United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to FORM 10-QSB
(Form 10-QSB/A)
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended Commission File Number:
August 31, 1999 0-24075
NBG RADIO NETWORK, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 88-0362102
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
520 SW Sixth Avenue, Suite 750
Portland, Oregon 97204
(Address of principal executive offices) (Zip Code)
(503) 802-4624
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
The registrant has one class of Common Stock with 12,148,293 shares
outstanding as of October 4, 1999.
Transitional Small Business Issuer Disclosure Format (check one):
Yes [ ] No [X].
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Pursuant to Rule 12b-15, promulgated under the Securities Exchange Act of 1934,
the registrant amends the following Item of its Quarterly Report on Form 10-QSB
for the quarter ended August 31, 1999, so that, as amended, such Item reads as
set forth herein:
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Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
Exhibit Number Description of Exhibit
3.2 Amended and Restated Bylaws of NBG Radio Network,
Inc. (incorporated by reference to Exhibit 3.2 to
the registrant's Form 10-QSB for the fiscal quarter
ended August 31, 1999).
10.1 1998 Stock Incentive Plan.*
27 Financial Data Schedule (incorporated by reference
to Exhibit 27 to the registrant's Form 10-QSB for
the fiscal quarter ended August 31, 1999).
* Management contract or compensatory plan.
(b) No reports on Form 8-K were required to be filed during the quarter
ended August 31, 1999.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
NBG RADIO NETWORK, INC.,
a Nevada corporation
Date: November 5, 1999 By: /s/ John J. Brumfield
--------------------------------------------
John J. Brumfield, Chief Financial Officer
Vice President, Finance
(Principal Financial and Accounting Officer)
NBG RADIO NETWORK, INC.
1998 STOCK INCENTIVE PLAN
1. Purpose. The purpose of this Stock Incentive Plan (the "Plan") is to enable
NBG Radio Network, Inc., a Nevada corporation (the "Company") to attract and
retain the services of (1) selected employees, officers and directors of the
Company or of any subsidiary of the Company and (2) selected nonemployee agents,
consultants, advisors, persons involved in the sale or distribution of the
Company's products and independent contractors of the Company or any subsidiary.
2. Shares Subject to the Plan. Subject to adjustment as provided below and in
Section 13, the shares to be offered under the Plan shall consist of Common
Stock of the Company, and the total number of shares of Common Stock that may be
issued under the Plan shall not exceed 3,000,000 shares. The shares issued under
the Plan may be authorized and unissued shares or reacquired shares. If an
option, stock appreciation right or performance unit granted under the Plan
expires, terminates or is canceled, the unissued shares subject to such option,
stock appreciation right or performance unit shall again be available under the
Plan. If shares sold or awarded as a bonus under the Plan are forfeited to the
Company or repurchased by the Company, the number of shares forfeited or
repurchased shall again be available under the Plan.
3. Effective Date and Duration of Plan.
(a) Effective Date. The Plan shall become effective as of June 12, 1998. No
incentive stock option granted under the Plan shall become exercisable, however,
until the Plan is approved by the affirmative vote of the holders of a majority
of the shares of Common Stock represented at a shareholders meeting at which a
quorum is present and any such awards under the Plan prior to such approval
shall be conditioned on and subject to such approval. Subject to this
limitation, options, stock appreciation rights and performance units may be
granted and shares may be awarded as bonuses or sold under the Plan at any time
after the effective date and before termination of the Plan.
(b) Duration. The Plan shall continue in effect until all shares available
for issuance under the Plan have been issued and all restrictions on such shares
have lapsed. The Board of Directors may suspend or terminate the Plan at any
time except with respect to options, performance units and shares subject to
restrictions then outstanding under the Plan. Termination shall not affect any
outstanding options, any right of the Company to repurchase shares or the
forfeitability of shares issued under the Plan.
4. Administration.
(a) Board of Directors. The Plan shall be administered by the Board of
Directors of the Company, which shall determine and designate from time to time
the individuals to
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whom awards shall be made, the amount of the awards and the other terms and
conditions of the awards. Subject to the provisions of the Plan, the Board of
Directors may from time to time adopt and amend rules and regulations relating
to administration of the Plan, advance the lapse of any waiting period,
accelerate any exercise date, waive or modify any restriction applicable to
shares (except those restrictions imposed by law) and make all other
determinations in the judgment of the Board of Directors necessary or desirable
for the administration of the Plan. The interpretation and construction of the
provisions of the Plan and related agreements by the Board of Directors shall be
final and conclusive. The Board of Directors may correct any defect or supply
any omission or reconcile any inconsistency in the Plan or in any related
agreement in the manner and to the extent it shall deem expedient to carry the
Plan into effect, and it shall be the sole and final judge of such expediency.
(b) Committee. The Board of Directors may, by resolution, delegate to a
committee comprised solely of two (2) or more Non-Employee Directors (the
"Committee") any or all authority for administration of the Plan. If authority
is delegated to a Committee, all references to the Board of Directors in the
Plan shall mean and relate to the Committee except (i) as otherwise provided by
the Board of Directors and (ii) that only the Board of Directors may amend or
terminate the Plan as provided in Sections 3 and 14. "Non-Employee Director"
shall mean a Director who:
(i) Is not currently an officer of the Company or a parent or
subsidiary of the Company, or otherwise currently employed by the Company
or a parent or subsidiary of the Company;
(ii) Does not receive compensation, either directly or indirectly,
from the Company or a parent or subsidiary of the Company, for services rendered
as a consultant or in any capacity other than as a Director, except for an
amount that does not exceed the dollar amount for which disclosure would be
required pursuant to Item 404(a) of Regulation S-B.
(iii) Does not possess an interest in any other transaction for which
disclosure would be required pursuant to Item 404(a) of Regulation S-B; and
(iv) Is not engaged in a business relationship for which disclosure
would be required pursuant to Item 404(b) of Regulation S-B.
5. Types of Awards; Eligibility. The Board of Directors may, from time to
time, take the following actions, separately or in combination, under the Plan:
(i) grant Incentive Stock Options, as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), as provided in Sections 6(a) and
6(b); (ii) grant options other than Incentive Stock Options ("Non-Statutory
Stock Options") as provided in Sections 6(a) and 6(c); (iii) award stock bonuses
as provided in Section 7; (iv) sell shares subject to restrictions as provided
in Section 8; (v) grant stock appreciation rights as provided in Section 9; (vi)
grant cash bonus rights as provided in Section 10; (vii) grant performance units
as provided in Section 11 and (viii) grant foreign qualified awards as provided
in Section 12. Any such awards may be made to employees, including employees who
are officers or directors, and to other individuals described in Section 1 who
the Board of Directors believes have made or will
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make an important contribution to the Company or any subsidiary of the Company;
provided, however, that only employees of the Company shall be eligible to
receive Incentive Stock Options under the Plan. The Board of Directors shall
select the individuals to whom awards shall be made and shall specify the action
taken with respect to each individual to whom an award is made. At the
discretion of the Board of Directors, an individual may be given an election to
surrender an award in exchange for the grant of a new award.
6. Option Grants.
(a) General Rules Relating to Options.
(i) Terms of Grant. The Board of Directors may grant options under the
Plan. With respect to each option grant, the Board of Directors shall determine
the number of shares subject to the option, the option price, the period of the
option, the time or times at which the option may be exercised, whether the
option is an Incentive Stock Option or a Non-Statutory Stock Option. At the time
of the grant of an option or at any time thereafter, the Board of Directors may
provide that an optionee who exercised an option with Common Stock of the
Company shall automatically receive a new option to purchase additional shares
equal to the number of shares surrendered and may specify the terms and
conditions of such new options.
(ii) Exercise of Options. Except as provided in Section 6(a)(iv) or as
determined by the Board of Directors, no option granted under the Plan may be
exercised unless at the time of such exercise the optionee is employed by or in
the service of the Company or any subsidiary of the Company and shall have been
so employed or provided such service continuously since the date such option was
granted. Absence on leave or on account of illness or disability, as described
in 6(a)(iv)(1), shall not, however, be deemed an interruption of employment or
service for this purpose. Unless otherwise determined by the Board of Directors,
vesting of options shall not continue during an absence on leave (including an
extended illness) or on account of disability. Except as provided in Sections
6(a)(iv) and 13, options granted under the Plan may be exercised from time to
time over the period stated in each option in such amounts and at such times as
shall be prescribed by the Board of Directors, provided that options shall not
be exercised for fractional shares. Unless otherwise determined by the Board of
Directors, if the optionee does not exercise an option in any one year with
respect to the full number of shares to which the optionee is entitled in that
year, the optionee's rights shall be cumulative and the optionee may purchase
those shares in any subsequent year during the term of the option.
(iii) Nontransferability. Each Incentive Stock Option and, unless
otherwise determined by the Board of Directors, each other option granted under
the Plan by its terms shall be nonassignable and nontransferable by the
optionee, either voluntarily or by operation of law, except (i) to an optionee's
family member (as defined in General Instruction A.1(a)(5) to Form S-8) by gift
or domestic relations order; or (ii) by will or by the laws of descent and
distribution of the state or country of the optionee's domicile at the time of
death.
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(iv) Termination of Employment or Service.
(1) General Rule. Unless otherwise determined by the Board of
Directors, in the event the employment or service of the optionee with the
Company or a subsidiary terminates for any reason other than because of physical
disability or death as provided in subsections 6(a)(iv)(2) and (3), the option
may be exercised at any time prior to the expiration date of the option or the
expiration of thirty (30) days after the date of such termination, whichever is
the shorter period, but only if and to the extent the optionee was entitled to
exercise the option at the date of such termination.
(2) Termination Because of Total Disability. Unless otherwise
determined by the Board of Directors, in the event of the termination of
employment or service because of total disability, the option may be exercised
at any time prior to the expiration date of the option or the expiration of 12
months after the date of such termination, whichever is the shorter period, but
only if and to the extent the optionee was entitled to exercise the option at
the date of such termination. The term "total disability" means a medically
determinable mental or physical impairment which is expected to result in death
or which has lasted or is expected to last for a continuous period of 12 months
or more and which causes the optionee to be unable, in the opinion of the
Company and two independent physicians, to perform his or her duties as an
employee, director, officer or consultant of the Company and to be engaged in
any substantial gainful activity. Total disability shall be deemed to have
occurred on the first day after the Company and the two independent physicians
have furnished their opinion of total disability to the Company.
(3) Termination Because of Death. Unless otherwise determined by
the Board of Directors, in the event of the death of an optionee while employed
by or providing service to the Company or a subsidiary, the option may be
exercised at any time prior to the expiration date of the option or the
expiration of 12 months after the date of death, whichever is the shorter
period, but only if and to the extent the optionee was entitled to exercise the
option at the date of death and only by the person or persons to whom such
optionee's rights under the option shall pass by the optionee's will or by the
laws of descent and distribution of the state or country of domicile at the time
of death.
(4) Amendment of Exercise Period Applicable to Termination. The
Board of Directors, at the time of grant or, with respect to an option that is
not an Incentive Stock Option, at any time thereafter, may extend the 30-day and
12-month exercise periods any length of time not longer than the original
expiration date of the option, and may increase the portion of an option that is
exercisable, subject to such terms and conditions as the Board of Directors may
determine.
(5) Failure to Exercise Option. To the extent that the option of
any deceased optionee or of any optionee whose employment or service terminates
is not exercised within the applicable period, all further rights to purchase
shares pursuant to such option shall cease and terminate.
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(6) Termination for Cause. Notwithstanding any other provision of
this plan to the contrary, any options granted under this plan shall terminate
as of the date the optionee ceases to be in the service of the Company if the
optionee was terminated for "cause" or could have been terminated for "cause."
If the optionee has an employment or consulting agreement with the Company, the
term "cause" shall have the meaning given that term in the employment or
consulting agreement. If the optionee does not have an employment or consulting
agreement with the Company, or if such employment or consulting agreement does
not define the term "cause," the term "cause" shall mean: (A) misconduct or
dishonesty that materially adversely affects the Company, including without
limitation (i) an act materially in conflict with the financial interests of the
Company, (ii) an act that could damage the reputation or customer relations of
the Company, (iii) an act that could subject the Company to liability, (iv) an
act constituting sexual harassment or other violation of the civil rights of
coworkers, (v) failure to obey any lawful instruction of the Board or any
officer of the Company and (vi) failure to comply with, or perform any duty
required under, the terms of any confidentiality, inventions or non-competition
agreement the optionee may have with the Company, or (B) acts constituting the
unauthorized disclosure of any of the trade secrets or confidential information
of the Company, unfair competition with the Company or the inducement of any
customer of the Company to breach any contract with the Company. The right to
exercise any option shall be suspended automatically during the pendency of any
investigation by the Board, or its designee, and/or any negotiations by the
Board, or its designee, and the optionee, regarding any actual or alleged act or
omission by the optionee of the type described in this subsection.
(v) Purchase of Shares. Unless the Board of Directors determines
otherwise, shares may be acquired pursuant to an option granted under the Plan
only upon receipt by the Company of notice in writing from the optionee of the
optionee's intention to exercise, specifying the number of shares as to which
the optionee desires to exercise the option and the date on which the optionee
desires to complete the transaction, and if required in order to comply with the
Securities Act of 1933, as amended, containing a representation that it is the
optionee's present intention to acquire the shares for investment and not with a
view to distribution. Unless the Board of Directors determines otherwise, on or
before the date specified for completion of the purchase of shares pursuant to
an option, the optionee must have paid the Company the full purchase price of
such shares in cash (including, with the consent of the Board of Directors, cash
that may be the proceeds of a loan from the Company (provided that, with respect
to an Incentive Stock Option, such loan is approved at the time of option
grant)) or, with the consent of the Board of Directors, in whole or in part, in
Common Stock of the Company valued at fair market value, restricted stock,
performance units or other contingent awards denominated in either stock or
cash, promissory notes and other forms of consideration. The Board of Directors
shall make a good faith determination of the fair market value of Common Stock
provided in payment of the purchase price. If the Common Stock of the Company is
not publicly traded on the date the option is exercised, the Board of Directors
may consider any valuation methods it deems appropriate and may, but is not
required to, obtain one or more independent appraisals of the Company. If the
Common Stock of the Company is publicly traded on the date the option is
exercised, the fair market value of Common Stock provided in payment of the
purchase price shall be the closing price
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of the Common Stock as reported on the OTC Bulletin Board, any exchange or
NASDAQ on the last trading day preceding the date the option is exercised, or
such other reported value of the Common Stock as shall be specified by the Board
of Directors. No shares shall be issued until full payment for the shares has
been made. With the consent of the Board of Directors (which, in the case of an
Incentive Stock Option, shall be given only at the time of option grant), an
optionee may request the Company to apply automatically the shares to be
received upon the exercise of a portion of a stock option (even though stock
certificates have not yet been issued) to satisfy the purchase price for
additional portions of the option. Each optionee who has exercised an option
shall immediately upon notification of the amount due, if any, pay to the
Company in cash amounts necessary to satisfy any applicable federal, state and
local tax withholding requirements. If additional withholding is or becomes
required beyond any amount deposited before delivery of the certificates, the
optionee shall pay such amount to the Company on demand. If the optionee fails
to pay the amount demanded, the Company may withhold that amount from other
amounts payable by the Company to the optionee, including salary, subject to
applicable law. With the consent of the Board of Directors an optionee may
satisfy this obligation, in whole or in part, by having the Company withhold
from the shares to be issued upon the exercise that number of shares that would
satisfy the withholding amount due or by delivering to the Company Common Stock
to satisfy the withholding amount. Upon the exercise of an option, the number of
shares reserved for issuance under the Plan shall be reduced by the number of
shares issued upon exercise of the option.
(b) Incentive Stock Options. Incentive Stock Options shall be subject to
the following additional terms and conditions:
(i) Limitation on Amount of Grants. No employee may be granted
Incentive Stock Options under the Plan if the aggregate fair market value, on
the date of grant, of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by that employee during any calendar
year under the Plan and under all incentive stock option plans (within the
meaning of Section 422 of the Code) of the Company or any parent or subsidiary
of the Company exceeds $100,000.
(ii) Limitations on Grants to 10 Percent Shareholders. An Incentive
Stock Option may be granted under the Plan to an employee possessing more than
10 percent of the total combined voting power of all classes of stock of the
Company or of any parent or subsidiary of the Company only if the option price
is at least 110 percent of the fair market value, as described in Section
6(b)(iv), of the Common Stock subject to the option on the date it is granted
and the option by its terms is not exercisable after the expiration of five
years from the date it is granted.
(iii) Duration of Options. Subject to Sections 6(a)(ii) and 6(b)(ii),
Incentive Stock Options granted under the Plan shall continue in effect for the
period fixed by the Board of Directors, except that no Incentive Stock Option
shall be exercisable after the expiration of 10 years from the date it is
granted.
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(iv) Option Price. The option price per share shall be determined by
the Board of Directors at the time of grant. Except as provided in Section
6(b)(ii), the option price shall not be less than 100 percent of the fair market
value of the Common Stock covered by the Incentive Stock Option at the date the
option is granted. The Board of Directors shall make a good faith determination
of the fair market value. If the Common Stock of the Company is not publicly
traded on the date the option is granted, the Board of Directors may consider
any valuation methods it deems appropriate and may, but is not required to,
obtain one or more independent appraisals of the Company. If the Common Stock of
the Company is publicly traded on the date the option is exercised, the fair
market value shall be deemed to be the closing price of the Common Stock as
reported on the OTC Bulletin Board, any exchange or NASDAQ on the last trading
day preceding the date the option is granted, or, if there has been no sale on
that date, on the last preceding date on which a sale occurred or such other
value of the Common Stock as shall be specified by the Board of Directors.
(v) Limitation on Time of Grant. No Incentive Stock Option shall be
granted on or after the tenth anniversary of the effective date of the Plan.
(vi) Conversion of Incentive Stock Options. The Board of Directors may
at any time without the consent of the optionee convert an Incentive Stock
Option to a Non-Statutory Stock Option.
(c) Non-Statutory Stock Options. Non-Statutory Stock Options shall be
subject to the following terms and conditions in addition to those set forth in
Section 6(a) above:
(i) Option Price. The option price for Non-Statutory Stock Options
shall be determined by the Board of Directors at the time of grant and may be
any amount determined by the Board of Directors.
(ii) Duration of Options. Non-Statutory Stock Options granted under
the Plan shall continue in effect for the period fixed by the Board of
Directors.
7. Stock Bonuses. The Board of Directors may award shares under the Plan as
stock bonuses. Shares awarded as a bonus shall be subject to the terms,
conditions, and restrictions determined by the Board of Directors. The
restrictions may include restrictions concerning transferability and forfeiture
of the shares awarded, together with such other restrictions as may be
determined by the Board of Directors. The Board of Directors may require the
recipient to sign an agreement as a condition of the award, but may not require
the recipient to pay any monetary consideration other than amounts necessary to
satisfy tax withholding requirements. The agreement may contain any terms,
conditions, restrictions, representations and warranties required by the Board
of Directors. The certificates representing the shares awarded shall bear any
legends required by the Board of Directors. The Company may require any
recipient of a stock bonus to pay to the Company in cash upon demand amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If the recipient fails to pay the amount demanded, the Company may
withhold that amount from other amounts payable by the Company to the recipient,
including salary or fees for services, subject to applicable law. With the
consent of the Board of Directors, a recipient may deliver
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Common Stock to the Company to satisfy this withholding obligation. Upon the
issuance of a stock bonus, the number of shares reserved for issuance under the
Plan shall be reduced by the number of shares issued.
8. Restricted Stock. The Board of Directors may issue shares under the Plan for
such consideration (including promissory notes and services) as determined by
the Board of Directors. Shares issued under the Plan shall be subject to the
terms, conditions and restrictions determined by the Board of Directors. The
restrictions may include restrictions concerning transferability, repurchase by
the Company and forfeiture of the shares issued, together with such other
restrictions as may be determined by the Board of Directors. All Common Stock
issued pursuant to this Section 8 shall be subject to a purchase agreement,
which shall be executed by the Company and the prospective recipient of the
shares prior to the delivery of certificates representing such shares to the
recipient. The purchase agreement may contain any terms, conditions,
restrictions, representations and warranties required by the Board of Directors.
The certificates representing the shares shall bear any legends required by the
Board of Directors. The Company may require any purchaser of restricted stock to
pay to the Company in cash upon demand amounts necessary to satisfy any
applicable federal, state or local tax withholding requirements. If the
purchaser fails to pay the amount demanded, the Company may withhold that amount
from other amounts payable by the Company to the purchaser, including salary,
subject to applicable law. With the consent of the Board of Directors, a
purchaser may deliver Common Stock to the Company to satisfy this withholding
obligation. Upon the issuance of restricted stock, the number of shares reserved
for issuance under the Plan shall be reduced by the number of shares issued.
9. Stock Appreciation Rights.
(a) Grant. The Board of Directors may grant stock appreciation rights under
the Plan, subject to such rules, terms, and conditions as the Board of Directors
prescribes.
(b) Exercise.
(i) Each stock appreciation right shall entitle the holder, upon
exercise, to receive from the Company in exchange therefor an amount equal in
value to the excess of the fair market value on the date of exercise of one
share of Common Stock of the Company over its fair market value on the date of
grant (or, in the case of a stock appreciation right granted in connection with
an option, the excess of the fair market value of one share of Common Stock of
the Company over the option price per share under the option to which the stock
appreciation right relates), multiplied by the number of shares covered by the
stock appreciation right or the option, or portion thereof, that is surrendered.
Payment by the Company upon exercise of a stock appreciation right may be made
in Common Stock valued at fair market value, in cash, or partly in Common Stock
and partly in cash, all as determined by the Board of Directors.
(ii) A stock appreciation right shall be exercisable only at the time
or times established by the Board of Directors. If a stock appreciation right is
granted in connection with an option, the following rules shall apply: (1) the
stock appreciation right shall be
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exercisable only to the extent and on the same conditions that the related
option could be exercised; (2) the stock appreciation rights shall be
exercisable only when the fair market value of the stock exceeds the option
price of the related option; (3) the stock appreciation right shall be for no
more than 100 percent of the excess of the fair market value of the stock at the
time of exercise over the option price; (4) the stock appreciation right expires
no later than expiration of the underlying option; (5) upon exercise of the
stock appreciation right, the option or portion thereof to which the stock
appreciation right relates terminates; and (6) upon exercise of the option, the
related stock appreciation right or portion thereof terminates.
(iii) The Board of Directors may withdraw any stock appreciation right
granted under the Plan at any time and may impose any conditions upon the
exercise of a stock appreciation right or adopt rules and regulations from time
to time affecting the rights of holders of stock appreciation rights. If the
stock appreciation right is granted in conjunction with an incentive stock
option, no change to the stock appreciation right shall give the optionee
additional benefits under the incentive stock option. Such rules and regulations
may govern the right to exercise stock appreciation rights granted prior to
adoption or amendment of such rules and regulations as well as stock
appreciation rights granted thereafter.
(iv) For purposes of this Section 9, the fair market value of the
Common Stock shall be determined as of the date the stock appreciation right is
exercised, under the methods set forth in Section 6(b)(iv).
(v) No fractional shares shall be issued upon exercise of a stock
appreciation right. In lieu thereof, cash may be paid in an amount equal to the
value of the fraction or, if the Board of Directors shall determine, the number
of shares may be rounded downward to the next whole share.
(vi) Each stock appreciation right granted in connection with an
Incentive Stock Option, and unless otherwise determined by the Board of
Directors, each other stock appreciation right granted under the Plan by its
terms shall be nonassignable and nontransferable by the holder, either
voluntarily or by operation of law, except by will or by the laws of descent and
distribution of the state or country of the holder's domicile at the time of
death. Each stock appreciation right by its terms shall be exercisable during
the holder's lifetime only by the holder. However, if the holder is disabled as
described in 6(a)(iv)(2), a legal representative may exercise the option on the
holder's behalf.
(vii) Each participant who has exercised a stock appreciation right
shall, upon notification of the amount due, pay to the Company in cash amounts
necessary to satisfy any applicable federal, state and local tax withholding
requirements. If the participant fails to pay the amount demanded, the Company
may withhold that amount from other amounts payable by the Company to the
participant including salary, subject to applicable law. With the consent of the
Board of Directors a participant may satisfy this obligation, in whole or in
part, by having the Company withhold from any shares to be issued upon the
exercise that number of shares that would satisfy the withholding amount due or
by delivering Common Stock to the Company to satisfy the withholding amount.
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(viii) Upon the exercise of a stock appreciation right for shares, the
number of shares reserved for issuance under the Plan shall be reduced by the
number of shares issued. Cash payments of stock appreciation rights shall not
reduce the number of shares of Common Stock reserved for issuance under the
Plan.
10. Cash Bonus Rights.
(a) Grant. The Board of Directors may grant cash bonus rights under the
Plan in connection with (i) options granted or previously granted, (ii) stock
appreciation rights granted or previously granted, (iii) stock bonuses awarded
or previously awarded and (iv) shares sold or previously sold under the Plan.
Cash bonus rights will be subject to rules, terms and conditions as the Board of
Directors may prescribe. Unless otherwise determined by the Board of Directors,
each cash bonus right granted under the Plan by its terms shall be nonassignable
and nontransferable by the holder, either voluntarily or by operation of law,
except by will or by the laws of descent and distribution of the state or
country of the holder's domicile at the time of death. The payment of a cash
bonus shall not reduce the number of shares of Common Stock reserved for
issuance under the Plan.
(b) Cash Bonus Rights in Connection With Options. A cash bonus right
granted in connection with an option will entitle an optionee to a cash bonus
when the related option is exercised (or terminates in connection with the
exercise of a stock appreciation right related to the option) in whole or in
part if, in the sole discretion of the Board of Directors, the bonus right will
result in a tax deduction that the Company has sufficient taxable income to use.
If an optionee purchases shares upon exercise of an option and does not exercise
a related stock appreciation right, the amount of the bonus, if any, shall be
determined by multiplying the excess of the total fair market value of the
shares to be acquired upon the exercise over the total option price for the
shares by the applicable bonus percentage. If the optionee exercises a related
stock appreciation right in connection with the termination of an option, the
amount of the bonus, if any, shall be determined by multiplying the total fair
market value of the shares and cash received pursuant to the exercise of the
stock appreciation right by the applicable bonus percentage. The bonus
percentage applicable to a bonus right, including a previously granted bonus
right, may be changed from time to time at the sole discretion of the Board of
Directors but shall in no event exceed 75 percent.
(c) Cash Bonus Rights in Connection With Stock Bonus. A cash bonus right
granted in connection with a stock bonus will entitle the recipient to a cash
bonus payable when the stock bonus is awarded or restrictions, if any, to which
the stock is subject lapse. If bonus stock awarded is subject to restrictions
and is repurchased by the Company or forfeited by the holder, the cash bonus
right granted in connection with the stock bonus shall terminate and may not be
exercised. The Board of Directors shall determine the amount and timing of
payment of a cash bonus.
(d) Cash Bonus Rights in Connection With Stock Purchases. A cash bonus
right granted in connection with the purchase of stock pursuant to Section 8
will entitle the recipient to a cash bonus when the shares are purchased or
restrictions, if any, to which the stock is subject lapse. Any cash bonus right
granted in connection with shares purchased
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pursuant to Section 8 shall terminate and may not be exercised in the event the
shares are repurchased by the Company or forfeited by the holder pursuant to
applicable restrictions. The amount of any cash bonus to be awarded and timing
of payment of a cash bonus shall be determined by the Board of Directors.
(e) Taxes. The Company shall withhold from any cash bonus paid pursuant to
Section 10 the amount necessary to satisfy any applicable federal, state and
local withholding requirements.
11. Performance Units. The Board of Directors may grant performance units
consisting of monetary units which may be earned in whole or in part if the
Company achieves certain goals established by the Board of Directors over a
designated period of time, but not in any event more than 10 years. The goals
established by the Board of Directors may include earnings per share, return on
shareholders' equity, return on invested capital, and such other goals as may be
established by the Board of Directors. In the event that the minimum performance
goal established by the Board of Directors is not achieved at the conclusion of
a period, no payment shall be made to the participants. In the event the maximum
corporate goal is achieved, 100 percent of the monetary value of the performance
units shall be paid to or vested in the participants. Partial achievement of the
maximum goal may result in a payment or vesting corresponding to the degree of
achievement as determined by the Board of Directors. Payment of an award earned
may be in cash or in Common Stock or in a combination of both, and may be made
when earned, or vested and deferred, as the Board of Directors determines.
Deferred awards shall earn interest on the terms and at a rate determined by the
Board of Directors; however, such rate shall be no less than the long-term
federal rate in effect under Section 1274(d) of the Internal Revenue Code of
1986, as amended (as of the date the award is made), compounded semi-annually.
Unless otherwise determined by the Board of Directors, each performance unit
granted under the Plan by its terms shall be nonassignable and nontransferable
by the holder, either voluntarily or by operation of law, except by will or by
the laws of descent and distribution of the state or country of the holder's
domicile at the time of death. Each participant who has been awarded a
performance unit shall, upon notification of the amount due, pay to the Company
in cash amounts necessary to satisfy any applicable federal, state and local tax
withholding requirements. If the participant fails to pay the amount demanded,
the Company may withhold that amount from other amounts payable by the Company
to the participant, including salary or fees for services, subject to applicable
law. With the consent of the Board of Directors a participant may satisfy this
obligation, in whole or in part, by having the Company withhold from any shares
to be issued that number of shares that would satisfy the withholding amount due
or by delivering Common Stock to the Company to satisfy the withholding amount.
The payment of a performance unit in cash shall not reduce the number of shares
of Common Stock reserved for issuance under the Plan. The number of shares
reserved for issuance under the Plan shall be reduced by the number of shares
issued upon payment of an award.
12. Foreign Qualified Grants. Awards under the Plan may be granted to such
officers and employees of the Company and its subsidiaries and such other
persons described in Section 1 residing in foreign jurisdictions as the Board of
Directors may determine from time
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to time. The Board of Directors may adopt such supplements to the Plan as may be
necessary to comply with the applicable laws of such foreign jurisdictions and
to afford participants favorable treatment under such laws; provided, however,
that no award shall be granted under any such supplement with terms which are
more beneficial to the participants than the terms permitted by the Plan.
13. Changes in Capital Structure.
(a) Stock Splits; Stock Dividends. If the outstanding Common Stock of the
Company is hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of any stock split, combination of shares or dividend payable in shares,
recapitalization or reclassification appropriate adjustment shall be made by the
Board of Directors in the number and kind of shares available for grants under
the Plan. In addition, the Board of Directors shall make appropriate adjustment
in the number and kind of shares as to which outstanding options, or portions
thereof then unexercised, shall be exercisable, so that the optionee's
proportionate interest before and after the occurrence of the event is
maintained. Notwithstanding the foregoing, the Board of Directors shall have no
obligation to effect any adjustment that would or might result in the issuance
of fractional shares, and any fractional shares resulting from any adjustment
may be disregarded or provided for in any manner determined by the Board of
Directors. Any such adjustments made by the Board of Directors shall be
conclusive.
(b) Mergers, Reorganizations, Etc. In the event of a merger, consolidation,
plan of exchange, acquisition of property or stock, separation, reorganization
or liquidation to which the Company or a subsidiary is a party or a sale of all
or substantially all of the Company's assets (each, a "Transaction"), the Board
of Directors shall, in its sole discretion and to the extent possible under the
structure of the Transaction, select one of the following alternatives for
treating outstanding options under the Plan:
(i) Outstanding options shall remain in effect in accordance with
their terms.
(ii) Outstanding options ("old options") shall be converted into
options ("new options") to purchase stock in the corporation that is the
surviving or acquiring corporation in the Transaction. The amount, type of
securities subject thereto and exercise price of the new options shall be
determined by the Board of Directors of the Company, taking into account the
relative values of the companies involved in the Transaction and the exchange
rate, if any, used in determining shares of the surviving corporation to be
issued to holders of shares of the Company. However, with respect to an
incentive stock option, the excess of the fair market value of the stock subject
to the option over the option price before the conversion shall equal or exceed
such excess after the conversion, and the new option shall not give the holder
additional benefits that were not available under the old option. The Board of
Directors shall make a good faith determination of the fair market value of the
stock subject to the old option and the stock subject to the new option. Unless
otherwise determined by the Board of Directors, the new options shall be vested
only to the extent that the vesting requirements relating to options granted
hereunder have been satisfied.
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(iii) The Board of Directors shall provide a 30-day period prior to
the consummation of the Transaction during which outstanding options may be
exercised to the extent then exercisable, and upon the expiration of such 30-day
period, all unexercised options shall immediately terminate. The Board of
Directors may, in its sole discretion, accelerate the exercisability of options
so that they are exercisable in full during such 30-day period.
(c) Dissolution of the Company. In the event of the dissolution of the
Company, options shall be treated in accordance with Section 13(b)(iii).
(d) Rights Issued by Another Corporation. The Board of Directors may also
grant options, stock appreciation rights, performance units, stock bonuses and
cash bonuses and issue restricted stock under the Plan having terms, conditions
and provisions that vary from those specified in this Plan provided that any
such awards are granted in substitution for, or in connection with the
assumption of, existing options, stock appreciation rights, stock bonuses, cash
bonuses, restricted stock and performance units granted, awarded or issued by
another corporation and assumed or otherwise agreed to be provided for by the
Company pursuant to or by reason of a Transaction.
14. Amendment of Plan. The Board of Directors may at any time, and from time to
time, modify or amend the Plan in such respects as it shall deem advisable
because of changes in the law while the Plan is in effect or for any other
reason. Except as provided in Sections 6(a)(iv), 9, 10 and 13, however, no
change in an award already granted shall be made without the written consent of
the holder of such award. In addition, administrative changes to the Plan made
by the Board of Directors pursuant to Section 4 shall not be deemed a change in
an award.
15. Approvals. The obligations of the Company under the Plan are subject to the
approval of state and federal authorities or agencies with jurisdiction in the
matter. The Company will use its reasonable efforts to take steps required by
state or federal law or applicable regulations, including rules and regulations
of the Securities and Exchange Commission and any stock exchange on which the
Company's shares may then be listed, in connection with the grants under the
Plan. The foregoing notwithstanding, the Company shall not be obligated to issue
or deliver Common Stock under the Plan if such issuance or delivery would
violate applicable state or federal securities laws. Unless registered, each
certificate representing shares of Common Stock (or other securities) issued
under the Plan shall bear a legend substantially as follows:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 or any state securities laws. The shares may
not be sold, offered for sale, pledged or hypothecated in the absence of an
effective registration statement for the shares under said Acts and laws or an
opinion of counsel satisfactory to the Company that such registration is not
required with respect to such sale or offer."
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16. Employment and Service Rights. Nothing in the Plan or any award pursuant to
the Plan shall (i) confer upon any employee any right to be continued in the
employment of the Company or any subsidiary or interfere in any way with the
right of the Company or any subsidiary by whom such employee is employed to
terminate such employee's employment at any time, for any reason, with or
without cause, or to decrease such employee's compensation or benefits, or (ii)
confer upon any person engaged by the Company any right to be retained or
employed by the Company or to the continuation, extension, renewal, or
modification of any compensation, contract, or arrangement with or by the
Company.
17. Rights as a Shareholder. The recipient of any award under the Plan shall
have no rights as a shareholder with respect to any Common Stock until the date
of issue to the recipient of a stock certificate for such shares. Except as
otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date occurs prior to the date
such stock certificate is issued.
