LASER STORM, INC.
1996 INCENTIVE AND NONSTATUTORY
STOCK OPTION PLAN
1. Purpose of the Plan. The purposes of this 1996 Incentive and
Nonstatutory Stock Option Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to the Employees and Consultants of the Company and to promote the
success of the Company's business. Options granted hereunder may be either
"incentive stock options," as defined in Section 422 of the Internal Revenue
Code of 1986, as amended, or "nonstatutory stock options," at the discretion of
the Board and as reflected in the terms of the written stock option agreement.
2. Definitions. As used herein, the following definitions shall apply:
a. "Board" shall mean the Committee, if one has been appointed,
or the Board of Directors of the Company if no Committee is appointed.
b. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
c. "Common Stock" shall mean the $0.001 par value common stock of
the Company.
d. "Company" shall mean Laser Storm, Inc., a Colorado
corporation.
e. "Committee" shall mean the Committee appointed by the Board in
accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed, or the Board if no committee is appointed.
f. "Consultant" shall mean any person who is engaged by the
Company or any Subsidiary to render consulting services and is
compensated for such consulting services, but does not include a
director of the Company who is compensated for services as a director
only with the payment of a director's fee by the Company.
g. "Continuous Status as an Employee" shall mean the absence of
any interruption or termination of service as an Employee. Continuous
Status as an Employee 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 90 days or reemployment upon the expiration of such leave is
guaranteed by contract or statute.
h. "Employee" shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the
Company. The payment of a director's fee by the Company shall not be
sufficient to constitute "employment" by the Company.
i. "Incentive Stock Option" shall mean an Option which is
intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code and which shall be clearly identified as such
in the written Stock Option Agreement provided by the Company to each
Optionee granted an Incentive Stock Option under the Plan.
j. "Non-Employee Director" shall mean a director who:
(i) Is not currently an officer (as defined in
Section 16a-1(f) of the Securities Exchange Act of 1934, as
amended) of the Company or a Parent or Subsidiary of the
Company, or otherwise currently employed by the Company or a
Parent or Subsidiary of the Company.
(ii) Does not receive compensation, either directly
or indirectly, from the Company or a Parent or Subsidiary of
the Company, for services rendered as a Consultant or in any
capacity other than as a director, except for an amount that
does not exceed the dollar amount for which disclosure would
be required pursuant to Item 404(a) of Regulation S-K adopted
by the United States Securities and Exchange Commission.
(iii) Does not possess an interest in any other
transaction for which disclosure would be required pursuant to
Item 404(a) of Regulation S-K adopted by the United States
Securities and Exchange Commission.
k. "Nonstatutory Stock Option" shall mean an Option granted under
this Plan which does not qualify as an Incentive Stock Option and
which shall be clearly identified as such in the written Stock Option
Agreement provided by the Company to each Optionee granted a
Nonstatutory Stock Option under this Plan. To the extent that the
aggregate fair market value of Optioned Stock to which Incentive Stock
Options granted under Options to an Employee are exercisable for the
first time during any calendar year (under the Plan and all plans of
the Company or any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options under the Plan.
The aggregate fair market value of the Optioned Stock shall be
determined as of the date of grant of each Option and the
determination of which Incentive Stock Options shall be treated as
qualified incentive stock options under Section 422 of the Code and
which Incentive Stock Options exercisable for the first time in a
particular year in excess of the $100,000 limitation shall be treated
as Nonstatutory Stock Options shall be determined based on the order
in which such Options were granted in accordance with Section 422(d)
of the Code.
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l. "Option" shall mean an Incentive Stock Option, a Nonstatutory
Stock Option or both as identified in a written Stock Option Agreement
representing such stock option granted pursuant to the Plan.
m. "Optioned Stock" shall mean the Common Stock subject to an
Option.
n. "Optionee" shall mean an Employee or other person who is
granted an Option.
o. "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
p. "Plan" shall mean this 1996 Incentive and Nonstatutory Stock
Option Plan.
q. "Share" shall mean a share of the Common Stock of the Company,
as adjusted in accordance with Section 11 of the Plan.
r. "Stock Option Agreement" shall mean the agreement to be
entered into between the Company and each Optionee which shall set
forth the terms and conditions of each Option granted to each
Optionee, including the number of Shares underlying such Option and
the exercise price of each Option granted to such Optionee under such
agreement.
s. "Subsidiary" shall mean a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 1,000,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock. If an Option should expire
or become unexercisable for any reason without having been exercised in full,
the unpurchased Shares which were subject thereto shall, unless the Plan shall
have been terminated, become available for future grant under the Plan.
4. Administration of the Plan.
a. Procedure. The Plan shall be administered by the Board or a
Committee appointed by the Board consisting of two or more
Non-Employee Directors to administer the Plan on behalf of the Board,
subject to such terms and conditions as the Board may prescribe.
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(i) Once appointed, the Committee shall continue to
serve until otherwise directed by the Board (which for
purposes of this paragraph (a)(i) of this Section 4 shall be
the Board of Directors of the Company). From time to time the
Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without
cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the
Committee and thereafter directly administer the Plan.
(ii) Members of the Board who are granted, or have
been granted, Options may vote on any matters affecting the
administration of the Plan or the grant of any Options
pursuant to the Plan.
b. Powers of the Board. Subject to the provisions of the Plan,
the Board shall have the authority, in its discretion:
(i) To grant Incentive Stock Options, in accordance
with Section 422 of the Code, and Nonstatutory Stock Options
or both as provided and identified in a separate written Stock
Option Agreement to each Optionee granted such Option or
Options under the Plan; provided however, that in no event
shall an Incentive Stock Option and a Nonstatutory Stock
Option granted to any Optionee under a single Stock Option
Agreement be subject to a "tandem" exercise arrangement such
that the exercise of one such Option affects the Optionee's
right to exercise the other Option granted under such Stock
Option Agreement;
(ii) To determine, upon review of relevant
information and in accordance with Section 8(b) of the Plan,
the fair market value of the Common Stock;
(iii) To determine the exercise price per Share of
Options to be granted, which exercise price shall be
determined in accordance with Section 8(a) of the Plan;
(iv) To determine the Employees or other persons to
whom, and the time or times at which, Options shall be granted
and the number of Shares to be represented by each Option;
(v) To interpret the Plan;
(vi) To prescribe, amend and rescind rules and
regulations relating to the Plan;
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(vii) To determine the terms and provisions of each
Option granted (which need not be identical) and, with the
consent of the holder thereof, modify or amend each Option;
(viii) To accelerate or defer (with the consent of
the Optionee) the exercise date of any Option, consistent with
the provisions of Section 7 of the Plan;
(ix) To authorize any person to execute on behalf of
the Company any instrument required to effectuate the grant
of an Option previously granted by the Board; and
(x) To make all other determinations deemed
necessary or advisable for the administration of the Plan.
c. Effect of Board's Decision. All decisions, determinations
and interpretations of the Board shall be final and binding on all
Optionees and any other permissible holders of any Options granted
under the Plan.
5. Eligibility.
a. Persons Eligible. Options may be granted to any person
selected by the Board. Incentive Stock Options may be granted only to
Employees. An Employee, who is also a director of the Company, its
Parent or a Subsidiary, shall be treated as an Employee for purposes
of this Section 5. An Employee or other person who has been granted an
Option may, if he is otherwise eligible, be granted an additional
Option or Options.
b. No Effect on Relationship. The Plan shall not confer upon any
Optionee any right with respect to continuation of employment or other
relationship with the Company nor shall it interfere in any way with
his right or the Company's right to terminate his employment or other
relationship at any time.
6. Term of Plan. The Plan became effective on November 1, 1996. It shall
continue in effect until October 31, 2006, unless sooner terminated under
Section 13 of the Plan.
7. Term of Option. The term of each Option shall be 10 years from the date
of grant thereof or such shorter term as may be provided in the Stock Option
Agreement. However, in the case of an Option granted to an Optionee who, at the
time the Option is granted, owns stock representing more than 10% of the total
combined voting power of all classes of stock of the Company or any Parent or
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Subsidiary, if the Option is an Incentive Stock Option, the term of the Option
shall be five years from the date of grant thereof or such shorter time as may
be provided in the Stock Option Agreement.
8. Exercise Price and Consideration.
a. Exercise Price. The per Share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be such price as is
determined by the Board, but the per Share exercise price under an
Incentive Stock Option shall be subject to the following:
(i) If granted to an Employee who, at the time of the
grant of such Incentive Stock Option, owns stock representing
more than 10% of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the per Share
exercise price shall not be less than 110% of the fair market
value per Share on the date of grant.
(ii) If granted to any other Employee, the per Share
exercise price shall not be less than 100% of the fair market
value per Share on the date of grant.
b. Determination of Fair Market Value. The fair market value per
Share on the date of grant shall be determined as follows:
(i) If the Common Stock is listed on the New York
Stock Exchange, the American Stock Exchange or such other
securities exchange designated by the Board, or admitted to
unlisted trading privileges on any such exchange, or if the
Common Stock is quoted on a National Association of Securities
Dealers, Inc. system that reports closing prices, the fair
market value shall be the closing price of the Common Stock as
reported by such exchange or system on the day the fair market
value is to be determined, or if no such price is reported for
such day, then the determination of such closing price shall
be as of the last immediately preceding day on which the
closing price is so reported;
(ii) If the Common Stock is not so listed or admitted
to unlisted trading privileges or so quoted, the fair market
value shall be the average of the last reported highest bid
and the lowest asked prices quoted on the National Association
of Securities Dealers, Inc. Automated Quotations System or, if
not so quoted, then by the National Quotation Bureau, Inc. on
the day the fair market value is determined; or
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(iii) If the Common Stock is not so listed or
admitted to unlisted trading privileges or so quoted, and bid
and asked prices are not reported, the fair market value shall
be determined in such reasonable manner as may be prescribed
by the Board.
c. Consideration and Method of Payment. The consideration to be
paid for the Shares to be issued upon exercise of an Option, including
the method of payment, shall be determined by the Board and may
consist entirely of cash, check, other shares of Common Stock having a
fair market value on the date of exercise equal to the aggregate
exercise price of the Shares as to which said Option shall be
exercised, or any combination of such methods of payment, or such
other consideration and method of payment for the issuance of Shares
to the extent permitted under the Colorado Business Corporation Act.
9. Exercise of Option.
a. Procedure for Exercise: Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such
conditions as determined by the Board, including performance criteria
with respect to the Company and/or the Optionee, and as shall be
permissible under the terms of the Plan.
In the sole discretion of the Board, at the time of the grant
of an Option or subsequent thereto but prior to the exercise of an
Option, an Optionee may be provided with the right to exchange, in a
cashless transaction, all or part of the Option for Common Stock of
the Company on terms and conditions determined by the Board.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and
full payment for the Shares with respect to which the Option is
exercised has been received by the Company. Full payment, as authorized
by the Board, may consist of a consideration and method of payment
allowable under Section 8(c) and this Section 9(a) of the Plan. Until
the issuance (as evidenced by the appropriate entry on the books of the
Company or of the duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a shareholder 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
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record date is prior to the date the stock certificate is issued,
except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of
Shares as to which the Option is exercised.
b. Termination of Status as an Employee. In the case of an
Incentive Stock Option, if any Employee ceases to serve as an
Employee, he may, but only within such period of time not exceeding
three months as is determined by the Board at the time of grant of the
Option after the date he ceases to be an Employee of the Company,
exercise his Option to the extent that he was entitled to exercise it
at the date of such termination. To the extent that he was not
entitled to exercise the Option at the date of such termination, or if
he does not exercise such Option (which he was entitled to exercise)
within the time specified herein, the Option shall terminate.
c. Disability of Optionee. In the case of an Incentive Stock
Option, notwithstanding the provisions of Section 9(b) above, in the
event an Employee is unable to continue his employment with the
Company as a result of his total and permanent disability (as defined
in Section 22(e)(3) of the Code), he may, but only within such period
of time not exceeding 12 months as is determined by the Board at the
time of grant of the Option from the date of termination, exercise his
Option to the extent he was entitled to exercise it at the date of
such termination. To the extent that he was not entitled to exercise
the Option at the date of termination, or if he does not exercise such
Option (which he was entitled to exercise) within the time specified
herein, the Option shall terminate.
d. Death of Optionee. In the case of an Incentive Stock Option,
in the event of the death of the Optionee:
(i) During the term of the Option if the Optionee was
at the time of his death an Employee the Company and had been
in Continuous Status as an Employee or Consultant since the
date of grant of the Option, the Option may be exercised, at
any time within 12 months following the date of death, by the
Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the
extent of the right to exercise that would have accrued had
the Optionee continued living and remained in Continuous
Status as an Employee 12 months after the date of death; or
(ii) Within such period of time not exceeding three
months as is determined by the Board at the time of grant of
the Option after the termination of Continuous Status as an
Employee, the Option may be exercised, at any time within 12
months following the date of death, by the Optionee's estate
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or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right
to exercise that had accrued at the date of termination.
10. Nontransferability of Options. In the case of an Incentive Stock
Option, the Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent and distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
11. Adjustments Upon Changes in Capitalization or Merger. Subject to any
required action by the shareholders 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 have been returned to the Plan upon cancellation or expiration of any
Option, 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 Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares subject to an Option.
In the event of the proposed dissolution or liquidation of the Company, the
Option will terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Board. The Board may, in the exercise
of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Board and give each Optionee the right to
exercise his Option as to all or any part of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable. In the event
of the proposed sale of all or substantially all of the assets of the Company,
or the merger of the Company with or into another corporation in a transaction
in which the Company is not the survivor, the 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 determines, in the
exercise of its sole discretion and in lieu of such assumption or substitution,
that the Optionee shall have the right to exercise the Option as to all of the
Optioned Stock, including Shares as to which the Option would not otherwise be
exercisable. If the Board makes an Option fully exercisable in lieu of
assumption or substitution in the event of such a merger or sale of assets, the
Board shall notify the Optionee that the Option shall be fully exercisable for a
period of 30 days from the date of such notice, and the Option will terminate
upon the expiration of such period.
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12. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date on which the Board makes the determination granting such
Option. Notice of the determination shall be given to each Employee or other
person to whom an Option is so granted within a reasonable time after the date
of such grant. Within a reasonable time after the date of the grant of an
Option, the Company shall enter into and deliver to each Employee or other
person granted such Option a written Stock Option Agreement as provided in
Sections 2(r) and 16 hereof, setting forth the terms and conditions of such
Option and separately identifying the portion of the Option which is an
Incentive Stock Option and/or the portion of such Option which is a Nonstatutory
Stock Option.
13. Amendment and Termination of the Plan.
a. Amendment and Termination. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem
advisable; provided that, the following revisions or amendments shall
require approval of the shareholders of the Company in the manner
described in Section 17 of the Plan:
(i) An increase in the number of Shares subject to
the Plan above 1,000,000 Shares, other than in connection with
an adjustment under Section 11 of the Plan;
(ii) Any change in the designation of the class of
Employees eligible to be granted Incentive Stock Options; or
(iii) Any material amendment under the Plan that
would have to be approved by the shareholders of the Company
for the Board to continue to be able to grant Incentive Stock
Options under the Plan.
b. Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and
such Options shall remain in full force and effect as if the Plan had
not been amended or terminated, unless mutually agreed otherwise
between the Optionee and the Board, which agreement must be in writing
and signed by the Optionee and the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the rules and
regulations promulgated thereunder, applicable state securities laws, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of legal counsel for the Company with
respect to such compliance.
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As a condition to the existence of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares and such other
representations and warranties which in the opinion of legal counsel for the
Company, are necessary or appropriate to establish an exemption from the
registration requirements under applicable federal and state securities laws
with respect to the acquisition of such Shares.
15. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. Inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's legal counsel to be necessary for the lawful issuance
and sale of any Share hereunder, shall relieve the Company of any liability
relating to the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
16. Option Agreement. Each Option granted to an Employee or other persons
shall be evidenced by a written Stock Option Agreement in such form as the Board
shall approve.
17. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company on or before October 31, 1997. Such
shareholder approval and any shareholder approval required under Section 13 of
the Plan, may be obtained at a duly held shareholders meeting by the affirmative
vote of the holders of a majority of the outstanding shares of the voting stock
of the Company, who are present or represented and entitled to vote thereon, or
by unanimous written consent of the shareholders in accordance with the
provisions of the Colorado Business Corporation Act.
18. Information to Optionees. The Company shall provide to each Optionee,
during the period for which such Optionee has one or more Options outstanding,
copies of all annual reports and other information which are provided to all
shareholders of the Company. The Company shall not be required to provide such
information if the issuance of Options under the Plan is limited to key
employees whose duties in connection with the Company assure their access to
equivalent information.
19. Gender. As used herein, the masculine, feminine and neuter genders
shall be deemed to include the others in all cases where they would so apply.
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20. CHOICE OF LAW. ALL QUESTIONS CONCERNING THE CON- STRUCTION, VALIDITY
AND INTERPRETATION OF THIS PLAN AND THE INSTRUMENTS EVIDENCING OPTIONS WILL BE
GOVERNED BY THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF
COLORADO.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this Plan effective as of November 1, 1996.
LASER STORM, INC.,
a Colorado corporation
By: /s/ William R. Bauerle
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William R. Bauerle, President
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