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EXHIBIT 10.11
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FORM OF
TransAct Technologies Incorporated
1996 STOCK PLAN
Effective July 30, 1996
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TransAct Technologies Incorporated
1996 STOCK PLAN
1. Purpose
TransAct Technologies Incorporated (the "Company") desires to attract
and retain the best available talent and encourage the highest level of
performance by employees and other persons who perform services for the Company
in order to serve the best interests of the Company and stockholders. By
affording eligible persons the opportunity to acquire proprietary interests in
the Company and by providing them incentives to put forth maximum efforts for
the success of the Company's business, the TransAct Technologies Incorporated
1996 Stock Plan (the "1996 Plan") is expected to contribute to the attainment of
those objectives.
2. Scope and Duration
Awards under the 1996 Plan may be granted in the form of incentive
stock options ("incentive stock options") as provided in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), in the form of
non-qualified stock options ("non-qualified options") (unless otherwise
indicated, references in the 1996 Plan to "options" include incentive stock
options and non-qualified options), in the form of shares of the common stock,
par value $.01 per share, of the Company (the "Common Stock") that are
restricted as provided in paragraph 11 ("restricted shares"), in the form of
units to acquire shares of Common Stock that are restricted as provided in
paragraph 11 ("restricted units") or in the form of stock appreciation rights
("rights") or limited stock appreciation rights ("limited rights"). The maximum
aggregate number of shares of Common Stock as to which awards may be granted
from time to time under the 1996 Plan is 600,000 shares. The shares available
may be in whole or in part, as the Board of Directors of the Company (the "Board
of Directors") shall from time to time determine, authorized but unissued shares
or issued shares reacquired by the Company. Unless otherwise provided by the
Compensation Committee, shares covered by expired or terminated options and
forfeited restricted shares or restricted units will be available for subsequent
awards under the 1996 Plan, except to the extent prohibited by Rule 16b-3, as
amended, or any successor provision thereto ("Rule 16b-3"), or other applicable
rules under Section 16(b) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Any shares issued by the Company in respect of the
assumption or substitution of outstanding awards from a corporation or other
business entity by the Company shall not reduce the number of shares available
for awards under the 1996 Plan. No incentive stock option shall be granted more
than 10 years after the Effective Date.
3. Administration
The 1996 Plan shall be administered by the Compensation Committee of
the Board of Directors, consisting of not less than two members who shall
qualify to administer the 1996 Plan as contemplated by Rule 16b-3 (unless Rule
16b-3 shall permit fewer than two members to so qualify); provided, however,
that, with respect to individual participants who are not subject to Section
16(b) of the Exchange Act, the Compensation Committee of the Board of Directors
may delegate authority to administer the 1996 Plan to another committee of
directors which committee may include directors who do not meet the standards
set forth immediately above. Unless the context otherwise requires, the term
"Committee" shall refer to both the Compensation Committee and any other
committee of directors to whom authority have been delegated.
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The Committee shall have plenary authority in its discretion, subject
to and not inconsistent with the express provisions of the 1996 Plan to grant
options, to determine the purchase price of the shares of Common Stock covered
by each option, the term of each option, the persons to whom, and the time or
times at which options shall be granted, and the number of shares to be covered
by each option; to designate options as incentive stock options or non-qualified
options and to determine which options shall be accompanied by rights and
limited rights; to grant rights and to determine the terms and conditions
applicable to such rights; to grant restricted shares and restricted units and
to determine the term of the restricted period and other conditions applicable
to such shares or units, the persons to whom, and the time or times at which,
restricted shares or restricted units shall be granted and the number of shares
or units to be covered by each grant; to interpret the 1996 Plan; to prescribe,
amend and rescind rules and regulations relating to the 1996 Plan; to determine
the terms and provisions of the option and rights agreements (which need not be
identical) and the restricted share and restricted units agreements (which need
not be identical) entered into in connection with awards under the 1996 Plan;
and to make all other determinations deemed necessary or advisable for the
administration of the 1996 Plan. The Committee may delegate to one or more of
its members or to one or more agents such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the 1996 Plan.
The Committee may employ attorneys, consultants, accountants or other
persons and the Committee, the Company and its officers and directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all persons who have
received awards, the Company and all other interested persons. No member or
agent of the Committee shall be personally liable for any action, determination
or interpretation taken or made in good faith with respect to the 1996 Plan or
awards made thereunder, and all members and agents of the Committee shall be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.
4. Eligibility; Factors to be Considered in Granting Awards
Awards will be limited to officers and other key employees of the
Company and its subsidiaries, and except in the case of incentive stock options,
any other non-employees who may provide services to the Company or its
subsidiaries (all such persons being hereinafter referred to as "employees"). In
determining the employees to whom awards shall be granted and the number of
shares or units to be covered by each award, the Committee shall take into
account the nature of the employees' duties, their present and potential
contributions to the success of the Company and such other factors as it shall
deem relevant in connection with accomplishing the purposes of the 1996 Plan. A
director of the Company or of a subsidiary who is not also an employee of the
Company (or deemed to be an employee of the Company as provided above) will not
be eligible to receive an award.
Awards may be granted singly, in combination or in tandem and may be
made in combination or in tandem with, in replacement of, or as alternatives to,
awards or grants under any other employee plan maintained by the Company, its
present and future subsidiaries. An employee who has been granted an award or
awards under the 1996 Plan may be granted an additional award or awards, subject
to such limitations as may be imposed by the Code on the grant of incentive
stock options. No award of incentive stock options shall result in the aggregate
fair market value of Common Stock with respect to which incentive stock options
are exercisable for the first time by any employee during any calendar year
(determined at the time the incentive stock option is granted) exceeding
$100,000. The Committee, in its sole discretion, may grant to an employee who
has been granted an award under the 1996 Plan or any other employee plan
maintained by the Company or its subsidiaries, or any predecessors or successors
thereto, in exchange for the surrender and cancellation of such award, a new
award in the same or a different form and containing such terms, including
without limitation a price which is different (either higher or lower) than any
price provided in the award so surrendered and cancelled, as the Committee may
deem appropriate.
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5. Option Price
The purchase price of the Common Stock covered by each option shall be
determined by the Committee, but in the case of an incentive stock option shall
not be less than 100% of the fair market value (110% in the case of a 10%
shareholder of the Company) of the Common Stock on the date the option is
granted, which shall be deemed to equal the closing price of the Common Stock as
quoted by NASDAQ (the "Market Value") for the date on which the option is
granted, or if there are no sales on such date, on the next preceding day on
which there were sales. The Committee shall determine the date on which an
option is granted, provided that such date is consistent with the Code and any
applicable rules or regulations thereunder. In the absence of such
determination, the date on which the Committee adopts a resolution granting an
option shall be considered the date on which such option is granted, provided
the employee to whom the option is granted is promptly notified of the grant and
an option agreement is duly executed as of the date of the resolution. The
purchase price of the Common Stock covered by each option shall also be
applicable in connection with the exercise of any related right or limited
right. The purchase price shall be subject to adjustment as provided in
paragraph 14.
6. Terms of Options
The term of each incentive stock option granted under the 1996 Plan
shall not be more than 10 years (5 years in the case of a 10% shareholder of the
Company) from the date of grant, as the Committee shall determine, subject to
earlier termination as provided in paragraphs 12 and 13. The term of each
non-qualified stock option granted under the 1996 Plan shall be such period of
time as the Committee shall determine, subject to earlier termination as
provided in paragraphs 12 and 13.
7. Exercise of Options; Loans
(a) Subject to the provisions of the 1996 Plan, an option granted under
the 1996 Plan shall become vested as determined by the Committee. The Committee
may, in its discretion, determine as a condition of any option, that all or a
stated percentage of the options shall become exercisable, in installments or
otherwise, only after completion of a specified service requirement. The
Committee may also, in its discretion, accelerate the exercisability of any
option at any time and provide, in any option agreement, that the option shall
become immediately exercisable as to all shares of Common Stock remaining
subject to the option on or following either (i) the first purchase of shares of
Common Stock pursuant to a tender offer or exchange offer (other than an offer
by the Company or any of its subsidiaries) for all, or any part of, the Common
Stock ("Offer"), (ii) a change in control of the Company (as defined in this
paragraph), (iii) approval by the Company's stockholders of a merger in which
the Company does not survive as an independent, publicly owned corporation, a
consolidation, or a sale, exchange or other disposition of all or substantially
all the Company's assets, or (iv) a change in the composition of the Board of
Directors during any period of two consecutive years such that individuals who
at the beginning of such period were members of the Board of Directors cease for
any reason to constitute at least a majority thereof, unless the election, or
the nomination for election by the Company's stockholders, of each new director
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period (the date upon which an
event described in clause (i), (ii), (iii) or (iv) of this paragraph 7(a) occurs
shall be referred to herein as an "acceleration date"). A "change in control" is
deemed to occur at the time of any acquisition of voting securities of the
Company by any person or group (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), but excluding (i) the Company or any of its subsidiaries,
(ii) any person who was an officer or director of the Company on the day
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immediately prior to the Effective Date hereof, or (iii) any savings, pension or
other benefits plan for the benefit of employees of the Company or any of its
subsidiaries, which theretofore did not beneficially own voting securities
representing more than 30% of the voting power of all outstanding voting
securities of the Company, if such acquisition results in such entity, person or
group owning beneficially securities representing more than 30% of the voting
power of all outstanding voting securities of the Company. As used herein,
"voting power" means ordinary voting power for the election of directors of the
Company.
(b) An option may be exercised at any time or from time to time
(subject, in the case of an incentive stock option, to such restrictions as may
be imposed by the Code), as to any or all full shares as to which the option has
become exercisable. Notwithstanding the foregoing provision, no option may be
exercised without the prior consent of the Committee by an employee who is
subject to Section 16(b) of the Exchange Act until the expiration of six months
from the date of the grant of the option.
(c) The purchase price of the shares as to which an option is exercised
shall be paid in full at the time of exercise; payment may be made in cash,
which may be paid by check, or other instrument acceptable to the Company, or,
with the consent of the Committee, in shares of the Common Stock, valued at the
Market Value on the date of exercise, or if there were no sales on such date, on
the next preceding day on which there were sales or (if permitted by the
Committee and subject to such terms and conditions as it may determine) by
surrender of outstanding awards under the 1996 Plan. In addition, any amount
necessary to satisfy applicable federal, state or local tax requirements shall
be paid promptly upon notification of the amount due. The Committee may permit
such amount to be paid in shares of Common Stock previously owned by the
employee, or a portion of the shares of Common Stock that otherwise would be
distributed to such employee upon exercise of the option, or a combination of
cash and shares of such Common Stock.
(d) Except as provided in paragraphs 12 and 13, no option may be
exercised at any time unless the holder thereof is then an employee of or
performing services for the Company or one of its subsidiaries. For this
purpose, "subsidiary" shall include, as under Treasury Regulations Section
1.421-7(h)(3) and (4), Example (3), any corporation that is a subsidiary of the
Company during the entire portion of the requisite period of employment during
which it is the employer of the holder.
(e) The Committee, in its sole discretion, may elect, in lieu of
delivering all or a portion of the shares of Common Stock as to which an option
has been exercised, if the fair market value of the Common Stock exceeds the
exercise price of the option (i) to pay the employee in cash or in shares of
Common Stock, or a combination of cash and Common Stock, an amount equal to the
excess of (A) the Market Value on the exercise date of the shares of Common
Stock as to which such option has been exercised, or if there were no sales on
such date, on the next preceding day on which there were sales over (B) the
option price, or (ii) in the case of an option which is a non-qualified option,
to defer payment and to credit the amount of such excess on the Company's books
for the account of the optionee and either (a) to treat the amount in such
account as if it had been invested in the manner from time to time determined by
the Committee, with dividends or other income therein being deemed to have been
so reinvested or (b) for the Company's convenience, to contribute the amount
credited to such account to a trust, which may be revocable by the Company, for
investment in the manner from time to time determined by the Committee and set
forth in the instrument creating such trust; provided, however, that, to the
extent required by Rule 16b-3 or other applicable rules under Section 16(b) of
the Exchange Act, in order to perfect the exemption provided thereunder for cash
settlements of stock appreciation rights, the Committee shall not exercise its
discretion to grant cash to any employee who is subject to the provisions of
Section 16(b) of the Exchange Act unless the exercise occurs during any period
commencing on the third business day following the date of release for
publication of any annual or quarterly summary statements of the Company's sales
and earnings and ending on the twelfth business day following such date (a
"Window Period"). The Committee's election pursuant to this subparagraph shall
be made by giving
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written notice of such election to the employee (or other person exercising the
option). Shares of Common Stock paid pursuant to this subparagraph will be
valued at the Market Value on the exercise date, or if there were no sales on
such date, on the next preceding day on which there were sales.
(f) Subject to any terms and conditions that the Committee may
determine in respect of the exercise of options involving the surrender of
outstanding awards, upon, but not until, the exercise of an option or portion
thereof in accordance with the 1996 Plan, the option agreement and such rules
and regulations as may be established by the Committee, the holder thereof shall
have the rights of a stockholder with respect to the shares issued as a result
of such exercise.
(g) The Company may make loans to such option holders as the Committee,
in its discretion, may determine (including a holder who is a director or
officer of the Company) in connection with the exercise of options granted under
the 1996 Plan; provided, however, that the Committee shall not authorize the
making of any loan where the possession of such discretion or the making of such
loan would result in a "modification" (as defined in Section 424 of the Code) of
any incentive stock option. Such loans shall be subject to the following terms
and conditions and such other terms and conditions as the Committee shall
determine not inconsistent with the 1996 Plan. Such loans shall bear interest at
such rates as the Committee shall determine from time to time, which rates may
be below then current market rates (except in the case of incentive stock
options). In no event may any such loan exceed the fair market value, at the
date of exercise, of the shares covered by the option, or portion thereof,
exercised by the holder. No loan shall have an initial term exceeding five
years, but any such loan may be renewable at the discretion of the Committee.
When a loan shall have been made, shares of Common Stock having a fair market
value at least equal to the principal amount of the loan shall be pledged by the
holder to the Company as security for payment of the unpaid balance of the loan.
Every loan shall comply with all applicable laws, regulations and rules of the
Board of Governors of the Federal Reserve System and any other governmental
agency having jurisdiction.
8. Award and Exercise of Rights
(a) A right may be awarded by the Committee in connection with any
option granted under the 1996 Plan (a "tandem right"), either at the time the
option is granted or thereafter at any time prior to the exercise, termination
or expiration of the option. A right may also be awarded separately (a
"free-standing right"). Each tandem right shall be subject to the same terms and
conditions as the related option and shall be exercisable only to the extent the
option is exercisable.
The term of each freestanding right granted under the 1996 Plan shall
be such period of time as the Committee shall determine. Subject to the
provisions of the 1996 Plan, such right shall become vested as determined by the
Committee. Prior to becoming 100% vested, each freestanding right shall become
exercisable, in installments or otherwise, as the Committee shall determine. The
Committee may also, in its discretion, accelerate the exercisability of any
freestanding right at any time and provide, in the agreement covering a
freestanding right, that the right shall become immediately exercisable on or
following an acceleration date (as defined in paragraph 7(a)).
No right shall be exercisable by an employee who is subject to the
provisions of Section 16(b) of the Exchange Act without the prior consent of the
Committee prior to the expiration of six months from the date the right is
awarded (and then, as to a tandem right, only to the extent the related option
is exercisable). Notwithstanding the foregoing, no right shall be exercisable by
an employee who is subject to the provisions of Section 16(b) of the Exchange
Act without the prior consent of the Committee prior to the expiration of one
year from the date of the initial sale of shares of Common Stock of the Company
to the public.
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(b) A right shall entitle the employee upon exercise in accordance with
its terms (subject, in the case of a tandem right, to the surrender unexercised
of the related option or any portion or portions thereof which the employee from
time to time determines to surrender for this purpose) to receive, subject to
the provisions of the 1996 Plan and such rules and regulations as from time to
time may be established by the Committee, a payment having an aggregate value
equal to (A) the excess of (i) the fair market value on the exercise date of one
share over (ii) the option price per share, in the case of a tandem right, or
the price per share specified in the terms of the right, in the case of a
freestanding right, times (B) the number of shares with respect to which the
right shall have been exercised. The payment shall be made in the form of all
cash, all shares of Common Stock, or a combination thereof, as elected by the
employee, provided that, unless otherwise approved by the Committee, the
election by an employee who is subject to the provisions of Section 16(b) of the
Exchange Act to receive all or a part of a payment in cash, as well as the
exercise by the employee of the right for cash, shall be made only during a
Window Period (as defined in paragraph 7(e) hereof); and provided further, that
the Committee shall have sole discretion to consent to or disapprove the
election of an officer or director to receive all or part of a payment in cash
(which consent or disapproval may be given at any time after the election to
which it relates). The price per share specified in a freestanding right shall
be determined by the Committee but in no event shall be less than the average of
the daily closing prices for the Common Stock as reported by NASDAQ during a
period determined by the Committee in its sole discretion that shall consist of
any trading day or any number of consecutive trading days, not exceeding 30,
during the period of 30 trading days ending on the trading day immediately
preceding the date the right is granted, provided that, in the absence of a
different determination by the Committee, the price per share shall be
determined on the basis of a period consisting of 30 trading days. Such price
shall be subject to adjustment as provided in paragraph 14. The Committee shall
determine the date on which a freestanding right is granted. In the absence of
such determination, the date on which the Committee adopts a resolution granting
such right shall be considered the date of grant, provided the employee is
promptly notified of the grant and an agreement is duly executed as of the date
of the resolution.
If upon exercise of a right the employee is to receive a portion of the
payment in shares of Common Stock, the number of shares received shall be
determined by dividing such portion by the fair market value of a share on the
exercise date. The number of shares received may not exceed the number of shares
covered by any option or portion thereof surrendered. Cash will be paid in lieu
of any fractional share.
No payment will be required from the employee upon exercise of a right,
except that any amount necessary to satisfy applicable federal, state or local
tax requirements shall be withheld or paid promptly upon notification of the
amount due and prior to or concurrently with delivery of cash or a certificate
representing shares. The Committee may permit such amount to be paid in shares
of Common Stock previously owned by the employee, or a portion of the shares of
Common Stock that otherwise would be distributed to such employee upon exercise
of the right, or a combination of cash and shares of such Common Stock.
(c) For purposes of this paragraph 8, the fair market value of a share
on any particular date shall mean the Market Value of such share on such date,
or if there are no sales on such date, on the next preceding day on which there
were sales; provided, however, that with respect to exercises of rights by an
employee who is subject to the provisions of Section 16(b) of the Exchange Act
during any Window Period, the Committee may prescribe, by rule of general
application, such other measure of fair market value per share as the Committee
may, in its discretion, determine but not in excess of the highest sale price of
the Common Stock during such Window Period and, in the case of rights that
relate to an incentive stock option, not in excess of the maximum amount that
would be permissible under Section 422 of the Code and the Treasury Regulations
thereunder without disqualifying such option as an incentive stock option under
Section 422.
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(d) Upon exercise of a tandem right, the number of shares subject to
exercise under the related option shall automatically be reduced by the number
of shares represented by the option or portion thereof surrendered.
(e) A right related to an incentive stock option may only be exercised
if the fair market value of a share of Common Stock on the exercise date exceeds
the option price.
(f) Whether payments to employees upon exercise of tandem rights
related to non-qualified options or of freestanding rights are made in cash,
shares of Common Stock or a combination thereof, the Committee shall have sole
discretion as to timing of the payments, whether in one lump sum or in annual
installments or otherwise deferred, which deferred payments may in the
Committee's sole discretion (i) bear amounts equivalent to interest or cash
dividends, (ii) be treated as invested in the manner from time to time
determined by the Committee, with dividends or other income thereon being deemed
to have been so reinvested, or (iii) for the convenience of the Company,
contributed to a trust, which may be revocable by the Company or subject to the
claims of its creditors, for investment in the manner from time to time
determined by the Committee and set forth in the instrument creating such trust,
all as the Committee shall determine.
(g) If a freestanding right is not exercised, or neither a tandem right
nor the related option is exercised, before the end of the day on which the
right ceases to be exercisable and the fair market value of a share on such date
exceeds (i) the option price per share in the case of a tandem right or (ii) the
price per share specified in the terms of the right in the case of a
freestanding right, such right shall be deemed exercised and a payment in the
amount prescribed by subparagraph 8(b), less any applicable taxes, shall be paid
to the employee in cash.
9. Award and Exercise of Limited Rights
(a) A limited right may be awarded by the Committee in connection with
any option granted under the 1996 Plan with respect to all or some of the shares
of Common Stock covered by such related option. A limited right may be granted
either at the time the option is granted or thereafter at any time prior to the
exercise, termination or expiration of the option. A limited right may be
granted to an employee irrespective of whether such employee is being granted or
has been granted a right under paragraph 8 hereof. A limited right may be
exercised only during the ninety-day period beginning on an acceleration date
(as defined in paragraph 7(a)). In addition, each limited right shall be
exercisable only if, and to the extent that, the related option is exercisable
and, in the case of a limited right granted in respect of an incentive stock
option, only when the fair market value per share of the Common Stock exceeds
the option price per share. Upon exercise of a limited right, such related
option shall cease to be exercisable to the extent of the shares of Common Stock
with respect to which such limited right is exercised. Upon the exercise or
termination of a related option, the limited right with respect to such related
option shall terminate to the extent of the shares of Common Stock with respect
to which the related option was exercised or terminated.
(b) Upon the exercise of limited rights, the holder thereof shall
receive in cash whichever of the following amounts is applicable:
(i) in the case of an exercise of limited rights by reason of the
occurrence of an Offer (as defined in paragraph 7(a)(i)), an amount equal to the
Offer Spread (as defined in paragraph 9(d));
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(ii) in the case of an exercise of limited rights by reason of an
acquisition of Common Stock described in paragraph 7(a)(ii), an amount equal to
the Acquisition Spread (as defined in paragraph 9(h) hereof);
(iii) in the case of an exercise of limited rights by reason of an
event described in paragraph 7(a)(iii), an amount equal to the Merger Spread (as
defined in paragraph 9(f) hereof); or
(iv) in the case of an exercise of limited rights by reason of a change
in the composition of the Board of Directors as described in paragraph 7(a)(iv),
an amount equal to the Spread (as defined in paragraph 9(i) hereof).
Notwithstanding the foregoing, in the case of a limited right granted
in respect of an incentive stock option, the holder may not receive an amount in
excess of such amount as will enable such option to qualify as an incentive
stock option.
(c) The term "Offer Price per Share" as used in this paragraph 9 shall
mean, with respect to the exercise of any limited right by reason of the
occurrence of an Offer, the greater of (i) the highest price per share of Common
Stock paid in any Offer, which Offer is in effect at any time during the
ninety-day period ending on the date on which such limited right is exercised,
or (ii) the highest fair market value per share of Common Stock during such
ninety-day period. Any securities or property which are part or all of the
consideration paid for shares of Common Stock in the Offer shall be valued in
determining the Offer Price per Share at the higher of (A) the valuation placed
on such securities or property by the corporation, person or other entity making
such Offer or (B) the valuation placed on such securities or property by the
Committee.
(d) The term "Offer Spread" as used in this paragraph 9 shall mean an
amount equal to the product computed by multiplying (i) the excess of (A) the
Offer Price per Share over (B) the option price per share of Common Stock at
which the related option is exercisable, by (ii) the number of shares of Common
Stock with respect to which such limited right is being exercised.
(e) The term "Merger Price per Share" as used in this paragraph 9 shall
mean, with respect to the exercise of any limited right by reason of an event
described in paragraph 7(a) (iii), the greater of (i) the fixed or formula price
for the acquisition of shares of Common Stock occurring pursuant to such event
if such fixed or formula price is determinable on the date on which such limited
right is exercised, and (ii) the highest fair market value per share of Common
Stock during the ninety-day period ending on the date on which such limited
right is exercised. Any securities or property which are part or all of the
consideration paid for shares of Common Stock pursuant to such event shall be
valued in determining the Merger Price per Share at the higher of (A) the
valuation placed on such securities or property by the corporation, person or
other entity which is a party with the Company to such event or (B) the
valuation placed on such securities or property by the Committee.
(f) The term "Merger Spread" as used in this paragraph 9 shall mean an
amount equal to the product computed by multiplying (i) the excess of (A) the
Merger Price per Share over (B) the option price per share of Common Stock at
which the related option is exercisable, by (ii) the number of shares of Common
Stock with respect to which such limited right is being exercised.
(g) The term "Acquisition Price per Share" as used in this paragraph 9
shall mean, with respect to the exercise of any limited right by reason of an
acquisition of Common Stock described in paragraph 7(a)(ii), the greater of (i)
the highest price per share stated on the Schedule 13D or any amendment thereto
filed by the holder of 30% or more of the Company's voting power which gives
rise to the exercise of such limited right, and (ii) the highest fair market
value per share of Common Stock during the ninety-day period ending on the date
the limited right is exercised.
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(h) The term "Acquisition Spread" as used in this paragraph 9 shall
mean an amount equal to the product computed by multiplying (i) the excess of
(A) the Acquisition Price per Share over (B) the option price per share of
Common Stock at which the related option is exercisable, by (ii) the number of
shares of Common Stock with respect to which such limited right is being
exercised.
(i) The term "Spread" as used in this paragraph 9 shall mean, with
respect to the exercise of any limited right by reason of a change in the
composition of the Board described in paragraph 7(a) (iv), an amount equal to
the product computed by multiplying (i) the excess of (A) the highest fair
market value per share of Common Stock during the ninety-day period ending on
the date the limited right is exercised over (B) the option price per share of
Common Stock at which the related option is exercisable, by (ii) the number of
shares of Common Stock with respect to which the limited right is being
exercised.
(j) Notwithstanding any other provision of the 1996 Plan, rights
granted pursuant to paragraph 8 may not be exercised to the extent that any
limited rights granted with respect to the same option are then exercisable.
(k) For purposes of this paragraph 9, "fair market value per share of
Common Stock" for any day shall mean the Market Value for such day (or if there
were no sales on such day, on the next preceding day on which there were sales).
10. Non-Transferability of Options and Rights
Options, rights and limited rights granted under the 1996 Plan shall
not be transferable otherwise than by will or the laws of descent and
distribution, or pursuant to a qualified domestic relations order as defined by
Section 414(p) of the Code. Options, rights and limited rights may be exercised
during the lifetime of the employee only by the employee or by the employee's
guardian or legal representative (unless such exercise would disqualify an
option as an incentive stock option).
11. Award and Delivery of Restricted Shares or Restricted Units
(a) At the time an award of restricted shares or restricted units is
made, the Committee shall establish a period of time (the "Restricted Period")
applicable to such award. Each award of restricted shares or restricted units
may have a different Restricted Period. The Committee may, in its sole
discretion, at the time an award is made, prescribe conditions for the
incremental lapse of restrictions during the Restricted Period, for the lapse or
termination of restrictions upon the satisfaction of other conditions in
addition to or other than the expiration of the Restricted Period with respect
to all or any portion of the restricted shares or restricted units and provide
for the lapse of all restrictions with respect to all restricted shares or
restricted units covered by the award upon the occurrence of an acceleration
date as defined in paragraph 7(a). The Committee may also, in its sole
discretion, shorten or terminate the Restricted Period or waive any conditions
for the lapse or termination of restrictions with respect to all or any portion
of the restricted shares or restricted units. Notwithstanding the foregoing, all
restrictions shall lapse or terminate with respect to all restricted shares or
restricted units upon death or total disability (as defined in paragraph 13).
(b) Upon the grant of an award of restricted shares, a stock
certificate representing a number of shares of Common Stock equal to the number
of restricted shares granted to an employee shall be registered in the
employee's name but shall be held in custody by the Company for the employee's
account. The employee shall generally have the rights and privileges of a
stockholder as to such restricted shares, including the right to
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vote such restricted shares, except that, subject to the provisions of paragraph
12, the following restrictions shall apply: (i) the employee shall not be
entitled to delivery of the certificate until the expiration or termination of
the Restricted Period and the satisfaction of any other conditions prescribed by
the Committee; (ii) none of the restricted shares may be sold, transferred,
assigned, pledged, or otherwise encumbered or disposed of during the Restricted
Period and until the satisfaction of any other conditions prescribed by the
Committee; and (iii) all of the restricted shares shall be forfeited and all
rights of the employee to such restricted shares shall terminate without further
obligation on the part of the Company unless the employee has remained an
employee of the Company or any of its subsidiaries or any combination thereof
until the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Committee applicable to
such restricted shares. At the discretion of the Committee, cash and stock
dividends with respect to the restricted shares may be either currently paid or
withheld by the Company for the employee's account subject to the expiration or
termination of the Restricted Period and the satisfaction of any other
conditions prescribed by the Committee, and interest may be paid on the amount
of cash dividends withheld at a rate and subject to such terms as determined by
the Committee. Upon the forfeiture of any restricted shares, such forfeited
restricted shares and any cash or stock dividends withheld for the employee's
account shall be transferred to the Company without further action by the
employee. The employee shall have the same rights and privileges, and be subject
to the same restrictions, with respect to any shares received pursuant to
paragraph 14.
(c) Upon the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Committee or at such
earlier time as provided for in paragraph 12, the restrictions applicable to the
restricted shares shall lapse and a stock certificate for the number of shares
of Common Stock with respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions, except any that may be imposed by law,
to the employee or the employee's beneficiary or estate, as the case may be. The
Company shall not be required to deliver any fractional share of Common Stock
but will pay, in lieu thereof, the fair market value (determined as of the date
the restrictions lapse) of such fractional share to the employee or the
employee's beneficiary or estate, as the case may be. No payment will be
required from the employee upon the issuance or delivery of any restricted
shares, except that any amount necessary to satisfy applicable federal, state or
local tax requirements shall be withheld or paid promptly upon notification of
the amount due and prior to or concurrently with the issuance or delivery of a
certificate representing such shares. The Committee may permit such amount to be
paid in (i) shares of Common Stock previously owned by the employee, (ii) a
portion of the shares of Common Stock that otherwise would be distributed to
such employee upon the lapse of the restrictions applicable to the restricted
shares, or (iii) a combination of cash and shares of such Common Stock;
provided, however, unless otherwise approved by the Committee, that an election
by an employee subject to Section 16(b) of the Exchange Act to use shares of
Common Stock described in clause (ii) above to satisfy any federal, state or
local tax requirement shall be made only during a Window Period (as defined in
paragraph 7(e) hereof), and provided further that the Committee shall have sole
discretion to consent to or disapprove of any such election (which consent or
disapproval may be given at any time after the election to which it relates).
(d) In the case of an award of restricted units, no shares of Common
Stock shall be issued at the time the award is made, and the Company shall not
be required to set aside a fund for the payment of any such award. At the
discretion of the Committee, cash and stock dividends with respect to the Common
Stock ("Dividend Equivalents") may be currently paid or withheld by the Company
for the employee's account subject to the expiration or termination of the
Restricted Period and the satisfaction of any other conditions prescribed by the
Committee, and interest may be paid on the amount of cash dividends withheld at
a rate and subject to such terms as determined by the Committee.
Upon the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Committee or at such
earlier time as provided for in paragraph 12, the Company shall deliver to the
employee or the employee's beneficiary or estate, as the case may be, one share
of Common
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Stock for each restricted unit with respect to which the restrictions have
lapsed ("vested unit"), and cash equal to any Dividend Equivalents credited with
respect to each such vested unit and any interest thereon; provided, however,
that the Committee may, in its sole discretion, elect to pay cash or part cash
and part Common Stock in lieu of delivering only Common Stock for vested units.
If a cash payment is made in lieu of delivering Common Stock, the amount of such
cash payment shall be equal to the Market Value for the date on which the
Restricted Period lapsed with respect to such vested unit, or if there are no
sales on such date, on the next preceding day on which there were sales. No
payment will be required from the employee upon the award of any restricted
units, the crediting or payment of any Dividend Equivalents, or the delivery of
Common Stock or the payment of cash in respect of vested units, except that any
amount necessary to satisfy applicable federal, state or local tax requirements
shall be withheld or paid promptly upon notification of the amount due. The
Committee may permit such amount to be paid in (i) shares of Common Stock
previously owned by the employee, (ii) a portion of the shares of Common Stock
that otherwise would be distributed to such employee in respect of vested units,
or (iii) a combination of cash and shares of such Common Stock; provided,
however, unless otherwise approved by the Committee, that an election by an
employee subject to Section 16(b) of the Exchange Act to use the shares of
Common Stock described in clause (ii) above to satisfy any federal, state or
local tax requirement shall be made only during a Window Period (as defined in
paragraph 7(e) hereof); and provided further that the Committee shall have sole
discretion to consent to or disapprove of any such election (which consent or
disapproval may be given at any time after the election to which it relates).
Upon the occurrence of an acceleration date (as defined in paragraph
7(a)), all outstanding vested units (including any restricted units whose
restrictions have lapsed as a result of the occurrence of such acceleration
date) and credited Dividend Equivalents shall be payable as soon as practicable
but in no event later than 90 days after such acceleration date in cash, in
shares of Common Stock, or part in cash and part in Common Stock, as the
Committee, in its sole discretion, shall determine. To the extent that an
employee receives cash in payment for his vested units, such employee shall
receive an amount equal to the product of (i) the number of vested units
credited to such employee's account for which such employee is receiving payment
in cash times (ii) the Multiplication Factor (as defined below). To the extent
that an employee receives Common Stock in payment for his vested units, such
employee shall receive the number of shares of Common Stock determined by
dividing (i) the product of (x) the number of vested units credited to such
employee's account for which such employee is receiving payment in Common Stock
times (z) the Multiplication Factor, by (ii) the fair market value per share of
the Common Stock as of the day preceding the payment date. "Multiplication
Factor" shall mean (i) in the event of the occurrence of an Offer as defined in
paragraph 7(a)(i), the Offer Price per Share as modified below, (ii) in the case
of an acquisition of Common Stock described in paragraph 7(a) (ii), the
Acquisition Price per Share as modified below, (iii) in the case of an event
described in paragraph 7(a)(iii), the Merger Price per Share as modified below,
or (iv) in the case of a change in the composition of the Board of Directors as
described in paragraph 7(a)(iv), the highest fair market value per share of the
Common Stock for any day during the applicable ninety-day period described
below. For purposes of the preceding sentence, (i) the applicable ninety-day
period described in paragraphs 9(c), (e) and (g) and in clause (iv) above shall
mean the ninety-day period ending on or within 89 days following an acceleration
date which the Committee, in its sole discretion, shall select and (ii) fair
market value per share of the Common Stock shall mean the Market Value.
(e) The restricted unit award agreement may permit an employee to
request that the payment of vested units (and Dividend Equivalents and the
interest thereon with respect to such vested units) be deferred beyond the
payment date specified in the agreement. The Committee shall, in its sole
discretion, determine whether to permit such deferment and to specify the terms
and conditions, which are not inconsistent with the 1996 Plan, to be contained
in the agreement. In the event of such deferment, the Committee may determine
that interest shall be credited annually on the Dividend Equivalents, at a rate
to be determined by the Committee. The Committee may also determine to compound
such interest.
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12. Termination of Employment
Unless otherwise determined by the Committee, and subject to such
restrictions as may be imposed by the Code in the case of any incentive stock
options, in the event that the employment of an employee to whom an option,
right or limited right has been granted under the 1996 Plan shall be terminated
(except as set forth in paragraph 13), such option, right or limited right may,
subject to the provisions of the 1996 Plan, be exercised (to the extent that the
employee was entitled to do so at the termination of his employment) at any time
within three months after such termination, or, in the case of an employee whose
termination results from retirement from active employment at or after age 55
within one year after such termination, but in no case later than the date on
which the option, right or limited right terminates; provided, however, that any
option, right or limited right held by an employee whose employment is
terminated for cause shall forthwith terminate, to the extent not theretofore
exercised.
Unless otherwise determined by the Committee, if an employee to whom
restricted shares or restricted units have been granted ceases to be an employee
of the Company or of a subsidiary prior to the end of the Restricted Period and
the satisfaction of any other conditions prescribed by the Committee for any
reason other than death or total disability (as defined in paragraph 13), the
employee shall immediately forfeit all restricted shares and restricted units.
Awards granted under the 1996 Plan shall not be affected by any change of duties
or position so long as the holder continues to be an employee of the Company or
any of its subsidiaries. Any option, right, limited right, restricted share or
restricted unit agreement, or any rules and regulations relating to the 1996
Plan, may contain such provisions as the Committee shall approve with reference
to the determination of the date employment terminates and the effect of leaves
of absence. Any such rules and regulations with reference to any option
agreement shall be consistent with the provisions of the Code and any applicable
rules and regulations thereunder. Nothing in the 1996 Plan or in any award
granted pursuant to the 1996 Plan shall confer upon any employee any right to
continue in the employ of the Company or any of its subsidiaries or interfere in
any way with the right of the Company or any such subsidiary to terminate such
employment at any time.
Notwithstanding anything else in the 1996 Plan to the contrary, if the
corporation employing an individual to whom an option, right, limited right,
restricted unit or restricted share has been granted under the 1996 Plan ceases
to be a subsidiary of the Company, then the Committee may provide that service
with such employer or its direct or indirect subsidiaries in any capacity
shall be considered employment with the Company for purposes of the 1996 Plan.
13. Death or Total Disability of Employee
If an employee to whom an option, right or limited right has been
granted under the 1996 Plan shall die or suffer a "total disability" while
employed by the Company or its subsidiaries or within three months (or, in the
case of an employee whose termination results from retirement from active
employment at or after age 55, within one year) after the termination of such
employment (other than termination for cause), such option, right or limited
right may be exercised, to the extent that the employee was entitled to do so at
the termination of employment (including by reason of death or total
disability), as set forth herein (subject to the restrictions set forth in
paragraphs 8 and 9 with respect to persons subject to Section 16(b) of the
Exchange Act) by the employee, the legal guardian of the employee (unless such
exercise would disqualify an option as an incentive stock option), a legatee or
legatees of the employee under the employee's last will, or by the employee's
personal representatives or distributees, whichever is applicable, at any time
within one year after
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the date of the employee's death or total disability, but in no case later than
the date on which the option, right or limited right terminates. For purposes
hereof, "total disability" is defined as the permanent inability of an employee,
as a result of accident or sickness, to perform any and every duty pertaining to
such employee's occupation or employment for which the employee is suited by
reason of the employee's previous training, education and experience.
14. Adjustment upon Changes in Capitalization, etc.
Notwithstanding any other provision of the 1996 Plan, the Committee may
at any time, in its sole discretion, make or provide for such adjustments to the
1996 Plan, to the number and class of shares available thereunder or to any
outstanding options, rights, restricted shares or restricted units as it may
deem appropriate to prevent dilution or enlargement of rights, including
adjustments in the event of distributions to holders of Common Stock other than
a normal cash dividend, changes in the outstanding Common Stock by reason of
stock dividends, split-ups, recapitalizations, mergers, consolidations,
combinations or exchanges of shares, separations, reorganizations, liquidations
and the like. In the event of any offer to holders of Common Stock generally
relating to the acquisition of their shares, the Committee may, in its sole
discretion, make any adjustment as it deems equitable in respect of outstanding
options, rights, limited rights and restricted units, including in the
Committee's discretion revision of outstanding options, rights, limited rights
and restricted units so that they may be exercisable for or payable in the
consideration payable in the acquisition transaction. Any such determination by
the Committee shall be conclusive. No adjustment shall be made in respect of an
incentive stock option if such adjustment would disqualify such option as an
incentive stock option under Section 422 of the Code and the Treasury
Regulations thereunder. No adjustment shall be made in the minimum number of
shares with respect to which an option may be exercised at any time. Any
fractional shares resulting from such adjustments to options, rights, limited
rights or restricted units shall be eliminated.
15. Effective Date
The 1996 Plan shall be effective as of July 30, 1996, (the "Effective
Date"), provided that the adoption of the 1996 Plan shall have been approved
by the stockholders of the Company. The Committee thereafter may, in its
discretion, grant awards under the 1996 Plan, the grant, exercise or payment
of which shall be expressly subject to the conditions that, to the extent
required at the time of grant, exercise or payment, (i) if the Company deems it
necessary or desirable, a Registration Statement under the Securities Act of
1933 with respect to such shares shall be effective, and (ii) any requisite
approval or consent of any governmental authority of any kind having
jurisdiction over awards granted under the 1996 Plan shall be obtained.
16. Termination and Amendment
The Board of Directors of the Company may suspend, terminate, modify or
amend the 1996 Plan, provided that any amendment that would increase the
aggregate number of shares that may be issued under the 1996 Plan, materially
increase the benefits accruing to participants under the 1996 Plan, or
materially modify the requirements as to eligibility for participation in the
1996 Plan shall be subject to the approval of the Company's stockholders to the
extent required by Rule 16b-3, applicable law or any other governing rules or
regulations, except that any such increase or modification that may result from
adjustments authorized by paragraph 14 does not require such approval. If the
1996 Plan is terminated, the terms of the 1996 Plan shall, notwithstanding such
termination, continue to apply to awards granted prior to such termination. In
addition, no suspension, termination, modification or amendment of the 1996 Plan
may, without the consent of the employee to whom an award shall theretofore have
been granted, adversely affect the rights of such employee under such award.
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17. Written Agreements
Each award of options, rights, limited rights, restricted shares or
restricted units shall be evidenced by a written agreement, executed by the
employee and the Company, which shall contain such restrictions, terms and
conditions as the Committee may require.
18. Effect on Other Stock Plans
The adoption of the 1996 Plan shall have no effect on awards made or to
be made pursuant to other stock plans covering employees of the Company or its
subsidiaries, or any predecessors or successors thereto.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer
to execute this Plan as of the 22 day of August, 1996.
TransAct Technologies Incorporated
By: BART C. SHULDMAN
Title: Chief Executive Officer
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