EXHIBIT "A"
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
KARTS INTERNATIONAL INCORPORATED ("the Corporation"), a corporation
organized and existing under and by virtue of the Nevada General Corporation
Law, DOES HEREBY CERTIFY:
FIRST: The name of the Corporation is Karts International Incorporated.
SECOND: The Board of Directors of the Corporation adopted a resolution
to amend the Articles of Incorporation as amended. Article FOURTH of the
Articles of Incorporation of the Corporation is hereby amended and restated in
its entirety to read as follows:
"FOURTH. The Corporation shall have authority to issue two
classes of shares to be designated, respectively, "Common Stock" and
"Preferred Stock." The aggregate number of shares of capital stock that
the Corporation will have authority to issue is One Hundred Million
(100,000,000) shares, Ninety Million (90,000,000) of which will be
shares of Common Stock, having a par value of $.001 per share, and Ten
Million (10,000,000) of which will be shares of Preferred Stock, having
a par value of $.001 per share.
Preferred Stock may be issued in one or more series as may be
determined from time to time by the Board of Directors. All shares of
any one series of Preferred Stock will be identical except as to the
date of issue and the dates from which dividends on shares of the
series issued on different dates will cumulate, if cumulative.
Authority is hereby expressly granted to the Board of Directors to
authorize the issuance of one or more series of Preferred Stock, and to
specify by resolution or resolutions providing for the issue of each
such series, the voting powers, designations, preferences, and
relative, participating, optional, redemption, conversion, exchange or
other special rights, qualifications, limitations or restrictions of
such series, and the number of shares in each series, to the full
extent now or hereafter permitted by law."
THIRD: This certificate of Amendment of Articles of Incorporation shall
be effective as of __________________, 2000.
FOURTH: The Corporation's outstanding shares of Common Stock, Series A
Preferred Stock and Series B Preferred Stock are the only classes of voting
securities of the Corporation. The number of shares of the Corporation
outstanding and entitled to vote on an amendment to the Articles of
Incorporation consists of 4,000,0000 shares of Series A Preferred Stock which
have voting rights equivalent to 8,000,000 votes, 73,333 shares of Series B
Preferred Stock which have voting rights equivalent to 14,666,600 votes and
7,498,392 shares of Common Stock which are entitled to one vote for each share
of Common Stock. The holders of the Series A Preferred Stock, Series B Preferred
Stock and shares of Common Stock had the right to cast a total of 30,164,992
votes at the Annual Meeting of Stockholders held on December 12, 2000. A total
of __________ votes were cast for the amendment, __________ votes were against
the amendment and __________ votes abstained. The change and amendment were
consented to and approved by a majority vote of the stockholders holding at
least a majority of each class of stock outstanding and entitled to vote
thereon.
KARTS INTERNATIONAL INCORPORATED
------------------------------------
Charles Brister, President
------------------------------------
Geoffrey Craig benRichard, Secretary
EXHIBIT "A" - Page1
<PAGE>
State of ________________.
County of _______________.
On _______________________, personally appeared before me, a Notary
Public, Charles Brister and Geoffrey Craig benRichard, who acknowledged that
they executed the above instrument in their capacity as President and Secretary,
respectively, of Karts International Incorporated.
-------------------------
Notary Public
EXHIBIT "A" - Page 2
<PAGE>
EXHIBIT "B"
2000 STOCK COMPENSATION PLAN
of
KARTS INTERNATIONAL INCORPORATED
1. Purpose of the Plan. This 2000 Stock Compensation Plan is intended
to encourage ownership of the common stock of KARTS INTERNATIONAL INCORPORATED,
a Nevada corporation, by certain officers, directors, employees and advisors of
the Company, including, without limitation, any division of the Company, or any
Subsidiary or Subsidiaries of the Company, in order to provide additional
incentive for such persons to promote the success and the business of the
Company or its Subsidiaries and to encourage them to remain in the employ of the
Company or its divisions or its Subsidiaries by providing such persons an
opportunity to benefit from any appreciation of the common stock of the Company
through the issuance of stock options and related stock appreciation rights to
such persons in accordance with the terms of the Plan. It is further intended
that options granted pursuant to this Plan shall constitute either incentive
stock options within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended, or options which do not constitute Incentive Options, as
determined by the Committee at the time of issuance of such options.
2. Definitions. As used herein, each of the following terms shall have
the meaning given to it below:
(a) "Advisor" means any non-entity human being or corporation
sole in any form of a contractual relationship with the Company as a
non-statutory steward, corporation sole, or otherwise, which term is defined in
contrast and contradistinction to the term "Person", "Affiliate", "Director",
"Parent" and "Subsidiary", defined herein.
(b) "Affiliate" means, with respect to any Person, any Parent
or Subsidiary of such Person, whether such Parent or Subsidiary is now or
hereafter existing.
(c) "Applicable Laws" means all applicable federal, state,
local or foreign laws, regulations and legal requirements, including without
limitation the legal requirements relating to the administration of stock option
plans and equity incentive plans (and the issuance of shares of capital stock
thereunder) under United States state corporate laws, United States federal and
state securities laws, and the Code.
(d) "Award" means an award of Incentive Options, Nonqualified
Options, Reload Options or Stock Appreciation Rights, under the Plan, whether
singly, in combination or in tandem.
(e) "Award Agreement" means the agreement (including an Option
Agreement) between the Company and the Holder setting forth the terms and
conditions of an Award under the Plan.
(f) "Board" means the Board of Directors of the Company.
(g) "Code" means the Internal Revenue Code of 1986, as
amended.
(h) "Committee" means (a) the Compensation Committee of the
Board of Directors (or in the event that there is not a Compensation Committee,
then the Board of Directors) with respect to Awards granted to all employees and
consultants of the Company (other than Non-Employee Directors of the Company)
and (b) the entire Board of Directors (regardless of whether there is a
Compensation Committee) with respect to Awards granted to Non-Employee Directors
of the Company.
(i) "Common Stock" means the common stock, par value $0.001
per share, of the Company.
(j) "Company" means Karts International Incorporated, a Nevada
corporation.
(k) "Director" means a member of the Board of Directors of the
Company.
(l) "Disability" shall have the meaning given it or any
similar term in the employment agreement of the Holder with the Company or an
Affiliate; provided, however, that if that Holder has no such employment
agreement or if the employment agreement applicable to the Holder does not
specify the meaning of such term, "Disability" shall mean the inability of the
Holder to fulfill such Holder's obligations to the Company or an Affiliate by
reason of any physical or mental impairment which can be expected to result in
death or which has endured or can be expected to endure for a continuous period
of not less than 12 months as determined by a physician acceptable to the
Committee in its sole discretion.
<PAGE>
(m) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(n) "Holder" means a Person who has received an Award under
the Plan.
(o) "Incentive Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.
(p) "Non-Employee Director" means a "Non-Employee Director"
within the meaning of Rule 16b-3.
(q) "Nonqualified Option" means an Option that is not intended
to qualify as an Incentive Option.
(r) "Option" means any option to purchase shares of Common
Stock which is granted pursuant to the Plan and includes Incentive Options,
Nonqualified Options and Reload Options.
(s) "Option Agreement" means the written option agreement in
the form approved by the Committee for use under the Plan between the Company
and Holder evidencing the grant of an Option.
(t) "Optionee" means the Person who receives an Option under
the Plan.
(u) "Parent" means a "parent corporation," whether now or
hereafter existing, which is a corporation (other than the employer corporation)
in an unbroken chain of corporations ending with the employee corporation if, at
the time of the granting of the option, each of the corporations other than the
employer corporation owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
(v) "Person" means any individual, corporation, partnership,
limited liability company, joint venture, estate, trust, unincorporated
association, or any other entity.
(w) "Plan" means this 2000 Stock Compensation Plan of the
Company.
(x) "Rule 16b-3" means Rule 16b-3 promulgated under the
Exchange Act or any successor rule thereto.
(y) " Reload Option" means any option granted under Section 12
as a result of the payment of the exercise price of an Option and/or the
withholding tax related thereto in the form of Common Stock owned by the Holder
or the withholding of Common Stock by the Company.
(z) "SAR" means the award of stock appreciation rights granted
under Section 1 hereof.
(aa) "Subsidiary" means a "subsidiary corporation," whether
now or hereafter existing, which is a corporation (other than the employer
corporation) 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% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
<PAGE>
3. Stock Subject to the Plan. Subject to adjustment as provided in
Section 15 hereof, there will be reserved for the use upon the exercise of
Options to be granted from time to time under the Plan not less than 750,000
shares of the common stock, $.001 par value per share (the "Common Stock"), of
the Company, which shares in whole or in part shall be authorized, but unissued,
shares of the Common Stock or issued shares of Common Stock which shall have
been reacquired by the Company as determined from time to time by the Board of
Directors of the Company (the "Board of Directors"). The maximum aggregate
number of shares of Common Stock which may be optioned, sold, granted, or
otherwise issued under the Plan shall initially be 750,000 which amount may, at
the discretion of the Board, be increased from time to time to a number such
that the number of shares of Common Stock available for issuance pursuant to
Options to be granted pursuant to this Plan equals 10% of the total number of
shares of Common Stock of the Company and shares of any other class of Common
Stock of the Company outstanding from time to time; provided, however, subject
to adjustment under Section 15 of the Plan, the number of shares of Common Stock
which may be optioned, sold, granted or otherwise issued under the Plan shall
never be less than 750,000. Notwithstanding the foregoing, subject to adjustment
under Section 15 of the Plan, no more than 9,000,000 shares of Common Stock will
be available for the granting of Incentive Stock Options under the Plan. Subject
to adjustment pursuant to the provisions of Section 15, the maximum aggregate
number of shares of Common Stock with respect to which Options may be granted
during the term of the Plan shall not exceed 9,000,000 shares. The maximum
aggregate number of shares of Common Stock with respect to which Options during
the term may be granted to any Optionee during the term of the Plan shall not
exceed ten percent (10%) of the shares eligible for issuance under the Plan. To
determine the number of shares of Common Stock available at any time for the
granting of Options under the Plan, there shall be deducted from the total
number of reserved shares of Common Stock, the number of shares of Common Stock
in respect of which Options have been granted pursuant to the Plan which remain
outstanding or which have been exercised. If and to the extent that any Option
to purchase reserved shares shall not be exercised by an Optionee for any reason
or if such Option to purchase shall terminate as provided herein, such shares
which have not been so purchased hereunder shall again become available for the
purposes of the Plan unless the Plan shall have been terminated, but such
unpurchased shares shall not be deemed to increase the aggregate number of
shares specified above to be reserved for purposes of the Plan (subject to
adjustment as provided in Section 15 hereof). The grant of SARs shall not affect
the number of shares available for grant of Awards under the Plan.
4. Administration of the Plan.
(a) General. The Plan shall be administered by the Board of
Directors or a Committee appointed by the Board. During any period of time in
which the Company is subject to the reporting requirements of the Exchange Act,
the Committee shall be comprised solely of not less than two members, each of
whom shall be (i) a Non-Employee Director, and (ii) unless otherwise determined
by the Board, an "outside director" within the meaning of Treasury Regulation
Section 1.162-27(e)(3)), except that if at any time there shall be less than two
(2) Directors who are qualified to serve on the Committee, then the Plan shall
be administered by the full Board. All references in this Plan to the Committee
shall be deemed to refer instead to the full Board at any time there is not a
Committee consisting of at least two (2) members of the Board qualified to act
hereunder. The Board may from time to time appoint members of the Committee in
substitution for or in addition to members previously appointed and may fill
vacancies, however caused, in the Committee. If the Board does not designate a
Chairman of the Committee, the Committee shall select one of its members as its
Chairman. The Committee shall hold its meetings at such times and places as it
shall deem advisable. A majority of its members shall constitute a quorum. Any
action of the Committee shall be taken by a majority vote of its members at a
meeting at which a quorum is present. Notwithstanding the preceding, any action
of the Committee may be taken without a meeting by a written consent signed by
all of the members, and any action so taken shall be deemed fully as effective
as if it had been taken by a vote of the members present in person at the
meeting duly called and held. The Committee may appoint a Secretary, shall keep
minutes of its meetings, and shall make such rules and regulations for the
conduct of its business as it shall deem advisable.
<PAGE>
(b) Plan Interpretation and Administration. The Committee
shall have the sole authority and power, subject to the express provisions and
limitations of the Plan, to construe the Plan and the Awards granted hereunder,
and to adopt, prescribe, amend, and rescind rules and regulations relating to
the Plan, and to make all determinations necessary or advisable for
administering the Plan, including, but not limited to, (i) the designated Person
or Persons who shall be granted Awards under the Plan, (ii) the term of each
Option, (iii) the number of shares covered by such Option, (iv) whether such
Option shall constitute an Incentive Option or a Nonqualified Option or a Reload
Option, (v) the exercise price for the purchase of the shares of Common Stock
covered by such Option, (vi) the period during which the Option may be
exercised, (vii) whether the right to purchase the number of shares covered by
the Option shall be fully vested on issuance of the Option so that such shares
may be purchased in full at one time or whether the right to purchase such
shares shall become vested over a period of time so that such shares may only be
purchased in installments, (viii) the time or times at which Options shall be
granted, (ix) amend the terms of any Option previously granted in such a manner
that the amended Option contains such terms and conditions as the Committee
could have determined and set forth in the Option at the time it was originally
granted, (x) determine and grant alternate stock appreciation rights, including,
without limitation, the recipients and the related terms and conditions thereof
consistent with the applicable provisions of the Plan, (xi) prescribe the form
of Award Agreements embodying Awards granted under the Plan, (xii) grant waivers
of Plan terms, conditions, restrictions and limitations to the extent permitted
under the Plan, (xiii) accelerate the exercise, vesting or payment of an Award
when such action or actions would be in the best interests of the Company, and
(xiv) determine the fair market value of a share of Common Stock as of the date
of grant of an Option. The Committee's determinations under the Plan, including
the above enumerated determinations, need not be uniform and may be made by it
selectively among the persons who receive, or are eligible to receive, Options
under the Plan, whether or not such persons are similarly situated.
The interpretation by the Committee of any provision of the
Plan or of any Option Agreement entered into pursuant to the Plan with respect
to any Incentive Option shall be in accordance with Section 422 of the Code and
the regulations issued thereunder, and as such section or regulations may be
amended from time to time, in order that the rights granted hereunder and
pursuant to such Option Agreements shall constitute "incentive stock options"
within the meaning of such section. The interpretation and construction by the
Committee of any provision of the Plan or of any Award granted hereunder shall
be final and conclusive, unless otherwise determined by the Board. The decisions
of the Board and its actions with respect to the Plan shall be final, conclusive
and binding on all Persons having or claiming to have any right or interest in
or under the Plan, including Optionees and their respective estates,
beneficiaries and legal representatives. No member of the Board or the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any Award granted pursuant to the Plan. Upon issuing an Award
under the Plan, the Committee shall report to the Board the name of the person
granted such Award, and if such Award is an Option, whether such Option is an
Incentive Option or a Nonqualified Option, the number of shares of Common Stock
covered by the Option, and the terms and conditions of such Option.
(c) Changes in Applicable Law. If the laws relating to
Incentive Options or Nonqualified Options are changed, altered or amended during
the term of the Plan, the Board shall have full authority and power to alter or
amend the Plan with respect to Incentive Options or Nonqualified Options,
respectively, to conform to such changes in Applicable Law without the necessity
of obtaining further shareholder approval thereof, unless the changes require
such approval.
5. Types of Awards Under the Plan. Subject to the applicable provisions
of the Plan, awards under the Plan may be in the form of Incentive Options,
Nonqualified Options, alternate stock appreciation rights (as described in
Section 11 hereof), Reload Options (as described in Section 12 hereof), or a
combination thereof. Awards under a particular Section of the Plan need not be
uniform, and Awards under two or more Sections of the Plan may be combined into
a single Award Agreement.
<PAGE>
6. Persons to Whom Options Shall be Granted.
(a) Nonqualified Options. Nonqualified Options shall be
granted only to officers, directors (including Non-Employee Directors) of the
Company or a Subsidiary, employees and advisors of the Company or a Subsidiary
who, in the judgment of the Committee, are responsible for or contribute to the
management or success of the Company or a Subsidiary and who, at the time of the
granting of the Nonqualified Options, are either officers, directors, employees
or advisors of the Company or a Subsidiary.
(b) Incentive Options. Incentive Options shall be granted only
to employees of the Company or a Subsidiary who, in the judgment of the
Committee, are responsible for or contribute to the management or success of the
Company or a Subsidiary and who, at the time of the granting of the Incentive
Option are either an employee of the Company or a Subsidiary. Except as set
forth in Section 9(g) hereof, no individual shall be granted an Incentive Option
who, immediately before such Incentive Option was granted, would own more than
ten percent (10%) of the total combined voting power or value of all classes of
stock of the Company (a "10% Shareholder").
7. Factors to Be Considered in Granting Awards. In making any
determination as to persons to whom Awards shall be granted and the number of
shares to be covered by Options, the Committee shall take into account the
duties and responsibilities of the respective officers, directors, employees, or
advisors, their current and potential contributions to the success of the
Company or a Subsidiary, and such other factors as the Committee shall deem
relevant in connection with accomplishing the purpose of the Plan.
8. Time of Granting Awards. Neither any provision contained in the Plan
nor any resolution adopted or to be adopted by the Board or the Shareholders of
the Company or a Subsidiary nor any action taken by the Committee shall
constitute the granting of any Award. The granting of an Award shall be effected
only when a written Award Agreement acceptable in form and substance to the
Committee, subject to the terms and conditions hereof, including if the Award
consists of an Option, those set forth in Section 9 hereof, shall have been duly
executed and delivered by or on behalf of the Company and the person to whom
such Option shall be granted. No person shall have any rights under the Plan
until such time, if any, as a written Award Agreement shall have been duly
executed and delivered as set forth in this Section 8.
9. Terms and Conditions of Options. All Options granted pursuant to
this Plan must be granted within ten (10) years from the date the Plan is
adopted by the Board. Each Option Agreement governing an Option granted
hereunder shall be subject to at least the following terms and conditions, and
shall contain such other terms and conditions, not inconsistent therewith, that
the Committee shall deem appropriate:
(a) Number of Shares. Each Option shall state the number of
shares of Common Stock which it represents.
(b) Type of Option. Each Option shall state whether it is
intended to be an Incentive Option or a Nonqualified Option.
(c) Option Period.
(1) General. Each Option shall state the date upon
which it is granted. Each Option shall be exercisable in whole
or in part during such period as is provided under the terms
of the Option, subject to any vesting period set forth in the
Option, but in no event shall an Option be exercisable either
in whole or in part after the expiration of ten (10) years
from the date of grant thereof; provided, however, if an
Incentive Option is granted to a 10% Shareholder, such
Incentive Option shall not be exercisable more than five (5)
years from the date of grant thereof.
<PAGE>
(2) Termination of Employment. Except as otherwise
provided in case of Disability, death or Change of Control (as
hereinafter defined), no Option shall be exercisable after an
Optionee who is an employee of the Company or a Subsidiary
ceases to be employed by the Company or a Subsidiary;
provided, however, that the Committee shall have the right in
its sole discretion, but not the obligation, to extend the
exercise period of any Incentive Option for not more than
three (3) months following the date of termination of such
Optionee's employment and to extend the term of any
Nonqualified Option for a period determined by the Committee
provided such period may not exceed the original exercise
period set forth in the Option Agreement; provided further,
however, that no Option shall be exercisable after the
expiration of ten (10) years from the date it is granted, and
provided further, that no Incentive Option granted to a 10%
Shareholder shall be exercisable after the expiration of five
(5) years from the date it is granted. To the extent that the
Optionee was not entitled to exercise the Option at the date
of such termination, or if the Optionee does not exercise the
Option to the extent so entitled within the time specified
herein, the Option shall terminate and the shares of Common
Stock covered by such Option shall revert to the Plan.
(3) Cessation of Service as Director or Advisor.
Except as otherwise provided in case of Disability, death or
Change of Control, no Option shall be exercisable after an
Optionee who was a director or advisor of the Company or a
Subsidiary ceases to be a director or advisor of the Company
or a Subsidiary; provided, however, that the Committee shall
have the right in its sole discretion, but not the obligation,
to extend the exercise period of any such Option for a period
determined by the Committee provided such period may not
exceed the original exercise period set forth in the Option
Agreement; provided further, however, that no Option shall be
exercisable after the expiration of ten (10) years from the
date it is granted. To the extent that the Optionee was not
entitled to exercise the Option at the date of such
termination, or if the Optionee does not exercise the Option
to the extent so entitled within the time specified herein,
the Option shall terminate and the shares of Common Stock
covered by such Option shall revert to the Plan.
<PAGE>
(4) Disability. If an Optionee's employment is
terminated by reason of the permanent and total Disability of
such Optionee or if an Optionee who is a director or advisor
of the Company or a Subsidiary ceases to serve as a director
or advisor by reason of the permanent and total Disability of
such Optionee, the Committee shall have the right in its sole
discretion, but not the obligation, to extend the exercise
period of any Option then held by such Optionee for not more
than one (1) year following the date of termination of the
Optionee's employment or the date such Optionee ceases to be a
director or advisor of the Company or a Subsidiary, as the
case may be, subject to the condition that no Option shall be
exercisable after the expiration of ten (10) years from the
date it is granted and subject to the further condition that
no Incentive Option granted to a 10% Shareholder shall be
exercisable after the expiration of five (5) years from the
date it is granted. To the extent that the Optionee was not
entitled to exercise the Option at the date of such
termination, or if the Optionee does not exercise the Option
to the extent so entitled within the time specified herein,
the Option shall terminate and the shares of Common Stock
covered by such Option shall revert to the Plan.
(5) Death. If an Optionee dies while in the employ of
the Company or a Subsidiary, or while serving as a director or
advisor of the Company or such Subsidiary, and shall not have
fully exercised Options granted pursuant to the Plan, such
Options may be exercised in whole or in part at any time
within one (1) year after the Optionee's death, by the
executors or administrators of the Optionee's estate or by any
person or persons who shall have acquired the Options directly
from the Optionee by bequest or inheritance (the "Option
Beneficiary"), but only to the extent that the Optionee was
entitled to exercise such Option at the date of such
Optionee's death, subject to the condition that no Option
shall be exercisable after the expiration of ten (10) years
from the date it is granted and subject to the further
condition that no Incentive Option granted to a 10%
Shareholder shall be exercisable after the expiration of five
(5) years from the date it is granted. To the extent that, at
the time of death, the Optionee was not entitled to exercise
the Option, or if the Option Beneficiary does not exercise the
Option within the time specified herein, the Option shall
terminate and the shares of Common Stock covered by such
Option shall revert to the Plan.
(6) Acceleration and Exercise Upon Change of Control.
Notwithstanding the preceding provisions of this Section 9(c),
if any Option granted under the Plan provides for either (a)
an incremental vesting period whereby such Option may only be
exercised in installments as such incremental vesting period
is satisfied or (b) a delayed vesting period whereby such
Option may only be exercised after the lapse of a specified
period of time, such as after the expiration of one (1) year,
such vesting period shall be accelerated upon the occurrence
of a Change of Control of the Company, or a threatened Change
of Control of the Company as determined by the Committee, so
that such Option shall thereupon become exercisable
immediately in part or its entirety by the holder thereof, as
such holder shall elect. For the purposes of this Plan, a
"Change of Control" shall be deemed to have occurred if:
<PAGE>
(i) Any "person", including a "group" as
determined in accordance with Section 13(d)(3) of the
Exchange Act and the Rules and Regulations
promulgated thereunder, is or becomes, through one or
a series of related transactions or through one or
more intermediaries, the beneficial owner, directly
or indirectly, of securities of the Company
representing 20% or more of the combined voting power
of the Company's then outstanding securities, other
than a person who is such a beneficial owner on the
Effective Date of the Plan and any affiliate of such
person;
(ii) As a result of, or in connection with,
any tender offer or exchange offer, merger or other
business combination, sale of assets or contested
election, or any combination of the foregoing
transactions (a "Transaction"), the persons who were
Directors of the Company before the Transaction shall
cease to constitute a majority of the Board of
Directors of the Company or any successor to the
Company;
(iii) Following the Effective Date of the
Plan, the Company is merged or consolidated with
another corporation and as a result of such merger or
consolidation less than 40% of the outstanding voting
securities of the surviving or resulting corporation
shall then be owned in the aggregate by the former
shareholders of the Company, other than (x) any party
to such merger or consolidation, or (y) any
affiliates of any such party;
(iv) A tender offer or exchange offer is
made and consummated for the ownership of securities
of the Company representing 20% or more of the
combined voting power of the Company's then
outstanding voting securities; or
(v) The Company transfers more than 50% of
its assets, or the last of a series of transfers
results in the transfer of more than 50% of the
assets of the Company, to another corporation that is
not a wholly-owned corporation of the Company. For
purposes of this subsection 9(c)(6)(v), the
determination of what constitutes more than 50% of
the assets of the Company shall be determined based
on the sum of the values attributed to (i) the
Company's real property as determined by an
independent appraisal thereof, and (ii) the net book
value of all other assets of the Company, each
determined as of the date of the Transaction
involved.
<PAGE>
In addition, upon a Change of Control, any Options
previously granted under the Plan, to the extent not already
exercised, may be exercised in whole or in part, either
immediately or at any time during the term of the Option, as
such holder shall elect.
Anything to the contrary in the foregoing notwithstanding, a
Change in Control shall not mean or be deemed to have occurred for any
reason whatsoever regarding any circumstances when any change in the
actual or beneficial ownership of any type of stock of the Company held
by the Schlinger Foundation is transferred by the Schlinger Foundation
to another person or persons, trusts, corporations or entities, which
are by contract either affiliated with, in voting trust with, or
effectively controlled by the Schlinger Foundation.
(d) Option Prices. The purchase price or prices of the shares
of the Common Stock which shall be offered to any person under the Plan and
covered by an Option shall be one hundred percent (100%) of the fair market
value of the Common Stock at the time of granting such Option or such greater
purchase price as may be determined by the Committee at the time of granting
such Option; provided, however, if an Incentive Option is granted to a 10%
Shareholder, the purchase price of the shares of the Common Stock covered by
such Incentive Option may not be less than one hundred ten percent (110%) of the
fair market value of the shares on the date such Incentive Option is granted.
During such time as the Common Stock is not listed upon an established stock
exchange, the fair market value per share shall be deemed to be the closing
sales price of the Common Stock on the NASDAQ National Market ("NASDAQ") on the
date the Option is granted, as reported by NASDAQ, if the Common Stock is so
quoted, and if not so quoted, the mean between dealer "bid" and "ask" prices of
the Common Stock in the New York over-the-counter market on the date the Option
is granted, as reported by the National Association of Securities Dealers, Inc.
If the Common Stock is listed upon an established stock exchange or exchanges,
such fair market value shall be deemed to be the highest closing price of the
Common Stock on such stock exchange or exchanges on the date the Option is
granted or, if no sale of the Common Stock of the Company shall have been made
on an established stock exchange on such day, on the next preceding day on which
there was a sale of such stock. If there is no market price for the Common
Stock, then the Board and the Committee may, after taking all relevant facts
into consideration, determine the fair market value of the Common Stock.
(e) Exercise of Options. To the extent that a holder of an
Option has a current right to exercise, the Option may be exercised from time to
time by written notice to the Company at its principal place of business. Such
notice shall state the election to exercise the Option, the number of whole
shares in respect of which it is being exercised, shall be signed by the Person
or Persons so exercising the Option, and shall contain any investment
representation required by Section 9(i) hereof. Such notice shall be accompanied
by payment of the full purchase price of such shares and by the Option Agreement
evidencing the Option. In addition, if the Option shall be exercised, pursuant
to either Section 9(c)(4) or Section 9(c)(5) hereof, by any person or persons
other than the Optionee, such notice shall also be accompanied by appropriate
proof of the right and authority of such person or persons to exercise the
Option. The Company shall deliver a certificate or certificates representing
such shares as soon as practicable after the aforesaid notice and payment of
such shares shall be received. The certificate or certificates for the shares as
to which the Option shall have been so exercised shall be registered in the name
of the Person or Persons so exercising the Option. In the event the Option shall
not be exercised in full, the Secretary of the Company shall endorse or cause to
be endorsed on the Option the number of shares which has been exercised
thereunder and the number of shares that remain exercisable under the Option and
return such Option Agreement to the holder thereof.
<PAGE>
(f) Nontransferability of Options. An Option granted pursuant
to the Plan shall be exercisable only by the Optionee or the Optionee's court
appointed guardian as set forth in Section 9(c)(4) hereof during the Optionee's
lifetime and shall not be assignable or transferable by the Optionee otherwise
than by Will or the laws of descent and distribution. An Option granted pursuant
to the Plan shall not be assigned, pledged or hypothecated in any way (whether
by operation of law or otherwise other than by Will or the laws of descent and
distribution) and shall not be subject to execution, attachment, or similar
process. Any attempted transfer, assignment, pledge, hypothecation, or other
disposition of an Award or of any rights granted thereunder contrary to the
foregoing provisions of this Section 9(f), or the levy of any attachment or
similar process upon an Award or such rights, shall be null and void.
(g) Limitations on 10% Shareholders. No Incentive Option may
be granted under the Plan to any 10% Shareholder unless (i) such Incentive
Option is granted at an option price not less than one hundred ten percent
(110%) of the fair market value of the shares on the date such Incentive Option
is granted and (ii) such Incentive Option expires on a date not later than five
(5) years from the date the Incentive Option is granted.
(h) Limits on Vesting of Incentive Options. An individual may
be granted one or more Incentive Options, provided that the aggregate fair
market value (as determined at the time such Incentive Option is granted) of the
Common Stock with respect to which Incentive Options are exercisable for the
first time by such individual during any calendar year shall not exceed
$100,000. To the extent the $100,000 limitation in the preceding sentence is
exceeded, such Option shall be treated as an Option which is not an Incentive
Option.
(i) Compliance with Securities Laws. The Plan and the grant
and exercise of the rights to purchase of Common Stock hereunder, and the
Company's obligations to sell and deliver shares of Common Stock upon the
exercise of rights to purchase shares, shall be subject to all applicable
federal and state laws, rules and regulations, and to such approvals by any
regulatory or governmental agency as may, in the opinion of counsel for the
Company, be required, and shall also be subject to all applicable rules and
regulations of any stock exchange upon which the Common Stock of the Company may
then be listed. At the time of exercise of any Option, the Company may require
the Optionee to execute any documents or take any action which may be then
necessary to comply with the Securities Act of 1933, as amended (the "Securities
Act"), and the rules and regulations promulgated thereunder, or any other
applicable federal or state laws regulating the sale and issuance of securities,
and the Company may, if it deems it necessary, include provisions in the Option
Agreements to assure such compliance. The Company may, from time to time, change
its requirements with respect to enforcing compliance with federal and state
securities laws, including the request for and enforcement of letters of
investment intent, such requirements to be determined by the Company, acting in
the judgment of and through the Committee, as necessary from time to time during
the term of the Plan to assure compliance with said laws. Such changes may be
made with respect to any particular Option or Common Stock issued upon exercise
thereof. Without limiting the generality of the foregoing, if the Common Stock
issuable upon exercise of an Option granted under the Plan is not registered
under the Securities Act, the Company at the time of exercise will require that
the registered owner execute and deliver an investment representation agreement
to the Company in form acceptable to the Company and its counsel, and the
Company will place a legend on the certificate evidencing such Common Stock
restricting the transfer thereof, which legend shall be substantially as
follows:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW BUT HAVE BEEN
ACQUIRED FOR THE PRIVATE INVESTMENT OF THE HOLDER HEREOF AND
MAY NOT BE OFFERED, SOLD OR TRANSFERRED UNTIL EITHER (i) A
REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE
WITH REGARD THERETO, OR (ii) THE COMPANY SHALL HAVE RECEIVED
AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY AND ITS
COUNSEL THAT REGISTRATION UNDER SUCH SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION
WITH SUCH PROPOSED OFFER, SALE OR TRANSFER."
<PAGE>
(j) Additional Provisions. The Option Agreements authorized
under the Plan shall contain such other provisions as the Committee shall deem
advisable, including, without limitation, restrictions upon the exercise of the
Option. Any such Option Agreement with respect to an Incentive Option shall
contain such limitations and restrictions upon the exercise of the Incentive
Option as shall be necessary in order that the Option will be an "incentive
stock option" as defined in Section 422 of the Code.
10. Medium and Time of Payment. The purchase price of the shares of the
Common Stock as to which an Option shall be exercised shall be paid in full
either (i) in cash at the time of exercise of the Option, (ii) by tendering to
the Company previously acquired nonforfeitable, unrestricted shares of Common
Stock having an aggregate fair market value (as of the date of receipt of such
shares by the Company) equal to the purchase price for the number of shares of
Common Stock purchased, or (iii) partly in cash and partly in shares of Common
Stock valued at fair market value as of the date of receipt of such shares by
the Company. Cash payment for the shares of the Common Stock purchased upon
exercise of any Option shall be in the form of either a cashier's check,
certified check or money order. Personal checks may be submitted, but will not
be considered as payment for the shares of Common Stock purchased and no
certificate evidencing such shares will be issued until the personal check
clears payment through normal banking channels. If a personal check is not paid
upon presentment by the Company, then the attempted exercise of the Option will
be deemed null and void. In the event the Optionee tenders shares of Common
Stock in full or partial payment for the shares being purchased pursuant to
exercise of an Option, the shares of Common Stock so tendered shall be
accompanied by fully executed stock power(s) endorsed in favor of the Company
with the signature on such stock power(s) being guaranteed. If an Optionee
tenders shares, such Optionee shall thereupon assume sole and full
responsibility for the tax consequences, if any, to such Optionee arising
therefrom, including the possible application of Code Section 424(c), or its
successor Code section, which negates nonrecognition of income with respect to
such transferred shares, if such transferred shares have not been held for the
minimum statutory holding period to qualify for preferential tax treatment.
11. Alternate Stock Appreciation Rights.
(a) Award of Alternate Stock Rights. Concurrently with or
subsequent to the award of any Option to purchase one or more shares of Common
Stock, the Committee may in its sole discretion, subject to the provisions of
the Plan and such other terms and conditions as the Committee may prescribe,
award to the Optionee with respect to each share of Common Stock covered by an
Option (the "Related Option"), a related alternate SAR, permitting such Optionee
to be paid the appreciation on the Related Option in lieu of exercising the
Related Option. A SAR granted with respect to an Incentive Option must be
granted together with the Related Option. A SAR granted with respect to a
Nonqualified Option may be granted together with or subsequent to the grant of
such Related Option.
(b) Alternate Stock Rights Agreement. Each SAR shall be on
such terms and conditions not inconsistent with this Plan as the Committee may
determine and shall be evidenced by a written agreement executed by the Company
and the Optionee receiving the Related Option.
(c) Exercise. An SAR may be exercised only if and to the
extent that its Related Option is eligible to be exercised on the date of
exercise of the SAR. To the extent that a holder of a SAR has a current right to
exercise, the SAR may be exercised from time to time by written notice to the
Company at its principal place of business. Such notice shall state the election
to exercise the SAR, the number of shares in respect of which it is being
exercised, shall be signed by the person so exercising the SAR and shall be
accompanied by the agreement evidencing the SAR and the Related Option. In the
event the SAR shall not be exercised in full, the Secretary of the Company shall
endorse or cause to be endorsed on the SAR and the Related Option the number of
shares which have been exercised thereunder and the number of shares that remain
exercisable under the SAR and the Related Option, respectively, and return such
SAR and Related Option to the holder thereof.
<PAGE>
(d) Amount of Payment. The amount of payment to which an
Optionee shall be entitled to receive upon the exercise of each SAR shall be
equal to 100% of the amount, if any, by which the fair market value of a share
of Common Stock on the exercise date exceeds the fair market value of a share of
Common Stock on the date the Option related to said SAR was granted or became
effective, as the case may be; provided, however, the Company may, in its sole
discretion, withhold from such cash payment any amount necessary to satisfy the
Company's obligation for withholding taxes with respect to such payment. For
this purpose, the fair market value of a share of Common Stock shall be
determined in the manner set forth in Section 9(d) hereof.
(e) Form of Payment. The amount payable by the Company to an
Optionee upon exercise of a SAR may be paid in shares of Common Stock, cash or a
combination thereof. The number of shares of Common Stock to be paid to an
Optionee upon such Optionee's exercise of a SAR shall be determined by dividing
the amount of payment determined pursuant to Section 11(d) hereof by the fair
market value of a share of Common Stock on the exercise date of such SAR. For
purposes of this Plan, the exercise date of a SAR shall be the date the Company
receives written notification from the Optionee of the exercise of the SAR in
accordance with the provisions of Section 11(c) hereof. As soon as practicable
after exercise, the Company shall either deliver to the Optionee the amount of
cash due such Optionee or a certificate or certificates for such shares of
Common Stock. All such shares shall be issued subject to the applicable rights
and restrictions specified herein.
(f) Termination of SAR. Except as otherwise provided in case
of Disability or death, no SAR shall be exercisable after an Optionee ceases to
be an employee, director or advisor of the Company or a Subsidiary; provided,
however, that the Committee shall have the right in its sole discretion, but not
the obligation, to extend the exercise period for not more than three (3) months
following the date such Optionee ceases to be an employee, director or advisor
of the Company or a Subsidiary; provided further, that the Committee may not
extend the period during which an Optionee may exercise a SAR for a period
greater than the period during which an Optionee may exercise the Option related
to said SAR. If an Optionee's position as an employee, director or advisor of
the Company is terminated due to the Disability or death of such Optionee, the
Committee shall have the right, in its sole discretion, but not the obligation,
to extend the exercise period applicable to the SAR for a period not to exceed
the period in which the Optionee may exercise the Option related to said SAR, as
set forth in Sections 9(c)(4) and 9(c)(5) hereof, respectively.
(g) Effect of Exercise of SAR. The exercise of any SAR shall
cancel and terminate the right to purchase an equal number of shares covered by
the Related Option.
(h) Effect of Exercise of Related Option. Upon the exercise or
termination of any Related Option, the SAR with respect to such Related Option
shall terminate to the extent of the number of shares of Common Stock as to
which the Related Option was exercised or terminated.
(i) Nontransferability of SAR. A SAR granted pursuant to this
Plan shall be exercisable only by the Optionee or the Optionee's court appointed
guardian as set forth in Section 9(c)(4) hereof during the Optionee's lifetime
and, subject to the provisions of Section 11(f) hereof, shall not be assignable
or transferable by the Optionee. A SAR granted pursuant to the Plan shall not be
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment, or similar
process. Any attempted transfer, assignment, pledge, hypothecation, or other
disposition of any SAR or of any rights granted thereunder contrary to the
foregoing provisions of this Section 11(i), or the levy of any attachment or
similar process upon a SAR or such rights, shall be null and void.
<PAGE>
(j) No Interest in Company Assets. To the extent any Person
acquires a right to receive payments from the Company under the Plan, such
rights shall be no greater than the rights of an unsecured creditor of the
Company, and such Person shall not have any rights in or against any specific
assets of the Company.
12. Reload Options.
(a) Authorization of Reload Options. Concurrently with the
award of any Nonqualified Option and/or the award of any Incentive Option to any
participant in the Plan, the Committee may authorize a Reload Option to purchase
for cash or shares that number of shares of Common Stock equal to the sum of:
(1) The number of shares of Common Stock used to
exercise the underlying Nonqualified Option or Incentive
Option; and
(2) To the extent authorized by the Committee, the
number of shares of Common Stock used to satisfy any tax
withholding requirement incident to the exercise of the
underlying Nonqualified Option or Incentive Option.
The grant of a Reload Option will become effective upon the
exercise of the underlying Nonqualified Option, Incentive Option or Reload
Option through the use of shares of Common Stock held by the Optionee for at
least 12 months. Notwithstanding the fact that the underlying option may be an
Incentive Option, a Reload Option is not intended to qualify as an "incentive
stock option" under Section 422 of the Code.
(b) Reload Option Amendment. Each Option Agreement shall state
whether the Committee has authorized Reload Options with respect to the
underlying Nonqualified Option and/or Incentive Option. Upon the exercise of an
underlying Nonqualified Option or Incentive Option, the Reload Option will be
evidenced by an amendment to the underlying Option Agreement.
(c) Reload Option Price. The option price per share of Common
Stock deliverable upon the exercise of a Reload Option shall be the fair market
value of a share of Common Stock on the date the grant of the Reload Option
becomes effective, determined in the manner set forth in Section 9(d) hereof.
(d) Term and Exercise. Each Reload Option shall be fully
exercisable six months from the effective date of grant. The term of each Reload
Option shall be equal to the remaining term of the underlying Nonqualified
Option and/or Incentive Option.
(e) Termination of Employment. No additional Reload Options
shall be granted to Optionees when Nonqualified Options, Incentive Options
and/or Reload Options are exercised pursuant to the terms of this Plan following
termination of the Optionee's employment.
(f) Applicability of Other Sections. To the extent not
inconsistent with the foregoing provisions of this Section, the other Sections
of this Plan pertaining to Options, including Sections 6, 7, 8, 9 and 10, are
incorporated herein by this reference thereto as though fully set forth herein.
13. Rights as a Shareholder. The holder of an Option or a SAR shall
have no rights as a shareholder with respect to the shares covered by the Option
or SAR until the due exercise of the Option, Related Option, or SAR and the date
of issuance of one or more stock certificates to such holder for such shares. 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 15 hereof.
<PAGE>
14. Optionee's Agreement to Serve. Each employee receiving an Option
shall, as one of the terms of the Option Agreement, agree that such employee
will remain in the employ of the Company or a Subsidiary for a period of at
least one (1) year from the date on which the Option shall be granted to such
employee; and that such employee will, during such employment, devote such
employee's entire time, energy, and skill to the service of the Company or a
Subsidiary as may be required by the management thereof, subject to vacations,
sick leaves, and military absences. Such employment, subject to the provisions
of any written contract between the Company or a Subsidiary and such employee,
shall be at the pleasure of the Board of Directors of the Company or a
Subsidiary, and at such compensation as the Company or a Subsidiary shall
reasonably determine. Any termination of such employee's employment during the
period which the employee has agreed pursuant to the foregoing provisions of
this Section 14 to remain in employment that is either for cause or voluntary on
the part of the employee shall be deemed a violation by the employee of such
employee's agreement. In the event of such violation, any Option or Options held
by such employee, to the extent not theretofore exercised, shall forthwith
terminate, unless otherwise determined by the Committee. Notwithstanding the
preceding, neither the action of the Company in establishing the Plan nor any
action taken by the Company, a Subsidiary or the Committee under the provisions
hereof shall be construed as granting the Optionee the right to be retained in
the employ of the Company or a Subsidiary, or to limit or restrict the right of
the Company or a Subsidiary, as applicable, to terminate the employment of any
employee of the Company or a Subsidiary, with or without cause.
15. Adjustments on Changes in Capitalization.
(a) Changes in Capitalization. Subject to any required action
by the Shareholders of the Company, the number of shares of Common Stock covered
by the Plan, the number of shares of Common Stock covered by each outstanding
Option, the exercise price per share thereof specified in each such Option, and
the rights and privileges attendant to any outstanding SARs shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a subdivision or consolidation of shares
or the payment of a stock dividend (but only on the Common Stock) or any other
increase or decrease in the number of such shares effected without receipt of
consideration by the Company after the date such Option or such SAR is granted,
so that upon exercise of such Option or related SAR, if any, the Optionee shall
receive the same number of shares or same SARs, as applicable, the Optionee
would have received had the Optionee been the holder of all shares subject to
such Optionee's outstanding Options immediately before the effective date of
such change in the number of issued shares of the Common Stock.
(b) Reorganization, Dissolution or Liquidation. Subject to any
required action by the Shareholders of the Company, if the Company shall be the
surviving corporation in any merger or consolidation, each outstanding Option
and SAR, if any, shall pertain to and apply to the securities to which a holder
of the number of shares of Common Stock subject to such Option or related SARs
would have been entitled. A dissolution or liquidation of the Company or a
merger or consolidation in which the Company is not the surviving corporation,
shall cause each outstanding Option and each outstanding SAR to terminate as of
a date to be fixed by the Committee (which date shall be as of or prior to the
effective date of any such dissolution or liquidation or merger or
consolidation); provided, that not less than thirty (30) days written notice of
the date so fixed as such termination date shall be given to each Optionee, and
each Optionee shall, in such event, have the right, during the such period of
thirty (30) days preceding such termination date, to exercise such Optionee's
Options and SARs, as applicable, in whole or in part in the manner herein set
forth. In the event of any recapitalization, reorganization, extraordinary
dividend or distribution or restructuring transaction (including any
distribution of shares of stock of any Subsidiary or other property to holders
of shares of Common Stock) affecting the Common Stock, the number of shares
issuable under this Plan shall be subject to such adjustment as the Committee
may deem appropriate, and the number of shares issuable pursuant to any Option
or rights related to any SARs theretofore granted (whether or not then
exercisable) and/or the exercise price per share of such Option and/or the
rights related to such SARs, as applicable, shall be subject to such adjustment
as the Committee may deem appropriate with a view toward preserving the value
any of such Option and any such SARs, respectively.
<PAGE>
(c) Change in Par Value. In the event of a change in the
Common Stock of the Company as presently constituted, which change is limited to
a change of all of its authorized shares with par value into the same number of
shares with a different par value or without par value, the shares resulting
from any change shall be deemed to be the Common Stock within the meaning of the
Plan.
(d) Notice of Adjustments. To the extent that the adjustments
set forth in the foregoing paragraphs of this Section 15 relate to the capital
stock or securities of the Company, such adjustments, if any, shall be made by
the Committee, whose determination in that respect shall be final, binding and
conclusive, provided that each Incentive Option granted pursuant to this Plan
shall not be adjusted in a manner that causes the Incentive Option to fail to
continue to qualify as an "incentive stock option" within the meaning of Section
422 of the Code. The Company shall give timely notice of any adjustments made to
each holder of an Option and related SAR, if applicable, under this Plan and
such adjustments shall be effective and binding on the Optionee.
(e) Effect Upon Holders of Options and SARs. Except as
hereinbefore expressly provided in this Section 15, the holder of an Option or
an SAR shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class by reason of
any dissolution, liquidation, merger, reorganization, 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, 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
the Option or related SARs. Without limiting the generality of the foregoing, no
adjustment shall be made with respect to the number or price of shares subject
to any Option or SAR granted hereunder upon the occurrence of any of the
following events:
(1) The grant or exercise of any other options or
SARs which may be granted or exercised under this Plan or any
other qualified or nonqualified stock option plan or under any
other employee benefit plan of the Company whether or not such
options or SARs were outstanding on the date of grant of the
Option or SAR or thereafter granted;
(2) The sale of any shares of Common Stock in any
public offering of securities by the Company, including,
without limitation, shares sold upon the exercise of any
overallotment option granted to underwriters in connection
with such offering;
(3) The issuance, sale or exercise of any warrants to
purchase shares of Common Stock whether or not such warrants
were outstanding on the date of grant of the Option or SAR or
thereafter issued;
<PAGE>
(4) The issuance or sale of rights, promissory notes
or other securities convertible into shares of Common Stock in
accordance with the terms of such securities (the "Convertible
Securities") whether or not such Convertible Securities were
outstanding on the date of grant of the Option or SAR or were
thereafter issued or sold;
(5) The issuance or sale of Common Stock upon
conversion or exchange of any Convertible Securities, whether
or not any adjustment in the purchase price was made or
required to be made upon the issuance or sale of such
Convertible Securities and whether or not such Convertible
Securities were outstanding on the date of grant of the Option
or were thereafter issued or sold; or
(6) Upon any amendment to or change in the terms of
any rights or warrants to subscribe for or purchase, or
options for the purchase of, Common Stock or Convertible
Securities or in the terms of any Convertible Securities,
including, but not limited to, any extension of any expiration
date of any such right, warrant or option, any change in any
exercise or purchase price provided for in any such right,
warrant or option, any extension of any date through which any
Convertible Securities are convertible into or exchangeable
for Common Stock or any change in the rate at which any
Convertible Securities are convertible into or exchangeable
for Common Stock.
(f) Right of Company to Make Adjustments. The grant of an
Option and related SARs 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 structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets or to suspend, terminate, amend or modify the Plan.
16. Investment Purpose. Each Option under the Plan shall be granted on
the condition that the purchase of the shares of Common Stock thereunder shall
be for investment purposes, and not with a view to resale or distribution
thereof; provided, however, that in the event the shares of stock subject to
such Option are registered under the Securities Act or in the event a resale of
such shares of stock without such registration would otherwise be permissible,
such condition shall be inoperative if in the opinion of counsel for the Company
such condition is not required under the Securities Act or any other applicable
law or regulation, or rule of any governmental agency.
17. No Obligation to Exercise Option or SAR. The granting of an Option
or SAR pursuant to the Plan shall impose no obligation upon the Optionee to
exercise such Option or SAR.
18. Modification, Extension, and Renewal of Options and SARs. Subject
to the terms and conditions and within the limitations of the Plan, the
Committee and the Board may modify, extend or renew outstanding Options and
related SARs granted under the Plan, or accept the surrender of outstanding
Options and related SARs, if applicable, each to the extent not theretofore
exercised. Notwithstanding the foregoing, however, no modification of an Option
or SAR shall, without the consent of the Optionee, alter or impair any rights or
obligations under any Option or SAR theretofore granted under the Plan.
<PAGE>
19. Effective Date of the Plan. The Plan shall become effective on the
date of execution hereof, which date is the date the Board approved and adopted
the Plan (the "Effective Date"); provided, however, if the Shareholders of the
Company shall not have approved the Plan by the requisite vote of the
Shareholders within twelve (12) months after the Effective Date, then the Plan
shall terminate and all Options and SARs theretofore granted under the Plan
shall terminate and be null and void.
20. Termination of the Plan. This Plan shall terminate as of the
expiration of ten (10) years from the Effective Date. Options and related SARs,
as applicable, may be granted under this Plan at any time and from time to time
prior to its termination. Any Option and related SAR, if applicable, outstanding
under the Plan at the time of its termination shall remain in effect until the
Option and related SAR, if applicable, shall have been exercised or shall have
expired.
21. Amendment of the Plan. The Plan may be terminated at any time by
the Board. The Board may at any time and from time to time without obtaining the
approval of the Shareholders of the Company or a Subsidiary, modify or amend the
Plan (including such form of Award Agreement as hereinabove mentioned) in such
respects as it shall deem advisable; provided, however, any amendment to the
Plan shall be approved by the Shareholders of the Company if the amendment would
(i) materially increase the benefits accruing to participants under the Plan,
(ii) materially increase the number of securities which may be issued under the
Plan, except as provided in Section 15 hereof, or (iii) materially modify the
requirements as to eligibility for participation in the Plan. Without limiting
the generality of the foregoing, the Board may at any time and from time to time
without obtaining the approval of the Shareholders of the Company modify or
amend the Plan (including such form of Award Agreements as hereinabove
mentioned) to (i) comport with changes in the Code, the Employee Retirement
Income Security Act of 1974 ("ERISA"), or the rules and regulations thereunder
or other applicable laws, (ii) increase the number of securities issuable to
investors under the Plan by less than ten percent (10%) based on the amount of
securities issuable under the Plan as last expressly approved by the
Shareholders of the Company, (iii) amend the Plan to adjust the terms of Options
and SARs, if applicable, previously granted to reflect a restructuring
transaction, such as a holding company formation, stock split or stock dividend,
extraordinary dividend, spin-off or issuance of repurchase rights. The
termination or any modification or amendment of the Plan shall not, without the
consent of the Optionee, affect such Optionee's rights under any Option or
related SAR, if any, theretofore granted to such Optionee. With the consent of
the Optionee to whom such Option and related SAR, if any, was granted, an
outstanding Option and related SAR, if applicable, may be modified or amended by
the Committee in such manner as it may deem appropriate and consistent with the
requirements of the Plan applicable to the grant of a new Option and related
SAR, if applicable, on the date of modification or amendment.
22. Tax Withholding. Whenever an Optionee shall recognize compensation
income as a result of the exercise of any Option or SAR granted under the Plan,
such Optionee shall remit in cash to the Company or a Subsidiary the minimum
amount of federal income and employment tax withholding which the Company or
Subsidiary is required to remit to the Internal Revenue Service in accordance
with the then applicable provisions of the Code. The full amount of such
withholding shall be paid by the Optionee simultaneously with the award or
exercise of an Option or SAR, as applicable.
<PAGE>
23. Other Benefits. No Award granted under the Plan shall be considered
compensation for purposes of computing benefits or contributions under any
retirement plan of the Company or any Affiliates now or subsequently in effect.
24. Indemnification of Committee. 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 all the
reasonable expenses, including, without limitation, attorneys' 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 Option or SAR 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 in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee member is liable for negligence or misconduct in
the performance of his duties; provided that within sixty (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 pursue and
defend the same.
25. Application of Funds. The proceeds received by the Company from the
sale of Common Stock pursuant to Options granted hereunder will be used for
general corporate purposes.
26. Notices. All notices required or permitted to be given or made
under the Plan or any Award Agreement shall be in writing and shall be deemed to
have been duly given or made if (i) delivered personally, (ii) transmitted by
first class registered or certified United States mail, postage prepaid, return
receipt requested, (iii) sent by prepaid overnight courier service, or (iv) sent
by telecopy or facsimile transmission, answer back requested, to the Person who
is to receive it at the address that such person has theretofore specified by
written notice delivered in accordance herewith. Such notices shall be effective
(i) if delivered personally or sent by courier service, upon actual receipt by
the intended recipient, (ii) if mailed, upon the earlier of five (5) days after
deposit in the mail or the date of delivery as shown by the return receipt
therefore, or (iii) if sent by telecopy or facsimile transmission, when the
answer back is received. The Company or an Optionee may change, at any time and
from time to time, by written notice to the other, the address that it or such
Optionee had theretofore, specified for receiving notices. Until such address is
changed in accordance herewith, notices hereunder or under an Award Agreement
shall be delivered or sent (i) to an Optionee at the Optionee's address set
forth in the records of the Company or (ii) to the Company at the principal
executive offices of the Company clearly marked "Attention: Stock Plan
Administration."
27. Severability. If any provision of the Plan or any Award Agreement
is held to be illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining provisions of the Plan or such agreement, as the
case may be, but such provision shall be fully severable and the Plan or such
agreement, as the case may be, shall be construed and enforced as if the illegal
or invalid provision had never been included herein or therein.
28. Governing Law. Except to the extent governed by the applicable
provisions of the Code or Federal securities laws, this Plan shall be governed
by and construed in accordance with the laws of the State of Nevada.
IN WITNESS WHEREOF, this Plan is executed by the undersigned officers
of KARTS INTERNATIONAL INCORPORATED, each being hereunto duly empowered and
authorized, on this 19th day of October, 2000.
KARTS INTERNATIONAL INCORPORATED
By: /s/ Charles Brister
------------------------------
Charles Brister, President
ATTEST:
/s/ Geoffrey Craig benRichard barAbba
--------------------------------------
Geoffrey Craig benRichard barAbba,
Secretary
<PAGE>
KARTS INTERNATIONAL INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 12, 2000
The undersigned hereby appoints Charles Brister and Geoffrey Craig
benRichard or either of them, with power of substitution, as proxies to vote all
stock of Karts International Incorporated (the "Company") owned by the
undersigned at the Annual Meeting of Stockholders to be held at 62204 Commercial
Street, Roseland, Louisiana 70456, at 2:00 p.m., Central Standard Time on
December 12, 2000, and any adjournment thereof, on the following matters as
indicated below and such other business as may property come before the meeting.
1. [ ] FOR the election as director of all nominees
listed below (except as marked to the
contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees
listed below: Charles Brister, Blair
Lawrence benGerald, Geoffrey Craig
benRichard and Timotheus James benHarold.
INSTRUCTION: To withhold authority to vote for
individual nominees, write their names in the space
provided below.
-----------------------------------------------------
2. Proposal to approve an amendment to the
Articles of Incorporation to increase the
number of authorized shares of common stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve the Karts International
Incorporated 2000 Stock Compensation Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To transact such other business as may
properly come before the meeting or any
adjournments thereof.
<PAGE>
THIS PROXY MUST BE DATED AND SIGNED ON THE REVERSE SIDE
This Proxy is solicited on behalf of the Company's Board of Directors.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made, this
Proxy will be voted FOR all nominees as directors, FOR the proposal to approve
an amendment to the Articles of Incorporation to increase the number of
authorized shares of common stock, and FOR the proposal to approve the Karts
International Incorporated 2000 Stock Compensation Plan.
Please sign exactly as your name appears on this Proxy Card. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
DATED:__________________________________, 2000
______________________________________________
Signature of Stockholder
______________________________________________
Signature if held jointly
PLEASE mark, sign and return the Proxy Card promptly using the enclosed
envelope.
