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EXHIBIT 99.2
ULTRACISION, INC.
1987 INCENTIVE STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
This Incentive Stock Option plan (hereinafter called the "Plan") for
ULTRACISION, INC. (hereinafter called the "Company") is intended to advance the
interests of the Company by providing officers and other key employees who have
substantial responsibility for the direction and management of the Company with
additional incentive for them to promote the success of the business, to
increase their proprietary interest in the success of the Company, and to
encourage them to remain in its employ. The above aims will be effectuated
through the granting of certain stock options. It is intended that options
issued under the Plan and designated by the Committee under Section 3(b) will
qualify as Incentive Stock Options (hereinafter called "ISOs") under Section
422A of the Internal Revenue Code as enacted by the Economic Recovery Tax Act of
1981 and the terms of the Plan shall be interpreted in accordance with this
intention.
2. ADMINISTRATION OF THE PLAN
The Board of Directors shall appoint a Stock Option Plan Committee
(hereinafter called the "Committee") which shall consist of three members, at
least one of whom shall be a Director of the Company. Subject to the provisions
of the Plan, the Committee shall have plenary authority, in its discretion: (a)
to determine the employees of the Company (from among the class of employees
eligible under Section 3 to receive options under the Plan) to whom options
shall be granted; (b) to determine the time or times at which options shall be
granted; (c) to determine the option price of the shares subject to each option,
which price shall not be less than the minimum specified in Section 5; (d) to
determine (subject to Section 7) the time or times when each option shall become
exercisable and the duration of the exercise period; and (e) to interpret the
Plan and to prescribe, amend, and rescind rules and regulations relating to it.
The Committee shall select one of its members as its Chairman and shall hold its
meetings at such times and places as it shall deem advisable. All action of the
Committee shall be taken by unanimous vote of its members. Any action may be
taken by a written instrument signed by all the members of the Committee, and
action so taken shall be fully as effective as if it had been taken by a
unanimous vote of the members at a meeting duly called and held. The Committee
may appoint a secretary to keep minutes of its meetings and shall make such
rules and regulations for the conduct of its business as it shall deem
advisable.
3. ELIGIBILITY AND LIMITATIONS ON OPTIONS GRANTED UNDER THE PLAN
(a) Options will be granted only to persons who are key employees
of the Company. The term "key employees" shall include officers, directors,
executives, and supervisory personnel, as well as other employees of the
Company.
Exhibit 99.2
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(b) At the time of the grant of each option under this Plan, the
Committee shall determine whether such option is to be designated as an ISO. If
an option is to be so designated as an ISO, then the provisions of Section 7(d)
of this Plan shall be made applicable to such option. In addition, no option
granted to any employee, who at the time of such grant, owns stock possessing
more than 10 percent of the total combined voting power of all classes of stock
of the Company, may be designated as an ISO, unless at the time of such grant,
the option price is fixed at not less than 110 percent of the fair market value
of the stock subject to the option, and exercise of such option is prohibited by
its terms after the expiration of five (5) years from the date such option is
granted.
(c) The aggregate fair market value of the stock for which any
employee may be granted options designated as ISOs in any calendar year (under
this or any other stock option plan established by the Company or a subsidiary
corporation of the Company) shall not exceed $100,000 plus any unused limit
carryover (as defined in 3(d) hereof) to such year from any prior calendar year
beginning on or after January 1, 1981.
(d) The unused limit carryover from any such calendar year shall
be one-half of any excess of $100,000 over the aggregate fair market value of
the stock for which an employee was granted options that qualify (whether from
their issuance or as a result of subsequent amendment and election by the
Company) as ISOs in any such calendar year (under this and all other stock
option plans established by the Company. The unused limit for any calendar year
shall be carried forward for three (3) years. ISOs granted in any year shall be
applied against the current year limitation first and then against the remaining
unused limit carryovers to such year in the order of the calendar year in which
the carryovers arose.
4. SHARES OF STOCK SUBJECT TO THE PLAN
There will be reserved for use upon the exercise of options to be
granted from time to time under the Plan (subject to the provisions of Section
12) an aggregate of 75,000 shares of the Common Stock of the Company, which
shares may be (in whole or in part, as the Board of Directors of the Company,
hereinafter called the "Board" shall from time to time determine,) authorized
but unissued shares of the Common Stock which shall have been reacquired by the
Company. Any shares subject to an option under the Plan, which option for any
reason expires or is terminated unexercised as to such shares, may again be
subjected to an option under the Plan.
5. OPTION PLAN
The purchase price under each option issued shall be determined by the
Committee at the time the option is granted, but in no event shall such purchase
price be less than 100 percent of the fair market value of the Company's Common
Stock on the date of grant.
The term "fair market value" shall be determined in the opinion of a
completely independent and well qualified expert. Amounts treated as unstated
interest under Internal Revenue Code Section 483 are not to be included as part
of the option price.
Exhibit 99.2
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6. DILUTION OR OTHER AGREEMENT
In the event that additional shares of Common Stock are issued pursuant
to a stock split or a stock dividend, the number of shares of Common Stock then
covered by each outstanding option granted hereunder shall be increased
proportionately with no increase in the total purchase price of the shares then
so covered, and the number of shares of Common Stock reserved for the purpose of
the Plan shall be increased by the same proportion. In the event that the shares
of Common Stock of the Company from time to time issued and outstanding are
reduced by a combination of shares, the number of shares of Common Stock then
covered by each outstanding option granted hereunder shall be reduced
proportionately, with no reduction in the total price of the shares then so
covered, and the number of shares of Common Stock reserved for the purposes of
the Plan shall be reduced by the same proportion. In the event that the Company
should transfer assets to another corporation and distribute the stock of such
other corporation without the surrender of Common Stock of the Company, and if
such distribution is not taxable as a dividend and no gain or loss is recognized
by reason of Section 355 of the Internal Revenue Code of 1954, or some similar
section, then the total purchase price of the shares covered by each outstanding
option shall be reduced by an amount which bears the same ratio to the total
purchase price then in effect as the market value of the stock distributed in
respect of a share of the Common Stock of the Company, immediately following the
distribution, bears to the aggregate of the market value at such time of a share
of the Common Stock of the Company and the stock distributed in respect thereof.
All such adjustments shall be made by the Committee, whose determination upon
the same shall be final and binding upon the optionees. No fractional shares
shall be issued, and any fractional shares resulting from the computations
pursuant to this Section 6 shall be eliminated from the respective option. No
adjustment shall be made for cash dividends or the issuance to stockholders of
rights to subscribe for additional common Stock or other securities.
7. PERIOD OF OPTION AND CERTAIN LIMITATIONS ON RIGHT TO EXERCISE
(a) All options issued under the Plan shall be for such period as
the Committee shall determine, but for not more than ten (10) years from the
date of grant thereof.
(b) The period of the option, once it is granted, may be reduced
only as provided for in Section 9 in connection with the termination of
employment or death of the optionee or in Section 7(c) in the case of less than
satisfactory performance.
(c) Each option granted under this Plan shall become exercisable
only after two (2) years continued employment of the optionee with the Company
immediately following the date the option is granted. Any option designated as
an ISO shall be exercisable in full, or as to any part thereof, at any time
after the expiration of two (2) years following the date of such option is
granted, but only if the optionee chooses to exercise such option and to pay for
such option in the manner set forth in Section 7(e) hereof (i.e., in cash or
certified bank check or shares of the Company's Common Stock, or any combination
of the foregoing in an amount equal to the full option price of the shares being
purchased). Any option not designated as an ISO and any option designated as an
ISO that the optionee chooses to exercise in any manner other than that
permitted in the preceding sentence, shall be exercisable only to the extent of
one-
Exhibit 99.2
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fifth of the total number of optioned shares after the expiration of two (2)
years following the date the option is granted only to the extent of two-fifths
of the total number of optioned shares after the expiration of three (3) years
following the date the option is granted, only to the extent of three-fifths of
the total number of optioned shares after the expiration of four (4) years
following the date the option is granted, only to the extent of four-fifths of
the total number of optioned shares after the expiration of five (5) years
following the date the option is granted, and in full only after the expiration
of six (6) years following the date the option is granted, such limitations
being calculated, in the case of any resulting fraction, to the nearest lower
whole number of shares. Notwithstanding the foregoing, the Committee may, in its
sole discretion, (i) prescribe longer time periods and additional requirements
with respect to the exercise of an option and (ii) terminate in whole or in part
such portion of any option as has not yet become exercisable at the time of
termination if it determines that the optionee is not performing satisfactorily
the duties to which he was assigned on the date the option was granted or duties
of at least equal responsibility. No option may be exercised unless the optionee
is at the time of such exercise in the employee of the Company and shall have
been continuously so employed since the grant of his option. Absence or leave
approved by the management of the Company shall not be considered an
interruption of employment for any purpose under the Plan.
(d) No option under this Plan designated by the Committee as an
ISO may be exercised while there is outstanding in the hands of the optionee any
ISO (whether granted under the Plan or any other stock option plan established
by the Company or a subsidiary corporation of the Company) which was granted
before the granting of the ISO hereunder sought to be exercised. For purposes of
this Section 7(d), any ISO shall be treated as outstanding until such option is
exercised in full or expires by reason of lapse of time.
(e) Subject to the alternative settlement methods set forth in
Section 7(h) hereof, the exercise of any option shall also be contingent upon
receipt by the Company of cash or certified bank check to its order, shares of
the Company's Common Stock, or any combination of the foregoing in an amount
equal to the full option price of the shares being purchased. For purposes of
this paragraph, shares of the Company's Common Stock that are delivered in
payment of the option price shall be valued at their fair market value
determined under the method set forth in Section 5 of this Plan applied as of
the date of the exercise of the option. However, in order to facilitate the
accumulation of funds to enable employees to exercise their option, they will
have the right, if they so elect, to direct the Company to withhold from their
compensation regular amounts to be applied toward the exercise of the options.
Funds credited to the stock option accounts will be under the control of the
Company until applied to the payment of the option price at the direction of the
employee or returned to the employee in the event the amount is not used for
purchase of shares under option, and all funds received or held by the Company
under the Plan may be used for any corporate purpose, and no interest shall be
payable to a participant on account of any amounts so held. Such amounts may be
withdrawn by the employee at any time, in whole or in part, for any reason.
(f) No optionee or his legal representative, legatees, or
distributees, as the case may be, will be, or will be deemed to be, a holder of
any share subject to an option unless and until certificates for such shares are
issued to him or them under the terms of the Plan. No
Exhibit 99.2
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adjustment shall be made for dividends or other rights for which the record date
is prior to the date such stock certificate is issued.
(g) In no event may an option be exercised after the expiration
of its term.
(h) As an alternative to payment in full by the optionee for the
number of shares of Common Stock in respect of which an option is exercised, the
Committee may provide alternative settlement methods as follows:
(1) The Committee, in its discretion, may provide in
the initial grant of any option, that the optionee may elect either of the
alternative settlement methods set forth in subsection (2) below.
(2) The alternative settlement methods are for the
optionee, upon exercise of the option, to receive from the Company: (A) cash in
an amount equal to the excess of the value of one share over the option price
times the number of shares as to which the option is exercised; or (B) the
number of whole shares of Common stock having an aggregate value not greater
than the cash amount calculated under Section 7(h) (2) (A). For purposes of
determining an alternative settlement, the value per share shall be the "fair
market value" determined under the method set forth in Section 5 hereof, applied
as of the date of the exercise of the option, or such other price as the
Committee shall determine to be the fair market value of the Common Stock on the
date of exercise.
(i) An election of any of the alternative settlement methods
provided for under Section 7 (h) (2) shall be binding on the optionee, when
made. The optionee may elect to what extent the alternative settlement method
elected shall be paid in cash, in Common Stock, or partially in Common Stock,
provided that the aggregate value of the payments shall not be greater than the
cash amount calculated under Section 7(h) (2) (A). No fractional shares of
Common Stock shall be issued, and the Committee shall determine whether cash
shall be paid in lieu of such fractional share interest or whether such
fractional share interest shall be eliminated.
(j) The alternative settlement methods provided above in Section
7(h) (2) shall not be available unless the cash amount calculated thereunder
shall be positive, i.e. when the value of one share shall exceed the option
price per share.
(k) Exercise of an option in any manner, including an exercise
involving an election of an alternative settlement method with respect to an
option, shall result in a decrease in the number of shares of Common Stock which
thereafter may be available under the Plan by the number of shares as to which
the option is exercised.
(1) To the extent that the exercise of options by one of the
alternative settlement methods provided for in Section (h) (2) results in
compensation income to the optionee, the Company will withhold from the amount
due to the optionee utilizing such alternative settlement method, an appropriate
amount for federal, state and local taxes.
Exhibit 99.2
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8. ASSIGNABILITY
Each option granted under this Plan shall be transferable only by will
or the laws of descent and distribution. The option granted shall be exercisable
only by the employee to whom the option is granted during his lifetime. Except
as permitted by the preceding sentence, no option granted under the Plan or any
of the rights and privileges thereby conferred shall be transferred, assigned,
pledged, or hypothecated in any way (whether by operation of law or otherwise),
and no such option, right, or privilege shall be subject to execution,
attachment, or similar process. Upon any attempt so to transfer, assign, pledge,
hypothecate, or otherwise dispose of the option, or of any right or privilege
conferred thereby, contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon such option, right or privilege, the option
and such rights and privileges shall immediately become null and void.
9. EFFECT OF TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY
(a) In the event of the termination of employment of an optionee
during the two (2) year period under the date of issuance of an option to him
either by reason of (i) a discharge for cause or (ii) voluntary separation on
the part of the optionee and without consent of his employing company or
companies, any option or options theretofore granted to him under this Plan to
the extent not theretofore exercised by him shall forthwith terminate.
(b) In the event of the termination of employment of an optionee
(otherwise than by reason of death or retirement of the optionee at his
Retirement Date by the Company employing the optionee at such time), any option
or options granted to him under the Plan to the extent not theretofore exercised
shall be deemed canceled and terminated forthwith, except that, subject to the
provisions of section (a) of this Section, such optionee may exercise any
options theretofore granted to him, which have not then expired and which are
otherwise exercisable within the provisions of Section 7(c) hereof, within three
(3) months after such termination. If the employment of an optionee shall be
terminated by reason of the optionee's retirement at his Retirement Date by the
Company employing the optionee at such time, the optionee shall have the right
to exercise such option or options held by him to the extent that such options
have not expired, at any time within three (3) months after such retirement. The
provisions of Section 7(c) to the contrary notwithstanding, upon retirement, all
options held by optionee shall be immediately exercisable in full.
(c) In the event that an optionee shall die while employed by the
Company or shall die within three (3) months after retirement at his Retirement
Date, any option or options granted to him under this Plan and not theretofore
exercised by him or expired shall be exercisable by the estate of the optionee
or by any person who acquired such option by bequest or inheritance from the
optionee in full, notwithstanding Section 7(c) at any time within one (1) year
after the death of the optionee. References hereinabove to the optionee shall be
deemed to include any person entitled to exercise the option after the death of
the optionee under the terms of this Section.
(d) In the event of the termination of employment of an optionee
by reason of the optionee's disability, the optionee shall have the right,
notwithstanding the provisions of
Exhibit 99.2
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Section 7(c) hereof, to exercise all options held by him to the extent that
options have not previously expired or been exercised, at any time within one
(1) year after such termination. The term "disability" shall, for the purposes
of this Plan, be defined in the same manner as such term is defined in Section
105(d) (4) of the Internal Revenue Code of 1954.
(e) For the purposes of this Plan, "Retirement Date" shall mean
any date an employee is otherwise entitled to retire under the Company's
retirement plans and shall include normal retirement at age 65, early retirement
at age 62, and retirement at age 60 after 30 years of service.
10. LISTING AND REGISTRATION OF SHARES
Each option shall be subject to the requirement that if at any time the
Stock Option Committee shall determine, in its discretion, that the listing,
registration, or qualification of the shares covered thereby upon any securities
exchange or under any state or federal law or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of such option or the issue or purchase of shares
thereunder, such option may not be exercised in whole or in part unless and
until such listing, registration, qualification, consent, or approval shall have
been effected or obtained free of any conditions not acceptable to the
Committee.
11. EXPIRATION AND TERMINATION OF THE PLAN
Options may be granted under the Plan at any time or from time to time
as long as the total number of shares optioned or purchased under this Plan does
not exceed 75,000 shares of Common Stock. The Plan may be abandoned or
terminated at any time by the Board of Directors of the Company except with
respect to any options then outstanding under the Plan. No option shall be
granted pursuant to the Plan after ten (10) years from the effective date of the
Plan.
12. AMENDMENT OF PLAN
The Board of Directors may at any time and from time to time modify and
amend the Plan (including such form of option agreement) in any respect;
provided, however, that ho such amendment shall: (a) increase (except in
accordance with Section 6) the maximum number of shares for which options may be
granted under the Plan either in the aggregate or to any individual employee; or
(b) reduce (except in accordance with Section 6) the minimum option prices which
may be established under the Plan; or (c) extend the period of periods during
which options may be granted or exercised; or (d) change the provisions relating
to the determination of employees to whom options shall be granted and the
number of shares to be covered by such options; or (e) change the provisions
relating to adjustments to be made upon changes in capitalization; or (f) change
the method for the selection of the Committee as provided by Section 2 hereof.
The termination of any modification or amendment of the Plan shall not, without
the consent of an employee, affect his rights under an option theretofore
granted to him.
Exhibit 99.2
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13. APPLICABILITY OF PLAN TO OUTSTANDING STOCK OPTIONS
This Plan shall not affect the terms and conditions of any non-qualified
stock options heretofore granted to any employee of the Company or a subsidiary
corporation of the Company under any other plan relating to non-qualified stock
options; nor shall it affect any of the rights of any employee to whom such a
non-qualified stock option was granted.
14. EFFECTIVE DATE OF PLAN
This Plan shall become effective on the later of the date of its
adoption by the Board of Directors of the Company or its approval by the vote of
the holders of a majority of the outstanding shares of the Company's Common
Stock. This Plan shall not become effective unless such shareholder approval
shall be obtained within twelve (12) months before or after the adoption of the
Plan by the Board of Directors.
Date Plan adopted by Board of Directors: November 12, 1987
Date Plan approved by Shareholders: November 13, 1987
Exhibit 99.2
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