TENGASCO, INC. STOCK INCENTIVE PLAN
ARTICLE 1
THE PLAN
1.1. NAME. The name of this Plan is the Tengasco, Inc. Stock Incentive
Plan.
1.2 PURPOSE AND SCOPE.
(a) The purposes of the Plan are to (i) attract and retain the best
available personnel for positions of substantial responsibility, (ii) encourage
ownership of the Company's common stock by Employees of the Company (and any
current or future Parent or Subsidiary of the Company), (iii) encourage
ownership of the Company's common stock by the Company's Directors (and any
current or future Parent or Subsidiary of the Company), and (iv) promote the
Company's business success by creating a long-term mutuality of interests
between its Employees, non-employee Directors, other Plan participants and the
Company's shareholders.
(b) The Plan provides for the granting of (i) Incentive Stock Options,
Nonqualified Stock Options and stock appreciation rights ("SARs") to Employees;
and, (ii) Nonqualified Stock Options and SARs to non-employee Directors of the
Company and Consultants to the Company.
1.3 EFFECTIVE DATE AND DURATION OF PLAN. This Plan is effective for a
ten-year period commencing on October 25, 2000, and ending on October 24, 2010,
provided that options and SARs granted under the Plan prior to the termination
date shall continue to be exercisable in accordance with the terms of the
Agreement granting such option or SAR beyond termination of the Plan.
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ARTICLE 2
DEFINITIONS
Capitalized terms in this Plan shall have the following meanings (unless
the context plainly requires that a different meaning apply):
2.1 ACT. The Securities Act of 1933, as amended from time to time, or any
replacement legislation.
2.2 AGREEMENT. Written agreement between the Company and the Recipient
granting the option or SAR to the Recipient.
2.3 BOARD. The Board of Directors of the Company.
2.4 CODE. The Internal Revenue Code of 1986, as amended from time to time,
or any replacement legislation and regulations promulgated thereunder.
2.5 COMMITTEE. The stock option or compensation committee appointed by the
Board, if one is appointed. If no Committee has been appointed, the term
Committee shall mean the Board. The Committee shall consist solely of two or
more Non-Employee Directors as that term is defined under Regulation 240.16b-3
promulgated by the Securities and Exchange Commission.
2.6 COMMON STOCK. The Company's $.001 par value common stock.
2.7 COMPANY. Tengasco, Inc. and any successor to such corporation, whether
by merger, consolidation, liquidation or otherwise.
2.8 CONSULTANT. Any person engaged by the Company (or any Parent or
Subsidiary) as a non-employee service provider pursuant to the terms of a
written contract.
2.9 DIRECTOR. Any duly elected member of the Board.
2.10 DISABILITY. Permanent and total disability within the meaning of
Section 22(e)(3) of the Code.
2.11 EMPLOYEE. All persons employed by the Company or any Parent or
Subsidiary, including officers, whether full-time or part-time.
2.12 EXCHANGE ACT. The Securities Exchange Act of 1934, as amended from
time to time, or any replacement legislation.
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2.13 FAIR MARKET VALUE. The closing price per share of Common Stock on the
American Stock Exchange or nationally recognized securities exchange on which
the stock is listed. If the stock is not listed on a generally recognized
securities exchange, Fair Market Value shall be determined by the Committee in
good faith, using such criteria as the Committee may, in its sole discretion,
deem appropriate.
2.14 INCENTIVE STOCK OPTION. Any stock option granted under this Plan which
is intended to qualify as an "incentive stock option" within the meaning of
Section 422 of the Code.
2.15 NONQUALIFIED STOCK OPTION. Any stock option granted under this Plan
which is not intended to qualify as an Incentive Stock Option.
2.16 OPTIONED SHARES. Those Shares subject to a stock option granted
pursuant to this Plan.
2.17 PARENT. A parent corporation, whether now or hereafter existing,
within the meaning of Section 424(e) of the Code.
2.18 PLAN. The Tengasco, Inc. Stock Incentive Plan, as amended from time to
time.
2.19 RECIPIENT. An individual who has received a stock option or SAR
pursuant to this Plan.
2.20 SHARE. One share of the Company's Common Stock, as adjusted in
accordance with Section 5.7 of this Plan.
2.20 SAR. A stock appreciation right which entitles the holder upon
exercise of that right to the product of (a) the excess of the Fair Market Value
of one Share on the date of exercise over the price per share established by the
Committee (in its sole discretion) for the grant and (b) the number of Shares
subject to the grant, payable in either Shares, cash or a combination of the
two, as provided in Section 5.4(b).
2.21 SUBSIDIARY. A subsidiary corporation, whether now or hereafter
existing, within the meaning of Section 424(f) of the Code.
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ARTICLE 3
PLAN ADMINISTRATION
3.1 ADMINISTRATION.
(a) The Plan shall be administered by the Committee. The Committee shall
have the authority, in its sole discretion, including, but not limited to,
determining the individuals who shall receive options and SARs; the times when
they shall receive them; whether an option shall be an Incentive or a
Nonqualified Stock Option; whether an SAR shall be granted separately, in tandem
with or in addition to an option; the number of shares to be subject to each
option and SAR; the term of each option and SAR; the date each option and SAR
shall become exercisable; whether an option or SAR shall be exercisable in
whole, in part or in installments, and if in installments, the number of shares
to be subject to each installment; whether the installments shall be cumulative,
the date each installment shall become exercisable and the term of each
installment; whether to accelerate the date of exercise of any installment;
whether shares may be issued on exercise of an option as partly paid, and, if
so, the dates when future installments of the exercise price shall become due
and the amounts of such installments; the exercise price of each option and the
base price of each SAR; the form of payment of the exercise price; the form of
payment by the Company upon the Recipient's exercise of an SAR; whether to
require that the Recipient remain in the employ of the Company or its Subsidiary
for a period of time from and after the date the option or SAR is granted to
him; the amount necessary to satisfy the Company's obligation to withhold taxes;
whether to restrict the sale or other disposition of the shares of Common Stock
acquired upon the exercise of an option and to waive any such restriction; to
subject the exercise of all or any portion of an option or SAR to the
fulfillment of contingencies as specified in the Agreement, including without
limitations, contingencies relating to financial objectives (such as earnings
per share, cash flow return, return on investment or growth in sales) for a
specified period for the Company, and/or the period of continued employment of
the Recipient with the Company or its Subsidiary, and to determine whether such
contingencies have been met; to construe the respective Agreements granting such
options and
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SARs; with the consent of the Recipient, to cancel or modify an option or SAR,
provided such option or SAR as modified would be permitted to be granted on such
date under the terms of the Plan; and to make all other determinations necessary
or advisable for administering the Plan. The determinations of the Committee on
the matters referred to herein shall be conclusive.
(b) Options and SARs granted under this Plan shall be evidenced by duly
adopted resolutions of the Committee included in the minutes of the meeting at
which they are adopted or in a unanimous written consent.
(c) The Committee shall endeavor to administer the Plan and grant
options and SARs hereunder in a manner that is compatible with the obligations
of persons subject to Section 16 of the Exchange Act, although compliance with
Section 16 is the obligation of the Recipient, not the Company. Neither the
Committee, the Board, nor the Company can assume any legal responsibility for a
Recipient's compliance with his obligations under Section 16 of the Exchange
Act.
(d) No member of the Committee or the Board shall be liable for any
action taken or determination made in good faith with respect to the Plan or any
option or SAR granted hereunder.
ARTICLE 4
ELIGIBILITY FOR GRANTS
4.1 ELIGIBILITY AND TERMS OF GRANTS.
(a) The Committee shall have full discretionary authority to determine
the persons eligible to receive an option or SAR.
(b) In determining the persons to whom options or SARs shall be granted
and the number of shares to be covered by each option or SAR, the Committee
shall take into account the duties of the respective persons, their past,
present and potential contributions to the success of the Company, and such
other factors as the Committee shall deem relevant to accomplish the purposes
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of the Plan.
(c) A Recipient shall be eligible to receive more than one grant of an
option or SAR during the term of the Plan, on the terms and subject to the
restrictions set forth herein.
4.2 GRANTING OF OPTIONS.
(a) The granting of any option or SAR shall be entirely in the
discretion of the Committee and nothing in the Plan shall be construed as giving
any Employee, Director or Consultant any right to participate under this Plan or
to receive any option or right under it.
(b) The Committee may, in its sole discretion, accept the cancellation
of outstanding options or SARs in return for the grant of new options or SARs
for the same or different number and at the same or different option price.
ARTICLE 5
GENERAL PROVISIONS
5.1 STOCK SUBJECT TO PLAN.
(a) The stock subject to options or SARs hereunder shall be shares of
Common Stock. Such shares, in whole or part, may be authorized but unissued
shares, reacquired shares or both. The aggregate number of shares of Common
Stock as to which options and SARs may be granted from time to time under the
Plan shall not exceed 1,000,000, subject to adjustment as provided in Section
5.7 hereof. The Company shall at all times during the term of the Plan reserve
and keep available such number of shares of Common Stock as will be sufficient
to satisfy the requirements of the Plan
(b) Any shares subject to an option or SAR which for any reason expire,
are canceled or are terminated unexercised (other than those which expire, are
canceled or terminated pursuant to the exercise of a tandem SAR or option) shall
again become available for the granting of options or SARs under the Plan. The
number of shares of Common Stock underlying that portion of an option or SAR
which is exercised (regardless of the number of shares actually issued) shall
not
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again become available for grant under the Plan.
5.2 TERMS AND CONDITIONS; AGREEMENTS. Each option or SAR granted under this
Plan shall be evidenced by a written agreement (the "Agreement") between the
Company and the Recipient. The Agreement shall be in the form determined by the
Committee in its discretion and shall be subject to such amendment or
modification from time to time as the Committee shall deem necessary or
appropriate to comply with or take advantage of applicable laws or regulations.
Each Agreement shall specifically identify the portion, if any, of the option
which constitutes an Incentive Stock Option and the portion, if any, which
constitutes a Nonqualified Stock Option. Each Agreement shall comply with and be
subject to the following terms and conditions:
(a) NUMBER OF SHARES. Each Agreement shall state the number of shares
covered by the option or SAR.
(b) EXERCISE PRICE AND BASE PRICE.
(1) Each Agreement shall state the exercise price for the option or
the base price for the SAR which price shall be determined by the Committee.
(2) The date on which the Committee adopts a resolution expressly
granting an option or SAR shall be considered the day on which such option or
SAR is granted, unless a future date is specified in the resolution, and the
Fair Market Value of the Common Stock to which such option or SAR relates shall
be determined at the close of the day on which the resolution is adopted, unless
another value and/or another date is specified in the resolution.
(c) TERM. Each Agreement shall state the period during and times at
which the option or SAR shall be exercisable, in accordance with the following
limitations:
(1) The date on which the Committee adopts a resolution expressly
granting an option or SAR shall be considered the day on which such option or
SAR is granted, although such grant shall not be effective until the Recipient
has executed an Agreement with respect to such option or SAR.
(2) Subject to the provisions of section 7.4 hereof, the exercise
period of any option or SAR shall not exceed ten (10) years from the date of the
grant of the option or SAR.
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(3) The Committee shall have the authority to accelerate or extend
the exercisability of any outstanding option or SAR at such time and under such
circumstances as it, in its sole discretion, deems appropriate. No exercise
period may be so extended to increase the term of an option or SAR beyond ten
(10) years from the date of the grant.
(4) The exercise period shall be subject to earlier termination as
provided in Sections 5.5 and 5.6 hereof, and furthermore, shall be terminated
upon surrender of the option or SAR by the Recipient if such surrender has been
authorized in advance by the Committee.
5.3 NOTICE OF INTENT TO EXERCISE OPTION OR SAR. An option or SAR granted
under the Plan may be exercised in whole or in part by notifying the Company (or
its designee) in the manner and upon the terms as may be provided in the
Agreement.
5.4 EXERCISE OF OPTION OR SAR.
(a) Upon receipt by the Company (or its designee) of the notice provided
in Section 5.3, an option shall deemed to be exercised as to the number of
Shares specified in such notice and Shares in that amount shall be issued to the
Recipient upon payment to the Company of the amount specified in Section 6.2 or
7.5, whichever is applicable. The option purchase price shall be paid in full
upon exercise unless the Agreement permits installment payments. The purchase
price for the option shall be paid in cash, or in shares of Common Stock having
a Fair Market Value equal to such option price, or in property or in a
combination of cash shares and property and, subject to approval of the
Committee, may be effected in whole or in part with funds received from the
Company at the time of exercise as a compensatory cash payment. The Committee
shall have the sole and absolute discretion to determine whether or not property
other than cash or Common Stock may be used to purchase the Optioned Shares.
(b) Upon receipt by the Company (or its designee) of the notice provided
in Section 5.3 of the exercise of a SAR, the SAR shall deemed to be exercised as
to the number of Shares specified in the notice and the Committee shall (as it
may determine in its sole discretion) issue to the Recipient either (1) Shares
of Common Stock based on the Fair Market Value on the date of payment (with any
fractional Shares to be paid in cash), (2) cash or (3) a combination of Shares
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and cash, equal in value (in United States dollars) to the amount payable under
the SAR. Any cash payment to be made by the Company under this Section may, as
determined by the Committee in its sole discretion, be payable in installments
over a period of no more than 6 months.
5.5 TERMINATION. Except as provided herein or in the Agreement, an option
or SAR may not be exercised unless the Recipient then is an Employee or Director
of or consultant to the Company (or a corporation or a parent or subsidiary
corporation of such corporation issuing or assuming the option or SAR in a
transaction to which Section 424(a) of the Code applies), and unless the
Recipient has remained continuously as an Employee or officer or Director or
consultant to the Company since the date of grant of the option or SAR.
(a) Unless otherwise provided in the Agreement, if the Recipient ceases
to be an Employee or Director of, or consultant to, the Company (other than by
reason of death, Disability or retirement), all options and SARs theretofore
granted to such Recipient that are exercisable at the time of such cessation
may, unless earlier terminated in accordance with their terms, be exercised
within three months after such cessation; provided, however, that if the
employment or consulting relationship of a Recipient shall terminate, or if a
Director shall be removed, for cause, all options and SARs theretofore granted
to such Recipient shall to the extent not previously exercised, terminate
immediately. Any such determination by the Committee as to whether termination
is for cause shall be final and biding upon the Recipient.
(b) Options and SARs granted under the Plan shall not be affected by any
change in the status of a Recipient so long as he continues to be associated
with the Company or its Subsidiary.
(c) Nothing in the Plan or in any Option or SAR granted hereunder shall
confer upon a Recipient any right to continue in the employ of or maintain any
other relationship with the Company or interfere in any way with the right of
the Company to terminate such employment or other relationship between the
Recipient and the Company.
5.6 DEATH, DISABILITY OR RETIREMENT OF RECIPIENT. Unless otherwise provided
in the Agreement, if a Recipient shall die while an Employee or Director of or a
consultant to the
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Company, or if the Recipient's employment, officer status or consulting
relationship shall terminate by reason of Disability or retirement, all options
or SARs theretofore granted to such Recipient, whether or not otherwise
exercisable, unless earlier terminated in accordance with their terms, may be
exercised by the Recipient or by the Recipient's estate or by a person who
acquired the right to exercise such options or SARs by bequest or inheritance or
otherwise by reason of the death or Disability of the Recipient, at any time
within one year after the date of death, Disability or retirement of the
Recipient; provided, however, that in the case of Incentive Stock Options such
one-year period shall be limited to three months in the case of retirement.
5.6 NON-TRANSFERABILITY OF OPTIONS; RESTRICTIONS ON TRANSFERABILITY.
(a) No option or SAR granted under the Plan shall be transferable
otherwise than by will or the laws of descent and distribution, or qualified
domestic relations order as defined in the Code or Title I of the Employee
Retirement Income Security Act, and options and SARs may be exercised, during
the lifetime of the holder thereof, only by him or his legal representatives.
Notwithstanding the foregoing, at the discretion of the Committee, Nonqualified
Stock Options may be transferred in a transaction for estate planning purposes.
(b) Any attempted sale, pledge, assignment, hypothecation or other
transfer of an option contrary to the provisions hereof and/or the levy of any
execution, attachment or similar process upon an option, shall be null and void
and without force or effect and shall result in a termination of the option.
(c) As a condition to the transfer of any shares of Common Stock issued
upon exercise of an option granted 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 Act or any other applicable securities
laws or that such transfer has been registered under Federal and all applicable
state securities laws. Further, the Company shall be authorized to refrain from
delivering or transferring shares of Common Stock issued under this Plan until
the Committee determines that such delivery or transfer will not violate
applicable securities laws and the Recipient has tendered to the Company any
Federal, state or local tax owed by the Recipient as a result of exercising the
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Option or SAR or disposing of any Common Stock when the Company has a legal
liability to satisfy such tax. The Company shall not be liable for damages due
to delay in the delivery or issuance of any stock certificate for any reason
whatsoever, including, but not limited to, a delay caused by listing
requirements of any securities exchange or any registration requirements under
the Act, the Exchange Act, or under any other state, federal or provincial law,
rule or regulation. The Company is under no obligation to take any action or
incur any expense in order to register or qualify the delivery or transfer of
shares of Common Stock under applicable securities laws or to perfect any
exemption from such registration or qualification. Furthermore, the Company will
not be liable to any Recipient for failure to deliver or transfer shares of
Common Stock if such failure is based upon the provisions of this paragraph.
5.7 RECAPITALIZATION; EFFECT OF OTHER CHANGES.
(a) Subject to any required action by the shareholders of the Company,
the aggregate number of Shares for which options may be granted hereunder, the
number of Shares covered by any outstanding option or SAR, and the price per
Share thereof under each such option or SAR shall be proportionately adjusted
for the following: (a) any dividend or other distribution declared as to Common
Stock which is payable in Shares: and (b) an increase or decrease in the number
of outstanding shares of Common Stock resulting from a stock split or reverse
split of shares, recapitalization or other capital adjustment. All fractional
Shares or other securities which result from such an adjustment shall be
eliminated and not carried forward to any subsequent adjustment.
(b) In the event of the proposed dissolution or liquidation of the
Company, or any corporate separation or division, including, but not limited to,
split-up, split-off or spin-off, or a merger or consolidation of the Company
with another corporation, the Committee may provide that the holder of each
option and SAR then exercisable shall have the right to exercise such Option or
SAR (at its then current exercise price) solely for the kind and amount of
shares of stock and other securities, property, cash or any combination thereof
receivable upon such dissolution, liquidation, corporate separation or division,
or merger or consolidation by a holder of the number of Shares of
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Common Stock for which such option or SAR might have been exercised immediately
prior to such dissolution, liquidation, corporate separation or division, or
merger or consolidation.
(c) Paragraph (b) of this Section 5.7 shall not apply to a merger or
consolidation in which the Company is the surviving corporation and shares of
Common Stock are not converted into or exchanged for stock, securities of any
other corporation, cash or any other thing of value. Notwithstanding the
preceding sentence, in case of any consolidation or merger of another
corporation into the Company in which the Company is the surviving corporation
and in which there is a reclassification or change (including a change to the
right to receive cash or other property) of the Shares of Common Stock
(excluding a change in par value, or from no par value to par value, or any
change as a result of a subdivision or combination, but including any change in
such Shares into two or more classes or series of shares), the Committee may
provide that the Recipient of each option or SAR then exercisable shall have the
right to exercise such option or SAR solely for the kind and amount of shares of
stock and other securities (including those of any new direct or indirect parent
of the Company), property, cash or any combination thereof receivable upon such
reclassification, change, consolidation or merger by the holder of the number of
shares of Common Stock for which such option or SAR might have been exercised.
(d) Except as expressly provided in this Section 5.7, the Recipient
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class other than the Company's Common Stock, or the payment of any
stock dividend or any other increase or decrease in the number of shares of
stock of any class other than the Company's Common Stock, or by reason of any
dissolution, liquidation, merger, or consolidation or spin-off of assets or
stock of another corporation; and any issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, other
than the Company's Common Stock, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock subject to an option or SAR. The grant of an option or SAR pursuant to the
Plan shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structures, or to merge or consolidate, or to
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dissolve, liquidate, or sell or transfer all or any part of its business or
assets.
(e) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive,
provided that each Incentive Stock Option granted pursuant to this Plan shall
not be adjusted in a manner that causes such option to fail to continue to
qualify as an Incentive Stock Option within the meaning of Section 422 of the
Code.
5.8 NO RIGHTS AS A SHAREHOLDER; NON-DISTRIBUTIVE INTENT.
(a) Neither a Recipient of an option, nor such Recipient's legal
Representative, heir, legatee or distributee, shall be deemed to be the holder
of, or to have any rights of a holder with respect to any shares subject to such
option until after the option is exercised and the shares are issued.
(b) No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 5.7 hereof.
(c) Upon exercise of an option at a time when there is no registration
statement in effect under the Act relating to the shares issuable upon exercise,
Shares may be issued to the Recipient only if the Recipient represents and
warrants in writing to the Company that the shares purchased are being acquired
for investment and not with a view to the distribution thereof and provides the
Company with sufficient information to establish an exemption from the
registration requirements of the Act.
5.9 CONVERSION OF OUTSTANDING OPTIONS TO SARS. The Company may, in its sole
discretion and without the consent of the Recipient, elect at any time to
convert any option granted under the Plan to a SAR. In the event of such an
election, any converted SAR shall remain in effect until the option involved
would have expired under the terms of the Agreement with the Recipient. The base
price of such SAR shall be determined using the Fair Market Value of the Shares
subject to the option on the date the option was first granted. Notice of such
an election shall be provided to the Recipient as soon as feasible after the
date of the election.
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5.10 WITHDRAWAL. A Recipient may at any time elect in writing to abandon an
option or SAR with respect to the number of Shares as to which the option or SAR
shall not have been exercised.
5.11 COMPLIANCE WITH APPLICABLE LAWS AND ARTICLES OF INCORPORATION.
(a) The Company shall have the right to place appropriate legends upon
the certificate for any Shares issued pursuant to this Plan and take such other
acts as it may deem necessary or appropriate to ensure that the issuance of
Optioned Shares or the exercise of a SAR complies with applicable provisions of
Federal and state securities laws.
(b) The Company shall not be obligated to issue Shares under any option
or in payment of any SAR granted under this Plan that would violate any law.
Each Recipient may be required to make representations, enter into restrictive
agreements, or take such other actions as may be deemed necessary or appropriate
by the Company to ensure compliance with applicable law and the Company's
Articles of Incorporation and By-laws.
ARTICLE 6
SPECIAL RULES FOR NONQUALIFIED STOCK OPTIONS
6.1 OPTION PRICE. The purchase price of Shares subject to a Nonqualified
Stock Option shall be determined by the Committee at the time the option is
granted; provided, that the purchase price shall not be less than 85% of the
Fair Market Value of such Shares on the date of the grant.
6.2 PAYMENT UPON EXERCISE OF OPTION. The amount to be paid by the Recipient
upon exercise of a Nonqualified Stock Option shall be the full purchase price
for the Shares involved provided in the Agreement to be paid in the manner
determined by the Committee, together with the amount of any required federal,
state, and local tax withholding (as determined by the Committee in its sole
discretion). The Committee may, in its sole discretion, permit a Recipient to
elect to pay the required tax withholding by having the Company withhold Shares
having a Fair Market Value at the time of exercise equal to the amount required
to be withheld. An election by a Recipient to
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have shares withheld for this purpose will (together with such additional
restrictions as the Company may impose) be subject to the following:
(a) If a Recipient has received multiple option grants, a separate
election must be made for each grant;
(b) The election must be made prior to the date the option is
exercised;
(c) The election will be irrevocable;
(d) The election may be rejected by the Company;
(e) If the Recipient is an "officer" of the Company within the
meaning of Section 16 of the Exchange Act ("Section 16") as defined in Rule
16a-1(f) promulgated by the Securities Exchange Commission, the election may not
be made within six months following the grant of the option; and,
(f) If the Recipient is an "officer" of the Company within the
meaning of Section 16, the election must be made either six months prior to the
day the option is exercised or during the period beginning on the third business
day following the date of release of the Company's quarterly or annual summary
statement of sales and earnings and ending on the twelfth business day following
such date.
ARTICLE 7
SPECIAL RULES FOR INCENTIVE STOCK OPTIONS
7.1 CONFORMANCE WITH CODE REQUIREMENTS. Incentive Stock Options granted
under this Plan shall conform to, be governed by, and be interpreted in
accordance with Section 422 of the Code and any regulations thereunder
including, without limitation, those provisions of Section 422 of the Code that
prohibit an option by its terms to be exercisable after ten (10) years from the
date that it was granted. All Incentive Stock Options granted under the Plan
shall at the time of the grant be specifically designated as such in the
Agreement. Only Employees may be granted Incentive Stock Options. To the extent
that any option granted as an Incentive Stock Option fails to conform
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to the applicable requirements, it shall be treated and honored by the Company
as a Nonqualified Stock Option.
7.2 OPTION PRICE. The purchase price of each Share optioned under the
Incentive Stock Option provisions of this Plan shall be determined by the Board
in its sole discretion but shall, in no event, be less than the Fair Market
Value on the date of grant.
7.3 LIMITATION ON AMOUNT OF INCENTIVE STOCK OPTION.
The aggregate Fair Market Value (determined on the date of grant) of the Shares
with respect to which Incentive Stock Options are exercisable for the first time
during any calendar year under all plans of the Company (and any Parent or
Subsidiary) shall not exceed $100,000 (or such other limit as may be established
by law from time to time).
7.4 LIMITATION ON GRANTS TO SUBSTANTIAL SHAREHOLDERS. An Employee may not,
immediately prior to the grant of an Incentive Stock Option hereunder, own stock
in the Company representing more than ten percent (10%) of the total voting
power of all classes of stock of the Company (after taking into account the
attributions rules of Section 424(d) of the Code) unless the per share option
price specified by the Board for the Incentive Stock Options granted such an
Employee is at least one hundred ten percent (110%) of the Fair Market Value of
the Company's stock on the date of grant and such option, by its terms, is not
exercisable after the expiration of five (5) years from the date such option is
granted. For purposes of this limitation, Section 424(d) of the Code governs the
attributes of stock ownership.
7.5 PAYMENT UPON EXERCISE OF OPTION. The amount to be paid by the Recipient
upon exercise of an Incentive Stock Option shall be the full purchase price
thereof provided in the Agreement to be paid in the manner determined by the
Committee.
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ARTICLE 8
AMENDMENT AND TERMINATION
8.1 AMENDMENT.
(a) The Committee shall have the right to amend the Plan at any time and
from time to time; provided, that no such amendment of the Plan shall, without
stockholder approval, (1) increase the number of shares which may be issued
under the Plan as set forth in Section 5.1, (2) change in any way the class of
employees eligible to receive Incentive Stock Options under the Plan, (3) extend
the duration of the Plan, or (4) be effective if stockholder approval of the
amendment is required at such time in order for the Plan's stock options or SARs
to qualify for any available exemption from Section 16 of the Exchange Act or by
any other applicable law, regulation, rule of order.
(b) No amendment may be made that would cause options granted hereunder
not to qualify as Incentive Stock Options under the Code or would cause options
or SARs under the Plan not to qualify for exemption under Section 16 of the
Exchange Act.
(c) No amendment of the Plan shall, without the written consent of the
holder of an option or SAR awarded under the Plan prior to the date of the
amendment or termination adversely affect the rights of such holder with respect
to such option or SAR.
(d) Notwithstanding anything herein or in any Agreement to the contrary,
the Committee shall have the power to amend the Plan in any manner deemed
necessary or advisable for options or SARs granted under the Plan to qualify to
be treated as Incentive Stock Options under the Code or for any exemption
provided under Section 16 of the Exchange Act and any such amendment shall, to
the extent deemed necessary or advisable by the Board, be applicable to any
outstanding stock options previously granted under the Plan. In the event of
such an amendment to the Plan, the holder of any option or SAR outstanding under
the Plan shall, upon request of the Committee and as a condition for exercising
of such option or SAR, execute a conforming amendment in the form prescribed by
the Committee to the Agreement within such reasonable period
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of time as the Committee shall specify in such request.
8.2 TERMINATION. The Committee shall have the right to terminate the Plan
at any time; provided, that no such termination shall terminate any outstanding
option or SAR previously granted under the Plan or adversely affect the rights
of such holder without his or her written consent. No new options or SARs may be
granted under the Plan on or after the date of termination.
ARTICLE 9
FOREIGN EMPLOYEES, DIRECTORS AND CONSULTANTS
9.1 OPTION GRANTS TO FOREIGN NATIONALS. The Committee may grant Options and
SARs under this Plan to eligible Employees, Directors or consultants who are
foreign nationals on such additional or different terms and conditions as may in
the judgment of the Committee, in its sole discretion, be necessary or
appropriate to comply with the provisions of any applicable laws of a foreign
country.
ARTICLE 10
MISCELLANEOUS
10.1 ADOPTION BY BOARD; APPROVAL OF SHAREHOLDERS. This Plan was approved by
the Board effective October 25, 2000. Until and unless this Plan is approved by
the shareholders of the Company within twelve (12) months of the date the Plan
was approved by the Board, as required by section 422(b) of the Code, this Plan
and the options granted hereunder shall remain effective, but the reference
herein to Incentive Stock Options shall not be effective and all options granted
under the Plan shall be Nonqualified Stock Options.
10.2 ASSUMPTION. Subject to the provisions of Section 5.7 hereof, the terms
and conditions of any outstanding option or SAR granted pursuant to this Plan
shall be assumed by, be binding upon and shall inure to the benefit of any
successor corporation to the Company and shall, to the extent
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applicable, continue to be governed by the terms and conditions of this Plan.
Such successor corporation may, but shall not be obligated to, assume this Plan.
10.3 TERMINATION OF RIGHT OF ACTION. Every right of action arising out of
or in connection with the Plan by or on behalf of the Company, or by any
shareholder of the Company against any past, present or future member of the
Board or the Committee, or against any Employee, or by an Employee (past,
present or future) against the Company, irrespective of the place where an
action may be brought and of the place of residence of any such shareholder,
Director or Employee, will cease and be barred by the expiration of three (3)
years from the date of the act or omission in respect of which such right of
action is alleged to have arisen or such shorter period as may be provided by
law.
10.4 TAX LITIGATION. The Company shall have the right, but not the
obligation, to contest, at its expense, any tax ruling or decision,
administrative or judicial, on any issue which is related to the Plan and which
the Committee believes to be important to holders of options and SARs granted
under this Plan and to conduct any such contest or litigation arising therefrom
to a final decision.
10.5 NO RESTRICTIONS ON ADOPTION OF OTHER PLANS. Nothing in this Plan shall
restrict the Company's rights to adopt other option plans pertaining to any or
all of the Employees, Directors or Consultants covered under this Plan or other
Employees, Directors or Consultants not covered under this Plan.
10.6 COSTS AND EXPENSES. Except as provided herein, all costs and expenses
of administering the Plan shall be paid by the Company.
10.7 PLAN UNFUNDED. This Plan shall be unfunded. Except for the Company's
reservation of a sufficient number of authorized shares to the extent required
by law to meet the requirements of the Plan, the Company shall not be required
to establish any special or separate fund or to make any other segregation of
assets to assure payment of any grant under the Plan.
10.8 GOVERNMENT REGULATIONS. The rights of Recipients and the obligations
of the Company hereunder shall be subject to all applicable laws, rules, and
regulations and to such approvals as may be required by any governmental agency.
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10.9 PROCEEDS FROM SALE OF STOCK. Proceeds of the purchase of Optioned
Shares by a Recipient may be used by the Company for any business purpose.
10.10 GOVERNING LAW. This Plan shall be governed by and construed in
accordance with the laws of the State of Tennessee.
10.11 INVALIDITY. If any provision of the Plan shall be held invalid or
unlawful for any reason, such event shall not affect or render invalid or
unenforceable the remaining provisions of the Plan.
* * * * * * * * * * * * * * * * *
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