EXHIBIT 10(ai)
THE CLASSICA GROUP, INC.
1998 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
1. Purposes of Plan. The purposes of the The Classica Group, Inc. 1998
Incentive and Non-Qualified Stock Option Plan (hereinafter referred to as the
"Plan") are to provide to employees of The Classica Group, Inc.(hereinafter
referred to as the "Corporation"), as well as employees of subsidiary or parent
corporations which may currently exist or be formed or acquired in the future,
an opportunity for investment in the Corporation's common stock (hereinafter
referred to as the "Shares"), as an inducement for such individuals to remain
with the Corporation, and to encourage them to increase their efforts to make
the Corporation's business more successful.
2. Effective Date and Termination of Plan. The effective date of the
Plan is April 1, 1998, the date on which the Plan was adopted by the Board of
Directors of the Corporation. The Plan shall terminate on, and no option shall
be granted hereunder, after April 1, 2008; provided, however, that the Board of
Directors may at any time prior to that date terminate the Plan; and provided
further that any option granted hereunder prior to the termination of the Plan
shall remain exercisable in accordance with its terms as then in effect.
3. Administration of Plan. The Plan shall be administered by the Board
of Directors of the Corporation. The Board of Directors may, however, to the
extent permissible under the Corporation" Articles of Organization, By-laws and
applicable law, delegate any of its functions under this Plan to a committee of
the Board of Directors or any other committee. Wherever in this Plan the term
""oard of Directors""is used it shall be construed to mean such committee to the
extent that the Board of Directors may have delegated any of its functions to
said committee and only to the extent of any such delegation. The acts of a
majority of the members present at any meeting of the Board of Directors at
which a quorum is present, or acts approved in writing by a majority of the
entire Board, shall be the acts of the Board of Directors for purposes of the
Plan.
4. Eligibility and Grant of Options. Subject to the provisions of the
Plan, the Board of Directors shall (i) authorize the granting of incentive stock
options, non-qualified stock options or a combination of incentive stock options
and non-qualified stock options (hereinafter collectively referred to as
"options" unless otherwise stated); (ii) determine and designate from time to
time those employees (from the group consisting of all employees of the Company)
to whom options are to be granted and the number of Shares to be optioned to
each employee; (iii) determine the number of Shares subject to each option; and
(iv) determine the time or times when and the manner in which each option shall
be exercisable and the duration of the exercise period. In determining the
eligibility of an individual to receive an option, as well as in determining the
number of Shares to be optioned to any individual, the Board of Directors shall
consider the position and responsibilities of the employee, the nature and value
to the Corporation, parent or subsidiary of his services and accomplishments,
his present and potential contribution to the success of the Corporation, parent
or subsidiary, and such other factors as the Board may deem relevant. To be
eligible to receive an incentive stock option or non-qualified stock option an
individual must be an employee of the Corporation, parent or subsidiary. A
Director shall abstain from voting on the grant of any options to himself, his
spouse, his children, grandchildren and parents. The grant of each option shall
be confirmed by a Stock Option Agreement (in the form prescribed by the Board of
Directors) which shall be executed by the Corporation and the optionee as
promptly as practicable after such grant. More than one option may be granted to
an individual.
Incentive stock options shall be those options which satisfy the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended and
which the Board of Directors has specifically identified as incentive stock
options in the Stock Option Agreement executed by the Corporation and the
optionee. In the case of incentive stock options, the aggregate fair market
value, determined at the time incentive stock options are granted, of the stock
with respect to which the incentive stock options are exercisable for the first
time by such individual during any calendar year (under all such plans the
Corporation may adopt) shall not exceed one hundred thousand dollars
($100,000.00). In the event that an incentive stock option granted pursuant to
the terms of this Plan is granted to an employee who, prior to the grant, holds
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation, its parent or a subsidiary ("10% Shareholder") the
option price under such grant shall be at least one hundred ten percent (110%)
of the fair market value, and such option, by its terms, shall not be
exercisable more than five (5) years from the date of grant.
Nothing in the Plan or in any option granted pursuant to the Plan shall
confer on any individual any right to continue in the employ of the Corporation
or any parent or subsidiary or interfere in any way with the right of the
Corporation to terminate his employment at any time.
5. Number of Shares Subject to Options. The Board of Directors, prior
to the time options under the Plan become exercisable, shall reserve for the
purposes of the Plan a total of Eight Hundred Thousand (800,000) Shares, which
Shares may be either authorized and unissued Shares, or previously issued Shares
held in the treasury of the Corporation, or both. Shares as to which an option
granted under the Plan shall remain unexercised at the expiration or termination
thereof, and Shares subject to options which are cancelled, may be the subject
of the grant of further options. Shares reserved pursuant to this paragraph may
be adjusted to reflect changes in the Corporation's capital structure as
discussed in paragraph 19 hereof.
6. Option Price. The option price per Share shall be determined in each
case by the Board of Directors and shall not be less than one hundred percent
(100%) (one hundred ten percent (110%) in the case of an incentive stock option
granted to a 10% Shareholder) of the fair market value thereof as determined by
the Board by any reasonable method using market quotations on the date the
option is granted.
7. Period of Option and When Exercisable. No option may be granted
under this Plan whose exercise date is later than ten (10) years after the date
of the grant or five (5) years after the date of grant in the case of an
incentive stock option granted to a 10% Shareholder. Generally, an option may be
exercised only by the optionee and subject to the rules set forth below only if,
at all times during the period beginning on the date of the granting of such
option and ending with the date of exercise of such option, the optionee is an
employee of the Corporation, its parent or a subsidiary.
(i) Except as otherwise provided herein, in the case of
an employee who terminates employment, options which
are vested but unexercised as of the date of
termination of employment must be exercised within
three (3) months of termination. In the case of an
employee who is discharged for cause, as determined
in the sole discretion of the Board of Directors, all
previously vested but unexercised options shall be
forfeited immediately.
(ii) In the case of an employee who dies during the three
(3) month period discussed in (i) above, options
which are vested but unexercised as of the date of
termination of employment must be exercised within
twelve (12) months of death.
(iii) Options which are vested but unexercised as of the
date of termination of employment due to death, must
be exercised within twelve (12) months after the
death of an optionee.
(iv) In the event that the employee becomes disabled as
defined in Section 22(e)(3) of the Internal Revenue
Code of 1986, as amended, options which are vested
but unexercised as of the date of termination of
employment due to disability must be exercised within
twelve (12) months following the date of termination
of the optionee" said employment.
(v) In the event an optionee's employment is terminated
for any reason (including but not limited to,
voluntary or involuntary termination or termination
resulting from the death or disability of the
optionee), all unvested options shall be immediately
forfeited.
Notwithstanding the foregoing, options may not be exercised after the
original five (5) or ten (10) year term. Options may be exercised on behalf of
the estate of a former employee by the person or persons entitled to do so under
the optionee's will or, if the optionee shall have failed to make testamentary
disposition of such option or shall have died intestate, by the optionee's legal
representative or representatives. Such person, persons, representative, or
representatives are hereinafter referred to as the "Successors of an Optionee."
8. Vesting. Options granted to a participant shall be exercisable
pursuant to vesting schedules established for individual grants by the Board of
Directors or a committee thereof.
9. Exercise of Options. Subject to Plan restrictions and vesting, an
option may be exercised, and payment in full of the option price made, by an
optionee only by written notice (in the form prescribed by the Board of
Directors) to the Corporation specifying the number of Shares to be so
purchased. Such notice shall state that the option price will be paid in full in
cash (which in the discretion of the Board of Directors may be obtained through
a loan from the Corporation or from a third party and guaranteed by the
Corporation) or other property, in the discretion of the Corporation. If the
Corporation accepts a request to pay in stock of the Corporation in satisfaction
of the exercise price, the fair market value of said stock shall at least equal
the option price, and, in the case of incentive stock options, prior to such
acceptance the Corporation must be furnished with evidence that the acquisition
of said stock and its transfer in payment of the option price satisfies the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended and
other applicable law. As soon as practicable after receipt by the Corporation of
such notice and of payment in full of the option price of all the Shares with
respect to which an option has been exercised, a certificate or certificates
representing such Shares shall be registered (subject to the provisions of
paragraph 16 hereof) in the name of the optionee or the Successors of an
Optionee as defined under this Plan and delivered to the optionee or to the
Successors of an Optionee.
10. Sale of the Corporation. In the case of a Sale of the Corporation
as herein defined, in the discretion of the Board of Directors options granted
but unexercised shall become fully vested (100%) and exercisable for a period of
twenty (20) days from the date notice of such Sale is given to the optionees.
Upon the expiration of the twenty (20) day period, all then unexercised options
shall be permanently cancelled. For purposes of this paragraph, a Sale or Public
Offering shall be deemed to occur upon the happening of any one of the
following:
(i) A sale of all or substantially all of the Corporation's
assets outside the ordinary course of business;
(ii) An offer to purchase at least a majority of the
Corporation's issued and outstanding common stock or
an offer to the Corporation's shareholders to tender
for sale at least a majority of the Corporation's
issued and outstanding common stock, which offer is
accepted or tender made with respect to at least a
majority of the Corporation's issued and outstanding
shares of common stock;
(iii) The merger or consolidation of the Corporation with
another corporation or entity; or
(iv) A dissolution or liquidation of the Corporation.
11. Employer Withholding. In the case of non-qualified stock options,
the Corporation shall be required to withhold additional income taxes
attributable to that amount which is considered compensation includible in the
optionee's gross income by reason of the exercise of such options. The
Corporation in its discretion shall determine the method and amount of
withholding.
12. Exercise by Successors and Payment in Full. An option may be
exercised, and payment in full of the option price made, by the Successors of an
Optionee only by written notice (in the form prescribed by the Board of
Directors) to the Corporation specifying the number of Shares to be purchased.
Such notice shall state that the option price will be paid in full in cash
(which in the discretion of the Board of Directors may be obtained through a
loan from the Corporation or from a third party and guaranteed by the
Corporation), property or stock of the Corporation in conformance with paragraph
9 hereof. As soon as practicable after receipt by the Corporation of such notice
and of payment in full of the option price of all the Shares with respect to
which an option has been exercised, a certificate or certificates representing
such Shares shall be registered (subject to the provisions of paragraph 16
hereof) in the name or names of such Successors of an Optionee and shall be
delivered to him.
13. Non-Transferability of Option. Each option granted under the Plan
shall by its terms be nontransferable by the optionee except by will or the laws
of descent and distribution of the state wherein the optionee is domiciled at
the time of his death.
14. Other Terms of Options. Options granted pursuant to the Plan shall
contain such terms, provisions, and conditions not inconsistent herewith as
shall be determined by the Board of Directors.
15. Registration of Certificates. Certificates representing Shares may
be registered either in the name of the Optionee or in the name or names of the
Successors of an Optionee. Designation of the appropriate form of registration
of certificates shall be made in the written notice given to the Corporation
upon exercise of an option.
16. Listing and Registration of Shares. If at any time the Board of
Directors of the Corporation shall determine, in its discretion, that the
listing, registration, or qualification of any of the Shares subject to options
under the Plan upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body is necessary or
desirable as a condition of or in connection with the granting of options or the
purchase or issue of Shares thereunder, no further options may be granted and
outstanding options may not be exercised in whole or in part unless and until
such listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors. The Board of Directors shall have the authority to cause the
Corporation at its expense to take any action related to the Plan which may be
required in connection with such listing, registration, qualification, consent,
or approval. The Board of Directors may require that any person exercising an
option hereunder shall make such representations and agreements and furnish such
information as it deems appropriate to assure compliance with the foregoing or
any other applicable legal requirement.
17. Interpretation and Amendments. The Board of Directors may make such
rules and regulations and establish such procedures for the administration of
the Plan as it deems appropriate. In the event of any dispute or disagreements
as to the interpretation of this Plan or of any rule, regulation, or procedure,
or as to any question, right or obligation arising from or related to the Plan,
the decision of the Board of Directors shall be final and binding upon all
persons. The Board of Directors may amend this Plan as it shall deem advisable.
However, in no event shall any such amendment adversely affect the rights of an
optionee under any existing stock option agreement without the consent of such
optionee.
18. Indemnification and Exculpation.
(a) Each person who is or shall have been a member of the Board
of Directors shall be indemnified and held harmless by the Corporation against
and from any and all loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by him in connection with or resulting from any claim,
action, suit, or proceeding to which he may be or become a party or in which he
may be or become involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him in
settlement thereof (with the Corporation's written approval) or paid by him in
satisfaction of a judgment in any such action, suit, or proceeding, except a
judgment in favor of the Corporation based upon a finding of his lack of good
faith; subject, however, to the condition that upon the institution of any
claim, action, suit, or proceeding against him, he shall in writing give the
Corporation an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf. The foregoing
right of indemnification shall not be exclusive of any other right to which
such person may be entitled as a matter of law or otherwise, or any power that
the Corporation may have to indemnify him or hold him harmless.
(b) Each member of the Board of Directors, and each officer and
employee of the Corporation shall be fully justified in relying or acting in
good faith upon any information furnished in connection with the administration
of the Plan by any appropriate person or persons other than himself. In no event
shall any person who is or shall have been a member of the Board of Directors,
or an officer or employee of the Corporation be held liable for any
determination made or other action taken or any omission to act in reliance upon
any such information, or for any action (including the furnishing of
information) taken or any failure to act, if in good faith.
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19. Changes in Capital Structure. In the event that a dividend shall be
declared upon the Shares payable in Shares, the number of Shares then subject to
any option outstanding under the Plan and the number of Shares reserved for the
grant of options pursuant to the Plan but not yet subject to option shall be
adjusted by adding to each such Share the number of Shares which would be
distributable in respect thereof if such Shares had been outstanding on the date
fixed for determining the shareholders of the Corporation entitled to receive
such Share dividend. In the event that the outstanding Shares shall be changed
into or exchanged for a different number of Shares or other securities of the
Corporation or of another corporation, whether through reorganization,
recapitalization, split-up, combination of shares, merger, or consolidation,
then there shall be substituted for each Share subject to any such option and
for each Share reserved for the grant of options pursuant to the Plan but not
yet subject to option the number and kind of Shares or other securities into
which each outstanding Share shall have been so changed or for which each such
Share shall have been exchanged. In the event there shall be any change, other
than as specified above in this paragraph, in the number or kind of outstanding
Shares or of any shares or other securities into which such Shares shall have
been changed or for which they shall have been exchanged, then if the Board of
Directors shall in its sole discretion determine that such change equitably
requires an adjustment in the number or kind of Shares theretofore reserved for
the grant of options pursuant to the Plan but not yet subject to option and of
the Shares then subject to an option or options, such adjustments shall be made
by the Board of Directors and shall be effective and binding for all purposes of
the Plan and of each option outstanding thereunder. In the case of any such
substitution or adjustment as provided for in this paragraph, the aggregate
option exercise price set forth for all outstanding options for all Shares
covered thereby prior to such substitution or adjustment will be the option
exercise price for all shares or other securities which shall have been adjusted
pursuant to this paragraph. No adjustment or substitution provided for in this
paragraph shall require the Corporation to sell a fractional Share, and the
total substitution or adjustment with respect to each outstanding option shall
be limited accordingly. Upon any adjustment made pursuant to this paragraph, the
Corporation will, upon request, deliver to the optionee or to his successors a
certificate setting forth the option price thereafter in effect and the number
and kind of shares or other securities thereafter purchasable on the exercise of
the option.
20. Notices. All notices under the Plan shall be in writing, and if to
the Corporation, shall be delivered to the Treasurer of the Corporation or
mailed to its principal office, addressed to the attention of the Treasurer; and
if to the optionee, shall be delivered personally or mailed to the optionee at
the address appearing in the payroll records of the Corporation. Such addresses
may be changed at any time by written notice to the other party.
