VIISAGE TECHNOLOGY, INC.
AMENDED AND RESTATED 1996 MANAGEMENT STOCK OPTION PLAN
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Section 1 -- Purpose
The Purpose of this Plan is to advance the interest of Viisage Technology,
Inc. (the "Company"), a Delaware corporation, by providing an opportunity to
selected officers and employees of the Company to purchase common stock of the
Company. By encouraging such stock ownership, the Company and its parent seek
to attract, retain and motivate officers and employees. It is intended that
this purpose will be effected by issuance of nonqualified stock options
("nonqualified options") and incentive stock options intended to qualify under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")
("incentive options").
Section 2 -- Effective Date
The Plan became effective as of June 17, 1996, the date as of which it was
adopted by the Board of Directors of the Company (the "Effective Date"),
provided that, with respect to incentive options, the Plan is approved by the
shareholders of the Company within one year of that date. (If such approval is
not obtained, the Plan shall be effective only for the purpose of issuing
nonqualified options, and although incentive options may be issued before
Shareholder approval is obtained, no incentive option may be exercised until
such approval is obtained or one year has elapsed from the Effective Date, and
such incentive options will be treated as nonqualified options if such approval
is not obtained.) On July 21, 1997, the Board voted to amend the Plan, subject
to shareholder approval, to authorize an additional 701,000 shares under the
Plan to increase the number of shares available under the Plan to 2,057,100
shares. On January 26, 2000, the Board voted to further amend the Plan,
subject to shareholder approval, to authorize an additional 750,000 shares under
the Plan to increase the number of shares available under the Plan to 2,807,100
shares.
Section 3 -- Stock Subject to the Plan
Options issued under this Plan shall be exercisable for the Company's
common stock. The number of shares that may be issued under this Plan shall not
exceed in the aggregate two million eight hundred seven thousand one hundred
(2,807,100) shares of the common stock, $.001 par value, of the Company (the
"Shares"), subject to adjustment as provided in Sections 9 and 10 below. Any
Shares subject to an option which for any reason expires or is terminated as to
such Shares may again be the subject of an option under this Plan. In addition,
any Shares purchased by an optionee upon exercise of an option under this Plan
that are subsequently repurchased by the Company pursuant to the terms of such
option, and Shares tendered as payment for Shares upon exercise of an option
under this Plan, may again be the subject of an option under the Plan. The
Shares delivered upon exercise of options under this Plan may, in whole or in
part, be either authorized but unissued Shares or issued Shares reacquired by
the Company.
Section 4 -- Administration
This Plan shall be administered by a committee of two or more non-employee
members of the Board of Directors of the Company appointed by the Board (the
"Committee"), each of whom
meets any applicable requirements under Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or any successor provision, as
applicable to the Company at the time ("Rule 16b-3"). Subject to the provisions
of the Plan, the Committee shall have full power to construe and interpret the
Plan and to establish, amend and rescind rules and regulations for its
administration. Any decisions made with respect thereto shall be final and
binding on the Company, the optionee and all other persons. No member of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan.
Section 5 -- Eligible Participants
Incentive options may be issued to such management employees of the Company
as are selected by the Committee. Nonqualified options may be issued to such
officers or management employees of the Company as are selected by the
Committee. Options under this Plan may not be issued to members of the Board of
Directors of the Company. No employee may be granted options to acquire, in the
aggregate, more than 1,337,000 Shares under the Plan (subject to adjustment as
provided in Sections 9 and 10 below) during any fiscal year of the Company. If
any option granted under the Plan shall expire or terminate for any reason
without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part or shall be repurchased by the Company, the
Shares subject to such option shall be included in the determination of the
aggregate number of Shares deemed to have been granted to such employee under
the Plan.
Section 6 -- Duration of the Plan
This Plan shall remain in effect indefinitely, unless terminated earlier
pursuant to Paragraph 14 hereof, provided no incentive options may be issued
after the tenth anniversary of the Effective Date. Options that are issued on or
before the date of this Plan's termination shall remain exercisable in
accordance with their respective terms after the termination of the Plan.
Section 7 -- Restriction on Incentive Options
Incentive options (but not nonqualified options) issued under this Plan
shall be subject to the following restrictions:
(a) Limitation on Number of Shares. To the extent that the aggregate fair
market value, determined as of the date the incentive option is issued, of the
Shares with respect to which incentive options are exercisable for the first
time by an employee during any calendar year exceeds $100,000 (the "$100,000
limitation"), the portion of such option which is exercisable in excess of such
$100,000 limitation shall be treated as a nonqualified option. In the event
that an employee is eligible to participate in any other incentive stock option
plan of the Company intended to comply with the provisions of Section 422 of the
Code, the $100,000 limitation shall apply to the aggregate number of Shares for
which incentive stock options may be issued under all such plans.
(b) 10% Stockholder. If any employee to whom an incentive option is issued
pursuant to the provisions of the Plan is on the date of issuance the owner of
stock (as determined under Section 424 (d) of the Code) possessing more than 10%
of the total combined voting power of all classes of stock of the Company or any
of its subsidiaries, then the following special provisions shall
be applicable to the incentive option issued to such individual:
(i) The option price per share subject to such incentive option shall not
be less than 110% of the fair market value of one share on the date of
issuance; and
(ii) The incentive option shall not have a term in excess of five (5) years
from the date of issuance.
Section 8 -- Terms and Conditions of Options
Options issued under this Plan shall be evidenced by written instruments in
such form not inconsistent with this Plan as the Committee shall approve from
time to time, which instruments shall evidence the following terms and
conditions, and such other terms and conditions (which need not be the same in
different options) not inconsistent with the Plan as the Committee may approve
from time to time:
(a) Price. Subject to the conditions on incentive options in paragraph
7(b), if applicable, the purchase price per share of stock payable upon the
exercise of each incentive option issued hereunder shall be not less than one
hundred percent of the fair market value of the stock on the day the option is
issued. The purchase price per Share of stock payable upon exercise of each
nonqualified option issued hereunder shall be determined by the Committee. Fair
market value shall be determined in accordance with procedures to be established
in good faith by the Committee and, with respect to incentive options,
conforming to regulations issued by the Internal Revenue Service with regard to
incentive stock options.
(b) Number of Shares. Each option agreement shall specify the number of
Shares to which it pertains.
(c) Exercise of Options. Subject to the conditions on incentive options in
subparagraph (b)(ii) of Paragraph 7, if applicable, each option shall be
exercisable for the full amount or for any part thereof and at such intervals or
in such installments, with acceleration based on such events, as the Committee
may determine at the time it issues such option, provided that no incentive
option shall be exercisable with respect to any Shares later than ten (10) years
after the date of the issuance of such option.
(d) Notice of Exercise and Payment. An option shall be exercisable only by
delivery of a written notice to the Company's Treasurer or any other officer of
the Company designated by the Committee to accept such notices on its behalf,
specifying the number of Shares for which it is exercised. If said Shares are
not at that time effectively registered under the Securities Act of 1933, as
amended, the optionee shall include with such notice a letter, in form and
substance satisfactory to the Company, confirming that the Shares are being
purchased for the optionee's own account for investment and not with a view to
distribution. Payment shall be made in full at the time the option is
exercised. Payment shall be made by (i) cash; (ii) by check; (iii) if permitted
by vote of the Committee and stated in the Option agreement, subject to Section
13(c) below, by delivery and assignment to the Company of Shares previously
owned by the optionee for more than six months and having a value equal to the
Option price; (iv) if permitted by vote of the Committee and stated in
the Option agreement (and if permitted by applicable law), through the delivery
of an assignment to the Company of a sufficient amount of the proceeds from the
sale of unrestricted Shares acquired upon exercise to pay for all of the Shares
so acquired and any tax withholding obligation resulting from such exercise, and
an authorization to the broker or selling agent to pay that amount to the
Corporation; or (v) by a combination of (i), (ii), (iii) and (iv). The value of
the Company stock for purposes of the foregoing clause (iii) shall be its fair
market value as of the date the Option is exercised, as determined in accordance
with procedures to be established by the Committee.
(e) Withholding Taxes; Delivery of Shares. The Company's obligation to
deliver Shares upon exercise of an option, in whole or in part, shall be subject
to the optionee's satisfaction of all applicable federal, state and local income
and employment act withholding obligations. If permitted by vote of the
Committee and stated in the stock option agreement, subject to Section 13(c)
below, the optionee may satisfy the obligation, in whole or in part, (i) by
electing to have Shares withheld having a value equal to the amount to be so
satisfied (but not in an amount exceeding the minimum statutory withholding
requirement applicable to such exercise), or (ii) by delivery and assignment to
the Company of Shares previously owned by the optionee having a value equal to
the amount to be so satisfied (but unless such Shares have been owned by the
optionee for more than six months, not in an amount exceeding the minimum
statutory withholding requirement applicable to such exercise). The value of
Shares to be withheld or assigned shall be determined based on the fair market
value of the Shares on the date the amount of tax to be withheld is to be
determined.
(f) Termination of Options. Each option shall terminate and may no longer
be exercised if the optionee ceases for any reason to perform services as an
employee (or in the case of nonqualified options, as an officer or employee),
unless otherwise provided in the optionee's option agreement; provided, however,
that no option may be exercised to any extent by anyone after the date of
expiration of the option.
(g) Rights as Shareholder. The optionee shall have no rights as a
shareholder with respect to any Share covered by this option until the purchase
thereof.
(h) Non-Transferability. No option shall be transferable by the optionee
otherwise than by will or the laws of descent or distribution, and each option
shall be exercisable during the optionee's lifetime only by the optionee.
Notwithstanding the foregoing (but in the case of an optionee that is subject to
Section 16 of the Exchange Act, only to the extent consistent with the
requirements of Rule 16b-3 or other rules under Section 16 of the Exchange Act,
and in the case of an incentive option, only if then permitted for incentive
options under the Code and applicable regulations and rulings), such option may
be transferred pursuant to an order that would constitute a qualified domestic
relations order as defined in the Code or Title I of the Employee Retirement
Income Security Act or the rules thereunder.
(i) Repurchase of Shares by the Company. Any Shares purchased by an
optionee upon exercise of an option may in the discretion of the Committee be
subject to repurchase by the Company if and to the extent specifically set forth
in the option agreement pursuant to which the Shares were purchased.
(j) The instruments evidencing options may be in the form of agreements to
be executed
by both the optionee and the Company or certificates, letters or similar
instruments, which need not be executed by the optionee but acceptance of which
will evidence agreement to the terms of the issuance.
Section 9 -- Stock Dividends; Stock Splits; Stock Combinations;
Recapitalization.
In the event of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Company's capitalization, or other
distribution with respect to holders of the Company's common stock other than
normal cash dividends, automatic adjustment shall be made in the number and kind
of shares as to which outstanding options or portions thereof then unexercised
shall be exercisable and in the available shares set forth in Section 3 hereof,
to the end that the proportionate interest of the option holder shall be
maintained as before the occurrence of such event. Such adjustment in
outstanding options shall be made without change in the total price applicable
to the unexercised portion of such options and with a corresponding adjustment
in the option price per share. Automatic adjustment shall also be made in the
number and kind of shares subject to options subsequently issued under the Plan.
Section 10 -- Merger; Sale of Assets; Dissolution
In the event of a change of the Company's common stock resulting from a
merger or similar reorganization as to which the Company is the surviving
corporation, or the formation of a holding company, the number and kind of
shares which thereafter may be optioned and sold under the Plan and the number
and kind of shares then subject to options issued hereunder or portions thereof
then unexercised and the price per share thereof shall be appropriately adjusted
by the Committee to prevent substantial dilution or enlargement of the rights
available or granted hereunder. If the Company shall be a party to a merger or
a similar reorganization after which the Company will not survive, or if there
will be a sale of substantially all the common stock of the Company or a sale of
all or substantially all of the assets of the Company, the Committee, in its
discretion, may declare (a) that all outstanding options issued hereunder are to
be terminated after giving at least 30 days' notice to holders of outstanding
options (but if the Committee determines that 30 days' notice would be
disruptive to the reorganization transaction with respect to which such notice
is given, then the Committee may give such shorter notice as the circumstances
reasonably require, but in no event less than 10 days), (b) that any outstanding
option issued hereunder shall pertain to and apply, with appropriate adjustments
as determined by the Committee, to the securities of the resulting corporation
to which a holder of the number of Shares subject to the option would have been
entitled, or (c) that the Company or resulting corporation will purchase all
outstanding options issued hereunder from the optionees at a price per Share as
to which the option is outstanding, unexercised and vested equal to the
difference between the price at which Shares of the Company are to be purchased
or exchanged in the transaction and the option price stated in the option
agreement.
Section 11 -- Certain Definitions
(a) The term "employee" shall have, for purposes of the Plan, the meaning
ascribed to it under Section 3401(c) of the Code and the regulations promulgated
thereunder.
(b) the term "option", unless otherwise indicated, means either an
incentive option or a nonqualified option.
(c) the term "optionee" means an officer or employee to whom an option is
issued under this Plan.
Section 12 -- Reload Options
Concurrently with the award of incentive options and nonqualified options
under this Plan, the Committee may authorize reload options ("Reload Options")
to purchase the number of Shares which equals, to the extent authorized by the
Committee, the number of Shares previously owned by the optionee for more than
six months that are delivered and assigned to the Company in payment of the
exercise price of such underlying option or in payment of the optionee's
withholding tax obligation arising from the exercise of such underlying option.
The issuance of a Reload Option shall become effective upon the exercise of such
underlying option. Despite the fact that the underlying option may be an
incentive option, a Reload Option is not intended to qualify as an "incentive
stock option" under Section 422 of the Code. The instrument evidencing each
option under this Plan for which Reload Options have been authorized by the
Committee shall state that Reload Options are authorized thereunder, and upon
exercise of such underlying option, the Reload Option shall be evidenced by an
amendment to the underlying option instrument. The option price per Share
deliverable upon the exercise of a Reload Option shall be the fair market value
per Share on the date the issuance of the Reload Option becomes effective, as
determined by the Committee. Each Reload Option is exercisable six months from
the effective date of its issuance. The term of each Reload Option shall be
equal to the remaining option term of the underlying incentive option or
nonqualified option with respect to which it was issued. No additional Reload
Options shall be issued to optionees when options are exercised following
termination of the optionee's employment, except to the extent otherwise
provided in an optionee's option agreement.
Section 13 -- Regulatory Compliance and Listing
(a) The issuance or delivery of any Shares subject to exercisable Options
hereunder may be postponed by the Committee for such period as may be required
to comply with any applicable requirements under the Federal securities laws,
any applicable listing requirements of NASDAQ or any national securities
exchange or any requirements under any law or regulation applicable to the
issuance or delivery of such Shares. The Company shall not be obligated to issue
or deliver any such Shares if the issuance or delivery thereof would constitute
a violation of any provision of any law or of any applicable regulation of any
governmental authority, NASDAQ or any national securities exchange.
(b) Should any provision of this Plan require modification or be
unnecessary to comply with the requirements of Section 16 of the Exchange Act
and Rule 16b-3, subject, in the case of incentive options, to applicable
requirements for incentive options under the Code, the Committee may waive such
provision and/or amend this Plan to add to or modify the provisions hereof
accordingly.
(c) Any election made by an optionee then subject to Section 16 of the
Exchange Act to make payment of any portion of an option price with Shares or to
make payment of any portion of a
tax withholding obligation with respect to an option exercise with Shares or by
withholding of Shares shall be subject to any then-applicable requirements of
Rule 16b-3 and other applicable rules under Section 16 of the Exchange Act.
Section 14 -- Termination or Amendment of Plan
The Board of Directors shall have the right to amend, modify or terminate
the Plan at any time and from time to time; provided, however, that unless
required by law, no such amendment or modification shall (a) affect any right or
obligation with respect to any option theretofore issued; or (b) if this Plan
has been approved by the Company's stockholders, make any modification or
amendment affecting incentive options, for which stockholder approval is
required under the Code, unless such amendment or modification affecting
incentive options has been approved by the stockholders. In addition, no such
amendment or modification shall be made without previous approval by the
stockholders where such approval is necessary to satisfy, nor shall any
amendment or modification be made at a time when the same would violate, any
then-applicable requirements of federal securities laws (including without
limitation Rule 16b-3), the Code or rules of NASDAQ or any stock exchange on
which the Company's common stock is listed.