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EXHIBIT 4.1
On March 24, 2000, the Board of Directors of MSI Holdings, Inc. adopted
the following amended and restated Stock Option Plan.
MSI HOLDINGS, INC.
2000 STOCK OPTION PLAN
1. Purpose.
MSI Holdings, Inc., a Utah corporation (herein, together with its
successors, referred to as the "Company"), by means of this 2000 Stock Option
Plan (the "Plan"), desires to afford certain individuals and employees of the
Company and any parent corporation or subsidiary corporation thereof now
existing or hereafter formed or acquired (such parent and subsidiary
corporations sometimes referred to herein as "Related Entities") who are
responsible for the continued growth of the Company an opportunity to acquire a
proprietary interest in the Company, and thus to create in such persons an
increased interest in and a greater concern for the welfare of the Company and
any Related Entities. As used in the Plan, the terms "parent corporation" and
"subsidiary corporation" shall mean, respectively, a corporation within the
definition of such terms contained in Sections 424(e) and 424(f), respectively,
of the Internal Revenue Code of 1986, as amended (the "Code"). All defined terms
not otherwise defined in Sections 1 through 16 of this Plan shall have the
meanings set forth in Section 17 of this Plan.
The stock options described in Sections 6 and 7 (the "Options") and the
shares of Common Stock (as hereinafter defined) acquired pursuant to the
exercise of such Options are a matter of separate inducement and are not in lieu
of any salary or other compensation for services.
2. Administration.
(a) Committee. The Board of Directors of the Company (the "Board of
Directors") shall administer the Plan with respect to all Employees (as
hereinafter defined) or Eligible Non-Employees (as hereinafter defined) or may
delegate all or part of its duties under this Plan to any committee or
sub-committee appointed by the Board of Directors (the "Committee") or to any
officer or committee of officers of the Company, subject in each case to such
conditions and limitations as the Board of Directors may establish and subject
to the following sentence. Unless a majority of the members of the Board of
Directors determines otherwise: (a) the Committee shall be constituted in a
manner that satisfies the requirements of Rule 16b-3, which Committee shall
administer the Plan with respect to all Employees or Eligible Non-Employees who
are subject to Section 16 of the Exchange Act in a manner that satisfies the
requirements of Rule 16b-3; and (b) the Committee shall be constituted in a
manner that satisfies the requirements of Section 162(m), which Committee shall
administer the Plan with respect to "performance-based compensation" for all
Employees or Eligible Non-Employees who are reasonably expected to be "covered
employees" as those terms are defined in Section 162(m). The number of persons
that shall constitute the Committee shall be determined from time to time by a
majority of all the members of the Board of Directors. Except for references in
Sections 2(a), 2(b), and 2(c) and unless the context otherwise requires,
references herein to the Committee shall also refer to the Board of Directors as
administrator of the Plan for Employees or Eligible Non-Employees or to the
appropriate delegate of the Committee or the Board of Directors.
(b) Duration, Removal, Etc. The members of the Committee shall serve at
the pleasure of the Board of Directors, which shall have the power, at any time
and from time to time, to remove members from or add members to the Committee.
Removal from the Committee may be with or without cause. Any individual serving
as a member of the Committee shall have the right to resign from membership in
the Committee by written notice to the Board of Directors. The Board of
Directors, and not the remaining members of the Committee, shall have the power
and authority to fill vacancies on the Committee, however caused.
(c) Meetings and Actions of Committee. The Board of Directors shall
designate which of the Committee members shall be the chairman of the Committee.
If the Board of Directors fails to designate a Committee chairman, the members
of the Committee shall elect one of the Committee members as chairman, who shall
act as chairman until he ceases to be a member of the Committee or until the
Board of Directors elects a new chairman. The Committee shall hold its meetings
at those times and places as the chairman of the Committee may determine. At all
meetings of the Committee, a quorum for the transaction of business shall be
required, and a quorum shall be deemed present if at least
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a majority of the members of the Committee are present. At any meeting of the
Committee, each member shall have one vote. All decisions and determinations of
the Committee shall be made by the majority vote or majority decision of all of
its members present at a meeting at which a quorum is present; provided,
however, that any decision or determination reduced to writing and signed by all
of the members of the Committee shall be as fully effective as if it had been
made at a meeting that was duly called and held. The Committee may make any
rules and regulations as it may deem advisable for the conduct of its business
that are not inconsistent with the provisions of the Plan, the certificate of
incorporation of the Company, the by-laws of the Company, Rule 16b-3 so long as
it is applicable, and Section 162(m) so long as it is applicable.
3. Shares Available.
Subject to the adjustments provided in Section 9, the maximum aggregate
number of shares of Common Stock, $0.10 par value, of the Company ("Common
Stock") in respect of which Options may be granted for all purposes under the
Plan shall be 10,000,000 shares. If, for any reason, any shares as to which
Options have been granted cease to be subject to purchase thereunder, including
the expiration of such Option, the termination of such Option prior to exercise,
or the forfeiture of such Option, such shares shall thereafter be available for
grants under the Plan. Options granted under the Plan may be fulfilled in
accordance with the terms of the Plan with (i) authorized and unissued shares of
the Common Stock, (ii) issued shares of such Common Stock held in the Company's
treasury, or (iii) issued shares of Common Stock reacquired by the Company in
each situation as the Board of Directors or the Committee may determine from
time to time.
4. Eligibility and Bases of Participation.
Grants of Incentive Options (as hereinafter defined) and Non-Qualified
Options (as hereinafter defined) may be made under the Plan, subject to and in
accordance with Section 6, to Employees. As used herein, the term "Employee"
shall mean any employee of the Company or any Related Entity, including officers
and directors of the Company or any Related Entity who are also employees of the
Company or any Related Entity, who is regularly employed on a salaried basis and
who is so employed on the date of such grant.
Grants of Non-Qualified Options may be made, subject to and in
accordance with Section 7, to any Eligible Non-Employee. As used herein, the
term "Eligible Non-Employee" shall mean any director of the Company who is not
regularly employed on a salaried basis with the Company and any other person or
entity of any nature whatsoever, specifically including an individual, a firm, a
company, a corporation, a partnership, a trust, or other entity (collectively, a
"Person"), that the Committee designates as eligible for a grant of Options
pursuant to this Plan because such Person performs bona fide consulting,
advisory, or other services for the Company or any Related Entity (other than
services in connection with the offer or sale of securities in a capital-raising
transaction) and the Board of Directors or the Committee determines that the
Person has a direct and significant effect on the financial development of the
Company or any Related Entity.
The adoption of this Plan shall not be deemed to give any Person a
right to be granted any Options.
Notwithstanding any other provision of this Plan to the contrary, with
respect to the grant of any Options to any Employee or Eligible Non-Employee,
the Committee shall first determine the number of shares in respect of which
Options are to be granted to such Employee or Eligible Non-Employee and shall
then cause to be granted to such Employee or Eligible Non-Employee an Option
exercisable for such shares. The exercise price per share of Common Stock under
each Option shall be fixed by the Committee at the time of grant of the Option
and shall equal at least 100% of the Fair Market Value of a share of Common
Stock on the date of grant.
5. Authority of Committee.
Subject to the express provisions of the Plan and any applicable law
with which the Company intends the Plan to comply, the Committee shall have the
authority, in its sole and absolute discretion, (a) to adopt, amend, and rescind
administrative and interpretive rules and regulations relating to the Plan,
including without limitation to adopt and observe such procedures concerning the
counting of Options against the Plan and individual maximums as it may deem
appropriate from time to time; (b) to determine the Employees or Eligible
Non-Employees to whom, and the time or
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times at which, Options shall be granted; (c) to determine the number of shares
of Common Stock, that shall be the subject of each Option; (d) to determine the
terms and provisions of each award evidencing Options granted hereunder (which
need not be identical), including provisions defining or otherwise relating to
(i) the term and the period or periods and extent of exerciseability of the
Options, (ii) the extent to which the transferability of shares of Common Stock
issued or transferred pursuant to any Option is restricted, (iii) the effect of
termination of employment on the Option, (iv) the effect of approved leaves of
absence (consistent with any applicable regulations of the Internal Revenue
Service) and (v) the establishment of procedures for an optionee (A) to have
withheld from the total number of shares of Common Stock to be acquired upon the
exercise of an Option that number of shares having a Fair Market Value which,
together with such cash as shall be paid in respect of fractional shares, shall
equal the aggregate exercise price under such Option for the number of shares
then being acquired (including the shares to be so withheld), and (B) to
exercise a portion of an Option by delivering that number of shares of Common
Stock already owned by such optionee having an aggregate Fair Market Value which
shall equal the partial Option exercise price and to deliver the shares thus
acquired by such optionee in payment of shares to be received pursuant to the
exercise of additional portions of such Option, the effect of which shall be
that such optionee can in sequence utilize such newly acquired shares in payment
of the exercise price of the entire Option, together with such cash as shall be
paid in respect of fractional shares; provided, however, that (A) in the case of
Incentive Options, no shares shall be used to pay the exercise price under this
paragraph unless (1) such shares were not acquired through the exercise of
Incentive Options or (2) if so acquired, (x) such shares have been held for more
than two years since the grant of such Incentive Options and for more than one
year since the exercise of such Incentive Options (the "Holding Period"), or (y)
if such shares have not been held for the Holding Period, the optionee elects in
writing to use such shares to pay the exercise price under this paragraph, and
(B) no such procedure shall be available if there is an opinion of the Company's
independent accounting firm that the use of such a procedure could negatively
affect the financial statements of the Company or a Related Entity; (e) to
accelerate, pursuant to Section 8 or otherwise, the time of exerciseability of
any Option that has been granted; (f) to construe the respective awards
evidencing Options pursuant to the Plan; (g) to make determinations of the Fair
Market Value of the Common Stock pursuant to the Plan; (h) to delegate its
duties under the Plan to such agents as it may appoint from time to time,
subject to the second sentence of Section 2(a); and (i) to make all other
determinations, perform all other acts, and exercise all other powers and
authority necessary or advisable for administering the Plan, including the
delegation of those ministerial acts and responsibilities as the Committee deems
appropriate. The Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan, in any Option, or in any awards
evidencing Options granted hereunder in the manner and to the extent it deems
necessary or desirable to carry the Plan into effect, and the Committee shall be
the sole and final judge of that necessity or desirability. The determinations
of the Committee on the matters referred to in this Section 5 shall be final and
conclusive. The Committee shall not have the power to appoint members of the
Committee or to terminate, modify, or amend the Plan. Those powers are vested in
the Board of Directors.
An Option shall be vested and/or exercisable in whole or in part and at
such times as determined by the Committee. The Committee in its discretion may
provide that an Option shall be vested or exercisable only upon the attainment
of one or more performance goals or targets established by the Committee, which
are based on (i) the price of a share of Common Stock, (ii) the Company's
earnings per share, (iii) the Company's market share, (iv) the market share of a
business unit of the Company designated by the Committee, (v) the Company's
sales, (vi) the sales of a business unit of the Company designated by the
Committee, (vii) the net income (before or after taxes) of the Company or a
business unit of the Company designated by the Committee, (viii) the cash flow
return on investment of the Company or any business unit of the Company
designated by the Committee, (ix) the earnings before or after interest, taxes,
depreciation, and/or amortization of the Company or any business unit of the
Company designated by the Committee, (x) the economic value added, or (xi) the
return on stockholders' equity achieved by the Company.
From time to time, the Board of Directors and appropriate officers of
the Company shall be and are authorized to take whatever actions are necessary
to file required documents with governmental authorities, stock exchanges, and
other appropriate Persons to make shares of Common Stock available for issuance
pursuant to awards evidencing Options granted hereunder.
6. Stock Options for Employees.
Subject to the express provisions of this Plan, the Committee shall
have the authority to grant incentive stock options pursuant to Section 422 of
the Code ("Incentive Options"), to grant non-qualified stock options (options
which do not qualify under Section 422 of the Code) ("Non-Qualified Options"),
and to grant both types of Options to
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Employees. No Incentive Option shall be granted pursuant to this Plan after the
earlier of ten years from the date of adoption of the Plan or ten years from the
date of approval of the Plan by the stockholders of the Company. Notwithstanding
anything in this Plan to the contrary, Incentive Options may be granted only to
Employees. The terms and conditions of the Options granted under this Section 6
shall be determined from time to time by the Committee; provided, however, that
the Options granted under this Section 6 shall be subject to all terms and
provisions of the Plan (other than Section 7), including the following:
(a) Option Exercise Price. Subject to Section 4, the Committee shall
establish the Option exercise price at the time any Option is granted at such
amount as the Committee shall determine; provided, that such price shall not be
less than the Fair Market Value per share of Common Stock at the date the Option
is granted; and provided, further, that in the case of an Incentive Option
granted to a person who, at the time such Incentive Option is granted, owns
shares of the Company or any Related Entity which possess more than 10% of the
total combined voting power of all classes of shares of the Company or of any
Related Entity, the option exercise price shall not be less than 110% of the
Fair Market Value per share of Common Stock at the date the Option is granted.
The Option exercise price shall be subject to adjustment in accordance with the
provisions of Section 9 of the Plan.
(b) Payment. The price per share of Common Stock with respect to each
Option exercise shall be payable at the time of such exercise. Such price shall
be payable in cash or by any other means acceptable to the Committee, including
delivery to the Company of shares of Common Stock owned by the optionee or by
the delivery or withholding of shares pursuant to a procedure created pursuant
to Section 5(d) of the Plan. Shares delivered to or withheld by the Company in
payment of the Option exercise price shall be valued at the Fair Market Value of
the Common Stock on the day preceding the date of the exercise of the Option.
(c) Continuation of Employment. Each Incentive Option shall require the
optionee to remain in the continuous employ of the Company or any Related Entity
from the date of grant of the Incentive Option until no more than three months
prior to the date of exercise of the Incentive Option.
(d) Exerciseability of Stock Option. Subject to Section 8, each Option
shall be exercisable in one or more installments as the Committee may determine
at the time of the grant. No Incentive Option by its terms shall be exercisable
after the expiration of ten years from the date of grant of such Option;
provided, however, that no Incentive Option granted to a person who, at the time
such Option is granted, owns stock of the Company, or any Related Entity,
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, or any Related Entity, shall be exercisable after the
expiration of five years from the date such Option is granted.
(e) Death. If any optionee's employment with the Company or a Related
Entity terminates due to the death of such optionee, the estate of such
optionee, or a Person who acquired the right to exercise such Option by bequest
or inheritance or by reason of the death of the optionee, shall have the right
to exercise such Option in accordance with its terms at any time and from time
to time within 180 days after the date of death unless a shorter or longer
period is expressly provided in such Option (but in no event prior to the 90th
day after the death of such optionee) or established by the Committee pursuant
to Section 8 (but in no event after the expiration date of such Option).
(f) Disability. If the employment of any optionee terminates because of
his Disability (as defined in Section 17), such optionee or his legal
representative shall have the right to exercise the Option in accordance with
its terms at any time and from time to time within 180 days after the date of
such termination unless a shorter or longer period is expressly provided in such
Option (but in no event prior to the 90th day after the date of such termination
of employment) or established by the Committee pursuant to Section 8 (but not
after the expiration date of the Option); provided, however, that in the case of
an Incentive Option, the optionee or his legal representative shall in any event
be required to exercise the Incentive Option within one year after termination
of the optionee's employment due to his Disability.
(g) Termination for Good Cause. Unless an optionee's Option expressly
provides otherwise or the Committee determines otherwise, such optionee shall
immediately forfeit all rights under his Option, except as to the shares of
stock already purchased thereunder, if the employment of such optionee with the
Company or a Related Entity is terminated by the Company or any Related Entity
for Good Cause (as defined in Section 17 below). The determination that there
exists Good Cause for termination shall be made by the Committee (unless
otherwise agreed to in writing by
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the Company and the optionee) and any decision in respect thereof by the
Committee shall be final and binding on all parties in interest.
(h) Other Termination of Employment. If the employment of an optionee
with the Company or a Related Entity terminates for any reason other than those
specified in subsections 6(e), (f) or (g) above, such optionee shall have the
right to exercise his Option in accordance with its terms, within one year after
the date of such termination, unless a shorter or longer period is expressly
provided in such Option or established by the Committee pursuant to Section 8
(but not after the expiration date of the Option); provided, that no Incentive
Option shall be exercisable more than three months after such termination.
(i) Maximum Exercise. The aggregate Fair Market Value of stock
(determined at the time of the grant of the Option) with respect to which
Incentive Options are exercisable for the first time by an optionee during any
calendar year under all plans of the Company and any Related Entity shall not
exceed $100,000.
7. Stock Option Grants to Eligible Non-Employees.
(a) Subject to the express provisions of this Plan, the Committee shall
have the authority to grant Non-Qualified Options to Eligible Non-Employees. The
terms and conditions of the Options granted under this Section 7 shall be
determined from time to time by the Committee; provided, however, that the
Options granted under this Section 7 shall be subject to all terms and
provisions of the Plan (other than Section 6), including the following:
(i) Option Exercise Price. Subject to Section 4, the
Committee shall establish the Option exercise price
at the time any Non-Qualified Option is granted at
such amount as the Committee shall determine. The
Option exercise price shall be subject to adjustment
in accordance with the provisions of Section 9 of the
Plan.
(ii) Payment. The price per share of Common Stock with
respect to each Option exercise shall be payable at
the time of such exercise. Such price shall be
payable in cash or by any other means acceptable to
the Committee, including delivery to the Company of
shares of Common Stock owned by the optionee or by
the delivery or withholding of shares pursuant to a
procedure created pursuant to Section 5(d) of the
Plan. Shares delivered to or withheld by the Company
in payment of the Option exercise price shall be
valued at the Fair Market Value of the Common Stock
on the day preceding the date of the exercise of the
Option.
(iii) Exerciseability of Stock Option. Subject to Section
8, each Option shall be exercisable in one or more
installments as the Committee may determine at the
time of the grant. No Option shall be exercisable
after the expiration of ten years from the date of
grant of the Option, unless otherwise expressly
provided in such Option.
(iv) Death. If the retention by the Company or any Related
Entity of the services of any Eligible Non-Employee
terminates because of his death, the estate of such
optionee, or a Person who acquired the right to
exercise such Option by bequest or inheritance or by
reason of the death of the optionee, shall have the
right to exercise such Option in accordance with its
terms, at any time and from time to time within 180
days after the date of death unless a shorter or
longer period is expressly provided in such Option
(but in no event prior to the 90th day after the
death of such optionee) or established by the
Committee pursuant to Section 8 (but in no event
after the expiration date of such Option).
(v) Disability. If the retention by the Company or any
Related Entity of the services of any Eligible
Non-Employee terminates because of his Disability,
such optionee or his legal representative shall have
the right to exercise the Option in accordance with
its terms at any time and from time to time within
180 days after the date of the optionee's termination
unless a shorter or longer period is expressly
provided in such Option (but in no event prior to the
90th day after the date of such termination of
employment) or established by the Committee pursuant
to Section 8 (but not after the expiration of the
Option).
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(vi) Termination for Good Cause. If the retention by the
Company or any Related Entity of the services of any
Eligible Non-Employee is terminated (i) for Good
Cause or (ii) as a result of removal of the optionee
from office as a director of the Company or of any
Related Entity for cause by action of the
stockholders of the Company or such Related Entity in
accordance with the by-laws of the Company or such
Related Entity, as applicable, and the corporate law
of the jurisdiction of incorporation of the Company
or such Related Entity, then such optionee shall
immediately forfeit his rights under his Option
except as to the shares of stock already purchased.
The determination that there exists Good Cause for
termination shall be made by the Committee (unless
otherwise agreed to in writing by the Company and the
optionee) and any decision in respect thereof by the
Committee shall be final and binding on all parties
in interest.
(vii) Other Termination of Relationship. If the retention
by the Company or any Related Entity of the services
of any Eligible Non-Employee terminates for any
reason other than those specified in subsections
7(a)(iv), (a)(v) or (a)(vi) above, such optionee
shall have the right to exercise his or its Option in
accordance with its terms within one year after the
date of such termination, unless a shorter or longer
period is expressly provided in such Option or
established by the Committee pursuant to Section 8
(but not after the expiration date of the Option).
(b) An Eligible Non-Employee that is a non-employee director of the
Company may elect to receive Options in lieu of all or a portion of such
director's annual cash retainer fee, if any, for services as a director of the
Company. Notwithstanding subsection 7(a)(ii), the following shall apply if a
non-employee director elects to receive all or a portion of his/her annual cash
retainer in Options:
(i) Method of Election. Except as otherwise specified by
the Committee, a non-employee director's election
shall be made in accordance with the following
provisions. Unless the Committee provides otherwise,
the election may be made only by written notice
delivered to the Committee prior to the first day of
the calendar year in which the cash payment would
otherwise be made. The election shall specify the
amount of the annual cash retainer that is to be paid
in the form of Options and shall be irrevocable
except for payments otherwise payable in the next
calendar year after the date of a written notice of
revocation.
(ii) Terms of Options. The date of grant of an Option
granted pursuant to this Section 7(b) shall be the
date on which the portion of the annual cash retainer
fee that the non-employee director has elected not to
receive would otherwise have been paid. The number of
shares subject to that Option shall be determined by
dividing the foregone amount of the annual cash
retainer fee otherwise due and payable on the date of
grant by the value of an Option for one share of
Common Stock on the date of grant having the terms
set forth herein, which value shall be calculated
pursuant to the Black-Scholes Model. The exercise
price with respect to a share of Common Stock subject
to that Option shall be the Fair Market Value of a
share of Common Stock on the Option's date of grant.
8. Change of Control.
Except as otherwise expressly provided in a particular Option, if (i) a
Change of Control shall occur or (ii) the Company shall enter into an agreement
providing for a Change of Control, then the Committee may declare any or all
Options outstanding under the Plan to be exercisable in full at such time or
times as the Committee shall determine and the Company may purchase any or all
of such Options for an amount of cash equal to the amount that could have been
attained upon the exercise of such Options or the realization of the optionee's
rights had such Option been currently exercisable. Each Option accelerated by
the Committee pursuant to the preceding sentence shall terminate,
notwithstanding any express provision thereof or any other provision of the
Plan, on such date (not later than the stated exercise date) as the Committee
shall determine.
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9. Adjustment of Shares.
Except as otherwise contemplated in Section 8, and unless otherwise
expressly provided in a particular Option, in the event that, by reason of any
merger, consolidation, combination, liquidation, reorganization,
recapitalization, stock dividend, stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares or other like change in capital
structure of the Company (collectively, a "Reorganization"), the Common Stock is
substituted, combined, or changed into any cash, property, or other securities,
or the shares of Common Stock are changed into a greater or lesser number of
shares of Common Stock, the number and/or kind of shares and/or interests
subject to an Option and the per share price or value thereof shall be
appropriately adjusted by the Committee to give appropriate effect to such
Reorganization. Any fractional shares or interests resulting from such
adjustment shall be eliminated. Notwithstanding the foregoing, (i) each such
adjustment with respect to an Incentive Option shall comply with the rules of
Section 424(a) of the Code, and (ii) in no event shall any adjustment be made
which would render any Incentive Option granted hereunder other than an
"incentive stock option" for purposes of Section 422 of the Code. The maximum
aggregate number of shares of Common Stock in respect of which Options may be
granted under this Plan as provided for in Section 3 shall be subject to
adjustment as contemplated above.
Except as otherwise contemplated in Section 8, and unless otherwise
expressly provided in a particular Option, in the event that the Company is not
the surviving entity of a Reorganization and, following such Reorganization and,
in connection with such Reorganization, any optionee will hold Options issued
pursuant to this Plan which have not been exercised, canceled, or terminated in
connection therewith, the Company shall cause such Options to be assumed (or
canceled and replacement Options issued) by the surviving entity or a Related
Entity with such changes in the number and/or kind of shares and/or interests
subject to an Option and the per share price or the value thereof as the
Committee determines is necessary to give appropriate effect to such
Reorganization. In the event of any perceived conflict between the provisions of
Section 8 and this Section 9, the Committee's determination under Section 8
shall control.
10. Assignment or Transfer.
(a) Transfer of Incentive Options. Incentive Options are not
transferrable by an optionee other than by will or the laws of
descent and distribution.
(b) Transfer of Non-Qualified Options.
(i) Permitted Transferees. The Committee may, in its
discretion, permit an optionee to transfer all or any
portion of a Non-Qualified Option, or authorize all
or a portion of any Non-Qualified Option to be
granted to an optionee to be on terms which permit
transfer by such optionee, to (A) the spouse, former
spouse, children, stepchildren, grandchildren,
parents, stepparents, grandparents, siblings, nieces,
nephews, mother-in-law, father-in-law, sons-in-law,
daughters-in-law, brothers-in-law, or sisters-in-law
of the optionee, including adoptive relationships, or
any other person sharing the optionee's household
(other than a tenant or employee) (collectively,
"Immediate Family Members"), (B) a trust or trusts in
which such Immediate Family Members have more than
fifty percent of the beneficial interest, (C) a
foundation in which such Immediate Family Members (or
the optionee) control the management of assets, or
(D) any other entity in which such Immediate Family
Members (or the optionee) own more than fifty percent
of the voting interests (collectively, "Permitted
Transferees"); provided that (x) there may be no
consideration for any such transfer, (y) subsequent
transfers of Non-Qualified Options transferred as
provided above shall be prohibited except subsequent
transfers back to the option grantee and transfers to
other Permitted Transferees of the option grantee.
(ii) Domestic Relations Orders. In the Committee's sole
discretion Non-Qualified Options may be transferred
pursuant to domestic relations orders entered or
approved by a court of competent jurisdiction upon
delivery to the Company of written notice of such
transfer and a certified copy of such order.
(iii) Other Transfers and Exercise Rights. Except as
expressly permitted by Sections 10(b)(i) and
10(b)(ii), Non-Qualified Options requiring exercise
shall not be transferable other than by will or the
laws of descent and distribution. In the event that a
legal representative has been
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appointed in connection with the Disability of an
optionee, the optionee's options may be exercised by
the legal representative.
(iv) Effect of Transfer. Following the transfer of any
Non-Qualified Option as contemplated by Sections
10(b)(i), 10(b)(ii) and 10(b)(iii), (A) such
Non-Qualified Option shall continue to be subject to
the same terms and conditions as were applicable
immediately prior to transfer, provided that the term
"optionee" shall be deemed to refer to the Permitted
Transferee, the recipient under a domestic relations
order, or the estate or heirs of a deceased optionee,
as applicable, to the extent appropriate to enable
the optionee to exercise the transferred
Non-Qualified Option in accordance with the terms of
this Plan and applicable law, (B) the provisions of
Sections 7(e) through (h) hereof shall continue to be
applied with respect to the original optionee and,
following the occurrence of any such events described
therein the Non-Qualified Options shall be
exercisable by the Permitted Transferee, the
recipient under a domestic relations order, or the
estate or heirs of a deceased Holder, as applicable,
only to the extent and for the periods specified in
Sections 7(e) through (h), and (C) in the discretion
of the Committee, all voting control in the Common
Stock transferred pursuant to the exercise of
Non-Qualified Options shall be retained in the option
grantee.
(c) Procedures and Restrictions. Any optionee desiring to transfer
an Option as permitted under Section 10(a) or 10(b) shall make
application therefor in the manner and time specified by the
Committee and shall comply with such other requirements as the
Committee may require to assure compliance with all applicable
securities laws. The Committee shall not give permission for
such a transfer if (i) it would give rise to short-swing
liability under Section 16(b) of the Exchange Act, or (ii) it
may not be made in compliance with all applicable federal,
state and foreign securities laws.
11. Compliance with Securities Laws.
The Company shall not in any event be obligated to file any
registration statement under the Securities Act or any applicable state
securities law to permit exercise of any option or to issue any Common Stock in
violation of the Securities Act or any applicable state securities law. Each
optionee (or, in the event of his death or, in the event a legal representative
has been appointed in connection with his Disability, the Person exercising the
Option) shall, as a condition to his right to exercise any Option, deliver to
the Company an agreement or certificate containing such representations,
warranties and covenants as the Company may deem necessary or appropriate to
ensure that the issuance of shares of Common Stock pursuant to such exercise is
not required to be registered under the Securities Act or any applicable state
securities law.
Certificates for shares of Common Stock, when issued, may have
substantially the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD,
PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL THE HOLDER
HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN
THE DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH OFFER, SALE,
PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT VIOLATE
APPLICABLE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Common Stock issued
pursuant to an effective registration statement under the Securities Act and in
accordance with applicable state securities laws.
12. Withholding Taxes.
By acceptance of the Option, the optionee will be deemed to (i) agree
to reimburse the Company or Related Entity by which the optionee is employed for
any federal, state, or local taxes required by any government to be withheld or
otherwise deducted by such corporation in respect of the optionee's exercise of
all or a portion of the Option; (ii)
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authorize the Company or any Related Entity by which the optionee is employed to
withhold from any cash compensation paid to the optionee or in the optionee's
behalf, an amount sufficient to discharge any federal, state, and local taxes
imposed on the Company, or the Related Entity by which the optionee is employed,
and which otherwise has not been reimbursed by the optionee, in respect of the
optionee's exercise of all or a portion of the Option; and (iii) agree that the
Company may, in its discretion, hold the stock certificate to which the optionee
is entitled upon exercise of the Option as security for the payment of the
aforementioned withholding tax liability, until cash sufficient to pay that
liability has been accumulated, and may, in its discretion, effect such
withholding by retaining shares issuable upon the exercise of the Option having
a Fair Market Value on the date of exercise which is equal to the amount to be
withheld.
13. Costs and Expenses.
The costs and expenses of administering the Plan shall be borne by the
Company and shall not be charged against any Option nor to any employee
receiving an Option.
14. Funding of Plan.
The Plan shall be unfunded. The Company shall not be required to make
any segregation of assets to assure the payment of any Option under the Plan.
15. Other Incentive Plans.
The adoption of the Plan does not preclude the adoption by appropriate
means of any other incentive plan for employees.
16. Effect on Employment.
Nothing contained in the Plan or any agreement related hereto or
referred to herein shall affect, or be construed as affecting, the terms of
employment of any Employee except to the extent specifically provided herein or
therein. Nothing contained in the Plan or any agreement related hereto or
referred to herein shall impose, or be construed as imposing, an obligation on
(i) the Company or any Related Entity to continue the employment of any
Employee, and (ii) any Employee to remain in the employ of the Company or any
Related Entity.
17. Definitions.
In addition to the terms specifically defined elsewhere in the Plan, as
used in the Plan, the following terms shall have the respective meanings
indicated unless another definition is agreed to in writing by the Company and
the optionee in an option grant agreement with respect to such term or a similar
term:
(a) "Affiliate" shall mean, as to any Person, a Person that directly,
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person.
(b) "Authorization Date" shall have the meaning set forth in Section
10(b) hereof.
(c) "Board of Directors" shall have the meaning set forth in Section 2
hereof.
(d) "Change of Control" shall mean the first to occur of the following
events: (i) any sale, lease, exchange, or other transfer (in one transaction or
series of related transactions) of all or substantially all of the assets of the
Company to any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act, (ii) a majority of the Board of Directors of the Company
shall consist of Persons who are not Continuing Directors; (iii) the acquisition
after the date of acceptance of this Plan by any Person or Group of the power,
directly or indirectly, to vote or direct the voting of securities having more
than 50% of the ordinary voting power for the election of directors of the
Company, or (iv) the approval by the stockholders of the Company of a merger or
consolidation of the Company with any other entity, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity or such surviving entity's parent) at least fifty percent (50%)
of the total voting power represented by
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the voting securities of the Company or such surviving entity or such surviving
entity's parent outstanding immediately after such merger or consolidation.
(e) "Code" shall have the meaning set forth in Section 1 hereof.
(f) "Committee" shall have the meaning set forth in Section 2 hereof.
(g) "Common Stock" shall have the meaning set forth in Section 3
hereof.
(h) "Company" shall have the meaning set forth in Section 1 hereof.
(i) "Continuing Director" shall mean, as of the date of determination,
any Person who (i) was a member of the Board of Directors of the Company on the
date of adoption of this Plan or (ii) was nominated for election or elected to
the Board of Directors of the Company with the affirmative vote of a majority of
the Continuing Directors who were members of such Board of Directors at the time
of such nomination or election.
(j) "Disability" shall mean permanent disability as defined under
Section 22(e)(3) of the Code.
(k) "Election Notice" shall have the meaning set forth in Section 10(b)
hereof.
(l) "Eligible Non-Employee" shall have the meaning set forth in Section
4 hereof.
(m) "Employee" shall have the meaning set forth in Section 4 hereof.
(n) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(o) "Fair Market Value", shall, as it relates to the Common Stock,
mean, at the option of the Committee, the average of the high and low prices or
the closing price of such Common Stock as reported on the principal national
securities exchange on which the shares of Common Stock are then listed or the
NASDAQ National Market, as applicable, on the date specified herein for such a
determination, or if there were no sales on such date, on the next succeeding
day or immediately preceding day on which there were sales, or if such Common
Stock is not listed on a national securities exchange or the NASDAQ National
Market, the last reported bid price in the over-the-counter market, or if such
shares are not traded in the over-the-counter market, the per share cash price
for which all of the outstanding Common Stock could be sold to a willing
purchaser in an arms length transaction (without regard to minority discount,
absence of liquidity, or transfer restrictions imposed by any applicable law or
agreement) at the date of the event giving rise to a need for a determination.
Except as may be otherwise expressly provided in a particular Option, Fair
Market Value shall be determined in good faith by the Committee.
(p) "Good Cause", with respect to any Employee, shall mean (unless
another definition is agreed to in writing by the Company and the optionee)
termination by action of the Board of Directors because of: (A) the optionee's
conviction of, or plea of nolo contendere to, a felony or a crime involving
moral turpitude; (B) the optionee's personal dishonesty, incompetence, willful
misconduct, willful violation of any law, rule, or regulation (other than minor
traffic violations or similar offenses) or breach of fiduciary duty which
involves personal profit; (C) the optionee's commission of material
mismanagement in the conduct of his duties as assigned to him by the Board of
Directors or the optionee's supervising officer or officers of the Company or
any Related Entity; (D) the optionee's willful failure to execute or comply with
the policies of the Company or any Related Entity or his stated duties as
established by the Board of Directors or the optionee's supervising officer or
officers of the Company or any Related Entity, or the optionee's intentional
failure to perform the optionee's stated duties; or (E) substance abuse or
addiction on the part of the optionee. "Good Cause", with respect to any
Eligible Non-Employee, shall mean (unless another definition is agreed to in
writing by the Company and the optionee) termination by action of the Board of
Directors because of: (A) the optionee's conviction of, or plea of nolo
contendere to, a felony or a crime involving moral turpitude; (B) the optionee's
personal dishonesty, incompetence, willful misconduct, willful violation of any
law, rule, or regulation (other than minor traffic violations or similar
offenses) or breach of fiduciary duty which involves personal profit; (C) the
optionee's commission of material mismanagement in providing services to the
Company or any Related Entity; (D) the optionee's willful failure to comply with
the policies of the Company in providing services to the Company or any Related
Entity, or the optionee's intentional failure to perform the services for which
the optionee has been engaged; (E) substance abuse or addiction on
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the part of the optionee; or (F) the optionee's willfully making any material
misrepresentation or willfully omitting to disclose any material fact to the
board of directors of the Company or any Related Entity with respect to the
business of the Company or any Related Entity.
(q) "Holding Period" shall have the meaning set forth in Section 5
hereof.
(r) "Incentive Options" shall have the meaning set forth in Section 6
hereof.
(s) The terms "include," "included" or "including" when used herein
shall mean "including, but not limited to".
(t) "Non-Qualified Options" shall have the meaning set forth in Section
6 hereof.
(u) "Options" shall have the meaning set forth in Section 1 hereof.
(v) "Person" shall have the meaning set forth in Section 4 hereof.
(w) "Plan" shall have the meaning set forth in Section 1 hereof.
(x) "Related Entities" shall have the meaning set forth in Section 1
hereof.
(y) "Reorganization" shall have the meaning set forth in Section 9
hereof.
(z) "Right of First Refusal" shall have the meaning set forth in
Section 10(b) hereof.
(aa) "Rule 16b-3" shall mean Rule 16b-3, as amended, or other
applicable rules under Section 16(b) of the Exchange Act.
(bb) "Sale Notice" shall have the meaning set forth in Section 10(b)
hereof.
(cc) "Section 162(m)" means Section 162(m) of the Code and the rules
and regulations adopted from time to time thereunder, or any successor law or
rule as it may be amended from time to time.
(dd) "Securities Act" shall mean the Securities Act of 1933.
(ee) "Subsidiary" shall mean, with respect to any Person, any other
Person of which such first Person owns or has the power to vote, directly or
indirectly, securities representing a majority of the votes ordinarily entitled
to be cast for the election of directors or other governing Persons.
(ff) "Transfer" shall have the meaning set forth in Section 10(b)
hereof.
18. Amendment of Plan.
The Board of Directors shall have the right to amend, modify, suspend
or terminate the Plan at any time; provided, that no amendment shall be made
which shall increase the total number of shares of the Common Stock which may be
issued and sold pursuant to Options granted under the Plan or to change the
class of individuals eligible to receive awards under the Plan unless such
amendment is made by or with the approval of the stockholders. The Board of
Directors shall have the right to amend the Plan and the Options outstanding
thereunder, without the consent or joinder of any optionee or other Person, in
such manner as may be determined necessary or appropriate by the Board of
Directors in order to cause the Plan and the Options outstanding thereunder (i)
to qualify as "incentive stock options" within the meaning of Section 422 of the
Code, (ii) to comply with Rule 16b-3 (or any successor rule) under the Exchange
Act (or any successor law) and the regulations (including any temporary
regulations) promulgated thereunder, or (iii) to comply with Section 162(m) of
the Code (or any successor section) and the regulations (including any temporary
regulations) promulgated thereunder. Except as provided above, no amendment,
modification, suspension or termination of the Plan shall alter or impair any
Options previously granted under the Plan, without the consent of the holder
thereof.
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19. Effective Date.
The Plan shall become effective on the date on which it is approved by
the Board of Directors, provided the Plan is approved by the stockholders of the
Company within twelve months thereafter. Notwithstanding any provision in the
Plan, in any Option Agreement, or in any Restricted Stock Agreement, no
Incentive Option shall be exercisable or vest prior to such stockholder
approval.
20. Individual Limitations on Awards.
No person may be granted during any one year period, Options with respect to
more than 2,000,000 shares of Common Stock. If an Option is canceled, the
canceled Option shall continue to be counted against the maximum number of
shares of Common Stock for which Options may be granted to such Person under the
Plan. If, after the grant, the exercise price of an Option is reduced, the
transaction shall be treated as a cancellation of the Option and the grant of a
new Option. In such case, both the Option that is deemed to be canceled and the
Option that is deemed to be granted reduce the maximum number of shares for
which Options may be granted to such Person under the Plan.
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