding other conditions on exercisability in the stock option
agreement.
7. METHOD OF EXERCISE OF OPTIONS.
(a) Options may be exercised by the Participant giving written
notice of the exercise to the Company, stating the number of shares the
Participant has elected to purchase under the Option. Such notice shall be
effective only if accompanied by the exercise price in full in cash; provided,
however, that if the terms of an Option so permit, the Participant may (i)
deliver, or cause to be withheld from the Option shares, shares of Company Stock
(valued at their Fair Market Value on the date of exercise) in satisfaction of
all or any part of the exercise price, (ii) deliver a properly executed exercise
notice together with irrevocable instructions to a broker to deliver promptly to
the Company, from the sale or loan proceeds with respect to the sale of Company
Stock or a loan secured by Company Stock, the amount necessary to pay the
exercise price and, if required by the Committee, Applicable Withholding Taxes,
or (iii) deliver an interest bearing promissory note, payable to the Company, in
payment of all or part of the exercise price together with such collateral as
may be required by the Committee at the time of exercise. The interest rate
under any such promissory note shall be established by the Committee and shall
be at least equal to the minimum interest rate required at the time to avoid
imputed interest under the Code.
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(b) The Company may place on any certificate representing
Company Stock issued upon the exercise of an Option any legend deemed desirable
by the Company's counsel to comply with federal or state securities laws, and
the Company may require a customary written indication of the Participant's
investment intent. Until the Participant has made any required payment,
including any Applicable Withholding Taxes, and has had issued a certificate for
the shares of Company Stock acquired, he or she shall possess no shareholder
rights with respect to the shares.
(c) Each Participant shall agree as a condition of the
exercise of an Option to pay to the Company, or make arrangements satisfactory
to the Company regarding the payment to the Company of, Applicable Withholding
Taxes. Until such amount has been paid or arrangements satisfactory to the
Company have been made, no stock certificate shall be issued upon the exercise
of an Option.
(d) As an alternative to making a cash payment to the Company
to satisfy Applicable Withholding Taxes, if the Option agreement so provides,
the Participant may, subject to the provisions set forth below, elect to (i)
deliver shares of already owned Company Stock or (ii) have the Company retain
that number of shares of Company Stock that would satisfy all or a specified
portion of the Applicable Withholding Taxes. The Committee shall have sole
discretion to approve or disapprove any such election.
(e) Notwithstanding anything herein to the contrary, if the
Company Stock is Publicly Traded, Options shall always be granted and exercised
in such a manner as to conform to the provisions of Rule 16b-3.
8. NONTRANSFERABILITY OF OPTIONS. Nonstatutory Stock Options shall be
transferable by will or by the laws of descent and distribution, and to such
greater extent as specifically provided in the Incentive Award. Incentive Stock
Options, by their terms, shall not be transferable except by will or by the laws
of descent and distribution and shall be exercisable, during the Participant's
lifetime, only by the Participant.
9. EFFECTIVE DATE OF THE PLAN. The effective date of the Plan is
September 11, 1998. The Plan shall be submitted to the shareholders of the
Company for approval. Until (i) the Plan has been approved by the Company's
shareholders, and (ii) the requirements of any applicable Federal or State
securities laws have been met, no Option shall be exercisable.
10. TERMINATION, MODIFICATION, CHANGE. If not sooner terminated by the
Board, this Plan shall terminate at the close of business on September 11, 2008.
No Incentive Awards shall be made under the Plan after its termination. The
Board may terminate the Plan or may amend the Plan in such respects as it shall
deem advisable; provided, that to the extent required by any Federal or state
law or regulation or the rules of any domestic stock exchange on which the
Company Stock is traded, no amendment may be made that requires shareholder
approval unless the amendment is authorized by the
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shareholders of the Company. Notwithstanding the foregoing, the Board may
unilaterally amend the Plan and Incentive Awards as it deems appropriate to
cause Incentive Stock Options to meet the requirements of the Code and
regulations thereunder. Except as provided in the preceding sentence, a
termination or amendment of the Plan shall not, without the consent of the
Participant, adversely affect a Participant's rights under an Incentive Award
previously granted to him or her.
11. CHANGE IN CAPITAL STRUCTURE.
(a) In the event of a stock dividend, stock split or
combination of shares, recapitalization or merger in which the Company is the
surviving corporation or other change in the Company's capital stock (including,
but not limited to, the creation or issuance to shareholders generally of
rights, options or warrants for the purchase of common stock or preferred stock
of the Company), the number and kind of shares of stock or securities of the
Company to be subject to the Plan and to Options then outstanding or to be
granted thereunder, the maximum number of shares or securities which may be
delivered under the Plan, the exercise price and other relevant provisions shall
be appropriately adjusted by the Committee, whose determination shall be binding
on all persons. If the adjustment would produce fractional shares with respect
to any unexercised Option, the Committee may adjust appropriately the number of
shares covered by the Option so as to eliminate the fractional shares.
(b) If the Company is a party to an initial public offering, a
consolidation or a merger in which the Company is not the surviving corporation,
a transaction that results in the acquisition of substantially all of the
Company's outstanding stock by a single person or entity, or a sale or transfer
of substantially all of the Company's assets, the Committee may take such
actions with respect to outstanding Incentive Awards as the Committee deems
appropriate.
(c) Notwithstanding anything in the Plan to the contrary, the
Committee may take the foregoing actions without the consent of any Participant,
and the Committee's determination shall be conclusive and binding on all persons
for all purposes.
12. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Committee who shall be appointed by the Board. If the Company Stock is Publicly
Traded, the Committee shall consist of two or more Non-Employee Directors.
Subject to paragraph (d) below, if the Company Stock is Publicly Traded, the
Committee shall be the Compensation Committee unless the Board shall appoint
another Committee to administer the Plan. The Committee shall have general
authority to impose any limitation or condition upon an Incentive Award the
Committee deems appropriate to achieve the objectives of the Incentive Award and
the Plan and, without limitation and in addition to powers set forth elsewhere
in the Plan, shall have the following specific
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authority (subject to Section 13 with respect to Incentive Awards for
Non-Employee Directors):
(a) The Committee shall have the power and complete discretion
to determine (i) which eligible employees shall receive Incentive
Awards and the nature of each Incentive Award, (ii) the number of
shares of Company Stock to be covered by each Incentive Award, (iii)
whether Options shall be Incentive Stock Options or Nonstatutory Stock
Options, (iv) the Fair Market Value of Company Stock, (v) the time or
times when an Incentive Award shall be granted, (vi) whether an
Incentive Award shall become vested over a period of time and when it
shall be fully vested, (vii) when Options may be exercised, (viii)
whether a Disability exists, (ix) the manner in which payment will be
made upon the exercise of Options, (x) conditions relating to the
length of time before disposition of Company Stock received upon the
exercise of Options is permitted, (xi) whether to approve a
Participant's election (A) to deliver shares of already owned Company
Stock to satisfy Applicable Withholding Taxes or (B) to have the
Company withhold from the shares to be issued upon the exercise of a
Nonstatutory Stock Option the number of shares necessary to satisfy
Applicable Withholding Taxes, (xii) notice provisions relating to the
sale of Company Stock acquired under the Plan, and (xiii) any
additional requirements relating to Incentive Awards that the Committee
deems appropriate. The Committee shall have the power to amend the
terms of previously granted Incentive Awards so long as the terms as
amended are consistent with the terms of the Plan and provided that the
consent of the Participant is obtained with respect to any amendment
that would be detrimental to him or her, except that such consent will
not be required if such amendment is for the purpose of complying with
Rule 16b-3 or any requirement of the Code applicable to the Incentive
Award.
(b) The Committee may adopt rules and regulations for carrying
out the Plan. The interpretation and construction of any provision of
the Plan by the Committee shall be final and conclusive. The Committee
may consult with counsel, who may be counsel to the Company, and shall
not incur any liability for any action taken in good faith in reliance
upon the advice of counsel.
(c) A majority of the members of the Committee shall
constitute a quorum, and all actions of the Committee shall be taken by
a majority of the members present. Any action may be taken by a written
instrument signed by all of the members, and any action so taken shall
be fully effective as if it had been taken at a meeting.
(d) The Board from time to time may appoint members previously
appointed and may fill vacancies, however caused, in the Committee.
13. GRANTS TO NON-EMPLOYEE DIRECTORS. All provisions of the Plan shall
apply to the grant of Incentive Awards to Non-Employee Directors,
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except as specifically provided in this section. All Incentive Awards to
Non-Employee Directors will be Nonstatutory Stock Options. With respect to
Incentive Awards to Non-Employee Directors, the Board will have all of the
authority of the Committee under the Plan. The Board may delegate its authority
to the Compensation Committee or another committee of the Board that is composed
solely of Non-Employee Directors. The provisions for payment of Applicable
Withholding Taxes will not apply to Incentive Awards to Non-Employee Directors.
14. NOTICE. All notices and other communications required or permitted
to be given under this Plan shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed first class, postage prepaid, as
follows (a) if to the Company - at its principal business address to the
attention of the Treasurer of the Company at the principal address of the
Company; (b) if to any Participant - at the last address of the Participant
known to the sender at the time the notice or other communication is sent.
15. INTERPRETATION. The terms of this Plan are subject to all present
and future regulations and rulings of the Secretary of the Treasury or his or
her delegate relating to the qualification of Incentive Stock Options under the
Code. If any provision of the Plan conflicts with any such regulation or ruling,
then that provision of the Plan shall be void and of no effect. The terms of
this Plan shall be governed by the laws of the State of Delaware.
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