APPENDIX A
YOCREAM International, Inc.
2000 STOCK OPTION PLAN
ARTICLE I
PURPOSE OF THE PLAN
The purpose of this 2000 Stock Option Plan (the "Plan") is to advance the
interests of YOCREAM International, Inc. (the "Company") and its shareholders by
enabling the Company to attract and retain the services of people with training,
experience and ability and to provide additional incentive to employees and
non-employee directors of the Company and others who provide services to the
Company by giving them an additional opportunity to participate in the ownership
of the Company.
ARTICLE II
DEFINITIONS
As used herein, the following definitions will apply:
(a) "Available Shares" means the number of shares of Common Stock available at
any time for issuance pursuant to Incentive Stock Options or Nonqualified Stock
Options under this Plan as provided in Article III.
(b) "Award" means any grant of an Incentive Stock Option or any grant of a
Nonqualified Stock Option under this Plan.
(c) "Board of Directors" means the Board of Directors of the Company.
(d) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means any committee appointed by the Board of Directors in
accordance with Article V of this Plan, or, if no such committee has been
appointed, shall mean the Board of Directors.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means YOCREAM International, Inc. an Oregon business
corporation, and, unless the context otherwise requires, any majority owned
subsidiary of the Company and any successor or assignee of the Company by
merger, consolidation, acquisition of all or substantially all of the assets of
the Company or otherwise.
(h) "Disabled" means a mental or physical impairment which has lasted or which
is expected to last for a continuous period of 12 months or more and which
renders an Optionee unable, in the Committee's sole discretion, of performing
the duties which were assigned to the Optionee during the 12 month period prior
to such determination. The Committee's determination of the existence of an
individual's disability will be effective when communicated in writing to the
Optionee and will be conclusive on all of the parties.
(i) "Effective Date" means the date on which this Plan is approved by the
Board of Directors.
(j) "Employee" means any person employed by the Company.
(k) "Fair Market Value" with respect to shares of Common Stock for any date
means:
1) If the Common Stock is traded on a national securities exchange or on
either the National Market System or Small Cap Market of NASDAQ, the
"Fair Market Value of a share of Common Stock shall be the average
between the lowest and highest reported sales price of the Common Stock
for such date, or if no transactions occurred on such date, on the last
date on which trades occurred;
2) If the Common Stock is not traded on a national securities exchange or
on NASDAQ but bid and asked prices are regularly quoted on the NASDAQ OTC
Bulletin Board Service, by the National Quotation Bureau or any other
comparable service, the "Fair Market Value" of a share of Common Stock
shall be the average between the highest bid and lowest asked prices as
reported by such service for such date or, if such date was not a
business day, on the preceding business day; or
3) If there is no public trading of the Common Stock within the terms of
subparagraphs A or B, the "Fair Market Value" of a share of Common Stock
shall be as determined by the Committee in its sole discretion.
(l) "Incentive Stock Option" means an option to purchase shares of Common Stock
that the Committee indicates is intended to qualify as an incentive stock
option within the meaning of "Section 422 of the Internal Revenue Code and is
granted under Article VI of this Plan.
(m) "Nonqualified Stock Option" means an option to purchase shares of Common
Stock that the Committee either indicates is intended to be a nonqualified
stock option or indicates is not intended to qualify as an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code and is
granted under Article VII of this Plan.
(n) "Optionee" means any individual who is granted either an Incentive Stock
Option or a Nonqualified Stock Option under this Plan.
(o) "Reserved Shares" means the number of shares of Common Stock reserved for
issuance pursuant to Awards under this Plan as provided in Section 3.1 of
Article III.
(p) "Securities Act" means the Securities Act of 1933, as amended.
(q) "Significant Shareholder" means any person who owns stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any parent or subsidiary of the Company. For purposes
of this definition a person shall be considered as owning all stock owned,
directly or indirectly by or for such person's brothers and sister, spouse,
ancestors and lineal descendants. In addition, stock owned, directly or
indirectly, by or for a corporation, partnership, estate or trust shall be
considered as being owned proportionately by or for its shareholders, partners
or beneficiaries to the extent required by Section 422 of the Internal Revenue
Code.
ARTICLE III
STOCK SUBJECT TO THE PLAN
3.1 Aggregate Number of Reserved Shares. Subject to adjustment in
accordance with Section 9.1, the total number of shares of Common Stock reserved
for issuance pursuant to all Awards under this Plan is established at 100,000
shares.
3.2 Number of Available Shares. At any point in time, the number of
Available Shares shall be the number of Reserved Shares at such time minus:
(a) the number of shares of Common Stock issued upon the exercise of
Incentive Stock Options and Nonqualified Stock Options prior to such
time; and
(b) the number of shares covered by Incentive Stock Options and
Nonqualified Stock Options that have been granted and which have not
yet expired, been terminated or been cancelled to the extent that
such options have not been exercised at such time.
As a result of the foregoing, if an Incentive Stock Option or Nonqualified Stock
Option expires, terminates or is cancelled for any reason without having been
exercised in full, the shares of Common Stock Covered by such option that were
not purchased through the exercise of such option will be added back to the
Available Shares. However, shares of Common Stock used by an Optionee to satisfy
withholding obligations upon the exercise of a Nonqualified Stock Option shall
nonetheless, for purposes of this Plan, be considered as having been issued upon
the exercise of such option.
3.3 Sources of Available Shares. Available Shares may be either (i)
authorized but unissued shares of Common Stock or (ii) shares of Common Stock
which have previously been issued by the Company that were subsequently
reacquired by the Company. The source of Available Shares shall be determined by
the Board of Directors from time-to-time in their sole discretion. In the
absence of any determination by the Board of Directors to the contrary, the
Available Shares shall come from the authorized but unissued shares of Common
Stock of the Company. The Company will, at all times, reserve for issuance
shares of Common Stock equal to the sum of (i) the number of shares covered by
Incentive Stock Options and Nonqualified Stock Options that have been granted
and which have not yet expired, been terminated or been cancelled to the extent
that such options have not been exercised at such time and (ii) the number of
Available Shares at such time.
3.4 Annual Limit on Number of Shares to Any One Person. No person will be
eligible to receive Awards under this Plan which, in aggregate, exceed 20,000
shares in any calendar year except in connection with the hiring or commencement
of services from such person in which case such limit shall be 40,000 shares
during such calendar year.
ARTICLE IV
COMMENCEMENT AND DURATION OF THE PLAN
4.1 Effective Date of the Plan. This Plan will be effective as of the
date on which it is approved by the Board of Directors (the "Effective Date")
subject to the provisions of Section 4.2.
4.2 Shareholder Approval of the Plan. This Plan will be submitted
for the approval of the shareholders of the Company within twelve (12) months of
the Effective Date. This Plan will be deemed, approved by the shareholders if
approved by a majority of the votes cast at a duly held meeting of the Company's
shareholders at which a quorum is present in person or by proxy. No awards will
be made under this Plan prior to such shareholder approval.
4.3 Termination of the plan. This plan will terminate ten years from the
effective date. In addition, the Board of Directors will have the right to
suspend or terminate this Plan at any time. Any termination of this Plan will
not affect the exercisability of any Incentive Stock Options or Nonqualified
Stock Options granted under this Plan prior to such termination.
ARTICLE V
ADMINISTRATION OF THE PLAN
Subject to the provisions of this Plan and any additional terms or
conditions which may, from time to time, be imposed by the Board of Directors,
the Committee will administer this Plan and will have the authority, in its sole
discretion, to grant Incentive Stock Options or grant Nonqualified Stock Options
in accordance with Articles VI and VII, respectively. The Committee may, from
time to time, adopt rules and regulations relating to the administration of this
Plan and may, but is not required to, seek the advice of legal, tax, accounting
and compensation advisors. Decisions of the Committee with respect to the
administration of this Plan, the interpretation or construction of this Plan or
the interpretation or construction of any written agreement evidencing an Award
will be final and conclusive, subject only to review by the full Board of
Directors. The Committee may correct any defect, supply any omission or
Reconcile any inconsistency in this Plan or in any agreement evidencing an Award
in the manner and to the extent it deems appropriate.
The Board of Directors shall appoint the members of the Committee, which
shall consist of at least two directors from the Board of Directors. For
purposes of this paragraph, directors who are not "outside directors" as such
term is defined in Treasury Regulation (section) 1.162-27(e)(3) and directors
who are not "nonemployee directors" as such term is defined in Rule 16b-3 issued
by the Securities and Exchange Commission under Section 16 of the Securities
Exchange Act of 1934, as amended, shall be referred to as nonqualified
directors. Nonqualified directors may serve on the Committee. However,
nonqualified directors shall be deemed (notwithstanding any statement to the
contrary which may be contained in minutes of a meeting of the Committee) to
have abstained from any action requiring under Section 162(m)the approval of a
committee consisting solely of outside directors or from any action requiring
under Rule 16b-3 the approval of a committee consisting solely of nonemployee
directors and the assent of any such disqualified director shall be ignored for
purposes of determining whether or not an such actions were approved by the
Committee. If the Committee proposes to take an action by unanimous consent in
lieu of a meeting and such action would require under Section 162(m) the
approval of a committee consisting solely of outside directors or such action
would require under Rule 16b-3 the approval of a committee consisting solely of
nonemployee directors, the disqualified director shall, for purposes of such
consent, be deemed to not be a member of the Committee.
If no Committee is appointed, the Board of Directors will have all the
duties and responsibilities of the Committee as set forth in this Plan. In
addition, the Board of Directors may abolish a Committee and assume the duties
and responsibilities of the Committee at any time if it elects to do so in a
resolution adopted by the Board of Directors.
ARTICLE VI
INCENTIVE STOCK OPTION TERMS AND CONDITIONS
Incentive Stock Options may be granted under this Plan in accordance with
the following terms and conditions.
6.1 Requirement for a Written Incentive Stock Option Agreement. Each
Incentive Stock Option will be evidenced by a written option agreement. The
Committee will determine from time-to-time the form of Incentive Stock Option
agreement to be used under this Plan. The terms of the Incentive Stock Option
agreement must be consistent with this Plan and any inconsistencies will be
resolved in accordance with the terms and conditions specified in this Plan.
Except as otherwise required by this Section 6, the terms and conditions of
each Incentive Stock Option do not need to be identical.
6.2 Who May be Granted an Incentive Stock Option. An Incentive Stock
Option may be granted to any Employee who, in the judgment of the Committee,
has performed or will perform services of importance to the Company in the
management, operation and development of the business of the Company or of one
or more of its Subsidiaries. The Committee, in its sole discretion, shall
determine when and to which Employees Incentive Stock Options are granted under
this Plan.
6.3 Number of Shares covered by an Incentive Stock Option. The Committee,
in its sole discretion, shall determine the number of shares of Common Stock
covered by each Incentive Stock Option granted under this Plan and such number
shall be specified in the written agreement evidencing such Incentive Stock
Option.
6.4 Vesting Schedule Under an Incentive Stock Option. The Committee, in
its sole discretion, shall determine whether an Incentive Stock Option is
immediately exercisable as to all of the shares of Common Stock covered by such
option or whether it is only exercisable in accordance with a vesting schedule
as determined by the Committee, in its sole discretion. The vesting terms and
conditions, if any, of each Incentive Stock Option as determined by the
Committee shall be specified in the written option agreement evidencing such
option. Notwithstanding the foregoing, to the extent that an Incentive Stock
Option (together with other incentive stock options within the meaning of
Section 422 of the Internal Revenue Code held by such Optionee with an equal or
lower exercise price per share) purports to become exercisable for the first
time during any calendar year as to shares of Common Stock with a Fair Market
Value (determined at the time of grant) in excess of $100,000, such excess
shares shall be considered to be covered by a nonqualified stock option and not
an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code.
6.5 Exercise Price of an Incentive Stock Option. The purchase price of
shares of Common Stock under each Incentive Stock Option will be 100% of the
Fair Market Value of a share of Common Stock as of the date on which the
Incentive Stock Option was granted. However, if the Optionee is a Significant
Shareholder, the purchase price of shares of Common Stock under each Incentive
Stock Option will be 110% of the Fair Market Value of a share of Common Stock
as of the date on which the Incentive Stock Option was granted.
6.6 Duration of an Incentive Stock Option--Generally. The Committee will
determine, in its sole discretion, the term of each Incentive Stock Option
provided that such term will not exceed 10 years from the date on which such
option was granted or, in the case of a Significant Shareholder, will not exceed
5 years from the date on which such option was granted. The term of each
Incentive Stock Option shall be set forth in the written option agreement
evidencing such option. The Optionee shall have no further right to exercise an
Incentive Stock Option following the expiration of such term.
6.7 The Effect of Termination of the Optionee's Employment on the Term of an
Incentive Stock Option. If an Optionee, while possessing an Incentive Stock
Option that has not expired or been fully exercised, ceases to be an Employee of
the: Company for any reason other than as a result of the death or disability
of the Optionee (as provided for in Section 6.8 and 6.9, respectively), the
Incentive Stock Option may be exercised, to the extent not previously exercised
and subject to any vesting provisions contained in the written option agreement,
at any time within three months following the date the Optionee ceased to be an
Employee of the Company except that this provision will not extend the time
within which an Incentive Stock Option may be exercised beyond the expiration of
the term of such option. The Committee may provide that if the Optionee's
employment is terminated by the Company for cause, as determined by the
Company's President or Board of Directors in their reasonable discretion, the
Incentive Stock Option will terminate immediately upon the Company's notice to
the Optionee of such termination.
6.8 The Effect of the Death of an Optionee on the Term of an Incentive Stock
Option. If an Optionee, while possessing an Incentive Stock Option that has
not expired or been fully exercised, ceases to be an Employee of the Company as
a result of the death of the Optionee, the Incentive Stock Option may be
exercised, to the extent not previously exercised and subject to any vesting
provisions contained in the written option agreement, at any time within 12
months following the date of the Optionee's death except that this provision
will not extend the time within which an Incentive Stock Option may be exercised
beyond the expiration of the term of such option.
6.9 The Effect of the Disability of an Optionee on the Term of an Incentive
Stock Option. If an Optionee, while possessing an Incentive Stock Option that
has not expired or been fully exercised, ceases to be an Employee of the Company
as a result of the Optionee becoming Disabled, the Incentive Stock Option may be
exercised, to the extent not previously exercised and subject to any vesting
provisions contained in the written option agreement, at any time within 12
months following the date of the Optionee becoming Disabled except that this
provision will not extend the time within which an Incentive Stock Option may
be exercised beyond the expiration of the term of such option.
6.10 Transferability. No Incentive Stock Option may be transferred by the
Optionee other than by will or the laws of descent and distribution upon the
death of the Optionee.
6.11 Tax Treatment and Savings Clause. Nothing contained in this Plan, any
written option agreement representing and Incentive Stock Option, any document
provided by the Company to an Option or any statement made by or on behalf of
the Company shall constitute a representation or warranty of the tax treatment
of any option or that such option shall qualify as an incentive stock option
under Section 422 of the Internal Revenue Code. Any option which is designated
as an Incentive Stock Option but which, either in whole or in part, fails for
any reason to qualify as an incentive stock option within the meaning of Section
422 of the Internal Revenue Code or which fails to satisfy requirements under
this Plan which apply only to Incentive Stock Options shall be treated as an
incentive stock option to the fullest extent permitted under Section 422 of the
Internal Revenue Code and this Plan and otherwise shall, notwithstanding such
designation, be treated as a Nonqualified Stock Option under this Plan.
ARTICLE VII
NONQUALIFIED STOCK OPTION TERMS AND CONDITIONS
Nonqualified Stock Options may be granted under this Plan in accordance with
the following terms and conditions.
7.1 Requirement for a Written Nonqualified Stock Option Agreement. Each
Nonqualified Stock Option will be evidenced by a written option agreement. The
Committee will determine from time-to-time the form of written Nonqualified
Stock Option agreement to be used under this Plan. The terms of the Nonqualified
Stock Option agreement must be consistent with this Plan and any inconsistencies
will be resolved in accordance with the terms and conditions specified in this
Plan. Except as otherwise required by this Section 7, the terms and conditions
of each Nonqualified Stock Option do not need to be identical.
7.2 Who May be Granted an Nonqualified Stock Option. A Nonqualified Stock
Option may be granted to any Employee, any director of the Company and any other
individual who, in the judgment of the Committee, has performed or will perform
services of importance to the Company in the management, operation and
development of the business of the Company or of one or more of its
Subsidiaries. The Committee, in its sole discretion, shall determine when and to
whom Nonqualified Stock Options are granted under this Plan.
7.3 Number of Shares Covered by a Nonqualified Stock Option. The
Committee, in its sole discretion, shall determine the number of shares of
Common Stock covered by each Nonqualified Stock Option granted under this Plan
and such number shall be specified in the written agreement evidencing such
Nonqualified Stock Option.
7.4 Vesting Schedule Under a Nonqualified Stock Option. The Committee, in
its sole discretion, shall determine whether a Nonqualified Stock Option is
immediately exercisable as to all of the shares of Common Stock covered by such
option or whether it is only exercisable in accordance with a vesting schedule
as determined by the Committee, in its sole discretion. The vesting terms and
conditions, if any, of each Nonqualified Stock Option as determined by the
Committee shall be specified in the written option agreement evidencing such
option.
7.5 Exercise Price of a Nonqualified Stock Option. The purchase price of
shares of Common Stock under each Nonqualified Stock Option will be 100% of the
Fair Market Value of a share of Common Stock as of the date on which the
Nonqualified Stock Option was granted. However, if it is subsequently determined
that the exercise price as stated in the written option agreement is less than
100% of the Fair Market Value as of the date on which an option was granted,
such fact will not invalidate a Nonqualified Stock Option.
7.6 Duration of a Nonqualified Stock Option--Generally. The Committee will
determine, in its sole discretion, the term of each Nonqualified Stock Option
provided that such term will not exceed 10 years from the date on which such
option was granted. The term of each Nonqualified Stock Option shall be set
forth in the written option agreement evidencing such option. The Optionee shall
have no further right to exercise a Nonqualified Stock Option following the
expiration of such term.
7.7 The Effect of Termination of the Optionee's Employment or Service as a
Director on the Term of a Nonqualified Stock Option. If an Optionee, while
possessing a Nonqualified Stock Option that has not expired or been fully
exercised, ceases to be an Employee of the Company (or, in the case of an
Optionee who is not an Employee but is a director of the Company, ceases to be
a director of the Company) for any reason other than as a result of the death
or disability of the Optionee (as provided for in Section 7.8 and 7.9,
respectively), the Nonqualified Stock Option may be exercised, to the extent not
previously exercised and subject to any vesting provisions contained in the
written option agreement, at any time within three months following the date the
Optionee ceased to be an Employee (or a director as the case may be) of the
Company except that this provision will not extend the time within which an
Nonqualified Stock Option may be exercised beyond the expiration of the term of
such option. The Committee may provide that if the Optionee's employment is
terminated by the Company for cause, as determined by the Company's President or
Board of Directors in their reasonable discretion, the Nonqualified Stock Option
will terminate immediately upon the Company's notice to the Optionee of such
termination.
7.8 The Effect of the Death of an Optionee on the Term of a Nonqualified
Stock Option. If an Optionee, while possessing a Nonqualified Stock Option
that has not expired or been fully exercised, ceases to be an Employee, ceases
to serve as a director of the Company or ceases to provide services to the
Company as a result of the Optionee's death, the Nonqualified Stock Option may
be exercised, to the extent not previously exercised and subject to any vesting
provisions contained in the written option agreement, at any time within 12
months following the date of the Optionee's death except that this provision
will not extend the time within which a Nonqualified Stock Option may be
exercised beyond the expiration of the term of such option.
7.9 The Effect of the Disability of an Optionee on the Term of a
Nonqualified Stock Option. If an Optionee, while possessing a Nonqualified
Stock Option that has not expired or been fully exercised, ceases to be an
Employee, ceases to be an Employee, ceases to serve as a director of the Company
or ceases to provide services to the Company as a result of the Optionee
becoming Disabled, the Nonqualified Stock Option may be exercised, to the extent
not previously exercised and subject to any vesting provisions contained in the
written option agreement, at any time within 12 months following the date of the
Optionee becoming Disabled except that this provision will not extend the time
within which a Nonqualified Stock Option may be exercised beyond the expiration
of the term of such option.
7.10 Transferability. The Committee may, in the written agreement
evidencing any Nonqualified Stock Option, provide that such Nonqualified Stock
Option be transferred by gift to the Optionee' s spouse, children or a trust for
the exclusive benefit of any combination of the Optionee, the Optionee's spouse
and the Optionee's children provided that any transfer of a Non-Qualified Option
shall be conditioned upon the Optionee and the transferee of such Non-Qualified
Stock Option executing and delivering to the Company a form of
Transfer/Assumption of Non-Qualified Stock Option Agreement as the Company may
request. Notwithstanding any transfer of a Non-Qualified Stock Option, the
Optionee shall remain liable to the Company for any income tax withholding
amounts which the Company is required to withhold at the time that the
transferred Non-Qualified Stock Option is exercised. If the written agreement
evidencing any Nonqualified Stock Option does not expressly provide that such
Nonqualified Stock Option is transferable, such Nonqualified Stock Option may
not be transferred by the Optionee, other than by will or the laws of descent
and distribution upon the death of the Optionee, without the prior written
consent of the Committee, which consent may be withheld in the Committee's sole
discretion.
ARTICLE VIII
EXERCISE OF OPTIONS TO PURCHASE SHARES
8.1 Notice of Exercise. Shares may be purchased pursuant to an Incentive
Stock Option or Nonqualified Stock Option granted under this Plan only upon
receipt by the Company of written notice signed and delivered by the Optionee
(or, in the case of exercise after death of the Optionee, by the executor,
administrator, heir or legatee of the Optionee, as the case may be) directed to
the President of the Company (or such other person as the Company may designate)
at the principal business office of the Company. Such notice will state the
number of shares of Common Stock being purchased, specify the method of payment
of the exercise price for the shares being purchased, specify the method of
payment of the Tax Withholding if the option is a Nonqualified Stock Option,
and, unless an registration under the Securities Act is in effect with respect
to the Plan at the time of such exercise, contain such representations as the
Company determines to be necessary or appropriate in order for the sale of
shares of Common Stock being purchased pursuant to such exercise to qualify for
exemptions from registration under the Securities Act.
8.2 Payment of Exercise Price. Unless the Committee, in its sole
discretion, determines otherwise, Shares may be acquired upon the exercise of an
Incentive Stock Option or Nonqualified Stock Option granted under this Plan only
upon receipt by the Company of payment in full of the Exercise Price of such
shares being purchased in cash, by delivery of a full-recourse promissory note,
by the surrender of other securities issued by the Company (provided that such
other securities have been held by the Optionee for at least six months prior to
the date on which the Option is being exercised) or by any combination of the
foregoing. The Committee may, in its sole discretion, permit an Optionee to
elect to pay the Exercise Price by authorizing a duly registered and licensed
broker-dealer to sell the shares of Common Stock to be issued upon such exercise
(or, at least, a sufficient portion thereof) and instructing such broker-dealer
to immediately remit to the Company a sufficient portion of the proceeds from
such sale to pay the entire Exercise Price of the shares of Common Stock
purchased in such exercise. No shares of Common Stock will be issued upon the
exercise or attempt to exercise any option unless and until payment or adequate
provision for payment of the Exercise Price of such shares has been made in
accordance with the foregoing.
8.3 Payment of Tax Withholding Amounts. Unless the Committee, in its sole
discretion determines otherwise, each Optionee must, upon the exercise of a
Nonqualified Stock Option granted under this Plan (including Nonqualified Stock
Options transferred by the Optionee), either with the delivery of the notice of
exercise or upon notification of the amount due, pay to the Company or make
adequate provision for the payment of all amounts determined by the Company to
be required to satisfy applicable federal, state and local tax withholding
requirements ("Tax Withholding"). The Nonqualified Stock Option may provide or
the Committee may allow, in its sole discretion, the payment by the Optionee of
the Tax Withholding in cash, by the Company withholding such amount from other
amounts payable by the Company to the Optionee, including salary, by delivery of
other securities of the Company, by the Optionee requesting the Company to
reduce the number of Shares to be issued upon the exercise of the Nonqualified
Stock Option or any combination of the foregoing. By receiving and exercising a
Nonqualified Stock Option, the Optionee shall be deemed to have consented to the
Company withholding the amount of any Tax Withholding from any amounts payable
by the Company to the Optionee. The Committee may, in its solediscretion, permit
an Optionee to elect to pay the Tax Withholding by authorizing a duly registered
and licensed broker-dealer to sell the Shares to be issued upon such exercise
(or, at least, a sufficient portion thereof) and instructing such broker-dealer
to immediately remit to the Company a sufficient portion of the proceeds from
such sale to pay the Tax Withholding. No Shares will be issued upon an exercise
of a Nonqualified Stock Option unless and until payment or adequate provision
for payment of the Tax Withholding has been made in accordance with the
foregoing. If the Company determines that additional withholding is or becomes
required beyond any amount paid or provided for by the Optionee in accordance
with the foregoing, the Optionee will pay such additional amount to the Company
immediately upon demand by the Company. 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. The Optionee, by receiving and
exercising any Nonqualified Stock Option shall be deemed to have consented to
such withholding.
8.4 Payment of Exercise Price or Withholding with Other Securities. To the
extent permitted in Section 8.2 and Section 8.3 above, the Exercise Price and
Tax Withholding may be paid by the surrender of other securities of the Company
by so notifying the Company in the notice of exercise and by delivering to the
Company with such notice either the certificates or instruments representing
such other securities duly endorsed for transfer or by delivering to the Company
an attestation in such form as the Company may deem to be appropriate with
respect to the Optionee's ownership of other securities of the Company. Any
Common Stockor other securities of the Company shall, for purposes of this
Section 8, be valued at the publicly reported price for the last sale on the
last business day preceding the day the Company receives the Optionee's notice
of exercise, or, if there are no publicly reported prices of such Common Stock
or other securities of the Company, at the fair market value of such Common
Stock or other securities of the Company, as determined in good faith by the
Board of Directors. To the extent permitted in Section 8.3 above, Tax
Withholding may, if the Optionee so notifies the Company at the time of the
notice of exercise, be paid by the application of Shares which could be received
upon exercise of a Nonqualified Stock Option or shares of Common Stock which
could be received upon exercise of any other stock option issued by the Company.
This application of Shares shall be accomplished by crediting toward the
Optionee s Tax Withholding obligation the difference between the fair market
value of the Company's Common Stock and the exercise price of the
Nonqualified Stock Option or other stock option specified in the Optionee's
notice. Any such application shall be considered an exercise of the Nonqualified
Stock Option or other stock option to the extent that Shares are so applied and,
as such, may add to the Optionee's withholding obligation.
8.5 Compliance with Securities Laws. No Shares will be issued with respect
to the exercise of any Incentive Stock Option or Nonqualified Stock Option
unless the exercise and the issuance of the Shares will comply with all relevant
provisions of law, including, without limitation, the Securities Act, any
registration under the Securities Act in effect with respect to the Plan, all
applicable state securities laws, the Securities Exchange Act of 1934, as
amended, the Internal Revenue Code, the respective rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the Common Stock may then be listed, and will be further subject to the approval
of counsel for the Company with respect to such compliance. The Company will not
be liable to any Optionee or any other person for failure to issue Shares upon
the exercise of an option where such failure is due to the inability of the
Company to obtain all permits, exemptions or approvals from regulatory
authorities which are deemed by the Company's counsel to be necessary. The Board
may require any action or agreement by an Optionee as may from time to time be
necessary to comply with the federal and state securities laws. The Company will
not be obliged to prepare, file or maintain a registration under the Securities
Act with respect to the Plan or to take any actions with respect to any state
securities laws.
8.6 Issuance of Shares. Notwithstanding the good faith compliance by the
Optionee with all of the terms and conditions of the written agreement
Evidencing an Incentive Stock Option or Nonqualified Stock Option and with this
Article VIII, the Optionee will not become a shareholder and will have no rights
as a shareholder with respect to the Shares purchased through such exercise
unless and until a stock certificate is issued in the name of the Optionee by
the Company or its transfer agent. Notwithstanding the foregoing, the Company
shall not unreasonably delay the issuance of a stock certificate and shall
exercise reasonable efforts to cause such stock certificate to be issued to the
Optionee as soon as is practicable after the compliance by the Optionee with all
of the terms and conditions of the written agreement and with this Article VIII.
8.7 Notice of any Disqualifying Disposition and Provision for Tax
Withholding. Any Optionee that exercises an Incentive Stock Option and then
makes a "disqualifying disposition" (as such term is defined under Section 422
of the Internal Revenue Code) of the shares so purchased, shall immediately
notify the Company in writing of such disqualifying disposition and shall pay or
make adequate provision for all Tax Withholding as if such Incentive Stock
Option was a Nonqualified Stock Option in accordance with Section 8.3.
ARTICLE IX
CHANGES IN CAPITAL STRUCTURE
9.1 Adjustments of Number of Shares and Exercise Price. Except as provided
in Section 9.2, if the outstanding shares of Common Stock are hereafter
increased, decreased, changed into or exchanged for a different number or kind
of shares of Common Stock or for other securities of the Company or of another
corporation, by reason of any reorganization, merger, consolidation,
reclassification, stock split-up, combination of shares or Common Stock, or
dividend payable in shares of Common Stock, the Committee will make such
adjustment as it deems appropriate in the number and kind of shares of Common
Stock or other securities covered by Incentive Stock Options and Nonqualified
Stock Options which may be granted under this Plan. In addition, the Committee
will at such time make such adjustment in the number and kind of shares of
Common Stock or other securities covered by outstanding Incentive Stock Options
and outstanding Nonqualified Stock Options, as well as make an adjustment in the
exercise price under each such options as the Committee deems appropriate. Any
determination by the Committee as to what adjustments may be made, and the
extent thereof, will be final, binding on all parties and conclusive.
9.2 Acceleration of Vesting. In the event of any dissolution or
liquidation of the Company, or any merger or consolidation with one or more
corporations in which the Company is not the surviving entity, or in which the
security holders of the Company prior to such transaction do not receive in the
transaction securities with voting rights with respect to the election of
directors equal 50% or more of the votes of all classes of securities of the
surviving corporation which will be outstanding immediately after such
transaction, each outstanding Incentive Stock Option and each outstanding
Nonqualified Stock Option shall become immediately exercisable in its entirety,
notwithstanding any vesting schedule included in the written agreement
evidencing such option, fifteen (15) days prior to such event and shall, unless
the event fails to occur, continue to be exercisable in such manner for forty-
five (45) days after such event, unless, as an expressed term of such
transaction, adequate provision is made for the continuation of the rights of
holders of such outstanding option after the consummation of such transaction.
ARTICLE X
UNDERWRITERS LOCK-UP
Each written agreement evidencing an Award will specify that the Optionee,
by accepting the Award agrees that whenever the Company undertakes a firmly
underwritten public offering of its securities, the Optionee will, if requested
to do so by the managing underwriter in such offering, enter into an agreement
not to sell or dispose of any securities of the Company owned or controlled by
the Optionee provided that such restriction will not extend beyond 12 months
from the effective date of the registration statement filed in connection with
such offering.
ARTICLE XI
EMPLOYMENT RIGHTS
Nothing in this Plan nor in any written agreement evidencing an Award will
confer upon any Optionee any right to be continued in the employment of the
Company or to limit or affect in any way the right of the Company, in its sole
discretion, (a) to terminate the employment of such Optionee at any time, with
or without cause, (b) to change the duties of such Optionee, or (c) to increase
or decrease the compensation of the Optionee at any time. Unless the written
agreement evidencing an Award expressly provides otherwise, vesting under such
agreement shall be conditioned upon:
1) for Employees of the Company, the continued employment of the Optionee;
2) for independent contractors, the Optionee continuing to provide services
to the Company on substantially the same terms and conditions as such
services were provided at the time of the Award; or
3) for directors who are not Employees, the Optionee continuing to serve as
a director of the Company;
and nothing in this Plan shall be construed as creating a contractual or implied
right or covenant by the Company to continue such employment, service as an
independent contractor or service as a director.
ARTICLE XII
AMENDMENT OF PLAN
The Board of Directors may, at any time and from time to time, modify or
amend this Plan as it deems advisable except that any amendment increasing the
number of shares of Common Stock reserved under this Plan or expanding the
persons eligible to receive Awards shall only become effective if and when such
amendment is approved by the shareholders of the Company. Except as provided in
Section 9 hereof, no amendment shall be made to the terms or conditions of an
outstanding Incentive Stock Option or Nonqualified Stock Option without the
written consent of the Optionee.
DATED as of and approved by the Board of Directors of the Company effective as
of January 25, 2000.
Approved by the shareholders of the Company on March 29, 2000.
