1
EXHIBIT 10.23
DOLPHIN INFORMATION SERVICES, INC.
1998 STOCK OPTION PLAN
Dolphin Information Services, Inc., a Delaware corporation (the
"Company"), sets forth herein the terms of its 1998 Stock Option Plan (the
"Plan") as follows:
ARTICLE I
PURPOSE OF PLAN
The Plan is intended to enhance the Company's ability to attract and
retain highly qualified officers, key employees and Outside Directors (as
defined herein), and to motivate such officers, key employees and Outside
Directors to serve the Company, ORBCOMM Global, L.P. and their respective
affiliates (as defined herein) and to expend maximum effort to improve the
business results and earnings of the Company, by providing to such officers, key
employees and Outside Directors an opportunity to acquire or increase a direct
proprietary interest in the operations and future success of the Company. To
this end, the Plan provides for the grant of stock options in accordance with
the terms hereof. Stock options granted under the Plan may be non-qualified
stock options or incentive stock options, as provided herein, except that stock
options granted to Outside Directors shall in all cases be non-qualified stock
options.
ARTICLE II
DEFINITIONS
For purposes of interpreting the Plan and related documents
(including Option Agreements), the following definitions shall apply:
2.01 Affiliate. The term "affiliate" of, or "affiliated" with, a person
shall mean any company or other trade or business that controls, is controlled
by or is under common control with such person within the meaning of Rule 405 of
Regulation C under the Securities Act, including a "Subsidiary" (as defined
herein).
2.02 Benefit Arrangement. The term "Benefit Arrangement" shall have the
meaning set forth in Article 12 hereof.
2.03 Board. The term "Board" shall mean the Board of Directors of the
Company.
2.04 Code. The term "Code" shall mean the Internal Revenue Code of 1986,
as now in effect or as hereafter amended.
1
2
2.05 Committee. The term "Committee" shall mean a committee of, and
designated from time to time by resolution of, the Board, which shall consist of
no fewer than two members of the Board.
2.06 Company. The term "Company" shall mean Dolphin Information Services,
Inc., a Delaware corporation.
2.07 Effective Date. The term "Effective Date" shall mean the date on
which the Plan is approved by the sole stockholder of the Company.
2.08 Exchange Act. The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as now in effect or as hereafter amended.
2.09 Fair Market Value. The term "Fair Market Value" shall mean the value
of a share of Stock, determined as follows: if on the Grant Date or other
determination date the shares of Stock are listed on an established national or
regional stock exchange, are admitted to quotation on the Nasdaq National
Market, or are publicly traded on an established securities market, the Fair
Market Value of a share shall be the closing price of the shares of Stock on
such exchange or in such market (the highest such closing price if there is more
than one such exchange or market) on the trading day prior to the Grant Date or
such other determination date (or if there is no such reported closing price,
the Fair Market Value shall be the mean between the highest bid and lowest asked
prices or between the high and low sale prices on such trading day) or, if no
sale of shares of Stock are reported for such trading day, on the next preceding
day on which any sale shall have been reported. If the shares of Stock are not
listed on such an exchange, quoted on such system or traded on such a market,
Fair Market Value shall be the value of the shares of Stock as determined by the
Board in good faith, which determination shall be final, conclusive and binding;
provided that, any time when at least a majority of the voting power of the
Company's capital stock is beneficially owned by ORBCOMM Global, L.P., any such
determination of Fair Market Value shall only be effective upon the approval of
the designated representatives of the General Partners of ORBCOMM Global, L.P.
2.10 Grant. The term "Grant" shall mean an award of an Option under the
Plan.
2.11 Grant Date. The term "Grant Date" shall mean, as determined by the
Board or authorized Committee (a) the date as of which the Board or such
Committee approves a Grant or (b) the date on which the recipient of a Grant
first becomes eligible to receive a Grant under Article 6 hereof.
2.12 Incentive Stock Option. The term "Incentive Stock Option" shall mean
an "incentive stock option" within the meaning of Section 422 of the Code, or
the corresponding provision of any subsequently enacted tax statute, as amended
from time to time.
2.13 Option. The term "Option" shall mean an option to purchase one or
more shares of Stock pursuant to the Plan.
2
3
2.14 Option Agreement. The term "Option Agreement" shall mean the written
agreement between the Company and an Optionee that evidences and sets forth the
terms and conditions of a Grant.
2.15 Optionee. The term "Optionee" shall mean a person who receives or
holds an Option under the Plan.
2.16 Option Period. The term "Option Period" shall have the meaning set
forth in Section 10.01 hereof.
2.17 Option Price. The term "Option Price" shall mean the purchase price
for each share of Stock subject to an Option.
2.18 Other Agreement. The term "Other Agreement" shall have the meaning
set forth in Section 12 hereof.
2.19 Outside Director. The term "Outside Director" shall mean a member of
the Board who is not an officer or employee of the Company.
2.20 Plan. The term "Plan" shall mean this Dolphin Information Services,
Inc. 1998 Stock Option Plan.
2.21 Reporting Person. The term "Reporting Person" shall mean a person
who is required to file reports under Section 16(a) of the Exchange Act.
2.22 Securities Act. The term "Securities Act" shall mean the Securities
Act of 1933, as now in effect or as hereafter amended.
2.23 Stock. The term "Stock" shall mean the common stock, par value $.001
per share, of the Company.
2.24 Subsidiary. The term "Subsidiary" shall mean any "subsidiary
corporation" of the Company within the meaning of Section 424(f) of the Code.
2.25 Termination Date. The term "Termination Date" shall have the meaning
set forth in Section 10.02 hereof.
ARTICLE III
ADMINISTRATION OF PLAN
3.01 Administration by Board. The Board shall have such powers and
authorities related to the administration of the Plan as are consistent with the
Company's Certificate of Incorporation, Bylaws and applicable law. The Board
shall have full power and authority to take all actions and to make all
determinations required or provided for under the Plan, any Grant or
3
4
any Option Agreement, and shall have full power and authority to take all such
other actions and make all such other determinations not inconsistent with the
specific terms and provisions of the Plan that the Board deems to be necessary,
appropriate or desirable to the administration of the Plan, any Grant or any
Option Agreement. All such actions and determinations shall be by the
affirmative vote of a majority of the members of the Board present at a meeting
or by unanimous consent of the Board executed in writing in accordance with the
Company's Certificate of Incorporation, Bylaws and applicable law. The
interpretation and construction by the Board of any provision of the Plan, any
Grant or any Option Agreement shall be final, binding and conclusive. At any
time when at least a majority of the voting power of the Company's capital stock
is beneficially owned by ORBCOMM Global, L.P., prior to the Grant of any Option
and each other action taken with respect to the Plan, the Board shall consult
with the designated representatives of the General Partners of ORBCOMM Global,
L.P. (except to the extent otherwise authorized by such representatives) with
respect to such intended Grant or other action.
3.02 Administration by Committee. The Board from time to time may
delegate to a Committee such powers and authorities related to the
administration and implementation of the Plan, as set forth in Section 3.01
hereof and in other applicable provisions, as the Board shall determine,
consistent with the Company's Certificate of Incorporation, Bylaws and
applicable law. In the event that the Plan, any Grant or any Option Agreement
entered into hereunder provides for any action to be taken by or determination
to be made by the Board, such action may be taken by or such determination may
be made by the Committee if the power and authority to do so has been delegated
to the Committee by the Board as provided for in this Section. Unless otherwise
expressly determined by the Board, any such action or determination by the
Committee shall be final, binding and conclusive.
3.03 Grants. Subject to the other terms and conditions of the Plan, the
Board shall have full and final authority to (a) designate Optionees, (b)
determine the type or types of Grants to be made to an Optionee, (c) determine
the number of shares of Stock to be subject to a Grant, (d) establish the terms
and conditions of each Grant (including, but not limited to, the Option Price of
any Option, the nature and duration of any restriction or condition (or
provision for lapse thereof) relating to the vesting, exercise, transfer or
forfeiture of a Grant or the shares of Stock subject thereto, and any terms or
conditions that may be necessary to qualify Options as Incentive Stock Options),
(e) prescribe the form of each Option Agreement evidencing a Grant, (f) make
Grants alone, in addition to, in tandem with, or in substitution or exchange for
any other Grant or any other award granted under another plan of the Company or
an affiliate of the Company, and (g) amend, modify, or supplement the terms of
any outstanding Grant. The Company may retain the right in an Option Agreement
to cause a forfeiture of any rights of an Optionee pursuant to a Grant
(including, but not limited to, the gain realized by an Optionee) on account of
the Optionee taking actions in "competition with the Company," as defined in the
applicable Option Agreement. Furthermore, the Company may annul a Grant if the
Optionee is an employee of the Company or an affiliate and is terminated "for
cause" as defined in the applicable Option Agreement. The Board's authority
hereunder specifically includes the authority, to effectuate the purposes of the
Plan but without amending the Plan, to modify Grants to eligible individuals who
are foreign nationals or are individuals who are employed outside the United
States to recognize differences in local law, tax policy or custom. The terms
and conditions imposed by the Board
4
5
with respect to the vesting, exercise or forfeiture of a Grant may, without
limitation, include performance-based conditions relating to the trading price
of shares of Stock, market share, sales, revenue growth, cost reduction,
earnings per Share and return on equity. As a condition to any subsequent Grant,
the Board shall have the right, at its discretion, to require Optionees to
return to the Company Grants previously awarded under the Plan. Subject to the
terms and conditions of the Plan, any such new Grant shall be upon such terms
and conditions as are specified by the Board at the time the new Grant is made.
3.04 No Liability. No member of the Board or of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any Grant or Option Agreement.
3.05 Applicability of Rule 16b-3. Those provisions of the Plan that make
express reference to Rule 16b-3 under the Exchange Act shall apply only to
Reporting Persons and shall be effective only from and after the date the
Company has a class of equity security registered under Section 12 of the
Exchange Act.
ARTICLE IV
NUMBER OF SHARES AVAILABLE FOR GRANT
4.01 Aggregate Limitation. Subject to adjustment as provided in Section
15.01 hereof, the aggregate number of shares of Stock available for issuance
under the Plan pursuant to Options (including Incentive Stock Options) shall be
3,000,000. Shares of Stock issued or to be issued under the Plan shall be
authorized but unissued shares. If any shares covered by a Grant are not
purchased or are forfeited, or if a Grant otherwise terminates without delivery
of any shares of Stock subject thereto, then the number of shares of Stock
counted against the aggregate number of shares available under the Plan with
respect to such Grant shall, to the extent of any such forfeiture or
termination, again be available for making Grants under the Plan.
4.02 Per-Optionee Limitation. The initial Grant of Options to any person
eligible for a Grant under Section 6.01 hereof may not be exercisable for
greater than 360,000 shares of Stock (subject to adjustment as provided in
Section 15.03 hereof). Except for the initial Grant, no person eligible for a
Grant under Section 6.02 hereof may be awarded Options in any calendar year
exercisable for greater than 100,000 shares of Stock (subject to adjustment as
provided in Section 15.03 hereof). If the initial Grant is of Options
exercisable for 100,000 shares of Stock or more, no additional Grants may be
made in the same calendar year to the same Optionee. If the initial Grant is of
Options exercisable for fewer than 100,000 shares of Stock, additional Grants
may be made in the same calendar year to the same Optionee so long as Options to
acquire no more than an aggregate of 100,000 shares of Stock are granted to such
Optionee in such year.
5
6
ARTICLE V
TERM OF PLAN
The Plan shall be effective as of the Effective Date. The Plan has no
termination date; however, no Incentive Stock Option may be granted under the
Plan on or after October 9, 2008.
ARTICLE VI
PERMISSIBLE GRANTEES
6.01 Company and Affiliate Employees. Subject to the provisions of
Article 7, Grants may be made under the Plan to any employee of the Company,
ORBCOMM Global, L.P. or any of their respective affiliates, including any such
employee who is an officer or director of the Company, ORBCOMM Global, L.P. or
any of their respective affiliates, and any Outside Director of the Company,
ORBCOMM Global, L.P. or any of their respective affiliates.
6.02 Successive Grants. An eligible person may receive more than one
Grant, subject to such restrictions as are provided herein.
ARTICLE VII
LIMITATIONS ON GRANTS OF INCENTIVE STOCK OPTIONS
An Option shall constitute an Incentive Stock Option only (a) if the
Optionee of such Option is an employee of the Company or any Subsidiary of the
Company; (b) to the extent specifically provided in the related Option
Agreement; and (c) to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of Stock with
respect to which all Incentive Stock Options held by such Optionee become
exercisable for the first time during any calendar year (under the Plan and all
other plans of the Optionee's employer and its affiliates) does not exceed
$100,000. This limitation shall be applied by taking Options into account in the
order in which they were granted.
ARTICLE VIII
OPTION AGREEMENT
Each Grant pursuant to the Plan shall be evidenced by an Option
Agreement, in such form or forms as the Board shall from time to time determine.
Option Agreements evidencing Grants made from time to time or at the same time
need not contain similar provisions but shall be consistent with the terms of
the Plan. Each Option Agreement evidencing a Grant shall specify whether such
Options are intended to be non-qualified stock options or Incentive Stock
Options, and in the absence of such specification such options shall be deemed
non-qualified stock options.
6
7
ARTICLE IX
OPTION PRICE
The Option Price of each Option shall be fixed by the Board and stated in
the Option Agreement evidencing such Option. The Option Price of an Incentive
Stock Option shall be the Fair Market Value of a share of Stock on the Grant
Date; provided, however, that in the event that an Optionee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b)(6) and 424(d) of the Code (relating to ownership of more than
ten percent (10%) of the Company's outstanding shares of Stock), the Option
Price of an Option granted to such Optionee that is intended to be an Incentive
Stock Option shall be not less than one hundred and ten percent (110%) of the
Fair Market Value of a share of Stock on the Grant Date. In no case shall the
Option Price of any Option be less than eighty-five percent (85%) of the Fair
Market Value of a share of Stock on the Grant Date.
ARTICLE X
VESTING, TERM AND EXERCISE OF OPTIONS
10.01 Vesting and Option Period. Subject to Section 10.02 and Section
15.01 hereof, each Option granted under the Plan shall become exercisable at
such times and under such conditions as shall be determined by the Board and
stated in the applicable Option Agreement. For purposes of this Section 10.01,
fractional numbers of shares of Stock subject to an Option shall be rounded down
to the next nearest whole number. The period during which any Option shall be
exercisable shall constitute the "Option Period" with respect to such Option.
10.02 Term. Each Option granted under the Plan shall terminate, and all
rights to exercise options and purchase shares of Stock thereunder shall cease,
upon the expiration of ten years from the Grant Date, or under such
circumstances and on such date prior thereto as is set forth in the Plan or as
may be fixed by the Board and stated in the Option Agreement relating to such
Option (the "Termination Date"); provided, however, that in the event that the
Optionee would otherwise be ineligible to receive an Incentive Stock Option by
reason of the provisions of Sections 422(b)(6) and 424(d) of the Code (relating
to ownership of more than ten percent (10%) of the outstanding shares of Stock),
an Option granted to such Optionee that is intended to be an Incentive Stock
Option shall not be exercisable after the expiration of five years from its
Grant Date.
10.03 Acceleration. Any limitation on the exercise of an Option contained
in any Option Agreement may be rescinded, modified or waived by the Board, in
its sole discretion, at any time and from time to time after the Grant Date of
such Option, so as to accelerate the vesting for such Option.
10.04 Termination of Employment or Other Relationship for a Reason Other
than Death or Disability. Upon the termination of an Optionee's employment or
other relationship with the Company, ORBCOMM Global, L.P. or any of their
respective affiliates, other than by reason of
7
8
death or "permanent and total disability" (within the meaning of Section
22(e)(3) of the Code), any Option or portion thereof held by such Optionee that
has not vested as of such date in accordance with the provisions of Section
10.01 hereof shall terminate immediately. With respect to any Option or portion
thereof that has vested as of such date in accordance with the provisions of
Section 10.01 hereof but has not been exercised, such Optionee shall have the
right to exercise any such vested Option at any time within the earlier of (a)
the close of business on the day that is three months following the Optionee's
termination of employment or other relationship (or, if such day is a Saturday,
Sunday or holiday, at the close of business on the next preceding day that is
not a Saturday, Sunday or holiday) (or, in the case of an Option that is not an
Incentive Stock Option, such longer period as the Board, in its discretion, may
determine prior to the expiration of such three month period) and (b) the
termination of the Option pursuant to Section 10.02 above. Upon termination of
an Option or portion thereof, the Optionee shall have no further right to
purchase shares of Stock pursuant to such Option or portion thereof. Whether a
leave of absence or leave on military or government service shall constitute a
termination of employment or other relationship for purposes of the Plan shall
be determined by the Board, which determination shall be final, binding and
conclusive. For purposes of the Plan, a termination of employment, service or
other relationship shall not be deemed to occur if the Optionee is immediately
thereafter employed with or an officer of the Company, ORBCOMM Global, L.P. or
any of their respective affiliates, or is engaged as an Outside Director of the
Company, ORBCOMM Global, L.P. or any of their respective affiliates. Whether a
termination of an Optionee's employment or other relationship with the Company,
ORBCOMM Global, L.P. or any of their respective affiliates shall have occurred
shall be determined by the Board, which determination shall be final, binding
and conclusive.
10.05 Rights in the Event of Death. If an Optionee dies while employed by
or providing services to the Company, ORBCOMM Global, L.P. or any of their
respective affiliates, any Option or portion thereof held by such Optionee that
has not vested as of the date of such Optionee's death in accordance with the
provisions of Section 10.01 hereof shall terminate immediately. With respect to
any Option or portion thereof that has vested as of such date in accordance with
the provisions of Section 10.01 hereof but has not been exercised, the executors
or administrators or legatees or distributees of such Optionee's estate shall
have the right to exercise any such Option at any time within the earlier of (a)
one year after the date of such Optionee's death (or such longer period as the
Board, in its discretion, may determine prior to the expiration of such one-year
period) and (b) the termination of the Option pursuant to Section 10.02 above.
Upon termination of an Option or portion thereof, the executors or
administrators or legatees or distributees of such Optionee's estate shall have
no further right to purchase shares of Stock pursuant to such Option or portion
thereof.
10.06 Rights in the Event of Disability. If an Optionee's employment or
other relationship with the Company, ORBCOMM Global, L.P. or any of their
respective affiliates is terminated by reason of the "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code) of such
Optionee, any Option or portion thereof held by such Optionee that has not
vested as of the date of such "permanent and total disability" in accordance
with the provisions of Section 10.01 hereof shall terminate immediately. With
respect to any Option or portion thereof that has vested as of such date in
accordance with the provisions of Section 10.01
8
9
hereof but has not been exercised, such Optionee shall have the right to
exercise any such Option at any time within the earlier of (a) one year after
such termination of employment or service (or, in the case of an Option that is
not an Incentive Stock Option, such longer period as the Board, in its
discretion, may determine prior to the expiration of such one-year period) and
(b) termination of the Option pursuant to Section 10.02 above. Whether a
termination of employment or service by reason of "permanent and total
disability" shall have occurred shall be determined by the Board, which
determination shall be final, binding and conclusive. Upon termination of an
Option or portion thereof, Optionee shall have no further right to purchase
shares of Stock pursuant to such Option or portion thereof.
10.07 Limitations on Exercise of Option. Notwithstanding any other
provision of the Plan, in no event may any Option be exercised, in whole or in
part, prior to the Effective Date, after ten years following the Grant Date for
such Option, or after the occurrence of an event referred to in Section 15.02
hereof that results in termination of the Option.
10.08 Method of Exercise. An Option that is exercisable may be exercised
by the Optionee's delivery to the Company of written notice of exercise on any
business day, at the Company's principal office, addressed to the attention of
the Secretary of the Company. Such notice shall specify the number of shares of
Stock with respect to which the Option is being exercised and shall be
accompanied by payment in full of the Option Price of the shares of Stock for
which the Option is being exercised. Payment of the Option Price for the shares
purchased pursuant to the exercise of an Option shall be made (a) in cash or in
cash equivalents; (b) to the extent permitted by law and at the discretion of
the Company, through the tender to the Company of shares of Stock, which shares,
if acquired from the Company, shall have been held for at least six months and
which shall be valued, for purposes of determining the extent to which the
Option Price has been paid thereby, at their Fair Market Value on the date of
exercise of the Option; or (c) by combination of the methods described in (a)
and (b). The Board may provide, by inclusion of appropriate language in an
Option Agreement, that payment in full of the Option Price need not accompany
the written notice of exercise provided that the notice is accompanied by
delivery of an unconditional and irrevocable undertaking by a licensed broker
acceptable to the Company as the agent for the individual exercising the Option
to deliver promptly to the Company sufficient funds to pay the Option Price and
directs that the certificate or certificates for the shares of Stock for which
the Option is exercised be delivered to a licensed broker acceptable to the
Company as the agent for the individual exercising the Option and, at the time
such certificate or certificates are delivered, the broker tenders to the
Company cash (or cash equivalents acceptable to the Company) equal to the Option
Price for the shares of Stock purchased pursuant to the exercise of the Option
plus the amount (if any) of federal and/or other taxes that the Company may in
its judgment, be required to withhold with respect to the exercise of the
Option. An attempt to exercise any Option granted hereunder other than as set
forth above shall be invalid and of no force and effect.
10.09 Rights as a Stockholder. Unless otherwise stated in the applicable
Option Agreement, an individual holding or exercising an Option shall have none
of the rights of a stockholder (for example, the right to receive cash or
dividend payments or distributions attributable to the subject shares of Stock
or to direct the voting of the subject shares of Stock)
9
10
until the shares of Stock covered thereby are fully paid and issued to such
individual. Except as provided in Article 15 hereof, no adjustment shall be made
for dividends, distributions or other rights for which the record date is prior
to the date of such issuance.
10.10 Delivery of Stock Certificates. Promptly after the exercise of an
Option by an Optionee and the payment in full of the Option Price, such Optionee
shall be entitled to the issuance of a Stock certificate or certificates
evidencing his or her ownership of the shares of Stock subject to the Option.
ARTICLE XI
TRANSFERABILITY OF OPTIONS
11.01 Nontransferability of Options. During the lifetime of an Optionee,
only the Optionee (or, in the event of legal incapacity or incompetence, the
Optionee's guardian or legal representative) may exercise an Option. No Option
shall be assignable or transferable by the Optionee to whom it is granted, other
than by will or the laws of descent and distribution.
11.02 Nontransferability of Shares. An Optionee (or such other individual
who is entitled to exercise an Option) shall not sell, pledge, assign, gift,
transfer, or otherwise dispose of any shares of Stock acquired pursuant to an
Option to any person or entity without first offering such shares to the Company
for purchase on the same terms and conditions as those offered the proposed
transferee. The Company may assign its right of first refusal under this Section
11.02 in whole or in part, to (a) any holder of stock or other securities of the
Company (a "Securityholder"), (b) any of its or ORBCOMM Global, L.P.'s
affiliates or (c) any other person or entity that the Board determines in its
sole discretion has a sufficient relationship with or interest in the Company.
The Company shall give reasonable written notice to the Optionee of any such
assignment of its rights. The restrictions of this Section 11.02 re-apply to any
person to whom Stock that was originally acquired pursuant to an Option is sold,
pledged, assigned, bequeathed, gifted, transferred or otherwise disposed of,
without regard to the number of such subsequent transferees or the manner in
which they acquire the Stock, but the restrictions of this Section 11.02 do not
apply to a transfer of Stock that occurs as a result of the death of the
Optionee or of any subsequent transferee (but shall apply to the executor, the
administrator or personal representative, the estate, and the legatees,
beneficiaries and assigns thereof).
11.03 Company Repurchase Rights.
(a) Upon the termination of an Optionee's employment or other
relationship with the Company, ORBCOMM Global, L.P. or any of their respective
affiliates (whether as an employee or a director of the Company, ORBCOMM Global,
L.P. or any of their respective affiliates, or otherwise), the Company shall
have the right, for a period of up to 180 days following such termination, to
repurchase any or all of the shares of Stock acquired by the Optionee pursuant
to the Plan under an Option (including shares that were previously transferred
pursuant to Section 11.01 or Section 11.02 above, unless otherwise specified in
the Option
10
11
Agreement), at a price equal to the Fair Market Value of such shares of Stock on
the date of termination.
(b) Upon the exercise of an Option following termination of an
Optionee's employment or other relationship with the Company, ORBCOMM Global,
L.P. or any of their respective affiliates (whether as an employee or a director
of the Company, ORBCOMM Global, L.P. or any of their respective affiliates, or
otherwise), the Company shall have the right, for a period of up to 180 days
following such exercise, to repurchase any or all of the shares of Stock
acquired by the Optionee pursuant to such Option exercise, at a price that is
equal to the Fair Market Value of such shares (including shares that were
previously transferred pursuant to Section 11.01 or Section 11.02 above, unless
otherwise specified in the Option Agreement), on the date of exercise (or at the
Fair Market Value on such other date as shall have been specified by the Board
on the Grant Date and set out in the applicable Option Agreement with respect to
the Grant).
(c) On the closing of any repurchase authorized under this Section
11.03, the Optionee shall deliver to the Company a certificate or certificates
representing the Shares to be purchased by the Company, duly endorsed for
transfer, free and clear of any lien or encumbrance, in exchange for payment of
the purchase price (i) by check, (ii) by delivery of a subordinated promissory
note of the Company in the principal amount of the purchase price of the Shares,
bearing interest at a rate equal to the then applicable federal short-term rate
(determined pursuant to Section 1274(d) of the I.R.C.), providing for quarterly
payments of interest and payment of the principal amount in full on the first
anniversary of the date of issuance, and containing provisions as approved by
the Board in its sole discretion providing for the subordination of such notes
to such indebtedness, whether then existing or thereafter created, of the
Company as is specified by the Board, including, without limitation,
indebtedness for money borrowed or similar indebtedness, or (iii) any
combination of the foregoing; provided, however, that no more than fifty percent
(50%) of the purchase price for Shares may be paid by subordinated promissory
note.
(d) In the event that the Company determines that it cannot or will
not exercise its rights to purchase Stock under this Section 11.03 and the
applicable Option Agreement, in whole or in part, the Company may assign its
rights, in whole or in part, to (i) any Securityholder, (ii) of its or ORBCOMM
Global L.P.'s affiliates or (iii) any other person or entity that the Board
determines in its sole discretion has a sufficient relationship with or interest
in the Company. The Company shall give reasonable written notice to the Optionee
of any assignment of its rights.
11.04 Purchase by Company of Stock Acquired Pursuant to Option Exercises.
(a) Subject to the conditions set forth in this Section, an Optionee or his or
her executor, administrator, legatee or distributee that has acquired shares of
Stock pursuant to exercise of an Option shall have the right, so long as such
Optionee is still an employee or Outside Director of the Company, ORBCOMM
Global, L.P. or any of their respective affiliates or such Optionee has suffered
a "permanent and total disability" or has died, to require the Company to
repurchase any or all of such shares of Stock that have been held by the
Optionee for at least six months from the date of exercise of such Option
("Payable Stock"). The Company shall purchase Payable Stock
11
12
at a price that is equal to the Fair Market Value of such shares on March 1 and
September 1 of each year (each such date is referred to as a "Valuation Date").
Within 30 days after each such Valuation Date after any Options have become are
exercisable, the Company shall cause the Fair Market Value of the Stock to be
determined and shall notify each holder of Payable Stock of such Fair Market
Value (the "Company Notice"). Within 30 days after the date of the Company
Notice, each such holder of Payable Stock may elect to have all or any portion
of his or her Payable Shares be purchased by the Company at a price per share
equal to such Fair Market Value by submitting to the Committee an irrevocable
written notice of such election (the "Optionee Notice").
(b) The purchase and sale of such shares shall be completed within
60 days after the Company Notice, at the principal offices of the Company or at
such other place and time as the Company and the Optionee may agree. At the
closing, the Optionee shall deliver to the Company a certificate or certificates
representing the Payable Stock specified in the Optionee Notice to be purchased
by the Company, duly endorsed for transfer, free and clear of any lien or
encumbrance, in exchange for payment of the purchase price (i) by check, (ii) by
delivery of a subordinated promissory note of the Company in the principal
amount of the purchase price of the Payable Stock, bearing interest at a rate
equal to the then applicable federal short-term rate (determined pursuant to
Section 1274(d) of the I.R.C.), providing for quarterly payments of interest and
payment of the principal amount in full on the first anniversary of the date of
issuance, and containing provisions as approved by the Board in its sole
discretion providing for the subordination of such notes to such indebtedness,
whether then existing or thereafter created, of the Company as is specified by
the Board, including, without limitation, indebtedness for money borrowed or
similar indebtedness, or (iii) any combination of the foregoing; provided,
however, that no more than fifty percent (50%) of the purchase price for Payable
Stock may be paid by subordinated promissory note.
(c) Notwithstanding the foregoing, each repurchase by the Company
pursuant to this Section must be specifically authorized by the Board, which may
only authorize such repurchase if (i) such repurchase is permitted under
applicable laws or under the terms of any of (A) the Company's, ORBCOMM Global's
or any of their respective affiliates' then-existing debt instruments or
agreements governing such debt instruments, (B) the then-existing terms of any
class of preferred stock of the Company, ORBCOMM Global or any of their
respective affiliates, or (C) any then-existing stockholders agreement to which
the Company, ORBCOMM Global, L.P. or any of their respective affiliates is a
party; (ii) there has not yet been a public offering (within the meaning of the
Securities Act and the rules and regulations thereunder) of the Stock; (iii) no
amounts are owed by the Company to any Securityholder at the time of such
repurchase; (iv) the Board determines, in its sole discretion, that such
repurchase would not impair the working capital of the Company; and (v) the
Company would be authorized under law to declare and pay cash dividends on the
shares of its capital stock at the time of such repurchase; provided that, any
time when at least a majority of the voting power of the Company's capital stock
is beneficially owned by ORBCOMM Global, L.P., any such repurchase shall require
the prior approval of the designated representatives of the General Partners of
ORBCOMM Global, L.P.
11.05 Publicly Traded Stock. If the Stock is listed on an established
national or regional stock exchange or the Nasdaq National Market, or is
publicly traded in an established securities
12
13
market, the transfer restrictions of Section 11.02 and Section 11.03 shall
terminate as of the first date that the Stock is so listed or publicly traded.
11.06 Legend. To enforce the restrictions imposed upon shares of Stock
under the Plan or as provided in an Option Agreement, the Board may cause a
legend or legends to be placed on any certificate representing shares of Stock
issued pursuant to the Plan that complies with the applicable securities laws
and regulations and makes appropriate reference to the restrictions imposed
under the Plan.
ARTICLE XII
PARACHUTE LIMITATIONS
Notwithstanding any other provision of the Plan or of any other
agreement, contract, or understanding heretofore or hereafter entered into by an
Optionee with the Company or any affiliate of the Company, except an agreement,
contract, or understanding hereafter entered into that expressly modifies or
excludes application of this paragraph (an "Other Agreement"), and
notwithstanding any formal or informal plan or other arrangement for the direct
or indirect provision of compensation to the Optionee (including groups or
classes of participants or beneficiaries of which the Optionee is a member),
whether or not such compensation is deferred, is in cash or is in the form of a
benefit to or for the Optionee (a "Benefit Arrangement"), if the Optionee is a
"disqualified individual," as defined in Section 280G(c) of the Code, any Option
held by that Optionee and any right to receive any payment or other benefit
under the Plan shall not become exercisable or vested (a) to the extent that
such right to exercise, vesting, payment or benefit, taking into account all
other rights, payments or benefits to or for the Optionee under the Plan, all
Other Agreements and all Benefit Arrangements, would cause any payment or
benefit to the Optionee under the Plan to be considered a "parachute payment"
within the meaning of Section 280G(b)(2) of the Code as then in effect (a
"Parachute Payment") and (b) if, as a result of receiving a Parachute Payment,
the aggregate after-tax amounts received by the Optionee from the Company under
the Plan, all Other Agreements and all Benefit Arrangements would be less than
the maximum after-tax amount that could be received by the Optionee without
causing any such payment or benefit to be considered a Parachute Payment. In the
event that the receipt of any such right to exercise, vesting, payment, or
benefit under the Plan, in conjunction with all other rights, payments, or
benefits to or for the Optionee under any Other Agreement or any Benefit
Arrangement would cause the Optionee to be considered to have received a
Parachute Payment under the Plan that would have the effect of decreasing the
after-tax amount received by the Optionee as described in clause (b) of the
preceding sentence, then the Optionee shall have the right, in the Optionee's
sole discretion, to designate those rights, payments or benefits under the Plan,
any Other Agreements and any Benefit Arrangements that should be reduced or
eliminated so as to avoid having the payment or benefit to the Optionee under
the Plan be deemed to be a Parachute Payment.
13
14
ARTICLE XIII
REQUIREMENTS OF LAW
13.01 General. The Company shall not be required to sell or issue any
shares of Stock in connection with the exercise of any Option if the sale or
issuance of such shares of Stock would constitute a violation by the Optionee,
any other person exercising a right emanating from such Option, or the Company
of any provision of any law or regulation of any governmental authority,
including without limitation any federal or state securities laws or
regulations. If at any time the Company shall determine, in its sole discretion,
that the listing, registration or qualification of any shares of Stock subject
to a Option upon any securities exchange or under any governmental regulatory
body is necessary, appropriate or desirable as a condition of, or in connection
with, the issuance or purchase of shares of Stock hereunder, no shares of Stock
may be issued or sold to the Optionee or any other person exercising a right
emanating from such Option unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Company, and any delay caused thereby shall in no way
affect the date of termination of the Option. Specifically, in connection with
the Securities Act, upon the exercise of any Option that may be settled in
shares of Stock, unless a registration statement under the Securities Act is in
effect with respect to the shares of Stock covered by such Option, the Company
shall not be required to sell or issue such shares of Stock unless the Board has
received evidence satisfactory to it that the Optionee or any other person
exercising a right emanating from such Option may acquire such shares of Stock
pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Board shall be final, binding and
conclusive. The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act. The Company shall not
be obligated to take any affirmative action to cause the exercise of an Option
or the issuance of shares of Stock pursuant to the Plan to comply with any law
or regulation of any governmental authority. As to any jurisdiction that
expressly imposes the requirement that an Option shall not be exercisable until
the shares of Stock covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances in which the laws
of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption.
13.02 Rule 16b-3. During any time when the Company has a class of equity
security registered under Section 12 of the Exchange Act, it is the intent of
the Company that Grants pursuant to the Plan and the exercise of Options granted
hereunder will qualify for the exemption provided by Rule 16b-3 under the
Exchange Act. To the extent that any provision of the Plan or action by the
Board does not comply with the requirements of Rule 16b-3, it shall be deemed
inoperative to the extent permitted by law and deemed advisable by the Board,
and shall not affect the validity of the Plan. In the event that Rule 16b-3 is
revised or replaced, the Board may exercise its discretion to modify the Plan in
any respect necessary to satisfy the requirements of, or to take advantage of
any features of, the revised exemption or its replacement.
14
15
ARTICLE XIV
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Grants have not been
made; provided, however, that the Board shall not, without approval of the
Company's stockholders, amend the Plan such that it does not comply with the
Code or, to the extent applicable, Section 16b-3. Except as permitted under this
Article 14 or Article 15 hereof, no amendment, suspension, or termination of the
Plan shall, without the consent of the Optionee, alter or impair rights or
obligations under any Grant theretofore awarded under the Plan.
ARTICLE XV
EFFECT OF CHANGES IN CAPITALIZATION
15.01 Changes in Shares of Stock. Subject to Section 15.02, in the event
of any merger, reorganization, consolidation, recapitalization, separation,
liquidation, stock dividend, spin-off, split-up, share combination or other
change in the corporate structure of the Company affecting the shares of Stock,
(a) such adjustment may be made in the number and class of shares of Stock that
may be delivered under Section 4.01 hereof and the Grant limits under Section
4.02 hereof, and in the number and class of and/or price of shares of Stock
subject to outstanding Grants as may be determined to be appropriate and
equitable by the Board, in its sole discretion, to prevent dilution or
enlargement of existing rights; and (b) the Board, or, if another legal entity
assumes the obligations of the Company hereunder, the board of directors,
compensation committee or similar body of such other legal entity, shall either
(i) make appropriate provision for the protection of outstanding Grants by the
substitution on an equitable basis of appropriate equity interests or awards
similar to the Grants, provided that the substitution neither enlarges nor
diminishes the value and rights under the Grants or (ii) upon written notice to
the Optionees, provide that Grants will be exercised, distributed, canceled or
exchanged for value pursuant to such terms and conditions (including the waiver
of any existing terms or conditions) as shall be specified in the notice. Any
adjustment of an Incentive Stock Option under this Section 15.01 shall be made
in such a manner so as not to constitute a "modification" within the meaning of
Section 424(h)(3) of the Code. The conversion of any convertible securities of
the Company shall not be treated as a change in the corporate structure of the
Company affecting the shares of Stock.
15.02 Reorganization, Sales of Assets or Sale of Shares of Stock. The
Board may, in its discretion, determine that, upon the dissolution or
liquidation of the Company or upon a merger, consolidation, or reorganization of
the Company with one or more other entities in which the Company is not the
surviving entity, or upon a sale of substantially all of the assets of the
Company to another entity, or upon any transaction (including, without
limitation, a merger or reorganization in which the Company is the surviving
entity) that results in any person or entity (or person or entities acting as a
group or otherwise in concert, owning eighty percent (80%) or more of the
combined voting power of all classes of securities of the Company, all Options
outstanding hereunder shall become immediately exercisable for a specified
period not to exceed 15 days
15
16
immediately prior to the scheduled consummation of the event, except to the
extent provision is made in writing in connection with such transaction for the
continuation of the Plan or the assumption of such Options, theretofore granted,
or for the substitution for such Options of new options covering the stock of a
successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kinds of shares or units and exercise prices,
in which event the Plan and Option theretofore granted shall continue in the
manner and under the terms so provided. Notwithstanding the foregoing, if any
such transaction is to be accounted for as a pooling, all Options outstanding
hereunder shall become immediately exercisable for a period of 15 days
immediately prior to the scheduled consummation of the event, except to the
extent provision is made in writing in connection with such transaction for the
continuation of the Plan or the assumption of such Options, theretofore granted,
or for the substitution for such Options of new options covering the stock of a
successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kinds of shares or units and exercise prices,
in which event the Plan and Option theretofore granted shall continue in the
manner and under the terms so provided. Any exercise of an Option during such
specified (or in the case of a "pooling" transaction, 15-day) period shall be
conditioned upon the consummation of the event and shall be effective only
immediately before the consummation of the event. Upon consummation of any such
event, the Plan and all outstanding but unexercised Options shall terminate,
except to the extent provision is made in writing in connection with such
transaction for the continuation of the Plan or the assumption of such Options
theretofore granted, or for the substitution for such Options of new options
covering the shares of a successor entity, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kinds of shares or units and
exercise prices, in which event the Plan and Options theretofore granted shall
continue in the manner and under the terms so provided. The Board shall send
written notice of an event that will result in such a termination to all
individuals who hold Options not later than the time at which the Company gives
notice thereof to its stockholders.
15.03 Adjustments. Adjustments under this Article 15 related to shares of
Stock or securities of the Company shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. No
fractional shares of Stock or other securities shall be issued pursuant to any
such adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share of
Stock.
15.04 No Limitations on Company. The making of Grants pursuant to the
Plan shall not affect or limit in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure or to merge, consolidate, dissolve or liquidate, or to
sell or transfer all or any part of its business or assets.
ARTICLE XVI
DISCLAIMER OF RIGHTS
No provision in the Plan, any Grant or any Option Agreement shall be
construed to confer upon any individual the right to remain in the employ or
service of the Company, ORBCOMM Global, L.P. or any of their respective
affiliates, or to interfere in any way with any
16
17
contractual or other right or authority of the Company, ORBCOMM Global, L.P. or
any of their respective affiliates either to increase or decrease the
compensation or other payments to any individual at any time, or to terminate
any employment or other relationship between any individual and the Company,
ORBCOMM Global, L.P. or any of their respective affiliates. In addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Option Agreement, no Grant awarded under the Plan shall
be affected by any change of duties or position of the Optionee, so long as such
Optionee continues to be a director, officer or employee of the Company, ORBCOMM
Global, L.P. or any of their respective affiliates. The obligation of the
Company to pay any benefits pursuant to the Plan shall be interpreted as a
contractual obligation to pay only those amounts described herein, in the manner
and under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Company to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any
participant or beneficiary under the terms of the Plan.
ARTICLE XVII
NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor the submission of the
Plan to or approval by the stockholders of the Company shall be construed as
creating any limitations upon the right and authority of the Board to adopt such
other incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or particular individuals) as the Board in its sole
discretion determines desirable, including, without limitation, the granting of
stock options otherwise than under the Plan.
ARTICLE XVIII
WITHHOLDING TAXES
The Company, ORBCOMM Global, L.P. or any of their respective affiliates,
as the case may be, shall have the right to deduct from payments of any kind
otherwise due to an Optionee any Federal, state, or local taxes of any kind
required by law to be withheld upon the exercise of an Option. At the time of
such vesting, lapse, or exercise, the Optionee shall pay to the Company ORBCOMM
Global, L.P. or any of their respective affiliates, as the case may be, any
amount that the Company, ORBCOMM Global, L.P. or any of their respective
affiliates may reasonably determine to be necessary to satisfy such withholding
obligation. To the extent permitted by law and at the discretion of the Company,
ORBCOMM Global, L.P. or any of their respective affiliates, the Optionee may
elect to satisfy such obligations, in whole or in part, (a) by causing the
Company, ORBCOMM Global, L.P. or any of their respective affiliates to withhold
shares of Stock otherwise issuable to the Optionee or (b) by delivering to the
Company, ORBCOMM Global, L.P. or any of their respective affiliates shares of
Stock already owned by the Optionee, which shares, if acquired from the Company,
shall have been held for at least six months by such Optionee and which shall be
valued at their Fair Market Value on the date of exercise of the Option and be
equal to such withholding obligations. An Optionee who has made
17
18
an election pursuant to this Article 18 may satisfy his or her withholding
obligation only with shares of Stock that are not subject to any repurchase,
forfeiture, unfulfilled vesting, or other similar requirements.
ARTICLE XIX
GENERAL PROVISIONS
19.01 Captions. The use of captions in the Plan or any Option Agreement
is for the convenience of reference only and shall not affect the meaning of any
provision of the Plan or such Option Agreement.
19.02 Other Provisions. Each Grant awarded under the Plan may contain
such other terms and conditions not inconsistent with the Plan as may be
determined by the Board, in its sole discretion.
19.03 Number and Gender. With respect to words used in the Plan, the
singular form shall include the plural form, the masculine gender shall include
the feminine gender, etc., as the context requires.
19.04 Severability. If any provision of the Plan or any Option Agreement
shall be determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
19.05 Pooling. Notwithstanding anything in the Plan to the contrary, if
any right under or feature of the Plan would cause to be ineligible for pooling
of interest accounting a transaction that would, but for the right or feature
hereunder, be eligible for such accounting treatment, the Board may modify or
adjust the right or feature so that the transaction will be eligible for pooling
of interest accounting. Such modification or adjustment may include payment of
cash or issuance to an Optionee of shares of Stock having a Fair Market Value
equal to the cash value of such right or feature.
19.06 Governing Law. The validity and construction of the Plan and the
instruments evidencing the Grants awarded hereunder shall be governed by the
laws of the State of Delaware (without giving effect to the conflict or choice
of law provisions thereof).
* * *
18
19
The Plan was duly adopted and approved by the Board of Directors and the
sole stockholder of the Company as of the 9th day of October 1998.
/S/ MARY ELLEN SERAVALLI
------------------------------------------
Mary Ellen Seravalli
Vice President and Secretary
19