<PAGE> 1
EXHIBIT 10.4
AUTONATION, INC.
1997 EMPLOYEE STOCK OPTION PLAN
(As Amended and Restated on April 17, 2000)
AutoNation, Inc. (the "Company") hereby adopts this AutoNation, Inc.
1997 Employee Stock Option Plan (the "Plan"), amended and restated as of
November 2, 1998, the terms of which shall be as follows:
1. PURPOSE
The Plan is intended to advance the interests of The Company by
providing eligible individuals (as designated pursuant to Section 4 below) with
an opportunity to acquire or increase a proprietary interest in the Company,
which thereby will create a stronger incentive to expend maximum effort for the
growth and success of the Company and its subsidiaries, and will encourage such
eligible individuals to remain in the employ of the Company or one or more of
its subsidiaries. Each stock option granted under the Plan (an "Option") shall
be an option that is not intended to constitute an "incentive stock option"
("Incentive Stock Option") within the meaning of Section 422 of the Internal
Revenue Code of 1986, or the corresponding provision of any subsequently-enacted
tax statute, as amended from time to time (the "Code") unless such Option is
granted to an employee of the Company or a "subsidiary corporation" (a
"Subsidiary") thereof within the meaning of Section 424 (f) of the Code and is
specifically designated at the time of grant as being an Incentive Stock Option.
Any Option so designated shall constitute an Incentive Stock Option only to the
extent that it does not exceed the limitations set forth in Section 7 below.
2. ADMINISTRATION
(a) BOARD. The Plan shall be administered by the Board of Directors of
the Company (the "Board"), which shall have the full power and authority to take
all actions, and to make all determinations required or provided for under the
Plan or any Option granted or Option Agreement (as defined in Section 8 below)
entered into under the Plan and all such other actions and determinations not
inconsistent with the specific terms and provisions of the Plan deemed by the
Board to be necessary or appropriate to the administration of the Plan or any
Option granted or Option Agreement entered into hereunder. All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting at which any issue relating to the Plan is
properly raised for consideration or without a meeting by written consent of the
Board executed in accordance with the Company's Certificate of Incorporation
<PAGE> 2
and Bylaws, and with applicable law. The interpretation and construction by the
Board of any provision of the Plan or of any Option granted or Option Agreement
entered into hereunder shall be final and conclusive.
(b) COMMITTEE. The Board may from time to time appoint a Stock Option
Committee (the "Committee") consisting of not less than two members of the
Board, none of whom shall be an officer or other salaried employee of the
Company or any Subsidiary, and each of whom shall qualify in all respects as a
"non-employee director" as defined in Rule 16b-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (the "Exchange Act") and an
"outside director" for purposes of Section 162(m) of the Code. The Board, in its
sole discretion, may provide that the role of the Committee shall be limited to
making recommendations to the Board concerning any determinations to be made and
actions to be taken by the Board pursuant to or with respect to the Plan, or the
Board may delegate to the Committee such powers and authorities related to the
administration of the Plan, as set forth in Section 2(a) above, as the Board
shall determine, consistent with the Certificate of Incorporation and Bylaws of
the Company and applicable law. The Board may remove members, add members, and
fill vacancies on the Committee from time to time, all in accordance with the
Company's Certificate of Incorporation and Bylaws, and with applicable law. The
majority vote of the Committee, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee.
(c) NO LIABILITY. No member of the Board or of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any Option granted or Option Agreement entered into hereunder.
(d) DELEGATION TO THE COMMITTEE. In the event that the Plan or any
Option granted or Option Agreement entered into hereunder provides for any
action to be taken by or determination to be made by the Board, such action may
be taken by or such determination may be made by the Committee if the power and
authority to do so has been delegated to the Committee by the Board as provided
for in Section 2(b) above. Unless otherwise expressly determined by the Board,
any such action or determination by the Committee shall be final and conclusive.
3. STOCK
The stock that may be issued pursuant to Options granted under the Plan
shall be shares of common stock, $.01 par value, of the Company (the "Stock"),
which shares may be treasury shares or authorized but unissued shares. The
2
<PAGE> 3
number of shares of Stock that may be issued pursuant to Options granted under
the Plan shall not exceed in the aggregate 20,000,000 shares, subject to
adjustment as provided in Section 17 below. If any Option expires, terminates,
or is terminated or canceled for any reason prior to exercise in full, the
shares of Stock that were subject to the unexercised portion of such Option
shall be available for future Options granted under the Plan. Any Stock covered
by an award (or portion of an award) granted under the Plan, which is forfeited
or canceled, expires or is settled in cash, including the settlement of tax
withholding obligations using Stock, shall be deemed not to have been delivered
for purposes of determining the maximum number of shares of Stock available for
delivery under the Plan. Likewise, if. any Option is exercised by tendering
shares of Stock, either actually or by attestation, to the Company as full or
partial payment for such exercise under this Plan or any prior plan of the
Company, only the number of shares issued net of the shares tendered shall be
deemed delivered for purposes of determining the maximum number of shares of
Stock available for delivery under the Plan. Further, Stock issued under the
Plan through the settlement, assumption or substitution of outstanding awards or
obligations to grant future awards as a condition of the Company acquiring
another entity shall not reduce the maximum number of shares of Stock available
for delivery.
4. ELIGIBILITY
(a) EMPLOYEES. Options may be granted under the Plan to any employee of
the Company, a Subsidiary or any other entity of which on the relevant date at
least a majority of the securities or other ownership interest having ordinary
voting power (absolutely or contingently) for the election of directors or other
persons performing similar functions ("Voting Securities") are at the time owned
directly or indirectly by the Company or any Subsidiary (an "Affiliate"),
including any such employee who is an officer or director of the Company, a
Subsidiary or an Affiliate, as the Board shall determine and designate from time
to time prior to expiration or termination of the Plan. The maximum number of
shares of Stock subject to Options that may be granted during any calendar year
under the Plan to any executive officer or other employee of the Company or any
Subsidiary or Affiliate whose compensation is or may be subject to Code
ss.162(m) is 5,000,000 shares (subject to adjustment as provided in Section 17
hereof).
(b) INDEPENDENT CONTRACTORS. Options may be granted to independent
contractors performing services for the Company or any Subsidiary or Affiliate
as determined by the Board from time to time on the basis of their importance to
the business of the Company or such Subsidiary or Affiliate. Independent
contractors shall not be eligible to receive options intended to constitute
3
<PAGE> 4
Incentive Stock Options. Nonemployee directors of the Company shall not be
eligible to receive options under the Plan.
(c) MULTIPLE GRANTS. An individual may hold more than one Option,
subject to such restrictions as are provided herein.
5. EFFECTIVE DATE AND TERM OF THE PLAN
(a) EFFECTIVE DATE. The Plan shall be effective as of the date of
adoption by the Board, which date is set forth below, subject to approval of the
Plan, within one year of such effective date, by the stockholders of the Company
by a majority of the votes present and entitled to vote at a duly held meeting
of the stockholders at which a quorum representing a majority of all outstanding
voting stock is present, either in person or by proxy or by written consent in
accordance with the Company's Certificate of Incorporation and Bylaws; provided,
however, that upon approval of the Plan by the stockholders of the Company as
set forth above, all Options granted under the Plan on or after the effective
date shall be fully effective as if the stockholders of the Company had approved
the Plan on the effective date. If the stockholders fail to approve the Plan
within one year of such effective date, any options granted hereunder shall be
null and void and of no effect.
(b) TERM. The Plan shall terminate on the date 10 years from the
effective date.
6. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Board may, at any
time and from time to time, prior to the date of termination of the Plan, grant
to such eligible individuals as the Board may determine ("Optionees"), Options
to purchase such number of shares of the Stock on such terms and conditions as
the Board may determine. The date on which the Board approves the grant of an
Option (or such later date as is specified by the Board) shall be considered the
date on which such Option is granted.
7. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option intended to constitute an Incentive Stock Option (and so
designated at the time of grant) shall qualify as an Incentive Stock Option only
to the extent that the aggregate fair market value (determined at the time the
4
<PAGE> 5
Option is granted) of the stock with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
(under the Plan and all other plans of the Optionee's employer corporation and
its parent and subsidiary corporations within the meaning of Section 422(d) of
the Code) does not exceed $100,000. This limitation shall be applied by taking
Options into account in the order in which they were granted.
8. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by written
agreements ("Option Agreements"), to be executed by the Company and by the
Optionee, in such form or forms as the Board shall from time to time determine.
Option Agreements covering Options granted from time to time or at the same time
need not contain similar provisions; provided, however, that all such Option
Agreements shall comply with all terms of the Plan.
9. OPTION PRICE
The purchase price of each share of the Stock subject to an Option
shall be not less than 100 percent of the fair market value of a share of the
Stock which shall mean either the closing price of a share of the Stock on the
business day prior to the date the option is granted or, with respect to annual
grants of stock options commencing with the year 2000, the average of the
closing price of a share of the Stock on the first three business days of the
year as reported on the New York Stock Exchange, absent manifest error, or at a
price otherwise fixed by the Board or by the Committee in good faith as the fair
market value and stated in an option agreement with the Optionee (the "Option
Price") provided, however, that in the event the Optionee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b) (6) and 424(d) of the Code (relating to stock ownership of more
than 10 percent), the Option Price of an Option that is intended to be an
Incentive Stock Option shall be not less than 110 percent of the fair market
value of a share of Stock at the time such Option is granted.
10. TERM AND EXERCISE OF OPTIONS
(a) OPTION PERIOD. Each Option granted under the Plan shall terminate
and all rights to purchase shares thereunder shall cease upon the expiration of
ten years from the date such Option is granted, or on such date prior thereto as
may be fixed by the Board and stated in the Option Agreement relating to such
Option; PROVIDED, HOWEVER, that in the event the Optionee would otherwise be
5
<PAGE> 6
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b) (6) and 424(d) of the Code (relating to stock ownership of more
than 10 percent), an Option granted to such Optionee that is intended to be an
Incentive Stock Option shall in no event be exercisable after the expiration of
five years from the date it is granted.
(b) VESTING AND LIMITATIONS ON EXERCISE. Except as otherwise provided
herein, each Option shall become exercisable with respect to 25% of the total
number of shares subject to the Option on the date that is 12 months after the
date of its grant (the "Vesting Date") and with respect to an additional 25% of
the number of such shares on each of the next three succeeding anniversaries of
the Vesting Date; provided, however, that the Board may in its discretion
provide that an Option may be exercised, in whole or in part, at any time and
from time to time, over a period commencing on or after the date of grant and
ending upon the expiration or termination of the Option, as the Board shall
determine and set forth in the Option Agreement relating to such Option. Without
limiting the foregoing, the Board, subject to the terms and conditions of the
Plan, may in its sole discretion provide that an Option may be exercised
immediately upon grant or that it may not be exercised in whole or in part for
any period or periods of time during which such Option is outstanding; provided,
however, that any vesting requirement or other such limitation on the exercise
of an Option may be rescinded, modified or waived by the Board, in its sole
discretion, at any time and from time to time after the date of grant of such
Option, so as to accelerate the time at which the Option may be exercised.
(c) METHOD OF EXERCISE. An Option that is exercisable hereunder may be
exercised by delivery to the Company on any business day, at its principal
office, addressed to the attention of the Stock Option Administrator, of written
notice of exercise, which notice shall specify the number of shares with respect
to which the Option is being exercised, and shall be accompanied by payment in
full of the Option Price of the shares for which the Option is being exercised,
except as provided below. The minimum number of shares of Stock with respect to
which an Option may be exercised, in whole or in part, at any time shall be the
lesser of 100 shares or the maximum number of shares available for purchase
under the Option at the time of exercise. Payment of the Option Price for the
shares of Stock purchased pursuant to the exercise of an Option shall be made
(i) in cash or in cash equivalents; (ii) through the tender to the Company of
shares of Stock, which shares shall be valued, for purposes of determining the
extent to which the Option Price has been paid thereby, at their fair market
value (determined in the manner described in Section 9 above) on the date of
exercise; (iii) by delivering a written direction to the Company that the Option
be exercised pursuant to a "cashless" exercise/sale procedure (pursuant to which
6
<PAGE> 7
funds to pay for exercise of the Option are delivered to the Company by a broker
upon receipt of stock certificates from the Company) or a cashless exercise/loan
procedure (pursuant to which the optionees would obtain a margin loan from a
broker to fund the exercise) through a licensed broker acceptable to the Company
whereby the stock certificate or certificates for the shares of Stock for which
the Option is exercised will be delivered to such broker as the agent for the
individual exercising the Option and the broker will deliver to the Company cash
(or cash equivalents acceptable to the Company) equal to the Option Price for
the shares of Stock purchased pursuant to the exercise of the Option plus the
amount (if any) of federal and other taxes that the Company, may, in its
judgment, be required to withhold with respect to the exercise of the Option;
(iv) to the extent permitted by applicable law and under the terms of the Option
Agreement with respect to such Option, by the delivery of a promissory note of
the Optionee to the Company on such terms as shall be set out in such Option
Agreement; or (v) by a combination of the methods described in (I), (ii), (iii)
and (iv). The Optionee must also satisfy any tax obligations through delivery of
cash, Stock or withholding of shares of Stock by the Company. Payment in full of
the Option Price need not accompany the written notice of exercise if the Option
is exercised pursuant to the cashless exercise/sale procedure described above.
An attempt to exercise any Option granted hereunder other than as set forth
above shall be invalid and of no force and effect. Promptly after the exercise
of an Option, the individual exercising the Option shall be entitled to the
issuance of a Stock certificate or certificates evidencing his ownership of such
shares. A separate Stock certificate or certificates shall be issued for any
shares purchased pursuant to the exercise of an Option that is intended to be an
Incentive Stock Option, which certificate or certificates shall not include any
shares that were purchased pursuant to the exercise of an Option that is not an
Incentive Stock Option. An individual holding or exercising an Option shall have
none of the rights of a shareholder until the shares of Stock covered thereby
are fully paid and issued to him and, except as provided in Section 18 below, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date of such issuance.
(d) CHANGE IN CONTROL. In the event of a Change in Control (as defined
below), except as the Board shall otherwise provide in an Option Agreement with
respect to an Option granted under the Plan, all outstanding Options shall
become immediately exercisable in full, without regard to any limitation on
exercise imposed pursuant to Section 10(b) above, and, unless waived in advance
of such Change in Control by the Board, each Optionee who is a director, an
employee or a consultant of the Company or a Subsidiary or Affiliate at the time
of such Change in Control shall have the right to require the Company to pay, in
cancellation of such Option, an amount equal to the product of (i) the excess of
7
<PAGE> 8
(x) the fair market value per share of the Stock over (y) the Option Price times
(ii) the number of shares of Stock specified by the Optionee in a written notice
to the Company (up to the full number of shares of Stock then subject to such
Option). For purposes of the Plan, a "Change in Control" shall be deemed to
occur if any person shall (a) acquire direct or indirect beneficial ownership of
more than 50% of the total combined voting power with respect to the election of
directors of the issued and outstanding stock of the Company (except that no
Change in Control shall be deemed to have occurred if the persons who were
stockholders of the Company immediately before such acquisition own all or
substantially all of the voting stock or other interests of such person
immediately after such transaction), or (b) have the power (whether as a result
of stock ownership, revocable or irrevocable proxies, contract or otherwise) or
ability to elect or cause the election of directors consisting at the time of
such election of a majority of the Board. A "person" for this purpose shall mean
any person, corporation, partnership, joint venture or other entity or any group
(as such term is defined for purposes of Section 13 (d) of the Exchange Act) and
a Person shall be deemed to be a beneficial owner as that term is used in Rule
13d-3 under the Exchange Act. The amount payable under this Section 10(e) shall
be remitted by the Company in cash or by certified or bank check, reduced by
applicable tax withholding.
(e) Notwithstanding any other provision of the Plan, no Option granted
to an Optionee under the Plan shall be exercisable in whole or in part prior to
the date the Plan is approved by the stockholders of the Company as provided in
Section 5 above.
11. TRANSFERABILITY OF OPTIONS
No Option shall be assignable or transferable by the Optionee to whom
it is granted, other than by will or the laws of descent and distribution,
except that, upon approval by the Board, the Optionee may transfer an Option
that is not intended to constitute an Incentive Stock Option (a) pursuant to a
qualified domestic relations order as defined for purposes of the Employee
Retirement Income Security Act of 1974, as amended, or (b) by gift: to a member
of the "Family" (as defined below) of the Optionee, to or for the benefit of one
or more organizations qualifying under Code ss.~501(c)(3) and 170(c)(2) (a
"Charitable Organization") or to a trust for the exclusive benefit of the
Optionee, one or more members of the Optionee's Family, one or more Charitable
Organizations, or any combination of the foregoing, provided that any such
transferee shall enter into a written agreement to be bound by the terms of this
Agreement. For this purpose, "Family" shall mean the ancestors, spouse,
siblings, spouses of siblings, lineal descendants and spouses of lineal
descendants of the Optionee. During the lifetime of an Optionee to whom an
8
<PAGE> 9
Incentive Stock Option is granted, only such Optionee (or, in the event of legal
incapacity or incompetence, the Optionee's guardian or legal representative) may
exercise the Incentive Stock Option.
12. TERMINATION OF EMPLOYMENT OR SERVICE
(a) GENERAL. Except as otherwise provided in Section 12 (b) or 13 below
or as may otherwise be provided by the Board, upon the termination of employment
or other service of an Optionee with the Company, a Subsidiary, a spin-off
corporation or an Affiliate for any reason, all Options held by such Optionee at
the time of such termination shall immediately terminate and such Optionee shall
have no further right to purchase shares of Stock pursuant to such Option;
provided, however, that, unless such termination is by the Company for "Cause,"
all such Options, to the extent exercisable on the date of such termination,
shall remain exercisable until the earlier of (a) the expiration date of such
Option as fixed by the Board pursuant to Section 10(a) and (b) the 60th day
following the date of such termination. For purposes of the foregoing, "Cause"
shall mean (1) the Optionee's conviction for commission of a felony or other
crime; (2) the commission by the Optionee of any act against the Company
constituting willful misconduct, dishonesty, fraud, theft or embezzlement; (3)
the Optionee's failure, inability or refusal to perform any of the material
services, duties or responsibilities required of him by the Company, or to
materially comply with the policies or procedures established from time to time
by the Company, for any reason other than his illness or physical or mental
incapacity; (4) the Optionee's dependence, as determined in good faith by the
Company, on any addictive substance, including, but not limited to, alcohol or
any illegal or narcotic drugs; (5) the destruction of or material damage to
Company property caused by the Optionee's willful or grossly negligent conduct;
and (6) the willful engaging by the Optionee in any other conduct which is
demonstrably injurious to the Company or its subsidiaries, monetarily or
otherwise. Determination of Cause shall be made by the Board in its sole
discretion. Notwithstanding the foregoing, if the Optionee is a party to an
employment agreement with the Company, "Cause" with respect to such Optionee
shall have the meaning set forth therein.
(b) CHANGE IN OWNERSHIP OF SUBSIDIARY OR AFFILIATE. If an Optionee
ceases to be an employee or an independent contractor of the Company or any
Subsidiary following a "Change in Ownership" (as defined below) (whether because
of the termination of employment or service of the Optionee, because the
corporation or other entity by which the Optionee was employed or for which the
Optionee was providing services as an independent contractor, ceases to be a
Subsidiary or Affiliate or otherwise) then such options shall continue to vest
according to the vesting schedule unless the Board determines otherwise. A
9
<PAGE> 10
"Change in Ownership" shall be deemed to have occurred with respect to an
Optionee if (i) as a result of a merger, consolidation, reorganization, business
combination, sale, exchange or other disposition of Voting Securities (as
defined in Section 4 (a)) or other transaction, the corporation or other entity
by which the Optionee is employed or for which the Optionee is providing
services as an independent contractor ceases to be a Subsidiary or Affiliate of
the Company and, immediately after such transaction, the persons who were
stockholders of the Company immediately before such transaction (the "the
Company Stockholders") do not own at least a majority of the Voting Securities
of such corporation or other entity or (ii) there is a sale or other disposition
of all or substantially all of the assets of the trade or business by which the
Optionee is employed or for which the Optionee is providing services as an
independent contractor and, immediately after such transaction, the Company or
the Company Stockholders do not own at least a majority of the Voting Securities
of a corporation or other entity that acquires such assets and engages in such
trade or business.
(c) Whether a leave of absence or leave on military or government
service shall constitute a termination of employment of service for purposes of
the Plan shall be determined by the Board, which determination shall be final
and conclusive. For purposes of the Plan, a termination of employment or service
with the Company, a Subsidiary, a spin-off corporation or Affiliate shall not be
deemed to occur if the Optionee is immediately thereafter employed by or
otherwise providing services to the Company, any Subsidiary, any spin-off
corporation or Affiliate.
13. RIGHTS IN THE EVENT OF DEATH, DISABILITY OR RETIREMENT
Except as otherwise provided by the Board and notwithstanding anything
in Section 12 to the contrary, if an Optionee's termination of employment or
service is by reason of the death, "permanent and total disability" (within the
meaning of Section 22(e)(3) of the Code) or "Retirement"of such Optionee, all
Options held by such Optionee at the time of such termination shall become
immediately vested and exercisable in full and shall remain exercisable until
the earlier of (a) the expiration date of such Option as fixed by the Board
pursuant to Section 10(a) and (b) the 3rd anniversary of the date of such
termination. Whether a termination of employment or service is to be considered
by reason of "permanent and total disability" for purposes of this Plan shall be
determined by the Board, which determination shall be final and conclusive. For
purposes of the foregoing, "Retirement" shall mean the Optionee's termination of
employment or other service from the Company or a Subsidiary after attainment of
age 55 and completion of at least 6 years of service with the Company or a
Subsidiary. For purposes of the preceding sentence employment or other service
10
<PAGE> 11
with an entity prior to its becoming a Subsidiary or after its ceasing to be a
Subsidiary shall be disregarded.
14. USE OF PROCEEDS
The proceeds received by the Company from the sale of Stock pursuant to
Options granted under the Plan shall constitute general funds of the Company.
15. REQUIREMENTS OF LAW
(a) VIOLATIONS OF LAW. The Company shall not be required to sell or
issue any shares of Stock under any Option if the sale or issuance of such
shares would constitute a violation by the individual exercising the Option or
the Company of any provisions of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or
regulations. Any determination in this connection by the Board shall be final,
binding, and conclusive. The Company shall not be obligated to take any
affirmative action in order to cause the exercise of an Option or the issuance
of shares pursuant thereto to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option shall not be exercisable unless and until the shares
of Stock covered by such Option are registered or are subject to an available
exemption from registration, the exercise of such Option (under circumstances in
which the laws of such jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.
(b) COMPLIANCE WITH RULE 16B-3. The intent of this Plan is to qualify
for the exemption provided by Rule 16b-3 under the Exchange Act. To the extent
any provision of the Plan does not comply with the requirements of Rule 16b-3,
it shall be deemed inoperative to the extent permitted by law and deemed
advisable by the Board and shall not affect the validity of the Plan. In the
event Rule l6b-3 is revised or replaced, the Board, or the Committee acting on
behalf of the Board, may exercise discretion to modify this Plan in any respect
necessary to satisfy the requirements of the revised exemption or its
replacement.
16. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Options have not been
granted; provided, however, that no amendment by the Board shall, without
11
<PAGE> 12
approval by a majority of the votes present and entitled to vote at a duly held
meeting of the stockholders of the Company at which a quorum representing a
majority of all outstanding voting stock is, either in person or by proxy,
present and voting on the amendment, or by written consent in accordance with
applicable state law and the Certificate of Incorporation and Bylaws of the
Company, change the requirements as to eligibility to receive Options that are
intended to qualify as Incentive Stock Options, increase the maximum number of
shares of Stock in the aggregate that may be sold pursuant to Options that are
intended to qualify as Incentive Stock Options granted under the Plan (except as
permitted under Section 17 hereof) or modify the Plan so that Options granted
under the Plan could not satisfy the applicable requirements of Code ss.162(m).
Except as permitted under Section 17 hereof, no amendment, suspension or
termination of the Plan shall, without the consent of the holder of the Option,
alter or impair rights or obligations under any Option theretofore granted under
the Plan.
17. EFFECT OF CHANGES IN CAPITALIZATION
(a) ADJUSTMENT FOR CORPORATE TRANSACTIONS. The Board may determine that
a corporate transaction has affected the price of the Stock such than an
adjustment or adjustments to outstanding awards are required to preserve (or
prevent enlargement of) the benefits or potential benefits intended at time of
grant. For this purpose a corporate transaction may include, but is not limited
to, any stock dividend, stock split, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination or exchange of shares of Stock, or other similar occurrence. In the
event of such a corporate transaction, the Board may, in such manner as the
Board deems equitable, adjust (i) the number and kind shares of Stock which may
be delivered under the Plan pursuant to Section 3; (ii) the number and kind of
shares of Stock subject to outstanding awards; and (iii) the exercise price of
outstanding stock options.
(b) DISSOLUTION OR LIQUIDATION; REORGANIZATION IN WHICH THE COMPANY IS
NOT THE SURVIVING CORPORATION OR SALE OF ASSETS OR STOCK. Upon the dissolution
or liquidation of the Company the Plan and all Options outstanding hereunder
shall terminate. In the event of any termination of the Plan under this Section
17(b), each individual holding an Option shall have the right, immediately prior
to the occurrence of such termination and during such reasonable period as the
Board in its sole discretion shall determine and designate, to exercise such
Option in whole or in part, whether or not such Option was otherwise exercisable
at the time such termination occurs and without regard to any vesting or other
limitation on exercise imposed pursuant to Section 10(b) above. In connection
with a merger, consolidation, reorganization or other business combination
12
<PAGE> 13
of the Company with one or more other entities in which the Company is not the
surviving entity, or upon a sale of all or substantially all of the assets of
the Company to another entity, or upon any transaction (including, without
limitation, a merger or reorganization in which the Company is the surviving
corporation) that results in any person or entity (or persons or entities acting
as a group or otherwise in concert) owning more than 50 percent of the combined
voting power of all classes of stock of the Company, the Company and the
acquiring or surviving entity shall provide for the continuation of the Plan and
the assumption of the Options theretofore granted, or for the substitution for
such Options of new options covering the stock of a successor entity, or a
parent or subsidiary thereof, with appropriate adjustments as to the number and
kinds of shares and exercise prices. The Board shall send prior written notice
of the occurrence of an event described in this Section 17(b) to all individuals
who hold Options not later than the time at which the Company gives notice to
its stockholders that such event is proposed.
(c) NO LIMITATIONS ON CORPORATION. The grant of an Option pursuant to
the Plan shall not affect or limit 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, consolidate, dissolve or liquidate,
or to sell or transfer all or any part of its business or assets.
18. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ of the Company, any Subsidiary, any
spin-off corporation or Affiliate, or to interfere in any way with the right and
authority of the Company, any Subsidiary, any spinoff corporation or Affiliate
either to increase or decrease the compensation of any individual at any time,
or to terminate any employment or other relationship between any individual and
the Company, any Subsidiary, any spin-off corporation or Affiliate.
19. NON-EXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
13
<PAGE> 14
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options or stock
appreciation rights otherwise than under the Plan.
This Plan was duly adopted and approved by the Board of Directors of
the Company effective as of the 2nd day of January, 1997, subject to approval
and adoption by the stockholders of the Company.
This Plan was duly approved and adopted by the stockholders of the
Company at a meeting held the 13th day of May, 1997.
This Plan was duly amended by the Board of Directors of the Company
effective as of the 2nd day of November, 1998.
This Plan was duly amended by the Board of Directors of the Company
effective as of the 6th day of January, 1999.
This Plan was duly amended and restated by the Board of Directors of
the Company effective as of April 17, 2000.
14
