-----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, B12rT0oZM0A66tx7LLmN57+bfXNVB2wnu8WkMk4dYFXOJcWn97o8N8/f5Y+pWZyh KZRhTtBPgX4Jx+ISiNEkFA== 0000912057-01-515913.txt : 20010516 0000912057-01-515913.hdr.sgml : 20010516 ACCESSION NUMBER: 0000912057-01-515913 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20010515 EFFECTIVENESS DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTRUSION COM INC CENTRAL INDEX KEY: 0000736012 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 751911917 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-60928 FILM NUMBER: 1637458 BUSINESS ADDRESS: STREET 1: 1101 ARAPAHO ROAD CITY: RICHARDSON STATE: TX ZIP: 75081 BUSINESS PHONE: 9722346400 MAIL ADDRESS: STREET 1: 1101 ARAPAHO ROAD CITY: RICHARDSON STATE: TX ZIP: 75081 FORMER COMPANY: FORMER CONFORMED NAME: ODS NETWORKS INC DATE OF NAME CHANGE: 19970507 FORMER COMPANY: FORMER CONFORMED NAME: OPTICAL DATA SYSTEMS INC DATE OF NAME CHANGE: 19950517 S-8 1 a2049201zs-8.txt S-8 As filed with the Securities and Exchange Commission on Registration No. 333- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-8 REGISTRATION STATEMENT Under The Securities Act Of 1933 -------------------------- INTRUSION.COM, INC. (Exact name of registrant as specified in its charter) DELAWARE 75-1911917 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1101 East Arapaho Richardson, Texas 75081 (Address of principle executive offices) Registrant's telephone number including area code: (972) 234-6400 INTRUSION.COM, INC. 1995 STOCK OPTION PLAN (FULL TITLE OF THE PLAN) Jay R. Widdig Chief Financial Officer and Secretary INTRUSION.COM, INC. 1101 East Arapaho Richardson, Texas 75081 (972) 234-6400 (Name, address and telephone number, including area code, of agent for service) Calculation of Registration Fee
- ------------------------------------------------------------------------------------------------- Proposed maximum Proposed maximum Title of securities Amount to be offering price per aggregate offering Amount of to be registered registered (1) share (2) price (2) registration fee - ------------------------------------------------------------------------------------------------- Common Stock, $.01 par value per share 850,000 $3.79 $3,221,500 $805.38 - -------------------------------------------------------------------------------------------------
(1) Pursuant to Rule 416, shares issuable upon any stock split, stock dividend or similar transaction with respect to the shares covered hereby are also being registered hereunder. (2) Estimated solely for the purpose of determining the registration fee pursuant to Rule 457(h) on the basis of the average of the high and low sales prices of the Common Stock of Intrusion.com, Inc. as reported on the Nasdaq Stock Market, National Market System, on May 14, 2001. PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS ITEM 1. PLAN INFORMATION.* ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.* PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The following documents heretofore filed or to be filed by Intrusion.com, Inc. (the "Registrant") with the Securities and Exchange Commission (the "Commission") are incorporated by reference herein: (a) The Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2000, which includes the consolidated financial statements of the Registrant and its subsidiaries and certain supplementary data for the fiscal year ended December 31, 2000, together with the report thereon of Ernst & Young LLP, independent auditors. (b) The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2001 which includes the consolidated financial statements of the Registrant and its Subsidiaries for the quarter ended March 31, 2001. (c) The description of the Common Stock of the Registrant incorporated by reference in its Registration Statement on Form 8-A (File No. 0-20191) which was declared effective by the Commission on May 21, 1992, pursuant to Section 12(g) of the Exchange Act, including any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Registrant subsequent to the date of this Registration Statement pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment to this Registration Statement 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 in this Registration Statement and to be a part hereof from the respective dates of filing of such documents. * Information required by Part I to be contained in the Section 10(a) prospectus is omitted from this Registration Statement in accordance with Rule 428 under the Securities Act of 1933, as amended (the "Securities Act"), and the Note to Part I of Form S-8. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Registrant's Certificate of Incorporation relieves its directors from liability for monetary damages to the fullest extent permitted by Delaware law. Section 145 of the Delaware General Corporation Law provides, in effect, that any person made a party to any action by reason of the fact that he is or was a director, officer, employee or agent of the Registrant may and, in certain cases, must be indemnified by the Registrant against, in the case of a non-derivative action, judgments, fines, amounts paid in settlement and reasonable expenses (including attorneys' fees) incurred by him as a result of such action, and in the case of a derivative action, against expenses (including attorneys' fees), if in either type of action he acted in good faith and in a manner he reasonably believed to be not opposed to the Registrant's best interests. This indemnification does not apply, in a derivative action, to matters as to which it is adjudged that the director, officer, employee or agent is liable to the Registrant, unless upon court order it is determined that, despite such adjudication of liability, but in view of all the circumstances of the case, he is fairly and reasonably entitled to indemnity for expenses, and, in a non-derivative action, to any criminal proceeding in which such person had reasonable cause to believe his conduct was unlawful. Article Six, Section 3, and Article Ten of the Registrant's Certificate of Incorporation, as amended, provide, in general, that no director of the Registrant shall be personally liable for monetary damages for breach of the director's fiduciary duty as a director, except for liability for (i) any breach of the director's duty of loyalty to the Registrant or its stockholders; (ii) an act or omission not in good faith or an act or omission that involves intentional misconduct or a knowing violation of law; (iii) any liability under Section 174 of the Delaware General Corporation Law (pertaining to unlawful payment of a dividend or an unlawful stock purchase or redemption); or (iv) a transaction from which the director received an improper personal benefit. Article Six of the Registrant's Bylaws, provides, in general, that the Registrant shall indemnify its directors and officers under the circumstances defined in Section 145 of the Delaware General Corporation Law and gives authority to the Registrant to purchase insurance with respect to such indemnification. The Registrant has entered into separate Indemnity Agreements with each of its directors and certain of its executive officers (each, an "Indemnitee"), under which the Registrant will, upon proper request of the Indemnitee, indemnify any Indemnitee if such Indemnitee is a party to or is threatened to be made a party to or is otherwise involved in any third party proceedings or proceedings by or in the right of the Registrant to procure a judgment in its favor by reason of the fact that the Indemnitee is or was a director and/or officer of the Registrant or is or was serving at the request of the Registrant as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against all expenses, judgments, fines and penalties, actually and reasonably incurred by the Indemnitee in connection with the defense or settlement of any of such proceedings; provided that (i) in the case of a third party proceeding, the Indemnitee acted in good faith and in a manner which the Indemnitee reasonably believed to be in or not opposed to the best interests of the Registrant, and in the case of a criminal proceeding, in addition, that the Indemnitee had no reasonable cause to believe that his conduct was unlawful, (ii) in the case of a proceeding by or in the right of the Registrant, the Indemnitee acted in good faith and in a manner which the Indemnitee reasonably believed to be in or not opposed to the best interests of the Registrant and in which the Indemnitee shall not have been adjudged to be liable to the Registrant for negligence or misconduct in the performance of the Indemnitee's duty to the Registrant, unless the court in which such proceeding is brought determines that the Indemnitee is fairly and reasonably entitled to indemnity for expenses as such court deems proper, and (iii) in the case of a proceeding by or in the right of the Registrant, the Indemnitee is only indemnified against expenses and not against any judgment, fines or penalties. Notwithstanding the above, the Registrant shall indemnify an Indemnitee for all expenses incurred in connection with any proceedings to the extent that the Indemnitee has been successful in defense of any such proceeding, or in defense of any claim, issue or matter therein. The Registrant will also, upon proper request of the Indemnitee, pay in advance the expenses incurred by the Indemnitee in any of the above proceedings, if the Indemnitee shall undertake to repay such amounts to the extent it is determined that the Indemnitee is not entitled to indemnification. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. ITEM 8. EXHIBITS. The following documents are filed as Exhibits herewith pursuant to Item 601 of Regulation S-K or are incorporated in this Registration Statement by reference to previous filings with the Commission as noted. EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------ ---------------------- 4.1 Instruments Defining Rights of Shareholders. Reference is made to Registrant's Registration Statement on Form 8-A, as amended, and the exhibits thereto, which are incorporated herein by reference pursuant to Item 3(c) of this Registration Statement. 5.1 Opinion of Brobeck, Phleger and Harrison, LLP regarding 850,000 shares of Common Stock 23.1 Consent of independent auditors 23.2 Consent of counsel (included in the opinion of Brobeck, Phleger and Harrison, LLP, filed herewith as Exhibit 5.1) 24.1 Power of Attorney (included on the signature page of this Registration Statement) 99.1 Intrusion.com, Inc. 1995 Stock Option Plan, as amended ITEM 9. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (1) 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; 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; provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement. (2) 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 therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; (3) To remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the offering; and (4) 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 that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 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 provisions described in Item 6 of this Registration Statement, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore, unenforceable. If 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. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, 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 Richardson, State of Texas, on the 15th day of May, 2001. INTRUSION.COM, INC. (REGISTRANT) BY: /s/ TIMOTHY W. KINNEAR -------------------------------------------- Timothy W. Kinnear PRESIDENT AND CHIEF EXECUTIVE OFFICER POWER OF ATTORNEY We, the below signed officers and directors of Intrusion.com, Inc. ("Registrant"), do hereby constitute and appoint Timothy W. Kinnear and Jay R. Widdig, with full power of substitution, our true and lawful attorney and agent, to do any and all acts and things in our names in the capacities indicated which Timothy W. Kinnear and Jay R. Widdig may deem necessary or advisable to enable the Registrant to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission in connection with this Registration Statement, including specifically, but not limited to, the power and authority to sign for us, or any of us, in our names in the capacities indicated, and any and all amendments (including post-effective amendments) to this Registration Statement; and we do hereby ratify and confirm all that Timothy W. Kinnear and Jay R. Widdig shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ G. WARD PAXTON Chairman of the Board and Director May 15, 2001 - ------------------------------- G. Ward Paxton /s/ TIMOTHY W. KINNEAR Chief Executive Officer, President, May 15, 2001 - ------------------------------- (Principal Executive Officer) and Timothy W. Kinnear Director /s/ T. JOE HEAD Vice Chairman of the Board and May 15, 2001 - ------------------------------- Director T. Joe Head /s/ JAY R. WIDDIG Chief Financial Officer, Vice May 15, 2001 - ------------------------------- President, Secretary and Treasurer Jay R. Widdig (Principal Financial and Accounting Officer) /s/ J. FRED BUCY, JR. Director May 15, 2001 - ------------------------------- J. Fred Bucy, Jr. /s/ GRANT A. DOVE Director May 15, 2001 - ------------------------------- Grant A. Dove /s/ DONALD M. JOHNSTON Director May 15, 2001 - ---------------------- Donald M. Johnston
INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------ ---------------------- 4.1 Instruments Defining Rights of Shareholders. Reference is made to Registrant's Registration Statement on Form 8-A, as amended, and the exhibits thereto, which are incorporated herein by reference pursuant to Item 3(c) of this Registration Statement. 5.1 Opinion of Brobeck, Phleger and Harrison, LLP regarding 850,000 shares of Common Stock 23.1 Consent of independent auditors 23.2 Consent of counsel (included in the opinion of Brobeck, Phleger and Harrison, LLP, filed herewith as Exhibit 5.1) 24.1 Power of Attorney (included on the signature page of this Registration Statement) 99.1 Intrusion.com, Inc. 1995 Stock Option Plan, as amended EX-5.1 2 a2049201zex-5_1.txt EXHIBIT 5.1 EXHIBIT 5.1 OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP May 15, 2001 Intrusion.com, Inc. 1101 E. Arapaho Road Richardson, Texas 75081 Re: Intrusion.com, Inc. Registration Statement on Form S-8 for an aggregate of 850,000 Shares of Common Stock Ladies and Gentlemen: We have acted as counsel to Intrusion.com, Inc., a Delaware corporation (the "Company"), in connection with the registration on Form S-8 (the "Registration Statement") under the Securities Act of 1933, as amended, of an additional 850,000 shares of the Company's common stock (the "Shares") authorized for issuance under the Company's 1995 Stock Option Plan (the "Plan"). This opinion is being furnished in accordance with the requirements of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K. We have reviewed the Company's charter documents and the corporate proceedings taken by the Company in connection with the establishment of the Plan. Based on such review, we are of the opinion that if, as and when the shares are issued and sold (and the consideration therefor received) pursuant to the provisions of option agreements or direct stock issuances duly authorized under the Plan and in accordance with the Registration Statement, such Shares will be duly authorized, legally issued, fully paid and non-assessable. We consent to the filing of this opinion letter as Exhibit 5.1 to the Registration Statement. This opinion letter is rendered as of the date first written above and we disclaim any obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinion expressed herein. Our opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters relating to the Company, the Plan or the Shares. Very truly yours, /s/ Brobeck Phleger & Harrison LLP BROBECK, PHLEGER & HARRISON LLP EX-23.1 3 a2049201zex-23_1.txt EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm in the Registration Statement (Form S-8) pertaining to the Intrusion.com, Inc. 1995 Stock Option Plan and to the incorporation by reference therein of our report dated January 17, 2001, with respect to the consolidated financial statements and schedule of Intrusion.com, Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 2000, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Dallas, Texas May 10, 2001 EX-99.1 4 a2049201zex-99_1.txt EXHIBIT 99.1 EXHIBIT 99.1 INTRUSION.COM, INC. 1995 STOCK OPTION PLAN AS AMENDED SECTION 1 ESTABLISHMENT AND PURPOSE This Plan is established (i) to offer selected Employees of the Company or its Subsidiaries an equity ownership interest in the financial success of the Company, (ii) to provide the Company an opportunity to attract and retain the best available personnel for positions of substantial responsibility, and (iii) to en-courage equity participation in the Company by selected Employees. This Plan provides for the grant by the Company of Options to purchase Shares. Options granted under this Plan may include nonstatutory options as well as ISOs intended to qualify under section 422 of the Code. SECTION 2 DEFINITIONS The following definitions shall be applicable to the terms used in this Plan: (a) "BOARD OF DIRECTORS" shall mean the board of directors of the Company, as duly elected from time to time. (b) "CHANGE IN CONTROL" shall mean to have occurred at such time as either (i) any "person," as such term is used in section 14(d) of the Exchange Act, other than the Company, a wholly-owned Subsidiary of the Company or any employee benefit plan of the Company, or its Subsidiaries, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act (or any successor rule)), directly or indirectly, of fifty percent (50%) or more of the combined voting power of the Company's Stock, or (ii) individuals who constitute the Board of the Directors on the effective date (as provided in Section 11 hereof) of this Plan (the "Incumbent Board") cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election or nomination for election by the Company's shareholders was approved by a vote of at least three quarters of the directors comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director without objection to such nomination) shall be, for purposes of this clause (ii) considered as though such person was a member of the Incumbent Board. (c) "CODE" shall mean the Internal Revenue Code of 1986, as amended, and as interpreted by the rules and regulations promulgated thereunder. (d) "COMMITTEE" shall mean a committee appointed by the Board of Directors in accordance with Section 3 of this Plan to implement, interpret and administer the Plan. (e) "COMPANY" shall mean Intrusion.com, Inc., a Delaware corporation. (f) "DATE OR GRANT" shall mean the date on which the Committee grants an Option to an Optionee. (g) "DISINTERESTED DIRECTOR" shall mean a member of the Board of Directors who is not, during the one year prior to service as an administrator under this Plan (as described in Section 3 of this Plan) granted an Option pursuant to the terms of this Plan (or any other plan of the Company or any of its Subsidiaries) except (i) participation in a formula plan meeting the conditions of Rule 16b-3(c)(2)(ii) under the Exchange Act, (ii) participation in an ongoing securities acquisition plan meeting the conditions in Rule 16b-3(d)(2)(i) under the Exchange Act, (iii) an election to receive an annual retainer fee in either cash or an equivalent amount of securities of the Company, or partly in cash and partly in securities, or (iv) that participation in this Plan shall not disqualify a director for the purpose of administering another plan that does not permit participation by the Board of Directors; provided, that the scope of the exceptions in this paragraph shall automatically be reduced or expanded to the extent that Rule 16b-3 under the Exchange Act is amended to reduce or expand the scope of the exceptions thereunder. (h) "EMPLOYEE" shall mean each individual who performs services for the Company or its Subsidiaries, provided the relationship between such individual and the Company or its Subsidiaries is the legal relationship of employer and employee. This definition of "Employee" is subject to the definition set forth in section 3401(c) of the Code. (i) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, and as interpreted by the rules and regulations promulgated thereunder. (j) "EXERCISE PRICE" shall mean the amount for which one or more Shares may be purchased upon exercise of an Option, as specified by the Committee in the applicable Stock Option Agreement. In no event shall the Exercise Price be less than the par value per Share. (k) "FAIR MARKET VALUE" shall mean (1) if the Stock of the Company is listed upon an established stock exchange or exchanges, the highest closing price of the Stock on such stock exchange or exchanges on the day in question or, if no sale of the Stock of the Company shall have been made on any stock exchange on such day, on the next preceding day on which there was a sale of the Stock, (2) if the Stock of the Company is not listed upon an established stock exchange, the mean between dealer "bid" and "ask" prices of the Stock in the New York over-the-counter market on the day in question, as reported by the National Association of Securities Dealers, Inc., and (3) if there is no public market for the Stock of the Company, such amount as the Board of Directors and the Committee, in their sole discretion, after taking all relevant facts into consideration, shall determine. (l) "ISO" shall mean a stock option which meets the requirements of section 422(b) of the Code. (m) "NONSTATUTORY OPTION" shall mean any Option granted by the Committee that does not meet the requirements of sections 421 through 424 of the Code, as amended. (n) "OPTION" shall mean either an ISO or Nonstatutory Option, as the context requires. (o) "OPTIONEE" shall mean an individual who has been granted an Option. (p) "PERMANENT AND TOTAL DISABILITY" shall mean that an individual is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months. An individual shall not be considered to suffer from Permanent and Total Disability unless such individual furnishes proof of the existence thereof in such form and manner, and at such times, as the Committee may reasonably require. (q) "PLAN" shall mean this 1995 Stock Option Plan of Intrusion.com, Inc., as amended from time to time. (r) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and as interpreted by the rules and regulations promulgated thereunder. (s) "SHARE" shall mean one share of Stock, as adjusted in accordance with Section 8 of this Plan (if applicable). (t) "STOCK" shall mean the common stock, $.01 par value, of the Company. (u) "STOCK OPTION AGREEMENT" shall mean the agreement executed between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to the granting of an Option. (v) "SUBSIDIARY" shall mean any corporation as to which fifty percent (50%) or more of the outstanding voting stock or shares shall now or hereafter be owned or controlled, directly by a person, any Subsidiary of such person, or any Subsidiary of such Subsidiary. (w) "TEN-PERCENT STOCKHOLDER" shall mean a person who owns more than ten percent (10%) of the total combined voting power of all classes of outstanding stock of the Company or any Subsidiary at the date of grant of an Option, taking into account the attribution rules set forth in section 424 of the Code, as amended. For purposes of this definition, the term "outstanding stock" shall include all stock actually issued and outstanding immediately after the grant of an Option to an Optionee. The term "outstanding stock" shall not include reacquired shares or shares authorized for issuance under outstanding Options held by the Optionee or by any other person. Whenever appropriate, words used in the Plan in the singular may mean the plural, the plural may mean the singular, and the masculine may mean the feminine. SECTION 3 ADMINISTRATION (a) GENERAL ADMINISTRATION. This Plan shall be administered by the Committee, which shall consist of at least two persons, each of whom shall be a Disinterested Director who meets the requirements of an "outside director," as defined in Prop. Treas. Reg. Section 1.162-27(e)(3); provided, however, that a director who is a Disinterested Director will be treated as meeting the requirements of an "outside director" until the first meeting of stockholders at which directors are to be elected that occurs after January 1, 1996. The members of the Committee shall be appointed by the Board of Directors for such terms as the Board of Directors may determine. The Board of Directors may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, however caused, may be filled by the Board of Directors. (b) COMMITTEE PROCEDURES. The Board of Directors shall designate one of the members of the Committee as chairman. The Committee may hold meetings at such times and places as it shall determine. The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing by a majority of all Committee members, shall be valid acts of the Committee. A majority of the Committee shall constitute a quorum. (c) AUTHORITY OF COMMITTEE. This Plan shall be administered by, or under the direction of, the Committee constituted in such a manner as to comply at all times with Rule 16b-3 (or any successor rule) under the Exchange Act. The Committee shall administer this Plan so as to comply at all times with the Exchange Act and, subject to the Code, shall otherwise have absolute and final authority to interpret this Plan and to make all determinations specified in or permitted by this Plan or deemed necessary or desirable for its administration or for the conduct of the Committee's business, including without limitation the authority to take the following actions: (i) To interpret this Plan and to apply its provisions; (ii) To adopt, amend or rescind rules, procedures and forms relating to this Plan; (iii) To authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of this Plan; (iv) To determine when Options are to be granted under this Plan; (v) To select the Optionees; (vi) To determine the number of Shares to be made subject to each Option; (vii) To prescribe the terms, conditions and restrictions of each Option, including without limitation the Exercise Price and the determination whether an Option is to be classified as an ISO or a Nonstatutory Option; (viii) To amend any outstanding Stock Option Agreement, subject to applicable legal restrictions and, where appropriate, the consent of the Optionee who entered into such agreement; (ix) To establish procedures so that an Optionee may obtain a loan through a registered broker-dealer under the rules and regulations of the Federal Reserve Board, for the purpose of exercising an Option; (x) To establish procedures for an Optionee (1) to have withheld from the total number of Shares to be acquired upon the exercise of an Option that number of Shares having a Fair Market Value, which, together with such cash as shall be paid in respect of fractional shares, shall equal the Exercise Price, and (2) to exercise a portion of an Option by delivering that number of Shares already owned by an Optionee having a Fair Market Value which shall equal the partial Exercise Price and to deliver the Shares thus acquired by such Optionee in payment of Shares to be received pursuant to the exercise of additional portions of the Option, the effect of which shall be that an Optionee can in sequence utilize such newly acquired shares in payment of the Exercise Price of the entire Option, together with such cash as shall be paid in respect of fractional shares; (xi) To establish procedures whereby a number of Shares may be withheld from the total number of Shares to be issued upon exercise of an Option, to meet the obligation of withholding for federal and state income and other taxes, if any, incurred by the Optionee upon such exercise; and (xii) To take any other actions deemed necessary or advisable for the administration of this Plan. All interpretations and determinations of the Committee made with respect to the granting of Options shall be final, conclusive, and binding on all interested parties. The Committee may make grants of Options on an individual or group basis. No member of the Committee shall be liable for any action that is taken or is omitted to be taken if such action or omission is taken in good faith with respect to this Plan or grant of any Option. SECTION 4 ELIGIBILITY The Committee shall select certain Employees of the Company or its Subsidiaries to participate in this Plan; provided, however, that any Disinterested Directors who are serving as administrators of this Plan shall not be eligible for any Options nor shall any other person be eligible for any Options if the granting of a Option to such person would destroy the satisfaction by this Plan of the general exemptive conditions of Rule 16b-3 under the Exchange Act. SECTION 5 SHARES SUBJECT TO PLAN (a) BASIC LIMITATION. Shares offered under this Plan may be authorized but unissued Shares or Shares that have been reacquired by the Company. The aggregate number of Shares that are reserved and available for issuance under this Plan shall be three million, three hundred thousand (3,300,000) Shares, subject to adjustment pursuant to Section 8 of this Plan. The Committee shall not issue more Shares than are available for issuance under this Plan. The number of Shares that are subject to unexercised Options at any time under this Plan shall not exceed the number of Shares that remain available for issuance under this Plan. The Company, during the term of this Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of this Plan. (b) INDIVIDUAL LIMITATION. Notwithstanding anything herein to the contrary, no Employee may be granted an Option, which in combination with other Options to such Employee under the Plan (regardless of whether such other Options have been exercised or cancelled), aggregates more then 50,000 Shares in any one year period. (c) ADDITIONAL SHARES. In the event any outstanding Option for any reason expires, is cancelled or otherwise terminates, the Shares allocable to the unexercised portion of such Option shall again be available for issuance under this Plan. SECTION 6 TERMS AND CONDITIONS OF OPTIONS (a) TERM OF OPTION. The term of each Option shall be ten (10) years from the Date of Grant or such shorter term as may be determined by the Committee; provided, however, in the case of an ISO granted to a Ten-Percent Stockholder, the term of such ISO shall be five (5) years from the Date of Grant or such shorter time as may be determined by the Committee. (b) EXERCISE PRICE AND METHOD OR PAYMENT. (i) EXERCISE PRICE. The Exercise Price shall be such price as is determined by the Committee in its sole discretion and set forth in the Stock Option Agreement; provided, however; that the Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of the Shares subject to such option on the Date of Grant (or 110% in the case of an Option granted to an Optionee who is a Ten-Percent Stockholder on the Date of Grant). (ii) PAYMENT OF SHARES. Payment for the Shares upon exercise of an Option shall be made in cash, by certified check, or by any other method of payment as may be permitted under applicable law and approved by the Committee. (c) EXERCISE OF OPTION. (i) PROCEDURE FOR EXERCISE; RIGHTS OF SHAREHOLDER. Any Option granted hereunder shall be exercisable at such times under such conditions as shall be determined by the Committee, including without limitation, performance criteria with respect to the Company or the Optionee, and in accordance with the terms of this Plan; provided, however, that in no event shall an Option be exercisable in whole or in part prior to one year from the Date of Grant or after the expiration of ten years from the Date of Grant. An Option may not be exercised for a fraction of a Share. An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Stock Option Agreement by the Optionee entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment may, as authorized by the Committee, consist of any form of consideration and method of payment allowable under Section 6(b)(ii) of this Plan. Upon the receipt of notice of exercise and full payment for the Shares, the Shares shall be deemed to have been issued and the Optionee shall be entitled to receive such Shares and shall be a stockholder with respect to such Shares, and the Shares shall be considered fully paid and nonassessable. No adjustment will be made for a dividend or other right for which the record date is prior to the date on which the stock certificate is issued, except as provided in Section 8 of this Plan. Each exercise of an Option shall reduce, by an equal number, the total number of Shares that may thereafter be purchased under such Option. (ii) TERMINATION OF STATUS AS AN EMPLOYEE. Except as provided in Subsections 6(c)(iii) and 6(c)(iv) below, an Optionee holding an outstanding Option who ceases to be an Employee of the Company for any reason may exercise the Option to the extent that the Optionee was entitled to exercise it on such date, but only until the earlier of the date (i) the Option held by the Optionee expires, or (ii) ninety (90) days after the date such Optionee ceases to be an Employee, unless the Committee further extends such period in its sole discretion. To the extent that the Optionee was not entitled to exercise an Option on such date, or if the Optionee does not exercise it within the time specified herein, such Option shall terminate. The Committee shall have the authority to determine the date an Optionee ceases to be an Employee, and must provide to the Optionee such determination within fifteen (15) days. Leaves of absence approved by the Committee which conform to the policies of the Company shall not be considered termination of employment if the employer-employee relationship as defined under the Code otherwise continues to exist. (iii) PERMANENT AND TOTAL DISABILITY. Notwithstanding the provisions of Section 6(c)(ii) above, in the event an Optionee is unable to continue to perform services for the Company or any of its Subsidiaries as a result of such Optionee's Permanent and Total Disability (and, for ISOs, at the time such Permanent and Total Disability begins, the Optionee was an Employee and had been an Employee since the Date of Grant), such Optionee may exercise an outstanding Option in whole or in part notwithstanding that such Option may not be fully exercisable, but only until the earlier of the date (i) the Option held by the Optionee expires, or (ii) twelve (12) months from the date of termination of services due to such Permanent and Total Disability. To the extent the Optionee does not exercise the Option within the time specified herein, such Option shall terminate. (iv) DEATH OF AN OPTIONEE. Notwithstanding the provisions of Section 6(c)(ii) above, upon the death of an Optionee, any outstanding Option held by an Optionee shall terminate and be of no further effect; provided, however, that if at the time of death, the Optionee was an Employee (and, for ISOs, at the time of death, the Optionee was an Employee and had been an Employee since the Date of Grant), the Option may be exercised in whole or in part by the Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, notwithstanding that such Option may not have been fully exercisable on the date of the Optionee's death, but only until the earlier of the date (i) the Option held by the Optionee expires, or (ii) twelve (12) months from the date of the Optionee's death. To the extent the Option is not entitled to be exercised on such date or if the Option is not exercised within the time specified herein, such Option shall terminate. (d) NON-TRANSFERABILITY OF OPTIONS. Any Option granted under this Plan may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder, and is nonassignable by operation of law or subject to execution, attachment or similar process. Any Option granted under this Plan can only be exercised during the Optionee's lifetime by such Optionee. Any attempted sale, pledge, assignment, hypothecation or other transfer of the Option contrary to the provisions hereof and the levy of any execution, attachment or similar process upon the Option shall be null and void and without force or effect. No transfer of the Option by will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished written notice thereof and an authenticated copy of the will and/or such other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of the Option. The terms of any Option transferred by will or by the laws of descent and distribution shall be binding upon the executors, administrators, heirs and successors of the Optionee. (e) TIME OF GRANTING OPTIONS. Any Option granted hereunder shall be deemed to be granted on the Date of Grant. Written notice of the Committee's determination to grant an Option to an Employee, evidenced by a Stock Option Agreement, dated as of the Date of Grant, shall be given to such Employee within a reasonable time after the Date of Grant. Any ISO granted hereunder must be granted within ten years from the earlier of the date this Plan in adopted or the date this Plan in approved by the stockholders of the Company. (f) MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Within the limitations of this Plan, the Committee may modify, extend or renew outstanding Options or may accept the cancellation of outstanding Options (to the extent not previously exercised) for the granting of new Options in substitution therefor. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, alter or impair the Optionee's rights or obligations under such Option. (g) RESTRICTIONS ON TRANSFER OF SHARES. Any Shares issued upon exercise of an Option shall be subject to such rights of repurchase and other transfer restrictions as the Committee may determine in its sole discretion. Such restrictions shall be set forth in the applicable Stock Option Agreement. (h) SPECIAL LIMITATION ON ISOS. To the extent that the aggregate Fair Market Value (determined on the Date of Grant) of the Shares with respect to which ISOs are exercisable for the first time by an individual during any calendar year under this Plan, and under all other plans maintained by the Company, exceeds $100,000, such Options shall be treated as Options that are not ISOs. SECTION 7 ISSUANCE OF SHARES As a condition to the issuance or transfer of any Shares issued under this Plan, the Company may require an opinion of counsel, satisfactory to the Company, to the effect that such transfer will not be in violation of the Securities Act, or any other applicable securities laws, rules or regulations, or that such Shares have been registered under federal and all applicable state securities laws. The Company may refrain from delivering or transferring Shares issued under this Plan until the Committee has determined that the Optionee has tendered to the Company any and all applicable federal, state or local tax owed by the Optionee as the result of the receipt of a Option, the exercise of an Option or the disposition of any Shares issued under this Plan, in the event that the Company reasonably determines that it might have a legal liability to satisfy such tax. The Company shall not be liable to any person or entity for damages due to any delay in the delivery or issuance of any stock certificate evidencing any Shares for any reason whatsoever. SECTION 8 CAPITALIZATION ADJUSTMENTS; MERGER; CHANGE IN CONTROL (a) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required action by the stockholders of the Company, the number of Shares covered by each outstanding Option, the aggregate number of Shares that have been authorized for issuance under this Plan, and the Exercise Price of any outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, payment of a stock dividend with respect to the Stock, recapitalization, combination or reclassification of the Stock, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company. Such adjustment shall be made by the Committee in its sole discretion, which adjustment shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Option. (b) DISSOLUTION, LIQUIDATION, SALE OF ASSETS OR MERGER. In the event of the proposed dissolution or liquidation of the Company, or a proposed sale of all or substantially all of the assets of the Company, or the proposed merger of the Company with or into another corporation, any Options shall terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Committee; provided, however, that the Committee may, in the exercise of its sole discretion, in such instances declare that any Option shall terminate as of a date fixed by the Committee and give each Optionee the right to exercise the Optionee's Option as to all or any part of the Shares covered by such Option, including Shares as to which the Option would not otherwise be exercisable. (c) CHANGE IN CONTROL. Notwithstanding Section 8(b), in the event there occurs a Change in Control, the Committee may at its discretion permit the Optionees to exercise any outstanding Option held by such Optionee in whole or in part notwithstanding that such Option may not be fully exercisable. SECTION 9 NO EMPLOYMENT RIGHTS No provision of this Plan or under any Stock Option Agreement shall be construed to give any individual any right to remain an Employee of, or provide services to, the Company or any of its Subsidiaries or to affect the right of the Company or any subsidiary, as applicable, to terminate any individual's service at any time, with or without cause. SECTION 10 SHAREHOLDER APPROVAL (a) IN GENERAL. If this Plan is adopted by action of the Board of Directors prior to approval by the Company's stockholders, the Board of Directors, to continue and implement this Plan, shall submit this Plan to the stockholders of the Company for their approval. This Plan shall not become effective until such approval has been obtained. (b) AMENDMENTS. With respect to any amendment to this Plan adopted by the Committee that is required to be approved by the Company's stockholders pursuant to the terms of Section 11 of this Plan, such approval shall be obtained within twelve (12) months after the date such amendment is adopted by the Committee; provided, that such amendment shall not become effective until such approval has been obtained. (c) SOLICITATION OF APPROVAL. The approval by the Company's stockholders of this Plan, and their approval of any subsequent amendment to this Plan requiring their approval, shall be solicited (i) substantially in accordance with section 14(a) of the Exchange Act, or (ii) after the Company has furnished in writing to the stockholders entitled to vote substantially the same information concerning this Plan as that which would be required by the rules and regulations then in effect under section 14(a) of the Exchange Act. SECTION 11 TERM OF PLAN; EFFECT OF AMENDMENT OR TERMINATION (a) TERM OF PLAN. This Plan shall become effective upon its adoption by the Board of Directors and will be subject to the approval by the stockholders of the Company in accordance with Section 10 above. This Plan shall continue in effect for a term of ten (10) years unless sooner terminated under this Section 11. (b) AMENDMENT AND TERMINATION. The Committee in its sole discretion may terminate this Plan at any time. The Committee may amend this Plan at any time in such respects as the Committee may deem advisable; provided, that the following amendments shall require approval of the holders of a majority of the outstanding Shares entitled to vote: (i) Any change in the aggregate number of Shares that may be issued under this Plan, other than in connection with an adjustment under Section 8 of this Plan; (ii) Any change in the designation of the individuals eligible to be granted Options; or (iii) Any change in this Plan that would materially increase the benefits accruing to individuals under this Plan. (c) EFFECT OF TERMINATION. In the event this Plan is terminated, no Shares shall be issued under this Plan, except upon exercise of an Option granted prior to such termination. The termination of this Plan, or any amendment hereof, shall not affect any Shares previously issued to an Optionee or any Option previously granted under this Plan. SECTION 12 GOVERNING LAW This plan and any and all Stock Option Agreements executed in connection with this Plan shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflict of laws principles. -----END PRIVACY-ENHANCED MESSAGE-----