1
Exhibit 10.1.2
AMENDED AND RESTATED
AIRONET WIRELESS COMMUNICATIONS, INC.
1996 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. The purpose of the Plan (defined herein) is to
promote the best interests of the Company (defined herein) and its stockholders
by enabling the Company to attract and retain highly qualified personnel through
rewarding valued Employees (defined herein) and directors with the opportunity,
pursuant to Options (defined herein) granted hereunder, to acquire a proprietary
interest in the Company and thereby encourage them to put forth their maximum
efforts for the continued success and growth of the Company.
2. DEFINITIONS. In addition to other initially capitalized terms which
are defined elsewhere in the Plan, the following terms shall have the respective
meanings set forth in this Section 2:
(a) "Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(b) "Authorized Shares" means the maximum aggregate number of
shares of Common Stock specified in Section 3(a) as being authorized
and reserved for the granting of Options hereunder, subject to
adjustment in accordance with Section 12.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(e) "Commission" means the United States Securities and
Exchange Commission.
(f) "Committee" means (i) the Committee appointed by the Board
in accordance with Section 4(a), or (ii) if no Committee has been
appointed, the Board.
(g) "Common Stock" means the Common Stock, par value $.01 per
share, of the Company.
(h) "Company" means Aironet Wireless Communications, Inc., a
Delaware corporation.
(i) "Continuous Employment" means the continued employment of
an Employee by the Company, the Parent or any Subsidiary, without
interruption or termination after the grant of an Option. Continuous
Employment shall not be considered interrupted in the case of sick
leave, military leave or any other leave of absence approved by the
Board (provided that such leave is for a period of not more than ninety
(90) days or re-employment upon the expiration of such leave is
mandated by contract or statute) or in the case of transfers
2
between locations of the Company or between the Company, the Parent,
any Subsidiary or any of their respective successors.
(j) "Employee" means any person, including officers and
directors, who are, at the time of grant, employed by or independent
contractors of (or in the case of directors serving) the Company, the
Parent or any Subsidiary.
(k) "Fair Market Value" means fair market value as defined in
Section 7(b).
(l) "IPO" means an underwritten public offering by the Company
of the Common Stock (or units of which the Common Stock is a part) for
at least $8.00 per share, pursuant to a registration statement filed by
the Company under the Securities Act (other than a registration
statement on Form S-4 or a Form S-8 or any other special purpose
forms), and pursuant to which the Company receives net proceeds of not
less than $8,000,000.
(m) "Option" means a right granted to an Employee pursuant to
the Plan to purchase a specified number of shares of Common Stock at a
specified price during a specified period and on such other terms and
conditions as may be specified pursuant to the Plan. Options may be
granted as Tax Qualified Options or as Options which do not qualify as
Tax Qualified Options.
(n) "Option Agreement" means the written agreement evidencing
an Option by and between the Company and the Optionee as required by
Section 14.
(o) "Option Price" means the option price as defined in
Section 7(a).
(p) "Optioned Stock" means the Common Stock subject to an
Option.
(q) "Optionee" means an Employee who receives an Option.
(r) "Parent" means Telxon Corporation, a Delaware corporation,
and any successor thereto, or any other corporation which hereafter
owns not less than fifty percent (50%) of the then voting shares of the
Company.
(s) "Plan" means the Amended and Restated Aironet Wireless
Communications, Inc. 1996 Stock Option Plan.
(t) "Rule 16b -3" means Rule 16b -3 promulgated by the
Commission under the Act or any similar successor regulation exempting
certain transactions involving stock -based compensation arrangements
from the "short -swing" liability provisions of Section 16 of the Act,
as adopted and amended from time to time and as interpreted by formal
or informal opinions of, and releases published or other interpretive
advice provided by, the Staff of the Commission.
Page 2 of 19
3
(u) "Section 16 Person" means, at such times as the Company is
a reporting company under the Act, if ever, an Employee who is subject
to Section 16 of the Act, as interpreted by the rules and regulations
promulgated by the Commission thereunder, as adopted and amended from
time to time, and by formal or informal opinions of, and releases
published or other interpretive advice provided by, the Staff of the
Commission.
(v) "Securities Act" means the Securities Act of 1933, as
amended from time to time.
(w) "Securities Law Requirements" means the Act and the rules
and regulations promulgated by the Commission thereunder, as adopted
and amended from time to time, including but not limited to Rule 16b
-3, and as interpreted by formal or informal opinions of, and releases
published or other interpretive advice provided by, the Staff of the
Commission, and the requirements of any stock exchange, automated inter
-dealer quotation system or other recognized securities market on which
the Common Stock is listed or traded or in which the Common Stock is
included, as adopted and amended from time to time and as interpreted
by formal or informal opinions of, and other interpretive advice,
provided by the representatives of such stock exchange, quotation
system or other securities market.
(x) "Shares" means the Common Stock as adjusted in accordance
with Section 12 of the Plan.
(y) "Staff" means the staff of the Commission.
(z) "Subsidiary" means a corporation of which not less than
fifty percent (50%) of the voting shares are owned by the Company, the
Parent or a Subsidiary of either the Company or the Parent, whether or
not such corporation now exists or is hereafter organized or acquired
by the Company, the Parent or a Subsidiary.
(aa) "Successor" means the estate of an Optionee or a person
who succeeds by will or the laws of descent and distribution to an
Optionee' s right to exercise an Option.
(bb) "Tax Qualified Option" means an Option which is intended
at the time of grant to qualify for special tax treatment under Section
422A or other particular provisions of the Code and the regulations,
rulings and procedures promulgated, published or otherwise provided
thereunder, as adopted and amended from time to time.
3. STOCK SUBJECT TO THE PLAN.
(a) NUMBER OF SHARES ISSUABLE. Subject to adjustment in
accordance with Section 12, the maximum aggregate number of shares of
Common Stock which may be issued and sold under Options granted
pursuant to the Plan is 2,150,500. The Shares issued and sold upon the
exercise of Options may be treasury Shares, Shares of original issue or
a combination thereof.
Page 3 of 19
4
(b) COMPUTATION OF SHARES AVAILABLE FOR GRANT. For purposes of
computing the number of Authorized Shares available from time to time
under the Plan for the grant of Options, the number of Shares subject
to each Option granted pursuant to the Plan shall be provisionally
counted against the Authorized Shares from and after the grant of such
Option but only for so long as and to the extent that such Option shall
remain outstanding and unexercised. Upon the exercise, in whole or in
part, of an Option, the number of Shares issued upon such exercise
shall be permanently deducted from the Authorized Shares, provided that
no such permanent deduction shall be made, and the provisional
deduction against the Authorized Shares shall be reversed, to the
extent that the exercise price and/or the withholding taxes with
respect to such exercise are paid through the delivery to the Company
by the person exercising the option of Shares already owned by such
person and/or through the withholding by the Company of Shares from the
total number of Shares with respect to which the Option is exercised.
The provisional deduction against the Authorized Shares shall likewise
be reversed to the extent of the unexercised portion of an Option upon
the expiration, lapse, cancellation, surrender, forfeiture or other
termination of such Option. The Shares covered by any such reversal of
a provisional deduction against the Authorized Shares shall immediately
become available for the granting of new Options under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. The Plan shall be administered by the Board or
the Board may, in its discretion, appoint a Committee to administer the
Plan subject to such terms and conditions as the Board may prescribe;
provided, however, that the terms upon which, including the time or
times at or within which, and the price or prices at which Shares may
be purchased upon the exercise of Options shall be approved or ratified
by such action of the Board or a committee duly designated by the Board
from its members as may be required by the Delaware General Corporation
Law, as amended from time to time; and provided further, however, that,
unless otherwise deemed, under all of the circumstances, to be in the
best interest of the Company, neither the Board nor any such Committee
shall make any decision concerning the Plan with respect to any Section
16 Person unless the Board or such Committee making such decision is
constituted so that such decision complies with the applicable
requirements of Rule 16b -3. Once appointed, the Committee shall
continue to serve until otherwise directed by the Board. From time to
time the Board may increase the size of the Committee and may appoint
additional members thereof, remove members (with or without cause),
fill vacancies however caused and remove all members of the Committee
and thereafter directly administer the Plan.
(b) POWERS OF THE COMMITTEE. Subject to the Delaware General
Corporation Law and the provisions of the Plan, the Committee shall
have the authority, in its sole discretion:
(i) To determine in accordance with Section 7(b) the
Fair Market Value of the Shares;
(ii) To determine the Employees to whom, and the time
or times at which, Options shall be granted and the number of
Shares subject to purchase upon exercise
Page 4 of 19
5
of each Option (there being no limit on the number of Options
which may be granted to any one Employee or on the aggregate
number of Shares subject to purchase thereunder, except such
restrictions thereon as may be imposed by applicable tax laws
which will have to be observed if the Committee intends that a
particular Option qualify as a Tax Qualified Option);
(iii) To determine the terms and provisions of each
Option (which terms and provisions need not be identical),
including, but not limited to, the following:
(A) The Option Price subject to the
provisions of Section 7(a); and
(B) Whether Options shall become exercisable
over a period of time and when they shall be
partially or fully exercisable;
(iv) To accelerate the time as of which any
Option may be exercised;
(v) To amend any outstanding Option, subject to
the provisions of Section 19;
(vi) To authorize any person to prepare and
execute on behalf of the Company any instrument deemed by the
Committee to be necessary or advisable to evidence or
effectuate the Plan, any Option granted hereunder or any
amendment to the Plan or any Option Agreement;
(vii) To interpret the Plan;
(viii) To prescribe, amend and rescind, if deemed
necessary or appropriate, rules and regulations relating to
the Plan; and
(ix) To make all other determinations the Committee
may deem necessary or advisable in connection with the
administration of the Plan.
(c) EFFECT OF BOARD AND COMMITTEE DECISIONS. All decisions,
determinations and actions of the Board and the Committee in connection
with the construction, interpretation, administration, application,
operation and implementation of the Plan shall be final, conclusive and
binding on the Company, its stockholders and Subsidiaries, all
Employees, Optionees, and Successors and the respective legal
representatives, heirs, and estates, and successors and assigns of all
of the foregoing and all other persons claiming under or through any of
them.
(d) EXCULPATION AND INDEMNIFICATION. No member of the Board or
the Committee, and no Employee or other agent acting on behalf of the
Board or the Committee, shall be personally liable for any decision,
determination or action made or taken, or failed to be made or taken,
with respect to the Plan or any Option granted hereunder, and the
Company shall fully protect each such person in respect of any such
decision, determination
Page 5 of 19
6
or action and shall indemnify each such person against any and all
claims, losses, damages, expenses and liabilities arising from or in
connection with any such decision, determination or action.
5. ELIGIBILITY. Options may be granted only to Employees who, in the
sole judgment of the Committee, have contributed or will contribute to the
success and growth of the Company. An Employee to whom the Company has
previously granted a stock option pursuant to the Plan or otherwise may, if he
is otherwise eligible, be granted additional Options.
The existence of the Plan shall not create in any Employee any right to
be granted an Option hereunder, and neither the existence of the Plan nor the
granting of any Options to any Employee hereunder shall confer upon such
Employee any right with respect to continuation of the employment of such
Employee by the Company, the Parent or any Subsidiary or shall in any way
interfere with or limit the right which such Employee or the Company, the Parent
or any Subsidiary may otherwise have to terminate such employment at any time
with or without cause. Upon the termination of any Employee's employment with
the Company, the Parent or any Subsidiary, neither the Company nor the Parent or
any Subsidiary shall have any liability or obligation to such Employee under the
Plan any Option Agreement or any Options granted to such Employee hereunder
unless such Options are then currently exercisable in accordance with Section
10(a) hereof and, if so exercisable, the Company's sole obligation shall be to
issue the appropriate number of Shares to such Employee upon the exercise of any
Option granted to such Employee under the Plan prior to such termination of
employment, provided that such exercise is duly and timely made in accordance
with the provisions of the Plan and such Option.
6. TERM OF OPTIONS. Except as may otherwise be specified by the
Committee in its sole discretion at the time of grant thereof and reflected in
the Option Agreement evidencing such Option, the term of each Option shall be
ten (10) years from the date of grant thereof, provided that the Committee, if
it intends that a particular Option qualify as a Tax Qualified Option, will have
to observe such restrictions on the term of such Option as may be imposed by the
applicable tax laws in order for such Option so to qualify. Each Option shall
continue in effect in accordance with its terms notwithstanding that the Plan
may be terminated prior to the expiration of the term of such Option.
7. EXERCISE PRICE.
(a) MINIMUM PRICE REQUIRED. The per Share exercise price for
the Optioned Stock shall be such price as is determined by the
Committee at the time of grant of an Option and reflected in the Option
Agreement evidencing the same. Notwithstanding the foregoing, in no
event shall such exercise price per Share be less than the Fair Market
Value per Share as of the day prior to the date of grant of such
Option.
(b) DEFINITION OF "FAIR MARKET VALUE". For all purposes under
the Plan, "Fair Market Value" per Share shall be determined by the
Board in its sole discretion taking into consideration such data as the
Board shall in its sole discretion deem appropriate; provided, however,
that if the Shares are included in the Nasdaq Stock Market National
Market System
Page 6 of 19
7
or listed on a stock exchange on the date as of which the same is to be
determined, the Fair Market Value per Share shall be the closing price
on such quotation system or exchange which is the principal trading
market for the Shares on the date of determination or, if no sale price
was reported for the Shares on the date of determination, the closing
price on such principal trading market for the last trading day prior
to the date of determination for which a sale price was reported;
provided further, however, that if the foregoing method of determining
Fair Market Value is inconsistent with the then existing tax law
requirements with respect to any Option which the Committee intends to
qualify as a Tax Qualified Option, then the Fair Market Value per Share
shall be determined by the Committee in such manner as is required for
such Tax Qualified Option to qualify as such.
8. WITHHOLDING TAXES. Before a stock certificate evidencing the Shares
being acquired through exercise of an Option will be issued to the Optionee, the
Optionee must pay, or make arrangements acceptable to the Company for the
payment of, any and all federal, state and local withholding taxes, whether
domestic or foreign, required to be withheld in connection with the exercise of
an Option.
9. FORM OF PAYMENT.
(a) ACCEPTABLE FORMS OF CONSIDERATION. Except as may otherwise
be specified by the Committee in its sole discretion at the time of
grant thereof and reflected in the Option Agreement evidencing such
Option, the following forms of consideration will be accepted in
payment of the exercise price for the Shares to be issued upon exercise
of an Option and of the taxes required to be withheld in connection
with such exercise: (i) cash, (ii) personal check, (iii) bank cashier's
check, (iv) already owned Shares (duly endorsed for transfer with
signature guaranteed), or (v) any combination of the foregoing. Except
as may otherwise be specified by the Committee in its sole discretion
at the time of grant thereof and reflected in the Option Agreement
evidencing such Option, Shares withheld from the Shares to be issued
upon exercise of the Option, either alone or in any combination with
any of the other acceptable forms of consideration recited in this
Paragraph (a), will also be an accepted form of consideration for
payment of the taxes required to be withheld in connection with the
exercise of an Option. In addition to the acceptable forms of
consideration hereinabove recited in this Paragraph (a), the Committee
may determine in its sole discretion at the time of grant of an Option,
and if the Committee so determines, shall provide in the Option
Agreement evidencing such Option, that one or both of the following
additional forms of consideration will be accepted, either alone or in
any combination with any of the other acceptable forms of consideration
recited in this Paragraph (a), in payment of the items specified: (vi)
in payment of the exercise price for the Shares to be issued upon
exercise of an Option, Shares withheld from the Shares to be issued
upon such exercise, and/or (vii) in payment of the exercise price for
the Shares to be issued upon exercise of an Option and the taxes
required to be withheld in connection with such exercise, a commitment
for the delivery to the Company of proceeds from the sale, pursuant to
a brokerage or similar arrangement approved in advance by the Committee
in its sole discretion, of Shares to be issued upon exercise of the
Option. The forms of consideration which will be accepted in payment of
the exercise price for an Option and related withholding taxes shall be
specified
Page 7 of 19
8
in the Option Agreement evidencing such Option, and the person or
persons entitled to exercise the Option shall be entitled to elect from
those so specified form(s) to be used in effecting payment with respect
to a particular exercise; provided, however, that any election by a
Section 16 Person to use already owned Shares or have Shares withheld
from those issuable upon such exercise shall be effective only if made
in accordance with the applicable requirements of Rule 16b-3; and
provided further that a commitment for the delivery to the Company of
proceeds from the sale, pursuant to a brokerage or similar arrangement,
of Shares to be issued upon exercise of an Option will not be accepted
from a Section 16 Person if under Securities Law Requirements such a
sale would be matched with such exercise to result in "short-swing"
profit liability under Section 16(b) of the Act on the part of such
Section 16 Person with respect to such transaction.
(b) WITHHOLDING TAX LOANS. In addition to any one or more of
the acceptable forms of consideration recited in Paragraph (a) of this
Section 9 which the Committee may permit in the Option Agreement to be
used for the payment of withholding taxes, the Committee may determine
in its discretion at the time of grant of an Option to permit the
Optionee (but not any Successor) to, and if the Committee so
determines, shall provide in the Option Agreement evidencing such
Option that such Optionee may, borrow from the Company an amount
sufficient to pay the taxes required to be withheld in connection with
the exercise of such an Option, with each such borrowing to be
evidenced by a promissory note of the Optionee payable to the order of
the Company. Except as may otherwise be specified by the Committee in
its sole discretion at the time of grant thereof and reflected in the
Option Agreement evidencing an Option, each such loan shall be for a
term of five (5) years at a rate of interest equal to the Company's
then primary domestic commercial lender's prime or base rate as in
effect from time to time, with payments of interest on such loan due
quarterly and payments toward the principal of such loan due, to the
extent of the net proceeds therefrom, within fifteen (15) days after
any disposition by the Optionee of any Shares acquired upon exercise of
any stock option granted by the Company to the Optionee pursuant to the
Plan or otherwise (excluding any disposition of such Shares by gift or
to the Company in payment of the exercise price of a stock option
granted by the Company to the Optionee pursuant to the Plan or
otherwise and/or any related withholding taxes), provided that the
entire unpaid principal balance shall be due at the earlier of (i) the
expiration of the five (5) year term, or (ii) the termination of the
Optionee's Continuous Employment (other than by reason of Optionee's
"disability" (as defined in Section 10(d)) or "retirement" (as defined
in Section 10(e))).
(c) COMPANY WITHHOLDING OF TAXES. If, upon being notified by
the Company of the amount of the taxes required to be withheld in
connection with an exercise of an Option, the Optionee fails promptly
to pay, or to make arrangements acceptable to the Company for the
payment of, such taxes, the Company shall have the right to elect (but
shall be under no obligation) to cover such taxes through:
(i) withholding Shares from those issuable upon such
exercise, provided that any such election so to withhold
Shares with respect to the exercise of an Option
Page 8 of 19
9
by a Section 16 Person shall be effective only if made in
accordance with the applicable requirements of Rule 16b -3;
and/or
(ii) deducting such taxes from any amounts payable in
cash to the Optionee by the Company for any reason as of the
time of such exercise or any time thereafter.
(d) VALUATION OF SHARES DELIVERED OR WITHHELD. Where already
owned Shares, or Shares withheld from those issuable upon such
exercise, are used in payment of the exercise price and/or related
withholding taxes, such Shares shall be valued (i) with respect to the
payment of the exercise price, at Fair Market Value as of the day
immediately preceding the date of exercise and (ii) with respect to the
payment of withholding taxes, at Fair Market Value as of the day
immediately preceding the date tax withholding is required to be made.
(e) OPTIONEE CERTIFICATION OF ALREADY OWNED SHARES. Already
owned Shares which were acquired through a previous exercise of a stock
option granted to an Optionee by the Company pursuant to the Plan or
otherwise may be used in payment of the exercise price of an Option
and/or related withholding taxes only if the previous exercise through
which such Shares were acquired was made as of a date not less than six
(6) months prior to the date of the exercise of the Option in
connection with which such Shares are being tendered as payment. A
tender of already owned Shares in payment of the exercise price of an
Option and/or related withholding taxes will not be accepted by the
Company unless accompanied by a written statement signed by the person
or persons entitled to exercise such Option certifying that either (i)
the Shares tendered in payment were acquired other than through the
exercise of a stock option granted by the Company or (ii) the Shares
tendered in payment were acquired through the exercise, on such date(s)
as shall be recited in such statement (which date(s) shall be not less
than six (6) months prior to the date of tender), of stock option(s)
granted by the Company.
(f) DELIVERY OF ALREADY OWNED SHARES. Where the person
exercising an Option elects to use already owned Shares in full or
partial payment of the exercise price and/or related withholding taxes,
the Committee may, in its sole discretion, accept, in lieu of physical
delivery of the stock certificates evidencing such Shares, such
constructive delivery of such Shares as may be satisfactory to the
Committee.
10. METHOD OF EXERCISE.
(a) EXERCISE ELIGIBILITY. An Option may be exercised in
accordance with the terms hereof at any time after, and only after, one
or more of the following has occurred:
(i) a Change in Control (as defined in Paragraph
(c) of Section 12) or
(ii) an IPO.
Page 9 of 19
10
In the event of any conflict or apparent conflict between the
provisions of this Section 10(a) and any other provision in the Plan,
the provisions of this Section 10(a) shall control.
(b) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any
Option granted hereunder shall be exercisable at such times and under
such conditions as determined by the Committee and as permitted under
the Plan. An Option may not be exercised for a fraction of a Share. In
order to exercise an Option, the person or persons entitled to exercise
it shall deliver to the Company written notice of the number of Shares
with respect to which the Option is being exercised, accompanied by
payment in full of the aggregate exercise price for the Shares so to be
acquired. To constitute an effective exercise of an Option, such notice
and payment shall be addressed to the attention of the Treasurer of the
Company and must be received at the principal executive office of the
Company (i) with respect to an Option that is terminated for
"Misconduct" (as defined below) pursuant to Paragraph (b) of this
Section 10 or for "Prohibited Conduct" (as defined in Section 16(a))
pursuant to Section 16(a), prior to the time of the occurrence of the
event constituting such Misconduct or Prohibited Conduct or (ii) with
respect to any other Option, by 5:00 p.m., local time, on the date of
expiration or termination of the Option. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends nor any
other rights as a stockholder shall exist with respect to the Optioned
Stock notwithstanding the exercise of the Option. No adjustment will be
made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in
Section 12.
Exercise of an Option shall result in a decrease in the number
of Shares which thereafter shall be available for sale under such
Option by the number of Shares as to which the Option is exercised,
including any Shares withheld from the Shares to be issued pursuant to
such exercise to cover the exercise price and/or related withholding
taxes.
(c) TERMINATION OF EMPLOYMENT. Subject to the limitations in
Section 10(a) on exercise prior to a Change in Control or an IPO, and
except as may otherwise be specified by the Committee in its sole
discretion at the time of grant thereof and reflected in the Option
Agreement evidencing such Option, upon the termination of an Optionee's
Continuous Employment (other than by reason of the Optionee's death,
disability or retirement), he may exercise his Option (to the extent,
if any, that he was entitled to exercise it at the time of such
termination of employment) until the earlier of (i) the date thirty
(30) days (or such longer period of time as is determined by the
Committee in its sole discretion at the time of such termination of
employment, provided that if the Committee intends that a particular
Option continue to qualify as a Tax Qualified Option, the Committee
will observe such restrictions as may be imposed by applicable tax laws
on the post-termination period within which a Tax Qualified Option may
be exercised if it wishes to ensure that any post-termination exercise
of such Option is made only within the period permitted by such laws)
after the effective date of the termination of his employment or (ii)
the expiration date of such Option, and the Option shall terminate on
the earlier of such dates; provided, however, that if the Optionee is
terminated by the Company for Misconduct, then such Option shall
terminate effective as
Page 10 of 19
11
of the time of the conduct constituting such Misconduct. As used in the
Plan, "Misconduct" means that the Optionee has engaged in Prohibited
Conduct, committed an act of embezzlement, fraud or theft with respect
to the property or business of the Company or any of its affiliates, or
deliberately disregarded the rules of the Company in such a manner as
to cause material loss, damage or injury to or otherwise endanger the
property, reputation, employees or business prospects of the Company.
The Committee shall determine whether an Optionee's employment was
terminated by reason of Misconduct. In making such determination, the
Committee may, but shall not be required to, give the Optionee an
opportunity to be heard and to present evidence on his behalf.
(d) DEATH OF OPTIONEE. Subject to the limitations in Section
10(a) on exercise prior to a Change in Control or an IPO, and except as
may otherwise be specified by the Committee in its sole discretion at
the time of grant thereof and reflected in the Option Agreement
evidencing such Option, upon the death of an Optionee who is at the
time of his death in the employ of the Company or a Subsidiary and who
shall have been in Continuous Employment since the date of grant of the
Option, the Option may be exercised (to the extent, if any, the
Optionee was entitled to do so as of the date of his death) by his
Successor until the earlier of (i) the date six (6) months following
the date of death (or, if the Committee intends that a particular
Option qualify as a Tax Qualified Option, such lesser period of time
following the date of the Optionee's death within which the applicable
tax laws may require that the Option be exercised in order for such
Option so to qualify) and (ii) the expiration date of such Option, and
the Option shall terminate on the earlier of such dates.
(e) DISABILITY OF OPTIONEE. Subject to the limitations in
Section 10(a) on exercise prior to a Change in Control or an IPO, and
except as may otherwise be specified by the Committee in its sole
discretion and reflected in the Option Agreement evidencing such
Option, if an Optionee's Continuous Employment terminates due to his
having become permanently and totally disabled within the meaning of
Section 22(e)(3) of the Code ("disability"), the Option may be
exercised (to the extent, if any, the Optionee was entitled to do so as
of the effective date of the termination of his employment by reason of
such disability) until the earlier of (i) the later of June 1, 1998 or
the date one (1) year after the effective date of such termination of
employment and (ii) the expiration date of such Option, and the Option
shall terminate on the earlier of such dates.
(f) RETIREMENT OF OPTIONEE. Subject to the limitations in
Section 10(a) on exercise prior to a Change in Control or an IPO, and
except as may otherwise be specified by the Committee in its sole
discretion and reflected in the Option Agreement evidencing such
Option, if an Optionee's Continuous Employment terminates by reason of
(i) his retirement at any age entitling him to benefits under the
provisions of any retirement plan of the Company, the Parent, or any
Subsidiary in which such Optionee participates; or (ii) retirement at
any time after attaining age 65 (whichever circumstance is applicable
constituting "retirement"), the Option may be exercised (to the extent
the Optionee shall be entitled, if any, to do so as of the effective
date of the termination of his employment by reason of such retirement)
until the earlier of (A) the date three (3) months after the effective
Page 11 of 19
12
date of the termination of his employment and (B) the expiration date
of such Option, and the Option shall terminate on the earlier of such
dates.
11. NON-TRANSFERABILITY OF OPTIONS. Options may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner by the Optionee
except at death by will or by the laws of descent and distribution and may be
exercised during the life of the Optionee only by the Optionee. No lien,
obligation or liability of an Optionee or a Successor shall attach to or
otherwise encumber the right and interest of such Optionee or Successor in and
to any Options outstanding under the Plan.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) ADJUSTMENTS, IN GENERAL. Subject to the provisions of
Paragraph (b) of this Section 12 and to any required action by the
stockholders of the Company, the number of Shares covered by each
outstanding Option, and the number of Shares which have been authorized
for issuance under the Plan but as to which no Options have yet been
granted or which due to the expiration, lapse, cancellation, surrender,
forfeiture or other termination of a stock option under the Plan are
again available for grant, as well as the price per Share covered by
each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued and outstanding Shares
resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of Shares or any other similar increase
or decrease in the aggregate number of issued and outstanding Shares
effected without receipt of consideration by the Company; provided,
however, that neither the issuance of Shares pursuant to the exercise,
conversion or exchange of any securities of the Company exercisable
for, convertible into or exchangeable for Shares nor the issuance of
Shares pursuant to any anti-dilution agreement shall be deemed to have
been "effected without receipt of consideration." Any fractional Shares
which would otherwise result from any such adjustments shall be
eliminated either by deleting all fractional Shares or by appropriate
rounding to the next higher (fractions of one-half or more) or lower
(fractions of less than one -half) whole Share. All such adjustments
shall be made by the Board in its sole discretion. Except as expressly
provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into or exchangeable for shares of
stock of any class, shall affect, and no adjustment by reason thereof
shall be made to, the number of or exercise price for Shares subject to
an Option.
Subject to the provisions of Paragraph (b) of this Section 12,
in the event of a sale of all or substantially all of the assets of the
Company, the sale of all issued and outstanding shares of the Company
to a single purchaser, or the merger or consolidation of the Company
with or into another corporation, each outstanding Option shall be
assumed, or an equivalent option shall be substituted, by such
successor corporation or a parent or subsidiary of such successor
corporation, unless the Board, in the exercise of its sole discretion,
determines that, in lieu of such assumption or substitution, the
Optionee shall have the right to exercise the Option as to all or any
part of the Optioned Stock, including Shares as to which the Option
would not otherwise then be exercisable. If in the event of a merger,
consolidation or sale of the Company by stock or asset sale, the Board
makes an Option fully exercisable in lieu
Page 12 of 19
13
of assumption or substitution, the Company shall notify the Optionee
that the Option shall be fully exercisable for a period of thirty (30)
days from the date of such notice, and the Option will terminate upon
the expiration of such period.
(b) SPECIAL ADJUSTMENTS UPON CHANGE IN CONTROL. In the event
of a "Change in Control" of the Company (as defined in Paragraph (c) of
this Section 12), unless otherwise determined by the Board in its sole
discretion prior to the occurrence of such Change in Control, the
following acceleration and valuation provisions shall apply:
(i) Any Options outstanding as of the date of such
Change in Control that are not yet fully vested on such date
shall become fully vested; and
(ii) The value of all outstanding Options, measured
by the excess of the "Change in Control Price" (as defined in
Paragraph (d) of this Section 12) over the exercise price,
shall be cashed out, and the Options so cashed out shall
terminate. The cash out proceeds shall be paid to the Optionee
or, in the event of death of an Optionee prior to payment, to
his Successor.
(c) DEFINITION OF "CHANGE IN CONTROL". For purposes of this
Section 12, a "Change in Control" means the happening of any of the
following:
(i) When any "person," as such term is used in
Sections 13(d) and 14(d) of the Act becomes the "beneficial
owner" (as defined in Rule 13d-3 promulgated by the Commission
under the Act, as adopted and amended from time to time and as
interpreted by formal or informal opinions of, and releases
published or other interpretive advice provided by, the Staff
of the Commission), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding
securities;
(ii) The consummation of a transaction requiring
stockholder approval and involving the sale of all or
substantially all of the assets of the Company or the merger
or consolidation of the Company with or into another
corporation.
(iii) For purposes of determining whether there has
been a Change In Control under Section 12(c)(i), a Company or
affiliate employee benefit plan, including any trustee of such
a plan acting as trustee (who himself is not a beneficial
owner, directly or indirectly (other than the securities in
such trust), of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the
Company's then outstanding securities), acting as trustee
shall not be considered to be a person who has become the
beneficial owner, directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding
securities.
(d) DEFINITION OF "CHANGE IN CONTROL PRICE". For purposes of
this Section 12, "Change in Control Price" shall be: (i) the highest
price paid or offered, as determined by the
Page 13 of 19
14
Board, in any bona fide transaction or bona fide offer related to the
Change in Control at any time within the sixty (60) day period
immediately preceding the date of the Change in Control (the "Sixty-Day
Period") or if the Shares are then traded on the Nasdaq Stock Market
National Market System, a stock exchange or other recognized securities
market, then, at the election of the Board, (ii) the highest closing
sale price of a Share, as reported by the Nasdaq Stock Market National
Market System, any stock exchange on which the Shares are listed or any
other recognized securities market on which the Shares are traded, at
any time within the Sixty-Day Period.
13. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Committee makes the determination
granting such Option; provided, however, that the Committee may approve an
earlier grant date if required to ratify a prior promise by the Corporation to
an Employee to grant the Option. Notice of such determination shall be given to
each Employee to whom an Option is so granted within a reasonable time after the
date of such grant.
14. OPTION AGREEMENTS. As a condition to the effectiveness of each
grant of an Option under the Plan, the Optionee shall enter into a written
Option Agreement in such form as may be authorized by the Committee from time to
time. Subject to the provisions of Section 20(a), each such Option Agreement
shall contain such provisions as are required by the terms of the Plan and may
contain such additional provisions not inconsistent with the terms of the Plan
as the Committee in its sole discretion may from time to time authorize. Each
Option Agreement evidencing an Option granted to a Section 16 Person shall also
provide for such minimum waiting period from the date of grant before the Option
may be exercised, and such minimum holding period from the date of the
acquisition of Shares upon exercise of an Option for which such Shares must be
held before making any disposition of such Shares, as may be required by Rule
16b-3.
15. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an Option unless the exercise of such Option and the issuance and
delivery of such Shares pursuant thereto shall comply with all applicable
Securities Law Requirements and all other applicable provisions of law,
including, without limitation, any applicable state "blue sky" laws and foreign
(national and provincial) securities laws and the rules and regulations
promulgated under any of such laws, and shall be further subject to the approval
of counsel for the Company with respect to such compliance.
As a condition to the grant or exercise of an Option or the issuance of
Shares upon exercise of an Option, the Company may require the person exercising
such Option to become a party to a stockholders agreement restricting
transferability of the Shares and to make such representations and warranties to
the Company as may be required by the Committee in its sole discretion,
including those which, in the opinion of counsel for the Company, are required
by any of the aforementioned Securities Law Requirements and other laws, which
may include, without limitation, representations and warranties that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares.
Page 14 of 19
15
The Company shall not have any liability to any Optionee in respect of
any delay in the sale or issuance of Shares hereunder until the Company is able
to obtain authority from any governmental authority (domestic or foreign) or
self-regulatory organization having jurisdiction thereover, which authority is
deemed by the Company's counsel to be necessary to the lawful sale and issuance
of such Shares, or any failure to sell or issue such Shares as to which such
requisite authority the Company is unable to obtain. In no event shall the
Company be required to take any action to make it possible to issue Shares
hereunder.
16. FORFEITURE OF OPTIONS AND REALIZED BENEFITS.
(a) LOSS OF UNEXERCISED OPTIONS. If an Optionee holding an
outstanding Option, without the written consent of the Company as
authorized by the Committee in its sole discretion, engages in any of
the following (any such conduct being referred to as "Prohibited
Conduct") at any time during the period beginning on the date the
Optionee first entered the employ of the Company, the Parent or a
Subsidiary and continuing for so long as any portion of such Option
remains outstanding and unexercised (the "Grant Period"):
(i) rendering services for any organization or
engaging directly or indirectly in any business which, in the
sole judgment of the Committee, is or becomes competitive with
the Company, the Parent or a Subsidiary, or where such
rendering of services or engaging in business, in the sole
judgment of the Committee, is or becomes otherwise prejudicial
to or in conflict with the interests of the Company, the
Parent or a Subsidiary; provided, however, that the ownership
of a not more than ten percent (10%) equity interest in any
organization or business whose equity is listed on a
recognized securities exchange or traded over-the-counter
shall not constitute Prohibited Conduct within the meaning of
this Subparagraph (i);
(ii) disclosing to anyone outside the Company, the
Parent or any Subsidiary, or use in other than the business of
the Company, the Parent or any Subsidiary, any confidential or
proprietary information relating to the business of the
Company, the Parent or any Subsidiary, acquired by the
Optionee either during or after employment with the Company,
the Parent or a Subsidiary;
(iii) except as may otherwise be permitted by any
agreement otherwise made by the Company, the Parent or a
Subsidiary with the Optionee, failing to disclose fully and
promptly in writing and assign to the Company, the Parent or
to the Subsidiary by which the Optionee is or was employed all
right, title and interest in any discovery, invention,
process, method, improvement or idea, whether or not
patentable or subject to copyright protection and whether or
not reduced to tangible form or reduced to practice, made or
conceived by such person during employment by the Company, the
Parent or such Subsidiary, relating in any manner to the
actual or contemplated business, research or development work
of the Company, the Parent or such Subsidiary or to do
anything reasonably necessary to enable the Company, the
Parent or such Subsidiary to secure a patent, copyright or
similar protection in the
Page 15 of 19
16
United States of America and/or in foreign countries as the
Company, the Parent or such Subsidiary may elect; or
(iv) inducing or attempting to induce any customer or
supplier of the Company , the Parent or a Subsidiary to breach
any contract with the Company , the Parent or a Subsidiary or
otherwise terminate its relationship with the Company, the
Parent or a Subsidiary; then the Committee shall have the
right, upon determining that the Optionee has engaged in any
Prohibited Conduct at any time during the Grant Period (in
making such determination, the Committee may, but shall not be
required to, give the Optionee an opportunity to be heard and
to present evidence on his behalf), to declare the Option
forfeited and canceled effective as of the time of the conduct
constituting such Prohibited Conduct.
(b) OPTIONEE CERTIFICATION UPON EXERCISE. Each time an
Optionee exercises an Option, the Optionee shall be deemed to certify
to the Company that such Optionee did not, without the written consent
of the Company as authorized by the Committee in its sole discretion,
engage in any Prohibited Conduct at any time during the period
beginning on the date the Optionee first entered the employ of the
Company, the Parent or a Subsidiary and ending on the date of such
exercise (the "Pre-Exercise Period").
(c) LOSS OF REALIZED BENEFITS. In the event that the Committee
determines with respect to a particular exercise of an Option that the
Optionee engaged in any Prohibited Conduct at any time during the
Pre-Exercise Period or within one (1) year after such exercise (in
making such determination, the Committee may, but shall not be required
to, give the Optionee an opportunity to be heard and to present
evidence on his behalf), such Optionee shall be liable to the Company
(i) to the extent such Optionee has, prior to his receipt of the
"Forfeiture Notice" (as defined below), disposed of the Shares acquired
through such exercise, for payment to the Company of an amount in cash
equal to the excess of (A) the net cash proceeds from such disposition
(or if such Shares were disposed of other than for cash, the aggregate
Fair Market Value of such Shares as of the date of disposition) over
(B) that portion of the sum of the cash and the aggregate Fair Market
Value as of the exercise date of any already owned Shares used by the
Optionee to pay the exercise price for such Shares (such sum being
referred to as the "Exercise Payment") which is allocable to the Shares
disposed of in the proportion that such number of Shares bears to the
total number of Shares issued pursuant to such Option exercise and (ii)
to the extent such Optionee still owns at the time he receives the
Forfeiture Notice the Shares acquired through such exercise, at the
option of the Committee, either (A) for the return of such Shares to
the Company in exchange for a cash refund from the Company to such
Optionee in an amount equal to that portion of the Exercise Payment
which is allocable to the Shares still owned in the proportion that
such number of Shares bears to the total number of Shares issued
pursuant to such Option exercise (such portion being referred to as the
"Retained Shares Exercise Payment") or (B) for payment to the Company
of an amount in cash equal to the excess of the aggregate Fair Market
Value as of the exercise date of the Shares still owned over the
Retained Shares Exercise Payment. To enforce such liability against
such Optionee, the Committee shall notify the Optionee thereof in
writing within three (3) years of the date of the affected Option
Page 16 of 19
17
exercise, which notice (the "Forfeiture Notice") shall include a
statement of the form of payment which the Committee has elected to
receive from the Optionee with respect to Shares still owned by the
Optionee. Within ten (10) days after receiving the Forfeiture Notice,
the Optionee shall make full payment of such liability to the Company
in cash, or to the extent such Optionee still owns Shares acquired
through the affected exercise and the Committee elects in the
Forfeiture Notice to receive such Shares, stock certificates evidencing
such Shares still owned by the Optionee (duly endorsed for transfer
with signature guaranteed). In the event that the Committee elects to
receive, and the Optionee returns, Shares, the Company shall make the
refund payment required to be made to the Optionee with respect to such
Shares upon the Company's receipt of such Shares as hereinabove
required.
(d) CUMULATIVE RIGHTS. The obligation of an Optionee under
this Section 16 to refrain from Prohibited Conduct is in addition to,
and does not in any way supersede or diminish, any other obligation of
such Optionee with respect to such matters which such Optionee may owe
to the Company, the Parent, any Subsidiary or any other person under
any agreement, applicable law or otherwise (a "Similar Obligation").
Any action taken by the Company or the Committee to enforce,
compromise, settle or waive the provisions of this Section 16 with
respect to any particular event constituting Prohibited Conduct shall
not in any way affect the rights of the Company, the Committee, the
Parent, any Subsidiary or any other person against an Optionee with
respect to any other event constituting Prohibited Conduct or any
Similar Obligation, nor shall any action taken or failed to be taken by
the Company, the Parent, any Subsidiary or any other person against an
Optionee to enforce, compromise, settle or waive any Similar Obligation
have any effect on the rights of the Company and the Committee under
this Section 16.
17. RESERVATION OF SHARES. As of the date of adoption of the Plan, the
Company has sufficient authorized but unissued Shares to satisfy the
requirements of the Plan. The Company shall reserve and hereafter keep available
such number of Shares as shall be sufficient to satisfy the requirements of the
Plan.
18. EFFECTIVENESS OF PLAN. The Plan was duly adopted by the Board and
by the unanimous written consent of the Stockholders, as required by the
Delaware General Corporation Law. The Plan shall continue in full force and
effect until (i) terminated by resolution of the Board or (ii) both (A) all
Options granted under the Plan have been exercised in full and (B) no Authorized
Shares remain available for the granting of additional Options. The termination
of the Plan shall not affect Options already granted, which Options shall remain
in full force and effect in accordance with their respective terms and the terms
hereof as if the Plan had not been terminated.
19. AMENDMENT OF PLAN AND OUTSTANDING OPTIONS. The Board may,
in its sole discretion, amend the Plan from time to time, provided that any
amendment which Rule 16b-3 or any other Securities Law Requirement requires be
approved by the stockholders of the Company shall be made only with the approval
of such stockholders. Amendments to the Plan shall apply prospectively to all
Options then outstanding under the Plan, except in the case of any amendment
which is adverse to an Optionee, in which case the amendment shall apply with
respect
Page 17 of 19
18
to the outstanding Options held by the adversely affected Optionee only upon the
consent of such Optionee to such amendment. In exercising its authority under
Section 4(b)(v) to amend outstanding Options, the Committee likewise may make an
amendment which adversely affects the Optionee only upon the consent of such
Optionee to such amendment. Notwithstanding the provisions of this Section 19,
the consent of the Optionee shall not be required with respect to an amendment
to the Plan or to any outstanding Option which is made in order to comply with
Securities Law Requirements or which causes a Tax Qualified Option no longer to
qualify as such.
20. GENERAL PROVISIONS.
(a) GRANTS TO FOREIGN EMPLOYEES. Notwithstanding any other
provision of the Plan to the contrary but subject to applicable
Securities Law Requirements and tax laws, to the extent deemed
necessary or appropriate by the Committee in its sole discretion in
order to further the purposes of the Plan with respect to Employees who
are foreign nationals and/or employed outside the United States of
America, an Option granted to any such Employee may be on terms and
conditions different from those specified in the Plan in recognition of
the differences in the laws, tax policies and customs applicable to
such an Employee, without the necessity of the Plan being amended to
provide for such different terms and conditions.
(b) NATURE OF BENEFITS. Benefits realized by an Optionee under
the Plan or any Option granted hereunder shall not be deemed a part of
such Optionee's regular, recurring compensation for purposes of the
termination, indemnity or severance pay law of any country and shall
not be included in, nor have any effect on, the determination of
benefits under any other employee benefit plan or similar arrangement
provided to such Optionee by the Company unless expressly so provided
by such other plan or arrangement, or except where the Committee
expressly determines in its sole discretion that an Option or portion
thereof should be so included in order accurately to reflect
competitive compensation practices or to recognize that an Option has
been granted in lieu of a portion of competitive annual cash
compensation.
(c) DETERMINATION OF DEADLINES. If any day on or before which
action under the Plan or any Option granted hereunder must be taken
falls on a Saturday, Sunday or Company-recognized holiday, such action
may be taken on the next succeeding day which is not a Saturday, Sunday
or Company-recognized holiday; provided, however, that the provisions
of this Paragraph (c) shall not apply to, and shall not extend the time
for exercise of, any Option which is terminated for Misconduct pursuant
to Section 10(b) or for Prohibited Conduct pursuant to Section 16(a).
(d) GOVERNING LAW. To the extent that federal laws (such as
the Act or the Code) or the Delaware General Corporation Act do not
otherwise control, the Plan and all determinations made and actions
taken pursuant hereto shall be governed by the laws of the State of
Ohio and construed accordingly.
Page 18 of 19
19
(e) GENDER AND NUMBER. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns
shall include the plural and vice versa.
(f) CAPTIONS. The captions contained in the Plan are for
convenience of reference only and do not affect the meaning of any term
or provision hereof.
Page 19 of 19