-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AxatG5wbLyZw4U+B3Pv3SGd44kI2IiJWrTn4t6mPE+/tL0MI/VtXQZyw/EC4DHKR 47o0pH/r66Fb4JQ1aqJ4sw== 0000898430-01-000967.txt : 20010320 0000898430-01-000967.hdr.sgml : 20010320 ACCESSION NUMBER: 0000898430-01-000967 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20010319 EFFECTIVENESS DATE: 20010319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APPLIED MICRO CIRCUITS CORP CENTRAL INDEX KEY: 0000711065 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 942586591 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-57202 FILM NUMBER: 1571299 BUSINESS ADDRESS: STREET 1: 6290 SEQUENCE DR CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 6194509333 MAIL ADDRESS: STREET 1: 6290 SEQUENCE DRIVE CITY: SAN DIEGO STATE: CA ZIP: 92121 S-8 1 0001.txt FORM S-8 As filed with the Securities and Exchange Commission on March 19, 2001 Registration No. 333-_____ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________ FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 __________________ Applied Micro Circuits Corporation (Exact Name Of Registrant As Specified In Its Charter) __________________ Delaware 94-2586591 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 6290 Sequence Drive San Diego, California 92121 (858) 450-9333 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) __________________ Raleigh Technology Corp. Equity Compensation Plan (Full Title of the Plan) __________________ William E. Bendush Vice President, Finance and Administration, and Chief Financial Officer Applied Micro Circuits Corporation 6290 Sequence Drive San Diego, California 92121 (858) 450-9333 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) __________________ Copies to: D. Bradley Peck, Esq. Cooley Godward LLP 4365 Executive Drive, Suite 1100 San Diego, California 92121 (858) 550-6000 __________________ CALCULATION OF REGISTRATION FEE
==================================================================================================================================== Proposed Maximum Proposed Maximum Title of Securities Offering Aggregate Amount of to be Registered Amount to be Registered (1) Price per Share (2) Offering Price (2) Registration Fee (2) - ------------------------------------------------------------------------------------------------------------------------------------ Common Stock (par value $.01) 53,860 shares 5.86 $315,619.60 $78.90 ====================================================================================================================================
(1) On March 14, 2001, the Registrant completed the acquisition of Raleigh Technology Corp., a Delaware corporation ("RTC"). In connection with the acquisition, the Registrant assumed the obligations under the RTC Equity Compensation Plan (the "Plan") and is obligated to issue up to 53,860 shares of common stock of the Registrant pursuant to the exercise of stock options outstanding under the Plan on the date the acquisition of RTC was consummated. The Registrant does not anticipate issuing any additional stock options under the Plan. (2) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(h) of the Securities Act of 1933, as amended (the "Securities Act"). The price per share and aggregate offering price are calculated on the basis of the weighted average exercise price of $5.86 for 53,860 shares subject to outstanding stock options granted under the Plan. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by Applied Micro Circuits Corporation (the "Company") with the Securities and Exchange Commission are incorporated by reference into this Registration Statement: (a) The Company's annual report on Form 10-K for the year ended March 31, 2000. (b) All other reports filed pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") since the end of the fiscal year covered by the annual report referred to in (a) above. (c) The description of the Company's Common Stock which is contained in a registration statement on Form 8-A filed under the Exchange Act on October 10, 1997, including any amendment or report filed for the purpose of updating such description. All reports and other documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part of this registration statement from the date of the filing of such reports and documents. DESCRIPTION OF SECURITIES Not applicable. INTERESTS OF NAMED EXPERTS AND COUNSEL Not applicable. INDEMNIFICATION OF DIRECTORS AND OFFICERS Under Section 145 of the Delaware General Corporation Law, the Company has broad powers to indemnify its directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act. The Company's Bylaws provide that the Company will indemnify its directors and executive officers and may indemnify its other officers, employees and other agents to the fullest extent permitted by Delaware law. The Company believes that indemnification under its Bylaws covers at least negligence and gross negligence by indemnified parties, and may require the Company to advance litigation expenses in the case of stockholder derivative actions or other actions, against and undertaken by the indemnified party to repay such advances if it is ultimately determined that the indemnified party is not entitled to indemnification. In addition, the Company's Certificate of Incorporation provides that, pursuant to Delaware law, its directors shall not be liable for monetary damages for breach of the directors' fiduciary duty of care to the Company and its stockholders. This provision in the Certificate of Incorporation does not eliminate the duty of care, and in appropriate circumstances equitable remedies such as injunctive or other forms of nonmonetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director's duty of loyalty to the Company for acts or omissions not in good faith or involving intentional misconduct, for knowing violations of law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Delaware law. The provision also does not affect a director's responsibilities under any other law, such as the federal securities laws or state or federal environmental laws. The Company has entered into separate indemnification agreements with its officers and directors. These agreements may require the Company, among other things, to indemnify the directors against certain liabilities that 2 may arise by reason of their status or service as directors (other than liabilities arising from willful misconduct of a culpable nature), to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified and to obtain directors' insurance if available on reasonable terms. The Company maintains director and officer liability insurance. EXEMPTION FROM REGISTRATION CLAIMED Not applicable. EXHIBITS Exhibit Number 5.1 Opinion of Cooley Godward LLP 23.1 Consent of Ernst & Young LLP, Independent Auditors 23.2 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to this Registration Statement 24.1 Power of Attorney is contained on the signature pages 99.1 Raleigh Technology Corp. Equity Compensation Plan 99.2 Form of Stock Option Agreement used in connection with the Raleigh Technology Corp. Equity Compensation Plan UNDERTAKINGS 1. The undersigned registrant hereby undertakes: (a) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post- effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) ((S) 230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (b) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 3 (c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. 2. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 3. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. 4 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Diego, State of California, on March 16, 2001. Applied Micro Circuits Corporation By: /s/ William E. Bendush --------------------------------------------- William E. Bendush Vice President, Finance and Administration, and Chief Financial Officer POWER OF ATTORNEY Know All Persons By These Presents, that each person whose signature appears below constitutes and appoints David M. Rickey and William E. Bendush, and both or either of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date /s/ David M. Rickey Chairman of the Board of Directors, February 27, 2001 - -------------------------------------- President and Chief Executive Officer David M. Rickey (principal executive officer) /s/ William E. Bendush Vice President, Finance and March 16, 2001 - -------------------------------------- Administration, and Chief Financial William E. Bendush Officer (principal financial and accounting officer) /s/ Roger A. Smullen, Sr. Vice-Chairman of the Board of Directors March 16, 2001 - -------------------------------------- Roger A. Smullen, Sr. /s/ R. Clive Ghest Director March 16, 2001 - -------------------------------------- R. Clive Ghest
5 /s/ Franklin P. Johnson, Jr. Director March 16, 2001 - -------------------------------------- Franklin P. Johnson, Jr. /s/ S. Atiq Raza Director February 26, 2001 - -------------------------------------- S. Atiq Raza /s/ Arthur B. Stabenow Director March 16, 2001 - -------------------------------------- Arthur B. Stabenow /s/ Harvey P. White Director March 16, 2001 - -------------------------------------- Harvey P. White /s/ William K. Bowes, Jr. Director March 16, 2001 - -------------------------------------- William K. Bowes, Jr. /s/ Douglas C. Spreng Director March 1, 2001 - -------------------------------------- Douglas C. Spreng
6 EXHIBIT INDEX Exhibit Description Number 5.1 Opinion of Cooley Godward LLP 23.1 Consent of Ernst & Young LLP, Independent Auditors 23.2 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to this Registration Statement 24.1 Power of Attorney is contained on the signature pages 99.1 Raleigh Technology Corp. Equity Compensation Plan 99.2 Form of Stock Option Agreement used in connection with the Raleigh Technology Corp. Equity Compensation Plan 7 EX-5.1 2 0002.txt OPINION OF COOLEY GODWARD EXHIBIT 5.1 March 16, 2001 Applied Micro Circuits Corporation 6290 Sequence Drive San Diego, CA 92121 Re: Registration Statement on Form S-8 Ladies and Gentlemen: You have requested our opinion with respect to certain matters in connection with the filing by Applied Micro Circuits Corporation (the "Company") of a Registration Statement on Form S-8 (the "Registration Statement") with the Securities and Exchange Commission, covering the registration of 53,860 shares of the Company's Common Stock, $.01 par value (the "Shares"), issuable upon the exercise of outstanding options issued pursuant to the Raleigh Technology Corp. Equity Compensation Plan (the "Plan"). Such options were assumed by the Company in connection with the Agreement and Plan of Merger and Reorganization dated as of January 29, 2001 (the "Merger Agreement"), by and among the Company, Dunhill Merger Sub, Inc., Raleigh Technology Corp. ("RTC") and certain securityholders of RTC. In connection with this opinion, we have examined and relied upon the Registration Statement and related prospectus, the Plan, the form of option agreement, the Merger Agreement, the Certificate of Merger, the Company's Certificate of Incorporation and Bylaws, as amended, and the originals or copies certified to our satisfaction of such records, documents, certificates, memoranda and other instruments as in our judgment are necessary or appropriate to enable us to render the opinion expressed below. We have assumed the genuineness and authenticity of all documents submitted to us as originals, the conformity to originals of all documents submitted to us as copies thereof and the due execution and delivery of all documents where due execution and delivery are a prerequisite to the effectiveness thereof. On the basis of the foregoing, and in reliance thereon, we are of the opinion that the Shares, when sold and issued in accordance with the Plan, the assumed option agreements and the Merger Agreement will be validly issued, fully paid, and nonassessable. We consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, Cooley Godward LLP D. Bradley Peck EX-23.1 3 0003.txt CONSENT OF E & Y EXHIBIT 23.1 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement on Form S-8 pertaining to the Raleigh Technology Corp. Equity Compensation Plan of our report dated April 19, 2000, with respect to the consolidated financial statements and schedule of Applied Micro Circuits Corporation, included in its Annual Report on Form 10-K for the fiscal year ended March 31, 2000, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP ---------------------- ERNST & YOUNG LLP San Diego, California March 13, 2001 EX-99.1 4 0004.txt RALEIGH TECHNOLOGY CORP. EXHIBIT 99.1 RALEIGH TECHNOLOGY CORP. EQUITY COMPENSATION PLAN Effective as of March 31, 1999 RALEIGH TECHNOLOGY CORP. EQUITY COMPENSATION PLAN ARTICLE I - GENERAL PROVISIONS 1.1 The Plan is designed, for the benefit of the Company, to attract and retain for the Company personnel of exceptional ability; to motivate such personnel through added incentives to make a maximum contribution to greater profitability; to develop and maintain a highly competent management team; and to be competitive with other companies with respect to equity compensation. 1.2 Awards under the Plan may be made to Participants in the form of (i) Incentive Stock Options; (ii) Nonqualified Stock Options; and/or (iii) Restricted Stock. 1.3 The Plan shall be effective as of the Effective Date. (a) Notwithstanding any other provision of this Plan, any Award granted to a Participant prior to the date on which the shareholders of the Company approve the Plan (which approval must be obtained within the 12-month period before the Effective Date or the 12-month period after the Effective Date in order for Incentive Stock Options to be granted under the Plan) shall be conditioned upon and subject to such shareholder approval to the extent required by Section 16(b) of the Act or Section 422 of the Code. (b) If an Incentive Stock Option is granted prior to the date on which such shareholder approval is obtained, and such approval is not obtained before the end of the 12-month period beginning on the Effective Date, such Incentive Stock Option shall be deemed a Nonqualified Stock Option granted pursuant to Article V. ARTICLE II - DEFINITIONS Except where the context otherwise indicates, the following definitions apply: 2.1 "Act" means the Securities Exchange Act of 1934, as now in effect or as hereafter amended. All citations to sections of the Act or rules thereunder are to such sections or rules as they may from time to time be amended or renumbered. 2.2 "Agreement" means the written agreement evidencing each Award granted to a Participant under the Plan. 2.3 "Award" means an award granted to a Participant in accordance with the provisions of the Plan. 2.4 "Board" means the Board of Directors of Raleigh Technology Corp. 2.5 "Code" means the Internal Revenue Code of 1986, as now in effect or as hereafter amended. All citations to sections of the Code are to such sections as they may from time to time be amended or renumbered. 2.6 "Committee" means the Compensation Committee of the Board or such other committee consisting of two or more members as may be appointed by the Board to administer this Plan pursuant to Article III or for such limited purposes as may be provided by the Board. To the extent required by Rule 16b-3 under the Act the Committee shall consist of individuals who are members of the Board and Non-Employee Directors. 2.7 "Company" means Raleigh Technology Corp., a North Carolina corporation, and its successors and assigns. The term "Company" shall include any Parent Corporation and any Subsidiary Corporation. With respect to all purposes of the Plan, including but not limited to, the establishment, amendment, termination, operation and administration of the Plan, Accton Americas Management Group, Inc. shall be authorized to act on behalf of all other entities included within the definition of Company. 2.8 "Disability" means disability as determined under procedures established by the Committee or in any Award. 2.9 "Effective Date" shall mean March 31, 1999. 2.10 "Eligible Participant" means any employee of the Company, as shall be determined by the Committee, as well as any other person, including directors and consultants whose participation in the Plan the Committee determines is in the best interest of the Company, subject to limitations as may be provided by the Code, the Act or the Committee. 2.11 "Fair Market Value" shall be the value of a share of stock, as determined by the Committee in its sole discretion from time to time. The determination of Fair Market Value in connection with an Incentive Stock Option shall be made by the Committee in accordance with Section 422 of the Code and the rules and regulations thereunder. 2.12 "Incentive Stock Option" means a Stock Option granted under Article IV of the Plan, and as defined in Section 422 of the Code. 2.13 "Non-Employee Director" shall have the meaning set forth in Rule 16b-3 under the Act. 2.14 "Nonqualified Stock Option" means a Stock Option granted under Article V of the Plan. 2.15 "Option Grant Date" means, as to any Stock Option, the latest of: 2 (a) the date on which the Committee grants the Stock Option by authorizing the officers of the Company to enter into an Award Agreement with the Participant for a specified number of options at a specified exercise price; (b) the date the Participant receiving the Stock Option becomes an employee of the Company, to the extent employment status is a condition of the grant or a requirement of the Code or the Act; or (c) such other date (later than the dates described in (i) and (ii) above) as the Committee may designate. 2.16 "Parent Corporation" means any corporation (other than Accton Americas Management Group, Inc.) in an unbroken chain of corporations ending with Accton Americas Management Group, Inc. if, at the time of the granting of the option, each of the corporations other than Accton Americas Management Group, Inc. owns stock possessing 50 percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 2.17 "Participant" means an Eligible Participant to whom an Award has been granted and who has entered into an Agreement evidencing the Award. 2.18 "Plan" means the Raleigh Technology Corp. Equity Compensation Plan, as amended from time to time. 2.19 "Restricted Stock" means an Award of Stock under Article VII of the Plan, which Stock is issued with the restriction that the holder may not sell, transfer, pledge, or assign such Stock and with such other restrictions as the Committee, in its sole discretion, may impose, including without limitation, any restriction on the right to vote such Stock, and the right to receive any cash dividends, which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate. 2.20 "Restriction Period" means the period commencing on the date an Award of Restricted Stock is granted and ending on such date as the Committee shall determine. 2.21 "Stock" means shares of common stock of Raleigh Technology Corp., as may be adjusted pursuant to the provisions of Section 3.10. 2.22 "Stock Option" means an Award under Article IV or V of the Plan of an option to purchase Stock. A Stock Option may be either an Incentive Stock Option or a Nonqualified Stock Option. 3 2.23 "Subsidiary Corporation" means any corporation (other than Accton Americas Management Group, Inc.) in an unbroken chain of corporations beginning with the employer corporation if, at the time of the granting of the option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50 percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 2.24 "Termination of Employment" means the discontinuance of employment of a Participant with the Company for any reason. The determination of whether a Participant has discontinued employment shall be made by the Committee in its discretion. In determining whether a Termination of Employment has occurred, the Committee may provide that service as a consultant or service with a business enterprise in which the Company has a significant ownership interest shall be treated as employment with the Company. The Committee shall have the discretion, exercisable either at the time the Award is granted or at the time the Participant terminates employment, to establish as a provision applicable to the exercise of one or more Awards that during the limited period of exercisability following Termination of Employment, the Award may be exercised not only with respect to the number of shares of Stock for which it is exercisable at the time of the Termination of Employment but also with respect to one or more subsequent installments for which the Award would have become exercisable had the Termination of Employment not occurred. ARTICLE III - ADMINISTRATION 3.1 This Plan shall be administered by the Committee. A Committee member who is not a Non-Employee Director shall not be able to participate in the decision to the extent prescribed by Rule 16b-3 under the Act at any time that the officers and directors of the Company are subject to Section 16 of the Act. The Committee, in its discretion, may delegate to one or more of its members such of its powers as it deems appropriate. The Committee also may limit the power of any member to the extent necessary to comply with Rule 16b-3 under the Act or any other law. Members of the Committee shall be appointed originally, and as vacancies occur, by the Board, to serve at the pleasure of the Board. The Board may serve as the Committee if by the terms of the Plan all Board members are otherwise eligible to serve on the Committee. 3.2 The Committee shall meet at such times and places as it determines. A majority of its members shall constitute a quorum, and the decision of a majority of those present at any meeting at which a quorum is present shall constitute the decision of the Committee. A memorandum signed by all of its members shall constitute the decision of the Committee without necessity, in such event, for holding an actual meeting. 3.3 The Committee shall have the exclusive right to interpret, construe and administer the Plan, to select the persons who are eligible to receive an Award, and to act in all matters pertaining to the granting of an Award and the contents of the Agreement evidencing the 4 Award, including without limitation, the determination of the number of Stock Options and shares of Stock subject to an Award and the form, terms, conditions and duration of each Award, and any amendment thereof consistent with the provisions of the Plan. All acts, determinations and decisions of the Committee made or taken pursuant to grants of authority under the Plan or with respect to any questions arising in connection with the administration and interpretation of the Plan, including the severability of any and all of the provisions thereof, shall be conclusive, final and binding upon all Participants, Eligible Participants and their beneficiaries. 3.4 The Committee may adopt such rules, regulations and procedures of general application for the administration of this Plan, as it deems appropriate. 3.5 The aggregate number of shares of Stock which are subject to an Award under the Plan shall be Three Million, One Hundred Ninety Seven Thousand, Eight Hundred Twenty Seven (3,197,827) shares, subject to adjustment as provided in Section 3.10. Such shares of Stock shall be made available from authorized and unissued shares of the Company. If, for any reason, any shares of Stock subject to Options awarded under the Plan are not delivered or purchased, or are reacquired by the Company, for reasons including, but not limited to, a forfeiture of Restricted Stock or termination, expiration or cancellation of a Stock Option, such shares of Stock shall not be charged against the aggregate number of shares of Stock subject to Options available for Awards under the Plan, and may again be subject to Options available for Award under the Plan. 3.6 Each Award granted under the Plan shall be evidenced by a written Award Agreement. Each Award Agreement shall be subject to and incorporate, by reference or otherwise, the applicable terms and conditions of the Plan, and any other terms and conditions, not inconsistent with the Plan, required by the Committee. 3.7 The Company shall not be required to issue or deliver any certificates for shares of Stock prior to: (a) the listing of such shares on any stock exchange or national quotation system on which the Stock may then be listed; and (b) the completion of any registration or qualification of such shares of Stock under any federal or state law, or any ruling or regulation of any government body which the Company shall, in its discretion, determine to be necessary or advisable. 3.8 All certificates for shares of Stock delivered under the Plan shall also be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange or national quotation system upon which the Stock is then listed and any applicable federal or state laws, and the Committee may cause a legend or legends to be 5 placed on any such certificates to make appropriate reference to such restrictions. In making such determination, the Committee may rely upon an opinion of counsel for the Company. 3.9 Subject to the restrictions on Restricted Stock, as provided in Article VII of the Plan and in the Restricted Stock Award Agreement, each Participant who receives an Award of Restricted Stock shall have all of the rights of a shareholder with respect to such shares of Stock, including the right to vote the shares to the extent, if any, such shares possess voting rights and receive dividends and other distributions. Except as provided otherwise in the Plan or in an Award Agreement, no Participant awarded a Stock Option shall have any right as a shareholder with respect to any shares of Stock covered by his or her Stock Option prior to the date of issuance to him or her of a certificate or certificates for such shares of Stock. 3.10 If any reorganization, recapitalization, reclassification, stock split-up, stock dividend, or consolidation of shares of Stock, merger or consolidation of the Company or sale or other disposition by the Company of all or a portion of its assets, any other change in the Company's corporate structure, or any distribution to shareholders other than a cash dividend results in the outstanding shares of Stock, or any securities exchanged therefor or received in their place, being exchanged for a different number or class of shares of Stock or other securities of the Company, or for shares of Stock or other securities of any other corporation; or new, different or additional shares or other securities of the Company or of any other corporation being received by the holders of outstanding shares of Stock, then equitable adjustments shall be made by the Committee in: (a) the limitation of the aggregate number of shares of Stock that may be awarded as set forth in Section 3.5 of the Plan; (b) the number and class of Stock that may be subject to an Award, and which have not been issued or transferred under an outstanding Award; (c) the purchase price to be paid per share of Stock under outstanding Stock Options; and (d) the terms, conditions or restrictions of any Award and Award Agreement, including the price payable for the acquisition of Stock; provided, however, that all adjustments made as the result of the foregoing in respect of each Incentive Stock Option shall be made so that such Stock Option shall continue to be an Incentive Stock Option, as defined in Section 422 of the Code, unless the Committee has stated its intent in writing to treat such Stock Option instead as a Nonqualified Stock Option. 6 3.11 In addition to such other rights of indemnification as they may have as directors or as members of the Committee, the members of the Committee shall be indemnified by the Company against reasonable expenses, including attorney's fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted thereunder, and against all amounts paid by them in settlement thereof, provided such settlement is approved by independent legal counsel selected by the Company, or paid by them in satisfaction of a judgment or settlement in any such action, suit or proceeding, except as to matters as to which the Committee member has been negligent or engaged in misconduct in the performance of his duties; provided, that within 60 days after institution of any such action, suit or proceeding, a Committee member shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same. 3.12 The Committee may require each person purchasing shares of Stock pursuant to a Stock Option Award or other Award under the Plan to represent to and agree with the Company in writing that he is acquiring the shares of Stock without a view to distribution thereof. The certificates for such shares of Stock may include any legend which the Committee deems appropriate to reflect any restrictions on transfer. 3.13 The Committee shall be authorized to make adjustments in performance based criteria or in the other terms and conditions of Awards in recognition of unusual or nonrecurring events affecting the Company or its financial statements or changes in applicable laws, regulations or accounting principles. Unless otherwise required by applicable law, rule or regulation, such adjustments will not be considered to result in the grant of a new Stock Option or other Award. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement in the manner and to the extent it shall deem desirable to carry it into effect. In the event the Company shall assume outstanding employee benefit awards or the right or obligation to make future such awards in connection with the acquisition of another corporation or business entity, the Committee may, in its discretion, make such adjustments in the terms of Awards under the Plan as it shall deem appropriate to assume the outstanding awards, rights and obligations. 3.14 If the Committee determines that egregious circumstances exist which have been caused by the Participant, the Committee shall have the full power and authority to cancel or suspend any Award to such Participant. In particular, but without limitation, all outstanding Awards to any Participant may be canceled if (a) the Participant, without the consent of the Committee, while employed by the Company or after termination of such employment, becomes associated with, employed by, renders services to, or owns any interest in, other than any insubstantial interest, as determined by the Committee, any business that is in competition with the Company or with any business in which the Company has a substantial interest as determined by the Committee; (b) the Participant is terminated for cause as defined in Section 8.2(a); or (c) the Company voluntarily or involuntarily files for 7 and obtains relief under the United States Bankruptcy Code or any similar state law for the protection of creditors. ARTICLE IV - INCENTIVE STOCK OPTIONS 4.1 Each provision of this Article IV and of each Incentive Stock Option granted hereunder shall be construed in accordance with the provisions of Section 422 of the Code, and any provision hereof that cannot be so construed shall be disregarded. 4.2 All or any portion of the shares of stock authorized for issuance pursuant to Section 3.5 herein shall be available for issuance pursuant to Incentive Stock Options granted hereunder. 4.3 Incentive Stock Options shall be granted only to Eligible Participants who are in the active employment of the Company, each of whom may be granted one or more such Incentive Stock Options for a reason related to his employment at such time or times determined by the Committee following the Effective Date until March 31, 2009, subject to the following conditions: (a) The Incentive Stock Option price per share of Stock shall be set in the Award Agreement, but shall not be less than 100% of the Fair Market Value of the Stock on the Option Grant Date. However, if the Optionee owns more than 10% of the outstanding Stock (as determined pursuant to Section 424(d) of the Code) on the Option Grant Date, the Incentive Stock Option price per share shall not be less than 110% of the Fair Market Value of the Stock on the Option Grant Date. (b) The Incentive Stock Option may be exercised in whole or in part from time to time within ten (10) years from the Option Grant Date (five (5) years if the Optionee owns more than 10% of the Stock on the Option Grant Date), or such shorter period as may be specified by the Committee in the Award Agreement; provided, that, in any event, the Incentive Stock Option shall lapse and cease to be exercisable upon a Termination of Employment or within such period following a Termination of Employment as shall have been specified in the Incentive Stock Option Award Agreement, which period shall not exceed three months unless: (i) employment shall have terminated as a result of death or Disability, in which event such period shall not exceed one year after the date of death or Disability; or (ii) death shall have occurred following a Termination of Employment and while the Incentive Stock Option was still exercisable, in which event such period shall not exceed one year after the date of death; 8 provided, further, that such period following a Termination of Employment shall in no event extend the original exercise period of the Incentive Stock Option. (c) The Committee may adopt any other terms and conditions which it determines should be imposed for the Incentive Stock Option to qualify under Section 422 of the Code, as well as any other terms and conditions not inconsistent with this Article IV as determined by the Committee. 4.4 The Committee may at any time offer to buy out for a payment in cash, Stock or other consideration an Incentive Stock Option previously granted, based on such terms and conditions as the Committee shall establish and communicate to the Participant at the time that such offer is made. 4.5 The Incentive Stock Option Award Agreement may include any other terms and conditions not inconsistent with this Article IV or in Article VI, as determined by the Committee. 4.6 If the aggregate Fair Market Value, determined as of the Option Grant Date, of the shares of Stock with respect to which Incentive Stock Options (determined without regard to this subsection) are first exercisable during any calendar year by any Eligible Participant exceeds $100,000, or any Incentive Stock Options fail to qualify under Section 422 of the Code, such Incentive Stock Options shall be treated as Nonqualified Stock Options granted under Article V with respect to such excess. ARTICLE V - NONQUALIFIED STOCK OPTIONS 5.1 One or more Stock Options may be granted as Nonqualified Stock Options to Eligible Participants to purchase shares of Stock at such time or times determined by the Committee, following the Effective Date, subject to the terms and conditions set forth in this Article V. 5.2 The Nonqualified Stock Option price per share of Stock shall be established in the Award Agreement and may be less than 100% of the Fair Market Value at the time of the grant, or at such later date as the Committee shall determine. 5.3 The Nonqualified Stock Option may be exercised in full or in part from time to time within such period as may be specified by the Committee or in the Award Agreement; provided, that, in any event, the Nonqualified Stock Option shall lapse and cease to be exercisable upon a Termination of Employment or within such period following a Termination of Employment as shall have been specified in the Nonqualified Stock Option Award Agreement, which period shall not exceed three months unless: (i) employment shall have terminated as a result of death or Disability, in which event such period shall not exceed one year after the date of death or Disability; or 9 (ii) death shall have occurred following a Termination of Employment and while the Nonqualified Stock Option was still exercisable, in which event such period shall not exceed one year after the date of death; provided, further, that such period following a Termination of Employment shall in no event extend the original exercise period of the Nonqualified Stock Option. 5.4 The Nonqualified Stock Option Award Agreement may include any other terms and conditions not inconsistent with this Article V or in Article VI, as determined by the Committee. ARTICLE VI - INCIDENTS OF STOCK OPTIONS 6.1 Each Stock Option shall be granted subject to such terms and conditions, if any, not inconsistent with this Plan, as shall be determined by the Committee, including any provisions as to continued employment as consideration for the grant or exercise of such Stock Option and any provisions which may be advisable to comply with applicable laws, regulations or rulings of any governmental authority. 6.2 A Stock Option shall not be transferable by the Participant other than by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of the Participant only by him or in the event of his death or Disability, by his guardian or legal representative; provided, however, that a Nonqualified Stock Option may be transferred and exercised by the transferee to the extent determined by the Committee to be consistent with securities and other applicable laws, rules and regulations. Notwithstanding any language herein or in any Award Agreement to the contrary, any restrictions on transfer of a Stock Option in the Plan or the Award Agreement shall be void and of no effect if the Committee determines that a transfer can be made consistent with securities and other applicable laws, rules and regulations. 6.3 Shares of Stock purchased upon exercise of a Stock Option shall be paid for in such amounts, at such times and upon such terms as shall be determined by the Committee, subject to limitations set forth in the Stock Option Award Agreement. Without limiting the foregoing, the Committee may establish payment terms for the exercise of Stock Options which permit the Participant to deliver shares of Stock, or other evidence of ownership of Stock satisfactory to the Company, with a Fair Market Value equal to the Stock Option price as payment, provided that any such payment terms comply with any applicable requirements under Rule 16b-3 of the Act. 6.4 No cash dividends shall be paid on shares of Stock subject to unexercised Stock Options. 10 6.5 In the event of Disability or death, the Committee, with the consent of the Participant or his legal representative, may authorize payment, in cash or in Stock, or partly in cash and partly in Stock, as the Committee may direct, of an amount equal to the difference at the time between the Fair Market Value of the Stock subject to a Stock Option and the option price in consideration of the surrender of the Stock Option. 6.6 If a Participant is required to pay to the Company an amount with respect to income and employment tax withholding obligations in connection with exercise of a Nonqualified Stock Option, and/or with respect to certain dispositions of Stock acquired upon the exercise of an Incentive Stock Option, the Committee, in its discretion and subject to such rules as it may adopt, may permit the Participant to satisfy the obligation, in whole or in part, by making an irrevocable election that a portion of the total Fair Market Value of the shares of Stock subject to the Nonqualified Stock Option and/or the Incentive Stock Option, be paid in the form of cash in lieu of the issuance of Stock and that such cash payment be applied to the satisfaction of the withholding obligations. The amount to be withheld shall not exceed the statutory minimum federal and state income and employment tax liability arising from the Stock Option exercise transaction. Notwithstanding any other provision of the Plan, any election under this Section 6.6 is required to satisfy any applicable requirements under Rule 16b-3 of the Act. 6.7 The Committee may permit the voluntary surrender of all or a portion of any Stock Option granted under the Plan to be conditioned upon the granting to the Participant of a new Stock Option for the same or a different number of shares of Stock as the Stock Option surrendered, or may require such surrender as a condition precedent to a grant of a new Stock Option to such Participant. Subject to the provisions of the Plan, and except as otherwise agreed by the Participant, such new Stock Option shall be exercisable at the same price as the surrendered Stock Option and during such period and on such other terms and conditions as are specified by the Committee at the time the new Stock Option is granted. Upon surrender, the Stock Options surrendered shall be canceled and the shares of Stock previously subject to them shall be available for the grant of other Stock Options. For purposes of determining the number of Stock Options issued pursuant to the Plan, new Stock Options offered in consideration for Stock Options to be surrendered shall not be considered as issued until such Stock Options are surrendered unless otherwise required by law. 11 ARTICLE VII - RESTRICTED STOCK 7.1 Restricted Stock Awards may be made to certain Participants as an incentive for the performance of future services that will contribute materially to the successful operation of the Company. Awards of Restricted Stock may be made either alone, in addition to or in tandem with Other Awards granted under the Plan and/or cash payments made outside of the Plan. 7.2 With respect to Awards of Restricted Stock, the Committee shall: (a) determine the purchase price, if any, to be paid for such Restricted Stock, which may be equal to or less than par value and may be zero, subject to such minimum consideration as may be required by applicable law; (b) determine the length of the Restriction Period; (c) determine any restrictions applicable to the Restricted Stock such as service or performance, other than those set forth in this Article VII; (d) determine if the restrictions shall lapse as to all shares of Restricted Stock as the end of the Restriction Period or as to a portion of the shares of Restricted Stock in installments during the Restriction Period; and (e) determine if dividends and other distributions on the Restricted Stock are to be paid currently to the Participant or paid to the Company for the account of the Participant. 7.3 Awards of Restricted Stock must be accepted within a period of 60 days, or such shorter period as the Committee may specify, by executing a Restricted Stock Award Agreement and paying whatever price, if any, is required. The prospective recipient of a Restricted Stock Award shall not have any rights with respect to such Award, unless such recipient has executed a Restricted Stock Award Agreement and has delivered a fully executed copy thereof to the Committee, and has otherwise complied with the applicable terms and conditions of such Award. 7.4 Except when the Committee determines otherwise, or as otherwise provided in the Restricted Stock Award Agreement, if a Participant terminates employment with the Employer for any reason before the expiration of the Restriction Period, all shares of Restricted Stock still subject to restriction, shall be forfeited by the Participant and shall be reacquired by the Company. 12 7.5 Except as otherwise provided in this Article VII, no shares of Restricted Stock received by a Participant shall be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of during the Restriction Period. 7.6 To the extent not otherwise provided in a Restricted Stock Award Agreement, in cases of death, Disability or retirement or in cases of special circumstances, the Committee, if it finds that a waiver would be appropriate, may elect to waive any or all remaining restrictions with respect to such Participant's Restricted Stock. 7.7 In the event of hardship or other special circumstances of a Participant whose employment with the Employer is involuntarily terminated, the Committee may waive in whole or in part any or all remaining restrictions with respect to any or all of the Participant's Restricted Stock, based on such factors and criteria as the Committee may deem appropriate. 7.8 The certificates representing shares of Restricted Stock may either: (a) be held in custody by the Company until the Restriction Period expires or until restrictions thereon otherwise lapse, and the Participant shall deliver to the Company a stock power endorsed in blank relating to the Restricted Stock; and/or (b) be issued to the Participant and registered in the name of the Participant, and shall bear an appropriate restrictive legend and shall be subject to appropriate stop-transfer orders. 7.9 Except as provided in this Article VII, a Participant receiving a Restricted Stock Award shall have, with respect to the shares of Restricted Stock covered by any Award, all of the rights of a shareholder of the Company, including the right to vote the shares to the extent, if any, such shares possess voting rights and the right to receive any dividends; provided, however, the Committee may require that any dividends on such shares of Restricted Stock shall be automatically deferred and reinvested in additional Restricted Stock subject to the same restrictions as the underlying Award, or may require that dividends and other distributions on Restricted Stock shall be paid to the Company for the account of the Participant. The Committee shall determine whether interest shall be paid on such amounts, the rate of any such interest, and the other terms applicable to such amounts. 7.10 If and when the Restriction Period expires without a prior forfeiture of the Restricted Stock subject to such Restriction Period, unrestricted certificates for such shares shall be delivered to the Participant; provided, however, that the Committee may cause such legend or legends to be placed on any such certificates as it may deem advisable under 13 the rules, regulations and other requirements of the Securities and Exchange Commission and any applicable federal or state law. 7.11 In order to better ensure that Award payments actually reflect the performance of the Company and the service of the Participant, the Committee may provide, in its sole discretion, for a tandem performance-based or other Award designed to guarantee a minimum value, payable in cash or Stock to the recipient of a Restricted Stock Award, subject to such performance, future service, deferral and other terms and conditions as may be specified by the Committee. ARTICLE VIII - AMENDMENT AND TERMINATION 8.1 The Board, upon recommendation of the Committee, or otherwise, at any time and from time to time, may amend or terminate the Plan. To the extent required by Rule 16b-3 under the Act (if the officers and directors of the Company are subject to Section 16 of the Act) or Section 422 of the Code, no amendment, without approval by the Company's shareholders, shall: (a) alter the group of persons eligible to participate in the Plan; (b) increase the maximum number of shares of Stock or Stock Options which are available for Awards under the Plan; (c) extend the period during which Incentive Stock Option Awards may be granted beyond March 30, 2009; (d) limit or restrict the powers of the Committee with respect to the administration of this Plan; (e) change the definition of an Eligible Participant for the purpose of an Incentive Stock Option or increase the limit or the value of shares of Stock for which an Eligible Participant may be granted an Incentive Stock Option; (f) materially increase the benefits accruing to Participants under this Plan; (g) materially modify the requirements as to eligibility for participation in this Plan; or (h) change any of the provisions of this Article VIII. 8.2 No amendment to or discontinuance of this Plan or any provision thereof by the Board or the shareholders of the Company shall, without the written consent of the Participant, adversely affect, as shall be determined by the Committee, any Award theretofore granted to such Participant under this Plan; provided, however, the Committee retains the right and 14 power to: (a) annul any Award if the Participant is terminated for cause as determined by the Committee in its discretion; (b) provide for the forfeiture of shares of Stock or other gain under an Award as determined by the Committee for competing against the Company; (c) convert any outstanding Incentive Stock Option to a Nonqualified Stock Option; and (d) cancel or terminate any and all Stock Options in connection with any proceeding under the United States Bankruptcy Code or any similar proceeding under state law for the protection of creditors. ARTICLE IX - MISCELLANEOUS PROVISIONS 9.1 Nothing in the Plan or any Award granted hereunder shall confer upon any Participant any right to continue in the employ of the Company, or to serve as a director or consultant thereof, or interfere in any way with the right of the Company to terminate his or her employment or relationship at any time. Unless specifically provided otherwise, no Award granted under the Plan shall be deemed salary or compensation for the purpose of computing benefits under any employee benefit plan or other arrangement of the Company for the benefit of its employees unless the Company shall determine otherwise. No Participant shall have any claim to an Award until it is actually granted under the Plan. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall, except as otherwise provided by the Committee, be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company, and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts, except as provided in Article VII with respect to Restricted Stock and except as otherwise provided by the Committee. 9.2 The Company may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of any taxes which the Company is required by any law or regulation of any governmental authority, whether federal, state or local, domestic or foreign, to withhold in connection with any Stock Option or the exercise thereof, or in connection with any other type of equity-based compensation provided hereunder or the exercise thereof, including, but not limited to, the withholding of payment of all or any portion of such Award or another Award under this Plan until the Participant reimburses the Company for the amount the Company is required to withhold with respect to such taxes, or canceling any portion of such Award or another Award under this Plan in an amount sufficient to reimburse itself for the amount it is required to so withhold, or selling 15 any property contingently credited by the Company for the purpose of paying such Award or another Award under this Plan, in order to withhold or reimburse itself for the amount it is required to so withhold. 9.3 The Plan and the grant of Awards shall be subject to all applicable federal and state laws, rules, and regulations and to such approvals by any United States government or regulatory agency as may be required. Any provision herein relating to compliance with Rule 16b-3 under the Act shall not be applicable with respect to participation in the Plan by Participants who are not subject to Section 16(b) of the Act. 9.4 The terms of the Plan shall be binding upon the Participant, the Company, and their successors and assigns. 9.5 Neither a Stock Option nor any other Award, except as provided otherwise by the Committee, shall be transferable except as provided for herein. If any Participant makes such a transfer in violation hereof, any obligation of the Company shall forthwith terminate. 9.6 This Plan and all actions taken hereunder shall be governed by the laws of the State of North Carolina, without respect to the principles of the choice of law on the conflicts of laws. 9.7 The Plan is intended to constitute an "unfunded" plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general unsecured creditor of the Company. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver shares of Stock or payments in lieu of or with respect to Awards hereunder; provided, however, that, unless the Committee otherwise determines with the consent of the affected Participant, the existence of such trusts or other arrangements is consistent with the "unfunded" status of the Plan. 9.8 Each Participant exercising an Award hereunder agrees to give the Committee prompt written notice of any election made by such Participant under Section 83(b) of the Code, or any similar provision thereof. 9.9 If any provision of this Plan or an Award Agreement is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award Agreement under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award Agreement, it shall be stricken and the remainder of the Plan or the Award Agreement shall remain in full force and effect. 16 IN WITNESS WHEREOF, this document is executed effective as of the date specified above. RALEIGH TECHNOLOGY CORP. ATTEST: By: /s/ Albert Basilico --------------------------------- Print Name: ______________________ Title: _____________________________ (Corporate Seal) ______________________________ Secretary 17 EX-99.2 5 0005.txt FORM OF STOCK OPTION AGREEMENT Exhibit 99.2 RALEIGH TECHNOLOGY CORP. INCENTIVE STOCK OPTION AGREEMENT THIS INCENTIVE STOCK OPTION AGREEMENT (this "Agreement") is made as of the ___ day of ________________ (the "Grant Date"), by and between RALEIGH TECHNOLOGY CORP., a Delaware corporation (the "Corporation"), and __________________________________ (the "Participant"). WHEREAS, the committee appointed under the Raleigh Technology Corp. Equity Compensation Plan (the "Committee") granted Participant an option to purchase shares of the Corporation's Common Stock, $.01 par value per share (the "Common Stock"), pursuant to the Raleigh Technology Corp. Equity Compensation Plan (the "Plan") (capitalized terms used herein shall have the meanings set out in the Plan unless otherwise specified in this Agreement); and WHEREAS, this Agreement evidences the grant of such option. NOW, THEREFORE, in consideration of the foregoing, of the mutual promises set forth below and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: 1. Grant of Option. The Committee granted Participant an option --------------- to purchase from the Corporation, during the period specified in Section 2 of this Agreement, a total of _____________________________________________ (_________) shares of Common Stock, at the purchase price of $___________ per share (the "Purchase Price"), in accordance with the terms and conditions stated in this Agreement. The shares of Common Stock subject to the option granted hereby are referred to below as the "Shares," and the option to purchase such Shares is referred to below as the "Option." 2. Vesting and Exercise of Option. The Option shall vest and ------------------------------ become exercisable in increments in accordance with the four-year schedule set forth below measured from _____________________ (the "Commencement Date"), provided that the Option shall vest and become exercisable with respect to an increment as specified only if Participant is employed with the Corporation on the specified date for such increment: (a) On the first annual anniversary of the Commencement Date the Option shall vest and become fully exercisable with respect to twenty five percent (25%) of the Shares; (b) on the second annual anniversary of the Commencement Date, the Option shall vest and become exercisable with respect to an additional twenty five percent (25%) of the Shares; (c) on the third annual anniversary of the Commencement Date, the Option shall vest and become exercisable with respect to an additional twenty five percent (25%) of the Shares; and (d) on the fourth annual anniversary of the Commencement Date, the Option shall vest and become exercisable with respect to an additional twenty five percent (25%) of the Shares. The schedule set forth above is cumulative, so that Shares as to which the Option has become vested and exercisable on and after a date indicated by the schedule may be purchased pursuant to exercise of the Option at any subsequent date prior to termination of the Option. The Option may be exercised at any time and from time to time to purchase up to the number of Shares as to which it is then vested and exercisable. Notwithstanding the foregoing, the Option shall vest and become exercisable, to the extent not already vested and exercisable, upon a Corporate Reorganization, provided that Participant is employed by the Corporation on the date of such Corporate Reorganization. In the event of a Corporate Reorganization, the Corporation shall send Participant prior written notice of the effectiveness of such event and the last day on which Participant may exercise the Option. Participant may, upon compliance with all of the terms of this Agreement and the Plan, purchase any or all of the Shares with respect to which the Option is vested and exercisable on or prior to the last day specified in such notice, and, to the extent the Option is not exercised, it shall terminate at 5:00 P.M., eastern standard time, on the last day specified in such notice. 3. Termination of Option. The Option shall remain exercisable as --------------------- specified in Section 2 above until the earliest to occur of the dates specified below, upon which date the Option shall terminate: (a) the date all of the Shares are purchased pursuant to the terms of this Agreement; (b) upon the expiration of ninety (90) days following the Termination of Employment of Participant; (c) at 5:00 P.M., eastern standard time, on the last date specified in the notice described in Section 2 above in the event of a Corporate Reorganization; or (d) the ten year anniversary of the Grant Date at 5:00 P.M., eastern standard time. Upon its termination, the Option shall have no further force or effect and Participant shall have no further rights under the Option or to any Shares which have not been purchased pursuant to prior exercise of the Option. 2 4. Manner of Exercise of Option. ---------------------------- (a) The Option may be exercised only by (i) Participant's completion, execution and delivery to the Corporation of a notice of exercise and, if required by the Corporation, an "investment letter" as supplied by the Corporation confirming Participant's representations and warranties in Section 24 of this Agreement, including the representation that Participant is acquiring the Shares for investment only and not with a view to the resale or other distribution thereof, and (ii) the payment to the Corporation, pursuant to the terms of this Agreement, of an amount equal to the Purchase Price multiplied by the number of Shares being purchased as specified in Participant's notice of exercise. Participant's notice of exercise shall be given in the manner specified in Section 18 but any exercise of the Option shall be effective only when the items required by the preceding sentence are actually received by the Corporation. The notice of exercise and the "investment letter" may be in the form set forth in Exhibit A attached to this Agreement. Payment of the aggregate --------- Purchase Price for Shares Participant has elected to purchase shall be made by cash or good check. Notwithstanding anything to the contrary in this Agreement, the Option may be exercised only if compliance with all applicable federal and state securities laws can be effected. (b) Upon any exercise of the Option by Participant or as soon thereafter as is practicable, the Corporation shall issue and deliver to Participant a certificate or certificates evidencing such number of Shares as Participant has then elected to purchase. Such certificate or certificates shall be registered in the name of Participant and shall bear the legend specified in Section 23 of this Agreement and any legend required by any federal or state securities laws and by the North Carolina Business Corporation Act. 5. Definitions; Authority of Committee. ----------------------------------- (a) A "Corporate Reorganization" means the happening of any one (1) of the following events: (i) the dissolution or liquidation of the Corporation; (ii) a reorganization, merger or consolidation involving the Corporation, unless (A) the transaction involves only the Corporation and one or more of the Corporation's parent corporation and wholly-owned (excluding interests held by employees, officers and directors) subsidiaries; or (B) the shareholders who had the power to elect a majority of the board of directors of the Corporation immediately prior to the transaction have the power to elect a majority of the board of directors of the surviving entity immediately following the transaction; (iii) the sale of all or substantially all of the assets of the Corporation to another corporation, person or business entity; or (iv) an acquisition of Corporation stock, unless the shareholders who had the power to elect a majority of the board of directors of the Corporation immediately prior to the acquisition have the power to elect a majority of the board of directors of the Corporation immediately following the transaction. (b) "Termination of Employment" shall mean termination of any employment relationship of Participant with the Corporation for any reason whatsoever, including, without limitation, death, disability, retirement, voluntary termination, involuntary termination, dismissal with or without Cause or resignation. 3 (c) "Cause" shall be limited to the following events: (i) drug abuse by Participant; (ii) alcohol abuse by Participant if it interferes with the efficient conduct of business by Participant; (iii) theft, embezzlement or other similar act by Participant of any tangible or intangible asset of the Corporation or any customer, supplier or investor of the Corporation; (iv) commission of any other criminal act by Participant (whether or not Participant is prosecuted and convicted) if such act causes or is likely to cause damage to the business of the Corporation; (v) a material breach by Participant of any written agreement between the Corporation and Participant, or any written policy of the Corporation known by and applicable to all its employees, but a mere mistake in business judgment shall not constitute "Cause" unless it is a part of a continuing pattern of bad judgment that has caused actual damage to the Corporation or its business, and (vi) willful failure by Participant to follow the instructions of the Board of Directors of the Corporation (the "Board") or an officer or other supervisory employee of the Corporation duly authorized by the Board, the Bylaws of the Corporation or an officer of the Corporation to give instructions to Participant, to the extent such instructions are reasonably related to the business of the Corporation, are given in good faith to promote the interest of the Corporation, would not require Participant to commit any illegal act and are not given to provide the Corporation with cause for terminating Participant. (d) All determinations made by the Committee with respect to the interpretation, construction and application of any provision of this Agreement shall be final, conclusive and binding on the parties. 6. Default Treatment. ----------------- (a) The Option shall be construed so that it is in compliance with the requirements of section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). If for any reason the Option does not meet the requirements of section 422 of the Code, then the Option or any portion of the Option, as necessary, shall be deemed a nonqualified stock option granted under the Plan. (b) If the aggregate Fair Market Value, determined on the date of grant, of the stock to which this Option and any other incentive stock options are exercisable for the first time by Participant during any calendar year under the Plan or any other stock option plan of the Corporation exceeds $100,000, the Option shall be deemed a nonqualified stock option granted under the Plan to the extent of such excess. 4 7. Restrictions on Transfer of Shares. ---------------------------------- (a) Except as otherwise provided in subsection (b) below and in Sections 8, 9 and 15 of this Agreement, neither the Option nor any Shares shall or may be sold, exchanged, delivered, assigned, bequeathed or gifted, pledged, mortgaged, hypothecated or otherwise encumbered, transferred or permitted to be transferred, or otherwise disposed of, whether voluntarily, involuntarily or by operation of law (including, without limitation, the laws of bankruptcy, intestacy, descent and distribution or succession) or on an absolute or contingent basis. For purposes of Sections 8, 9, 10, 15 and 19 hereof, any reference to Participant shall (when applicable) be deemed to be and include references to Participant's estate, executors or administrators, personal or legal representatives and transferees (direct or indirect). (b) In the event of Participant's death, the Option and/or any Shares then held of record by Participant may be transferred to any executor, administrator, personal or legal representative, legatee, heir or distributee of the estate of Participant; provided, that, as a condition precedent to such transfer of any of the Option and/or any Shares, each and every prospective transferee shall (i) provide or cause to be provided to the Corporation, at its request, sufficient evidence of the legal right and authority of such prospective transferee to have the Option and/or any such Shares so transferred and (ii) comply with the provisions of Section 11 of this Agreement. 8. Option of the Corporation to Purchase Shares Upon Termination ------------------------------------------------------------- of Employment. -------------- (a) In the event of the Termination of Employment of Participant, if Shares have been previously issued by the Corporation pursuant to exercise of the Option, the Corporation shall have the option (but shall not be obligated) to repurchase at the price specified in subsection (c) below any or all of the Shares owned by Participant and Participant's estate, executors or administrators, personal or legal representatives, and transferees (direct or indirect). (b) The option specified in Section 8(a) hereof, to the extent applicable, may be exercised by the Corporation after the Termination of Employment of Participant by giving written notice of such exercise to Participant, specifying the time and date on which settlement on the purchase of such Shares by the Corporation is to be made and the number of Shares to be so purchased by the Corporation. The date specified shall not be later than sixty (60) days after the date such notice is given. Settlement shall be held on the purchase of Shares under this Section 8 at the principal executive offices of the Corporation or at such other place as the Corporation shall notify Participant. At settlement, Participant shall deliver to the Corporation the materials required pursuant to Section 10 hereof and, simultaneously therewith, the Corporation shall deliver to Participant a good check in the amount of the purchase price of the Shares being purchased by the Corporation pursuant to this Section 8. 5 (c) The per share purchase price of the Shares to be purchased and sold pursuant to this Section 8 shall be as follows: (i) If the Termination of Employment giving rise to the purchase by the Corporation under this Section 8 was other than for Cause, as determined by the Committee in its discretion, then the per share purchase price under this Section 8 shall be the fair market value of the Shares on the date of such Termination of Employment, as determined by the Committee in its discretion. (ii) If the Termination of Employment giving rise to the purchase by the Corporation under this Section 8 was for Cause, as determined by the Committee in its discretion, then the per share purchase price under this Section 8 shall be equal to the Purchase Price. (d) The option specified in this Section 8, to the extent applicable, shall terminate when the Corporation has consummated a public offering of its Common Stock pursuant to the Securities Act of 1933, as amended. 9. Right of First Refusal. ---------------------- (a) In the event that Participant shall receive a Bona Fide Offer (as defined in Section 9(b) hereof) to purchase some or all of the Shares then owned by Participant (assuming Participant has purchased some or all of the Shares), and in the further event that Participant desires to accept such Bona Fide Offer, Participant shall give written notice to the Corporation containing the information required by Section 9(c) and offering to sell such Shares to the Corporation upon the same terms and conditions as are contained in the Bona Fide Offer or upon such other terms to which Participant consents. The Corporation shall then have such rights and privileges, for the prescribed time periods, as are set forth in Section 9(d) hereof. (b) The term "Bona Fide Offer" as used in this Agreement means an offer in writing, signed by an offeror or offerors (who must be a person or persons financially capable of carrying out the terms of such Bona Fide Offer) not affiliated in any manner with, or related to, Participant, in a form legally enforceable, upon its acceptance, against such nonaffiliated and unrelated offeror or offerors. (c) The notice from Participant to the Corporation with respect to a Bona Fide Offer under Section 9(a) shall contain a true and complete copy of the Bona Fide Offer, setting forth the price and all of the terms and conditions, with the name(s), address(es) and business(es) or other occupation(s) of the nonaffiliated and unrelated offeror or offerors. Any notice which does not contain all such information shall not be considered effective under Section 9(a). (d) For a period of sixty (60) days from its receipt of Participant's notice under Section 9(a) the Corporation shall have the right, at its sole option, to purchase the 6 Shares so offered. Such right of the Corporation may be exercised by the Corporation by giving written notice of such exercise to Participant within such sixty (60) day period. Such notice from the Corporation shall specify the time and date on which settlement in connection with the exercise of such right is to be made. The date specified shall not be later than ninety (90) days from the date such notice is given by the Corporation. Settlement shall be held on the purchase of Shares under this Section 9 at the principal executive offices of the Corporation or at such other place as the Corporation shall notify Participant. At settlement, Participant shall deliver to the Corporation the materials required pursuant to Section 9 hereof and, simultaneously therewith, the Corporation shall deliver to Participant the purchase price for such Shares in the amount, manner and form provided for in the Bona Fide Offer. (e) If the Corporation shall not elect, within such sixty (60) day period, to purchase all of the Shares covered by the Bona Fide Offer, Participant shall have the right to accept the Bona Fide Offer in whole (but not in part) and to sell such Shares, subject to the provisions and restrictions of this Agreement, but only in strict accordance with all of the provisions of the Bona Fide Offer and only if the sale is fully consummated within ninety (90) days after the date Participant gives the notice required by Section 9(a). In the event that such sale is not fully consummated within such ninety (90) day period, the provisions of this Section 9 must again be complied with by Participant before Participant may sell Shares pursuant to this Section 9. (f) The right of first refusal specified in this Section 9 shall terminate when the Corporation has consummated a public offering of its Common Stock pursuant to the Securities Act of 1933, as amended. (g) The right of first refusal specified in this Section 9 shall be freely assignable by the Corporation. 10. Delivery of Stock and Documents. Upon the closing of any ------------------------------- purchase by the Corporation of any Shares pursuant to Section 8 or 9 of this Agreement, Participant shall deliver to the Corporation the certificate or certificates representing the Shares being sold, free and clear of all options, contracts, commitments, liens, pledges, security interests and other encumbrances, duly endorsed for transfer, and such assignments and other documents and instruments evidencing the title of Participant and of Participant's compliance with this Agreement as may be reasonably required by the Corporation or by counsel for the Corporation. Upon the closing of such purchase, Participant shall be deemed to have represented and warranted to the Corporation (and, if requested by the Corporation, shall then represent and warrant in writing) that Participant owns the Shares being purchased, free and clear of all options, contracts, commitments, liens, pledges, security interests and other encumbrances. Participant agrees to indemnify the Corporation against any and all losses, damages, liabilities, claims, actions, proceedings, judgments, costs and expenses (including reasonable attorneys' fees) arising out of any breach of such representation and warranty. 11. Binding Upon Transferees. In the event that, at any time or ------------------------ from time to time, any Shares are transferred to any party (other than the Corporation) pursuant to the provisions 7 of Section 9 hereof or otherwise, the transferee shall take such Shares pursuant to all of the provisions, conditions and obligations of the Plan and this Agreement (including, without limitation, the obligations to sell and transfer, and to offer to sell and transfer, such Shares pursuant to the provisions of Section 8, 9 and 15 hereof), and, as a condition precedent to the transfer of such Shares, the transferee shall agree in writing, for and on behalf of such transferee and such transferee's successors and assigns, to be bound by all provisions of the Plan and this Agreement. For purposes of this Section 11, the obligation of any such transferee pursuant to Section 8 to sell such Shares shall arise upon the Corporation's exercise of its option pursuant to Section 8 at any time after Participant's termination of employment, not such transferee's termination of employment (if any). 12. Termination of Restrictions. The restrictions on --------------------------- transferability of the Shares under Section 4 of this Agreement and the application of the provisions of Sections 8, 9 and 15 of this Agreement shall terminate upon the adoption of resolutions by the Committee expressly terminating such restrictions and provisions; provided, however, that no termination under this Section 12 shall be deemed to affect any restrictions imposed by any applicable federal or state securities law, rule, regulation or order with respect to the ownership, sale or disposition by Participant of any of the Shares. 13. Changes in Capital Structure of the Corporation. Subject to ----------------------------------------------- any required action by the shareholders of the Corporation and the provisions of the North Carolina Business Corporation Act, the number of shares of Common Stock subject to this Agreement as well as the Purchase Price of any Shares not yet purchased by Participant shall be proportionately adjusted for (a) a division, combination or reclassification of the shares of Common Stock of the Corporation or (b) a dividend payable in shares of Common Stock of the Corporation. 14. Rights Prior to Exercise. Participant will have no rights as ------------------------ a shareholder with respect to the Shares except to the extent that Participant has exercised the Option and has been issued and received delivery of a certificate or certificates evidencing the Shares so purchased. 15. Sale or Other Disposition by Majority Interest. Participant ---------------------------------------------- hereby irrevocably appoints the Corporation and its President, or either of them, as Participant's agents and attorneys-in-fact, with full power of substitution for and in Participant's name, to sell, exchange, transfer or otherwise dispose of all or a portion of Participant's Shares and to do any and all things and to execute any and all documents and instruments (including, without limitation, any stock transfer powers) in connection therewith, such powers of attorney not to become operable until such time as the holder or holders of a majority of the issued and outstanding shares of Common Stock of the Corporation sell, exchange, transfer or otherwise dispose of, or contract to sell, exchange, transfer or otherwise dispose of, all or a majority of the issued and outstanding shares of Common Stock of the Corporation. Any sale, exchange, transfer or other disposition of all or a portion of Participant's Shares pursuant to the foregoing powers of attorney shall be made upon substantially the same terms and conditions (including sale price per share) applicable to a sale, exchange, transfer or other disposition of shares of Common Stock of the Corporation owned by the holder or holders of a majority of the issued and 8 outstanding shares of Common Stock of the Corporation. For purposes of determining the sale price per share of the Shares under this Section 15, there shall be excluded the consideration (if any) paid or payable to the holder or holders of a majority of the issued and outstanding shares of Common Stock of the Corporation in connection with any employment, consulting, noncompetition or similar agreements which such holder or holders may enter into in connection with or subsequent to such sale, transfer, exchange or other disposition. The foregoing power of attorney shall not impose or be deemed to impose any fiduciary duty or any other duty (except as set forth in this Section 15) or obligation on either the Corporation or its President, shall be irrevocable and coupled with an interest and shall not terminate by operation of law, whether by the death, bankruptcy or adjudication of incompetency or insanity of Participant or the occurrence of any other event. 16. Engagement of Participant. Nothing in this Agreement shall be ------------------------- construed as constituting a commitment, guarantee, agreement or understanding of any kind or nature that the Corporation shall continue to employ Participant, nor shall this Agreement affect in any way the right of the Corporation to terminate the employment of Participant at any time and for any reason. By Participant's execution of this Agreement, Participant acknowledges and agrees that Participant's employment is "at will." No change of Participant's duties as an employee of the Corporation shall result in, or be deemed to be, a modification of any of the terms of this Agreement. 17. Burden and Benefit; Corporation. This Agreement shall be ------------------------------- binding upon, and shall inure to the benefit of, the Corporation and Participant, and their respective heirs, personal and legal representatives, successors and assigns. As used in this Section 17, the term the "Corporation" shall also include any corporation which is the parent or a subsidiary of the Corporation or any corporation or entity which is an affiliate of the Corporation by virtue of common (although not identical) ownership, and for which Participant is providing services in any form during Participant's employment with the Corporation or any such other corporation or entity. Participant hereby consents to the enforcement of any and all of the provisions of this Agreement by or for the benefit of the Corporation and any such other corporation or entity. 18. Notices. Any and all notices under this Agreement shall be in ------- writing, and sent by hand delivery or by certified or registered mail (return receipt requested and first-class postage prepaid), in the case of the Corporation, to its principal executive offices to the attention of the President, and, in the case of Participant, to Participant's address as shown on the Corporation's records. 19. Specific Performance. Strict compliance by Participant shall -------------------- be required with each and every provision of this Agreement and particularly with the procedures set forth in Sections 8 and 9 hereof. The parties hereto agree that the Shares are unique, that Participant's failure to perform the obligations provided by this Agreement will result in irreparable damage to the Corporation and that specific performance of Participant's obligations may be obtained by suit in equity. 9 20. Governing Law. This Agreement shall be construed and enforced ------------- in accordance with the laws of the State of North Carolina, without reference to its conflicts of laws rules or the principles of the choice of law. 21. Modifications. No change or modification of this Agreement ------------- shall be valid unless the same is in writing and signed by the parties hereto. 22. Terms and Conditions of Plan. The terms and conditions ---------------------------- included in the Plan, the receipt of a copy of which Participant hereby acknowledges by execution of this Agreement, are incorporated by reference herein, and to the extent that any conflict may exist between any term or provision of this Agreement and any term or provision of the Plan, such term or provision of the Plan shall control. 23. Stock Legend. All certificates for Shares issued by the ------------ Corporation to Participant or Participant's successors and assigns or to any other person becoming a signatory to this Agreement shall be endorsed with legends in substantially the following form, and any transfer agent of the Corporation may be instructed to require compliance with all legends on such certificates: The securities represented hereby are subject to the terms of an Option Agreement between the Corporation and the holder of such securities. Pursuant to the terms of such Option Agreement, the Corporation has the right to purchase such securities under certain circumstances. A copy of the Option Agreement can be obtained from the Secretary of the Corporation, without charge, upon the written request of the holder of record of this certificate. The securities represented hereby have not been registered under any federal or state securities laws and have been issued under exemptions from registration that depend, in part, on the intent of the holder not to sell or transfer these securities in any manner not permitted by such laws. These securities therefore may not be sold or transferred except upon registration under all applicable federal and state securities laws or upon delivery to the Corporation of either (a) a no-action letter from the federal and state agencies having jurisdiction thereof, or (b) an opinion of counsel satisfactory to the Corporation that neither the sale nor the proposed transfer constitutes a violation of the registration provisions of any federal or state securities laws. 24. Covenants and Representations of Participant. -------------------------------------------- Participant represents, warrants, covenants and agrees with the Corporation as follows: 10 (a) The Option is being received for Participant's own account without the participation of any other person, with the intent of holding the Option and the Shares issuable pursuant thereto for investment and without the intent of participating, directly or indirectly, in a distribution of the Shares and not with a view to, or for resale in connection with, any distribution of the Shares or any portion thereof. (b) Participant is not acquiring the Option or any Shares based upon any representation, oral or written, by any person with respect to the future value of, or income from, the Shares, but rather upon an independent examination and judgment as to the prospects of the Corporation. (c) Participant has had the opportunity to ask questions of and receive answers from the Corporation and its executive officers and to obtain all information necessary for Participant to make an informed decision with respect to the investment in the Corporation represented by the Option and any Shares issued upon its exercise. (d) Participant is able to bear the economic risk of any investment in the Shares, including the risk of a complete loss of the investment, and Participant acknowledges that Participant must continue to bear the economic risk of any investment in Shares received upon exercise of the Option for an indefinite period. (e) Participant understands and agrees that the Shares subject to the Option may be issued and sold to Participant without registration under any state or federal laws relating to the registration of securities and in that event will be issued and sold in reliance on exemptions from registration under appropriate state and federal laws. (f) Shares issued to Participant upon exercise of the Option will not be offered for sale, sold or transferred by Participant other than pursuant to: (i) an effective registration under applicable state securities laws or in a transaction which is otherwise in compliance with those laws; (ii) an effective registration under the Securities Act of 1933, or a transaction otherwise in compliance with such Act; and (iii) evidence satisfactory to the Corporation of compliance with all applicable state and federal securities laws. The Corporation shall be entitled to rely upon an opinion of counsel satisfactory to it with respect to compliance with the foregoing laws. (g) The Corporation will be under no obligation to register the Shares issuable pursuant to the Option or to comply with any exemption available for sale of the Shares by Participant without registration, and the Corporation is under no obligation to act in any manner so as to make Rule 144 promulgated under the Securities Act of 1933 available with respect to any sale of the Shares by Participant. (h) Participant has not relied upon the Corporation with respect to any tax consequences related to the grant or exercise of this Option, or the disposition of Shares purchased pursuant to its exercise. Participant acknowledges that, as a result of the grant 11 and/or exercise of the Option, Participant may incur a substantial tax liability. Participant assumes full responsibility for all such consequences and the filing of all tax returns and elections Participant may be required or find desirable to file in connection therewith. In the event any valuation of the Option or Shares purchased pursuant to its exercise must be made under federal or state tax laws and such valuation affects any return or election of the Corporation, Participant agrees that the Corporation may determine such value and that Participant will observe any determination so made by the Corporation in all returns and elections filed by Participant. In the event the Corporation is required by applicable law to collect any withholding, payroll or similar taxes by reason of the grant or any exercise of the Option, Participant agrees that the Corporation may withhold such taxes from any monetary amounts otherwise payable by the Corporation to Participant and that, if such amounts are insufficient to cover the taxes required to be collected by the Corporation, Participant will pay to the Corporation such additional amounts as are required. (i) The agreements, representations, warranties and covenants made by Participant herein with respect to the Option shall also extend to and apply to all of the Shares issued to Participant from time to time pursuant to exercise of the Option. Acceptance by Participant of any certificate representing Shares shall constitute a confirmation by Participant that all such agreements, representations, warranties and covenants made herein shall be true and correct at that time. [SIGNATURE PAGE FOLLOWS] 12 IN WITNESS WHEREOF, the Corporation and Participant have executed this Agreement and affixed their seals hereto as of the day and year first above written. ATTEST: RALEIGH TECHNOLOGY CORP. ______________________________ By: ______________________________ _________________________, Secretary Print Name: ________________________ Title: _____________________________ [CORPORATE SEAL] WITNESS: PARTICIPANT ______________________________ _______________________________(SEAL) Name: 13 -----END PRIVACY-ENHANCED MESSAGE-----