Exhibit 10.2
PALADYNE CORP.
1999 STOCK OPTION PLAN
1 Purpose. This 1999 Stock Option Plan (the "Plan")
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of Paladyne Corp., a Delaware corporation (the "Company"), is
intended to provide incentives: (i) to certain directors,
officers, employees and other persons who perform services for or
on behalf of the Company and any subsidiaries of the Company
(collectively, the "Subsidiaries") by providing them with
opportunities to purchase capital stock in the Company pursuant
to options granted hereunder which qualify as "incentive stock
options" under Section 422(b) of the Internal Revenue Code of
1986, as amended (the "Code") ("ISO" or "ISOs") or which do not
qualify as ISOs ("Non-Qualified Option" or "Non-Qualified
Options"); and (ii) to individuals who are directors but not also
employees of the Company and the Subsidiaries ("Non-Employee
Directors"), and to individuals who are members of the Advisory
Board or an independent contractor, or consultant to the Company
or its Subsidiaries, by providing them with opportunities to
purchase capital stock in the Company pursuant to Non-Qualified
Options. Both ISOs and Non-Qualified Options are referred to
hereinafter individually as an "Option" and collectively as
"Options," and persons to whom Options are granted are referred
to hereinafter individually as an "Optionee" and collectively as
"Optionees." As used herein, the term "Subsidiary" means
"subsidiary corporation" as that term is defined in Section
424(f) of the Code.
2 Administration of the Plan. The Plan shall be
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administered by a Committee of the Board of Directors of the
Company (the "Committee"), each member of which shall be a "Non-
Employee Director" within the meaning of Rule 16b-3 or any
successor provision ("Rule 16b-3") under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). The Committee
shall consist of two or more members. Subject to the terms of
the Plan, the Committee shall have the authority to (i) determine
the employees of the Company and Subsidiaries (from among the
class of employees eligible under Section 4 hereof to receive
ISOs) to whom ISOs may be granted; (ii) determine the person and
the number of shares which may be issued under each Option; (iii)
determine the time or times at which Options may be granted; (iv)
determine the exercise price of shares subject to each Option,
which price shall not be less than the fair market value as
specified in Section 6; (v) determine (subject to Sections 7 and
9) the time or times when each Option shall become exercisable
and the duration of the exercise period; (vi) determine whether
restrictions are to be imposed on shares subject to Options and
the nature of such restrictions, if any, and (vii) interpret the
Plan and prescribe and rescind rules and regulations relating to
it. If the Committee determines to issue a Non-Qualified Option,
it shall take whatever actions it deems necessary, under Section
422 of the Code and the regulations promulgated thereunder, to
ensure that such Option is not treated as an ISO. The
interpretation and construction by the Committee of any
provisions of the Plan or of any Option granted under it shall be
final. The Committee may from time to time adopt such rules and
regulations for carrying out the Plan as it may deem best. No
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member of the Committee or of the Board of Directors of the
Company shall be liable for any action or determination made in
good faith with respect to the Plan or any Option granted under
it.
3 Stock. The stock delivered under this Plan shall
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be the Company's Common Stock, par value $.001 per share (the
"Common Stock"), either authorized and unissued, treasury stock
or shares purchased on the open market. The aggregate number of
shares which may be issued pursuant to the Plan is 2,500,000,
subject to adjustment as provided in Section 13. If any Option
granted under the Plan shall expire or terminate for any reason
without having been exercised in full or shall cease for any
reason to be exercisable in whole or in part, the unpurchased
shares subject to such Option shall again be available for grants
of Options under the Plan.
4 Eligible Employees and Others. ISOs and Non-
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Qualified Options may be granted to individuals who are employees
of the Company and its Subsidiaries, including officers and
directors who are also employees at the time the Option is
granted. Non-Qualified Options may be granted to Non-Employee
Directors and independent contractors and consultants to the
Company and its Subsidiaries, affiliates or any entity in which
the Company has an interest, or who are deemed by the Committee
to be in a position to perform such services in the future.
Granting of any Option to any person shall neither entitle that
person to, nor disqualify him from, participation in any other
Option grant.
5 Term of Plan; Granting of Options. The term of
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the Plan will commence on the date of adoption of the Plan by the
Company's Board of Directors, subject to approval by stockholders
within one year of adoption, and terminate on the day immediately
preceding the tenth anniversary of said adoption, except as to
Options outstanding on that date and subject to earlier
termination as provided in Sections 9 and 10 hereof. Options may
be granted under the Plan at any time during the term of the
Plan. The date of grant of an Option under the Plan shall be the
date specified by the Committee at the time it grants the Option;
provided, however, that such date shall not be prior to the date
on which the Committee acts to approve the grant. No Option shall
be granted pursuant to the Plan after January 18, 2009.
6 Minimum Exercise Price; ISO Limitations.
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6.1 Price for Non-Qualified Options. The
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exercise price per share for each Non-Qualified Option granted under
the Plan shall not be less than the fair market value of the Common
Stock on the date of grant of the Option, and in no event shall
be less than the minimum legal consideration required therefor
under the laws of the State of Delaware or the laws of any
jurisdiction in which the Company or its successors in interest
may be organized.
6.2 Price for ISOs. The exercise price per share
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for each ISO granted under the Plan shall not be less than the
fair market value per share of Common Stock on the date of such
grant. In the case of an ISO to be granted to an employee owning
stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or
any Subsidiary (a "10% Employee"), the price per share for such
ISO shall not be less than one hundred ten percent (110%) of the
fair market value per share of Common Stock on the date of grant.
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For purposes of determining stock ownership under this Section,
the rules of Section 424(d) of the Code shall apply.
6.3 $100,000 Annual Limitation on ISO Vesting.
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To the extent that, in the aggregate under this Plan and all
incentive stock option plans of the Company and any Subsidiary,
ISOs become exercisable for the first time by an employee during
any calendar year with respect to stock having a fair market
value (determined at the time the ISOs were granted) in excess of
$100,000, such excess amount of stock shall be deemed to have
been granted as a Non-Qualified Option, and not as an ISO.
6.4 Determination of Fair Market Value. If at
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the time an Option is granted under the Plan, the Company's Common
Stock is publicly traded, "fair market value" shall be determined
as of the last business day for which the prices or quotes
discussed in this sentence are available prior to the date such
Option is granted and shall be (i) the mean (on that date) of the
high and low prices of the Common Stock on the principal national
securities exchange on which the Common Stock is traded, if the
Common Stock is then traded on a national securities exchange;
(ii) the last reported sale price (on that date) of the Common
Stock on the NASDAQ National Market or Small Cap Market (or other
interdealer quotation system), if the Common Stock is not then
traded on a national securities exchange; or (iii) the closing
bid price (or average of bid prices) last quoted (on that date)
by the OTC Electronic Bulletin Board or other established
quotation service for over-the-counter securities, if the Common
Stock is not reported on the NASDAQ National Market or Small Cap
Market (or other interdealer quotation system). However, if the
Common Stock is not publicly traded at the time an Option is
granted under the Plan, the "fair market value" shall be deemed
to be the fair value of the Common Stock as determined by the
Committee in good faith after taking into consideration all
factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in
private transactions negotiated at arm's length.
7 Option Duration. Subject to earlier termination
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as provided in Sections 9 and 10, each Option shall expire on the
date specified by the Committee, but not more than (i) ten (10)
years from the date of grant in the case of Non-Qualified
Options, (ii) ten (10) years from the date of grant in the case of
ISOs generally, and (iii) five (5) years from the date of grant in
the case of ISOs granted to a 10% Employee, as determined under
Section 6.02. Subject to earlier termination as provided in
Sections 9 and 10, the term of each ISO shall be the term set
forth in the original instrument granting such ISO, except with
respect to any part of such ISO that is converted into a
Non-Qualified Option pursuant to Section 16.
8 Exercise of Option. Subject to the provisions of
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Sections 9 through 12, each Option granted under the Plan shall
be exercisable as follows:
8.1 Vesting. The Option shall either be fully
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exercisable on the date of grant or shall become exercisable
thereafter in such installments as the Committee may specify,
provided that an Option granted to a director or officer of the
Company may not vest earlier than six (6) months from the date of
grant.
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8.2 Full Vesting of Installments. Once an
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installment becomes exercisable it shall remain exercisable until
expiration or termination of the Option, unless otherwise
specified by the Committee.
8.3 Partial Exercise. Each Option or installment
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may be exercised at any time or from time to time, in whole or in
part, for up to the total number of shares with respect to which
it is then exercisable.
8.4 Acceleration of Vesting. The Committee shall
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have the right to accelerate the date of exercise of any
installment of any Option, provided that the Committee shall not,
without the consent of an Optionee, accelerate the exercise date
of any installment of any Option granted to any employee as an
ISO if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described
in Section 6.03.
9 Termination of Employment. If an Optionee ceases
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his employment with, or service by, the Company and all
Subsidiaries other than by reason of death or disability as
defined in Section 10 or by the Company or any Subsidiary for
cause, no further installments of his Options shall become
exercisable, and his Options shall terminate after the passage of
one (1) year from the date of termination of his employment or
service (or three (3) months as to ISOs), but in no event later
than on their specified expiration dates, during which period he
shall have the right to exercise any Options exercisable by him
on the date of termination of employment, subject to exercise for
such other periods as determined by the Committee at the time of
grant. Options held by an Optionee whose termination of
employment or service is for cause shall terminate upon such
termination. For purposes of this Section 9 only, employment or
service shall be considered as continuing uninterrupted during
any bona fide leave of absence (such as those attributable to
illness, military obligations or governmental service). A bona
fide leave of absence with the written approval of the Committee
shall not be considered an interruption of employment or service
under this Section 9, provided that such written approval
contractually obligates the Company or any Subsidiary to continue
the employment or service of the Optionee after the approved
period of absence. Options granted under the Plan shall not be
affected by any change of employment or service within or among
the Company and Subsidiaries, so long as the Optionee continues
to be an employee or independent contractor or advisor of the
Company or any Subsidiary. Nothing in the Plan shall be deemed
to give any Optionee the right to be retained in employment or
other service by the Company or any Subsidiary for any period of
time. The Committee may, in its sole discretion, change the
termination period for any Option from the period provided for in
this Section 9 or in Section 10 to a period less than the
respective periods specified herein.
10 Death; Disability.
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10.1 Death. If an Optionee ceases his employment
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with or service by the Company and all Subsidiaries by reason of
his death, any Option may be exercised, to the extent of the
number of shares with respect to which he could have exercised it
on the date of his death, by his estate, personal representative
or beneficiary who has acquired the Option by will or by the laws
of descent and distribution at any time within one (1) year from
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the date of the Optionee's death or such later date as fixed by
the Committee as to Non-Qualified Options, but in no event later
than on their specified expiration dates.
10.2 Disability. If an Optionee ceases his
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employment with or service by the Company and all Subsidiaries by
reason of his disability, he shall have the right to exercise any
Option held by him on the date of termination of employment, to
the extent of the number of shares with respect to which he could
have exercised it on that date, at any time prior to one (1) year
from the date of the termination of the Optionee's employment or
service or such later date as fixed by the Committee as to Non-
Qualified Options, but in no event later than on their specified
expiration dates. For the purposes of the Plan, the term
"disability" shall mean "permanent and total disability" as
defined in Section 22(e)(3) of the Code or successor statute.
11 Assignability. No Option shall be assignable or
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transferable by the Optionee except (i) by will or by the laws of
descent and distribution, (ii) pursuant to a qualified domestic
relations order or Title I of the Employee Retirement Income
Security Act or (iii) with respect to Non-Qualified Options, to a
spouse or lineal descendant or lineal ascendant of the Optionee.
12 Terms and Conditions of Options. Options shall be
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evidenced instruments (which need not be identical) in such forms
as the Committee may from time to time approve (the "Option
Agreements"). The Option Agreements shall conform to the terms
and conditions set forth in Sections 6 through 11 hereof and may
contain such other provisions as the Committee deems advisable
which are not inconsistent with the Plan, including restrictions
applicable to shares of Common Stock issuable upon the exercise
of Options. The Committee may from time to time confer authority
and responsibility on one or more of its own members and/or one
or more officers of the Company to execute and deliver the Option
Agreements. The proper officers of the Company are authorized
and directed to take any and all action necessary or advisable
from time to time to carry out the terms of the Option
Agreements.
13 Adjustments. Upon the occurrence of any of the
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following events, an Optionee's rights with respect to Options
granted to him hereunder shall be adjusted as hereinafter
provided, unless otherwise specifically provided in the written
agreement between the Optionee and the Company relating to such
Option:
13.1 Stock Dividends and Stock Splits. If the
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shares of Common Stock shall be subdivided or combined into a
smaller or greater number of shares or if the Company shall issue
any shares of Common Stock as a stock dividend on its outstanding
Common Stock, the number of shares of Common Stock deliverable
upon the exercise of Options shall be appropriately decreased or
increased proportionately, and appropriate adjustments shall be
made in the purchase price per share to reflect such subdivision,
combination or stock dividend.
13.2 Consolidations or Mergers. If the Company is
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to be consolidated with or acquired by another entity in a
merger, sale of all or substantially all of the Company's assets
or otherwise (an "Acquisition"), the Committee or the board of
directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board"), shall, as to outstanding
Options, either (i) make appropriate provision for the
continuation of such Options by substituting on an equitable
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basis for the shares then subject to such Options the
consideration payable with respect to the outstanding shares of
Common Stock in connection with the Acquisition; (ii) upon
written notice to the Optionees, provide that all Options must be
exercised, to the extent then exercisable, within a specified
number of days of the date of such notice, at the end of which
period the Options shall terminate; or (iii) terminate all
Options in exchange for a cash payment equal to the excess of the
fair market value of the shares subject to such Options (to the
extent then exercisable) over the exercise price thereof.
13.3 Recapitalization or Reorganization. In the
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event of a recapitalization or reorganization of the Company
(other than a transaction described in Section 13.02) pursuant to
which securities of the Company or of another corporation are
issued with respect to the outstanding shares of Common Stock, an
Optionee upon exercising an Option shall be entitled to receive
for the purchase price paid upon such exercise the securities he
would have received if he had exercised his Option prior to such
recapitalization or reorganization.
13.4 Change in Control. In the event of a change
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in control of the Company, all Options under the Plan which are not
fully vested shall vest 100% and shall be immediately
exercisable. For purposes of this Plan, a "change in control"
shall mean any of the following events: (a) the Company receives
a report on Schedule 13D filed with the Securities and Exchange
Commission pursuant to Section 13(d) of the Exchange Act disclosing
that any person, group, corporation or other entity is the beneficial
owner, directly or indirectly, of twenty percent (20%) or more of
the outstanding Common Stock of the Company; (b) any person (as
such term is defined in Section 13(d) of the Exchange Act),
group, corporation or other entity other than the Company or any
Subsidiary, purchases shares pursuant to a tender offer or
exchange offer to acquire any Common Stock of the Company for
cash, securities or any other consideration, provided that after
consummation of the offer, the person, group, corporation or
other entity in question is the beneficial owner (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of twenty percent (20%) or more of the outstanding
Common Stock of the Company (calculated as provided in paragraph
(d) of Rule 13d-3 under the Exchange Act in the case of rights to
acquire common stock); (c) the stockholders of the Company
approve (i) any consolidation or merger of the Company in which
the Company is not the continuing or surviving corporation or
pursuant to which shares of Common Stock would be converted into
cash, securities or other property, or (ii) any sale, lease,
exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets
of the Company; or (d) there shall have been a change in a
majority of the members of the Board of Directors of the Company
within a twenty-four (24) month period unless the election or
nomination for election by the Company's stockholders of each new
director was approved by the vote of two-thirds of the directors
then still in office who were in office at the beginning of the
twenty-four (24) month period.
13.5 Modification of ISOs. Notwithstanding the
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foregoing, any adjustments made pursuant to Section 13.01, 13.02,
13.03 or 13.04 with respect to ISOs shall be made only after the
Committee, after consulting with counsel for the Company,
determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in Section
424 of the Code) or would cause any adverse tax consequences for
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the holders of such ISOs. If the Committee determines that such
adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such
adjustments.
13.6 Dissolution or Liquidation. In the event of
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the proposed dissolution or liquidation of the Company, each
Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such
other conditions as shall be determined by the Committee.
13.7 Issuances of Securities. Except as expressly
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provided herein, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares subject to
Options. No adjustments shall be made for dividends paid in cash
or in property other than securities of the Company.
13.8 Fractional Shares. No fractional shares
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shall be issued under the Plan and the Optionee shall receive from
the Company cash in lieu of such fractional shares.
13.9 Adjustments. Upon the happening of any of
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the events described in Section 13.01, 13.02, 13.03 or 13.04 above,
the class and aggregate number of shares set forth in Section 3
hereof that are subject to Options which previously have been or
subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such
subparagraphs. The Committee or the Successor Board shall
determine the specific adjustments to be made under this Section
13 and, subject to Section 2 hereof, its determination shall be
conclusive.
14 Means of Exercising Options. An Option (or any
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installment or portion of an installment thereof) shall be
exercised by giving written notice to the Company at its
principal office address. The notice shall identify the Option
being exercised and specify the number of shares as to which such
Option is being exercised, accompanied by full payment of the
purchase price therefor either: (a) in United States dollars in
cash or by check; (b) at the discretion of the Committee, through
delivery of shares of Common Stock having a fair market value
equal as of the date of the exercise to the cash exercise price
of the Option; or (c) at the discretion of the Committee, by any
combination of (a) and (b) above. If the Committee exercises its
discretion to permit payment of the exercise price of an ISO by
means of the methods set forth in clauses (b) or (c) of the
preceding sentence, such discretion shall be exercised in writing
at the time of the grant of the Option in question. An Optionee
shall not have the rights of a stockholder with respect to the
shares covered by his Option until the date of issuance of a
stock certificate to him for such shares. Except as expressly
provided above in Section 13 with respect to changes in
capitalization and stock dividends, no adjustment shall be made
for dividends or similar rights for which the record date is
before the date such stock certificate is issued.
15 Termination or Amendment of Plan. The Board of
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Directors may terminate or amend the Plan in any respect at any
time; however, without the approval of the Company's stockholders
obtained within twelve (12) months before or after the Board of
Directors adopts a resolution authorizing any such termination or
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amendment, the Board of Directors may not so terminate or amend
the Plan if prior stockholder approval is then required by
Section 16(b) of the Exchange Act, applicable Delaware law or tax
law, or the rules of any applicable national securities exchange
or national stock quotation system on which the Common Stock may
then be listed or traded. Except as otherwise provided in this
Section 15, in no event may action of the Board of Directors or
stockholders alter or impair the rights of an Optionee, without
his consent, under any Option previously granted to him.
16 Notice to Company of Disqualifying Disposition.
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By accepting an ISO granted under the Plan, each Optionee agrees to
notify the Company in writing immediately after making a
Disqualifying Disposition, as described in Sections 421, 422 and
424 of the Code and regulations thereunder, of any stock acquired
under the Plan (or stock received in a transaction described in
Section 424(b) or 424(c)(1)(B) of the Code, relating to
distributions of stock with respect to stock acquired under the
Plan and certain tax-free exchanges of stock acquired under the
Plan for other stock or securities). A Disqualifying Disposition
(with certain exceptions) is generally any disposition within two
(2) years of the date the ISO was granted or within one (1) year
of the date the ISO was exercised, whichever period ends later.
With respect to stock held jointly with right of survivorship, a
termination of such joint tenancy may constitute a Disqualifying
Disposition. This Section 16 shall be made binding upon the
Optionee and upon any transferee of stock described in this
Section to whom Section 424(c)(4)(B) of the Code applies.
17 Withholding of Additional Income Taxes. Upon the
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exercise of a Non-Qualified Option or the making of a
Disqualifying Disposition (as defined in Section 16), the Company
may withhold taxes in respect of amounts that constitute
compensation includible in gross income, whenever the Company
determines that such withholding is required. The Committee in
its discretion may condition the exercise of an Option on the
Optionee's making satisfactory arrangement for such withholding.
In addition to tax withholding, government regulations may impose
reporting or other obligations on the Company with respect to the
Plan. For example, the Company may be required to send tax
information statements to employees and former employees that
exercise ISOs.
18 Governing Law, Construction. The validity and
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construction of the Plan and the agreements evidencing Options
shall be governed by the laws of the State of Delaware, or the
laws of any jurisdiction in which the Company or its successors
in interest may be organized. In construing this Plan, the
singular shall include the plural and the masculine gender shall
include the feminine and neuter, unless the context otherwise
requires.
Adopted by the Board of Directors
and Stockholders as of January 19, 1999
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